b IJM Land Berhad (187405-T)
THE SHAPE OF THINGS TO COME Always thinking ahead and planning with the future in mind, at IJM Land we ask ourselves, “What next?” Nothing inspires us more than future possibilities. The focal point of our developments has always been to deliver new living concepts ahead of their time. We are committed and dedicated to emerging new lifestyle standards as it makes our day to know that dreams are being fulfilled everyday. This cover reflects our passion to create and our proven capabilities in realising aspirations of a new generation of property owners.
CONTENTS
3 CORPORATE STRUCTURE 18 CHAIRMAN’S STATEMENT 48 CORPORATE RESPONSIBILITY 4 SHARE AND WARRANT 22 CEO’S REVIEW OF PERFORMANCE OPERATIONS 56 FINANCIAL STATEMENTS 5 ORGANISATION CHART 26 CORPORATE 157 LIST OF TOP 10 GOVERNANCE PROPERTIES 6 GROUP FINANCIAL STATEMENT HIGHLIGHTS 163 ANALYSIS OF 35 AUDIT COMMITTEE SHAREHOLDINGS AND 8 CORPORATE REPORT WARRANTHOLDINGS INFORMATION 38 STATEMENT OF INTERNAL 168 NOTICE OF ANNUAL 9 PROFILE OF DIRECTORS CONTROL GENERAL MEETING AND SECRETARIES 40 QUALITY STATEMENT FORM OF PROXY 16 MANAGEMENT TEAM PROFILE 43 CUSTOMER RELATIONSHIP MANAGEMENT ANNUAL REPORT 2012 1
VISION MISSION VALUES PERSONALITY
To be an • Passion • Teamwork • Professional internationally • Expertise • Innovative • Trend setting admired property developer • Leading edge • Customer focus • Astute ideas • Environmental • Dynamic • Creating value for sustainability customers & • Integrity stakeholders Aviva Green, Seremban 2
Creating outstanding landscapes that leave a lasting impression, while introducing new features and design that enhance possibilities and shape new lifestyles.
Wangsa Baiduri, Subang Jaya ANNUAL REPORT 2012 3
Corporate Structure
100% 100% RB Land Sdn Bhd Aras Varia Sdn Bhd Dian Warna Sdn Bhd Ikatan Flora Sdn Bhd RB Property Management Sdn Bhd 100% Seremban Two Holdings Sdn Bhd Emko Properties Sdn Bhd Seremban Two Properties Sdn Bhd Tarikan Abadi Sdn Bhd Titian Tegas Sdn Bhd Unggul Senja Sdn Bhd 71% 29% Shah Alam 2 Sdn Bhd
100% RB Development Sdn Bhd
100% 100% ERMS Berhad Holiday Villa Management Sdn Bhd
100% 100% IJM Properties Sdn Bhd Chen Yu Land Sdn Bhd Manda’rina Sdn Bhd 86% Worldwide Ventures Sdn Bhd 70% Sova Holdings Sdn Bhd 80% Aqua Aspect Sdn Bhd Jelutong Development Sdn Bhd 70% Cypress Potential Sdn Bhd 51% Suria Bistari Development Sdn Bhd 4 IJM Land Berhad (187405-T)
Share and Warrant Performance
4.0 12,000
3.5 FBM 100 10,000
ShareShare Price (RM) 3.0 Performance 8,000 2.5 4.0 12,000 2.0 6,000
3.5 FBM 100 10,000 1.5 4,000
Share Price (RM) 3.0 1.0 8,000 2.5 2,000 0.5 2.0 6,000 0 0 1.5 April’11 May’11 June’11 July’11 August’11 September’11 October’11 November’11 December’11 January’12 February’12 March’12 4,000 1.0 IJM Land FBM 100 2,000 0.5
0 0 April’11 May’11 June’11 July’11 August’11 September’11 October’11 November’11 December’11 January’12 February’12 March’12
IJM Land FBM 100
Warrant Performance
4.0 12,000
3.5 FBM 100 10,000 3.0 Warrant Price (RM) Warrant 8,000 2.5 4.0 12,000 2.0 6,000
3.5 FBM 100 10,000 1.5 3.0 4,000 Warrant Price (RM) Warrant 1.0 8,000 2.5 2,000 0.5 2.0 6,000 0 0 1.5 April’11 May’11 June’11 July’11 August’11 September’11 October’11 November’11 December’11 January’12 February’12 March’12 4,000 1.0 IJM Land FBM 100 2,000 0.5
0 0 April’11 May’11 June’11 July’11 August’11 September’11 October’11 November’11 December’11 January’12 February’12 March’12
IJM Land FBM 100 ANNUAL REPORT 2012 5
Organisation Chart
PROPERTY DEVELOPMENT General Managers • Functions • Regions
Property Development Sales & Marketing Board of Directors Sales Administration Land Administration Finance Business Development Human Resource Company Secretaries Committees Chief Executive Officer Property Management & Managing Director Quality Assurance
Audit Internal Audit & HOTEL Risk Management Nomination & Remuneration General Managers Securities & Options Front Office Food & Beverage Housekeeping Club Operations Sales & Marketing Finance Human Resource Maintenance Security Information Technology 6 IJM Land Berhad (187405-T)
Group Financial Highlights
FYE2012 FYE2011 FYE2010 FYE2009 FYE2008 FINANCIAL YEAR ENDED 31 MARCH RM’000 RM’000 RM’000 RM’000 RM’000 Operating revenue 1,206,023 1,162,223 1,101,058 671,010 295,205
Profit before taxation 281,858 285,544 148,193 68,303 54,892
Net profit attributable to owners of the Company 193,709 217,653 108,663 51,126 41,713
Issued share capital 1,388,359 1,124,665 1,103,274 1,103,268 568,187
Shareholders' funds 2,429,599 1,836,223 1,655,447 1,547,551 692,960
Total asset 4,466,524 4,278,603 4,322,804 3,934,793 1,417,099
Earnings per share (Basic) sen 14.07 19.65 9.85 5.93 7.34
Gross dividend per share sen 4.00 4.00 2.00 - -
Net assets per share RM 3.22 3.80 3.92 3.57 2.49
Return on total assets 4.34% 5.09% 2.51% 1.30% 2.94%
Return on equity 7.97% 11.85% 6.56% 3.30% 6.02%
Gearing (Borrowings/equity) 28.79% 30.96% 42.76% 34.40% 44.42%
Share price (RM)
High 2.92 3.25 2.68 2.51 3.50
Low 1.60 2.05 0.73 0.55 0.97
Closing 2.18 2.75 2.33 0.72 1.88
Warrant price (RM)
High 1.54 1.93 1.40 0.35 n/a
Low 0.56 0.85 0.17 0.08 n/a
Closing 0.79 1.43 1.13 0.19 n/a
Serena, S2 Heights, Seremban 2
Seri Riana Residence Show Gallery, Wangsa Maju, Kuala Lumpur ANNUAL REPORT 2012 7
OPERATING REVENUE (RM’000) PROFIT BEFORE TAXATION (RM’000) FYE FYE ‘08 295,205 ‘08 54,892
‘09 671,010 ‘09 68,303
‘10 1,101,058 ‘10 148,193
‘11 1,162,223 ‘11 285,544
‘12 1,206,023 ‘12 281,858
SHAREHOLDERS' FUNDS (RM’000) TOTAL ASSET (RM’000) FYE FYE ‘08 692,960 ‘08 1,417,099
‘09 1,547,551 ‘09 3,934,793
‘10 1,655,447 ‘10 4,322,804
‘11 1,836,223 ‘11 4,278,603
‘12 2,429,599 ‘12 4,466,524
Summer, S2 Heights, Seremban 2 8 IJM Land Berhad (187405-T)
Corporate Information
Dato’ Md Naim Bin Nasir Directors (Independent Non-Executive Director)
Tan Sri Dato’ Tan Boon Seng @ Krishnan Boey Tak Kong (Non-Executive Chairman) (Independent Non-Executive Director)
Dato’ Soam Heng Choon Dato’ Teh Kean Ming (Chief Executive Officer & Managing Director) (Non-Executive Director)
Tan Sri Dato’ Nasruddin Bin Bahari Datuk Lee Teck Yuen (Senior Independent Non-Executive Director) (Non-Executive Director)
Registered Office Share Registrar Auditors 2nd Floor, Wisma IJM IGB Corporation Berhad PricewaterhouseCoopers Jalan Yong Shook Lin (Share Registration Department) (Chartered Accountants) 46050 Petaling Jaya Level 32, The Gardens South Tower Level 10, 1 Sentral Selangor Darul Ehsan Mid Valley City Jalan Travers Malaysia Lingkaran Syed Putra Kuala Lumpur Sentral 59200 Kuala Lumpur 50706 Kuala Lumpur Tel : +603-7985 8288 Malaysia Malaysia Fax : +603-7952 1200 Email : [email protected] Tel : +603-2289 8989 Tel : +603-2173 1188 Website : www.ijmland.com Fax : +603-2289 8802 Fax : +603-2173 1288 E-mail : [email protected] Website : www.pwc.com/my Website : www.igbcorp.com Business Office Principal Bankers Ground Floor, Wisma IJM Stock Exchange Listing Jalan Yong Shook Lin AmInvestment Bank Berhad 46050 Petaling Jaya Main Market of CIMB Bank Berhad Selangor Darul Ehsan Bursa Malaysia Securities Berhad Malaysia since 19 December 1991 Hong Leong Bank Berhad Tel : +603-7985 8288 BMSB Code : 5215 HSBC Bank Malaysia Berhad Fax : +603-7952 9091 Reuters Code : IJML.KL OCBC Bank (Malaysia) Berhad Email : [email protected] Bloomberg Code : IJMLD MK Website : www.ijmland.com Public Bank Berhad United Overseas Bank (Malaysia) Berhad ANNUAL REPORT 2012 9
Profile of Directors and SecretarIES
Tan Sri Dato’ Tan Boon Seng @ Krishnan PSM, SMS, DSPN B.Econs (Hons), CPA(M), MBA Non-Executive Chairman • Securities & Options Committee
Tan Sri Dato’ Tan, born in December 1952, was appointed Chairman on 9 November 2007. He was the Group Financial Controller of Kumpulan Perangsang Selangor Berhad prior to joining IJM Corporation Berhad (“IJM”) as Financial Controller in 1983. He was appointed an Alternate Director in IJM on 12 June 1984, Director on 10 April 1990 and Deputy Managing Director on 1 November 1993. He was then appointed Group Managing Director on 1 January 1997 and was redesignated Chief Executive Officer & Managing Director (“CEO&MD”) on 26 February 2004. He stepped down as the CEO&MD of IJM on 31 December 2010 and was appointed Executive Deputy Chairman on 1 January 2011. He qualified as a Certified Public Accountant in 1978 after graduating with a Bachelor of Economics (Honours) degree from University of Malaya in 1975, and holds a Master’s degree in Business Administration from Golden Gate University, San Francisco, USA. His directorships in other public companies include IJM, IJM Plantations Berhad, Malaysian Airline System Berhad, Malaysian Community & Education Foundation and Grupo Concesionario del Oeste S.A., Argentina. He is a member of the Board of Governors of Malaysia Property Incorporated (MPI). He also serves as a Trustee of Perdana Leadership Foundation. He is actively involved in the promotion of Malaysia India business ties and is currently the President of the Malaysia-India Business Council (MIBC) and Chairman of the Malaysia India CEO Forum. 10 IJM Land Berhad (187405-T)
Profile of Directors and SecretarIES (continued)
1. Dato’ Soam Heng Choon DIMP B.Sc. (Civil Eng.) (Hons), P.Eng., MIEM Chief Executive Officer & Managing Director • Securities & Options Committee 1
2. Tan Sri Dato’ Nasruddin Bin Bahari PSM, DSPN, JMN B.A. (Hons), MPA Senior Independent Non-Executive Director • Audit Committee • Nomination & Remuneration Committee • Securities & Options Committee
2 ANNUAL REPORT 2012 11
Dato’ Soam, born in August 1959, was appointed Executive Director on 25 May 2004 and subsequently the Managing Director on 2 October 2006. He was redesignated Chief Executive Officer & Managing Director on 1 February 2010. He graduated from the University of Strathclyde, United Kingdom with a Bachelor of Science (1st Class Honours) in civil engineering. He was with the Ministry of Works for 10 years prior to joining Road Builder (M) Holdings Bhd Group in 1989. He has extensive experience in construction and property development. He is a Professional Engineer (P.Eng.) and a member of the Institution of Engineers, Malaysia. He is the immediate past Chairman of the Real Estate and Housing Developers Association (REHDA), Negeri Sembilan branch and Vice President of REHDA Malaysia. He is also the Managing Director of RB Land Sdn Bhd and IJM Properties Sdn Bhd, and a Director of ERMS Berhad.
Tan Sri Dato’ Nasruddin, born in November 1937, was appointed Director on 9 November 2007 and assumed the position of Senior Independent Non-Executive Director on 22 November 2007. He graduated with a Bachelor of Arts (Honours) degree from the University of Malaya in 1960 and obtained his Master’s degree in Public Administration from the University of Pittsburgh, USA in 1970. Upon his graduation, he joined the Malaysian civil service in 1961 and his last position was the Secretary General of the Ministry of Defence. He was also a Director of Road Builder (M) Holdings Bhd from 1993 to 2007. His directorships in other public companies include OCBC Al-Amin Bank Berhad (Chairman), OCBC Bank (M) Berhad (Chairman), OCBC Credit Berhad (Chairman), PacificMas Berhad (Chairman), Lingkaran Trans Kota Holdings Berhad and Great Eastern Life Assurance (Malaysia) Berhad. 12 IJM Land Berhad (187405-T)
Profile of Directors and SecretarIES (continued)
1 2
1. Dato’ Md Naim Bin Nasir DPMJ, PIS, PLP B. A. (Hons) Independent Non-Executive Director • Audit Committee
2. Boey Tak Kong CA(M), FCCA, ACIS, MMIM & MIMM Independent Non-Executive Director • Audit Committee • Nomination & Remuneration Committee
3. Dato’ Teh Kean Ming DSPN, PKT B.E (Civil), P.Eng., MIEM Non-Executive Director
3 ANNUAL REPORT 2012 13
Dato’ Naim, born in July 1951, was appointed Director on 26 November 2009. He graduated with a Bachelor of Arts (Honours) degree from University of Malaya in 1975. He has held various key positions in the council of major towns within the State of Johor and was the Mayor of Johor Bahru City Council before his retirement in 2009. He had been the Secretary of the Johor Bahru City Council (2001-2002), President of the Batu Pahat Municipal Council (2002-2003), Mersing District Officer & President of the Mersing District Council (2003-2004), Muar District Officer & President of the Tangkak District Council (2004-2005), and was the Director of Land & Mine Johor (2005-2006), before being appointed Mayor of Johor Bahru City Council in 2006.
Mr Boey, born in May 1954, was appointed Director on 21 February 2000. He is currently the Managing Director of Terus Mesra Sdn Bhd, a strategic management and leadership development training company. He is a Fellow member of the Chartered Association of Certified Accountants, UK, Associate member of the Institute of Chartered Secretaries & Administrators, UK, Chartered Accountant of the Malaysian Institute of Accountants, member of the Malaysian Institute of Management and Associate member of the Institute of Marketing Malaysia. His directorships in other public companies include Bunseng Holdings Berhad, Censof Holdings Berhad (formerly known as Century Software Holdings Berhad), Dutch Lady Milk Industries Berhad, Green Packet Berhad, Gadang Holdings Berhad, Permaju Industries Berhad and Formis Resources Berhad.
Dato’ Teh, born in April 1955, was appointed Director on 9 November 2007. He graduated with a Bachelor of Engineering degree from University of New South Wales, Australia in 1981. He was a Resident Civil & Structural Engineer of Dayabumi Phase 3 Project (1981-1983) and Menara Maybank (1983-1987) and Area Engineer of Antah Biwater J.V. Sdn Bhd (1987-1989) prior to joining IJM Construction Sdn Bhd as Project Manager (1989-1993), Senior Manager (Project) (1994-1997) and Project Director (1998-2001). He was the head of the Property Division of IJM Corporation Berhad (“IJM”) from 2001 to 2008. He was also the Group General Manager of IJM from 1 April 2001 to 31 December 2004 and Managing Director of IJM Properties Sdn Bhd from 1 January 2005 to 10 June 2009. He joined the Board of IJM as an Alternate Director on 1 September 2005 and was the Deputy Chief Executive Officer & Deputy Managing Director of IJM from 1 July 2008 to 31 December 2010. He was then appointed Chief Executive Officer & Managing Director of IJM on 1 January 2011. His directorships in other public companies include IJM, IJM Plantations Berhad, ERMS Berhad and Road Builder (M) Holdings Bhd. 14 IJM Land Berhad (187405-T)
Profile of Directors and Secretaries (continued)
1. Datuk Lee Teck Yuen PJN B.Sc. (Hons.) Civil Eng. & Bus. Adm. Non-Executive Director • Nomination & Remuneration Committee
1
2. Jeremie Ting Keng Fui FCIS, MBA Company Secretary
3. Ng Yoke Kian ACIS Company Secretary
2 3 ANNUAL REPORT 2012 15
Datuk Lee, born in August 1956, was appointed Executive Vice Chairman on 6 April 2007 and redesignated to the position of Non-Executive Director on 22 November 2007. He graduated with a Bachelor of Science (Honours) degree in Civil Engineering and Business Administration from University of Leeds, United Kingdom in 1978. He has more than 30 years experience in property development. His directorships in other public companies include IJM Corporation Berhad, Road Builder (M) Holdings Bhd, Malaysian South-South Corporation Berhad (Executive Director) and Asean Business Forum. He is also currently the President of Malaysian Water Ski Federation, Honorary Secretary of Malaysian South-South Association and the Honorary Consul of the Republic of Colombia.
Mr Jeremie Ting, born in September 1957, was appointed Company Secretary on 9 November 2007. He is also the Company Secretary of IJM Corporation Berhad (“IJM”) and IJM Plantations Berhad, and heads the Corporate Services, Administration, and Information Systems Departments of IJM. He completed the examinations of The Institute of Chartered Secretaries and Administrators (ICSA) in 1981, after obtaining a Diploma in Foundations of Administration from Chelmer Institute of Higher Education, Chelmsford, Essex, England in 1979, and obtained a Master’s degree in Business Administration from Golden Gate University, San Francisco, USA in 1986. He is presently a Council Member of the Malaysian Institute of Chartered Secretaries & Administrators (MAICSA) and has been in Council for many years since 1994. He is also MAICSA Adviser for Bursa Affairs, and Chairman of the Governance Committee and Corporate Communications & Publications Committee, and a member of the National Disciplinary Tribunal, and Technical & Professional Practice Committee. He was adjudged the winner of the ROC-MAICSA Company Secretary Award 2000 under the Listed Company Category, and was the MAICSA President for 2004. He was a member of the Committee of Adjudicators of the Malaysian Corporate Governance (MCG) Index 2011 and 2010 of the Minority Shareholder Watchdog Group (MSWG), and a member of the Focus Group for the Malaysian Code on Corporate Governance 2012 and Working Group for the Corporate Governance Blueprint 2011 of the Securities Commission. 2. Jeremie Ting Keng Fui FCIS, MBA Company Secretary Ms Ng, born in August 1967, was appointed Company Secretary on 6 April 2012. She is also the Company Secretary of IJM Corporation Berhad (“IJM”) 3. Ng Yoke Kian and IJM Plantations Berhad. ACIS She is an Associate of Malaysian Institute of Chartered Secretaries & Administrators (MAICSA). Company Secretary She started her career with a secretarial firm for about 5 years and was an Assistant Manager of the Technical and Research Department of the MAICSA prior to joining IJM. She has more than 20 years experience in corporate secretarial work.
Note: 1. There are no family relationship between the Directors and/or major shareholders of the Company. 2. All Directors are Malaysians. 3. Save for Tan Sri Dato’ Tan Boon Seng @ Krishnan, Dato’ Teh Kean Ming, Datuk Lee Teck Yuen and Dato’ Soam Heng Choon who have deemed interest in certain related party transactions as disclosed in Note 40 to the financial statements, none of the Directors has any financial interest in any business arrangement involving the Group. 4. All Directors maintain a clean record with regard to convictions for offences. 16 IJM Land Berhad (187405-T) management team profile
Top from left: Dato’ Soam Heng Choon, Edward Chong Sin Kiat, Toh Chin Leong, Hoo Kim See, Tham Huen Cheong, Patrick Oye Bottom from left: Chong Ching Foong, Roger Lee Wai Hin, Shuy Eng Leong, Chai Kian Soon, Lee Kok Hoo, Bahrin Bin Baharudin ANNUAL REPORT 2012 17
Edward Chong Sin Kiat Manager (Construction Division Johor Bahru) Shuy Eng Leong Chief Financial Officer and later the Branch Manager Johor Bahru Chief Operating Officer, (Property Division). He has extensive experience Radiant Pillar Sdn Bhd Edward Chong Sin Kiat, aged 41, has been with in accounting, finance, property management and Shuy Eng Leong, aged 53, joined the Group the Group since 2000. He was redesignated as property development. Chief Financial Officer on 1 February 2012. Prior in May 2011 as the Chief Operating Officer to that, he held the position of General Manager, for Radiant Pillar Sdn Bhd, a joint venture Patrick Oye between IJM Properties Sdn Bhd and Kumpulan Finance, responsible for the Group’s corporate General Manager, Property Development (Sabah) and finance functions. He holds a Bachelor of Europlus Bhd to undertake a 1,878 acres mixed Business (Accountancy) Degree from Royal Patrick Oye, aged 55, has been with the Group development project called “Bandar Rimbayu”. Melbourne Institute of Technology, Australia. since 2003. He is presently the General Manager, He holds an MBA from University of Bath (UK) as He is a Chartered Accountant of the Malaysian Property Development (Sabah). He holds a well as Bachelor of Engineering from University Institute of Accountants and a Certified Practising Diploma in Civil Engineering from Federal Institute of Malaya. Prior to joining the Group, he has held senior management positions in several public Accountant of CPA Australia. Before joining the of Technology. Prior to joining the Group, he held listed property companies and successfully Group, he was attached to an investment bank senior management positions in several property implemented many projects over a span of more and prior to that, a public accounting firm. development groups for more than 20 years. He has vast experience in constructions and property than 20 years. development. Toh Chin Leong Chai Kian Soon General Manager, Property Development General Manager, Property Management (Northern Region) Chong Ching Foong General Manager, Property Development Chai Kian Soon, aged 47, has been with the Toh Chin Leong, aged 45, has been with the Group (Sarawak) Group since 1995. He is presently the General since 1995. He is presently the General Manager, Manager, Property Management, in charge of Property Development (Northern Region). He holds Chong Ching Foong, aged 56, has been with the the property management and maintenance and Group since 1992. He is presently the General a Bachelor of Science degree in Civil Engineering sales administration in Central Region. He is a Manager, Property Development (Sarawak). and a Master of Science degree in Geotechnical Chartered Accountant of the Malaysian Institute He holds a Bachelor of Science degree in Civil Engineering from the University of Arkansas, of Accountants and a Fellow of the Chartered Engineering from the United Kingdom, a Master in USA. Prior to joining the Group, he was attached Association of Certified Accountants. Prior to to Arkansas State Highway & Transportation Business Administration degree from the United joining the Group, he was attached to a public Department as a graduate engineer. Kingdom and a Master in Advanced Business accounting firm and a public listed construction Practice from Australia. company for more than 7 years. Hoo Kim See General Manager, Property Development Prior to joining the Group, he was attached to Lee Kok Hoo (Central Region) the private sector as well as the civil service. His extensive work experience encompasses project General Manager, Business Development Hoo Kim See, aged 49, has been with the planning, project management (civil engineering Lee Kok Hoo, aged 48, has been with the Group Group since 1991. He is presently the and building), property development (residential since 1990. He is presently the General Manager, General Manager, Property Development and commercial), property management & Business Development. He holds Diploma in (Central Region). He graduated from University maintenance, and general management. Technology (Building) from Tunku Abdul Rahman Sains Malaysia with a Bachelor of Science College and a Master Degree in Business Degree in Housing, Building and Planning. Roger Lee Wai Hin Administration from University of Strathclyde, He is a member of Institute Surveyors Malaysia General Manager, Cypress Potential Sdn Bhd United Kingdom. He has extensive experience in and a Registered Quantity Surveyor with the general construction and property development, Board of Quantity Surveyors Malaysia. He has Roger Lee Wai Hin, aged 48, joined the Group specialising in project management of buildings extensive experience in property development, in December 2011 as the General Manager to & schools projects, design & build projects, land project management and contract administration. undertake a 1,188 acres mixed development acquisition for development and joint venture project called “Sebana Cove”. He holds a Master development. Tham Huen Cheong of Engineering from University of Auckland (NZ) General Manager, Property Development as well as Bachelor of Civil Engineering (Hons) Bahrin Bin Baharudin (Southern Region) from University of Canterbury (NZ). He is a General Manager, Land Administration registered Professional Engineer (P.Eng.) and a Tham Huen Cheong , aged 53 , has been with Bahrin Bin Baharudin, aged 59, has been with member of the Institution of Engineers, Malaysia the Group since 1983. He is presently the General the Group since July 2000. He is presently the (MIEM). Prior to joining the Group, he has held Manager, Property Development (Southern General Manager, Land Administration. He senior management positions in several public Region). He is a member of the Association of graduated from the Portsmouth Polytechnic, with International Accountants, recognised by the UK listed property companies and successfully a Bachelor of Science (Hons) in Civil Engineering. Government as a Recognised Qualifying Body for implemented many development projects over He is a member of the Institution of Engineers, statutory auditors. Before joining the Group, he a span of more than 17 years. He has extensive Malaysia and a Registered Professional Engineer. has worked in an international accounting firm for experience in construction, project planning, Prior to joining the Group he was attached with the 4 years and prior to his current appointment, he property development, project management and Negeri Sembilan State Development Corporation. had served as Accountant (Accounts & Finance land acquisition for development. He has extensive experience in project planning Dept Head Office), Finance & Administration and property development.
18 IJM Land Berhad (187405-T)
CHAIRMAN’S STATEMENT
1 Lagenda, Melaka
I am delighted to report that IJM Land has delivered yet another set of commendable results for the financial year ended 31 March 2012. On the back of very encouraging product acceptance, the Group achieved property sales in excess of RM1 billion for the third consecutive year and a record turnover of RM1.21 billion this financial year.
OPERATING ENVIRONMENT Utama Lakeview Villas, Sandakan In 2011, the Malaysian economy grew by 5.1% despite being weighed down by a much weakened global economy. Malaysia’s economic growth was largely underpinned by strong domestic activity, driven by both household and business spending, and supported by higher public sector consumption as the positive effects of the Economic Transformation Programme (ETP) gained momentum. ANNUAL REPORT 2012 19
Altitude 236, Bukit Manda’rina, Kuala Lumpur
In line with the resilient domestic economy, supportive labour market FINANCIAL PERFORMANCE conditions and availability of credit financing, the property market remained on a growth trend that moderated only towards the end of the For the financial year ended 31 March 2012, the Group recorded our year. In 2011, the Malaysian property market recorded an all time high highest ever revenue of RM1.21 billion, an increase of 4.3% from the 430,403 transactions valued at RM137.83 billion which were 14.3% RM1.16 billion achieved in the preceding year. Profit before taxation of and 28.3% higher respectively compared to 2010. RM281.86 million (2011: RM285.54 million) would have also been the Group’s highest to date, if not for the recognition of a RM63 million gain on Riding on this positive sentiment, the Group continued to enhance its disposal of a subsidiary company, Delta Awana Sdn Bhd, which owned the value proposition to prospective buyers by offering a wide range of Aeon Bandaraya Melaka shopping mall, in the previous financial year. products incorporating contemporary designs and innovative features in our well located developments. The positive results of our efforts are This strong performance is principally attributable to the robust sales reflected in the financial performance of the Group. enjoyed at all our new launches, with sales hitting RM1.35 billion. Better margins and lower finance cost further improved the bottom line. 20 IJM Land Berhad (187405-T)
CHAIRMAN’S STATEMENT (continued)
ECONOMIC OUTLOOK & PROSPECTS measures. Our prospects for the coming year remains positive given the strong level of committed sales on hand, the strategically located land In 2012, the Malaysian economy is projected to grow at a steady pace of bank and resilient domestic economic outlook. Nonetheless, we will remain 4% to 5%, anchored by continued resilience in domestic demand growth. vigilant due to the uncertainties and volatilities in the global economy, In response to the uncertain global economic environment, measures especially from the impact of the ongoing Eurozone debt crisis. such as one-off financial assistance to low and middle income groups and implementation of projects under the Economic Transformation Programme DIVIDENDS (ETP) are expected to provide support to consumer spending and private investments. Nevertheless, Bank Negara has adopted a pre-emptive The Company is committed to the payment of annual dividends. approach to ensure macroeconomic stability including advocating the The quantum of dividends is determined after taking into account, inter prudent management of household debt. Among measures implemented alia, the level of available funds, the amount of retained earnings, capital were the imposition of a maximum loan-to-value (LTV) ratio of 70% on third expenditure commitments and other investment planning requirements. and subsequent housing loan facilities taken by borrowers, new measures on credit cards to promote judicious spending habits and requiring loan For the financial year ended 31 March 2012, the Company declared eligibility assessments to be based on the borrower’s net income. These an interim dividend of 4 sen (single tier) per share to be paid on 3 July measures will have an impact on property sales. 2012 to shareholders whose name appears on the Company’s register of depositors as at 5.00pm on 15 June 2012. This is reflective of the Group’s The Group is cautiously confident that our balanced mix of affordable policy of paying sustainable levels of dividends annually. products that cater to the needs of our customers, both in terms of price and product, will enable us to withstand any dip in sentiment that may No final dividend is proposed for the financial year. arise from potential global shocks and our Central Bank’s pre-emptive
THE LIGHT Waterfront, Penang ANNUAL REPORT 2012 21
Nusa Duta, Johor Bahru
Ampersand @ Kia Peng, Kuala Lumpur
Seri Riana Residence, Wangsa Maju, Kuala Lumpur
CORPORATE DEVELOPMENTS Except as disclosed in Note 40 of the Notes to the Financial Statements, there are no material contracts involving directors’ and major During the year, the Group entered into a conditional Share Sale and shareholders’ interest during the period. Purchase Agreement with Aspirasi Ratna Sdn Bhd (“ARSB”) to acquire from ARSB a total of 1,000,000 ordinary shares of RM1 each in Nasa ACKNOWLEDGEMENT Land Sdn Bhd (“NLSB), representing 50% equity interest in NLSB, for a total cash consideration of RM51 million. NLSB is the land owner The Board and I would like to take this opportunity to express our cum developer of a mixed development project known as Desa Palma appreciation to the management and employees of the Group for in Mukim Tebrau, Daerah Johor Bahru, Johor Darul Takzim with an their dedication and commitment and to our shareholders, partners, aggregate undeveloped net area of approximately 95.83 acres. The customers, suppliers, bankers and regulatory authorities for their acquisition was completed on 11 June 2012. invaluable support and assistance during the year. We look forward to your continued support as we continue on our journey to be the CORPORATE GOVERNANCE developer of choice.
We subscribe and will continue to uphold the principles of good I also wish to thank members of the Board for their wholehearted corporate governance as we believe that it is the platform for sustainable commitment and services rendered to the Group. In particular, I would enhancement of shareholders’ value. Our practices are set out in our like to record our deepest appreciation for the services rendered by Mr Statement of Corporate Governance on pages 26 to 34. Boey Tak Kong, who will be retiring at the conclusion of the forthcoming Annual General Meeting on 27 August 2012. Mr Boey has very ably There were no sanctions and/or penalties imposed on the Company and chaired the Audit Committee of the Board for the past 12 years. its subsidiaries, Directors or management by the relevant regulatory authorities.
RELATED PARTY TRANSACTIONS
The related party transactions of the Group are disclosed in Note 40 of Tan Sri Dato’ Tan Boon Seng @ Krishnan the Notes to the Financial Statements which also set out the recurrent Non-Executive Chairman related party transactions conducted during the year in accordance with the mandate obtained from shareholders at the Company’s Extraordinary Meeting held on 23 August 2011. 22 IJM Land Berhad (187405-T)
CEO’S REVIEW OF OPERATIONS
For the financial year ended 31 March 2012, the Group recorded a revenue and profit before tax of RM1.21 billion and RM281.86 million respectively. Although revenue increased by 4.3%, profit before tax was marginally lower by 1.3% as previous financial year’s profit before tax included a RM63 million gain on disposal of a subsidiary company, Delta Awana Sdn Bhd, the property investment subsidiary which owned the Aeon Bandaraya Melaka shopping mall.
Serena, S2 Heights, Seremban 2
Light Collection II, Penang ANNUAL REPORT 2012 23
Light Linear, Penang
In 2011, the Malaysian economy recorded a steady growth of 5.1% Our strategically located projects across the country generally despite a challenging international economic environment. Domestic experienced strong demand. In Penang, our prestigious “The Light” demand, driven by both household and business spending, and waterfront development, Maritime office suites, Pearl Regency, Vertiq supported by higher public sector consumption, registered a strong and The Address condominium projects, Klang Valley’s Laman Granview growth in 2011. In line with the stable economic environment, improved in Puchong (an exclusive semi-detached and bungalow enclave), labour market conditions and rising inflationary fears, the property Johor’s landed residential development within Iskandar Malaysia called market continued on a growth trend that only moderated towards the Nusa Duta, D’Rich and D’Ambience condominium projects, continued end of the year. In 2011, the Malaysian property market recorded to receive overwhelming demand. Our on-going townships such as 430,403 transactions valued at RM137.83 billion which were 14.3% Seremban 2 in Negeri Sembilan, Shah Alam 2 in Puncak Alam, Selangor and 28.3% higher respectively compared to 2010. In tandem with the and Bandar Utama in Sandakan, Sabah, also continued to receive strong vibrant property market, the Group’s projects throughout the country support. continued to enjoy healthy take up rates, which enabled it to achieve RM1.35 billion in sales. 24 IJM Land Berhad (187405-T)
CEO’S REVIEW OF OPERATIONS (continued)
Laman Baiduri, Subang Jaya
The main contributors to the Group’s 2012 revenue and profit were The Group is well poised to endure this cautious sentiment with our Penang’s Light Linear, Light Point, Light Collection I and II and Pearl balance mix of affordable products to meet the ever changing customers’ Regency condominium, Klang Valley’s Laman Granview, Melaka’s 1 demands with regards to prices and concepts. We will continue to Lagenda commercial development, Johor’s Nusa Duta landed residential monitor the timing and quantum of our future launches to match the development and our matured townships in Shah Alam 2, Seremban 2 market’s demand. and Bandar Utama. Our projects in the pipeline such as Seri Riana Residence, a new In 2012, the Malaysian economy is projected to grow at a steady pace condominium project in Wangsa Maju, Kuala Lumpur which is strategically of between 4% to 5%, anchored by the resilient growth in domestic located adjacent to the highly successful Riana Green East project and demand, despite the uncertainties on the global front. In response, within walking distance to the popular Wangsa Walk shopping centre and measures such as one-off financial assistance to low and middle income Sri Rampai LRT station, Sanctuary Gardens landed residential project in groups to support private consumptions and the on-going implementation of projects under the Economic Transformation Programme (ETP) to support private investment will help spur economic growth. Nevertheless, Bank Negara had adopted a pre-emptive approach for ensuring macroeconomic stability and prudent level of household debts. Among the measures implemented were, the maximum loan-to-value (LTV) ratio of 70% on third and subsequent residential housing loan, increasing minimum income threshold for credit card applicant and imposing a maximum credit limit to promote prudent financial management and the usage of net income as a criteria for assessing mortgage loan eligibility.
Carmita, Shah Alam 2 ANNUAL REPORT 2012 25
Permatang Tinggi, Penang and the Sky Mansions, our maiden project in Kota Kinabalu, Sabah which is a twin block condominium project with a panaromic view of the Likas Bay. In addition, we are actively preparing to bring to the market our new 1,878 acre green Bandar Rimbayu township in Klang Valley and the commercial precinct of The Light Waterfront, Penang.
Despite the cautious sentiment caused by the Eurozone debt crisis, the outlook of the Group remains positive. This is backed by the strong level of committed sales in hand, our strategically located landbank and the extensive product mix coupled with the current accommodative interest rate regime.
Dato’ Soam Heng Choon CEO & Managing Director
Laman Granview, Puchong, Selangor 26 IJM Land Berhad (187405-T)
Corporate Governance Statement
The Board of Directors (“the Board”) fully support the eight (8) principles of the Malaysian Code on Corporate Governance 2012 (“the Code”), which the Company will endeavour to adopt in making good corporate governance an integral part of its business dealings and culture. The Board is committed to ensuring that the highest standards of corporate governance, as embodied in the Code, are practiced throughout the Group.
I. BOARD OF DIRECTORS
1. Board Charter 2. Composition of the Board
The Board Charter as a source of reference and primary induction The Board comprises seven (7) members, six (6) of whom are literature, providing insights to prospective Board members and Non-Executive Directors. The Chairman is one of the Non-Executive senior management, has been adopted by the Board on 25 May Directors. Tan Sri Dato’ Nasruddin bin Bahari is the Senior 2012. The core areas of the Board Charter include the following:- Independent Non-Executive Director, who will attend to any query or concern raised by the shareholders. Amongst the Non-Executive (i) Board Membership, which includes composition, appointments Directors, three (3) are Independent Non-Executive Directors. The and re-election, independence of Director and new composition reflects that more than one-third (1/3) of its members directorship; are independent. The Board is satisfied that the current Board composition fairly reflects the investment of major shareholders and (ii) Board Role, which includes duties and responsibilities and minority shareholders of the Company. matters reserved for the Board; The Independent Non-Executive Directors are able to provide (iii) Chairman and the Chief Executive Officer & Managing Director independent judgment, experience and objectivity without being (“CEO&MD”); subordinated to operational considerations. They help to ensure that the interests of all shareholders are taken into account by the Board (iv) Board Committees; and that the relevant issues are subjected to objective and impartial (v) Board Meetings; consideration by the Board. In line with the recommendation of the Code, the tenure of an Independent Director of the Company should (vi) Financial Reporting; not exceed a cumulative term of nine (9) years. An Independent Director may continue to serve the Board subject to the (vii) Directors’ Remuneration;
(viii) Directors’ Training & Continuing Education; Nusa Duta, Johor Bahru (ix) Company Secretary;
(x) Investor Relations and Shareholder Communication; and
(xi) Access to Information and Independent Advice.
The details of the Board Charter are available for reference in the IJM Group website at www.ijm.com.
ANNUAL REPORT 2012 27
re-designation of the Independent Director as a Non-Independent The Directors have a diverse set of skills, experience and Director. In the event the Board intends to retain the Independent knowledge necessary to govern the Group. The Non-Executive Director as an Independent Director after serving a cumulative Directors are professionals in the field of property development, term of nine (9) years, shareholders’ approval will be sought. engineering, finance, accounting or experienced senior public administrators. Together, they possess a wide range of One (1) of the Independent Directors, namely Mr Boey Tak competencies, capabilities, technical skills and relevant business Kong, who has served the Board for more than nine (9) years experience to ensure that the Group continues to be a competitive as Independent Director, will continue to serve the Board as leader within the property development industry, recognised for Independent Director till the date of the ensuing Annual General its technical and professional competence. Meeting of the Company. 4. Board Meetings The role of the Non-Executive Chairman and the CEO&MD are distinct and separate to ensure there is a balance of power and The Board holds at least four (4) scheduled meetings annually, authority. The Non-Executive Chairman is responsible for the with additional meetings convened as and when necessary. leadership, effectiveness, conduct and governance of the Board. However, informal meetings and consultations are frequently The Non-Executive Chairman did not previously hold the position and freely held to share expertise and experiences. During of CEO&MD in the Group. the financial year, four (4) Board meetings were held and the attendance record of each Director is as follows:- The CEO&MD has overall responsibility for the day-to-day management of the business and implementation of the Board’s Number of policies and decisions. The CEO&MD is responsible to ensure Meetings due execution of strategic goals, effective operations within Attended Percentage the Group, and to explain, clarify and inform the Board on key matters pertaining to the Group. Executive Director Dato’ Soam Heng Choon 4/4 100% The composition and size of the Board are reviewed from time to Independent Non-Executive time to ensure its appropriateness. Directors The profile of each Director is presented on pages 9 to Tan Sri Dato’ Nasruddin bin Bahari 4/4 100% 15. Dato’ Md Naim bin Nasir 4/4 100% Boey Tak Kong 4/4 100% 3. Duties and Responsibilities of the Board Non-Executive Directors The Board is primarily responsible for the Group’s overall Tan Sri Dato’ Tan Boon Seng strategic plans for business performance, appraisal of major @ Krishnan 4/4 100% business proposals, overseeing the proper conduct of business, Datuk Lee Teck Yuen 4/4 100% succession planning, risk management, shareholders’ communication, internal control and management information Dato’ Teh Kean Ming 4/4 100% systems; while the Management is accountable for the execution The Directors also attend the IJM Group annual senior of the expressed policies and attainment of the Group corporate management forum where operational strategies, performance objectives. The demarcation complements and reinforces the progress and other issues are extensively presented, discussed supervisory role of the Board. and communicated to senior managers of the Group. 28 IJM Land Berhad (187405-T)
Corporate Governance Statement (continued)
Sri Carcosa, Seremban 2
5. Supply of Information B. Nomination & Remuneration Committee
All Directors are provided with the performance and progress The Nomination & Remuneration Committee was established reports on a timely basis prior to the scheduled Board meetings. on 25 February 2008. It comprises of two (2) Independent All Board papers, including complicated issues or specific matters, Non-Executive Directors and one (1) Non-Executive Director. are distributed in advance to ensure Directors are well informed and The Nomination & Remuneration Committee comprises wholly have the opportunity to seek additional information, and are able to of Non-Executive Directors, being chaired by Tan Sri Dato’ obtain further clarification from the Company Secretaries, should Nasruddin bin Bahari. The other members are Datuk Lee Teck such a need arise. Where necessary, the services of other senior Yuen and Mr Boey Tak Kong. management or external consultants will be arranged to brief and help the Directors clear any doubt or concern. The duties and responsibilities of the Nomination & Remuneration Committee are to assist the Board in reviewing The schedule of matters reserved specifically for the Board’s and recommending the appropriate remuneration policies deliberation include the approval of corporate plans, annual applicable to Directors, CEO&MD and senior management, budgets, new ventures, acquisitions and disposals of undertakings and the appointment and evaluation of the performances of and properties of a substantial value, and changes to the Directors. management and control structure within the Group. Proper minutes of all deliberations of the Board are recorded, including the issues The terms of reference of the Nomination & Remuneration discussed and the conclusion of decisions. Committee include reviewing and determining the mix of skills, experience and other qualities (including core competencies All Directors have access to the advice and services of the Company of Non-Executive Directors on an annual basis); and to assess Secretaries. The Directors may seek independent advice where the effectiveness of the Board as a whole, the committees of necessary, at the expense of the Company, so as to ensure the the Board and the contribution of each individual Director on Directors are able to make independent and informed decisions. an annual basis, including the independence of Independent Non-Executive Director (“INED”). The details of the terms of 6. Committees Established by the Board reference of the Nomination & Remuneration Committee are available for reference at the IJM Group’s website at The Board has delegated certain functions to the Committees it www.ijm.com. established to assist in the execution of its responsibilities. The Committees operate under clearly defined terms of reference. The activities of the Nomination & Remuneration Committee for The Committees are authorised by the Board to deal with and the financial year include the following:- to deliberate on matters delegated to them within their terms of reference. The Chairman of the respective Committees reports to (i) reviewed the salary, promotion and bonus & incentive of the Board on the outcome of the Committee meetings and such senior management of the Group; reports are included in the Board papers. (ii) considered the nominations to the Board of Directors of A. Audit Committee Subsidiaries and Associates;
The Audit Committee was established on 20 July 1994 (iii) assessed and evaluated the effectiveness of Directors comprising entirely of Independent Non-Executive Directors. through Self & Peer Assessments and the Assessment The Audit Committee is chaired by Mr Boey Tak Kong and other of the Board as a whole (including the CEO&MD and the members of the Audit Committee are Tan Sri Dato’ Nasruddin independence of INED); bin Bahari and Dato’ Md Naim Bin Nasir. The terms of reference and summary of activities of the Audit Committee are set out on pages 35 to 37. ANNUAL REPORT 2012 29
(iv) reviewed the Directors’ Fees; 7. Board Evaluation
(v) reviewed the talent pool list for succession planning; The Nomination & Remuneration Committee was satisfied with the performance and effectiveness of the Board and Board (vi) reviewed the composition of the Board; and Committees. The Board evaluation criteria was reviewed and enhanced by the Nomination & Remuneration Committee during (vii) reviewed the proposed incentive scheme for the year. employees. The Board evaluation comprises a Board Assessment, an The Nomination & Remuneration Committee meets as Individual (Self & Peer) Assessment and an Assessment of required. Four (4) meetings were held during the financial Independence of Independent Directors. The assessment of year and the attendance record of each member of the the Board is based on specific criteria, covering areas such as Committee is as follows:- the Board composition and structure, principal responsibilities of the Board, the Board process, the CEO&MD’s performance, Number of succession planning and Board governance. For Individual (Self Meetings & Peer) Assessment, the assessment criteria include contribution Attended Percentage to interaction, role and duties, knowledge and integrity and Tan Sri Dato’ Nasruddin bin Bahari 4/4 100% assessment of independence. The criteria for assessing the Boey Tak Kong 3/4 75% independence of an Independent Director include the relationship Datuk Lee Teck Yuen 4/4 100% between the Independent Director and the Company and his involvement in any significant transaction with the Company. All recommendations of the Nomination & Remuneration Committee are subject to endorsement of the Board. 8. Appointments to the Board
C. Securities and Options Committee The Nomination & Remuneration Committee is responsible for making recommendations for the appointment of Directors The Securities and Options Committee (“SOC”) was to the Board, including those of subsidiaries and associated established on 26 May 2008 and is chaired by Tan Sri companies. In making these recommendations, the Nomination Dato’ Nasruddin bin Bahari (Chairman), and the other & Remuneration Committee considers the required mix of skills members are Tan Sri Dato’ Tan Boon Seng @ Krishnan and experience, which the Directors bring to the Board. and Dato’ Soam Heng Choon. The SOC is responsible for implementing and administrating of options, and regulating The process for the appointment of Non-Executive Directors and approving the securities transactions and registrations (both the Independent and non-Independent Directors) to the together with such other functions as may be agreed to by Board is as follows:- the SOC and the Board from time to time. (i) Nomination & Remuneration Committee reviews annual Board assessment & evaluation;
(ii) Nomination & Remuneration Committee determines skills matrix;
(iii) source for the candidate;
(iv) Nomination & Remuneration Committee evaluates and matches the criteria of the candidate, and will consider diversity, including gender, where appropriate;
(v) Nomination & Remuneration Committee recommends to the Board for appointment; and
(vi) the Board approves the appointment of the candidate.
Tate, Shah Alam 2 30 IJM Land Berhad (187405-T)
Corporate Governance Statement (continued)
Maritime Piazza, Penang
9. Re-election II. REMUNERATION
The Articles of Association provides that every new appointed The remuneration policy of the Company is based on the philosophy Director be subjected to re-election at the immediate Annual of giving higher weightage on performance-related bonuses. These General Meeting. Furthermore, one third (1/3) of the Board shall are entrenched in the remuneration policy for Executive Director retire from office and be eligible for re-election at every Annual (including senior management), which are reviewed annually by the General Meeting, and all the Directors should submit themselves Nomination & Remuneration Committee. The Group also participates in for re-election at least every three years. This has been consistently industry specific surveys by independent professional firms to obtain practised. current data in benchmarking the Group.
10. Directors’ Training The performance of Directors are measured by the Directors’ contribution and commitment to both the Board and the Group. The All Directors have attended the Directors’ Mandatory Accreditation Executive Director’s and senior management’s remuneration depend on Programme organised by Bursa Malaysia Securities Berhad (“Bursa the achievement of the goals and/or quantified organisational targets as Securities”). Our Directors have attended conferences, seminars, well as Key Performance Indicators (“KPI”) set at the beginning of each and training programmes from time to time covering areas such year. The strategic initiatives or KPI set for the CEO&MD for financial as finance, risk management, and in regulatory laws, rules and year ending 31 March 2013 encompass the four (4) main areas of guidelines. An induction briefing is also provided by our Company Commercial, Stakeholders, Efficiency, and Infrastructure. Secretaries to newly appointed Directors. In the case of Non-Executive Directors, the level of remuneration reflects The Company is aware of the importance of continuous training the contribution and level of responsibilities undertaken by the particular for Directors to enable the Directors to effectively discharge their Non-Executive Director. duties, and will on a continuous basis, evaluate and determine the training needs of its Directors. In addition to the basic salary and bonus & incentives for all its employees, including the Executive Director, the Group also offers benefits-in-kind During the year, all the Directors have attended various training such as private medical care (including “portable” critical illnesses programmes, seminars and/or conferences. The details of each insurance) and car in accordance with the IJM Scheme and Conditions of the Directors’ Training and participation in activities of the of Service. On top of the Employees Provident Fund statutory contribution Group are available for reference in the IJM Group’s website at rate of 13%, the Group provides additional contribution ranging from 1% www.ijm.com. to 5% to all its employees based on length of services. Updates on companies and securities legislations, and other relevant rules and regulations, such as amendments to the Companies Act 1965 (“the Act”), Main Market Listing Requirements of Bursa Securities, the Code and Corporate Governance Blueprint 2011, and Capital Markets & Services Act 2007, were provided to the Board, together with the Board papers, in order to acquaint them with the latest developments in these areas.
Where possible and when the opportunity arises, Board meetings may be held at locations within the Group’s operating businesses to enable the Directors to obtain a better perspective of the business and enhance their understanding of the Group’s operations.
Amanda, Shah Alam 2 ANNUAL REPORT 2012 31
1. Directors’ Remuneration
The details of the remuneration of Directors during the year are as follows:
A. Aggregate remuneration of Directors categorised into appropriate components:
Bonus, Incentives Benefits Salaries Fees & Others EPF -in-kind Total RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
Executive Director 532 - 495 174 29 1,230 Non-Executive Directors - 517 54* - - 571
* An allowance of RM1,000 was paid to the Non-Executive Directors for each of the Board and Committee meeting attended.
B. Aggregate remuneration of each Director:
RM’000
Executive Director Dato’ Soam Heng Choon 1,230
Non-Executive Directors Tan Sri Dato’ Tan Boon Seng @ Krishnan 122 Tan Sri Dato’ Nasruddin bin Bahari 107 Dato’ Md Naim bin Nasir 90 Boey Tak Kong 110 Datuk Lee Teck Yuen 79 Dato’ Teh Kean Ming 63
III. INVESTOR RELATIONS AND SHAREHOLDER The Group conducts regular dialogues with financial analysts. At least two (2) scheduled IJM Group Briefings are held each COMMUNICATION year, usually coinciding with the release of the IJM Group’s 1. Dialogue between the Company and Investors second and final quarterly results, to explain the results achieved and the strategies going forward. The Company places great importance in ensuring the highest standards of transparency and accountability in the disclosure of A press conference is normally held after the Annual General pertinent information to its shareholders as well as to potential Meeting and/or Extraordinary General Meeting of the Company investors, analysts and the public. to provide the media an opportunity to receive an update from the Board on the proceedings at the meetings and to address This is achieved through timely announcements and disclosures any queries or areas of interest of the media. made to Bursa Securities during the year, including the release of financial results on a quarterly basis, with a view to provide In addition, the Company participates in several institutional the shareholders and the investing public with updated overview investors’ forums both locally and outside Malaysia. of the Group’s performance and operations. The Company’s full Any information that may be regarded as material would not year audited financial results are released within two (2) months be given to any single shareholder or shareholder group on a after the financial year end. The annual report is released within selective basis, except to the extent of their representation in the four (4) months after the financial year end. Board. 32 IJM Land Berhad (187405-T)
Corporate Governance Statement (continued)
Taman Utama, Sandakan
2. Annual General Meeting 4. Electronic Dividend Payment (“eDividend”)
The Annual General Meeting is the principal forum for dialogue The Company has implemented eDividend in 2010 following the with shareholders. The notice of meeting and the annual report are announcement of Bursa Malaysia to promote greater efficiency sent out to shareholders at least twenty-one (21) days before the of the dividend payment system. The eDividend refers to the date of the meeting in accordance with the Company’s Articles of payment of cash dividends by directly crediting into the bank Association. accounts of shareholders instead of making payment via bank cheques. The Company strongly encourages all shareholders to At each Annual General Meeting, a presentation is given by register for eDividend through the stock broker’s offices where the CEO&MD to explain the Group’s strategy, performance and the CDS accounts of the shareholders are maintained. Further major developments to shareholders. The Board also encourages details can be obtained from Bursa Malaysia’s website at www. shareholders to participate in the question and answer session at bursamalaysia.com the Annual General Meeting.
3. Openness and Transparency IV. ACCOUNTABILITY AND AUDIT
The Group has established a comprehensive website at 1. Financial Reporting www.ijm.com which includes a dedicated section on Investor Relations, to further enhance shareholder communication. In presenting the annual financial statements and quarterly announcements to the shareholders, the Board aims to present a To better serve stakeholders of the Group, a feedback page on balanced and understandable assessment of the Group’s position the website provides an avenue for stakeholders to suggest and prospects. This also applies to other price sensitive public improvements via email: [email protected]. In addition, stakeholders reports and reports to regulators. who wish to reach the Group can do so through the ‘Contact Us’ or ‘Feedback’ page. 2. Directors’ Responsibility Statement
Investor queries pertaining to financial performance or company The Directors are required by the Act to prepare the financial developments can be directed to the Investor Relations statements for each financial year in accordance with the provisions Manager of IJM Corporation Berhad, Mr Shane Guha Thakurta of the Act and applicable approved accounting standards to give (Tel: +603-79855041, Fax: +603-79529388, E-mail: a true and fair view of the state of affairs of the Group and the [email protected]), whereas shareholder and company Company at the end of the financial year and of the results and cash related queries can be referred to the Company Secretaries, flows of the Group and of the Company for the financial year. Ms Ng Yoke Kian and Mr Jeremie Ting Keng Fui (Tel: +603-79858131, Fax: +603-79521200, E-mail: [email protected]). I Lagenda, Melaka ANNUAL REPORT 2012 33
The Directors have, in preparing the financial statements: 6. Related Party Transactions
i) used appropriate accounting policies which were Related party transactions of the Group for the financial year consistently applied; are disclosed in Note 40 to the Financial Statements, including recurrent transactions conducted during the financial year in ii) made judgments and estimates that are reasonable and accordance with the general mandate obtained from shareholders prudent; at the Extraordinary General Meeting held on 23 August 2011. iii) ensured that all applicable accounting standards have been followed; and V. CODES AND POLICIES iv) prepared financial statements on a going concern basis as the Directors have a reasonable expectation, having made 1. Code of Ethics and Conduct enquiries, that the Group and the Company have adequate The Code of Ethics and Conduct (“the CEC”) which sets out the resources to continue in operations for the foreseeable principles and standards of business ethics and conduct of the future. Group, has been adopted by the Board on 25 May 2012. The CEC The Directors are responsible for ensuring that the Company is applicable to all employees (including full time, probationary, keeps accounting records which disclose, with reasonable contract and temporary staff) and Directors of the Group. accuracy, the financial position of the Group and the Company The core areas of conduct under the CEC include the and which enable them to ensure that the financial statements following:- comply with the Act. (i) conflict of interest; The Directors have also taken such steps as are reasonably open to them to safeguard the assets of the Group and the Company, (ii) confidential information; and to prevent fraud and other irregularities. (iii) inside information and securities trading;
3. Internal Control (iv) protection of assets and funds; (v) business records and control; The Group’s Statement of Internal Control is set out on pages 38 and 39. (vi) compliance to the law; (vii) personal gifting; 4. Relationship with the Auditors (viii) health and safety; The role of the Audit Committee in relation to the external auditors is set out on pages 35 to 37. (ix) sexual harassment; (x) outside interest; 5. Non-Audit Fee (xi) fair and courteous behaviour; and The amount of non-audit fee incurred for the services provided (xii) misconduct. by the external auditors and their affiliated companies to the Group for FY 2012 amounted to RM184,272. The details of the CEC are available for reference in the IJM Group website at www.ijm.com.
2. Whistle-Blowing Policy
2nd Enclave, Bukit Mandarina, The Whistle-Blowing Policy of the Company has been adopted Kuala Lumpur since 2006. The Policy was revised in May 2011 following the introduction of the Whistleblower Protection Act 2010 to enhance the coverage and protection to whistleblowers, which encompasses report of suspected and/or known misconduct, wrongdoings, corruption and instances of fraud, waste, and/or abuse involving the resources of the Group.
The Whistle-Blowing Policy is posted on the IJM Group’s intranet portal and website at www.ijm.com for ease of access for reporting by employees and associates of the Group. 34 IJM Land Berhad (187405-T)
Corporate Governance Statement (continued)
3. Corporate Disclosure Policy
The Board places importance in ensuring disclosure made to shareholders and investors are comprehensive, accurate and on a timely and even basis as it is critical towards building and maintaining corporate credibility and investor confidence. A Corporate Disclosure Policy for the Group to set out clear policies and procedures for disclosure of material information is being addressed, following the emphasis of Bursa Securities as outlined in its Corporate Disclosure Guide.
Signed on behalf of the Board of Directors in accordance with its resolution dated 17 July 2012.
Tan Sri Dato’ Tan Boon Seng @ Krishnan Non-Executive Chairman
Seri Riana Residence, Wangsa Maju, Kuala Lumpur ANNUAL REPORT 2012 35
AUDIT COMMITTEE REPORT
During the financial year, the Audit Committee carried out its duties and responsibilities in accordance with its terms of reference and held discussions with the internal auditors, external auditors and management staff. The Audit Committee is of the view that no material misstatements or losses, contingencies or uncertainties have arisen, based on the reviews made and discussions held.
Membership Serena, S2 Heights, Seremban 2
The Audit Committee shall be appointed by the Board of Directors from amongst the Non-Executive Directors and shall consist of not less than three (3) members, with a majority of them being Independent Directors. The members of the Audit Committee shall elect a Chairman from among their numbers, and who shall be an Independent Director. In determining independence, the Board will observe the Listing Requirements of Bursa Malaysia Securities Berhad (“Bursa Securities”).
The Chairman of the Audit Committee, Mr. Boey Tak Kong, is a Fellow member of the Chartered Association of Certified Accountants, UK, and a Chartered Accountant of the Malaysian Institute of Accountants. The A quorum consists of two (2) members present and a majority of whom Board of Directors shall review the term of office and performance of must be Independent Directors. During the financial year, the Audit the Audit Committee and each of its members at least once every three Committee convened four (4) meetings. The Audit Committee members (3) years. and their details of attendance at Audit Committee meetings are tabled below: Meetings and Minutes
Meetings shall be held at least four (4) times a year with the attendance No. of of the Chief Financial Officer, Head of Internal Audit and representatives meetings of the external auditors. Other Board members and senior management attended may attend meetings upon the invitation of the Audit Committee. At Boey Tak Kong least twice a year, the Audit Committee shall meet with the external Independent Non-Executive Director (Chairman) 4/4 auditors without the present of management. Tan Sri Dato’ Nasruddin Bin Bahari Senior Independent Non-Executive Director 4/4 The auditors, both internal and external, may request a meeting if they Dato' Md Naim bin Nasir consider that one is necessary. Independent Non-Executive Director 4/4 The Chairman of the Audit Committee engages on a continuous basis with senior management, Head of Internal Audit and the external auditors, in order to keep abreast of matters and issues affecting the The Company Secretary acts as secretary to the Audit Committee. Group. Minutes of each meeting are distributed to each Board member and the Chairman of the Audit Committee reports on key issues discussed at each meeting to the Board. 36 IJM Land Berhad (187405-T)
AUDIT COMMITTEE REPORT (continued)
Altitude 236, Bukit Mandarina, Kuala Lumpur
Authority 6. To review the assistance given by the employees of the Company to the external auditors. The Audit Committee shall in accordance with the procedure determined by the Board and at the cost of the Company: 7. To review the internal audit scope, functions, competency and resources of the internal audit together with the internal audit plan • have authority to investigate any activity within its terms of and programme. reference; 8. To monitor any related party transactions and situations where a • have full, free and unrestricted access to any information pertaining conflict of interest may arise within the Company or the Group. to the Group; 9. To review the reports of the Risk Management Committee in relation • have direct communication channels with the external and internal to the adequacy and integrity of the Group’s internal control system. auditors, as well as all employees of the Group; and 10. To discuss problems and reservations arising from the interim and • be able to obtain external independent professional or other advice final external audits and any matters the external auditors may wish to and to secure the attendance of outsiders with the relevant experience discuss (in the absence of management, where necessary). and expertise if it considers this as necessary. 11. To review all prospective financial information provided to the regulators and/or the public. Duties 12. To report promptly to the Bursa Securities on any matter reported by The following are the summary of the main duties and responsibilities of it to the Board of Directors, which has not been satisfactorily resolved the Audit Committee collectively: resulting in the breach of the Bursa Securities Listing Requirements.
1. To review the quarterly results to Bursa Securities and year end The details of the terms of reference of the Audit Committee financial statements of the Group before submission to the Board. are available for reference at the IJM Group’s website at www.ijm.com. 2. To consider the nomination and appointment of external auditors, as well as their audit fee. Laman Granview, Puchong, Selangor 3. To consider any letter of resignation from the external auditors, and any questions of resignation or dismissal.
4. To discuss with the external auditors, prior to the commencement of audit, their audit plan, which states the nature of the audit and to ensure co-ordination of audit where more than one (1) audit firm is involved.
5. To review with the external auditors their evaluation of the system of internal controls, management letter and the management’s response. ANNUAL REPORT 2012 37
Summary of Activities for The Financial Year Training
During the year, the Audit Committee carried out the following During the year, all the Audit Committee members have attended activities: conferences, seminars and training programmes. Details of these are available at the IJM Group’s website at www.ijm.com. 1.0 Financial Reporting
• Reviewed the quarterly financial result announcements and Internal Audit Function the year end financial statements of the Group; The Internal Audit function has been outsourced to the Internal Audit • In the review of the annual audited financial statements, Department (“IAD”) of IJM Corporation Berhad. The Board has chosen the Audit Committee discussed with management and the to outsource this function as the Board is of the opinion that the external auditors the accounting principles and standards operations of the Group by itself cannot support an effective IAD in that were applied and their judgement of the items that may terms of availability of appropriate skills and resources. The Internal affect the financial statements. Audit fees charged to the Group for the financial year ended 31 March 2012 was RM160,000. 2.0 Internal Audit The IAD reports directly to the Audit Committee on its activities • Reviewed the annual internal audit plan proposed by the based on the approved annual Internal Audit Plan. The IAD adopts a Internal Auditors to ensure the adequacy of the scope and risk-based auditing approach, taking into account global best practices coverage of work; and industry standards. • Reviewed the effectiveness of the audit process, resource The main role of the IAD is to provide the Audit Committee with requirements for the year and assessed the performance of independent and objective reports, performed with impartiality, the Internal Audit function; proficiency and due professional care, on the effectiveness of the • Reviewed the audit reports presented by the Internal Auditors system of internal controls within the Group. The Audit Committee then on their findings and recommendations with respect to deliberates on the internal audit reports to ensure recommendations system and control weaknesses. The Audit Committee from the reports are duly acted upon by management. then proposed that control weaknesses be rectified and In an effort to provide value added services, the IAD also plays an recommendations for improvements be implemented. active advisory role in the review and improvement of existing internal 3.0 External Audit controls within the Group.
• Reviewed the external auditors’ audit strategy, audit plan This Audit Committee Report is made in accordance with the resolution and scope of work for the year; of the Board of Directors dated 17 July 2012.
• Reviewed the findings of the external auditors’ reports, particularly issues raised in the management letter and ensure where appropriate, the necessary corrective action has been taken by management.
4.0 Risk Management Committee
• Reviewed the Risk Management Committee’s reports and assessments.
5.0 Related Party Transactions
• Reviewed the related party transactions that arose within the Group to ensure that the transactions are fair and reasonable to, and are not to the detriment of, minority shareholders. D’Ambience Residences, Johor Bahru 38 IJM Land Berhad (187405-T)
STATEMENT OF INTERNAL CONTROL
The Malaysian Code on Corporate Governance sets out as a principle that the Board of a listed company should maintain a sound system of internal control to safeguard shareholders’ investment and the Group’s assets. Bursa Securities’ Listing Requirements require the Board of a listed company to include a statement in its annual report on the state of internal control of the listed issuer as a Group. Set out below is the Board’s Statement of Internal Control which has been prepared in accordance with the Statement of Internal Control: Guidance for Directors of Public Listed Companies and Bursa Securities’ Listing Requirements.
Matters Reserved For The Board The principle features of the Group’s internal control can be summarised as follows:- The Board has overall responsibility for the Group’s system of internal • Board Committees controls and has reviewed their integrity and effectiveness. The Board is responsible for identifying the major business risks faced by the Group and The delegation of responsibilities to the various committees of the Board for determining the appropriate course of action to manage those risks. The of Directors is clearly defined. At present, the committees which are Board continuously evaluates and manages risks faced by the Group and established are the Audit Committee, Nomination and Remuneration regularly reviews on the planned action, to ascertain if risks are mitigated Committee and Securities and Options Committee. and well managed. • Organisational Structure and Responsibility Levels The Board maintains full control over strategic, financial, organisational and The Group has a well defined organisational structure with a clear line compliance issues and has put in place an organisation with formal lines of accountability and has strict authorisation, approval and control of responsibility and delegation of authority. The Board has delegated to procedures within which senior management operate. All operating the executive management the implementation of the systems of internal subsidiaries have similar internal controls as the holding company. control. Responsibility levels are communicated throughout the Group, which The systems of internal control are designed to safeguard the assets of the set out, among others, authorisation levels, segregation of duties and Group, to ensure the maintenance of proper accounting records and to provide other control procedures. reliable financial information for use within the business and for publication. • Authority levels However, these controls are designed to manage rather than eliminate the risk to achieve business objectives and can only provide reasonable and not Clearly defined authorisation procedures and authority limits set for absolute assurance against material error, misstatement, loss or breach of major tenders, major capital expenditure projects, acquisitions and set regulation. disposals of businesses, and other significant transactions.
The Board maintains an ongoing commitment to strengthen the Group’s The approval of capital and revenue proposals above certain limits is control environment and process. reserved to the Board. Other investment decisions are delegated for approval in accordance with authority limits established. Comprehensive Review On The System Of Internal Control appraisal and monitoring procedures are applied to all major investment decisions. The Group’s internal control structures were in place throughout the financial year under review. These processes have been reviewed regularly and accord The authority of the Directors are required for key treasury matters with the guidance contained in the Statement of Internal Control: Guidance including changes to equity and loan financing, interest rate, cheque for Directors of Public Listed Companies. signatories, the opening of bank accounts and foreign currency transactions. ANNUAL REPORT 2012 39
Aviva Green, Seremban 2
• Human Resource Policies Internal Audit Key positions throughout the Group are filled with personnel with The Internal Audit review process is conducted by the Internal Audit the relevant experience and qualifications. The Group further Department of IJM Corporation Berhad which independently focused equips their personnel via training programmes and courses. on the key areas of business risk. It works to a risk based approach • formalised strategic planning and operating plan audit plan agreed annually with the Audit Committee and reports on the processes adequacy and effectiveness of the Group’s internal control systems to the Audit Committee. The Group undertakes a comprehensive business planning and budgeting process each year, to establish plans and targets After taking into consideration of the internal audit reports, the Audit against which performance is monitored on an ongoing basis. Key Committee is able to assess the effectiveness of the system of internal business risks are identified during the business planning process control as it operated during the year and subsequently reports its and are reviewed regularly during the year. opinion to the Board. • Reporting and review The Board and Management recognises that the development of The Group requires its business units to report its performance on internal control system is an ongoing process and maintains an ongoing a monthly basis. The Group then holds scheduled management commitment to strengthen the existing internal control environment of and operations review meetings to review the progress of its the Group. business units against operating plans and budgets as well as to monitor the adherence to the internal control procedures This Statement of Internal Control is made in accordance with the established. These meetings are also held to discuss pertinent resolution of the Board of Directors dated 17 July 2012. issues and formulate corrective/improvement measures. Pertinent information is provided to the Board and senior management on a timely basis. • financial performance The full year financial results and the state of affairs are audited by the external auditors and are given to shareholders. In addition, the Group also releases unaudited financial results on a quarterly basis to shareholders via Bursa Securities. • Update on developments The Board is regularly updated on new developments in legal, accounting and business environment. D’Rich Executive Suites, Johor Bahru 40 IJM Land Berhad (187405-T)
QUALITY STATEMENT
Meeting customer requirements necessitates intense focus from all parts of the Group on our customers. IJM Land Berhad is firmly committed to upholding the Group’s “Mark of Excellence”. Quality excellence will remain the core focus of our business operations and the tool to achieve customer satisfaction. In addition, we will also strive to maintain an environment in which our staff can be fully involved in achieving peak levels of quality and customer satisfaction.
In line with our quality philosophy, IJM Land will continue to: The quality management principles as stated in MS ISO9000, MS ISO9004 • Review the effectiveness of the Quality Management System and strive and recognised best practices have been taken into consideration during the to meet customers’ expectations. development of IJM Land processes. • Comply with statutory, regulatory and MS ISO 9001 requirement; These processes have been through continuous reviews to enhance internal and seek continuous improvement of IJM Land Quality Management System. and external customer expectations and requirements. • Enhance the skill and knowledge of IJM Land staff through continuous All levels of staff have been subjected to continuous training and awareness coaching and training. sessions to ensure better understanding of IJM Land quality management • Ensure a safe, healthy and conducive work environment at all times. systems and knowledge on specific matters.
Make Good, Better Internal Quality Audit
IJM Land has developed a quality-conscious culture strategy that encourages As part of our on-going staff development programme, a new group of staff open and honest two-way communication on all issues; and provides a from various business units throughout Peninsular and East Malaysia have foundation for consistent and fair treatment of every staff member. Emphasis been selected to be trained as Internal Quality Auditors. The enlarge pool of on this culture is apparent in the involvement of management and various auditors provides opportunity for more effective and efficient auditing and levels of human resources throughout IJM Land operations. The involvement planning. ranges from operational and quality review, internal quality audit, process measurement, and product quality monitoring and customer satisfaction Internal Quality Auditing is fundamental to quality management system as assessment. it verifies the suitability and effectiveness of company systems. Through assessment of the inputs, outputs and control within a process, as well The continuous improvement process is embedded in the various work as its interactions with other processes, internal quality auditing helps processes and procedures at appropriate levels of business operations in identify the weak links between processes and opportunities for continual IJM Land. improvement.
Continual Improvement Process In cross-region internal quality auditing, exposure to different process requirements and good practices enable internal quality auditors to learn the Quality is a never-ending quest, and our continual improvement process strength of other regions and to evaluate the effectiveness and efficiency of remains a never-ending effort towards discovering and eliminating the root our own processes and work cultures through internal benchmarking. causes of problems. We are able to accomplish this by using small-steps improvements, rather than implementing one huge improvement. Customer Survey
Quality Management Systems The understanding of customer perceptions is important in developing and improving IJM Land’s processes, products and services. A new customer IJM Land has developed a strong foundation of Quality Management Systems satisfaction survey conducted in 3rd Quarter of 2011 provides a better that established an appropriate control of processes and interactions insight of customers’ expectations and perceptions of IJM Land products internally and externally. and services.
In the 2nd Quarter of 2012, all staff were briefed on the customer survey results to recognise the customers’ expectations and seek improvements in the future. ANNUAL REPORT 2012 41
Control of Outsourced Services Quality assessment was conducted at defined stages, comprising structural works, and architectural and M&E works. In-progress Control of outsourced services was established to ensure the services assessment was conducted jointly with the project team as check and provided by third parties were monitored and reviewed. Regular balance to ensure projects were completed within the specified quality discussion, assessment and training were conducted to ensure level. Final architectural assessment was conducted as an independent services and products met the internal and external customer needs evaluation of IJM Land product quality. and expectations. A series of training to enhance knowledge and skills of staffs, contractors, The outsourced services control included: consultants and other service providers have been conducted for all • Consultancy services projects through-out Peninsular and East Malaysia. • Construction works The training promotes self-assessment practices throughout IJM Land • Legal services developments to ensure continuous monitoring of product quality. • Landscaping services • Security services On-going internal quality assessment during construction progress based on CONQUAS framework provides an assurance to customers Process Management and stakeholders of consistent and reliable IJM Land’s product quality delivery. At IJM Land, core business and support processes are monitored for their compliances, efficiency and effectiveness. Key performance QLASSIC & CONQUAS Assessment Result indicators (KPI) of processes were compiled and reviewed on a consistent basis. KPI provides measurable goals which allow teams to Project (Score %) work together to a common set of measurable goals. The KPI helps to QLASSIC Park Avenue Parcel 7 (08/2009) 77.00% drive individual and team for better performance. Meanwhile corrective CQ Bayu Sri Bintang (09/2009) 77.90% measures, preventive measures and improvements are developed timely to enhance the quality of products and services. CQ Bayu Segar (09/2009) 77.90% CQ Subang 10 Baiduri (9/2008) 77.30% As part of IJM Group’s transformation initiatives of becoming high performance organisation, KPI of IJM Land has been revised to CQ Ampersand (05/2010) 72.50% synergise with the group’s initiatives framework. CQ Platino (09/2010) 72.70%
QLASSIC Summer Place (11/2010) 71.00% Product Quality CQ Laman Granview 2 (6/2011) 79.20%
IJM Land’s product quality monitoring and review were conducted CQ Nusa Duta Ph 3A1 & 3B1(7/2011) 80.60% based on recognised models from CONQUAS, Singapore and QLASSIC, Malaysia. CQ Utama Lake View Villas (9/2011) 74.00% CQ Laman Granview 3 & 4 (10/2011) 72.90% 42 IJM Land Berhad (187405-T)
QUALITY STATEMENT (continued)
BCI Asia Awards 2012
MS ISO 9001:2008 Certification: The certification promotes IJM Land’s consistency of practices and continual improvement in delivering quality products and services to customers. A total of 33 IJM Land subsidiaries and jointly controlled entities were certified to MS ISO9001 quality management system: Product Quality Assessment: • EMKO Properties Sdn Bhd • RB Land Sdn Bhd IJM Land developments have been subjected to CONQUAS and QLASSIC and • RB Development Sdn Bhd IJM Land Internal assessment. • Seremban Two Holdings Sdn Bhd The projects assessed spread throughout Peninsular and East Malaysia. • Seremban Two Properties Sdn Bhd • Shah Alam 2 Sdn Bhd Latest assessed projects: • RB Property Management Sdn Bhd • Laman Granview Phase 2 @ Puchong : 79.2 • Casa Warna Sdn Bhd • Laman Granview Phase 3 & 4 @ Puchong : 72.9 • Ikatan Flora Sdn Bhd • Aras Varia Sdn Bhd • Nusa Duta Phase 3A1 & 3B1 @ Johor : 80.6 • Dian Warna Sdn Bhd • Utama Lake View @ Sandakan : 74.0 • Titian Tegas Sdn Bhd • Tarikan Abadi Sdn Bhd Property Awards • Unggul Senja Sdn Bhd 1) The Edge Top Property Developers Awards 2011 • IJM Properties Sdn Bhd • Chen Yu Land Sdn Bhd IJM Land is ranked amongst the top 10 developer by The Edge (Malaysia): • Manda’rina Sdn Bhd Property Excellence Awards 2011. • Maxharta Sdn Bhd IJM Land is ranked at the 3rd position in the qualitative attributes which • Worldwide Ventures Sdn Bhd consist of product quality, innovation & creativity, value creation for buyers, • Aqua Aspect Sdn Bhd image and expertise. • Jelutong Development Sdn Bhd • IJMP-MK Joint Venture The improvement in qualitative attributes from 12th (The EDGE: 2009 Awards) • NS Central Market Sdn Bhd to 3rd position indicates consumers’ and industry recognition of IJM Land • Cypress Potential Sdn Bhd efforts in its “Ever Improving” journey. • Island Golf View Sdn Bhd IJM Land is ranked at the 19th position in the quantitative attributes which • Suria Bistari Development Sdn Bhd consists of shareholders funds, turnover, profit before tax and cash/net • EMKO Management Services Sdn Bhd gearing. • Seremban Two Property Management Sdn Bhd • IJM Management Services Sdn Bhd 2) The Edge Billion Ringgit Club 2011 • Liberty Heritage Sdn Bhd 3) BCI Asia Awards 2012 – Malaysia • Jalinan Masyhur Sdn Bhd • Sinaran Intisari Sdn Bhd ~ BCI Asia Top 10 2012 Developers Awards • Elegan Pesona Sdn Bhd ANNUAL REPORT 2012 43 customer relationship management
IJM Land’s Customer Relationship Management (“CRM”) model is based on business strategy and technology to identify, acquire and retain customers by building on core customer relationships. This is done by optimising the management of customer life cycles, expanding customer revenue and profitability over time, and increasing customer satisfaction and loyalty. The fundamental CRM strategy is driven by the Company’s brand promise of “Bringing Life To Ordinary Spaces”. By enhancing the value and brand experience of being a customer of IJM Land, the mission of amplifying brand satisfaction and loyalty will invariably contribute to the objective of business goals and profitable customer relationships.
CRM Activities – Johor D’Rich Executive Suites Signing Ceremony 15 January 2012 Official Launch of D’Ambience Residences 12 February 2012 In efforts to increase awareness of D’Rich Executive Suites, a signing ceremony was held at the Grand This event coincided with the Chinese New Paragon Hotel. This event saw customers who had Year celebrations and thus received a very booked the suites earlier, sign the Sale & Purchase encouraging response. Many positive feedbacks Agreement. As a token of appreciation, each
Chinese New Year Celebration, Johor were received on the design of the sales gallery purchaser was given a RM200 Jusco voucher and and show units. To make the event merrier, a mini a hotel buffet ticket. lucky draw was held with hamper giveaways to lucky winners. Those who attended were treated Lucky Draw Event to a buffet lunch. The event concluded on a 10 July 2011 successful note. Purchasers of the Nusa Duta properties were D’Ambience Residences Signing Ceremony invited to attend a special lucky draw event as an 16 October 2011 after-sales appreciation. This event was aimed at building a positive image with existing buyers. A Sales & Purchase signing ceremony was held During the event, purchasers dined buffet style D’Ambience Residences for the first 40 purchasers during the soft launch while being entertained by a live band. Some of Signing Ceremony event. Purchasers who attended were pleasantly the prizes offered were air-conditioners, LCD TVs, surprised to receive a RM200 Jusco voucher massage chair and two Toyota Vios cars; all of each as a token of appreciation. Later, they were which found their way to happy, new owners. all treated to lunch at the hotel’s ballroom. Many of the purchasers came for the event with their friends and families. As a result, new sales were generated on the event day and the following weeks.
D’Rich Executive Suites Signing Ceremony
Lucky Draw @ Nusa Duta 44 IJM Land Berhad (187405-T)
customer relationship management (continued)
Chinese New Year Celebration @ Laman Granview
CRM Activities – Klang Valley Laman Granview Chinese New Year Event 5 February 2012 Official Launch Of Altitude 236 This Chinese New Year event was the perfect 5 November 2011 opportunity to conduct a soft launch of Phase 5 An event was organized in conjunction with the homes Guests were entertained with the traditional official launch of Altitude 236. Based on a classical lion dance, acrobatic performance, Feng Shui talk, Official Launch of Dragon mascot and clowns. Customary to the Altitude 236 theme of a British family gathering, this Family Day event saw English breakfast and high-tea being festivities, guests were also treated to delicious food served. Those who attended were entertained with and beverages. a violin performance by Joanne Yeoh, jazz band ensemble, fire eater show, magic show and face Shah Alam 2 Hari Raya Open House painting. 10 September 2011 To usher in the festivities of Hari Raya, families living Chinese New Year Celebrations @ Altitude 236 in Shah Alam 2 and Puncak Alam came together 4 February 2012 in an open house event at Phase 5A5 – Amanda To create more awareness for the launch of Altitude showhouse. This event enabled residents to mingle Chinese New Year Celebration 236, an event was organized to coincide with the and get to know one another. The event highlights @ Altitude 236 Chinese New Year celebrations. This event was open included the Best Family Photo Competition, Super to all house buyers of Bukit Manda’rina homes. The Kids singing contest, Gamelan performance, song Hari Raya Open House highlights of this event included Lion Dance, meet the performances by a Malay artist, ketupat making @ Shah Alam 2 God of Prosperity sessions and Feng Shui seminar contest, magic show, face painting, clown shows by Master Chow. Traditional Chinese delicacies were and of course, traditional Raya delicacies. also served. Villa 33 Holland Theme Event Laman Granview Joint Promotion With Citibank 16 July 2011 29 October 2011 This is a special invitation to Citigold card members IJM Land held a joint promotional event with Citibank and Citibank Platinum Card members of Cheras & at Laman Granview’s show village. This exclusive Kuala Lumpur. The Holland theme was prevalent event was opened only to Citigold and Platinum throughout as windmills decorated the show card holders. While guests had the opportunity to house grounds and some staff were dressed in have a first-hand experience of a high-end luxury traditional Dutch costumes. Guests also had the home, they were also treated to an Egyptian dance opportunity to enjoy a relaxing foot massage and performance, magic show, magical clown show, manicure services. For entertainment, there were photo session with Egyptian dressed usherers and jazz music performances and magical clown shows. a selection of fine Arabian food. Sandwiches from the renowned Subway chain and delicious Baskin Robbins ice-creams were treats of the day.
Holland Theme Event Merdeka Raya Celebration
ANNUAL REPORT 2012 45
CRM Activities – Seremban & Melaka
Kiddie Lympic @ Seremban 2 22 May 2011
The biennial Kiddie Lympic was brought back due to its popularity and this event had a great response from the kindergarten children and Kiddie Lympic parents. About 250 children from 8 kindergartens in Seremban had joined in throughout the day. The matches for the day included 30m race, 50m relay Official Launch @ Aviva Green race, obstacle race, short putt throwing, sharp shooter and telematch. Through sports and games, children would be able to realize their potential and express their sporting prowess creativity and Merdeka Raya Celebration leadership qualities.
Aviva Green @ Seremban 2 Official Launch 3 July 2011
Registrants and home buyers were invited to a special preview of Aviva Green Show Village with Chinese New Year Celebration an exclusive dinner, wine tasting, star gazing and a special violin performance by Joanne Yeoh, a world famous Malaysian violinist.
Mid-Autumn Celebration 3 September 2011
A jointly organised event with Malaysia Women’s Career Building Association with the objective Chinese New Year Celebration Merdeka Raya Celebration of promoting awareness for this non-profit organization. The highlight of the day included a 12 February 2012 colouring contest, hi-tea with mooncakes and ice In conjunction with the Chinese New Year cream, horse-carting ride and also a special mascot promotion and official launch of Savanna, double appearance. A total of 500 children participated in storey Semi-D Homes in S2 Heights, a Chinese the colouring contest. New Year Celebration was held at the sales gallery with a special appearance by the god of prosperity, Merdeka Raya Celebration imperial dragon and lion dance, traditional 25 September 2011 performances and a calligraphy contest, The event As Hari Raya Aidilfitri was celebrated on the same attracted more than 1,000 people. day as the National Day in 2011, a Merdeka Raya Hand Over Reception @ One Lagenda celebration was held to strengthen community One Lagenda Hand Over Reception in Melaka living within Seremban 2. The activities of the day 4 March 2012 were a choir performance by START foundation Purchasers of the One Lagenda shopoffice were and special mask changing performance by local invited to the hand over reception where they were boy, Suresh. A colouring contest was also held for treated to an authentic Nyonya buffet, lion dance school children from the age of 7 to 12 years old. performance and entertained by a live band. A ‘Count the Malaysian Flag’ contest was lined-up a month ago and more than 200 people had taken part in it. Last but not least, all guests were served with local Raya cuisine. 46 IJM Land Berhad (187405-T)
customer relationship management (continued)
Mid-Autumn Festival
CRM Activities – Sandakan, Sabah The event continued into the night with dance performances and magic show. The public was Mothers’ Day Celebration 2011 also entertained by a group of talented children and 23 & 24 April 2011 was also amazed by the gracefulness of ballroom dancing. The night ended on a high note with the In order to show appreciation to all mothers, IJM lucky draw where 50 fabulous prizes were given Land in Sandakan had organised a Mothers’ Day away as well as the grand prize of a 32” plasma Celebration which was held on 23rd and 24th April television. 2011 at the newly completed Utama Court 2 pool Mothers’ Day Celebration area adjacent to the club house. Mid-Autumn Festival 17 September 2011 The two-day event was filled with various activities among which was the Mother and Child Most Look IJM Land in Sandakan celebrated the Mid- Alike Photo Competition, a colouring competition Autumn festival with the public on 17 September for children aged from 6 years old to 12 years old 2011. The night began with a lantern competition and secondary students from the age of 13 years where participants of all ages brought along their old to 18 years old. Light refreshment was served handmade lanterns using recycled material for throughout the day. display. The audience were also entertained by various performances such as 24 seasons drum The activities for the second day were a Pet Dog Family Carnival performance by Yu Yuan Secondary School, choir Competition, performance by a local singer and singing by Bel Canto group and traditional dance dance performance by D’world Studio ending with performances also by Yu Yuan Secondary School. the highlight of the two-day event which was the Game sessions such as peanuts peeling and clay lucky draw of 30 electrical goods and appliances. molding competitions were also held to interact with the people who came to the event. They were each Family Carnival Celebration presented with a nicely packed complimentary moon 10 July 2011 cake package from sponsor, Kelly Bakery. A family carnival was held at the pool side of Utama Chinese New Year Court 2. Some members of the public brought 22 January 2012 their pets to participate in the beauty pageant for Family Carnival pet dogs where the dogs displayed their skills in This year’s Chinese New Year (CNY) celebration was performing tricks and fastest recall (race). Dog food, held on the eve with a CNY countdown with the dog shampoo and cash vouchers were awarded to public on 22 January 2012. The event kicked off at the winners. 10pm with performances by local singers and special appearances by popular Malaysian artistes Athena There were also booths which offered various types Beh and Johnson Wee much to the delight of the of activities such as dart throwing, sand art, and face audience. The “god of fortune” made his appearance painting. The children were entertained by a clown at the stroke of midnight after the highlight of the sculpting balloons as giveaways. countdown which was the fireworks display. ANNUAL REPORT 2012 47
Hong Kong Appreciation Dinner 13 November 2011
IJM Land hosted an appreciation dinner for Pearl Regency Hong Kong customers and prospects. A total of 46 buyers and guests were invited to dinner.
House Warming Party The objective of the dinner was to maintain a good relationship with our overseas buyers and to keep them updated on IJM Land’s new projects.
CRM Activities – Penang South East Asia Property Awards 30 November 2011 Summer Place condominium House Warming Party The Property Awards Gala Dinner was held in 2 April 2011 Fort Canning Hotel, Singapore. Most of the major developers in South East Asia countries participated As part of a tradition, IJM Land in Penang organised in the awards ceremony which was by invitation a house warming party for all houseowners at only. Summer Place. Lots of activities were organised on House Warming Party that day such as face painting, kids’ games, dance IJM Land has been nominated in Best Developer performance and the highlights of the day were a category; while THE LIGHT POINT has been lion dance, 24 Chinese drums performance & lucky nominated in Best Condo Development category. draw.
ICT Partnership Ceremony of THE LIGHT Waterfront Penang 30 September 2011
A strategic alliance among TIME, Astro and Dimension Data with IJM LAND to design and
ICT Partnership Ceremony build an integrated Information & Communication Technologies infrastructure for THE LIGHT Waterfront Penang.
THE LIGHT will be among the first mega development in Penang that offers such sophisticated digital South East Asia Property Awards lifestyle to its residents and business operators.
The ceremony was officiated by YAB Chief Minister of Penang at THE LIGHT Sales Gallery.
Hong Kong Appreciation Dinner 48 IJM Land Berhad (187405-T)
CORPORATE RESPONSIBILITY
As IJM Land grows from strength to strength, the Group places considerable emphasis on Corporate Responsibility (“CR”). As an integral part of its operations, the Group’s Corporate Responsibility programmes are designed to benefit the community, society and also help enhance the value of its business. The definition and formulation of goals and programmes of IJM Land’s CR model stays firmly in line with the Group’s brand promise of “Bringing Life To Ordinary Spaces”. Similar to that of IJM group, IJM Land’s CR framework focuses on four main pillars – MARKETPLACE; ENVIRONMENT; COMMUNITY; AND WORKPLACE.
MARKETPLACE Another policy adopted by the Group is having in place a sound risk management framework. This is to ensure that investments undertaken by the The CR in the area of marketplace is concentrated on four key areas: Group generate better risk-reward returns for the Group’s stakeholders.
Business Ethics & Values Stakeholder Engagement
The Group places high importance on integrity as one of its core values. General meetings are regularly held to engage with the Group’s stakeholders. This holds true as it is from this point that a brand name with a reputation Often, participation in local and overseas conferences for fund managers is created. It is only by conducting business with ethics and value that the is part of the Group’s agenda. This is in tandem with regular meetings reputation of the Group can be enchanced. held with fund managers and financial analysts throughout the year. Any updated investor relations information will then be made available in Integrity is applied holistically to safeguard investor interests as well as IJM Land’s corporate website. customers. Being customer-centric will also benefit the Group in the long term. For this reason, the corporate philosophy has evolved to become “At IJM Land, We Make Good Better”.
Corporate Governance
The Group is committed to the highest standards of the Malaysian Code on Corporate Governance 2012.
Among the practices outlined by the code, the Group engages in true and fair financial reporting in the interest of investors.
IJM Land is proudly one of the few companies that releases its 4th Quarter results as audited results to Bursa annually. ANNUAL REPORT 2012 49
Products & Services Media Appreciation Night @ Kuala Lumpur In order to maintain the high quality standards in areas of development, yearly reviews are conducted on the effectiveness of Quality Management System in accordance with ISO 9001:2008 certification.
It is the aim of the Group to constantly develop a quality-conscious culture strategy and a continuous improvement process through internal quality auditing and customer surveys.
All product quality monitoring and reviews are based on recognised models from CONQUAS Singapore and QLASSIC Malaysia. In addition, yearly assessments of sub-contractors, consultants and service providers are conducted. Activities Focused On Stakeholder Engagement Buka Puasa with the Media
IJM Land played host to a breaking of fast event called “Majlis Berbuka Puasa Bersama Media” in conjunction with Hari Raya. Held at Holiday Villa, Subang in August 2011, this event was attended by all media invitees. The event gave the opportunity to foster better working relationship with the media while they dined over a sumptuous buffet spread, specially prepared by the hotel.
Media Appreciation Night @ Penang
ENVIRONMENT
IJM Land’s credo “Bringing Life To Ordinary Spaces” remains an important brand promise as this drives the Company to focus on developing sustainable communities. Buka Puasa with the Media In the year under review, the on-going green initiatives include: Media Appreciation Night Adopting Green Building Concepts in our developments
A special event in appreciation of the close collaboration with the media A RM10 billion township called Bandar Rimbayu in Selangor is planned was organised on two occasions. The Media Appreciation Nights were as a green township with certification from GBI Malaysia. held for the Northern Region in Penang and for the Central Region in Over in the northern region, the Group’s flagship development – The Light Kuala Lumpur respectively. Waterfront, Penang – incorporates Green Building concept features. The setting for the events was informal and members of the media Both The Light Linear and The Light Point high-rise condominiums have were treated to good food and drinks. Amongst the highlights of the been certified with the GBI rating in December 2010. night was a lucky draw with attractive prizes. Generally, it was a night to remember and those who attended were also given a briefing of IJM Land’s upcoming projects. 50 IJM Land Berhad (187405-T)
CORPORATE RESPONSIBILITY (continued)
World Habitat Day
Penang Mini Green Expo 2011 – Solar Chapter On 9 April 2011, the Sungai Gelugor river mouth adjacent to the entrance of THE LIGHT Waterfront site was the focus point. Sungai Gelugor’s This Green Expo was held on 17 December 2011 at the 1st Avenue polluted river mouth was treated by using EM mud balls. About 50 Mall, with the objective of raising awareness and educating the public participants comprising IJM Land employees and their family members on the importance of utilising resources in a sustainable manner demonstrated their commitment towards conserving the environment by consistent with the vision and mission of the Penang Green Council. throwing mud balls into the river. What started off as an after-work staff The event also saw the emphasis on solar power as an important activity turned into a green, noble cause. IJM Land had organised three source of renewable energy. mud ball making sessions within the last quarter; including one session with Heng Ee secondary school students. This effort to treat the polluted Adopting The 4R Principles In Waste Management - Reduce, river will be the first of many more environmental conservation efforts Reuse, Recycle & Replace by IJM Land. Another green initiative championed by the IJM Group is the Supporting World Environment Day 2011 “Go Green” campaign. Since its launch in April 2011, IJM Land has adopted and will continue to practice the 4R principles of Reduce, A group of 30 people, comprising staff, consultants and contractors Reuse, Recycle & Replace in its effort to minimise wastes. Through embarked on a clean-up activity at Gunung Datuk, Negeri Sembilan on this campaign, staff at IJM Land were encouraged and made aware 12 June 2011 in support of the World Environment Day 2011 in line with that green living begins at home and that effective waste management the theme – Forests: Nature at your service. is the key towards environmental sustainability.
Mud Balls For Environmental Conservation COMMUNITY
Cleaning up rivers and lakes in the vicinity of IJM Land’s developments The community pillar encompasses Social Development; Community is a continuous initiative. Towards this end, effective Micro-organism Development; Education; Sports Development and Arts & Culture. (EM) technology and EM Mud Balls are being implemented in Penang and Seremban.
Mud Balls for cleaner rivers World Environment Day ANNUAL REPORT 2012 51
Before After
Home Rehabilitation Programme
SOCIAL DEVELOPMENT To spread the Deepavali cheer, the staff of Holiday Villa Subang Jaya visited Pusat Jagaan Kanak-Kanak Sri Sai in Klang, bringing with them Home Rehabilitation Programme 50 packs of Briyani rice and Deepavali sweets.
Initiated in 2010, IJM Land’s Home Rehabilitation Programme Christmas High Tea (myHome) was inspired by the Ministry of Housing and Local In the spirit of giving, the children of The Shelter Home in Petaling Government’s (MHLG) flagship House Build Programme in celebration Jaya were treated to a delicious Christmas High Tea. As part of the of World Habitat Day. day’s highlights, Jojo the Clown entertained the kids. This merry event This programme represents one of the company’s core CR initiatives. was held at the Coriander Garden, Holiday Villa Subang Jaya on 29 December 2011. During the financial year under review, four houses were identified and given a makeover totalling RM65,000. Among the four houses, one was in Johor Bahru; two in Sandakan; and one in Seremban.
In July 2011, the IJM Land team went to the aid of a poor Malay lady in Skudai, Johor to rebuild her home which was destroyed in a violent storm. A total of RM15,000 was sponsored by IJM Land for this cause. During the handover ceremony, IJM Land Southern Region General Manager, Mr Tham Huen Cheong and the house contractor handed over the repaired house to the delighted lady.
Similar efforts were made in Sandakan and Seremban by respective Christmas High Tea teams from IJM Land to help rebuild the homes of those who were in need. Chinese New Year 2012 Community Festival Get-Togethers The Persatuan Rumah Kids in USJ 1 received a pleasant surprise as Buka Puasa With Underprivileged Children they were visited by the Heads of Department and Executives of Holiday Villa Subang Jaya. This was in conjunction with the 2012 Chinese New 100 children from three different orphanages, namely Rumah Bakti, Year festivities. While there, a donation was made to the home as part Rumah Kasih Harmoni and Rumah Kasih Bistari were treated to a of the hotel’s CSR Outreach Programme. Ramadan Buffet on 6 August 2011. They were all given ‘duit raya’ by the management of Holiday Villa Subang Jaya.
Chinese New Year Celebration
Deepavali At Pusat Jagaan Sri Sai
Buka Puasa Celebration 52 IJM Land Berhad (187405-T)
CORPORATE RESPONSIBILITY (continued)
Blood Donation Campaign Upgrading of a pedestrian bridge at Persimpangan Bertingkat Gelugor
Charity Aid To Children’s Homes COMMUNITY DEVELOPMENT
A “Majlis Beramah Mesra Bersama Anak-Anak Yatim” was organised by IJM Land’s CR activities also cover the development of the local communities’ Holiday Villa Subang Jaya on 8 July 2011. To mark the occasion, a donation well being. of RM5,900 was made to each of the invited orphanages. They were Rumah Kasih Bistari, Rumah Kasih Harmoni and Rumah Bakti. The latest community development initiative by IJM Land is the upgrading of a pedestrian bridge and U-turn at Persimpangan Bertingkat Gelugor, Tun Dr. Majlis Beramah Mesra Bersama Anak-Anak Yatim Lim Chong Eu Expressway and the widening of a 400 meter stretch of road at Batu Uban to ease traffic congestion that has been faced by motorists at Bayan Lepas for the past few decades.
The ground breaking ceremony was held on 20 January 2012 and this initiative is estimated to cost RM3.7 million.
The Group also participated in a CR programme spearheaded by REHDA Penang Chapter and SPEAD members to clean up Taman Tunku in Seberang Jaya. Additional trees were planted, and more benches and lightings were added for the benefit and safety of park users.
Blood Donation Campaign
A blood donation drive was held on 24 July 2011 in support of the Blood Bank’s effort to boost its supply during the month of Ramadan. The drive yielded 40 packs of blood.
Another blood donation drive was organised by the PR department of Holiday Villa Subang Jaya on 28 January 2012. This drive attracted both the public and hotel staff, which resulted in 65 pints of blood being collected.
Blood Donation Campaign
Trees Planting at Taman Tunku, Seberang Jaya ANNUAL REPORT 2012 53
IJM Land, as a responsible developer, has organised a neighbourhood Four key areas of activities include, land donation for building of safety campaign together with Polis DiRaja Malaysia Seremban district schools; tree planting in school compounds and fields; donations to with the objective of creating a platform for the various communities build additional sports facilities; donating computers and books for of Seremban 2 for a dialogue with the Police on tackling crimes and libraries. working towards a safer neighbourhood. It was also hoped that the neighbourhood safety campaign would pave the way for a better and effective 2-way communication between the Police and residents of Seremban 2 in which the representatives from each community can engage in constructive discussion and debate about strategic policing, crime and community safety issues in their respective neighbourhood.
As a caring corporate citizen, IJM Land has distributed hampers and cash tokens to the less fortunate during festive seasons to bring some cheer to some of these underprivileged households. A group of staff from the Group’s Seremban office had visited 13 households to give away ‘duit raya’ and hampers at the end of the Ramadhan month. Donations for building of basketball court
The annual S2 Carnival was held on 14 November 2011 for residents and purchasers. The theme was called Candy Land Adventure. The event In the year under review, the Group and the Seremban municipal was the perfect opportunity for residents and visitors to get together for council had jointly organised a tree planting activity in 3 schools in a day of fun filled activities and food. The highlight of the day was the the Seremban 2 township namely SJK Seremban 2A, SJK Seremban lucky draw event with prizes that included an iPhone, flat screen TVs 2B and SMK Seremban 2. A total of 150 people comprising students, and various electrical items. teachers, government staff and officials as well as the staff of IJM Land in Seremban had actively planted more than 120 trees within the vicinity of the three schools.
The Group had also donated a sum of RM6,000 to SMK Bukit Kepayang in Seremban 2 for the building of a basketball court for the students of the secondary school, a national primary school and a tamil primary school who shares common sport facilities under the ‘wawasan’ school concept.
In efforts to increase the standard of English among students, IJM Land participated in New Straits Times’ Newspaper In Education Q & A session during Safety Campaign @ (NIE) programme by sponsoring 10 schools in Penang with a donation Seremban 2 of RM10,080. As a result, a total of over 9,000 students benefited by Police Demostration at Safety Campaign @ receiving newspapers pull-out that are used as an English language Seremban 2 learning tool. The format and modules of the newspaper is designed to make it more interesting and fun to study English.
Trees Planting @ Seremban 2
EDUCATION
Education is an area of focus for IJM Land as nurturing young minds is crucial towards the growth of a nation. Therefore, the Group places emphasis in contributing to the enhancement of educational facilities for the community. 54 IJM Land Berhad (187405-T)
CORPORATE RESPONSIBILITY (continued)
24 festive drum competition
SPORTS DEVELOPMENT On 10 December 2011, IJM Land collaborated with Sin Chew Jit Poh Seremban branch to hold the national level of the 24 festive drum competition at S2 City IJM Land is also focused on providing the communities the Group operates in Park. The competition attracted many participants from Chinese schools and with avenues for sports activities for an active lifestyle. Among the company’s private institutions in Malaysia, however, only 6 of the best were selected to efforts include the sponsorship of the Penang Bridge International Marathon; represent the states of Penang, Selangor, Negeri Sembilan and Johor. The promoting cycling towards greener townships; sponsoring lawn bowl objective of this competition was to promote the culture of 24 festive drums tournaments for the young and senior citizens. Also, outdoor sports facilities (which is originated in Malaysia) among our diverse communities. are provided for in each of the Company’s developments or townships.
ARTS & CULTURE
In building better communities, the development of cultural appreciation is always regarded as an important aspect. To this end, IJM Land is actively involved in such initiatives like:
- The development of a proposed performing arts and cultural centre at The Light Waterfront in Penang;
- Promoting the Georgetown Festival;
Souvenirs presentation @ 24 festive drum competition - Sponsoring the Penang Island Jazz Festival;
- Sponsoring activities and events that promote Malaysian culture. WORKPLACE Staff dance competition to promote teamwork CR for IJM Land encompasses a holistic approach, where the workplace and the welfare of staff are given attention to. Various programmes have been designed for the benefit and well-being of every staff and member of the company. These range from personal development like training, teambuilding, to health and workplace environment.
Human Capital
Investing in human capital is an important aspect of a successful company. To this end, regular training and seminar courses are organised for staff and members of the Group.
Team building programmes are organised to help staff realise that success at the workplace is related to strong teamwork and motivation. ANNUAL REPORT 2012 55
High Performance Culture (HPC) Initiative
The HPC initiative reinforces IJM Group’s enhanced vision, mission and core values to realise the IJM Group’s vision to become a leading Malaysian conglomerate in the markets they serve. Delivering sustainable value to all stakeholders is the mission of all divisions of the IJM Group and to attain this, all staff will be instilled with the following core values: • Integrity • Passion • Efficiency • Teamwork
• Respect for Diversity Movie outings with underprivileged children @ Give Day Out • Innovation • Customer Focus Activities included rehabilitating schools, rivers and community parks; • Quality tree-planting at forest reserves and along IJM’s expressways; the construction of a badminton court for an orphanage; movie outings with Elected divisional champions, consisting of senior staff that emulate underprivileged children; mangrove seed planting; beach clean-ups these core values, have started conducting the Core Values awareness and other fun and enriching activities. workshops in the Central Region and Sabah, with Northern and Southern regions in early June. Rehabilitating community park @ Give Day Out
Core Values awareness workshops Main objectives of the IJM Give Day Out 2011 were: • To reach out to the underprivileged; Give Day Out • To impact the environment where we operate by doing something positive; On 3 December 2011, the very first Give Day Out event was held. This • To foster staff integration and teamwork; event was designed to involve the staff of IJM Group – from every level in the spirit of CR. It was held in all locations and countries in which IJM • To create an awareness of the various causes and communities has presence. This included Malaysia, China and India. that needed aid; and • To encourage the spirit of “giving for a good cause” among staff. In total, over 100 groups comprising, 2000 staff embarked on CR activities of their choice. This Corporate Responsibility Statement is made in accordance with the resolution of the Board of Directors dated 17 July 2012. 58 DIRECTORS’ REPORT AND STATEMENT 64 STATEMENTS OF COMPREHENSIVE INCOME 65 CONSOLIDATED BALANCE SHEET 66 COMPANY BALANCE SHEET 67 STATEMENTS OF CHANGES IN EQUITY 70 CASH FLOW STATEMENTS 73 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 91 NOTES TO THE FINANCIAL STATEMENTS 154 STATUTORY DECLARATION 155 INDEPENDENT AUDITORS’ REPORT
58 IJM Land Berhad (187405-T)
DIRECTORS’ REPORT AND STATEMENT
The Directors have pleasure in submitting their annual report together with the audited financial statements of the Group and of the Company for the financial year ended 31 March 2012.
PRINCIPAL ACTIVITIES The Company is principally engaged in investment holding. The subsidiaries are principally engaged in property development, construction, hotel operations and investment holding. The principal activities of the subsidiaries are disclosed in Note 42 to the financial statements. There have been no significant changes in these principal activities during the financial year.
FINANCIAL RESULTS The Group The Company RM’000 RM’000 Net profit for the financial year 200,274 49,913
Attributable to: Owners of the Company 193,709 49,913 Non-controlling interests 6,565 – 200,274 49,913
DIVIDENDS Dividend paid since the end of the previous financial year is as follow: RM’000 In respect of the financial year ended 31 March 2011: A single tier interim dividend of 4 sen per share, paid on 12 July 2011 54,987
On 29 May 2012, the Directors have declared an interim dividend in respect of the financial year ended 31 March 2012 of 4% (single tier dividend) to be paid on 3 July 2012 to every member who is entitled to receive the dividend as at 5:00pm on 15 June 2012. The Directors do not recommend the payment of any final dividend for the financial year ended 31 March 2012.
RESERVES AND PROVISIONS All material transfers to or from reserves or provisions during the financial year are disclosed in the financial statements.
SHARE CAPITAL During the financial year, the issued and paid-up ordinary share capital of the Company was increased from RM1,124,665,246 to RM1,388,358,668 by way of: (a) the issuance of 33,808,365 ordinary shares of RM1.00 each arising from the exercise of Warrants 2008/2013 at the exercise price of RM1.35 per share in accordance with the Deed Poll dated 13 August 2008. (b) the issuance of 229,885,057 ordinary shares of RM1.00 each arising from the conversion of the RM400 million nominal value of 10 year 3% coupon redeemable convertible unsecured loan stocks (“RCULS”) at the conversion price of RM1.74 by the ultimate holding company, IJM Corporation Berhad. The new ordinary shares issued rank pari passu in all respects with the existing ordinary shares of the Company. ANNUAL REPORT 2012 59
WARRANTS 2008/2013 The Warrants 2008/2013 are constituted by a Deed Poll dated 13 August 2008. On 12 September 2008, the Company allotted 454,549,285 Rights Shares together with 227,274,642 Warrants at an issue price of RM1.35 per Rights Share, on a renounceable basis of four (4) Rights Share and two (2) Warrants for every five existing ordinary shares held on 18 August 2008, being the Rights Entitlement Date. Each Warrant 2008/2013 entitles the registered holder to subscribe for one (1) new ordinary share in the Company at any time from 12 September 2008 up to the date of expiry on 11 September 2013, at an exercise price of RM1.35 or such adjusted price in accordance with the provisions in the Deed Poll. Any Warrants 2008/2013 not exercised at the date of maturity will lapse and cease to be valid for any purpose. The Warrants 2008/2013 is listed on the Main Market of Bursa Malaysia Securities Berhad with effect from 16 September 2008. The ordinary shares issued from the exercise of Warrants 2008/2013 shall rank pari passu in all respects with the existing issued ordinary shares of the Company except that they shall not be entitled to any dividends, distributions or rights, the entitlement date of which is prior to the date of the allotment of the new shares arising from the exercise of Warrants 2008/2013.
DIRECTORS The Directors in office since the date of the last report and statement are: Tan Sri Dato’ Tan Boon Seng @ Krishnan @ Dato’ Soam Heng Choon @ Tan Sri Dato’ Nasruddin Bin Bahari *#@ Dato’ Md Naim Bin Nasir # Boey Tak Kong *# Datuk Lee Teck Yuen * Dato’ Teh Kean Ming * members of the Nomination and Remuneration Committee # members of the Audit Committee @ members of the Securities & Options Committee 60 IJM Land Berhad (187405-T)
DIRECTORS’ REPORT AND STATEMENT (continued)
DIRECTORS’ INTERESTS IN SHARES According to the Register of Directors’ Shareholdings, particulars of Directors’ interests in shares and Warrants of the Company and its related corporations during the financial year are as follows: Number of ordinary shares of RM1.00 each Balance as at Balance as at 1.4.2011 Acquired Disposed 31.3.2012 IJM Land Berhad Name of Director Tan Sri Dato’ Tan Boon Seng @ Krishnan Indirect interest 20,000(1) – – 20,000(1) Datuk Lee Teck Yuen Direct interest 11,064,693(2) – – 11,064,693(2)
Number of Warrants 2008/2013 Balance as at Disposed/ Balance as at 1.4.2011 Acquired Exercised 31.3.2012 IJM Land Berhad Name of Director Tan Sri Dato’ Tan Boon Seng @ Krishnan Direct interest 1,248,610 – – 1,248,610 Indirect interest 123,900(1) – – 123,900(1) Dato’ Soam Heng Choon Direct interest 451,500 – – 451,500 Tan Sri Dato’ Nasruddin Bin Bahari Direct interest 2,725 – – 2,725 Indirect interest 2,250(1) – – 2,250(1) Dato’ Teh Kean Ming Direct interest 147,000 – – 147,000 Indirect interest 5,200(1) – – 5,200(1) ANNUAL REPORT 2012 61
DIRECTORS’ INTERESTS IN SHARES (continued) Number of ordinary shares of RM1.00 each Balance as at Balance as at 1.4.2011 Acquired Disposed 31.3.2012 IJM Corporation Berhad (The Ultimate Holding Company) Name of Director Tan Sri Dato’ Tan Boon Seng @ Krishnan Direct interest 2,449,180 – – 2,449,180 Indirect interest 1,095,136(1) – 650,000(1) 445,136(1) Dato’ Soam Heng Choon Direct interest 21,000 – – 21,000 Tan Sri Dato’ Nasruddin Bin Bahari Direct interest 38,150 – – 38,150 Indirect interest 31,500(1) – – 31,500(1) Datuk Lee Teck Yuen Direct interest 1,240,000 – – 1,240,000 Indirect interest 580,000(1) – – 580,000(1) Dato’ Teh Kean Ming Direct interest 84,000 – – 84,000 Indirect interest 91,000(1) – – 91,000(1)
Number of Warrants 2009/2014 Balance as at Disposed/ Balance as at 1.4.2011 Acquired Execised 31.3.2012 IJM Corporation Berhad (The Ultimate Holding Company) Name of Director Tan Sri Dato’ Tan Boon Seng @ Krishnan Direct interest 1,424,348 – – 1,424,348 Indirect interest 670,000(1) 380,000(1) – 1,050,000(1) Dato’ Soam Heng Choon Direct interest 2,100 – – 2,100 Tan Sri Dato’ Nasruddin Bin Bahari Indirect interest 3,200(1) – – 3,200(1) Dato’ Teh Kean Ming Direct interest 39,300 – – 39,300 Indirect interest 39,800(1) – – 39,800(1) 62 IJM Land Berhad (187405-T)
DIRECTORS’ REPORT AND STATEMENT (continued)
DIRECTORS’ INTERESTS IN SHARES (continued) Number of ordinary shares of RM0.50 each Balance as at Balance as at 1.4.2011 Acquired Disposed 31.3.2012 IJM Plantations Berhad (A Related Company) Name of Director Tan Sri Dato’ Tan Boon Seng @ Krishnan Direct interest 646,000 – – 646,000 Indirect interest 429,982(1) – – 429,982(1)
Number of Warrants 2009/2014 Balance as at Disposed/ Balance as at 1.4.2011 Acquired Exercised 31.3.2012 IJM Plantations Berhad (A Related Company) Name of Director Tan Sri Dato’ Tan Boon Seng @ Krishnan Direct interest 70,060 – – 70,060 Indirect interest 51,051(1) – – 51,051(1)
(1) Through a family member (2) Through a nominee company
Except as disclosed above, the Directors in office at the end of the financial year do not have any direct or indirect interest in the shares or Warrants of the Company and its related corporations during the financial year. Since the end of the previous financial year, no Director has received or become entitled to receive a benefit (other than the fees and other emoluments shown in the financial statements) by reason of a contract made by the Company or by a related corporation with the Director or with a firm of which the Director is a member, or with a company in which the Director has a substantial financial interest. Except as disclosed above, neither during nor at the end of the financial year was the Company or any of its subsidiaries a party to any arrangement whose object was to enable the Directors to acquire benefits through the acquisition of shares in, or debentures of, the Company or any other body corporate, other than the Warrants 2008/2013 of the Company (Note 7 to the financial statements).
OTHER STATUTORY INFORMATION Before the financial statements of the Group and of the Company were made out, the Directors took reasonable steps: (a) to ascertain the action taken in relation to the writing off of bad debts and the making of allowance for doubtful debts and satisfied themselves that all known bad debts had been written off and that adequate allowance had been made for doubtful debts; and (b) to ensure that any current assets, other than debts, which were unlikely to realise their book values in the ordinary course of business had been written down to their estimated realisable values. ANNUAL REPORT 2012 63
OTHER STATUTORY INFORMATION (continued) At the date of this report and statement, the Directors are not aware of any circumstances: (a) which would render the amounts written off for bad debts or the amount of the allowance for doubtful debts of the Group and of the Company inadequate to any material extent or the values attributed to current assets of the Group and of the Company misleading; or (b) which have arisen which render adherence to the existing method of valuation of assets or liabilities of the Group and of the Company misleading or inappropriate; or (c) not otherwise dealt with in this report and statement or in the financial statements that would render any amount stated in the financial statements of the Group and of the Company misleading. In the interval between the end of the financial year and the date of this report and statement: (a) no item, transaction or other events of a material and unusual nature has arisen which, in the opinion of the Directors, would substantially affect the results of the operations of the Group and of the Company for the current financial year; or (b) no charge has arisen on the assets of any company in the Group which secures the liability of any other person nor has any contingent liability arisen in any company in the Group. No contingent or other liability of any company in the Group has become enforceable or is likely to become enforceable within the period of twelve months after the end of the financial year which, in the opinion of the Directors, will or may affect the ability of the Company and its subsidiaries to meet their obligations when they fall due. In the opinion of the Directors: (a) the results of the operations of the Group and of the Company during the financial year have not been substantially affected by any item, transaction or event of a material and unusual nature; (b) the financial statements of the Group and of the Company set out on pages 64 to 153 are drawn up so as to give a true and fair view of the state of affairs of the Group and of the Company as at 31 March 2012 and of the results and cash flows of the Group and of the Company for the financial year ended on that date in accordance with the MASB Approved Accounting Standards in Malaysia for Entities Other than Private Entities and the provisions of the Companies Act, 1965; and (c) the information set out in Note 46 to the financial statements have been prepared in accordance with the Guidance on Special Matter No.1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants.
ULTIMATE HOLDING COMPANY The Directors regard IJM Corporation Berhad, a public limited liability company incorporated in Malaysia and listed on the Main Market of Bursa Malaysia Securities Berhad, as the ultimate holding company.
AUDITORS The auditors, PricewaterhouseCoopers, have expressed their willingness to continue in office.
Signed on behalf of the Board in accordance with a resolution of the Directors.
TAN SRI DATO’ TAN BOON SENG @ KRISHNAN DATO’ SOAM HENG CHOON DIRECTOR DIRECTOR
Petaling Jaya 29 May 2012 64 IJM Land Berhad (187405-T)
STATEMENTS OF COMPREHENSIVE INCOME for the financial year ended 31 March 2012
The Group The Company Note 2012 2011 2012 2011 RM’000 RM’000 RM’000 RM’000 Operating revenue 4 1,206,023 1,162,223 81,709 74,736 Cost of sales 5(a) (826,156) (778,999) – – Gross profit 379,867 383,224 81,709 74,736 Other operating income 13,865 79,690 – 68,291 Selling and distribution expenses (43,908) (35,727) – – Administrative expenses (86,741) (82,002) (3,090) (3,124) Other operating expenses (9,594) (37,143) (1,946) (11,277) Operating profit before finance cost 5 253,489 308,042 76,673 128,626 Finance income 9 68,473 51,734 5,086 2,212 Finance cost 10 (33,128) (74,529) (16,900) (43,601) Operating profit after finance cost 288,834 285,247 64,859 87,237 Share of (losses)/ profits of associates 24 (1) 16 – – Share of (losses)/ profits of jointly controlled entities 25 (6,975) 281 – – Profit before taxation 281,858 285,544 64,859 87,237 Income tax expense 11 (81,584) (61,535) (14,946) (3,752) Net profit for the financial year 200,274 224,009 49,913 83,485
Other comprehensive income (net of tax): Currency translation differences 492 76 – – Revaluation of land and buildings 36,281 – – – 36,773 76 – – Total comprehensive income for the financial year 237,047 224,085 49,913 83,485
Net profit attributable to: Owners of the Company 193,709 217,653 Non-controlling interests 6,565 6,356 Net profit for the financial year 200,274 224,009
Total comprehensive income attributable to: Owners of the Company 230,492 217,951 Non-controlling interests 6,555 6,134 Total comprehensive income for the financial year 237,047 224,085
The Company Note 2012 2011 Dividend per share (sen) 13 4.00 4.00
Earnings per share for net profit attributable to owners of the Company: The Group Note 2012 2011 Basic (sen) 12(a) 14.07 19.65 Fully diluted (sen) 12(b) 13.29 16.37 ANNUAL REPORT 2012 65
CONSOLIDATED BALANCE SHEET as at 31 March 2012
Note 2012 2011 RM’000 RM’000 CAPITAL AND RESERVES ATTRIBUTABLE TO OWNERS OF THE COMPANY Share capital 15(a) 1,388,359 1,124,665 Share premium 15(b) 296,364 76,128 Revaluation reserve 36,281 – Exchange translation reserve 148 (354) Redeemable Convertible Unsecured Loan Stocks (“RCULS”) 17 – 49,202 Other reserves 16 85,499 102,356 Retained profits 622,948 484,226 2,429,599 1,836,223 NON-CONTROLLING INTERESTS 50,362 43,807 TOTAL EQUITY 2,479,961 1,880,030 NON-CURRENT LIABILITIES Borrowings 18 286,806 262,177 Trade and other payables 19 861,412 781,922 RCULS 17 – 362,711 Deferred tax liabilities 20 56,813 62,580 1,205,031 1,469,390 3,684,992 3,349,420 NON-CURRENT ASSETS Property, plant and equipment 21 175,853 140,304 Investment properties 22 67,116 106,970 Associates 24 1,978 1,979 Jointly controlled entities 25 619,038 482,396 Available-for-sale financial assets 26 113 113 Long term receivable 27 21,961 22,667 Deferred tax assets 20 46,156 26,465 Land held for property development 29(a) 631,403 600,579 1,563,618 1,381,473 CURRENT ASSETS Property development costs 29(b) 1,464,726 1,407,578 Inventories 30 178,041 228,627 Assets held for sale 31 54,032 10,167 Trade and other receivables 32 569,166 553,844 Tax recoverable 11,599 5,554 Deposits, cash and bank balances 33 625,342 691,360 2,902,906 2,897,130 Less: CURRENT LIABILITIES Trade and other payables 34 666,703 832,416 Current tax liabilities 1,945 10,704 Borrowings 18 - Bank overdraft 73 – - Others 112,811 86,063 781,532 929,183 NET CURRENT ASSETS 2,121,374 1,967,947 3,684,992 3,349,420 66 IJM Land Berhad (187405-T)
COMPANY BALANCE SHEET as at 31 March 2012
Note 2012 2011 RM’000 RM’000 CAPITAL AND RESERVES ATTRIBUTABLE TO OWNERS OF THE COMPANY Share capital 15(a) 1,388,359 1,124,665 Share premium 15(b) 296,364 76,128 Revaluation reserve 10,007 10,007 Redeemable Convertible Unsecured Loan Stocks (“RCULS”) 17 – 49,202 Other reserves 16 85,778 102,635 Retained profits 85,421 90,495 TOTAL EQUITY 1,865,929 1,453,132
NON-CURRENT LIABILITIES Borrowings 18 199,936 256,000 RCULS 17 – 362,711 Deferred tax liabilities 20 – 9,014 199,936 627,725 2,065,865 2,080,857 NON-CURRENT ASSETS Property, plant and equipment 21 4 12 Subsidiaries 23 787,782 789,512 Available-for-sale financial assets 26 30 30 Deferred tax assets 20 76 – 787,892 789,554
CURRENT ASSETS Trade and other receivables 32 1,251,302 1,122,110 Tax recoverable 2,120 1,804 Deposits, cash and bank balances 33 142,110 234,769 1,395,532 1,358,683 Less: CURRENT LIABILITIES Trade and other payables 34 31,495 5,380 Borrowings 18 86,064 62,000 117,559 67,380 NET CURRENT ASSETS 1,277,973 1,291,303 2,065,865 2,080,857 ANNUAL REPORT 2012 67
STATEMENTS OF CHANGES IN EQUITY for the financial year ended 31 March 2012 492 Total equity 36,281 36,773 45,642 RM’000 200,274 237,047 (54,987) 372,229 1,880,030 2,479,961 – – – – (10) (10) Non- 6,565 6,555 43,807 50,362 RM’000 interests controlling
502 Total 36,281 36,783 45,642 RM’000 193,709 230,492 (54,987) 372,229 1,836,223 2,429,599 – – – – – profits (54,987) RM’000 484,226 193,709 193,709 622,948 Retained
– – – – – – – – 49,202 RCULS (49,202) RM’000 – – – – – 502 148 (354) 502 502 reserve RM’000 Exchange translation – – – – – – – Other 85,499 RM’000 102,356 (16,857) reserves
– – – – – – Attributable to owners of the Company 36,281 36,281 36,281 36,281 reserve RM’000 Revaluation – – – – – – Share 76,128 28,690 RM’000 191,546 296,364 premium
– – – – – – Share 33,809 capital RM’000 229,885 1,124,665 1,388,359
Note 15,16 net of tax: arising from translation of net investment in a foreign jointly controlled operation and branch for the financial year, net of tax for the financial year
The Group
At 1 April 2011 Comprehensive income: Net profit for the financial year Other comprehensive income, Currency translation differences Revaluation of land and buildings Other comprehensive income Total comprehensive income Interim dividend (single tier) - Year ended 31 March 2011 Issuance of shares: - Exercise of Warrants 2008/2013 - Conversion of RCULS At 31 March 2012 68 IJM Land Berhad (187405-T)
STATEMENTS OF CHANGES IN EQUITY (continued) for the financial year ended 31 March 2012
76 (37) Total 7,503 equity 28,878 (22,067) RM’000 224,009 224,085 1,641,668 1,880,030 – – (37) (222) Non- 6,356 6,134 7,503 30,207 43,807 RM’000 interests controlling
– – 298 Total 28,878 RM’000 217,653 217,951 (22,067) 1,611,461 1,836,223 – – – – profits RM’000 217,653 288,640 (22,067) 217,653 484,226 Retained
– – – – – – – 49,202 49,202 RCULS RM’000 – – – – – 298 298 (652) (354) reserve RM’000 Exchange translation – – – – – – Other (10,666) RM’000 113,022 102,356 reserves Attributable to owners of the Company
– – – – – – Share 57,975 18,153 76,128 RM’000 premium
– – – – – – Share 21,391 capital RM’000 1,103,274 1,124,665
36 Note 15,16
foreign jointly controlled operation and branch translation of net investment in a financial year of the Group
The Group
At 1 April 2010
Comprehensive income: Net profit for the financial year Other comprehensive income, net of tax: Currency translation differences arising from Total comprehensive income for the Effects arising from changes in composition Liquidation of a subsidiary Interim dividend (single tier) - Year ended 31 March 2010 Issuance of shares: At 31 March 2011 - Exercise of Warrants 2008/2013 ANNUAL REPORT 2012 69
Non-distributable Distributable Share Share Revaluation Other Retained Total Note capital premium reserve reserves RCULS profits equity RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 The Company At 1 April 2011 1,124,665 76,128 10,007 102,635 49,202 90,495 1,453,132 Total comprehensive income: Net profit for the financial year – – – – – 49,913 49,913 Interim dividend (single tier) - Year ended 31 March 2011 – – – – – (54,987) (54,987) Issuance of shares: 15,16 - Exercise of Warrants 2008/2013 33,809 28,690 – (16,857) – – 45,642 - Conversion of RCULS 229,885 191,546 – – (49,202) – 372,229 At 31 March 2012 1,388,359 296,364 10,007 85,778 – 85,421 1,865,929
At 1 April 2010 1,103,274 57,975 10,007 113,301 49,202 29,077 1,362,836 Total comprehensive income: Net profit for the financial year – – – – – 83,485 83,485 Interim dividend (single tier) - Year ended 31 March 2010 – – – – – (22,067) (22,067) Issuance of shares: 15,16 - Exercise of Warrants 2008/2013 21,391 18,153 – (10,666) – – 28,878 At 31 March 2011 1,124,665 76,128 10,007 102,635 49,202 90,495 1,453,132 70 IJM Land Berhad (187405-T)
CASH FLOW STATEMENTS for the financial year ended 31 March 2012
The Group The Company Note 2012 2011 2012 2011 RM’000 RM’000 RM’000 RM’000 OPERATING ACTIVITIES Profit before taxation 281,858 285,544 64,859 87,237 Adjustments for: Property, plant and equipment: - depreciation 21 6,005 5,752 8 5 - gain on disposal (75) (89) – – - written off 21 165 267 – 1 Investment properties: - depreciation 22 1,948 3,971 – – Trade and other receivables: - bad debts written off 23 – – – - bad debts recovered (812) (709) – – Quoted shares: - gain on disposal – (74) – (74) Finance cost 10 33,128 74,529 16,900 43,601 Finance income 4,9 (68,904) (52,106) (21,725) (33,345) Dividend income 4 – (2) (64,500) (43,033) Impairment: - land held for property development 29(a) 3 1,822 – – - property development costs 29(b) – 10,739 – – - amounts owing by jointly controlled entities 25 2,853 1,119 – – - goodwill 28 – 476 – – - investment in a subsidiary 23 – – 1,730 9,512 - receivables 1,775 912 216 1,764 - assets held for sale 31 – 1,601 – – Building stocks written down 1,484 11,592 – – Reversal of building stocks written down (1,426) – – – Project expenses written off 79 1,142 – – Cost of sales - fair value adjustment to financial liabilities at inception (5,459) (3,928) – – Gain on disposal of interest in a subsidiary 37 – (62,948) – (68,217) Gain on liquidation of subsidiaries and associates – (4) – – Gain on disposal of land held for property development (3,692) (4,755) – – Gain on disposal of assets held for sale 31 (1,857) – – – Provision for gratuity 43 230 – – Refundable membership securities deposit forfeited (95) (90) – – Share of losses/(profits) of: - associates 24 1 (16) – – - jointly controlled entities 25 6,975 (281) – – Unrealised losses on foreign exchange 738 3,095 – – Unrealised gains on foreign exchange (726) – – – 254,032 277,789 (2,512) (2,549) ANNUAL REPORT 2012 71
The Group The Company Note 2012 2011 2012 2011 RM’000 RM’000 RM’000 RM’000
OPERATING ACTIVITIES (continued) Changes in working capital: Decrease in property development costs 53,265 93,595 – – Decrease in inventories 50,528 18,834 – – (Increase)/decrease in trade and other receivables (14,566) 29,548 (5,031) (17) (Decrease)/increase in trade and other payables (145,352) (127,521) 288 (58,419) (56,125) 14,456 (4,743) (58,436) Cash flow from/(used in) operations 197,907 292,245 (7,255) (60,985) Interest paid (22,446) (32,131) (20,976) (28,429) Tax paid (124,743) (72,905) – (1,348) Tax refunded 49 258 1,031 – (147,140) (104,778) (19,945) (29,777) Net cash flow from/(used in) operating activities 50,767 187,467 (27,200) (90,762)
CASH FLOWS FROM INVESTING ACTIVITIES Acquisition of shares in a subsidiary 23,36 – (15,646) – (18,000) Proceeds from disposal of quoted shares – 123 – 123 Proceeds from disposal of interest in a subsidiary 37 – 66,447 – 68,467 Distribution of capital to non-controlling interests – (37) – – Liquidation of associates – 1,189 – – Redemption of redeemable preference shares of a jointly controlled entity – 25,753 – – Dividends received – 1 48,375 38,001 Interest received 29,563 25,720 5,086 2,212 Proceeds from disposal of land held for property development 13,951 17,616 – – Proceeds from disposal of investment properties – 4,155 – – Proceeds from disposal of assets held for sale 31 7,000 – – – Proceeds from disposal of property, plant and equipment 122 144 – – Purchase of property, plant and equipment 21 (4,487) (5,205) – (2) Acquisition of land held for property development (108,487) (53,349) – – Net advances to jointly controlled entities (108,230) (93,185) – – Repayment of advances from associates – 1,940 – – (Advances to)/repayment of advances from subsidiaries – – (77,977) 165,290 Advances to related companies – – – (1) Net cash flow (used in)/from investing activities (170,568) (24,334) (24,516) 256,090
72 IJM Land Berhad (187405-T)
CASH FLOW STATEMENTS (continued) for the financial year ended 31 March 2012
The Group The Company Note 2012 2011 2012 2011 RM’000 RM’000 RM’000 RM’000 CASH FLOWS FROM FINANCING ACTIVITIES Advances from/(repayment of advances to) ultimate holding company 14,145 (18,835) 403 – Proceeds from exercise of Warrants 2008/2013 45,642 28,878 45,641 28,878 Drawdown of bank borrowings 88,340 316,100 – 30,000 Repayments of bank borrowings (36,964) (156,590) (32,000) (32,000) Repayment of land premium to the Penang State Government (3,000) (6,000) – – Repayment of finance lease liabilities (2) (2) – – Dividend paid (54,987) (22,067) (54,987) (22,067) Net cash flow from/(used in) financing activities 53,174 141,484 (40,943) 4,811
NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS DURING THE FINANCIAL YEAR (66,627) 304,617 (92,659) 170,139 CASH AND CASH EQUIVALENTS AT BEGINNING OF THE FINANCIAL YEAR 691,360 386,937 234,769 64,630 EFFECTS OF EXCHANGE RATE CHANGES 536 (194) – – CASH AND CASH EQUIVALENTS AT END OF THE FINANCIAL YEAR 38 625,269 691,360 142,110 234,769 ANNUAL REPORT 2012 73
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES for the financial year ended 31 March 2012
The following accounting policies have been applied consistently to all the years presented in dealing with items which are considered material in relation to the financial statements, unless otherwise stated.
1 BASIS OF PREPARATION The financial statements of the Group and of the Company have been prepared in accordance with the provisions of the Companies Act, 1965 and Financial Reporting Standards, the Malaysian Accounting Standards Board (“MASB”) Approved Accounting Standards in Malaysia for Entities Other than Private Entities. The financial statements have been prepared under the historical cost convention, unless otherwise indicated in this summary of significant accounting policies. The preparation of financial statements in conformity with the MASB Approved Accounting Standards in Malaysia for Entities Other than Private Entities requires the use of certain critical accounting estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reported period. It also requires Directors to exercise their judgement in the process of applying the Company’s accounting policies. Although these estimates and judgement are based on the Directors’ best knowledge of current events and actions, actual results may differ from those estimates. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed in Note 2 to the financial statements. (a) Standards, amendments and improvements to published standards and interpretations that are effective The new accounting standards, amendments and improvements to published standards and interpretations that are effective for the Group’s and the Company’s financial year beginning on or after 1 April 2011 and are applicable to the Group and the Company are as follows: • Revised FRS 3 “Business combinations” • Revised FRS 127 “Consolidated and separate financial statements” • Amendment to FRS 2 “Share-based payment - Group cash-settled share-based payment transactions” • Amendment to FRS 7 “Financial instruments: Disclosures - improving disclosures about financial instruments” • Amendment to IC Interpretation 9 “Reassessment of embedded derivatives” • Amendment to FRS 132 “Financial instruments: Presentation – Classification of rights issues” • IC Interpretation 4 “Determining whether an arrangement contains a lease” • IC Interpretation 12 “Service concession arrangements” • IC Interpretation 16 “Hedges of a net investment in a foreign operation” • IC Interpretation 17 “Distribution of non-cash assets to owners” • IC Interpretation 18 “Transfers of assets from customers” • Improvements to FRSs (2010) All changes in accounting policies have been made in accordance with the transitional provisions of the respective standards, amendments and improvements to published standards and interpretations. The new accounting standards, amendments and improvements to published standards and interpretations on the financial statements of the Group and of the Company do not result in a significant change to the accounting policies and do not have a material impact on the financial statements of the Group and of the Company except for Revised FRS 3 “Business combinations”, Revised FRS 127 “Consolidated and separate financial statements”, Amendment to FRS 7 “Financial instruments: Disclosures - improving disclosures about financial instruments”, of which the impact is set out in Note 44 to the financial statements. 74 IJM Land Berhad (187405-T)
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) for the financial year ended 31 March 2012
1 BASIS OF PREPARATION (continued) (b) Standards, amendments to published standards and interpretations to existing standards that are applicable to the Group, but are not yet effective and have not been early adopted (i) In the financial year beginning on 1 April 2012, the Group will continue to apply the Financial Reporting Standards Framework. The new standards, amendments to published standards and interpretations that are mandatory for the Group’s financial year beginning on or after 1 April 2012 or later periods, and the Group has not early adopted, are as follows: • The revised FRS 124 “Related party disclosures” (effective from 1 January 2012) removes the exemption to disclose transactions between government-related entities and the government, and all other government-related entities. The following new disclosures are now required for government-related entities: - The name of the government and the nature of their relationship; - The nature and amount of each individually significant transactions; and - The extent of any collectively significant transactions, qualitatively or quantitatively. • IC Interpretation 19 “Extinguishing financial liabilities with equity instruments” (effective from 1 July 2011) provides clarification when an entity renegotiates the terms of a financial liability with its creditor and the creditor agrees to accept the entity’s shares or other equity instruments to settle the financial liability fully or partially. A gain or loss, being the difference between the carrying value of the financial liability and the fair value of the equity instruments issued, shall be recognised in profit or loss. Entities are no longer permitted to reclassify the carrying value of the existing financial liability into equity with no gain or loss recognised in profit or loss. • Amendment to FRS 7 “Financial instruments: Disclosures on transfers of financial assets” (effective from 1 January 2012) promotes transparency in the reporting of transfer transactions and improves users’ understanding of the risk exposures relating to transfers of financial assets and the effect of those risks on an entity’s financial position, particularly those involving securitisation of financial assets. (ii) In the financial year beginning on or after 1 April 2013, the Group will be adopting the new IFRS-compliant framework, Malaysian Financial Reporting Standards (“MFRS”). In November 2011, the MASB Board issued a new MASB approved accounting framework, the Malaysian Financial Reporting Standards (“MFRS”) in conjunction with the Board’s plan to converge with International Financial Reporting Standards in 2012. The MFRS Framework is to be applied by all Entities Other Than Private Entities for annual periods beginning on or after 1 April 2012, with the exception of entities that are within the scope of MFRS 141 “Agriculture” and IC Interpretation 15 “Agreements for the Construction of Real Estate”, including its parent, significant investor and venturer (herewith called “Transitioning Entities”). Transitioning Entities will be allowed to defer adoption of the new MFRS Framework for an additional one year. Consequently, adoption of the MFRS Framework by Transitioning Entities will be mandatory for annual periods beginning on or after 1 April 2013. The Group is categorised under Transitioning Entities and will adopt the MFRS framework for the financial year beginning on 1 April 2013. The Group will apply the following new standards, amendments to standards and interpretations: MFRS 1 “First-time adoption of MFRS” provides for certain optional exemptions and certain mandatory exceptions for first-time MFRS adopters. The Group is in the process of making an assessment of the potential impact of this standard on the financial statements. • IC Interpretation 15 “Agreements for construction of real estates” (effective from 1 January 2012) supersedes FRS 201 “Property development activities” in respect of basis of income recognition for property development. • MFRS 9 “Financial instruments - classification and measurement of financial assets and financial liabilities” (effective from 1 January 2015) replaces the multiple classification and measurement models in MFRS 139 with a single model that has only two classification categories: amortised cost and fair value. The basis of classification depends on the entity’s business model for managing the financial assets and the contractual cash flow characteristics of the financial asset. The accounting and presentation for financial liabilities and for de-recognising financial instruments has been relocated from MFRS 139, without change, except for financial liabilities that are designated at fair value through profit or loss (“FVTPL”). Entities with financial liabilities designated at FVTPL recognise changes in the fair value due to changes in the liability’s credit risk directly in other comprehensive income (“OCI”). There is no subsequent recycling of the amounts in OCI to profit or loss but accumulated gains or losses may be transferred within equity. ANNUAL REPORT 2012 75
1 BASIS OF PREPARATION (continued) (b) Standards, amendments to published standards and interpretations to existing standards that are applicable to the Group, but are not yet effective and have not been early adopted (continued) (ii) The new standards, amendments to published standards and interpretations that are mandatory for the Group’s financial year beginning on or after 1 April 2013 or later periods, and the Group has not early adopted, are as follows: (continued) • MFRS 10 “Consolidated financial statements” (effective from 1 January 2013) changes the definition of control. An investor controls an investee when it is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. It establishes control as the basis for determining which entities are consolidated in the consolidated financial statements and sets out the accounting requirements for the preparation of consolidated financial statements. It replaces all the guidance on control and consolidation in MFRS 127 “Consolidated and separate financial statements” and IC Interpretation 112 “Consolidation – special purpose entities”. • MFRS 11 “Joint arrangements” (effective from 1 January 2013) requires a party to a joint arrangement to determine the type of joint arrangement in which it is involved by assessing its rights and obligations arising from the arrangement, rather than its legal form. There are two types of joint arrangement: joint operations and joint ventures. Joint operations arise where a joint operator has rights to the assets and obligations relating to the arrangement and hence accounts for its interest in assets, liabilities, revenue and expenses. Joint ventures arise where the joint operator has rights to the net assets of the arrangement and hence equity accounts for its interest. Proportional consolidation of joint ventures is no longer allowed. • MFRS 12 “Disclosures of interests in other entities” (effective from 1 January 2013) sets out the required disclosures for entities reporting under the two new standards, MFRS 10 and MFRS 11, and replaces the disclosure requirements currently found in MFRS 128 “Investments in associates”. It requires entities to disclose information that helps financial statement readers to evaluate the nature, risks and financial effects associated with the entity’s interests in subsidiaries, associates, joint arrangements and unconsolidated structured entities. • MFRS 13 “Fair value measurement” (effective from 1 January 2013) aims to improve consistency and reduce complexity by providing a precise definition of fair value and a single source of fair value measurement and disclosure requirements for use across MFRSs. The requirements do not extend the use of fair value accounting but provide guidance on how it should be applied where its use is already required or permitted by other standards. The enhanced disclosure requirements are similar to those in MFRS 7 “Financial instruments: Disclosures”, but apply to all assets and liabilities measured at fair value, not just financial ones. • The revised MFRS 127 “Separate financial statements” (effective from 1 January 2013) includes the provisions on separate financial statements that remain in MFRS 127 after the control provisions of MFRS 127 have been included in the new MFRS 10. • The revised MFRS 128 “Investments in associates and joint ventures”(effective from 1 January 2013) includes the requirements for joint ventures, as well as associates, to be equity accounted following the issue of MFRS 11. • Amendment to MFRS 1 “First time adoption on fixed dates and hyperinflation” (effective from 1 January 2012) includes two changes to MFRS 1. The first replaces references to a fixed date of 1 January 2004 with ”the date of transition to MFRSs”, thus eliminating the need for entities adopting MFRSs for the first time to restate de-recognition transactions that occurred before the date of transition to MFRSs. The second amendment provides guidance on how an entity should resume presenting financial statements in accordance with MFRSs after a period when the entity was unable to comply with MFRSs because its functional currency was subject to severe hyperinflation. • Amendment to MFRS 101 “Presentation of items of other comprehensive income” (effective from 1 July 2012) requires entities to separate items presented in other comprehensive income (“OCI”) in the statement of comprehensive income into two groups, based on whether or not they may be recycled to profit or loss in the future. The amendments do not address which items are presented in OCI. 76 IJM Land Berhad (187405-T)
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) for the financial year ended 31 March 2012
1 BASIS OF PREPARATION (continued) (b) Standards, amendments to published standards and interpretations to existing standards that are applicable to the Group, but are not yet effective and have not been early adopted (continued) (ii) The new standards, amendments to published standards and interpretations that are mandatory for the Group’s financial year beginning on or after 1 April 2013 or later periods, and the Group has not early adopted, are as follows: (continued) • Amendment to MFRS 119 “Employee benefits” (effective from 1 January 2013) makes significant changes to the recognition and measurement of defined benefit pension expense and termination benefits, and to the disclosures for all employee benefits. Actuarial gains and losses will no longer be deferred using the corridor approach. MFRS 119 shall be withdrawn on application of this amendment. • Amendment to MFRS 7 “Financial instruments: Disclosures” (effective from 1 January 2013) requires more extensive disclosures focusing on quantitative information about recognised financial instruments that are offset in the balance sheet and those that are subject to master netting or similar arrangements irrespective of whether they are offset. • Amendment to MFRS 132 “Financial instruments: Presentation” (effective from 1 January 2014) does not change the current offsetting model in MFRS 132. It clarifies the meaning of “currently has a legally enforceable right of set-off” that the right of set-off must be available today (not contingent on a future event) and legally enforceable for all counterparties in the normal course of business. It clarifies that some gross settlement mechanisms with features that are effectively equivalent to net settlement will satisfy the MFRS 132 offsetting criteria. The above standards, amendments to published standards and interpretations are not anticipated to have any significant impact on the financial statements of the Group and of the Company in the year of initial application other than IC Interpretation 15 “Agreements for Construction of Real Estates”. The Group is in the process of assessing the impact of IC Interpretation 15 “Agreements for Construction of Real Estates” on its financial statements.
2 ECONOMIC ENTITIES IN THE GROUP (a) Subsidiaries Subsidiaries are those corporations, partnerships or other entities (including special purpose entities) in which the Group has power to exercise control over the financial and operating policies so as to obtain benefits from their activities, generally accompanying a shareholding of more than one half of the voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group controls another entity. In assessing whether potential voting rights contribute to control, the Group examines all facts and circumstances (including the terms of exercise of the potential voting rights and any other contractual arrangements whether considered individually or in combination) that affect potential voting rights. Subsidiaries are consolidated using the acquisition method of accounting, except for business combinations involving entities or businesses under common control with agreement dates on or after 1 January 2006, which are accounted for using the merger method of accounting. Under the acquisition method of accounting, subsidiaries are fully consolidated from the date on which control is transferred to the Group and are de-consolidated from the date that control ceases. The cost of an acquisition is measured as the fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange. The cost of acquisition includes the fair value of any asset or liability resulting from a contingent consideration arrangement. The costs directly attributable to the acquisition are expensed as incurred. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the date of acquisition. The excess of the cost of acquisition and the amount of any non-controlling interest in the acquiree over the fair value of the identifiable net assets acquired at the date of acquisition is reflected as goodwill – See accounting policy 3 on goodwill. If the cost of acquisition is less than the fair value of the identifiable net assets of the subsidiary acquired, the gain is recognised directly in profit or loss. Where more than one exchange transaction is involved, any adjustment to the fair values of the subsidiary’s identifiable assets, liabilities and contingent liabilities relating to previously held interests of the Group is recognised in profit or loss. ANNUAL REPORT 2012 77
2 ECONOMIC ENTITIES IN THE GROUP (continued) (a) Subsidiaries (continued) Non-controlling interest represents that portion of the profit or loss and net assets of a subsidiary attributable to equity interests that are not owned, directly or indirectly through subsidiaries, by the Company. It is measured at the non-controlling interests’ share of the fair value of the subsidiaries’ identifiable assets and liabilities at the date of acquisition and the non-controlling interests’ share of changes inthe subsidiaries’ equity since that date. All earnings and losses of the subsidiary are attributed to the owners of the company and the non-controlling interests, even if the attribution of losses to the non-controlling interests results in a debit balance in the total equity. Profit or loss attributable to non-controlling interests for prior years is not restated. Under the merger method of accounting, the results of subsidiaries are presented as if the merger had been effected throughout the current and previous years. The assets and liabilities combined are accounted for based on the carrying amounts from the perspective of the common control shareholder at the date of transfer. On consolidation, the cost of the merger is cancelled with the values of the shares received. Any resulting credit difference is classified as equity and regarded as a reserve. Any resulting debit difference is adjusted against reserve. Any share premium, capital redemption reserve and any other reserves which are attributable to share capital of the merged enterprises, to the extent that they have not been capitalised by a debit difference, are reclassified and presented as movement in other reserves. All inter-company transactions, balances and unrealised gains on transactions between group companies are eliminated except for contracted finished goods which are stated at net realisable value. Unrealised losses are also eliminated but considered an impairment indicator of the asset transferred. Where necessary, adjustments are made to the financial statements of subsidiaries to ensure consistency of accounting policies with those of the Group. The gain or loss on disposal of a subsidiary, which is the difference between net disposal proceeds and the Group’s share of its net assets as of the date of disposal, including the cumulative amount of any exchange differences that relate to the subsidiary, is recognised in profit or loss attributable to the owners of the Company. (b) Transactions with non-controlling interests The Group applies a policy of treating transactions with non-controlling interests as transactions with equity owners of the Group. For purchases from non-controlling interests, the difference between any consideration paid and the relevant share of the carrying value of net assets of the subsidiary acquired is deducted from equity. Gains or losses on disposals to non-controlling interests are also recorded in equity. For disposals to non-controlling interests, differences between any proceeds received and the relevant share of non-controlling interests are also recognised in equity. (c) Associates Associates are those corporations, partnerships or other entities in which the Group exercises significant influence, but which it does not control, generally accompanying a shareholding of between 20% and 50% of the voting rights. Significant influence is the power to participate in the financial and operating policy decisions of the associates but not the power to exercise control over those policies. Investments in associates are accounted for using the equity method of accounting and are initially recognised at cost. The Group’s investment in associate includes goodwill identified on acquisition, net of any accumulated impairment. The Group’s share of its associates’ post-acquisition profits or losses is recognised in profit or loss, and its share of post-acquisition movements in reserves is recognised in other comprehensive income. The cumulative post-acquisition movements are adjusted against the carrying amount of the investment. When the Group’s share of losses in an associate equals or exceeds its interest in the associate, including any other long term unsecured receivables, the Group’s interest is reduced to nil and recognition of further losses is discontinued except to the extent that the Group has incurred legal or constructive obligations or made payments on behalf of the associate. If the associate subsequently reports profits, the Group resumes recognising its share of those profits only after its share of the profits equals the share of losses not recognised. 78 IJM Land Berhad (187405-T)
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) for the financial year ended 31 March 2012
2 ECONOMIC ENTITIES IN THE GROUP (continued) (c) Associates (continued) Unrealised gains on transactions between the Group and its associates are eliminated to the extent of the Group’s interest in the associates; unrealised losses are also eliminated unless the transaction provides evidence on impairment of the asset transferred. Where necessary, in applying the equity method, adjustments are made to the financial statements of associates to ensure consistency of accounting policies with those of the Group. Dilution gains and losses in associates are recognised in profit or loss. For incremental interest in an associate, the date of acquisition is the purchase date at each stage and goodwill is calculated at each purchase date based on the fair value of assets and liabilities identified. There is no “step up to fair value” of net assets of the previously acquired stake and the share of profits and equity movements for the previously acquired stake is recorded directly through equity. (d) Jointly controlled entities Jointly controlled entities are corporations, partnerships, or other entities over which there is contractually agreed sharing of control by the Group with one or more parties where the strategic financial and operating decisions relating to the entities require unanimous consent of the parties sharing control. The Group’s interest in jointly controlled entities is accounted for in the consolidated financial statements using the equity method of accounting. Equity accounting involves recognising the Group’s share of the post-acquisition results of jointly controlled entities in profit or loss and its share of post-acquisition movements of reserves in other comprehensive income. The cumulative post-acquisition movements are adjusted against the cost of the investment and include goodwill on acquisition (net of accumulated impairment). Unrealised gains on transactions between the Group and its jointly controlled entities are eliminated to the extent of the Group’s interest in the jointly controlled entities; unrealised losses are also eliminated unless the transaction provides evidence on impairment of the assets transferred. The Group recognises the portion of gains or losses on the sale of assets by the Group to the joint venture that is attributable to the other venturers. The Group does not recognise its share of profits or losses from the joint venture that result from the purchase of assets by the Group from the joint venture until it resells the assets to an independent party. However, a loss on the transaction is recognised immediately if the loss provides evidence of a reduction in the net realisable value of current assets or an impairment. Where necessary, adjustments are made to the financial statements of jointly controlled entities to ensure consistency of accounting policies with the Group. (e) Jointly controlled operations A jointly controlled operation is a contractual agreement whereby the Group and other parties have joint control over an economic activity. In respect of its interest in jointly controlled operations, the Group recognises in its financial statements the assets that it controls and the liabilities that it incurs as well as the expenses that it incurs and its share of the income and expenses that it earns from the sales of goods or services by the joint venture.
3 GOODWILL Goodwill represents the excess of the cost of acquisition of subsidiaries, jointly controlled entities and associates over the fair value of the Group’s share of the identifiable net assets at the date of acquisition. Goodwill on acquisition of subsidiaries is included in the balance sheet as intangible assets. Goodwill is tested annually for impairment and carried at cost less accumulated impairment. Impairment of goodwill are not reversed. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold. Goodwill is allocated to cash-generating units for the purpose of impairment testing. The allocation is made to those cash-generating units or groups of cash-generating units that are expected to benefit from the synergies of the business combination in which the goodwill arose. The Group allocates goodwill to each business segment in each country in which it operates. See accounting policy 22 on impairment of non-financial assets. Goodwill on acquisitions of jointly controlled entities and associates is included in investments in jointly controlled entities and associates respectively. Such goodwill is tested for impairment as part of the overall balance. ANNUAL REPORT 2012 79
4 INVESTMENTS Investments in subsidiaries, jointly controlled entities and associates are shown at cost less accumulated impairment. Where an indication of impairment exists, the carrying amount of the investment is assessed and written down immediately to its recoverable amount. See accounting policy 22 on impairment of non-financial assets. Long term investments are classified as available-for-sale financial assets. These are initially measured at fair value plus transaction costs and subsequently, at fair value except for investment in equity instruments that do not have a quoted market price in an active market and whose fair value cannot be reliably measured. These are measured at cost and are included in non-current assets unless management intends to dispose of the investment within 12 months of the reporting date. Changes in fair values of available-for-sale equity securities are recognised in other comprehensive income. A significant or prolonged decline in the fair value of the investment below its cost is considered as an indicator that the asset is impaired. See accounting policy 19(d)(ii) on impairment of available-for-sale financial assets. Short term investments in marketable securities are classified as financial assets at fair value through profit or loss and measured at fair value on the date a transaction is entered into and are subsequently re-measured at fair value with changes in fair value recognised in profit or loss. Market value is calculated by reference to stock exchange quoted selling prices at the close of business on the balance sheet date. On disposal of an investment, the difference between net disposal proceeds and its fair value is recognised in profit or loss.
5 FOREIGN CURRENCIES (a) Functional and presentation currency Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic environment in which the entity operates (the “functional currency”). The financial statements are presented in Ringgit Malaysia, which is the Company’s functional and presentation currency. (b) Transactions and balances Foreign currency transactions are translated into the functional currency using the exchange rates prevailing on the transaction dates. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss. (c) Group companies The results and financial position of all the group entities (none of which has the currency of a hyperinflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows: • Assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that balance sheet; • Income and expenses for each statement of comprehensive income presented are translated at the average exchange rates (unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the rate on the dates of the transactions); and • All resulting exchange differences are recognised as a separate component of other comprehensive income. On consolidation, exchange differences arising from the translation of the net investment in foreign operations are taken to other comprehensive income. When a foreign operation is partially disposed of or sold, a proportionate share of such exchange differences is reclassified to profit or loss as part of the gain or loss on disposal. Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and are translated at the closing rate at the date of the balance sheet. 80 IJM Land Berhad (187405-T)
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) for the financial year ended 31 March 2012
6 PROPERTY, PLANT AND EQUIPMENT AND DEPRECIATION All property, plant and equipment are stated at cost or at valuation less accumulated depreciation and accumulated impairment except for freehold land and capital work-in-progress which are not depreciated. Freehold land is not depreciated as it has an infinite life. Depreciation on capital work-in-progress commences when the assets are ready for their intended use. Cost includes expenditure that is directly attributable to the acquisition of the asset. Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognised. All other repairs and maintenance are recognised in profit or loss during the financial period in which they are incurred. Hotel properties comprise of leasehold land, hotel buildings and related fixed plant and equipment. Hotel properties are revalued periodically by independent professional valuers at an interval of not exceeding 5 years with additional revaluations in the intervening years where market conditions indicate that the carrying values of the revalued properties materially differ from the market values. Leasehold land classified as finance lease is amortised in equal instalments over the period of the respective leases that range from 30 to 99 years. Other property, plant and equipment are depreciated on a straight-line basis to write-off the cost of the assets, or their revalued amounts, to their residual values over their estimated useful lives. The annual rates of depreciation are: Hotel properties - Buildings 35 years - Plant and equipment 10 years Freehold buildings, leasehold buildings and apartments 2% Office equipment, furniture and fittings 5 to 33.3% Bowling, games and hotel operating equipment 5 to 10% Computers 15 to 33.3% Motor vehicles 20% Renovations and partition 10% When an asset’s carrying amount is increased as a result of a revaluation, the increase is recognised in other comprehensive income as a revaluation surplus reserve. When the asset’s carrying amount is decreased as a result of a revaluation, the decrease is recognised in other comprehensive income to the extent of any credit balance existing in the revaluation surplus reserve of that asset; all other decreases are recognised in profit or loss. The residual values and useful lives of property, plant and equipment are reviewed, and adjusted as appropriate, at each balance sheet date. The effects of any revision of the residual values and useful lives are included in profit or loss for the financial year in which the changes arise. At each balance sheet date, the Group assesses whether there is any indication of impairment. Where an indication of impairment exists, the carrying value of the asset is assessed and written down immediately to its recoverable amount. See accounting policy 22 on impairment of non-financial assets. Gains and losses on disposals are determined by comparing proceeds with carrying amounts and are included in profit or loss. On disposal of revalued assets, amounts in the revaluation reserve relating to those assets are transferred to retained earnings. Where applicable, the fair value of property, plant and equipment at the date of acquisition of subsidiaries is carried forward in place of cost. ANNUAL REPORT 2012 81
7 INVESTMENT PROPERTIES Investment properties comprise principally land and buildings held for long term rental yields or for capital appreciation or both, and are not occupied by the Group. Investment properties are stated at cost less accumulated depreciation and accumulated impairment. Freehold land is not depreciated as it has an infinite life. Depreciation on buildings is calculated so as to write off the cost of the assets less residual values on a straight-line basis over the expected useful lives. The annual depreciation rate for buildings is 2%. On disposal of an investment property, or when it is permanently withdrawn from use and no future economic benefits are expected from its disposal, it shall be derecognised. The difference between the net disposal proceeds and the carrying amount is recognised in profit or loss in the period of the retirement or disposal.
8 REVENUE AND PROFIT RECOGNITION Revenue comprises the fair value of the consideration received or receivable for the sale of goods and services in the ordinary course of the Group’s activities. Revenue is shown net of sales taxes and discounts and after eliminating sales within the Group. The Group recognises revenue when the amount of revenue can be reliably measured, it is probable that future economic benefits will flow to the entity and specific criteria have been met for each of the Group’s activities as described below. The amount of revenue is not considered to be reliably measurable until all contingencies relating to the sale have been resolved. The Group bases its estimates on historical results, taking into consideration the type of customer, the type of transaction and the specifics of each arrangement. (a) Construction contracts A construction contract is a contract specifically negotiated for the construction of an asset or a combination of assets that are closely interrelated or interdependent in terms of their design, technology and functions or their ultimate purpose or use. When the outcome of a construction contract can be estimated reliably, contract revenue and contract costs are recognised as revenue and expenses respectively by reference to the stage of completion of the contract activity at the balance sheet date. The stage of completion of a construction contract is determined based on the proportion that the contract costs incurred for work performed to-date bear to the estimated total costs for the contract. Costs incurred during the financial year in connection with future activity on a contract are excluded from costs incurred to-date when determining the stage of completion of a contract. Such costs are shown as amounts due from/(to) customers on construction contracts within trade and other receivables on the balance sheet unless it is not probable that such contract costs are recoverable from the customers, in which case such costs are recognised as an expense immediately. When the outcome of a construction contract cannot be estimated reliably, contract revenue is recognised to the extent of contract costs incurred that are likely to be recoverable. When it is probable that total contract costs will exceed total contract revenue, the expected loss is recognised as an expense immediately. Contract revenue comprises the initial amount of revenue agreed in the contract and variations in the contract work and claims that can be measured reliably. A variation or a claim is only included in contract revenue when it is probable that the customer will approve the variation or negotiations have reached an advanced stage such that it is probable that the customer will accept the claim. 82 IJM Land Berhad (187405-T)
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) for the financial year ended 31 March 2012
8 REVENUE AND PROFIT RECOGNITION (continued) (b) Property development activities When the outcome of the development activity can be estimated reliably and the sale of the development unit is effected, property development revenue and costs are recognised as revenue and expenses respectively by reference to the stage of completion of development activity at the balance sheet date. The stage of completion is determined based on the proportion that the property development costs incurred to-date bear to the estimated total costs for the property development. When the outcome of a development activity cannot be estimated reliably, property development revenue is recognised only to the extent of property development costs incurred that is probable will be recoverable and the property development costs on the development units sold are recognised when incurred. Where it is probable that total property development costs will exceed total property development revenue, the expected loss is recognised as an expense in the period in which the loss is identified. (c) Sale of goods Sales are recognised upon delivery of products and customer acceptance, and performance of after-sales services, if any, net of sales taxes and discounts and after eliminating sales within the Group. (d) Hotel operations revenue Hotel revenue represents income derived from room rental, sales of food and beverage and other hotel related income. Room rental income is recognised on an accrual basis. Sales of food and beverage are recognised upon delivery to customers. Hotel revenue is recognised net of sales tax and discounts. (e) Other revenue Dividend income is recognised when the shareholder’s right to receive payment is established. Interest income is recognised on a time proportion basis, taking into account the principal outstanding and the effective rate over the period to maturity, unless collectability is in doubt, in which case it is recognised on a cash receipt basis. Late payment charges are recognised in the profit or loss on a cash receipt basis. Payments made by defaulted purchasers of development properties are forfeited and recognised as forfeiture income in the profit or loss when the terms and conditions in respect of the right of forfeiture as stipulated in the sale and purchase agreements signed with the purchasers are fulfilled. Rental income is recognised on an accrual basis unless collectability is in doubt, in which case the recognition of such income is suspended. Revenue from management services is recognised upon performance of services.
9 BORROWINGS AND BORROWING COSTS Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently carried at amortised cost; any difference between initial recognised amount and the redemption value is recognised in profit or loss over the period of the borrowings using the effective interest method, except for borrowing costs incurred for the construction of any qualifying assets. Borrowing costs incurred on borrowings directly associated with property development activities and construction contracts up to completion is capitalised and included as part of property development costs and construction contract costs. Borrowing costs to finance a township development commences when activities necessary to prepare the development land for its intended use commences and includes activities associated with obtaining approvals prior to commencement of physical development. Capitalisation of borrowing costs in relation to each individual development phase shall cease upon the completion of the respective development phase. Borrowing costs incurred on borrowings to finance the construction of property, plant and equipment during the period that is required to complete and prepare the asset for its intended use are capitalised as part of the cost of the asset. All other borrowing costs are charged to profit or loss. ANNUAL REPORT 2012 83
10 LAND HELD FOR PROPERTY DEVELOPMENT AND PROPERTY DEVELOPMENT COSTS Land held for property development consists of land held for future development where no significant development has been undertaken or where development activities are not expected to be completed within the normal operating cycle. Such land is classified as non-current asset and is stated at cost or at valuation less accumulated impairment. Land held for property development is transferred to property development costs (under current assets) when development activities have commenced and the development is expected to be completed within the normal operating cycle. Costs associated with the acquisition of land include the purchase price of the land, professional fees, stamp duties, commissions, conversion fees and other relevant levies. Where the Group had previously recorded the land at revalued amount, it continues to retain this amount as its deemed
cost as allowed by FRS 2012004 on “Property Development Activities”. When an indication of impairment exists, the carrying amount of the asset is assessed and written down immediately to its recoverable amount. See accounting policy 22 on impairment of non-financial assets. Property development costs comprise costs associated with the acquisition of land and all costs directly attributable to development activities or that can be allocated on a reasonable basis to these activities. Property development costs not recognised as an expense is recognised as an asset and is stated at the lower of cost and net realisable value. Cost includes cost of land, all direct building costs and other related development expenditure, including interest expenses incurred during the period of active development. Where revenue recognised in profit or loss exceeds billings to purchasers, the balance is shown as accrued billings under trade and other receivables (within current assets). Where billings to purchasers exceed revenue recognised in profit or loss, the balance is shown as progress billings under trade and other payables (within current liabilities). Where applicable, the fair value of land at the date of acquisition of subsidiaries is carried forward in place of cost.
11 INVENTORIES (a) Completed buildings, vacant industrial and bungalow lots Units of completed development properties, vacant industrial and bungalow lots held for sale are stated at the lower of cost and net realisable value. The cost comprises proportionate cost of land and related development and construction expenditure. Where applicable, the fair value of completed buildings at the date of acquisition of subsidiaries is carried forward in place of cost. Net realisable value is the estimated selling price in the ordinary course of business, less the costs of completion and applicable variable selling expenses. (b) Finished goods and construction materials Saleable merchandise and operating supplies are stated at the lower of cost and net realisable value. Cost is determined on a weighted average basis. The cost comprises the original cost of purchase plus the cost of bringing the inventories to their present location and condition. Net realisable value is the estimated selling price in the ordinary course of business, less the costs of completion and applicable variable selling expenses.
12 AMOUNTS DUE FROM/(TO) CUSTOMERS ON CONSTRUCTION CONTRACTS Where the amounts of construction contract costs incurred plus recognised profits (less recognised losses) exceed progress billings, the net balance is shown as amounts due from customers on construction contracts under trade and other receivables. Where the progress billings exceed the amounts of construction contract costs incurred plus recognised profits (less recognised losses), the net balance is shown as amounts due to customers on construction contracts under trade and other payables. 84 IJM Land Berhad (187405-T)
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) for the financial year ended 31 March 2012
13 TRADE RECEIVABLES Trade receivables are amounts due from customers for goods sold or services performed in the ordinary course of business. If collection is expected in one year or less (or in the normal operating cycle of the business, if longer), they are classified as current assets. If not, they are presented as non-current assets. Trade receivables are initially recognised at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment. See accounting policy 19(d) on impairment of financial assets.
14 LEASES A lease is an agreement whereby the lessor conveys to the lessee in return for a payment, or series of payments, the right to use an asset for an agreed period of time. (a) Accounting as lessee Finance leases Leases of property, plant and equipment where the Group assumes substantially all the risks and rewards of ownership are classified as finance leases. Finance leases are capitalised at the lower of the fair value of the leased assets and the estimated present value of the underlying lease payments at the date of inception. Each lease payment is allocated between the liability and finance charges so as to achieve a periodic constant rate of interest on the lease principal outstanding. The corresponding rental obligations, net of finance charges, are included in borrowings. The interest element of the finance charge is charged to profit or loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. Property, plant and equipment acquired under finance lease contracts is depreciated over the useful life of the asset. If there is no reasonable certainty that the ownership will be transferred to the Group, the asset is depreciated over the shorter of the lease term and its useful life. Operating leases Leases of assets where a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases are charged to profit or loss over the lease period. (b) Accounting as lessor Finance leases Leases of assets where the lessee assumes substantially all the risks and rewards of ownership are classified as finance leases. When assets are leased out under a finance lease, the present value of the lease payments is recognised as a receivable. The difference between the gross receivable and the present value of the receivable is recognised as unearned finance income. Lease income is recognised over the term of the lease using the net investment method so as to reflect a constant periodic rate of interest on the balance outstanding. Operating leases Assets leased out under operating leases are included in property, plant and equipment or investment properties, where applicable, in the balance sheet. They are depreciated over their useful lives on bases consistent with similar owned property, plant and equipment or investment properties, where applicable. Rental income (net of any incentives given to lessees) is recognised on a straight-line basis over the lease term. ANNUAL REPORT 2012 85
15 INCOME TAXES The income tax expense for the period comprises current tax and deferred tax. Tax is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in equity, respectively. Current tax expense is determined according to the tax laws of each jurisdiction in which the Group operates and includes all taxes based upon the taxable profits, including withholding taxes payable by a foreign branch on distributions of retained earnings to companies in the Group. Deferred tax is recognised in full, using the liability method, on temporary differences at the balance sheet date between the tax bases of assets and liabilities and their carrying amounts in the financial statements. Deferred tax liabilities are recognised for all taxable temporary differences and deferred tax assets are recognised for all deductible temporary differences to the extent that it is probable that taxable profits will be available against which the deductible temporary differences or unused tax losses can be utilised. Deferred tax is not recognised if the temporary difference arises from goodwill or from the initial recognition of an asset or liability in a transaction which is not a business combination and, at the time of the transaction, affects neither accounting profit nor taxable profit. Deferred tax is recognised on temporary differences arising on investments in subsidiaries, associates and jointly controlled entities, except where the timing of the reversal of the temporary difference can be controlled and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax is measured at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled, based on tax rates that have been enacted or substantively enacted at the balance sheet date. Deferred tax is recognised in profit or loss, except when it arises from a transaction which is recognised directly in equity or other comprehensive income, in which case the deferred tax is also charged or credited directly to equity or other comprehensive income, or when it arises from a business combination that is an acquisition, in which case the deferred tax is included in the resulting goodwill. Deferred tax assets and liabilities are offset when the enterprise has a legally enforceable right to offset and intends to settle either on a net basis or to realise the asset and settle the liability simultaneously.
16 EMPLOYEE BENEFITS (a) Short term employee benefits The Group recognises a liability and an expense for bonuses based on a formula that takes into consideration the profit attributable to the owners of the Company after certain adjustments. The Group recognises a provision where there is a contractual obligation or where there is a past practice that has created a constructive obligation. Wages, salaries, bonuses and non-monetary benefits are accrued in the period in which the associated services are rendered by employees of the Group. (b) Post-employment benefits The Group has post-employment benefit schemes in accordance with local conditions and practices in the countries in which it operates. These benefit plans are defined contribution plans. A defined contribution plan is a pension plan under which the Group pays fixed contributions into a separate entity (a fund) and will have no legal or constructive obligations to pay further contributions if the fund does not hold sufficient assets to pay all employee benefits relating to employee service in the current and prior periods. The Group’s contributions to defined contribution plan are charged to profit or loss in the period to which they relate. Once the contributions have been paid, the Group has no further payment obligations. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in the future payments is available. As required by law, companies in Malaysia make contributions to the national pension scheme, the Employees Provident Fund (“EPF”), a defined contribution plan. 86 IJM Land Berhad (187405-T)
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) for the financial year ended 31 March 2012
17 CASH AND CASH EQUIVALENTS Cash and cash equivalents comprise cash in hand, deposits held at call with banks, other short term, highly liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are included within borrowings in current liabilities on the balance sheet.
18 SHARE CAPITAL (a) Classification Ordinary shares are classified as equity. Other shares are classified as equity or liability according to the economic substance of the particular instrument. (b) Share issue costs External costs directly attributable to the issue of new shares are shown as a deduction from the share premium account. In other cases, they are charged to the profit or loss when incurred. (c) Dividends Interim dividends on ordinary shares are recognised as liabilities when declared. Proposed final dividends are accrued as liabilities only after approval by shareholders. (d) Warrants reserve Proceeds from the issuance of warrants, net of issue costs, are credited to warrants reserve which is non-distributable. Warrants reserve is transferred to the share premium account upon the exercise of warrants and the warrants reserve in relation to unexercised warrants at the expiry of the warrants period will be transferred to retained profits. (e) Purchase of own shares Where the Company purchases the Company’s equity share capital, the consideration paid, including any directly attributable incremental external costs, net of tax, is deducted from capital and reserves attributable to owners of the Company as treasury shares until they are cancelled, reissued or disposed of. Where such shares are sold, the difference between the sales consideration and the carrying amount of the treasury shares are shown as a movement in equity. Where the consideration received is more than the carrying amount, the credit difference arising is taken to the share premium account. Where the consideration received is less than the carrying amount, the debit difference is offset against reserves. Where such shares are cancelled, the issued share capital is reduced by the nominal value of the cancelled shares. The amount by which the Company’s issued share capital is diminished on cancellation of shares is transferred to a capital redemption reserve account.
19 FINANCIAL INSTRUMENTS Financial instruments are contracts that give rise to both a financial asset of one enterprise and a financial liability or equity instrument of another enterprise. A financial asset is any asset that is cash, a contractual right to receive cash or another financial asset from another enterprise, a contractual right to exchange financial instruments with another enterprise under conditions that are potentially favourable, or an equity instrument of another enterprise. A financial liability is any liability that is a contractual obligation to deliver cash or another financial asset to another enterprise, or to exchange financial instruments with another enterprise under conditions that are potentially unfavourable. ANNUAL REPORT 2012 87
19 FINANCIAL INSTRUMENTS (continued) (a) Classification The Group classifies its financial assets in the following categories: loans and receivables and available-for-sale. The classification depends on the nature of the asset and the purpose for which the financial assets were acquired. Management determines the classification at initial recognition. (i) Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are presented as current assets, except for those expected to be realised later than 12 months after the balance sheet date which are presented as non-current assets. The Group’s loans and receivables comprise “amounts due from jointly controlled entities”, “long term receivables”, “trade and other receivables (other than amounts due from customers on construction contracts, accrued billings in respect of property development and prepayments)” and “deposits, cash and bank balances” in the balance sheet (Notes 25,27,32 and 33). (ii) Available-for-sale Available-for-sale financial assets are non-derivative financial assets that are either designated in this category or not classified in any of the other categories. They are presented as non-current assets unless management intends to dispose of the assets within 12 months after the balance sheet date. Investment in unquoted equity instruments which are classified as available-for-sale and whose fair value cannot be reliably measured are measured at cost. These investments are assessed for impairment at each reporting date. (b) Recognition and initial measurement Regular purchases and sales of financial assets are recognised on the trade-date, the date on which the Group commits to purchase or sell the asset. Financial assets are initially recognised at fair value plus transaction costs. (c) Subsequent measurement – gains and losses Available-for-sale financial assets are subsequently carried at fair value. Loans and receivables are subsequently carried at amortised cost using the effective interest method. Changes in the fair value of available-for-sale financial assets are recognised in other comprehensive income, except for impairment (see accounting policy 19(d)(ii) on impairment of available-for-sale financial assets) and foreign exchange gains and losses on monetary assets. The exchange differences on monetary assets are recognised in profit or loss, whereas exchange differences on non-monetary assets are recognised in other comprehensive income as part of fair value change. Interest and dividend income on available-for-sale financial assets are recognised separately in profit or loss. Dividend income on available- for-sale equity instruments are recognised in profit or loss when the Group’s right to receive payments is established. (d) Subsequent measurement – impairment of financial assets The Group assesses at each balance sheet date whether there is objective evidence that a financial asset or group of financial assets is impaired and recognises an allowance for impairment when such evidence exists. A financial asset or a group of financial assets is impaired and impairment is incurred only if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset (a “loss event”) and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated. If any such evidence exists, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset’s original effective interest rate. The asset’s carrying amount is reduced and the amount of the loss is recognised in profit or loss. The carrying amount of the financial assets is reduced by the impairment directly for all financial assets with the exception of trade receivables, where the carrying amount is reduced through the use of an allowance account. When a trade receivable becomes uncollectible, it is written off against the allowance account. 88 IJM Land Berhad (187405-T)
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) for the financial year ended 31 March 2012
19 FINANCIAL INSTRUMENTS (continued) (d) Subsequent measurement – impairment of financial assets (continued) In a subsequent period, if the amount of the impairment decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment is reversed to the extent that the carrying amount of the asset does not exceed its amortised cost at the reversal date. The amount of reversal is recognised in profit or loss. (i) Loans and receivables Significant financial difficulties of the debtor, probability that the debtor will enter into bankruptcy, and default or significant delay in payments are objective evidence that these financial assets are impaired. When a receivable is uncollectible, it is written off against the related allowance account. Such receivables are written off after all the necessary procedures have been completed and the amount of the loss has been determined. If “loans and receivables” has a variable interest rate, the discount rate for measuring any impairment is the current effective interest rate determined under the contract. As a practical expedient, the Group may measure impairment on the basis of an instrument’s fair value using an observable market price. If, in a subsequent period, the amount of the impairment decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the reversal of the previously recognised impairment is recognised in profit or loss. (ii) Available-for-sale financial assets In addition to the objective evidence of impairment described in accounting policy 19(d)(i) above, a significant or prolonged decline in the fair value of the equity investment below its cost is considered as an indicator that the asset is impaired. If any such evidence exists, the cumulative loss that had been recognised directly in equity is removed from equity and recognised in profit or loss. The amount of cumulative loss that is reclassified to profit or loss is the difference between the acquisition cost and the current fair value, less any impairment of that financial asset previously recognised in profit or loss. Impairment recognised in profit or loss on equity investment classified as available-for-sale is not reversed through profit or loss. (e) Derecognition Financial assets are derecognised when the rights to receive cash flows from the investments have expired or have been transferred and the Group has transferred substantially all risks and rewards of ownership. When available-for-sale financial assets are sold, the accumulated fair value adjustments recognised in other comprehensive income are reclassified to profit or loss. (f) Financial liabilities The Group classifies its financial liabilities as other financial liabilities. The classification depends on the nature of the liabilities and the purpose for which the financial liabilities were incurred. Management determines the classification at initial recognition. Other financial liabilities Other financial liabilities of the Group comprise “RCULS”, “borrowings” and “trade and other payables (other than provisions, amounts due to customers on construction contracts and progress billings in respect of property development)” (Notes 17,18, 19 and 34). When other financial liabilities are recognised initially, they are measured at fair value plus directly attributable transaction costs. Subsequent to initial recognition, other financial liabilities are measured at amortised cost using the effective interest method. Gains and losses are recognised in statement of comprehensive income when the other financial liabilities are derecognised, and through the amortisation process. Financial liabilities are derecognised when the obligation specified in the contract is discharged, cancelled or expired. ANNUAL REPORT 2012 89
19 FINANCIAL INSTRUMENTS (continued) (g) Fair value estimation for disclosure purposes The fair value of publicly traded securities is based on quoted market prices at the balance sheet date. In assessing the fair value of the financial instruments, the Group uses a variety of methods and makes assumptions that are based on market conditions existing at each balance sheet date. Quoted market prices or dealer quotes for the specific or similar instruments are used for long term debt. Other techniques and bases, such as discounted value of future cash flows and the underlying net asset base of the instrument, are used to determine fair value for the remaining financial instruments. In particular, the fair value of financial liabilities is estimated by discounting the future contractual cash flows at the current market interest rate available to the Group for similar financial instruments. The carrying values of financial assets and financial liabilities with a maturity period of less than one year are assumed to approximate their fair values. (h) Offsetting financial instruments Financial assets and liabilities are offset and the net amount is presented on the balance sheet when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis, or realise the asset and settle the liability simultaneously.
20 TRADE AND OTHER PAYABLES Trade and other payables are initially recognised at fair value and subsequently measured at amortised cost using the effective interest method. Trade and other payables are classified as current liabilities if payment is due within one year (or in the normal operating cycle of the business if longer). If not, they are presented as non-current liabilities.
21 GOVERNMENT GRANTS The Group treats the benefit of a government loan at a below-market rate of interest as a government grant. The loan shall be recognised and measured initially at its fair value. The benefit of the below-market rate of interest is measured as the difference between the initial carrying value of the loan and the proceeds received, and is recognised as a government grant, which will be credited to the statement of comprehensive income over the expected lives of the related assets on bases consistent with the depreciation of the related assets for which the loan was granted to the Group.
22 IMPAIRMENT OF NON-FINANCIAL ASSETS Assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment. Assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying value may not be recoverable. An impairment is recognised for the amount by which the carrying value of the asset exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value-in-use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). Non-financial assets, other than goodwill, that suffered an impairment are reviewed for possible reversal of the impairment at each reporting date. The impairment is charged to profit or loss unless it reverses a previous revaluation, in which case it is charged to the revaluation surplus. Impairment of goodwill is not reversed. In respect of other assets, any subsequent increase in recoverable amount is recognised in profit or loss unless it reverses an impairment of a revalued asset, in which case it is taken to revaluation surplus reserve. 90 IJM Land Berhad (187405-T)
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) for the financial year ended 31 March 2012
23 PROVISION Provisions are recognised when: • the Group has a present legal or constructive obligation as a result of past events; • it is probable that an outflow of resources will be required to settle the obligation; and • a reliable estimate of the amount can be made. Provisions are measured at the present value of the expenditures expected to be required to settle the obligation using a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the obligation. The increase in the provision due to passage of time is recognised as finance cost.
24 SEGMENTAL INFORMATION Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision-maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Chief Executive Officer (“CEO”) of the Group that makes strategic decisions.
25 CONTINGENT LIABILITIES The Group does not recognise a contingent liability but discloses its existence in the financial statements. A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the Group or a present obligation that is not recognised because it is not probable that an outflow of resources will be required to settle the obligation. A contingent liability also arises in the extremely rare circumstance where there is a liability that cannot be recognised because it cannot be measured reliably. Contingent liabilities do not include financial guarantee contracts. In the acquisition of subsidiaries by the Group under a business combination, the contingent liabilities assumed are measured initially at their fair values at the acquisition date, irrespective of the extent of any non-controlling interests. The Group recognises separately the contingent liabilities of the acquiree as part of allocating the cost of a business combination where their fair values can be measured reliably. Where the fair values cannot be measured reliably, the resulting effect will be reflected in the goodwill arising from the acquisitions and the information about the contingent liabilities acquired is disclosed in the notes to the financial statements. Subsequent to the initial recognition, the Group measures the contingent liabilities that are recognised separately at the date of acquisition at the
higher of the amount that would be recognised in accordance with the provisions of FRS 1372004 “Provisions, Contingent Liabilities and Contingent Assets” and the amount initially recognised less, when appropriate, cumulative amortisation recognised in accordance with
FRS 1182004 “Revenue”.
26 NON-CURRENT ASSETS CLASSIFIED AS ASSETS HELD FOR SALE Non-current assets are classified as assets held for sale, and are stated at the lower of carrying amount and fair value less costs to sell, if their carrying amount is recovered principally through a sale transaction rather than through continuing use and a sale is considered highly probable. ANNUAL REPORT 2012 91
NOTES TO THE FINANCIAL STATEMENTS for the financial year ended 31 March 2012
1 GENERAL INFORMATION The Company is principally engaged in investment holding. The subsidiaries are principally engaged in property development, construction, hotel operations and investment holding. The principal activities of the subsidiaries are disclosed in Note 42 to the financial statements. There have been no significant changes in these principal activities during the financial year. The Company is a public limited liability company, incorporated and domiciled in Malaysia, and is listed on the Main Market of Bursa Malaysia Securities Berhad. The address of the registered office of the Company is 2nd Floor, Wisma IJM, Jalan Yong Shook Lin, 46050 Petaling Jaya, Selangor Darul Ehsan, Malaysia. The principal place of business of the Company is located at Ground Floor, Wisma IJM, Jalan Yong Shook Lin, 46050 Petaling Jaya, Selangor Darul Ehsan, Malaysia. The ultimate holding company is IJM Corporation Berhad, a public limited liability company incorporated in Malaysia and listed on the Main Market of Bursa Malaysia Securities Berhad. The financial statements have been approved for issue in accordance with a resolution of the Board of Directors on 29 May 2012.
2 CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS Estimates and judgements are continually evaluated by the Directors and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, rarely equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are outlined below. (a) Income taxes The Group is subject to income taxes in numerous jurisdictions. Due to the complexity of transactions entered into by the Group, significant judgement is required in determining the capital allowances, deductibility of certain expenses and the chargeability of certain income during the estimation of the provision for income taxes. In determining the tax treatment, the Directors have relied upon industry practice and experts opinion. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the income tax and deferred income tax provisions in the period in which such determination is made. (b) Deferred tax assets Deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available against which the temporary differences can be utilised. This involves judgement regarding the future financial performance of the particular entity in which the deferred tax asset has been recognised. (c) Property development The Group recognises property development profits by reference to the stage of completion of the development activity at the balance sheet date. The stage of completion is determined based on the proportion that the property development costs incurred to-date bear to the estimated total costs for the property development. Where it is probable that total property development costs of a development phase will exceed total property development revenue of the development phase, the expected loss on the development phase is recognised as an expense immediately. Significant judgement is required in the estimation of total property development costs. Where the actual total property development costs is different from the estimated total property development costs, such difference will impact the property development profits/(losses) recognised. 92 IJM Land Berhad (187405-T)
NOTES TO THE FINANCIAL STATEMENTS (continued) for the financial year ended 31 March 2012
2 CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS (continued) (d) Allowance for impairment of receivables The Group recognises an allowance for impairment of receivables when there is objective evidence that the Group will not be able to collect all amounts due according to the original terms of receivables. Significant judgement is required in the assessment of the recoverability of receivables. The methodology and assumptions used for estimating both the amount and timing of future cash flows and discount rates are reviewed regularly to reduce any differences between the estimated loss and actual loss experienced. To the extent that actual recoveries deviate from management’s estimates, such variances may have a material impact on the profit or loss. Based on management’s assessment, management believes that the current level of allowance for impairment of receivables is adequate. In addition, management is also rigorously monitoring the recoverability of these receivables. (e) Impairment of assets The Group determines whether an asset is impaired by evaluating the extent to which the recoverable amount of an asset is less than its cost. This evaluation is subject to changes such as market performance, economic and political situation of the country. A variety of methods is used to determine the recoverable amount, such as valuation reports and discounted cash flows. For discounted cash flows, significant judgement is required in the estimation of the present value of future cash flows generated by the assets, which involve uncertainties and are significantly affected by assumptions used and judgements made regarding estimates of future cash flows and discount rates. Changes in assumptions could significantly affect the results of the Group’s test for impairment of assets.
3 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES The Group’s activities expose it to market risk (including foreign currency exchange risk, interest rate risk and price risk), credit risk, liquidity risk and capital risk. The Group’s overall financial risk management objective is to minimise any potential adverse effects from the unpredictability of financial markets on the Group’s financial performance in order to ensure the Group creates value for its shareholders. Financial risk management is carried out through risk reviews, internal control systems, insurance programmes and adherence to the Group’s financial risk management policies. Management regularly reviews these risks and approves the treasury policies, which covers the management of these risks. (a) Market risk (i) Currency risk Entities in the Group primarily transact in currencies of their respective functional currencies except for certain borrowings which were denominated in currencies other than their respective functional currencies. Foreign exchange exposures in transactional currencies other than functional currencies of the operating entities are kept to a minimal level. The currency exposure profile of the Group’s and the Company’s financial assets and liabilities is disclosed in the respective notes to the financial statements. Currency risks as defined by FRS 7 arise on account of monetary assets and liabilities being denominated in a currency that is not the functional currency. At 31 March 2012, if Ringgit Malaysia (“RM”) had weakened/strengthened by 3% (2011: 3%) against Singapore Dollar (“SGD”) with all other variables being held constant, the Group’s profit after taxation for the year would have been higher/lower by RM401,318 (2011: RM613,212) mainly as a result of foreign exchange gains/ losses on translation of RM denominated inter-branch borrowings in the entity with SGD functional currency. At 31 March 2012, if Ringgit Malaysia (“RM”) had weakened/strengthened by 2% (2011: 10%) against Vietnam Dong (“VND”) with all other variables being held constant, the Group’s profit after taxation for the year would have been higher/lower by RM624,199 (2011: RM2,162,733) mainly as a result of foreign exchange gains/ losses on translation of RM denominated inter-branch borrowings in the entity with VND functional currency. ANNUAL REPORT 2012 93
3 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (continued) (a) Market risk (continued) (i) Currency risk (continued) The fluctuations of Ringgit Malaysia against Singapore Dollar and Vietnam Dong would not have any impact on the Company’s profit after taxation for the year. This sensitivity analysis ignores any offsetting foreign exchange factors and has been determined assuming that the change in foreign exchange rates had occurred at the balance sheet date. The stated change represents management’s assessment of reasonably possible changes in foreign exchange rates over the period until the next annual balance sheet date. (ii) Cash flow interest rate risk Cash flow interest rate risk is the risk that the future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Group’s interest bearing assets are primarily short-term bank deposits with financial institutions. The interest rates on these deposits are monitored closely to ensure that they are maintained at favourable rates. The Group considers the risk of significant changes to interest rates on deposits to be unlikely. Interest rate exposure arises mainly from the Group’s current and non-current borrowings which are on a variable rate basis and co-related with changes in cost of funds of the lenders (“COF”). If the Group’s current and non-current borrowings, at variable rates on which effective hedges have not been entered into, changes in cost of funds of the lenders by 75 (2011: 75) basis points with all other variables being held constant, the effects on profit after taxation would be as follows: The Group The Company 2012 2011 2012 2011 RM’000 RM’000 RM’000 RM’000 Borrowings based on cost of funds (“COF”): - increase by 75 basis points (2,227) (1,846) (1,609) (1,789) - decrease by 75 basis points 2,227 1,846 1,609 1,789
(b) Credit risk Credit risk refers to the risk that counterparty will default on its contractual obligations resulting in financial loss to the Group. Credit risk arises from deposits, cash and bank balances with financial institutions as well as credit exposures to customers, including outstanding receivables. For trade and other receivables, the Group controls these risks by the application of credit approvals, limits and monitoring procedures. The Group also minimises its exposure through analysing the counterparties’ financial condition prior to entering into any agreements/contracts and obtaining sufficient collateral where appropriate to mitigate credit risk. Trade receivables are monitored on an ongoing basis via Group management reporting procedures. For other financial assets (deposits, cash and bank balances with financial institutions), the Group adopts the policy of dealing only with counterparties of high credibility (i.e. banks and financial institutions). The maximum exposure to credit risk is represented by the carrying amount of each financial asset in the balance sheet after deducting any impairment allowance. See Notes 25, 27 and 32 to the financial statements on further disclosure on credit risk. 94 IJM Land Berhad (187405-T)
NOTES TO THE FINANCIAL STATEMENTS (continued) for the financial year ended 31 March 2012
3 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (continued) (c) Liquidity risk The Group actively manages its debt maturity profile, operating cash flows and the availability of funding (comprises undrawn borrowing facilities and cash and cash equivalents) so as to ensure that all refinancing, repayment and funding needs are met. As part of its overall prudent liquidity management, the Group maintains sufficient levels of cash or cash convertible investments (Note 38) to meet its working capital requirements. In addition, the Group strives to maintain available banking facilities of a reasonable level to its overall debt position. As far as possible, the Group raises committed funding from financial institutions and prudently balances its portfolio with some short term funding so as to achieve overall cost effectiveness. The table below analyses the financial liabilities of the Group and the Company into relevant maturity groupings based on the remaining period from the balance sheet date to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows. Less than Between Over 1 year 1 and 5 years 5 years The Group RM’000 RM’000 RM’000 At 31 March 2012 Borrowings 132,825 316,488 – Land premium payable to the Penang State Government 3,000 6,100 – Refundable membership securities deposit – – 5,926 Finance lease liabilities 1 – – Amount owing to ultimate holding company – 856,564 – Trade and other payables 544,065 106,155 – 679,891 1,285,307 5,926
At 31 March 2011 Borrowings 87,196 262,421 – Land premium payable to the Penang State Government 3,000 9,100 – Refundable membership securities deposit – – 6,021 Finance lease liabilities 3 1 – Amount owing to ultimate holding company 30,000 770,301 – Trade and other payables 633,353 94,068 – 753,552 1,135,891 6,021
Less than Between Over 1 year 1 and 5 years 5 years The Company RM’000 RM’000 RM’000 At 31 March 2012 Borrowings 100,872 221,617 – Trade and other payables 31,495 – – 132,367 221,617 –
At 31 March 2011 Borrowings 76,631 289,399 – Trade and other payables 5,066 – – 81,697 289,399 –
In addition to the above, the Company has financial guarantee contracts in relation to financial guarantees given to the subsidiaries as disclosed in Note 18 B (b) (I, II, IV and V) to the financial statements. ANNUAL REPORT 2012 95
3 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (continued) (d) Capital risk The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern and to maintain an optimal capital structure so as to maximise shareholder value. In order to maintain or achieve an optimal capital structure, the Group may adjust the dividend payment, return capital to shareholders, issue new shares, buy back issued shares, obtain new financing facilities or dispose assets to reduce borrowings. Management monitors capital based on the Group’s and Company’s gearing ratio. The Group and the Company are also required by certain banks to maintain a gearing ratio of not exceeding 150%. The Group’s and the Company’s strategies are to maintain gearing ratio of not exceeding 100%. The Group and the Company monitor gearing ratios based on the terms of the respective loan agreement. (e) Fair value measurements The following table presents assets measured at fair value and classified by level of the following fair value measurement hierarchy: (i) quoted prices (unadjusted) in active markets for identical assets (Level 1); (ii) inputs other than quoted prices included within Level 1 that are observable for the asset , either directly or indirectly (Level 2); and (iii) inputs for the asset that are not based on observable market data (unobservable inputs) (Level 3). The fair value of financial instruments traded in active markets (such as trading securities) is based on quoted market prices at the balance sheet date. The quoted market price used for financial assets held by the Group and the Company is the closing price. These instruments are included in Level 1. The fair value of financial instruments that are not traded in an active market (for example, transferable club membership) is determined by using valuation technique. The fair value of the transferable club membership is calculated based as the present value of the estimated future cash flows based on observable yield curves. These instruments are classified as Level 2. If a valuation technique for these instruments is based on significant unobservable inputs, such instruments are classified as Level 3. Level 1 Level 2 Level 3 Total RM’000 RM’000 RM’000 RM’000 The Group 2012 Available-for-sale financial assets – 113 – 113 Total assets – 113 – 113
2011 Available-for-sale financial assets – 113 – 113 Total assets – 113 – 113
Level 1 Level 2 Level 3 Total RM’000 RM’000 RM’000 RM’000 The Company 2012 Available-for-sale financial assets – 30 – 30 Total assets – 30 – 30
2011 Available-for-sale financial assets – 30 – 30 Total assets – 30 – 30 96 IJM Land Berhad (187405-T)
NOTES TO THE FINANCIAL STATEMENTS (continued) for the financial year ended 31 March 2012
4 OPERATING REVENUE The Group The Company 2012 2011 2012 2011 RM’000 RM’000 RM’000 RM’000 Property development revenue 1,162,877 1,068,439 – – Construction contract revenue – 21,811 – – Management services 347 694 570 570 Dividend income – 2 64,500 43,033 Rental income 3,812 26,931 – – Interest on leasing 2,289 2,497 – – Lease of land 134 134 – – Forfeiture income 97 339 – – Hotel operations 33,321 33,156 – – Interest income 431 372 16,639 31,133 Rendering of other services 2,715 7,848 – – 1,206,023 1,162,223 81,709 74,736
Supplementary information on operating revenue of the Group inclusive of the Group’s share of revenue of jointly controlled entities are as follows: 2012 2011 RM’000 RM’000 Operating revenue of the Group 1,206,023 1,162,223 Share of operating revenue of: - Jointly controlled entities (Note 25) 16,736 15,309 1,222,759 1,177,532 ANNUAL REPORT 2012 97
5 OPERATING PROFIT BEFORE FINANCE COST (a) The following expenses (excluding finance cost and tax expense) by nature have been debited in arriving at operating profit before finance cost: The Group The Company Note 2012 2011 2012 2011 RM’000 RM’000 RM’000 RM’000 Cost of development properties 809,910 741,786 – – Construction contract costs – 20,950 – – Hotel operations costs 16,224 16,151 – – Costs of rendering of other services 22 112 – – Cost of sales 826,156 778,999 – – Employee benefits cost 6 44,492 41,147 1,054 668 Auditors’ remuneration - statutory audit 8 694 584 150 45 - non-statutory audit 184 23 – – Allowance for impairment of receivables 1,775 912 216 1,764 Bad debts written off 23 – – – Property, plant and equipment: - depreciation 21 6,005 5,752 8 5 - written off 21 165 267 – 1 - gain on disposal (75) (89) – – Investment properties: - depreciation 22 1,948 3,971 – – Project expenses written off 79 1,142 – – Provision for gratuity 43 230 – – Hire of motor vehicles 63 51 – – Management fees 580 584 – – Rental of land and buildings 1,812 1,409 – – Hire of plant and equipment 32 15 – – Impairment on land held for property development 29(a) 3 1,822 – – Impairment on property development costs 29(b) – 10,739 – – Impairment on goodwill 28 – 476 – – Impairment on investment in a subsidiary 23 – – 1,730 9,512 Impairment on amounts owing by jointly controlled entities 25 2,853 1,119 – – Impairment on assets held for sale 31 – 1,601 – – Building stocks written down 1,484 11,592 – – Losses on foreign exchange: - unrealised 738 3,095 – – - realised – 90 – –
Direct operating expenses from investment properties that generated rental income for the Group during the financial year amounted to RM761,707 (2011: RM1,155,316). Direct operating expenses from investment properties that did not generate rental income for the Group during the financial year amounted to RM Nil (2011: RM Nil). 98 IJM Land Berhad (187405-T)
NOTES TO THE FINANCIAL STATEMENTS (continued) for the financial year ended 31 March 2012
5 OPERATING PROFIT BEFORE FINANCE COST (continued) (b) The following amounts have been credited in arriving at operating profit before finance cost: The Group The Company Note 2012 2011 2012 2011 RM’000 RM’000 RM’000 RM’000 Bad debts recovered 812 709 – – Gains on foreign exchange: - unrealised 726 – – – - realised – 1,072 – – Refundable membership securities deposit forfeited 19(d) 95 90 – – Rental income 2,356 3,364 – – Rental income from investment properties 3,858 26,983 – – Gain on disposal of quoted shares – 74 – 74 Gain on disposal of interest in a subsidiary 37 – 62,948 – 68,217 Gain on disposal of assets held for sale 31 1,857 – – – Rental income from rental of parking lots 1,730 1,147 – – Reversal of building stock written down 1,426 – – –
6 EMPLOYEE BENEFITS COST The Group The Company 2012 2011 2012 2011 RM’000 RM’000 RM’000 RM’000 Wages, salaries and bonus 34,914 32,426 821 489 Defined contribution retirement plan 4,804 4,058 120 97 Other employee benefits 4,774 4,663 113 82 44,492 41,147 1,054 668
7 DIRECTORS’ REMUNERATION The Group The Company 2012 2011 2012 2011 RM’000 RM’000 RM’000 RM’000 Directors: Fees 517 461 517 461 Gratuity 43 230 – – Defined contribution retirement plan 214 209 – – Other emoluments 1,327 1,393 54 65 2,101 2,293 571 526
The estimated monetary value of benefits-in-kind provided to the Directors of the Group by way of usage of the Group’s assets and the provision of other benefits during the financial year amounted to RM29,225 (2011: RM27,200). ANNUAL REPORT 2012 99
7 DIRECTORS’ REMUNERATION (continued) An Executive Director and two (2) Non-Executive Directors of the Company have been offered Warrants 2008/2013 of the Company pursuant to an offer for sale by the ultimate holding company to the eligible employees of the Group as follows: Number of Warrants 2008/2013 Balance as at Balance as at Expiry date Exercise price Offer price 1.4.2011 Disposed Exercised 31.3.2012 RM/Warrant RM/Warrant 11 September 2013 1.35 0.302 1,695,610 – – 1,695,610
8 AUDITORS’ REMUNERATION – STATUTORY AUDIT The Group The Company 2012 2011 2012 2011 RM’000 RM’000 RM’000 RM’000 PricewaterhouseCoopers Malaysia* - current financial year 644 596 100 50 - under/(over) accrual in respect of previous financial year 43 (18) 50 (5) 687 578 150 45 Other auditors 7 6 – – 694 584 150 45
* PricewaterhouseCoopers Malaysia and other member firms of PricewaterhouseCoopers International Limited are separate and independent legal entities.
9 FINANCE INCOME The Group The Company 2012 2011 2012 2011 RM’000 RM’000 RM’000 RM’000 Finance income from: Bank balances and deposit 15,019 8,856 5,086 2,212 Loans and receivables - related parties 38,241 25,231 – – - non-related parties 15,115 17,272 – – Unwinding of discounts for financial assets 98 375 – – 68,473 51,734 5,086 2,212 100 IJM Land Berhad (187405-T)
NOTES TO THE FINANCIAL STATEMENTS (continued) for the financial year ended 31 March 2012
10 FINANCE COST The Group The Company Note 2012 2011 2012 2011 RM’000 RM’000 RM’000 RM’000 Interest expenses arising from: - Interest charged by related companies 8,854 23,093 – – - Bank borrowings 17,800 21,257 16,409 16,463 - Advances from the ultimate holding company 38,611 38,701 – 2,625 - Advances from a minority shareholder of a subsidiary – 189 – – - Interest on RCULS 17 491 24,513 491 24,513 - Fair value adjustment to financial assets at inception 66 129 – – - Unwinding of discounts for financial liabilities 4,022 4,821 – – 69,844 112,703 16,900 43,601 Less: Interest capitalised into: - Land held for property development 29(a) (6,374) (7,852) – – - Property development costs 29(b) (30,342) (30,322) – – 33,128 74,529 16,900 43,601
11 INCOME TAX EXPENSE The Group The Company 2012 2011 2012 2011 RM’000 RM’000 RM’000 RM’000 Current tax: - Malaysian income tax 109,879 77,193 14,779 3,482 - Real Property Gains Tax – 1,442 – 1,442 - Overseas taxation – 363 – – 109,879 78,998 14,779 4,924 Deferred taxation (Note 20) (28,295) (17,463) 167 (1,172) 81,584 61,535 14,946 3,752
Current tax: - Current year 86,745 73,326 17,106 4,924 - Under/(over) accrual in prior years (net) 23,134 5,672 (2,327) – 109,879 78,998 14,779 4,924
Deferred taxation: - Origination and reversal of temporary differences (5,608) (9,250) (78) (1,167) - (Over)/under accrual in prior years (net) (22,687) (8,213) 245 (5) 81,584 61,535 14,946 3,752 ANNUAL REPORT 2012 101
11 INCOME TAX EXPENSE (continued) The explanation of the relationship between income tax expense and profit before taxation is as follows: The Group The Company 2012 2011 2012 2011 RM’000 RM’000 RM’000 RM’000 Profit before taxation 281,858 285,544 64,859 87,237 Tax calculated at the Malaysian tax rate of 25% (2011: 25%) 70,465 71,386 16,215 21,809 Tax effects of: - Share of results of jointly controlled entities and associates 1,744 (1,805) – – - Expenses not deductible for tax purposes 6,632 18,733 813 3,287 - Income not subject to tax (740) (13,890) – (15,569) - Difference in tax rate in relation to Real Property Gains Tax – (5,770) – (5,770) - Difference tax rates in other countries 88 (674) – – - Utilisation of previously unrecognised temporary differences (229) (5,815) – – - Utilisation of previously unrecognised tax losses (50) (113) – – - Current year tax losses not recognised 3,049 1,315 – – - Deductible temporary differences not recognised 178 709 – – - Under/ (over) accrual in prior years (net) 447 (2,541) (2,082) (5) Income tax expense 81,584 61,535 14,946 3,752
The tax (charge)/credit in relation to the components of other comprehensive income are as follows: The Group 2012 2011 Before tax Tax After tax Before tax Tax After tax RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 Other comprehensive income: - Revaluation of land and buildings 48,375 (12,094) 36,281 – – – - Currency translation differences 492 – 492 76 – 76 48,867 (12,094) 36,773 76 – 76
Current tax – – – – – – Deferred taxation – (12,094) – – – – – (12,094) – – – –
The tax credit directly to equity is as follows: The Group and the Company 2012 2011 RM’000 RM’000 Deferred taxation: - Conversion of RCULS in the current financial year (Note 20) (9,257) – 102 IJM Land Berhad (187405-T)
NOTES TO THE FINANCIAL STATEMENTS (continued) for the financial year ended 31 March 2012
11 INCOME TAX EXPENSE (continued) Included in taxation of the Group are tax savings from utilisation of tax losses as follows: The Group 2012 2011 RM’000 RM’000 Tax losses: Tax savings as a result of the utilisation of tax losses brought forward for which the related credit is recognised during the year 50 113
Under the single tier tax system which comes into effect from the year of assessment 2008, companies are not required to have tax credit under Section 108 of Income Tax Act, 1967 for dividend payment purposes. Dividends paid under this system are tax exempt in the hands of shareholders. Companies with Section 108 credits as at 31 March 2012 may continue to pay franked dividends until the Section 108 credits are exhausted or 31 December 2013, whichever is earlier, unless they opt to disregard the Section 108 credits to pay single tier dividends under the special transitional provisions of the Finance Act, 2007. The Company has opted to pay single tier dividends since the previous financial year.
12 EARNINGS PER SHARE (a) Basic The basic earnings per share for the financial year has been calculated based on the Group’s profit attributable to owners of the Company for the financial year of RM193,708,905 (2011: RM217,653,628) and on the weighted average number of ordinary shares inissueof 1,376,553,948 (2011: 1,107,865,425) shares. The weighted average number of ordinary shares in issue was derived at after taking into account the issuance of shares pursuant to the exercise of Warrants 2008/2013 and the conversion of RCULS by the ultimate holding company during the financial year. The Group 2012 2011 RM’000 RM’000 Net profit attributable to owners of the Company 193,709 217,653
Weighted average number of ordinary shares in issue (’000) 1,376,554 1,107,865
Basic earnings per share 14.07 sen 19.65 sen
(b) Fully diluted For the purpose of calculating diluted earnings per share, the Group’s profit attributable to owners of the Company and the weighted average number of ordinary shares in issue during the financial year are adjusted to assume the conversion/exercise of all dilutive potential ordinary shares, i.e. the 3% RCULS and Warrants 2008/2013. At the beginning of the financial year, the Group’s profit attributable to owners of the Company for the financial year is adjusted by the after-tax effect of interest expense recognised during the financial year which would be saved on conversion of the outstanding RCULS into ordinary shares. The adjusted weighted average number of ordinary shares in issue during the year is the weighted average number of ordinary shares in issue during the financial year, adjusted to assume the conversion of all dilutive potential ordinary shares. A calculation is done to determine the number of shares that could have been acquired at market price (determined as the weighted average annual share price of the Company’s shares) based on the monetary value of the subscription rights attached to Warrants 2008/2013. This calculation serves to determine the “bonus” element to the ordinary shares outstanding for the purpose of computing the dilution. The RCULS and Warrants 2008/2013 are deemed to have been converted into ordinary shares at the beginning of the financial year. ANNUAL REPORT 2012 103
12 EARNINGS PER SHARE (continued) (b) Fully diluted (continued) The Group 2012 2011 RM’000 RM’000 Net profit attributable to owners of the Company 193,709 217,653 After-tax effects of interest on RCULS 368 18,385 Net profit attributable to owners of the Company including assumed conversion of RCULS 194,077 236,038
Weighted average number of ordinary shares in issue (’000) 1,376,554 1,107,865 Adjustments for Warrants 2008/2013 (’000) 79,176 104,527 Adjustments for RCULS (’000) 4,397 229,885 1,460,127 1,442,277
Diluted earnings per share 13.29 sen 16.37 sen
13 DIVIDENDS The Company 2012 2011 Gross Amount Gross Amount dividend of dividend dividend of dividend per share net of tax per share net of tax Sen RM’000 Sen RM’000 Interim dividend - Single tier interim dividend 4.00 * 4.00 54,987
* The amount of dividend will be determined based on the number of shareholders entitled to receive the dividend as at 5:00pm on 15 June 2012.
On 29 May 2012, the Directors have declared an interim dividend in respect of the financial year ended 31 March 2012 of 4% (single tier dividend) to be paid on 3 July 2012 to every member who is entitled to receive the dividend as at 5:00pm on 15 June 2012. The interim dividend has not been recognised in the Statement of Changes in Equity as it was declared subsequent to the financial year end. The Directors do not recommend the payment of any final dividend for the financial year ended 31 March 2012.
14 SEGMENTAL REPORTING Management has determined the operating segments based on the reports reviewed by the Chief Executive Officer (“CEO”) of the Group that are used to make strategic decisions. The CEO considers the business from business segment perspective and assesses the performance of the operating segments based on a measure of profit before taxation. The Group has the following principal business segments: (a) Hotel - Operate and manage hotel and other related services (b) Property development - Development of land into vacant lots, residential, commercial and industrial buildings and management of properties (c) Construction - Construction activities (d) Investment holding - Provision of corporate and financial support to the Group, property investment and other dormant companies 104 IJM Land Berhad (187405-T)
NOTES TO THE FINANCIAL STATEMENTS (continued) for the financial year ended 31 March 2012
14 SEGMENTAL REPORTING (continued) The segment information provided to the CEO for the reportable segments for the financial year ended 31 March 2012 is as follows: Property Investment 2012 Note Hotel development Construction holding The Group RM’000 RM’000 RM’000 RM’000 RM’000 REVENUE: Total revenue 33,321 1,166,467 – 87,944 1,287,732 Less: Inter-segment revenue – – – (81,709) (81,709) Total segment revenue 33,321 1,166,467 – 6,235 1,206,023
RESULTS: (Loss)/profit before taxation (337) 268,734 5,223 8,238 281,858
(Loss)/profit before taxation includes: Depreciation and amortisation of property, plant and equipment, leasehold land, investment properties (4,432) (1,565) – (1,956) (7,953) Impairment on: - land held for property development 29(a) – (3) – – (3) - amounts owing by jointly controlled entities 25 – (2,853) – – (2,853) - receivables 32 (46) (1,729) – – (1,775) Finance income 9 41 49,536 13,810 5,086 68,473 Finance cost 10 – (23,873) (8,994) (261) (33,128) Share of results of associates 24 – – – (1) (1) Share of results of jointly controlled entities 25 – (6,975) – – (6,975)
Inter-segment revenue comprises dividend income, interest, management fee charged between the segments. These transactions are transacted on agreed terms between the segments. The revenue from external customers reported to the CEO is measured in a manner consistent with that in the statements of comprehensive income. The revenue from operating segments is disclosed in Note 4 to the financial statements. ANNUAL REPORT 2012 105
14 SEGMENTAL REPORTING (continued) The segment information provided to the CEO for the reportable segments for the financial year ended 31 March 2012 is as follows: Property Investment 2012 Note Hotel development Construction holding The Group RM’000 RM’000 RM’000 RM’000 RM’000 ASSETS: Segment assets 187,207 3,703,492 200,044 318,026 4,408,769 Unallocated corporate assets - Deferred tax assets 20 46,156 - Tax recoverable 11,599 Consolidated total assets 4,466,524 Segment assets includes: - Investment in associates 24 – – – 1,978 1,978 - Investment in jointly controlled entities 25 – 619,038 – – 619,038 - Additions to non-current assets* (other than financial instruments and deferred tax assets) - Land held for property development 29(a) – 114,861 – – 114,861 - Property, plant and equipment 21 1,460 3,027 – – 4,487
LIABILITIES: Segment liabilities 12,598 1,478,531 149,173 287,503 1,927,805 Unallocated corporate liabilities - Deferred tax liabilities 20 56,813 - Current tax liabilities 1,945 Consolidated total liabilities 1,986,563
* Non-current assets comprise property, plant and equipment, investment properties and land held for property development.
The amounts provided to the CEO with respect to total assets and total liabilities are measured in a manner consistent with that of the financial statements. These assets and liabilities are allocated based on the operation of the segments. 106 IJM Land Berhad (187405-T)
NOTES TO THE FINANCIAL STATEMENTS (continued) for the financial year ended 31 March 2012
14 SEGMENTAL REPORTING (continued) The segment information provided to the CEO for the reportable segments for the financial year ended 31 March 2011 is as follows: Property Investment 2011 Note Hotel development Construction holding The Group RM’000 RM’000 RM’000 RM’000 RM’000 REVENUE: Total revenue 33,156 1,074,416 21,811 99,543 1,228,926 Less: Inter-segment revenue – – – (66,703) (66,703) Total segment revenue 33,156 1,074,416 21,811 32,840 1,162,223
RESULTS: (Loss)/profit before taxation (759) 216,340 (214) 70,177 285,544
(Loss)/profit before taxation includes: Depreciation and amortisation of property, plant and equipment, leasehold land, investment properties (4,232) (1,507) (9) (3,975) (9,723) Impairment on: - land held for property development 29(a) – (1,822) – – (1,822) - property development costs 29(b) – (10,739) – – (10,739) - amounts owing by jointly controlled entities 25 – (1,119) – – (1,119) - receivables 32 (36) (876) – – (912) - goodwill 28 – (476) – – (476) Finance income 9 33 33,609 15,682 2,410 51,734 Finance cost 10 – (42,087) (16,694) (15,748) (74,529) Gain on disposal of interest in a subsidiary 37 – – – 62,948 62,948 Share of results of associates 24 – – – 16 16 Share of results of jointly controlled entities 25 – 281 – – 281
Inter-segment revenue comprises sales of property, dividend income, interest, management fee charged between the segments. These transactions are transacted on agreed terms between the segments. The revenue from external customers reported to the CEO is measured in a manner consistent with that in the statements of comprehensive income. The revenue from operating segments is disclosed in Note 4 to the financial statements. ANNUAL REPORT 2012 107
14 SEGMENTAL REPORTING (continued) The segment information provided to the CEO for the reportable segments for the financial year ended 31 March 2011 is as follows: Property Investment 2011 Note Hotel development Construction holding The Group RM’000 RM’000 RM’000 RM’000 RM’000 ASSETS: Segment assets 139,273 3,493,135 247,628 366,548 4,246,584 Unallocated corporate assets - Deferred tax assets 20 26,465 - Tax recoverable 5,554 Consolidated total assets 4,278,603
Segment assets includes: - Investment in associates 24 – – – 1,979 1,979 - Investment in jointly controlled entities 25 – 482,396 – – 482,396 - Additions to non-current assets* (other than financial instruments and deferred tax assets) - Land held for property development 29(a) – 61,201 – – 61,201 - Property, plant and equipment 21 3,832 1,371 – 2 5,205
LIABILITIES: Segment liabilities 12,933 1,422,467 203,798 686,091 2,325,289 Unallocated corporate liabilities - Deferred tax liabilities 20 62,580 - Current tax liabilities 10,704 Consolidated total liabilities 2,398,573
* Non-current assets comprise property, plant and equipment, investment properties and land held for property development.
The amounts provided to the CEO with respect to total assets and total liabilities are measured in a manner consistent with that of the financial statements. These assets and liabilities are allocated based on the operation of the segments. Geographical segments The segmental financial information by geographical segments is not presented as the Group’s activities are mainly carried out in Malaysia. 108 IJM Land Berhad (187405-T)
NOTES TO THE FINANCIAL STATEMENTS (continued) for the financial year ended 31 March 2012
15 SHARE CAPITAL AND SHARE PREMIUM (a) SHARE CAPITAL The Group and the Company 2012 2011 Number Nominal Number Nominal of shares value of shares value ‘000 RM’000 ‘000 RM’000 Ordinary shares of RM1 each: Authorised: At 1 April/ At 31 March 2,000,000 2,000,000 2,000,000 2,000,000
Issued and fully paid: At 1 April 1,124,665 1,124,665 1,103,274 1,103,274 Issuance of shares: - Exercise of Warrants 2008/2013 33,809 33,809 21,391 21,391 - Conversion of RCULS (Note 17) 229,885 229,885 – – At 31 March 1,388,359 1,388,359 1,124,665 1,124,665
(i) During the financial year, the issued and paid-up ordinary share capital of the Company was increased from RM1,124,665,246 to RM1,388,358,668 by way of the issuance of 33,808,365 ordinary shares of RM1.00 each arising from the exercise of Warrants 2008/2013 at the exercise price of RM1.35 per share and the issuance of 229,885,057 ordinary shares of RM1.00 each arising from the conversion of the RM400 million nominal value of 10 year 3% coupon RCULS at the conversion price of RM1.74 by the ultimate holding company, IJM Corporation Berhad. The new ordinary shares issued rank pari passu in all respects with the existing ordinary shares of the Company. (ii) Warrants 2008/2013 The Warrants 2008/2013 are constituted by a Deed Poll dated 13 August 2008. On 12 September 2008, the Company allotted 454,549,285 Rights Shares together with 227,274,642 Warrants at an issue price of RM1.35 per Rights Share, on a renounceable basis of four (4) Rights Share and two (2) Warrants for every five existing ordinary shares held on 18 August 2008, being the Rights Entitlement Date. Each Warrant 2008/2013 entitles the registered holder to subscribe for one (1) new ordinary share in the Company at any time from 12 September 2008 up to the date of expiry on 11 September 2013, at an exercise price of RM1.35 or such adjusted price in accordance with the provisions in the Deed Poll dated 13 August 2008. Any Warrants 2008/2013 not exercised at the date of maturity will lapse and cease to be valid for any purpose. The Warrants 2008/2013 is listed on the Main Market of Bursa Malaysia Securities Berhad with effect from 16 September 2008. Warrants 2008/2013 exercised during the financial year resulted in 33,808,365 (2011: 21,391,495) new ordinary shares being issued at RM1.35 each. The weighted average quoted price of shares of the Company at the time when the Warrants were exercised was RM2.76 (2011: RM2.67) per share. As at the balance sheet date, 172,036,922 Warrants 2008/2013 (2011: 205,845,287) remained unexercised. (b) SHARE PREMIUM The Group and the Company 2012 2011 RM’000 RM’000 At 1 April 76,128 57,975 Arising from: - Exercise of Warrants 2008/2013 28,690 18,153 - Conversion of RCULS (Note 17) 191,546 – At 31 March 296,364 76,128 ANNUAL REPORT 2012 109
16 OTHER RESERVES The Group The Company 2012 2011 2012 2011 RM’000 RM’000 RM’000 RM’000 (a) Warrant reserves At 1 April 102,635 113,301 102,635 113,301 Transferred to share premium account upon exercise of Warrants 2008/2013 (16,857) (10,666) (16,857) (10,666) At 31 March 85,778 102,635 85,778 102,635
(b) Merger deficit At 1 April/ At 31 March (279) (279) – – Total 85,499 102,356 85,778 102,635
17 REDEEMABLE CONVERTIBLE UNSECURED LOAN STOCKS (“RCULS”) IJM Corporation Berhad, the ultimate holding company, had fully converted the RM400 million nominal value of 10 year 3% coupon RCULS into ordinary shares of RM1.00 each at the conversion price of RM1.74 during the financial year. The amount recognised in the balance sheets of the Group and the Company are analysed as follows: The Group and the Company 2012 2011 RM’000 RM’000 Liability component at date of issue: Face value of RCULS issued on 20 November 2008, net of transaction costs 400,000 400,000 Equity component, net of deferred tax liability (49,202) (49,202) Deferred tax liability (16,401) (16,401) 334,397 334,397
Liability component: At 1 April 362,711 350,198 Interest expense (Note 10) 491 24,513 Interest paid (230) (12,000) 362,972 362,711 Conversion: Conversion to ordinary shares (Note 15(a)) (229,885) – Share premium (Note 15 (b)) (191,546) – Equity component, net of deferred tax liability 49,202 – Deferred tax liability (Note 20) 9,257 – Liability component at 31 March – 362,711
Interest expense on the RCULS was calculated on the effective yield basis by applying the coupon interest rate of 7% for an equivalent non-convertible bond to the liability component of the RCULS. 110 IJM Land Berhad (187405-T)
NOTES TO THE FINANCIAL STATEMENTS (continued) for the financial year ended 31 March 2012
17 REDEEMABLE CONVERTIBLE UNSECURED LOAN STOCKS (“RCULS”) (continued) Principal features of RCULS (i) The RCULS are issued in registered form and in denomination of RM1.00 and multiples thereof. (ii) The RM400,000,000 nominal value of 10 year 3% coupon RCULS were issued by the Company to IJM Corporation Berhad, the ultimate holding company, at 100% of its nominal value of RM1.00 each pursuant to the restricted issue of RCULS. The RCULS were unsecured and shall rank pari passu amongst themselves and with all the other subordinated and unsecured obligations of the Company, subject only to those preferred by mandatory provision of law. The RCULS shall rank above the Company’s ordinary shares. (iii) The RCULS carried a coupon rate of 3% per annum based on the nominal value of the RCULS from the date of issue on 20 November 2008 up to the Maturity Date on 19 November 2018. The coupon was payable semi-annually in arrears. The RCULS were redeemable at the option of the holder after the fifth (5th) anniversary at 100% of its nominal value. Upon redemption, the RCULS would be cancelled. Unless previously converted or redeemed, all outstanding RCULS would be mandatorily redeemed on the Maturity Date. (iv) The holder, IJM Corporation Berhad, had the right to convert the RCULS into the Company’s new shares at the conversion price of RM1.74 at any time during the Conversion Period. The conversion price was subject to adjustments under certain circumstances in accordance with the provisions of the Subscription Agreement.
18 BORROWINGS The Group The Company Note 2012 2011 2012 2011 RM’000 RM’000 RM’000 RM’000 Current Secured: - Revolving credits 18(a) 32,000 32,000 30,000 30,000 - Term loans 18(b) 59,611 36,963 56,064 32,000 91,611 68,963 86,064 62,000 Unsecured: - Revolving credit 21,200 17,100 – – 112,811 86,063 86,064 62,000 - Bank overdrafts 73 – – – 112,884 86,063 86,064 62,000 Non-current Secured: - Term loans 18(b) 286,806 262,177 199,936 256,000 Total borrowings 399,690 348,240 286,000 318,000 ANNUAL REPORT 2012 111
18 BORROWINGS (continued) A. Effective interest rates and maturity profiles of borrowings The exposure of borrowings to interest rate and cash flow risks and the periods in which the borrowings mature or reprice are as follows: Floating interest rate Effective interest Total rate as at carrying The Group year end amount < 1 year 1-2 years 2-3 years 3-4 years 4-5 years % p.a RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 2012 Unsecured Revolving credit 4.0 - 5.3 21,200 21,200 – – – – Bank overdrafts 7.1 73 73 – – – – 21,273 21,273 – – – – Secured Revolving credit 1 4.9 2,000 2,000 – – – – Revolving credit 2 4.9 30,000 30,000 – – – – 32,000 32,000 – – – –
Term loan 1 4.9 5,260 2,630 2,630 – – – Term loan 2 4.9 917 917 – – – – Term loan 3 5.2 256,000 56,064 56,064 71,936 71,936 – Term loan 4 4.7 27,880 – – 9,280 9,280 9,320 Term loan 5 4.7 56,360 – – 18,800 18,800 18,760 346,417 59,611 58,694 100,016 100,016 28,080 399,690 112,884 58,694 100,016 100,016 28,080
2011 Unsecured Revolving credit 3.4 - 5.0 17,100 17,100 – – – – 17,100 17,100 – – – – Secured Revolving credit 1 4.5 2,000 2,000 – – – – Revolving credit 2 4.6 30,000 30,000 – – – – 32,000 32,000 – – – –
Term loan 1 4.5 7,890 2,630 2,630 2,630 – – Term loan 2 4.5 3,250 2,333 917 – – – Term loan 3 5.0 288,000 32,000 56,064 56,064 71,936 71,936 299,140 36,963 59,611 58,694 71,936 71,936 348,240 86,063 59,611 58,694 71,936 71,936 112 IJM Land Berhad (187405-T)
NOTES TO THE FINANCIAL STATEMENTS (continued) for the financial year ended 31 March 2012
18 BORROWINGS (continued) A. Effective interest rates and maturity profiles of borrowings (continued) The exposure of borrowings to interest rate and cash flow risks and the periods in which the borrowings mature or reprice are as follows (continued): Floating interest rate Effective interest Total rate as at carrying The Company year end amount < 1 year 1-2 years 2-3 years 3-4 years 4-5 years % p.a RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 2012 Secured Revolving credit 2 4.9 30,000 30,000 – – – – Secured Term loan 3 5.2 256,000 56,064 56,064 71,936 71,936 – 286,000 86,064 56,064 71,936 71,936 –
2011 Secured Revolving credit 2 4.6 30,000 30,000 – – – – Secured Term loan 3 5.0 288,000 32,000 56,064 56,064 71,936 71,936 318,000 62,000 56,064 56,064 71,936 71,936
B. Principal features of borrowings (a) Revolving Credits I The security of the Revolving Credit 1 of RM2,000,000 (2011: RM2,000,000) is disclosed in Note 18 (b) (II). II The Revolving Credit 2 of RM30,000,000 (2011: RM30,000,000) is secured by way of Lien-Holder’s Caveat over landed properties (Note 29) of a subsidiary of the Company with a minimum security cover of 1.0 time the loan outstanding. (b) Term Loans I Term Loan 1 of RM5,260,000 (2011: RM7,890,000) is secured by way of: (i) a facilities agreement for the sum of RM7,890,000; (ii) a registered open all monies third party charge over certain parcels of freehold vacant commercial land of a subsidiary of the Company (Note 29); and (iii) a corporate guarantee by the Company. II Term Loan 2 of RM916,667 (2011: RM3,250,000) and Revolving Credit 1 of RM2,000,000 (2011: RM2,000,000) (Note 18(a) (I)) are secured by way of: (i) a facilities agreement for the sum of RM9,000,000; (ii) a registered open all monies third party charge over certain parcels of freehold vacant commercial land of a subsidiary of the Company (Note 29); and (iii) a corporate guarantee by the Company. ANNUAL REPORT 2012 113
18 BORROWINGS (continued) B. Principal features of borrowings (continued) (b) Term Loans (continued) III Term Loan 3 of RM256,000,000 (2011: RM288,000,000) is secured by way of: (i) a facilities agreement for the sum of RM320,000,000; (ii) a first legal charge created under the National Land Code, 1965 over certain properties and parcels of land of the subsidiaries of the Company (Notes 21, 22 and 29); and (iii) Letter of awareness/comfort from the ultimate holding company, IJM Corporation Berhad. IV Term Loan 4 of RM27,880,000 (2011: RM Nil ) is secured by way of: (i) a facility agreement for the sum of RM27,880,000; (ii) a first party first legal charge over two parcels of freehold land of a subsidiary of the Company (Note 29); and (iii) a corporate guarantee by the Company. V Term Loan 5 of RM56,360,000 (2011: RM Nil ) is secured by way of: (i) a facility agreement for the sum of RM56,360,000; (ii) a first party first legal charge over one parcel of freehold land of a subsidiary of the Company (Note 29); and (iii) a corporate guarantee by the Company.
19 TRADE AND OTHER PAYABLES The Group Note 2012 2011 RM’000 RM’000 Other payables: Advances from the Penang State Government 19(a) 33,180 33,180 Land premium payable to the Penang State Government 19(b) 9,100 12,100 Less: Payable within 12 months 34 (3,000) (3,000) Payable after 12 months 6,100 9,100 Amounts owing to ultimate holding company 19(c) 816,206 733,620 Refundable membership securities deposit 19(d) 5,926 6,021 43 861,412 781,921 Finance lease liabilities 34(f) – 1 861,412 781,922
(a) On 17 January 2003, a subsidiary of IJM Properties Sdn Bhd (“IJMP”), Jelutong Development Sdn Bhd (“JDSB”), has entered into a Reimbursement Land Cost Agreement with the Penang State Government in connection with the completion of the Jelutong Expressway Project. As at 31 March 2012, Jelutong Expressway has completed Stage 2 of the construction works. Stage 3 of the construction works is expected to commence within 1 month upon resolving and relocating all the affected squatters by the State Government. The advances on reimbursable land cost are interest free. However, if JDSB fails to pay the Penang State Government any of the instalment payments by their respective due dates, JDSB shall be liable to pay to the Penang State Government interest at the rate of 8% per annum on any such outstanding instalment payments. 114 IJM Land Berhad (187405-T)
NOTES TO THE FINANCIAL STATEMENTS (continued) for the financial year ended 31 March 2012
19 TRADE AND OTHER PAYABLES (continued) (a) On 17 January 2003, a subsidiary of IJM Properties Sdn Bhd (“IJMP”), Jelutong Development Sdn Bhd (“JDSB”), has entered into a Reimbursement Land Cost Agreement with the Penang State Government in connection with the completion of the Jelutong Expressway Project. (continued) The repayment schedule of the advances from the Penang State Government is as follows: Percentage of advances to be repaid to the Timing of repayment Penang State Government % 36 months from the commencement of Stage 3 of the Construction Works of Jelutong Expressway or from the completion of alienation of Parcels A2 and B1, whichever is the later (1st Payment) 30 12 months from the date of the Certificate of Completion of the entire Jelutong Expressway or from the date of the 1st Payment, whichever is the later (2nd Payment) 30 12 months from the date of the 2nd Payment 40
(b) On 4 October 2002, a subsidiary of IJM Properties Sdn Bhd (“IJMP”), Jelutong Development Sdn Bhd (“JDSB”) entered into a Supplementary Agreement to the Privatisation Agreement with the Penang State Government in connection with the land alienation to JDSB in exchange for undertaking the Jelutong Expressway Project. JDSB shall pay the Penang State Government a land premium of RM24,100,000 from the date of issuance of advertising permit for sale of the first phase of the low-medium cost housing units on Parcel C2. The land premium is repayable to the Penang State Government as follows: The Group 2012 2011 RM’000 RM’000 Not later than 1 year (Note 34) 3,000 3,000 Later than 1 year but not later than 2 years 3,000 3,000 Later than 2 years but not later than 3 years 3,100 3,000 Later than 3 years but not later than 4 years – 3,100 6,100 9,100 9,100 12,100
(c) The amounts owing to the ultimate holding company represent unsecured advances which bear interest at the rate of 5.0% (2011: 5.0%) per annum except for RM9,043,959 (2011: RM6,707,582) which is interest-free. The ultimate holding company has confirmed that it will not demand settlement of any portion of the amount outstanding as at 31 March 2012 within the next twelve months. (d) This represents membership securities deposit received by ERMS Berhad (“ERMS”), a subsidiary of the Company, prior to the implementation of a Deed of Trust dated 20 May 1993. The membership securities deposit is refundable only upon the transfer of a membership by a member to an acceptable transferee and after the said transferee has paid the required refundable membership securities deposit. Based on the Deed of Trust, the refundable membership securities deposit shall be paid to an Accumulated Fund over 92 equal annual payments of RM77,000. Subsequently on 28 June 1997, the Trustee agreed to an annual payment of RM364 to be paid to the Accumulated Fund over 88 years beginning from 15 June 1998. On 20 March 2003, ERMS had withdrawn the Accumulated Fund and purchased a group premium pension scheme, which terminal value will be used to refund the membership securities deposit to the members. Accordingly, ERMS had ceased to contribute the fixed annual payment to the Accumulated Fund. ANNUAL REPORT 2012 115
20 DEFERRED TAXATION Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when the deferred taxes relate to the same tax authority. The following amounts, determined after appropriate offsetting, are shown in the balance sheet: The Group The Company 2012 2011 2012 2011 RM’000 RM’000 RM’000 RM’000 Deferred tax assets (46,156) (26,465) (76) – Deferred tax liabilities 56,813 62,580 – 9,014 10,657 36,115 (76) 9,014
At 1 April 36,115 46,165 9,014 10,186 (Credited)/charged to income statement (Note 11) - Property, plant and equipment (568) 745 (2) (2) - Development properties (3,197) (4,292) – – - Investment properties 18 198 – – - Finance lease receivables (124) 68 – – - Operating lease receivables – 769 – – - Payables (24,476) (13,950) 234 (34) - RCULS (65) (3,128) (65) (3,128) - Unutilised tax losses and other temporary differences 117 (584) – – - Utilisation of previously unrecognized deferred tax assets and tax losses – 2,711 – 1,992 (28,295) (17,463) 167 (1,172) Charged/(credited) to other comprehensive income: Exchange translation differences – (305) – – Revaluation reserve 12,094 – – – 12,094 (305) – – Conversion of RCULS (Note 17) (9,257) – (9,257) – Disposal of interest in a subsidiary (Note 37) – (930) – – Acquisition of shares in a subsidiary (Note 36) – 8,648 – – At 31 March 10,657 36,115 (76) 9,014
Subject to income tax Deferred tax assets (before offsetting) Payables 43,332 18,856 76 311 Unutilised tax losses and other temporary differences 2,582 2,699 – – Development properties 10,555 12,525 – – Property, plant and equipment 9 33 – – 56,478 34,113 76 311 Offsetting (10,322) (7,648) – (311) Deferred tax assets (after offsetting) 46,156 26,465 76 – 116 IJM Land Berhad (187405-T)
NOTES TO THE FINANCIAL STATEMENTS (continued) for the financial year ended 31 March 2012
20 DEFERRED TAXATION (continued) The following amounts, determined after appropriate offsetting, are shown in the balance sheet (continued): The Group The Company 2012 2011 2012 2011 RM’000 RM’000 RM’000 RM’000 Deferred tax liabilities (before offsetting) Property, plant and equipment (8,984) (9,576) – (3) Development properties (44,412) (49,579) – – Investment properties (645) (627) – – RCULS – (9,322) – (9,322) Revaluation reserve (12,094) – – – Finance lease receivables (1,000) (1,124) – – (67,135) (70,228) – (9,325) Offsetting 10,322 7,648 – 311 Deferred tax liabilities (after offsetting) (56,813) (62,580) – (9,014)
The amount of unutilised tax losses and other temporary differences for which no deferred tax assets are recognised in the balance sheets are as follows: The Group The Company 2012 2011 2012 2011 RM’000 RM’000 RM’000 RM’000 Unutilised tax losses and other temporary differences 80,634 68,581 – –
Deferred tax assets not recognised at 25% (2011: 25%) 20,158 17,145 – –
The unutilised tax losses and other temporary differences are available indefinitely for offset against future taxable profits of the subsidiaries in which those items arose. Deferred tax assets have not been recognised in respect of these items as they may not be used to offset taxable profits of other subsidiaries in the Group and they have arisen in subsidiaries that have a recent history of losses. ANNUAL REPORT 2012 117 – 900 487 992 658 2012 5,567 1,197 4,880 6,679 69,493 85,000 RM’000 175,853 At 31 March
– (93) (290) (572) (349) (641) (159) (384) (168) (6,005) (2,205) (1,144) RM’000 Depreciation – – – – – – – – – (5) (11,097) RM’000 (11,102) to assets (Note 31) Transferred held for sale
4 1 6 1 – – – – – – – – RM’000 Exchange translation differences
– – – – – – – (6) (25) (14) (120) (165) RM’000 Written off – – – – – – – – (1) (47) (23) (23) RM’000 Disposals
– – – – – – – – – 5,519 48,375 42,856 RM’000 Revaluation – – – – 581 436 531 334 744 164 4,487 1,697 RM’000 Additions
51 859 782 302 2011 1,059 6,178 6,044 4,944 66,179 42,716 11,190 RM’000 140,304 At 1 April - buildings - plant and equipment equipment Renovation and partition The Group 2012 Net book value Hotel properties: - at 2012 valuation - at cost Leasehold land - at 2012 valuation Freehold buildings Leasehold buildings and apartments Office equipment, furniture and fittings Motor vehicles Capital work-in-progress PROPERTY, PLANT AND EQUIPMENT plant and equipment are as follows: The details of property, Bowling, games and hotel operating Computers
21 118 IJM Land Berhad (187405-T)
NOTES TO THE FINANCIAL STATEMENTS (continued) for the financial year ended 31 March 2012
21 PROPERTY, PLANT AND EQUIPMENT (continued) The details of property, plant and equipment are as follows (continued): At 31 March 2012 Exchange Accumulated Accumulated translation Net book The Group Cost Valuation depreciation impairment differences value RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 Hotel properties - at 2012 valuation - buildings – 69,493 – – – 69,493 - at cost - plant and equipment 27,492 – (1,045) (20,880) – 5,567 Leasehold land - at 2012 valuation – 85,000 – – – 85,000 Leasehold buildings and apartments 2,319 – (1,381) (38) – 900 Office equipment, furniture and fittings 27,310 – (20,632) – 1 6,679 Bowling, games and hotel operating equipment 20,600 – (15,720) – – 4,880 Computers 3,580 – (2,922) – – 658 Motor vehicles 3,949 – (2,959) – 2 992 Renovation and partition 1,892 – (699) – 4 1,197 Capital work-in-progress 487 – – – – 487 87,629 154,493 (45,358) (20,918) 7 175,853 ANNUAL REPORT 2012 119
– – At 51 2011 31 March – (286) 782 (388) 4,944 (160) 1,059 (240) 11,190 (571) 42,716 (382) 6,044 (2,205) 66,179
– – – – – – – – (5) (207) 302 (47) (117) 859 (884) (12) sales (6,652) (5,752) 140,304 (5,687) (160) held for to assets (Note 31) Depreciation Transferred 8 – – – – – – – – – – 2,298 (29) (1,024) 6,178 4,784 (7,090) – – (10) Exchange translation differences Reclassifications – (2) off (10) (22) (196) Written –––– –– –– –– –––– –––– –––– –––– –––– –––– –––– of (Note 36) Disposals Acquisition Acquisition subsidiaries – – – – – (continued) (As 737 318 474 501 127 (24) 363 153 2010 4,788 2,353 4,996 524 4,046 950 30 (30) (59) (4) 1,219 1,236 406 11,430 68,384 restated) Additions At 1 April – – – – – – – – – – 5,847 – – 896 896 43,287 43,287 Effect of adopting adopting to FRS 117 improvement improvement – – (As 737 363 2010 4,046 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 103,520 44,183 147,703 5,205 157 (54) (267) (36) reported) At 1 April previously
equipment 1,236 progress 4,788 partition and hotel operating equipment 4,996 furniture and fittings buildings and apartments 1,219 buildings 11,430 - at cost - at valuation - plant and - buildings 5,847 valuation - buildings 68,384 Capital work-in- Renovation and Motor vehicles 474 Computers Bowling, games Office equipment, Office equipment, Leasehold Freehold Freehold Leasehold land - at cost The Group 2011 Net book value Hotel properties - at 2007 The details of property, plant and equipment are as follows (continued): The details of property, PROPERTY, PLANT AND EQUIPMENT
21 120 IJM Land Berhad (187405-T)
NOTES TO THE FINANCIAL STATEMENTS (continued) for the financial year ended 31 March 2012
21 PROPERTY, PLANT AND EQUIPMENT (continued) The details of property, plant and equipment are as follows (continued): At 31 March 2011 Exchange Accumulated Accumulated translation Net book The Group Cost Valuation depreciation impairment differences value RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 Hotel properties - at 2007 valuation - buildings – 100,181 (8,821) (25,181) – 66,179 - at cost - plant and equipment 27,329 – (405) (20,880) – 6,044 Leasehold land - at valuation – 45,000 (2,284) – – 42,716 Freehold buildings 11,991 – (801) – – 11,190 Leasehold buildings and apartments 2,319 – (1,222) (38) – 1,059 Office equipment, furniture and fittings 25,861 – (19,677) – (6) 6,178 Bowling, games and hotel operating equipment 20,475 – (15,531) – – 4,944 Computers 3,263 – (2,961) – – 302 Motor vehicles 3,742 – (2,940) – (20) 782 Renovation and partition 1,323 – (443) – (21) 859 Capital work-in-progress 51 – – – – 51 96,354 145,181 (55,085) (46,099) (47) 140,304
At 1 April At 31 March 2011 Additions Written off Depreciation 2012 RM’000 RM’000 RM’000 RM’000 RM’000 The Company 2012 Net book value Office equipment, furniture and fittings 4 – – (1) 3 Computers 8 – – (7) 1 Motor vehicles – – – – – Renovation – – – – – 12 – – (8) 4
At 1 April At 31 March 2010 Additions Written off Depreciation 2011 RM’000 RM’000 RM’000 RM’000 RM’000 The Company 2011 Net book value Office equipment, furniture and fittings 5 – – (1) 4 Computers 10 2 (1) (3) 8 Motor vehicles – – – – – Renovation 1 – – (1) – 16 2 (1) (5) 12 ANNUAL REPORT 2012 121
21 PROPERTY, PLANT AND EQUIPMENT (continued) The details of property, plant and equipment are as follows (continued): Accumulated Net book Cost depreciation value RM’000 RM’000 RM’000 The Company 2012 Office equipment, furniture and fittings 29 (26) 3 Computers 71 (70) 1 Motor vehicles 246 (246) – Renovation 48 (48) – 394 (390) 4
The Company 2011 Office equipment, furniture and fittings 29 (25) 4 Computers 72 (64) 8 Motor vehicles 246 (246) – Renovation 48 (48) – 395 (383) 12
(a) The hotel properties and the leasehold land of ERMS Berhad, a subsidiary of the Company, stated at valuation was revalued during the current financial year by an independent qualified valuer, Kuljeet Singh, a member of the Institute of Surveyors, Malaysia and a partner with Raine & Horne International Zaki + Partners. The valuation was arrived at by the Comparison Method of Valuation where reference was made to similar resorts. Based on this valuation, the value of the hotel properties was RM69,493,000, as compared to the carrying value of RM63,974,000. The resultant surplus of RM5,519,000 had been credited to revaluation reserve and adjusted to the hotel properties by eliminating the accumulated depreciation of RM2,205,000. Based on this valuation, the value of the leasehold land was RM85,000,000 as compared to its carrying value of RM42,144,000. The resultant surplus of RM42,856,000 had been credited to revaluation reserve and adjusted to the leasehold land by eliminating the accumulated depreciation of RM572,000. (b) Had the revalued hotel properties and the leasehold land been carried at cost less accumulated depreciation/ amortisation, the net book value would have been as follows: 2012 2011 RM’000 RM’000 Net book value Buildings Cost 65,075 65,075 Less: Accumulated depreciation (21,814) (19,954) 43,261 45,121
Leasehold land Cost 42,796 42,796 Less: Accumulated amortisation (2,148) (1,611) 40,648 41,185 122 IJM Land Berhad (187405-T)
NOTES TO THE FINANCIAL STATEMENTS (continued) for the financial year ended 31 March 2012
21 PROPERTY, PLANT AND EQUIPMENT (continued) (c) Hotel properties of a subsidiary with carrying value of RM69,493,226 (2011: RM66,179,118) have been charged to financial institutions to secure banking facility granted to the Group and the Company for Term Loan 3 (Note 18). (d) A parcel of long term leasehold land of a subsidiary with carrying value of RM85,000,000 (2011: RM42,714,880) has been charged to financial institutions to secure for banking facility granted to the Group and the Company for Term Loan 3 (Note 18).
22 INVESTMENT PROPERTIES Long term Freehold Leasehold Freehold leasehold Note land land buildings buildings Total RM’000 RM’000 RM’000 RM’000 RM’000 The Group 2012 Net book value At 1 April 2011 4,071 20,706 18,602 63,591 106,970 Transferred to assets held for sale 31 (2,418) (3,615) (17,155) (14,718) (37,906) Depreciation charges for the year 5(a) – (251) (201) (1,496) (1,948) At 31 March 2012 1,653 16,840 1,246 47,377 67,116
2011 Net book value At 1 April 2010 As previously reported 4,071 – 19,016 346,866 369,953 Effect of adopting improvement to FRS 117 – 64,003 – – 64,003 As restated 4,071 64,003 19,016 346,866 433,956 Disposal of interest in a subsidiary 37(b) – (41,471) – (272,273) (313,744) Reversal of over accrual of costs – (155) – (4,000) (4,155) Transferred to assets held for sale 31 – (1,253) – (3,863) (5,116) Depreciation charges for the year 5(a) – (418) (414) (3,139) (3,971) At 31 March 2011 4,071 20,706 18,602 63,591 106,970 ANNUAL REPORT 2012 123
22 INVESTMENT PROPERTIES (continued) Long term Freehold Leasehold Freehold leasehold land land buildings buildings Total RM’000 RM’000 RM’000 RM’000 RM’000 The Group At 31 March 2012 Cost 1,653 17,578 2,421 52,576 74,228 Accumulated depreciation – (738) (642) (5,095) (6,475) Accumulated impairment – – (533) (104) (637) Net book value 1,653 16,840 1,246 47,377 67,116
At 31 March 2011 Cost 4,071 21,347 20,703 68,406 114,527 Accumulated depreciation – (641) (1,568) (4,711) (6,920) Accumulated impairment – – (533) (104) (637) Net book value 4,071 20,706 18,602 63,591 106,970
The above properties are not occupied by the Group and are used to either earn rentals or for capital appreciation, or both. As at 31 March 2012, the fair value of the properties of the Group was estimated at RM71,010,000 (2011: RM153,400,000) by the Directors based on either valuation by independent professionally qualified valuers or the Directors’ estimates by reference to open market value of properties in the vicinity. There has been no significant change from previous valuation compared to the fair value and the current market valuation supports the fair value of the properties. Long term leasehold land and building with carrying values amounting to RM Nil (2011: RM15,077,229) have been charged to financial institutions to secure for banking facility granted to the Group and the Company for Term Loan 3 (Note 18). Land title to freehold land and leasehold land with the carrying value of RM1,653,369 and RM16,000,534 (2011: RM1,653,369 and RM16,220,296) respectively as at 31 March 2012 is in the process of being transferred.
23 SUBSIDIARIES The Company Note 2012 2011 RM’000 RM’000 At cost: At 1 April Unquoted shares 799,024 781,274 Add: Acquisition of shares in a subsidiary 36 – 18,000 Less: Disposal of interest in a subsidiary 37 – (250) 799,024 799,024 Less: Accumulated impairment (11,242) (9,512) At 31 March 787,782 789,512
The Group’s effective equity interest in the subsidiaries and their respective principal activities are set out in Note 42 to the financial statements. 124 IJM Land Berhad (187405-T)
NOTES TO THE FINANCIAL STATEMENTS (continued) for the financial year ended 31 March 2012
24 ASSOCIATES The Group 2012 2011 RM’000 RM’000 Unquoted shares, at cost 3,509 3,509 Share of post acquisition accumulated losses (1,531) (1,530) 1,978 1,979 Represented by: The Group’s share of net assets 1,978 1,979
(a) The Group’s share of assets and liabilities of the associates are as follows: The Group 2012 2011 RM’000 RM’000 Non-current assets 1,780 1,780 Current assets 226 228 Current liabilities (28) (29) Net assets 1,978 1,979
(b) The Group’s share of the revenue and expenses of the associates are as follows: The Group 2012 2011 RM’000 RM’000 Other income 5 23 Expenses including taxation (6) (7) Net (loss) /profit for the financial year (1) 16
(c) The details of the associates, all of which are incorporated in Malaysia, are as follows: Effective equity interest Principal activities Held by IJM Properties Sdn Bhd 2012 2011 % % Ever Mark (M) Sdn Bhd 50 50 Dormant MASSCORP-Vietnam Sdn Bhd* 20 20 Investment holding Held by Worldwide Ventures Sdn Bhd PIETC Holdings Sdn Bhd 42 42 In Member’s Voluntary Liquidation * Audited by a firm other than member firm of PricewaterhouseCoopers International Limited and PricewaterhouseCoopers Malaysia. ANNUAL REPORT 2012 125
25 JOINTLY CONTROLLED ENTITIES The Group 2012 2011 RM’000 RM’000 Share of net assets of jointly controlled entities 8,376 15,351 Amounts owing by jointly controlled entities 664,887 518,417 Less: Allowance for impairment on amounts owing by jointly controlled entities (54,225) (51,372) 610,662 467,045 619,038 482,396
The amounts owing by the jointly controlled entities are mainly advances for the jointly controlled entities’ working capital requirements and bear interest at the rate of 8.3% (2011: 8.3%). These advances are repayable from the cash flows generated by the property development activities undertaken by the jointly controlled entities. Amounts owing by the jointly controlled entities are mainly in respect of amounts due from the jointly controlled entities related to Kumpulan Europlus Berhad, an associate of the ultimate holding company. Amounts due from jointly controlled entities that are impaired: As at 31 March 2012, amounts owing by jointly controlled entities of RM54,225,137 (2011: RM51,371,535) was impaired and provided for. The net amount recoverable from the jointly controlled entities are arrived at based on the present value of the projected cash flows expected to be generated by the property development activities undertaken by these jointly controlled entities. Movements on the Group’s allowance for impairment of amounts owing by jointly controlled entities are as follows: The Group 2012 2011 RM’000 RM’000 At 1 April 51,372 347 Effect of adopting FRS 139 – 49,906 Charge for the year 2,853 1,119 At 31 March 54,225 51,372
The Group has carried out an assessment on the recoverability of the amounts due from jointly controlled entities and management believes that the current impairment is adequate. 126 IJM Land Berhad (187405-T)
NOTES TO THE FINANCIAL STATEMENTS (continued) for the financial year ended 31 March 2012
25 JOINTLY CONTROLLED ENTITIES (continued) (a) Details of the jointly controlled entities are as follows: The Group’s effective interest in jointly Name controlled entities Principal activities 2012 2011 % % IJM Management Services Sdn Bhd 70 70 Project and construction management services - Giat Bernas Sdn Bhd Joint Venture IJM Properties Sdn Bhd 60 60 Property development - Danau Lumayan Sdn Bhd Joint Venture IJM Properties Sdn Bhd - JA Manan Development Sdn Bhd Joint Venture 50 50 Property development Elegan Pesona Sdn Bhd 50 50 Property development Astaka Tegas Sdn Bhd 50 50 Property development and investment holdings Sierra Ukay Sdn Bhd 50 50 Property development Sierra Selayang Sdn Bhd 50 50 Property development Good Debut Sdn Bhd 50 50 Property development Valencia Terrace Sdn Bhd 50 50 Property development Radiant Pillar Sdn Bhd 50 50 Property development Cekap Tropikal Sdn Bhd 50 50 Property development Larut Leisure Enterprise (Hong Kong) Limited 50 50 Property development IJMP – RPSB Joint Venture 60 60 Dormant
(b) The Group’s share of assets and liabilities of the jointly controlled entities are as follows: The Group 2012 2011 RM’000 RM’000 Non-current assets 285,452 66,522 Current assets 280,168 361,833 Non-current liabilities (77,574) (82,867) Current liabilities (490,001) (340,468) (1,955) 5,020 Goodwill on acquisition 10,331 10,331 Net assets 8,376 15,351
(c) The Group’s share of the revenue and expenses of the jointly controlled entities are as follows: The Group 2012 2011 RM’000 RM’000 Revenue 16,736 15,309 Other income 2,114 2,434 Expenses including taxation (25,827) (17,566) Share of results of jointly controlled entities 2 104 Net (loss)/ profit for the financial year (6,975) 281
There is no capital commitment and contingent liability relating to the Group’s interest in the jointly controlled entities. ANNUAL REPORT 2012 127
26 AVAILABLE-FOR-SALE FINANCIAL ASSETS The Group The Company 2012 2011 2012 2011 RM’000 RM’000 RM’000 RM’000 Cost Unquoted shares: - in Malaysia 875 875 – – 875 875 – – Transferable club membership 193 193 60 60 1,068 1,068 60 60 Allowance for diminution in value Unquoted shares: - in Malaysia (875) (875) – – Transferable club membership (80) (80) (30) (30) (955) (955) (30) (30) 113 113 30 30
27 LONG TERM RECEIVABLE The Group Note 2012 2011 RM’000 RM’000 Lease receivable 22,667 23,164 Less: Amount receivable within 12 months (Included in trade and other receivables) 32 (706) (497) 21,961 22,667
Lease receivable 33,063 35,848 Less: Unearned interest income (10,396) (12,684) 22,667 23,164 Lease receivable: - Receivable within 1 year 32 706 497 - Receivable between 1 and 5 years 6,342 4,927 - Receivable after 5 years 15,619 17,740 22,667 23,164
The lease receivable arises from the lease arrangement entered into by IJM Properties Sdn Bhd, a subsidiary of the Company, to lease a building to a third party for a period of 15 years commencing 1 March 2007. The Group does not have any significant exposure to credit risk from the lease receivable as the ownership and rights to the building revert to the Group in the event of default. 128 IJM Land Berhad (187405-T)
NOTES TO THE FINANCIAL STATEMENTS (continued) for the financial year ended 31 March 2012
28 GOODWILL The Group 2012 2011 RM’000 RM’000 Cost At 1 April 476 – Acquisition of shares in a subsidiary (Note 36) – 494 Exchange translation differences – (18) At 31 March 476 476
Accumulated impairment At 1 April (476) – Charge for the year – (476) At 31 March (476) (476) Net book value at 31 March – –
29 PROPERTY DEVELOPMENT (a) Land held for property development The Group Note 2012 2011 RM’000 RM’000 Freehold land, at cost 489,247 465,713 Leasehold land, at cost 74,372 73,585 Development costs 74,315 68,084 Accumulated impairment (6,531) (6,803) At 31 March 631,403 600,579
At 1 April 600,579 621,359 Additions during the year: - Freehold land, at cost 109,772 39,485 - Leasehold land, at cost 868 1,430 - Development costs 4,221 20,286 114,861 61,201 Transferred to property development costs: 29(b) - Freehold land, at cost (72,682) (31,534) - Leasehold land, at cost – (11,439) - Development costs (1,093) (25,589) - Accumulated impairment – 1,264 (73,775) (67,298) ANNUAL REPORT 2012 129
29 PROPERTY DEVELOPMENT (continued) (a) Land held for property development (continued) The Group 2012 2011 RM’000 RM’000 Disposal of land: - Freehold land, at cost (2,527) (9,573) - Leasehold land, at cost (627) (1,493) - Development costs (7,381) (2,326) - Accumulated impairment 276 531 (10,259) (12,861) Reclassification: - Freehold land, at cost (11,029) (3,259) - Leasehold land, at cost 546 4,272 - Development costs 10,484 (1,013) - Accumulated impairment (1) – – – Impairment charges for the year: - Development costs (3) (1,822) (3) (1,822) At 31 March 631,403 600,579
Borrowing costs of RM6,374,034 (2011: RM7,852,120) for the Group have been capitalised in land held for property development during the financial year (Note 10). Freehold land and leasehold land of the Group with carrying values amounting to RM143,788,173 (2011: RM109,566,336) and RM2,638,375 (2011: RM2,771,326) respectively have been charged to financial institutions to secure banking facility granted to the Group and the Company for Term Loan 3 and 5 (Note 18). Land title to freehold land with the carrying value of RM49,943,843 as at 31 March 2012 (2011: RM49,943,843) is in the process of being transferred. 130 IJM Land Berhad (187405-T)
NOTES TO THE FINANCIAL STATEMENTS (continued) for the financial year ended 31 March 2012
29 PROPERTY DEVELOPMENT (continued) (b) Property development costs The Group Note 2012 2011 RM’000 RM’000 At 1 April - Freehold land, at cost 576,758 612,969 - Leasehold land, at cost 341,559 442,457 - Development costs 1,994,076 2,038,365 - Accumulated costs charged to income statement (1,397,923) (1,515,996) - Completed units transferred to building stocks (89,970) (176,564) - Accumulated impairment (15,692) (6,035) - Exchange translation differences (1,230) – 1,407,578 1,395,196 Less: Completed development properties: - Freehold land, at cost (12,543) (80,195) - Leasehold land, at cost (62,010) (121,687) - Development costs (607,416) (728,440) - Accumulated costs charged to income statement 602,164 762,861 - Completed units transferred to building stocks 79,805 167,461 – – Arising from the acquisition of subsidiaries: - Development costs 36 – 47,063 – 47,063 Costs incurred during the financial year: - Freehold land, at cost 40,699 8,852 - Leasehold land, at cost 199 11,681 - Development costs 704,259 616,035 745,157 636,568 Reclassification: - Freehold land, at cost – 3,598 - Leasehold land, at cost (274) (2,331) - Development costs 65 (4,536) - Accumulated costs charged to income statement 3 923 - Completed units transferred to building stocks 206 – - Accumulated impairment – 2,346 – – Transferred from land held for property development: 29(a) - Freehold land, at cost 72,682 31,534 - Leasehold land, at cost – 11,439 - Development costs 1,093 25,589 - Accumulated impairment – (1,264) 73,775 67,298 ANNUAL REPORT 2012 131
29 PROPERTY DEVELOPMENT (continued) (b) Property development costs (continued) The Group Note 2012 2011 RM’000 RM’000 Costs charged to income statement (740,592) (645,711) Completed units transferred to building stocks (21,507) (80,867) Exchange translation differences 315 (1,230) Impairment charges for the year – (10,739) At 31 March 1,464,726 1,407,578
At 31 March: - Freehold land, at cost 677,596 576,758 - Leasehold land, at cost 279,474 341,559 - Development costs 2,092,077 1,994,076 - Accumulated costs charged to income statement (1,536,348) (1,397,923) - Completed units transferred to building stocks (31,466) (89,970) - Accumulated impairment (15,692) (15,692) - Exhange translation differences (915) (1,230) 1,464,726 1,407,578
Property development costs incurred during the financial year include the capitalisation of the following expenses: The Group Note 2012 2011 RM’000 RM’000 Interest expenses 10 30,342 30,322
Freehold land and leasehold land of the Group with carrying values amounting to RM159,339,426 (2011: RM126,209,669) and RM44,366,999 (2011: RM44,728,442) respectively have been charged to the financial institutions to secure banking facilities granted to the Group and the Company for Revolving Credit 1 and 2 and Term Loan 1,2,3 and 4 (Note 18). Land title to leasehold land with the carrying value of RM32,769,000 (2011: RM32,769,000) is in the process of being transferred.
30 INVENTORIES The Group 2012 2011 RM’000 RM’000 Cost Finished goods: - Completed buildings, vacant industrial and bungalow lots 158,463 158,458 Materials and consumables 24 623 Construction materials 2,888 5,863 161,375 164,944 Net realisable value Finished goods: - Completed buildings 15,533 63,654 Materials and consumables 1,133 29 178,041 228,627 132 IJM Land Berhad (187405-T)
NOTES TO THE FINANCIAL STATEMENTS (continued) for the financial year ended 31 March 2012
31 ASSETS HELD FOR SALE The Group 2012 2011 RM’000 RM’000 At 1 April 10,167 – Transferred from property, plant and equipment (Note 21) 11,102 6,652 Transferred from investment properties (Note 22) 37,906 5,116 59,175 11,768 Less: Impairment charges for the year – (1,601) Less: Disposal during the year (5,143) – At 31 March 54,032 10,167
(a) IJM Properties Sdn Bhd, a wholly-owned subsidiary of the Company, had on 22 September 2011 entered into a sale and purchase agreement with Ewein Land Sdn Bhd to dispose of all that piece of freehold land and hereditaments known as Lot No. 777 held under Geran No. Hakmilik 77968, Seksyen 4, Bandar Jelutong, Daerah Timur Laut, Pulau Pinang measuring approximately 46,823 square feet together with a sixteen-storey office building and a seven-storey car park collectively known as Menara IJM Land for a total cash considerationof RM50,000,000. The disposal is pending fulfilment of condition precedents as at 31 March 2012. (b) Holiday Villa Management Sdn Bhd, a wholly-owned subsidiary of the Company, had on 10 October 2011, entered into a sale and purchase agreement with Jutamars Sdn Bhd to dispose of a parcel of leasehold land situated at PT4308, HS(D)7083, Mukim Mentakab, Daerah Temerloh, Pahang Darul Makmur, with a hotel building erected thereon for a cash consideration of RM4,521,883.50. The disposal is pending fulfilment of condition precedents as at 31 March 2012. The assets were measured at fair value less costs to sell at the date of held-for-sale classification. (c) Worldwide Ventures Sdn Bhd, an 86%-owned subsidiary of the Company, had on 21 October 2011, entered into a sale and purchase agreement with INTI International College Penang Sdn Bhd to dispose of all that parcel of leasehold land held under PN6836 Lot 11517 (formerly held under HS(D) 15866 PT2764), Mukim 13, District of Timor Laut, Penang measuring approximately 8,140 square metres and all building erected thereon for a cash consideration of RM24,000,000. The disposal is pending fulfilment of condition precedents 31 March 2012. (d) IJM Management Services Sdn Bhd, a wholly-owned subsidiary of the Company, had on 3 October 2011, entered into a sale and purchase agreement with Litland Corporation Sdn Bhd to dispose of office space located at Wisma Penang Garden, No. 42, Jalan Sultan Ahmad Shah, Penang, measuring approximately 8,832 square feet together with the car park lots for a cash consideration of RM1,767,000. The disposal was completed on 25 April 2012. (e) In the previous financial year, a wholly-owned subsidiary of the Company entered into a sale and purchase agreement withFairview School Penang Sdn Bhd to dispose of IJM Lake Plaza together with the security system installed within for a cash consideration of RM7,000,000. The disposal was completed during the financial year and a gain on disposal of RM1,857,061 was recognised in profit or loss (Note 5(b)). ANNUAL REPORT 2012 133
32 TRADE AND OTHER RECEIVABLES The Group The Company Note 2012 2011 2012 2011 RM’000 RM’000 RM’000 RM’000 Trade receivables 32(a) 354,511 349,772 – – Less: Allowance for impairment of trade receivables (6,096) (5,677) – – 348,415 344,095 – – Lease receivable 27 706 497 – – Amounts owing by fellow subsidiaries 32(b) 586 586 – – 1,292 1,083 – – Other receivables 57,447 67,657 – 980 Less: Allowance for impairment of other receivables (5,473) (6,333) – (980) 51,974 61,324 – – Amounts owing by: - fellow subsidiaries 32(b) 7,392 8,009 18 18 - subsidiaries 32(c) – – 1,246,175 1,122,014 7,392 8,009 1,246,193 1,122,032 409,073 414,511 1,246,193 1,122,032 Deposits 17,910 8,192 5,109 78 426,983 422,703 1,251,302 1,122,110 Accrued billings in respect of property development 140,892 94,080 – – Amounts due from a customer on construction contracts 35 – 36,360 – – Prepayments 1,291 701 – – 569,166 553,844 1,251,302 1,122,110
(a) Credit terms of trade receivables range from 14 - 90 days (2011: 14 - 90 days). (b) Amounts owing by fellow subsidiaries are unsecured, interest-free and repayable on demand. (c) The amounts owing by subsidiaries are interest free, unsecured and repayable on demand except for advances to subsidiaries amounting to RM286,000,000 (2011: RM718,000,000) which are specifically financed by borrowings. The respective borrowing rates range from 4.6% - 5.3% (2011: 3.0% - 4.7%) per annum and are borne by the subsidiaries which utilise the funds. The Company has carried out an assessment on the recoverability of these balances and management believes that the current impairment recognised is adequate. Trade and other receivables that are neither past due nor impaired: Trade and other receivables that are neither past due nor impaired are substantially property purchasers. The Group does not have any significant credit risk from its property development activities as its services and products are predominantly rendered and sold to a large number of property purchasers with end financing facilities from reputable financiers. Trade receivables are monitored on an on-going basis via Group management reporting procedures. Credit risks with respect to trade receivables are limited as the ownership and rights to the properties revert to the Group in the event of default. 134 IJM Land Berhad (187405-T)
NOTES TO THE FINANCIAL STATEMENTS (continued) for the financial year ended 31 March 2012
32 TRADE AND OTHER RECEIVABLES (continued) Trade and other receivables that are past due but not impaired: As at 31 March 2012, trade receivables of the Group of RM264,454,082 (2011: RM 51,846,272) were past due but not impaired. These relate to customers for whom there are no recent history of default, purchasers with end-financing from reputable financial institutions or land titles being held by the Group until receipt of full payment. There is no objective evidence that the receivables are not fully recoverable. The ageing analysis of these receivables is as follows: The Group 2012 2011 RM’000 RM’000 1 - 30 days past due not impaired 17,887 19,569 31 - 60 days past due not impaired 5,312 12,171 61 - 90 days past due not impaired 12,420 7,367 More than 91 days past due not impaired 228,835 12,739 264,454 51,846
Debts more than 91 days past due not impaired of RM200,000,000 was received subsequent to the financial year end. Trade and other receivables that are impaired: As at 31 March 2012, trade and other receivables for the Group and the Company of RM11,569,608 (2011: RM12,010,357) and RM Nil (2011: RM980,000) respectively were impaired and provided for. The receivables were individually impaired either because of significant delay in collection period or because the debtors are in financial difficulty. Movements on the Group’s and the Company’s allowance for impairment of trade and other receivables are as follows: The Group The Company 2012 2011 2012 2011 RM’000 RM’000 RM’000 RM’000 At 1 April 12,010 11,883 980 980 Charges for the year 1,775 912 – – Bad debts written off (1,404) (76) (980) – Bad debts recovered (812) (709) – – At 31 March 11,569 12,010 – 980
The Group does not have any significant exposure to any individual customer or counterparty nor does the Group have any major concentration of credit risk, other than the concentration of credit risk in respect of an amount of RM200,000,000 due from SS Two Mall Sdn Bhd, a construction contract customer of the Group, which was received subsequent to the financial year end. The Group has carried out an assessment on the recoverability of the remaining balances and management believes that the current impairment is adequate. There is no material difference between the carrying value of the trade and other receivables and their fair value, due to the short-term duration of the receivables. ANNUAL REPORT 2012 135
33 DEPOSITS, CASH AND BANK BALANCES The Group The Company Note 2012 2011 2012 2011 RM’000 RM’000 RM’000 RM’000 Deposits with licensed banks 33(a) 227,015 353,561 111,090 205,061 Cash and bank balances 98,432 107,470 31,020 29,708 Housing Development Accounts 33(b) 299,895 230,329 – – 398,327 337,799 31,020 29,708 625,342 691,360 142,110 234,769 (a) Included in deposits with licensed banks of the Group is sinking fund accounts of RM1,437,455 (2011: RM1,304,149). The sinking fund was established to cover the costs of periodic major repairs or replacement of the public amenities and club facilities of a subsidiary. (b) Cash and bank balances include balances amounting to RM299,895,318 (2011: RM230,329,038) which are maintained in designated Housing Development Accounts pursuant to the Housing Development (Control and Licensing) Act, 1966 and Housing Development (Housing Development Account) Regulation 1991 in connection with the Group’s property development projects. The utilisation of these balances are restricted before completion of the housing development projects and fulfilment of all relevant obligations to the purchasers, such that the cash could only be withdrawn from such accounts for the purpose of completing the particular projects. The effective interest rates per annum as at the end of the financial year for the Group and the Company are as follows: The Group The Company 2012 2011 2012 2011 % % % % Deposits with licensed banks 2.10 - 3.00 1.60 – 2.80 2.70 – 3.00 2.55 – 2.75 Cash at bank held under Housing Development Accounts 1.75 - 1.95 1.60 – 1.75 – –
The cash and bank balances are deposits at call with banks and earn no interest. Deposits with licensed banks have a maturity period ranging between 2 - 30 days (2011: 1 - 90 days). 136 IJM Land Berhad (187405-T)
NOTES TO THE FINANCIAL STATEMENTS (continued) for the financial year ended 31 March 2012
34 TRADE AND OTHER PAYABLES The Group The Company Note 2012 2011 2012 2011 RM’000 RM’000 RM’000 RM’000 Trade payables 40,261 58,967 – – Amounts owing to fellow subsidiaries 34(a) 355,152 442,289 – – 395,413 501,256 – – Amounts owing to: - fellow subsidiaries 34(a) 41,938 35,264 – – - ultimate holding company 34(b) 5,619 33,658 404 – - jointly controlled entities 34(e) 8,846 9,454 – – - subsidiaries 34(e) – – 29,991 – 56,403 78,376 30,395 – Other payables, provisions and accruals: Other payables 37,459 33,871 162 334 Deposits received 27,203 13,434 – – Accruals 34(d) 124,734 123,043 440 4,732 Land premium payable to the Penang State Government 19(b) 3,000 3,000 – – 192,396 173,348 602 5,066 644,212 752,980 30,997 5,066 Progress billings in respect of property development 14,664 72,711 – – Provisions 34(c) 7,826 6,722 498 314 Finance lease liabilities 34(f) 1 3 – – 666,703 832,416 31,495 5,380
Credit terms of trade and other payables range from 30 - 45 days (2011: 30 - 45 days). (a) The trade portion of the amounts owing to fellow subsidiaries have a credit term of 30 days, and balances outstanding for more than 30 days (2011: 30 days) bear interest at rates ranging from 5.0% - 6.0% (2011: 5.0% - 6.0%) per annum. The non-trade transactions represent advances and payments made on behalf which are unsecured, interest-free and repayable on demand. (b) Amounts owing to the ultimate holding company are unsecured, interest-free and repayable on demand except for RM Nil (2011: RM30,000,000) which bears interest at the rate of Nil (2011: 5.0%) per annum. (c) Included in the provision is an amount provided for gratuity payment to a Director of the Company amounting to RM1,713,600 (2011: RM1,670,400). The provision is in respect of amounts equivalent to 2 months of the Director’s last drawn salary for each year of service multiplied by the number of years in service with the Group, shall be paid to the Director upon his leaving of office or death, provided the gratuity payment does not exceed the Director’s total emoluments in the 3 years immediately preceding the Director’s leaving of office or death. (d) In the preceding financial year, included in accruals was an accrued interest of RM4,339,726 in respect of RCULS. The interest element in respect of RCULS was payable semi-annually in arrears to the ultimate holding company. (e) The amounts owing to jointly controlled entities and subsidiaries are unsecured, interest-free and repayable on demand. ANNUAL REPORT 2012 137
34 TRADE AND OTHER PAYABLES (continued) (f) Finance lease liabilities The Group 2012 2011 RM’000 RM’000 Minimum lease payments: - not later than 1 year 2 3 - later than 1 year and not later than 2 years – 2 2 5 Less: Future finance charges on finance lease liabilities (1) (1) Present value of finance lease liabilities 1 4 Represented by: Current 1 3 Non-current – 1 1 4 Present value of finance lease liabilities: - not later than 1 year 1 3 - later than 1 year and not later than 2 years – 1 1 4
The Group 2012 2011 % % Weighted average effective interest rate of finance lease liabilities at balance sheet date 6.2 6.2
35 AMOUNTS DUE FROM A CUSTOMER ON CONSTRUCTION CONTRACTS The Group The Company Note 2012 2011 2012 2011 RM’000 RM’000 RM’000 RM’000 Aggregate costs incurred to-date 194,955 194,955 – – Attributable profits 32,005 32,005 – – 226,960 226,960 – – Less: Progress billings on contract (226,960) (190,600) – – Amounts due from a customer on construction contracts 32 – 36,360 – –
The amount due from a customer on construction contracts is secured in the form of an irrevocable power of attorney granted to the Group to deal with the land and building in the event of default. See Note 32 to the financial statements for further disclosure on credit risk. 138 IJM Land Berhad (187405-T)
NOTES TO THE FINANCIAL STATEMENTS (continued) for the financial year ended 31 March 2012
36 ACQUISITION OF SHARES IN SUBSIDIARIES (a) There are no acquisitions of subsidiaries/ additional interest in subsidiaries by the Group during the financial year. (b) In the preceding financial year, the Group acquired the following subsidiary: (i) The Company had on 21 May 2010 entered into a Share Sale Agreement with the existing shareholders of Sova Holdings Sdn Bhd (“SHSB”) to acquire 210,000 ordinary shares of RM1.00 each, representing 70% of the issued and paid up capital of SHSB for a total cash consideration of RM18,000,000. The acquisition was completed on 9 September 2010. Details of net assets acquired are as follows: Acquiree’s Fair Note carrying value value RM’000 RM’000 Identifiable assets and liabilities Non-current assets Property, plant and equipment 21 157 157 Current assets Property development costs 29 12,471 47,063 Receivables 2,908 2,908 Tax recoverable 28 28 Cash and bank balances 2,354 2,354 17,761 52,353 Non-current liabilities Deferred tax liabilities 20 – (8,648) – (8,648) Current liabilities Payables (18,853) (18,853) (18,853) (18,853) Identifiable net (liabilities)/assets (935) 25,009 Less: 30% of fair value of total net assets held by non-controlling interests (7,503) Identifiable net assets acquired 17,506 Goodwill 28 494 Purchase consideration 23 18,000 (ii) Details of cash flows arising from the acquisition are as follows: The Group RM’000 Total purchase consideration (18,000) Less: Cash and cash equivalents of subsidiary acquired 2,354 Cash outflow to the Group on acquisition (15,646)
The acquired business contributed revenue of RM Nil and loss before taxation of RM4,577,978 to the Group for the period from 9 September 2010, date of completion of acquisition, to 31 March 2011. ANNUAL REPORT 2012 139
37 DISPOSAL OF INTEREST IN SUBSIDIARIES (a) There are no disposals of interest in subsidiaries by the Group during the financial year. (b) In the preceding financial year, the Group disposed the following subsidiary: (i) On 24 June 2010, the Company entered into Share Sale and Purchase Agreement to dispose 250,000 ordinary shares of RM1.00 each, representing 100% equity interest in Delta Awana Sdn Bhd (“DASB”), for a total cash consideration of RM68,467,134. Following the completion of the disposal, DASB ceased to be a subsidiary of the Company. Details of the disposal are as follows: At date of disposal RM’000 Investment properties (Note 22) 313,744 Trade and other receivables 7,532 Cash and bank balances 2,020 Trade and other payables (12,513) Amounts owing to related companies (17,504) Deferred tax liabilities (Note 20) (930) Current tax liabilities (3,830) Term loan (283,000) Net assets 5,519 Net disposal proceeds (68,467) Gain on disposal to the Group (Note 5(b)) (62,948)
(ii) The net cash flows on disposal were determined as follows: At date of disposal RM’000 Total proceeds from disposal – cash consideration 68,467 Cash and cash equivalents of subsidiary disposed of (2,020) Cash inflow to the Group on disposal 66,447 140 IJM Land Berhad (187405-T)
NOTES TO THE FINANCIAL STATEMENTS (continued) for the financial year ended 31 March 2012
38 CASH AND CASH EQUIVALENTS Cash and cash equivalents included in the Group’s and the Company’s cash flow statements comprise the following: The Group The Company Note 2012 2011 2012 2011 RM’000 RM’000 RM’000 RM’000 Deposits with licensed banks 33 227,015 353,561 111,090 205,061 Cash and bank balances 33 98,432 107,470 31,020 29,708 Housing Development Accounts 33 299,895 230,329 – – 398,327 337,799 31,020 29,708 Bank overdrafts - Unsecured 18 (73) – – – 625,269 691,360 142,110 234,769
39 FAIR VALUES OF FINANCIAL INSTRUMENTS FOR DISCLOSURE PURPOSES The fair value of a financial instrument is assumed to be the amount at which the instrument could be exchanged or settled between knowledgeable and willing parties in an arm’s length transaction. Quoted market prices, when available, are used as a measure of fair values. However, for a significant portion of the Group’s and of the Company’s financial instruments, quoted market prices do not exist. For such financial instruments, fair values presented are estimates derived using the discounted value of future cash flows or other valuation techniques. These techniques involve uncertainties and are significantly affected by the assumptions used and judgements made regarding risk characteristics of various financial instruments, discount rates, estimates of future cash flows and other factors. Changes in assumptions could significantly affect these estimates and the resulting fair values. Except as stated below, the carrying values of other financial liabilities of the Group and of the Company at the balance sheet date approximated their fair values. The Group The Company Note Carrying Fair Carrying Fair amount value amount value RM’000 RM’000 RM’000 RM’000 Financial Liabilities At 31 March 2012 Advances from the Penang State Government 19 33,180 (aa) – – Land premium payable to the Penang State Government 19 9,100 8,219 – –
At 31 March 2011 Advances from the Penang State Government 19 33,180 (aa) – – Land premium payable to the Penang State Government 19 12,100 10,730 – –
(aa) The fair value of the advances from the Penang State Government has not been disclosed as the repayment is scheduled upon completion of certain conditions as set out in Note 19 to the financial statements, of which the completion date could not be reasonably determined as at the year end. ANNUAL REPORT 2012 141
40 SIGNIFICANT RELATED PARTY DISCLOSURES In addition to related party disclosures mentioned elsewhere in the financial statements, set out below are other significant related party transactions and balances. A General Mandate has been obtained from shareholders vide a Circular to Shareholders dated 29 July 2011 for Recurrent Related Party Transactions with the following related parties: (i) IJM Corporation Berhad and its subsidiaries (“IJM Group”) (ii) Kumpulan Europlus Berhad, an associate of the ultimate holding company, and its subsidiaries (“KEB Group”), Trinity Corporation Berhad and its subsidiaries (“Trinity Group”), and jointly controlled entities with KEB Group and Trinity Group (iii) Directors of IJM Group and persons connected to such Directors (a) The ultimate holding company is IJM Corporation Berhad, a public limited liability company, incorporated and domiciled in Malaysia and listed on the Main Market of Bursa Malaysia Securities Berhad. (b) Identities of related parties Parties are considered to be related to the Group if the Group has the ability, directly or indirectly, to control the party or exercise significant influence over the party in making financial and operating decisions, or vice versa, or where the Group and the party are subject to common control or common significant influence. Related parties may be individuals or other entities. Other than those disclosed elsewhere in the financial statements, the Group has related party relationship with the following parties: Identities of related parties Relationship Arkitek Kitas Sdn A firm related to a shareholder of a subsidiary Virgo Jurutera Perunding A firm related to a shareholder of a subsidiary SM Consulting Engineers Sdn Bhd A firm related to a shareholder of a subsidiary 142 IJM Land Berhad (187405-T)
NOTES TO THE FINANCIAL STATEMENTS (continued) for the financial year ended 31 March 2012
40 SIGNIFICANT RELATED PARTY DISCLOSURES (continued) (c) Significant related party transactions The Group The following transactions with related parties were carried out under terms and conditions negotiated amongst the related parties. The Group 2012 2011 RM’000 RM’000 Fellow subsidiaries: Progress claims charged by: - Road Builder (M) Sdn Bhd 248,616 260,747 - Jurutama Sdn Bhd 213,168 112,079 - IBS Building Systems Sdn Bhd 37,476 43,990 - IJM Construction Sdn Bhd 24,256 10,965 Purchase of construction materials: - Commerce House Sdn Bhd – 8,279 Interest charged by: - Road Builder (M) Sdn Bhd 9,144 11,950 - IJM Construction Sdn Bhd (1,254) 1,243 - IBS Building Systems Sdn Bhd 209 792 - Jurutama Sdn Bhd 230 2,169 - Commerce House Sdn Bhd 10 – Rental of office charged by: - IJM Construction Sdn Bhd 1,018 1,018 Progress billings charged to: - IJM Plantations Berhad 380 921
Firms related to a shareholder of a subsidiary: Architectural fees paid to Arkitek Kitas Sdn 355 383 Professional fees for civil and structural works paid to Virgo Jurutera Perunding 985 782 Professional fees for mechanical and electrical engineering paid to SM Consulting Engineers Sdn Bhd 46 68 Ultimate holding company: Repayment to the ultimate holding company (13,928) (180,116) Interest on advances charged by the ultimate holding company 38,611 39,387 Net expenses paid on behalf by the ultimate holding company 30,440 59,338 Interest on RCULS charged by the ultimate holding company 230 12,000 ANNUAL REPORT 2012 143
40 SIGNIFICANT RELATED PARTY DISCLOSURES (continued) (c) Significant related party transactions (continued) The Group (continued) The following transactions with related parties were carried out under terms and conditions negotiated amongst the related parties. (continued) The Group 2012 2011 RM’000 RM’000 Jointly controlled entities: Interest charged (to)/by: - Sierra Ukay Sdn Bhd (7,263) (4,840) - Sierra Selayang Sdn Bhd – (198) - Radiant Pillar Sdn Bhd (11,404) (6,045) - Good Debut Sdn Bhd (2,681) (1,326) - Valencia Terrace Sdn Bhd (5,625) (3,339) - Cekap Tropikal Sdn Bhd (4,777) (3,296) - IJM Properties Sdn Bhd - JA Manan Development Sdn Bhd Joint Venture (1,537) (2,001) - Larut Leisure Enterprise (Hong Kong) Limited (4,953) (4,185) Net advances (to)/from: - Sierra Ukay Sdn Bhd (1,943) (23,164) - Good Debut Sdn Bhd (9,219) (8,539) - Cekap Tropikal Sdn Bhd (4,981) (886) - Valencia Terrace Sdn Bhd (31,822) (23,266) - Elegan Pesona Sdn Bhd (5,016) 1,143 - Radiant Pillar Sdn Bhd (63,593) (50,448) - IJM Properties Sdn Bhd - JA Manan Development Sdn Bhd Joint Venture 5,290 8,780 - Danau Lumayan Sdn Bhd 600 – - Astaka Tegas Sdn Bhd (1) (2) - Sierra Selayang Sdn Bhd (10) (73) - Larut Leisure Enterprise (Hong Kong) Limited (35) (114) Project management and sales and marketing fees charged to: - Elegan Pesona Sdn Bhd (20) (2,217) Jointly controlled entity of a fellow subsidiary: Progress claims charged by: - IJM Construction-Perkasa Sutera Joint Venture – 2,904 144 IJM Land Berhad (187405-T)
NOTES TO THE FINANCIAL STATEMENTS (continued) for the financial year ended 31 March 2012
40 SIGNIFICANT RELATED PARTY DISCLOSURES (continued) (c) Significant related party transactions (continued) The Company The following transactions with related parties were carried out under terms and conditions negotiated amongst the related parties. (continued) The Company 2012 2011 RM’000 RM’000 Subsidiaries: Advances (to)/from: - RB Land Sdn Bhd (23,285) (67,000) - Emko Properties Sdn Bhd 30,000 – - IJM Properties Sdn Bhd (13,160) (21,400) - Sova Holdings Sdn Bhd (7,640) (27,583) - ERMS Berhad – (1,000) Repayment of advances by: - Emko Properties Sdn Bhd 2,221 9,500 - Shah Alam 2 Sdn Bhd – 10,000 - IJM Properties Sdn Bhd – 39,786 - RB Land Sdn Bhd – 48,000 - ERMS Berhad – 1,000 Expenses paid on behalf for: - IJM Properties Sdn Bhd (63,387) (30,780) - RB Land Sdn Bhd (1,911) (14,356) - Emko Properties Sdn Bhd (5) (4,064) Dividend income received from: - RB Land Sdn Bhd – (15,000) - IJM Properties Sdn Bhd (40,000) (20,000) - Delta Awana Sdn Bhd – (8,031) - Emko Properties Sdn Bhd (24,500) – Interest charged to: - RB Land Sdn Bhd (4,917) (4,920) - Shah Alam 2 Sdn Bhd (5,984) (6,112) - Emko Properties Sdn Bhd – (80) - IJM Properties Sdn Bhd (4,537) (16,594) - Delta Awana Sdn Bhd – (2,271) - Sova Holdings Sdn Bhd (1,200) (470) Management fees charged to: - ERMS Berhad (552) (552) Ultimate holding company: Interest on RCULS charged by the ultimate holding company 230 12,000 Repayment of interest on RCULS to the ultimate holding company (4,570) (12,000) Interest on advances charged by the ultimate holding company – 2,625 Repayment to the ultimate holding company – (55,860) ANNUAL REPORT 2012 145
40 SIGNIFICANT RELATED PARTY DISCLOSURES (continued) (d) Key management compensation during the financial year: Key management personnel comprise the Directors and management personnel of the Group, having authority and responsibility for planning, directing and controlling the activities of the Group entities directly or indirectly. The Group The Company 2012 2011 2012 2011 RM’000 RM’000 RM’000 RM’000 Wages, salaries and bonus 3,946 3,200 437 351 Defined contribution retirement plan 650 528 68 58 Gratuity 43 230 – – Other employee benefits 244 272 25 46 4,883 4,230 530 455
(e) Transactions with Directors and key management personnel relating to the purchase of properties during the financial year: The following transactions with Directors and key management personnel were carried out under terms not more favourable than those generally available to the public or employees of the ultimate holding company and its subsidiaries, or under negotiated terms which the Board of Directors, after deliberation, has believed to be in the best interests of the Group. The Group 2012 2011 RM’000 RM’000 Progress billings charged to: - Directors and key management personnel of the Company and the ultimate holding company 2,151 31,539 - Close family members of Directors and key management personnel of the Company and the ultimate holding company 6,387 4,658 Amount outstanding arising from progress billings as at end of financial year from: - Directors and key management personnel of the ultimate holding company 128 3 - Close family members of Directors and key management personnel of the Company and the ultimate holding company 158 8
The amounts that remained outstanding at the reporting date in respect of the transactions with related parties are shown in Notes 19, 32 and 34 to the financial statements.
41 COMMITMENTS The Group The Company 2012 2011 2012 2011 RM’000 RM’000 RM’000 RM’000 Approved and contracted for 145,209 60,459 – –
Analysed as follows: - Development land 98,553 59,376 – – - Investment 45,900 – – – - Property, plant and equipment 756 1,083 – – 145,209 60,459 – – 146 IJM Land Berhad (187405-T)
NOTES TO THE FINANCIAL STATEMENTS (continued) for the financial year ended 31 March 2012
42 LIST OF SUBSIDIARIES AS AT 31 MARCH 2012 Country of Effective Name incorporation equity interest Principal activities 2012 2011 % % Held by the Company ERMS Berhad Malaysia 100 100 Hotel operations Emko Properties Sdn Bhd Malaysia 100 100 Property development Econstates Management Malaysia 100 100 Dormant Services Sdn Bhd RB Land Sdn Bhd Malaysia 100 100 Property development and construction activities IJM Properties Sdn Bhd Malaysia 100 100 Investment holding and property development RB Development Sdn Bhd Malaysia 100 100 Property development Sova Holdings Sdn Bhd Malaysia 70 70 Property development Held by ERMS Berhad Holiday Villa Management Sdn Bhd Malaysia 100 100 Hotel operations Held by Emko Properties Sdn Bhd Emko Management Services Sdn Bhd Malaysia 100 100 Property management Tulip Avenue Sdn Bhd Malaysia – 100 Liquidated Held by RB Land Sdn Bhd Seremban Two Landscape Sdn Bhd Malaysia 80 80 In Member’s Voluntary Liquidation Seremban Two Property Management Sdn Bhd Malaysia 100 100 Property management Seremban Two Holdings Sdn Bhd Malaysia 100 100 Property development Seremban Two Properties Sdn Bhd Malaysia 100 100 Property development Seremban Two Driving Range Sdn Bhd Malaysia 75 75 In Member’s Voluntary Liquidation Shah Alam 2 Sdn Bhd Malaysia 100 100 Property development RB Property Management Sdn Bhd Malaysia 100 100 Property development Casa Warna Sdn Bhd Malaysia 100 100 Property management Ikatan Flora Sdn Bhd Malaysia 100 100 Property development Serenity Ace Sdn Bhd Malaysia – 100 Liquidated Aras Varia Sdn Bhd Malaysia 100 100 Property development Dian Warna Sdn Bhd Malaysia 100 100 Property development Titian Tegas Sdn Bhd Malaysia 100 100 Property development Tarikan Abadi Sdn Bhd Malaysia 100 100 Property development Unggul Senja Sdn Bhd Malaysia 100 100 Property development Murni Lapisan Sdn Bhd Malaysia 100 100 Property development ANNUAL REPORT 2012 147
42 LIST OF SUBSIDIARIES AS AT 31 MARCH 2012 (continued) Country of Effective Name incorporation equity interest Principal activities 2012 2011 % %
Held by IJM Properties Sdn Bhd Chen Yu Land Sdn Bhd Malaysia 100 100 Property development Glamour Development (MM2H) Sdn Bhd Malaysia – 100 Liquidated IJM Management Services Sdn Bhd Malaysia 100 100 Providing project and construction management services and sales and marketing services Liberty Heritage (M) Sdn Bhd Malaysia 100 100 Property management and car parking services Manda’rina Sdn Bhd Malaysia 100 100 Property development Maxharta Sdn Bhd Malaysia 100 100 Dormant Wedec Sdn Bhd Malaysia 100 100 In Member’s Voluntary Liquidation Worldwide Ventures Sdn Bhd Malaysia 86 86 Property development and investment holding Aqua Aspect Sdn Bhd Malaysia 80 80 Property development Jelutong Development Sdn Bhd Malaysia 80 80 Property development IJMP – MK Joint Venture Malaysia 70 70 Property development NS Central Market Sdn Bhd Malaysia 70 70 Property development Cypress Potential Sdn Bhd Malaysia 70 70 Property development Jalinan Masyhur Sdn Bhd Malaysia 51 51 Property development Sinaran Intisari (M) Sdn Bhd Malaysia 51 51 Dormant Suria Bistari Development Sdn Bhd Malaysia 51 51 Property development Held by Worldwide Ventures Sdn Bhd PIETC Sdn Bhd Malaysia – 86 Liquidated Island Golf View Sdn Bhd Malaysia 86 86 Property development Sheffield Enterprise Sdn Bhd Malaysia 60 60 Dormant 148 IJM Land Berhad (187405-T)
NOTES TO THE FINANCIAL STATEMENTS (continued) for the financial year ended 31 March 2012
43 FINANCIAL INSTRUMENTS BY CATEGORY Loans and Available-for-sale Note receivables financial assets Total RM’000 RM’000 RM’000 The Group At 31 March 2012 Assets as per balance sheet: Non-current assets: Amounts due from jointly controlled entities 25 610,662 – 610,662 Available-for-sale financial assets 26 – 113 113 Long term receivables 27 21,961 – 21,961 Current assets: Trade and other receivables * 32 426,983 – 426,983 Deposits, cash and bank balances 33 625,342 – 625,342 Total 1,684,948 113 1,685,061
* Trade and other receivables exclude accrued billings in respect of property development, amounts due from a customer on construction contracts and prepayments.
Other financial liabilities at amortised costs Total RM’000 RM’000 Liabilities as per balance sheet: Non-current liabilities: Borrowings 18 286,806 286,806 Trade and other payables 19 861,412 861,412 Current liabilities: Trade and other payables ** 34 644,212 644,212 Borrowings 18 112,884 112,884 Total 1,905,314 1,905,314
** Trade and other payables exclude progress billings in respect of property development, finance lease liabilities and provisions. ANNUAL REPORT 2012 149
43 FINANCIAL INSTRUMENTS BY CATEGORY (continued) Loans and Available-for-sale Note receivables financial assets Total RM’000 RM’000 RM’000 The Group At 31 March 2011 Assets as per balance sheet: Non-current assets: Amounts due from jointly controlled entities 25 467,045 – 467,045 Available-for-sale financial assets 26 – 113 113 Long term receivables 27 22,667 – 22,667 Current assets: Trade and other receivables * 32 422,703 – 422,703 Deposits, cash and bank balances 33 691,360 – 691,360 Total 1,603,775 113 1,603,888
* Trade and other receivables exclude accrued billings in respect of property development, amounts due from a customer on construction contracts and prepayments.
Other financial liabilities at amortised costs Total RM’000 RM’000 Liabilities as per balance sheet: Non-current liabilities: Borrowings 18 262,177 262,177 Trade and other payables 19 781,921 781,921 RCULS 17 362,711 362,711 Current liabilities: Trade and other payables ** 34 752,980 752,980 Borrowings 18 86,063 86,063 Total 2,245,852 2,245,852
** Trade and other payables exclude progress billings in respect of property development, finance lease liabilities and provisions. 150 IJM Land Berhad (187405-T)
NOTES TO THE FINANCIAL STATEMENTS (continued) for the financial year ended 31 March 2012
43 FINANCIAL INSTRUMENTS BY CATEGORY (continued) Loans and Available-for-sale Note receivables financial assets Total RM’000 RM’000 RM’000 The Company At 31 March 2012 Assets as per balance sheet: Non-current assets: Available-for-sale financial assets 26 – 30 30 Current assets: Trade and other receivables 32 1,251,302 – 1,251,302 Deposits, cash and bank balances 33 142,110 – 142,110 Total 1,393,412 30 1,393,442
Other financial liabilities at amortised costs Total RM’000 RM’000 Liabilities as per balance sheet: Non-current liabilities: Borrowings 18 199,936 199,936 Current liabilities: Trade and other payables 34 30,997 30,997 Borrowings 18 86,064 86,064 Total 316,997 316,997 ANNUAL REPORT 2012 151
43 FINANCIAL INSTRUMENTS BY CATEGORY (continued) Loans and Available-for-sale Note receivables financial assets Total RM’000 RM’000 RM’000 The Company At 31 March 2011 Assets as per balance sheet: Non-current assets: Available-for-sale financial assets 26 – 30 30 Current assets: Trade and other receivables 32 1,122,110 – 1,122,110 Deposits, cash and bank balances 33 234,769 – 234,769 Total 1,356,879 30 1,356,909
Other financial liabilities at amortised costs Total RM’000 RM’000 Liabilities as per balance sheet: Non-current liabilities: Borrowings 18 256,000 256,000 RCULS 17 362,711 362,711 Current liabilities: Trade and other payables 34 5,066 5,066 Borrowings 18 62,000 62,000 Total 685,777 685,777 152 IJM Land Berhad (187405-T)
NOTES TO THE FINANCIAL STATEMENTS (continued) for the financial year ended 31 March 2012
44 CHANGES IN ACCOUNTING POLICIES The following describes the impact of revised FRS 3 “Business combinations”, revised FRS 127 “Consolidated and separate financial statements” and Amendment to FRS 7 “Financial instruments: Disclosures – improving disclosures about financial instruments” on the accounting policies and the financial statements of the Group. (a) Revised FRS 3 “Business combinations” The Group has changed its accounting policy on business combinations when it adopted the revised FRS 3 “Business combinations”. Previously, contingent consideration in a business combination was recognised when it is probable that payment will be made. Acquisition- related costs were included as part of the cost of business combination. With the adoption of the revised FRS 3 “Business combinations”, the cost of acquisition includes the fair values of any asset or liability resulting from a contingent consideration arrangement. Acquisition-related costs were previously included as part of the cost of business combination. With the adoption of the revised FRS 3 “Business combinations”, the costs directly attributable to the acquisition are expensed as incurred. The Group has applied the new policy prospectively to transactions occurring on or after 1 April 2011. As a consequence, no adjustments were necessary to any of the amounts previously recognised in the financial statements. (b) Revised FRS 127 “Consolidated and separate financial statements” The Group has changed its accounting policy on non-controlling interests when it adopted the revised FRS 127 “Consolidated and separate financial statements”. Previously, the Group had stopped attributing losses to the non-controlling interests where the losses exceeded the carrying amount of the non-controlling interests. With the adoption of the revised FRS 127 “Consolidated and separate financial statements”, all earnings and losses of the subsidiary are attributed to the owners of the company and non-controlling interests, even if the attribution of losses to the non-controlling interests results in a debit balance in the shareholders’ equity. The Group has applied this policy prospectively. On the date of adoption of the new policy, no adjustments have been made to the non- controlling interests previously recognised in the financial statements. (c) Amendment to FRS 7 “Financial instruments: Disclosures – improving disclosures about financial instruments” The amendment to FRS 7 requires enhanced disclosures about fair value measurement and liquidity risk. In particular, the amendment requires disclosure of fair value measurements by level of a fair value measurement hierarchy. Except for additional disclosure in the notes to the financial statements, the adoption of the amendment to FRS 7 has no significant impact on the financial statements of the Group and of the Company in the current financial year.
45 SIGNIFICANT EVENTS DURING THE FINANCIAL YEAR The Company has on 21 March 2012 entered into a conditional Share Sale and Purchase Agreement with Aspirasi Ratna Sdn Bhd (“ARSB”) to acquire from ARSB a total of 1,000,000 ordinary shares of RM1 each in Nasa Land Sdn Bhd (“NLSB”), representing 50% equity interest in NLSB, for a total cash consideration of RM51,000,000. The acquisition is pending fulfilment of condition precedents as at 31 March 2012. NLSB is the land owner cum developer of a mixed development project known as Desa Palma in Mukim Tebrau, Daerah Johor Bahru, Johor Darul Takzim with an aggregate undeveloped net area of approximately 95.83 acres. ANNUAL REPORT 2012 153
46 DISCLOSURE OF REALISED AND UNREALISED RETAINED PROFITS/(ACCUMULATED LOSSES) The following analysis is prepared in accordance with Guidance on Special Matter No.1, Determination of Realised and Unrealised Profits or Losses in the context of disclosure pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants (“MIA Guidance”) and the directive of Bursa Malaysia Securities Berhad. The Group The Company 2012 2011 2012 2011 RM’000 RM’000 RM’000 RM’000 Total retained profits of the Company and its subsidiaries: - Realised 931,411 795,674 85,345 90,186 - Unrealised 27,837 6,914 76 309 959,248 802,588 85,421 90,495 Total share of accumulated losses of associates: - Realised (1,531) (1,530) – – - Unrealised – – – – Total share of (accumulated losses)/retained profits of jointly controlled entities: - Realised (15,969) (7,033) – – - Unrealised 2,720 759 – – 944,468 794,784 85,421 90,495 Less: Consolidation adjustments (321,520) (310,558) – – Total group retained profits 622,948 484,226 85,421 90,495 154 IJM Land Berhad (187405-T)
STATUTORY DECLARATION
I, Edward Chong Sin Kiat, being the officer primarily responsible for the financial management of IJM Land Berhad, do solemnly and sincerely declare that, to the best of my knowledge and belief, the financial statements set out on pages 64 to 153 are correct and I make this solemn declaration conscientiously believing the same to be true and by virtue of the provisions of the Statutory Declaration Act, 1960. Subscribed and solemnly declared at Petaling Jaya on 29 May 2012.
EDWARD CHONG SIN KIAT ANNUAL REPORT 2012 155
REPORT OF THE AUDITORS to the members of IJM Land Berhad (Incorporated in Malaysia) (Company No. 187405 T)
REPORT ON THE FINANCIAL STATEMENTS
We have audited the financial statements of IJM Land Berhad on pages 64 to 153 which comprise the balance sheets as at 31 March 2012 of the Group and of the Company, and the statements of comprehensive income, changes in equity and cash flows of the Group and of the Company for the year then ended, and a summary of significant accounting policies and other explanatory notes, as set out on Notes 1 to 45.
Directors’ Responsibility for the Financial Statements
The Directors of the Company are responsible for the preparation of financial statements that give a true and fair view in accordance with MASB Approved Accounting Standards in Malaysia for Entities Other than Private Entities and the Companies Act, 1965, and for such internal control as the Directors determine are necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
Auditors’ Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with approved standards on auditing in Malaysia. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on our judgement, including the assessment of risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the entity’s preparation of financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the Directors, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the financial statements have been properly drawn up in accordance with MASB Approved Accounting Standards in Malaysia for Entities Other than Private Entities and the Companies Act, 1965 so as to give a true and fair view of the financial position of the Group and of the Company as of 31 March 2012 and of their financial performance and cash flows for the year then ended.
PricewaterhouseCoopers (AF 1146), Chartered Accountants, Level 10, 1 Sentral, Jalan Travers, Kuala Lumpur Sentral, P. O. Box 10192, 50706 Kuala Lumpur, Malaysia T: +60 (3) 2173 1188, F: +60 (3) 2173 1288, www.pwc.com/my 156 IJM Land Berhad (187405-T)
REPORT OF THE AUDITORS (continued) to the members of IJM Land Berhad (Incorporated in Malaysia) (Company No. 187405 T)
REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS
In accordance with the requirements of the Companies Act, 1965 in Malaysia, we also report the following:
(a) In our opinion, the accounting and other records and the registers required by the Act to be kept by the Company and its subsidiaries have been properly kept in accordance with the provisions of the Act.
(b) We are satisfied that the financial statements of the subsidiaries that have been consolidated with the Company’s financial statements are in form and content appropriate and proper for the purposes of the preparation of the financial statements of the Group and we have received satisfactory information and explanations required by us for those purposes.
(c) Our audit reports on the financial statements of the subsidiaries did not contain any qualification or any adverse comment made under Section 174(3) of the Act.
OTHER REPORTING RESPONSIBILITIES
The supplementary information set out in Note 46 on page 153 is disclosed to meet the requirement of Bursa Malaysia Securities Berhad and is not part of the financial statements. The Directors are responsible for the preparation of the supplementary information in accordance with Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants (“MIA Guidance”) and the directive of Bursa Malaysia Securities Berhad. In our opinion, the supplementary information is prepared, in all material respects, in accordance with the MIA Guidance and the directive of Bursa Malaysia Securities Berhad.
OTHER MATTERS
This report is made solely to the members of the Company, as a body, in accordance with Section 174 of the Companies Act, 1965 in Malaysia and for no other purpose. We do not assume responsibility to any other person for the content of this report.
PRICEWATERHOUSECOOPERS LOH LAY CHOON (No. AF: 1146) (No. 2497/03/14 (J)) Chartered Accountants Chartered Accountant
Kuala Lumpur 29 May 2012 ANNUAL REPORT 2012 157 list of top 10 properties as at 31 March 2012
Approximate Land/ Net Book *Date of Last Description Tenure/ Age of Built-up Value as at Revaluation/ and Year of Building Area 31/3/12 Date of No. Location Existing Use Expiry (Year) (sq.ft) (RM’000) Acquisition
1 PT 9354 Land for Freehold – 8,436,445 220,861 19/3/2004 PT 9363 commercial PT 9534 development PT 19967 Lot 21774 – 21775 Mukim Rasah Daerah Seremban Negeri Sembilan Darul Khusus
Lot 22057 Lot 22062 Lot 22064 Lot 22791 Lot 25176 Lot 25178 Lot 25747 – 25765 Lot 25767 Lot 25769 – 25777 Lot 25778 Lot 25955 Lot 25976 Lot 25981 Lot 25983 Lot 25985 PT 552 – 553 PT555 PT 558 – 561 PT 564 – 578 Lot 28501 Lot 28503 – 28505 Lot 31503 Lot 31521 Lot 31524 Lot 33735 Mukim Bandar Seremban Utama Daerah Seremban Negeri Sembilan Darul Khusus
PT 5579 Land for 503,784 Mukim Rasah industrial Daerah Seremban development Negeri Sembilan Darul Khusus
PT 278 – 346 Mukim Bandar Seremban Utama Daerah Seremban Negeri Sembilan Darul Khusus
PT 18249 – 18253 Land for 2,215,815 PT 18260 – 18262 residential PT 18264 – 18268 development PT 18271 – 18272 PT 18273 – 18309 PT 18311 – 18319 PT 18320 Mukim Rasah Daerah Seremban Negeri Sembilan Darul Khusus
PT 1 – 6 Mukim Bandar Seremban Utama Daerah Seremban Negeri Sembilan Darul Khusus 158 IJM Land Berhad (187405-T)
list of top 10 properties (continued) as at 31 March 2012
Approximate Land/ Net Book *Date of Last Description Tenure/ Age of Built-up Value as at Revaluation/ and Year of Building Area 31/3/12 Date of No. Location Existing Use Expiry (Year) (sq.ft) (RM’000) Acquisition
1 Parent Lot 23280 Parent Lot 23281 PT 19567 – 19568 Mukim Rasah Daerah Seremban Negeri Sembilan Darul Khusus
PT 362 – PT 542 Residential 1,178,797 Lot 27258 – 27263 development Lot 27302 – 27304 in progress Lot 27313 – 27315 Lot 27318 Lot 27397 – 27398 Lot 31251 – 31252 Lot 31256 Lot 31258 – 31260 Lot 31266 Lot 31268 – 31274 Lot 31276 Lot 31287 Lot 31289 – 31292 Lot 31295 – 31296 Lot 31308 Lot 31314 – 31322 Lot 31326 Lot 31331 – 31332 Lot 31356 Lot 31369 – 31371 Lot 31373 Lot 31381 – 31383 Lot 31386 – 31387 Lot 31400 – 31401 Lot 31405 Lot 31408 – 31409 Mukim Bandar Seremban Utama Daerah Seremban Negeri Sembilan Darul Khusus
PT 9447 – 9475 Commercial 927,678 PT 9529 – 9530 development Mukim Rasah in progress Daerah Seremban Negeri Sembilan Darul Khusus
Lot 27068 – 27070 Lot 27086 Lot 27089 Lot 27090 – 27093 Lot 27101 – 27102 Lot 27104 – 27106 Lot 27136 – 27137 Lot 27139 Lot 27140 – 27141 Lot 27155 Lot 25179 Mukim Bandar Seremban Utama Daerah Seremban Negeri Sembilan Darul Khusus ANNUAL REPORT 2012 159
Approximate Land/ Net Book *Date of Last Description Tenure/ Age of Built-up Value as at Revaluation/ and Year of Building Area 31/3/12 Date of No. Location Existing Use Expiry (Year) (sq.ft) (RM’000) Acquisition
2 PT 24934 – 24954 Residential Freehold – 931,003 321,958 19/3/2004 PT 24983 – 25027 development PT 25042 – 25149 in progress PT 24744 – 24775 Mukim Rasah Daerah Seremban Negeri Sembilan Darul Khusus
PT 32682 – 32711 PT 32712 – 32739 PT 32740 – 32877 PT 32883 – 32901 Mukim Labu Daerah Seremban Negeri Sembilan Darul Khusus
PT 24920 – 24933 Land for 3,674,118 PT 24955 – 24982 residential PT 25028 – 25041 development PT 24776 – 24919 PT 32296 – 32349 PT 32350 – 32371 PT 32136 – 32197 PT 32198 – 32295 PT 32902 – 32964 PT 32372 – 32623 PT 32624 – 32642 PT 23303 PT 32135 PT 32965 Mukim Labu Daerah Seremban Negeri Sembilan Darul Khusus
PT 22721 – 22730 PT 23227 – 23243 PT 23253 – 23302 Mukim Rasah Daerah Seremban Negeri Sembilan Darul Khusus
PT 32878 – 32882 Land for 3,955,807 PT 32115 – 32118 commercial PT 23304 – 23306 development Mukim Labu Daerah Seremban Negeri Sembilan Darul Khusus
PT 23244 – 23247 PT 23996 PT 22597 PT 25150 – 25329 Mukim Rasah Daerah Seremban Negeri Sembilan Darul Khusus
PT 23307 – 23308 Agricultural 47,319,193 PT 32127 land PT 32129 – 32134 PT 34398 Mukim Labu Daerah Seremban Negeri Sembilan Darul Khusus 160 IJM Land Berhad (187405-T)
list of top 10 properties (continued) as at 31 March 2012
Approximate Land/ Net Book *Date of Last Description Tenure/ Age of Built-up Value as at Revaluation/ and Year of Building Area 31/3/12 Date of No. Location Existing Use Expiry (Year) (sq.ft) (RM’000) Acquisition
3 Lot 13855 – 14000 Residential Leasehold/ – 1,039,479 185,217 19/3/2004 PT 10355 – 10454 development 2106 PT 9926 – 10017 in progress PT 10174 – 10269 PT 10018 – 10173
Lot 13853 Land for 1,203,260 Lot 13814 commercial Lot 13815 development
Lot 13841 Land for 15,002,379 Lot 13846 residential Lot 13851 development PT 10455 – 10686 PT 10693 – 11076 PT 11079 – 11430 PT 6328 – 6331 PT 6468 – 6471 PT 6540 – 6551 PT 6812 – 6815 Lot 13807 Lot 13810 PT 5631 – 5632 Leasehold/ 2104
PT 11435 – 11834 Land for mixed Leasehold/ 1,638,227 3/6/2004 Mukim Jeram residential and 2111 Daerah Kuala Selangor commercial Selangor Darul Ehsan development
4 Lot 14783 and Lot 1 Hotel and Leasehold/ 23 – 26 358,072 154,493 17/1/2012 Mukim Damansara recreational club 2086/ Daerah Petaling 2089 Selangor Darul Ehsan
5 PTD 154414 Land for mixed Freehold – 10,894,154 77,936 5/9/2008 Sektor Perancangan Tebrau development Kawasan Perluasan Tebrau 81100 Johor Bahru Johor Darul Takzim
6 CL 075121569 Land for mixed Freehold – 23,566,247 180,368 19/12/2011 Sibuga development
CL 075402676 Leasehold/ 19/8/2010 Mile 5, Jalan Labuk 2882 CL 075402694 Mile 5, Jalan Labuk
CL 075477584 Leasehold/ 5/9/2008 Mile 6, North Road 2102
CL 075204269 Residential Leasehold/ Mile 6, North Road Development 2886 CL 075204241 Mile 6, North Road Daerah Sandakan Sabah ANNUAL REPORT 2012 161
Approximate Land/ Net Book *Date of Last Description Tenure/ Age of Built-up Value as at Revaluation/ and Year of Building Area 31/3/12 Date of No. Location Existing Use Expiry (Year) (sq.ft) (RM’000) Acquisition
7 HSD 15366 – 15368 Marine Leasehold/ – 51,100,875 127,139 5/9/2008 HSD 13900 – 13901 operator, 2092 – vacant land 2094
HSD 14215 Freehold HSD 14219 HSD 18447 – 18448 HSD 14217
HSD 17987 Leasehold/ 2098
HSD 14214 Freehold 18
HSD 14221 – HSD 14243 HSD 14245 – 14247 HSD 14253 HSD 14262 HSD 14264 – 14265
HSD 14266 – 14268 18 Mukim Pengerang Daerah Kota Tinggi Johor Darul Takzim
8 Balance Parcel A1 Residential, Freehold – 8,852,449 427,517 Seksyen 8 commercial, Bandar Georgetown mixed development, reclaimation of land
Parcel A2, Seksyen 8 Yet to be Bandar Georgetown reclaimed
Parcel B1, Seksyen 8 Leasehold Bandar Georgetown
PT 168, HSD 14095 Leasehold/ Seksyen 8 2105 Bandar Georgetown
PT 87, HSD 13805 Leasehold/ Seksyen 8 2104 Bandar Georgetown
Parcel A1, Lot 690 Freehold Geran 117785 Seksyen 8 Bandar Georgetown Parcel A1, Lot 691 Geran 117786, Seksyen 8 Bandar Georgetown
Lot 555, PN 6491 Leasehold/ Seksyen 8 2104 Bandar Georgetown 162 IJM Land Berhad (187405-T)
list of top 10 properties (continued) as at 31 March 2012
Approximate Land/ Net Book *Date of Last Description Tenure/ Age of Built-up Value as at Revaluation/ and Year of Building Area 31/3/12 Date of No. Location Existing Use Expiry (Year) (sq.ft) (RM’000) Acquisition
8 PT 241 Leasehold/ Seksyen 9W 2100 Bandar Georgetown
Lot 775, HSD 77966 Freehold Lot 776, HSD 77967 Seksyen 4 Bandar Jelutong
Lot 10071, PN 3292 Leasehold/ Mukim 13 2099
PT 2022 Leasehold/ Mukim 13 2100 PT 1957, HSD 8206 PT 2554, HSD 15382 Mukim 13 Lot 10264, PN 3292 Mukim 13 Daerah Timur Laut Pulau Pinang
9 Lot 98154 – 98167, PN 92139 – 92146 Residential, Leasehold/ – 1,693,392 230,833 Lot 97903 – 97951, PN 92411 – 92423 commercial 2110 Lot 97892 – 97899, PN 92139 – 92146 Lot 97903 – 97951, PN 92148 – 92196 Lot 97953 – 97977, PN 92197 – 92221 Lot 97980 – 98022, PN 92222 – 92264 Lot 98025 – 98043, PN 92265 – 92883
Lot 45654 – 45687, PN 48489 – 48521 Leasehold/ Lot 45749, PN 48483 2106 Lot 45648, PN 48487 Lot 45751, PN 48485 Lot 45752, PN 48486 Lot 45650, PN48484 Mukim Petaling Wilayah Persekutuan
10 Section 52 Residential and Leasehold/ – 245,524 64,121 19/9/2008 KTLD Jalan Petanak commercial 2059 Kuching development Sarawak ANNUAL REPORT 2012 163
Analysis of Shareholdings & warrAntholdings
I. ANALYSIS OF SHAREHOLDINGS as at 29 June 2012 Authorised Share Capital : RM2,000,000,000 Issued & Paid-up Capital : RM1,398,696,653 Class of Shares : Ordinary Shares of RM1.00 each Voting Rights On show of hands : 1 vote On a poll : 1 vote for each share held
DISTRIBUTION OF SHAREHOLDINGS Number of Number Percentage of Range of Shareholdings Shareholders of Shares Issued Capital Less than 100 53 1,635 0.00% 100 - 1,000 2,230 2,109,989 0.15% 1,001 - 10,000 3,981 16,237,154 1.16% 10,001 - 100,000 653 19,727,410 1.41% 100,001 to less than 5% of issued shares 185 357,843,115 25.59% 5% and above of issued shares 2 1,002,777,350 71.69% 7,104 1,398,696,653 100.00%
REGISTER OF SUBSTANTIAL SHAREHOLDERS Percentage Number of Shares of Issued Direct Deemed Capital Employees Provident Fund Board 78,351,100 922,277,3501 71.54% Government of Singapore Investment Corporation Pte Ltd 80,500,000 - 5.76% IJM Corporation Berhad 922,277,350 - 65.94%
1 Through IJM Corporation Berhad
THIRTY LARGEST SHAREHOLDERS Percentage of Number of Shares Issued Capital 1. IJM Corporation Berhad 922,277,350 65.94% 2. Cartaban Nominees (Asing) Sdn Bhd Government Of Singapore Investment Corporation Pte Ltd For Government Of Singapore (C) 80,500,000 5.76% 3. Citigroup Nominees (Tempatan) Sdn Bhd Employees Provident Fund Board 60,251,000 4.31% 4. Amanahraya Trustees Berhad Skim Amanah Saham Bumiputera 50,000,000 3.57% 5. Kumpulan Wang Persaraan (Diperbadankan) 27,805,000 1.99% 6. Amanahraya Trustees Berhad Amanah Saham Malaysia 14,434,100 1.03% 7. Amanahraya Trustees Berhad Amanah Saham Didik 13,579,400 0.97% 8. RHB Capital Nominees (Tempatan) Sdn Bhd Pledged Securities Account For Lee Teck Yuen (MLK) 11,064,693 0.79% 164 IJM Land Berhad (187405-T)
Analysis of Shareholdings & warrAntholdings (continued)
THIRTY LARGEST SHAREHOLDERS (continued) Percentage of Number of Shares Issued Capital 9. Amanahraya Trustees Berhad Public Islamic Select Treasures Fund 10,133,300 0.72% 10. Valuecap Sdn Bhd 9,242,600 0.66% 11. Amanahraya Trustees Berhad Public Islamic Dividend Fund 8,217,200 0.59% 12. Citigroup Nominees (Asing) Sdn Bhd Exempt An For Citibank NA (AEGON BV) 7,039,300 0.50% 13. Amanahraya Trustees Berhad Public Islamic Equity Fund 6,897,500 0.49% 14. Citigroup Nominees (Tempatan) Sdn Bhd ING Insurance Berhad (INV-IL PAR) 6,840,600 0.49% 15. Amanahraya Trustees Berhad Public Islamic Optimal Growth Fund 5,599,500 0.40% 16. Citigroup Nominees (Tempatan) Sdn Bhd Employees Provident Fund Board (CIMB PRIN) 5,399,100 0.39% 17. Citigroup Nominees (Tempatan) Sdn Bhd Employees Provident Fund Board (Nomura) 5,000,000 0.36% 18. Citigroup Nominees (Asing) Sdn Bhd CBNY For Dimensional Emerging Markets Value Fund 4,814,100 0.34% 19. Maybank Nominees (Tempatan) Sdn Bhd Maybank Trustees Berhad For Public Regular Savings Fund (N14011940100) 4,671,000 0.33% 20. Tokio Marine Life Insurance Malaysia Bhd As Beneficial Owner (PF) 4,630,000 0.33% 21. Citigroup Nominees (Tempatan) Sdn Bhd Employees Provident Fund Board (HDBS) 4,158,300 0.30% 22. Maybank Nominees (Tempatan) Sdn Bhd Maybank Trustees Berhad For Public Ittikal Fund (N14011970240) 3,460,600 0.25% 23. HSBC Nominees (Asing) Sdn Bhd BNY Brussels For Wisdomtree Emerging Markets Smallcap Dividend Fund 3,089,677 0.22% 24. HSBC Nominees (Asing) Sdn Bhd HSBC-FS I For JF Malaysia Fund 2,820,000 0.20% 25. AMSEC Nominees (Tempatan) Sdn Bhd Amtrustee Berhad For CIMB Islamic Dali Equity Growth Fund (UT-CIMB-DALI) 2,809,800 0.20% 26. Citigroup Nominees (Tempatan) Sdn Bhd Kumpulan Wang Persaraan (Diperbadankan) (CIMB Equities) 2,789,200 0.20% 27. Amanahraya Trustees Berhad Public Islamic Select Enterprises Fund 2,465,100 0.18% 28. Amanahraya Trustees Berhad Sekim Amanah Saham Nasional 2,374,500 0.17% 29. CIMB Commerce Trustee Berhad Public Focus Select Fund 2,239,600 0.16% 30. Amanahraya Trustees Berhad Public Islamic Mixed Asset Fund 2,078,300 0.15% 1,286,680,820 91.99%
ANNUAL REPORT 2012 165
II. ANALYSIS OF WARRANTHOLDINGS as at 29 June 2012 Warrants 2008/2013 : 161,698,937 outstanding
DISTRIBUTION OF WARRANTHOLDINGS Percentage of Number of Number Outstanding Range of Warrantholdings Warrantholders of Warrants Warrants Less than 100 1,039 46,370 0.03% 100 - 1,000 2,796 817,909 0.51% 1,001 - 10,000 1,395 7,352,389 4.55% 10,001 - 100,000 753 24,861,890 15.37% 100,001 - to less than 5% of issued warrants 132 50,938,409 31.50% 5% and above of issued warrants 1 77,681,970 48.04% 6,116 161,698,937 100.00%
THIRTY LARGEST WARRANTHOLDERS Percentage of Outstanding Number of Warrants Warrants 1. IJM Corporation Berhad 77,681,970 48.04% 2. RHB Capital Nominees (Tempatan) Sdn Bhd Pledged Securities Account For Sow Huey Shan (MLK) 5,208,240 3.22% 3. Velerie E Siok Lin 2,960,400 1.83% 4. HLB Nominees (Tempatan) Sdn Bhd Pledged Securities Account For Sow Huey Shan 2,264,000 1.40% 5. RHB Capital Nominees (Tempatan) Sdn Bhd Pledged Securities Account For Lim Beng Teck (CEB) 2,250,000 1.39% 6. Sow Huey Shan 1,940,000 1.20% 7. RHB Capital Nominees (Tempatan) Sdn Bhd Pledged Securities Account For Lim Beng Keat (CEB) 1,652,800 1.02% 8. Tan Boon Seng @ Krishnan 1,245,010 0.77% 9. Maybank Nominees (Tempatan) Sdn Bhd Maybank Trustees Berhad For CIMB-Principal Strategic Bond Fund (290077) 1,100,000 0.68% 10. General Technology Sdn Bhd 1,079,833 0.67% 11. Koh Ping Ming @ Quek Ping Ming 1,010,000 0.62% 12. CIMSEC Nominees (Tempatan) Sdn Bhd CIMB For General Technology Sdn Bhd (PB) 916,800 0.57% 13. General Technology Sdn Bhd 900,000 0.56% 14. Sow Huey Shan 805,000 0.50% 15. UOBM Nominees (Asing) Sdn Bhd Exempt An For Societe Generale Bank & Trust, Singapore Branch (CUST ASSET) 694,600 0.43% 16. Tong Wai Yong 680,000 0.42% 17. AMSEC Nominees (Tempatan) Sdn Bhd Amtrustee Berhad For Pacific Pearl Fund (UT-PM-PPF) 650,000 0.40% 166 IJM Land Berhad (187405-T)
Analysis of Shareholdings & warrAntholdings (continued)
THIRTY LARGEST WARRANTHOLDERS (continued) Percentage of Outstanding Number of Warrants Warrants 18. Minister Of Finance Akaun Jaminan Pinjaman Kerajaan Persekutuan 609,525 0.38% 19. Lee Sik Pin 601,200 0.37% 20. RHB Capital Nominees (Tempatan) Sdn Bhd Pledged Securities Account For Cheah Song Kang @ Chiah Jee Ba (CEB) 556,000 0.34% 21. Lee Min Huat 519,400 0.32% 22. Goh Chye Keat 503,900 0.31% 23. Chong Haw Shan 503,800 0.31% 24. ECML Nominees (Asing) Sdn. Bhd. DMG & Partners Securities Pte Ltd For Keen Capital Investments Ltd (N2-60391) (009) 500,000 0.31% 25. Khoo Choon Hoe 495,600 0.31% 26. Khor Kiem Teoh 494,100 0.31% 27. Velerie E Siok Lin 470,000 0.29% 28. Soam Heng Choon 451,500 0.28% 29. AFFIN Nominees (Tempatan) Sdn Bhd Pledged Securities Account For Goh Kim Kooi 418,500 0.26% 30. CIMB Group Nominees (Tempatan) Sdn Bhd CIMB Commerce Trustee Berhad For Hong Leong Asia-Pacific Income Plus Fund (50076 BHLBT) 400,000 0.25% 109,562,178 67.76%
III. DIRECTORS’ SHAREHOLDINGS & WARRANTHOLDINGS
DIRECTORS’ SHAREHOLDINGS & WARRANTHOLDINGS IN IJM LAND BERHAD as at 29 June 2012 Percentage Number of Warrants Percentage of Number of Shares of Issued 2008/2013 Outstanding Name of Director Direct Deemed Capital Direct Deemed Warrants
Tan Sri Dato’ Tan Boon Seng @ Krishnan - 20,0001 0.001% 1,248,610 123,9001 0.849% Dato’ Soam Heng Choon - - - 451,500 - 0.279% Tan Sri Dato’ Nasruddin bin Bahari - - - 2,725 2,2501 0.003% Datuk Lee Teck Yuen 11,064,6932 - 0.791% - - - Dato’ Teh Kean Ming - - - 147,000 5,2001 0.094%
Note: 1 Through a family member 2 Through a nominee company ANNUAL REPORT 2012 167
DIRECTORS’ SHAREHOLDINGS & WARRANTHOLDINGS IN IJM CORPORATION BERHAD as at 29 June 2012 Percentage Number of Warrants Percentage of Number of Shares of Issued 2009/2014 Outstanding Name of Directors Direct Deemed Capital Direct Deemed Warrants Tan Sri Dato’ Tan Boon Seng @ Krishnan 2,449,180 445,1361 0.209% 1,424,348 1,050,0001 2.491% Dato’ Soam Heng Choon 21,000 - 0.002% 2,100 - 0.002% Tan Sri Dato’ Nasruddin bin Bahari 38,150 31,5001 0.005% - 3,2001 0.003% Datuk Lee Teck Yuen 1,240,000 580,0001 0.132% - - - Dato’ Teh Kean Ming 84,000 91,0001 0.013% 39,300 39,8001 0.080%
Note: 1 Through a family member
DIRECTORS’ SHAREHOLDINGS & WARRANTHOLDINGS IN IJM PLANTATIONS BERHAD as at 29 June 2012 Percentage Number of Warrants Percentage of Number of Shares of Issued 2009/2014 Outstanding Name of Director Direct Deemed Capital Direct Deemed Warrants Tan Sri Dato’ Tan Boon Seng @ Krishnan 646,000 429,9821 0.134% 70,060 51,0511 0.152%
Note: 1 Through a family member
Except for those disclosed above, none of the other Directors has any interest in the securities of the Company or its related corporations. 168 IJM Land Berhad (187405-T)
NOTICE OF ANNUAL GENERAL MEETING
NOTICE IS HEREBY GIVEN that the 23rd Annual General Meeting (“AGM”) of IJM LAND BERHAD (187405-T) will be held at Victorian Ballroom, Level 1, Holiday Villa Hotel & Suites Subang, 9 Jalan SS12/1, 47500 Subang Jaya, Selangor Darul Ehsan, Malaysia on Monday, 27 August 2012, at 3.30 p.m. to transact the following matters:- 1. To receive the audited financial statements for the year ended 31 March 2012 together with the reports of the Directors and Auditors thereon. 2. To elect retiring Directors as follows:- (a) Tan Sri Dato’ Nasruddin bin Bahari (RESOLUTION 1) (b) Dato’ Md Naim bin Nasir (RESOLUTION 2) 3. To appoint PricewaterhouseCoopers as Auditors and to authorise the Directors to fix their remuneration. (RESOLUTION 3) 4. As special business to consider and pass the following resolutions:- (a) DIRECTORS’ FEES (RESOLUTION 4) “THAT the Directors’ fees of RM516,500 for the year ended 31 March 2012 be approved to be divided amongst the Directors in such manner as they may determine.” (b) PROPOSED RENEWAL OF SHARE BUY-BACK AUTHORITY (RESOLUTION 5) “THAT, further to the mandate granted at the Extraordinary General Meeting on 23 August 2011, the Directors be and are hereby authorised to purchase the ordinary shares of the Company through the stock exchange of Bursa Malaysia Securities Berhad at any time upon such terms and conditions as the Directors in their absolute discretion deem fit provided that:- (i) the aggregate number of shares purchased (which are to be treated as treasury shares) does not exceed ten per cent (10%) of the issued capital of the Company; and (ii) the funds allocated for the purchase of shares shall not exceed its retained profits and share premium account AND THAT the Directors be and are hereby further authorised to deal with the treasury shares in their absolute discretion (which may be distributed as dividends, resold and/or cancelled) AND THAT such authority shall continue to be in force until:- (a) the conclusion of the next Annual General Meeting (“AGM”); (b) the expiration of the period within which the next AGM is required by law to be held; or (c) revoked or varied in a general meeting, whichever occurs first.” (c) PROPOSED RENEWAL OF GENERAL MANDATE FOR RECURRENT RELATED PARTY TRANSACTIONS “THAT, further to the mandate granted at the Extraordinary General Meeting on 23 August 2011, the Directors be and are hereby authorised to enter into and to give effect to specified recurrent transactions of a revenue or trading nature with specified classes of Related Parties as set out in:- (i) Part B Section 2.1(ii)(a); and (RESOLUTION 6) (ii) Part B Section 2.1(ii)(b) (RESOLUTION 7) of the Circular to Shareholders dated 30 July 2012 AND THAT such authority shall continue to be in force until:- (a) the conclusion of the next Annual General Meeting (“AGM”); (b) the expiration of the period within which the next AGM is required by law to be held; or (c) revoked or varied in a general meeting, whichever occurs first.” ANNUAL REPORT 2012 169
(d) Special Resolution PROPOSED AMENDMENTS TO ARTICLES OF ASSOCIATION AND ADOPTION OF NEW ARTICLES OF ASSOCIATION (RESOLUTION 8) “THAT the alteration, modification and/or addition to the Articles of Association as set out in Appendix I of the Circular to Shareholders dated 30 July 2012 be and are hereby approved and that the altered Articles of Association, signed by the Chairman of this meeting for purpose of identification, be and is hereby adopted as the new Articles of Association in substitution for and to supersede all the existing Articles of Association of the Company.”
By Order of the Board
Ng Yoke Kian Jeremie Ting Keng Fui Company Secretaries
Petaling Jaya 30 July 2012
Notes:- 1. RETIREMENT OF DIRECTOR The Resolution 1, if approved, will authorise the continuity in office of the Director (who is over the age of 70 years) until the next AGM pursuant to Section 129(6) of the Companies Act, 1965 (“the Act”). Pursuant to Section 129(7) of the Act, the Resolution 1 will be put to vote by poll. 2. DIRECTORS’ FEES The Resolution 4, if approved, will authorise the payment of Directors’ fees pursuant to Article 91 of the Articles of Association. 3. SHARE BUY-BACK AUTHORITY AND RECURRENT RELATED PARTY TRANSACTIONS The details of the proposals are set out in the Circular to Shareholders dated 30 July 2012, which is despatched together with the Annual Report 2012. 4. AMENDMENTS TO ARTICLES OF ASSOCIATION The Resolution 8, if approved, will bring the Company’s Articles of Association in line with the amendments to the Main Market Listing Requirements of Bursa Malaysia Securities Berhad, as set out in the Circular to Shareholders dated 30 July 2012. 5. APPOINTMENT OF PROXY (i) a proxy may but need not be a member; (ii) a member, other than an exempt authorised nominee, is entitled to appoint up to two (2) proxies; (iii) a member, who is an authorised nominee, may appoint up to two (2) proxies in respect of each Securities Account held; whereas, an exempt authorised nominee may appoint multiple proxies in respect of each Securities Account held; (iv) a member who appoints a proxy must duly execute the Form of Proxy, and if more than one (1) proxy is appointed, the number of shares to be represented by each proxy must be clearly indicated; (v) a corporate member who appoints a proxy must execute the Form of Proxy under seal or the hand of its officer or attorney duly authorised; (vi) the duly executed Form of Proxy must be deposited at the Registered Office not less than forty-eight (48) hours before the time set for holding the meeting or adjourned meeting; (vii) only members whose names appear in the Record of Depositors as at 16 August 2012 will be entitled to attend and vote at the meeting; and (viii) the Annual Report, Circular to Shareholders, and Form of Proxy are available for download at www.ijm.com. 6. POLL VOTING The Resolutions 5, 6, 7, and 1 will be put to vote by poll and for expediency, will be tabled first before Agenda 1. All other Resolutions will be put to vote by a show of hands unless a poll is demanded. Besides the Chairman, a poll may be demanded by at least three (3) members present in person or by proxy; or by any member or members present in person or by proxy holding not less than 10% of the total voting rights. This page has been intentionally left blank. form of proxy
I/We ______NRIC/Passport/Company No.:______Mobile Phone No.:______CDS Account No.:______Number of Shares Held:______Address:______being a member of IJM LAND BERHAD (187405-T), hereby appoint: (1) Name of proxy:______NRIC No.:______Address:______Number of Shares Represented:______(2) Name of proxy:______NRIC No.:______Address:______Number of Shares Represented:______or failing him/her, the Chairman of the meeting, as my/our proxy to vote for me/us and on my/our behalf at the 23rd Annual General Meeting (“AGM”) of IJM LAND BERHAD to be held at Victorian Ballroom, Level 1, Holiday Villa Hotel & Suites Subang, 9 Jalan SS12/1, 47500 Subang Jaya, Selangor Darul Ehsan, Malaysia on Monday, 27 August 2012, at 3.30 p.m., and at any adjournment thereof, in the manner indicated below:-
No. Resolutions For Against
1. To reappoint Tan Sri Dato’ Nasruddin bin Bahari as Director to hold office until the next AGM
2. To reappoint Dato’ Md Naim bin Nasir as Director
3. To reappoint PricewaterhouseCoopers as Auditors and to authorise the Directors to fix their remuneration
4. To approve the payment of Directors’ fees of RM516,500
5. To approve the Proposed Renewal of Share Buy-Back Authority
6. To approve the Proposed Renewal of General Mandate for Recurrent Related Party Transactions as set out in Part B Section 2.1(ii)(a) of the Circular to Shareholders
7. To approve the Proposed Renewal of General Mandate for Recurrent Related Party Transactions as set out in Part B Section 2.1(ii)(b) of the Circular to Shareholders
8. To approve the Proposed Amendments to Articles of Association
Please indicate with “X” how you wish your vote to be cast. In the absence of specific instruction, your Proxy will vote or abstain as he/she thinks fit.
Signed (and sealed) this day of 2012
Signature(s) :
Notes:- (i) a proxy may but need not be a member; (ii) a member, other than an exempt authorised nominee, is entitled to appoint up to two (2) proxies; (iii) a member, who is an authorised nominee, may appoint up to two (2) proxies in respect of each Securities Account held; whereas, an exempt authorised nominee may appoint multiple proxies in respect of each Securities Account held; (iv) a member who appoints a proxy must duly execute the Form of Proxy, and if more than one (1) proxy is appointed, the number of shares to be represented by each proxy must be clearly indicated; (v) a corporate member who appoints a proxy must execute the Form of Proxy under seal or the hand of its officer or attorney duly authorised; (vi) the duly executed Form of Proxy must be deposited at the Registered Office not less than forty-eight (48) hours before the time set for holding the meeting or adjourned meeting; (vii) only members whose names appear in the Record of Depositors as at 16 August 2012 will be entitled to attend and vote at the meeting; and (viii) the Annual Report, Circular to Shareholders, and Form of Proxy are available for download at www.ijm.com. STAMP
The Company Secretary
IJM LAND BERHAD (187405-T) 2nd Floor, Wisma IJM Jalan Yong Shook Lin 46050 Petaling Jaya Selangor Darul Ehsan Malaysia