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ANNUALREPORT

2020REALISING DREAMSFOR A BRIGHTER FUTURE

RationaleThe illustration depicts the devotion of Hua Yang in realising the dreams of fellow Malaysians for the betterment of a brighter future. Hua Yang focuses on positive value creation by implementing digital transformation and resilience strategy that create long term efficiency. The blocks that spell D.R.E.A.M.S embodied the core values of Hua Yang that have always been the foundation in developing a future proof plan that improves the quality of lives through affordable homes.

Contents

1

4

2

5 6

3002 About Us

002 Our Vision

002 Our Mission

003 Our Core Values

004 Corporate Information

006 Corporate Structure

024 Chairman’s Statement

025 Management Discussion and Analysis Report

037 Sustainability Statement

047 Corporate Governance Overview Statement

058 Audit Committee Report

061 Nomination Committee Report

063 Additional Compliance Information

064 Statement on Risk Management and Internal Control

007 5 Year Group Financial Highlights

008 Our Journey

010 Our Presence Across Malaysia

012 Highlights of 2019 - 2020

014 Our Newsboard

068 Directors’ Report

072 Statements of Financial Position

074 Statements of Profit or Loss and Other Comprehensive Income

075 Consolidated Statement of Changes in Equity

076 Statement of Changes in Equity

077 Statements of Cash Flows

081 Notes to the Financial Statements

149 Statement by Directors

149 Statutory Declaration

150 Independent Auditors’ Report

155 List of Group’s Properties

159 Analysis of Shareholdings

163 Notice of Annual General Meeting

Proxy Form - Enclosed

016 Board of Directors

018 Profile of Directors

021 Other Information of Directors

022 Profile of Senior Management

AboutHua Yang

PerformanceReview

CorporateHighlights

FinancialStatement

AdditionalInformation

GroupLeadership

Hua Yang Berhad - Annual Report 2020 001

About UsAbout Hua Yang

Provide affordable housing for a developing nation

• Empower Malaysians to achieve their dream homes• Protect and enhance the interest of our stakeholders• Ensure quality in our products and performance

Our Vision

Our Mission

Hua Yang Berhad has come a long way from its first eight four-storey shops at Jalan Gopeng, Ipoh. Today, the Group consistently delivers quality, affordable, integrated townships, high-rise residential projects and commercial lots across the nation.

With over 20,549 properties worth RM4.8 billion completed across the nation, the Group has honed and refined its skills in identifying areas within established and thriving districts to successfully introduce its concept of affordable lifestyle accommodation. Hua Yang currently has developments in Klang Valley, Johor, Perak, Negeri Sembilan, and Penang and is recognised as one of nation’s leading property developers in the affordable home segment. This is a testament to the Group’s dedicated workforce and the close rapport Hua Yang has built with its customers.

Through this journey, the Group’s vision has remained the same – to be steadfast in its commitment to make dreams of affordable home ownership a reality. Looking ahead, the Group aims to stay ahead of the curve by embracing a digitalised transformation, migrating its operations online, and allowing Hua Yang to increase productivity and efficiency.

Regardless of the future ahead, the Group will continue on a steady path, to create value and drive excellence in all it does.

Hua Yang Berhad - Annual Report 2020002

Our Core ValuesAbout Hua Yang

The smallest details get our full attention as we develop homes that

owners can be proud of

Hua Yang aspiresto offer quality and

reliable homes

Performing efficiently isnot a goal nor mission,

it is our culture

Providing Malaysians withaffordable homes is our

pioneering vision

We strive to do our best inbuilding homes that meetthe needs of Malaysians

Sustainability is keyin building a home

for generations

DEPENDABLE RELIABLE EFFICIENT

AFFORDABLE MOTIVATED SUSTAINABLE


____________________________________________________________________Board of Directors

Tan Sri Dato’ Seri Dr. Ting Chew PehChairman / Independent Non-Executive Director

Ho Wen Yan Chief Executive Officer / Executive Director

Dato’ Tan Bing Hua Senior Independent Non-Executive Director

Chew Po Sim Non-Independent Non-Executive Director

Chew Hoe Soon Non-Independent Non-Executive Director

Y.A.M. Tengku Dato’ Rahimah Binti Al-Marhum Sultan Mahmud Independent Non-Executive Director

Ho Wen Fan Alternate Director to Chew Po Sim

____________________________________________________________________Audit Committee

Chairman Dato’ Tan Bing HuaSenior Independent Non-Executive Director

Members Tan Sri Dato’ Seri Dr. Ting Chew Peh Independent Non-Executive Director


____________________________________________________________________Remuneration Committee

Chairman Dato’ Tan Bing HuaSenior Independent Non-Executive Director

Members Tan Sri Dato’ Seri Dr. Ting Chew Peh Independent Non-Executive Director


Y.A.M. Tengku Dato’ Rahimah Binti Al-Marhum Sultan Mahmud Independent Non-Executive Director

Corporate InformationAbout Hua Yang

____________________________________________________________________Nomination Committee

Chairman Tan Sri Dato’ Seri Dr. Ting Chew PehIndependent Non-Executive Director

Members Dato’ Tan Bing Hua Senior Independent Non-Executive Director


____________________________________________________________________Company Secretaries

Leong Oi Wah (SSM PC No.: 201908000717) (MAICSA 7023802)Tan Hwai Lun (SSM PC No.: 202008001765) (MIA 24085)Lam Cho Wai (SSM PC No.: 202008001864) (MIA 37324)

____________________________________________________________________Registered Office

C-21, Jalan Medan Selayang 1,Medan Selayang, 68100 Batu Caves,Selangor Darul Ehsan.Tel : +603-6188 4488 Fax : +603-6188 4487 E-mail : [email protected]

____________________________________________________________________Office In Malaysia

Head OfficeC-21, Jalan Medan Selayang 1,Medan Selayang, 68100 Batu Caves,Selangor Darul Ehsan.Tel : +603-6188 4488 Fax : +603-6188 4487 E-mail : [email protected] Website : www.huayang.com.my

Perak Branch 123A, Jalan Raja Permaisuri Bainun (JalanKampar), 30250 Ipoh, Perak Darul Ridzuan .Tel : +605-254 3812 Fax : +605-254 2625 E-mail : [email protected]

Johor Branch 53 & 55, Jalan Besi Taman Sri Putri,81300 Skudai, Johor Darul Takzim.Tel : +607-559 1388 Fax : +607-556 0388 E-mail : [email protected]

Penang Branch Unit 3-07 & 3-08, Medan Perniagaan Pauh Jaya Jalan Baru,13700 Perai, Pulau Pinang.Tel : +604-386 6138 Fax : +604-386 6137 E-mail : [email protected]


____________________________________________________________________Auditors

KPMG PLT (LLP0010081-LCA & AF 0758) Chartered Accountants Level 10, KPMG Tower 8, First Avenue, Bandar Utama 47800 Petaling Jaya Selangor Darul Ehsan

____________________________________________________________________Principal Bankers

Al Rajhi Banking & Investment Corporation (Malaysia) BerhadAmBank Islamic Berhad Bangkok Bank BerhadOCBC Bank (Malaysia) BerhadPublic Bank BerhadRHB Bank Berhad

____________________________________________________________________Share Registrar

Boardroom Corporate Services Sdn Bhd11th Floor, Menara Symphony,No. 5, Jalan Prof. Khoo Kay Kim,Seksyen 13, 46200 Petaling Jaya,Selangor Darul Ehsan Tel : +603-7890 4700 Fax : +603-7890 4670

Corporate Information (cont'd)About Hua Yang

41Years in the

Indus

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5States

in

Malay

sia

20,54

9

Prop

ertie

s

RM 4.

8

Billio

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____________________________________________________________________Stock Exchange Listing

Main Market of Bursa Malaysia Securities Berhad Listed on : 29th November 2002 Stock name : HuaYang Stock code : 5062 Sector : Properties

____________________________________________________________________Shariah Compliance Listing

Shariah Advisory Council of the Securities Commission Malaysia listing on 29th May 2020


Corporate Structure

Hua Yang Berhad

100%Prisma PelangiSdn Bhd

100%Celestial Solar FarmSdn Bhd

100%Daya NiagaSdn Bhd

100%G Land DevelopmentSdn Bhd

100%Grandeur ParkSdn Bhd

100%Grand View RealtySdn Bhd

100%Yoon LianRealty Sendirian Berhad

100%Sunny ModeSdn Bhd

100%Johanjana CorporationSdn Bhd

70%Kajang HeightsDevelopmentSdn Bhd

100%Prop ParkSdn Bhd

100%Bison HoldingsSdn Bhd

100%Huayang VenturesSdn Bhd

100%Pembinaan Hua YangSdn Bhd

100%Tinggian DevelopmentSendirian Berhad

100%Agro-ModIndustriesSdn Bhd

*30.95%Magna PrimaBerhad* Investment in associate

About Hua Yang


5 Year Group Financial HighlightsCorporate Highlights

^ Restatedfollowingthefirst-timeadoptionofMFRSframework

# Thecomparativefiguresforearningspersharehavebeenrestatedtoreflecttheadjustmentarisingfromthebonusissuecompletedduringthefinancialyear2017

Financial YearEnded 31 March

Key Data of Operating Results:

Revenue

(Loss) / Profit Before Tax

(Loss) / Profit After Tax

(Loss) / Profit Attributable To EquityHolders of the Company

Key Data of Financial Position:

Total Assets

Total Borrowings

Equity Attributable to Owners of the Company

Total Equity

Financial Indicators:

Return on Equity (%)

Return on Total Assets (%)

(Loss) / Earnings Per Share (sen)

Gross Dividend Per Share (sen)

Net Dividend Per Share (sen)

Net Assets Per Share (RM)

Net Gearing Ratio

2016RM’ 000

575,740

144,729

110,075

110,075

952,852

228,745

541,625

541,625

20%

12%

31.27

5.00

5.00

2.05

0.34

2017RM’ 000

385,358

80,622

60,929

60,929

1,050,348

278,385

595,397

595,397

10%

6%

17.31

4.00

4.00

1.69

0.39

2018RM’ 000

227,357

8,625

2,162

2,162

1,207,180

441,820

590,965

590,965

0%

0%

0.61

-

-

1.68

0.72

2019RM’ 000

272,520

(13,812)

(22,470)

(22,230)

1,196,123

403,082

562,565

585,143

-4%

-2%

(6.32)

-

-

1.60

0.65

2020RM’ 000

279,614

(64,275)

(73,214)

(73,133)

1,069,327

319,524

488,409

510,906

-14%

-7%

(20.78)

-

-

1.39

0.55

A

B

C

#

^


Our JourneyCorporate Highlights

1978

1993

2007

1991

2002

Hua Yang Berhad was incorporated on 28 December 1978 under a private limited company, Heng Po Sdn Bhd. First project in Ipoh comprising 8 units of 4-storey shops at Jalan Gopeng, Ipoh. The project was completed in September 1981.

The Group expanded to the Southern region with an acquistion of 477 acres of freehold land in Johor Bahru for a township development, launched in March 2001.

Acquisition of 17.89 acres of land in Sungai Besi to develop One South, a mixed development flagship project.

The 1st phase of One South was launched at the start of 2010.

Acquisition of 838 acres of land in Bandar Universiti Seri Iskandar, Hua Yang’s first integrated township in Perak consisting of residential and commercial units that was launched in year 2001.

Hua Yang was listed on Bursa Malaysia Main Board on 29 November.

*Image for illustrationn only

Ipoh

Johor Bahru

Selangor

Ipoh


Our Journey (cont'd)Corporate Highlights

2008

2015

2019

2010

2018

In October, the Group launched its first high-rise development in Klang Valley, Symphony Heights Serviced Apartments, which was successfully completed in November 2012.

The Group ventured into a new market by acquiring 4.9 acres of land in Bukit Mertajam, Penang. Hua Yang further strengthened its presence in Penang via the acquisitions of 9.5 acres of land in Taman Juru and 8.59 acres of land in Seberang Prai.

The Group launched its new project in Bandar Universiti Seri Iskandar, Perak. Sakura comprises of 410 single-storey terraced houses spread across 25-acres of land is targeted to complete in Q3, 2021.

At the beginning of 2010, the Group launched Senawang Link, an integrated commercial and industrial development project in Seremban.

The Group launched its first project in Seberang Perai, Penang. Meritus Residensi, a 44-storey tower with 480 units of serviced apartments and 15 retail shops was completed in January, 2020.

Selangor

Penang

Perak

Negeri Sembilan

Penang


Our Presence Across MalaysiaCorporate Highlights

Making waves in Klang Valley is Astetica Residences, the latest lifestyle serviced apartments located in the heart of Seri Kembangan. 34 storeys and 35 storeys in height, these towering residential masterpieces offer exquisite homes with comprehensive sky facilities and a range of practical layouts and built-up sizes suitable for large families, newly-weds and young adults alike.

Launched in 2017, Freesia measures 22 ft x 60 ft with a built-up size of 880 sqft. Comes with 3 bedrooms and 2 bathrooms and completed with high ceilings for added comfort. Built with practicality in mind, Freesia exudes an architecture concept with a modern and contemporary facade. Perfect for a small family, the homes allow for two cars and corner units come with a spacious garden area.

Situated within the dynamic and fast-growing 777-acre township of BUSI, Freesia is nestled among a variety of amenities, including a Tesco Superstore, a KFC drive-thru restaurant, major universities (UiTM and Universiti Teknologi Petronas), police station, wet market, schools, banks and bus station terminals. The township also has a good selection of national primary and secondary schools, Islamic schools and kindergartens. Also located in the vicinity is Kolej Vokasional Seri Iskandar, Sekolah Menengah Teknik Seri Iskandar and Institut Latihan Kemas Seri Iskandar. Healthcare facilities include clinics and a well-equipped medical centre.

KLANG VALLEY-Seri Kembangan

PERAK-Bandar Universiti Seri Iskandar


Our Presence Across Malaysia (cont'd)Corporate Highlights

Launched in October 2017, OVAL @ Elemence at Taman Denai Alam comprises 64 cluster houses and 2 link bungalows. At the 73-acre township, Elemence is richly designed with tree-lined avenues, recreational gardens and green pockets.

With access and exit to at least six major routes and highways, Elemence is excellently connected to surrounding areas, whereby one can easily reach major towns like Pasir Gudang, the Masai town centre, and Johor Bahru city centre.

Launched in January 2017, at a 44 storeys high, Meritus Residensi is a mixed development that offers a dual skyline view of Penang and Butterworth. It is a mixed development located strategically near matured commercial areas such as Chai Leng Park and Perai Industrial Estate.

Meritus Residensi is 480 units of services apartment and 15 units rental spread across of land 4.32 acres offers thriving hotspot for rising entrepreneurs. Every unit comes with 2 covered parking bays while selected units enjoy a private garden and up to 4 parking bays. The short distance between mainland and island is one of the enticing features of living here.

PENANG-Seberang Perai

JOHOR BAHRU-Taman Denai Alam


Highlights of 2019 - 2020Corporate Highlights

2nd March TPH Link Ph 9 - Parcel 2 Sales Launch cum CNY Event

1st April HYB 40th Anniversary Own & Win Bonanza Official Launch

18th - 21st April HYB Teambuilding

26th - 28th AprilMapex @ Midvalley Kuala Lumpur

MAR

2019JUN

2019

APR 2019

JUL 2019

AUG 2019SEP 2019

29th June Riang Ria Raya @ Elemence Sales Gallery

11st July Opening of 2nd Kluang Station outlet @ BU11 Oasis Business Central

19th JulyHYB staff visitation to iProperty office

28th August Hua Yang Berhad 40th Annual General Meeting

31st August ‘Kendurian Merdeka’ event

September ‘Mid-Autumn’ event

September ‘Malaysia Day’ event

24th - 25th September Group 1 - English For Business Writing Speaking & Presentation

30th September - 1st OctoberEQ For Middle Management Training


Highlights of 2019 - 2020 (cont'd)Corporate Highlights

NOV 2019JAN 2020

FEB 2020

DEC 2019

OCT 2019

October“Deepavali Celebration” event

15th - 16th OctoberGroup 1 - Coaching & Counselling for Better Performance Training

29th - 30th OctoberGroup 2 - Coaching & Counselling for Better Performance Training

26th OctoberSoft Launch Sakura Phase 1

6th November HYB Staff Drone Training

16th November Proton X70 Test Drive Event

28th DecemberHYB 40th Anniversary Grand Lucky Draw FB Live Event

29th DecemberAston Acacia Blood Donation

15th -16th January Group 2 - English for Business Writing, Speaking & Presentation

31st JanuaryAston Acacia Launching & Chinese New Year Event

22nd FebruaryHua Yang’s Own & Win Bonanza Prize Giving Ceremony


Our NewsboardCorporate Highlights


Our Newsboard (cont'd)Corporate Highlights


Board of DirectorsGroup Leadership

Ho Wen YanChief Executive Officer / Executive Director

Tan Sri Dato’ Seri Dr. Ting Chew PehChairman / Independent Non-Executive Director

- Chairman of Nomination Committee - Member of Audit Committee and

Remuneration Committee

Chew Hoe SoonNon-Independent Non-Executive Director

- Member of Audit Committee, Remuneration Committee and Nomination Committee


Board of Directors (cont'd)Group Leadership

Y.A.M. Tengku Dato’ Rahimah Binti Al-MarhumSultan MahmudIndependent Non-Executive Director

- Member of Remuneration Committee

Dato’ Tan Bing HuaSenior Independent Non-Executive Director

- Chairman of Audit Committee and Remuneration Committee

- Member of Nomination Committee

Chew Po SimNon-Independent Non-Executive Director

Ho Wen FanAlternate Director


Profile of DirectorsGroup Leadership

Tan Sri Dato’ Seri Dr. Ting Chew PehAged 77, Malaysian, Male

Chairman / Independent Non-Executive Director - Chairman of Nomination Committee - Member of Audit Committee and Remuneration Committee

Tan Sri Dato’ Seri Dr. Ting Chew Peh was appointed to the Board of Hua Yang Berhad (“Hua Yang”) on 1 June 2000 and was made the Chairman of the Board. He has a Bachelor of Arts Degree from University of Malaya and a Master of Science Degree from University of London. He also holds a Doctorate in Philosophy, which he obtained from University of Warwick.

Tan Sri Dato’ Seri Dr. Ting started his career as a lecturer in the Faculty of Social Sciences and Humanities at Universiti Kebangsaan Malaysia in 1974 until 1980. He was then appointed as an Associate Professor at the Faculty until 1987.

In 1987, Tan Sri Dato’ Seri Dr. Ting ventured into politics with his election as a Member of Parliament for the Gopeng constituency, which he held until the 2008 general elections. He previously served as a Parliamentary Secretary of the Ministry of Health (1988 – 1989), Deputy Minister in the Prime Minister’s Department (1989 – 1990), Minister of Housing and Local Government (1990 – 1999) and Secretary-General of Malaysian Chinese Association (MCA) (1990 – 2005). He served as Independent Director on the Board of Puncak Niaga Holdings Berhad from July 2000 and retired in May 2018.

He currently sits on the Boards of Johan Holdings Berhad, Sycal Ventures Berhad and UTAR Education Foundation. He also serves as a Director of several private companies.


Profile of Directors (cont'd)Group Leadership

Chew Hoe SoonAged 68, Malaysian, Male

Non-Independent Non-Executive Director- Member of Audit Committee, Remuneration Committee and Nomination

Committee

Ho Wen YanAged 46, Malaysian, Male

Chief Executive Officer

Mr. Chew Hoe Soon was appointed to the Board of Hua Yang on 2 June 2003. He holds a Bachelor of Economics (Accounting) Degree (Honours) and a Diploma in Accounting, both from University Malaya. He is a member of the Malaysian Institute of Accountants (MIA).

Mr. Chew Hoe Soon has extensive working experiences in the field of finance and sales & marketing of consumer products, having held the position of Managing Director in a large multinational company for a number of years.

Mr. Ho Wen Yan was appointed to the Board of Hua Yang on 1 June 2007. He received his architectural training in the United Kingdom at the University of Bath and the Architectural Association. He also holds a Master of Science (Construction Economics and Management) Degree from University College London.

He joined Hua Yang on 20 October 2003 as a Project Coordinator at its Johor Branch. He has been an Executive Director of the Group since 1 June 2007 and was appointed Chief Executive Officer on 20 August 2010.

He was appointed to the Board of Magna Prima Berhad on 13 February 2017 as Executive Director. On 13 February 2020, he was redesignated from Executive Director to Non-Independent Non-Executive Director of Magna Prima Berhad.

Dato’ Tan Bing HuaAged 76, Malaysian, Male

Senior Independent Non-Executive Director- Chairman of Audit Committee and Remuneration Committee - Member of Nomination Committee

Dato’ Tan Bing Hua was appointed to the Board of Hua Yang on 16 January 2006. He graduated from University of Malaya with a B.A (Hons) degree in year 1967. In 1982, he decided to further his studies in law, graduating with L.L.B. (Honours) degree from the University of London in 1985 and a Barrister-at-Law of the Lincoln’s Inn, England in 1986.

Dato’ Tan Bing Hua started his career in public service in Bank Negara Malaysia upon his graduation in 1967 where he served for a period of 15 years until 1982. He then practised law in the firm of Amin-Tan & Co in Kuala Lumpur from 1987 to 2012 upon his call to the Malayan Bar in 1987. Thereafter, he continued to practice law in the firm of Choong & Partners from 2013 to 2014.

He served as Independent Director on the Board of Far East Holdings Berhad from July 2012 to March 2020.


Profile of Directors (cont'd)Group Leadership

Ho Wen FanAged 42, Singaporean, Male

Alternate Director

Mr. Ho Wen Fan was appointed to the Board of Hua Yang on 1 September 2017 as an Alternate Director to Madam Chew Po Sim. He holds a Bachelor of Science (Economics) degree from University of Bristol, United Kingdom and is a certified Financial Risk Manager.

Mr. Ho Wen Fan started his career with OCBC Bank Singapore, spending 3 years in the Risk Management Division. He then joined the Deutsche Bank Group in Singapore and was subsequently posted overseas, spending 5 years in their Japan office.

He is currently managing the investment portfolio of Heng Holdings Sdn. Berhad, a substantial shareholder of the Company.

Y.A.M. Tengku Dato’ Rahimah Binti Al-Marhum Sultan MahmudAged 54, Malaysian, Female

Independent Non-Executive Director- Member of Remuneration Committee

Y.A.M. Tengku Dato’ Rahimah was appointed to the Board of Hua Yang on 22 May 2018. Y.A.M. Tengku Dato’ Rahimah holds a Bachelor of Science degree in Economics and Accountancy from the City of London University, England. She is a member of the Malaysian Institute of Management.

Y.A.M. Tengku Dato Rahimah was appointed the Chairman of Loh and Loh Corporation Berhad (“LLCB”) on 19 September 2008 until 2012. From 2012 until 2017, she co-owned shares in LLCB and continued to hold the position of the Chairman of LLCB and Director in Loh and Loh Construction Sdn Bhd until November 2017. LLCB covered both spectrums of engineering namely civil & structural and mechanical & electrical and specializes in building dams, water and waste water treatment plants and also ventured into property development sector.

She served as a Non-Independent Non-Executive Director on the Board of Puncak Niaga Holdings Berhad from August 2006 to October 2019.

Chew Po SimAged 77, Malaysian, Female

Non-Independent Non-Executive Director

Mdm. Chew Po Sim was appointed to the Board of Hua Yang on 27 January 2003. She holds a teaching certificate and on her early retirement from the teaching profession, she ventured into a horticulture trading business for more than 20 years.

Mdm. Chew Po Sim is also currently overseeing her investment holding company, namely Heng Holdings Sdn. Berhad, a substantial shareholder of the Company.


NAME OF DIRECTOR

1. Tan Sri Dato’ Seri Dr. Ting Chew Peh

2. Ho Wen Yan

3. Dato’ Tan Bing Hua

4. Chew Po Sim

5. Chew Hoe Soon

6. Y.A.M. Tengku Dato’ Rahimah Binti Al-Marhum Sultan Mahmud

ATTENDANCE

4 / 4

4 / 4

4 / 4

3 / 4

4 / 4

3 / 4

Other Information of DirectorsGroup Leadership

FAMILY RELATIONSHIPNone of the Directors have any relationship with each other and major shareholders of Hua Yang except that Ho Wen Yan and Ho Wen Fan are the sons of Chew Po Sim and the nephew of Chew Hoe Soon. Chew Po Sim and Chew Hoe Soon are siblings.

Chew Po Sim is the mother of Ho Min Yi, Ho Wen Yan, Ho Wen Han and Ho Wen Fan, the major shareholders of Hua Yang.

CONFLICT OF INTERESTNone of the Directors have any conflict of interest with the Company.

LIST OF CONVICTIONS OF OFFENCENone of the Directors have been convicted for any offences (other than traffic offences), public sanction or received any penalty imposed by the relevant regulatory bodies inside or outside Malaysia within the past five (5) years.

ATTENDANCE OF THE BOARDAll the Directors have complied with the minimum 50% attendance in respect of Board Meeting as required in the Listing Requirements. There were four (4) Board Meetings held during the financial year ended 31 March 2020 and the attendance of each Director is as follows:


Profile of Senior ManagementGroup Leadership

Ho Wen YanChief Executive Officer

Aged 46, Malaysian, Male

Yeoh Swee HengAssistant General Manager


Tan Hwai LunChief Financial Officer


Ng Kok HongGeneral Manager


Wong Kam MoiAssistant General Manager

Aged 57, Malaysian, Female

Mr. Ho’s profile is set out on page 19 of this Annual Report.

Mr. Yeoh joined Hua Yang as Project Manager on 31 March 2008 and was promoted to Assistant General Manager in April 2015. He graduated with a Bachelor in Science (Hons) in Building Construction Management from Sheffield Hallam University, United Kingdom.

He has extensive experience in construction and property development. He oversees the property development operation and land search of the Group.

Mr. Tan joined Hua Yang as Financial Controller in July 2011 and was promoted to Chief Financial Officer in May 2017. He is a member of the Malaysia Institute of Accountant ("MIA") and CPA Australia.

He has more than 13 years of financial management working experience. He oversees the finance strategy and planning of the Hua Yang Group.

Mr. Ng joined Hua Yang in March 2011 as Ipoh Branch Manager. He graduated with a Degree in Civil Engineering (Hons.) from University of Malaysia, Sabah in 2000. He was promoted to General Manager in April 2018.

He has more than 18 years of working experience in planning, directing, designing, and coordinating various property development projects. He is currently overseeing the operations of the Northern region’s branches as well as the new business ventures of the Group.

Ms. Wong joined Hua Yang in 2003 and was promoted to Branch Manager in 2013. Her main portfolio is overseeing all development, planning and operational aspects of the Johor Branch.

She has more than 27 years of working experience in planning and overseeing Administration, Human Resource, Sales & Marketing strategies implementation.


Profile of Senior Management (cont'd)Group Leadership

Nurhayati binti ZubirAssistant General Manager


Tan Kwee FarAssistant General Manager


Puan Nurhayati joined Hua Yang in November 2013 as Human Resource Manager and was promoted to Assistant General Manager in April 2017. She is a graduate from the University of North London, United Kingdom with a Bachelor Degree (Hons) in Human Resource with Marketing in 1999.

Prior to joining Hua Yang, she had 13 years of working experience in the areas of training, marketing, corporate services and human resource. Currently, she oversees the effectiveness of the human capital and corporate communication.

Ms. Tan joined Hua Yang in May 2013 as Administration Manager and was promoted to Assistant General Manager in April 2017. She holds a Certificate in Journalism obtained in year 1993 and LCCI Higher Diploma in year 1995.

She has more than 18 years of working experience in the areas of Accounts & Finance, Administration and Human Resource. Currently, she is responsible for office administration and operations functions of the Group.

Notes:

Save for the Chief Executive Officer who has family relationship with other Directors and / or major shareholders of Hua Yang Berhad as disclosed on page 21 of this Annual Report, none of the Senior Management has:

• Any family relationship with any Director and/or major shareholder of Hua Yang Berhad;• Any conflict of interest with Hua Yang Berhad; and• Any conviction for offences (other than traffic offences), public sanction or received any penalty imposed by the relevant

regulatory bodies inside or outside Malaysia within the past five (5) years.


Chairman’s StatementPerformance Review

Dear Shareholders,

It has been a tumultuous year. The Covid-19 virus outbreak created a global pandemic which halted global and domestic economic activities. As infection rates and death toll climbed, governments across the world had imposed restrictions on movements and shut down businesses to curb the spreading of the virus. Monetary and fiscal stimuli were also implemented to ease the negative impact caused by this global pandemic.

Since March 2020, our government has implemented the Movement Control Order (‘MCO’) as a preventive measure to contain the Covid-19 pandemic. Following this, mass movements and gatherings were prohibited. Schools, government and private offices were closed, except for those involved in the provision of essential services. These limitations had an adverse impact to the overall economy generally and the property sector has not been spared.

Considering the weak economic environment, Hua Yang’s performance has been satisfactory. Our management has been proactively managing the development business; diligently driving sales, pacing new property launches and more importantly streamlining operating costs. Hua Yang possesses prime development landbank across key regions in Malaysia. With the lowering of interest rates and introduction of series of economic stimulus packages in excess of RM300 billion to ease the burden on the Rakyat and support businesses as well as boost the economy, we are confident to return to our growth track once stability returns. We will pace our property launches to feed into demand within the mid-affordable housing segment.

Malaysia registered GDP growth of 4.3% in 2019, but Bank Negara Malaysia has projected growth in 2020 to contract to a range of -3.5% to -5.5% as a result of output loss from Covid-19, implementation of MCO and disruptions to commodity supplies. In that respect we are encouraged that things are returning to some sense of normalcy with the easing of the MCO and more importantly, that the pandemic in Malaysia looks to be contained. We look forward to economic activities picking up again, but we remain mindful that prevailing uncertainties may linger until a vaccine for Covid-19 can be produced.

For the financial year ended 31 March 2020, the Board of Directors has not recommended any dividend payments. We are going through challenging times, but the core strengths and proven capabilities of Hua Yang as a developer of mid-affordable residential properties remains intact. Our ability to identify the right locations to introduce residential projects that cater to the needs of our buyers will restore our growth momentum and enable us to return to a healthy dividend path.

Hua Yang eagerly anticipates the resumption of our property launch schedule. However, we believe what takes precedence is the need for us to acknowledge the efforts of our frontline personnel in combating this Covid-19 outbreak. On behalf of my Board Directors and management team of Hua Yang, we extend our deepest gratitude to the frontliners for the risks they exposed themselves to, and their relentless efforts to subside this pandemic.

I also wish to thank all our stakeholders for continuous support and devotion, especially through these trying times. My gratitude also goes to all our staff, whom I have no doubt that their collective strengths will successfully drive Hua Yang to greater heights. Last but not least, to my fellow directors, whom I hold in high regards and admiration, thank you for constant advice and dedication to the Board.

Tan Sri Dato’ Seri Dr. Ting Chew PehChairman

“ Understandably we are going through challenging times, but the core strengths and proven capabilities of Hua Yang as a developer of mid-affordable residential properties remain intact.”


Management Discussion and Analysis ReportPerformance Review

Ho Wen YanChief Executive Officer

" Despite the prolonged industry downcycle, Hua Yang remains committed to delivering a unique brand of quality mid-market homes in key strategic urban hotspots across Malaysia. ”


Management Discussion and Analysis Report (cont'd)Performance Review

Dear Valued Shareholders,

Hua Yang Berhad (“Hua Yang”) achieved a commendable operating performance for the financial year ended 31 March 2020 (“FY2020”). During the year, the property sector remained subdued due to conservative lending policies and issues with slower income growth and affordability. As a result of the above factors, inventories in primary and secondary markets continued to remain high.

In addition, the last quarter of FY2020 brought about the unprecedented negative impacts of the novel coronavirus disease (“COVID-19”). The disease spread rapidly around the world, prompting the World Health Organisation to declare COVID-19 a pandemic. Malaysia responded to this by closing our borders and implementing the Movement Control Order (“MCO”) on 18 March 2020, a lockdown aimed at preventing the spread of COVID-19. Such restrictions had a significant impact on the property sector and the economy as the demand and supply of good and services were severely affected.

Against this backdrop, Hua Yang focused on clearing completed inventories and aggressively marketed on-going projects whilst improving cash flow and paring down long-term debt obligations. New launches were strategically undertaken at a more measured pace, taking into account projected market demand and project cash flow requirements. This approach has paid off as inventory levels are at a manageable level and long-term debt has been reduced significantly.

Financial Performance

In FY2020, the Group’s total revenue increased marginally to RM279.6 million from RM272.5 million recorded in the previous financial year (“FY2019”) while gross profit remained largely unchanged at RM73.4 million. Revenue was supported by steady construction progress of on-going projects and sale of completed properties. Key projects that contributed to FY2020 revenue include ASTETICA RESIDENCES in Selangor and MERITUS RESIDENSI in Mainland Penang. Contributions from these key projects accounted for approximately 67% of total group revenue. Within the key regions, Penang accounted for 38% of group revenue, whilst Johor and Klang Valley contributed 21% and 29% respectively.

Despite the commendable performance in revenue and gross profit, Hua Yang reported a loss before tax (“LBT”) of RM64.3 million and a loss after tax of RM73.2 million in FY2020. The significant decline in earnings was due to an impairment loss of RM74.7 million on its investment in associate, Magna Prima Berhad (“MPB”).

The impairment loss was due to a change in the method used to estimate the fair value of MPB from a net asset value to the quoted price of MPB published in the Main Market of Bursa Malaysia Securities Berhad. The change in the fair value estimate was deemed necessary and prudent taking into the account the appointment of Receiver and Manager over the properties and assets of MPB’s subsidiary, Magna Ecocity Sdn. Bhd.

Excluding this provision of impairment loss and the share of loss at the associate level, Hua Yang’s adjusted operating profit would have risen 14% to RM35.2 million, whilst adjusted profit before tax would have improved significantly to RM20.6 million in FY2020. This demonstrates Hua Yang’s improving business fundamentals and underlying strength in its development activities as core operating profit sustained a steady growth trend on a yearly basis despite the increasingly difficult market environment.

FY2020 Revenue Contribution by Region


Management Discussion and Analysis Report (cont'd)Performance Review

Success in our marketing efforts to dispose of available units in our completed properties has yielded positive results, as can be seen in the following chart. However, total inventory increased during the fourth quarter of FY2020 due to the completion of retail shops at Taman Pulai Hijauan, ELEMENCE @ Taman Denai Alam Phase 1 and MERITUS RESIDENSI, Phase 1, adding a total of 65 units comprising of high rise, landed residentials and retail shop lots.

In FY2020, Hua Yang completed and handed over a total of 606 units of properties with a total Gross Development Value (“GDV”) of RM275.9 million. This includes Taman Pulai Hijauan, ELEMENCE @ Taman Denai Alam Phase 1 and MERITUS RESIDENSI, Phase 1.

Group Revenue & Operating Profit Performance

FY2020 Inventories in Completed Properties

FY2020 Completed Projects


Performance Review

Total assets as at end FY2020 amounted to RM1,069.3 million, compared to RM1,196.1 million as at end FY2019. Land held for property development stood at RM448.2 million, decreasing marginally from RM478.6 million last year. Inventories of completed properties amounted to RM63.1 million, increase marginally from RM58.0 million as at end FY2019.

Total liabilities decreased 8.6% to RM558.4 million from RM611.0 million at the end FY2019. Total borrowings declined by 20.7% to RM319.5 million from RM403.1 million. Notably, long term borrowings declined significantly by 43.7% to RM166.6 million.

In line with the reduction in borrowings, net gearing decreased to 0.55 times against shareholders’ funds of RM488.4 million. Net gearing is expected to reduce further via positive cash generation from projects to be completed this financial year and sale of inventories. The Group’s net assets per share attributable to owners of the Company amounted to RM1.39 per share.

Dividends

The Board has not recommended any dividend payments for FY2020 having taken into account the underlying business fundamentals and various challenges faced by the domestic economy. Capital resources will be deployed strategically towards key projects at a measured pace. In the long term, Hua Yang possesses a strong development platform with a solid development landbank portfolio in key urban hotspots. We remain confident that we would be able to return to a steady growth and dividend trend when market conditions improve.

Property Development

In FY2020, we achieved new sales of RM200.4 million underpinned by sales from completed and ongoing projects across key development regions. Driving the sales was MERITUS RESIDENSI on Mainland Penang, which has continued to be well taken-up despite intense market competition in the northern region. ASTETICA RESIDENCE in Seri Kembangan, Selangor, also contributed to new sales during the year. Additionally, our key established townships of TAMAN PULAI HIJAUAN in Johor and BANDAR UNIVERSITI SERI ISKANDAR in Perak continued to deliver steady sales. Sales derived from these key projects made up approximately 76% of total sales for FY2020.

As at end FY2020, unbilled sales amounted to RM118 million, markedly lower than RM205 million as at end FY2019. The decrease can be attributed to several factors, namely; completion of several projects including retail shops at Taman Pulai Hijauan, ELEMENCE @ Taman Denai Alam Phase 1 and MERITUS RESIDENSI Phase 1, steady construction progress of all on-going projects and a disruption in sales activities brought about by the MCO in 4QFY2020. Additionally, the Group also strategically delayed new launches to prioritise marketing unsold inventories and ongoing projects. That being said, we expect unbilled sales to improve in the coming financial year, driven by the planned launch of several key projects.

During the year, Hua Yang launched RM90 million worth of new properties as we adopted a prudent and realistic approach to new project launches. Our focus remained on driving sales of our completed and on-going projects. The success of our approach is evidenced by the manageable inventory level of RM63 million and significantly improved net gearing level.

New launches in FY2020 comprised of new phases in our established townships TAMAN PULAI HIJAUAN and BANDAR UNIVERSITI SERI ISKANDAR and our new township projects at ELEMENCE @ Taman Denai Alam, Johor.

Historical Trend in New Sales FY2020 Sales Contribution by Region

Management Discussion and Analysis Report (cont'd)


Performance Review

Landbanking

Hua Yang did not engage in other landbanking activities in FY2020. At present, Hua Yang’s landbank for future development stands at approximately 451 acres across key development regions, with a combined GDV of approximately RM5.2 billion to be developed over a period of 5 to 7 years.

Historical Trend in New Launches

Future Undeveloped Landbank by Geographical Region (As at 31 Mar 2020)



Performance Review

Strategic Investment in Magna Prima Berhad (“MPB”)

Hua Yang’s 30.95% associate company, MPB contributed a loss of RM10.1 million at the associate level, 39.2% lower than the RM16.7 million incurred in FY2019.

At the company level, MPB reported a net loss of RM34.7 million whilst revenue stood at RM30.1 million for the financial year ended 31 December 2019. Notably, the sale of shop offices in Kepong offset the weaker sales for the serviced apartments and shop offices at Boulevard Business Park on Jalan Kuching. In the near term, the operating performance of MPB continues to be negatively impacted by a prolonged industry downcycle, slow take-up rate of key development projects and an increasingly challenging liquidity position.

That being said, we believe that there is significant value in MPB’s landbank which are located in prime areas in the Klang Valley. MPB’s net asset value stood at RM486.0 million as at end-Dec 2019, translating to RM1.46 per share. Key assets include 2.6 acres freehold land at Jalan Ampang within the vicinity of Kuala Lumpur City Centre, 20 acres located at Seksyen 15 Shah Alam and 6.95 acres located on Jalan Gasing in Petaling Jaya.

Property Development Projects

Hua Yang remains committed to delivering a unique brand of quality mid-market homes in key strategic urban hotspots across Malaysia. The Group advocates modern yet practical concepts and designs that are tailor made to appeal to the next generation of home buyers. The following highlights several of Hua Yang’s key development projects.

Future GDV by Geographical Region (As at 31 Mar 2020)



Performance Review

Launched in early 2017, ASTETICA RESIDENCES, a mixed residential development, offers 520 exquisite serviced apartments with 26 retail lots and 48 studio offices, with a total GDV of RM303 million. The two stylish-designed residential towers, 34 storeys and 35 storeys in height, are strategically located at the heart of matured township of Seri Kembangan, Selangor.

The design of the serviced apartments is meant to be exclusive semi-Ds and bungalows in the sky, with low density of ten units per floor served by four lifts and each unit being a corner unit. A broad selection of layouts and built-up sizes are made available for large families, newly-weds as well as young adults. One of the highlights of the project is its comprehensive family-oriented facilities covering approximately 16,000 sq ft (square feet) that is linked with a sky bridge on the 26th floor (double volume) of the tower blocks.

ASTETICA RESIDENCES is within proximity to various well-established amenities such as The Mines Shopping Centre, The Mines 2 Shopping Mall, AEON Cheras Selatan, Columbia Asia Medical Centre, Australia International School, Bukil Jalil Stadium, Palace of The Golden Horses and many more. The project is also very well connected to various highways such as the SILK and Besraya Highways and others major routes.

KLANG VALLEY-ASTETICA RESIDENCES, Selangor

Total Estimated GDV : RM303 millionLand size : 3.7 acres

Status : OngoingSales of ongoing phases : 66% (as at 31 March 2020)



Performance Review

PUCHONG HORIZON, Hua Yang’s latest flagship mixed development, is strategically located within proximity to the bustling Pusat Bandar Puchong district. The 29.2 acres mixed development in Klang Valley, is earmarked for an integrated residential and commercial development with GDV of approximately RM2.05 billion.

Touted as the tallest residential tower in the surrounding area, the serviced apartment offers residents a bird’s eye view of lakes, towns and forest reserves. AVIARY RESIDENCE’s unique features include choice designs and layouts, 3-tiered security, a multi-faceted facilities floor and 2 covered car parks per unit.

Adjacent to the matured Puchong and Subang Jaya townships, the mixed development is well-connected via numerous highways including the Lebuhraya Damansara-Puchong, ELITE Expressway, Shah Alam Expressway and South Klang Valley Expressway. Amenities and facilities within the development include Regent International School, SEGi College Subang Jaya, Monash University, IOI Mall Puchong, SetiaWalk Mall, Gaint Bandar Puteri, Tesco Extra Puchong, Rakan Muda Complex, Columbia Asia Hospital and many more.

The Group is looking forward to officially roll out the maiden phase of AVIARY RESIDENCE in PUCHONG HORIZON in coming financial years. The debut launch will include 565 serviced apartments in a 36-storey tower, has with an estimated GDV of RM247 million.

KLANG VALLEY-PUCHONG HORIZON, Selangor

Total Estimated GDV : RM2.05 billionLand size : 29.2 acres

Status : Soft launchedMaiden Phase: AVIARY RESIDENCE



Performance Review

ELEMENCE at TAMAN DENAI ALAM is the Group’s latest township development in Johor, sitting on a 73.2-acre freehold land, with its initial phases debuted in October 2017. It is a continuation of the Group’s township development in Johor, namely TAMAN PULAI INDAH and TAMAN PULAI HIJAUAN, which started back in 1993.

This RM375 million gated and guarded township project is conveniently connected to surrounding area, such as Pasir Gudang, the Masai town centre and Johor Bahru city centre, with excellent access to at least six major routes and highways including Senai-Desaru Expressway and East Coast Highway. Vital industrial amenities like the Johor Port and Tanjung Langsat Port are situated within a 13 kilometres radius, while Pengerang is about 80km away. Frequent flyers will also appreciate the proximity of the Senai International Airport, just 55 kilometres from this new township project.

ELEMENCE at TAMAN DENAI ALAM is richly designed with tree-lined avenues, recreation gardens and green pockets, with each home offers spacious living spaces with cosy layouts that cater for the entire family. It is developed with Sungai Kim Kim as its centrepiece and in close proximity to supermarkets, hospitals, educational institutions, banks and restaurants.

The maiden launch of OVAL Phase 1 in FY2018, comprising double-storey cluster houses and link bungalows with a GDV of RM41 million, was completed and successfully handed-over to our buyers in January 2020. In FY2020, the Group has rolled-out new phases comprising cluster houses and shop offices, with total estimated combined GDV of RM44 million.

JOHOR-ELEMENCE, TAMAN DENAI ALAM, Johor

Total Estimated GDV : RM375 millionLand size : 73.2 acres




Performance Review

BANDAR UNIVERSITI SERI ISKANDAR, an integrated university township, is strategically located in-between the state capital and southern part of Perak, approximately 35km to the southwest of Ipoh City. The 777-acre township is well-connected with direct access from the Ipoh-Lumut highway.

Built on the basis of a lifestyle that is in complete harmony with nature, the dynamic and fast-growing affordable township contains quality residential homes and commercial components fronting lakes and natural landscapes, a host of leisure and entertainment facilities, in-town educational institute of higher learning, and a state-of-the-art medical centre.

The RM1.45 billion township is nestled among a variety of amenities, which includes Tesco Superstore, a KFC drive-thru restaurant, police station, wet market, schools, banks, bus station terminals and many more. The township also has a good selection of national primary and secondary schools, Islamic schools and kindergartens. Also located in the vicinity is Kolej Vokasional Seri Iskandar, Sekolah Menengah Teknik Seri Iskandar and Institute Latihan Kemas Seri Iskandar. Healthcare facilities include clinics and a well-equipped medical centre.

BUSI has launched close to RM800 million worth of properties since its first year of launch back in 2001. With most of its previous phases launched completed and fully sold, FREESIA phase 2, ERICA phase 2 and SAKURA phase 1, are the three ongoing residential phases comprising single- and double-storey terrace houses. These ongoing phases, designed for practical and comfortable living are well-received, thus far achieved overall sales of 80% as at end-March 2020. In financial year ending 31 March 2021 (“FY2021”), the Group is looking to introduce new phases in SAKURA, comprising single-storey terrace houses with total estimated GDV of RM62 million.

PERAK-BANDAR UNIVERSITI SERI ISKANDAR, Ipoh

Total Estimated GDV : RM1,447 millionLand size : 777 acres




Performance Review

MERITUS RESIDENSI is Hua Yang’s maiden development project in Mainland Penang, strategically located near matured commercial areas such as the Chai Leng Park and Perai Industrial Estate. The 6.8-acre freehold land is earmarked for a mixed development with the first phase comprises a 44-storey tower with 480 units of serviced apartments and 15 retail shops.

MERITUS RESIDENSI is strategically located near matured commercial areas such as the Chai Leng Park and Perai Industrial Estate, with excellent access to Jalan Baru, the North-South Expressway, Butterworth Outer Ring Road and the Penang Bridge. It is also within proximity to the Mydin Mall, various hypermarkets and leisure and shopping malls, schools, hospital and medical centres.

The 44-storey tower, which offers a dual skyline view of Penang and Butterworth with its serviced apartments almost sold, has recently completed and successfully handed over to the customers. The RM208 million project offers a variety of layouts and modern designs, with selected units enjoying a private garden and up to 4 parking bays.

PENANG-MERITUS RESIDENSI, Prai, Mainland Penang

Total Estimated GDV : RM313 millionLand size : 7 acres

Status : CompletedSales of completed phase : 85% (as at 31 March 2020)



Performance Review

Anticipated Risks

Hua Yang operates in an environment where we will face competition from our peers. It is important that we keep ourselves relevant in understanding the market’s needs and remain committed to our core values in strengthening our brand presence in the affordable mid-market homes segment.

Construction delays would also have wide implications in affecting our financial performance as well as our buyers’ perception. At Hua Yang we have introduced processes for efficient planning and monitoring of construction progress on our respective development projects. To that extent, we have established a strong track record in ensuring that projects are completed and successfully handed over to our buyers on time.

Hua Yang adopts a prudent financial policy to maintain a healthy balance sheet with manageable gearing and cash flows. This would provide us with the liquidity for working capital on our development activities, and where appropriate, enable us to seek out landbanking opportunities when they arise. Managing risks is an essential component to our ability in achieving our performance goals. Further details of our risk management can be found in the Statement On Risk Management and Internal Control of the Annual Report.

Prospects and Outlook

The property sector is expected to remain challenging in the near future. Consumers continue to be plagued by low income growth compounded by the Covid-19 pandemic that is likely to last well into FY2021. Additionally, prospective buyers struggle to obtain financing as financial institutions continue to take a prudent approach to loan approvals.

That being said, we look forward to some positives for the sector such as low interest rate environment, easing of MCO and the reintroduction of the Home Ownership Campaign (“HOC”). Among other things, the HOC allows for RPGT exemption and a lifting of the financing limit for the third mortgage. We expect the above factors to provide some much need stimulus for the sector in the near term.

On the company front, we continue to employ a two-pronged approach of selling existing inventory as well as current ongoing projects whilst strategically pacing new launches according to market demand. This strategy has proved fruitful as evidence by our manageable inventory levels and significant reduction in long-term debt.

In the coming year, we plan to launch new properties with a total estimated GDV of RM202 million. Amongst the new launches will be new phases in our existing townships of BANDAR UNIVERSITI SERI ISKANDAR in Perak comprising of single-storey terrace houses with a GDV of RM62 million. In Penang, we plan for the maiden launch of the serviced apartments and retail shops in ASTON ACACIA, Bukit Mertajam with a GDV of RM140 million.

FY2021 Planned Launches

TOTAL RM 202 mil

Over the longer term, Hua Yang’s existing landbank is strategically located in key regions with a potential GDV of approximately RM5.3 billion. We expect this landbank to be developed at a measured pace over the coming years. However, Hua Yang will not hesitate to accelerate development activities when the market conditions improve and consumer sentiment turns positive.



SustainabilityStatement

Sustainability Statement (cont'd)Performance Review

Hua Yang has always been at the forefront of the affordable housing industry; thus it is part of the Group to practise optimum sustainable business strategy by integrating our economic, environmental and social aims with the needs of our business activities and stakeholders. The Group’s goals and core value can be seen in the sustainable aspirations because we endeavour to practise good sustainability strategy.

In order to ensure that sustainability is practised throughout the Group, we have adopted four (4) pillars of sustainability journey.

SUSTAINABILITY COMMITTEEOur Sustainability Committee is tasked to oversee the Group’s efforts towards embracing corporate sustainability. The Board of Directors provide oversight to the Sustainability Committee, which is chaired by the Chief Executive Officer.

These strategies are in line with the Economic, Environment and Social (EES) risks that we face, thus providing a cornerstone for all future initiatives and efforts towards sustainable development.

Deliver affordable anddependable quality

service and products

Promotingengagement and

investing in the localcommunity

Enhancing values bymotivating our workersand ensure reliable andefficient supply chain

management

Build a sustainableenvironment through

innovation

FOUR PILLARS OF OUR SUSTAINABILITY JOURNEY



MATERIAL SUSTAINABILITY MATTERS / INDEXIdentifying Material Sustainability Matters through a thorough process of identification, ranking and verification, the Group was able to refine 20 material sustainability matters that are relevant to the Group’s business operations and impact to our stake-holders in accordance to importance, relevance and impact. The final materiality matrix is presented as follows:

EconomicIndicator

EnvironmentalIndicator

SocialIndicator

High Importance Critical Importance

IMPORTANCE TO BUSINESS OPERATIONS

IMPO

RTA

NCE

TO

STA

KEH

OLD

ERS

Hig

h Im

port

ance

Criti

cal I

mpo

rtan

ce

A

CE

D

J

G

L

T

S

N

F

B

HI

K

M

O

P

Q

R

Material Sustainability Matters Relevant Stakeholder (s) Applicable GRI Indicator (s)

Housing AffordabilityOccupational Safety and HealthBusiness DigitisationMarket PresenceEconomic PerformanceRegulatory ComplianceSupply Chain ManagementEthics and IntegrityCustomer Satisfaction and Brand ReputationProject ManagementCorporate Governance and TransparencyEnergyProduct QualityWaste ManagementEmployee BenefitsCustomer PrivacyEmployee Development and TrainingContribution to SocietyGreen Buildings ComplianceWater

Customers, CommunitiesRegulators & Government Agency, Vendors & Suppliers, EmployeesCustomers, CommunitiesShareholders & Investors, Vendors & SuppliersShareholders & Investors, CustomersRegulators & Government Agency, Shareholders & Investors, CustomersVendors & Suppliers, CustomersRegulators & Government Agency, Shareholders & InvestorsCustomers and Shareholders & InvestorsRegulators & Government AgencyRegulators & Government Agency, Shareholders & InvestorsRegulators & Government Agency, Customers, Vendors & SuppliersCustomersRegulators & Government Agency, Customers, CommunitiesEmployeesCustomersEmployeesCommunities, MediaCustomers, Shareholders & Investors and Vendors & SuppliersCustomers, Communities

Product Service and LabellingOccupational Health and SafetyGRI General Standard DisclosuresGRI General Standard DisclosuresGRI General Standard DisclosuresComplianceGRI General Standard DisclosuresGRI General Standard DisclosuresProduct Service and LabellingComplianceGRI General Standard DisclosuresEnergyProduct Service and LabellingWaste and EffluentsDiversity and Equal OpportunityCustomer PrivacyTraining and EducationLocal CommunitiesComplianceWater

A

C

E

D

J

G

L

T

S

N

F

B

HI

K

M

OPQR


Performance Review

Economic Sustainability

Hua Yang’s objective is to work towards achieving business sustainability through the amalgamation of methods that will ensure long term profitability and growth.

Anti-Bribery & Anti-Corruption Policy

Facebook: Hua Yang Berhad14,000 followers

1. EMBEDDING ETHICAL BUSINESS PRACTICESAdhering to the laws and regulations outlined by the government, the Group has been adopting the Malaysian Code of Corporate Governance 2017 (“MCCG”) to maintain our corporate accountability and ethical practices sustainably.

Our Board of Directors has approved the Anti-Bribery and Anti-Corruption Policy in its efforts to maintain high standard of code of conduct and business ethics among its directors and employees.

Our Whistleblowing Policy is now fully available to our stakeholders via our corporate website when there is cause to report any business misconduct. This policy was created to provide a level of transparency along with accessibility to our stakeholders to report any business wrong doings by the Group.

2. BUSINESS DIGITIZATIONThe Group has moved towards digitalising our business operation in light of the current technology trend. The move towards digitalisation has improved our efficiency, in particular, in our administration, the way we manage our projects, our marketing as well as our sales and finance practises.

This digitalisation process has ensured that our daily corporate operations is efficient, cost-effective, reliable and reduces the usage of paper. This contributes to our sustainable development and our end-goal is to digitalise our business operations; facilitating a paper-less environment. The Group has also set some achievable targets for this financial year as well as the next to systematically digitise our daily operations.

To embrace this digitalisation process, we have made our presence known in various social media platforms, such as Facebook and YouTube. The move towards social media platforms has opened our market to a younger generation since they are the ones most active on these platforms. This ensures we are able to reach out to more people, as compared with engagement through traditional platforms, like newspapers, billboards and brochures.

Whistleblowing Policy

Sustainability Statement (cont'd)


Customer Relationship Management System- Customer feedback

Quality Assessment System For Build Construction Work

4. CUSTOMER SATISFACTIONWe ensure that communication is always open between our customers via multiple communication channels. Our Customer Care Offices welcome walk-in home owners as well as receive feedback via emails and telephone calls. A comprehensive Customer Relationship Management (CRM) system has been put in place to manage customers’ feedback, where our latest completed project, Meritus Residensi at Seberang Perai, Penang is a testament to our continuous commitment in managing customers’ satisfaction.

3. PRODUCT QUALITY CONTROLOur responsibility as a property developer is to ensure that the homes we build and the services we offer are reliable and safe. The Group has developed houses that adhere to high safety standards, in order to meet the expectations of our future owners.

Our commitment to safety standards and building guidelines is demonstrated in our continuous compliance to the CIS 7:2014 standard ‘Quality Assessment System for Building Construction Work’ and ‘Quality Assessment System in Construction’ (QLASSIC) standard as outlined by Malaysia’s Construction Industry Development Board (CIDB).

Quality Assessment System In Construction, (Qlassic Standard)

Customer Care Offices- Walk-in home owners- Email- Telephone



Performance Review

Workplace Sustainability

The health and well-being of our employees must be maintained in order to ensure Hua Yang has a continued productive workforce. Towards this end, 36 of our employees are appointed to the Group’s Emergency Response Team (ERT). Their responsibilities include;

• Implementing and monitoring measures to ensure workplace safety

• Report, record and investigate instances of workplace accidents and non-compliance to safety standards as outlined in the Group’s P&P standards

• Conduct planned emergency evacuation exercise annually

DIVERSITY AND INCLUSIONEmployees are the major asset to our business operations. Currently, our overall employee distribution consists of 45% females and 55% males. In order to balance the gender roles, our female employees are given fair opportunity to hold high positions based on merits, capabilities and qualifications.

Employee Gender Distribution

55% males 45% females

Employee Gender Distribution by Job Designation

55% 45%

Employee Age Distribution by Gender

Age 50years old

10 10

3

54

16

7

43

20

30

40

50

SeniorManagement

Middle Management

Executives Non-Executives

104

41

7

19

3

43

5

11

20

30

40

50

Male EmployeesFemale Employees

36 of our employees are appointed to the Group’s Emergency Response Team (ERT)



EMPLOYEE DEVELOPMENT AND TALENT MANAGEMENT Employees are by far our largest group of stakeholders and will drive the growth of the Group forward. All employees were given the opportunity to attend at least 8 hours of training per year by participating in training sessions that cover diverse range of technical and soft skill topics. With the trainings, Hua Yang is assured that our employees are more than capable of handling day-to-day tasks and provide service excellence. The in-house training conducted for our employees are listed in the table below.

No

1

2

3

4

5

6

Date

30 Sep - 01 Oct 2019

15 - 16 Oct 201929 - 30 Oct 2019

24 - 25 Sep 201915 - 16 Jan 2020

13 - 14 Jan 202019 - 20 Feb 2020

25 Oct 2019 (HQ & Ipoh)14 - 15 Oct 2019 (PG)05 Aug 2019 (JB)

08 - 09 Jan 2020

Topics

EQ For Middle Management

Coaching & Counselling for Better Performance

English for Business Writing, Speaking & Presentation

Construction Method: Construction Planning, Schedulling, Monitoring & Control

Receptionist & Administrative Assistant: Developing 8 Skills in Managing Office Reception & Providing Office Support

Sales Lead Generation for Property Industry

In addition to normal trainings, the Group has undertaken a structured Talent Management program to identify its critical jobs and potential successors. These talents will be further developed to ensure readiness in carrying out the next level jobs.

We continuously encourage our employees to strive in their given position as best they can, and we strongly support their career growth regardless of age or gender.

With a workforce that is in the 30 and above age group, we look forward to welcoming young talent. While with age comes experience, we believe the younger generation has new ideas to contribute.



Environmental Sustainability

REDUCING ENERGY USAGEClimate change has become a growing challenge for all and we have attempted to mitigate this through the alignment our business aspirations. While our development projects often consume a significant amount of energy during its construction phase, we will continue to be mindful of the energy consumed.

We have taken several measures to curb wasteful practices which includes installing energy-saving light fixtures and implementing control systems to optimise the elevators for our high-rise projects.

Our projects in the Central region are installed with LED lightbulbs in the corridors and the carpark is lighted by T5-fluorescent light tubes. Well-ventilated buildings are also our signature and we practise this by providing an open corridor concept, which reduces the need for air conditioning or fans.

As a rule, most of our projects are installed with the elevator collective control system. This system increases the efficiency of the elevator travel time while reducing energy consumption at the same time. We will continue on this path and future efforts on energy conservation will include initiatives to monitor consumption across our projects and corporate building. This measure is needed to effectively install sustainable measures that would reduce the Group’s overall electricity usage.

Implement ControlSystems

Performance Review

CENTRAL REGION

Led Lightbulbs T5 FluorescentLight TubesVentilation & OpenCorridor Concept

Elevator CollectiveControl System

ENERGY SAVING INITIATIVES

Install Energy-SavingLight Fixtures



WATER MANAGEMENTAs a way to use water efficiently and reduce wastage, there are several water management initiatives the Group has put into place. Our Northern, Central and Johor Bahru development projects are equipped with rain-water harvesting systems, where water collected through this system is recycled for irrigation purposes as well as for landscape usage.

RESPONSIBLE WASTE MANAGEMENTOur waste volume is generated from our on-going development projects and we are in the midst of implementing a systematic waste recording system. We employed independent contractors who will be responsible of disposing our waste and minimise pollution.

Our construction sites are regularly monitored by regulatory bodies such as the Department of Environment (DOE). This is to ensure that we are in compliance to the Environmental Quality Act 1974 and its subsidiary regulations such as the Environmental Quality (Scheduled Wastes) Regulations 2005. We have maintained our reputation as a law-abiding organisation thus far and we will strive to always be aware of our responsibilities to safeguard the environment.

Environmental Quality (Scheduled Wastes) Regulations 2005 Compliance

MONITORED BY THE DEPARTMENT OF ENVIRONMENT

Environmental Quality Act 1974 Compliance



Social Sustainability

Performance Review

As part of our vision to making dreams real, Hua Yang strives to support to the surrounding community at each of our development projects. The Group look towards building a sustainable and harmonious neighbourhood and fulfilling our responsibility as a corporate citizen. We also actively invest via generous contributions to the community with an objective to create a positive impact within the community and establish a good platform for our future generations.

29th DecemberAston Acacia Blood Donation



Corporate Governance Overview Statement Performance Review

The Board of Directors (“the Board”) of Hua Yang Berhad (“Hua Yang” or “the Company”) is committed to ensure that the highest standards of corporate governance are implemented and maintained throughout the Group as a fundamental part of discharging its responsibilities to protect and enhance shareholders’ value. Therefore, the Board supports the principles laid out in the Malaysian Code on Corporate Governance 2017 (“the Code”). These principles and practices supported by existing internal controls processes, are regularly audited and reviewed to ensure that transparency, integrity and accountability has been in place for the financial year ended 31 March 2020. Further details on the application of each individual practice of the Code are available in the Corporate Governance Report that is available at the Company’s website www.huayang.com.my.

This Statement is prepared pursuant to Paragraph 15.25 of Bursa Malaysia Securities Berhad (“Bursa Securities”) Main Market Listing Requirements (“Listing Requirements”) and the following describes how the Group has applied the principles and recommendations set out in the Code.

Principle A: Board Leadership and Effectiveness

Board Responsibilities

The Company is led and managed by an experienced Board comprising members with a wide range of experience in relevant field and bring a broad range of skills, experiences and knowledge required to successfully direct and supervise the Group’s business activity.

The role of the Board as stated in the Board Charter is as follows:

• Representing and promoting interest of the shareholders with a view to adding long-term value to the Company's shares.

• Ensuring the positions of Chairman and CEO are held by different individuals.

• Ensuring the Company Goals are clearly established, and that strategies plan developed by Management support long term value creation and includes strategies on economic, environment and social consideration underpinned by sustainability.

• Directing future expansion and reviewing investment made by the Company.

• Together with senior management, promote good corporate governance culture within the Company which reinforces ethical, prudent and professional behavior.

• Establishing policies to strengthen the performance of the Company including ensuring that Management is proactively seeking to build the business through innovation, initiative, technology, new products and the development of its business capital.

• Monitoring the performance of Management to determine whether the business is being properly managed.

• Appointing the CEO, setting the terms of the CEO's employment contract and, where necessary, terminating the CEO's employment with the Company.

• Formulating the succession plan to ensure that all the candidates appointed to senior management positions are of sufficient calibre and that there are programmes to provide for the orderly succession of senior management.

• Deciding on steps to be taken to protect the Company’s assets and the ability to meet its debts and other obligations when they fall due, and ensuring that such steps are taken.

• Ensuring proper procedures are in place to ensure the Company’s financial statements are true and fair and prepared based on the applicable accounting standards. The financial performance of the Group are reviewed for integrity and approved by the Board.

• Ensuring that the Company has in place appropriate risk management/compliance policies and ensuring the implementation of appropriate internal controls and mitigating measures to manage such risks.

• Ensuring that the Company has in place procedures to enable effective communication with stakeholders.

• Ensuring the Board is supported by a suitably qualified and competent Company Secretary to provide sound governance advice, ensure adherence to rules and procedures, and advocate adoption of corporate governance best practice. The appointment and removal of the Secretary shall be a matter of the Board as a whole.


Corporate Governance Overview Statement (cont'd)Performance Review

Key Responsibilities of Chairman

Tan Sri Dato’ Seri Dr. Ting Chew Peh, the Independent Non- Executive Chairman is responsible for the effectiveness conduct and governance of the Board.

The Chairman is principally responsible for the working of the Board which include:-

• Providing overall leadership to the Board, without limiting the principle of collective responsibility for Board decisions and ensuring the integrity and effectiveness of the governance process of the Board.

• Participating in the selection of Board members and ensuring that the membership is properly balanced.

• Setting agenda for Board meetings, usually in conjunction with the CEO and Secretary. The Chairman should ensure that the agenda and all necessary background papers are given to Directors 7 days before the meeting to enable the papers to be adequately considered before the meeting.

• Chairing meetings of the Board and general meeting in such a manner that will stimulate debate on the issues before the Board and encourage the most effective contribution from each Director.

• Facilitating meetings of the Board to ensure that no Directors, whether executive or non-executive, dominates discussion, that appropriate discussion takes place and that relevant opinion among Directors is forthcoming.

• Reviewing the minutes of meetings of the Board before meeting, to ensure they accurately reflect the Board's deliberations, and matters arising from the minutes and on which further action is required have been addressed.

• Ensuring the Company provides an orientation and education program for new directors.

• Initiating, normally in conjunction with the CEO, the formulation of a business plan to ensure that the Board establishes at the beginning of each year the goals it wishes to achieve and the means by which this will be carried out.

• Initiating the establishment of Board Committees and ensuring that they achieve their objectives.

• Leading the Board in establishing and monitoring good corporate governance practices in the company.

The Chairman acts as an informal link between the Board and Management and particularly between the Board and the CEO to ensure the Company runs effectively and efficiently.

The Chairman, along with all other Directors, recognises that the CEO is the leader of the Company in all matters of Management. Although the Chairman does not involved in the Company's day-to-day operations and is kept informed by the CEO of all important matters and will make himself available to the CEO as part of the control mechanism in ensuring that the CEO’s decisions are properly considered and are sound, providing assistance and advice when needed especially on sensitive matters which the CEO feels unable to discuss with other executives as well as to ensure that the CEO understands properly the Board’s decisions and instructions. The CEO is responsible to report to the Board as a whole and not just to the Chairman.

The Chairman chairs all general meetings and uses this as an opportunity to inform shareholders of the Company's affair including its performance. He allows and encourage shareholders to have their say while remaining relevant to the matter at issue, and the Chairman then summarises and unifies thoughts and ideas that are discussed. He has control over the meeting to ensure the proceedings run smoothly.

The Chairman also leads the role in presenting the Company's proposal, whether formally or informally, with the authorities, institutional or potential investors and those having influence on the environment in which the Company operates.


Corporate Governance Overview Statement (cont'd)Performance Review

Key Responsibilities of CEO

The principal responsibilities of the CEO include:

• The CEO is responsible in leading the management team, implementation of the policies/decisions approved by the Board, and acts as the Group’s official spokesperson.

• The CEO is responsible to plan the future direction of the Group for the Board’s consideration and approval.

• Only decisions of the Board acting as a body are binding on the CEO. Decisions or instructions of individual Directors, officers or committees are not binding except in those instances where specific authorization is given by the Board.

• The CEO, in association with the Chairman, is accountable to the Board for the achievement of the Company goals and the CEO is accountable for the observance of the Management Limitations.

Key Responsibilities of Company Secretaries

The Board of Directors is supported by qualified and competent Company Secretaries.

The Company Secretaries have attended seminars and workshops during the financial year 2019/2020 to keep abreast with the latest development in the Listing Requirements and Companies Act 2016.

The responsibilities of the Company Secretaries are:

• Manage all board and committee meeting logistics, attend and record minutes of all board and committee meetings and facilitate board communications.

• Advise the Board on its roles and responsibilities.

• Facilitate the orientation of new directors and assist in director training and development.

• Advise the Board on corporate disclosures and compliance with company and securities regulations and listing requirements.

• Manage processes pertaining to the annual shareholder meeting.

• Monitor corporate governance developments and assist the board in applying governance practices to meet the Board’s needs and stakeholders’ expectations.

• Serves as a focal point for stakeholders’ communication and engagement on corporate governance issues.

All Directors, particularly the Chairman, have access to the advice and services of the Secretary for the purposes of the Board's affairs and the Business.

To facilitate robust Board discussion, the Chairman together with the Company Secretary ensures that Directors are provided with sufficient information and time to prepare for Board meeting. The meeting materials are circulated at least 7 days in advance of the Board meeting.

The Company Secretaries record, prepare and circulate the minutes of the meetings of the Board and Board Committees and ensure that the minutes are properly kept at the registered office of the Company and produced for inspection, if required.


Performance Review

Board Charter

The Board has formalized and adopted a Board Charter which serves as a source of reference for Directors. The Board Charter is established to provide guidance and clarity on the Board’s roles and responsibilities as well as the relationship between the Board and shareholders.

The Board Charter also sets out processes and procedures for convening Board meetings. The Board reviews the Board Charter when it is necessary to ensure it remains consistent with the Board’s objectives and responsibilities and any new regulations that may have an impact on the Board’s responsibilities.

The full Board Charter is available online at www.huayang.com.my.

Code of Conduct and Business Ethics

The Board is aware of the need to establish a corporate culture that would foster the common goal of achieving business profitability, whilst cultivating ethical business conducts.

The Board has developed and formalised a clear set of values that emphasis on a culture encompassing sound business practices and good ethical conduct and incorporated them in the Code of Conduct and Business Ethics. The Board has also formulated of the Group’s Policies and Procedures of which all employees are required to adhere to, failure of which will result in appropriate action being taken.

The full Code of Conduct and Business Ethics is available online at www.huayang.com.my.

Whistleblowing Policy and Procedures

This will provide an avenue for the internal or external stakeholders to raise concerns related to possible improprieties in matters of compliance and other malpractices in an appropriate manner and without fear of reprisal or retaliation.

The Whistleblowing Policy seeks to enhance corporate governance by helping to foster an environment where integrity and ethical behavior is maintained and any illegality, improper conduct and / or wrongdoings in the Group may be exposed.

The Policy serves as an early warning system and may enable the Group to remedy any wrongdoings before serious damage is caused.

The full Whistleblowing Policy and Procedures is available online at www.huayang.com.my.

Anti-Bribery and Anti-Corruption Policy

The Group has established an Anti-Bribery and Anti-Corruption Policy which prohibits all forms of bribery and corruption practices pursuant to Section 17A of the Malaysian Anti-Corruption Commission Act 2009.

The Company is committed to uphold a high standard of business ethics to create an environment

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