02 - malaysiastock.biz file02 Notice of Annual General Meeting 03 Statement Accompanying Notice of Annual General Meeting 04 Corporate Information 06 Chairman’s Statement

02 Notice of Annual General Meeting

03 Statement Accompanying Notice of Annual General Meeting

04 Corporate Information

06 Chairman’s Statement

12 Board of Directors

13 Directors’ Profile

21 Business Divisions

24 Five-Year Group Statistics

25 Corporate Governance Statement

29 Statement of Directors’ Responsibility

30 Other Information

31 Audit Committee Report

34 Statement on Internal Control

35 Financial Statements

95 Particulars of Group Properties

96 Analysis of Shareholdings

Form of Proxy

About the cover image

The cover depicts a man carefully shaping a piece of pottery. And in the same analogy, it takes the same expertise, patience and perseverance to shape a Company to become a successful Organization. The Group personifes these traits along with the passion and careful approach taken to mould each Division into an exemplary Organization of admirable quality.

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ECOFIRST CONSOLIDATED BHD (15379-V)

NOTICE IS HEREBY GIVEN that the Thirty-Eighth Annual General Meeting of the Company will be held at Ballroom 1, Level 5, The Summit Hotel, Subang USJ, Persiaran Kewajipan, USJ 1, 47600 UEP Subang Jaya, Selangor Darul Ehsan on Thursday, 24 November 2011 at 10.00 a.m. to transact the following business:-

AGENDA

ORDINARY BUSINESS

1. To receive the Audited Financial Statements for the financial year ended 31 May 2011 together with the Directors’ and Auditors’ Reports thereon.

2. To approve the Directors’ Fees for the financial year ended 31 May 2011. (Resolution 1)

3. To re-elect the following Directors who will be retiring pursuant to Article 113 of the Company’s Articles of Association:3.1 Dato’ Syed Ariff Fadzillah Bin Syed Awalluddin3.2 Dato’ Tiong Kwing Hee

(Resolution 2)(Resolution 3)

4. To re-appoint Messrs Russell Bedford LC & Company, the retiring Auditors as Auditors of the Company and to authorize the Directors to determine their remuneration. (Resolution 4)

SPECIAL BUSINESS

To consider and if thought fit, to pass the following resolution, with or without modifications, as an Ordinary Resolution of the Company: -

5. ORDINARY RESOLUTION AUTHORITY FOR DIRECTORS TO ISSUE SHARES

RESOLVED:“THAT pursuant to Section 132D of the Companies Act, 1965, and subject to the Main Market Listing Requirements of Bursa Malaysia Securities Berhad (“Bursa Securities”) and the approvals of the relevant governmental and/or regulatory authorities (if any), the Directors be and are hereby authorized to issue shares in the Company at any time, upon such terms and conditions, for such purposes and to such person or persons as the Directors may deem fit, provided that the aggregate number of shares issued pursuant to this resolution does not exceed 10% of the issued share capital of the Company at the time of issue AND THAT the Directors be also empowered to obtain the approval of Bursa Securities for the listing of and quotation for the additional shares so issued on Bursa Securities AND THAT such authority shall continue to be in force until the conclusion of the next Annual General Meeting of the Company.” (Resolution 5)

6. To transact any other business for which due notice shall have been given in accordance with the Companies Act, 1965 and the Company’s Articles of Association.

BY ORDER OF THE BOARD

YEOH CHONG KEAT (MIA 2736)REBECCA LEONG SIEW KWAN (MAICSA 7045547)Secretaries

Kuala Lumpur 2 November 2011

Notice of THIRTY-EIGHTH ANNUAL GENERAL MEETING

3

ANNUAL REPORT 2011

Notes:-

(i) A member entitled to attend and vote at the meeting is entitled to appoint not more than one (1) proxy to attend and vote in his stead. A proxy need not be a member of the Company and Section 149(1) of the Companies Act, 1965 shall not apply.

(ii) Where a member of the Company is an authorised nominee as defined under the Securities Industry (Central Depositories) Act 1991, it may appoint at least one (1) proxy in respect of each securities account it holds with ordinary shares of the Company standing to the credit of the said securities account.

(iii) The instrument appointing a proxy shall be in writing under the hand of the appointer or of his attorney duly authorised in writing or if the appointer is a corporation, either under seal or under the hand of an officer or attorney duly authorised.

(iv) The original instrument appointing a proxy and the power of attorney or other authority, if any, under which it is signed or a notarially certified copy of that power or authority shall be deposited at the Registered Office of the Company at Suite 11.1A, Level 11, Menara Weld, 76 Jalan Raja Chulan, 50200 Kuala Lumpur not less than forty-eight (48) hours before the time for holding the meeting or adjourned meeting.

Explanatory notes on Special Business:

Resolution 5The Ordinary Resolution proposed under this resolution 5, if passed, will renew the authority given to the Directors of the Company to issue and allot new shares in the Company at any time, to such person or persons, upon such terms and conditions and for such purposes as the Directors may, in their absolute discretion, deem fit (“General Mandate”), provided that the number of shares issued pursuant to this General Mandate, when aggregated with the nominal value of any such shares issued during the preceding twelve (12) months, does not exceed 10% of the nominal value of total issued share capital of the Company at the time of issue. This renewed General Mandate, unless revoked or varied at a general meeting, will expire at the conclusion of the next annual general meeting (“AGM”) of the Company.

The General Mandate procured and approved in the preceding year 2010 which was not exercised by the Company during the year, will expire at the forthcoming Thirty-Eighth AGM of the Company.

With this renewed General Mandate, the Company will be able to raise funds expeditiously for the purpose of funding future investment, working capital and/or acquisition(s) without having to convene a general meeting to seek shareholders’ approval when such opportunities or needs arise.

***********************************************************************************************************

StAteMeNt AccoMPANYiNG Notice of ANNUAL GeNeRAL MeetiNG

Further details of the following Directors standing for re-election are set out in the Directors’ Profile Section of the Annual Report:

(a) Dato’ Syed Ariff Fadzillah Bin Syed Awalluddin(b) Dato’ Tiong Kwing Hee

Notice of THIRTY-EIGHTH ANNUAL GENERAL MEETING (cont’d)

4


boARd of diRectoRS

CHAIRMAN

Dato’ Syed Ariff Fadzillah bin Syed Awalluddin

PREsIdENT

Dato’ (Dr.) Teoh Seng Foo

GRoUP CHIEf ExECUTIvE offICER /ExECUTIvE dIRECToR

Dato’ Tiong Kwing Hee

dIRECToRs

Amos Siew Boon YeongDato’ Boey Chin GanLim Een HongTeoh Seng Kian (Alternate Director to Dato’ (Dr.) Teoh Seng Foo)

sECRETARIEs

Yeoh Chong KeatRebecca Leong Siew Kwan

AUdIToRs

Russell Bedford LC & Company10th Floor, Bangunan Yee Seng15, Jalan Raja Chulan50200 Kuala Lumpur

sHARE REGIsTRAR Symphony Share Registrars Sdn. Bhd.Level 6, Symphony HousePusat Dagangan Dana 1Jalan PJU 1A/4647301 Petaling JayaSelangor Darul EhsanTel : 03 – 7841 8000Fax: 03 – 7841 8151/8152

REGIsTEREd offICE

Suite 11.1A, Level 11Menara Weld76, Jalan Raja Chulan50200 Kuala LumpurTel : 03 – 2031 1988Fax: 03 – 2031 9788

sToCk ExCHANGE LIsTING

Bursa Malaysia Securities BerhadMain Market

WEbsITE

www.ecofirst.com.my

coRPoRAte INfoRMATIoN

cHAiRMAN’S StAteMeNt

On behalf of the Board of Directors of Ecofirst Consolidated Bhd (“the Company”), I hereby present to you the Annual Report and the Audited Financial Statements of the Company and the Group for the Financial Year Ending 31 May 2011.

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ANNUAL REPORT 2011

Performance Review

I am pleased to report that the Group has turned the corner during this financial year ended 31 May 2011. With a profit before tax of RM9.4 million recorded against a revenue of RM25.0 million, efforts to turnaround the Group have culminated in positive results which compare favourably to losses incurred over the previous years. Going forward, I believe the Group is poised to sustain this healthy performance as it enters an exciting growth phase.

The Group’s retail complex, South City Plaza (“SCP”) at Seri Kembangan, Selangor, generated 37% to Group’s revenue at RM9.4 million in terms of recurring rental income and property management fees. This recurring source of revenue will be expanded in the next financial year as the Group’s newly completed 5-storey retail complex, known as 1Segamat, in Segamat, Johor will commence business in the first quarter of next year. 1Segamat, being the only mall in Segamat town, will be an exciting addition to the Group’s portfolio of prime assets.

Our development project, Taipan @ Ipoh Cybercentre in Daerah Kinta, Jelapang, Perak generated RM6.2 million or 25% to Group revenue. The development of 102 units of 3-storey shop-offices is progressing smoothly and is in fact, ahead of schedule. The development is expected to be completed by the next financial year, approximately 1 year ahead of the scheduled delivery date.

The Group’s construction activity contributed RM9.3 million in revenue representing 37% of the Group’s total revenue. The revenue was derived from the construction project of the National Youth Training Institute at Peretak, Kuala Kubu Baru, Selangor which was completed during the financial year under review. The Group is continuing to seek opportunities to secure new construction projects to boost the Division’s future revenue and profit contribution.

During the financial year under review, the Group through concentrated efforts, was able to recover RM38.4 million of debts and hence wrote-back provisions for doubtful debts made in prior years which were no longer required. The effect of the write-back of provisions was partly mitigated by losses of RM23.7 million incurred on revocation of retail units sold.

cHAiRMAN’S StAteMeNt

Newly completed 1Segamat retail complex in Segamat, Johor.

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Operational Review

In my statement last year, I mentioned about plans to construct 2 blocks of 13-storey service apartments as a continuing development of SCP. I would now like to report that construction works began in mid-2011 and the project which is known as “Academia” is targeted to be completed by August 2012. The cash flow generated from this development will be used to pare down our bank borrowings.

With more innovative and concerted marketing strategies, rental income derived from SCP registered a slight improvement during this financial year ended 31 May 2011 as compared to the previous year. With the anticipated completion of Academia apartments and the launching of a cineplex coupled with various upgrading works, the retail outlook at SCP should improve accordingly.

The Group anticipates a promising future for 1Segamat with a good tenant mix. The Group is fortunate to be able to resume and complete this project which will provide a steady income stream and enhance the Group’s performance in the future. 1Segamat is a modern and vibrant mall right in the heart of Segamat town and is located adjacent to the bus/taxi terminal and the train station. The opening of 1Segamat is expected to be by the first quarter of next year.

The Group’s commercial development in Taipan @ Ipoh Cybercentre which commenced this year contributed significantly to the Group’s performance with the development of 102 units of shop-offices under the first phase which were fully sold. Plans are also underway for the development of the second phase consisting of 147 units of shop-offices which will generate positive income to the Group over the coming financial years.

Both the Network Marketing and Agro-Biotechnology Divisions continue to face a challenging environment.

Revenue from the Network Marketing Division decreased in the financial year under review as compared to the previous financial year. As part of plans to revamp the business, we have re-assessed and re-aligned our product line to include only product ranges that are unique to the Group’s brand and most importantly that benefit the ultimate consumer. As the Group believes there is good business potential in the business of network marketing, with the correct product lines and a strong distributor base supported by a visionary and effective management team, we will continue intensified efforts to turnaround this Division.

Under the Agro-Biotechnology Division, we have a mixed basket of organic crops at our farm in Desaru, Johor. The Group is positively bullish on the long-term contributions from this Division as we enter the next phase of collaboration with various scientists to produce sustainable higher value bio-technology and bio-organic agro food products.

The mining operations via the Group’s co-operation agreement with CV Geo Mineral Resources for the exploitation of an iron ore mine in South Kalimantan, Indonesia is expected to commence contribution in the next financial year. During the year under review, the setting up of the machineries and equipment was completed. The necessary testing and commissioning are being done to ensure smooth running of the mining operations.

cHAiRMAN’S StAteMeNt (cont’d)

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ANNUAL REPORT 2011


Industry Overview and Prospects

The Malaysian economy continued to expand albeit at a slower pace of 4% during the second quarter of 2011 as compared to 4.9% in the first quarter of 2011. The slower growth rate was also reflected in the domestic demand which grew 5.2% in the second quarter of 2011 as compared to 6.9% in the first quarter which was largely driven by strong private consumption and investment activities.

The growth momentum is expected to be sustained in the remaining quarters of 2011, emanating mainly from private consumption and investment activities as well as acceleration of public expenditure, underpinned by strengthening domestic demand amid continued policy support.

The future economic growth on the domestic front is however susceptible to effects of global developments such as the Eurozone debt crisis, feeble recovery of the US economy and global inflationary pressures fuelled by increasing energy prices.

Nevertheless, with supportive government initiative and policies infused on the local front to help spur investment activities and private consumption growth which augur well for the domestic sector, the Group looks forward to a promising year ahead in 2012.

Winners of the ‘‘Save The Earth’’ Sculpture Designing Competition organised at South City Plaza.

Our employees donated food items and spent time with orphans and underprivileged children at Pusat Jagaan Ragarenthirar Karunai Illam in Balakong, Selangor.

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Corporate and Social Responsibility

The Group is committed to the importance of its corporate and social responsibilities whilst pursuing its corporate goals.

During the year, the Group played host at SCP to several activities which included, amongst others, several blood donation campaigns hosted together with the Lions Club, Persatuan Pendaki Gunung and several others, fund raising campaign for a shelter home and religious society, health screening programmes under the umbrella of the National Kidney Foundation, college activities and many other community related activities such as pet rearing, music entertainment shows, chess competition and health talks.

As part of our contribution to society, we also participated in charitable programmes and activities involving orphans and children from single parent homes.

Taking cognisance of the fact that human capital is an essential element of the Group’s success, we strive to promote opportunities to enhance the skills and proficiency of our employees whilst ensuring their wellbeing. Team building events and informal get-togethers are also organised regularly to create better working relationships between employees.

Acknowledgement

On behalf of the Board of Directors, I wish to thank, firstly, the management team and all employees of the Group for their remarkable commitment and spirited dedication in responding and rising to the challenges. We look forward to this continued effort which is so essential for the future growth of the Group.

I also wish to express our sincere appreciation to our valued shareholders, clients, bankers and business associates for their steadfast support and confidence in the Group. The Group values and looks forward to this continued support as we progress towards sustainable success in the years ahead.

To my fellow Board members, I wish to thank each and every one for their invaluable guidance and contribution towards the betterment of the Group.

Dato’ Syed Ariff Fadzillah Bin Syed Awalluddin

Chairman


Dato’ Boey Chin Gan

Independent Non-Executive DirectorMalaysian

Mr. Teoh Seng Kian

Alternate Director to Dato’ (Dr.) Teoh Seng FooMalaysian

Mr. Amos Siew Boon Yeong


Mr. Lim Een Hong


Dato’ Syed Ariff Fadzillah bin Syed Awalluddin

Chairman/Independent Non-Executive DirectorMalaysian

Dato’ (Dr.) Teoh Seng Foo

President/Non-Independent Executive DirectorMalaysian

Dato’ Tiong Kwing Hee

Group Chief Executive Officer/Executive DirectorMalaysian

01

01

05 06 07

03 04

03

0405

07

06

02

02

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ANNUAL REPORT 2011

Dato’ Syed Ariff Fadzillah bin Syed Awalluddin, aged 68, was appointed to the Board on 27 January 2006. He was re-designated to Chairman/Independent Non-Executive Director on 1 December 2009. He is also the Chairman of the Nomination Committee and a member of the Remuneration Committee.

He holds a Bachelor of Arts degree in History from University Malaya. He also holds a Diploma in Development Administration and a Master of Arts in International Relations.

He started his career as an Assistant District Officer in Kulim, Kedah in 1967. He was an Assistant Secretary in the Public Service Commission, Kuala Lumpur between 1970 and 1972 before being transferred to the Ministry of Foreign Affairs. Prior to retiring in November 2001, he served as the Ambassador of Malaysia to the Kingdom of Thailand from 1996 to 2001, Ambassador to the Republic of Korea with joint accreditation to Mongolia (1992 to 1995) and Ambassador of Malaysia to Fiji with concurrent accreditations to Tuvalu, Tonga, Western Samoa, Kiribati and Nauru (1998 and 1991). His other foreign assignments include postings to Indonesia, Libya and Canada. He was also the Deputy Permanent Representative of the Permanent Mission of Malaysia to the United Nations between 1982 and 1986. From 1991 to 1992, he served as the Undersecretary at the Ministry of Foreign Affairs in charge of Southeast Asia and South Pacific.

He also sits as director on the boards of MNRB Holdings Berhad, MNRB Retakaful Berhad and Malaysian Reinsurance Berhad.

He has no family relationship with any other Director and/or major shareholder of the Company. He has not entered into any transaction, whether directly or indirectly, which has a conflict of interest with the Company and has no convictions for offences, other than traffic offences (if any), within the past ten (10) years.

He has attended four (4) out of five (5) Board meetings held during the financial year ended 31 May 2011.

Dato’ Syed Ariff Fadzillah bin Syed Awalluddin(Chairman/Independent Non-Executive Director)Malaysian

diRectoRS’ PRofILE

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Dato’ (Dr.) Teoh Seng Foo(President/Non-Independent

Executive Director)Malaysian

diRectoRS’ PRofILE (cont’d)

Dato’ (Dr.) Teoh Seng Foo, aged 55 was appointed to the Board on 5 May 1997. He was re-designated from the position of an Executive Deputy Chairman to President/Non-Independent Executive Director on 1 December 2009. He is also the Chairman of the Executive and Remuneration Committees.

An accountant by profession, Dato’ Teoh is a Chartered Accountant of the Malaysian Institute of Accountants, a Chartered Management Accountant and Fellow Member of the Chartered Institute of Management Accountants, United Kingdom.

Dato’ Teoh has wide corporate experience, having held senior management positions in multi-nationals such as Intel Technology, Woodward & Dickerson Inc., Coopers & Lybrand and Esquel Group.

Dato’ Teoh was conferred the Honorary Doctorate in Business Administration by University of Abertay Dundee, United Kingdom. He is also a Patron of the University of Abertay Foundation based in United Kingdom.

Dato’ Teoh currently holds board positions as the President of Meda Inc. Berhad and President/Executive Deputy Chairman of SEG International Bhd.

He is a brother to Teoh Seng Aun and Teoh Seng Kian (who is also his alternate director), who are substantial shareholders of the Company. Apart from the above, he has no other family relationship with any other Director and/or major shareholder of the Company. He has ceased to be a substantial shareholder of the Company on 13 April 2011.

He has not entered into any transaction, whether directly or indirectly, which has a conflict of interest with the Company, other than those disclosed in the notes accompanying the financial statements, and has no convictions for offences, other than traffic offences (if any), within the past ten (10) years.

He has attended all the five (5) Board meetings held during the financial year ended 31 May 2011.

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ANNUAL REPORT 2011

Dato’ Tiong Kwing Hee(Group Chief Executive Officer/Executive Director)Malaysian


Dato’ Tiong Kwing Hee, aged 53, first joined the Board as an Alternate Director on 18 September 2008 and subsequently appointed as Executive Director/Chief Executive Officer on 2 January 2009. He is currently the Group Chief Executive Officer of the Company. He is also a member of the Executive Committee and the Chairman of the Risk Management Committee.

He obtained a Bachelor of Arts (Hons) majoring in Business Administration from Hanover College, United States of America in 1982 and a Master Degree in Business Economics from Miami University, United States of America in 1983.

He started his career with Sim Lim Holdings Berhad in 1983 as Executive Officer in charge of corporate finance and was promoted to Manager in 1984 and General Manager in 1985. He left Sim Lim Holdings Berhad in 1987 following his venture into the timber industry and became a shareholder cum director of marketing in Wansuria Sdn Bhd. He was a substantial shareholder in London Pacific Ltd, a company listed on the New Zealand Stock Exchange between 1988 and 1994. In 1994, he left the timber industry when he sold off his stake in Wansuria Sdn Bhd to Pan Pacific Asia Berhad. In 1995, he joined D-Systems Pte Ltd, a Singapore based company with exclusive distribution rights of drywall system from United States of America for Asia Pacific region, as the Chief Executive Officer. In 1997, he was head hunted on a two (2) years contract as an Executive Director of a listed company to prepare that company for a corporate restructuring.

In 2000, Dato’ Tiong was appointed as an Executive Director of Mercury Industries Berhad and subsequently he joined the Company on 2 September 2008. During the course of his career, he has been directly involved in various industrial sectors including corporate finance, financial services, manufacturing, plantations, property, construction, education, leisure, entertainment and mineral resources. He has extensive hands-on experience, knowledge and exposure in international business, corporate planning, restructuring and turnaround.



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Mr. Lim Een Hong(Independent Non-Executive

Director)Malaysian

Mr. Lim Een Hong, aged 44, was appointed to the Board on 29 March 2010. He is also a member of the Audit and Nomination Committees.

He is a lawyer by profession and holds a Bachelor of Law (Hons) from University of Malaya. Presently, he is the Chief Executive Officer and Director of Eduspec Holdings Bhd.

He started his career as a litigation lawyer handling banking and civil litigation cases from 1992 to 1996. He was partner of Eugene Tan & Co from 1994 to 1998 before setting up his own firm, Messrs EH Lim, Lee & Partners. He is exposed to property and land conveyancing transactions, property financing and land dealings. He has vast experience in land dealings negotiations, corporate restructuring, joint venture participation, acquisition, investment management and general corporate representation.


He has attended four (4) out of five (5) Board meetings held during the financial year ended 31 May 2011.


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ANNUAL REPORT 2011

Mr. Amos Siew Boon Yeong(Independent Non-Executive Director)Malaysian

Mr. Amos Siew Boon Yeong, aged 53, was appointed to the Board on 27 October 2005. He is also the Chairman of the Audit Committee and a member of the Remuneration Committee.

He qualified as a Certified Public Accountant in 1984 and is currently a member of the Malaysian Institute of Certified Public Accountants, a Chartered Accountant with the Malaysian Institute of Accountants and an associate member of the Chartered Tax Institute of Malaysia. He is also a Certified Financial Planner and is a member of the Financial Planning Association of Malaysia.

He started his auditing career and professional training with the accounting firm, Coopers & Lybrand in 1978 before establishing his own practice in 1988. He is currently the sole practitioner of the public accounting firm, Messrs. Siew Boon Yeong & Associates. He has vast experience in auditing, tax planning, corporate finance and financial planning and has been involved in numerous assignments on merger and acquisitions, debt restructuring and liquidation.

He is also a Director of SEG International Bhd.




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Mr. Teoh Seng Kian(Alternate Director to Dato’

(Dr.) Teoh Seng Foo)Malaysian

Mr. Teoh Seng Kian, aged 51, was appointed as Alternate Director to Dato’ (Dr.) Teoh Seng Foo, the President, on 1 December 2009.

He graduated with a Bachelor of Engineering (Mechanical) degree from Australia in 1984. He started his career with an Australian company specializing in manufacturing of building materials. Upon returning to Malaysia, he served as a director in a company involved in quarrying and infrastructure construction. He is currently the Executive Director of Meda Inc. Berhad.

He is a substantial shareholder of the Company and is deemed to have an interest in all the shares held by the Company in the subsidiaries by virtue of his substantial interest in shares of the Company. He is a brother to Dato’ (Dr.) Teoh Seng Foo, the President of the Company and Teoh Seng Aun, who is a substantial shareholder of the Company. Apart from the above, he has no other family relationship with any other Director and/or major shareholder of the Company.

He has not entered into any transaction, whether directly or indirectly, which has a conflict of interest with the Company, other than those disclosed in the notes accompanying the financial statements, and has no convictions for offences, other than traffic offences (if any), within the past ten (10) years.


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ANNUAL REPORT 2011

Dato’ Boey Chin Gan(Independent Non-Executive Director)Malaysian


Dato’ Boey Chin Gan, aged 46, was appointed to the Board on 1 April 2009. He is also a member of the Audit and Nomination Committees.

He obtained the Bachelor of Arts (Honours) from the University Kebangsaan Malaysia (UKM).

Dato’ Boey is very active in the social economic development of the country. He has served as the Press Secretary to the Minister of Housing and Local Government of Malaysia for 11 years from 1993 to 2004. In 2004, Dato’ Boey was the Kedah State Assemblyman. Dato’ Boey has vast experiences and extensive knowledge in administrative and strategic planning by virtue of his long service in government sectors.



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ANNUAL REPORT 2011

bUSiNeSS dIvIsIoNs

CONSTRUCTION DIVISION

The Division’s construction and upgrading project of the National Youth Training Institute in Peretak, Selangor has been successfully completed. The government funded training centre which can accommodate up to 800 students consists of academic blocks, student residences, staff quarters and faculty facilities.

The Division is seeking opportunities to secure new construction projects from both the private and public sectors to boost its future contribution to the Group.

PROPERTY DIVISION

This Division has two investment properties under its stable.

The first is a 5-storey commercial and retail complex in Seri Kembangan, Selangor, known as South City Plaza (‘‘SCP’’)which currently houses several established vocational and technical education providers. Other tenants in SCP are those in the food & beverage business, hypermarket operator, personal care stores, fashion retailers, telecommunication providers, entertainment outlets, imported furniture retailers etc. which provide a wide range of services and facilities to students, shoppers and

communities alike. On-going efforts are being carried out to further improve its tenant base and investment yield.

Construction has commenced for 2 tower blocks consisting of 416 units of service apartments on top of the existing SCP. The development known as “Academia” would, upon completion, enhance the value of the retail complex in terms of being part of an integrated development with synergistic benefits attributable to the population present at both the complex and the residential towers. The Academia has been fully sold and construction is expected to be completed and handed over by the third quarter of next year.

The second property is a 5-storey commercial and retail complex in Segamat, Johor known as 1Segamat. Construction of this complex has been completed this year and the complex is targeted to be opened for business by the first quarter of next year.

The approximately 450,000 sq. ft. complex will house major tenants consisting of a supermarket, an eight hall Cineplex, a book store, food and beverage outlets, fashion and lifestyle retailers and many others.

Being the only modern shopping mall in the town of Segamat, we are optimistic of a significant contribution from 1Segamat in the years ahead.

The completed construction and upgrading of the National Youth Training Institude in Peretak, Selangor.

Artist impression of the Academia Project consisting of 2 tower blocks of service apartments in Seri Kembangan, Selangor.

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bUSiNeSS dIvIsIoNs (cont’d)

PROPERTY DIVISION (cont’d)

The Group’s commercial development project in Mukim of Hulu Kinta, Ipoh, Perak consists of 2 and 3 storey shop-offices and is known as Taipan @ Ipoh Cybercentre. With easy access from the North-South Highway (exit Jelapang/Chemor), the development is located within the most convenient prime area of Ipoh, surrounded by other intensive developments consisting of government offices, business centers, hypermarket, transportation hub, education centers, housing estates etc.. The Group has recently added on another 4.33 acres in the same vicinity for the development of 67 units of shop-offices which is currently 75% sold. Construction of this development is expected to commence early next year.

NETWORK MARKETING DIVISION

Under this Division, recent research has identified a major breakthrough product in the form of Black Garlic, a fermented garlic derived from fresh garlic which has long been known as a herbal wonder food. Based on Japanese technology, the Black Garlic is a unique product resulting from prolonged extraction of fresh garlic at high

temperature for a period of 50-60 days and through this process, the garlic turns black naturally.

The Black Garlic is a powerful antioxidant which effectiveness is at least 22 times more than fresh garlic. This advanced bio-technology process which is a first in the world is able to produce black garlic with numerous health benefits key amongst which is enhancing the body immune system, anti-inflammatory effects, anti-aging, improves blood circulation and brain performance, regulates blood sugar levels, revitalizes and improves stamina and many other health benefits.

Other products offered range from health to beauty care, personal to home care, bodywear to jewelry and water equipment to car care. Each product is manufactured under stringent Good Manufacturing Practices (GMP) and Hazard Analysis and Critical Control Point (HACCP) quality standards and are all syariah compliant.

A group of committed leaders has been identified to work closely with the marketing team to promote our innovative services and proprietary products for optimal health to capture the local and global wellness market.

Black Garlic - a unique product with numerous health benefits produced using an advanced bio-technology process.

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ANNUAL REPORT 2011

bUSiNeSS dIvIsIoNs (cont’d)

AGRO-BIOTECHNOLOGY DIVISION

This Division operates a biotechnology-based organic farm at Desaru, Johor via a joint-venture with a Johor state government-linked corporation.

Currently, the land is under cultivation with various types of organic vegetables and fruit crops such as sweet corn, sweet potato, chilly, green leafy vegetables, radish, sesame, groundnuts, pineapple and many others. Backed by our “SOM” (Sijil Organik Malaysia) certification, the acceptance of our organic farm produce by organic wholesalers and retailers has been very encouraging. The next phase is to move into higher value bio-technology and bio-organic food products in collaboration with food/nutrition scientists.

MINERAL RESOURCE DIVISION

This Division represents the Group’s new business entry into mineral resources; more specifically the exploitation of iron ore in South Kalimantan, Indonesia.

The fully set-up mining processing plant is currently undergoing testing and commissioning. Mining activities are expected to be fully operational by the end of the year.

The Group is optimistic that this Division will start to contribute significantly in terms of revenue and profit in the next financial year.

Organic produce from our Desaru farm.

Organic produce from our Desaru farm.

Setting-up of the mining processing plant in South Kalimantan, Indonesia.

Iron ore area in Tanah Laut Regency, South Kalimantan, Indonesia.

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five-YeAR GRoUP sTATIsTICs

Year ended 31 May

Period ended 31 May

Year ended 31 July

2011 2010 2009 2008* 2007

Revenue (RM Mil) 25.0 21.1 44.0 30.5 93.2

Profit / (Loss) Before Taxation and Minority Interests (RM Mil) 9.5 (41.4) (90.3) (22.2) (33.6)

Profit / (Loss) Attributable to Shareholders (RM Mil) 8.8 (41.4) (90.6) (33.4) (36.4)

Shareholders’ Funds (RM Mil) 118.6 105.2 145.3 232.0 269.9

Total Assets Employed (RM Mil) 414.4 358.7 433.6 515.2 582.6

Earnings / (Loss) Per 50 Sen Share (Sen) 1.4 (6.4) (13.9) (5.1) (5.6)

Net Asset Per 50 Sen Share (RM) 0.18 0.16 0.22 0.36 0.42

Weighted Average Number of Shares (50 Sen Per Share) in issue during the year (‘000) 650,148 650,148 650,148 650,148 650,148

100,000

90,000

80,000

70,000

60,000

50,000

40,000

30,000

20,000

10,000

_2007 2008 2009 2010 2011

(RM’000)ReveNUe

20,000

10,000

–

-10,000

-20,000

-30,000

-40,000

-50,000

-60,000

-70,000

-80,000

-90,000

-100,0002007 2008 2009 2010 2011

(RM’000)PRofit / (LoSS) befoRe tAxAtioN ANd MiNoRitY iNteReStS

300,000

250,000

200,000

150,000

100,000

50,000

_2007 2008 2009 2010 2011

(RM’000)SHAReHoLdeRS’ fUNd

* 10 month period from 1.8.2007 to 31.5.2008 due to change in financial year end from 31 July to 31 May.

25

ANNUAL REPORT 2011

INTRODUCTION

The Board of Directors (“Board”) of EcoFirst Consolidated Bhd (“ECB”) subscribes to the fundamental principles of good corporate governance and best practice provisions contained in the Malaysian Code on Corporate Governance (Revised 2007) (“the Code”). Compliance with the Code has always been recognised by ECB as the basic tenet to safeguard the interests of all stakeholders and to enhance shareholders’ value.

BOARD OF DIRECTORS

Constitution of the Board and Board Balance

The Board, led by an Independent Non-Executive Chairman, comprises of six (6) members of whom two (2) are Executive Directors, four (4) are Non-Executive Directors all of whom are Independent, including the Chairman. One (1) of the Executive Directors has an appointed Alternate Director. The profile of each Director is set out in the Directors’ Profile Section of the Annual Report.

The Board’s composition brings to the Group a diverse wealth of skills, knowledge and a balanced mix of experience and expertise to effectively discharge its stewardship responsibilities in spearheading the Group’s growth and future direction. There is a clear segregation of responsibilities between the Directors to ensure a balance of power and authority. Generally, the Executive Directors are responsible for making and implementing operational and corporate decisions. Non-Executive Directors play a pivotal role in corporate accountability by providing unbiased and independent views in the sharing of knowledge and experience, towards the formulation of policies and in the decision-making process. Where a potential conflict of interest may arise, it is mandatory practice for the Director concerned to declare his interest and abstain from the decision-making process.

There is a clear division of responsibility between the Chairman and Group Chief Executive Officer to ensure that there is a balance of power and authority. The Chairman is responsible for ensuring Board effectiveness whilst the Group Chief Executive Officer has overall responsibility for the operating units, organizational effectiveness and implementation of Board policies and decisions. Although all the Directors have an equal responsibility for the Group’s operations, the role of these Independent Non-Executive Directors is important as they provide independent views, advice and judgement on issues of strategy, business performance and controls. The Independent Non-Executive Directors provide independent and constructive views in ensuring that the strategies proposed by the management are studied and deliberated to take account of the interests not only of the Group, but also of shareholders, and the public at large.

Meetings of the Board of Directors

At least four (4) board meetings are held annually; each meeting scheduled to consider the quarterly financial results and operational performance. Additional meetings are convened as and when necessary. During the financial year ended 31 May 2011, five (5) board meetings were held and the summary of attendance by the Directors is as follows:

Name of DirectorsTotal

Attendance% of

Attendance

Dato’ (Dr.) Teoh Seng Foo(Alternate Director : Teoh Seng Kian) 5/5 100

Dato’ Tiong Kwing Hee 5/5 100

Dato’ Syed Ariff Fadzillah bin Syed Awalluddin 4/5 80

Amos Siew Boon Yeong 5/5 100

Dato’ Boey Chin Gan 5/5 100

Lim Een Hong 4/5 80

The Company Secretary also attended all the Board meetings held during the financial year under review.

CORpORATE gOvERNANCE statement

26


Access to Advice and Information

Board meetings are structured with a pre-set agenda, providing the Directors with relevant and timely information to enable them to discharge their duties and responsibilities effectively. Board papers, which provide updates on operational, financial and corporate developments, are circulated to enable Directors to obtain further explanation where necessary in order to facilitate informed decision-making.

All Directors have access to all information within the Group and direct access to the advice and services of the Company Secretary, whether as a full Board or in their individual capacity. In addition, the Directors are also empowered to seek external and independent professional advice at the Company’s expense, in order to discharge their duties and responsibilities more effectively.

Board Committees

The Board has delegated specific responsibilities to four (4) committees, which operate within approved terms of reference, to assist in the effective discharge of its principal responsibilities. Notwithstanding the above, the ultimate responsibility for the final decision lies with the full Board. These committees are:

a) Nomination Committee

The Nomination Committee, which comprises wholly of Non-Executive Directors, recommends candidates with an optimal mix of qualifications, skills and experience to the Board. The Nomination Committee also carries out annual evaluation on the effectiveness of the whole Board, the various Committees and individual Director’s contribution to the Board’s decision-making process.

The present members of the Nomination Committee are as follows:

Dato’ Syed Ariff Fadzillah bin Syed Awalluddin - Chairman/Independent Non-Executive DirectorDato’ Boey Chin Gan - Member/Independent Non- Executive DirectorLim Een Hong - Member/Independent Non-Executive Director

b) Remuneration Committee

The Remuneration Committee, comprising mainly Non-Executive Directors, is responsible for drawing up the policy framework and to make recommendations to the Board on the remuneration packages of the Executive Directors. The Executive Directors do not participate in decisions relating to their remuneration packages. The Board as a whole determines the remuneration of Non-Executive Directors with the Director concerned abstaining from participating in decisions in respect of his individual remuneration.

The Remuneration Committee comprises of the following members:

Dato’ (Dr.) Teoh Seng Foo - Chairman/President/Executive DirectorAmos Siew Boon Yeong - Member/Independent Non-Executive DirectorDato’ Syed Ariff Fadzillah bin Syed Awalluddin - Member/Independent Non-Executive Director

c) Audit Committee

The terms of reference and further information on the Audit Committee are outlined in the Audit Committee Report Section of this Annual Report.

d) Risk Management Committee

The Risk Management Committee oversees the implementation of the risk management system within the Group. The Committee reports directly to the Board and assists the Board in overseeing the management of risk issues and reviews the efficacy of internal controls within the Group.

CORpORATE gOvERNANCE statement (ConT’d)

27

ANNUAL REPORT 2011

d) Risk Management Committee (cont’d)

The present members of the Risk Management Committee are as follows:

Dato’ Tiong Kwing Hee (Group Chief Executive Officer) - Chairman

Nur Arina Caroline Wambeck Binti Abdullah (General Manager, Finance & Accounts) - Member

Loke Kam Foo (General Manager, Operation) - Member

Re-election

All Directors will retire at regular intervals by rotation once at least every three (3) years and shall be eligible for re-election in accordance with the provisions of the Company’s Articles of Association.

Directors’ Training

All Directors have attended and completed the Mandatory Accreditation Programme as prescribed by Bursa Malaysia Securities Berhad (“Bursa Securities”). The Board acknowledges the importance of continuous training and they have attended various training programmes and seminars to keep abreast with developments in the business environment as well as with the new relevant regulatory and statutory requirements, to further enhance their skills and knowledge.

During the financial year ended 31 May 2011, the Directors have attended the following training programmes:-

No. Directors Title of Training Programmes Date

1. Dato’ Syed Ariff Fadzillah Bin Syed Awalluddin

• Prime Minister’s 1Malaysia “Economic Transformation Programme (ETP)”

27/04/2011

2. Dato’ (Dr.) Teoh Seng Foo • Prime Minister’s 1Malaysia “Economic Transformation Programme (ETP)”

27/04/2011

3. Dato’ Tiong Kwing Hee • Prime Minister’s 1Malaysia “Economic Transformation Programme (ETP)”

27/04/2011

4. Amos Siew Boon Yeong • National Tax Conference 2010• Seminar Percukaian Kebangsaan 2010

06/07/2010 & 07/07/201019/10/2010

5. Dato’ Boey Chin Gan • Prime Minister’s 1Malaysia “Economic Transformation Programme (ETP)”

27/04/2011

6. Lim Een Hong • Prime Minister’s 1Malaysia “Economic Transformation Programme (ETP)”

27/04/2011

7. Teoh Seng Kian (Alternate Director to Dato’ (Dr.) Teoh Seng Foo)

• Prime Minister’s 1Malaysia “Economic Transformation Programme (ETP)”

27/04/2011


28


DIRECTORS’ REMUNERATION

The details of the remuneration for the Directors of the Company for the financial year under review are as follows:

1. Aggregate remuneration of the Directors categorised into appropriate components:Fees(RM)

Remuneration and others(RM)

Total(RM)

Executive Directors – 833,020 833,020

Non-Executive Directors 137,950 – 137,950

2. The number of Directors whose total remuneration fall within the following bands:

Range of RemunerationNumber of Directors

Executive Non-Executive

Nil 1* –

Below RM50,000 – 4

RM350,001 to RM400,000 2 –

* Alternate Director

RELATIONSHIp WITH SHAREHOLDERS

Shareholders Communication and Investors Relationship Policy

The Group recognises the importance of establishing a direct line of communication with shareholders and investors through timely dissemination of information on the Group’s performance and major developments via appropriate channels of communication.

Platforms for dissemination of information include the Annual General Meetings (“AGM”) and Extraordinary General Meetings (“EGM”), if any, distribution of Annual Reports and relevant circulars, issuance of press releases and press conferences. Information on the financial performance of the Group is communicated to the public via the announcement of its financial results to Bursa Securities on a quarterly basis.

To further enhance the transparency and communication with the shareholders and other stakeholders, the Company has an official website at www.ecofirst.com.my for the timely dissemination of business related information for the benefit of all interested parties.

Shareholders could be given the opportunity to communicate directly with Dato’ Syed Ariff Fadzillah bin Syed Awalluddin, or any of the other Independent Non-Executive Directors should there be any concerns relating to the Company.

AgM

The AGM is the principal forum for communicating with shareholders. Henceforth, the Chairman and the Board encourage shareholders to attend and participate in an open discussion during the AGM. Shareholders who are unable to attend are allowed to appoint a proxy to attend and vote on their behalf. Shareholders are given the opportunity to seek clarification on any matter pertaining to the business and financial performance of the Group.


29

ANNUAL REPORT 2011

ACCOUNTABILITY AND AUDIT

Financial Reporting

The Board is responsible for ensuring the proper maintenance of accounting records of the Group. The Audit Committee assists the Board in reviewing information for disclosure purposes such as the quarterly report for release to Bursa Securities in order to ensure its accuracy, adequacy and completeness.

A Statement by Directors on their responsibility in preparing the Annual Financial Statements is set out below.

Internal Control

The Statement on Internal Control presented on page 34 of this Annual Report provides an overview of the state of internal controls within the Group.

Relationship with Auditors

The Board through the establishment of an Audit Committee maintains a formal and transparent arrangement with the Company’s auditors, both internal and external.

Compliance Statement

The Company has been in compliance with the Code during the financial year under review save for the disclosure of details of the remuneration of each Director. The Board is of the view that the transparency and accountability aspects of Corporate Governance as applicable to Directors’ Remuneration are appropriately served by the band disclosure made above under ‘Directors’ Remuneration’.

This statement was approved by the Board of Directors on 27 September 2011.


STATEMENT OF DIRECTORS’ RESpONSIBILITY IN pREpARINg THE ANNUAL FINANCIAL STATEMENTS

The Directors are legally required, in accordance with the Companies Act, 1965, to prepare financial statements, which present a true and fair view of the state of affairs, and of the results of the operations of the Group and the Company and in preparing the financial statements for the financial year ended 31 May 2011, the Directors have:

• ensured compliance with applicable accounting standards approved in Malaysia;• adopted and consistently applied appropriate accounting policies; and • made judgements and estimates that are prudent and reasonable.

The Directors are responsible for ensuring that proper accounting records are maintained, which disclose with reasonable accuracy, the financial position of the Group and also to ensure that the financial statements comply with applicable approved accounting standards in Malaysia. In addition, the Board is responsible for the proper safeguarding of the Group’s assets and to take reasonable steps for the prevention and detection of fraud and other irregularities.

30


Material Contract

On 11 March 2011, the Company entered into a Sale and Purchase Agreement with Mr. Teoh Seng Aun, who is a substantial shareholder of the Company and is also the brother of certain directors of the Company, namely Dato’ (Dr.) Teoh Seng Foo and Mr. Teoh Seng Kian (alternate director to Dato’ (Dr.) Teoh Seng Foo) for the acquisition of the entire issued and paid-up share capital of Curah Bahagia Sdn Bhd comprising 500,000 ordinary shares of RM1.00 each, of which he is the registered and/or beneficial owner, for a total cash consideration of RM4,500,000.00 (“Acquisition”). The Acquisition was completed on 3 May 2011.

Other than the above mentioned, there were no material contracts subsisting at the end of financial year or entered into since the end of the previous financial year by the Company or its subsidiaries, which involved the interest of the Directors and major shareholders.

Non-Audit Fee

No non-audit fee was paid to external auditors during the financial year.

Share Buy-backs

The Company did not implement any share buy-back scheme during the financial year.

Depository Receipt Programme

The Company did not sponsor any depository receipt programme during the financial year.

Sanctions and/or Penalties

There were no public sanctions and/or penalties imposed on the Company and its subsidiaries, directors or management by the relevant regulatory bodies.

Variation in Results

There was no material variation between the audited results and the unaudited results previously released for the financial year ended 31 May 2011.

Revaluation Policy on Landed Properties

The Group has adopted a 5-year revaluation policy with regards to its landed properties.

Profit Guarantee

The Company did not make any arrangement during the financial year which requires profit guarantee.

Option, Warrants or Convertible Securities

There were no options or convertible securities issued or exercised during the financial year.

Utilisation of Proceeds Raised from Corporate Proposal

There were no proceeds raised from any corporate proposal during the year under review. The Company did not implement any fund raising exercise during the financial year under review.

Recurrent Related Party Transaction of a Revenue Nature

There was no recurrent related party transaction of a revenue nature, which requires shareholders’ mandate during the financial year.

OTHER InFORmatIOn

31

ANNUAL REPORT 2011

AUDIT COMMITTEE RePORt

MEMBERSHIp

The Audit Committee (“the Committee”) comprises wholly of Independent Non-Executive Directors as follows:-

Amos Siew Boon Yeong - Chairman/Independent Non-Executive DirectorDato’ Boey Chin Gan - Member/Independent Non-Executive DirectorLim Een Hong - Member/Independent Non-Executive Director

MEETINgS & ATTENDANCES

A total of five (5) meetings of the Audit Committee were held during the financial year ended 31 May 2011. The meetings were appropriately structured through the use of agendas, which were distributed in advance to all the members of the Audit Committee. Attendances of each member were as follows and the Company Secretary attended all the meetings during the year:-

Members Total Attendance % of Attendance

Amos Siew Boon Yeong 5/5 100

Dato’ Boey Chin Gan 5/5 100

Lim Een Hong 4/5 80

TERMS OF REFERENCE OF THE AUDIT COMMITTEE

Constitution

The Terms of Reference of the Audit Committee was established by the Board on 26 April 1994. Subsequently, amendments were made to the terms of reference and approvals were sought at the Company’s Board Meetings held on 29 March 2001 and 26 March 2008.

Membership

The Audit Committee shall be appointed by the Board from amongst the Directors of the Company and shall consist of not less than three members. All the Audit Committee members must be non-executive directors, with a majority of them being Independent Directors. At least one member of the Audit Committee:

1. must be a member of the Malaysian Institute of Accountants; or

2. if he is not a member of the Malaysian Institute of Accountants, he must have at least three years’ working experience and: (i) he must have passed the examinations specified in Part I of the 1st Schedule of the Accountants Act 1967; or(ii) he must be a member of one of the associations of accountants specified in Part II of the 1st Schedule of the Accountants Act

1967; or(iii) fulfils such other requirements as prescribed or approved by the Exchange.

No alternate director shall be appointed as a member of the Audit Committee. The members of the Audit Committee shall select a Chairman from among their numbers who shall be an Independent Director.

If a member of the Committee resigns, dies or for any other reason ceases to be a member with the result that the number of members is reduced below three, the Board shall, within three months of that event, appoint such number of new members as may be required to make up the minimum number of three members.

The term of office and performance of the Audit Committee and each of its members shall be reviewed by the Board at least once every three years to determine whether the Audit Committee and its members have carried out their duties in accordance with their terms of reference.

32


Authority

The Audit Committee shall, in accordance with a procedure determined by the Board and at the cost of the Company:

1. have authority to investigate any matter within its terms of reference;

2. have the resources which are required to perform its duties;

3. have full and unrestricted access to any information pertaining to the Company;

4. have direct communication channels with the external auditors and person(s) carrying out the internal audit function or activity;

5. be able to obtain independent professional or other advice; and

6. be able to convene meetings with the external auditors, the internal auditors or both, excluding the attendance of other directors and employees of the Company, whenever deemed necessary.

Functions

The functions of the Committee shall be to review the following and report the same to the Board:

1. with the external auditors, their audit plans;

2. with the external auditors, their evaluation of the system of internal controls;

3. with the external auditors, their audit reports;

4. the assistance given by the Company’s employees to the external auditors;

5. the adequacy of the scope, functions, competency and resources of the internal audit functions and that it has the necessary authority to carry out its works;

6. the internal audit programme, processes, the results of the internal audit programme, processes or investigations undertaken and whether or not appropriate action is taken on the recommendations of the internal audit function;

7. the quarterly results and year end financial statements, prior to the approval by the Board, focusing particularly on:

(a) changes in or implementation of major accounting policy changes;

(b) significant and unusual events; and

(c) compliance with accounting standards and other legal requirements;

8. any related party transactions and conflict of interest situation that may arise within the Company or Group including any transaction, procedure or course of conduct that raises questions of management integrity;

9. any letter of resignation from the external auditors of the Company; and

10. to consider the nomination of a person or persons as external auditors together with such other functions as may be agreed to by the Audit Committee and the Board.

Meetings

Meetings shall be held not less than four (4) times a year. The external auditors may request a meeting if they consider that one is necessary. The Chairman shall convene a meeting whenever any member of the Audit Committee requests for a meeting by giving not less than three (3) clear days notice thereof unless such requirement is waived by all members. However, consent from member that is overseas is not required. Written notice of the meeting together with the agenda shall be given to the members of the Audit Committee.

In order to form a quorum in respect of a meeting of an Audit Committee, the majority of members present must be Independent Directors and any decision shall be by a simple majority. The Chairman shall not have a casting vote.

AUDIT COMMITTEE RePORt (ConT’d)

33

ANNUAL REPORT 2011

Reporting procedure

The Secretary of the Committee shall circulate the minutes of meetings of the Committee to all members of the Board.

SUMMARY OF ACTIvITIES DURINg THE FINANCIAL YEAR

The Audit Committee carried out the following duties in accordance with its terms of reference:

• Reviewed the external auditors’ scope of work and audit plans for the year. Prior to the audit, representatives from the external auditors presented their audit strategy and plan.

• Reviewed with the external auditors, major issues arising from the audit.

• Considered the outsourcing of the internal audit function to an independent professional firm and reviewed the Group’s internal audit plan.

• Reviewed the internal audit reports, which highlighted the audit issues, recommendations and management’s responses. The members of the Audit Committee were briefed on pertinent audit issues findings and observations by the Internal Auditors at the meetings of the Audit Committee. The Audit Committee also discussed the management actions taken to improve the system of internal control based on recommendations made in the internal audit reports.

• Recommended to the Board areas of improvement opportunities in internal control system, procedures and risk management.

• Reviewed the quarterly unaudited financial results for announcements purposes before recommending them for the Board’s approval.

• Reviewed the draft audited financial statements of the Group and of the Company prior to submission to the Board for their consideration and approval.

• Reviewed related party transactions entered into by the Group.

• Reviewed the Audit Committee Report and the Statement on Internal Control for insertion into the Company’s Annual Report.

• Met with the External Auditors, in the absence of Management, to discuss problems and reservations (if any) arising from their audits.

• Reviewed the applicability of certain new accounting standard on the financials of the Group.

STATEMENT ON EMpLOYEES’ SHARE OpTION SCHEME (“ESOS”)

The Committee will verify the ESOS allocation in compliance with the criteria as stipulated in the by-laws of ESOS of the Company, if any.

INTERNAL AUDIT FUNCTION

In July 2010, the Company outsourced its internal audit function to an independent professional consultancy firm entrusted with the role of providing independent and systematic reviews on the systems of internal control of the Group. The Internal Audit function provides an independent and objective feedback to the Audit Committee and the Board on the adequacy, effectiveness and efficiency of the internal control system within the Group.

Throughout the financial year under review, the Internal Auditors had carried out the internal audit works on the three main business operations of the Group i.e. network marketing, property management and construction, assignments which were in accordance with the annual internal audit plan approved by the Audit Committee.

Upon completion of each audit cycle, the Internal Auditors would report to the Audit Committee on their audit findings, their recommendations of corrective actions to be taken by the management together with the management’s responses in relation thereto. The Internal Auditors would also conduct follow-up reviews on previously reported issues during the audit cycles and the results of their observations would be reported to the Audit Committee accordingly. At the request of the Audit Committee, the Internal Auditors may re-visit previously audited business operations to further assess the system of internal controls and the procedures implemented.

There was no material internal control failure that was reported in respect of internal audit works carried out during the financial year under review, that would have resulted in any significant loss to the Group.

AUDIT COMMITTEE RePORt (ConT’d)

34


STATEMENT On InteRnal cOntROl

In compliance with Paragraph 15.26(b) of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad, the Board is committed to maintain a sound system of internal control in the Group and is pleased to provide the following statement, which outlines the state, nature, and scope of internal control of the Group during the financial year ended 31 May 2011.

Board responsibilities

The Board maintains a system of internal control to safeguard shareholders’ investment and the Group’s assets. The Board is committed to establish an appropriate control environment and also to review the adequacy and integrity of the system of internal control. Due to the limitations inherent in any system of internal control, these systems, though implemented, are designed to manage, rather than to eliminate the risk of failure to achieve corporate objectives. Accordingly, the system can only provide reasonable but not absolute assurance against material misstatement or loss.

The Board confirms that there is an underlying and ongoing process in the Group for the identification, evaluation and mitigation of its significant risks. The Board further confirmed that these processes are being regularly reviewed and accords with the Statement of Internal Control: Guidance for Directors of Public Listed Companies.

Enterprise Risk Management Framework

The Board recognises that risk management is an integral part of the Group’s business operations and has put in place the Enterprise Risk Management Framework within the Group as an on-going process for identifying, evaluating, monitoring and managing the significant risk affecting the achievement of its business objectives.

The Group established its risk framework with the aim of mitigating or minimising such risks. A database of risk records was compiled and risk mitigating action plans were communicated to the Risk Management Committee (“RMC”), which in turn identified and communicated to the Board the critical risks (present and future) the Group faced and management action plans to manage these risks.

Internal Audit Function

The Group has out sourced the internal audit function to an independent professional firm. The internal audit function reports directly to the Audit Committee to provide feedback regarding the adequacy and integrity of the Group’s system of internal control. The internal audit function reviews the key activities of the Group based on the annual audit plan approved by the Audit Committee.

The Audit Committee reviews the audit plan, together with internal audit reports to obtain the necessary level of assurance with respect to the adequacy of the internal controls as required by the Board. The Audit Committee presents its findings to the Board on a quarterly basis or as appropriate.

During the financial year, the cost incurred for the internal audit function amounted to approximately RM 70,500.00.

Other Risks and Control Processes

In addition to the risk management and internal audit function, the Board has put in place an organisational structure with formally defined lines of responsibility and delegation of authority, allowing internal checks and balances. This includes a Procurement & Quality Assurance standard operational procurement manual. These procedures are relevant to the Group and provide continuous assurance to top management and the Board. The Group has also developed and made available to employees an Employee Handbook.

Quarterly updates of the financial results of the Group are provided to the Audit Committee and the Board for assessment of the performance of the Group. Management meetings, which involve Executive Directors and selected executive personnel, are regularly held in order to identify and address any problems encountered by the Group, so that appropriate actions could be taken to address the issues.

Review of Statement by External Auditors

The External Auditors have reviewed this statement for inclusion in the Annual Report 2011 and reported to the Board that nothing has come to their attention that causes them to believe that this statement is inconsistent with their understanding of the process adopted by the Board in reviewing the adequacy and integrity of the system of the internal controls.

This statement is made in accordance with the resolution passed by the Board of Directors on 27 September 2011.

FINANCIAL STATEMENTS

CONTENTS pAgES

DIRECTORS’ REpORT 36

STATEMENT BY DIRECTORS 40

STATUTORY DECLARATION 40

REpORT OF THE INDEpENDENT AUDITORS 41

STATEMENTS OF COMpREHENSIvE INCOME 43

STATEMENTS OF FINANCIAL pOSITION 44

STATEMENTS OF CHANgES IN EqUITY 45

STATEMENTS OF CASH FLOWS 46

NOTES TO THE FINANCIAL STATEMENTS 49

36


The directors submit their report and the audited financial statements of the Group and the Company for the financial year ended 31 May 2011.

pRINCIpAL ACTIvITIES

The principal activities of the Company consist of investment holding and provision of management services. The principal activities of the subsidiaries are disclosed in Note 12 to the financial statements.

There have been no significant changes in the nature of these activities during the financial year.

FINANCIAL RESULTS

Group Company

RM’000 RM’000

Net profit/(loss) for the year 8,493 (6,640)

Attributable to:

Owners of the Company 8,760 (6,640)

Minority interests (267) –

8,493 (6,640)

In the opinion of the directors, the results of the operations of the Group and the Company during the financial year have not been substantially affected by any item, transaction or event of a material and unusual nature other than those disclosed in Note 6 to the financial statements.

DIvIDENDS

No dividend has been paid or declared by the Company since the end of the previous financial year. The directors also do not recommend any dividend payment in respect of the current financial year.

RESERvES AND pROvISIONS

There were no material transfers to or from reserves or provisions during the financial year other than those disclosed in the financial statements.

ISSUE OF SHARES AND DEBENTURES

The Company has not issued any new shares or debentures during the financial year.

SHARE OpTIONS

No options have been granted by the Company to any parties during the financial year to take up unissued shares of the Company.

No shares have been issued during the financial year by virtue of the exercise of any option to take up unissued shares of the Company. As at the end of the financial year, there were no unissued shares of the Company under options.

DIRECTORS’ RePORt

37

ANNUAL REPORT 2011

DIRECTORS’ RePORt (ConT’d)

DIRECTORS

The directors of the Company in office since the date of the last report are:

Dato’ Syed Ariff Fadzillah Bin Syed AwalluddinDato’ (Dr.) Teoh Seng FooTeoh Seng Kian (Alternate to Dato’ (Dr.) Teoh Seng Foo) Dato’ Tiong Kwing HeeAmos Siew Boon Yeong Dato’ Boey Chin GanLim Een Hong

DIRECTORS’ INTERESTS

The interests in the Company and its related companies of those who were directors at the end of the financial year, as recorded in the Register of Directors’ Shareholdings kept under Section 134 of the Companies Act, 1965, are as follows:

Number of ordinary shares of RM0.50 each

Balance as at1.6.2010 Bought Sold

Balance as at31.5.2011

Direct interestDato’ (Dr.) Teoh Seng Foo 34,222,500 4,200,000 18,132,000 20,290,500

Teoh Seng Kian (Alternate to

Dato’ (Dr.) Teoh Seng Foo) 79,602,632 – – 79,602,632

Dato’ Tiong Kwing Hee 12,903,100 1,651,500 – 14,554,600

Indirect interest **Dato’ (Dr.) Teoh Seng Foo 516,332 – 516,332 –


Dato’ (Dr.) Teoh Seng Foo) 516,332 – 516,332 –

Other shareholdings in which directors are deemed to have interests #Dato’ (Dr.) Teoh Seng Foo 9,819,000 – 9,819,000 –


Dato’ (Dr.) Teoh Seng Foo) 2,495,300 – – 2,495,300

** Deemed interest pursuant to Section 6A(4) of the Companies Act, 1965

# Disclosure of interest pursuant to Section 134(12) of the Companies Act,1965.

None of the other directors in office at the end of the financial year, had held shares or beneficial interest in shares of the Company and its related companies during the financial year, according to the register required to be kept under Section 134 of the Companies Act, 1965.

38


DIRECTORS’ BENEFITS

Since the end of the previous financial year, no director has received or become entitled to receive any benefit (other than a benefit included in the aggregate amount of emoluments received or due and receivable by the directors as shown in the financial statements or the fixed salary of a full time employee of the Company) 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 except for any benefit which may be deemed to have arisen by virtue of the transactions between the Group and the Company and a company in which certain directors of the Company have interests as disclosed in Notes 30 and 35 to the financial statements.

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

OTHER STATUTORY INFORMATION

Before the financial statements of the Group and the Company were made out, the directors took reasonable steps:

(a) to ascertain that action had been taken in relation to the writing off of bad debts and the making of provision for doubtful debts and had satisfied themselves that all known bad debts had been written off and that adequate provision had been made for doubtful debts; and

(b) to ensure that any current assets which were unlikely to realise their book values in the ordinary course of business had been written down to their expected realisable values.

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

(a) which would render the amount written off for bad debts or the amount of the provision for doubtful debts in the financial statements of the Group and the Company inadequate to any substantial extent;

(b) which would render the values attributed to current assets in the financial statements of the Group and the Company misleading; and

(c) which have arisen which render adherence to the existing method of valuation of assets or liabilities of the Group and the Company misleading or inappropriate.

In the interval between the end of the financial year and the date of this report:

(a) no item, transaction or event of a material and unusual nature has arisen which, in the opinion of the directors, would substantially affect the results of the operations of the Group and the Company for the financial year in which this report is made; and

(b) no charge has arisen on the assets of the Group and the Company which secures the liability of any other person nor have any contingent liabilities arisen in the Group and the Company.

No contingent or other liability of the Group and the Company has become enforceable or is likely to become enforceable within the period of twelve months after the end of the financial year which, in the opinion of the directors, will or may affect the ability of the Group and the Company to meet their obligations as and when they fall due.

At the date of this report, the directors are not aware of any circumstances not otherwise dealt with in this report or the financial statements, which would render any amount stated in the financial statements misleading.


39

ANNUAL REPORT 2011

AUDITORS

The auditors, Messrs Russell Bedford LC & Company, have indicated their willingness to continue in office.

Signed on behalf of the Boardin accordance with a resolution of the directors,

DATO’ (DR.) TEOH SENG FOO

DATO’ TIONG KWING HEE

Seri Kembangan, Selangor Darul Ehsan

27 September 2011


40


The directors of ECOFIRST CONSOLIDATED BHD state that, in the opinion of the directors, the accompanying financial statements are drawn up in accordance with the provisions of the Companies Act, 1965 and the Approved Accounting Standards for Entities Other Than Private Entities in Malaysia so as to give a true and fair view of the financial position of the Group and of the Company as at 31 May 2011, and of their financial performance and their cash flows for the year ended on that date.

The supplementary information set out in Note 37, which is not part of the financial statements, is prepared in all material respects, in accordance with Guidance on Special Matter No.1 “ Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements” as issued by the Malaysian Institute of Accountants and the directive of Bursa Malaysia Securities Berhad.

Signed on behalf of the Boardin accordance with a resolution of the directors,

DATO’ (DR.) TEOH SENG FOO


Seri Kembangan, Selangor Darul Ehsan

27 September 2011

STATUTORY DeclaRatIOnI, DATO’ TIONG KWING HEE, being the director primarily responsible for the financial management of ECOFIRST CONSOLIDATED BHD, do solemnly and sincerely declare that to the best of my knowledge and belief, the accompanying financial statements are 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, 1960.

Subscribed and solemnly declared by the above named DATO’ TIONG KWING HEE at Kuala Lumpur in Wilayah Persekutuan on 27 September 2011


Before me,

ARSHAD ABDULLAH No. W550COMMISSIONER FOR OATHS

Kuala Lumpur, Wilayah Persekutuan.

STATEMENT BY DIRectORs

41

ANNUAL REPORT 2011

1. Report on the financial statements

We have audited the accompanying financial statements which comprise the statements of financial position of the Group and of the Company as at 31 May 2011, and the related statements of comprehensive income, changes in equity and cash flows for the year then ended, and a summary of significant accounting policies and other explanatory notes.

1.1 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 the Companies Act 1965 (“Act”) and the Approved Accounting Standards for Entities Other Than Private Entities in Malaysia, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

1.2 Auditors’ responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the 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 evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’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 entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, 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.

1.3 Opinion

In our opinion, the financial statements have been properly drawn up in accordance with the Act and the Approved Accounting Standards for Entities Other Than Private Entities in Malaysia so as to give a true and fair view of the financial position of the Group and of the Company as at 31 May 2011, and of their financial performance and their cash flows for the year ended on that date.

REpORT OF THE InDePenDent aUDItORsTO THE MEMBERS OF ECOFIRST CONSOLIDATED BHD (Incorporated in Malaysia)

42


2. Report on other legal and regulatory requirements

In accordance with the requirements of the Act, we also report on 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 by its subsidiaries of which we have acted as auditors have been properly kept in accordance with the provisions of the Act.

(b) We have considered the financial statements and the auditors’ reports thereon of the subsidiary of which we have not acted as auditors, as indicated in Note 12 to the financial statements, being financial statements that have been included in the Group’s financial statements.

(c) We are satisfied that the financial statements of the subsidiaries that have been consolidated with the Company’s financial statements are in form and content appropriate and proper for the purposes of the preparation of the Group’s financial statements and we have received satisfactory information and explanations required by us for those purposes.

(d) The auditors’ reports on the financial statements of the subsidiaries were not subject to any qualification material in relation to the Group’s financial statements and did not include any comment made under Section 174(3) of the Act.

3. Other reporting responsibilities

The supplementary information set out in Note 37 is disclosed to meet the requirement of Bursa Malaysia Securities Berhad and is not part of the financial statements. The directors are responsible for the preparation of the supplementary information in accordance with Guidance on Special Matter No. 1 “Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements” as issued by the Malaysian Institute of Accountants (“MIA Guidance”) and the directive of Bursa Malaysia Securities Berhad. In our opinion, the supplementary information is prepared, in all material respects, in accordance with the MIA Guidance and the directive of Bursa Malaysia Securities Berhad.

4. Other matters

This report is made solely to the members of the Company, as a body, in accordance with Section 174 of the Act and for no other purpose. We do not assume responsibility to any other person for the content of this report.

RUSSELL BEDFORD LC & COMPANY TEOH WUEY SZEAF 1237 2831/01/12 (J)CHARTERED ACCOUNTANTS PARTNER

Kuala Lumpur27 September 2011

REpORT OF THE InDePenDent aUDItORsTO THE MEMBERS OF ECOFIRST CONSOLIDATED BHD (Incorporated in Malaysia) (ConT’d)

43

ANNUAL REPORT 2011

Note Group Company2011 2010 2011 2010

RM’000 RM’000 RM’000 RM’000Revenue 4 24,976 21,073 2,520 3,919Cost of sales 5 (19,387) (17,824) – –

Gross profit 5,589 3,249 2,520 3,919Other operating income 50,527 25,716 1,396 15,896Distribution costs (499) (725) – –Administration expenses (9,864) (5,870) (3,221) (3,388)Other operating expenses (28,189) (50,414) (4,378) (13,161)

Profit/(Loss) from operations 17,564 (28,044) (3,683) 3,266

Finance costs (8,112) (14,172) (2,957) (5,233)Share in profit of associate – 826 – –

Profit/(Loss) before tax 6 9,452 (41,390) (6,640) (1,967)Income tax expense 7 (959) (78) – –

Net profit/(loss) for the year 8,493 (41,468) (6,640) (1,967)Other comprehensive income:Gain on fair value changes on available for sale financial assets 3,420 – 3,200 –Foreign currency translation:-Exchange differences on translation of financial

statements of foreign subsidiaries 5 (2,059) – –-Disposal of a subsidiary – 3,384 – –

Other comprehensive income for the year, net of tax 3,425 1,325 3,200 –

Total comprehensive income/(loss) for the year 11,918 (40,143) (3,440) (1,967)

Profit/(loss) attributable to:Owners of the Company 8,760 (41,375) (6,640) (1,967)Minority interests (267) (93) – –

8,493 (41,468) (6,640) (1,967)

Total comprehensive income/(loss) attributable to:Owners of the Company 12,185 (40,050) (3,440) (1,967)Minority interests (267) (93) – –

11,918 (40,143) (3,440) (1,967)

Basic earnings/(loss) per share (sen) 8 1.35 (6.36)

The accompanying notes form an integral part of the financial statements.

STATEMENTS OF cOmPRehensIve IncOmeFOR THE YEAR ENDED 31 MAY 2011

44


Group CompanyNote 2011 2010 2011 2010

RM’000 RM’000 RM’000 RM’000Non current assetsProperty, plant and equipment 9 1,660 3,296 658 825Investment properties 10 318,265 263,247 – –Prepaid lease payments 11 – – – –Investment in subsidiaries 12 – – 43,338 37,715Investment in an associate 13 – – – –Other financial assets 14 7,781 3,366 7,318 3,144Deferred tax assets 15 226 812 – –Intangible asset 16 – – – –Trade receivables 19 2,087 – – –

330,019 270,721 51,314 41,684

Current assetsInventories 17 329 429 – –Property development costs 18 56,830 54,944 – –Trade receivables 19 7,484 1,516 – –Amount due from subsidiaries 20 – – 278,258 265,865Other receivables, deposits and prepayments 21 16,029 4,676 130 1,677Tax recoverable 214 227 486 485Cash and bank balances 22 3,451 26,171 434 23,060

84,337 87,963 279,308 291,087

Total assets 414,356 358,684 330,622 332,771

Share capital 23 325,074 325,074 325,074 325,074Reserves 24 (206,452) (219,861) (203,001) (200,511)

Shareholders’ equity 118,622 105,213 122,073 124,563Minority interests 14,751 15,018 – –

Total equity 133,373 120,231 122,073 124,563

Non current liabilitiesHire purchase liabilities 25 277 457 246 391Long term borrowings 26 104,644 77,085 17,957 3,500Trade payables 27 1,653 – – –Other payables 28 – – 471 –

106,574 77,542 18,674 3,891Current liabilitiesTrade payables 27 23,302 6,127 – –Amount due to subsidiaries 20 – – 170,306 172,397Other payables and accruals 28 88,189 67,559 19,423 21,432Hire purchase liabilities 25 190 190 146 138Short term borrowings 29 28,370 53,413 – 10,350Tax payable 34,358 33,622 – –

174,409 160,911 189,875 204,317

Total liabilities 280,983 238,453 208,549 208,208

Total equity and liabilities 414,356 358,684 330,622 332,771


STATEMENTS OF FInancIal POsItIOnAS AT 31 MAY 2011

45

ANNUAL REPORT 2011

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STATEMENTS OF chanGes In eQUItYFOR THE YEAR ENDED 31 MAY 2011

46


Group Company2011 2010 2011 2010

RM’000 RM’000 RM’000 RM’000Cash flows from/(used in) operating activities

Profit/(Loss) before taxation 9,452 (41,390) (6,640) (1,967)

Adjustments for:

Accretion of implicit interest in retention sum receivable (62) – – –

Adjustments on financial liabilities carried at amortised cost (2,689) – – –

Amortisation of prepaid lease payments – 9 – –

Amortisation of financial guarantee liabilities – – (123) –

Amortisation of implicit interest in relation to retention sums payable 131 – – –

Depreciation 655 1,154 290 309

Fair value adjustments on investment properties (3,542) – – –

Gross dividend income (33) (16) (1,633) (3,021)

Impairment losses on

- property, plant and equipment 1,230 – – –

- property development costs – 26,378 – –

- investment in subsidiaries – – 1,577 1,816

- investment in an associate – 9,056 – 7,172

Interest expense 8,112 14,172 2,957 5,233

Interest income (339) (339) (339) (167)

Inventories written off 56 59 – –

Loss on revocation of retail units sold 23,713 – – –

Plant and equipment written off 292 1,225 201 –

Provision for contingencies in respect of disposal of subsidiaries – 337 – 337

Provision for doubtful debts of

- subsidiaries – – 1,350 3,181

- others 3,958 11,893 1,250 572

Provision for contingencies in respect of disposal of subsidiaries no longer required – (11,331) – (11,331)

Provision for doubtful debts no longer required (38,451) (7,102) (933) (1,279)

Provision for liquidated ascertained damages 817 73 – –

Provision for liquidated ascertained damages no longer required (2,054) (1,392) – –

STATEMENTS OF cash FlOWsFOR THE YEAR ENDED 31 MAY 2011

47

ANNUAL REPORT 2011

STATEMENTS OF cash FlOWsFOR THE YEAR ENDED 31 MAY 2011 (ConT’d)

Group Company2011 2010 2011 2010

RM’000 RM’000 RM’000 RM’000

Share in profit of associate – (826) – –

Loss on foreign exchange - unrealised – 4 – –

Loss/(Gain) on disposal of

- an associate – (2,565) – (2,557)

- property, plant and equipment 53 44 – –

- other financial assets – 92 – 79

- a subsidiary – (509) – (200)

Waiver of term loan liabilities (1,328) – – –

Operating loss before working capital changes (29) (974) (2,043) (1,823)

Decrease in inventories 44 132 – –

(Increase)/Decrease in trade and other receivables (6,923) 9,253 1,081 (173)

Increase/(Decrease) in trade and other payables 5,172 (7,580) (937) (1,071)

Increase in development costs (14,134) (54) – –

Cash (used in)/from operations (15,870) 777 (1,899) (3,067)

Income tax paid – net (12) (20) – –

Net cash (used in)/from operating activities (15,882) 757 (1,899) (3,067)

Cash flows from/(used in) investing activities

Acquisition of a subsidiary (Note 12) (3,641) – (4,500) –

Acquisition of quoted investment (25) – (24) –

Net dividends received 32 11 32 3,018

Interest received 279 339 279 167

Proceeds from disposal of

- an associate – 35,700 – 32,583

- other financial assets – 1,790 – 1,567

- property, plant and equipment 16 194 – 3

- a subsidiary – 194 – 200

Payments for

- additional shares in an existing subsidiary – – (2,000) –

- additional shares in investment in an associate – – – (285)

- property, plant and equipment (501) (958) (324) (22)

Net cash (used in) / from investing activities (3,840) 37,270 (6,537) 37,231

48


Group Company2011 2010 2011 2010

RM’000 RM’000 RM’000 RM’000Cash flows from/(used in) financing activities

Decrease in fixed deposits pledged – 69 – 69

Interest paid (69) (1,221) (24) (781)

Repayments of revolving credits – net (413) (2,636) – (2,665)

(Advances to)/Repayments from subsidiaries – – (14,027) 3,472

Repayments to an associate – (2,813) – (2,790)

Repayments of hire purchase liabilities (237) (378) (139) (132)

Repayments of term loans (2,279) (3,739) – (5,533)

Net cash used in financing activities (2,998) (10,718) (14,190) (8,360)

Net (decrease)/increase in cash and cash equivalents (22,720) 27,309 (22,626) 25,804

Effects of exchange rate changes – 1,353 – –

Cash and cash equivalents at beginning of year 26,171 (2,491) 23,060 (2,744)

Cash and cash equivalents at end of year 3,451 26,171 434 23,060

Cash and cash equivalents comprise:

Cash and bank balances 3,451 3,880 434 769

Short term deposits – 22,291 – 22,291

3,451 26,171 434 23,060


STATEMENTS OF cash FlOWsFOR THE YEAR ENDED 31 MAY 2011 (ConT’d)

49

ANNUAL REPORT 2011

NOTES TO THE FInancIal statements 31 MAY 2011

1. General information

The principal activities of the Company consist of investment holding and provision of management services. The principal activities of the subsidiaries are disclosed in Note 12.

There have been no significant changes in the nature of these activities during the financial year.

The Company is a public limited liability company, incorporated and domiciled in Malaysia, and is listed on the Main Market of Bursa Malaysia Securities Berhad.

The registered office is located at Suite 11.1A, Level 11, Menara Weld, 76 Jalan Raja Chulan, 50200 Kuala Lumpur.

The principal place of business is located at 1.61 First Floor, South City Plaza, Persiaran Serdang Perdana, Seksyen 1, 43300 Seri Kembangan, Selangor Darul Ehsan.

The financial statements were approved and authorised for issue by the board of directors on 27 September 2011.

2. Basis of preparation of the financial statements

The financial statements of the Group and the Company have been prepared and presented in accordance with the provisions of the Companies Act, 1965 and the Approved Accounting Standards for Entities Other Than Private Entities issued by the Malaysian Accounting Standards Board (“MASB”).

In the preparation of the financial statements, the directors are required to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of financial statements and the reported amounts of revenues and expenses during the financial year. Actual results could differ from those estimates.

Estimates and judgments are continually evaluated by the directors and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

In the process of applying the Group’s accounting policies, which are described below, management is of the opinion that there are no instances of application of judgment which are expected to have a significant effect on the amounts recognised in the financial statements.

Management believes that there are no key assumptions made concerning the futures, and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year other than as follow:

(i) Property development

The Group recognises property development revenue and expenses in the profit or loss by using the stage of completion method. The stage of completion is determined by the proportion that property development costs incurred for work performed to date bear to the estimated total property development costs.

Significant judgement is required in determining the stage of completion, the extent of the property development costs incurred, the estimated total property development revenue and costs, as well as the recoverability of the property development costs. In making the judgement, the Group evaluates based on past experience and by relying on the work of specialists.

The Group and the Company had adopted the new and revised Financial Reporting Standards (“FRSs”) and IC Interpretations that become mandatory for the current financial year. The adoption of these new and revised FRSs and IC Interpretations does not result in significant changes in accounting policies of the Group and the Company other than as follows:

50


2. Basis of preparation of the financial statements (cont’d)

(i) FRS7 Financial Instruments: Disclosures

Prior to 1 June 2010, information about financial instruments was disclosed in accordance with the requirements of FRS132 Financial Instruments: Disclosure and Presentation. FRS7 introduces new disclosures to improve the information about financial instruments. It requires the disclosure of qualitative and quantitative information about exposure to risks arising from financial instruments, including specified minimum disclosures about credit risk, liquidity risk and market risk, including sensitivity analysis to market risk.

The Group and the Company have applied FRS7 prospectively in accordance with the transitional provisions. Hence, the new disclosures have not been applied to the comparatives. The new disclosures are included throughout the Group’s and the Company’s financial statements for the year ended 31 May 2011.

(ii) FRS8 Operating Segments

FRS8, which replaces FRS1142004 Segment Reporting, specifies how an entity should report information about its operating segments, based on information about the components of the entity that is available to the chief operating decision maker for purposes of allocating resources to the segments and assessing their performance. The Standard also requires the disclosure of information about the products and services provided by the segments, the geographical areas in which the Group operates, and revenue from the Group’s major customers. The Group concluded that the reportable operating segments determined in accordance with FRS8 are the same as the business segments previously identified under FRS 1142004. The Group has adopted FRS8 retrospectively. These revised disclosures, including the related revised comparative information, are shown in Note 34.

(iii) FRS101 Presentation of Financial Statements (revised)

FRS101, which prohibits the presentation of items of income and expenses (that is, non owner changes in equity) in the statement of changes in equity, requiring ‘non-owner changes in equity’ to be presented, separately from owner changes in equity. All non-owner changes in equity will be required to be shown in a performance statement, but entities can choose whether to present one performance statement (the statement of comprehensive income) or two statements (the income statement and statement of other comprehensive income). The Group and the Company have elected to present this statement as a single statement.

Where the Group and the Company restate or reclassify comparative information, they will be required to present a restated statement of financial position as at the beginning comparative period in addition to the current requirement to present the statement of financial position at the end of the current period and comparative period.

FRS101 also requires the Group and the Company to make new disclosures to enable users of the financial statements to evaluate the Group’s and the Company’s objectives, policies and processes for managing capital.

(iv) FRS139 Financial Instruments : Recognition and Measurement

FRS139 establishes principles for recognising and measuring financial assets, financial liabilities and some contracts to buy and sell non-financial items. The Group and the Company have adopted FRS139 prospectively on 1 June 2010 in accordance with the transitional provisions. The effects arising from the adoption of this Standard has been accounted for by adjusting the opening balance of retained earnings as at 1 June 2010. Comparatives are not restated. The details of the changes in accounting policies and the effects arising from the adoption of FRS139 are discussed below:

(a) Equity instruments

Prior to 1 June 2010, the Group classified its investments in equity instruments which were held for non-trading purposes as long term investments. Such investments were carried at cost less impairment losses. Upon the adoption of FRS139, these investments, except for those whose fair value cannot be reliably measured, are designated at 1 June 2010 as available-for–sale financial assets and accordingly are stated at their fair values as at that date. The adjustments to their previous carrying amounts are recognised as adjustments to the opening balance of retained earnings as at 1 June 2010.

NOTES TO THE FInancIal statements 31 MAY 2011 (ConT’d)

51

ANNUAL REPORT 2011


2. Basis of preparation of the financial statements (cont’d)

(iv) FRS139 Financial Instruments : Recognition and Measurement (cont’d)

(b) Impairment of trade receivables

Prior to 1 June 2010, provision for doubtful debts was recognised when it was considered uncollectible. Upon the adoption of FRS139, an impairment loss is recognised when there is objective evidence that an impairment loss has been incurred. The amount of the loss is measured as the difference between the receivable’s carrying amount and the present value of the estimated future cash flows discounted at the receivable’s original effective interest rate. As at 1 June 2010, the Group has remeasured the allowance for impairment losses as at that date in accordance with FRS139 and no adjustment is required to be made to the opening balance of retained earnings as at that date.

(c) Financial guarantee contracts

During the current and prior years, the Company provided financial guarantees to banks in connection with bank loans and other banking facilities granted to its subsidiaries. Prior to 1 June 2010, the Company did not recognise any liability for such guarantees unless it was more likely than not that the guarantees would be called upon. The guarantees were disclosed as contingent liabilities. Upon the adoption of FRS139, all unexpired financial guarantees issued by the Company are recognised as liabilities and are measured at their initial fair values less accumulated amortisation as at 1 June 2010.

The Group and the Company have not adopted the new standards, amendments to published standards and interpretations that have been issued but not yet effective. These new standards, amendments to published standards and interpretations do not result in significant changes in accounting policies of the Group and the Company upon their initial application other than the following:

(i) Revised FRS3 Business Combinations and Amendments to FRS127 Consolidated and Separate Financial Statements

The revised standards are effective for annual periods beginning on or after 1 July 2010. The revised FRS3 introduces a number of changes in the accounting for business combinations occurring after 1 July 2010. These changes will impact the amount of goodwill recognised, the reported results in the period that an acquisition occurs, and future reported results. The Amendments to FRS127 require that a change in the ownership interest of a subsidiary (without loss of control) is accounted for as an equity transaction. Therefore, such transactions will no longer give rise to goodwill, nor will they give rise to gain or loss. Furthermore, the amended standard changes the accounting for losses incurred by the subsidiary as well as the loss of control of a subsidiary. The changes from revised FRS3 and Amendments to FRS127 will affect accounting treatment of future acquisitions or loss of control and transactions with minority interests.

(ii) IC Interpretation 15: Agreements for the Construction of Real Estate

This interpretation clarifies when and how revenue and related expenses from the sale of a real estate unit should be recognised if an agreement between a developer and a buyer is reached before the construction of the real estate is completed. Furthermore, the Interpretation provides guidance on how to determine whether an agreement is within the scope of FRS111: Construction Contracts or FRS118: Revenue.

The Group currently recognises revenue arising from property development projects using the stage of completion method. The Group is in the process of making an assessment of the impact of this Interpretation.

3. Significant accounting policies

Basis of accounting

The financial statements of the Group and the Company have been prepared under the historical cost convention and any other bases described in the significant accounting policies as summarised below.

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3. Significant accounting policies (cont’d)

Basis of consolidation The consolidated financial statements include the financial statements of the Company and all its subsidiaries listed under Note

12 made up to the end of the financial year. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control effectively commences until the date that control effectively ceases. Subsidiaries are consolidated using the acquisition method of accounting.

All significant inter company transactions, balances and unrealised gains on transactions between group companies are eliminated; unrealised losses are also eliminated unless cost cannot be recovered. Where necessary, accounting policies for subsidiaries have been changed to ensure consistency with the policies adopted by the Group.

Any 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 represents goodwill.

Any excess of the Group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities over the cost of acquisition is recognised immediately in the profit or loss.

Minority interests in the consolidated statement of financial position consist of the minorities’ share of the fair value of the identifiable assets and liabilities of the acquiree as at acquisition date and the minorities’ share of movements in the acquiree’s equity since then.

Revenue and income recognition

Revenue from sale of goods is measured at the fair value of the consideration receivable and is recognised in the profit or loss upon delivery of goods and when the risks and rewards of ownership have passed to the customers.

Revenue from management services rendered is recognised in the profit or loss when the services are rendered.

Revenue from property development is recognised in accordance with the accounting policy disclosed under ‘development property and costs’.

Revenue relating to construction contracts is recognised in accordance with the accounting policy disclosed under ‘construction contracts’.

Dividend income is recognised when the shareholder’s right to receive payment is established.

Interest income is recognised as it accrues using the effective interest rate method.

Rental income is recognised as it accrues unless collectibility is in doubt.

Foreign currencies

(i) Functional and presentation currency

The individual financial statements of each entity in the Group are measured using the currency of the primary economic environment in which the entity operates (“functional currency”). The consolidated financial statements are presented in Ringgit Malaysia (“RM”), which is also the Company’s functional currency and all values are rounded to the nearest thousand (RM’000) except when otherwise indicated.

(ii) Foreign currency transactions

Transactions in foreign currency are measured in the respective functional currencies of the Company and its subsidiaries and are recorded on initial recognition in the functional currencies at exchange rates approximating those ruling at the transaction dates. Monetary assets and liabilities denominated in foreign currencies are translated at the rate of exchange ruling at the reporting date. Non monetary items denominated in foreign currencies that are measured at historical cost are translated using the exchange rates as at the dates of the initial transactions. Non monetary items denominated in foreign currencies measured at fair value are translated using the exchange rates at the date when the fair value was determined.


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ANNUAL REPORT 2011


(ii) Foreign currency transactions (cont’d)

Exchange differences arising on the settlement of monetary items or on translating monetary items at the reporting date are recognised in profit or loss except for exchange differences arising on monetary items that form part of the Group’s net investment in foreign operations, which are recognised initially in other comprehensive income and accumulated under foreign currency translation reserve in equity. The foreign currency translation reserve is reclassified from equity to profit or loss of the Group on disposal of the foreign operation.

Exchange differences arising on the translation of non-monetary items carried at fair value are included in profit or loss for

the period except for the differences arising on the translation of non-monetary items in respect of which gains and losses are recognised directly in equity. Exchange differences arising from such non-monetary items are also recognised directly in equity.

(iii) Foreign operations

The assets and liabilities of foreign operations are translated into Ringgit Malaysia at the rate of exchange ruling at the reporting date and income and expenses are translated at exchange rates at the dates of the transactions. The exchange differences arising on the translation are taken directly to other comprehensive income. On disposal of a foreign operation, the cumulative amount recognised in other comprehensive income and accumulated in equity under foreign currency translation reserve relating to that particular foreign operation is recognised in the profit or loss.

The principal exchange rates for every unit of foreign currency ruling at reporting date used are as follows:

2011 2010RM RM

United States Dollar 3.01 3.25Singapore Dollar 2.44 2.32Hong Kong Dollar 0.39 0.42

Employee benefits

(i) Short term benefits

Wages, salaries, bonuses and social security contributions are recognised as an expense in the year in which the associated services are rendered by employees of the Group and the Company. Short term accumulating compensated absences such as paid annual leave are recognised when services are rendered by employees that increase their entitlement to future compensated absences. Short term non accumulating compensated absences such as sick leave are recognised when the absences occur.

(ii) Defined contribution plans

Obligations for contributions to defined contribution plans such as Employees Provident Fund are recognised as an expense in the profit or loss as incurred.

Income tax

Income tax on the profit or loss for the year comprises current and deferred tax. Current tax is the expected amount of income taxes payable in respect of the taxable profit for the year and is measured using the tax rates that have been enacted at the reporting date.

Deferred tax is provided for, using the ‘liability’ method, on temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts in the financial statements. In principle, deferred tax liabilities are recognised for all taxable temporary differences and deferred tax assets are recognised for all deductible temporary differences, unused tax losses and unused tax credits to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, unused tax losses and unused tax credits can be utilised.


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Income tax (cont’d)

Deferred tax is measured at the tax rates that are expected to apply in the period when the asset is realised or the liability settled, based on tax rates that have been enacted or substantively enacted at the reporting date. Deferred tax is recognised in the profit or loss, except to the extent that it relates to items recognised directly in equity or other comprehensive income, in which case it is recognised in equity or other comprehensive income.

Impairment of non-financial assets

The carrying amount of assets subject to accounting for impairment are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, the asset’s recoverable amount is estimated. An impairment loss is recognised whenever the carrying amount of an asset or the cash-generating unit to which it belongs exceeds its recoverable amount. Impairment losses are recognised in the profit or loss in the period in which it arises, unless, the asset is carried at a revalued amount, in which case the impairment loss is accounted for as a revaluation decrease to the extent that the impairment loss does not exceed the amount held in asset revaluation reserve for the same asset.

The recoverable amount is the greater of the asset’s net selling price and its value in use. In assessing value in use, 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 an asset that does not generate largely independent cash inflows, the recoverable amount is determined for the cash-generating unit to which the asset belongs.

An impairment loss in respect of goodwill is not reversed. In respect of other assets, 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. The reversal is recognised in the profit or loss, unless the asset is carried at revalued amount, in which case, such reversal is treated as a revaluation increase.

Property, plant and equipment and depreciation

Property, plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses, if any.

Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognised. All other repairs and maintenance are charged to the profit or loss during the financial year in which they are incurred.

Gain or loss arising from the disposal of an asset is determined as the difference between the net disposal proceeds and the carrying amount of the asset and is recognised in the profit or loss.

Depreciation on property, plant and equipment is calculated on a straight line basis to write off the cost of each asset to its residual value over the estimated useful life, at the following annual rates:

Long term leasehold properties (leasehold buildings and leasehold plantations) 50 - 99 years

Logponds and roadworks 5 years

Machinery, equipment and vehicles 3 - 10 years

The residual values, useful life and depreciation method are reviewed at each financial year end to ensure that the amount, method and period of depreciation are consistent with previous estimates and the expected pattern of consumption of the future economic benefits embodied in the items of property, plant and equipment.

Replanting expenditure is charged to the profit or loss in the year in which the expenditure is incurred.

Net planting expenditure incurred on land clearing and upkeep of trees to maturity is capitalised under leasehold plantation and upon maturity is amortised by equal instalments over the remaining period of the lease.


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ANNUAL REPORT 2011


Development property and costs

(i) Land held for property development

Land held for property development consists of land where no development activities have been carried out or where development activities are not expected to be completed within the normal operating cycle. Such land is classified within non current and is stated at cost less any impairment losses.

Land held for property development is reclassified as property development costs at the point when development actitivies have commenced and where it can be demonstrated that the development activities can be completed within the normal operating cycle.

(ii) Property development costs

Property development costs comprise all costs that are attributable to development activities or that can be allocated on a reasonable basis to such activities.

When the financial outcome of a development activity can be reliably estimated, property development revenue and expenses are recognised in the profit or loss by using the stage of completion method. The stage of completion is determined by the proportion that property development costs incurred for work performed to date bear to the estimated total property development costs.

Where the financial outcome of a development activity cannot be reliably estimated, property development revenue is recognised only to the extent of property development costs incurred that is probable will be recoverable, and property development costs on properties sold are recognised as an expense in the year in which they are incurred.

Any expected loss on a development project, including costs to be incurred over the defects liability period, is recognised as an expense immediately.

Property development costs not recognised as an expense is recognised as an asset, which is measured at the lower of cost and net realisable value.

The excess of revenue recognised in the profit or loss over billings to purchasers is classified as accrued billings under trade receivables and the excess of billings to purchasers over revenue recognised in the profit or loss is classified as progress billings under trade payables.

Investment properties

Investment properties are properties which are held either to earn rental income or for capital appreciation or for both. Such properties are measured initially at cost, including transaction costs. Subsequent to initial recognition, investment properties are stated at fair value. Fair value is arrived at by reference to market evidence of transaction prices for similar properties and is performed by registered independent valuers having an appropriate recognised professional qualification and recent experience in the location and category of the properties having valued.

A gain or loss arising from a change in the fair value of investment properties is recognised in profit or loss for the year in which it arises.

A property interest under an operating lease is classified and accounted for as an investment property on a property by property basis when the Group holds it to earn rentals or for capital appreciation or both. Any such property interest under an operating lease classifies as an investment property is carried at fair value.

Investment properties are derecognised when either they have been disposed of or when the investment property is permanently withdrawn from use and no future economic benefit is expected from its disposal. Any gains or losses on the retirement or disposal of an investment property are recognised in profit or loss in the year in which they arise.


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Investment in subsidiaries

Subsidiaries are those companies controlled by the Company. Control exists when the Company has the power, directly or indirectly, to govern the financial and operating policies of a company so as to derive benefits from its activities.

The Company’s investment in subsidiaries is stated at cost less impairment losses, if any.

Investment in associates

An associate is a company in which the Group or the Company has significant influence and which is neither a subsidiary nor a joint venture of the Group or the Company.

The Company’s investment in associates is stated at cost less impairment losses, if any.

The Group’s investment in associates is accounted for under the equity method of accounting based on the audited or management financial statements of the associates made up to the reporting date. Under this method of accounting, the Group’s interest in the post acquisition profit of the associates is included in the consolidated results while dividend received is reflected as a reduction of the investment in the consolidated statements of financial position.

Unrealised gains on transactions between the Group and its associates are eliminated to the extent of the Group’s interest in the associates; unrealised losses are also eliminated unless the transaction provides evidence on impairment of the asset transferred. Where necessary, in applying the equity method, adjustments have been made to the financial statements of associates to ensure consistency of accounting policies with the Group.

Intangible assets

Intangible assets including trademark licence acquired separately are measured on initial recognition at cost. Following initial recognition, intangible assets are carried at cost less any accumulated amortisation and any accumulated impairment losses. The useful lives of intangible assets are assessed to be either finite or indefinite. Intangible assets with finite lives are amortised on a straight line basis over the estimated economic useful lives and assessed for impairment whenever there is an indication that the intangible assets may be impaired. The amortisation period and the amortisation method for an intangible asset with a finite useful life are reviewed at least at each reporting date.

Intangible assets with indefinite useful lives are not amortised but tested for impairment annually or more frequently if the events or changes in circumstances indicate that the carrying value may be impaired either individually or at the cash generating unit level. The useful life of an intangible asset with an indefinite life is also reviewed annually to determine whether the useful life assessment continues to be supportable.

Inventories

Inventories are stated at the lower of cost and net realisable value. Cost of inventories is determined on the weighted average basis. Net realisable value represents the estimated selling prices less all estimated costs to completion and costs to be incurred in marketing, selling and distribution.

Costs of trading merchandise comprise the cost of purchase plus the cost of bringing the inventories to their present location and condition.

Construction contracts and amount due from/to contract customers

Where the outcome of a construction contract can be reliably estimated, contract revenue and contract costs are recognised as revenue and expenses respectively by using the stage of completion method. The stage of completion is measured by reference to the proportion of contract costs incurred for work performed to date to the estimated total contract costs.

Where the outcome of a construction contract cannot be reliably estimated, contract revenue is recognised to the extent of contract costs incurred that it is probable will be recoverable. Contract costs are recognised as expenses in the period in which they are incurred.


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ANNUAL REPORT 2011


Construction contracts and amount due from/to contract customers (cont’d)

Cost includes direct materials, labour, sub contract sum and attributable overheads paid or payable to date. When it is probable that total contract costs will exceed total contract revenue, the expected loss is recognised as an expense immediately.

Amount due from customers for construction contracts is the net amount of costs incurred plus recognised profits less the sum of recognised losses and progress billings for all contracts in progress for which costs incurred plus recognised profits (less recognised losses) exceed progress billings.

Amount due to customers for construction contracts is the net amount of costs incurred plus recognised profits less the sum of recognised losses and progress billings for all contracts in progress for which progress billings exceed costs incurred plus recognised profits (less recognised losses).

Leases

Assets acquired under leases which transfer substantially all the risks and rewards incident to ownership of the assets are capitalised under property, plant and equipment. The assets and the corresponding lease obligations are recorded at their fair values or, if lower, at the present value of the minimum lease payments of the leased assets at the inception of the respective leases.

Finance costs, which represent the difference between the total lease commitments and the fair values of the assets acquired, are charged to the profit or loss over the term of the relevant lease periods so as to give a constant periodic rate of charge on the remaining balance of the obligations for each accounting period.

All other leases which do not meet such criteria are classified as operating leases. Lease payments under operating leases are recognised as expense in the profit or loss on a straight line basis over the terms of the relevant lease.

Long term leasehold land that normally has an indefinite economic life and title is not expected to pass to the lessee by the end of the lease term is treated as operating lease. The prepaid land lease payments are amortised on the straight line basis over the lease period.

Plant and equipment acquired under hire purchase arrangements

Plant and equipment acquired under hire purchase arrangements are capitalised in the financial statements and the corresponding obligations treated as liabilities. Finance charges are allocated to the profit or loss to give a constant periodic rate of interest on the remaining hire purchase liabilities.

Provisions Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is

probable that an outflow of economic resources will be required to settle the obligation and the amount of the obligation can be estimated reliably.

Provisions are reviewed at each reporting date and adjusted to reflect the current best estimate. If it is no longer probable that an outflow of economic resources will be required to settle the obligation, the provision is reversed. If the effect of the time value of money is material, provisions are discounted using a current pre tax rate that reflects, where appropriate, the risk specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.

Borrowing costs

Borrowing costs are capitalised as part of the cost of a qualifying asset if they are directly attributable to the acquisition, construction or production of the asset. Capitalisation of borrowing costs commences when the activities to prepare the asset for its intended use or sale are in progress and the expenditures and borrowing costs are incurred. Borrowing costs are capitalised until the assets are substantially completed for their intended use or sale.

All other borrowing costs are recognised in profit or loss in the period they are incurred. Borrowing costs consist of interest and other costs that the Group and the Company incurred in connection with the borrowing of funds.


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Segment information

In the previous years, a segment was a distinguishable component of the Group that was engaged either in providing products or services (business segment), or in providing products or services within a particular economic environment (geographical segment) which was subject to risks and rewards that were different from those of other segments.

Following the adoption of FRS8, Operating Segments, an operating segment is a component of the Group that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Group’s other components. An operating segment’s operating results are reviewed regularly by the chief operating decision maker to make decisions about resources to be allocated to the segment and assess its performance, and for which discrete financial information is available.

Financial instruments

Financial instruments are recognised in the statement of financial position when the Company has become a party to the contractual provisions of the instrument.

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

Financial instruments are classified as liabilities or equity in accordance with the substance of the contractual arrangement. Interest, dividends and gains and losses relating to a financial instrument classified as a liability, are reported as expense or income.

Distributions to holders of financial instruments classified as equity are charged directly to equity. Financial instruments are offset when the Company has legal enforceable right to offset and intends to settle either on a net basis or realise the asset and settle the liability simultaneously.

Financial assets are classified as either at fair value through profit or loss, loans and receivables, held to maturity investments, or available-for-sale as appropriate. Financial liabilities are classified as either at fair value through profit or loss (derivative financial liabilities) or at amortised cost (borrowings and trade and other payables), as appropriate.

(i) Loans and receivables

Financial assets with fixed or determinable payments that are not quoted in an active market are classified as loans and receivables.

Subsequent to initial recognition, loans and receivables are measured at amortised cost using the effective interest method. Gains and losses are recognised in profit and loss when the loans and receivables are derecognised or impaired, and through the amortisation process.

Loans and receivables are classified as current assets, except for those having maturity dates later than 12 months after the reporting date which are classified as non-current.

(ii) Available-for-sale financial assets

Available-for-sale are financial assets that are designated as available-for-sale or are not classified in any of the three preceding categories.

After initial recognition, available-for-sale financial assets are measured at fair value. Any gains or losses in fair value of the financial assets are recognised in other comprehensive income, except that impairment losses, foreign exchange gains and losses on monetary instruments and interest calculated using the effective interest method are recognised in profit or loss. The accumulated gain or loss previously recognised in other comprehensive income is reclassified from equity to profit or loss as a reclassification adjustment when the financial asset is derecognised. Interest income calculated using effective interest method is recognised in profit or loss. Dividends on available-for-sale equity instruments are recognised in profit or loss when the Group and the Company’s right to receive payment is established.


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ANNUAL REPORT 2011


Financial instruments (cont’d)

(ii) Available-for-sale financial assets (cont’d)

Investment in equity instruments whose fair value cannot be reliably measured are measured at cost less impairment loss.

Available-for-sale financial assets are classified as non-current assets unless they are expected to be realised within 12 months after the reporting date.

(iii) Payables

Payables are recognised initially at fair value plus directly attributable transaction costs and subsequently measured at amortised cost using the effective interest method.

(iv) Interest bearing borrowings

Borrowings are recognised initially at fair value, net of transaction costs incurred, and subsequently measured at amortised cost using the effective interest method. Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the reporting date.

(v) Financial guarantee contracts

A financial guarantee contact is a contract that requires the issuer to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payment when due.

Financial guarantee contracts are recognised initially as a liability at fair value, net of transaction costs. Subsequent to initial recognition, financial guarantee contracts are recognised as income in profit or loss over the period of the guarantee. If the debtor fails to make payment relating to financial guarantee contract when it is due and the Group, as the issuer, is required to reimburse the holder for the associated loss, the liability is measured at the higher of the best estimate of the expenditure required to settle the present obligation at the reporting date and the amount initially recognised less cumulative amortisation.

(vi) Equity instruments

Equity instruments issued by the Company are recorded at the fair value of the proceeds received net of direct issue costs. Ordinary shares are classified as equity. Dividends on ordinary shares are recognised in equity in the period in which they are approved.

A financial asset or part of it is derecognised when, and only when the contractual rights to the cash flows from the financial asset expire or the financial asset is transferred to another party without retaining control or substantially all risks and rewards of the asset. On derecognition of a financial asset, the difference between the carrying amount and the sum of the consideration received (including any new asset obtained less any new liability assumed) and any cumulative gain or loss that had been recognised in equity is recognised in profit or loss.

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


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Impairment of financial assets

The Group and the Company assess at each reporting date whether there is any objective evidence that a financial asset is impaired.

(i) Trade and other receivables and other financial assets carried at amortised cost

To determine whether there is objective evidence that an impairment loss on financial assets has been incurred, the Group and the Company consider factors such as the probability of insolvency or significant financial difficulties of the debtor and default or significant delay in payments. For certain categories of financial assets, such as trade receivables, assets that are assessed not to be impaired individually are subsequently assessed for impairment on a collective basis on similar risk characteristics. Objective evidence of impairment for a portfolio of receivables could include the Group’s and the Company’s past experience of collecting payments, an increased in the number of delayed payments in the portfolio past the average credit period and observable changes in national or local economic conditions that correlate with default on receivables.

If any such evidence exist, the amount of impairment loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at the financial asset’s original effective interest rate. The impairment loss is recognised in profit or loss.

The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception of trade receivables, where the carrying amount is reduced through the use of an allowance account. When a trade receivable becomes uncollectible, it is written off against the allowance account.

If in a subsequent period, the amount of impairment loss decreases and the decrease can be related objectively to an event occurring after impairment was recognised, the previously recognised impairment loss is reversed to the extent that the carrying amount of the asset does not exceed its amortised cost at the reversal date. The amount of reversal is recognised in profit or loss.

(ii) Unquoted equity securities carried at cost If there is objective evidence (such as significant adverse changes in the business environment where the issuer operates,

probability of insolvency or significant financial difficulties of the issuer) that an impairment loss on financial assets carried at cost has been incurred, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at the current market rate of return for a similar financial asset. Such impairment losses are not reversed in subsequent periods.

(iii) Available-for-sale financial assets

Significant or prolonged decline in fair value below cost, significant financial difficulties of the issuer or obligor, and the disappearance of an active trading market are considerations to determine whether there is objective evidence that investment securities classified as available-for-sale financial assets are impaired.

If available-for-sale financial assets is impaired, an amount comprising the difference between its cost (net of any principal payment and amortisation) and its current fair value, less any impairment loss previously recognised in profit or loss, is transferred from equity to profit or loss.

Impairment losses on available-for-sale equity investments are not reversed in profit or loss in the subsequent periods. Increase in fair value, if any, subsequent to impairment loss is recognised in other comprehensive income.

Statements of cash flows

Statements of cash flows are prepared using the indirect method.

Cash equivalents are short term, highly liquid investments that are readily convertible to known amount of cash and which are subject to insignificant risk of changes in value.


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ANNUAL REPORT 2011

4. Revenue Group Company

2011 2010 2011 2010RM’000 RM’000 RM’000 RM’000

Construction income 9,274 11,041 – –

Dividends 33 16 1,633 3,021

Property development/investment 13,358 6,505 – –

Sale of goods 585 3,178 – –

Services 1,726 333 887 898

24,976 21,073 2,520 3,919

5. Cost of sales

Group2011 2010

RM’000 RM’000Construction costs 7,979 8,924

Property development/investment 9,582 5,971

Sale of goods 1,191 2,674

Services 635 255

19,387 17,824

6. Profit/(Loss) before tax

Group Company2011 2010 2011 2010

RM’000 RM’000 RM’000 RM’000Profit/(Loss) before tax is arrived at after charging:

Amortisation of implicit

interest in retention sums payable 131 – – –

Amortisation of prepaid lease payments – 9 – –

Auditors’ remuneration

- auditors of the Company - current year 150 130 40 39 - over provision in prior year (4) – – – - other auditors – 4 – –

Depreciation 655 1,154 290 309

Directors’ estimated cash value of benefits in kind 54 52 54 52

Directors’ fees 138 163 138 163

Directors’ other emoluments 780 821 780 821


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6. Profit/(Loss) before tax (cont’d)

Group Company2011 2010 2011 2010

RM’000 RM’000 RM’000 RM’000Impairment losses on

- property, plant and equipment 1,230 – – – - property development costs – 26,378 – – - investment in subsidiaries – – 1,577 1,816 - investment in an associate – 9,056 – 7,172

Interest expense

- bank overdrafts – 183 – 183 - hire purchase 31 44 24 32

- others 39 399 39 399 - revolving credits – 203 – 173 - term loans 8,042 13,343 2,894 4,446

Inventories written off 56 59 – –

Loss on foreign exchange

- realised – 10 – –

- unrealised – 4 – –

Loss on disposal of


- property, plant and equipment 53 47 – –

Loss on revocation of retail units sold 23,713 – – –

Plant and equipment written off 292 1,225 201 –

Provision for doubtful debts

- subsidiaries – – 1,350 3,181

- others 3,958 11,893 1,250 572

Provision for contingencies in respect of disposal of subsidiaries – 337 – 337

Provision for liquidated ascertained damages 817 73 – –

Rental of

- premises 103 575 98 21

- equipment 116 100 26 47

Staff costs 3,422 2,786 1,112 1,128


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ANNUAL REPORT 2011


Group Company2011 2010 2011 2010

RM’000 RM’000 RM’000 RM’000 And crediting:

Accretion of implicit

interest in retention sums receivable 62 – – –

Adjustments on financial liabilities carried at amortised cost 2,689 – – –

Amortisation of financial guarantee liabilities – – 123 –

Fair value adjustments on investment properties 3,542 – – –

Gross dividend income from

- Malaysia - quoted investment in an associate – – – 5

- unquoted investment in a subsidiary – – 1,600 3,000

- other unquoted investments 9 8 9 8

- Foreign

- other quoted investments 24 8 24 8

Gain on disposal of

- property, plant and equipment – 3 – –

- a subsidiary – 509 – 200


- an associate – 2,565 – 2,557

Interest income from

- short term deposits 279 96 279 96

- sundry receivables 60 243 60 71

Provision for liquidated ascertained damages no longer required 2,054 1,392 – –

Provision for contingencies in respect of disposal of subsidiaries no longer required – 11,331 – 11,331

Provision for doubtful debts no longer required

- subsidiaries – – 208 1,279

- others 38,451 7,102 725 –

Waiver of term loan liabilities 1,328 – – –

Staff costs comprise:

Defined contribution plan 299 270 92 109

Salaries, wages and allowances 2,750 2,403 782 964

Other employee related expenses 373 113 238 55

3,422 2,786 1,112 1,128


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The number of directors of the Company where total remuneration during the financial year falls within the following bands is analysed as follows:

2011 2010 Executive directors:

Nil 1 1 RM50,001 to RM100,000 – 1 RM350,001 to RM400,000 1 2 RM400,001 to RM500,000 1 –

Non executive directors: Below RM50,000 4 6

Loss on revocation of retail units sold

During the financial year:

a) Pujian Development Sdn Bhd, a subsidiary of the Group has revoked the sale and purchase agreements of certain retail units entered into with a purchaser due to fundamental breach in the terms of the sale and purchase agreements; and

b) The directors have decided to retain all retail units under construction in Segamat, Johor for leasing purposes. As a result, Tashima Development Sdn Bhd, a subsidiary of the Group, has obtained mutual agreement with certain purchasers to revoke the sale and purchase agreements entered into previously and has refunded the purchase consideration received in respect of the said retail units.

The loss arising from the various revocation of retail units sold are as follows:

Group2011 2010

RM’000 RM’000 Revenue reversed (40,533) –

Cost reversed 13,220 –

Deposit forfeited 3,600 –

(23,713) –

7. Income tax expense

Group Company2011 2010 2011 2010

RM’000 RM’000 RM’000 RM’000 Estimated income tax payable

Malaysia

- current (360) (18) – –

- (under)/over provision in prior years (13) 40 – –

Deferred tax (Note 15) (586) (100) – –

(959) (78) – –


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ANNUAL REPORT 2011

7. Income tax expense (cont’d)

A reconciliation of income tax expense applicable to profit/(loss) before tax at the statutory income tax rate to income tax expense at the effective income tax rate is as follows:

Group Company

2011 2010 2011 2010RM’000 RM’000 RM’000 RM’000

Profit/(Loss) before tax 9,452 (41,390) (6,640) (1,967)

Income tax using Malaysian tax rate of 25% (2010: 25%) (2,363) 10,347 1,660 492

Expenses not deductible for tax purposes (759) (7,124) (1,103) (4,441)

Income not subject to tax 11,590 5,913 488 3,949

Deferred tax assets not recognised (9,414) (9,305) (1,045) –

Utilisation of previously unrecognised unutilised tax losses

and unabsorbed capital allowances – 51 – –

(Under)/Over provision in prior years

- income tax (13) 40 – –

Income tax expense for the year (959) (78) – –

8. Basic earnings/(loss) per share

Basic earnings/(loss) per ordinary share is calculated based on the net profit/(loss) attributable to ordinary shareholders and weighted average number of ordinary shares in issue as follows:

Group2011 2010

RM’000 RM’000

Net profit/(loss) attributable to owners of the Company 8,760 (41,375)

’000 ’000

Weighted average number of ordinary shares in issue 650,148 650,148

Basic earnings/(loss) per ordinary share (sen) 1.35 (6.36)

There were no unissued shares of the Company under options and therefore, the scenario of fully diluted loss per share does not arise.


66


9. Property, plant and equipment

Group

Machinery equipment,

and vehicles Total2011 RM’000 RM’000Cost

At beginning of year 15,072 15,072

Additions 558 558

Acquisition of a subsidiary (Note12) 52 52

Disposals (181) (181)

Write offs (1,368) (1,368)

At end of year 14,133 14,133

Accumulated depreciation


Charge for the year 655 655


Write offs (1,076) (1,076)

At end of year 7,115 7,115

Accumulated impairment losses


Impairment during the year 1,230 1,230


Net book valueAt 31 May 2011 1,660 1,660


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ANNUAL REPORT 2011

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

Group

Long termleasehold

building

Logpondsand

roadworks

Machinery,equipment

and vehicles

Long termleaseholdplantation Total

2010 RM’000 RM’000 RM’000 RM’000 RM’000

Cost

At beginning of year 4,003 3,540 24,056 34,390 65,989

Additions – – 392 936 1,328

Disposals – – (487) – (487)

Disposal of a subsidiary (3,667) (3,244) (6,009) (32,447) (45,367)

Write offs – – (2,331) – (2,331)

Foreign exchange adjustment (336) (296) (549) (2,879) (4,060)

At end of year – – 15,072 – 15,072


At beginning of year 1,723 399 13,623 – 15,745

Charge for the year 348 22 1,154 – 1,524

Disposals – – (249) – (249)

Disposal of a subsidiary (1,927) (387) (5,310) – (7,624)

Write offs – – (1,106) – (1,106)

Foreign exchange adjustment (144) (34) (464) – (642)

At end of year – – 7,648 – 7,648


At beginning of year – – 4,128 30,528 34,656

Disposal of a subsidiary – – – (30,528) (30,528)

At end of year – – 4,128 – 4,128

Net book value

At 31 May 2010 – – 3,296 – 3,296


68



CompanyEquipment

and vehicles Total2011 RM’000 RM’000

Cost


Additions 324 324

Write offs (657) (657)







Net book value

At 31 May 2011 658 658

CompanyEquipment

and vehicles Total2010 RM’000 RM’000

Cost


Additions 22 22










Net book value

At 31 May 2010 825 825


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ANNUAL REPORT 2011


At the reporting date:

(i) Certain property, plant and equipment of the Group with aggregate carrying amount of RM Nil (2010: RM1.5million) have been charged as collaterals to secure the banking facilities referred to in Note 26.

(ii) Plant and equipment under hire purchase arrangements are:

Group Company

2011 2010 2011 2010

RM’000 RM’000 RM’000 RM’000

At net book value

Motor vehicles 451 627 335 508

During the financial year, cash payments made to purchase plant and equipment are as follows:

Group Company

2011 2010 2011 2010

RM’000 RM’000 RM’000 RM’000

Total additions 558 1,328 324 22

Additions through hire purchase arrangements (57) – – –

Capitalised in long term leasehold plantation

- depreciation of plant and equipment – (370) – –

501 958 324 22

During the financial year, depreciation expenses are charged to the following:

Group Company

2011 2010 2011 2010

RM’000 RM’000 RM’000 RM’000

Profit or loss 655 1,154 290 309

Long term leasehold plantation – 370 – –

655 1,524 290 309


70


10. Investment properties

Group

Long term leasehold retail units, commercial

space and car park bays

Construction in progress Total

2011 RM’000 RM’000 RM’000

At beginning of year 263,247 – 263,247

Gain from fair value

adjustment recognised in profit or loss 3,542 – 3,542

Transferred from property

development costs (Note18) – 39,645 39,645

Additions arising from

revocation of retail units sold 11,831 – 11,831

At end of year 278,620 39,645 318,265

Group

Long term leasehold retail units, commercial

space and car park bays

Construction in progress Total

2010 RM’000 RM’000 RM’000

At beginning/end of year 263,247 – 263,247

The investment properties of the Group with carrying amount of RM318.3 million (2010: RM263.2 million) have been pledged as collaterals to secure the banking facilities referred to in Note 26.

Fair value of investment properties of the Group were stated by the directors based on professional valuations carried out by Mr Long Tian Chek, a registered valuer with Henry Butcher Malaysia Sdn Bhd in July 2011 using the market value basis.

11. Prepaid lease payments

Group

2011 2010

RM’000 RM’000

Long term leasehold land:

Surrogate carrying amount

At beginning of year – 1,363

Disposal of a subsidiary – (1,239)

Foreign exchange adjustment – (124)

At end of year – –


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ANNUAL REPORT 2011

11. Prepaid lease payments (cont’d)

Group2011 2010

RM’000 RM’000Accumulated amortisation

At beginning of year – 67

Amortisation for the year – 9

Disposal of a subsidiary – (61)

Foreign exchange adjustment – (15)

At end of year – –

Carrying amount – –

12. Investment in subsidiaries

Company2011 2010

RM’000 RM’000Unquoted shares, at cost


Effect of adopting FRS139 700 –

As restated 303,422 304,175

Acquisition of a subsidiary 4,500 –

Additional subscription of shares in a subsidiary 2,000 –

Disposals – (1,453)

At end of year 309,922 302,722


At beginning of year (265,007) (264,644)

Impairment loss for the year (1,577) (1,816)

Disposals – 1,453

At end of year (266,584) (265,007)

Carrying amount 43,338 37,715


72


12. Investment in subsidiaries (cont’d)

The details of the subsidiaries are as follows:

Country ofincorporation

Issued andpaid up share

capital

Group’s effectiveinterest

Principalactivities

RM’000 2011 2010(unless

otherwiseindicated)

% %

Subsidiaries of the Company

Pujian Development Sendirian Berhad Malaysia 6,200 100 100 Property development and property investment

EcoFirst Development Sdn Bhd Malaysia 100 100 100 Dormant EcoFirst Construction Sdn Bhd Malaysia 2,550 100 100 Construction Tashima Development Sdn Bhd Malaysia 500 100 100 Property

developmentGangsa Etnik Sdn Bhd Malaysia 500 68 68 Property

developmentPanorama Tiara Sdn Bhd Malaysia 3,000 69 69 Property

developmentEcoFirst Products Sdn Bhd Malaysia 1,500 70 70 Multilevel

marketingEarth Revolution Sdn Bhd Malaysia # 51 51 DormantEcoFirst Fibaloy Sdn Bhd Malaysia 1,700 51 51 Ceased

operationOpal Horizon Sdn Bhd Malaysia # 100 100 General tradingEcoFirst Biotech Sdn Bhd Malaysia 250 52 52 DormantEcoFirst Laboratories Sdn Bhd Malaysia 250 100 100 Research and

developmentEcoFirst Agro Holdings Sdn Bhd Malaysia 110 100 100 Investment

holdingEcoFirst Hartz Sdn Bhd Malaysia 500 100 100 Ceased

operationKE Management & Training Sdn Bhd Malaysia 100 60 60 Ceased

operationKE Management Services Sdn Bhd Malaysia # 100 100 General

insurance agency

Hasil Rezeki (M) Sdn Bhd Malaysia 25 100 100 DormantGaydon Resources Limited British Virgin

IslandsUSD1 100 100 Dormant

Minat City Automotive Centre Sdn Bhd Malaysia # 100 100 Ceased operation

Sawitani Sdn Berhad Malaysia 10,000 100 100 Investment holding


73

ANNUAL REPORT 2011




capital


Principalactivities

RM’000 2011 2010(unless

otherwiseindicated)

% %

Subsidiaries of the CompanyJiddi Joned Enterprises Sdn Bhd Malaysia 5,500 82.2 82.2 Ceased

operationBerembang Sendirian Berhad Malaysia 2,800 98.1 98.1 Ceased

operationMudek Sdn Bhd Malaysia 2,800 89.3 89.3 Ceased

operationSeri Jasin Sdn Bhd Malaysia 1,946 98.3 98.3 Ceased

operationGabema Sdn Bhd Malaysia 26 97.7 97.7 Ceased

operationEcoFirst Products Worldwide Sdn Bhd Malaysia # 100 100 Investment

holdingCurah Bahagia Sdn Bhd Malaysia 2,500 100 – Property

development

Subsidiary of Gabema Sdn BhdPengangkutan Gabema Sdn Bhd Malaysia 65 90.2 90.2 Ceased

operation

Subsidiaries of Pujian Development Sendirian BerhadKilat Inspirasi Sdn Bhd Malaysia 180 100 100 DormantEfex Trade & Exhibitions Sdn Bhd Malaysia # 100 100 DormantBudaya Fokus Sdn Bhd Malaysia 500 100 100 Ceased

operationSouthern Utilities Corporation Sdn Bhd Malaysia # 100 100 Provision of

management services

SCP Management Sdn Bhd Malaysia 10 100 100 Provision of management services

Subsidiaries of EcoFirst Agro Holdings Sdn Bhd

EcoFirst Agro-Industries Sdn Bhd Malaysia 1,000 75 75 Investment holding

EcoFirst-YPM Sdn Bhd Malaysia 250 70 70 Dormant


74





capital


Principalactivities

RM’000 2011 2010(unless

otherwiseindicated)

% %

Subsidiary of EcoFirst Agro-Industries Sdn BhdJ-Biotech EcoFirst Agro Sdn Bhd Malaysia 1,000 52 52 Operation of

agriculture related businesses

Subsidiary of EcoFirst Products Worldwide Sdn BhdEcoFirst Products (S) Pte Ltd * Singapore # 100 100 Ceased

operations

The financial statements of the subsidiary indicated by * is not audited by Russell Bedford LC & Company.

# issued and paid up share capital of less than RM1,000

On 3 May 2011, the Company acquired 100% equity interest in Curah Bahagia Sdn Bhd (“CURAH”) for a total cash consideration of RM4,500,000. Upon acquisition, CURAH become a subsidiary of the Group. CURAH is a company incorporated in Malaysia and is principally involved in property development activities. Subsequently, on 23 May 2011, the Company further subscribed additional 2,000,000 ordinary shares of RM1 each in CURAH for a cash consideration of RM2,000,000.

The fair value of the identifiable assets and liabilities of CURAH as at the date of acquisition is as follows:2011

RM’000Non current assetsPlant and equipment 52

Current assetsProperty development costs 15,045Trade receivables 12,573Other receivables, deposits and prepayments 6,003Cash and bank balances 859Total assets 34,532

Current liabilitiesTrade payables 16,961Other payables and accruals 12,682Tax payables 389

Total liabilities (30,032)

Identifiable net assets acquired /Purchase consideration 4,500


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ANNUAL REPORT 2011


The effect of the acquisition on cash flows is as follows:Group

2011RM’000

Total cash consideration paid 4,500

Less: Cash and cash equivalents of subsidiary acquired (859)

Net cash outflow on acquisition 3,641

The acquired subsidiary had contributed the following results to the Group:RM’000

Revenue 6,191

Net profit after tax for the year 223

In the previous financial year, the Company disposed of all its holding of 1,906,999 ordinary shares of Solomon Islands Dollar 1 each in a direct subsidiary, Silvania Plantation Products (S.I.) Limited (“SPPL”), representing 100% of the issued and paid up

share capital of SPPL for a total cash consideration of RM200,000.

The disposal had the following effects on the Group’s assets and liabilities:

Group2010

RM’000Non current assets 8,394Current assets 689Current liabilities (12,776)Foreign exchange reserve 3,384Net liabilities disposed of (309)Gain on disposal 509

Consideration received 200Cash and cash equivalents disposed of (6)

Proceeds from disposal of a subsidiary 194


76


13. Investment in an associate

Group Company2011 2010 2011 2010

RM’000 RM’000 RM’000 RM’000Quoted shares at cost

At beginning of year – 44,510 – 40,565

Additions – – – 285

Disposals – (44,510) – (40,850)

At end of year – – – –


At beginning of year – 7,742 – 3,652

Impairment loss for the year – 9,056 – 7,172

Disposals – (16,798) – (10,824)

At end of year – – – –

Share in post acquisition profits – 5,417 – –

Disposals – (5,417) – –

Carrying amount – – – –

In the previous financial year, the Company disposed all its direct shareholding of 18,885,025 ordinary shares and indirect shareholding held through its wholly owned subsidiary, Sawitani Sdn Bhd of 1,905,000 ordinary shares of RM1 each in SEG International Berhad for a total consideration of RM35.7million.

14. Other financial assets

Group Company2011 2010 2011 2010

RM’000 RM’000 RM’000 RM’000Available-for-sale financial assets:

Quoted equity instruments, at cost

- Malaysia 13,859 13,858 4,761 4,761

- Foreign 249 225 249 225

14,108 14,083 5,010 4,986


At beginning of year (11,855) (31,967) (2,942) (9,068)

Disposals – 20,112 – 6,126

At end of year (11,855) (11,855) (2,942) (2,942)


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ANNUAL REPORT 2011

14. Other financial assets (cont’d)

Group Company2011 2010 2011 2010

RM’000 RM’000 RM’000 RM’000Fair value adjustmentsAt beginning of year – – – – - opening balance adjustment for FRS139 970 – 950 – - change for the year 3,420 – 3,200 –

At end of year 4,390 – 4,150 –

Carrying amount of quoted equity instruments 6,643 2,228 6,218 2,044

Unquoted equity instruments, at cost:At the beginning/end of year 16,148 16,148 16,110 16,110Less: Accumulated impairment losses (15,010) (15,010) (15,010) (15,010)

Carrying amount of unquoted equity instruments 1,138 1,138 1,100 1,100

Total carrying amount of available- for-sale financial assets 7,781 3,366 7,318 3,144

Market value of quoted equity shares 6,643 3,196 6,218 3,034

15. Deferred tax assets/(liabilities)

Group2011 2010

RM’000 RM’000

At beginning of year 812 912Recognised in profit or loss (Note 7) - current year (586) (100)At end of year 226 812

Presented after appropriate offsetting as follows:Deferred tax assets 13,135 14,334Deferred tax liabilities (12,909) (13,522)

226 812

Deferred tax assets of the Group are in respect of the following: Group

2011 2010RM’000 RM’000

Tax effects of unabsorbed capital allowances and unutilised tax losses 13,135 14,334

The unused tax losses and unused tax credits are available indefinitely for offset against future taxable profit of the subsidiaries in which those items arose.


78


15. Deferred tax assets/(liabilities) (cont’d)

Deferred tax liabilities of the Group are in respect of the following: Group

2011 2010RM’000 RM’000

Tax effects of excess of tax capital allowances over related depreciation of property, plant and equipment (12,909) (13,522)

Deferred tax assets have not been recognised in respect of the following temporary differences:

Group Company2011 2010 2011 2010

Tax effects of: RM’000 RM’000 RM’000 RM’000Unabsorbed capital allowances and unutilised tax losses 33,738 24,796 4,125 3,793

Excess of depreciation of plant and equipment over tax capital allowances – 2 – –

Provisions 15,563 15,950 – –

49,301 40,748 4,125 3,793

Portion of the deferred tax assets have not been recognised as it is not probable that taxable profit will be available in the foreseeable future to utilise these deferred tax assets.

16. Intangible asset

Group2011 2010

RM’000 RM’000Trademark licence at costAt beginning and end of year 570 570

Accumulated amortisationAt beginning and end of year 32 32

Accumulated impairment lossesAt beginning and end of year 538 538

Carrying amount – –

17. Inventories Group

2011 2010RM’000 RM’000

Trading merchandise 329 429


79

ANNUAL REPORT 2011

18. Property development costs

Group2011 2010

RM’000 RM’000At beginning of year:

Long term leasehold land 103,046 103,046

Development costs 108,451 108,447

211,497 211,493

Costs incurred during the year:

Acquisition of subsidiary (Note 12)

- Freehold land 14,100 –

- Development costs 945 –

15,045 –

Freehold land 12,182 –Development costs 18,199 4

30,381 445,426 4

Transferred to investment properties (Note 10)

- Long term leasehold land (4,708) –

- Development cost (67,554) –

(72,262) –

Costs recognised in profit or loss:


Recognised during the year (3,895) 50

At end of year (50,675) (46,780)

Accumulated expected losses:


Expected loss for the year – (26,378)

Transferred to investment properties (Note 10) 32,617 –

At end of year (77,156) (109,773)

Property development costs at end of year 56,830 54,944

Property development costs of the Group with carrying value of RM32.2 million (2010: RM54.9 million) have been charged as collaterals to secure the banking facilities as referred to in Note 26.


80


19. Trade receivables

Group2011 2010

RM’000 RM’000Trade receivables 30,776 57,206Accrued billings for property development 1,146 1,899

31,922 59,105

Less: Provision for doubtful debts (22,351) (57,589)

9,571 1,516Less: Portion due within one year (7,484) (1,516)Non current portion 2,087 –

Group2011 2010

RM’000 RM’000The non current portion of trade receivables is receivable as follows:Later than 1 year and not later than 2 years 2,087 –

The Group’s normal trade credit term is 30 days (2010: 30 days).

The following table provides information on the trade receivables’ credit risk exposure. Group

2011 2010RM’000 RM’000

Not impaired or past due 2,100 31 - 30 days past due not impaired 3,514 15231 - 60 days past due not impaired 3,078 12461 - 90 days past due not impaired 463 36More than 90 days past due not impaired 416 1,201

9,571 1,516Impaired 22,351 57,589

31,922 59,105

Trade receivables that are neither past due nor impaired are creditworthy debtors with good payment records with the Group.

The movement in the provision for doubtful debts accounts for trade receivables that are individually impaired at reporting date is as follows:

Group2011 2010

RM’000 RM’000At beginning of year 57,589 46,883Provision for the year 2,083 10,715Provision no longer required (36,497) (9)Written off (824) –At end of year 22,351 57,589

Trade receivables that are individually determined to be impaired at the reporting date relate to debtors that are in significant financial difficulties and have defaulted on payments. These receivables are not secured by any collateral or credit enhancements.


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ANNUAL REPORT 2011

20. Amount due from/(to) subsidiaries

Company2011 2010

RM’000 RM’000Amount due from subsidiaries 320,287 306,752Less: Provision for doubtful debts (42,029) (40,887)

278,258 265,865

The movement in the provision for doubtful debts accounts for amount due from subsidiaries that are individually impaired at reporting date is as follows:

Company2011 2010

RM’000 RM’000At beginning of year 40,887 68,079Provision for the year 1,350 3,181Provision no longer required (208) (1,279)Disposal of a subsidiary – (29,094)At end of year 42,029 40,887

The amounts due from/(to) subsidiaries comprise unsecured interest free advances receivable/(repayable) on demand.

21. Other receivables, deposits and prepayments

Group Company2011 2010 2011 2010

RM’000 RM’000 RM’000 RM’000

Other receivables 43,675 43,079 33,300 34,256Less: Provision for doubtful debts (39,937) (41,114) (33,300) (32,775)

3,738 1,965 - 1,481Deposits and prepayments 12,291 2,711 130 196

16,029 4,676 130 1,677

The movement in the provision for doubtful debts accounts for other receivables that are individually impaired at reporting date is as follows:

Group Company2011 2010 2011 2010

RM’000 RM’000 RM’000 RM’000At beginning of year 41,114 47,044 32,775 32,203

Provision for the year 1,875 1,178 1,250 572

Provision no longer required (1,954) (7,093) (725) –

Written off (1,098) (15) – –

At end of year 39,937 41,114 33,300 32,775

Other receivables that are individually determined to be impaired at the reporting date relate to debtors that are in significant financial difficulties and have defaulted on payments. These receivables are not secured by any collateral or credit enhancements.


82


22. Cash and bank balances

Group Company2011 2010 2011 2010

RM’000 RM’000 RM’000 RM’000Cash at banks and on hand 3,451 3,880 434 769Short term deposits with licensed financial institutions – 22,291 – 22,291Cash and bank balances 3,451 26,171 434 23,060

The weighted average effective interest rate of short term deposits at the reporting date are as follows:

Group Company2011 2010 2011 2010

% % % %Weighted average effective interest rate per annum 2.74 2.51 2.74 2.51

The short term deposits have no fixed maturity period and can be withdrawn by giving advance notice.

23. Share capital

Group and Company2011

No. ofordinary

shares ofRM0.50

each

2010No. of

ordinaryshares of

RM0.50each

Group and Company2011 2010

’000 ’000 RM’000 RM’000Authorised:At beginning and end of year 2,000,000 2,000,000 1,000,000 1,000,000Issued and fully paid:At beginning and end of year 650,148 650,148 325,074 325,074


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ANNUAL REPORT 2011

24. Reserves

Group Company2011 2010 2011 2010

RM’000 RM’000 RM’000 RM’000Accumulated losses (506,580) (517,030) (502,878) (496,238)

Non distributable:Share premium 295,727 295,727 295,727 295,727Fair value adjustment reserve 4,390 – 4,150 –Revaluation reserve – 1,436 – –Foreign exchange translation reserve 11 6 – –

300,128 297,169 299,877 295,727

(206,452) (219,861) (203,001) (200,511)

Share premium represents the excess of the consideration received over the nominal value of the shares issued by the Company.

The Group’s revaluation reserve consists of revaluation surplus from freehold land and buildings, long term leasehold land and investments.

The Group’s fair value adjustment reserve represents the cumulative fair value changes, net of tax, of available-for-sale financial assets until they are disposed of or impaired.

25. Hire purchase liabilities

Group Company2011 2010 2011 2010

RM’000 RM’000 RM’000 RM’000Amount outstanding 516 724 437 600Less: Interest in suspense (49) (77) (45) (71)

Principal portion 467 647 392 529Less: Portion due within one year (190) (190) (146) (138)Non current portion 277 457 246 391

Group Company2011 2010 2011 2010

RM’000 RM’000 RM’000 RM’000The non current portion of the hire purchase obligations is payable as follows:Later than 1 year and not later than 2 years 137 200 110 146Later than 2 years and not later than 5 years 56 147 53 135Later than 5 years 84 110 83 110

277 457 246 391

The weighted average effective interest rates implicit in the hire purchase obligations is 5.26% (2010: 5.26%) per annum.


84


26. Long term borrowings

Group Company2011 2010 2011 2010

RM’000 RM’000 RM’000 RM’000Term loans - secured 132,014 129,085 17,957 13,850Revolving credits - secured – 413 – –Non convertible preference shares issued by a subsidiary to its minority shareholder 1,000 1,000 – –

133,014 130,498 17,957 13,850Less: Portion due within one year (Note 29) (28,370) (53,413) – (10,350)Non current portion 104,644 77,085 17,957 3,500

Group Company2011 2010 2011 2010

RM’000 RM’000 RM’000 RM’000The non current portion of borrowings is payable as follows:Later than 1 year and not later than 2 years 56,411 20,970 1,600 3,500Later than 2 years and not later than 5 years 16,116 55,115 10,200 –Later than 5 years 32,117 1,000 6,157 –

104,644 77,085 17,957 3,500

The weighted average effective interest rates per annum are as follows:

Group Company2011 2010 2011 2010

% % % %Term loans - secured 8.48 8.48 8.60 8.52Revolving credits - secured 8.05 8.05 – –

Secured borrowings are secured by way of:Carrying amount

Group Company2011 2010 2011 2010

RM’000 RM’000 RM’000 RM’000Property, plant and equipment (Note 9) – 1,500 – –Investment properties (Note 10) 318,265 263,247 – –Property development costs (Note 18) 32,223 54,944 – –

Certain of the bank borrowings of the subsidiaries are also guaranteed by the Company.

27. Trade payables

Group2011 2010

RM’000 RM’000Trade payables 24,955 6,127Less: Portion due within one year (23,302) (6,127)Non current portion 1,653 –The non current portion of trade payables are repayable as follows:Later than 1 year and not later than 2 years 1,653 –

The normal trade credit period granted to the Group is 30 days (2010: 30 days).


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ANNUAL REPORT 2011

28. Other payables and accruals

Group Company2011 2010 2011 2010

RM’000 RM’000 RM’000 RM’000

Deposits received from tenants and purchasers of development properties 6,871 5,186 – –

Financial guarantee liabilities – – 577 –

Unsecured interest free advances from third parties 445 4,300 50 73

Provision for contingencies in respect of disposal of subsidiaries 337 337 337 337

Accrued interest 13,231 14,413 13,231 14,413

Provision for real property gains tax liabilities as required for accounting purposes 10,197 10,197 616 616Provision for liquidated ascertained damages in respect of property development projects 6,125 7,468 – –

Profit guarantee liabilities 2,189 2,189 2,189 2,189

Provision for tax penalties as required for accounting purposes 5,311 5,311 – –

Quit rent and assessment payables 2,017 4,024 – –

Contribution payable for local authority 3,198 4,221 – –

Outstanding purchase consideration for freehold land acquired for property development 23,313 – – –

Other payables 12,797 8,713 2,683 3,576

86,031 66,359 19,683 21,204

Accruals 2,158 1,200 211 228

88,189 67,559 19,894 21,432

Less: Non current portion – – (471) –

Portion due within one year 88,189 67,559 19,423 21,432

Company

2011 2010

RM’000 RM’000

The non current portion of other payables are repayable as follows:

Later than 1 year and not later than 2 years 93 –

Later than 2 years and not later than 5 years 263 –

Later than 5 years 115 –

471 –


86


29. Short term borrowings

Group Company2011 2010 2011 2010

RM’000 RM’000 RM’000 RM’000Term loans - secured 28,370 53,000 – 10,350Revolving credits - secured – 413 – –Current portion (Note 26) 28,370 53,413 – 10,350

30. Significant related party disclosures

(a) Related party transactions

Significant transactions with related parties are as follows: Company

Type of 2011 2010Related parties transaction RM’000 RM’000

A person connected to Dato’ (Dr) Teoh Seng Foo and Teoh Seng Kian, the directors of the Company

Acquisition of a subsidiary 4,500 –

The directors are of the opinion that the terms and conditions and prices of the above transactions are not materially different from that obtainable in transactions with unrelated parties.

(b) Related party balances

Group Company2011 2010 2011 2010

RM’000 RM’000 RM’000 RM’000Significant outstanding balances with companies in which certain directors have interestsName of companyPayableMeda Inc Berhad - profit guarantee liabilities 2,189 2,189 2,189 2,189

(c) Compensation of key management personnel

The key management personnel comprises mainly executive directors of the Company whose remuneration is disclosed in Note 6.

31. Commitments

Group Company2011 2010 2011 2010

RM’000 RM’000 RM’000 RM’000Operating lease commitmentsThe future minimum lease payments under non cancellable operating leases are as follows:Not later than 1 year 311 451 236 394Later than 1 year and not later than 2 years 249 411 235 376Later than 2 years and not later than 5 years 54 490 60 470

614 1,352 531 1,240


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ANNUAL REPORT 2011

32. Contingencies

At 31 May 2011, the Company had contingent liabilities in respect of the following:

(i) Two subsidiaries, Pujian Development Sendirian Berhad (“PDSB”) and Southern Utilities Corporation Sdn Bhd (“SUC”), have been served with a writ of summons by 56 purchasers of the South City Condominiums (“the Project”) seeking declarative orders, injunctive orders and general damages in respect of their purchase of the service apartments and shop units of the Project. The matter is now fixed for further case management on 10 January 2012 and for trial on 13 and 14 February 2012 and at this juncture, the loss arising therefore, if any, cannot be reasonably estimated.

The solicitors are of the opinion that PDSB and SUC have reasonably good defence for the above matter subject to the availability of sufficient documentary evidence to substantiate its defence. Therefore, no provision has been made in the financial statements.

(ii) PDSB was served with a writ of summons by 24 purchasers seeking rescission of the Sale and Purchase Agreements entered into with PDSB in respect of the shop units in the South City Plaza. The estimated loss to the Group is RM2.4 million. The Court has awarded the plaintiffs’ claims and Pujian has filed for appeal. The Court of Appeal has fixed for hearing on 3 October 2011.

The solicitors are of the opinion that PDSB has reasonably good chance of success in the appeal. Therefore, no provision has been made in the financial statements.

33. Material litigations and claims

(i) The Inland Revenue Board (“IRB”) issued a writ of summons against each of the 4 subsidiaries, Mudek Sdn Bhd (“Mudek”), Seri Jasin Sdn Bhd (“Seri Jasin”), Berembang Sendirian Berhad (“Berembang”) and Jiddi Joned Enterprises Sdn Bhd (“Jiddi Joned”) individually for real property gains tax owed by the subsidiaries.

IRB’s application for summary judgement against Mudek was allowed by the court on 14 January 2011. Mudek’s appeal has been adjourned from 28 July 2011 to a date yet to be fixed by the Court of Appeal. In the meantime, Mudek have obtained an interim stay of execution at the High Court pending hearing full application for stay which is now fixed for mention on 14 October 2011.

In respect of Seri Jasin’s suit, IRB has obtained summary judgement on 1 April 2010. Seri Jasin’s appeal was dismissed by the Court with costs on 15 March 2011.

Jiddi Joned and Berembang have both filed their defences. In respect of Jiddi Joned’s suit, the plaintiff has filed an application for summary judgement which was allowed on 1 April 2010. Jiddi Joned’s application for stay of execution was dismissed and have filed a Notice of Motion at the Court of Appeal. The appeal was heard on 21 April 2011 and the Court dismissed the appeal with costs.

In respect of Berembang’s suit, the Plaintiff’s application for summary judgement was heard on 12 July 2010 whereby the application was dismissed on the basis that there are triable issues. The plaintiff has filed an appeal to the Court of Appeal which has been adjourned from 28 July 2011 to a date yet to be fixed by the Court.

The said four subsidiaries have initiated another legal proceeding against certain parties for failure to release retention sums representing part of the real property gains tax as mentioned above. The Defendant has filed an appeal to the Court of Appeal which was dismissed on 18 August 2011 with cost. Plaintiff’s action at the High Court is now fixed for case management on 28 October 2011.

For accounting purposes, all the amounts owed have been provided for in the financial statements.

(ii) IRB filed 4 separate legal suits against Pujian Development Sendirian Berhad (“PDSB”) for a total amount of RM32.5 million. The claims are for income tax outstanding for assessment years 1998 to 2000, 2001 and 2004. For the first action, IRB has filed an application for summary judgement which was allowed on 8 June 2010. PDSB filed an appeal to the Court of Appeal which was dismissed on 12 July 2011 with cost. In relation to the second action, IRB has filed an application for summary judgement which was allowed with cost on 29 April 2011. PDSB has filed an appeal to the Court of Appeal which is pending hearing date. In relation to the third action, IRB filed an application for summary judgement which was allowed. PDSB filed an appeal to the Court of Appeal which was dismissed on 21 July 2011. As for the fourth action, IRB filed an application for summary judgement which was allowed. PDSB has filed an appeal to the Court of Appeal which is pending hearing date. PDSB’s application for a stay of execution was dismissed by the High Court. PDSB has filed an appeal against the stay to the Court of Appeal which is pending hearing date.

For accounting purposes, PDSB has provided for the income tax, inclusive of penalties, of RM32.5 million in respect of these pending litigations.


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33. Material litigations and claims (cont’d)

(iii) IRB filed 2 legal suits against Tashima Development Sdn Bhd (“Tashima”), for the recovery of income tax outstanding totalling RM6.4 million for assessment years 2000, 2001 and 2002 including penalties. In the first action, IRB has filed an application for summary judgement which was allowed on 4 January 2011. Tashima has filed an appeal to the Court of Appeal which is pending hearing date. In respect of the second action, the Court has allowed the plaintiff’s summary judgement application. Tashima has filed an appeal against the said decision which is pending fixture of date. Tashima’s application for stay of execution was dismissed on 17 June 2010 and it’s appeal in relation to the stay application has been dismissed as well.

For accounting purposes, Tashima has provided for the income tax, inclusive of penalties, of RM6.4 million in respect of these pending litigations.

(iv) IRB filed a legal suit against Sawitani Sdn Bhd (“Sawitani”) for a total amount of RM1.0 million. The claims are for real property gains tax outstanding for assessment year 2000. IRB has filed an application for summary judgement which was allowed on 27 September 2011. Sawitani will be filing an appeal to the Court of Appeal.

For accounting purposes, Sawitani has provided for the income tax, inclusive of penalties, of RM1.0 million in respect of this

pending litigation.

34. Segmental information

For management purposes, the Group is organised into business units based on their nature of business and has four reportable operating segments as follows:

Business segments Construction Property investment/management/development Network marketing Investment and others The above reportable segments mainly operate in Malaysia. Management monitors the operating results of its business units as well as relying on the segment information as disclosed

below for the purpose of making decision about resource allocation and performance assessment. The directors together with the management are of the opinion that all inter segment transactions have been entered into in

the normal course of business and have been established on terms and conditions that are not materially different from those obtainable in transactions with unrelated parties.


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ANNUAL REPORT 2011

34. Segmental information (cont’d)

Construction

Propertyinvestment/

management/development

Networkmarketing

Investmentand others Eliminations Consolidated

31 May 2011 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Revenue

Revenue from external customers 9,274 14,858 451 393 – 24,976

Inter-segment revenue – 754 – 2,549 (3,303) –

9,274 15,612 451 2,942 (3,303) 24,976

Results

Profit/(Loss) from operations before interest income 651 23,462 (1,927) (4,961) – 17,225

Interest income – – – 339 – 339

Profit/(Loss) from operations 651 23,462 (1,927) (4,622) – 17,564

Finance costs (4) (5,149) – (2,959) – (8,112)

Profit/(Loss) before tax 647 18,313 (1,927) (7,581) – 9,452

Income tax expense (12) (348) (586) (13) – (959)

Net profit/(loss) for the year 635 17,965 (2,513) (7,594) – 8,493

Minority interests – – – 267 – 267

Profit/(Loss) attributable to owners of the Company 635 17,965 (2,513) (7,327) – 8,760

Other informationSegment assets 4,957 397,525 1,066 10,808 – 414,356

Segment liabilities 4,000 226,302 1,229 49,452 – 280,983

Capital expenditure – 37 31 490 – 558

Depreciation 55 53 123 424 – 655

Non cash expenses other than depreciation

and amortisation 270 25,340 157 3,427 – 29,194Adjustments for financial

liabilities carried at amortised cost – (2,689) – – – (2,689)

Net amortisation of retention sum 69 – – – – 69Dividend income – – – (33) – (33)

Fair value adjustment on investment properties – (3,542) – – – (3,542)

Provision no longer required: - doubtful debts – (37,742) – (709) – (38,451)

- liquidated ascertained damaged – (2,054) – – – (2,054)Waiver of term loan liabilities – – – (1,328) – (1,328)


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34. Segmental information (cont’d)

Construction

Propertyinvestment/

management/development

Networkmarketing

Investmentand others Eliminations Consolidated

31 May 2010 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000RevenueRevenue from external customers 11,041 6,505 3,134 393 – 21,073Inter-segment revenue – – 5 4,116 (4,121) –

11,041 6,505 3,139 4,509 (4,121) 21,073ResultsProfit/(Loss) from

operations before interest income 761 (25,613) (1,463) (2,074) 6 (28,383)

Interest income – – – 339 – 339Profit/(Loss) from

operations 761 (25,613) (1,463) (1,735) 6 (28,044)Finance costs (13) (8,767) – (5,392) – (14,172)Share in profit of

associate – – – 826 – 826

Profit/(Loss) before tax 748 (34,380) (1,463) (6,301) 6 (41,390)Income tax expense (77) – – (1) – (78)Net profit/(loss) for the year 671 (34,380) (1,463) (6,302) 6 (41,468)Minority interests – – – 93 – 93Profit/(Loss) attributable

to owners of the Company 671 (34,380) (1,463) (6,209) 6 (41,375)

Other informationSegment assets 2,262 324,987 1,416 30,019 – 358,684Segment liabilities 3,998 148,288 1,706 84,461 – 238,453Capital expenditure – – 362 966 – 1,328Amortisation – – – 9 – 9Depreciation 81 55 197 1,191 – 1,524Non cash expenses other than depreciation

and amortisation 1,371 40,430 1,198 14,207 (8,349) 48,857Dividend income – – – (16) – (16)Provision no longer required: - doubtful debts – (5,270) – (1,832) – (7,102) - liquidated ascertained damages – (1,392) – – – (1,392) - contingencies in

respect of disposal of subsidiaries – – – (11,331) – (11,331)


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ANNUAL REPORT 2011

35. Event subsequent to the reporting date

Subsequent to the reporting date:

(a) the Group has disposed of its investment in quoted equity interest of 4,700,000 ordinary shares of RM0.50 each in Meda Inc Berhad (“MEDA”), a company in which certain directors have interests, for a total cash consideration of RM1,645,000 to the Group’s Executive Director, Dato’ Tiong Kwing Hee. The 4,700,000 ordinary shares disposed of represent approximately 1.05% of the total issued and paid-up capital of MEDA.

The financial effects arising from the transaction is immaterial to the Group.

(b) a subsidiary of the Group, Curah Bahagia Sdn Bhd had entered into a sale and purchase agreement to acquire a piece of freehold land for a total purchase consideration of RM6,601,518.

36. Financial instruments, financial risks and capital risk management

(a) Categories of financial instruments

The following table sets out the financial instruments as at the reporting date: Group Company

2011 2010 2011 2010RM’000 RM’000 RM’000 RM’000

Financial assetsAvailable-for-sale:- other financial assets 7,781 3,366 7,318 3,144Loans and receivables:- Amount due from subsidiaries – – 278,258 265,865- trade and other receivables

excluding prepayments 23,155 4,932 130 1,677- cash and bank balances 3,451 26,171 434 23,060

34,387 34,469 286,140 293,746Financial liabilitiesAmortised cost:- amount due to subsidiaries – – 170,306 172,397- borrowings 133,014 130,498 17,957 13,850- hire purchase liabilities 467 647 392 529- trade and other payables

excluding statutory liabilities 95,555 54,084 19,232 20,766229,036 185,229 207,887 207,542

(b) Financial risk management objectives and policies

The Group’s overall financial risk management programme seeks to minimise potential adverse effects on financial performance of the Group.

The Group does not hold or issue derivative financial instruments for speculative purposes.

There has been no change in the Group’s exposure to these financial risks or the manner in which it manages and measures the risk.

Interest rate risk management

The Group’s primary interest rate risk relates to interest bearing debts. The Group manages its interest rate exposure by maintaining a prudent mix of fixed and floating rate borrowings. The Group actively reviews its debt portfolio, taking into account the investment holding period and nature of its assets. The information on maturity dates and effective interest rates of financial liabilities are disclosed in their respective notes.


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36. Financial instruments, financial risks and capital risk management (cont’d)

(b) Financial risk management objectives and policies (cont’d)

Interest rate risk management (cont’d)

The sensitivity analysis below have been determined based on the exposure to interest rates for the banking facilities at the reporting date. A 50 basis point increase or decrease is used when reporting interest rate risk internally to key management personnel and represents management’s assessment of the reasonably possible change in interest rates.

If interest rates had been 50 basis points higher or lower and all other variables were held constant, the Group and Company’s profit/(loss) before tax would decrease/increase by RM665,000 (2010: RM652,000) and RM90,000 (2010: RM69,000) respectively.

Liquidity risk management

The Group and the Company maintains sufficient cash and bank balances, and internally generated cash flows to finance its activities. The Group and the Company finance their operations by a combination of equity and bank borrowings.

The following tables detail the remaining contractual maturity for non-derivative financial liabilities. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Group and the Company can be required to pay.

Liquidity risk

Group Contractual cash flows (including interest payments)

Carryingamount

Total Ondemand

or within1 year

Within 1 to2 years

Within 2 to5 years

More than5 years

2011 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000Non interest bearing debts 95,555 95,696 93,902 1,794 – –Interest bearing debts 133,014 158,132 28,370 61,231 20,742 47,789Hire purchase liabilities (fixed rate) 467 516 210 144 63 99

229,036 254,344 122,482 63,169 20,805 47,8882010Non interest bearing debts 54,084 54,084 54,084 – – –Interest bearing debts 130,498 142,106 53,413 22,749 64,944 1,000Hire purchase liabilities (fixed rate) 647 724 190 210 162 162

185,229 196,914 107,687 22,959 65,106 1,162

Company Contractual cash flows (including interest payments)

Carryingamount Total

Ondemand

or within1 year

Within 1 to2 years

Within 2 to5 years

More than5 years

2011 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Non interest bearing debts 189,538 189,538 189,538 – – –Interest bearing debts 17,957 24,012 – 1,733 13,106 9,173Hire purchase liabilities (fixed rate) 392 437 146 144 63 84

207,887 213,987 189,684 1,877 13,169 9,2572010Non interest bearing debts 193,163 193,163 193,163 – – –Interest bearing debts 13,850 14,196 10,350 3,257 589 –Hire purchase liabilities (fixed rate) 529 600 138 210 162 90

207,542 207,959 203,651 3,467 751 90


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ANNUAL REPORT 2011


(b) Financial risk management objectives and policies (cont’d)

Foreign exchange risk

Foreign exchange risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates.

The Group and the Company operate mainly in Malaysia and transact predominantly in Ringgit Malaysia (“RM”). As such, its exposure to foreign exchange risk is minimal other than the quoted equity instrument which is denominated in Hong Kong Dollar.

Market price risk

Market price risk is the risk that the fair value or future cash flows of the Group’s financial instruments will fluctuate because of changes in market prices (other than interest or exchange rates).

The Group and Company is exposed to equity price risk arising from its investment in quoted equity instruments. The quoted

equity instruments in Malaysia are listed on the Bursa Malaysia, whereas the quoted equity instrument outside Malaysia are substantially listed on Hong Kong Stock Exchange and are classified as available-for-sale financial assets.

Management of the Group monitors the equity instruments on a portfolio basis. Material instruments within the portfolio are managed on an individual basis and all buy and sell decisions are approved by the managing director of the Group.

A 5% changes in the Bursa Malaysia Index at the end of the reporting period with all other variables held constant would have impact the fair value adjustment reserve in equity and other comprehensive income of the Group and Company by RM280,000 and RM260,000 respectively. At reporting date, the impact of changes in 5% of Hang Seng Index, with all other variables held constant would have also impact the fair value adjustment reserve in equity and other comprehensive income of the Group and Company by RM47,000.

Credit risk management

The Group’s credit risk is primarily attributable to its trade and other receivables. Credit risks are managed by the application of credit approvals and amount due from related companies, limits and monitoring procedures. Credit risks are minimised and monitored via strictly limiting the Group’s associations to business partners with high creditworthiness. Trade receivables are monitored on an ongoing basis via the Group’s management reporting procedures. For other financial assets including cash and bank balances, the Group’s minimise credit risk by dealing exclusively with high credit rating counterparties. This represents the Group’s maximum exposure to credit risk. The Group’s performs ongoing credit evaluation of its customers and generally does not require collateral on account receivables. At reporting date, there were no significant concentrations of credit risk.

The Company provide unsecured financial guarantees to banks in respect of banking facilities granted to a subsidiary. The Company monitors on an ongoing basis the results of the subsidiary and repayments made by the subsidiary. The maximum exposure to credit risk amounts to RM116,745,000 (2010: RM115,647,000) representing the outstanding banking facilities of the subsidiary as at reporting date.

Fair values

The carrying amounts of cash and cash equivalents, receivables and payables, and other liabilities approximate their respective fair values due to the respectively short-term maturity of these financial instruments.

The fair values of the Groups’ other financial assets, borrowing and hire purchase liabilities approximate their carrying amount.

The fair values of financial assets and financial liabilities are determined with standard terms and conditions.


94



(c) Capital structure and equity

The Group’s objectives when managing capital is to maintain a strong capital base and safeguard the Group’s ability to continue as a going concern, so as to maintain investor, creditor and market confidence and to sustain future development of the business.

The Group manages its capital structure and makes adjustments to it in light of changes in economic conditions and the risk characteristics of the underlying assets. In order to maintain or adjust the capital structure, the group may adjust the amount of dividends paid to the shareholders, return capital to shareholders, issue new shares or sell assets to reduce debts.

The Group monitors capital using a gearing ratio, which is net debt (total borrowings less cash and cash equivalent) divided by total capital which comprises total equity plus net debt. The calculations of the Group’s and Company’s gearing ratios are as follows:

Group Company2011 2010 2011 2010

RM’000 RM’000 RM’000 RM’000Borrowings 133,481 131,145 18,349 14,379

Less: cash and cash equivalents (3,451) (26,171) (434) (23,060)

Net Debt 130,030 104,974 17,915 (8,681)

Total equity 133,373 120,231 122,073 124,563

Total capital 263,403 225,205 139,988 115,882

Gearing ratio 0.49 0.47 0.13 N/A

There were no changes in the Group’s approach to capital management during the financial year.

37. Supplementary information – breakdown of retained profits/accumulated losses into realised and unrealised

The breakdown of the retained profits/accumulated losses of the Group and of the Company as at 31 May 2011 into realised and unrealised is presented in accordance with the directive issued by Bursa Malaysia Securities Berhad dated 25 March 2010 and prepared in accordance with Guidance on Special Matter No.1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants.

Group Company2011 2011

RM’000 RM’000Total accumulated profits/(losses) of the Company and its subsidiaries

- Realised (562,140) (502,878)

- Unrealised (2,357) –

(564,497) (502,878)

Less: Consolidation adjustments 57,917 –

Accumulated losses as per financial statements (506,580) (502,878)


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ANNUAL REPORT 2011

pARTICULARS OF GROUP PROPeRtIes

The properties of the Group as at 31 May 2011 and their net book values (“NBV”) are indicated below:

Investment Properties

Sizes & Usage Title/ Location Company

Approximate Age of Building

(years)Lease Expiry

Date

Date of Acquisition/ Revaluation

NBVRM’000

1 91 sq. metres of office space

B-04-10, Perdana Selatan, Taman Serdang Perdana, (Seksyen 1) 43300 Seri Kembangan, Selangor Darul Ehsan

Pujian Development Sendirian Berhad

11 99-year lease expiring 09 Nov 2093

3.8.2006 130

2 150,417 sq. metres of com-mercial space

PN No. 7393, Lot No. 1, Pekan Serdang Daerah Petaling, Selangor

Pujian Development Sendirian Berhad


25.7.2011 277,377

3 55 sq. metres of commercial space


Opal Horizon Sdn Bhd


25.7.2011 268



Efex Trade & Exhibitions Sdn Bhd


25.7.2011 289



Ecofirst Development Sdn Bhd


25.7.2011 268



Ecofirst Laboratories Sdn Bhd


25.7.2011 289

7 7,291 sq. metres lease-hold land for commercial development

PTD 1468, Mukim Gemerah, Segamat, Johor.

Tashima Development Sdn Bhd

– 99-year lease Expiring 04 Jul 2100

5.7.2001

39,644

8 17,584 sq.metres Leasehold land for commercial development

PTB 1283, Bandar Segamat, Segamat, Johor.

– 99-year lease Expiring 04 Jul 2100

5.7.2001

318,265

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ANALYSIS OF shaRehOlDInGs

Statistical Report of Holders of Shares As At 30 September 2011 As per Record of Depositors (“ROD”)

Class of Securities : Ordinary shares of RM0.50 each (“Shares”)

Authorised Share Capital : RM1,000,000,000.00

Issued and fully paid-up : RM325,073,827.00share capital

Voting Rights : ShareholdersEvery member present in person or by proxy or represented by attorney shall have one vote and upon a poll, every such member shall have one vote for every share held.

No. of Shareholders : 27,758

ANALYSIS OF SHAREHOLDINGS AS AT 30 SEPTEMBER 2011

Range of Shareholdings Number of Shareholders

Number of Shares Percentage (%)

Less than 100 1,872 48,150 0.01100 – 1,000 4,718 4,252,954 0.651,001 – 10,000 16,086 72,583,272 11.1610,001 – 100,000 4,619 128,782,541 19.81100,001 – less than 5% of issued shares 463 444,480,737 68.375% and above of issued shares 0 0 0Total 27,758 650,147,654 100.00

LIST OF THIRTY LARGEST REGISTERED SHAREHOLDERS AS AT 30 SEPTEMBER 2011 AS PER ROD

Name of Shareholders Number of Shares Percentage

1. Teoh Seng Aun 27,790,000 4.27

2. Wawasan Fokus Sdn Bhd 26,648,700 4.10

3. Amsec Nominees (Tempatan) Sdn BhdPledged Securities Account For One Sierra Sdn Bhd 24,011,300 3.69

4. Purewise Sdn. Bhd. 20,338,700 3.13

5. Kenanga Nominees (Tempatan) Sdn BhdPledged Securities Account For Teoh Seng Kian 19,042,500 2.93

6. RHB Capital Nominees (Tempatan) Sdn BhdPledged Securities Account For Teoh Seng Aun (STG) 18,804,466 2.89

7. Teoh Seng Kian 18,027,100 2.77

8. RHB Capital Nominees (Tempatan) Sdn BhdPledged Securities Account For Teoh Seng Kian (DHG) 16,951,432` 2.61

9. Malacca Equity Nominees (Tempatan) Sdn BhdPledged Securities Account For Teoh Seng Aun 16,700,000 2.57

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ANNUAL REPORT 2011

ANALYSIS OF shaRehOlDInGs (ConT’d)

LIST OF THIRTY LARGEST REGISTERED SHAREHOLDERS AS AT 30 SEPTEMBER 2011 AS PER ROD (cont’d)

Name of Shareholders Number of Shares Percentage (%)

10. Malacca Equity Nominees (Tempatan) Sdn BhdPledged Securities Account For Teoh Seng Kian 16,700,000 2.57

11. Energy Junction Sdn. Bhd. 8,732,000 1.34

12. EB Nominees (Tempatan) Sendirian BerhadPledged Securities Account For Teoh Seng Kian (SFC) 8,384,600 1.29

13. Soh Chin Loong 8,000,000 1.23

14. RHB Capital Nominees (Tempatan) Sdn BhdPledged Securities Account For Tiong Kwing Hee (DHG) 7,403,100 1.14

15. Alliancegroup Nominees (Tempatan) Sdn BhdPledged Securities Account For Tiong Kwing Hee (8068389) 6,683,100 1.03

16. M. I. T Nominees (Tempatan) Sdn BhdPledged Securities Account For Teoh Seng Foo (MG0176-182) 6,525,000 1.00

17. M. I. T Nominees (Tempatan) Sdn BhdPledged Securities Account For LT Travel & Tours (M) Sdn. Bhd. (MG0226-181) 6,430,000 0.99

18. EB Nominees (Tempatan) Sendirian BerhadPledged Securities Account For Tan Kim Seng (SFC) 5,842,000 0.90

19. RHB Capital Nominees (Tempatan) Sdn BhdPledged Securities Account For Wong Fon Ying (CEB) 5,237,000 0.81

20. Malacca Equity Nominees (Tempatan) Sdn BhdPledged Securities Account For Teoh Seng Foo 4,665,500 0.72

21. Affin Nominees (Tempatan) Sdn BhdPledged Securities Account For Chung Kin Chuan (CHU0226C) 4,000,300 0.62

22. Kenanga Nominees (Tempatan) Sdn BhdAmara Investment Management Sdn Bhd For Teoh Seng Foo 3,982,999 0.61

23. M. I. T Nominees (Tempatan) Sdn BhdPledged Securities Account For Teoh Seng Aun (MG0177-182) 3,715,000` 0.57

24. RHB Capital Nominees (Tempatan) Sdn BhdPledged Securities Account For Liew Lee Chin (CEB) 3,500,000 0.54

25. EB Nominees (Tempatan) Sendirian BerhadPledged Securities Account For Teoh Seng Aun (SFC) 3,271,000 0.50

26. Cheam Shaw Fin 3,000,000 0.46

27. Kenanga Nominees (Tempatan) Sdn BhdAmara Investment Management Sdn Bhd For Teoh Seng Kian 2,908,100 0.45

28. Mah Toe Hiong 2,859,300 0.44

29. SJ Sec Nominees (Tempatan) Sdn BhdPledged Securities Account For Wawasan Fokus Sdn Bhd (SMT) 2,714,200 0.42

30. Soh Shuh Yih 2,613,500 0.40

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ANALYSIS OF shaRehOlDInGs (ConT’d)

SUBSTANTIAL SHAREHOLDERS’ SHAREHOLDINGS AS AT 30 SEPTEMBER 2011(based on the Register of Substantial Shareholders’ Shareholdings)

Name of Substantial shareholders

No. of Shares Held

Direct Interest (%) Indirect Interest (%)

Teoh Seng Kian 80,902,632 (12.44) – –

Teoh Seng Aun 70,280,554 (10.81) – –

Purewise Sdn Bhd 48,104,300 (7.40) – –

DIRECTORS’ SHAREHOLDINGS (IN THE COMPANY) AS AT 30 SEPTEMBER 2011(based on the Register of Directors’ Shareholdings)

Name of Directors

No. of Shares Held

Direct Interest (%) Indirect Interest (%)

Dato’ Syed Ariff Fadzillah bin Syed Awalluddin – – – –

Dato’ (Dr.) Teoh Seng Foo 11,190,500 (1.72) – –

Dato’ Tiong Kwing Hee 15,355,200 (2.36) – –

Amos Siew Boon Yeong – – – –

Dato’ Boey Chin Gan – – – –

Lim Een Hong – – – –

Teoh Seng Kian (Alternate Director to Dato’ (Dr.) Teoh Seng Foo)

80,902,632 (12.44) – –

Others**

Dato’ (Dr.) Teoh Seng Foo’s spouse 3,000,000 (0.46) – –

Teoh Seng Kian’s spouse 2,495,300 (0.38) – –

Notes:** Disclosure of direct interest held by their spouses, pursuant to Section 134(12)(c) of the Companies Act, 1965

FORM OF PROXY

Number of shares held

(Company No. 15379-V) Central Depository System Account No.

I/We ___________________________________________________________ NRIC/Company No. _________________________ (FULL nAME In BLoCK LETTERS)

of _______________________________________________________________________________________________________ (AddRESS)

being a member of ECOFIRST CONSOLIDATED BHD, hereby appoint ___________________________________________________

__________________________________of______________________________________________________________________ (FULL nAME In BLoCK LETTERS) (AddRESS)

or failing him/her, the CHAIRMAN OF THE MEETING* as my/our proxy to attend and vote for me/us on my/our behalf at the Thirty-Eighth Annual General Meeting of the Company to be held at Ballroom 1, Level 5, The Summit Hotel, Subang USJ, Persiaran Kewajipan, USJ 1, 47600 UEP Subang Jaya, Selangor Darul Ehsan on Thursday, 24 November 2011 at 10.00 a.m. or at any adjournment thereof.

* please delete if you do not wish to have this option in the absence of your proxy.

NO RESOLUTIONS FOR AGAINST

ORDINARY BUSINESS

1. Approval of Directors’ Fees

2. Re-election of Dato’ Syed Ariff Fadzillah Bin Syed Awalluddin as Director

3. Re-election of Dato’ Tiong Kwing Hee as Director

4. Re-appointment of Messrs Russell Bedford LC & Company as Auditors and to authorise the Directors to fix their remuneration

SPECIAL BUSINESS

5. Authority for Directors to issue shares

Please indicate with “X” in the space provided how you wish your proxy to vote. If no specific direction as to voting is given, the proxy will vote or abstain from voting at his/her discretion.

Dated this ………….day of …………………………2011 ………………………………………………………

Signature of Shareholder / Common SealNotes:

(i) A member entitled to attend and vote at the meeting is entitled to appoint not more than one (1) proxy to attend and vote in his stead. A proxy need not be a member of the Company and Section 149(1) of the Companies Act, 1965 shall not apply.

(ii) Where a member of the Company is an authorised nominee as defined under the Securities Industry (Central Depositories) Act 1991, it may appoint at least one (1) proxy in respect of each securities account it holds with ordinary shares of the Company standing to the credit of the said securities account.

(iii) The instrument appointing a proxy shall be in writing under the hand of the appointer or of his attorney duly authorised in writing or if the appointer is a corporation, either under seal or under the hand of an officer or attorney duly authorised.

(iv) The original instrument appointing a proxy and the power of attorney or other authority, if any, under which it is signed or a notarially certified copy of that power or authority shall be deposited at the Registered Office of the Company at Suite 11.1A, Level 11, Menara Weld, 76 Jalan Raja Chulan, 50200 Kuala Lumpur not less than forty-eight (48) hours before the time for holding the meeting or adjourned meeting.

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The Company SecretaryECOFIRST CONSOLIDATED BHD (15379-V) Suite 11.1A, Level 11, Menara Weld 76 Jalan Raja Chulan50200 Kuala LumpurMalaysia

Documents

02 - malaysiastock.biz file02 Notice of Annual General Meeting 03 Statement Accompanying Notice of Annual General Meeting 04 Corporate Information 06 Chairman’s Statement