(Incorporated in Malaysia) MUTIARA GOODYEAR DEVELOPMENT BERHAD (40282-V) Our Future Is Yours

Transcription

1 MUTIARA GOODYEAR DEVELOPMENT BERHAD (40282-V) (Incorporated in Malaysia) Our Future Is Yours annual report 2010

2 CONTENTS Vision & Mission 2 Group Five-Year Financial Highlights 4 Chairman s Statement 6 Corporate Information 11 Corporate Structure 12 Profile of Directors 13 Statement on Corporate Governance 16 Statement on Internal Control 22 Audit Committee 24 Notice of Annual General Meeting 27 Financial Statements 33 Properties Held by The Group 83 Analysis of Shareholdings 85 Cover Rationale Our Future Is Yours Our future at Mutiara Goodyear Development Berhad revolves around realizing yours. Painting a vision of her dream home, the girl represents the emerging demands and desires for tomorrow. It s the aspirations of the future generation that drive our passion to continuously innovate and enhance our future projects. Focused on distinction and value, we aim to define our success by the satisfaction we deliver to our stakeholders. Nadayu Melawati

3 3.5% Single tier dividend per share Sharing our results with our shareholders RM3.20million Net profit attributable to equity holders of the company Maintaining profits from both niche and township development division 1.35ringgit Net asset per share 1.40sen Basic earnings per share We continue to create value from our projects Towards a stronger future with several launches slated in 2011 Financial Year 2010 in Perspective - Launched the Nadayu brand in March Initiated a joint-venture agreement with Affin Islamic Bank under a Musyarakah concept for Nadayu 290 in Penang. - Prima Avenue on track to completion by first quarter annual report 2010

4 2 VISION Towards Excellence Our belief in quality and excellence is the pillar of our strength in our unceasing strive for progress and growth. Nadayu Melawati

5 Mutiara Goodyear Development Berhad (40282-V) 3 Prima Avenue MISSION We strive to improve the quality of our products and services through creative innovations, updating and adapting to market changes. We plan to a steady pace of development and expand on our commitments to ensure reasonable returns in both profits and benefits. We innovate to optimise our skills to result in quality products. We generate and maintain the goodwill and reputation achieved and aim towards better quality services. We take pride in our contribution to the well-being and welfare of the community through conducive living environments created in all our development projects. annual report 2010

6 4 Group Five-Year Financial Highlights < Not Restated > Restated with IC 15 FY2006 FY2007 FY2008 FY2009 FY2010 RM 000 RM 000 RM 000 RM 000 RM 000 Revenue 132, , , ,755 52,607 Profit Before Tax 11,201 18,235 35,104 91,486 9,554 Profit After Tax 5,114 17,255 25,709 69,847 3,236 Profit Attributable to Shareholders 5,130 17,797 19,892 69,899 3,240 Issued Share Capital 168, , , , ,914 Total Shareholders Fund 275, , , , ,844 Total Assets 540, , , , ,660 Net Assets Per Share (RM) Earnings Per Share (sen) Gross Dividend Per Share (sen) Revenue RM million Profit After Tax RM million with IC ,607 with IC ,236 Restated ,755 Restated , , ,709 Not Restated , ,789 Not Restated ,114 17,255 Total Shareholders Fund RM million Total Assets RM million with IC ,844 with IC ,660 Restated ,799 Restated , , ,171 Not Restated ,407 Not Restated , , ,820

7 Group Five-Year Financial Highlights (Cont d) Mutiara Goodyear Development Berhad (40282-V) 5 without IC 15 FY2006 FY2007 FY2008 FY2009 FY2010 RM 000 RM 000 RM 000 RM 000 RM 000 Revenue 132, , ,766 91, ,225 Profit Before Tax 11,201 18,235 35,104 21,027 28,817 Profit After Tax 5,114 17,255 25,709 17,394 17,684 Profit Attributable to Shareholders 5,130 17,797 19,892 17,446 17,688 Issued Share Capital 168, , , , ,914 Total Shareholders Fund 275, , , , ,055 Total Assets 540, , , , ,214 Net Assets Per Share (RM) Earnings Per Share (sen) Gross Dividend Per Share (sen) Revenue RM million Profit After Tax RM million without IC ,225 without IC , , , , , , , , ,114 Total Shareholders Fund RM million Total Assets RM million without IC ,055 without IC , , , , , , , , ,820 annual report 2010

8 6 DEAR VALUED SHAREHOLDERS, On behalf of the Board of Directors, I have the pleasure in presenting the Annual Report and Audited Financial Statements of Mutiara Goodyear Development Berhad ( Mutiara ) for the financial year ended 30 April chairman s statement The financial year under review was eventful for Mutiara. During the year, the Group initiated several strategic moves towards achieving the objective of becoming a lifestyle property developer in Malaysia. In March 2010, we launched the Nadayu brand. Nadayu represents the concept of living the exclusive lifestyle and, the first of this is the Nadayu Melawati. Nadayu Melawati is a high-end development comprising luxury bungalows, semi-detached homes, super links and boutique commercial units. Slated for launch in the new financial year 2011 will be Nadayu 92 Kajang, which is a mixed development and Nadayu 28 Sunway comprising serviced apartments and commercial units. Apart from the rebranding exercise, we also initiated a new way of property development, whereby we entered into a joint-venture agreement with Affin Islamic Bank Berhad under a Musyarakah concept. This will be for our Nadayu 290 in Penang which is slated for launch in Nadayu Melawati All in, the total GDV of our launches under the new initiatives is estimated to be around RM1.6 billion. Prima Avenue which was launched during the financial year 2009 and completely sold is progressing as scheduled. It will be due for completion by the first quarter of 2011.

9 Mutiara Goodyear Development Berhad (40282-V) 7 Nadayu Melawati Pearl Garden, Bandar Tasek Mutiara Nadayu Melawati FINANCIAL PERFORMANCE The Group has taken the option of early adoption of Issues Committee Interpretation 15 (IC 15). IC 15 essentially recognises revenue based on completion of project, as against the previous practice of percentage of completion. Revenue for the fiscal year ended 30 April 2010 recorded at RM52.6 million and profit after tax was RM3.2 million. If the Group has not early adopted IC 15 and revenue recognition is based on percentage of completion, the Group s revenue and profit after taxation for the fiscal year ended 30 April 2010 will be RM124.2 million and RM17.7 million respectively. Earnings per share for the year under review stood at 1.40 sen and net assets per share was at RM1.35. En. Hamidon Bin Abdullah Executive Chairman Prima Avenue annual report 2010

10 8 Nadayu Melawati DIVIDEND The Board of Directors is pleased to recommend a first and final single tier dividend of 3.5% per share for the financial year ended 30 April 2010 subject to the approval of shareholders at the forthcoming Annual General Meeting ( AGM ). The company has always maintained a consistent dividend payment trend and return surplus funds as a reward to the shareholders. PROSPECTS The Malaysian property sector is poised for further growth amidst growing confidence among investors and consumers coupled with the accommodating financing environment. The property market is on an upward trend with strong demand growth. We expect strong take up rates for our projects which will be launched during this period and will contribute positively to our future earnings. Additionally, we will continue to explore expansion opportunities to increase our land bank to drive future earnings growth. Nadayu Melawati

11 Chairman s Statement (Cont d) Mutiara Goodyear Development Berhad (40282-V) 9 CORPORATE DEVELOPMENTS 10 May 2010 Disposal of Land by Pembangunan Bandar Mutiara Sdn Bhd ( PBM ) to Tambun Indah Development Sdn Bhd ( TIDSB ). PBM, a wholly-owned subsidiary of Mutiara has entered into a Sale and Purchase Agreement with TIDSB to dispose of a 84 acres land referred to as Parcel B in the vicinity of Daerah Seberang Perai Selatan, Negeri Pulau Pinang for a cash consideration of RM40.2 million. This is part of the joint venture between Mutiara Group and Tambun Indah Sdn Bhd Group to jointly develop three parcels of land in PBM s township of Bandar Tasek Mutiara. 27 May 2010 Settlement Agreement entered into by Jurus Positive Sdn Bhd ( JPSB ) and Positive Quantum Sdn Bhd ( PQSB ). JPSB, a wholly-owned subsidiary of Mutiara has entered into a Settlement Agreement for the early settlement of PQSB s entitlement as stated in the Principal Development Agreement for RM20.6 million. The Settlement Agreement allows JPSB to gain full rights and control over the development of a acres prime development land located in Sunway, Petaling Jaya. 30 July 2010 Disposal of Property by Potensi Naga Sdn Bhd ( PNSB ) to Prosper Palm Oil Mill Sdn Bhd ( PPOM ). PNSB, a wholly-owned subsidiary of Mutiara has entered into a Sale and Purchase Agreement with PPOM to dispose a 13-storey office building together with 230 car park bays bearing the postal address of Wisma Goodyear, Block B, Kelana Centre Point, No. 3 Jalan SS 7/19, Kelana Jaya, Petaling Jaya, Selangor Darul Ehsan for a cash consideration of RM38.0 million. 27 August 2010 Disposal of Land by Regal Form Sdn Bhd ( RFSB ) to Pusaka Padu Sdn Bhd ( PPSB ). RFSB, a wholly-owned subsidiary of Mutiara has entered into a Sale and Purchase Agreement with PPSB to dispose of a acres vacant freehold land held under Lot 188 in the vicinity of Daerah Ulu Langat, Negeri Selangor for a cash consideration of RM18.4 million. View from Nadayu 290, Penang Prima Avenue Nadayu Melawati annual report 2010

12 10 Chairman s Statement (Cont d) Bandar Tasek Mutiara, Phase 8E MG Point, Gombak Pearl Garden, Bandar Tasek Mutiara CORPORATE GOVERNANCE The Board of Mutiara holds values such as integrity, transparency and dedication among a whole host of others, high on our list of priorities. We also place much emphasis on corporate governance and are at all times looking to create the utmost value for our shareholders. Measures taken and implemented have been outlined further in our Statement on Corporate Governance, Statement on Internal Control and the Audit Committee Report found further in this Annual Report. CORPORATE SOCIAL RESPONSIBILITY Mutiara is mindful of the impact its operations have on society. The Group s key corporate social responsibility ( CSR ) platforms continue to be in the areas of employees, shareholders, the environment as well as the communities at large. We will continue to identify activities where our support can make a real difference. CHANGE IN BOARDROOM Yang Berbahagia Dato Edmond Hoyt Yung, who has been instrumental to the growth of Mutiara since its inception, has relinquished his position as the Managing Director on 30 June We would like to wish him all the best and convey our sincere gratitude for his many years of dedication and hard work in building the company. In February 2010, Mr Tan Su Tan Hooi Thean has also resigned as Independent Non-Executive Director. We also wish him the best in his future undertakings. On a more delightful note, we welcome two new members to our Board. They are Mr. Chen Khai Voon as Non-Independent Non-Executive Director/ Deputy Chairman, with Mr Sa Chee Peng as his alternate, and Mr. Cheang Chee Leong as Executive Director/Deputy Chief Executive Officer. I believe these outstanding individuals will contribute greatly and lead Mutiara Group to greater heights. APPRECIATION On behalf of the Board of Directors, I wish to extend my heartfelt gratitude to all our shareholders for their steadfast support and confidence in the Group. My sincere appreciation also goes to the various government authorities, business associates, clients, financiers, media and other partners for their continued support. To our management and employees, thank you for the unwavering commitment and dedication to the ongoing success of Mutiara. Hamidon Bin Abdullah Executive Chairman

13 Corporate information Mutiara Goodyear Development Berhad (40282-V) 11 BOARD OF DIRECTORS En Hamidon Bin Abdullah (Executive Chairman) Mr Chen Khai Voon (Non-Independent Non-Executive Director/ Deputy Chairman) Mr Kee Cheng Teik (Executive Director/Chief Executive Officer) Mr Cheang Chee Leong (Executive Director/Deputy Chief Executive Officer) Mr Lim Beng Guan (Executive Director) En Abd Rahman Bin Mohamad (Independent Non-Executive Director and Chairman of the Audit Committee) Dato Seri Ismail Bin Shahudin (Independent Non-Executive Director) Dato Ikmal Hijaz Bin Hashim (Independent Non-Executive Director) Mr Choong Khoong Liang (Independent Non-Executive Director) Mr Sa Chee Peng (Alternate Director to Mr Chen Khai Voon) Audit Committee En Abd Rahman Bin Mohamad (Chairman, Independent Non-Executive Director) Dato Ikmal Hijaz Bin Hashim (Independent Non-Executive Director) Dato Seri Ismail Bin Shahudin (Independent Non-Executive Director) Company Secretary Ms Angeline Ng Sek Oi Auditors KPMG Chartered Accountants Level 10, KPMG Tower, No.8, First Avenue, Bandar Utama, Petaling Jaya, Selangor Darul Ehsan. Registered Office Tingkat 11, Menara Tun Razak, Jalan Raja Laut, Kuala Lumpur. Telephone : Facsimile : Financiers Affin Investment Bank Berhad Affin Islamic Bank Berhad AmBank Berhad Hong Leong Bank Berhad Malayan Banking Berhad OCBC Bank (Malaysia) Berhad Public Bank Berhad The Bank of East Asia, Limited United Overseas Bank (Malaysia) Berhad Advocates & Solicitors Arthur Wang, Lian & Associates Cheang & Ariff David Gurupatham & Koay Michael Chen & Co. Yip Kum Fook & Associates Y.M.Chin & Partners Zul Rafique & Partners Share Registrar Bina Management (M) Sdn Bhd Lot 10, The Highway Centre, Jalan 51/205, Petaling Jaya, Selangor Darul Ehsan. Telephone : Facsimile : Principal Place of Business Tingkat 11, Menara Tun Razak, Jalan Raja Laut, Kuala Lumpur. Telephone : Facsimile : Stock Exchange Listing Main Market of the Bursa Malaysia Securities Berhad Website Address annual report 2010

14 12 corporate structure MUTIARA GOODYEAR DEVELOPMENT BERHAD Investment Holding Company 100% 100% 100% Pembangunan Bandar Mutiara Sdn Bhd Dynastic Lion Sdn Bhd Susuran Timur Sdn Bhd 50% 100% 100% Jurus Positif Sdn Bhd 50% South East Dragon Sdn Bhd Regal Form Sdn Bhd 50% 100% 100% Affin-i Goodyear Sdn Bhd Puncak Kencana Sdn Bhd Potensi Naga Sdn Bhd 100% Investment Holding Property Development Twin Ridge Sdn Bhd Property Management Property Development & Investment Holding Property Investment

15 profile of directors Mutiara Goodyear Development Berhad (40282-V) 13 from left to right En Hamidon Bin Abdullah Mr Kee Cheng Teik En Hamidon Bin Abdullah Executive Chairman, Malaysian, aged 57 En Hamidon was first appointed onto the Board of Mutiara as the Executive Deputy Chairman on 5 December 2007 and was redesignated as Executive Chairman on 25 March En Hamidon has a Bachelor Degree in Applied Mathematics & Computer Science and a Master Degree in Urban Planning from University of Adelaide, Australia. Upon his graduation in 1975, he started his career as a System Analyst with the South Australia Highway Department. After 4 years, he was engaged as an Urban Planning Consultant with P. G. Pakpoys & Associates (KL). In 1983, he joined an architect firm, Hijjas Kasturi & Associates as one of its partners. Encik Hamidon is the founding member of the EP Manufacturing Bhd Group which he started in He also sits on the Boards of EP Manufacturing Bhd and ATIS Corporation Berhad. Mr Chen Khai Voon Non-Independent Non-Executive Director/Deputy Chairman, Malaysian, Age 50 Mr Chen was appointed to the Board of Mutiara on 17 December Mr Chen completed his Diploma in Accounting in 1981 and for the next eight years, gained experience in both the financial and distribution industries. In 1989, he founded KVC Electric (M) Sdn Bhd (now known as KVC Industrial Supplies Sdn Bhd) ( KVC ) and Group ( KVC Group ). Since then, he changed the industrial supply landscape and spearheads the KVC Group to be the leading One-Stop Industrial Supply Provider in Malaysia. He was appointed as Group Managing Director of ATIS Corporation Berhad on 15 April Mr Chen also sits on the Boards of ATIS Corporation Berhad and Genetec Technology Berhad. Mr Kee Cheng Teik Executive Director/Chief Executive Officer, Malaysian, aged 47 Mr Kee was appointed as Chief Executive Officer of Mutiara on 8 January 2008 and was subsequently appointed to the Board on 28 April Mr Kee holds a Bachelor Degree (Hons) in Civil Engineering from University of Malaya, Malaysia and MSc (Management) from Nanyang Technological University, Singapore. Mr Kee has 22 years of working experience in property development, project management and construction management. He started his career in Brunei as a Site Engineer in Upon completion of a sizeable college campus in Lutong, Brunei, he relocated to Singapore in 1989 and was involved in all aspects of development and management of various types of properties including conservation projects, shopping complexes, offices, condominiums and service apartments during his employment with Wing Tai Group (Singapore). In 1992, he was involved in managing the planning and implementation of the redevelopment of Ningbo City of China together with Wing Tai (Hong Kong). In 1993, he was seconded to Wing Tai (Kuala Lumpur) to oversee the property development ventures of the Group in Kuala Lumpur. He joined Cathay Organization (Singapore) in 1994 to set up a property arm in Kuala Lumpur and managed the Group s land banks and various property ventures in Malaysia. Mr Kee joined Mutiara Group in May 1996 as General Manager of Pembangunan Bandar Mutiara Sdn Bhd and started off its operations office in Penang which oversees the Group s township development at Seberang Perai Selatan known as Bandar Tasek Mutiara. Mr Kee has no directorship in other public listed companies. annual report 2010

16 14 profile of directors (Cont d) from left to right Mr Cheang Chee Leong Mr Lim Beng Guan En Abd Rahman Bin Mohamad Dato Seri Ismail Bin Shahudin Mr Cheang Chee Leong Executive Director/Deputy Chief Executive Officer, Malaysian, Age 41 Mr Cheang was appointed as Deputy Chief Executive Officer of Mutiara on 26 September 2009 and subsequently appointed to the Board of Mutiara on 29 October Mr Cheang is a qualified accountant. He holds a Bachelor Degree in Accounting from University Utara Malaysia, Malaysia and is a Member of both the Malaysian Institute of Accountants and the Malaysian Institute of Certified Public Accountants. He has extensive experience in financial management gained over 17 years whilst holding various senior positions in an audit firm and a property development company. Prior to joining the Company, he was the Chief Financial Officer of a public listed company involved in the supply and distribution of industrial, electrical and electronic products, where he was mainly responsible for Group Finance and Capital Management. Mr Cheang has no directorship in other public listed companies. Mr Lim Beng Guan Executive Director, Malaysian, Age 40 Mr Lim was appointed to the Board of Mutiara on 5 December Mr Lim holds a Bachelor Degree in Accountancy (Hons) from University of Malaya, Malaysia. His previous experience includes being in the corporate finance department of Commerce International Merchant Bankers Berhad and General Manager of Corporate Affairs of a public listed company. He also sits on the Board of ATIS Corporation Berhad. En Abd Rahman Bin Mohamad Independent Non-Executive Director and Chairman of the Audit Committee, Malaysian, aged 60 En Ishak was appointed to the Board of Mutiara on 27 June He is the Chairman of the Audit, Nomination and Remuneration Committees of the Company. He is a member of the Malaysian Institute of Accountants. He has been a qualified accountant since He was previously under the employment of Pernas Sime Darby Group. His initial appointment was with Pernas Sime Darby Holdings Sdn Bhd as Company Secretary cum Group Finance Controller. He has also worked for Ford Motor Company of Malaysia Sdn Bhd, now known as AMIM Holdings Sdn Bhd as a Finance Manager. He also sits on the Board of Kejuruteraan Samudra Timur Berhad. Dato Seri Ismail Bin Shahudin Independent Non-Executive Director, Malaysian, aged 59 Dato Seri Ismail was appointed to the Board of Mutiara on 28 April He is a member of the Audit, Nomination and Remuneration Committees of the Company. Dato Seri Ismail has a Bachelor of Economics (Hons) Degree from University of Malaya, Malaysia, majoring in Business Administration. Upon his graduation in 1974, he joined ESSO Malaysia Berhad and served for 5 years in its Finance Division. He then joined Citibank Malaysia in 1979 and served at the bank s headquarters in New York in 1984 as part of the team in the Asia Pacific division. Upon his return to Malaysia in 1986, he was promoted to the position of Vice President & Group Head of the Public Sector and Financial Institutions Group in Malaysia. In 1988, he served United Asian Bank Berhad as Deputy General Manager until Subsequently, he joined Maybank as General Manager of Corporate Banking and in 1997, he was appointed as Executive Director of Maybank. Dato Seri Ismail left Maybank in July 2002 to assume the position of Group Chief Executive Officer of MMC Corporation Berhad. He was then appointed to the Board of Bank Muamalat Malaysia Berhad and subsequently the chairmanship in March 2004 until his retirement in July Dato Seri Ismail s directorship in other public listed companies are PLUS Expressways Berhad, Malayan Banking Berhad, UEM Group Berhad, EP Manufacturing Berhad, SMPC Corporation Berhad and Aseana Properties Limited (listed on the London Stock Exchange).

17 profile of directors (Cont d) Mutiara Goodyear Development Berhad (40282-V) 15 from left to right Dato Ikmal Hijaz Bin Hashim Mr Choong Khoong Liang Dato Ikmal Hijaz Bin Hashim Independent Non-Executive Director, Malaysian, Age 57 Dato Ikmal was appointed to the Board of Mutiara on 28 April He is a member of the Audit, Nomination and Remuneration Committees of the Company. Dato Ikmal holds a Bachelor of Arts (Hons) Degree from University of Malaya, Malaysia and a Master of Philosophy Degree in Land Management from University of Reading, U.K. He began his career by serving in the Administrative and Diplomatic Service of the Government from 1976 to 1991 in various positions and responsibilities such as District Office, Regional Development Authority, Training Management and Administrative under Ministries Unit. He then joined United Engineers (M) Berhad as the General Manager of the Malaysian Singapore Second Crossing Project. He became the Chief Operating Officer of Projek Lebuhraya Utara-Selatan Berhad ( PLUS ) on 1 Jan 1993 and was subsequently appointed as its Managing Director from 1 Jan 1995 to 30 June He resigned as Managing Director of PLUS in 1999 but remained as a Director until Nov Dato Ikmal was appointed as the Managing Director of Prolink Development Sdn Bhd ( Prolink ) and Acting Chairman of the Supervisory Board, Property Division of Renong Group in July In Feb 2000, Dato Ikmal was appointed President of the Property Division of the Renong Group while maintaining his position as Managing Director of Prolink. He held the position of Managing Director at Renong Berhad from 2002 until Oct 2003 when he subsequently joined Pos Malaysia Berhad ( PMB ) as its Managing Director/ Chief Executive Officer on 6 Dec On 19 Dec 2003, Dato Ikmal was appointed Executive Director of Pos Malaysia & Services Holdings Berhad ( PMSHB ) and on 13 April 2004, he was re-designated as PMSHB s Group Managing Director/Chief Executive Officer. He was the Chief Executive Officer of Iskandar Regional Development Authority, Malaysia from 23 Feb 2007 until his appointment as Chairman and Independent Non-Executive Director of Faber Group Berhad ( FGB ), on 1 March He is also the Chairman of the FGB s Investment Committee. His directorship in other public companies are Faber Group Berhad, UEM Land Holdings Berhad and EP Manufacturing Berhad. Mr Choong Khoong Liang Independent Non-Executive Director, Malaysian, Age 40 Mr Choong was appointed to the Board of Mutiara on 5 December Mr Choong holds a Master Degree in Business Administration (Finance) with distinction from University of Hull, United Kingdom and he is a Fellow member of the Association of Chartered Certified Accountants. An accountant by profession, he started his career with Messrs KPMG before joining Commerce International Merchant Bankers Berhad, where he gained substantial experience in the capital markets and debt restructuring. He was also the Planning Advisor for Cemex Asia in Singapore (strategic business development) responsible for Asia/Africa region and an Associate Director, Asian Fixed Income in Standard Chartered Bank Malaysia Berhad. Mr Choong has no directorship in other public listed companies. Mr Sa Chee Peng Alternate Director to Mr Chen Khai Voon, Malaysian, Age 40 Mr Sa was appointed as Alternate Director to Mr Chen Khai Voon on 17 December Mr Sa holds a Bachelor Degree in Agriculture Business from Universiti Pertanian Malaysia, Malaysia. Upon his graduation in 1994, Mr Sa joined KVC Electric (Selangor) Sdn Bhd (now known as KVC Industrial Supplies (Selangor) Sdn Bhd) as a Sales Executive and was promoted to the position of Chief Operating Officer of KVC Connectors Sdn Bhd in In 1999, he became the Director of Sales and Marketing of KVC Group and in March 2003, he was appointed Managing Director of KVC. Mr Sa also sits on the Board of ATIS Corporation Berhad. Note:- None of the Directors has any family relationship with any Director and/or major shareholder of the Company. None of the Directors has any conflict of interest with the Company nor have they been convicted of any offences within the past ten (10) years. annual report 2010

18 16 Statement on Corporate Governance Introduction The Board of Directors is committed to upholding the principles of corporate governance in the Malaysian Code of Corporate Governance (the Code ). The Board will continuously strive to ensure that good corporate governance is implemented and practiced throughout the Group wherever applicable with the ultimate objective of protecting and enhancing shareholders value. The Board is pleased to report to its shareholders on the manner in which the Company has applied the Principles of the Code and the extent to which it has complied with the Best Practices of the Code, as set out below. 1. Board of Directors 1.1 Composition The Board currently has nine (9) members comprising:- One (1) Executive Chairman; Three (3) Executive Directors; Four (4) Independent Non-Executive Directors and One (1) Non-Independent Non-Executive Director. There is an Alternate Director on the Board. The size and composition of the Board has been maintained in line with the needs of the Company and in compliance with Bursa Malaysia Securities Berhad ( Bursa Securities ) Main Market Listing Requirements ( the Listing Requirements ). The Board has a balanced composition of Executive and Non-Executive Directors, with more than one third (1/3) Independent Non-Executive Directors. The Board has an effective working partnership with the Management in establishing the strategic direction of the Company. All major matters and issues are referred to the Board for consideration and approval. Encik Abd Rahman Bin Mohamad is the Senior Independent Non-Executive Director to whom concerns regarding the Company may be conveyed. The responsibilities and contributions of Independent and Non-Executive Directors also provide an element of objectivity, independent judgement and balance on the Board. The Board is satisfied that the current Board composition fairly reflects the investment of minority shareholders in the Company. Together, the Directors bring a wide range of business and financial experience for efficiency, direction and management of the Group s businesses. A brief description of the background of each Board member is set out in this Annual Report on pages 13 to Board Meetings The Board meets at least four (4) times a year with additional meetings convened as necessary. The Executive Directors are responsible for setting the agenda for Board Meetings. Any Board members may, however recommend the inclusion of items in the agenda. Such recommendations will be accommodated to the extent practicable. The Board receives documents on matters requiring its consideration prior to and in advance of each meeting. All proceedings of Board meetings are recorded and the minutes thereof signed by the Chairman of the meeting. Bandar Tasek Mutiara Prima Avenue

19 Statement on Corporate Governance (Cont d) Mutiara Goodyear Development Berhad (40282-V) 17 During the financial year ended 30 April 2010, the Board held four (4) meetings and details of Directors attendance are as follows:- Name of Directors Board Meeting s Attendance En Hamidon Bin Abdullah 4/4 Mr Chen Khai Voon 1/1 Mr Kee Cheng Teik 4/4 Mr Cheang Chee Leong 2/2 Mr Lim Beng Guan 4/4 En Abd Rahman Bin Mohamad 4/4 Dato Seri Ismail Bin Shahudin 4/4 Dato Ikmal Hijaz Bin Hashim 4/4 Mr Choong Khoong Kiang 4/4 1.3 Board Committees The Board delegates specific responsibilities to three (3) Committees, i.e. Audit Committee, Nomination Committee and Remuneration Committee, which operate within clearly defined terms of reference. Other committees are set up for specific purposes as and when required. The Report of the Audit Committee for the financial year ended 30 April 2010 is set out on pages 24 to 26 of the Annual Report. Details of the Remuneration Committee and Nomination Committee are set out on pages 18 and 19 respectively of the Annual Report. 1.4 Re-election of the Directors In accordance with the Company s Articles of Association, all Directors who are appointed by the Board are subject to re-election by shareholders at the next Annual General Meeting following their appointment. The Articles of Association of the Company also provide that all Directors shall retire from office once every three (3) years but shall be eligible for re-election. Directors over seventy (70) years of age are required to submit themselves for re-appointment annually in accordance with Section 129(6) of the Companies Act, Directors Training All Directors have attended the Mandatory Accreditation Programme prescribed by Bursa Securities. The Directors continue to attend seminars and courses to enhance their knowledge and skill and keep abreast with the latest development in the industry and regulatory requirements. Seminars and courses attended by the Directors were The Edge Investment Forum on Real Estate 2010; Corporate Governance Guide Towards Boardroom Excellence; KPI Conference for Public Sectors, Statutory Bodies and Government Agencies; Effective Board Governance Framework; Financial Industry Conference; Is It Worth The Risk; Corporate Strategies in an Economic Downturn; FRS 139 Financial Instruments: Recognition & Measurement; New Era of Financial Reporting for Developers; Excel Worksheet/Cashflow Modelling; 13th Annual Labuan Seminar 2009 and IFN 2009 Issuers & Investors Asia Forum. 1.6 Supply of information The Board has unrestricted access to timely and accurate information necessary in the furtherance of their duties, which is not only quantitative but also any other information deemed suitable. Board papers are distributed to Board members a few days prior to Board meetings to enable them to study and evaluate the matters to be discussed and obtain further explanations and/or clarifications where necessary. In addition, there is a schedule of matters reserved specifically for the Board s decision. All Directors have access to the advice and services of the Company Secretary and where necessary, in the furtherance of their duties, obtain independent professional advice at the Group s expense. annual report 2010

20 18 Statement on Corporate Governance (Cont d) 2. Directors Remuneration 2.1 Remuneration Committee The Remuneration Committee was established on 26 June 2003 and comprises the following Independent Non-Executive Directors:- - En Abd Rahman Bin Mohamad - Dato Ikmal Hijaz Bin Hashim - Dato Seri Ismail Bin Shahudin The Remuneration Committee is to review, assess and recommend to the Board the remuneration of Executive Directors in all forms, using outside independent professional advice as necessary. Nevertheless, the determination of remuneration packages of Directors is a matter for the Board as a whole and individual Directors are required to abstain from the discussion of their own remuneration. The Remuneration Committee shall also recommend to the Board the remuneration of non-executive Directors. The determination of the remuneration of the non-executive Directors is a matter for the Board as a whole. 2.2 Details of the Directors Remuneration For the financial year ended 30 April 2010, the aggregate of remuneration received by Directors of the Company is categorised as follows:- Remuneration Fees Meeting allowance Benefits-in kind Total (RM 000) (RM 000) (RM 000) (RM 000) (RM 000) Executive Directors 1, ,667 Non-Executive Directors The number of Directors of the Company whose remuneration during the year falls within the respective bands is as follows:- Numbers of Directors Range of Remuneration (RM) Executive Non-Executive Below 50, Between 50,001 to 100, Between 100,001 to 150, Between 150,001 to 200, Between 200,001 to 250, Between 250,001 to 300, Between 300,001 to 350, Between 350,001 to 400, Between 400,001 to 450, Between 450,001 to 500, Between 500,001 to 550, Between 550,001 to 600, Between 600,001 to 650, Between 650,001 to 700, Between 700,001 to 750, Total 5 6

21 Statement on Corporate Governance (Cont d) Mutiara Goodyear Development Berhad (40282-V) Appointment to the Board The appointment of additional Director is made as and when it is deemed necessary by the Board with due consideration given to the mix of expertise and experience required for an effective Board. 2.4 Nomination Committee The Nomination Committee was established on 26 June 2003 and comprises the following Independent Non- Executive Directors:- - En Abd Rahman Bin Mohamad - Dato Ikmal Hijaz Bin Hashim - Dato Seri Ismail Bin Shahudin The Nomination Committee has been given the responsibility to recommend new appointments to the Board. The Nomination Committee also reviews the effectiveness of the existing Board and the contribution of each Director. The recommendations of the Nomination Committee are subject to the approval of the Board. 3. Shareholders The Board believes in clear communication with the Company s shareholders. The Annual Reports, circulars to shareholders, various announcements and the quarterly announcements are the primary modes of communication to report on the Group s financial performance, business and activities to all its shareholders. Shareholders and members of the public can also obtain information on the annual and quarterly reports and the announcements made by accessing the Company s and Bursa Securities websites. At General Meetings of the Company, shareholders have direct access to the Directors and are given the opportunity to ask questions during the question and answer session. 4. Accountability & Audit 4.1 Financial Reporting In its financial reporting to shareholders and other interested parties by means of quarterly announcements of results and the annual financial statements, the Board aims to present a balanced and understandable assessment of the Group s financial position and prospects. The Audit Committee assists the Board in ensuring accuracy, adequacy and completeness of information for disclosure. 4.2 Statement of Directors Responsibilities in respect of the Annual Audited Financial Statements The Board of Directors hereby states that the preparation of financial statements for the financial year ended 30 April 2010 is the responsibility of the Directors. They are legally required to prepare financial statements for each financial year, which give a true and fair view of the state of affairs of the Company and of the Group as at the end of the financial year and of the results and cash flows of the Company and of the Group for that period. In preparing those financial statements, the Directors have:- - adopted suitable accounting policies and then applied them consistently; - made judgements and estimates that are prudent and reasonable; and - ensured applicable approved accounting standards have been followed. The Directors are responsible for keeping proper accounting records, which disclose with reasonable accuracy at any time the financial position of the Company and of the Group and to enable them to ensure that the financial statements comply with the Companies Act, Bandar Tasek Mutiara annual report 2010

22 20 Statement on Corporate Governance (Cont d) 4.3 Statement on Internal Control The Statement on Internal Control set out on pages 22 and 23 of the Annual Report provides an overview on the state of internal controls within the Group. 4.4 Relationship with auditors The Company maintains a professional and transparent relationship with the auditors in seeking their professional advice and towards ensuring compliance with approved accounting standards. Key features underlying the relationship of the Audit Committee with the external auditors are included in the Audit Committee s terms of reference as set out on pages 24 to 26 of the Annual Report. A summary of the Audit Committee s activities during the financial year is set out in the Audit Committee Report on page 26 of the Annual Report. The external auditors are also invited to brief the Audit Committee on specific issues as and when necessary. 4.5 Compliance statement The Company has complied throughout the financial year ended 30 April 2010 with all the Best Practices of corporate governance as set out in Part 2 of the Code, except that the Company does not have a formal orientation and education program for new recruits to the Board. Other Information 1. Material contracts There were no material contracts entered into by the Company and its subsidiaries involving Directors and major shareholders interest, either still subsisting at the end of the financial year ended 30 April 2010 or entered into since the end of the previous financial year except as disclosed in the financial statements. 2. Non-Audit Fees The amount of non-audit fees paid or payable to external auditors, Messrs KPMG by the Company and it s subsidiaries, amounts to RM49, Imposition of Sanctions and/or Penalties There were no sanctions and/or material penalties imposed on the Company or its subsidiaries, Directors or Management by relevant regulatory bodies during the financial year. 4. Revaluation of Landed Properties There is no revaluation policy on the Group s landed properties in respect of the financial year except for investment properties which are measured at fair value. 5. Options, Warrants or Convertible Securities The Company did not issue any options, warrants or convertible securities during the financial year. 6. Utilisation of Proceeds No proceeds were raised by the Company from any corporate proposals during the financial year. 7. Share Buybacks There were no share buybacks by the Company during the financial year.

23 Statement on Corporate Governance (Cont d) Mutiara Goodyear Development Berhad (40282-V) American Depository Receipt (ADR) or Global Depository Receipt (GDR) Programme The Company did not sponsor any ADR or GDR programme during the financial year. 9. Profit Estimate, Forecast or Projection The Company did not make any release on the profit estimate, forecast or projections for the financial year. 10. Variation in Results There were no material variances between the audited results for the financial year ended 30 April 2010 and the unaudited results previously announced. 11. Profit Guarantee During the financial year, there was no profit guarantee given by the Company and all its subsidiaries. 12. Recurrent Related Party Transactions of a Revenue or Trading Nature The aggregate value of recurrent related party transactions of a revenue or trading nature conducted during the financial year ended 30 April 2010 by Mutiara and its subsidiaries ( Mutiara Group ) in accordance with the shareholders mandate were as follows:- Name of company within Related Party Nature of Transaction Aggregate value of the Mutiara Group involved transactions (RM 000) Potensi Naga Sdn Bhd Bina Goodyear Rental of Office 109 Berhad Group Premises and Car Park Nadayu Melawati Bandar Tasek Mutiara annual report 2010

24 22 STATEMENT ON INTERNAL CONTROL Introduction In accordance with Paragraph 15.26(b) of the Listing Requirements, the Board of Directors of public listed companies are required to include in the Annual Report a statement about the state of internal control of the listed issuer as a group. The Board is committed to maintaining a sound system of internal control, identifying and managing risks across the operations of the Group in order to safeguard shareholders investment and assets of the Group. Board Responsibility The Board affirms its ultimate responsibility for the Group s system of internal controls, which includes the establishment of an appropriate control environment and framework, encompassing financial, operational and compliance controls as well as risk management, including the review of its adequacy and integrity on an ongoing basis. Due to the inherent limitations in any system of internal control, this system is designed to manage, rather than eliminate, the risk of failure to achieve corporate objectives. Inherent limitations would include, but are not limited to, control processes being deliberately circumvented by employees or others, Management overriding controls, poor judgement in decision-making and the occurrence of unforeseeable circumstances beyond the control of the Group. Accordingly, the internal control system can only provide reasonable and not absolute assurance against material misstatement or loss. Enterprise Risk Management Framework The Board confirms that there is an ongoing process for identifying and managing significant risks faced by the Group that accords with the publication on the Statement on Internal Control: Guidance to Directors of Public Listed Companies in all material aspects. The Board believes that maintaining a sound system of internal control is based on a clear understanding and appreciation of the following key elements of the Group s enterprise risk management system: - The issuance of a risk management policy and procedure document in September 2002, which outlines the risk management framework for the Group and offers practical guidance to all employees of the Group in identifying and managing risks; - A risk management structure which outlines the responsibility of the Risk Management Committee and Risk Management Units has been established; - On-going risk assessment process which involves the identification of key risks facing the Group, the potential impact and likelihood of those risks occurring, the effectiveness of controls and the action plans being taken to manage those risks to the desired level. Management had carried out a risk assesment review on the Group s operations, which covers property development in the Northern region and property development and property management in the Klang Valley. The risk assesment report had been tabled to the Risk Management Committee on 11 June The risk profiles and risk registers are reported by the Risk Management Committee to the Audit Committee on an annual basis. The Chairman of the Audit Committee reports the significant risks and control issues to the Board for its consideration. Prima Avenue Nadayu Melawati

25 STATEMENT ON INTERNAL CONTROL (Cont d) Mutiara Goodyear Development Berhad (40282-V) 23 Apart from the risk management process, the Board has put in place the following initiatives to enhance the system of internal control of the Group: - An organisational structure with formal defined lines of responsibility and delegation of authority; - Regular operational meetings attended by the Executive Directors and senior management team who review the operational performance of the respective projects, progress of tasks undertaken as well as considering land acquisitions; - Regular monitoring of the Group s financial performance by the Executive Directors and senior management team, where inquiries are made on all significant and unusual fluctuations in results; - Quarterly review of financial results and operational matters by the Board and Audit Committee; - Establishing policy on the financial limits and approving authority for the revenue and construction budgets with appropriate authority thresholds to ensure all revenue and construction budgets are in line with the Group s overall objectives; and - Quality control of the Group s products via regular site meetings with the contractors and employment of quality fulltime staff on site to regularly monitor the contractors daily work. Internal Audit Function The Group outsourced its internal audit function to a firm of consultants which provides the Board with the level of assurance required on the adequacy and integrity of the system of internal control. The internal audit function adopts a risk-based approach and prepares its audit strategy and plan based on the updated risk profile of the Group. During the financial year, the internal auditors presented a detailed management assurance plan to the Audit Committee for approval prior to commencement of the audit. The objectives of the assignment are to independently review the system of internal control as established by Management, the adequacy and integrity of such internal control system in relation to its objectives and make appropriate recommendation for improvement. Two cycles of internal audit were completed during the financial year and findings from the internal audit had been communicated to the Audit Committee. The Audit Committee considers the reports from the internal audit function and Management s responses, before reporting and making recommendations to the Board in strengthening the risk management and internal control systems. Weaknesses in Internal Controls That Result in Material Losses There were no material losses incurred during the financial year as a result of weaknesses in internal control. The Management is and will continue to take active measures to strengthen the control environment taking into account the changes in the external and internal environment of the Group. Bandar Tasek Mutiara annual report 2010

26 24 AUDIT COMMITTEE MEMBERSHIP The members of the Audit Committee comprise of the following Independent Non-Executive Directors:- En Abd Rahman Bin Mohamad (Chairman) Dato Ikmal Hijaz Bin Hashim Dato Seri Ismail Bin Shahudin Terms of Reference The Audit Committee was established on 6 February The Board shall ensure that the composition of the Audit Committee comply with the Listing Requirements as well as other regulatory requirements. 1. Objectives The primary functions of the Audit Committee is to assist the Board of Directors in fulfilling the following oversight objectives on the Group s activities:- assess the Group s processes relating to its risks and control environment; oversee financial reporting; and evaluate the internal and external audit processes. 2. Composition The Board shall elect and appoint the Audit Committee members from amongst their numbers, comprising no fewer than three (3) Directors. All members of the Audit Committee shall be Non-Executive Directors, the majority of whom shall be independent Directors of the Company. The Board shall at all times ensure that at least one (1) member of the Audit Committee:- Must be a member of Malaysian Institute of Accountants ( MIA ); or If he or she is not a member of MIA, he or she must have at least three (3) years of working experience and:- - he or she must have passed the examinations specified in Part I of the 1st Schedule of the Accountants Act 1967; or - he or she must be a member of the association of accountants specified in Part II of the 1st Schedule of the Accountants Act 1967; or Fulfils such other requirements as prescribed by Bursa Securities. If a member of the Audit Committee resigns, dies or for any reasons ceases to be a member with the result that the number of members is reduced below three (3), the Board shall within three (3) months of the event appoint such number of new members as may be required to fill the vacancy. The Chairman of the Audit Committee shall be an independent non-executive Director. No alternate Director of the Board shall be appointed as a member of the Audit Committee. The Board shall review the terms of office of each of its members at least once (1) every three (3) years. 3. Quorum and Committee s procedures Meetings shall be conducted at least four (4) times annually, or more frequently as circumstances dictate. In order to form a quorum for the meeting, the majority of the members present must be independent non-executive Directors. In the absence of the Chairman, the members present shall elect a Chairman for the meeting from amongst the members present.

27 AUDIT COMMITTEE (Cont d) Mutiara Goodyear Development Berhad (40282-V) 25 The Company Secretary shall be appointed Secretary of the Audit Committee ( the Secretary ). The Secretary in conjunction with the Chairman, shall draw up an agenda, which shall be circulated together with the relevant supporting papers, at least a few days prior to each meeting to the members of the Committee. The minutes shall be circulated to members of the Board. The Audit Committee may, as and when deemed necessary, invite other Board members and senior management members to attend the meetings. The presence of the external auditors will also be requested. The Chairman shall submit an annual report to the Board summarising the Audit Committee s activities during the year and the related significant results and findings. The Audit Committee shall meet at least once (1) annually with the management and the external auditors in separate sessions to discuss any matters with them without the presence of any executive member of the Board. The Audit Committee shall regulate the manner of proceedings of its meetings, having regard to normal conventions on such matter. 4. Authority The Audit Committee is authorised to seek any information it requires from employees, who are required to cooperate with any request made by the Committee. The Audit Committee shall have full and unlimited access to any information pertaining to the Group. The Audit Committee shall have direct communication channels with the internal and external auditors and with senior management of the Group and shall be able to convene meetings with the external auditors whenever deemed necessary. The Audit Committee shall have the resources that are required to perform its duties. The Committee can obtain, at the expense of the Company, outside legal or other independent professional advice it considers necessary. Where the Audit Committee is of the view that a matter reported by it to the Board has not been satisfactorily resolved resulting in a breach of the Listing Requirements, the Committee shall promptly report such matter to Bursa Securities. 5. Responsibilities and duties Review with the external auditor, the audit scope and plan, including any changes to the planned scope of the audit plan. Review the adequacy of the internal audit scope and plan, functions and resources of the internal audit function and that it has the necessary authority to carry out its work. Review the external and internal audit reports to ensure that appropriate and prompt remedial action is taken by management on major deficiencies in controls or procedures that are identified. Review major audit findings and the management s response during the year with management, external auditors and internal auditors, including the status of previous audit recommendations. Review the assistance given by the Group s officers to the auditors, and any difficulties encountered in the course of the audit work, including any restrictions on the scope of activities or access to required information. Bandar Tasek Mutiara Nadayu Melawati annual report 2010

28 26 AUDIT COMMITTEE (Cont d) Review the independence and objectivity of the external auditors and their services, including non-audit services and the professional fees, so as to ensure a proper balance between objectivity and value for money. Review the appointment and performance of external auditors, the audit fee and any question of resignation or dismissal before making recommendations to the Board. Review the adequacy and integrity of internal control systems, including enterprise risk management, management information system, and the internal auditors and/or external auditors evaluation of the said systems. Direct and where appropriate supervise any special projects or investigation considered necessary, and review investigation reports on any major defalcations, frauds and thefts. Review the quarterly results and the year end financial statements, prior to the approval by the Board focusing particularly on: - changes in or implementation of major accounting policy changes; - significant or unusual events; and - compliance with the accounting standards and other legal requirements; Review procedures in place to ensure that the Group is in compliance with the Companies Act 1965, the Main Market Listing Requirements of Bursa Securities and other legislative and reporting requirements. Review 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 question on management integrity. Any other activities, as authorised by the Board. 6. Meetings and Attendance During the financial year ended 30 April 2010, four (4) Audit Committee meetings were held. Details of the Audit Committee members attendence are as follows:- - En Abd Rahman Bin Mohamad (4/4) - Dato Ikmal Hijaz Bin Hashim (4/4) The other Audit Committee member, Dato Seri Ismail Bin Shahudin was appointed as a member subsequent to the last Audit Committee meeting held during the financial year ended 30 April In addition to the Audit Committee members, the General Manager - Finance, senior management and external auditors are invited for attendance at each meeting. Upon the request of the external auditors, the Chairman shall convene a meeting of the Audit Committee to consider any matter the external auditors believe should be brought to the attention of the Board. 7. Internal Audit Function Details of Internal Audit Function are set out on page 23 of the Annual Report. 8. Summary of Activities during the Financial Year The main activities undertaken by the Audit Committee during the financial year were as follows:- - Held meetings to review and discuss the unaudited quarterly interim financial reports and the audited financial statements of the Company and of the Group prior to recommending the same for approval by the Board, upon being satisfied that the financial reporting and disclosure requirements of the relevant authorities had been complied with. - The Audit Committee met with the external auditors and discussed the nature and scope of the audit, considered any significant changes in accounting and auditing issues, reviewed audit issues and concerns affecting the financial statements of the Company and its subsidiaries and discussed applicable accounting standards that may have significant implication on the Group s financial statements. - The Audit Committee also discussed and reviewed the Group s related party transactions and reported the same to the Board. - The Audit Committee also reviewed the Risk Management Framework, Risk Management Report and Internal Audit Plan and subsequently recommended to the Board for approval.

29 Mutiara Goodyear Development Berhad (40282-V) 27 NOTICE OF ANNUAL GENERAL MEETING NOTICE IS HEREBY GIVEN THAT the Thirty-First Annual General Meeting of Mutiara Goodyear Development Berhad will be held at The Eugenia, Ground Floor, Sime Darby Convention Centre, 1A, Jalan Bukit Kiara 1, Kuala Lumpur on Wednesday, 27 October 2010 at a.m. for the following purposes:- Nadayu Melawati annual report 2010

30 28 NOTICE OF ANNUAL GENERAL MEETING (Cont d) AGENDA 1. To receive the Audited Financial Statements together with the Reports of the Directors and Auditors thereon for the financial year ended 30 April To approve Directors fees of RM151, To approve the payment of a First and Final Single Tier Dividend of 3.5% for the financial year ended 30 April Resolution 1 Resolution 2 Resolution 3 4. To re-elect the following Directors retiring pursuant to Article 89 of the Company s Articles of Association and being eligible, offer themselves for re-election: (i) Encik Hamidon Bin Abdullah (ii) Mr Lim Beng Guan Resolution 4 Resolution 5 5. To re-elect the following Directors retiring pursuant to Article 96 of the Company s Articles of Association and being eligible, offer themselves for re-election: (i) Mr Cheang Chee Leong (ii) Mr Chen Khai Voon 6. To re-appoint Messrs KPMG as Auditors of the Company for the ensuing year and to authorise the Directors to fix their remuneration. Resolution 6 Resolution 7 Resolution 8 As Special BusinessES: To consider and, if thought fit, to pass the following Ordinary and Special Resolutions:- Ordinary Resolutions 7. Authority to Allot and Issue Shares Pursuant to Section 132D of the Companies Act, 1965 THAT, subject to the Companies Act, 1965, Articles of Association of the Company and approval from Bursa Malaysia Securities Berhad and other Governmental or regulatory bodies, full authority be and is hereby given to the Board of Directors pursuant to Section 132D of the Companies Act, 1965 to allot and issue shares in the capital of the Company at any time upon such terms and conditions and for such purposes as the Board of Directors may, in their absolute discretion, deem fit provided that the aggregate number of shares to be issued pursuant to this resolution does not exceed ten percent (10%) of the issued share capital of the Company for the time being and that such authority shall continue to be in force until the conclusion of the next Annual General Meeting of the Company. Resolution 9

31 NOTICE OF ANNUAL GENERAL MEETING (Cont d) Mutiara Goodyear Development Berhad (40282-V) Proposed Renewal of Share Buy-Back Authority THAT, subject always to the Companies Act, 1965 ( the Act ), rules, regulations and orders made pursuant to the Act, provisions of the Company s Memorandum and Articles of Association, Bursa Malaysia Securities Berhad ( Bursa Securities ) Main Market Listing Requirements and any other relevant authorities or approval for the time being in force or as may be amended from time to time, the Directors of the Company be and are hereby authorised to make purchases of ordinary shares of RM1.00 each in the Company s issued and paid-up ordinary share capital as may be determined by the Directors of the Company from time to time through Bursa Securities upon such terms and conditions as the Directors may in their absolute discretion deem fit, necessary or expedient in the interest of the Company ( Share Buy-Back Mandate ), provided that: (a) the aggregate number of ordinary shares which may be purchased and/or held by the Company as treasury shares shall not exceed ten percent (10%) of the total issued and paid-up ordinary share capital of the Company at any point in time pursuant to the said purchase(s); (b) the maximum funds to be allocated by the Company for the purpose of purchasing its ordinary shares shall not exceed the total retained earnings and share premium reserves of the Company for the financial year ended 30 April 2010; and (c) the authority conferred by this resolution shall be effective immediately upon the passing of this resolution and shall continue to be in force until: (i) the conclusion of the next Annual General Meeting ( AGM ) of the Company, at which time the authority shall lapse unless by ordinary resolution passed at that meeting, the authority is renewed, either unconditionally or subject to conditions; (ii) the expiration of the period within which the next AGM of the Company is required to be held pursuant to Section 143(1) of the Act (but shall not extend to such extension as may be allowed pursuant to Section 143(2) of the Act; or (iii) revoked or varied by resolution passed by the shareholders in general meeting, whichever is earlier. AND THAT upon completion of the purchase by the Company of its own ordinary shares, the Directors of the Company be and are hereby authorised to deal with the ordinary shares purchased in their absolute discretion in the following manner: (aa) cancel all the ordinary shares so purchased; and/or (bb) retain the ordinary shares so purchased in treasury for distribution as dividend to the shareholders and/or resell on the market of Bursa Securities; and/or (cc) retain part thereof as treasury shares and cancel the remainder. AND THAT the Directors of the Company be and are hereby authorised to take all such steps as are necessary (including the opening and maintaining of depository account(s) under the Securities Industry (Central Depositories) Act, 1991) and enter into any agreements, arrangements and guarantees with any party or parties to implement, finalise and give full effect to the Share Buy- Back Mandate with full powers to assent to any conditions, modifications, revaluations, variations and/or amendments (if any) as may be imposed by the relevant authorities from time to time or as the Directors may in their absolute discretion deem necessary and to do all such acts and things as the Directors may deem fit and expedient in the best interests of the Company. Resolution 10 annual report 2010

32 30 NOTICE OF ANNUAL GENERAL MEETING (Cont d) Special Resolution 9. Proposed Amendment to the Articles of Association of the Company THAT the existing Article 147 of the Company s Articles of Association be deleted in its entirety and be substituted with the following new Article 147:- Existing Article 147 Any dividend, interest or other money payable in cash in respect of shares may be paid by cheque or warrant and sent through the post directed to the registered address of the holder in the Register or Record of Depositors or if several persons are entitled thereto in consequence of the death or bankruptcy of the holder, to any one of such persons or to such person and to such address as such persons may by writing direct. Every such cheque or warrant shall be made payable to the order of the person to whom it is sent or person or persons entitled to the share in consequence of the death or bankruptcy of the holder may direct and payment of any such cheque or warrant shall operate as a good discharge to the Company in respect of the dividend represented thereby. Every such cheque or warrant shall be sent at the risk of the person entitled to the money thereby presented. New Article 147 Any dividend, interest or other money payable in cash in respect of shares may be paid by cheque or warrant sent through the post directed to the registered address of the holder who is named in the Register of Members or Record of Depositors or if several persons are entitled thereto in consequence of the death or bankruptcy of the holder, to any one of such persons or to such person and to such address as such person may in writing direct or by way of telegraphic transfer or electronic transfer or remittance to the nominated bank account of the holder or person entitled to such payment. Every such cheque or warrant or telegraphic transfer or electronic transfer or remittance shall be made payable to the order of the person to whom it is sent or person or persons entitled to the share in consequence of the death or bankruptcy of the holder may in writing direct and the payment of such cheque or warrant or telegraphic transfer or electronic transfer or remittance shall operate as a good and full discharge to the Company in respect of the payment represented thereby, notwithstanding that it may subsequently appear that the same has been stolen or that the endorsement thereon has been forged or that there is discrepancy in the details of the bank account given by the holder or person entitled to such payment. Every such cheque or warrant or telegraphic transfer or electronic transfer or remittance shall be sent at the risk of the person entitled to the money thereby represented. Resolution To transact any other business of which due notice shall have been given.

33 NOTICE OF ANNUAL GENERAL MEETING (Cont d) Mutiara Goodyear Development Berhad (40282-V) 31 NOTICE OF BOOKS CLOSURE NOTICE IS ALSO HEREBY GIVEN THAT the first and final single tier dividend of 3.5% for the financial year ended 30 April 2010, if approved by the shareholders at the Thirty-First Annual General Meeting, will be paid on 26 January 2011 to Depositors registered in the Record of Depositors at the close of business on 12 January A Depositor shall qualify for entitlement only in respect of: a) Shares transferred into the Depositor s Securities account before 4.00 p.m. on 12 January 2011 in respect of ordinary transfers; b) Shares bought on Bursa Malaysia Securities Berhad on a cum entitlement basis according to the Rules of Bursa Malaysia Securities Berhad. BY ORDER OF THE BOARD ANGELINE NG SEK OI Company Secretary Kuala Lumpur 5 October 2010 Notes: 1. A member of the Company entitled to attend and vote is entitled to appoint a proxy to attend and vote instead of him. A proxy may but need not be a member of the Company. 2. The instrument appointing a proxy must be deposited at the registered office of the Company at Tingkat 11, Menara Tun Razak, Jalan Raja Laut, Kuala Lumpur, not less than forty-eight (48) hours before the time appointed for holding the Meeting or any adjournment thereof. 3. Where a member appoints more than one (1) proxy, the appointment shall be invalid unless he specifies the proportion of his holdings to be represented by each proxy. 4. If the appointer is a corporation, this form shall be executed under its common seal or under the hand of its officer or attorney duly authorised. EXPLANATORY NOTES TO SPECIAL BUSINESSES 1. Resolution 9 - Authority to Allot and Issue Shares Pursuant to Section 132D of the Companies Act, 1965 This proposed Ordinary Resolution, if passed, is a renewal of the shareholders mandate obtained from the last Annual General Meeting ( AGM ) of the Company and will empower the Directors of the Company from the date of the forthcoming AGM until the next AGM to allot and issue shares of the Company up to an aggregate amount not exceeding ten percent (10%) of the issued capital of the Company for the time being for such purpose as the Directors consider would be in the best interests of the Company. This authority will expire at the next AGM of the Company, unless revoked or varied at a general meeting. The mandate obtained from the shareholders at the last AGM had not been utilised and no new shares of the Company had been allotted and issued from the date of the last AGM to the date of this notice. Should the mandate be renewed by the shareholders at the forthcoming AGM and should any new shares be issued in pursuance therefrom, any proceeds raised from the issuance of the said new shares would be utilised for working capital purposes. 2. Resolution 10 - Proposed Renewal of Share Buy-Back Authority This proposed Ordinary Resolution, if passed, will empower the Directors to buy-back and/or hold up to a maximum of ten percent (10%) of the Company s issued and paid-up share capital at any point in time, by utilizing the funds allocated which shall not exceed the aggregate of the retained profits and/or share premium reserve of the Company. This authority, unless revoked or varied by the Company in a general meeting, will expire at the conclusion of the next AGM of the Company. Further information is set out in Part A : Statement to Shareholders in relation to the Proposed Renewal of Share Buy-Back Authority dated 5 October 2010 which is despatched together with the Company s 2010 Annual Report. 3. Resolution 11 - Proposed Amendment to the Articles of Association of the Company This proposed Special Resolution, if passed, will allow the Company to pay dividend, interest or other money payable in cash in respect of shares of the Company by way of telegraphic transfer or electronic transfer or remittance to the nominated bank account of the holder or person entitled to such payment, in line with and pursuant to the implementation of electronic dividend payment or edividend by Bursa Malaysia Securities Berhad. Further information is set out in Part B : Circular to Shareholders in relation to the Proposed Amendment to the Articles of Association of the Company dated 5 October 2010 which is despatched together with Company's 2010 Annual Report. annual report 2010

34 32 NOTICE OF ANNUAL GENERAL MEETING (Cont d) STATEMENT ACCOMPANYING NOTICE OF ANNUAL GENERAL MEETING 1. Directors who are standing for re-election are :- a) Encik Hamidon Bin Abdullah - Retiring pursuant to Article 89 of the Company s Articles of Association. b) Mr Lim Beng Guan - Retiring pursuant to Article 89 of the Company s Articles of Association. c) Mr Cheang Chee Leong - Retiring pursuant to Article 96 of the Company s Articles of Association. d) Mr Chen Khai Voon - Retiring pursuant to Article 96 of the Company s Articles of Association. Details of the aforesaid Directors are set out in the Profile of Directors appearing on pages 13 to 15 of the Annual Report. Their shareholdings in the Company (if any) are set out on page 86 of the Annual Report. 2. Details of Attendance of Directors at Board Meetings. There were four (4) Board Meetings held during the financial year ended 30 April Details of attendance of the Directors are set out on page 17 of the Annual Report. 3. The Thirty-First Annual General Meeting of the Company will be held at The Eugenia, Ground Floor, Sime Darby Convention Centre, 1A, Jalan Bukit Kiara 1, Kuala Lumpur on Wednesday, 27 October 2010 at a.m.

35 Financial Statements Directors Report 34 Balance Sheets 37 Income Statements 38 Statement of Changes in Equity 39 Cash Flow Statements 40 Notes to the Financial Statements 42 Statement by Directors 80 Statutory Declaration 80 Independent Auditors Report 81

36 34 DIRECTORS REPORT for the year ended 30 April 2010 Mutiara Goodyear Development Berhad (Company No V) (Incorporated in Malaysia) and its subsidiaries 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 30 April PRINCIPAL ACTIVITIES The Company is principally engaged in investment holding, whilst the principal activities of the subsidiaries are as stated in Note 6 to the financial statements. There has been no significant change in the nature of these activities during the financial year. RESULTS Group Company RM 000 RM 000 Profit attributable to: Shareholders of the Company 3,240 8,111 Minority interest (4) RESERVES AND PROVISIONS 3,236 8,111 There were no material transfers to or from reserves and provisions during the financial year under review except as disclosed in the financial statements. DIVIDENDS Since the end of the previous financial year, the Company paid a final dividend of 3.00 sen per ordinary share less tax at 25% totalling RM5,195,000 (2.25 sen net per ordinary share) in respect of the financial year ended 30 April 2009 on 22 January The Directors have recommended a final single tier tax exempted dividend of approximately 3.50 sen per ordinary share totalling RM8,082,000 in respect of the financial year ended 30 April 2010, which is subject to approval by the shareholders at the forthcoming Annual General Meeting. The proposed final dividend has not been accounted for in the financial statements. DIRECTORS OF THE COMPANY Directors who served since the date of the last report are: Hamidon Bin Abdullah Lim Beng Guan Choong Khoong Liang Abd Rahman bin Mohamad Kee Cheng Teik Dato Seri Ismail Bin Shahudin Dato Ikmal Hijaz Bin Hashim Cheang Chee Leong (appointed on ) Chen Khai Voon (appointed on ) Sa Chee Peng (alternate director to Chen Khai Voon) (appointed on ) Tan Su Tan Hooi Thean (resigned on )

37 DIRECTORS REPORT for the year ended 30 April 2010 Mutiara Goodyear Development Berhad (40282-V) 35 DIRECTORS OF THE COMPANY (Cont d) The interests and deemed interests in the ordinary shares and debentures of the Company and of its related companies (other than wholly-owned subsidiaries) of those who were Directors at 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 of RM1.00 each At / Date of At appointment Bought Sold Shareholdings in which Directors have direct interests in the Company Hamidon Bin Abdullah 5,000,800 5,000,800 Lim Beng Guan 6,285,700 6,285,700 Abd Rahman Bin Mohamad 10,000 10,000 Kee Cheng Teik 6,410,000 1,302,100 7,712,100 Shareholdings in which Directors have indirect interests in the Company Lim Beng Guan 18,100,000 18,100,000 Choong Khoong Liang 18,100,000 18,100,000 Kee Cheng Teik 18,302,100 1,697,900 20,000,000 Chen Khai Voon 69,915,600 69,915,600 By virtue of his interest in the shares of the Company, Chen Khai Voon is also deemed to have interests in the shares of all subsidiaries disclosed in Note 6 to the financial statements to the extent that the Company has interest. The other Directors holding office at 30 April 2010 did not have any interest in the ordinary shares and debentures of the Company and of its related corporations during the financial year. 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 emoluments received or due and receivable by Directors as shown in the financial statements) 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, other than certain Directors who have significant financial interests in companies which traded with certain companies in the Group in the ordinary course of business as disclosed in Note 31 to the financial statements. 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 There were no changes in the authorised, issued and paid-up capital of the Company during the financial year. There were no debentures issued during the financial year other than as disclosed in the notes to the financial statements. OPTIONS GRANTED OVER UNISSUED SHARES No options were granted to any person to take up unissued shares of the Company during the financial year. annual report 2010

38 36 DIRECTORS REPORT for the year ended 30 April 2010 OTHER STATUTORY INFORMATION Before the balance sheets and income statements of the Group and of the Company were made out, the Directors took reasonable steps to ascertain that: i) there are no bad debts to be written off and no provision need to be made for doubtful debts, and ii) all current assets have been stated at the lower of cost and net realisable value. At the date of this report, the Directors are not aware of any circumstances: i) that would render it necessary to write off any bad debts or provide for any doubtful debts, or ii) that would render the value attributed to the current assets in the Group s and in the Company s financial statements 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. 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, the financial performance of the Group and of the Company for the financial year ended 30 April 2010 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 except for the early adoption of IC Interpretation 15, Agreements for the Construction of Real Estate as disclosed in Note 34 to the financial statements. SIGNIFICANT EVENTS DURING AND SUBSEQUENT TO THE FINANCIAL YEAR The significant events during and subsequent to the financial year are as disclosed in Note 33 to the financial statements. AUDITORS The auditors, Messrs KPMG, have indicated their willingness to accept re-appointment. Signed on behalf of the Board of Directors in accordance with a resolution of the Directors:... Cheang Chee Leong... Hamidon Bin Abdullah Kuala Lumpur, Date: 6 August 2010

39 BALANCE SHEETS at 30 April 2010 Mutiara Goodyear Development Berhad (40282-V) 37 Mutiara Goodyear Development Berhad (Company No V) (Incorporated in Malaysia) and its subsidiaries Group Company Restated Note RM 000 RM 000 RM 000 RM 000 Assets Property, plant and equipment 3 2,531 3,464 Intangible asset 4 16,219 16,219 Investment properties 5 27,056 61,596 Investments in subsidiaries 6 159, ,997 Investment in an associate 7 7, Long term receivables 8 118, ,064 Other investments 9 5,500 7,516 2,016 Land held for property development , ,303 Deferred tax assets 11 8,905 1,242 Total non-current assets 298, , , ,077 Inventories , ,046 Receivables, deposits and prepayments 13 14,261 26,541 55,877 24,926 Current tax assets ,899 Cash and cash equivalents 15 56,306 33, Assets classified as held for sale 16 67,459 60,072 Total current assets 376, ,467 56,049 25,045 Total assets 674, , , ,122 Equity Share capital 230, , , ,914 Reserves 19,341 19,341 19,341 19,341 Retained profits/(accumulated losses) 61,589 63, (2,836) Total equity attributable to shareholders of the Company , , , ,419 Minority interest 4,494 4,498 Total equity 316, , , ,419 Liabilities Loans and borrowings ,343 99,097 56,730 40,570 Deferred tax liabilities 11 27,126 24,108 Other long term liabilities 19 1,013 Total non-current liabilities 187, ,218 56,730 40,570 Payables and accruals 20 37,193 62,421 22,699 16,167 Loans and borrowings 18 40,467 67,443 5,003 3,960 Current tax liabilities 4, Deferred revenue 21 88,792 19,895 Total current liabilities 170, ,567 27,886 20,133 Total liabilities 358, ,785 84,616 60,703 Total equity and liabilities 674, , , ,122 The notes on pages 42 to 79 are an integral part of these financial statements. annual report 2010

40 38 INCOME STATEMENTS for the year ended 30 April 2010 Mutiara Goodyear Development Berhad (Company No V) (Incorporated in Malaysia) and its subsidiaries Group Company Restated Note RM 000 RM 000 RM 000 RM 000 Revenue 22 52, ,755 17,500 12,260 Results from operating activities 22 13,650 95,400 10,700 7,992 Interest expense 24 (4,564) (5,262) (3,835) (4,407) Interest income 680 1,373 2,695 2,667 Share of loss of associate company (212) (25) Profit before tax 9,554 91,486 9,560 6,252 Tax expense 25 (6,318) (21,639) (1,449) (923) Profit for the year 3,236 69,847 8,111 5,329 Attributable to: Shareholders of the Company 3,240 69,899 8,111 5,329 Minority interest (4) (52) Profit for the year 3,236 69,847 8,111 5,329 Earnings per share (sen) - Basic Dividend per share (sen) - net The notes on pages 42 to 79 are an integral part of these financial statements.

41 STATEMENTS OF CHANGES IN EQUITY for the year ended 30 April 2010 Mutiara Goodyear Development Berhad (40282-V) 39 Attributable to shareholders of the Company Distributable Non- (Accumulated distributable loss)/ Share Share Retained Minority Total capital premium profits Total interest equity Group Note RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 At 1 May 2008 As previously reported 230,914 19,341 53, ,242 5, ,042 Effect of adopting IC Interpretation (55,216) (55,216) (55,216) At 1 May 2008, restated 230,914 19,341 (1,229) 249,026 5, ,826 Profit for the year 69,899 69,899 (52) 69,847 Dividends final 27 (5,126) (5,126) (5,126) Acquisition of equity interest in a subsidiary (1,250) (1,250) At 30 April 2009/ 1 May 2009, restated 230,914 19,341 63, ,799 4, ,297 Profit for the year 3,240 3,240 (4) 3,236 Dividends final 27 (5,195) (5,195) (5,195) At 30 April ,914 19,341 61, ,844 4, ,338 Note 17.1 Distributable Non- (Accumulated distributable losses)/ Share Share Retained capital premium profits Total Company Note RM 000 RM 000 RM 000 RM 000 At 1 May ,914 19,341 (3,039) 247,216 Profit for the year 5,329 5,329 Dividends final 27 (5,126) (5,126) At 30 April 2009/ 1 May ,914 19,341 (2,836) 247,419 Profit for the year 8,111 8,111 Dividends final 27 (5,195) (5,195) At 30 April ,914 19, ,335 Note 17.1 Note 17.2 The notes on pages 42 to 79 are an integral part of these financial statements. annual report 2010

42 40 CASH FLOW STATEMENTS for the year ended 30 April 2010 Mutiara Goodyear Development Berhad (Company No V) (Incorporated in Malaysia) and its subsidiaries Group Company Restated Note RM 000 RM 000 RM 000 RM 000 Cash flows from operating activities Profit before tax 9,554 91,486 9,560 6,252 Adjustments for: Allowance for diminution in value of other investment 9 2, , Investment property - fair value changes (6,000) Depreciation of property, plant and equipment ,177 Dividend income 22 (11,600) (8,600) Loss/(Gain) on disposal of property, plant and equipment (66) Interest expense 4,564 5,262 3,835 4,407 Interest income (680) (1,373) (2,695) (2,667) Property, plant and equipment written off Share of loss in an associate Operating profit before working capital changes 10,643 97,130 1,116 6 Land held for property development (23,229) 12,280 Inventories (74,588) (75,599) Receivables, deposits and prepayments 4,973 30,705 (30,951) 14,685 Assets classified as held for sale 33,153 (60,072) Payables and accruals (25,228) 1,331 6,532 (3,977) Deferred revenue 68,897 19,895 Cash (used in)/generated from operations (5,379) 25,670 (23,303) 10,714 Interest received 680 1,373 2,695 2,667 Interest paid (4,546) (4,371) (133) (343) Net tax refund/(paid) 3,792 (10,452) (1,271) (861) Net cash (used in)/generated from operating activities (5,453) 12,220 (22,012) 12,177 Cash flows from investing activities Acquisition of property, plant and equipment (i) (216) (545) Acquisition from minority interest (6,647) Dividend received 11,600 8,600 Withdrawal/(Placement) of pledged deposits 387 (10) Proceeds from disposal of property, plant and equipment Increase in investment in an associate (ii) (150) (300) Net cash generated from/(used in) investing activities 303 (6,541) 11,600 8,600

43 CASH FLOW STATEMENTS for the year ended 30 April 2010 Mutiara Goodyear Development Berhad (40282-V) 41 Group Company Restated Note RM 000 RM 000 RM 000 RM 000 Cash flows from financing activities Interest paid (844) (3,702) (4,064) Advances to subsidiaries 2,159 (7,624) Dividend paid to shareholders of the Company (5,195) (5,126) (5,195) (5,126) Payment of finance lease liabilities (346) (737) Payment of finance lease interest (18) (47) Proceeds from loans and borrowings 100,479 28,083 20,000 Repayment of loans and borrowings (64,958) (22,297) (2,668) (2,507) Repayment to former shareholder of a subsidiary (1,013) Net cash generated from/(used in) financing activities 28,949 (968) 10,594 (19,321) Net increase in cash and cash equivalents 23,799 4, ,456 Cash and cash equivalents at 1 May (iii) 30,096 25,385 (1,173) (2,629) Cash and cash equivalents at 30 April (iii) 53,895 30,096 (991) (1,173) Notes to cash flow statement i) Acquisition of property, plant and equipment During the financial year, the Group acquired property, plant and equipment with an aggregate cost of RM326,000 ( RM655,000), of which RM110,000 ( RM110,000) was acquired under finance lease arrangements. ii) Non-cash transaction Investing activities During the financial year, a subsidiary acquired 7,307,000 preference shares of RM1.00 each at par via the capitalisation of debts. iii) Cash and cash equivalents Cash and cash equivalents in the cash flow statements comprise the following balance sheets amounts: Group Company RM 000 RM 000 RM 000 RM 000 Cash and bank balances (excluding the Sinking Fund Account) 42,482 19, Liquid investment 9,196 9, Deposits (excluding deposits pledged) 3,380 3,038 Bank overdrafts (1,163) (2,177) (1,163) (1,292) 53,895 30,096 (991) (1,173) The notes on pages 42 to 79 are an integral part of these financial statements. annual report 2010

44 42 NOTES TO THE FINANCIAL STATEMENTS Mutiara Goodyear Development Berhad (Company No V) (Incorporated in Malaysia) and its subsidiaries Mutiara Goodyear Development 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 address of its registered office and principal place of business is as follows: Registered office and principal place of business 11 th Floor, Menara Tun Razak Jalan Raja Laut Kuala Lumpur The consolidated financial statements as at and for the year ended 30 April 2010 comprise the Company and its subsidiaries (together referred to as the Group) and the Group s interest in an associate. The financial statements of the Company as at and for the year ended 30 April 2010 do not include other entities. The Company is principally engaged in investment holding, whilst the principal activities of the subsidiaries are as stated in Note 6 to the financial statements. The financial statements were approved by the Board of Directors on 6 August BASIS OF PREPARATION (a) Statement of compliance The financial statements of the Group have been prepared in accordance with Financial Reporting Standards (FRS), accounting principles generally accepted and the Companies Act, 1965 in Malaysia. The Group has not applied the following accounting standards, amendments and interpretations that have been issued by the Malaysian Accounting Standards Board (MASB) but are not yet effective for the Group: FRSs, Interpretations and amendments effective for annual periods beginning on or after 1 July 2009 FRS 8, Operating Segments FRSs, Interpretations and amendments effective for annual periods beginning on or after 1 January 2010 FRS 4, Insurance Contracts FRS 7, Financial Instruments: Disclosures FRS 101, Presentation of Financial Statements (revised) FRS 123, Borrowing Costs (revised) FRS 139, Financial Instruments: Recognition and Measurement Amendments to FRS 1, First-time Adoption of Financial Reporting Standards and FRS 127, Consolidated and Separate Financial Statements: Cost of an Investment in a Subsidiary, Jointly Controlled Entity or Associate Amendments to FRS 2, Share-based Payment: Vesting Conditions and Cancellations Amendments to FRS 132, Financial Instruments: Presentation and FRS 101, Presentation of Financial Statements - Puttable Financial Instruments and Obligation Arising on Liquidation Amendments to FRS 139, Financial Instruments: Recognition and Measurement, FRS 7, Financial Instruments: Disclosures and IC Interpretation 9, Reassessment of Embedded Derivatives Amendments to FRS 139, Financial Instruments: Recognition and Measurement Improvements to FRSs (2009) IC Interpretation 9, Reassessment of Embedded Derivatives IC Interpretation 10, Interim Financial Reporting and Impairment IC Interpretation 11, FRS 2 - Group and Treasury Share Transactions IC Interpretation 13, Customer Loyalty Programmes IC Interpretation 14, FRS The Limit on a Defined Benefit Asset, Minimum Funding Requirements and Their Interaction FRSs, Interpretations and amendments effective for annual periods beginning on or after 1 March 2010 Amendments to FRS 132, Financial Instruments: Presentation - Classification of Rights Issues

45 NOTES TO THE FINANCIAL STATEMENTS Mutiara Goodyear Development Berhad (40282-V) BASIS OF PREPARATION (Cont d) (a) Statement of compliance (Cont d) FRSs, Interpretations and amendments effective for annual periods beginning on or after 1 July 2010 FRS 1, First-time Adoption of Financial Reporting Standards (revised) FRS 3, Business Combinations (revised) FRS 127, Consolidated and Separate Financial Statements (revised) Amendments to FRS 2, Share-based Payment Amendments to FRS 5, Non-current Assets Held for Sale and Discontinued Operations Amendments to FRS 138, Intangible Assets IC Interpretation 12, Service Concession Agreements IC Interpretation 16, Hedges of a Net Investment in a Foreign Operation IC Interpretation 17, Distribution of Non-cash Assets to Owners Amendments to IC Interpretation 9, Reassessment of Embedded Derivatives FRSs, Interpretations and amendments effective for annual periods beginning on or after 1 January 2011 Amendments to FRS 1, First-time Adoption of Financial Reporting Standards - Limited Exemption from Comparative FRS 7 Disclosures for First-time Adopters - Additional Exemptions for First-time Adopters Amendments to FRS 7, Financial Instruments: Disclosures - Improving Disclosures about Financial Instruments Amendments to FRS 2, Group Cash-settled Share Based Payment IC Interpretation 4, Determining whether an Arrangement contains a Lease IC Interpretation 18, Transfers of Assets from Customers The Group plans to apply the abovementioned standards, amendments and interpretations: from the annual period beginning 1 May 2010 for those standards, amendments or interpretations that will be effective for annual periods beginning on or after 1 July 2009, 1 January 2010 and 1 March 2010, except for FRS 4, Amendments to FRS 2, IC Interpretation 11, IC Interpretation 13 and IC Interpretation 14 which are not applicable to the Group; and from the annual period beginning 1 May 2011 for those standards, amendments or interpretations that will be effective for annual periods beginning on or after 1 July 2010 and 1 January 2011, except for Amendments to FRS 2, IC Interpretation 12, IC Interpretation 16, IC Interpretation 17 and IC Interpretation 18 which are not applicable to the Group. The initial application of a standard, an amendment or an interpretation, which will be applied prospectively, is not expected to have any financial impact to the current and prior periods financial statements upon their first adoption. The impacts and disclosures as required by FRS (b), Accounting Policies, Changes in Accounting Estimates and Errors, in respect of applying FRS 7 and FRS 139 are not disclosed by virtue of the exemptions given in these respective FRSs. Material impacts of initial application of a standard, an amendment or an interpretation, which will be applied retrospectively, are disclosed below: FRS 8, Operating Segments FRS 8 replaces FRS , Segment Reporting and requires the identification and reporting of operating segments based on internal reports that are regularly reviewed by the chief operating decision maker of the Group in order to allocate resources to the segment and to assess its performance. Currently, the Group presents segment information in respect of its business segments (see Note 28). Under FRS 8, the Group will continue to present segment information in respect of its operating segments by products, namely property development and property investment. The Group has early adopted IC Interpretation 15 for the current financial year as permitted. The effect of adopting IC Interpretation 15 is set out in Note 34 to the financial statements. annual report 2010

46 44 NOTES TO THE FINANCIAL STATEMENTS 1. BASIS OF PREPARATION (Cont d) (b) Basis of measurement The financial statements have been prepared on the historical cost basis unless otherwise stated. (c) Functional and presentation currency These financial statements are presented in Ringgit Malaysia (RM), which is the Company s functional currency. All financial information presented in RM has been rounded to the nearest thousand, unless otherwise stated. (d) Use of estimates and judgements The preparation of financial statements 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 estimate is revised and in any future periods affected. In particular, information about significant areas of estimation uncertainty and critical judgements in applying accounting policies that have the most significant effect on the amounts recognised in the financial statements are described in the following notes: Note 4 - valuation of intangible assets Note 5 & 16 - valuation of investment properties and assets classified as held for sale Note 9 - valuation of other investments Note 11 - recognition of unutilised tax losses Note 10 and 12 - cost of sales and net realisable value for property development projects 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. The comparative included in the financial statements have been restated to take into account the effect of early adopting IC Interpretation 15, Agreements for the Construction of Real Estate (see Note 35). (a) Basis of consolidation (i) Subsidiaries Subsidiaries are entities controlled by the Group. Control exists when the Group has the ability to exercise its power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. In assessing control, potential voting rights that presently are exercisable are taken into account. Subsidiaries are consolidated using the purchase method of accounting. Under the purchase method of accounting, the financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases. Investments in subsidiaries are stated in the Company s balance sheet at cost less impairment losses.

47 NOTES TO THE FINANCIAL STATEMENTS Mutiara Goodyear Development Berhad (40282-V) SIGNIFICANT ACCOUNTING POLICIES (Cont d) (a) Basis of consolidation (Cont d) (ii) Associate An associate is an entity in which the Group has significant influence, but not control, over the financial and operating policies. An associate is accounted for in the consolidated financial statements using the equity method unless it is classified as held for sale (or included in a disposal group that is classified as held for sale). The consolidated financial statements include the Group s share of the profit or loss of the equity accounted associate, after adjustments, if any, to align the accounting policies with those of the Group, from the date that significant influence commences until the date that significant influence ceases. When the Group s share of losses exceeds its interest in an equity accounted associate, the carrying amount of that interest (including any long-term investments) is reduced to nil and the recognition of further losses is discontinued except to the extent that the Group has an obligation or has made payments on behalf of the investee. Investment in associate is stated in the Company s balance sheet at cost less any impairment losses, unless the investment is classified as held for sale (or included in a disposal group that is classified as held for sale). (iii) Changes in Group composition Where a subsidiary issues new equity shares to minority interests for cash consideration and the issue price has been established at fair value, the reduction in the Group s interests in the subsidiary is accounted for as a disposal of equity interest with the corresponding gain or loss recognised in the income statements. When a group purchases a subsidiary s equity shares from minority interests for cash consideration and the purchase price has been established at fair value, the accretion of the Group s interests in the subsidiary is accounted for as a purchase of equity interest for which the acquisition method of accounting is applied. The Group treats all other changes in group composition as equity transactions between the Group and its minority shareholders. 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) Minority interest Minority interest at the balance sheet date, being the portion of the net identifiable assets (excluding goodwill) of subsidiaries attributable to equity interests that are not owned by the Company, whether directly or indirectly through subsidiaries, are presented in the consolidated balance sheet and statement of changes in equity within equity, separately from equity attributable to the equity shareholders of the Company. Minority interest in the results of the Group are presented on the face of the consolidated income statement as an allocation of the total profit or loss for the year between minority interest and the equity shareholders of the Company. Where losses applicable to the minority exceed the minority s interest in the equity of a subsidiary, the excess, and any further losses applicable to the minority, are charged against the Group s interest except to the extent that the minority has a binding obligation to, and is able to, make additional investment to cover the losses. If the subsidiary subsequently reports profits, the Group s interest is allocated with all such profits until the minority s share of losses previously absorbed by the Group has been recovered. (v) Transactions eliminated on consolidation Intra-group balances, and any unrealised income and expenses arising from intra-group transactions, are eliminated in preparing the consolidated financial statements. Unrealised gains arising from transactions with equity accounted investees are eliminated against the investment to the extent of the Group s interest in the investee. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment. annual report 2010

48 46 NOTES TO THE FINANCIAL STATEMENTS 2. SIGNIFICANT ACCOUNTING POLICIES (Cont d) (b) Property, plant and equipment (i) Recognition and measurement Items of property, plant and equipment are stated at cost less accumulated depreciation and impairment losses, if any. Freehold land is stated at cost less impairment losses, if any. 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. 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. Gains and losses on disposal of an item of property, plant and equipment are determined by comparing the proceeds from disposal with the carrying amount of property, plant and equipment and are recognised net within other operating income or administrative expenses respectively in the income statements. (ii) Reclassification to investment property Property that is being constructed for future use as investment property is accounted for as property, plant and equipment until construction or development is complete, at which time it is remeasured to fair value and reclassified as investment property. Any gain or loss arising on remeasurement is recognised in the income statements. (iii) Subsequent costs The cost of replacing part 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 part will flow to the Group and its cost can be measured reliably. The carrying amount of those parts that are replaced is derecognised. The costs of the day-to-day servicing of property, plant and equipment are recognised in the income statement as incurred. (iv) Depreciation Depreciation is recognised in the income statement on a straight-line basis over the estimated useful lives of each part of an item of property, plant and equipment. 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 Office equipment, furniture and fittings Office renovation Car park equipment Computers Motor vehicles 50 years 10 years 10 years 10 years 4 years 5-7 years The depreciable amount is determined after deducting the residual value. Depreciation methods, useful lives and residual values are reassessed at the balance sheet date.

49 NOTES TO THE FINANCIAL STATEMENTS Mutiara Goodyear Development Berhad (40282-V) SIGNIFICANT ACCOUNTING POLICIES (Cont d) (c) Leased assets Leases in terms of which the Group 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. Other leases are operating leases, except for leasehold land classified as investment property, and the leased assets are not recognised on the Group s balance sheet. Property interest held under an operating lease, which is held to earn rental income or for capital appreciation or both, is classified as investment property. (d) Intangible assets Goodwill Goodwill/(negative goodwill) arises on the acquisition of subsidiaries and is measured at cost less any accumulated impairment losses, if any. Goodwill represents the excess of the cost of the acquisition over the Group s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities of the acquiree. Any excess of the Group s interest in the net fair value of acquiree s identifiable assets, liabilities and contingent liabilities over the cost of acquisition is recognised immediately in income statements. Goodwill is allocated to cash-generating units and is tested annually for impairment or more frequently if events or changes in circumstances indicate that it might be impaired. (e) Investments in debt and equity securities Investments in debt and equity securities are recognised initially at fair value plus attributable transaction costs. Subsequent to initial recognition: Investments in non-current equity securities other than investments in subsidiaries are stated at cost less allowance for diminution in value; Investments in non-current debt securities are stated at amortised cost using the effective interest method less allowance for diminution in value; and All current investments are carried at the lower of cost and market value, determined on an individual investment basis by category of investments or all current investments are carried at market value. Where in the opinion of the Directors, there is a decline other than temporary in the value of non-current equity securities and non-current debt securities other than investment in subsidiaries, the allowance for diminution in value is recognised as an expense in the financial year in which the decline is identified. On disposal of an investment, the difference between net disposal proceeds and its carrying amount is recognised in the income statements. All investments in debt and equity securities are accounted for using settlement date accounting. Settlement date accounting refers to: a) the recognition of an asset on the day it is received by the entity, and b) the derecognition on an asset and recognition of any gain or loss on disposal on the date it is delivered. annual report 2010

50 48 NOTES TO THE FINANCIAL STATEMENTS 2. SIGNIFICANT ACCOUNTING POLICIES (Cont d) (f) Investment property (i) Investment properties carried at fair value Investment properties are properties which are owned or held under a leasehold interest to earn rental income or for capital appreciation or for both. These include land held for a currently undetermined future use. Properties that are occupied by the companies in the Group are accounted for as owner-occupied rather than as investment properties. Investment properties are measured initially at cost and subsequently at fair value with any change therein recognised in the income statements. (ii) Reclassification to/from investment properties When an item of property, plant and equipment is transferred to investment property following a change in its use, any difference arising at the date of transfer between the carrying amount of the item immediately prior to transfer and its fair value is recognised directly in equity as a revaluation of property, plant and equipment. However, if a fair value gain reverses a previous impairment loss, the gain is recognised in the income statement. Upon disposal of an investment property, any surplus previously recorded in equity is transferred to retained earnings; the transfer is not made through the income statement. When an item of inventory or property development is transferred to investment property following a change in its use, any difference arising at the date of transfer between the carrying amount of the item immediately prior to the transfer and its fair value is recognised in the income statements. When the use of a property changes such that it is reclassified as property, plant and equipment or inventory or property development, its fair value at the date of reclassification becomes its cost for subsequent accounting. (iii) Determination of fair value An external, independent valuation company, having appropriate recognised professional qualifications and recent experience in the location and category of property being valued, values the Group s investment property portfolio once every three years. The fair values are based on directors valuation or market values, being the estimated amount for which a property could be exchanged on the date of the valuation between a willing buyer and a willing seller in an arm s length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion. In the absence of current prices in an active market, the valuations are prepared by considering the aggregate of the estimated cash flows expected to be received from renting out the property. A yield that reflects the specific risks inherent in the net cash flows then is applied to the net annual cash flows to arrive at the property valuation. Valuations reflect, where appropriate: the type of tenants actually in occupation or responsible for meeting lease commitments or likely to be in occupation after letting vacant accommodation, and the market s general perception of their creditworthiness; the allocation of maintenance and insurance responsibilities between the Group and the lessee; and the remaining economic life of the property. When rent reviews or lease renewals are pending with anticipated reversionary increases, it is assumed that all notices and where appropriate counter-notices have been served validly and within the appropriate time. Significant assumptions in arriving at the fair value of investment properties are disclosed in Note 5.

51 NOTES TO THE FINANCIAL STATEMENTS Mutiara Goodyear Development Berhad (40282-V) SIGNIFICANT ACCOUNTING POLICIES (Cont d) (g) Land held for property development Land held for property development consists of land or such portions thereof on which no development activities have been carried out or where active development activities are not expected to be completed within the Group s normal operating cycle of 2 to 3 years. Such land is classified as non-current asset and is stated at cost less accumulated impairment losses, if any. Land held for property development is reclassified as inventories - properties under development at the point when active development activities have commenced and where it can be demonstrated that the development activities can be completed within the Group s operating cycle of 2 to 3 years. Cost associated with the acquisition of land includes the purchase price of the land, professional fees, stamp duties, commission, conversion fees and other relevant levies. (h) Inventories (i) Properties under development Property development costs comprise costs associated with the acquisition of land and all costs that are directly attributable to development activities or that can be allocated on a reasonable basis to such activities. Property development costs not recognised as an expense is recognised as an asset and is stated at the lower of cost and net realisable value. (ii) Developed properties held for sale Completed properties held for sale are stated at the lower of cost and net realisable value. Cost consists of costs associated with the acquisition of land, direct costs and appropriate proportions of common costs attributable to developing the properties to completion. (i) Receivables Receivables are initially recognised at their cost when the contractual right to receive cash or another financial asset from another entity is established. Subsequent to initial recognition, receivables are stated at cost less allowance for doubtful debts. Receivables are not held for the purpose of trading. (j) 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 value. For the purpose of the cash flow statement, cash and cash equivalents are presented net of bank overdrafts, pledged deposits and pledged bank balances. (k) Assets classified as held for sale Assets that are expected to be recovered primarily through sale rather than through continuing use are classified as held for sale. Immediately before classification as held for sale, the assets are remeasured in accordance with the Group s accounting policies. Thereafter, generally the assets are measured at the lower of their carrying amount and fair value less cost to sell. Impairment losses on initial classification as held for sale and subsequent gains or losses on remeasurement are recognised in the income statements. Gains are not recognised in excess of any cumulative impairment loss. annual report 2010

52 50 NOTES TO THE FINANCIAL STATEMENTS 2. SIGNIFICANT ACCOUNTING POLICIES (Cont d) (l) Impairment of assets The carrying amount of the assets, other than developed properties held for sale, deferred tax assets, investment property that is measured at fair value and financial assets (other than investments in subsidiaries and an associate), are reviewed at each balance sheet date to determine whether there is any indication of impairment. If any such indication exists, the asset s recoverable amount is estimated. For goodwill that have an indefinite useful live the recoverable amount is estimated at each reporting date. The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs to sell. 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. 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 groups of assets (the cash-generating unit ). The goodwill acquired in a business combination, for the purpose of impairment testing, is allocated to cash-generating units that are expected to benefit from the synergies of the combination. An impairment loss is recognised if the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount unless the asset is carried at a revalued amount, in which case the impairment loss is recognised directly against any revaluation surplus for the asset to the extent that the impairment loss does not exceed the amount in the revaluation surplus for that same asset. Impairment losses are recognised in the income statements. Impairment losses recognised in respect of cash-generating units are allocated first to reduce the carrying amount of any goodwill allocated to the units and then to reduce the carrying amount of the other assets in the unit (groups of units) on a pro rata basis. An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment losses recognised in prior periods are assessed at each reporting date 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. 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 the income statement in the year in which the reversals are recognised. (m) Loans and borrowings Loans and borrowings are stated at amortised cost. (n) Employee benefits 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 provision is recognised for the amount expected to be paid under short-term cash bonus 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. The Group s contribution to the statutory pension funds are charged to the income statements in the year to which they relate. Once the contributions have been paid, the Group has no further payment obligations. (o) Payables Payables are measured initially and subsequently at cost. Payables are recognised when there is a contractual obligation to deliver cash or another financial asset to another entity.

53 NOTES TO THE FINANCIAL STATEMENTS Mutiara Goodyear Development Berhad (40282-V) SIGNIFICANT ACCOUNTING POLICIES (Cont d) (p) 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. (i) Warranties A provision for warranties is recognised as a result of the defect liability period warranty provided by the Group to its purchasers. The provision is based on historical claims and a weighting of all possible outcomes against their associated probabilities. (ii) 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 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. Where the Company enters into financial guarantee contracts to guarantee the indebtedness of other companies within its group, the Company considers these to be insurance arrangements, and accounts for them as such. In this respect, the Company treats the guarantee contract as a contingent liability until such time as it becomes probable that the Company will be required to make a payment under the guarantee. (q) Lease payments Payments made under operating leases are recognised in the income statement on a straight-line basis over the term of the lease. Lease incentives received are recognised as an integral part of the total lease expense, over the term of the lease. 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. (r) Deferred revenue Deferred revenue refers to progress billings net of discount attributable to the sale of properties under development for which the said properties under development have yet to be delivered. (s) Interest income and borrowing costs Interest income is recognised as it accrues, using the effective interest method. All borrowing costs are recognised in the income statement using the effective interest method, in the period in which they are incurred except to the extent that they are capitalised as being directly attributable to the acquisition, construction or production of an asset which necessarily takes a substantial period of time to be prepared for its intended use. 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. annual report 2010

54 52 NOTES TO THE FINANCIAL STATEMENTS 2. SIGNIFICANT ACCOUNTING POLICIES (Cont d) (t) Tax expense Tax expense comprises current and deferred tax. Tax expense is recognised in the income statement except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity. Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the balance sheet date, and any adjustment to tax payable in respect of previous years. Deferred tax is recognised using the balance sheet method, providing for temporary differences between the carrying amounts of assets and liabilities for reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognised for the following temporary differences: the initial recognition of goodwill and temporary differences that affects neither accounting nor taxable profit/(tax 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 balance sheet date. Deferred tax liability is recognised for all taxable temporary differences. A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available against which temporary difference can be utilised. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised. (u) Revenue recognition i) Revenue from property development Revenue from property development is measured at the fair value of the consideration receivable and is recognised, in the income statement when significant risks and rewards of ownership have been transferred to the buyer. ii) Dividend income Dividend income is recognised when the right to receive payment is established. iii) Rental income Rental income is recognised in the income statement on an accrual basis. (v) Earnings per share The Group presents basic and diluted earnings per share (EPS) data for its ordinary shares. 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. Diluted EPS is determined by adjusting the profit or loss attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding for the effects of all dilutive potential ordinary shares. (w) Segment reporting A segment is a distinguishable component of the Group that is engaged either in providing products or services (business segment), or in providing products or services within a particular economic environment (geographical segment), which is subject to risks and rewards that are different from those of other segments.

55 NOTES TO THE FINANCIAL STATEMENTS Mutiara Goodyear Development Berhad (40282-V) PROPERTY, PLANT AND EQUIPMENT Office equipment, Freehold furniture Office Car park Motor land Buildings and fittings renovation equipment Computers vehicles Total Group RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 Cost At 1 May , ,079 5,516 9,734 Additions Disposals (2) (14) (2,637) (2,653) Written off (2) (6) (8) At 30 April 2009/ 1 May , ,179 3,066 7,728 Additions Disposals (9) (27) (1,111) (1,147) Written off (36) (139) (175) At 30 April , ,156 2,117 6,732 Depreciation At 1 May ,850 4,848 Depreciation for the year ,177 Disposals (2) (13) (1,743) (1,758) Written off (1) (2) (3) At 30 April 2009/ 1 May ,893 4,264 Depreciation for the year Disposals (7) (22) (588) (617) Written off (24) (136) (160) At 30 April ,640 4,201 Carrying amounts At 1 May ,666 4,886 At 30 April 2009/ 1 May ,173 3,464 At 30 April ,531 Assets under finance lease Included in property, plant and equipment are motor vehicles acquired under finance lease arrangement with a net book value of RM422,000 ( RM755,000). 4. INTANGIBLE ASSET Group Goodwill RM 000 RM 000 Cost At 1 May/30 April 16,219 16,219 Goodwill is tested annually for impairment, including in the year of its initial recognition, as well as when there are indications of impairment. Impairment losses are recognised when the carrying amount of the cash-generating unit to which the goodwill has been allocated exceeds its recoverable amount. Impairment loss is recognised in the income statement and subsequent reversal is not allowed. annual report 2010

56 54 NOTES TO THE FINANCIAL STATEMENTS 4. INTANGIBLE ASSET (Cont d) For the purpose of impairment testing, goodwill is allocated to the unit at which the goodwill is monitored for internal management purposes. Impairment testing for cash-generating units containing goodwill The recoverable amount of the cash-generating unit was based on value in use calculations. These calculations use pre-tax cash flow projections based on financial budgets approved by management covering a four-year period. Value in use was determined by discounting the future cash flows generated from the continuing use of the unit and was based on the following key assumptions:- There will be no material change in the structure and principal activities of the cash-generating unit. Cash flows in determining the cash-generating unit s value in use were projected based on actual operating results and the budgeted development margins of development projects which are ready for launch in the next two years. Cash flows projected were based on unbilled sales of ongoing projects and the gross development value of projects to be launched for the financial year ending 30 April 2011 which have been discounted using the discount rate that approximates the borrowing rates of the cash-generating unit. There will be continual demand for quality residential and commercial properties at good and strategic locations. The discount rate applied in determining the recoverable amount of the unit was reflective of the assumptions of price increases attributable to general inflation and the estimated cost of funds of the cash-generating unit. The values assigned to the key assumptions represent management s assessment of future trends in the industry and are based on both external sources and internal sources (historical data). The above estimates are particularly sensitive in the following areas: Fluctuations in future planned revenues; Fluctuations in the development costs arising from fluctuations of raw material costs and construction costs; Fluctuations in the discount rate used; and Fluctuations in general interest rates. 5. INVESTMENT PROPERTIES Group RM 000 RM 000 At 1 May 61,596 61,596 Change in fair value 6,000 Transfer to asset classified as held for sale (40,540) At 30 April 27,056 61,596 Included in the above are: Long term leasehold land and building 32,000 Freehold land and building 2,540 Car park and office lots 27,056 27,056 27,056 61,596 At 30 April 2010, investment properties comprise of car park and office lots, which the Group intends to hold for rental income and investment purposes. The Group has a policy to value its investment property portfolio once every three years. The last valuation was performed for the financial year ended 30 April Within the previous three years, the Directors have performed a Directors valuation to estimate the fair value of the investment properties. The Group engaged Rahim & Co., an independent professional valuation firm, to perform the valuation of the investment properties for the current financial year.

57 NOTES TO THE FINANCIAL STATEMENTS Mutiara Goodyear Development Berhad (40282-V) INVESTMENT PROPERTIES (Cont d) In the previous financial year, the long term leasehold land and building had been charged by way of a deed of assignment for RM26,000,000 as security for banking facilities granted to the Company (Note 18). The car park and office lots have been charged as security for banking facilities granted to the Group s entities (Note 18). During the financial year, the leasehold and freehold land and buildings have been reclassified to assets classified as held for sale (Note 16). In the previous financial year, based on Directors valuation, the Directors were of the opinion that the carrying value of the investment properties approximate their fair value following the assessment of the yield of the investment properties vis-à-vis market yields of similar properties, and concluded that there were no significant changes in fair value to that as appraised by the independent professional valuer in the prior years. 6. INVESTMENTS IN SUBSIDIARIES Company RM 000 RM 000 At cost: Unquoted shares 159, ,997 The principal activities of the subsidiaries, their places of incorporation and the interest of the Company are as follows: Effective Country of ownership interest Name of company Principal activities incorporation % % Subsidiaries of the Company Dynastic Lion Sdn Bhd Investment holding Malaysia Pembangunan Bandar Property development Malaysia Mutiara Sdn Bhd and investment holding Susuran Timur Sdn Bhd Property management Malaysia Jurus Positif Sdn Bhd Property development Malaysia and investment holding Subsidiaries of Dynastic Lion Sdn Bhd Regal Form Sdn Bhd Property development Malaysia South East Dragon Sdn Bhd Investment holding Malaysia Subsidiaries of South East Dragon Sdn Bhd Potensi Naga Sdn Bhd Property investment Malaysia Puncak Kencana Sdn Bhd Property development Malaysia and investment holding Subsidiary of Puncak Kencana Sdn Bhd Twin Ridge Sdn Bhd Property development Malaysia Subsidiary of Jurus Positif Sdn Bhd Affin-i Goodyear Sdn Bhd Property development Malaysia Although the Group owns only 50% of the voting power of Affin-i Goodyear Sdn. Bhd. ( AIGSB ), it is able to govern the financial and operating policies of AIGSB. Consequently, the Group consolidates its investment in AIGSB. annual report 2010

58 56 NOTES TO THE FINANCIAL STATEMENTS 7. INVESTMENT IN AN ASSOCIATE Group RM 000 RM 000 At cost: Ordinary shares Preference shares 7,457 Share of post-acquisition reserves (237) (25) Summary of financial information on an associate: 7, Group Effective Net Total Total Country of ownership Revenue Loss assets liabilities incorporation interest (100%) (100%) (100%) (100%) 2010 % RM 000 RM 000 RM 000 RM 000 Tambun Indah Development Sdn. Bhd. # Malaysia ,678 16, Tambun Indah Development Sdn. Bhd. # Malaysia ,485 31,570 # Based on unaudited management accounts In the previous financial year, the Group acquired a 30% equity interest in Tambun Indah Development Sdn. Bhd. This investee was established in conjunction with other companies in a joint venture to develop three parcels of freehold land. During the financial year, the Group acquired an additional RM7,457,000 preference shares in the associate in which RM7,307,000 was settled by means of capitalisation of debts. 8. LONG TERM RECEIVABLES Company The amounts due from certain subsidiaries are unsecured, interest free and are not repayable within the next twelve months except for amounts due from subsidiaries amounting to RM10,500,000 ( RM12,660,000) which are subject to interest at 7.6% ( %) per annum. 9. OTHER INVESTMENTS Group Company RM 000 RM 000 RM 000 RM 000 At cost: Unquoted preference shares 5,500 5,500 Subordinated bonds 3,200 3,200 3,200 3,200 Less: Allowance for diminution in value (3,200) (1,184) (3,200) (1,184) 2,016 2,016 5,500 7,516 2,016 The Directors have assessed that there was a decline, other than temporary, in the value of the Company s investment in subordinated bonds. Accordingly, an amount of RM2,016,000 ( RM614,000) was provided as allowance for diminution in value during the financial year. The allowance was determined after taking into account the rating of the bonds and the recoverability of the obligors to the collateralised loan.

59 NOTES TO THE FINANCIAL STATEMENTS Mutiara Goodyear Development Berhad (40282-V) LAND HELD FOR PROPERTY DEVELOPMENT Group RM 000 RM 000 Land held for property development 230, ,303 Included in land held for property development is: Land 220, ,717 Landowner s entitlement 10,075 7, Landowner s entitlement 230, ,303 The Group through its subsidiary, Regal Form Sdn Bhd ( RFSB ), had entered into a joint venture agreement and supplemental joint venture agreement with Kajang Height Development Sdn. Bhd. ( KHD ) on 28 July 2008 and 27 April 2009 respectively to develop 256 pieces of freehold land measuring 68.5 acres. The land has been charged to a bank for banking facilities granted to KHD. Through the joint venture agreement, KHD contributes the land for the development while RFSB develops the land. In consideration for the joint venture, RFSB guarantees KHD a return of 22% of the gross development value of the development in cash or RM50,000,000 whichever is higher ( landowner s entitlement ). The parties also agree that upon the completion date (i.e. 5 years from the unconditional date of 13 November 2008 or 2 years extended at the option of the developer or such further period as mutually agreed by the parties, whichever is later), the landowner s entitlement may be satisfied via the allocation of unsold units which shall be by way of ballot drawing by KHD. RFSB paid a deposit of RM6,000,000 upon the execution of the joint venture agreement being part payment towards the landowner s entitlement. The balance of the landowner s entitlement shall be satisfied by way of cash or in units subject to a minimum of: i. RM2,500,000 only at the end of 18 months from the date of agreement; ii. RM2,500,000 only at the end of 24 months from the date of agreement; and iii. Thereafter, RM5,000,000 only on a 6 monthly basis until the full settlement of the landowner s entitlement of RM50,000,000 less any monies previously paid. At the expiry of the completion date and if there are pieces of land that remain undeveloped, RFSB is given the option to extend the joint venture agreement for another 2 years provided that the Company continues to pay RM5,000,000 every 6 months being payment towards landowner s entitlement, subject to a maximum sum of RM50,000,000, or based on negotiations between KHD and the Company. The title to the land will remain with KHD until the completion of the projects for sub-division to individual titles/strata titles to the end purchasers Option to sell land Included in land held for property development is a parcel of freehold land ( Parcel C ) amounting to RM18,225,000 ( RM21,180,000), for which a subsidiary had granted an option to an associate to acquire the land. This option is exercisable by the associate not later than eighteen (18) months from the date the Sale and Purchase Agreement for Parcel B is executed (see Note 33.1) Security Land held for property development are charged to secure loan facilities granted to the Group. In the previous financial year, the Group was in the process of arranging for charge of certain land held for property development to be released from the bank. The charge has since been released by the bank in the current financial year. The landowner s entitlement is supported by a corporate guarantee issued by the Company. annual report 2010

60 58 NOTES TO THE FINANCIAL STATEMENTS 10. LAND HELD FOR PROPERTY DEVELOPMENT (Cont d) 10.4 Change in development cost allocation Previously, the Group allocated development cost, i.e. land cost and common cost, to the respective projects/phases under development based on the land size, where applicable, when specific identification is not possible. Development costs are costs attributable to the development activities in general and, for which could be allocated to the project. In the current financial year, the Group changed the basis of cost allocation to allocate development cost to the respective projects/phases under development based on the relative sales values as the Directors are of the view that the revised basis of allocation is a better reflection of the commercial substance of the development projects. The above change is treated as a change in estimate and resulted in the following effects to the current financial year: RM 000 Balance sheet Increase in land held for property development 4,409 Increase in inventories 6,984 Decrease in assets classified as held for sales (11,393) 11. DEFERRED TAX Recognised deferred tax assets and liabilities Deferred tax assets and liabilities are attributable to the following: Assets Liabilities Net Restated Restated Restated Group RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 Property, plant and equipment (405) (449) (405) (449) Properties under development (26,550) (23,481) (26,550) (23,481) Tax loss carry-forwards 2, , Deferred revenue, net of property development costs 6,762 1,099 (171) (178) 6, Net tax assets/(liabilities) 8,905 1,242 (27,126) (24,108) (18,221) (22,866) Movement in temporary differences during the year Recognised Acquisition Recognised Acquisition Restated in income of Restated in income of At statement minority At statement minority At (Note 25) interest (Note 25) interest Group RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 Property, plant and equipment (225) (224) (449) 44 (405) Properties under development (17,213) (4,469) (1,799) (23,481) (3,069) (26,550) Tax loss carry-forwards 617 (474) 143 2,000 2,143 Deferred revenue, net of property development costs ,670 6,591 (15,900) (5,167) (1,799) (22,866) 4,645 (18,221)

61 NOTES TO THE FINANCIAL STATEMENTS Mutiara Goodyear Development Berhad (40282-V) INVENTORIES Group Restated Note RM 000 RM 000 Properties under development , ,573 Developed properties held for sale - at cost 5,961 18, Properties under development 237, ,046 Land 12,032 5,430 Development costs 219, , , , Property development costs incurred during the financial year include: Group RM 000 RM 000 Interest expense 7,935 5,360 Project management expense 6,766 14,701 5,360 Included in interest expense capitalised in the previous financial year was a reversal of interest cost in respect of a loan obtained from a company with a common director of RM1,937,000 which was waived. Project management expenses are costs incurred of an administrative and technical nature undertaken:- (i) during the pre-construction stage, such as the preparation of plans and the process of obtaining approvals and permits from government authorities; and (ii) during the development stage, such as professional fees, staff cost and infrastructure works that are related to the project. Project management expenses are capitalised only during periods in which activities necessary to prepare the property for its intended use are in progress Interest is capitalised in property development costs at rates ranging from 2.9% to 8.1% ( % to 8.8%) per annum The development properties have been charged to secure issuance of Commercial Papers and banking facilities obtained by the Group entities (Note 18). During the financial year, the charge has been released for certain development properties Estimation uncertainty and critical judgement The Group prepares estimates of budgeted costs and selling price for its property development projects based on the following key assumptions. The property development costs have been projected based on prevailing cost of construction and such costs are reviewed on an on-going basis; and The selling price of property under development has been projected based on prevailing market values of the location and type of properties under development. Any revision to estimates above that could affect the net realisable value of the property under development are recognised in the period in which the estimate is revised and in any future periods affected Included in property development cost is development costs of a parcel of freehold land ( Parcel C ) amounting to RM14,404,000 ( RM21,910,000), for which a subsidiary had granted an option to an associate to acquire the land. The option is exercisable by the associate not later than eighteen (18) months from the date the Sales and Purchase Agreement for Parcel B is executed (see Note 33.1). annual report 2010

62 60 NOTES TO THE FINANCIAL STATEMENTS 13. RECEIVABLES, DEPOSITS AND PREPAYMENTS Group Company Note RM 000 RM 000 RM 000 RM 000 Trade receivables ,282 12,776 Other receivables ,181 2,111 Deposits ,725 7, Prepayments Associate ,257 Subsidiaries ,872 24,921 Group 14,261 26,541 55,877 24, Included in trade receivables: i) are stakeholders sum amounting to RM497,000 ( RM9,099,000). ii) are amounts due from certain Directors and individuals related to certain Directors of RM1,463,000 ( Nil) for the sale of development properties. iii) was an amount due from a company in which a Director had interest of RM196,000 in the previous financial year. The amount was unsecured, interest free and was repayable on demand Included in other receivables: i) was an amount owed by a Director of RM89,000 for the acquisition of motor vehicle from a subsidiary in the previous financial year. ii) was an amount due from a company in which a Director of a subsidiary had interest of RM1,000 in the previous financial year. The amount was unsecured, interest free and was repayable on demand In the previous financial year, included in deposits of the Group were deposits paid by subsidiaries of RM6,580,000 for the purchase of three pieces of land In the previous financial year, included in prepayments were incidental costs amounting to RM567,000 on the acquisition of a land by a subsidiary The amount due from an associate is in respect of the Company s contribution to the associate for the purchase of land as disclosed in Note 33. Company 13.6 The amounts due from subsidiaries are non-trade in nature, unsecured, interest free except for RM38,330,000 ( RM15,464,000) which are subject to interest at rates ranging from 6.5% -7.6% ( %) per annum and are repayable on demand. 14. CURRENT TAX ASSETS Tax recoverable are excess taxes paid which are refundable (see Note 25). 15. CASH AND CASH EQUIVALENTS Group Company RM 000 RM 000 RM 000 RM 000 Deposits placed with licensed banks 4,596 4,495 Liquid investment 9,196 9, Cash and bank balances 42,514 19, ,306 33, Included in deposits placed with licensed banks of the Group is RM1,216,000 ( RM1,457,000) pledged for bank guarantee and term loan facilities granted to the Group (Note 18).

63 NOTES TO THE FINANCIAL STATEMENTS Mutiara Goodyear Development Berhad (40282-V) CASH AND CASH EQUIVALENTS (Cont d) Included in cash and bank balances is RM32,000 ( RM178,000) pledged for bank guarantee facilities granted to a subsidiary of the Group. Included in cash and bank balances of the Group is RM2,932,000 ( RM3,776,000), the utilisation of which is subject to the Housing Developers (Housing Development Account) (Amendment) Regulations The Directors regard liquid investment as cash and cash equivalents when they are highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. 16. ASSETS CLASSIFIED AS HELD FOR SALE The assets classified as held for sale comprise as follows:- Group Note RM 000 RM 000 At cost: Leasehold land and building ,000 Freehold land and building ,540 Freehold land ,919 60,072 67,459 60,072 Assets are classified as held for sale as efforts to sell the assets have commenced prior to the balance sheet date, and the sales are expected to be completed within the next twelve months As at the balance sheet date, the long term leasehold land and building comprise a 13-storey office building. The amount was transferred from investment properties (Note 5) based on the Directors resolution, as active steps have commenced to dispose off the properties within the next twelve months. The fair value of the leasehold land and building is based on independent professional valuations made in the current financial year and as adjusted for the yield method by considering the aggregate of the estimated cash flows expected to be received from renting out the property using average yield rate of 7%. The basis of valuation used on the leasehold land and building is the comparison method and investment method. The leasehold land and building have been charged by way of a deed of assignment for RM26,000,000 as security for banking facilities granted to the Company (Note 18) As at the balance sheet date, the freehold land and building comprise a 5-storey shophouse. The amount was transferred from investment properties (Note 5) based on the Directors resolution, as active steps have commenced to dispose off the properties within the next twelve months. The fair value of the freehold land and building is based on independent professional valuations made in the current financial year where the basis of valuation used is the comparison method and replacement cost method In the previous financial year, the freehold land comprises the cost of land and the property development capitalised for two parcels of land, Parcel A and Parcel B, which were classified as held for sale following the Sale and Purchase Agreement and Supplemental Agreement entered into on 12 June 2008 and 3 July 2008 respectively between a subsidiary and an associate. An Option Agreement was also entered into on 12 June 2008 between the aforementioned parties granting the associate an option to purchase Parcel B no later than eighteen months from the date of the Sale and Purchase Agreement for Parcel A. Sale of Parcel A was subsequently completed on 15 October Pursuant to the Option Agreement above, on 10 May 2010, the aforementioned parties entered into a Sale and Purchase Agreement for purchase of Parcel B. The sale is expected to be completed within the next financial year. Purchaser has paid 10% deposit subsequent to financial year end. annual report 2010

64 62 NOTES TO THE FINANCIAL STATEMENTS 17. SHARE CAPITAL AND RESERVES 17.1 Share capital Group and Company Number Number Amount of shares Amount of shares RM RM Authorised: Ordinary shares of RM1 each 500, , , ,000 Issued and fully paid: Ordinary shares of RM1 each 230, , , , Section 108 tax credit The Finance Act 2007 introduced a single tier company income tax system with effect from year of assessment As such, the Section 108 tax credit as at 31 December 2007 will be available to the Company until such time the credit is fully utilised or upon expiry of the six-year transitional period on 31 December 2013, whichever is earlier. During the financial year, the Company had fully utilised its available section 108 tax credit balance. Subsequent to the full utilisation of the tax credits, the Company has opted to frank dividends during the year under the single tier company income tax system. 18. LOANS AND BORROWINGS Group Company RM 000 RM 000 RM 000 RM 000 Non-current Term loans - unsecured - fixed rate 32,000 32,000 32,000 32,000 Term loans - secured - fixed rate 25,924 16,220 5,730 8,570 - floating rate 102,194 28,153 19,000 Bridging loans - secured 2,328 Commercial Papers - secured 20,000 Finance lease liabilities ,343 99,097 56,730 40,570 Current Term loans - secured - fixed rate 3,796 2,668 2,840 2,668 - floating rate 7,000 8,110 1,000 Bridging loans - secured 1,287 3,788 Commercial Papers - secured 20,000 Finance lease liabilities Bank overdrafts - secured 1,163 2,178 1,163 1,292 Revolving credits - unsecured 11,500 17,500 - secured 15,625 13,038 40,467 67,443 5,003 3, , ,540 61,733 44,530

65 NOTES TO THE FINANCIAL STATEMENTS Mutiara Goodyear Development Berhad (40282-V) LOANS AND BORROWINGS (Cont d) 18.1 The fixed rate term loans are subject to interest at rates ranging from 6.0% to 7.6% ( % to 7.6%) per annum. The floating rate term loans are subject to interest at 1.0% ( %) per annum above the lenders base lending rates and interest at rates ranging from 2% to 3% ( Nil) per annum above the lenders cost of funds. The bridging loans are subject to interest at rates ranging from 1.5% to 2.0% ( % to 2.0%) per annum above the lenders base lending rates. In the previous financial year, the Commercial Papers were subject to interest at rate ranging from 4.3% to 5.3% per annum. The finance lease liabilities are subject to fixed interest rates ranging from 2.3% to 3.3% ( % to 2.8%) per annum. The bank overdrafts are subject to interest at rate ranging at the lenders base lending rate to 1.0% above the lenders base lending rate ( % above the lenders base lending rate) per annum. The revolving credits are subject to interest at 0.5% ( %) per annum above the lenders cost of funds Terms and debt repayments schedule Year of Carrying Under Over 5 Group maturity amount year years years years 2010 RM 000 RM 000 RM 000 RM 000 RM 000 Term loans - unsecured - fixed rate ,000 32,000 Term loans - secured - fixed rates ,720 3,796 13,598 12,326 - floating rates ,194 7,000 15,930 83,264 3,000 Bridging loans - secured ,287 1,287 Finance lease liabilities Bank overdrafts - secured 1,163 1,163 Revolving credits - unsecured ,500 11,500 - secured ,625 15, ,810 40,467 61,629 95,714 3, Term loans - unsecured - fixed rate ,000 32,000 Term loans - secured - fixed rates ,888 2,668 4,753 11,467 - floating rates ,263 8,110 12,234 15,919 Bridging loans - secured ,116 3,788 2,328 Commercial Papers - secured ,000 20,000 20,000 Finance lease liabilities Bank overdrafts - secured 2,178 2,178 Revolving credits - unsecured ,500 17,500 - secured ,038 13, ,540 67,443 39,484 59,613 annual report 2010

66 64 NOTES TO THE FINANCIAL STATEMENTS 18. LOANS AND BORROWINGS (Cont d) 18.2 Terms and debt repayments schedule (Cont d) Year of Carrying Under Over 5 Company maturity amount year years years years 2010 RM 000 RM 000 RM 000 RM 000 RM 000 Term loans - fixed rate - unsecured ,000 32,000 - secured ,570 2,840 3,023 2,707 Term loans - floating rate ,000 1,000 4,000 12,000 3,000 Bank overdraft - secured 1,163 1,163 61,733 5,003 39,023 14,707 3, Term loans - fixed rate - unsecured ,000 32,000 - secured ,238 2,668 2,840 5,730 Bank overdraft - secured 1,292 1,292 44,530 3,960 2,840 37, The term loans of the Group are secured by way of: i) Legal and debenture charges over the Group s investment properties (Note 5), certain land held for property development (Note 10) and development properties (Note 12); ii) A deed of assignment on the investment property and rental thereon (Note 5); iii) Assignment of monies acceptable to the bank (Note 15); iv) Pledged deposits (Note 15); v) Corporate guarantee from the Company; vi) A charge over the Housing Development Accounts ( HDA account ) of Bandar Tasek Mutiara ( BTM ) project and legal assignment over all such proceeds, present and future deposited or to be deposited into the HDA accounts in respect of the BTM projects; vii) A charge over the project accounts for non-hda projects in respect of the BTM project; and viii) A legal assignment over all the performance bonds created or to be created in favour of the Company and all relevant insurance policies required to be taken by the Company in respect of the BTM project. The term loans of the Company are secured by way of legal charge over the investment properties of its subsidiaries (Note 5) The bridging loans of the Group are secured by way of: i) Legal and debenture charges over certain land held for property development (Note 10) and development properties (Note 12) of the Group; ii) Corporate guarantee from the Company; and iii) All car park rental proceeds from the Security Property shall be deposited and maintained under an operating account with the bank The bank overdrafts of the Group are secured by way of: i) Legal charge and specific debenture over certain lands held for property development (Note 10) and development properties (Note 12) owned by a subsidiary; ii) Legal charge over certain investment properties (Note 5) of the Group; and iii) Corporate guarantee from the Company. The bank overdraft of the Company is secured by way of legal charge over the investment properties of its subsidiaries (Note 5).

67 NOTES TO THE FINANCIAL STATEMENTS Mutiara Goodyear Development Berhad (40282-V) LOANS AND BORROWINGS (Cont d) 18.6 The revolving credits of the Group are secured by way of: i) Legal charge over the investment properties (Note 5) owned by a subsidiary; ii) iii) Corporate guarantee from the Company; and All car park rental proceeds from the car park lots shall be deposited and maintained under an operating account with the bank During the prior year, the Commercial Papers were subject to interest at rates ranging from 4.3% to 5.3% per annum The Group has agreed on the following significant covenants, amongst others: Term loan facility: i) A subsidiary, Twin Ridge Sdn. Bhd., shall not declare dividends above 10% of the par value of the paid up capital or 50% of the post tax profit without the bank s consent. Bridging loan: i) In the previous financial year, the Company had agreed on the following significant covenants, amongst others to maintain a security cover (total security value/total outstanding principal of the facility) of not less than 1.42 times. The term loans were restructured during the year and the financial covenant was removed Finance lease liabilities Finance lease liabilities are payable as follows: Group Minimum Minimum lease lease payments Interest Principal payments Interest Principal RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 Less than one year Between one and five years OTHER LONG TERM LIABILITIES In the previous financial year, this represents advances from a former shareholder of a subsidiary, who was also a former Director of the Company which was unsecured, interest free and was not repayable within the next twelve months. 20. PAYABLES AND ACCRUALS Group Company Restated Note RM 000 RM 000 RM 000 RM 000 Trade payables ,695 13,090 Other payables ,518 16,039 Accrued expenses 9,980 3, Amount due to a subsidiary ,499 15,961 Amount due to an associate ,579 37,193 62,421 22,699 16,167 annual report 2010

68 66 NOTES TO THE FINANCIAL STATEMENTS 20. PAYABLES AND ACCRUALS (Cont d) 20.1 Included in trade payables of the Group: i) are retention sums amounting to RM8,912,000 ( RM7,604,000) of which Nil ( RM3,559,000) is payable to a company in which a Director has interest. ii) was an amount due to a company in which a Director had interest of RM2,620,000 in the previous financial year. The amount was unsecured, interest free and was repayable on demand Included in other payables of the Group and Company: i) was an amount due to a company in which a Director had interest of RM7,100,000 in the previous financial year. The amount was non-trade in nature, unsecured, interest free and was repayable on demand. ii) is an amount due to a third party of RM260,000 ( RM260,000) in respect of the acquisition of certain development land. iii) is an amount due to a corporate shareholder of RM1,057,500 ( RM755,000). This amount is non-trade in nature, unsecured, interest free and is repayable on demand. This amount relates to the corporate shareholder s contribution to purchase a piece of freehold land. iv) was an amount due to a company in which a Director had interest of RM244,000 in the previous financial year. The amount was unsecured, interest free and was repayable on demand The amount due to a subsidiary is non-trade in nature, unsecured, interest free and is repayable on demand In the previous financial year, included in the amount due to an associate was RM17,958,000 in respect of the deposit paid by the associate for the acquisition of land by the associate. The remaining amount was nontrade in nature, unsecured and subject to interest rate at 3.2% per annum. 21. DEFERRED REVENUE Deferred revenue relates to progress billing net of discounts for which the final goods have yet to be delivered. 22. RESULTS FROM OPERATING ACTIVITIES Group Company Restated RM 000 RM 000 RM 000 RM 000 Revenue Dividend income 11,600 8,600 Sale of inventories 27, ,299 Sale of land held for development 20,705 Rental income - investment properties 4,838 5,456 Administrative fees 5,900 3,660 52, ,755 17,500 12,260 Cost of inventories (20,566) (286,566) Cost of land held for development (16,709) Direct operating expenses - investment properties (1,266) (2,499) (38,541) (289,065) Gross profit 14, ,690 17,500 12,260 Administration expenses (10,285) (14,421) (6,800) (4,268) Other operating income 16,576 3,361 Other operating expenses (6,707) (3,230) Results from operating activities 13,650 95,400 10,700 7,992

69 NOTES TO THE FINANCIAL STATEMENTS Mutiara Goodyear Development Berhad (40282-V) RESULTS FROM OPERATING ACTIVITIES (Cont d) Group Company RM 000 RM 000 RM 000 RM 000 Results from operating activities are arrived at after crediting: Dividend income from subsidiaries 11,600 8,600 Gain on disposal of property, plant and equipment 66 Rental income from properties held for sale Reversal of liquidated ascertained damages 45 Compensation received for liquidated and ascertained damages 1,257 Investment properties - fair value changes 6,000 and after charging: Allowance for diminution in value of other investments 2, , Auditors remuneration KPMG - Statutory audit - current year underprovision in prior year Other services - current year underprovision in prior year 31 Other auditors - Other services - current year underprovision in prior year Depreciation of property, plant and equipment 714 1,177 Property, plant and equipment written off 15 5 Personnel expenses (including Directors) - Contributions to Employee Provident Fund Wages, salaries and others 8,536 7,078 3,267 2,235 Loss on disposal of property, plant and equipment 248 Rental expense on land and buildings Management fee Liquidated ascertained damages expenses annual report 2010

70 68 NOTES TO THE FINANCIAL STATEMENTS 23. KEY MANAGEMENT PERSONNEL COMPENSATION The key management personnel compensations are as follows: Group Company RM 000 RM 000 RM 000 RM 000 Directors - Fees Remuneration 1, , Other short term employee benefits (including estimated monetary value of benefits-in-kind) ,779 1,136 1, Subsidiaries - Directors - Short term employee benefits (including estimated monetary value of benefits-in-kind) Other key management personnel: - Short term employee benefits (including estimated monetary value of benefits-in-kind) 2,377 1,824 1,564 1,275 4,195 3,095 3,309 2,274 Other key management personnel comprises persons other than the Directors of Group entities, having authority and responsibility for planning, directing and controlling the activities of the entity either directly or indirectly. 24. INTEREST EXPENSE Group Company RM 000 RM 000 RM 000 RM 000 Bank overdrafts Term loans 3,584 3,220 3,584 3,220 Finance lease liabilities Revolving credit Other interest ,564 5,262 3,835 4, TAX EXPENSE Group Company Restated RM 000 RM 000 RM 000 RM 000 Current tax expense - Current year 11,382 26,017 1, (Over)/Under provision for prior years # (419) (9,545) ,963 16,472 1, Deferred tax expense Reversal and origination of temporary differences (8,297) (1,808) Under provision of deferred tax expense for prior years # 3,652 6,975 Total tax expense 6,318 21,639 1,

71 NOTES TO THE FINANCIAL STATEMENTS Mutiara Goodyear Development Berhad (40282-V) TAX EXPENSE (Cont d) Group Company Restated RM 000 RM 000 RM 000 RM 000 Recognised in the income statements Profit for the year 3,236 69,847 8,111 5,329 Total tax expense 6,318 21,639 1, Profit before tax 9,554 91,486 9,560 6,252 Tax at Malaysian tax rate of 25%* 2,389 22,871 2,390 1,563 Non-deductible expenses 1, Non-taxable income (1,500) (1,900) (1,350) Others ,085 24,209 1, Under/(Over) provision in prior years 3,233 (2,570) ,318 21,639 1, * The corporate tax rates are 25% for year of assessment 2009 and onwards. Consequently deferred tax assets and liabilities are measured using these tax rates. # In the prior financial years, the Company s wholly owned subsidiary, Pembangunan Bandar Mutiara Sdn. Bhd. ( PBM ) submitted a revision of its tax computations for the years of assessment 1997 to The re-submission, which has been agreed by the Inland Revenue Board, mainly relates to the allowability of certain finance and property development expenses and the timing for which they are allowed to be claimed against the chargeable income of certain property development projects, resulted in an overprovision and excess payment of current tax payable amounting to RM9,014,000 for the mentioned years of assessment. The timing difference of certain expenses claimed further resulted in a corresponding recognition of deferred tax liabilities of RM6,500, EARNINGS PER ORDINARY SHARE - GROUP 26.1 Basic and earnings per share The calculations of basic earnings per share is based on the net profit attributable to ordinary shareholders of RM3,240,000 ( RM69,899,000) and the weighted average number of ordinary shares outstanding during the financial year of 230,914,000 ( ,914,000) Weighted average number of ordinary shares Issued ordinary shares 230, ,914 Restated Sen Sen Basic earnings per ordinary shares Diluted earnings per share No diluted earnings per share is disclosed in these financial statement as there are no dilutive potential ordinary shares. annual report 2010

72 70 NOTES TO THE FINANCIAL STATEMENTS 27. DIVIDENDS Dividends recognised in the current financial year by the Company are: Sen Total per share amount Date of 2010 (net of tax) RM 000 payment Final 2009 ordinary , January Final 2008 ordinary , January 2009 After the balance sheet date, the following dividend was proposed by the Directors. This dividend will be recognised in subsequent financial reports upon approval by the shareholders. Company Sen per share Total amount RM 000 Final ordinary (single tier) , SEGMENTAL REPORTING Segment information is presented in respect of the Group s business segments. The business segments are based on the Group s management and internal reporting structure. Segment information by geographical segments is not provided as the activities of the Group are located principally in Malaysia. Inter-segment pricing is determined based at arms length transactions. Segment results, assets and liabilities include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. Unallocated items mainly comprise interest earning assets and revenue, interestbearing loans, borrowings and expenses. Segment capital expenditure is the total cost incurred during the period to acquire segment assets that are expected to be used for more than one period. Business segments The Group comprises the following main business segments: Property development Development of residential and commercial properties. Property investment Property investment and rental services. Property Property development investment Consolidated Restated Restated RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 Business segments Revenue from external customers 47, ,299 4,838 5,456 52, ,755 Segment result 4,336 93,500 9,116 1,590 13,452 95,090 Unallocated income Results from operating activities 13,650 95,400 Interest expense (4,564) (5,262) Interest income 680 1,373 Share of loss of associate company (212) (25) Profit before tax 9,554 91,486 Tax expense (6,318) (21,639) Profit for the year 3,236 69,847

73 NOTES TO THE FINANCIAL STATEMENTS Mutiara Goodyear Development Berhad (40282-V) SEGMENTAL REPORTING (Cont d) Property Property development investment Consolidated Restated Restated RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 Segment assets 564, ,986 28,047 62, , ,786 Investment in associate 7, Assets classified as held for sale 67,459 60,072 Unallocated assets 7,181 9,949 Total assets 674, ,082 Segment liabilities 294, ,755 1,096 1, , ,775 Unallocated liabilities 62,442 45,010 Total liabilities 358, ,785 Capital expenditure - business segments others Depreciation - business segments others , CONTINGENT LIABILITIES - UNSECURED Company RM 000 RM 000 Corporate guarantee issued to financial institutions for banking facilities granted to subsidiaries 263, ,855 Corporate guarantee issued to a third party 50,000 50, , , CAPITAL COMMITMENTS Group RM 000 RM 000 Capital expenditure commitments Land held for property development Contracted but not provided for in the financial statements - Within one year 15,000 28,500 annual report 2010

74 72 NOTES TO THE FINANCIAL STATEMENTS 31. RELATED PARTIES 31.1 Identity of related parties For the purposes of these financial statements, parties are considered to be related to the Group if the Group has the ability, directly or indirectly, to control the party or exercise significant influence over the party in making financial and operating decisions, or vice versa, or where the Group and the party are subject to common control or common significant influence. Related parties may be individuals or other entities. Key management personnel are 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 includes all the Directors of the Group, and certain members of senior management of the Group Significant related party transaction other than those disclosed elsewhere in the financial statements are as follows: Group Company RM 000 RM 000 RM 000 RM 000 Related parties: Janitorial services receivable (3) Rental income receivable (96) (574) Sale of development properties (1,908) (121) Construction cost payable 4,973 Maintenance service charges payable 257 Management fees payable 188 Administrative expenses payable 6 Insurance premium payable 27 Disposal of motor vehicles Motor vehicle insurance 7 Parking fees receivable (13) (82) Subsidiaries: Administrative fees earned (5,900) (3,660) Interest income recoverable (2,685) (2,667) Associate: Interest expense payable Sale of land 20, As of 30 April, amounts owing by/(to) related parties are as follows: Doubtful Gross balance Allowance Net balance receivables outstanding for doubtful outstanding recognised for at debts at at the year end 30 April 30 April 30 April 30 April Group RM 000 RM 000 RM 000 RM Included in: Receivables, deposits and prepayments Related parties 1,463 1,463

75 NOTES TO THE FINANCIAL STATEMENTS Mutiara Goodyear Development Berhad (40282-V) RELATED PARTIES (Cont d) 31.3 As of 30 April, amounts owing by/(to) related parties are as follows: (Cont d) Doubtful Gross balance Allowance Net balance receivables outstanding for doubtful outstanding recognised for at debts at at the year end 30 April 30 April 30 April 30 April Group RM 000 RM 000 RM 000 RM Included in: Receivables, deposits and prepayments Related parties Associate 3,257 3,257 Payables and accruals Related parties (13,533) (13,533) Associate (29,579) (29,579) Corporate shareholder (755) (755) Company 2010 Included in: Receivables, deposits and prepayments Subsidiaries 174, ,777 Payables and accruals Subsidiaries (22,499) (22,499) 2009 Included in: Receivables, deposits and prepayments Subsidiaries 145, ,985 Payables and accruals Subsidiaries (15,961) (15,961) 32. FINANCIAL INSTRUMENTS 32.1 Financial risk management objectives and policies The Group s and the Company s financial risk management policy seeks to ensure that adequate financial resources are available for the development of the Group s and the Company s businesses whilst managing their risks. Exposure to credit, interest rate and liquidity risks arises in the normal course of the Group s and Company s businesses. Financial risk management is carried out through risk reviews and internal control systems. Credit risk Management has a credit policy in place to monitor and minimise the exposure to credit risk. The exposure to credit risk is monitored on an ongoing basis via management reporting procedures. At balance sheet date, there were no significant concentrations of credit risk. The maximum exposure to credit risk for the Group and for the Company are represented by the carrying amount of the receivables presented in the balance sheet. annual report 2010

76 74 NOTES TO THE FINANCIAL STATEMENTS 32. FINANCIAL INSTRUMENTS (Cont d) 32.1 Financial risk management objectives and policies (Cont d) Interest rate risk The Group s and the Company s exposure to interest rate risk arises from interest-bearing borrowings and interest-earning assets. The borrowings which have been taken to finance the working capital of the Group and of the Company are subject to floating and fixed interest rates. The Group and the Company does not hedge its interest rate risk. Excess funds are placed with licensed financial institutions for certain periods during which the interest rates are floating. The management reviews the rates at regular intervals. Effective interest rates and repricing analysis In respect of interest-earning financial assets and interest-bearing financial liabilities, the following table indicates their average effective interest rates at the balance sheet date and the periods in which they mature, or if earlier, reprice. Group Average effective Less More interest than than 2010 Note rate Total 1 year years years years years 5 years % RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 Fixed rate instruments Term loans - unsecured (32,000) (32,000) - secured (29,720) (3,796) (13,598) (12,326) Finance lease liabilities (321) (96) (101) (69) (47) (8) (62,041) (3,892) (45,699) (12,395) (47) (8) Floating rate instruments Deposits placed with licensed banks ,207 3,207 Liquid investment ,196 9,196 Term loans - secured (109,194) (109,194) Bridging loan - secured (1,287) (1,287) Bank overdrafts - secured (1,163) (1,163) Revolving credits - unsecured (11,500) (11,500) - secured (15,625) (15,625) (126,366) (126,366)

77 NOTES TO THE FINANCIAL STATEMENTS Mutiara Goodyear Development Berhad (40282-V) FINANCIAL INSTRUMENTS (Cont d) 32.1 Financial risk management objectives and policies (Cont d) Effective interest rates and repricing analysis (Cont d) Group Average effective Less More interest than than 2009 Note rate Total 1 year years years years years 5 years % RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 Fixed rate instruments Term loans - unsecured (32,000) (32,000) - secured (18,888) (2,668) (4,753) (6,847) (4,620) Finance lease liabilities (557) (161) (169) (159) (46) (22) (51,445) (2,829) (4,922) (39,006) (4,666) (22) Floating rate instruments Deposits placed with licensed banks ,495 4,495 Liquid investment ,781 9,781 Term loans - secured (36,263) (36,263) Bridging loan - secured (6,116) (6,116) Commercial Papers - secured (40,000) (40,000) Bank overdrafts - secured (2,178) (2,178) Revolving credits - unsecured (17,500) (17,500) - secured (13,038) (13,038) Amount due to associate company (11,621) (11,621) (112,440) (112,440) Company Average effective Less More interest than than 2010 Note rate Total 1 year years years years years 5 years % RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 Fixed rate instruments Amount due from certain subsidiaries 8, ,830 38,330 10,500 Term loans - unsecured (32,000) (32,000) - secured (8,570) (2,840) (3,023) (2,707) 8,260 35,490 (35,023) (2,707) 10,500 Floating rate instruments Liquid investment Term loans - secured (20,000) (20,000) Bank overdraft - secured (1,163) (1,163) (21,162) (21,162) annual report 2010

78 76 NOTES TO THE FINANCIAL STATEMENTS 32. FINANCIAL INSTRUMENTS (Cont d) 32.1 Financial risk management objectives and policies (Cont d) Effective interest rates and repricing analysis (Cont d) Company Average effective Less More interest than than 2009 Note rate Total 1 year years years years years 5 years % RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 Fixed rate instruments Amount due from certain subsidiaries 8, ,124 15,464 12,660 Term loans - unsecured (32,000) (32,000) - secured (11,238) (2,668) (2,840) (3,023) (2,707) (15,114) 12,796 (2,840) (35,023) (2,707) 12,660 Floating rate instruments Liquid investment Bank overdraft - secured (1,292) (1,292) Liquidity risk (1,224) (1,224) The Group and the Company monitors and maintains a level of cash and cash equivalents deemed adequate by management to finance the Group s and the Company s operations and to mitigate the effects of fluctuations in cash flows Fair values Group At balance sheet date, the carrying amounts of short term deposits placed with licensed banks, receivables, payables and short term borrowings approximates their fair values due to the relatively short term nature of these financial instruments. The carrying amount of the floating rate long term loans and Commercial Papers approximates their fair values as they are subject to floating interest rates. The Company provides financial guarantees to banks for credit facilities extended to certain subsidiaries and to a third party. The fair value of such financial guarantees are not expected to be material as the probability of the subsidiaries defaulting on the credit lines and on the joint venture agreement (Note 10.1) is remote. It was not practicable to estimate the fair value of the Group s investment in unquoted shares (including investment in an associate) due to the lack of comparable quoted market price and the inability to estimate fair value without incurring excess costs. The investment in an associate represents 30% of the issued ordinary shares and preference shares of an unquoted company. The investment is carried at its original cost of RM7,757,000 ( RM300,000) in the balance sheet. At the financial year end, the net unaudited tangible assets (100%) reported by the unquoted company was RM25,069,000 ( RM915,000). Company At balance sheet date, the carrying amounts of receivables, payables and short term borrowings approximates their fair values due to the relatively short term nature of these financial instruments. In respect of the long term amounts due from certain subsidiaries as disclosed in Note 8 to the financial statements, a reasonable estimate of fair value could not be made as they are not repayable within the next twelve months.

79 NOTES TO THE FINANCIAL STATEMENTS Mutiara Goodyear Development Berhad (40282-V) FINANCIAL INSTRUMENTS (Cont d) 32.2 Fair values (Cont d) Company (Cont d) The fair values of other financial liabilities together with the carrying amounts shown in the balance sheets are as follows: Carrying Fair Carrying Fair amount value amount value Note RM 000 RM 000 RM 000 RM 000 Financial liabilities Group Secured fixed rate term loan 18 29,720 26,005 18,888 16,339 Unsecured fixed rate term loan 18 32,000 28,453 32,000 27,213 Finance lease liabilities Company Secured fixed rate term loan 18 8,570 7,636 11,238 9,829 Unsecured fixed rate term loan 18 32,000 28,453 32,000 27,213 Estimation of fair values The fair value of the secured and unsecured fixed rate term loan and finance lease liabilities are determined using estimated future cash flows discounted using market related rate for a similar instrument at the balance sheet date. The interest rates used to discount cash flows are 6.1% ( %) and 2.7% ( %) respectively. 33. SIGNIFICANT EVENTS DURING AND SUBSEQUENT TO THE FINANCIAL YEAR 33.1 On 12 June 2008, the Company s wholly owned subsidiary, Pembangunan Bandar Mutiara Sdn. Bhd. ( PBM ) entered into a Shareholder Agreement with two companies to regulate their relationship as joint venturers for the proposed development of three parcels of freehold land measuring in total acres in Bandar Tasek Mutiara, Seberang Perai Selatan, Penang into a residential development. For the purpose of this joint venture agreement, a joint venture company, Tambun Indah Development Sdn. Bhd. ( TID ) has been established and PBM will hold 30% equity interest in TID. The total paid up capital of TID is RM24,358,000. The Group considered TID as an associate. In connection with the aforementioned joint venture, PBM and TID had entered into a Sale and Purchase Agreement on even date and a Supplemental Agreement on 3 July 2008 for the disposal by PBM to TID of one parcel of freehold land measuring approximately 67.9 acres ( Parcel A ) for a consideration of RM29,578,000. PBM had also entered into an Option Agreement with TID on 12 June 2008 granting TID the option to purchase two parcels of freehold land measuring approximately 84 acres ( Parcel B ) and acres ( Parcel C ) for a consideration of RM40,249,000 and RM53,224,000 respectively. The sale and purchase agreement for Parcel B shall be executed not later than eighteen (18) months from the date of the sale and purchase agreement for Parcel A, while the sale and purchase agreement for Parcel C shall be executed not later than eighteen (18) months from the sale and purchase agreement for Parcel B. Sale of Parcel A was completed on 15 October On 10 May 2010, PBM entered into Sale and Purchase Agreement with TID for purchase of the freehold land Parcel B. The sale is expected to be completed by 31 December TID has paid a 10% deposit subsequent to financial year end. annual report 2010

80 78 NOTES TO THE FINANCIAL STATEMENTS 33. SIGNIFICANT EVENTS DURING AND SUBSEQUENT TO THE FINANCIAL YEAR (Cont d) 33.2 On 27 May 2010, the Company s wholly owned subsidiary, Jurus Positif Sdn. Bhd. ( JPSB ) entered into a settlement agreement with Positive Quantum Sdn. Bhd. ( PQSB ) for the early settlement by JPSB of PQSB s entitlement as stated in the Principal Development Agreement and Supplemental Development Agreement signed on 29 June 2007 and 31 July 2008 respectively for an agreed liquidated sum of RM20,583,000 of which RM5,583,000 has been paid as at 30 April 2010 by JPSB to PQSB for the proposed development of a parcel of land measuring approximately acres. The remainder is to be paid within the next financial year, where any extension of the payment date shall be mutually agreed between JPSB and PQSB On 26 July 2010, the Company s wholly owned subsidiary, Potensi Naga Sdn. Bhd. entered into a Sale and Purchase Agreement with Tan Ah Ba and Lim Hock Choon ( Purchasers ) to dispose properties held under the Freehold Title Deed held under HS(D) 19584, PT 246, Bandar Alor Setar (now known as GRN Lot 41 Seksyen 14 Bandar Alor Setar, District Kota Setar, Kedah) and HS(D) PT 247, Bandar Alor Setar (now known as GRN Lot 42 Seksyen 14, Bandar Alor Setar, District Kota Setar, Kedah) together with two units of 5-storey shophouse known as No. 41 and 42, Jalan PSK 1, Pekan Simpang Kuala, Alor Setar, Kedah, for a cash consideration of RM2,200,000 ( Sale Consideration ). The Purchasers have paid a 10% deposit subsequent to financial year end. The remainder of the Sale Consideration shall be paid on or before expiry of the completion period, which is a period of six months from the date of SPA with an option of a one-month extension from the expiry of the completion date On 30 July 2010, the Company s wholly owned subsidiary, Potensi Naga Sdn. Bhd. entered into a Sale and Purchase Agreement ( SPA ) with Prosper Palm Oil Mill Sdn. Bhd. to dispose a 13-storey office building together with 230 car park bays, which is held under Strata Title PM 43/M3/1/397 No. Petak 397 in Tingkat No.1 Bangunan No. M3 Lot No Bandar Petaling Jaya, Daerah Petaling, Negeri Selangor with accessory parcels A550, A551, A553, A562 and A564 - A656 attached thereto ( the Strata Title ) and bearing the postal address of Wisma Goodyear, Block B, Kelana Centre Point, No. 3, Jalan SS 7/19, Kelana Jaya, Petaling Jaya, Selangor Darul Ehsan, for a cash consideration of RM38,000,000 ( Sale Consideration ). The Purchaser has paid a 10% deposit subsequent to financial year end. The remainder of the Sale Consideration shall be paid on or before expiry of the completion period, which is a period of three months from the date when all the conditions precedent have been fulfilled. The conditions precedent are to be fulfilled within 6 months from the date of SPA or such extensions as the parties may mutually agree upon in writing. 34. CHANGE IN ACCOUNTING POLICY The significant accounting policies set out in Note 2 have been applied in preparing the financial statements for the year ended 30 April During the financial year, the Company early adopted IC Interpretation 15, Agreements for the Construction of Real Estate, and the effects are summarised below: IC Interpretation 15: Agreements for the Construction of Real Estate IC Interpretation 15 replaces the existing FRS , Property Development Activities and provides guidance on how to account for revenue from construction of real estate. The adoption of IC Interpretation 15 resulted in a change in accounting policy which was applied retrospectively whereby the recognition of revenue from all property development activities of the Group was changed from the percentage of completion method to the completed method. As a result of the adoption of IC Interpretation 15, the development revenue and development cost recognised based on the percentage of completion method has now been reclassified to deferred revenue and inventories as a separate line item on the balance sheet.

81 NOTES TO THE FINANCIAL STATEMENTS Mutiara Goodyear Development Berhad (40282-V) CHANGE IN ACCOUNTING POLICY (Cont d) The change in accounting policy was recognised retrospectively in accordance with the provisions of IC Interpretation 15 and the comparatives have been correspondingly restated. The change in accounting policy had the following impact on the financial statements: Group 2009 RM 000 Income statement for the year ended 30 April Increase in revenue 307,460 Increase in cost of development properties (238,112) Increase in other operating income 1,111 Increase in tax expense (18,006) Increase in profit for the year 52,453 Balance sheet at 30 April Cumulative decrease in opening retained earnings 55, COMPARATIVE FIGURES The following comparative figures have been reclassified as a result of changes in accounting policies as stated in Note 34: As As previously restated stated RM 000 RM 000 Balance sheet Property development costs 127,325 Development properties held for sale 18,228 Inventories 163,046 Deferred tax assets 1, Deferred tax liabilities 24,108 23,930 Payables and accruals 62,421 61,139 Deferred revenue 19,895 Retained profits 63,544 66,307 Income statement Revenue 398,755 91,295 Result from operating activities 95,400 24,941 Profit before tax 91,486 21,027 Tax expense (21,639) (3,633) Profit for the year 69,847 17,394 Profit attributable to shareholders of the Company 69,899 17,446 Statements of changes in equity Retained earnings at 1 May 2008 (1,229) 53,987 Cash flow statement Profit before tax 91,486 21,027 Property development cost (30,851) Development properties held for sale (903) Inventories (75,599) Payables and accruals 1, Deferred revenue 19,895 annual report 2010

82 80 STATEMENT BY DIRECTORS pursuant to Section 169(15) of the Companies Act, 1965 Mutiara Goodyear Development Berhad (Company No V) (Incorporated in Malaysia) and its subsidiaries In the opinion of the Directors, the financial statements set out on pages 37 to 79 are drawn up in accordance with Financial Reporting Standards and the Companies Act, 1965 in Malaysia so as to give a true and fair view of the financial position of the Group and of the Company as of 30 April 2010 and of their financial performance and cash flows for the year then ended. Signed on behalf of the Board of Directors in accordance with a resolution of the Directors:... Cheang Chee Leong... Hamidon Bin Abdullah Kuala Lumpur, Date: 6 August 2010 STATUTORY DECLARATION pursuant to Section 169(16) of the Companies Act, 1965 I, Lee Swee Kheng, the Officer primarily responsible for the financial management of Mutiara Goodyear Development Berhad, do solemnly and sincerely declare that the financial statements set out on pages 37 to 79 are, to the best of my knowledge and belief, correct and I make this solemn declaration conscientiously believing the same to be true, and by virtue of the provisions of the Statutory Declarations Act, Subscribed and solemnly declared by the abovenamed in Kuala Lumpur on 6 August Lee Swee Kheng Before me: Lt. Kol Hj Jalil Bin Hj Ithnin (B) (No. W592) Commissioner For Oaths Kuala Lumpur

83 INDEPENDENT AUDITORS REPORT to the members of Mutiara Goodyear Development Berhad Mutiara Goodyear Development Berhad (Company No V) (Incorporated in Malaysia) and its subsidiaries Mutiara Goodyear Development Berhad (40282-V) 81 Report on the Financial Statements We have audited the financial statements of Mutiara Goodyear Development Berhad, which comprise the balance sheets as at 30 April 2010 of the Group and of the Company, and the income statements, statements of changes in equity and cash flow statements of the Group and of the Company for the year then ended, and a summary of significant accounting policies and other explanatory notes, as set out on pages 37 to 79. Directors Responsibility for the Financial Statements The Directors of the Company are responsible for the preparation and fair presentation of these financial statements in accordance with Financial Reporting Standards and the Companies Act, 1965 in Malaysia. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. Auditors Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with approved standards on auditing in Malaysia. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on our judgment, including the assessment of risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the Company s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the Directors, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the financial statements have been properly drawn up in accordance with Financial Reporting Standards and the Companies Act, 1965 in Malaysia so as to give a true and fair view of the financial position of the Group and of the Company as of 30 April 2010 and of their financial performance and cash flows for the year then ended. annual report 2010

84 82 INDEPENDENT AUDITORS REPORT to the members of Mutiara Goodyear Development Berhad Report on Other Legal and Regulatory Requirements In accordance with the requirements of the Companies Act, 1965 in Malaysia, we also report the following: a) In our opinion, the accounting and other records and the registers required by the Act to be kept by the Company and its subsidiaries have been properly kept in accordance with the provisions of the Act. b) We are satisfied that the accounts of the subsidiaries that have been consolidated with the Company s financial statements are in form and content appropriate and proper for the purposes of the preparation of the financial statements of the Group and we have received satisfactory information and explanations required by us for those purposes. c) Our audit reports on the accounts of the subsidiaries did not contain any qualification or any adverse comment made under Section 174(3) of the Act. Other Matters This report is made solely to the members of the Company, as a body, in accordance with Section 174 of the Companies Act, 1965 in Malaysia and for no other purpose. We do not assume responsibility to any other person for the content of this report. KPMG Firm Number: AF 0758 Chartered Accountants Adrian Lee Lye Wang Approval Number: 2679/11/11(J) Chartered Accountant Petaling Jaya, Selangor Date: 6 August 2010

85 PROPERTIES HELD BY THE GROUP Mutiara Goodyear Development Berhad (40282-V) 83 Location Tenure Total Area Year of expiry Description/ Net Book Age of Date of Existing Use Value as at Building Acquisition/ 30 April 2010 Revaluation* (RM 000) Part of Master Title Leasehold 114,745 Leasehold for 99 Office 38, years 30 April 2010* No H.S(M) 8544 sq feet years expiring on Building Master Lot No. P.T January 2094 Mukim of Damansara District of Petaling, Selangor Plot 41 and 42 Freehold 6,055 Shop House 2, years 30 April 2010* Lots 1877, 2078, 3264, sq feet 5458 and part 5459 Mukim of Pengkalan Kundor District of Kota Setar, Kedah Bangunan M1-B, Tingkat 5 Freehold 3.41 acres Being 84,168 1 November No 192, Geran (for developed as 2001/ Lot development Prima Avenue 30 April 2010* Bangunan M1-A, Tingkat 2 land) & car park lots No 60, Geran Lot Part of Geran Lot All the above lots are located at:- Pekan Cempaka District of Petaling State of Selangor Lot Nos 13,16, 20, 21, 22, 114, Freehold Lot 1383 is for Being 241,692 1 November 116, 1067, 1076, 1345, 1383, except for acres 99 years developed as , 1427, 1428, 1433, Lot 1383 expiring on Bandar 1445, 3487 part of 1628 and (approximately 26 January Tasek Mutiara part of acres) 2036 Mukim 15 which is Seberang Perai Selatan under a leasehold title. Lot 188, Geran Freehold Development 12, August Mukim Hulu Langat acres land 2003 Daerah Hulu Langat PT 6948 Freehold 1.32 Development 1, December Bandar Sungai Pusu acres land 2004 District of Gombak Selangor Darul Ehsan Grant 9720 Lot 542 and Freehold Being 107, December Grant acres developed as 2004 Lot 424, Mukim of Ulu Kelang Nadayu, District of Gombak Melawati Selangor Darul Ehsan Lot no PT 5034, HS(D) Freehold Development 3, March 2005 Mukim of Setapak acres land District of Gombak Selangor Darul Ehsan annual report 2010

86 84 PROPERTIES HELD BY THE GROUP (Cont d) Location Tenure Total Area Year of expiry Description/ Net Book Age of Date of Existing Use Value as at Building Acquisition/ 30 April 2010 Revaluation* (RM 000) PT 17715, HS(M) Leasehold Leasehold for Development 10,503 4 March 2005 Mukim of Ulu Kelang acres 99 years land and 12 February Daerah Gombak, Selangor expiring on June 2077 Lot 1210, No hakmilik 46 Leasehold 3.96 Leasehold for Development 1, May 2006 Lot 1211, No hakmilik 47 acres 99 years land and 10 December expiring on March 2068 All the above lots are located at:- Mukim of Ulu Kelang Daerah Gombak Selangor Darul Ehsan Lot PT 5032, HS(D) Freehold Development 1,481 5 April 2007 Daerah Gombak acres land Mukim Setapak, Selangor Lot 28605, HS(D) Leasehold Leasehold for Development 6, Jun 2007 Bandar Sunway, Daerah Petaling acres 99 years land Selangor expiring on (Joint Venture) 14 July 2107 HS(D) 20590, PT 5035 Freehold Development July 2008 Mukim of Setapak acres land District of Gombak Selangor Darul Ehsan Grant 7654 Lot 1255 Freehold Development 3,323 7 April 2008 Section 4 acres land Town of Georgetown North East District, Penang Grant 7653 Lot 1254 Freehold Development 3,307 9 April 2008 Section 4 acres land Bandar Georgetown Daerah Timur Laut Pulau Pinang Part of Lot Freehold Development 13, July 2008 Tmn Kajang Villa acres land Kajang, Selangor Darul Ehsan (Joint Venture) GM 92 Lot 1555 Freehold 3.77 Development 9,739 7 August 2008 Mukim 13 Daerah Timor Laut acres land Negeri Pulau Pinang Lot 290, Geran Mukim 13 Freehold Development 16,836 8 January 2009 Daerah Timur Laut acres land Bukit Gambir, Pulau Pinang

87 ANALYSIS OF SHAREHOLDINGS as at 15 September 2010 Mutiara Goodyear Development Berhad (40282-V) 85 Mutiara Goodyear Development Berhad (Company No V) (Incorporated in Malaysia) and its subsidiaries Class of Security : Ordinary Shares of RM1.00 each Authorised Share Capital : RM500,000,000 Issued & Paid-up Capital : RM230,913,200 Voting Rights : One voting right per ordinary share DISTRIBUTION OF SHAREHOLDINGS Holdings No. of Holders % No. of Shares % Less than 100 shares to 1,000 shares , ,001 to 10,000 shares 1, ,110, ,001 to 100,000 shares ,545, ,001 to less than 5% of issued shares ,617, % and above of issued shares ,915, TOTAL 2, ,913, LIST OF THIRTY (30) SHAREHOLDERS AS PER REGISTER OF DEPOSITORS Names of Shareholders No. of Shares % 1. ATIS Corporation Berhad 69,915, Rejoice Matrix Sdn Bhd 20,000, AIBB Nominees (Tempatan) Sdn Bhd Chua Ma Yu 11,500, Mohamed Bin Hashim 9,540, HLG Nominee (Tempatan) Sdn Bhd Equity Trust (Malaysia) Berhad for 9,100, True Horizon Sdn Bhd 6. Lim Kian Wat 7,500, M.I.T Nominees (Tempatan) Sdn Bhd Pledged Securities Account for Kee Cheng Teik 6,300, Dato Edmond Hoyt Yung 5, EB Nominees (Tempatan) Sdn Bhd Pledged Securities Account for 5,660, Mohd Nizam Bin Mohamed 10. M.I.T Nominees (Tempatan) Sdn Bhd Pledged Securities Account for 5,000, Hamidon Bin Abdullah 11. Abu Sahid Bin Mohamed 4,078, Mohd Nizam Bin Mohamed 4,000, Yeoh Kean Hua 3,900, Yap Wan Loong 3,068, HSBC Nominees (Asing) Sdn Bhd Exempt AN for BNP Paribas Securities Services 2,831, EB Nominees (Tempatan) Sdn Bhd Pledged Securities Account for 2,500, Shahrul Azhan Bin Shamsuddin 17. RHB Nominees (Tempatan) Sdn Bhd Pledged Securities Account for 2,400, Lofty Jewels Sdn Bhd 18. Dato Lee Choon Chin 2,224, EB Nominees (Tempatan) Sdn Bhd Pledged Securities Account for Chew Soo Ton 2,000, Tok Jiak Yong 1,969, annual report 2010

88 86 ANALYSIS OF SHAREHOLDINGS as at 15 September 2010 (Cont d) LIST OF THIRTY (30) SHAREHOLDERS AS PER REGISTER OF DEPOSITORS (Cont d) Names of Shareholders No. of Shares % 21. HSBC Nominees (Asing) Sdn Bhd Exempt AN for HSBC Private Bank (Suisse) S.A. 1,930, Mayban Nominees (Tempatan) Sdn Bhd Pledged Securities Account for 1,800, Mohd Nizam Bin Mohamed 23. Lim Khuan Eng 1,612, Chin Lee Heong 1,540, Ngu Liong Ting 1,333, Kee Cheng Teik 1,302, Chia Hee Chong 1,225, Lim Wei Wui 1,016, Chew Soo Ton 1,012, RHB Capital Nominees (Tempatan) Sdn Bhd Pledged Securities Account 852, for Tan Khee Eng TOTAL 192,959, SUBSTANTIAL SHAREHOLDERS Names of Shareholders Direct Interest Deemed Interest No. of Shares held % No. of Shares held % 1. ATIS Corporation Berhad 69,915, Rejoice Matrix Sdn Bhd 20,000, Chen Khai Voon 69,915,600 (a) Kee Cheng Teik 7,712, ,000,000 (b) 8.66 DIRECTORS SHAREHOLDINGS IN THE COMPANY Directors Direct Interest Deemed Interest No. of Shares held % No. of Shares held % 1. Chen Khai Voon 69,915,600 (a) Kee Cheng Teik 7,712, ,000,000 (b) Hamidon Bin Abdullah 5,000, Abd Rahman Bin Mohamad 10, Lim Beng Guan 6. Cheang Chee Leong 7. Dato Seri Ismail Bin Shahudin 8. Dato Ikmal Hijaz Bin Hashim 9. Choong Khoong Liang Notes:- (a) Deemed interest by virtue of his interest in ATIS Corporation Berhad. (b) Deemed interest by virtue of his interest in Rejoice Matrix Sdn Bhd.

89 Mutiara Goodyear Development Berhad (Company No V) (Incorporated in Malaysia) FORM OF PROXY No. of Shares held I/We...NRIC No... of... Tel No... being a member of MUTIARA GOODYEAR DEVELOPMENT BERHAD, hereby appoint *THE CHAIRMAN OF THE MEETING or... NRIC No... of... Occupation... or failing him,... NRIC No... of... Occupation... No Resolutions For Against 1. To receive the Audited Financial Statements together with the Reports of the Directors and Auditors thereon for the financial year ended 30 April To approve Directors fees of RM151, To approve the payment of a First and Final Single Tier Dividend of 3.5% for the financial year ended 30 April To re-elect En Hamidon Bin Abdullah as Director of the Company. 5. To re-elect Mr Lim Beng Guan as Director of the Company. 6. To re-elect Mr Cheang Chee Leong as Director of the Company. 7. To re-elect Mr Chen Khai Voon as Director of the Company. 8. To re-appoint Messrs KPMG as Auditors and to authorise the Directors to fix their remuneration. 9. Authority to Directors to allot and issue shares pursuant to Section 132D of the Companies Act, Proposed Renewal of Share Buy-Back Authority. 11. Proposed Amendment to the Articles of Association of the Company. * If you wish to appoint other person(s) to be your proxy/proxies, kindly delete the words Chairman of the Meeting and insert the name(s) of the person(s) desired. (Please indicate with an X, in the space provided whether you wish your vote to be casted for or against the resolution. Unless otherwise instructed, the proxy may vote as he or she shall think fit.)... Signature of Member Seal Date: as my/our proxy to vote for me/us and on my/our behalf at the Thirty-First Annual General Meeting of the Company to be held at The Eugenia, Ground Floor, Sime Darby Convention Centre, 1A, Jalan Bukit Kiara 1, Kuala Lumpur on Wednesday, 27 October 2010 at a.m. and at any adjournment thereof in the manner indicated below:- Notes:- 1. A member of the Company entitled to attend and vote is entitled to appoint a proxy to attend and vote instead of him. A proxy may but need not be a member of the Company. 2. An instrument appointing a proxy must be deposited at the registered office of the Company at Tingkat 11, Menara Tun Razak, Jalan Raja Laut, Kuala Lumpur, not less than forty-eight (48) hours before the time appointed for holding the Meeting or any adjournment thereof. 3. Where a member appoints more than one (1) proxy, the appointment shall be invalid unless he specifies the proportion of his holdings to be represented by each proxy. 4. If the appointer is a corporation, this form shall be executed under its common seal or under the hand of its officer or attorney duly authorised. annual report 2010

90 Please Fold Here Stamp The Company Secretary Mutiara Goodyear Development Berhad (40282-V) Tingkat 11, Menara Tun Razak Jalan Raja Laut Kuala Lumpur Please Fold Here

91 MUTIARA GOODYEAR DEVELOPMENT BERHAD (40282-V) Tingkat 11, Menara Tun Razak, Jalan Raja Laut, Kuala Lumpur Tel : Fax :