our business chairman’s statement management discussion & analysis ... caisson piles and micro...

Our BusinessPhilosophy & Model

• Quality Products• Excellent Service• Maximising Stakeholders Return• Good Corporate Governance• Social Responsibilities• Safety, Health & Environment• Efficiency Driven• Employees Welfare• Teamwork• Innovations

Vision• To be the leading bore piling and bridge specialist in the markets we serve.

Mission• Providing innovative solutions that leverage on our capabilities as the preferred bore piling and bridge specialist in Malaysia.• To deliver sustainable value that determines a better future for all.

Corporate ProfileIkhmas Jaya Group Berhad (“IJGB” or the “Group”) was founded in 1992 by Dato’ Ang Cheng Siong (Group Managing Director), Dato’ Ir. Dr. Khoo Ping Sen (Executive Director), Siew Mun Lout (Executive Director) and Yap Yoon Fatt (Head of Plant Division). IJGB is principally involved in engineering and construction of piling and foundation, bridges and buildings. Since the Group’s establishment, IJGB has accumulated an extensive track record of completed projects for both the public and private sectors to a total contract value of approximately RM1.7 billion.

IJGB is highly recognised in the industry for its diverse expertise and experiences across multiple discipline of engineering and has been involved in a number of high-profile projects such as the award-winning Putra and Prai Bridges, Klang Valley Mass Rapid Transit-Kajang Line, Kelana Jaya Light Rail Transit Extension, Paradigm Mall and KL Eco City just to name a few. Armed with its own in-house design and engineering professionals, IJGB is a competitive and formidable participant in the marketplace as a total multi-skilled solutions provider with a competitive edge and versatility to secure projects.

Vision & MissionCorporate Profile

Corporate MilestonesCorporate Information

Corporate StructureKey Management’s Profile

Board of DirectorsDirectors’ Profile

Chairman’s StatementManagement Discussion & Analysis

Sustainability StatementCorporate Social Responsibility

Corporate Governance Overview StatementAudit and Risk Management Committee Report

Statement on Risk Management and Internal ControlFinancial Statements

Additional Compliance InformationList of Properties

Analysis of ShareholdingsNotice of Annual General MeetingStatement Accompanying Notice

of Annual General MeetingForm of Proxy

010204050608091822273233495558128129131134

Contents

IKHMAS JAYA GROUP BERHADAnnual Report 2017 2

Ikhmas Jaya Sdn. Bhd. securedand commenced our first projectfor the design, construction andcommissioning of water pipelaying works from Sentul HillReservoir to Kuala Lumpur CityCentre Development Area whichwas completed in 1995

Ikhmas Jaya Sdn. Bhd. securedour first infrastructure bore pilingproject for the construction ofcontiguous bored pile walls forthe Gombak River Diversionflood mitigation project in KualaLumpur which was completedin 2006

Ikhmas Jaya Sdn. Bhd. wasawarded two (2) contracts toconstruct bridges in Putrajaya asfollows:a) Bridge BR 10; andb) Putra Bridge; both of which

were completed in 1999

Ikhmas Jaya Sdn. Bhd.undertook piling and foundationworks for an administrationcomplex, “Pusat PentadbiranKerajaan Persekutuan” inPrecinct 5, Putrajaya which wascompleted in 2008

Ikhmas Jaya Sdn. Bhd. secured acontract for the construction of abridge in Chenor, Pahang whichwas completed in 2004

Ikhmas Jaya Sdn. Bhd.commenced piling andfoundation works for ParadigmMall in Kelana Jaya, Selangor

Rekavista (Sarawak) Sdn. Bhd.secured and commenced itsfirst project for the constructionof a secondary school in Sibu,Sarawak which was completedin 2004

Ikhmas Jaya Sdn. Bhd. undertookthe following:a) the design and build of a

training centre for the Royal Malaysia Police (PULAPOL) in Terengganu; and

b) the infrastructure works, ground improvement, bridge structures, drainages, road works, landscape and associated works for JB Nusajaya Highway - Section 2: CH 2400 to CH 9500 which was completed in 2011

Ikhmas Jaya Sdn. Bhd. securedour first building bore pilingcontract for the constructionof a diaphragm wall for PrinceCourt Medical Centre, aprivate hospital in Kuala Lumpurwhich was completed in thesame year

Corporate Milestones

1994

2004

1997

2006

2001

2008

2002

2009

2003

IKHMAS JAYA GROUP BERHADAnnual Report 20173

Ikhmas Jaya Sdn. Bhd.undertook the design andconstruction of the Prai SwingBridge in mainland Penang forthe railway electrification anddouble tracking project fromIpoh to Padang Besar whichwas completed in August 2013

Received the IEM OutstandingEngineering AchievementAward for the design andconstruction of the Prai SwingBridge in mainland Penangfor the railway electrificationand double tracking projectbetween Ipoh and PadangBesar by the Institution ofEngineers Malaysia

a) Ikhmas Jaya Sdn. Bhd. undertook to build a superstructure and other finishing works including M&E and interior design works for Damai 88 service apartments in Ampang, Kuala Lumpur; and

b) Ikhmas Jaya Sdn. Bhd. undertook infrastructure works for Subang Skypark Terminal Railway Track - Phase 1, a railway project between Saujana and Skypark Terminal in Subang

a) Rekavista Sdn. Bhd. undertook contiguous bored pile wall, earthworks, piling and basement structure works for Parcel C of the KL Eco City project at Bangsar, Kuala Lumpur which was completed in May 2014;

b) Ikhmas Jaya Sdn. Bhd. secured an additional contract for the substructure works and elevated roadway for Parcel D of the KL Eco City project; and

c) Ikhmas Jaya Sdn. Bhd. was awarded a contract to undertake bore piling, caisson piles and micro piles works for Package V8 of the Klang Valley Mass Rapid Transit Sungai Buloh-Kajang Line project in Selangor

a) Listed on the Main Market of Bursa Malaysia Securities Berhad

b) Relocated and expanded our prefabricated buildings system manufacturing facility

c) Letter of award from MRCB Builders Sdn. Bhd. for total contract value of RM161.12 million

a) Awarded a RM166.40 million contract to undertake the construction of a service apartment awarded by Star Effort Sdn. Bhd.

b) Letter of award from Kayangan Kemas Sdn. Bhd. for a total contract value of RM65.30 million for sub-contract works for the construction of a bridge

c) Letter of award from Gallimont Development Sdn. Bhd. for a total contract value of RM173.50 million for the construction of a 49 storey block of serviced apartments

a) Letter of Award from MMC Engineering Services Sdn. Bhd. for RM13.85 million for Jacking Pits/Shaft using contiguous Bored Pile Method; and

b) Awarded a RM33.81 million contract from Symphony Crescent Sdn. Bhd. for the construction and completion of piling and substructure work for 2 blocks of business tower

2010

2014

2013

2012

2015

2016

2017


Corporate Information

AUDIT & RISKMANAGEMENT COMMITTEE

ChairmanYuen Choong Lai

MembersDato’ Syed Ariff Fadzillah

bin Syed AwalluddinDzulkifli David bin Abdullah

Tan Ming-Li

NOMINATION &REMUNERATION COMMITTEE

ChairmanDato’ Syed Ariff Fadzillah

bin Syed Awalluddin

MembersYuen Choong Lai

Dzulkifli David bin AbdullahTan Ming-Li

COMPANY SECRETARIESCynthia Gloria Louis(MAICSA 7008306)

Chew Mei Ling(MAICSA 7019175)

REGISTERED OFFICEUnit 621, 6th Floor, Block A

Kelana Centre PointNo. 3, Jalan SS7/19

Kelana Jaya47301 Petaling JayaSelangor Darul Ehsan

Tel : (03) 7880 9699Fax : (03) 7880 8699

HEAD OFFICENo. 35, 37 & 39,

Jalan PJU 1A/41BPusat Dagangan NZX

Ara Jaya, PJU1A47301 Petaling JayaSelangor Darul Ehsan

Tel : (03) 7885 0626 / 0612 / 0691Fax : (03) 7883 0720

Web : www.ikhmasjaya.comE-mail : [email protected]

STOCK EXCHANGE LISTINGMain Market ofBursa Malaysia

Securities Berhad

STOCK NAME/CODEIKHMAS/5268

AUDITORSKPMG PLT

(LLP0010081-LCA & AF0758)Level 10, KPMG Tower

8, First AvenueBandar Utama

47800 Petaling JayaSelangor Darul Ehsan

Tel : (03) 7721 3388Fax : (03) 7721 3399

SHARE REGISTRARSymphony Share Registrars

Sdn. Bhd. (378993-D)Level 6, Symphony HousePusat Dagangan Dana 1

Jalan PJU 1A/4647301 Petaling JayaSelangor Darul Ehsan

Tel : (03) 7841 8000Fax : (03) 7841 8151

PRINCIPAL BANKERSAmBank (M) Berhad

Malayan Banking BerhadCIMB Bank Berhad

BOARD OF DIRECTORS

Dato’ Syed Ariff Fadzillah bin Syed AwalluddinIndependent Non-Executive Chairman

Ang Wei ZhenExecutive Director

Dato’ Ang Cheng SiongGroup Managing Director

Dzulkifli David bin AbdullahIndependent Non-Executive Director

Dato’ Ir. Dr. Khoo Ping SenExecutive Director

Yuen Choong LaiSenior Independent Non-Executive Director

Siew Mun LoutExecutive Director

Tan Ming-LiIndependent Non-Executive Director

Corporate Structure

100%Ikhmas Jaya

Sdn. Bhd.

100%RekavistaSdn. Bhd.

100%Rekavista(Sarawak)Sdn. Bhd.

100%Ikhmas

EquipmentSdn. Bhd.

100%IJ Geotechnic

Sdn. Bhd.

100%MM2 Builders

Sdn. Bhd.

60%MM2 Building

SystemSdn. Bhd.

60%BE Specialist

Sdn. Bhd.

100%Exofield Property

Management Sdn. Bhd.

Ikhmas Jaya Group Berhad



Key Management’s Profile

1. Dato’ Ang Cheng Siong Group Managing Director For his profile, kindly refer to the Directors’ Profile on page 10 of the 2017 Annual Report.

2. Dato’ Ir. Dr. Khoo Ping Sen Executive Director For his profile, kindly refer to the Directors’ Profile on page 11 of the 2017 Annual Report.

3. Siew Mun Lout Executive Director For his profile, kindly refer to the Directors’ Profile on page 12 of the 2017 Annual Report.

4. Ang Wei Zhen Executive Director For his profile, kindly refer to the Directors’ Profile on page 13 of the 2017 Annual Report.

5. Tham Fook Sun Male | Malaysian | Aged 49 | Chief Financial Officer He is a Fellow Member of the Association of Chartered Certified Accountants (ACCA - UK) and also a

Chartered Accountant of the Malaysian Institute of Accountants (MIA). He joined Ikhmas Jaya on 26 September 2017 as the Chief Financial Officer.

4 67 98

1 2 35


He started his tax career with Ernst & Young and audit career with Deloitte Touche Tohmatsu.

Currently, he has more than 25 years of related work experience with managerial role in financial reporting, audit, tax planning and compliance, corporate finance and corporate affairs in many private limited companies (such as Shell Malaysia Trading, KAB Group, Acmar International, Halim Mazmin and etc.) and local public listed companies (such as Turiya, MK Land, Ho Wah Genting, Melewar Industrial Group, Berjaya Land and etc.) spanning across various industries – investment holding, trading, manufacturing, property management, property investment and development, and construction.

6. Yap Yoon Fatt Male | Malaysian | Aged 55 | Head of Plant Division Mr Yap completed his Sijil Pelajaran Malaysia in 1981 and started his career as a Survey Assistant in 1982. In

1994, he joined Ikhmas Jaya as the Senior Operations Manager and promoted to his current position in 2010. He has more than 25 years of experience in the construction field in the areas of site supervision of heavy construction equipment for bored piles and earthworks including managing and handling the site workers involved in earthworks, bore piling and basement constructions.

7. Siew Kian Wah Male | Malaysian | Aged 58 | Senior Project Director He graduated from University of Surrey, United Kingdom with a Bachelor of Science in Civil Engineering

Degree in 1983. He has been allocated a place at Strathclyde MBA Program in Malaysia to study for Master of Business Administration Degree in 1990.

He started his career as an engineer in 1983. He joined Ikhmas Jaya in 2017 as the Chief Operating Officer. He has been in the construction industry for the past 35 years. His experience and expertise covers the areas of design and build for high rise projects, piling engineering, design engineering in highway division and leading the construction team and division.

8. Woo Chee Meng Male | Malaysian | Aged 59 | Senior Project Manager Mr Woo graduated from West Virginia University, United States of America with a Bachelor of Science in

Civil Engineering Degree in 1983 and then obtained a Master of Engineering in Civil Engineering from the University of Virginia, United States of America in 1985. He started his career in 1985 as a Project Engineer. In 1997, he joined Ikhmas Jaya as Senior Project Manager. He is responsible for planning, executing and overseeing the completion of projects. He is skilled in exercising quality control, project planning and coordination, site supervision and management, and has extensive experience in bore piling, basement constructions, bridge constructions and earthworks.

9. Yap Beng Teck Male | Malaysian | Aged 59 | Senior Contracts Manager Mr Yap graduated with a Diploma in Technology (Building) from Tunku Abdul Rahman University College

in 1982. He was certified as an Internal Quality Auditor in 2004 with the International Register of Certificated Auditors (IRCA). His career began in 1982 as a Site Coordinator. He joined Ikhmas Jaya in 1997 as a Contracts Manager and subsequently promoted to Senior Contracts Manager in 2009. He has more than 32 years of experience in the construction industry ranging from pre-contract and post-contract administration, cost estimation, negotiation and general site supervision to internal quality audit.

Notes:

1. Family relationship with Director and/or Substantial Shareholder

Save for Mr Ang Wei Zhen, the Executive Director who is the son of Dato’ Ang Cheng Siong, the Group Managing Director and a Substantial Shareholder of the Company, none of the Key Management have any family relationship with any Director and/or Substantial Shareholder of the Company.

2. Conflict of Interest

None of the Key Management has any conflict of interest with the Company.

3. Conviction for Offences

Other than traffic offences, if any, none of the Key Management has been convicted for offences within the past 5 years.

Key Management’s Profile(cont’d)


Board of Directors

Dato’ Ang Cheng SiongGroup Managing Director

Standing: Sitting, left side: Sitting, right side:

Ang Wei ZhenExecutive Director

Yuen Choong LaiSenior Independent

Non-Executive Director

Tan Ming-LiIndependent


Dzulkifli David bin AbdullahIndependent


Siew Mun LoutExecutive Director

Dato’ Ir. Dr. Khoo Ping SenExecutive Director

Dato’ Syed Ariff Fadzillahbin Syed Awalluddin

IndependentNon-Executive Chairman


He is the Chairman of the Nomination and Remuneration Committee and a member of the Audit and Risk Management Committee.

Dato’ Syed Ariff Fadzillah obtained a Bachelor of Arts Degree in History from Universiti Malaya in 1967, a Diploma in Development Administration from London School of Economics (now known as London School of Economics and Political Science) in 1974 and a Master of Arts in International Relations from New York University in 1984.

He began his career in 1967 as an Assistant District Officer of Kulim, Kedah until 1969. In 1970, he joined the Public Service Commission, Kuala Lumpur as an Assistant Secretary until 1972 before he was transferred to the Ministry of Foreign Affairs in the same year. Thereafter, he was appointed as the First Secretary in the High Commission of Malaysia in Ottawa, Canada in 1973, the Charge’ de Affaires of Malaysia in Tripoli, Libya in 1976, the Principal Assistance of Secretary, Ministry of Foreign Affairs in Malaysia in 1979 and subsequently, the Deputy Permanent Representative of the Permanent Mission of Malaysia to the United Nations in New York between 1982 and 1986. In 1986, he was appointed as the Deputy Chief of Mission in the Malaysian Embassy in Jakarta, Indonesia where he served until 1989. Subsequently, from 1989 to 1991, he served as the Ambassador of Malaysia to Fiji with concurrent accreditations to Tuvalu, Tonga, Western Samoa, Kiribati and Nauru. He also served as the Undersecretary at the Ministry of Foreign Affairs in charge of Southeast Asia and South Pacific from 1991 to 1992. Prior to retiring in November 2001, he served as the Ambassador of Malaysia to the Republic of Korea with joint accreditation to Mongolia from 1992 to 1995 and Ambassador of Malaysia to Thailand from 1996 to 2001.

He is currently the Chairman/Independent Non-Executive Director of Ecofirst Consolidated Bhd and Berjaya Auto Berhad.

Dato’ Syed Ariff Fadzillahbin Syed AwalluddinMale | Malaysian | Aged 75 |Independent Non-Executive Chairman (Appointed on 24 December 2014)

Directors’ Profile


As our Group Managing Director, Dato’ Ang Cheng Siong is responsible for the overall management, strategic planning and business development of our Group.

He obtained his Diploma in Building Technology from Tunku Abdul Rahman College (now known as Tunku Abdul Rahman University College) in 1980. He subsequently obtained his Master of Business Administration (Finance) degree from the University of Hull, United Kingdom in 1992.

He began his career in 1980 with Pembinaan Leow Tuck Chui & Son Sdn. Bhd. as a Quantity Surveyor and left in 1981. He then joined Syarikat Manong Sdn. Bhd. in 1981 as a Site Supervisor. During his tenure in Syarikat Manong Sdn. Bhd., he was promoted to Senior Supervisor in 1983 and Site Agent in 1985. In 1988, he left Syarikat Manong Sdn. Bhd. and joined Ho Hup Construction Company Sdn. Bhd. (now known as Ho Hup Construction Company Berhad) as a Tender Manager. In 1992, he set up Ikhmas Jaya. Subsequently in 1994, he left Ho Hup Construction Company Berhad to manage Ikhmas Jaya.

He has accumulated more than 30 years of extensive experience and expertise in the construction field via his involvement in various types of projects involving buildings, highways, dams, marine works, laying pipes, bridges, breakwater constructions, sewerage treatment plants, water supply projects and sports complexes.

Directors’ Profile(cont’d)

Dato’ Ang Cheng SiongMale | Malaysian | Aged 63 |Group Managing Director(Appointed on 5 December 2013)


Dato’ Ir. Dr. Khoo Ping Sen is responsible for managing and supervising the design and method of construction for all of the projects carried out by our Group. He is also responsible for the special projects undertaken by our Group and our Group’s business development.

He graduated with a Bachelor of Engineering degree with Honours from Monash University, Australia in 1975. He was granted the Monash University Graduate Scholarship and pursued his doctorate degree at the same university and obtained his Doctor of Philosophy degree in Civil Engineering majoring in structures in 1979.

He began his career in 1979 with Wan Mohamed & Khoo Sdn. Bhd. as an Engineer. He was promoted to the positions of Senior Engineer, Associate, Senior Associate and Director before he left the company in 1990. In 1990, he joined Ho Hup Construction Company Sdn. Bhd. (now known as Ho Hup Construction Company Berhad) as a Senior Project Manager, where he was in charge of the Design Department and Bore Piling Division. In 1997, he left Ho Hup Construction Company Berhad as a General Manager to join Ikhmas Jaya in the same year as the Managing Director. He is a member of the Institution of Engineers Malaysia since 1983.

He has been involved in the construction industry for more than 35 years and his expertise is in the area of structural design which focuses on bridges, high-rise buildings and industrial buildings. He also specialises in bore piling and foundation works.


Dato’ Ir. Dr. Khoo Ping SenMale | Malaysian | Aged 66 |Executive Director(Appointed on 5 December 2013)


Mr Siew Mun Lout is responsible for the day-to-day operations of all of the projects undertaken by our Group.

He graduated with a Bachelor of Engineering in Civil Engineering with Honours from the University of New South Wales, Australia in 1987.

He began his career with Syarikat Manong Sdn. Bhd. in 1987 as a Site Engineer. In 1990, he left Syarikat Manong Sdn. Bhd. and joined Ho Hup Construction Company Sdn. Bhd. (now known as Ho Hup Construction Company Berhad) as a Site Engineer. He was subsequently promoted to the positions of Construction Engineer and Project Engineer before he left in 1994 to join Ikhmas Jaya as a Project Manager in the same year. He was then promoted to Senior Project Manager in 1997 and promoted to the General Manager of Rekavista in 1998. Subsequently in 2002, he was promoted to Executive Director of Ikhmas Jaya.

He has more than 25 years of construction experience in bridge works, earthworks and roadworks including breakwater constructions and was involved in numerous types of projects involving highways, dams, marine works, laying pipes, bridge constructions, bore piling and basement constructions.

Siew Mun LoutMale | Malaysian | Aged 55 |Executive Director(Appointed on 4 July 2014)



As our Executive Director, Mr Ang Wei Zhen is responsible for developing and implementing strategic plans to promote cost efficiency within our Group’s overall operations. He is also responsible for business development.

He graduated with a Bachelor of Applied Science degree majoring in Construction Management and Economics from the Curtin University of Technology, Australia in 2008.

He began his career with Rider Levett Bucknall Pty Ltd in Perth, Australia in 2008 as a Junior Quantity Surveyor, where he was primarily responsible for carrying out cost estimation work, document controls as well as producing bill of quantity. He left Rider Levett Bucknall Pty Ltd in 2009 and subsequently joined Ikhmas Jaya in the same year as Deputy Project Manager and Senior Quantity Surveyor. He was part of the management team involved in the project coordination, project management, document control, cost control and cost forecasting.

Ang Wei ZhenMale | Malaysian | Aged 34 |Executive Director(Appointed on 4 July 2014)



Encik Dzulkifli David bin Abdullah graduated from Universiti Malaya with a Bachelor of Arts in Economics in 1970. He completed and obtained his professional qualification from Institute of Cost and Management Accountants (now known as Chartered Institute of Management Accountants (CIMA)) in England, United Kingdom in 1974. He is a member of the Nomination and Remuneration Committee and the Audit and Risk Management Committee.

He began his career in 1975 with Esso Production Malaysia Inc. (“EPMI”) in Kuala Lumpur where he worked in various accounting and finance capacities including Internal Control Supervisor and Financial Accounting Division Manager until 1981 when he was promoted to “Special Assistant” to the Managing Director of EPMI. During his tenure as the “Special Assistant” to the Managing Director, his responsibility was mainly to be a liaison person in assisting the communications between the foreign professionals in the company and the team in Petronas. His role includes, but not limited to, assisting in reviewing the annual work program and budget, developing guidelines for authorisation to act on matters, arranging meetings as well as all written communications with Petronas, tracking of cost recoveries and special assignments instructed by the Managing Director such as representing the company on the Committee of International Chamber of Commerce. Subsequently, in 1982, he became the Supervisor of Planning and Budgeting for the Engineering Division of EPMI before being assigned to Esso Eastern Inc. in Houston, Texas, United States of America (“USA”) in 1984 and to Esso Australia Limited in Sale, Victoria, Australia in 1985 on a Temporary Foreign Assignment (TFA). In 1986, he returned to Kuala Lumpur and became the Assistant Controller of EPMI until 1988 when he was posted to EPMI in Kerteh, Terengganu to become the Regional Accounting Manager, a position he served until 1992. He returned to Kuala Lumpur in 1992 as the Materials Department (Procurement) Manager for EPMI and Esso Malaysia Berhad (now known as Petron Malaysia Refining & Marketing Bhd) until 1997. In the same year, he was assigned to Exxon Company International (ECI) New Jersey as the South East Asia Downstream Procurement Manager, based in Kuala Lumpur until 1999 before he was posted to Fairfax, Virginia, USA in 1999 to become a member of the Global Procurement “Merger Transition Planning Team” for ExxonMobil Corporation (“ExxonMobil”) until 2000. In 2001, he was assigned to ExxonMobil Oil Indonesia Inc. in Jakarta, Indonesia as the Procurement Services Manager until 2002 when he assumed the role as the Asia Pacific Regional “Purchase to Pay” Manager for ExxonMobil.

In 2002, he retired from ExxonMobil and started providing private consultancy services in the area of supply chain management to the group of companies under PT Bakrie and Brothers Tbk (“Bakrie and Brothers”) in Jakarta, Indonesia until 2003. In the same year in 2003, he was appointed as the Vice President of Procurement for PT Bakrie Telecom Tbk and Senior Vice President of Procurement of PT Cakrawala Andalas Televisi or commonly known as ANTV in Jakarta, Indonesia, both of which are the subsidiaries of Bakrie and Brothers. In early 2008, he left Bakrie and Brothers and returned to Malaysia. He currently freelances as a Consultant on supply chain management and management control processes.

Dzulkifli David bin AbdullahMale | Malaysian | Aged 71 |Independent Non-Executive Director (Appointed on 24 December 2014)



He is the Chairman of the Audit and Risk Management Committee and a member of the Nomination and Remuneration Committee.

Mr Yuen Choong Lai graduated from Universiti Utara Malaysia with a Bachelor (Honours) Degree in Accounting in 1988 before obtaining a Master of Business Administration in Finance from the University of Hull, United Kingdom in 1992. He obtained his Corporate Finance Qualification (CFQ) from the Institute of Chartered Accountants in England and Wales (ICAEW) in 2006 and is a member of the Corporate Finance Faculty of the ICAEW. He is also a Chartered Accountant and a member of the Malaysian Institute of Accountants (MIA) since 1992 and a Certified Practising Accountant (CPA) with CPA Australia since 2008.

He has more than 25 years of experience in the finance and accounting, banking and investment industry. Presently, he is the Chief Financial Officer of Fusionex International PLC, an international software company. He was formerly the director of a local private financial consultancy and investment boutique firm that specialises in corporate advisory and investment from 1995 to 2012. In 1994, he was with Kuala Lumpur Stock Exchange as the Accountant in the finance division of the Exchange. Prior to that, he has embarked on a career in banking with Hongkong and Shanghai Banking Corporation Limited from 1989 to 1994. In 1988, he started his career in audit with Price Waterhouse & Co.

Previously, he has served as a Non-Executive Director for several public companies in Malaysia including Kurnia Asia Berhad, Kurnia Insurans (Malaysia) Berhad and Analabs Resources Berhad.

Yuen Choong LaiMale | Malaysian | Aged 54 |Senior Independent Non-Executive Director (Appointed on 4 July 2014)



Ms Tan Ming-Li is a member of the Nomination and Remuneration Committee and the Audit and Risk Management Committee.

Ms Tan Ming-Li graduated with a double degree in Law (Hons) and Science from University of Melbourne, Australia in 1993 and has been a member of the Malaysian Bar since 1994.

She is currently a partner in the legal firm of Cheang & Ariff specialising in corporate and securities law, where she is principally involved in advising on capital market transactions, mergers and acquisitions, corporate restructuring as well as other corporate finance related work. Prior to joining Cheang & Ariff in 1997, she practiced law in the firm of Allen & Gledhill, Kuala Lumpur, in the areas of corporate and commercial litigation and intellectual property. She is an Independent Non-Executive Director of BP Plastics Holding Bhd and Tune Protect Group Bhd (formerly Tune Ins Holdings Berhad). She is also a Non-Executive Director of Tune Insurance Malaysia Berhad, a subsidiary of Tune Protect Group Bhd (formerly Tune Ins Holdings Berhad).

Tan Ming-LiFemale | Malaysian | Aged 49 | Independent Non-Executive Director (Appointed on 11 May 2015)



Notes:

1. Family Relationship with Director and/or Substantial Shareholder

Save for Mr Ang Wei Zhen, the Executive Director who is the son of Dato’ Ang Cheng Siong, the Group Managing Director and a Substantial Shareholder of the Company, none of the other Directors have any family relationship with any Director and/or Substantial Shareholder of the Company.

2. Conflict of Interest

None of the Directors have any conflict of interest with the Company.

3. Conviction for Offences

None of the Directors have been convicted for offences within the past five (5) years, other than traffic offences, if any.

4. Board Meetings

The number of board meetings attended by the Directors of the Company are set out on page 35 of this Annual Report.

5. Directors’ Shareholdings

The details of the Directors’ shareholdings in the Company and its subsidiaries are disclosed on page 131 of this Annual Report.



On behalf of the Board of Directors, I am pleased to present the Annual Report and Audited Financial Statements for Ikhmas Jaya Group Berhad (“IJGB” or “the Group”) for the financial year ended 31 December 2017 (“FY2017”).

For FY2017, the Group recorded a revenue of RM303.17 million and profit after tax ofRM5.92 million. Considering the rising cost of doing business and operational challenges in the extremely competitive construction industry, the results proved to be moderately satisfying as compared to last year’s revenue of RM242.57 million and profit after tax of RM10.25 million.

Chairman’s Statement

DearStakeholders,“

“

Dato’ Syed Ariff Fadzillahbin Syed Awalluddin,Chairman


Robust export growth performance particularly in the electrical and electronics (“E&E”) sector and commodities lifted Malaysia’s Gross Domestic Product (“GDP”) growth above expectations to 5.9 % in 2017. Our country’s total exports rose 19% to RM935.40 billion in 2017 – the strongest growth since 2005 and also a record high.

Our economy grew faster than forecasted in the second quarter, fuelled by a pick-up in manufacturing or industrial production and resilient consumer spending.

However, export growth particularly in the E&E sector is anticipated to moderate in 2018. At the same time, crude oil price is expected to remain range bound between USD55 to USD65 per barrel supported by production cuts led by OPEC and Russia.

Imbalances in the property market especially the glut in the high rise high end residential and commercial sectors and high household debts could pose a significant downside risk to economic growth heading into 2018.

The loose monetary policies and low interest rates implemented by central bankers in major advanced economies which resulted in cheap funding had led to the run up of debts in emerging market economies and frothy asset prices – be it in real estate, equity or bond markets.

Our capital markets – equity and bond markets have beengrowing strongly for the past five (5) years. Their growth rates even surpassed our nominal GDP growth rates. The equity market capitalisation is now around RM1.9 trillion whilst the bond market has grown to approximately RM1.3 trillion. Our equity and bond markets have been providing a reliable source of funding to support our economy which is estimated around RM1.3 trillion.

With the anticipated gradual pace of normalisation of monetary policies and interest rates by central bankers in major advanced economies; the cost of capital is expected to rise and this may have a negative spill over effect on our economy moving forward.

As at end of 2017, total foreign holdings constituted 16% of the Malaysian bond market, and foreign holdings in Malaysian Government Securities (“MGS”) stood at 45% of total MGS outstanding. With government debts of RM75 billion maturing in 2018, coupled with international reserves barely sufficient to cover the maturity of our short-term external debts within the next 12 months; this certainly poses a rollover risk.

Chairman’s Statement(cont’d)

MM2 Redang

Matrade TTDI



There are several infrastructure projects that are expected to kick off in 2018 which would help to maintain our economic growth momentum. It is estimated that the funding requirement of the projects till completion of up to RM1.0 trillion is needed over the next few years. A large proportion of it is expected to be funded via the bond market. With our current account surplus hovering around 2% - 3% of GDP and fiscal deficit at 3% of GDP; foreign funding is certainly a requisite to support these mega infrastructure projects. Nevertheless, the positive economic trends are expected to continue in the near term, with the recently tabled budgetary papers providing a positive outlook for Malaysia’s economy heading into 2018.

The economic expansion will continue to be underpinned by resilient domestic demand and synchronised and broad-based growth in the global economy. The International Monetary Fund (“IMF”) is forecasting growth of 3.9% for the global economy in 2018. Export growth for our country is expected to rise moderately in 2018, building upon this year’s 16.6%, with real GDP predicted to grow by between 5% and 5.5%.

In FY2017, IJGB continued with its pursuit of business growth with new contracts and replenishment of its order book. The Group’s total outstanding order book for FY2017 alone was approximately RM600.0 million.

Some initial delays beyond our control were encountered due to unforeseeable circumstances which impacted our revenue recognition and earnings. However, our proven experience enabled us to resolve these issues and move on to complete the projects.

While we sought to actively replenish our order book, we also adopted a more selective strategy in bidding for projects; giving priority to projects with decent margins and those with locked-in prices for construction materials.

Being an experienced bore piling specialist in the industry has seen our capabilities grow leaps and bounds throughout the years since our inception. The company has an outstanding track record of excellent project deliveries to clients. As a testimony to our accomplishments, we have completed numerous projects over the years and with a solid order book and historical track record in sight, we exude confidence in IJGB’s growth prospects.

IJGB provides engineering and construction services for the private and public sectors in Malaysia. The Group engages in piling and foundation works; construction of bridges, roads and buildings as well as other civil engineering and geotechnical works; and rental of plant, machinery, and equipment.

FINANCIAL PERFORMANCE

The Group recorded a revenue of RM303.17 million for the current financial year ended 31 December 2017, an increase of RM60.60 million (or 25.0%) as compared to RM242.57 million recorded in the preceding year.

The increase in revenue was mainly due to the Group’s increased construction activities, particularly in four (4) major key projects moving into acceleration phase during the second half of the current financial year ended 31 December 2017.

Subang Skypark Terminal Railway Track


As a result of which, the Group recorded a revenue of RM118.12 million for the fourth quarter of the current financial year ended 31 December 2017; an increase of RM39.92 million (or 51.0% - a higher percentage) as compared to RM78.20 million achieved in the preceding year’s corresponding quarter ended 31 December 2016.

The Group posted a profit before tax (“PBT”) of RM9.70 million and profit after tax (“PAT”) of RM5.92 million for the current financial year ended 31 December 2017, a decline of RM5.46 million (or 36.0%) and RM4.33 million (or 42.2%) as compared to PBT of RM15.16 million and PAT of RM10.25 million respectively achieved during the preceding year.

The decline in PBT and PAT was mainly due to erosion in average project margin caused by rising costs of piling and building materials, labor, transport, fuel and regulatory compliance; unavoidable delays in finalisation of completed project accounts; additional costs incurred in one infrastructure project during the second (2nd) quarter of the current financial year; and impairment of construction work in progress of completed projects, receivables and project deposits.

Another key factor which contributed to the said decline especially during first (1st) half of the current financial year was due to the fact that most of the existing ongoing projects were nearing their completion phase of which their earnings accretion began to plateau whilst the new projects were still in the take-off phase with earnings accretion being relatively weaker in comparison.

Due to the operating challenges and escalating costs of operation as mentioned above, the Group underperformed with a moderately satisfying performance in PBT and PAT during the current financial year ended 31 December 2017 as compared to its financial results achieved during the preceding year.

DIVIDEND

The Board did not propose any dividend for the financial year ended 31 December 2017.

OUTLOOK AND PROSPECTS

Our Malaysian economy is expected to remain resilient in 2018, with real GDP to expand between 5% and 5.5%, led by resilient domestic demand. Private sector expenditure is expected to stay vibrant, expanding by 7.3% in line with the anticipation of sustained spending in private consumption and investment activities.

Gross exports are projected to expand moderately to RM948.7 billion in 2018, led by continued demand for electrical and electronic products and commodities.

On the back of slower residential construction though supported by on-going infrastructure projects, the construction industry is forecasted to grow moderately at 7.5% in 2018.

With this in sight, IJGB will continue to intensify its efforts in pursuit of securing a healthy order book to sustain its earnings moving forward. We have weathered many storms together, and looking ahead, the Group is prepared to overcome the challenges and welcome the opportunities that lie ahead.

ACKNOWLEDGEMENTS

Representing the Board of Directors, my review of the performance during the past year would not be complete without extending my sincere thanks to the employees and management team of Ikhmas Jaya for their exemplary dedication and contributions in FY2017. My appreciation also extends down to my fellow Board members and the Audit and Risk Management Committee who have persevered with their sound judgement, advice and counsel in lending their expertise to the situations at hand. Not forgetting our dedicated business partners, clients, principal bankers and also the relevant regulatory and government authorities who have continuously been there as our pillar of support to our causes. Last but not least, I would like to thank our valued shareholders for their continued vote of confidence during the year under review.

Dato’ Syed Ariff Fadzillah bin Syed Awalluddin Independent Non-Executive Chairman



Management Discussion & Analysis

The year in review for FY2017 has seen Ikhmas Jaya Group Berhad (“IJGB or “the Group”) cement its place in the construction industry.

The year in review FY2017 was indeed challenging and had tested the Group on all fronts. However, IJGB remained resilient and had focused on pursuing its operation and business strategies as well as replenishing its order books.

The challenges faced include reduction in average project margin caused by rising costs of piling and building materials, labour, transport, fuel and regulatory compliance; unavoidable delays in finalisation of completed project accounts; and impairment of construction work in progress of completed projects, receivables and project deposits.

Although most of the Group’s on-going projects were nearing their completion phase during first half of the year in review, IJGB remained optimistic with its newly secured projects with order book of approximately RM355.39 million for the year in review.

All its key projects were well and underway into more progressive phases in the third quarter of the financial year. This coupled with a bridge project in Melaka and the notable Bukit Bintang City Centre (“BBCC”) project in KL City Centre moving into similar acceleration phase further strengthened the increase in revenue and contributed positively to earnings during the fourth quarter of the year in review.

Despite the operating challenges as mentioned above, the Group still recorded a moderately satisfying performance in profit before tax (“PBT”) and profit after tax (“PAT”) during the current FY2017 as compared to its financial results achieved during the preceding year.

FINANCIAL PERFORMANCE

Financial Indicators 2017 2016 Difference (%)Revenue (RM’000) 303,166 242,567 25.0%Profit Before Tax (RM’000) 9,695 15,159 -36.0%Profit After Tax (RM’000) 5,924 10,251 -42.2%Profit attributable to owners of Company 6,929 11,282 -38.6%Order Book (RM’000) 590,994 634,960 -6.9%Earnings per ordinary share (sen) 1.32 2.17 -39.2%Net Assets per Share (RM) 0.39 0.37 5.4%Current Ratio 1.46 1.52 -3.9%

Stonor, Kuala Lumpur

Matrade TTDI


Management Discussion & Analysis(cont’d)

FINANCIAL PERFORMANCE (cont’d)

The Group recorded a record high revenue of RM303.17 million for the current FY2017, an increase of RM60.60 million (or 25.0%) as compared to RM242.57 million recorded in the preceding year.

This was a result of the Group’s perseverance, dedication and commitment to win key projects taking the performances of the Group into a steady and accelerated phase during the second half of the current FY2017.

However, notwithstanding the above; the impairment of construction work in progress of completed projects, receivables and project deposits had caused a decline of RM10.58 million in PBT and RM8.26 million in PAT respectively during the current FY2017.

The Group posted a PBT of RM9.70 million and PAT of RM5.92 million for the current FY2017, a decrease of RM5.46 million (or 36.0%) and RM4.33 million (or 42.2%) as compared to PBT of RM15.16 million and PAT of RM10.25 million respectively achieved during the preceding year.

Subang Skypark Terminal Railway Track

CAPITAL EXPENDITURE

For the year in review, RM1.90 million from the IPO proceeds were spent for the purchase of construction equipment.

The acquisition of these equipment is vital for the Group’s operations as it allows for quality, timely delivery and execution of work that contributes to the revenue and earnings growth of the Group.


CASHFLOW

2017RM’000

2016RM’000

Difference(%)

Net cash used in operating activities (7,808) (16,147) 51.6%Net cash from/(used in) investing activities 1,125 (9,354) >100%Net cash from/(used in) financing activities 8,372 (3,627) >100%Net increase/(decrease) in cash and cash equivalents

1,689 (29,128) >100%

Cash and cash equivalents at beginning of financial year

(28,827) 301 >-100%

Cash and cash equivalents at end of financial year

(27,138) (28,827) 5.9%

The Group’s net cash used in operating activities for the year improved by 51.6% from a deficit of RM16.15 million to a smaller deficit of RM7.81 million and this was a result of improved working capital management with more synchronised and better matching of project inflows against outflows.

The net cash from investing activities and the drawdown of bank borrowings and proceeds from private placement of shares further enhanced the cash position of Group as at year end.


MITC Melaka Opus, Kuala Lumpur



STATEMENT OF FINANCIAL POSITION

2017 2016 RM’000 RM’000

ASSETS Non-current assets 103,785 104,995 Current assets 432,716 343,416

Total assets 536,501 448,411

EQUITY AND LIABILITIESEQUITY Share capital 173,992 130,000 Share premium - 36,747 Reserves 33,014 28,685

Total equity attributable to owners of the Company 207,006 195,432Non-controlling interest (2,591) (1,686)

Total equity 204,415 193,746

Non-current liabilities 35,229 28,687Current liabilities 296,857 225,978

Total liabilities 332,086 254,665

Total equity and liabilities 536,501 448,411Net assets per share attributable to ordinary owners of the Company RM0.39 RM0.37

In FY2017, total assets of the Group grew by RM88.09 million to RM536.50 million. The growth was mainly in the Group’s current assets, which had been supported by a corresponding increase in total liabilities which increased by RM77.42 million mainly due to increase in trade creditors and bank borrowings.

Net assets per share grew to RM0.39 as compared to RM0.37 in the preceding year.

Matrade TTDI



CONTRACTS SECURED

In total, IJGB secured approximately RM355.39 million value worth of contractual works in FY2017.

Projects Nature of Project Contract Value * (RM’000)Union Suites - Symphony Life Residential 37,740Subang Pelangi Residential 34,203Mayang Mall, Kuala Terengganu Retail Mall 58,872Bukit Bintang City Centre Luxury Retail Shopping City Centre 188,584SP Setia, Setia City Mall Retail Mall 36,000

* Contract value is exclusive of 6% GST

FUTURE OUTLOOK

Moving ahead for 2018, the construction industry is expected to expand, albeit at a relatively slower pace. The industry’s expansion is expected to be supported by the government’s on-going efforts to promote economic growth through large-scale investments under the 11th Malaysia Plan (“11MP”) 2016 – 2020. This plan is part of the government’s aim to achieve the status of a developed economy by 2020.

This marks a momentous milestone in our nation’s history. With 2020 now just three years away, the 11MP is the next critical step in our nation’s journey to become an advanced country with an economy that is broad based, innovative, competitive, diversified and inclusive with sustainable growth. The Group is firmly in-line with that vision to be one of the nation builders in the industry that we are in.

Barring any unforeseen circumstances, moving forward the Group anticipates a better outlook in its financial performance within the next twelve months after taking into consideration that most of the major projects would be in acceleration phase, therefore giving the Group a stronger accretion in revenue and earnings.

Malaysia’s construction industry is expected to grow strongly from 2016 to 2020, supported by the Government’s plan to improve the country’s transportation network and tourism infrastructure, as well as increase in the volume of renewable energy projects.

While there are many challenges in the construction industry, the Group has put in place a strategy to navigate the business and the Group remains committed to improve its efficiency and focus of its operations.

The year ahead looks promising for the Group as it fills up its order book with additional construction jobs worth approximately RM395.9 million within the first four (4) months in 2018. Its order book reached a new record high of approximately RM986.9 million.

We would welcome the year 2018 with a new vigor and cautious optimistic outlook. And we certainly hope the Group could scale up to greater heights as we look forward to a renewed and a better performance for IJGB in 2018.


Sustainability Statement

TOWARDS A FUTURE WITH SOUND AND SOLID CORPORATE VALUE AND PRINCIPLES

IJGB views sustainability as the bedrock foundation of its business model supporting its long term vision and mission and business objectives for sustainable growth.

Its pillars of support are premised on a set of pristine corporate values and principles which treat and enrich all of its existing and potential stakeholders – shareholders, customers, suppliers, employees, bankers, regulatory authorities, fellow corporate citizens and whosoever with social contract in a just and equitable and socially responsible manner.

Socially responsible and ethical business practices central to its core principles of sustainability are adhered to at all times in its business and operating environment.

Just as risk management needs to be inculcated into our business decision, each employee must learn to make the right and responsible choices and to identify all relevant key risks and opportunities to make a positive contribution.

At IJGB, our commitments towards responsible practices are embedded into our sustainability strategy. Developing and enriching lives, creating a great place to work and advocating environmentally friendly practices are values underpinned by our commitment to uphold the highest standards of corporate values and principles as well as corporate governance which is outlined in the Malaysian Code of Corporate Governance.

Health, Safety and Environment (“HSE”) regulation ranks the most high in the priority list for everyone in IJGB. To this end, we continue to develop and have a more holistic approach to HSE initiatives.

We continue to deliver with productive and beneficial initiatives to recognise and reward proactive approaches to improve health and safety performance. Over the course of this year, we have seen encouraging signs in our health and safety performance indicators, with trends showing sustained improvement.

Our HSE model has been developed to best serve the projects and the structure of the organisation. At the heart of it is our supply chain capability. The model reflects our competency and awareness of our responsibilities, with the proper HSE programmes put in place that are appropriate for their activities.

ENSURING SMOOTH PROGRESS THROUGH QUALITY HSE FOOTPRINTS

The construction industry for infrastructure and buildings is one of the largest contributors to the country’s economy, and traditionally many parties are involved in the design, fabrication and construction process.

As one of the key participants in the construction or real estate business, we need to meet all quality, safety, cost and time related objectives at all times. Both design and production are subject to many local regulations and sometimes insurance company guidelines.

We ensure that we provide independent and impartial examination, verification, validation and assessment on behalf of our clients to ensure that systems and products are designed and constructed according to the specifications and requirements.

QUALITY HSE THROUGH QUALIFIED CERTIFICATIONS

Having achieved our certification for Occupational Health and Safety Management Systems 18001 (“OHSAS 18001”) and ISO 14001 in 2017, IJGB continues to provide relevant and much needed ISO-related training to our employees with emphasis on internalising and empowering them to enforce the implementation or walk the talk of good HSE practices in the organisation.

IJGB trains its employees on quality standards, including ISO standards. It can result in cost savings in production as well as provide an edge in marketing of the quality-controlled products. Some quality training is conducted in-house whilst some employees are also sent for external courses and conferences to enhance their competencies.


Sustainability Statement(cont’d)

QUALITY HSE THROUGH QUALIFIED CERTIFICATIONS (cont’d)

Having achieved our certifications, ISO-related training was conducted throughout the year by external consultants with active participation from employees. The training is centred on providing the employees with greater awareness, as well as empowering them to implement the standards to elevate HSE across the organisation.

Various HSE training and programmes were rolled out during the financial year in an effort to drive IJGB’s HSE initiatives to a higher level.

HSE TRAINING & PROGRAMMES 2017

Date HSE Training & Programmes Project28th February 2017 Soap Test on oxy and acertylene NAZA TTDI, MATRADE28th February 2017 Training for Fire Extinguisher Use at

WorksiteNAZA TTDI, MATRADE

22nd March 2017 Safety Committee Meeting NAZA TTDI, MATRADE2nd August 2017 DOSH Terengganu Site Visit Mayang Mall, Kuala Terengganu9th August 2017 Training Lifting Operation for

Operator Crane and Boring RigMayang Mall, Kuala Terengganu

9th August 2017 Safety Committee Meeting Mayang Mall, Kuala Terengganu14th August 2017 KPDNKK Site Inspection Mayang Mall, Kuala Terengganu25th August 2017 Safety committee meeting and

walkaboutUnion Suites, Sunway

29th August 2017 Training Awareness for Scaffolding Erection

Bukit Bintang City Centre

6th & 8th September 2017 Briefing & Training Awareness for Lifting and Rigging


19th September 2017 Training Awareness for Chemical Spillage


29th September 2017 Training Awareness for Working at Height


2nd November 2017 HSE induction Subang Pelangi27th November 2017 Safety and health committee

meetingSubang Pelangi

25th December 2017 Training for Fire Extinguisher Use at Worksite

Mayang Mall, Kuala Terengganu



These HSE training and programmes are focused in the following key areas:

• Planning for hazard identification, risk assessment and risk control, OHSAS management programme structure and responsibility

• Training, awareness and competence• Consultation and communication• Operational control• Emergency preparedness and response• Performance measuring, monitoring and improvement

SPECIFIC CAMPAIGN AND ACTIVITIES


No Activities Frequency1 Housekeeping Every week2 Road cleaning When required3 Larvaciding Every week, when required4 Fogging Once a month

Mayang Mall, Kuala Terengganu

No Activities Frequency1 Housekeeping Every week2 Road cleaning Every week, when required3 Larvaciding Every week, when required4 Fogging Every two week

MITC, Melaka

No Activities Frequency1 Housekeeping Every week

Naza TTDI, Matrade

No Activities Frequency1 Housekeeping Every week2 Road cleaning When required3 Fogging Once a month

Stonor




SPECIFIC CAMPAIGN AND ACTIVITIES (cont’d)

Subang Pelangi

No Activities Frequency1 Housekeeping Daily2 Road cleaning When required3 Larvaciding Every week4 Fogging Every week

Union Suites, Sunway


OPUS, Kuala Lumpur

No Activities Frequency1 Housekeeping Every week2 Larvaciding Every week3 Fogging Every week

Setia City Mall

No Activities Frequency1 Housekeeping Every week2 Road cleaning When required3 Larvaciding Every week4 Fogging Every week



These efforts were complemented by HSE site audits that were conducted on daily, weekly and monthly basis involving safety and technical/project team.

The Group values and places great emphasis on HSE initiatives and we have a dedicated team that manages and monitors all HSE aspects of the said project and to advise on necessary action to ensure a safe and secure working environment.

ENVIRONMENT

IJGB is well aware and concerned for matters which have adverse or dire consequences to Mother Nature. We take our commitment to the environment seriously, and responsibly. Recycling business waste means less disposal to landfill and less overall harm to the environment. At IJGB, we strive to keep our responsibility to the environment in-line with our business philosophy and corporate values and principles. IJGB is able to attract new customers, enhance our chances of winning contracts and improve customer loyalty by demonstrating environmental responsibility through recycling efforts, reducing wastage, managing and handling waste through cost monitoring processes.

RISK

IJGB drives a pro-active risk management culture where regular risk awareness and coaching sessions are held to ensure that employees have a good understanding and application of risk management principles.

A dedicated department works closely with the Group’s operational managers to continuously strengthen the risk management initiatives within the Group so that it responds effectively to the constantly changing business environment and is thus able to protect and enhance value to stakeholders.

The Group has established a sound risk management framework and procedures for internal control. These procedures, which are embedded into the culture, processes and structures of the Group, are subject to regular review by the Board. They provide an on-going process for identifying, evaluating and managing the significant risks faced by the Group that may affect the achievement of its business objectives and strategies. PEOPLE DEVELOPMENT

People are at the heart of all that we do here at IJGB. Talent management is indeed and has become a challenging aspect of our operations. As we have progressed, we have ensured that our work environment, as well as talent development strategy also evolved to suit the needs of the workforce and demands of the work place in the highly competitive construction industry.

To provide job motivation and career advancement opportunities to our staff, the team works closely with our Human Resource Department to identify, engage, educate and motivate staff of all levels and further help them in their professional development. After all learning is a lifelong process and we intend to keep it that way here at IJGB.

By end of the day, IJGB desires to be proud of its staff and its staff to be proud of IJGB.

To achieve sustainable growth; it must be supported in a long term sustainable relationship with its stakeholders – one of them being its employees. And this becomes a self-reinforcing element for sustainable growth in IJGB’s business model.


Corporate Social Responsibility

THROUGHOUT THE YEARS, WE HAVE CONTINUOUSLY BEEN INVOLVED IN EFFORTS TO HELP STRENGTHEN THE COMMUNITIES WE PROUDLY SERVE.

Our corporate social responsibility (“CSR”) initiatives have always focused on activities that directly or indirectly contribute to the betterment of the construction and building industry; as well as the environment. In the process, we have also helped to reach out and make a positive contribution towards Malaysia’s future generation. Today, we maintain this commitment through our efforts to equip individuals with skills to enrich and improve their lives.

YAYASAN LATIHAN INSAN ISTIMEWA IPOH Though focused and primed with operational goals in the year, our hearts and thoughts are always with those underprivileged communities that need our assistance and morale support. To lend our assistance and to give our deserving friends deserving aids, we made cash and in-kind contribution to Yayasan Latihan Insan Istimewa Ipoh, a welfare home in Perak.

“MERMAID”, CHARITY SHOW

As a firm supporter of the arts and entertainment, we also made a charitable donation for the “MERMAID” Charity Show, a musical gala to help raise funds for the underprivileged as part of our overall CSR initiatives for the Subang Pelangi development.

CARING FOR THE COMMUNITY

We keep those that need our help close to our hearts and continue to do our best to fulfil our CSR obligations. Together with the dedicated efforts of all our people here at IJGB, we are constantly involved in engagement activities to lend a helping hand where, when and however it may be needed.


Corporate GovernanceOverview Statement

The Board of Directors (“the Board”) of Ikhmas Jaya Group Berhad (“the Company”) is committed to a corporate culture that is based on the principles and best practices of corporate governance and is practised by the Company and its subsidiaries (“the Group”).

The Group’s corporate governance framework is premised upon the following statutory provisions, best practices and guidelines:-

• Companies Act, 2016 (“the Act”);• Main Market Listing Requirements of Bursa Malaysia Securities Berhad (“BMSB”);• Malaysian Code on Corporate Governance (“the Code”).

The Group welcomed BMSB’s enhanced corporate governance disclosure requirements which were introduced in line with the Code.

The Group will continue its endeavour to comply with all the key Principles and Best Practices of the Code in its effort to observe high standards of transparency, accountability and integrity. The Group believes that good corporate governance will help to realise long term shareholders’ value, whilst taking into account the interest of other stakeholders.

The following paragraphs describe how the Group has applied the Principles and Best Practices of the Code.

PRINCIPLE A - BOARD LEADERSHIP AND EFFECTIVENESS

I. BOARD RESPONSIBILITIES

Practice 1.1 Roles and Responsibilities of the Board

The Board provides the overall governance as well as stewardship and oversight for the direction and management of the Company and Group.

In discharging its duties and functions effectively, the Board delegates certain responsibilities to its Board Committees. All committees have written terms of reference. These Committees are formed in order to enhance business and operating efficiency. The Chairman of the respective Committee will report to the Board the outcome of the Committees Meetings for the Board’s consideration and final decision. Minutes of the respective Meeting will be presented to the Board for its information. The Board retains full responsibility for the direction and control of the Company and the Group.

The Board establishes the vision and strategic objectives of the Group, directing policies, strategic action

plans and stewardship of the Group’s resources. The Board’s roles and responsibilities amongst others include:

a. Reviewing and approving the overall strategic plans and direction of the Group;b. Ensuring that the statutory accounts of the Group are truthful and fairly stated and conform with

the relevant regulations including acceptable accounting policies approved financial reporting standards;

c. Reviewing and approving annual budgets, business expansion, restructuring plans, material acquisitions and disposals and issuance of new securities;

d. Overseeing and evaluating the conduct and performance of the Company and Group;e. Identifying principal risks and ensuring implementation of a proper risk management system; f. Establishing a succession plan; g. Overseeing the development and implementation of a shareholder communication policy for the

Company; h. Reviewing the adequacy and the integrity of the management information and internal control

system of the Group; and i. Be responsible for the overall corporate governance of the Group, including environmental

and social impact and the Group’s strategic direction, establishing goals for Management and monitoring the achievement of these goals.


Corporate GovernanceOverview Statement(cont’d)

PRINCIPLE A - BOARD LEADERSHIP AND EFFECTIVENESS (cont’d)

I. BOARD RESPONSIBILITIES (cont’d)

Practice 1.2 Roles of the Chairman

Practice 1.3 Separation of roles of Chairman and Group Managing Director and Chief Executive Officer (“CEO”)

The roles of the Chairman of the Board and the Group Managing Director are segregated. The Chairman is primarily responsible for the proper conduct and working of the Board whilst the Group Managing Director is responsible for the day-to-day running of the business and implementation of Board’s policies and decisions. The Group Managing Director is assisted by the Executive Directors, Senior Management and heads of each division in implementing and running of the Group’s day-to-day business operations. The roles of the Independent Non-Executive Chairman and the Group Managing Director are mentioned in the Board Charter which is made available in the Company’s website www.ikhmasjaya.com.

The Independent Directors provide unbiased and independent views to safeguard the interests of shareholders. The Independent Directors are actively involved in the various Board Committees and contribute significantly to areas such as performance monitoring and enhancement of corporate governance and controls. They provide a broader view, independent assessment and opinions on management proposals presented by the Group Managing Director and Management.

Practice 1.4 Company Secretary

The Company Secretaries, Ms Cynthia Louis and Ms Chew Mei Ling are Associate member of the Malaysian Institute of Chartered Secretaries & Administrators.

The Company Secretaries whose appointment and removal are subject to the Board’s approval, attend all Board and Board Committee meetings. The Board has direct access to the advice and services of the Company Secretaries who are responsible to the Board for ensuring that the Board procedures are followed and that applicable rules and regulations are complied with.

In performing their duties, the Company Secretaries carry out, amongst others, the following tasks:-

• Statutory duties as required under the Act, Main Market Listing Requirements of BMSB and Capital Market and Services Act 2007;

• Facilitating and attending Board Meetings and Board Committee Meetings;• Maintaining records for the purpose of meeting statutory obligations;• Assisting the Board with the preparation of announcements for release to BMSB and the Securities

Commission Malaysia; and• Rendering advice and support to the Board and Management.

Practice 1.5 Information and Support for Directors

Prior to Board meetings, an agenda together with the relevant documents and information are distributed to all Directors at least five business days in advance of board meetings unless in unavoidable circumstances. The Senior Management and/or other relevant Board members will provide comprehensive explanation of pertinent issues and recommendations. The issues would then be deliberated and discussed thoroughly by the Board prior to decision-making.





Practice 1.5 Information and Support for Directors (cont’d)

Apart from the above, the Board members are supplied with information and reports on financial, operational, corporate, regulatory, business development and audit matters by way of board reports or upon specific request to enable them to discharge their duties and responsibilities. All Directors are notified of the corporate announcements released to BMSB, any amendment to BMSB Listing Requirements and any pertinent Regulatory changes. All Directors have access to management and auditors for independent views and advice.

In furtherance of their duties, the Directors may seek independent professional advice if necessary, at the expense of the Company.

Meetings and Time Commitment

The Board is satisfied with the level of time commitment given by the Directors towards fulfilling their roles and responsibilities as Directors of the Company during the financial year ended 31 December 2017. In compliance with the Listing Requirements, all the Directors do not hold directorships more than that prescribed under the Listing Requirements. There were five (5) Board of Directors’ Meetings held during the financial year ended 31 December 2017 and the details of the attendance of the Directors’ and Committees Meetings are as follows:-

Directors Board of Directors

ARMC NRC AGM

Dato’ Syed Ariff Fadzillah bin Syed Awalluddin 5/5 6/6 1/1 1/1Dato’ Ang Cheng Siong 5/5 - - 1/1Mr Siew Mun Lout 5/5 - - 1/1Dato’ Ir. Dr. Khoo Ping Sen 5/5 - - 1/1Mr Ang Wei Zhen 5/5 - - 1/1Mr Yuen Choong Lai 5/5 6/6 1/1 1/1En Dzulkifli David bin Abdullah 3/5 4/6 0/1 1/1Ms Tan Ming-Li 4/5 6/6 1/1 1/1Total Number of Meetings 5 6 1 1

ARMC - Audit & Risk Management Committee NRC - Nomination & Remuneration Committee AGM - Annual General Meeting




Main activities of the Board in year 2017

The main activities carried out by the Board in year 2017 are set out below:-

• Reviewed and approved the annual report, quarterly results and financial statements;• Received updates on risk management and internal control;• Reviewed and validated the results of the 2017 Board Effectiveness Evaluation; and• Reviewed the terms of office and the contribution, performance and the effectiveness of the Board

and individual directors, the ARMC, NRC and each member of the Board Committees to ensure that they have carried out their duties in accordance with their respective terms of reference.

Practice 2.1 Board Charter

The Company has established and adopted a Board Charter which serves as a reference point for Board activities. The Board Charter provides guidance for Directors and Management regarding the responsibilities of the Board and Board Committees, the requirements of Directors in carrying out their stewardship roles and in discharging their fiduciary duties towards the Company as well as boardroom activities. The Board Charter can be found on the Company’s website at www.ikhmasjaya.com.

The Board will review the Board Charter as and when necessary to ensure it remains consistent with the Board’s objectives and responsibilities, and all the relevant standards of corporate governance.

The Board Charter was last reviewed in April 2018.



Practice 3.1 Code of Conduct and Ethics

Practice 3.2 Whistleblowing Policies and Procedures

The Directors observe the Company Directors’ Code of Ethics established by the Companies Commission of Malaysia. The Code of Ethics is published in the Company’s website at www.ikhmasjaya.com.

The Board also has in place a Whistle Blowing Policy for employees to raise genuine concerns, without fear, about any suspected and/or known misconduct, wrongdoings, corruption, fraud, waste and/or abuse. The Whistle Blowing Policy is available for reference at the Company’s website at www.ikhmasjaya.com.




II. BOARD COMPOSITION

Practice 4.1 Board Composition and Independence

Board Composition

The Board consists of eight (8) members comprising the Chairman, who is an Independent Non-Executive Director, three (3) Independent Non-Executive Directors and four (4) Executive Directors.

The Board has complied with Paragraph 15.02 of the Listing Requirements which requires at least two directors or one-third of the Board (whichever is the higher) to be Independent Directors. The presence of the Independent Directors, forming half of the Board members, provides objectivity and independent judgment to decision making.

The Board is of the view that the current composition of the Board is appropriate, where no individual shall dominate the Board’s decision making. The Board believes that the current composition is appropriate given the collective skills and experience of the Directors and Ikhmas Jaya Group’s current size and nature of business. Further, the Board is of the view that with the current Board size, there is no disproportionate imbalance of power and authority on the Board between the Non-Independent and Independent Directors. The Board will continue to monitor and review the Board size and composition as may be needed.

The Non-Executive Directors of the Company are independent of management and free from any business relationship which could materially interfere with the exercise of their judgment. They, particularly the Independent Non-Executive Directors, are actively involved in various Board Committees. They provide guidance, unbiased, fully balanced and independent and objective views, advice and judgment to various areas such as performance monitoring, enhancement of corporate governance and controls so as to safeguard the interest of shareholders and stakeholders and to ensure that the highest standards of conduct and integrity are maintained by the Group.

It is a mandatory practice to have the Directors concerned to declare their interests and abstain from the decision making process when a potential conflict of interest arises.

Changes in Board Composition

There are no changes to the Board Composition in year 2017.

Annual Assessment of Independence

Criteria have been set to assess the independence of candidate for directors and existing directors based on the guidelines set out in the Listing Requirements.

On an annual basis, the Directors are required to confirm their independence by completing the independence checklist.

None of the Independent Director had any relationships and/or transactions that could materially interfere with their independent judgements and decisions. The Board was truly satisfied with the level of independence demonstrated by all Independent Directors.




II. BOARD COMPOSITION (cont’d)

Practices 4.2 and 4.3 Tenure of Independent Director

The Code recommends that the tenure of an Independent Director should not exceed a cumulative term of nine (9) years. Upon completion of the nine (9) years, an independent director may continue to serve on the Board subject to his re-designation as a non-independent director. In the event such Director is to be retained as an independent director, the Board must justify and seek annual shareholders’ approval. In the event the Board continues to retain the independent director after the twelfth (12th) year, annual shareholders’ approval must be sought through a two-tier voting process to retain the said director as an independent director.

The Board is mindful that the limitation of terms of service may result in a loss to the Company by the exit

of Board members who are making valuable and critical contributions and believes that the tenure of Independent Directors on the Board does not interfere with their objectives and independent judgement or their abilities to act in the best interest of the Company.

The Company does not have any Independent Non-Executive Director who has served more than nine (9) years as at the date of this Statement.

During the financial year, the NRC carried out an assessment of the Directors and recommended the re-election of directors at the Fifth (5th) AGM to the Board.

Practices 4.4 and 4.5 Board Diversity

The Board acknowledges the importance of diversity as an essential virtue of good corporate governance and an attribute of a well-functioning Board. Diversed views enhance Board discussions and ensure that the discussions made by the Board have been considered from all points of view. The Board acknowledges that diversity presents itself in a number of forms, including but not limited to gender, age, cultural background, educational background, ethnicity, professional experience, skills and knowledge.

The Board takes appropriate measures to ensure that boardroom diversity is considered as part of its selection and recruitment exercise. However, the merits of the individual and the knowledge and expertise relevant to the Company will be the main criteria when considering the selection of new candidates to the Board.

Although the Company does not currently have a written policy on diversity pertaining to the selection of

its Board members, the Board has always taken into account diversity as one of the selection criteria of Board appointees as it recognises that a diversified Board will provide effective and dynamic discussions at the Board level. Currently, we have one female director with legal expertise on our Board.





Practices 4.4 and 4.5 Board Diversity (cont’d)

The Board experience matrix, age and gender diversity of the Board during the financial year was as follows:

Industry / Backgroundexperience

Age composition

Gender

Directors

Dato’ Syed Ariff Fadzillah bin Syed AwalluddinDato’ Ang Cheng SiongMr Siew Mun LoutDato’ Ir. Dr. Khoo Ping SenMr Ang Wei ZhenMr Yuen Choong LaiEn Dzulkifli David bin AbdullahMs Tan Ming-Li

Practice 4.6 Sourcing of Directors

The nomination and election process of Board Members are as follows:-

The Board does not set specific criteria for the assessment and selection of candidates for appointment as director. Consideration would be taken on the need to meet the regulatory requirements such as the Act and the Listing Requirements, the experience, integrity, wisdom, independence of the candidate, ability to make analytical inquiries, ability to work as a team to support the Board, possession of the required skill, qualification and expertise that would add value to the Board, understanding of the business environment and the willingness to devote adequate time and commitment to attend to the duties/functions of the Board.

The NRC is responsible to recommend candidates to the Board to fill vacancy arising from resignation, retirement or other reasons or if there is a need to appoint additional directors with the required skill or profession to the Board in order to close the competency gap in the Board identified by the NRC. The potential candidate may be proposed by existing directors, senior management, shareholders or third party referrals.

Upon receipt of the proposal, the NRC is responsible to conduct an assessment and evaluation on the proposed candidate.

Public Service

Procument/Supply C

hain M

anagement

Project Managem

ent Legal/ Regulatory

Acad

emic

Consultancy

Civil Engineering

Construction M

anagement

Economics

30 – 35 46 – 5051 - 5561 – 7071 – 75

Male

Female

Accounting / Finance /

Corporate Finance





Practice 4.6 Sourcing of Directors (cont’d)

The assessment/evaluation process may include among others, a review of the candidate’s resume, curriculum vitae and qualification. The NRC would also assess the candidate’s integrity, wisdom, independence, ability to make independent and analytical inquiries, ability to work as a team to support the Board, understanding of the business environment and the willingness to devote adequate time and commitment to attend to the duties/functions of the Board.

Upon completion of the assessment and evaluation of the proposed candidate, the NRC would make its recommendation to the Board. Based on the recommendation of the NRC, the Board would evaluate and decide on the appointment of the proposed candidate.

Practices 4.7 & 6.2 Nomination & Remuneration Committee

The objective of the NRC is to assist the Board to implement procedures for selection of directors and assessing the effectiveness of the Board, Board Committees and contributions and performance of individual directors. Further, the NRC is to establish a framework on remuneration of the Board members and Senior Management and recommending the remuneration packages, in line with the business strategy, responsibilities and expertise, and long-term objectives of the Group.

The role of the NRC is to assist the Board in ensuring that the Board comprises individuals with the requisite skills, knowledge, professional expertise and character. The NRC also reviews the Board’s succession plan as well as the training and development needs of the Board.

The terms of reference of the NRC can be found on the Company’s website at www.ikhmasjaya.com. The Terms of Reference was reviewed by the Board at its meeting in April 2018.

The Nomination and Remuneration Committee comprises exclusively of Independent Non-Executive Directors:-

• Dato’ Syed Ariff Fadzillah bin Syed Awalluddin (Chairman, Independent Non-Executive Director)

• Mr Yuen Choong Lai (Member, Senior Independent Non-Executive Director)

• En Dzulkifli David bin Abdullah (Member, Independent Non-Executive Director)

• Ms Tan Ming-Li (Member, Independent Non-Executive Director)

Practice 5.1 Evaluation of Board, Board Committees and Individual Directors

The Board evaluation comprised a Board and Board Committee’s Assessment, Assessment by Individual Directors and Peer Assessments and Assessments of Independence of Independent Non-Executive Directors (“the Assessments”).





Practice 5.1 Evaluation of Board, Board Committees and Individual Directors (cont’d)

For Individual Performances and Board Evaluation, the assessment criteria include among others, contribution and performance, calibre and personality, Board mix and composition, quality of information and decision making as well as participation at Board and Committee Meetings. The Board also undertook an evaluation on the ARMC and the assessment criteria include effectiveness and quality, external and internal audits and financial reporting. The criteria for assessing the independence of an Independent Director include the relationship between the Independent Director and the Group and his or her involvement in any significant transaction with the Group. The results and recommendations from the evaluation were reported to the Board for further consideration and action, if required.

Directors who are subject to re-election and at the next AGM shall be assessed by the NRC before recommendation is made to the Board and shareholders for the re-election.

Annual Assessment of Existing Directors & Board Committees

To ensure that the Board would be able to discharge its duties and responsibilities effectively, the NRC has during the year carried out:

(i) an assessment of the Directors, which includes the self-assessment carried out by the individual Directors;

(ii) a review on the retirement of Directors by rotation eligible for re-election at the 5th AGM;(iii) an assessment on the independence of the Independent Directors; (iv) a review and assessment on the composition and diversity of the Board Committees;(v) an evaluation on the ARMC and the assessment criteria include effectiveness and quality, external

and internal audits and financial reporting. The NRC and the Board was satisfied with the performance and effectiveness of the ARMC.

There were no major concerns arising from the results of the Assessments. The feedback confirmed that the Board and each of its committee continue to operate effective and that each Director continues to make an effective contribution and demonstrates a strong commitment to the role.

The results of the Assessments form the basis for the NRC’s recommendation to the Board for the re-election of Directors at the forthcoming AGM.

Re-election of Directors

In accordance with the provisions of the Company’s Articles of Association, at least one-third (1/3) of the Directors for the time being or if their number is not three (3) or multiples of three (3), then the number nearest to one-third (1/3) shall retire from office and shall be eligible for re-election at each AGM. Consequently, each Director shall retire from office at least once in every three years but shall be eligible for re-election. Directors who are appointed to the Board during the year shall retire and seek re-election at the next AGM to be held following their appointments.

In accordance with the Article 122 of the Company’s Articles of Association, Dato’ Ang Cheng Siong, Dato’ Ir. Dr. Khoo Ping Sen and Ms Tan Ming-Li will retire and offer themselves for re-election at the forthcoming AGM.





Practice 5.1 Evaluation of Board, Board Committees and Individual Directors (cont’d)

Directors’ Training

All the Directors of the Company have attended the Mandatory Accreditation Programme. Directors are encouraged to attend relevant seminars and conferences to enhance their skills and knowledge and to keep abreast with the latest developments on laws and regulations.

The Board acknowledges that continuous education is vital for its Board members to gain insight and maintain awareness of the economy, technological advances, latest regulatory developments and management strategies. The NRC assesses from time to time the training needs of the Directors and ensures the fulfilment of such training deemed appropriate. The Board members are also encouraged to attend training programmes and seminars to keep abreast with developments in the industry as well as to enhance their professionalism and knowledge.

For the year under review, the training programmes and seminars attended by the Directors are as follows:

Directors Seminar/Forum/Conference/Training

Date

Dato’ Syed Ariff Fadzillah bin Syed Awalluddin

Malaysian Code on Corporate Governance 2017 and Cybersecurity

23.10.2017

Dato’ Ang Cheng Siong Malaysian Code on Corporate Governance 2017 and Cybersecurity

23.10.2017

Dato’ Ir. Dr. Khoo Ping Sen Malaysian Code on Corporate Governance 2017 and Cybersecurity

23.10.2017

Mr Siew Mun Lout Malaysian Code on Corporate Governance 2017 and Cybersecurity

23.10.2017

Mr Ang Wei Zhen Malaysian Code on Corporate Governance 2017 and Cybersecurity

23.10.2017

En Dzulkifli David bin Abdullah Malaysian Code on Corporate Governance 2017 and Cybersecurity

23.10.2017

Mr Yuen Choong Lai Malaysian Code on Corporate Governance 2017 and Cybersecurity

23.10.2017

Ms Tan Ming-Li Malaysian Code on Corporate Governance 2017 and Cybersecurity

FIDE FORUM - Economic & Financial Services Section Trends and Challenges Moving Dialogue with Senior Management of BNM

23.10.2017

27.03.2017




III. REMUNERATION

Practice 6.1 Remuneration Policy and Procedures for Directors and Senior Management

The objectives of the Company’s remuneration policy on Directors’ remuneration is to attract, retain and motivate the Directors of the highest quality and to recognise and reward the high performing Directors for achieving the Company’s business and corporate goals.

The NRC shall ensure that the levels of remuneration are competitive in the market to attract and retain Directors of the quality required to manage the business of the Group. The NRC is entrusted under its terms of reference to assist the Board, amongst others, to recommend to the Board the remuneration of the Executive Directors. In the case of Non-Executive Directors, the level of remuneration shall reflect the experience and level of responsibilities undertaken by each of the Non-Executive Directors concerned.

The fees for Directors are determined by the Board with the approval from Shareholders at the AGM. No Director is involved in deciding his own remuneration.

Practices 7.1 and 7.2 Disclosure of Remuneration of Directors and Senior Management

Details of Directors’ remuneration for the financial year ended 31 December 2017 are set out as below:-

Group Company

Executive Directors (RM)

Non-Executive Directors

(RM)Executive Directors

(RM)

Non-Executive Directors

(RM)Salaries and other emoluments

2,278,000 - 560,000 -

Fees - 174,000 - 174,000Benefits 275,017 32,000 68,029 32,000

The number of Directors whose total remuneration falls within the band of RM50,000 is as follows:-

Range of RemunerationNumber of Directors

Executive Non-Executive RM50,001 to RM100,000 - 4RM250,001 to RM300,000 1 -RM600,001 to RM650,000 1 -RM700,001 to RM750,000 1 -RM900,001 to RM950,000 1 -




III. REMUNERATION (cont’d)

Practices 7.1 and 7.2 Disclosure of Remuneration of Directors and Senior Management (cont’d)

(i) Directors’ Fees/Meeting Allowance

The Company will be seeking the approval of the shareholders for the Proposed Director Fees of RM176,000.00 and meeting allowance of RM32,000.00 for the financial year ending 31 December 2018 at the forthcoming 5th AGM. The fees will not be paid until the approval of the shareholders in the forthcoming AGM.

Fees (RM)

Annual Meeting Allowance

(RM)Chairman of the Board 48,000 8,000Non-Executive Director of the Board 40,000 8,000Chairman of Audit and Risk Management Committee 46,000 8,000Member of Audit and Risk Management Committee 40,000 8,000

(ii) Non-Executive Directors

The Non-Executive Directors are not entitled to any other benefits or incentive plan.

(iii) Group Managing Director

The Group Managing Director is not entitled to the above Directors’ fee or any meeting fees for Board or Board Committee meetings he attends for the Company. The Group Managing Director’s remuneration package is reflected in his service contract as structured taking into account the fixed compensation which includes basic salaries and allowances including retirement benefits, hospitalisation and surgical insurance and a variable performance-linked bonus.

(iv) Senior Management

The remuneration of the top 5 key senior management personnel are as follows:-

Senior Management Fees Salary/Bonus

Benefits in-kind Other emoluments

RM150,000 to RM200,000 - 5 - -

(v) Directors & Officers (D&O) Insurance

The Directors together with the officers of the Group are covered under the D&O insurance in respect of any liabilities or claims arising from them discharging their duties as Directors and Officers of the Group, provided they have not acted negligently, fraudulently or in breach of their duties. During the financial year, the total amount of sum insured for the Directors and Officers is RM480,000.00 for any one (1) claim and in aggregate of all claims. The premium incurred by the Company is RM17,196.00.



PRINCIPLE B - EFFECTIVE AUDIT AND RISK MANAGEMENT

Practice 8.1 Audit and Risk Management Committee Composition and ChairmanPractice 8.4 (Step Up) Independence of the Audit and Risk Management Committee

The ARMC is made up exclusively by Independent Directors based on the Step-Up recommendation of the Code and also fulfils the requirements of the Listing Requirement of which requires the ARMC comprise no fewer than three (3) members and that all members must be Non-Executive Directors with a majority of them being Independent Directors.

The Chairman of the ARMC is an Independent Director. The role and responsibilities of the ARMC as well as their rights are set out in the Terms of Reference contained on the corporate website.

Details of the activities carried out by the ARMC in FYE 2017 are set out on pages 53 to 54.

Practices 8.2 and 8.3 Oversight and Assessment of the Suitability and Independence of External Auditors

The Company’s independent External Auditors fill an essential role for the shareholders by enhancing the reliability of the Group’s financial statements and giving assurance of that reliability to users of the financial statements.

The Board has established a formal and transparent arrangement for maintaining appropriate relationships with the External Auditors in seeking professional advice and ensuring the compliance with the relevant regulations and applicable approved accounting standards in Malaysia. The external auditors attend ARMC meetings when necessary and have direct access to the ARMC and Internal Auditors for independent discussion.

Independence of Auditors

The Board through the ARMC reviews and assess the independence of the External Auditors on a yearly basis. The ARMC works closely with the Management team in assessing the suitability of the external auditor. The areas of assessment include among others, the external auditors’ objectivity and independence, audit fees, size and competency of the audit team, audit strategy, audit reporting and partner involvement.

The External Auditors, in supporting their independence, provided the ARMC with a written assurance confirming their independence throughout the conduct of the audit engagement in accordance with the relevant professional and regulatory requirements. The External Auditors have provided such declaration in their annual audit plan presented to the ARMC of the Company during the financial year.

In the event a former audit partner is appointed as a member of the ARMC, the former key audit partner is to observe a cooling-off period of at least two (2) years before being appointed.

The ARMC meets periodically to carry out its functions and duties pursuant to its terms of reference. During the financial year, the ARMC met the External Auditors twice without the presence of the Management.

The non-statutory audit fees incurred for services rendered to the Group by KPMG for financial year 2017 was RM109,000.00 (FY2016 : RM114,000.00).

The Board has considered the non-audit fees provided during the year by KPMG and is satisfied that the provision of those non-audit services during the year by KPMG does not compromise the Auditors’ independence.

The ARMC and the Board are satisfied with the performance, competence and independence of the External Auditors and the Board had recommended their re-appointment for shareholders’ approval at the forthcoming AGM.



PRINCIPLE B - EFFECTIVE AUDIT AND RISK MANAGEMENT (cont’d)

Practice 8.5 Financial Literacy of the ARMC

The ARMC possess the right mix of skills to discharge its duties effectively.

The Committee is led by Mr Yuen Choong Lai, a member of the Malaysian Institute of Accountants (MIA) and he possesses financial knowledge to provide satisfactory input on financial matters. The ARMC also comprises members with legal, corporate, public service and management control backgrounds, all of whom are financially literate and provide diverse perspectives that strengthen the quality of deliberations.

Practices 9.1 and 9.2 Risk Management and Internal Control Framework

The Board has an overall responsibility in maintaining a sound internal control system that provides reasonable assurance of effective and efficient operations and compliance with internal procedures and guidelines.

The Group’s approach to risk management and the principal risks faced by the Group are disclosed on the Statement on Risk Management and Internal Control as set out on pages 55 to 57 of the Annual Report.

Practices 10.1 and 10.2 Internal Audit Function

The Group has outsourced its internal audit (IA) function to a professional service firm which is independent of the activities and operations of the Group.

The IA function is tasked by the Board to undertake continuous review and assessment on the adequacy, efficiency and effectiveness of risk management, control and governance processes implemented in the Group.

The outsourced internal auditors report directly to the ARMC. Details on the internal audit function are set out in the ARMC Report and the Statement on Risk Management and Internal Control of this Annual Report.

The IA function has unrestricted access to the ARMC and is invited to attend meetings to facilitate the deliberation of audit reports. The minutes of the ARMC meetings are then tabled to the Board for information and serve as useful references, especially if there are pertinent issues that any Directors wish to highlight or seek clarification.

PRINCIPLE C - INTEGRITY IN CORPORATE REPORTING AND MEANINGFUL RELATIONSHIP WITH SHAREHOLDERS

Financial reporting

The Board, through the ARMC, endeavours to provide and present a balanced view and meaningful assessment of the Group’s financial performance to its shareholders, primarily through the Annual Reports and quarterly announcements of the Group’s results to BMSB. The Board is assisted by the ARMC in overseeing the Group’s financial reporting process and the accuracy, consistency and appropriateness of the use and application of accounting policies.

On a yearly basis, the ARMC meets with the External Auditors to go through the Audit Planning Memorandum prior to commencement of audit. In addition, the ARMC also meets with the External Auditors to discuss their report to the ARMC following completion of their audit. The External Auditors share with the ARMC any significant issues on the financial statements and regulatory updates. The ARMC obtains assurance from the External Auditors on the Company’s compliance with the applicable approved financial reporting standards.

The Directors acknowledge and are responsible for ensuring that proper accounting records are kept to reflect the reasonable accuracy of the financial position of the Company and the Group and to ensure the financial statements comply with all relevant rules and regulations.

The Directors have a general responsibility for taking reasonable steps to safeguard the assets of the Group and to prevent, minimise and detect fraud and other irregularities.



PRINCIPLE C - INTEGRITY IN CORPORATE REPORTING AND MEANINGFUL RELATIONSHIP WITH SHAREHOLDERS (cont’d)

Corporate Disclosures Policies and Procedures

Practice 11.1 Communication with Stakeholders

Recognising the importance of timely dissemination of information to shareholders and other stakeholders, the Board is committed to ensuring that the shareholders and other stakeholders are well informed of major developments of the Company and the information is communicated to them through the following:-

(i) The Annual Report;

(ii) The various disclosures and announcements made to BMSB including the Quarterly Results and Annual Results;

(iii) Briefings to the Company’s key investors or other investment community in order to provide them a better understanding of the Group’s operations and explanation to any concern highlighted; and

(iv) The website at www.ikhmasjaya.com which shareholders as well as members of the public are invited to access for the latest information on the Group.

The Board also encourages shareholders to communicate through other channels and has identified Mr Yuen Choong Lai as the Senior Independent Non-Executive Director to whom concerns from the public may be conveyed. Mr Yuen can be contacted via the following address:-

c/o Ikhmas Jaya Group BerhadNo 35, 37 and 39, Jalan PJU 1A/41B,Pusat Dagangan NZX, Ara Jaya47301 Petaling Jaya, Selangor Darul Ehsan

Practice 11.2 Integrated Reporting

The Group has yet to adopt integrated reporting.

Practice 12.1 Notice of Annual General Meeting

The Company’s AGM serves as a principal forum for dialogue with shareholders. Shareholders are encouraged to meet and communicate with the Board at the AGM and to vote on all resolutions. Extraordinary General Meetings are held as and when required.

The Company sends out the Notice of AGM and related circular to Shareholders at least 28 days before the meeting in order to facilitate the full understanding and evaluation of the issues involved.



PRINCIPLE C - INTEGRITY IN CORPORATE REPORTING AND MEANINGFUL RELATIONSHIP WITH SHAREHOLDERS (cont’d)

Practice 12.2 Directors to attend General Meetings

All the Directors, including the Chairman of the ARMC and NRC would attend the General Meetings to allow the shareholders to raise questions and clarify any issues they may have relating to each resolution tabled for approval.

Practice 12.3 Electronic Voting

General Meetings are currently convened in a specified venue and resolutions put forth are voted by the members present in person or by proxy at the said venue of the meeting. Electronic voting is adopted to ensure accurate recording of votes and all resolutions will be put to vote by poll.

This Practice 12.3 recommendation to leverage on technology is a new concept introduced and the Company would need time to study the availability of such software and hardware to facilitate such mode of voting. STATEMENT ON COMPLIANCE WITH BEST PRACTICES OF THE CODE

This statement is prepared in compliance with Paragraph 15.25 of the Listing Requirements and it is to be read together with the CG Report 2017 of the Company which is available in the Company’s website at www.ikhmasjaya.com. The Board is satisfied that the Company has complied with the Code during the financial year with regard to the recommendations supporting the Principles except as otherwise stated.

This statement was presented and approved at the Board of Directors’ Meeting held on 18 April 2018.



Audit and Risk ManagementCommittee Report

The Board of Directors of Ikhmas Jaya Group Berhad (“Company”) is pleased to present the report of the Audit and Risk Management Committee for the financial year ended 31 December 2017. AUDIT AND RISK MANAGEMENT COMMITTEE COMPOSITION AND MEETINGS

The Audit and Risk Management Committee (“the Committee”) comprises of four (4) members of the Board all of whom are Independent Non-Executive Directors as follows:-

Chairman: Mr Yuen Choong Lai (Senior Independent Non-Executive Director)Members : Dato’ Syed Ariff Fadzillah bin Syed Awalluddin (Independent Non-Executive Director) En Dzulkifli David bin Abdullah (Independent Non-Executive Director) Ms Tan Ming-Li (Independent Non-Executive Director) There were six (6) meetings held during the financial year ended (“FYE”) 31 December 2017 and the record of attendance of the Committee Members is as follows:-

Number of MeetingsAttended Held

Mr Yuen Choong Lai 6 6Dato’ Syed Ariff Fadzillah bin Syed Awalluddin 6 6En Dzulkifli David bin Abdullah 4 6Ms Tan Ming-Li 6 6

The Committee Terms of Reference

Purpose

The objective of the Committee is to assist the Board in discharging its responsibilities to safeguard the Company’s assets, manage the overall risk exposure of the Group, maintain adequate accounting records, develop and maintain effective systems of internal control, with the overall objective of ensuring that Management creates and maintains an effective control environment in the Group. The Committee also provides a channel of communication between the Board of Directors, Management, External Auditors and Internal Auditors.

Composition

1. The members of the Committee are to be appointed by the Board based on the recommendation of the Nomination and Remuneration Committee from amongst the Directors of the Company who fulfil the following requirements:-

(a) the Committee must be composed of no fewer than three (3) members;(b) all members of the Committee must be Non-Executive Directors, with a majority of them being

Independent Directors;(c) all members of the Committee should be financially literate; and(d) at least one member of the Committee must fulfil the expertise requisite of the Bursa Malaysia

Securities Berhad (“Bursa Securities”) Main Market Listing Requirements (“Listing Requirements”) as follows:


Audit and Risk ManagementCommittee Report(cont’d)

Composition (cont’d)

(i) he must be a member of the Malaysian Institute of Accountants (“MIA”); or(ii) if he is not a member of the MIA, he must have at least three (3) years’ working experience

and:(1) he must have passed the examinations specified in Part I of the First Schedule of the

Accountants Act 1967; or(2) he must be a member of one of the associations of accountants specified in Part II of the

First Schedule of the Accountants Act 1967; or(iii) fulfils such other requirements as prescribed or approved by Bursa Securities.

2. In the event a former audit partner is being appointed as a member of the ARMC, it would be the compulsory requirement that the former key audit partner(s) to observe a cooling-off period of at least two (2) years before being appointed.

3. No Alternate Director shall be appointed as a member of the Committee.

4. If a member of the Committee resigns, dies or for any reason ceases to be a member resulting in the non-compliance of paragraph 1 above, the Board must fill the vacancy within three (3) months.

5. The terms of office and performance of the Committee and each of its members shall be reviewed by the Nomination and Remuneration Committee annually. However, the appointment terminates when a member ceases to be a Director.

6. The Board shall have the discretion as it deems fit to rescind and/or revoke the appointment of any person(s) in the Committee.

Meetings

1. The Committee shall meet at least four (4) times a year and such additional meetings as the Chairman shall decide.

2. The quorum for a Committee Meeting shall be at least two (2) members; the majority present must be Independent Directors.

3. Notwithstanding paragraph 1 above, upon the request of any member of the Committee, non-member Directors, the Internal or External Auditors, the Chairman shall convene a meeting of the Committee to consider the matters brought to its attention.

4. The External Auditors have the right to appear and be heard at any meeting of the Committee and shall appear before the Committee when required to do so.

5. The non-member Directors and employees of the Company and of the Group shall normally attend the meetings at the Committee’s invitation, to assist in its deliberations and resolutions of matters raised. However, at least twice a year, the Committee should meet with the External Auditors without the presence of the executive board members and employees.

The Internal Auditors shall present and discuss the internal audit reports and other related matters.

6. In addition to the availability of detailed minutes of the Committee Meetings to the Board, the Chairman of the Committee at each Board Meeting, will report a summary of significant matters and resolutions.

7. A resolution in writing signed or approved via letter, telex, email or facsimile by all Committee members shall be effective for all purposes of a resolution passed at a meeting of the Committee duly convened, held and constituted. Any such resolution may be contained in a single document or may consist of several documents all in the like form signed by one or more members.



Rights

The Committee is authorised to:-

1. Investigate any matter within its terms of reference.

2. Have adequate resources required to perform its duties.

3. Have full and unrestricted access to information, records, documents, facilities and personnel of the Group necessary for the Committee to discharge its duties and responsibilities.

4. Have direct communication channels with the External Auditors and person(s) carrying out the internal audit function or activity.

5. Engage, consult and obtain outside legal or other independent professional advice and to secure the attendance of outsiders with relevant experience and expertise it considers necessary.

6. Conduct or authorise a third party to conduct specific assessment into any activity or function within the Group so far as it relates to the duties of the Committee and is in accordance with its terms of reference, and make recommendations to the Board regarding appropriate action resulting from any such assessment.

7. Convene meetings with the External Auditors, Internal Auditors or both, excluding the attendance of other Directors and employees of the Company, whenever deemed necessary.

Functions and duties – Audit

1. To review and recommend for the Board’s approval, the Internal Audit Charter which defines the independent purpose, authority, scope and responsibility of the internal audit function in the Company and the Group.

2. To formulate corporate governance and integrity policies, regulations and procedures and to monitor their compliance as well as to recommend and report to the Board where necessary.

3. To review the following and report the same to the Board:-

(a) With the External Auditors:

(i) the audit plan and audit report and the extent of assistance rendered by employees of the Company;

(ii) obtain understanding of internal controls;

(iii) the Management letter and management’s response;

(iv) issues and reservations arising from audits;

(v) any suspected fraud or irregularity, or suspected infringement of any relevant laws, rules or regulations, which has or is likely to have a material impact on the Company’s and the Group’s operating results or financial position, and Management’s response; and

(vi) to consider the nomination, appointment and re-appointment of External Auditors; their audit fees; and any questions on resignation, suitability and dismissal, including but not limited to the annual assessment of the External Auditors based on observations, professionalism, technical expertise, independence of the External Auditors and the firm’s resources.


Functions and duties – Audit (cont’d)

(b) With the Internal Audit Department:

(i) the adequacy and relevance of the scope, functions, competency and resources of the internal audit function and the necessary authority to carry out its work;

(ii) the audit plan of work programme, processes, the results of internal audit programme, processes or investigation undertaken and whether appropriate action is taken on the recommendation of the internal audit function;

(iii) the extent of cooperation and assistance rendered by employees of the Company; and

(iv) the appraisal of the performance of the internal audit function including that of the senior employee and any matter concerning their appointment and termination.

(c) The quarterly results and year end financial statements prior to the approval by the Board, focusing particularly on:-

(i) changes in and implementation of major accounting policies and practices;

(ii) significant and unusual issues;

(iii) going concern assumption;

(iv) major risks areas; and

(v) compliance with accounting standards, regulatory and other legal requirements.

(d) The major findings of investigations and management response.

(e) The propriety of any related party transaction and conflict of interest situation that may arise within the Company or the Group including any transaction, procedure or course of conduct that raises questions of Management integrity.

(f) To verify the allocation of share options to the Group’s eligible employees in compliance with the criteria set out in the By-Laws of the Company’s Employees’ Share Option Scheme, at the end of each financial year (if applicable).

4. To report any breach of the Listing Requirements which has not been satisfactorily resolved, to Bursa Securities.

The above functions and duties are in addition to such other functions as may be agreed to from time to time by the Committee and the Board.

Functions and duties - Risk

1. To oversee the Management’s activities in managing the Group’s critical risks related to strategic, financial, operational, legal and other risks.

2. To advise the Board on matters related to risk management.

3. To assist the Board to fulfil its corporate governance, risk management and statutory responsibilities in order to manage the overall risk exposure of the Group.



Functions and duties - Risk (cont’d)

4. Reviewing and recommending risk management strategies, policies and risk appetite/tolerance for the Board’s approval.

5. Reviewing and assessing the adequacy of risk management policies and framework in identifying, measuring, monitoring and controlling risks and the extent to which these are operating effectively.

6. Ensuring infrastructure, resources and systems are in place for risk management.

7. Ensuring that the employee responsible for implementing risk management systems perform those duties independently of the business units’ risk-taking activities.

Summary of Activities

During the FYE 31 December 2017 and up to the date of approval for issuance of this Report, the Committee had, in discharging its functions and duties, carried out, among others, the following activities:-

Financial Reporting Review

• Reviewed the Group’s audited financial statements and made recommendation to the Board for approval.

• Reviewed the unaudited quarterly reports and announcements and made recommendation to the Board for consideration and approval.

External Audit

• Reviewed the Audit Plan covering among others, the audit scope, audit methodology, timetable and milestones, audit materiality and audit focus areas.

• Assessed the suitability of Messrs KPMG PLT before recommendation to the Board for tabling for shareholders’ approval on their re-appointment as the external auditors of the Company.

• Reviewed and discussed on the audit for FYE 31 December 2017. Also, without the presence of Executive Directors and Management, discussed with the External Auditors on the assistance provided by the Management during the course of audit for FYE 31 December 2017 and if there were any matters that they would want to bring to the attention of the Audit and Risk Management Committee.

• Reviewed the audit fees before recommending to the Board for approval.

Internal Audit

• Reviewed, discussed and approved the outsourced internal auditors’ audit plan and fees for 2017.

• Reviewed and deliberated on the outsourced internal auditors’ report conducted on Human Resources Management and Financial Management.

• Follow-up review on the Enterprise Risk Management framework to ascertain that the recommended risk mitigation procedures are implemented and the status of implementation.

• Followed up on previous internal audit reports issued.

• Discussed with the Internal Auditors without the presence of Executive Directors and Management on Internal Auditor’s observations during the course of his audit.



Risk Management

• Reviewed and approved the Group’s Enterprise Risk Management Framework.

Related Party Transactions

• Reviewed the related party transactions and conflict of interest situation that may arise within the Company and the Group.

Others

• Reviewed the Statement on Risk Management and Internal Control for inclusion in the Annual Report.

INTERNAL AUDIT FUNCTION

The Group has appointed an external service provider to carry out the internal audit function, namely RCA Corporate Services Sdn. Bhd. The outsourced Internal Auditors acts independently with impartiality, proficiency and exercise due professional care, and reports directly to the Committee.

The Internal Auditors undertook regular reviews and audit assignments based on the Internal Audit Plan which was presented to, and approved by the Committee.

The audits were performed using a risk based approach and designed to test the Group’s established framework of controls to ascertain that they were operating effectively.

The Internal Auditors performed audits on the following business areas for FYE 31 December 2017:

• Capital Expenditure spending and Property, Plant and Equipment management, covering among others, procedures on acquisition and disposal contracts / agreements, physical verification of property, plant and equipment, procedures on machinery updates and maintenance and accounting records thereon.

• Project Management, covering among others procedures on origination of contracts, including tendering and contract awarding process, project resources and schedule planning, process of subcontractors sourcing, evaluation and award of works, project progress tracking, progress claims billing, monitoring of subcontractors progress claims payment, tracking of non-conformance issues, corrective and preventive actions, compliance with health, safety and environment.

• Procurement and Accounts Payables, covering among others, procurement policies and procedures, suppliers sourcing and assessment, purchasing operations and processes, purchase orders monitoring and cancellation, and payment process and accounts payables management.

Follow-up review on outstanding issues arising from the internal audits of the business areas undertaken during the year to ascertain that the recommended mitigation / rectification procedures are implemented and the status of implementation.

The reports on audits undertaken on the business areas, together with the internal control assessment, findings, recommendations and Management’s response and actions, were tabled to the Committee for deliberation.

The internal audit function also performed follow-up review to ascertain the status of implementation of recommendations made to the Committee on a quarterly basis.

The fees incurred by the Group in relation to the outsourced internal audit function for FYE 31 December 2017 was RM36,000.00.



Statement on Risk Managementand Internal Control

INTRODUCTION

The Board is committed to maintaining a sound internal control and risk management system in line with the Main Market Listing Requirements of Bursa Malaysia Securities Berhad. This Statement on Risk Management and Internal Control outlines the nature and scope of the risk management and internal control of the Group for the financial year ended 31 December 2017. The Statement on Risk Management and Internal Control is issued to report on the status of the Group’s compliance with the principles and best practices relating to risk management and internal control as stipulated in the Malaysian Code of Corporate Governance 2017 (“the Code”).

BOARD RESPONSIBILITIES

The Board affirms its overall responsibility over the Group’s systems of risk management and internal controls, which includes the existence of an appropriate control environment and framework, and the review of its effectiveness and adequacy to ensure that the Group’s assets and shareholders’ interests are safeguarded. The system of internal control covers governance, risk management, financial strategy, organisational, operational, regulatory and compliance control matters. The Board recognises that this system is designed to manage, rather than eliminate, the risks of not adhering to the Group’s policies and achieving goals. Therefore, it should be noted that control systems can only provide reasonable but not absolute assurance against material misstatement or loss.

RISK MANAGEMENT

In providing oversight of risk management framework and policies of the Group, the Board is assisted by the Audit and Risk Management Committee (“ARMC”) to:

• Ensure that Management maintains a sound system of risk management and internal controls to safeguard shareholders’ investments and the Group’s assets; and

• Ascertain the nature and extent of principal risks that may impact the Group’s strategic objectives.

The Group has put in place an Enterprise Risk Management framework (“ERM”) which comprises the following elements:

• Communicate and disseminate across the organisation the vision, role and direction of the Group;

• Provide guiding principles and approach towards risk management;

• Process of identification, assessment, evaluation and management of the various principal risks which affect the Group’s business;

• Creation of a risk-awareness culture and risk ownership for more effective management of risks;

• Regular review, tracking and reporting on keys risks identified and corresponding mitigation procedures; and

• Regular review of the effectiveness of the system of internal control.


Statement on Risk Managementand Internal Control(cont’d)

RISK MANAGEMENT (cont’d)

The framework is applied to determine, evaluate and manage principal risks of the Group. This is complemented by the system of internal control that is integrated into the Group’s operations and processes.

With the implementation of the ERM Framework, the management and reporting of principal risks are structured and organised into the following broad risk categories to facilitate risk mitigation:

• Strategic, which are risks that impact the business direction of the Group. Initiatives are taken to identify and highlight any developments that may impact the Group’s business and these are brought to the Board’s attention;

• Operational, which are risks that affect the operational efficiency and effectiveness of the Group’s activities and products. The Group endeavours to adopt best practices and standards in the various areas of operations so as achieve operational efficiency;

• Financial, which are risks related to financial processes and reporting. Internal controls are set in place to minimise any financial misstatements and the Group adopts the accounting standards issued by the Malaysian Accounting Standards Board in the preparation of financial information;

• Competency, which are risks associated with knowledge and resources in operational management and activities. Standard Operating Procedures are in place for guidance and these are supplemented with training and development programs where relevant.

Notwithstanding this, risk management principles, policies, procedures and practices are being updated to ensure relevance and compliance with current/applicable laws and regulations, and are made available to all employees.

INTERNAL AUDIT FUNCTION

The Board has delegated the responsibility of reviewing the adequacy and integrity of the internal control system to the ARMC. The ARMC assesses the adequacy and integrity of the internal control system and its compliance with the Group’s policies and procedures through independent reviews performed by the outsourced internal audit function. In this respect, the Board, through the ARMC receives and reviews reports on internal control from the outsourced internal audit function. The outsourced internal audit function reports directly to the ARMC.

The ARMC reviews and approves the audit plan, scope of work and reviews reports of the outsourced internal audit function. The internal audit function reports to the ARMC on areas for improvement and will subsequently follow up to determine the extent to which their recommendations have been implemented.

KEY ELEMENTS OF THE GROUP’S RISK MANAGEMENT AND INTERNAL CONTROL SYSTEMS

• Control Environment

The Board is committed towards maintaining a strong control structure and environment for the proper conduct of the Group’s business operations and towards achieving a sound system of internal control.


Statement on Risk Managementand Internal Control(cont’d)

KEY ELEMENTS OF THE GROUP’S RISK MANAGEMENT AND INTERNAL CONTROL SYSTEMS (cont’d)

• Control Environment (cont’d)

Management has established, with board oversight, structures, reporting lines and appropriate authorities and responsibilities, in pursuit of the Group’s objectives. There is a defined organisation structure with scopes of responsibility, lines of reporting, and appropriate levels of delegated authority, including proper approval and authorisation limits. This is reinforced by a process of hierarchical reporting which provides for a documented and auditable trail of accountability.

• Control Activities

The Group has in place standard operating procedures and controls to facilitate the provision of regular and comprehensive information to management, covering financial and operational performance and key business indicators, for effective monitoring and decision making.

• Information and Communication

The Board communicates and disseminates across the organisation the vision, mission and strategic direction of the Group. The management sets out key policies and procedures in the Standard Operating Procedure documents.

• Monitoring Activities

The Group’s operating procedures are designed to facilitate tracking and evaluation of financial and other results and performance.

The monitoring activities are supported by the outsourced internal audit function who visits, based on the Audit Plan approved by the Audit and Risk Management Committee, key business operations every quarter for systematic review of the effectiveness of internal controls and reports to the Audit and Risk Management Committee.

The Board continues to review and implement measures to strengthen the internal control environment of the Group.

CONCLUSION

The Board is of the view that the risk management and internal control systems are satisfactory and have not resulted in any material losses, contingencies or uncertainties that would require disclosure in the Group’s Annual Report. The Board continues to take pertinent measures to sustain and, where required, to improve the Group’s risk management and internal control systems in meeting the Group’s strategic objectives.

The Board has also received assurance from the Group Managing Director and Chief Financial Officer that the Group’s risk management and internal control systems in place for the financial year 2017 are operating adequately and effectively in all material aspects.

This statement is made in accordance with a resolution of the Board dated 25 April 2018.

Directors’ ReportStatement by DirectorsStatutory DeclarationIndependent Auditors’ Report to the MembersStatements of Financial PositionStatements of Profit or Loss and Other Comprehensive IncomeConsolidated Statement of Changes in EquityStatement of Changes in EquityStatements of Cash FlowsNotes to the Financial Statements

59646465717273747577

Financial Statements


Directors’ ReportFor the year ended 31 December 2017

The Directors have pleasure in submitting their report and the audited financial statements of the Group and of the Company for the financial year ended 31 December 2017.

Principal activities

The Company is principally engaged in investment holding activities, piling and foundation works. The principal activities of the subsidiaries are as stated in Note 5 to the financial statements. There has been no significant change in the nature of these activities during the financial year.

Ultimate holding company

The Company is a subsidiary of Ikhmas Jaya Holdings Sdn. Bhd., of which is incorporated in Malaysia and regarded by the Directors as the Company’s ultimate holding company, during the financial year and until the date of this report.

Results

Group Company RM’000 RM’000

Profit/(Loss) for the year attributable to: Owners of the Company 6,929 (655)Non-controlling interests (1,005) -

5,924 (655)

Reserves and provisions

There were no material transfers to or from reserves and provisions during the financial year under review.

Dividends

Since the end of the previous financial year, the Company paid a first and final single tier cash dividend of 0.5 sen per ordinary share totalling RM2,600,000 in respect of the financial year ended 31 December 2016 on 12 September 2017.

The Directors do not recommend any final dividend to be paid for the financial year under review.

Directors of the Company

Directors who served during the financial year until the date of this report are:

Dato’ Syed Ariff Fadzillah bin Syed AwalluddinDato’ Ang Cheng Siong Dato’ Ir. Dr. Khoo Ping Sen Siew Mun LoutAng Wei ZhenYuen Choong LaiDzulkifli David bin AbdullahTan Ming-Li


Directors’ Reportfor the year ended 31 December 2017 (cont’d)

Directors’ interests in shares

The interests and deemed interests in the shares of the Company and of its related corporations of those who were Directors at financial year end (including the interests of the spouses or children of the Directors who themselves are not Directors of the Company) as recorded in the Register of Directors’ Shareholdings are as follows:

Number of ordinary shares At Disposal/ At 1.1.2017 Acquired Transfer 31.12.2017

Interests in the CompanyDato’ Syed Ariff Fadzillah bin Syed Awalluddin 652,700 - (234,100) 418,600Dato’ Ang Cheng Siong - 63,000 - 63,000Ang Wei Zhen 300,000 - (300,000) -Yuen Choong Lai 1,180,000 - (966,200) 213,800Dzulkifli David bin Abdullah 100,000 - (52,000) 48,000Tan Ming-Li 28,000 - (28,000) -

Deemed interests in the Company Dato’ Ang Cheng Siong (1) 338,000,000 - (10,000,000) 328,000,000Dato’ Ir. Dr. Khoo Ping Sen (1) 338,000,000 - (10,000,000) 328,000,000

Note:

(1) Deemed interested by virtue of their interests in Ikhmas Jaya Holdings Sdn. Bhd. pursuant to Section 8 of the Companies Act 2016.

By virtue of their interests in the ordinary shares of the Company, Dato’ Ang Cheng Siong and Dato’ Ir. Dr. Khoo Ping Sen are also deemed interested in the ordinary shares of the subsidiaries during the financial year to the extent that Ikhmas Jaya Group Berhad has an interest.

Directors’ benefits

Since the end of the previous financial year, no Director of the Company has received nor become entitled to receive any benefit (other than a benefit included in the aggregate amount of remuneration received or due and receivable by Directors as shown in the financial statements or the fixed salary of a full time employee of the Company or of related corporations) by reason of a contract made by the Company or 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.

There were no arrangements during and at the end of the financial year which had the object of enabling Directors of the Company to acquire benefits by means of the acquisition of shares in or debentures of the Company or any other body corporate.



Issue of shares and debentures

During the financial year, the Company issued 10,350,000 new ordinary shares at RM0.70 per ordinary share via a private placement to eligible investors for a total cash consideration of RM7,245,000 for the purpose of working capital. The new ordinary shares issued rank pari passu in all respects with the existing shares of the Company.

In addition, pursuant to Section 618(2) of the Companies Act 2016, the Company has transferred share premium amounting to RM36,747,077 to form part of the Company’s share capital.

There were no other changes in the issued and paid up share capital of the Company and no debenture was issued during the financial year.

Options granted over unissued shares

No options were granted to any person to take up unissued shares of the Company during the financial year. Indemnity and insurance costs

During the financial year, the total amount of indemnity coverage and insurance premium paid for Directors of the Company were RM480,000 and RM17,196 respectively.

Other statutory information

Before the financial statements of the Group and of the Company were made out, the Directors took reasonable steps to ascertain that:

i) all known bad debts have been written off and adequate provision made for doubtful debts, and

ii) any current assets which were unlikely to be realised in the ordinary course of business have been written down to an amount which they might be expected so to realise.

At the date of this report, the Directors are not aware of any circumstances:

i) that would render the amount written off for bad debts or the amount of the provision for doubtful debts in the Group and in the Company inadequate to any substantial extent, or

ii) that would render the value attributed to the current assets in the financial statements of the Group and of the Company misleading, or

iii) 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

iv) not otherwise dealt with in this report or the financial statements that would render any amount stated in the financial statements of the Group and of the Company misleading.



Other statutory information (cont’d)

At the date of this report, there does not exist:

i) any charge on the assets of the Group or of the Company that has arisen since the end of the financial year and which secures the liabilities of any other person, or

ii) any contingent liability in respect of the Group or of the Company that has arisen since the end of the financial year.

No contingent liability 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 substantially affect the ability of the Group and of the Company to meet their obligations as and when they fall due.

In the opinion of the Directors, except for the gain on disposal of property, plant and equipment (see Note 18 to the financial statements), the financial performance of the Group and of the Company for the financial year ended 31 December 2017 have not been substantially affected by any item, transaction or event of a material and unusual nature nor has any such item, transaction or event occurred in the interval between the end of that financial year and the date of this report.

Significant events

Significant events during the financial year end are disclosed in Note 27 to the financial statements.

Subsequent events

Subsequent events after the financial year end are disclosed in Note 28 to the financial statements.



Auditors

The auditors, KPMG PLT, have indicated their willingness to accept re-appointment.

The auditors’ remuneration is disclosed in Note 18 to the financial statements.

Signed on behalf of the Board of Directors in accordance with a resolution of the Directors:

Dato’ Ang Cheng SiongDirector

Dato’ Ir. Dr. Khoo Ping SenDirector

Kuala Lumpur,

Date: 25 April 2018


Statement by Directors pursuant to Section 251(2) of the Companies Act 2016

Statutory Declaration pursuant to 251(1)(b) of the Companies Act 2016

In the opinion of the Directors, the financial statements set out on pages 71 to 127 are drawn up in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act 2016 in Malaysia so as to give a true and fair view of the financial position of the Group and of the Company as at 31 December 2017 and of their financial performance and cash flows for the financial year then ended.

Signed on behalf of the Board of Directors in accordance with a resolution of the Directors:

Dato’ Ang Cheng Siong Dato’ Ir. Dr. Khoo Ping SenDirector Director

Kuala Lumpur,

Date: 25 April 2018

I, Tham Fook Sun, the officer primarily responsible for the financial management of Ikhmas Jaya Group Berhad, do solemnly and sincerely declare that the financial statements set out on pages 71 to 127 are, to the best of my knowledge and belief, correct and I make this solemn declaration conscientiously believing the declaration to be true, and by virtue of the Statutory Declarations Act, 1960.

Subscribed and solemnly declared by the abovenamed Tham Fook Sun, NRIC: 690731-10-5561, MIA CA 29316, at Kuala Lumpur in the Federal Territory on 25 April 2018.

Tham Fook Sun

Before me:

D. SELVARAJW320Commissioner for OathsWilayah Persekutuan


Independent Auditors’ Report to the members of Ikhmas Jaya Group Berhad

Report on the Audit of the Financial Statements

Opinion

We have audited the financial statements of Ikhmas Jaya Group Berhad, which comprise the statements of financial position as at 31 December 2017 of the Group and of the Company, and the statements of profit or loss and other comprehensive income, statements of changes in equity and statements of cash flows of the Group and of the Company for the year then ended, and notes to the financial statements, including a summary of significant accounting policies, as set out on pages 71 to 127.

In our opinion, the accompanying financial statements give a true and fair view of the financial position of the Group and of the Company as at 31 December 2017, and of their financial performance and their cash flows for the year then ended in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act 2016 in Malaysia.

Basis for Opinion

We conducted our audit in accordance with approved standards on auditing in Malaysia and International Standards on Auditing. Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Financial Statements section of our auditors’ report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Independence and Other Ethical Responsibilities

We are independent of the Group and of the Company in accordance with the By-Laws (on Professional Ethics, Conduct and Practice) of the Malaysian Institute of Accountants (“By-Laws”) and the International Ethics Standards Board for Accountants’ Code of Ethics for Professional Accountants (“IESBA Code”), and we have fulfilled our other ethical responsibilities in accordance with the By-Laws and the IESBA Code.

Key Audit Matters

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of the Group and of the Company for the current financial year. These matters were addressed in the context of our audit of the financial statements of the Group and of the Company as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

i) Revenue and profit recognition and contract accounting

Refer to Note 2(n)(ii)-Significant accounting policy: Revenue and other income-Construction contracts, Note 8-Trade and other receivables and Note 14-Revenue.

The key audit matter

Construction contract accounting is inherently complex and there are significant judgements involved in estimating the costs to complete the projects. Revenue from fixed price construction contracts is recognised based upon work done certified by external surveyor while the cost of sales is assessed by reference to the proportion of value of work done certified relative to the total contract sum multiplied by the estimated costs to complete the projects.


Independent Auditors’ Report to the members of Ikhmas Jaya Group Berhad (cont’d)

Key Audit Matters (cont’d)

i) Revenue and profit recognition and contract accounting (cont’d)

The key audit matter (cont’d)

Profit recognition on contracts is a key audit matter because of the judgement involved in preparing estimates of the forecast costs on contracts. An error in the estimated profit on contracts could result in a material variance in the amount of profit or loss recognised to date and in the current period. The profit recognition on contracts includes key judgements over the expected recovery of costs arising from variations and claims. The potential outcome for contracts can have an individually and collectively material impact on the financial statements, whether through error or management bias.

As the status of contracts are updated on a regular basis, the Directors are required to exercise significant judgement in the assessment of contract variations which would impact the forecast profits on contracts. The key judgements over the expected recovery of costs for a contract arise from the following:

• Variations to the contract requested by the customer; • Claims made against the customer for delays or other additional costs for which the customer is

liable;• Liquidated and ascertained damages;• Completeness and accuracy of forecast costs to complete the contract and the ability to deliver

the contract within the forecast timelines.

The potential final contract outcome can cover a wide range, which can be individually material. In addition, changes in the judgements, and the related estimates, as contracts progress, can result in material adjustments to margin, which can be either positive or negative.

How the matter was addressed in our audit

We used a variety of quantitative and qualitative factors to select contracts with higher risk of material error according to their size or the complexity of contract accounting estimates for detailed testing. In this area, our audit procedures included, among others:

• Assessed the design and implementation of key controls over the recognition of contract revenue, margin, and related receivables and liabilities, to determine whether these controls were operating effectively throughout the year, regardless of whether these controls were ultimately relied upon;

• Inspected the selected contracts in order to challenge the Directors’ estimates on both current and future financial performance based on the historical performance of the Group and industry knowledge;

• Challenged the Directors’ key judgements inherent in the forecast costs to complete, that drive the accounting under the percentage of completion method, including the following procedures, among others:

• Assessed the management’s estimate of the timeline and costs to complete the existing projects through discussion with finance, commercial and operational units;

• Assessed the management’s ability to deliver the contracts within the budgeted timelines and any exposure to liquidated and ascertained damages for late delivery of contract works; and

• Inspected post-balance sheet performance to support year end judgements.



Key Audit Matters (cont’d)

i) Revenue and profit recognition and contract accounting (cont’d)

The key audit matter (cont’d)

How the matter was addressed in our audit (cont’d)

• Tested the existence and valuation of claims and variations both within the contract revenue and contract costs via inspection of correspondence with customers;

• Reviewed the amount due from contract customers for potential foreseeable loss by assessing the project status, costs to complete the existing projects as well as the claims or progress billings submitted after the financial year end;

• Assessed whether the amounts recognised in the financial statements were in line with the Group’s accounting policy and relevant accounting standards; and

• Considered the adequacy of the Group’s disclosures in respect of the judgements taken with respect to profit recognition and the key risks relating to these amounts.

ii) Valuation of trade receivables

Refer to the Note 2(j)(i)-Significant accounting policy: Impairment of financial assets, Note 8-Trade and other receivables and Note 22.4-Financial instruments-Credit risk.

The key audit matter

The Group has RM89,563,000 of trade receivables past due more than 120 days and together with amount due from contract customers amounted to RM178,285,000, they accounted for 50% of the total assets of the Group. The collectability of the Group’s trade receivables, including amount due from contract customers and the valuation of the allowance for impairment of trade receivables is therefore a key audit matter due to the significant judgements and the level of uncertainty involved.

How the matter was addressed in our audit

Our audit procedures included, among others:

• Tested on the account receivables ageing to ascertain the accuracy of the underlying information used to assess the adequacy of impairment loss of trade receivables;

• Discussed with Directors to understand the Group’s basis and assessment in relation to the recoverability of trade receivables and assessed customers’ payment history by checking to receipts from the customers;

• Checked the receipt of cash after the financial year-end against trade receivables and investigated the significant individual overdue balances by reference to recent history of recoveries and reviewed correspondences with the customers;

• Tested the retention balances due by corroborating the value of the retention sums to customer correspondences and the original contracts and assessed the recoverability of such balances;

• Considered the adequacy of the Group’s disclosures on the degree of estimation involved in arriving at the allowance for impairment loss.



Information Other than the Financial Statements and Auditors’ Report Thereon

The Directors of the Company are responsible for the other information. The other information obtained at the date of this auditors’ report is the information included in the Directors’ report and Statement on Risk Management and Internal Control to be included in the Annual Report, but does not include the financial statements of the Group and of the Company and our auditors’ report thereon. The remaining parts of the annual report are expected to be made available to us after this date.

Our opinion on the financial statements of the Group and of the Company does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements of the Group and of the Company, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements of the Group and of the Company or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on the work we have performed on the other information that we obtained prior to the date of this auditors’ report, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Responsibilities of Directors for the Financial Statements

The Directors of the Company are responsible for the preparation of financial statements of the Group and of the Company that give a true and fair view in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act 2016 in Malaysia. The Directors are also responsible for such internal control as the Directors determine is necessary to enable the preparation of financial statements of the Group and of the Company that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements of the Group and of the Company, the Directors are responsible for assessing the ability of the Group and of the Company to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Directors either intend to liquidate the Group or the Company or to cease operations, or have no realistic alternative but to do so.

Auditors’ Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements of the Group and of the Company as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with approved standards on auditing in Malaysia and International Standards on Auditing will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.



Auditors’ Responsibilities for the Audit of the Financial Statements (cont’d)

As part of an audit in accordance with approved standards on auditing in Malaysia and International Standards on Auditing, we exercise professional judgement and maintain professional scepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the financial statements of the Group and of the Company, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

• Obtain an understanding of internal control relevant to the audit 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 internal control of the Group and of the Company.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Directors.

• Conclude on the appropriateness of the Director’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the ability of the Group or of the Company to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors’ report to the related disclosures in the financial statements of the Group and of the Company or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors’ report. However, future events or conditions may cause the Group or the Company to cease to continue as a going concern.

• Evaluate the overall presentation, structure and content of the financial statements of the Group and of the Company, including the disclosures, and whether the financial statements of the Group and of the Company represent the underlying transactions and events in a manner that achieves fair presentation.

• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the financial statements of the Group. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

We communicate with Directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide the Directors with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with the Directors, we determine those matters that were of most significance in the audit of the financial statements of the Group and of the Company for the current year and are therefore the key audit matters. We describe these matters in our auditors’ report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our auditors’ report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.



Other Matters

This report is made solely to the members of the Company, as a body, in accordance with Section 266 of the Companies Act 2016 in Malaysia and for no other purpose. We do not assume responsibility to any other person for the content of this report.

KPMG PLT Chan Kah Mun(LLP0010081-LCA & AF 0758) Approval Number: 03350/01/2020 JChartered Accountants Chartered Accountant

Petaling Jaya, SelangorDate: 25 April 2018


Statements of Financial Position as at 31 December 2017

Group Company Note 2017 2016 2017 2016 RM’000 RM’000 RM’000 RM’000

Assets Property, plant and equipment 3 99,139 100,813 - - Investment properties 4 4,420 3,926 625 227 Investments in subsidiaries 5 - - 98,650 98,761 Other investments 6 226 226 - - Deferred tax assets 7 - 30 - -

Total non-current assets 103,785 104,995 99,275 98,988

Trade and other receivables 8 397,702 316,003 93,000 72,973 Inventories 9 232 404 - - Current tax assets 4,400 3,421 19 11 Cash and cash equivalents 10 30,382 23,588 7,527 7,204

Total current assets 432,716 343,416 100,546 80,188

Total assets 536,501 448,411 199,821 179,176

Equity Share capital 11 173,992 130,000 173,992 130,000 Share premium 11 - 36,747 - 36,747 Reserves 11 33,014 28,685 1,900 5,155

Equity attributable to owners of the Company 207,006 195,432 175,892 171,902Non-controlling interests (2,591) (1,686) - -

Total equity 204,415 193,746 175,892 171,902

Liabilities Loans and borrowings 12 25,502 20,012 - - Deferred tax liabilities 7 9,727 8,675 - -

Total non-current liabilities 35,229 28,687 - -

Trade and other payables 13 201,180 147,321 17,299 295 Loans and borrowings 12 94,885 78,631 6,630 6,979 Current tax liabilities 792 26 - -

Total current liabilities 296,857 225,978 23,929 7,274

Total liabilities 332,086 254,665 23,929 7,274

Total equity and liabilities 536,501 448,411 199,821 179,176

The notes on pages 77 to 127 are an integral part of these financial statements.


Statements of Profit orLoss and Other Comprehensive Income for the year ended 31 December 2017


Revenue 14 303,166 242,567 47,101 12,600Cost of sales (273,457) (186,428) (45,658) -

Gross profit 29,709 56,139 1,443 12,600Other income 5,951 282 164 -Administrative expenses (14,904) (12,544) (1,964) (1,529)Other operating expenses (5,689) (22,257) - -

Results from operating activities 15,067 21,620 (357) 11,071Finance income 15 3,957 714 187 290Finance costs 16 (9,329) (7,175) (485) (385)

Profit/(Loss) before tax 9,695 15,159 (655) 10,976Tax expense 17 (3,771) (4,908) - -

Profit/(Loss) and total comprehensive income/ (expense) for the year 18 5,924 10,251 (655) 10,976

Profit/(Loss) and total comprehensive income/ (expense) attributable to: Owners of the Company 6,929 11,282 (655) 10,976Non-controlling interests (1,005) (1,031) - -

Profit/(Loss) and total comprehensive income/ (expense) for the year 5,924 10,251 (655) 10,976

Basic earnings per ordinary share (sen) 19 1.32 2.17



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Statements of Changes in Equity for the year ended 31 December 2017

Non- distributable Distributable (Accumulated losses)/ Share Share Retained Total Note capital premium earnings equity RM’000 RM’000 RM’000 RM’000

Company At 1 January 2016 130,000 36,747 (621) 166,126Contributions by and distributions to owners of the Company Dividends to owners of the Company 20 - - (5,200) (5,200)Total transactions with owners of the Company - - (5,200) (5,200)Profit and total comprehensive income for the year - - 10,976 10,976

At 31 December 2016/ 1 January 2017 130,000 36,747 5,155 171,902Contributions by and distributions to owners of the Company Shares issued during the financial year 7,245 - - 7,245Dividends to owners of the Company 20 - - (2,600) (2,600)Total transactions with owners of the Company 7,245 - (2,600) 4,645Profit and total comprehensive income for the year - - (655) (655)Transfer in accordance with Section 618(2) of the Companies Act 2016 (Note 11.1) 36,747 (36,747) - -

At 31 December 2017 173,992 - 1,900 175,892

Note 11.1 Note 11.2



Statements of Cash Flows for the year ended 31 December 2017


Cash flows from operating activities Profit/(Loss) before tax 9,695 15,159 (655) 10,976 Adjustments for: Depreciation of property, plant and equipment 3 14,958 14,095 - - Depreciation of investment properties 4 69 26 - - Gain on disposal of property, plant and equipment (5,153) (112) - - Impairment losses on: - investment in subsidiaries 5 - - 260 - - trade receivables 1,014 - - - Property, plant and equipment written off - 6 - - Dividend income - - - (12,600) Finance income 15 (3,957) (714) (187) (290) Finance costs 16 9,329 7,175 485 385

Operating profit/(loss) before changes in working capital 25,955 35,635 (97) (1,529) Inventories 172 45 - - Trade and other receivables (75,563) (92,216) (20,027) (14,901) Trade and other payables 53,859 56,046 17,004 (206)

Cash generated from/(used in) operations 4,423 (490) (3,120) (16,636) Tax paid (2,967) (8,501) (8) (16) Tax refund 65 19 - 19 Interest paid (9,329) (7,175) (485) (385)

Net cash used in operating activities (7,808) (16,147) (3,613) (17,018)

Cash flows from investing activities Acquisition of a subsidiary - - (149) (1) Acquisition of property, plant and equipment (i) (795) (9,195) - - Acquisition of investment properties 4 (563) (1,022) (398) (227) Proceeds from disposal of property, plant and equipment 1,915 149 - - Interest received 568 714 187 290 Dividend received - - - 12,600

Net cash from/(used in) investing activities 1,125 (9,354) (360) 12,662


Statements of Cash Flows for the year ended 31 December 2017 (cont’d)


Cash flows from financing activities Proceeds from bankers’ acceptances and trust receipts 7,514 5,714 - - Proceeds from loans and other borrowings 11,089 11,085 - - Proceeds from issuance of shares 7,245 - 7,245 - Increase in equity interest by non-controlling interests 100 - - - Repayment of finance lease liabilities (9,848) (15,590) - - (Increase)/Decrease in pledged fixed deposits (5,128) 364 (312) (7,195) Dividend paid (2,600) (5,200) (2,600) (5,200)

Net cash from/(used in) financing activities 8,372 (3,627) 4,333 (12,395)

Net increase/(decrease) in cash and cash equivalents 1,689 (29,128) 360 (16,751)Cash and cash equivalents at 1 January (ii) (28,827) 301 (6,970) 9,781

Cash and cash equivalents at 31 December (ii) (27,138) (28,827) (6,610) (6,970)

(i) Acquisition of property, plant and equipment

During the year, the Group acquired property, plant and equipment with an aggregate cost of RM13,807,000 (2016: RM12,784,000), of which RM13,012,000 (2016: RM3,589,000) were acquired by means of finance leases.

(ii) Cash and cash equivalents

Cash and cash equivalents included in the statements of cash flows comprise the following statements of financial position amounts:


Fixed deposits with licensed banks 10 28,151 23,158 7,507 7,195 Less: Pledged deposits (28,151) (23,023) (7,507) (7,195)

- 135 - - Cash and bank balances 10 2,231 430 20 9 Bank overdrafts 12 (29,369) (29,392) (6,630) (6,979)

(27,138) (28,827) (6,610) (6,970)

The notes on ss 77 to 127 are an integral part of these financial statements.


Notes to the Financial Statements

Ikhmas Jaya Group Berhad is a public limited liability company, incorporated and domiciled in Malaysia and is listed on the Main Market of Bursa Malaysia Securities Berhad. The addresses of the principal place of business and registered office of the Company are as follows:

Principal place of business Registered officeNo. 35, 37 & 39 Unit 621, 6th Floor, Block AJalan PJU 1A/41B Kelana Centre PointPusat Dagangan NZX No. 3, Jalan SS17/9, Kelana JayaAra Jaya, PJU 1A 47301 Petaling Jaya47301 Petaling Jaya Selangor, MalaysiaSelangor, Malaysia

The consolidated financial statements of the Company as at and for the financial year ended 31 December 2017 comprise the Company and its subsidiaries (together referred to as the “Group” and individually referred to as “Group entities”).

The Company is principally engaged in investment holding activities, piling and foundation works. The principal activities of the subsidiaries are as stated in Note 5 to the financial statements.

The immediate and ultimate holding company during the financial year was Ikhmas Jaya Holdings Sdn. Bhd., a company incorporated in Malaysia.

These financial statements were authorised for issue by the Board of Directors on 25 April 2018.

1. Basis of preparation

(a) Statement of compliance

The financial statements of the Group and of the Company have been prepared in accordance with Malaysian Financial Reporting Standards (“MFRSs”), International Financial Reporting Standards and the requirements of the Companies Act 2016 in Malaysia.

The following are accounting standards, amendments and interpretations that have been issued by the Malaysian Accounting Standards Board (“MASB”) but have not been adopted by the Group and the Company:

MFRSs, Interpretations and amendments effective for annual periods beginning on or after 1 January 2018• MFRS 9, Financial Instruments (2014)• MFRS 15, Revenue from Contracts with Customers• Clarifications to MFRS 15, Revenue from Contracts with Customers• IC Interpretation 22, Foreign Currency Transactions and Advance Consideration• Amendments to MFRS 1, First-time Adoption of Malaysian Financial Reporting Standards

(Annual Improvements to MFRS Standards 2014 – 2016 Cycle) • Amendments to MFRS 2, Share-based Payment – Classification and Measurement of Share-

based Payment Transactions• Amendments to MFRS 4, Insurance Contracts – Applying MFRS 9 Financial Instruments with

MFRS 4 Insurance Contracts• Amendments to MFRS 128, Investments in Associates and Joint Ventures (Annual Improvements

to MFRS Standards 2014 – 2016 Cycle)• Amendments to MFRS 140, Investment Property – Transfers of Investment Property


Notes to the Financial Statements(cont’d)

1. Basis of preparation (cont’d)

(a) Statement of compliance (cont’d)

MFRSs, Interpretations and amendments effective for annual periods beginning on or after 1 January 2019• Amendments to MFRS 3, Business Combinations (Annual Improvements to MFRS Standards

2015 – 2017 Cycle)• Amendments to MFRS 9, Financial Instruments – Prepayment Features with Negative

Compensation• Amendments to MFRS 11, Joint Arrangements – Accounting for Acquisitions of Interests in Joint

Operations (Annual Improvements to MFRS Standards 2015 – 2017 Cycle)• MFRS 16, Leases• Amendments to MFRS 119, Employee Benefits – Plan Amendments, Curtailment or Settlement• Amendments to MFRS 112, Income Taxes (Annual Improvements to MFRS Standards 2015 –

2017 Cycle)• Amendments to MFRS 123, Borrowing costs (Annual Improvements to MFRS Standards 2015 –

2017 Cycle)• Amendments to MFRS 128, Investments in Associates and Joint Ventures – Long-term Interests

In Associates and Joint Ventures• IC Interpretation 23, Uncertainty over Income Tax Treatments

MFRSs, Interpretations and amendments effective for annual periods beginning on or after 1 January 2021 • MFRS 17, Insurance Contracts

MFRSs,Interpretationsandamendmentseffectiveforadateyettobeconfirmed• Amendments to MFRS 10, Consolidated Financial Statements and MFRS 128, Investments in

Associates and Joint Ventures – Sale or Contribution of Assets between an Investor and its Associate or Joint Venture

The Group and the Company plan to apply the abovementioned accounting standards, amendments and interpretations, where applicable:

• from the annual period beginning on 1 January 2018 for those accounting standards, amendments or interpretations that are effective for annual periods beginning on or after 1 January 2018.

• from the annual period beginning on 1 January 2019 for those accounting standards, amendments or interpretations that are effective for annual periods beginning on or after 1 January 2019.

The Group and the Company do not plan to apply MFRS 17, Insurance Contracts that is effective for annual periods beginning on 1 January 2021 as it is not applicable to the Group and the Company.

The initial application of the applicable accounting standards, amendments or interpretations are not expected to have any material financial impacts to the current period and prior period financial statements of the Group and the Company except as mentioned below:

MFRS 9, Financial Instruments

In November 2014, MASB issued the final version of MFRS 9, Financial Instruments which reflects all phases of the financial instruments project and replaces MFRS 139, Financial Instruments: Recognition and Measurement and all previous versions of MFRS 9. The standard introduces new requirements for classification and measurement, impairment and hedge accounting.

The adoption of MFRS 9 will have an effect on the classification and measurement of the Group’s and the Company’s financial assets, but will have no impact on the classification and measurement of the Group’s and the Company’s financial liabilities.




(a) Statement of compliance (cont’d)

MFRS 9, Financial Instruments (cont’d)

In respect of impairment of financial assets, MFRS 9 replaces the “incurred loss” model in MFRS 139 with an “expected credit loss” (ECL) model. The new impairment model applies to financial assets measured at amortised cost, contract assets and debt investments measured at fair value through other comprehensive income, but not to investments in equity instruments. In general, it is anticipated that the application of the ECL model of MFRS 9 will result in early recognition of credit losses for the receivables and a negative adjustment will be made to opening retained earnings, which will decrease the equity and net assets of the Group. As certain basis and assumptions are still being refined, the quantitative impact to the overall financial statements has not been finalised at this juncture.

MFRS 9 also incorporates new hedge accounting rules that intend to align hedge accounting with risk management practices. MFRS 9 does not cover guidance on macro hedge accounting as it will be addressed as a separate accounting standard project. MFRS 9 includes an accounting policy choice to defer the adoption of MFRS 9 hedge accounting and to continue with MFRS 139 hedge accounting.

The Group is finalising its detailed assessment of the impact of MFRS 9 on its consolidated financial statements as at 1 January 2018.

MFRS 15, Revenue from Contracts with Customers

Currently, the Group and the Company recognise revenue from contracts with customers based on existing policy as disclosed in Note 2(n). Upon adoption of MFRS 15, the Group and the Company will recognise the revenue from contracts with customers on the basis when a customer obtains control of the goods or services that reflects the consideration to which the Group and the Company expect to be entitled in exchange for those goods or services.

The Group is finalising its detailed assessment of the impact of MFRS 15 on its consolidated financial statements as at 1 January 2018.

MFRS 16, Leases

MFRS 16 replaces the guidance in MFRS 117, Leases, IC Interpretation 4, Determining whether an Arrangement contains a Lease, IC Interpretation 115, Operating Leases – Incentives and IC Interpretation 127, Evaluating the Substance of Transactions Involving the Legal Form of a Lease.

MFRS 16 introduces a single, on-balance sheet lease accounting model for lessees. A lessee recognises a right-of-use asset representing its right to use the underlying asset and a lease liability representing its obligations to make lease payments. There are recognition exemptions for short-term leases and leases of low-value items. Lessor accounting remains similar to the current standard which continues to be classified as finance or operating lease.

The Group is currently assessing the financial impact that may arise from the adoption of MFRS 16.

(b) Basis of measurement

The financial statements have been prepared on the historical cost basis other than as disclosed in Note 2.



(c) Functional and presentation currency

These financial statements are presented in Ringgit Malaysia (“RM”), which is the Company’s functional currency. All financial information is presented in RM and has been rounded to the nearest thousand, unless otherwise stated.

(d) Use of estimates and judgements

The preparation of the financial statements in conformity with MFRSs requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised and in any future periods affected.

There are no significant areas of estimation uncertainty and critical judgements in applying accounting policies that have significant effect on the amounts recognised in the financial statements other than those disclosed in the following notes:

• Note 2(n)(ii) - Revenue and other income - Construction contracts• Note 2(j)(i) - Impairment of financial assets

2. Significant accounting policies

The accounting policies set out below have been applied consistently to the periods presented in these financial statements and have been applied consistently by the Group entities, unless otherwise stated.

(a) Basis of consolidation

(i) Subsidiaries

Subsidiaries are entities, including structured entities, controlled by the Company. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases.

The Group controls an entity when it is exposed, or has rights, to variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Potential voting rights are considered when assessing control only when such rights are substantive. The Group also considers it has de facto power over an investee when, despite not having the majority of voting rights, it has the current ability to direct the activities of the investee that significantly affect the investee’s return.

Investments in subsidiaries are measured in the Company’s statement of financial position at cost less any impairment losses, unless the investment is classified as held for sale or distribution. The cost of investments includes transaction costs.

(ii) Business combinations

Business combinations are accounted for using the acquisition method from the acquisition date, which is the date on which control is transferred to the Group.

For new acquisitions, the Group measures the cost of goodwill at the acquisition date as:• the fair value of the consideration transferred; plus• the recognised amount of any non-controlling interests in the acquiree; plus• if the business combination is achieved in stages, the fair value of the existing equity

interest in the acquiree; less• the net recognised amount (generally fair value) of the identifiable assets acquired and

liabilities assumed.



2. Significant accounting policies (cont’d)

(a) Basis of consolidation (cont’d)

(ii) Business combinations (cont’d)

When the excess is negative, a bargain purchase gain is recognised immediately in profit or loss.

For each business combination, the Group elects whether it measures the non-controlling interests in the acquiree either at fair value or at the proportionate share of the acquiree’s identifiable net assets at the acquisition date.

Transaction costs, other than those associated with the issue of debt or equity securities, that the Group incurs in connection with a business combination are expensed as incurred.

(iii) Acquisitions of non-controlling interests

The Group accounts for all changes in its ownership interest in a subsidiary that do not result in a loss of control as equity transactions between the Group and its non-controlling interest holders. Any difference between the Group’s share of net assets before and after the change, and any consideration received or paid, is adjusted to or against Group reserves.

(iv) Non-controlling interests

Non-controlling interests at the end of the reporting period, being the equity in a subsidiary not attributable directly or indirectly to the owners of the Company, are presented in the consolidated statement of financial position and statement of changes in equity within equity, separately from equity attributable to the owners of the Company. Non-controlling interests in the results of the Group is presented in the consolidated statement of profit or loss and other comprehensive income as an allocation of the profit or loss and other comprehensive income for the year between non-controlling interests and owners of the Company.

Losses applicable to the non-controlling interests in a subsidiary are allocated to the non-controlling interests even if doing so causes the non-controlling interests to have a deficit balance.

(v) Restructuring among common shareholders

During a restructuring where the combining entities are controlled by the same parties both before and after the combination, book value accounting is applied. The assets and liabilities acquired are recognised in the consolidated financial statements at their respective carrying amounts without restatement. The differences between the cost of acquisition and the nominal value of the shares acquired are taken to merger reserve (or adjusted against any suitable reserve in the case of debit differences). The other components of equity of the acquired entities are added to the same components within Group equity.

(vi) Loss of control

Upon the loss of control of a subsidiary, the Group derecognises the assets and liabilities of the former subsidiary, any non-controlling interests and the other components of equity related to the former subsidiary from the consolidated statement of financial position. Any surplus or deficit arising on the loss of control is recognised in profit or loss. If the Group retains any interest in the former subsidiary, then such interest is measured at fair value at the date that control is lost. Subsequently, it is accounted for as an equity accounted investee or as an available-for-sale financial asset depending on the level of influence retained.

(vii) Transactions eliminated on consolidation

Intra-group balances and transactions, and any unrealised income and expenses arising from intra-group transactions, are eliminated in preparing the consolidated financial statements.





(b) Foreign currency

Foreign currency transactions

Transactions in foreign currencies are translated to the respective functional currencies of the Group entities at exchange rates at the dates of the transactions.

Monetary assets and liabilities denominated in foreign currencies at the end of the reporting period are retranslated to the functional currency at the exchange rate at that date.

Non-monetary assets and liabilities denominated in foreign currencies are not retranslated at the end of the reporting period, except for those that are measured at fair value are retranslated to the functional currency at the exchange rate at the date that the fair value was determined.

Foreign currency differences arising on retranslation are recognised in profit or loss, except for differences arising on the retranslation of available-for-sale equity instruments or a financial instrument designated as a hedge of currency risk, which are recognised in other comprehensive income.

(c) Financial instruments

(i) Initial recognition and measurement

A financial asset or a financial liability is recognised in the statement of financial position when, and only when, the Group or the Company becomes a party to the contractual provisions of the instrument.

A financial instrument is recognised initially, at its fair value plus, in the case of a financial instrument not at fair value through profit or loss, transaction costs that are directly attributable to the acquisition or issue of the financial instrument.

An embedded derivative is recognised separately from the host contract and accounted for as a derivative if, and only if, it is not closely related to the economic characteristics and risks of the host contract and the host contract is not categorised at fair value through profit or loss. The host contract, in the event an embedded derivative is recognised separately, is accounted for in accordance with policy applicable to the nature of the host contract.

(ii) Financial instrument categories and subsequent measurement

The Group and the Company categorise financial instruments as follows:

Financial assets

(a) Financialassetsatfairvaluethroughprofitorloss

Fair value through profit or loss category comprises financial assets that are held for trading, including derivatives (except for a derivative that is a financial guarantee contract or a designated and effective hedging instrument), contingent consideration in a business combination or financial assets that are specifically designated into this category upon initial recognition.

Derivatives that are linked to and must be settled by delivery of unquoted equity instruments whose fair values cannot be reliably measured are measured at cost.

Other financial assets categorised as fair value through profit or loss are subsequently measured at their fair values with the gain or loss recognised in profit or loss.




(c) Financial instruments (cont’d)

(ii) Financial instrument categories and subsequent measurement (cont’d)

Financial assets (cont’d)

(b) Loans and receivables

Loans and receivables category comprises debt instruments that are not quoted in an active market.

Financial assets categorised as loans and receivables are subsequently measured at amortised cost using the effective interest method.

(c) Available-for-salefinancialassets

Available-for-sale category comprises investment in club memberships that are not held for trading.

Investments in club memberships that do not have a quoted market price in an active market and whose fair value cannot be reliably measured are measured at cost.

All financial assets, except for those measured at fair value through profit or loss, are subject to review for impairment (see Note 2(j)).

Financial liabilities

All financial liabilities are subsequently measured at amortised cost other than those categorised as fair value through profit or loss.

Fair value through profit or loss category comprises financial liabilities that are derivatives (except for a derivative that is a financial guarantee contract or a designated and effective hedging instrument), contingent consideration in a business combination or financial liabilities that are specifically designated into this category upon initial recognition.

Derivatives that are linked to and must be settled by delivery of equity instruments that do not have a quoted price in an active market for identical instruments whose fair values otherwise cannot be reliably measured are measured at cost.

Other financial liabilities categorised as fair value through profit or loss are subsequently measured at their fair values with the gain or loss recognised in profit or loss.

(iii) Derecognition

A financial asset or part of it is derecognised when, and only when the contractual rights to the cash flows from the financial asset expire or control of the asset is not retained or substantially all of the risks and rewards of ownerships of the financial asset are transferred to another party. On derecognition of a financial asset, the difference between the carrying amount and the sum of the consideration received (including any new asset obtained less any new liability assumed) and any cumulative gain or loss that had been recognised in equity is recognised in profit or loss.




(c) Financial instruments (cont’d)

(iii) Derecognition (cont’d)

A financial liability or a part of it is derecognised when, and only when, the obligation specified in the contract is discharged, cancelled or expires. On derecognition of a financial liability, the difference between the carrying amount of the financial liability extinguished or transferred to another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in profit or loss.

(d) Property, plant and equipment

(i) Recognition and measurement

Items of property, plant and equipment are measured at cost less any accumulated depreciation and any accumulated impairment losses.

Cost includes expenditures that are directly attributable to the acquisition of the asset and any other costs directly attributable to bringing the asset to working condition for its intended use, and the costs of dismantling and removing the items and restoring the site on which they are located. The cost of self-constructed assets also includes the cost of materials and direct labour.

Purchased software that is integral to the functionality of the related equipment is capitalised as part of that equipment.

When significant parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment.

The gain or loss on disposal of an item of property, plant and equipment is determined by comparing the proceeds from disposal with the carrying amount of property, plant and equipment and is recognised net within “other income” and “other operating expenses” respectively in profit or loss.

(ii) Subsequent costs

The cost of replacing a component of an item of property, plant and equipment is recognised in the carrying amount of the item if it is probable that the future economic benefits embodied within the component will flow to the Group or the Company, and its cost can be measured reliably. The carrying amount of the replaced component is derecognised to profit or loss. The costs of the day-to-day servicing of property, plant and equipment are recognised in profit or loss as incurred.




(d) Property, plant and equipment (cont’d)

(iii) Depreciation

Depreciation is based on the cost of an asset less its residual value. Significant components of individual assets are assessed, and if a component has a useful life that is different from the remainder of that asset, then that component is depreciated separately.

Depreciation is recognised in profit or loss on a straight-line basis over the estimated useful lives of each component of an item of property, plant and equipment from the date that they are available for use. Leased assets are depreciated over the shorter of the lease term and their useful lives unless it is reasonably certain that the Group will obtain ownership by the end of the lease term. Freehold land is not depreciated. Property, plant and equipment under construction are not depreciated until the assets are ready for their intended use.

The estimated useful lives for the current and comparative periods are as follows:

• Buildings 50 years• Motor vehicles 5-8 years• Machinery and equipment 5-50 years• Furniture, fittings and equipment 10 years

Depreciation methods, useful lives and residual values are reviewed at the end of the reporting period, and adjusted as appropriate.

(e) Leased assets

(i) Finance lease

Leases in terms of which the Group or the Company assumes substantially all the risks and rewards of ownership are classified as finance leases. Upon initial recognition, the leased asset is measured at an amount equal to the lower of its fair value and the present value of the minimum lease payments. Subsequent to initial recognition, the asset is accounted for in accordance with the accounting policy applicable to that asset.

Minimum lease payments made under finance leases are apportioned between the finance expense and the reduction of the outstanding liability. The finance expense is allocated to each period during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability. Contingent lease payments are accounted for by revising the minimum lease payments over the remaining term of the lease when the lease adjustment is confirmed.

Leasehold land which in substance is a finance lease is classified as property, plant and equipment.




(e) Leased assets (cont’d)

(ii) Operating lease

Leases, where the Group or the Company does not assume substantially all the risks and rewards of ownership are classified as operating leases and, except for property interest held under operating lease, the leased assets are not recognised on the statement of financial position. Property interest held under an operating lease, which is held to earn rental income or for capital appreciation or for both, is classified as investment property and measured using the cost model.

Payments made under operating leases are recognised in profit or loss on a straight-line basis over the term of the lease. Lease incentives received are recognised in profit or loss as an integral part of the total lease expense, over the term of the lease. Contingent rentals are charged to profit or loss in the reporting period in which they are incurred.

Leasehold land which in substance is an operating lease is classified as prepaid lease payments.

(f) Investment properties

Investment properties carried at cost

Investment properties are properties which are owned or held under a leasehold interest to earn rental income or for capital appreciation or for both, but not for sale in the ordinary course of business, use in the production or supply of goods or services or for administrative purposes. Investment properties initially and subsequently measured at cost are accounted for similarly to property, plant and equipment.

(g) Inventories

Inventories are measured at the lower of cost and net realisable value.

The cost of inventories is calculated using the weighted average method, and includes expenditure incurred in acquiring the inventories, production or conversion costs and other costs incurred in bringing them to their existing location and condition. In the case of work-in-progress and finished goods, cost includes an appropriate share of production overheads based on normal operating capacity.

Net realisable value is the estimated net selling price in the ordinary course of business, less the estimated costs of completion and the estimated costs necessary to make the sale.




(h) Construction work-in-progress

Construction work-in-progress represents the gross unbilled amount expected to be collected from customers for contract work performed to date. It is measured at cost plus profit recognised to date less progress billings and recognised losses. Cost includes all expenditure related directly to specific projects and an allocation of fixed and variable overheads incurred in the Group’s contract activities based on normal operating capacity.

Construction work-in-progress is presented as part of trade and other receivables as amount due from contract customers in the statement of financial position for all contracts in which costs incurred plus recognised profits exceed progress billings. If progress billings exceed costs incurred plus recognised profits, then the difference is presented as amount due to contract customers which is part of the trade and other payables in the statement of financial position.

(i) Cash and cash equivalents

Cash and cash equivalents consist of cash on hand, balances and deposits with banks and highly liquid investments which have an insignificant risk of changes in fair value with original maturities of three months or less, and are used by the Group and the Company in the management of their short term commitments. For the purpose of the statement of cash flows, cash and cash equivalents are presented net of bank overdrafts and pledged deposits.

(j) Impairment

(i) Financial assets

All financial assets (except for financial assets categorised as fair value through profit or loss and investments in subsidiaries) are assessed at each reporting date whether there is any objective evidence of impairment as a result of one or more events having an impact on the estimated future cash flows of the asset. Losses expected as a result of future events, no matter how likely, are not recognised. For an investment in an equity instrument, a significant or prolonged decline in the fair value below its cost is an objective evidence of impairment. If any such objective evidence exists, then the impairment loss of the financial asset is estimated.

An impairment loss in respect of loans and receivables is recognised in profit or loss and is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at the asset’s original effective interest rate. The carrying amount of the asset is reduced through the use of an allowance account.

An impairment loss in respect of unquoted equity instrument that is carried at cost is recognised in profit or loss and is measured as the difference between the financial asset’s carrying amount and the present value of estimated future cash flows discounted at the current market rate of return for a similar financial asset.

If, in a subsequent period, the fair value of a debt instrument increases and the increase can be objectively related to an event occurring after the impairment loss was recognised in profit or loss, the impairment loss is reversed, to the extent that the asset’s carrying amount does not exceed what the carrying amount would have been had the impairment not been recognised at the date the impairment is reversed. The amount of the reversal is recognised in profit or loss.




(j) Impairment (cont’d)

(ii) Other assets

The carrying amounts of other assets (except for inventories, amount due from contract customers and deferred tax assets) are reviewed at the end of each reporting period to determine whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated.

For the purpose of impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or cash-generating units.

The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs of disposal. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset or cash-generating unit.

An impairment loss is recognised if the carrying amount of an asset or its related cash-generating unit exceeds its estimated recoverable amount.

Impairment losses are recognised in profit or loss. Impairment losses recognised in respect of cash-generating units are allocated to reduce the carrying amounts of the assets in the cash-generating unit (or a group of cash-generating units) on a pro rata basis.

Impairment losses recognised in prior periods are assessed at the end of each reporting period for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount since the last impairment loss was recognised. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised. Reversals of impairment losses are credited to profit or loss in the financial year in which the reversals are recognised.

(k) Equity instruments

Instruments classified as equity are measured at cost on initial recognition and are not remeasured subsequently.

(i) Issue expenses

Costs directly attributable to the issue of instruments classified as equity are recognised as a deduction from equity.

(ii) Ordinary shares

Ordinary shares are classified as equity.




(l) Employee benefits

(i) Short-term employee benefits

Short-term employee benefit obligations in respect of salaries, annual bonuses, paid annual leave and sick leave are measured on an undiscounted basis and are expensed as the related service is provided.

A liability is recognised for the amount expected to be paid under short-term cash bonus or profit-sharing plans if the Group has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably.

(ii) State plans

The Group’s contributions to statutory pension funds are charged to profit or loss in the financial year to which they relate. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in future repayments is available.

(m) Provisions

A provision is recognised if, as a result of a past event, the Group has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. The unwinding of the discount is recognised as finance cost.

(n) Revenue and other income

(i) Goods sold

Revenue from the sale of goods in the course of ordinary activities is measured at fair value of the consideration received or receivable, net of returns and allowances, trade discounts and volume rebates. Revenue is recognised when persuasive evidence exists, usually in the form of an executed sales agreement, that the significant risks and rewards of ownership have been transferred to the customer, recovery of the consideration is probable, the associated costs and possible return of goods can be estimated reliably, there is no continuing management involvement with the goods, and the amount of revenue can be measured reliably. If it is probable that discounts will be granted and the amount can be measured reliably, then the discount is recognised as a reduction of revenue as the sales are recognised.




(n) Revenue and other income (cont’d)

(ii) Construction contracts

Contract revenue includes the initial amount agreed in the contract plus any variations in contract work, claims and incentive payments, to the extent that it is probable that they will result in revenue and can be measured reliably. As soon as the outcome of a construction contract can be estimated reliably, contract revenue and contract cost are recognised in profit or loss in proportion to the stage of completion of the contract. Contract expenses are recognised as incurred unless they create an asset related to future contract activity.

The stage of completion is assessed by reference to the sums certified by surveyors for work performed to-date.

When the outcome of a construction contract cannot be estimated reliably, contract revenue is recognised only to the extent of contract costs incurred that are likely to be recoverable. An expected loss on a contract is recognised immediately in profit or loss.

(iii) Rental income

Rental income from investment property is recognised in profit or loss on a straight-line basis over the term of the lease.

(iv) Interest income

Interest income is recognised as it accrues using the effective interest method in profit or loss.

(v) Dividend income

Dividend income is recognised in profit or loss on the date that the Group’s or the Company’s right to receive payment is established.

(o) Borrowing costs

Borrowing costs that are not directly attributable to the acquisition, construction or production of a qualifying asset are recognised in profit or loss using the effective interest method.

Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are capitalised as part of the cost of those assets.

The capitalisation of borrowing costs as part of the cost of a qualifying asset commences when expenditure for the asset is being incurred, borrowing costs are being incurred and activities that are necessary to prepare the asset for its intended use or sale are in progress. Capitalisation of borrowing costs is suspended or ceases when substantially all the activities necessary to prepare the qualifying asset for its intended use or sale are interrupted or completed.

Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation.




(p) Income tax

Income tax expense comprises current and deferred tax. Current tax and deferred tax are recognised in profit or loss except to the extent that it relates to a business combination or items recognised directly in equity or other comprehensive income.

Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates enacted or substantively enacted by the end of the reporting period, and any adjustment to tax payable in respect of previous financial years.

Deferred tax is recognised using the liability method, providing for temporary differences between the carrying amounts of assets and liabilities in the statement of financial position and their tax bases. Deferred tax is not recognised for temporary differences arising from the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit or loss. Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the end of the reporting period.

Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax assets and liabilities on a net basis or their tax assets and liabilities will be realised simultaneously.

A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available against which the temporary difference can be utilised. Deferred tax assets are reviewed at the end of each reporting period and are reduced to the extent that it is no longer probable that the related tax benefit will be realised.

(q) Earnings per ordinary share

The Group presents basic earnings per share data for its ordinary shares (“EPS”).

Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the period, adjusted for own shares held.

(r) Contingent liabilities

Where it is not probable that an outflow of economic benefits will be required, or the amount cannot be estimated reliably, the obligation is not recognised in the statements of financial position and is disclosed as a contingent liability, unless the probability of outflow of economic benefits is remote. Possible obligations, whose existence will only be confirmed by the occurrence or non-occurrence of one or more future events, are also disclosed as contingent liabilities unless the probability of outflow of economic benefits is remote.




(s) Fair value measurements

Fair value of an asset or a liability, except for share-based payment and lease transactions, is determined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The measurement assumes that the transaction to sell the asset or transfer the liability takes place either in the principal market or in the absence of a principal market, in the most advantageous market.

For non-financial asset, the fair value measurement takes into account a market participant’s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.

When measuring the fair value of an asset or a liability, the Group uses observable market data as far as possible. Fair values are categorised into different levels in a fair value hierarchy based on the inputs used in the valuation technique as follows:

Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities that the Group can access at the measurement date.

Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.

Level 3: unobservable inputs for the asset or liability.

The Group recognises transfers between levels of the fair value hierarchy as of the date of the event or change in circumstances that caused the transfers.

(t) Operating segments

An operating segment is a component of the Group that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Group’s other components. Operating segment results are reviewed regularly by the chief operating decision maker, which in this case is the Group Managing Director, to make decisions about resources to be allocated to the segment and to assess its performance, and for which discrete financial information is available.


Note

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the

Fina

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(con

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Prop

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Fu

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RM’0

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RM’0

00

RM’0

00

RM’0

00

RM’0

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At 1

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6

8,73

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8,92

4 15

2,85

8 4,

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3 17

7,86

5

Ad

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-

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312

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4

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6/1

Janu

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2017

- 64

9 6,

420

79,6

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2,58

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81

Dep

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2 7,

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92,9

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Prop

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RM’0

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RM’0

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RM’0

00

RM’0

00

RM’0

00

RM’0

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G

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,794

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3 10

2,16

7

A

t 31

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3. Property, plant and equipment (cont’d)

3.1 Security

At 31 December 2017, freehold land and other buildings of the Group with an aggregate carrying amount of RM8,736,000 and RM2,446,000 (2016: RM8,736,000 and RM2,509,000) respectively have been pledged as security for the bank facilities granted to the Group (see Note 12).

3.2 Assets under finance lease

Included in property, plant and equipment of the Group are machinery and equipment and motor vehicles acquired under finance lease arrangements with an aggregate carrying amount of RM 54,756,000 (2016: RM68,170,000) (see Note 12).

4. Investment properties

Buildings Freehold under buildings construction Total RM’000 RM’000 RM’000

Group Cost At 1 January 2016 - 2,930 2,930 Additions - 1,022 1,022 Reclassification 3,109 (3,109) -

At 31 December 2016/1 January 2017 3,109 843 3,952 Additions 165 398 563 Reclassification 616 (616) - At 31 December 2017 3,890 625 4,515

Depreciation At 1 January 2016 - - - Depreciation for the year 26 - 26

At 31 December 2016/1 January 2017 26 - 26 Depreciation for the year 69 - 69 At 31 December 2017 95 - 95

Carrying amounts At 1 January 2016 - 2,930 2,930

At 31 December 2016/1 January 2017 3,083 843 3,926

At 31 December 2017 3,795 625 4,420



4. Investment properties (cont’d)

Buildings under construction 2017 2016 RM’000 RM’000 Company Cost At 1 January 227 - Additions 398 227

At 31 December 625 227

The following are recognised in profit or loss in respect of investment properties:

Group 2017 2016 RM’000 RM’000 Direct operating expenses: - non-income generating investment properties 69 26

Fair value information

Fair value of investment properties is categorised as follows:

Group 2017 2016 RM’000 RM’000 Level 3 Freehold buildings 4,366 4,100

Valuation process applied by the Group for Level 3 fair value

The fair value of the investment properties is estimated by the Directors using the comparison method. The comparison method entails critical analysis of recent transacted values of comparable properties in the neighbourhood and making adjustment for differences such as differences in location, size and shape of land, age and condition of building, tenure, title restrictions, if any and other relevant characteristics.

Investment properties of the Group amounting to RM3,021,000 (2016: RM3,083,000) have been charged to secure banking facilities granted to the Group (see Note 12).

Buildings under construction

Two (2016: Three) service apartments of the Group at year end are currently under construction and the fair values of the said properties are unable to be determined in view of the uncertainties involved in estimating their fair values.

Two (2016: Two) service apartments of the Company at year end are currently under construction and the fair values of the said properties are unable to be determined in view of the uncertainties involved in estimating their fair values.



5. Investments in subsidiaries

Company 2017 2016 RM’000 RM’000 Unquoted shares, at cost 98,761 98,761 Addition during the year 149 -

98,910 98,761 Less: allowance for impairment losses (260) -

98,650 98,761

The movements in the allowance for impairment losses on investment in subsidiaries during the financial year were:

Company 2017 2016 RM’000 RM’000 At 1 January - - Impairment loss during the financial year 260 -

At 31 December 260 -

Details of the subsidiaries are as follows: Effective ownership Country of interest Name of subsidiary incorporation Principal activities 2017 2016 % % Ikhmas Jaya Sdn. Bhd. Malaysia Piling and foundation works, 100 100 and its subsidiaries: construction of bridges and buildings, and other civil works

IJ Geotechnic Sdn. Bhd. Malaysia Geotechnical works and provision 100 100 of cutter soil mixing technology

Ikhmas Equipment Malaysia Rental of plant, machinery and 100 100 Sdn. Bhd. equipment

Rekavista Sdn. Bhd. Malaysia General civil and building 100 100 and its subsidiary: construction Rekavista (Sarawak) Malaysia General civil and 100 100 Sdn. Bhd. building construction MM2 Building System Malaysia Manufacturing of prefabricated 60 60 Sdn. Bhd. and its building system subsidiary:



5. Investments in subsidiaries (cont’d)

Details of the subsidiaries are as follows (cont’d): Effective ownership Country of interest Name of subsidiary incorporation Principal activities 2017 2016 % % MM2 Builders Sdn. Bhd. Malaysia Installation of prefabricated 60 60 building system

BE Specialist Sdn. Bhd. Malaysia General civil and building 60 60 construction

Exofield Property Malaysia Property Management 100 - Management Sdn. Bhd.

Acquisition of a subsidiary – Exofield Property Management Sdn. Bhd.

On 23 March 2017, the Company acquired the entire issued shares of Exofield Property Management Sdn. Bhd. comprising 2 ordinary shares for a cash consideration of RM2.00.

Subscription of shares in a subsidiary – BE Specialist Sdn. Bhd.

On 3 April 2017, the Company subscribed for 149,400 new ordinary shares of BE Specialist Sdn. Bhd. (“BESSB”) representing 60% of the new issuance for a total consideration of RM149,400. Following the subscription, the issued and paid-up share capital of BESSB increased from RM1,000 to RM250,000. The effective ownership interest held by the Company in BESSB remained the same.

5.1 Non-controlling interests in subsidiaries

The Group’s subsidiaries that have material non-controlling interests (“NCI”) are as follows:

MM2 Building System BE Sdn. Bhd. Specialist and its Sdn. Bhd. subsidiary Total RM’000 RM’000 RM’000

2017 NCI percentage of ownership interest and voting interest 40% 40% Carrying amount of NCI (184) (2,407) (2,591)Loss attributable to NCI (212) (793) (1,005)




5.1 Non-controlling interests in subsidiaries (cont’d)

The Group’s subsidiaries that have material non-controlling interests (“NCI”) are as follows (cont’d):

MM2 Building System BE Sdn. Bhd. Specialist and its Sdn. Bhd. subsidiary RM’000 RM’000

2017 Summarised financial information before intra-group eliminationAs at 31 December Non-current assets 222 1,139Current assets 1,572 23,941Current liabilities (2,255) (31,098)

Net liabilities (461) (6,018)

Year ended 31 December Revenue 1,458 2,903Loss for the year/total comprehensive expense (529) (1,983)

Cash flows (used in)/generated from operating activities (5) 23Cash flows used in investing activities (81) -Cash flows from/(used in) financing activities 249 (3)

Net increase in cash and cash equivalents 163 20

MM2 Building System BE Sdn. Bhd. Specialist and its Sdn. Bhd. subsidiary Total RM’000 RM’000 RM’000

2016NCI percentage of ownership interest and voting interest 40% 40% Carrying amount of NCI (72) (1,614) (1,686)Loss attributable to NCI (73) (958) (1,031)




5.1 Non-controlling interests in subsidiaries (cont’d)

The Group’s subsidiaries that have material non-controlling interests (“NCI”) are as follows (cont’d):

MM2 Building System BE Sdn. Bhd. Specialist and its Sdn. Bhd. subsidiary RM’000 RM’000

2016Summarised financial information before intra-group eliminationAs at 31 December Non-current assets 165 1,484Current assets 87 22,331Non-current liabilities - (3)Current liabilities (433) (27,847)

Net liabilities (181) (4,035)

Year ended 31 December Revenue - 3,252Loss for the year/total comprehensive expense (182) (2,396)

Cash flows generated from operating activities 165 366Cash flows used in investing activities (166) -Cash flows from/(used in) financing activities 1 (553)

Net decrease in cash and cash equivalents - (187)

6. Other investments

Group 2017 2016 RM’000 RM’000 Financial assets at fair value through profit or loss: - Quoted investments held for trading 4 4 Available for sales financial assets, at costs, - Club memberships 222 222 226 226 Market value of quoted investments 4 6



7. Deferred tax assets and (liabilities)

Recognised deferred tax assets and (liabilities)

Deferred tax assets and (liabilities) are attributable to the following:

Assets Liabilities Net 2017 2016 2017 2016 2017 2016 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Group Property, plant

and equipment - - (9,902) (8,675) (9,902) (8,675) Provisions - 30 - - - 30 Other items 175 - - - 175 -

Tax assets/ (liabilities) 175 30 (9,902) (8,675) (9,727) (8,645) Set off of tax (175) - 175 - - - Net tax assets/ (liabilities) - 30 (9,727) (8,675) (9,727) (8,645)

Movement in temporary differences during the financial year

Recognised Recognised in profit in profit At or loss At or loss At 1.1.2016 (Note 17) 31.12.2016 (Note 17) 31.12.2017 RM’000 RM’000 RM’000 RM’000 RM’000

Group Property, plant and equipment (8,241) (434) (8,675) (1,227) (9,902) Provisions - 30 30 (30) - Other items 272 (272) - 175 175

(7,969) (676) (8,645) (1,082) (9,727)

Unrecognised deferred tax assets

Deferred tax assets have not been recognised in respect of the following items (stated at gross):

Group Company 2017 2016 2017 2016 RM’000 RM’000 RM’000 RM’000 Tax loss carry-forwards 7,273 5,405 627 - Other deductible temporary differences 437 138 - - 7,710 5,543 627 -

The deductible temporary differences and tax loss carry-forwards do not expire under current tax legislation. Deferred tax assets have not been recognised in respect of these items because it is not probable that future taxable profit will be available against which the Group entities can utilise the benefits therefrom.



8. Trade and other receivables


Current Trade Trade receivables 8.1 208,037 152,072 16,304 -

Amount due from contract customers 8.2 178,285 157,152 1,101 -

386,322 309,224 17,405 -

Non-trade Amount due from subsidiaries 8.3 - - 75,539 72,738

Other receivables 6,725 2,301 17 134

6,725 2,301 75,556 72,872 Deposits 3,121 2,883 17 98 Prepayments 1,534 1,595 22 3

11,380 6,779 75,595 72,973

397,702 316,003 93,000 72,973

8.1 Trade receivables

Included in trade receivables at 31 December 2017 are retention sums related to construction work-in-progress. Retention sums are unsecured, interest free and expected to be collected as follows:

Group Company 2017 2016 2017 2016 RM’000 RM’000 RM’000 RM’000

Within 1 year 30,226 28,040 - - 1 - 2 years 8,385 14,029 - - 2 - 3 years 13,752 2,231 - - 3 - 4 years - 860 - - More than 4 years 1,568 811 - -

53,931 45,971 - -



8. Trade and other receivables (cont’d)

8.2 Construction work-in-progress


Aggregate costs incurred to date 1,294,461 1,131,489 40,832 - Add: Attributable profits 140,180 121,829 1,443 - Less: Foreseeable losses (364) (364) - -

1,434,277 1,252,954 42,275 - Less: Progress billings (1,262,524) (1,096,878) (41,174) -

171,753 156,076 1,101 -

Represented by: Amount due from contract customers 8.2.1 178,285 157,152 1,101 - Amount due to contract customers 13 (6,532) (1,076) - -

171,753 156,076 1,101 -

8.2.1 Amount due from contract customers

Included in amount due from contract customers is an amount of RM22,878,000 related to a project of which the contract has been terminated. The Group is in the midst of submitting a claim under the Construction Industry Payment and Adjudication Act 2012 (CIPAA). The Directors had sought input from a third party consultant and believe that the amount is fully recoverable as the work done and variations are supported by valid quantities and variations and would therefore be claimable.

8.3 Amount due from subsidiaries

Amount due from subsidiaries is unsecured, interest free and repayable on demand.

9. Inventories

Group 2017 2016 RM’000 RM’000

Work-in-progress 7 5 Construction materials on site 83 121 Raw materials and consumables 48 121 Finished goods 94 157 232 404

Recognised in profit or loss: Inventories recognised as cost of sales 472 419



10. Cash and cash equivalents


Cash and bank balances 2,231 430 20 9 Fixed deposits placed with licensed banks 28,151 23,158 7,507 7,195 30,382 23,588 7,527 7,204

Included in deposits placed with licensed banks of the Group and the Company are deposits of RM28,151,000 (2016: RM23,023,000) and RM7,507,000 (2016: RM7,195,000) respectively which have been pledged to financial institutions as security for bank guarantee and credit facilities granted to the Group and the Company as disclosed in Note 12.

11. Capital and reserves

11.1 Share capital

Group and Company Number Number of shares Amount of shares Amount 2017 2017 2016 2016 ’000 RM’000 ’000 RM’000

Issued and fully paid up:

Ordinary share At 1 January 520,000 130,000 520,000 130,000 Issued during the financial year 10,350 7,245 - - Transfer from share premium (Note 11.2) - 36,747 - -

At 31 December 530,350 173,992 520,000 130,000



11. Capital and reserves (cont’d)

11.1 Share capital (cont’d)

Ordinary shares

The holders of ordinary shares are entitled to receive dividends as declared from time to time, and are entitled to one vote per share at meetings of the Company.

In accordance with Section 74 of the Companies Act 2016, the Company’s ordinary shares no longer have a par or nominal value with effect from 31 January 2017. There is no impact on the number of shares in issue or the relative entitlement of any of the members as a result of this transition.

11.2 Share premium

The movements of share premium during the financial year are as follows:

Group and Company 2017 2016 RM’000 RM’000

At 1 January 36,747 36,747 Transfer to share capital (Note 11.1) (36,747) -

- 36,747

In the previous financial year, share premium comprises the premium paid over and above the par value of the shares on subscriptions of shares in the Company.

In accordance with the transitional provisions set out in Section 618 of the Companies Act 2016, any

amount standing to the credit of the Company’s share premium account will become part of the Company’s share capital. Companies have twenty-four months upon the commencement of the Companies Act 2016 to utilise the credit. During the financial year, the Company has utilised none of the credit of the share premium account which have now become part of the share capital.

11.3 Merger reserve/(deficit)

The merger reserve/(deficit) comprises the difference between the cost of acquisition and the nominal value of shares acquired during the acquisition of Ikhmas Jaya Sdn. Bhd. in the financial year ended 31 December 2015.



12. Loans and borrowings


Non-current Finance lease liabilities 12.1 20,233 14,415 - -

Secured term loans 5,269 5,597 - - 25,502 20,012 - - Current

Secured bank overdrafts 29,369 29,392 6,630 6,979 Unsecured bankers’ acceptances/trust receipts 27,257 19,743 - - Finance lease liabilities 12.1 13,677 16,331 - - Secured factoring facility 24,216 12,317 - - Secured term loans 366 848 - -

94,885 78,631 6,630 6,979

120,387 98,643 6,630 6,979

Security

The term loans are secured over the Group’s land and buildings (see Note 3.1 and Note 4).

Bank overdrafts are secured and supported by freehold land (see Note 3.1) and deposits placed with licensed banks (see Note 10).

Factoring facility is secured over assignment of contract proceeds.

12.1 Finance lease liabilities

Finance lease liabilities are payable as follows:

Present Present Future value of Future value of minimum minimum minimum minimum lease lease lease lease payments Interest payments payments Interest payments 2017 2017 2017 2016 2016 2016 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Group Less than one year 15,434 (1,757) 13,677 17,637 (1,306) 16,331 Between one and five years 22,087 (1,854) 20,233 14,970 (555) 14,415

37,521 (3,611) 33,910 32,607 (1,861) 30,746



12. Loans and borrowings (cont’d)

12.2 Reconciliation of movement of liabilities to cash flows arising from financing activities

Net changes from Acquisition At 1 financing of new At 31 January cash flows lease Dcember 2017 2017 2017 2017 RM’000 RM’000 RM’000 RM’000

Group Bankers’ acceptances and trust receipts 19,743 7,514 - 27,257Term loans and other borrowings 18,762 11,089 - 29,851Finance lease liabilities 30,746 (9,848) 13,012 33,910

69,251 8,755 13,012 91,018

In accordance to MFRS 107.60, comparative information is not required for preceding periods when an entity first applies Disclosure Initiative (Amendments to MFRS 107).

13. Trade and other payables


Current Trade

Amount due to a subsidiary 13.1 - - 16,714 - Trade payables 13.2 139,920 106,747 - - Amount due to contract customers 8.2 6,532 1,076 - -

146,452 107,823 16,714 -

Non-trade Amount due to directors 1,771 2,893 11 12

Other payables 13.3 46,832 28,791 174 118 Accruals 6,125 7,814 400 165 54,728 39,498 585 295 201,180 147,321 17,299 295


13. Trade and other payables (cont’d)

13.1 The amount due to a subsidiary is unsecured, interest free and repayable on demand.

13.2 Included in trade payables at 31 December 2017 are retention sums payable amounting to RM11,010,000 (2016: RM10,671,000).

13.3 Included in other payables at 31 December 2017 is an amount due to a substantial shareholder amounting to RM12,497,000 (2016: RM4,153,000). The amount due to a substantial shareholder is unsecured, interest free and repayable on demand.

14. Revenue


Construction contracts 302,630 242,509 47,101 - Sale of goods 428 58 - - Rental income 108 - - - Dividends - - - 12,600

303,166 242,567 47,101 12,600

15. Finance income


Interest income of financial assets that are not at fair value through profit or loss: - interest received from licensed banks 568 714 187 290 - others 3,389 - - - 3,957 714 187 290




16. Finance costs


Interest expense of financial liabilities that are not at fair value through profit or loss: - finance lease liabilities 2,181 2,112 - - - secured term loans 378 428 - - - secured bank overdrafts 2,282 1,409 485 305 - unsecured bankers’ acceptances/trust receipts 1,475 1,258 - - - secured factoring facility 1,425 787 - - - others 1,588 1,181 - 80

9,329 7,175 485 385

17. Tax expense

Recognised in profit or loss


Current tax expense - Current year 2,437 3,634 - - - Under provision in prior years 252 598 - -

2,689 4,232 - -

Deferred tax expense - Origination and reversal of temporary differences 1,643 1,856 - -- Over provision in prior years (561) (1,180) - -

1,082 676 - -

Total income tax expense 3,771 4,908 - -

Reconciliation of tax expense

Profit/(Loss) before tax 9,695 15,159 (655) 10,976

Income tax calculated using Malaysian tax rate of 24% (2016: 24%) 2,327 3,638 (157) 2,634Non-deductible expenses 1,233 1,208 7 390Effect of deferred tax assets not recognised 520 623 150 -Tax exempt income - - - (3,024)Other items - 21 - -

4,080 5,490 - -Over provision in prior years (309) (582) - -

3,771 4,908 - -



18. Profit/(Loss) for the year


Profit/(Loss) for the year is arrived at after charging:

Auditors’ remuneration -Statutory audit fees 213 189 35 22

-Non-audit fees 109 114 109 114 Depreciation of investment properties 4 69 26 - - Depreciation of property, plant and equipment 3 14,958 14,095 - - Impairment losses on:

- investment in subsidiaries - - 260 - - trade receivables 1,014 93 - - Personnel expenses (including key management personnel): - Contributions to Employees’ Provident Fund 791 722 - - - Wages, salaries and others 8,011 7,230 - - Property, plant and equipment written off 3 - 6 - - Realised loss on foreign exchange 103 - - -

and after crediting: Dividend income from subsidiary - - - 12,600

Gain on disposal of property, plant and equipment 5,153 112 - - Realised gain on foreign exchange - 3 - - Rental income from premises 117 108 - - Reversal of impairment loss on trade receivables - 43 - -



19. Earnings per ordinary share

The calculation of basic earnings per ordinary share at 31 December 2017 was based on the profit attributable to ordinary shareholders and a weighted average number of ordinary shares outstanding, calculated as follows:

2017 2016 RM’000 RM’000

Group Profit attributable to ordinary shareholders 6,929 11,282

2017 2016 ’000 ’000

Weighted average number of ordinary shares at 31 December 523,686 520,000 2017 2016 sen sen

Basic earnings per ordinary share 1.32 2.17

Diluted earnings per ordinary share is not presented as the Group has no shares or other instruments with

potential dilutive effects as at 31 December 2017 (2016: None).

20. Dividends

Dividends recognised by the Group and the Company:

Sen per Total amount Date of share RM’000 payment

2017 Paid to the owners of the Company

First and final 2016 (single tier) 0.50 2,600 12 September 2017

2016 Paid to the owners of the Company First and final 2015 (single tier) 1.00 5,200 9 September 2016

The Directors do not recommend any final dividend to be paid for the financial year under review.



21. Segment reporting

The Group is predominantly involved in civil and building construction, which is the only reportable segment. Other non-reportable segments comprise manufacturing and sales of prefabricated building system. None of these segments met the quantitative thresholds for reporting segments in 2017 and 2016. All the Group’s operations are carried out in Malaysia.

Major customers

The following are major customers with revenue equal or more than 10% of the Group’s total revenue:

Revenue Segment 2017 2016 RM’000 RM’000 - Customer A - 44,273 Civil and building construction - Customer B - 40,802 Civil and building construction - Customer C - 33,247 Civil and building construction - Customer D 49,587 - Civil and building construction - Customer E 45,576 - Civil and building construction - Customer F 35,223 - Civil and building construction - Customer G 34,055 - Civil and building construction

22. Financial instruments

22.1 Categories of financial instruments

The table below provides an analysis of financial instruments categorised as follows:

(a) Loans and receivables (“L&R”);(b) Available-for-sale financial assets (“AFS”);(c) Fair value through profit or loss (“FVTPL”)-Held for trading (“HFT”); and(d) Financial liabilities measured at amortised cost (“FL”).

Carrying L&R/ FVTPL Note amount (FL) AFS -HFT RM’000 RM’000 RM’000 RM’000

Group 2017

Financial assets Other investments 6 226 - 222 4

Trade and other receivables 396,168 396,168 - - Cash and cash equivalents 10 30,382 30,382 - -

426,776 426,550 222 4

Financial liabilities

Loans and borrowings 12 (120,387) (120,387) - - Trade and other payables 13 (201,180) (201,180) - -

(321,567) (321,567) - -



22. Financial instruments (cont’d)

22.1 Categories of financial instruments (cont’d)

Carrying L&R/ FVTPL Note amount (FL) AFS -HFT RM’000 RM’000 RM’000 RM’000

Group (cont’d) 2016 Financial assets Other investments 6 226 - 222 4

Trade and other receivables 314,408 314,408 - - Cash and cash equivalents 10 23,588 23,588 - -

338,222 337,996 222 4

Financial liabilities Loans and borrowings 12 (98,643) (98,643) - -

Trade and other payables 13 (147,321) (147,321) - -

(245,964) (245,964) - -

Carrying L&R/ Note amount (FL) RM’000 RM’000

Company 2017 Financial assets Trade and other receivables 92,978 92,978 Cash and cash equivalents 10 7,527 7,527

100,505 100,505

Financial liabilities Loans and borrowings 12 (6,630) (6,630) Trade and other payables 13 (17,299) (17,299)

(23,929) (23,929)




22.1 Categories of financial instruments (cont’d)

Carrying L&R/ Note amount (FL) RM’000 RM’000

Company (cont’d) 2016 Financial assets Trade and other receivables 72,970 72,970 Cash and cash equivalents 10 7,204 7,204

80,174 80,174

Financial liabilities Loans and borrowings 12 (6,979) (6,979) Trade and other payables 13 (295) (295)

(7,274) (7,274)

22.2 Net gains and losses arising from financial instruments


Loans and receivables 2,943 664 187 290 Financial liabilities measured at amortised cost (9,432) (7,172) (485) (385)

(6,489) (6,508) (298) (95)

22.3 Financial risk management

The Group has exposure to the following risks from its use of financial instruments:

• Credit risk• Liquidity risk• Market risk

22.4 Credit risk

Credit risk is the risk of a financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations. The Group’s exposure to credit risk arises principally from its receivables from customers. The Company’s exposure to credit risk arises principally from its receivables from customers and advances to subsidiaries.

Receivables

Risk management objectives, policies and processes for managing the risk

Management has a credit policy in place and the exposure to credit risk is monitored on an ongoing basis. Normally credit evaluations are performed on customers requiring credit over a certain amount.




22.4 Credit risk (cont’d)

Receivables (cont’d)

Exposure to credit risk, credit quality and collateral

As at the end of the reporting period, the maximum exposure to credit risk arising from receivables is represented by the carrying amounts in the statement of financial position.

Management has taken reasonable steps to ensure that receivables that are neither past due nor impaired are stated at their realisable values. A significant portion of these receivables are regular customers that have been transacting with the Group. The Group uses ageing analysis to monitor the credit quality of the receivables. Any receivables having significant balances past due more than 60 days, which are deemed to have higher credit risk, are monitored individually.

Impairment losses

The ageing of trade receivables as at the end of the reporting period was:

Individual Gross impairment Net RM’000 RM’000 RM’000

Group 2017 Not past due 87,608 - 87,608 Past due 1 - 30 days 14,910 - 14,910 Past due 31 - 120 days 15,956 - 15,956 Past due more than 120 days 90,627 (1,064) 89,563

209,101 (1,064) 208,037

2016 Not past due 55,902 - 55,902 Past due 1 - 30 days 3,275 - 3,275 Past due 31 - 120 days 14,145 - 14,145 Past due more than 120 days 78,800 (50) 78,750

152,122 (50) 152,072

Individual Gross impairment Net RM’000 RM’000 RM’000

Company 2017 Not past due 16,304 - 16,304 Past due 1 - 30 days - - - Past due 31 - 120 days - - - Past due more than 120 days - - -

16,304 - 16,304

2016 - - -





Receivables (cont’d)

Impairment losses (cont’d)

The movements in the allowance for impairment losses of trade receivables during the financial year were:

Group 2017 2016 RM’000 RM’000

At 1 January 50 - Impairment loss recognised 1,014 93 Impairment loss reversed - (43)

At 31 December 1,064 50

No allowance for impairment losses of trade receivables has been made for the remaining past due receivables as the Group monitors the results and repayments of these customers regularly and is confident of the ability of the customers to repay the balances owing.

The allowance account in respect of trade receivables is used to record impairment losses. Unless the Group is satisfied that recovery of the amount is possible, the amount considered irrecoverable is written off against the receivable directly.

The Group’s exposure to credit risk is influenced mainly by the individual characteristics of each customer rather than the industry or country in which the customers operate and therefore significant concentrations of credit risk primarily arise when the Group has significant exposure to individual customers. As at the end of the reporting period, 47% (2016: 46%) of the total trade receivables was due from the two (2016: one) largest customers of the Group.

Inter-company advances


The Company provides unsecured advances to subsidiaries. The Company monitors the results of the subsidiaries regularly.


As at the end of the reporting period, the maximum exposure to credit risk is represented by their carrying amounts in the statement of financial position.





Inter-company advances (cont’d)

Impairment losses

As at the end of the reporting period, there was no indication that the advances to the subsidiaries are not recoverable. The Company does not specifically monitor the ageing of the advances to subsidiaries.

Financial guarantees


The Company provides unsecured financial guarantees to banks in respect of banking facilities granted to a subsidiary. The Company monitors on an ongoing basis the results of the subsidiary and repayments made by the subsidiary.


The maximum exposure to credit risk of the Company amounts to RM97,807,000 (2016: RM102,473,000) representing the outstanding banking facilities of the subsidiary as at the end of the reporting period.

As at the end of the reporting period, there was no indication that the subsidiary would default on repayment.

The financial guarantees have not been recognised since the fair value on initial recognition was not material.

22.5 Liquidity risk

Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group’s exposure to liquidity risk arises principally from its various payables, loans and borrowings.

The Group maintains a level of cash and cash equivalents and bank facilities deemed adequate by the management to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when they fall due.


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22.5 Liquidity risk (cont’d)

Maturity analysis (cont’d)

Carrying Contractual Contractual Under amount interest rate cash flows 1 year RM’000 % RM’000 RM’000

Company 2017 Non-derivative financial liabilities Secured bank overdrafts 6,630 7.35 6,630 6,630 Trade and other payables 17,299 - 17,299 17,299 Financial guarantees - - 97,807 97,807

23,929 121,736 121,736

2016 Non-derivative financial liabilities Secured bank overdrafts 6,979 7.35 6,979 6,979 Trade and other payables 295 - 295 295 Financial guarantees - - 102,473 102,473

7,274 109,747 109,747

22.6 Market risk

Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and other prices that will affect the Group’s financial position or cash flows.

Investments


Investments are allowed only in liquid securities and only with counterparties that have a rating equal to or better than the Group.


As at the end of the reporting period, the Group and the Company have only invested in domestic securities. The maximum exposure to price risk is represented by the carrying amounts in the statement of financial position.

The investments are unsecured.

22.6.1 Interest rate risk

The Group’s fixed rate borrowings are exposed to a risk of change in their fair value due to changes in interest rates. The Group’s variable rate borrowings are exposed to a risk of change in cash flows due to changes in interest rates. Investments in equity securities and short term receivables and payables are not significantly exposed to interest rate risk.


The Group manages its interest rate exposure by maintaining a mix of fixed and floating rate borrowings.




22.6 Market risk (cont’d)

22.6.1 Interest rate risk (cont’d)

Exposure to interest rate risk

The interest rate profile of the Group’s and the Company’s significant interest-bearing financial instruments, based on carrying amounts as at the end of the reporting period were:


Fixed rate instruments Financial assets 28,151 23,158 7,507 7,195

Financial liabilities (85,383) (62,806) - -

Floating rate instruments Financial liabilities (35,004) (35,837) (6,630) (6,979)

Interest rate risk sensitivity analysis

Fair value sensitivity analysis for fixed rate instruments

The Group does not account for any fixed rate financial assets and liabilities at fair value through profit or loss, and the Group does not designate derivatives as hedging instruments under a fair value hedge accounting model. Therefore, a change in interest rate at the end of the reporting period would not affect profit or loss.

Cash flow sensitivity analysis for variable rate instruments

A change of 100 basis points (“bp”) in interest rates at the end of the reporting period would have increased/(decreased) post-tax profit or loss by the amounts shown below. This analysis assumes that all other variables remained constant.

Profit or (loss) 100 bp 100 bp increase decrease RM’000 RM’000

Group 2017 Floating rate instruments (266) 266

2016 Floating rate instruments (272) 272

Company 2017 Floating rate instruments (50) 50

2016 Floating rate instruments (53) 53


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in th

e st

atem

ent o

f fina

ncia

l pos

ition

.

Tota

l fai

r C

arry

ing

Leve

l 1

Leve

l 2

Leve

l 3

Tota

l Le

vel 1

Le

vel 2

Le

vel 3

To

tal

valu

e am

ount

G

roup

RM

’000

RM

’000

RM

’000

RM

’000

RM

’000

RM

’000

RM

’000

RM

’000

RM

’000

RM

’000

20

17

Fina

ncia

l ass

ets

Quo

ted

shar

es

4 -

- 4

- -

- -

4 4

C

lub

mem

bers

hips

-

- -

- -

355

- 35

5 35

5 22

2

4 -

- 4

- 35

5 -

355

359

226

Fi

nanc

ial l

iabi

litie

s

Se

cure

d te

rm lo

ans

- -

- -

- -

(5,5

39)

(5,5

39)

(5,5

39)

(5,6

35)

Fi

nanc

e le

ase

l

iabi

litie

s -

- -

- -

- (3

3,88

4)

(33,

884)

(3

3,88

4)

(33,

910)

-

- -

- -

- (3

9,42

3)

(39,

423)

(3

9,42

3)

(39,

545)

20

16

Fina

ncia

l ass

ets

Quo

ted

shar

es

6 -

- 6

- -

- -

6 4

C

lub

mem

bers

hips

-

- -

- -

395

- 39

5 39

5 22

2

6 -

- 6

- 39

5 -

395

401

226

Fi

nanc

ial l

iabi

litie

s

Se

cure

d te

rm lo

ans

- -

- -

- -

(6,2

67)

(6,2

67)

(6,2

67)

(6,4

45)

Fi

nanc

e le

ase

l

iabi

litie

s -

- -

- -

- (3

0,60

6)

(30,

606)

(3

0,60

6)

(30,

746)

- -

- -

- -

(36,

873)

(3

6,87

3)

(36,

873)

(3

7,19

1)

Fair

valu

e of

fina

ncia

l ins

trum

ents

not c

arrie

d at

fair

valu

eFa

ir va

lue

of fi

nanc

ial i

nstru

men

ts

carri

ed a

t fai

r val

ue




22.7 Fair value information (cont’d)

Level 1 fair value

Level 1 fair value is derived from quoted price (unadjusted) in active markets for identical financial assets or liabilities that the entity can access at the measurement date.

Level 2 fair value

Level 2 fair value is estimated using inputs other than quoted prices included within Level 1 that are observable for the financial assets or financial liabilities, either directly or indirectly.

Non-derivative financial liabilities

Fair value, which is determined for disclosure purposes, is calculated based on the present value of future principal and interest cash flows, discounted at the market rate of interest at the end of the reporting period.

Transfers between Level 1 and Level 2 fair values There has been no transfer between Level 1 and 2 fair values during the financial year (2016: no

transfer in either directions).

Level 3 fair value

Level 3 fair value is estimated using unobservable inputs for the financial assets and liabilities.

The following table shows the valuation techniques used in the determination of fair values within Level 3, as well as the key unobservable inputs used in the valuation models.

Financial instruments not carried at fair value

Type Description of valuation technique and inputs used Finance lease liabilities Discounted cash flows using a rate based on the current market rate and secured term loans of borrowings of the respective Group entities at the reporting date. Valuation processes applied by the Group for Level 3 fair value

The Group uses discounted cash flows in respect of the measurement of fair values of financial instruments. The management has overall responsibility for overseeing all significant fair value measurements, including Level 3 fair values.

23. Capital and other commitments

Group 2017 2016 RM’000 RM’000

Capital expenditure commitments Property, plant and equipment Contracted but not provided for 6,500 -



24. Contingencies

Company 2017 2016 RM’000 RM’000

Guarantees given to banks for facilities granted to a subsidiary 97,807 102,473

Litigation

(a) Signature Cabinet Sdn. Bhd. vs D.J. Design & Suppliers Sdn. Bhd. & Ikhmas Jaya Sdn. Bhd. (“IJSB”)

On 1 December 2016, a Court action by way of Writ and Statement of Claim was initiated by Signature Cabinet Sdn. Bhd. (“the Plaintiff”) against D.J. Design & Suppliers Sdn. Bhd. as the 1st Defendant and IJSB as the 2nd Defendant for outstanding payment of RM1,261,303.14 (“the outstanding sum”).

By a Letter of Award dated 8 December 2014 issued by IJSB as the main contractor, IJSB has appointed the Plaintiff as the Nominated Sub-Contractor for the supply, delivery and installation of kitchen cabinets for 150 units of service apartments (“the works”) at Lot 83, Seksyen 88 Jalan Damai off Jalan Ampang, Kuala Lumpur, Wilayah Persekutuan (“the Project”). The 1st Defendant is the owner of the Project.

A collateral agreement dated 29 June 2016 was signed between the Plaintiff and the 1st Defendant for direct payment of the outstanding sum following a discussion held between the same parties on 29 June 2016.

On 31 May 2017, all parties under the Court action had recorded a Consent Judgement wherein the 1st Defendant is to pay the Plaintiff an amount totalling RM1,425,215.52 by instalments as follows:-

1) RM500,000.00 - on or before 27.6.2017;2) RM308,405.17 - on or before 15.7.2017;3) RM308,405.17 - on or before 15.8.2017; and4) RM308,405.17 - on or before 15.9.2017.

At the date of these financial statements, IJSB was made to understand by the 1st Defendant that the 1st and 2nd instalment payments had been made to the Plaintiff. The remaining two instalments were extended to 16 March 2018 and 16 April 2018 respectively but remained unpaid as at the date of these financial statements.

(b) Tunjang Jitu Sdn. Bhd. vs Kerajaan Negeri Kuala Terengganu & United Overseas Bank (M) Bhd.

The Kerajaan Negeri Kuala Terengganu (“1st Defendant”) has awarded to Tunjang Jitu Sdn. Bhd. (“Plaintiff”) a main contract for a project known as “Merekabentuk, Membina, Menyiapkan dan Menyelenggara 160 Unit (5 Tingkat) Rumah Pangsa Mampu Milik di Pulau Redang, Kuala Terengganu” (“the Project”) valued at RM27.975 million and the Plaintiff has in turn awarded the Project to Ikhmas Jaya Sdn. Bhd. (“IJSB”) as the sub-contractor.

IJSB provided a performance bond to the 1st Defendant on behalf of the Plaintiff wherein the bond was issued by United Overseas Bank (M) Bhd. (“2nd Defendant”) for an amount of RM1,428,740. On 11 March 2018, the 1st Defendant called upon the bond based on purported termination of the main contract due to alleged delay in completing the Project.

The Plaintiff and IJSB had appointed solicitors to initiate a legal action against the 1st Defendant wherein the former is claiming for among others, outstanding sum for works performed and also an injunction to prohibit the 1st Defendant from calling and 2nd Defendant from releasing the bond to the 1st Defendant until the disposal of the above action. An ex-parte injunction has been obtained on 21 March 2018 and the matter is now fixed for hearing on 14 May 2018.



24. Contingencies (cont’d)

Litigation (cont’d)

(c) BSG Construction (M) Sdn. Bhd. vs Ikhmas Jaya Sdn. Bhd. (“IJSB”)

(i) Adjudication under Construction Industry Payment and Adjudication Act 2012 (ref no. Klrca/d/adj-1214-2017) between BSG Construction (M) Sdn. Bhd. and Ikhmas Jaya Sdn. Bhd.

BSG Construction (M) Sdn. Bhd. (“the Plaintiff”) had issued an Adjudication Notice dated 11 September 2017 under the Construction Industry Payment and Adjudication Act 2012 against IJSB (“the defendant”) for payment of certified sum of RM4,975,984. On 20 December 2017, the Adjudicator had awarded a sum of RM3,184,077 to the Plaintiff together with adjudication costs of RM59,025 and 5% interest per annum on the awarded sum from 25 January 2018 until full settlement.

(ii) Kuala Lumpur High Court originating summons No. WA-24C-35-02/2018 between BSG Construction (M) Sdn. Bhd. and Ikhmas Jaya Sdn. Bhd.

The Plaintiff had commenced the action on 19 February 2018 to convert the adjudication award to a Court judgment. IJSB has instructed its solicitors to set aside the Adjudicator’s award due to the fact that the Adjudicator has exceeded his jurisdiction and that the award is against natural justice. The Court has postponed the hearing from 19 April 2018 to 30 April 2018.

(iii) Kuala Lumpur High Court Writ No. WA-22C-14-02/2018 between BSG Construction (M) Sdn. Bhd. and Ikhmas Jaya Sdn. Bhd.

The Plaintiff had commenced the action on 22 February 2018 to claim for a sum of RM1,791,907 being the balance amount that was not awarded by the Adjudicator. IJSB has appointed solicitors to defend the claim. The plaintiff has filed a summary judgment application and is now fixed for hearing on 11 May 2018.

25. Related parties

Identity of related parties

For the purposes of these financial statements, parties are considered to be related to the Group or the Company if the Group or the Company has the ability, directly or indirectly, to control or jointly control the party or exercise significant influence over the party in making financial and operating decisions, or vice versa, or where the Group or the Company and the party are subject to common control. Related parties may be individuals or other entities.

Related parties also include key management personnel defined as those persons having authority and responsibility for planning, directing and controlling the activities of the Group either directly or indirectly. The key management personnel include all the Directors of the Group, and certain members of senior management of the Group.

The Group has related party relationship with its ultimate holding company, subsidiaries and key management personnel.



25. Related parties (cont’d)

Significant related party transactions

Related party transactions have been entered into in the normal course of business under negotiated terms. The significant related party transactions of the Group and the Company are shown below. The balances related to the below transactions are shown in Notes 8 and 13.


A. Ultimate holding company Advances received (14,006) (3,143) - -

B. Subsidiary

Contract cost - - 45,658 - Dividend income - - - (12,600) C. Key management personnel Directors

- Fees 174 174 174 174 - Remuneration 2,278 1,956 480 480 - Other short-term employee benefits 307 552 180 99

2,759 2,682 834 753

26. Capital management

The Group’s objective when managing capital is to maintain a strong capital base and safeguard the Group’s ability to continue as a going concern, so as to maintain investors and creditors confidence and to sustain future development of the business. The Directors monitor and are determined to maintain an optimal debt-to-equity ratio that complies with debt covenants and regulatory requirement.

The debt-to-equity ratios at 31 December 2017 and 31 December 2016 were as follows: Group 2017 2016 Note RM’000 RM’000

Total loans and borrowings 12 120,387 98,643Less: Cash and cash equivalents 10 (30,382) (23,588)

Net debt 90,005 75,055

Total equity 204,415 193,746

Net debt-to-equity ratio 0.44 0.39

There was no change in the Group’s approach to capital management during the financial year.



27. Significant events

Private placement

On 17 July 2017, the Company announced to Bursa Malaysia Securities Berhad (“Bursa Malaysia”) that the Company proposed to undertake a private placement of up to 52,000,000 new ordinary shares in the Company, representing up to 10.0% of the total number of issued shares of the Company and this proposal was approved by Bursa Malaysia on 25 July 2017.

On 24 August 2017, the first tranche of the Private Placement was completed following the listing of and quotation for 10,350,000 new ordinary shares at RM0.70 per share on Main Market of Bursa Malaysia and thereby raised RM7,245,000 for working capital purposes. As at 31 December 2017, the Group has fully utilised the amount raised.

28. Subsequent events

28.1 Private placement

On 20 February 2018, the second tranche of the Private Placement was completed following the listing of and quotation for 15,000,000 new ordinary shares at RM0.57 per share on Main Market of Bursa Malaysia and thereby raised RM8,550,000 for working capital purposes. As at the date of these financial statements, the proceeds have been fully utilised.

28.2 Settlement agreement with a trade receivable

On 17 April 2017, a wholly owned subsidiary of the Company, Ikhmas Jaya Sdn. Bhd. (“IJSB”) had entered into a settlement agreement with D.J. Design & Suppliers Sdn. Bhd. and Solid Promenade Sdn. Bhd. in respect of the settlement of the amount due by the former to IJSB amounting to RM75 million. The parties agreed the repayment of the total settlement sum in kind and in cash as follows:

(i) RM46,254,000 was repayable to IJSB by contra of 23 units in the property development project “Damai 88” free from encumbrances (“Settlement in kind”) which shall be immediately transferred by D.J. Design & Suppliers Sdn. Bhd. upon signing of the settlement agreement to IJSB or to Exofield Property Management Sdn. Bhd. or any party nominated and/or appointed by IJSB.

(ii) The balance settlement sum of RM28,746,000 which was repayable by four equal instalments of RM7,186,500 each starting from 30 June 2017 to 31 December 2017.

On 25 April 2018, IJSB had at the request of D.J. Design & Suppliers Sdn. Bhd. agreed to extend the settlement period of the unpaid portion of the balance settlement sum of RM28,746,000 from 31 December 2017 to 30 September 2018.


Additional Compliance Information

Utilisation of Proceeds from Public Issue

Ikhmas Jaya Group Berhad was listed on the Main Market of Bursa Malaysia Securities Berhad on 27 July 2015 (Listing). In conjunction with the Listing, the Company undertook a public issue of 126,000,000 new ordinary shares of RM0.25 each at an issue price of RM0.57 per share (Public Issue), raising gross proceeds of RM71.8 million. The status or the utilisation of the gross proceeds from the Public Issue as at 31 December 2017 is as follows:- Purpose Timeframe for

Utilisation upon Listing

Total Amount (RM’000)

Utilised Amount (RM’000)

Unutilised Balance (RM’000)

Purchase of construction equipment

Within 24 months 31,820 31,820 -

Purchase of machinery and equipment for manufacturing of prefabricated building system

Within 24 months 5,000 - 5,000

Repayment of bank borrowings

Within 6 months 12,000 12,000 -

Working capital Within 6 months 18,000 18,000 -Estimated listing expenses

Immediate 5,000 5,000 -

Utilisation of Proceeds from Private Placement

The Company had on 22 August 2017 completed the 1st tranche of private placement of 10,350,000 ordinary shares at an issue price of RM0.70 per share, raising RM7,245,000.00 for working capital.

On 15 February 2018, the Company completed the 2nd tranche of private placement of 15,000,000 ordinary shares at an issue price of RM0.57, further raising RM8,550,000.00 for working capital purposes.

As at the date of this Report, the proceeds from the private placement had been fully utilised.

Audit and Non-Audit Fee

The fee payables to the External Auditors, KPMG PLT in relation to the audit and non-audit services rendered to the Company and its subsidiaries for the financial year ended 31 December 2017 are as follows:-

The Company RM’000

The Group RM’000

Audit fees 35 213Non-audit fees 109 109

The non-audit fees were mainly due to fees incurred for the review of the Directors’ Statement on Risk Management and Internal Control and quarterly review.

Material Contracts

There were no material contracts entered into by the Company and its subsidiaries involving directors’ and major shareholders’ interest either subsisting at the end of the financial year ended 31 December 2017 or entered into since the end of the previous financial year.

Recurrent related Party Transactions

There were no Recurrent Related Party Transactions of a revenue or trading nature which requires shareholders’ mandate during the financial period under review.


No.

Loca

tion

Desc

riptio

n/ E

xist

ing

Use

App

oxim

ate

Age

of

Build

ing

Tenu

reLa

nd A

rea/

Bu

ilt-u

p A

rea

(sqf

)

NBV

as

at

31.1

2.20

17

(RM

)

Date

of a

cqui

sitio

n (i

f no

reva

luat

ion

is do

ne)

1.N

o. 3

5, J

alan

PJU

1A

/41B

, Pus

at D

agan

gan

NZX

, A

ra J

aya,

PJU

1A

, 473

01 P

etal

ing

Jaya

, Sel

ango

r D

arul

Ehs

an/

HSD

233

616,

Lot

No.

PT

3338

6,

Muk

im D

aman

sara

, Dist

rict o

f Pet

alin

g an

d S

tate

of

Sel

ango

r Dar

ul E

hsan

Two

(2) i

nter

med

iate

an

d o

ne (1

) cor

ner

adjo

inin

g un

its o

f 3-s

tore

y te

rrace

shop

/ of

fice

with

ba

sem

ent c

ar p

ark/

Our

Gro

up’s

hea

d o

ffice

9 ye

ars

Free

hold

2,43

9/

8,47

51,

834,

675

Not

e (1

)11

Oct

200

9

2.N

o. 3

7, J

alan

PJU

1A

/41B

, Pus

at D

agan

gan

NZX

, A

ra J

aya,

PJU

1A

, 473

01 P

etal

ing

Jaya

, Sel

ango

r D

arul

Ehs

an/

HSD

233

615,

Lot

No.

PT

3338

5,

Muk

im D

aman

sara

, Dist

rict o

f Pet

alin

g an

d S

tate

of

Sel

ango

r Dar

ul E

hsan

Two

(2) i

nter

med

iate

an

d o

ne (1

) cor

ner

adjo

inin

g un

its o

f 3-s

tore

y te

rrace

shop

/ of

fice

with

ba

sem

ent c

ar p

ark/

Our

Gro

up’s

hea

d o

ffice

9 ye

ars

Free

hold

1,80

0/

5,93

81,

445,

491

Not

e (1

)11

Jul

y 2

007

3.N

o. 3

9, J

alan

PJU

1A

/41B

, Pus

at D

agan

gan

NZX

, A

ra J

aya,

PJU

1A

, 473

01 P

etal

ing

Jaya

, Sel

ango

r D

arul

Ehs

an/

HSD

233

614,

Lot

No.

PT

3338

4,

Muk

im D

aman

sara

, Dist

rict o

f Pet

alin

g an

d S

tate

of

Sel

ango

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ul E

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Two

(2) i

nter

med

iate

an

d o

ne (1

) cor

ner

adjo

inin

g un

its o

f 3-s

tore

y te

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shop

/ of

fice

with

ba

sem

ent c

ar p

ark/

Our

Gro

up’s

hea

d o

ffice

9 ye

ars

Free

hold

1,80

0/

5,93

81,

462,

019

Not

e (1

)11

Jul

y 2

007

4.Lo

t 299

, Jal

an S

egen

ting,

425

00 T

eluk

Pan

glim

a G

aran

g, S

elan

gor D

arul

Ehs

an/

Ger

an M

ukim

14

65, L

ot 2

99, L

ocal

ity o

f Bat

u 12

, Jal

an T

elok

-Ju

gra,

Muk

im o

f Tel

uk P

angl

ima

Gar

ang,

Dist

rict

of K

uala

Lan

gat a

nd S

tate

of S

elan

gor D

arul

Eh

san

A p

arce

l of a

gric

ultu

re

land

zon

ed fo

r ind

ustri

al

use/

Vac

ant

Not

appl

icab

leFr

eeho

ld11

5,43

2/N

ot

appl

icab

le

3,41

1,97

0

Not

e (4

)29

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il 201

3

5.Lo

t 490

7, J

alan

Seg

entin

g, B

atu

11, K

uala

La

ngat

, 425

00 T

eluk

Pan

glim

a G

aran

g, S

elan

gor

Dar

ul E

hsan

/ G

eran

Muk

im 1

622,

Lot

490

7,

Loca

lity

of J

alan

Tan

jong

Dua

bela

s, M

ukim

of

Telu

k Pa

nglim

a G

aran

g, D

istric

t of K

uala

Lan

gat

and

Sta

te o

f Sel

ango

r Dar

ul E

hsan

A p

arce

l of i

ndus

trial

land

/ St

orag

e an

d m

aint

enan

ce

area

for c

onst

ruct

ion

mat

eria

ls an

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quip

men

t

Not

appl

icab

leFr

eeho

ld27

5,34

0/N

ot

appl

icab

le

2,15

9,87

3

Not

e (3

)27

Jan

200

4

6.N

o. 6

3, J

alan

SS1

5/8A

, SS1

5, 4

7500

Sub

ang

Jaya

, Se

lang

or D

arul

Ehs

an/

Ger

an 2

9881

8, L

ot N

o.

8254

, Ban

dar

Sub

ang

Jaya

(for

mer

ly k

now

n as

HS

D 9

434,

PT

No.

407

3, M

ukim

of D

aman

sara

), D

istric

t of P

etal

ing

and

Sta

te o

f Sel

ango

r Dar

ul

Ehsa

n

An

inte

rmed

iate

4-s

tore

y te

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shop

/ of

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Re

nted

to tw

o (2

) diff

eren

t te

nant

s

32 y

ears

31 y

ears

1,75

5/

6,69

687

0,11

6

Not

e (2

)30

Jun

e 19

95

List

of P

rope

rties


No.

Loca

tion

Desc

riptio

n/ E

xist

ing

Use

App

oxim

ate

Age

of

Build

ing

Tenu

reLa

nd A

rea/

Bu

ilt-u

p A

rea

(sqf

)

NBV

as

at

31.1

2.20

17

(RM

)

Date

of a

cqui

sitio

n (if

no

reva

luat

ion

is do

ne)

7.N

o. 2

, Jal

an K

eray

ong

5, T

aman

Sri

Kera

yong

, Off

Jala

n Ka

par,

4220

0 Ka

par,

Sela

ngor

Dar

ul E

hsan

/ PM

374

2, L

ot N

o. 3

1071

, Sek

syen

1, L

ocal

ity o

f Ka

par,

Peka

n Ka

par,

(form

erly

kno

wn

as H

S(M

) 16

307,

Lot

No.

PT

2059

1, M

ukim

of K

apar

), D

istric

t of

Kla

ng a

nd S

tate

of S

elan

gor D

arul

Ehs

an

A c

orne

r sin

gle-

stor

ey

terra

ce h

ouse

/ V

acan

t15

yea

rsLe

aseh

old

99

yea

rs

(exp

iring

on

17.0

1.20

94)

3,02

5/

1,05

314

,934

31 J

uly

1996

8.Un

it N

o. 8

-1, T

ype

D2,

Und

er G

RN 1

2914

, Lot

83

, Sek

syen

008

8, B

and

ar a

nd D

istric

t of K

uala

Lu

mpu

r, St

ate

of W

ilaya

h Pe

rsek

utua

n.

Serv

ice

apar

tmen

t2

year

sFr

eeho

ld1,

215

1,54

8,56

6N

ote

(5)

28 M

ay 2

012

9.Un

it N

o. 9

-1, T

ype

D, U

nder

GRN

129

14, L

ot 8

3,

Seks

yen

0088

, Ban

dar

and

Dist

rict o

f Kua

la

Lum

pur,

Stat

e of

Wila

yah

Pers

ekut

uan.

Serv

ice

apar

tmen

t1

year

Free

hold

1,04

01,

535,

016

Not

e (5

)23

Jul

y 20

13

List

of P

rope

rties

(con

t’d)

NO

TE

1.

The

Fire

Dep

artm

ent h

ad c

arrie

d o

ut it

s ins

pect

ion

and

had

giv

en th

eir a

ppro

val o

n 14

Jul

y 20

15. O

ur c

onsu

ltant

, Arc

hite

ct M

usta

pha

Kam

al (“

MK”

) had

subm

itted

th

e am

end

ed d

raw

ing

to M

ajlis

Ban

dar

aya

Peta

ling

Jaya

(“M

BPJ”

) on

22 D

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ber 2

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Class of shares : Ordinary sharesVoting Rights : One vote per shareIssued share capital : 545,350,000 ordinary shares

Category No. ofHolders

% of Holders No. of Shares % of Shares

Less than 100 4 0.18 200 0.00100 – 1,000 182 8.22 115,500 0.021,001 – 10,000 1,059 47.81 6,811,100 1.2510,001 – 100,000 796 35.94 26,957,500 4.94100,001 to 27,267,499 (*) 172 7.76 203,265,700 37.2727,267,500 and Above (**) 2 0.09 308,200,000 56.52Total 2,215 100.00 545,350,000 100.00

* Less than 5% of Issued Holdings** 5% and Above of Issued Holdings

SUBSTANTIAL SHAREHOLDERS’ SHAREHOLDINGS(According to the Register of Substantial Shareholders as at 16 April 2018)

No. Name of Substantial Shareholder

Direct IndirectNo. of Shares % of issued

share capitalNo. of Shares % of issued

share capital1. Ikhmas Jaya Holdings Sdn Bhd 328,000,000 60.14 - -2. Dato Ang Cheng Siong - - 328,000,000 (a) 60.143. Datin Kun Haw Choy - - 328,000,000 (b) 60.144. Aura Perdana Sdn Bhd - - 328,000,000 (c) 60.145. Dato’ Ir. Dr. Khoo Ping Sen - - 328,000,000 (c) 60.14

DIRECTORS’ SHAREHOLDINGS (According to the Register of Directors’ Shareholdings as at 16 April 2018)

No. Name of DirectorsDirect Indirect

No. of Shares % of issued share capital

No. of Shares % of issued share capital

1. Dato’ Ang Cheng Siong 163,000 0.03 328,000,000 (a) 60.142. Dato’ Ir. Dr. Khoo Ping Sen - - 328,000,000 (c) 60.143. Ang Wei Zhen - - - -4. Dato’ Syed Ariff Fadzillah

bin Syed Awalluddin - - - -

5. Yuen Choong Lai 233,800 0.04 - -6. Dzulkifli David bin Abdullah 48,000 0.009 - -7. Tan Ming-Li - - - -

Analysis of Shareholdings


DIRECTORS’ SHAREHOLDINGS (cont’d)As at 16 April 2018 (cont’d)

(a) Deemed interested by virtue of his shareholdings in Ikhmas Jaya Holdings Sdn Bhd and Aura Perdana Sdn Bhd pursuant to Section 8 of the Companies Act, 2016 (the Act).

(b) Deemed interested by virtue of her shareholding in Aura Perdana Sdn Bhd pursuant to Section 8 of the Act.

(c) Deemed interested by virtue of its/his shareholdings in Ikhmas Jaya Holdings Sdn Bhd pursuant to Section 8 of the Act.

In the subsidiaries

By virtue of their substantial interests in the shares of the Company, Dato’ Ang Cheng Siong and Dato’ Ir. Dr. Khoo Ping Sen are also deemed interested in the shares of the subsidiaries to the extent the Company has an interest.

LIST OF 30 LARGEST SHAREHOLDERS AS AT 16 APRIL 2018

No. Name of Shareholders Holdings %1 IKHMAS JAYA HOLDINGS SDN BHD 212,200,000 38.912 AMSEC NOMINEES (TEMPATAN) SDN BHD

PLEDGED SECURITIES ACCOUNT - AMBANK (M) BERHAD FORIKHMAS JAYA HOLDINGS SDN BHD (SMART)

96,000,000 17.60

3 LEMBAGA TABUNG HAJI 24,543,600 4.504 CITIGROUP NOMINEES (TEMPATAN) SDN BHD

EXEMPT AN FOR AIA BHD 15,679,200 2.88

5 MITRA USAHAWAN CAPITAL SDN BHD 15,000,000 2.756 CITIGROUP NOMINEES (TEMPATAN) SDN BHD

EMPLOYEES PROVIDENT FUND BOARD 14,966,200 2.74

7 MALAYSIA NOMINEES (TEMPATAN) SENDIRIAN BERHADGREAT EASTERN LIFE ASSURANCE (MALAYSIA) BERHAD (LEEF)

14,220,700 2.61

8 ALLIANCEGROUP NOMINEES (TEMPATAN) SDN BHDPLEDGED SECURITIES ACCOUNT FORIKHMAS JAYA HOLDINGS SDN BHD (7004493)

13,800,000 2.53

9 LEE CHOON HOOI 12,000,000 2.2010 SIM KENG CHOR 8,110,000 1.4911 CIMB GROUP NOMINEES (TEMPATAN) SDN BHD

CIMB COMMERCE TRUSTEE BERHAD KENANGA GROWTH FUND 7,227,800 1.33

12 DATIN SRI WONG PUI YOONG 4,389,500 0.8013 KWONG KENG WAI 4,100,000 0.7514 MALAYSIA NOMINESS (TEMPATAN) SENDIRIAN BERHAD

GREAT EASTERN LIFE ASSURANCE (MALAYSIA) BERGAD (DG) 3,993,500 0.73

Analysis of Shareholdings(cont’d)


Analysis of Shareholdings(cont’d)

No. Name of Shareholders Holdings %15 MALAYSIA NOMINEES (TEMPATAN) SENDIRIAN BERHAD

GREAT EASTERN LIFE ASSURANCE (MALAYSIA) BERHAD (CLBF) 3,720,000 0.68

16 CITIGROUP NOMINEES (TEMPATAN) SDN BHDKUMPULAN WANG PERSARAAN (DIPERBADANKAN) (KNGA SML CAP FD)

3,524,500 0.65

17 CITIGROUP NOMINEES (TEMPATAN) SDN BHD EXEMPT AN FOR AIA PUBLIC TAKAFUL BHD

3,266,400 0.60

18 HLIB NOMINEES (TEMPATAN) SDN BHD PLEDGED SECURITIES ACCOUNT FOR ABU SAHID BIN MOHAMED (MG0172-003)

2,153,400 0.39

19 SEAH CHIN LENG 2,111,000 0.3920 CITIGROUP NOMINEES (TEMPATAN) SDN BHD EMPLOYEES

PROVIDENT FUND BOARD (PHEIM) 1,670,000 0.31

21 CIMB GROUP NOMINEES (TEMPATAN) SDN BHDEXEMPT AN FOR PETROLIAM NASIONAL BERHAD (AMFUNDS)

1,464,700 0.27

22 SOH BOK KWAN 1,463,900 0.2723 YAP YOON FATT 1,393,000 0.2624 MALAYSIA NOMINESS (TEMPATAN) SENDIRIAN BERHAD

GREAT EASTERN TAKAFUL BERHAD (MEKAR) 1,339,000 0.25

25 CITIGROUP NOMINEES (TEMPATAN) SDN BHDKENANGA ISLAMIC INVESTORS BHD FOR LEMBAGA TABUNG HAJI

1,161,900 0.21

26 LIOW PENG KHEAN 1,070,000 0.2027 RAJA MOHD NAZRI BIN RAJA ABD MALEK 1,000,000 0.1828 TAN BENG GUAT 1,000,000 0.1829 YAYASAN GURU TUN HUSSEIN ONN 1,000,000 0.1830 TAN KA LIAN 983,000 0.18


Notice of Annual General Meeting

NOTICE IS HEREBY GIVEN THAT the Fifth (5th) Annual General Meeting of Ikhmas Jaya Group Berhad (“IJGB” or “the Company”) will be held at Zamrud 2 Room, The Saujana Hotel, Jalan Lapangan Terbang SAAS, 40150 Selangor Darul Ehsan on Wednesday, 27 June 2018 at 10.00 a.m. for the following purposes:

AGENDA

As Ordinary Business

1. To receive the Audited Financial Statements for the financial year ended 31 December 2017 together with the Reports of the Directors and Auditors thereon.

2. To approve the payment of Directors’ Fee of RM174,000 for the financial year ending 31 December 2018.

3. To approve the payment of Directors’ Benefits for an amount up to RM32,000 from 28 June 2018 up to the next AGM of the Company.

4. To re-elect the following Directors who retire as Directors of the Company pursuant to the Article 122 of the Company’s Articles of Association

(i) Dato’ Ang Cheng Siong(ii) Dato’ Ir. Dr. Khoo Ping Sen(iii) Tan Ming-Li

5. To re-appoint Messrs KPMG PLT as Auditors of the Company for the ensuing year and to authorise the Directors to fix their remuneration:

6. To consider and if thought fit, to pass the following Ordinary Resolution in accordance with Sections 75 and 76 of the Companies Act, 2016:

Authority to Allot and Issue Shares pursuant to Sections 75 and 76 of the Companies Act, 2016

“THAT subject to Sections 75 and 76 of the Companies Act, 2016 and the approvals of the relevant governmental/regulatory authorities, the Directors be and are hereby empowered to issue and allot shares in the Company, at any time to such persons and upon such terms and conditions and for such purposes as the Directors may, in their absolute discretion, deem fit, provided that the aggregate number of shares issued pursuant to this resolution does not exceed ten per centum of the number of issued shares of the Company for the time being and the Directors be and are also empowered to obtain the approval for the listing of and quotation for the additional shares so issued on Bursa Malaysia Securities Berhad; AND THAT such authority shall commence immediately upon the passing of this resolution and continue to be in force until the conclusion of the next Annual General Meeting of the Company in accordance with Section 76 of the Companies Act, 2016.”

7. To transact any other matter for which due notice shall have been given in accordance with the Company’s Articles of Association and the Companies Act, 2016.

Please referto Note A

Resolution 1

Resolution 2

Resolution 3Resolution 4Resolution 5

Resolution 6

Resolution 7


By Order of the Board

CYNTHIA GLORIA LOUIS (MAICSA 7008306)CHEW MEI LING (MAICSA 7019175)Company Secretaries

Petaling Jaya

30 April 2018

NOTES:

(a) Only members whose names appear in the Record of Depositors as at 20 June 2018 will be entitled to attend and vote at the meeting.

(b) A member entitled to attend and vote at this meeting is entitled to appoint at least one proxy to attend and vote in his stead. There shall be no restriction as to the qualification of the proxy. Where a member appoints more than one proxy, the appointment shall be invalid unless he specifies the proportion of his shareholdings to be represented by each proxy.

(c) Where a member of the Company is an Exempt Authorised Nominee which holds ordinary shares in the Company for multiple beneficial owners in one securities account (“omnibus account”), there is no limit to the number of proxies which the Exempt Authorised Nominee may appoint in respect of each omnibus account it holds.

(d) The instrument appointing a proxy shall be in writing under the hand of the appointer or of his attorney duly authorised in writing or, if the appointer is a corporation, under its common seal, or the hand of its attorney duly authorised.

(e) The instrument appointing a proxy must be deposited at the office of the Company’s Share Registrar, Symphony Share Registrars Sdn. Bhd., Level 6, Symphony House, Pusat Dagangan Dana 1, Jalan PJU 1A/46, 47301 Petaling Jaya, Selangor Darul Ehsan not less than forty-eight hours before the time set for holding the meeting or any adjournment thereof.

Explanatory Notes

A. This Agenda item is meant for discussion only, as the provision of Section 340(1)(a) of the Companies Act, 2016 does not require a formal approval of the shareholders for the Audited Financial Statements. Hence, this Agenda item is not put forward for voting.

B. Resolutions 1 and 2 – Directors’ Fee and Benefits Payable to Non-Executive Directors

Pursuant to Section 230(1) of the Companies Act 2016, fees and benefits (“Remuneration”) payable to the Directors of the Company will have to be approved by the shareholders at a general meeting. The Company is requesting shareholders’ approval for the payment of Remuneration to Non-Executive Directors for the period commencing from 1 January 2018 up until the conclusion of the next Annual General Meeting of the Company to be held in 2019 in accordance with the remuneration structure set out below.

Notice of Annual General Meeting(cont’d)


Notice of Annual General Meeting(cont’d)

Remuneration Structure:Annual Fees

(RM)Annual MeetingAllowance (RM)

Chairman of the Board 48,000 8,000Non-Executive Director of the Board 40,000 8,000Chairman of Audit Committee 46,000 8,000Member of Audit Committee 40,000 8,000

C. Resolution 7 - Authority to Allot and Issue Shares

The proposed Resolution 7, if passed, will empower the Directors of the Company to issue and allot shares in the Company up to an aggregate amount not exceeding ten per centum of the issued share of the Company for the time being for such purposes as they consider would be in the interest of the Company. This authority unless revoked or varied at a general meeting will expire at the next annual general meeting. This renewed mandate will provide flexibility to the Company for the allotment of shares for the purpose of funding working capital, future expansion, investment and/or acquisition(s) as deemed necessary.

As at the date of this notice and pursuant to the mandate granted to the Directors at the 4th Annual General Meeting held on 23 June 2017, the Company had on 22 August 2017 and 15 February 2018 issued and allotted 10,350,000 and 15,000,000 ordinary shares respectively, raising a total gross proceeds of RM15,795,000.00. Details of the utilisation of proceeds are set out in the Additional Compliance Information section of this Annual Report.

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IKHMAS JAYAGROUP BERHAD

1072872-D

CDS ACCOUNT NO.NO. OF SHARES HELD

I/We____________________________________________________________________________________________________________NRIC No. (New)_______________________________(Old)_____________________________/Company No. __________________of______________________________________________________________________________ Tel No.__________________________ being a member / members of IKHMAS JAYA GROUP BERHAD (1072872-D) hereby appoint the following person(s):-

Name Address NRIC/ Passport No. Proportion ofShareholdings (%)

*And/or failing him/her (delete as appropriate)

or failing him/her/them, THE CHAIRMAN OF THE MEETING, as my/our proxy/proxies, to vote for me/us on my/our behalf at the Fifth Annual General Meeting of the Company to be held at Zamrud 2 Room, The Saujana Hotel, Jalan Lapangan Terbang SAAS, 40150 Selangor Darul Ehsan on Wednesday, 27 June 2018 at 10.00 a.m. and at any adjournment thereof in the manner as indicated below in respect of the following Resolutions:-

RESOLUTIONS FOR AGAINSTResolution 1 Approval of Directors’ Fees for the financial year ending 31 December

2018.Resolution 2 Approval of Directors’ benefits from 28 June 2018 up to the next AGM of

the Company.Resolution 3 Re-election of Dato’ Ang Cheng Siong as a Director.Resolution 4 Re-election of Dato’ Ir Dr Khoo Ping Sen as a Director.Resolution 5 Re-election of Tan Ming-Li as a Director.Resolution 6 Re-appointment of Messrs KPMG PLT as Auditors and to authorise the

Directors to fix their remuneration.Resolution 7 Authority to issue shares pursuant to Sections 75 and 76 of the Companies

Act, 2016.

Please indicate with an “X” in the appropriate space how you wish your votes to be cast. If you do not indicate how you wish your proxy to vote on any

Resolution, the proxy will vote or abstain from voting at his/her/their discretion.

Date:___________________________ __________________________________________

Signature of Shareholder(s)

Notes:(a) Only members whose names appear in the Record of Depositors as at 20 June 2018 will be entitled to attend and vote at the

meeting.(b) A member entitled to attend and vote at this meeting is entitled to appoint at least one proxy to attend and vote in his

stead. There shall be no restriction as to the qualification of the proxy. Where a member appoints more than one proxy, the appointment shall be invalid unless he specifies the proportion of his shareholdings to be represented by each proxy.

(c) Where a member of the Company is an Exempt Authorised Nominee which holds ordinary shares in the Company for multiple beneficial owners in one securities account (“omnibus account”), there is no limit to the number of proxies which the Exempt Authorised Nominee may appoint in respect of each omnibus account it holds.

(d) The instrument appointing a proxy shall be in writing under the hand of the appointer or of his attorney duly authorised in writing or, if the appointer is a corporation, under its common seal, or the hand of its attorney duly authorised.

(e) The instrument appointing a proxy must be deposited at the office of the Company’s Share Registrar, Symphony Share Registrars Sdn. Bhd., Level 6, Symphony House, Pusat Dagangan Dana 1, Jalan PJU 1A/46, 47301 Petaling Jaya, Selangor Darul Ehsan not less than forty-eight hours before the time set for holding the meeting or any adjournment thereof.

PERSONAL DATA NOTICEBy submitting the proxy form, the shareholder or proxy accepts and agrees to the collection,use and disclosure of their personal data by the Company (or its agents or service providers) for the purposes of preparation and compilation of documents relating to the AGM (including any adjournment thereof).

FORM OF PROXY

The Share Registrar SYMPHONY SHARE REGISTRARS SDN. BHD.

Level 6, Symphony HousePusat Dagangan Dana 1

Jalan PJU 1A/4647301 Petaling JayaSelangor Darul Ehsan

AFFIXSTAMP

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