PROGRESSING WITH THE NATION - Malaysiastock.biz DIRECTORS’ BIODATA ... Dato’ Abdul Majit bin...

Annual Report 2014

CORPORATE OFFICE:

8th floor, Menara Zecon,No. 92 Lot 393 Section 5 KTLD,Jalan Satok 93400 Kuching, Sarawak, Malaysia.

Tel : +6082-275555Fax : +6082-275500Email : [email protected]

ZECON BERHAD (134463-X)

KUALA LUMPUR OFFICE:

Suite 2A-11-2, Level 11, Block 2APlaza Sentral, Jalan Stesen Sentral 5,Kuala Lumpur Sentral50470 Kuala Lumpur, Malaysia.

Tel : +603-22723118Fax : +603-22743656

ZECON

BER

HA

D (134463-X)

ANN

UAL REPORT 2014

PROGRESSING WITH THE NATION

Revenue (RM’ million)

157

08 09 10 11 13 14

143

170

152

237

209

Shareholder Equity (RM’ million)

173

08 09 10 11 13 14

179

144

146

107 77

Profit Before Tax (RM’ million)

Earning Per Share (sen)

4.8

0.9

08 09 10 11 13 14 08 09 10 11 13 14

6.4

4.9

6.4

1.5

1.1

1.1

(19.

3)

(20.

7)

(4.5

)

(16.

7)

Total Assets (RM’ million)

478

08 09 10 11 13 14

495

419

405

365

341

Net Asset Per Share (RM)

1.45

08 09 10 11 13 14

1.50

1.25

1.26

0.90

0.65

VISIONTo be a world class corporation providing excellent engineering and construction services.

MISSIONWe will deliver excellent engineering and construction services which meet our customers’ requirements through good corporate governance practices and superior technologies. We also strive to have an efficient, dedicated and trained workforce to serve our customers.

Financial Highlights

FINANCIAL HIGHLIGHTS

CORPORATE

CORPORATE INFORMATION ..................................................................................................................................................... 02

CORPORATE STRUCTURE .......................................................................................................................................................... 03

CHAIRMAN’S STATEMENT ......................................................................................................................................................... 04

GROUP MANAGING DIRECTOR’S REVIEW ........................................................................................................................... 06

BOARD OF DIRECTORS .............................................................................................................................................................. 08

DIRECTORS’ BIODATA ................................................................................................................................................................. 10

GOVERNANCE

CORPORATE GOVERNANCE STATEMENT ............................................................................................................................. 19

STATEMENT ON RISK MANAGEMENT & INTERNAL CONTROL ..................................................................................... 27

REPORT OF AUDIT COMMITTEE ............................................................................................................................................. 29

ADDITIONAL DISCLOSURES ..................................................................................................................................................... 32

CORPORATE SOCIAL RESPONSIBILITY ACTIVITIES ........................................................................................................... 34

ZECON’S PROJECTS .................................................................................................................................................................. 35

FINANCIAL REPORTS

FINANCIAL STATEMENTS........................................................................................................................................................... 37

ADDITIONAL INFORMATION

ANALYSIS OF SHAREHOLDINGS ...........................................................................................................................................142

ANALYSIS OF WARRANT HOLDINGS ..................................................................................................................................145

LIST OF PROPERTIES .................................................................................................................................................................148

ANNUAL GENERAL MEETING

NOTICE OF ANNUAL GENERAL MEETING ..........................................................................................................................150

PROXY FORM

CONTENTS

01ZECON BERHADAnnual Report 2014

BOARD OF DIRECTORS

Tan Sri Datuk Amar (Dr.) Tommy Bin Bugo @ Hamid Bin BugoIndependent Non-Executive Chairman

Datuk Dr. Haji Yusof @ Josree bin Haji YacobDeputy Independent Non-Executive Chairman

Datuk Haji Zainal Abidin bin Haji AhmadGroup Managing Director

Haji Zainurin bin Haji AhmadDeputy Managing Director

Poh Lik Gan @ Poh Li ThongIndependent and Non-Executive Director

Dato’ Abdul Majit bin Ahmad KhanIndependent and Non-Executive Director

Richard Kiew Jiat FongIndependent and Non-Executive Director

Datuk Haji Bolhassan bin Di @ Ahmad bin DiNon Independent and Non-Executive Director

AUDIT COMMITTEE

Poh Lik Gan @ Poh Li ThongChairman

Dato’ Abdul Majit bin Ahmad KhanRichard Kiew Jiat Fong

RISK MANAGEMENT COMMITTEE

Tan Sri Datuk Amar (Dr.) Tommy Bin Bugo @ Hamid Bin BugoChairman

Dato’ Abdul Majit bin Ahmad KhanHaji Zainurin bin Haji Ahmad

REMUNERATION & NOMINATION COMMITTEE

Datuk Dr. Haji Yusof @ Josree bin Haji YacobChairman

Tan Sri Datuk Amar (Dr.) Tommy Bin Bugo @ Hamid Bin BugoPoh Lik Gan @ Poh Li Thong

COMPANY SECRETARIES

Koh Fee Lee (MAICSA 7019845)

Lim Poh Yen (MAICSA 7009745)

AUDITORS

Messrs Ernst & YoungRoom 300-303, 3rd FloorWisma Bukit Mata KuchingJalan Tunku Abdul Rahman93100 Kuching, Sarawak.Tel : 082 243 233Fax : 082 421 287

SHARE REGISTRAR

Symphony Share Registration Services Sdn Bhd (506293-D)Level 26, Menara Multi Purpose, Capital SquareNo. 8, Jalan Munshi Abdullah50100 Kuala Lumpur.Tel : 03 2721 2222Fax : 03 2721 2530

PRINCIPAL BANKERS

Affin Investment Bank BerhadBank Kerjasama Rakyat Malaysia

BerhadKuwait Finance House (Malaysia)

BerhadBank Muamalat Malaysia BerhadMalayan Banking Berhad

SOLICITORS

Reddi & Co. AdvocatesAlbar & PartnersZul Rafique & PartnersAzmi & AssociatesMary Bolhassan, Noreda Ahmad & Co

STOCK EXCHANGE LISTING

Bursa Malaysia Securities Berhad, Main MarketStock Code : 7028Stock Name : ZECON

REGISTERED OFFICE

8th Floor, Menara Zecon, No. 92 Lot 393, Section 5 KTLD, Jalan Satok93400 Kuching, Sarawak.Tel : 082 275 555Fax : 082 275 500E-mail : [email protected] : www.zecon.com.my

BRANCH OFFICE

Suite 2A-11-2, Level 11, Block 2A, Plaza Sentral, Jalan Stesen Sentral 5KL Sentral, 50470 Kuala Lumpur.Tel : 03 2272 3118Fax : 03 2274 3656E-mail : [email protected]

CORPORATE INFORMATION

02 ZECON BERHAD Annual Report 2014

CORPORATE STRUCTURE

100% Zecon Toll Concessionaire Sdn Bhd

100% Zecon Water Corporation Sdn Bhd

100% Zecon Land Sdn Bhd

100% Zecon Geotechnical Services Sdn Bhd

100% Zecon Assets Sdn Bhd

100% Zecon Construction (Sarawak) Sdn Bhd

100% Zecon Mutiara Sdn Bhd

100% Zecon International Limited

100% Zecon Medicare Sdn Bhd

100% Zecon Designtech Sdn Bhd

100% Zecon Piling Sdn Bhd

100% Zecon Engineering & Construction Sdn Bhd

100% Matang Highway Sdn Bhd

100% Zecon MidEast Ltd

100% Zecon (Saudi Arabia) International Ltd

100% Demak Concessionaires Sdn Bhd

100% Permata Facilities Management Sdn Bhd

100% Zecon Australia Pty Ltd

96% Zecon Resources Sdn Bhd

70% Zecon Dredging Sdn Bhd

55% Teknik PS Sdn Bhd

51% Zecon Energy Sdn Bhd

51% Zecon Fab Sdn Bhd

51% Zecon Construction Sdn Bhd

35% L.C.S Trading Co. Sdn Bhd

81.62% Zecon Demak Jaya Sdn Bhd

55.44% Zecon Petra Jaya Sdn Bhd

100% IR Concept (M) Sdn Bhd

100% ZPM Satu Sdn Bhd

100% Zalpoint Tanah Putih Sdn Bhd

100% Agrowell Quarry Sdn Bhd

50.10% Sarmax Sdn Bhd

100% TPS Medicare Sdn Bhd

51% Zecon Well Services Sdn Bhd

100% Creative Venture Sdn Bhd

Subsidiary Companies

Associate Companies

B E R H A D


CHAIRMAN’SSTATEMENT

GROUP’S FINANCIAL HIGHLIGHTS

The Group recorded RM208.59 million in revenue during the 12 months financial period, as compared to previous 18 months financial period of RM237.82 million. However, if based on 12 months annualised revenue of RM158.55 million, the Group’s revenue has increased significantly due to the sales of land and final recognition of revenue for Matang Revised Route and the Faculty of Medical & Health Science (FMHS) and Institute of Health & Community Medicine (IHCM) of University Malaysia Sarawak (UNIMAS) projects that was in their final stage of completion in this financial period.

The Group recorded loss after taxation of RM14.87 million due to higher taxation of RM10.39 million arising from the sale of land, deferred tax asset and operational business tax, additional cost incurred in projects and impairment of asset.

ECONOMIC OUTLOOK

The Malaysian economy is expected to remain on a steady growth path in 2014 expanding by 4.5 – 5.5% as compared to 4.7% in previous year. The growth momentum will be supported by better performance in the external sector amid some moderation in domestic demand. The construction sector is expected to grow at a more moderate pace in 2014.


CHAIRMAN’S STATEMENT (CONT’D)

GROUP’S PROSPECTS

For 2015, the Malaysian economy is expected to grow at 5 – 6 %. This steady growth will provide a solid platform for the commencement of 11th Malaysia Plan in May 2015. As an emerging economy, investments in infrastructure development will continue to be the bedrock of our economy. We envisage that the construction and housing sectors will be boosted as the government is trying its best to provide affordable housing for certain segments of the population.

Our group is expected to secure a sizable construction contracts with our sale of land to Perumahan Rakyat 1 Malaysia (PR1MA) recently. This proposed project would boost the turnover of our construction division in the near future. We will continue to propose new projects to be developed within our land bank especially through strategic alliance with reputable developers in Malaysia. This will complement our normal business development activities including participating in new tenders and submitting proposals to relevant clients.

HEALTHY, SAFETY AND ENVIRONMENT (HSE)

The key guiding principles that we always hold to in meeting our corporate goals are the safety of our people, the well-being of the environment that we operate in as well as the safe operational condition of our assets. Recognising the importance of HSE at our work places, the Company has incorporated the Occupational Health and Safety Assessment Series (OHSAS 18001) and Environmental Management System (EMS 14001) elements in its existing management system and currently is in the midst of getting certification for both to complement our current Quality Management System that was already certified to ISO 9001:2008.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

As a responsible corporate citizen, we recognise that we have an underlying duty to commit to social causes through continuous and sustained investment of our CSR initiatives. We have embedded the principles of CSR in our day to day operations, putting sustainable and ethical ways of doing business. It is important to our employees to work with a socially responsible organisation and our approach therefore reflects our people.

Zecon’s Achievement Awards was introduced in March 2014 where awards were given to 7 children of the staff of the Company who scored remarkable results in Public Examinations. Monetary tokens were given to straight A’s students to recognize their hard work and also to motivate them to strive for excellence. Zecon’s Excellence Award

for the best students from the Faculty of Engineering, UNIMAS has been a yearly affair for the Company for the past 10 years.

OUR PEOPLE

The success of our Company depends on recruiting, nurturing and retaining the best talents. It is pivotal to build a competent workforce that can excel in a complex, rapidly changing environment. This belief is deeply embedded within the organization where top management and staff are seen as the Company’s biggest source of success, growth and most important asset of all. The Group invest in its people in term of training and development to ensure their continuous growth and advancement. The Company is fully committed in developing capable and competent employees. Its annual training budget has been increased and several trainings have been carried out for this purpose.

Recently, the Company decided to increase its Employee Provident Fund (EPF) employer’s contribution as much as 15 – 20% for staff who has been in service with the company for more than 10 years as a show of appreciation for their loyalty and hard work and at the same time maintain the talented pool of staff in the Company.

While we encourage our people to work hard as an important element of our success, we also ensure that it is balanced with social and recreational activities. As in the last 4 years, a bowling tournament was organised again this year and this tournament will be our annual activity since most of the staff enjoyed it.

APPRECIATION

On behalf of the Board, I would like to extend my heartfelt gratitude to our management and staff for their hard work, commitment and dedication to achieve the objectives of the Group. Our appreciation also goes to our business partners for their continued support. To my fellow Board members who have been instrumental in providing guidance and valuable insights to the management throughout the year, I thank you very much. To our shareholders and customers, we thank you for your confidence and support. We have built our business with you in mind and will continue adding value for shareholders and customers alike.

Thank you. Tan Sri Datuk Amar (Dr.) Hamid Bin BugoChairman


GROUP MANAGING DIRECTOR’S STATEMENT

GROUP MANAGING DIRECTOR’S REVIEW

INTRODUCTION

In this Financial Year of July 2013 – June 2014, we continued to focus on achieving our corporate vision, i.e. to be a leading construction and engineering company. Our vision has and will continue to keep us on track as we steer our business and operations steadily amidst the unpredictable economic situation worldwide.

The net loss after tax amounting to RM14.87 million posted in this financial year was mainly due to higher taxation arising from the sale of land and increased cost of operations. This will not affect our plan for the future as the Group remains committed in its strategy of staying focused in its core competencies by continuing to improve our position in the construction and engineering in the public as well as the private sectors and diversifying earnings through new property development through potential business ventures with established property developers in Malaysia to develop our land bank. We

believe our strategy will sustain Zecon’s business growth in the property development sector.

OPERATIONAL REVIEW

Construction The physical commencement of several construction projects such as the Proposed Supermall at Vista Tunku costing RM155 mil l ion and the RM495 million 300 beds Proposed Hospital Petra Jaya (HPJ) Project in Kuching, and the construction of the Proposed 10 Storey Commercial Building at Taman Melawati for Sime Darby Melawati Development Sdn Bhd costing RM82.9 million in Kuala Lumpur has contributed to the

group’s turnover during this financial year.


The construction of the Proposed Supermall at Vista Tunku is on-going and is expected to be completed in mid-2015 whereas the works at the Proposed Melawati Commercial Project should be completed in mid-2016. Construction activities at the HPJ project site is gaining momentum with foundation works completed. We are expected to complete the Proposed HPJ project in November 2016.

In the next financial year, we will commence the construction of our Proposed Children Specialist Hospital for Universiti Kebangsaan Malaysia undertaken as a Public-Private-Partnership (PPP) project. This project valued at RM606 million will be completed in 54 months from its commencement date duly approved by the government.

We will also achieved full completion of several projects such as the construction of Sungai Triang Dam and its associated works in Negeri Sembilan, the Faculty of Medicine & Health Science and Institute of Health & Community Medicine of University Malaysia Sarawak in Kuching, the Bintulu Compressor Station for Sabah-Sarawak Gas Pipeline Project, the final component of Matang Highway Revised Route Project and the Construction and Completion of 12 MLD Water Treatment Plant and its Associated Works in Kapit in the next financial year.

Toll ConcessionThe Tun Salahuddin Toll Bridge Concession continue to perform consistently with improved collection over the years as traffic volume hit a daily average of 30,000 vehicles using the Toll Bridge. The general maintenance of the roads and bridge within the toll concession areas has been carried out in a systematic manner since its opening in 2003.

Property DevelopmentThe commercial properties in Phase 1 and the double storey terraced houses in Phase 2 of our Vista Tunku Development in Petra Jaya are nearing completion pending issuance of its occupation permit from the relevant council. With the expected completion of the proposed Supermall project in 2015 and the commencement of new development soon, we envisage Vista Tunku will become a new residential and commercial hub in Petra Jaya, Kuching. We are also exploring to partner with property developer to develop our land bank at Petra Indah in Petra Jaya, Kuching into a new township in the near future.

FUTURE PROSPECTS

Our focus will continue to be on our traditional engineering and construction business as we build on our track records and expertise as an established engineering contractor. The Company is actively seeking for new projects and shall remain committed to exploring and evaluating opportunities to develop our business through joint ventures and/or strategic alliances that could complement our business.

Currently, we are collaborating with international companies such as Hyundai Engineering Co., Ltd and Posco Engineering of South Korea and PT Wijaya Karya (Persero) Tbk. of Indonesia in our current projects. The Management is also evaluating opportunities to establish strategic alliance with property corporations in Malaysia and hope to achieve success in the near future.

The construction of the Proposed Children Specialist Hospital for Universiti Kebangsaan Malaysia commencing in the next financial year with a 30 years concession period will provide a steady long term earning base for the group once completed and operational in 2017.

ACKNOWLEDGMENTS

On behalf of the Board, I would like to express my sincere appreciation to our shareholders, government bodies, clients, business associates and suppliers for their support over the past decades. Our whole-hearted thanks also go to the management team and staff for their commitment, hard work and efforts.

I would also like to acknowledge the contributions from our Board of Directors. They have provided wise counsel and direction to the Group from their vast experience and expertise, which we are privileged to have.

We are grateful to all of you who have keenly supported Zecon and contributed towards achieving its vision. Looking ahead, we will continue to work diligently to sustain the company’s growth and are indeed inspired by our future prospects.

Thank you.


GROUP MANAGING DIRECTOR’S REVIEW (CONT’D)


BOARDOF

DIRECTORS


Sitting: left to right

Datuk Haji Bolhassan bin Di @ Ahmad bin DiNon Independent and Non-Executive Director

Datuk Dr. Haji Yusof @ Josree bin Haji YacobDeputy Independent Non-Executive Chairman

Tan Sri Datuk Amar (Dr.) Tommy Bin Bugo @ Hamid Bin BugoIndependent Non-Executive Chairman


Poh Lik Gan @ Poh Li ThongIndependent and Non-Executive Director

Standing: left to right

Richard Kiew Jiat FongIndependent and Non-Executive Director

Dato’ Abdul Majit bin Ahmad KhanIndependent and Non-Executive Director

Haji Zainurin bin Haji AhmadDeputy Managing Director

BOARD OF DIRECTORS (CONT’D)


DIRECTORS’ BIODATA

Name of Director : Tan Sri Datuk Amar (Dr.) Tommy Bin Bugo @ Hamid Bin Bugo

Age : 69

Nationality : Malaysian

Qualification : • HonouredwithaPh.D.(inCommerce)byLincolnUniversity,NewZealand

• B.A.(Economics)M.A.(Economics)UniversityofCanterbury,NewZealand.

• PostgraduateDiplomainTeaching,ChristchurchTeacher’sCollege,New Zealand.

• PostgraduateCertificateinBusinessStudiesfromHarvardInstituteof Development Studies, Boston, USA.

Position held : Independent Non-Executive Chairman

Working experience & occupation

: Tan Sri Hamid was appointed to the Board on 2 August 2010. He has served in the public sector, holding various distinguished positions culminating in his appointment as State Secretary of Sarawak in the year 1991. He retired in the year 2000, and since then has held positions as Chairman and Director of several esteemed organisations. He is the Chairman of Yayasan Kemajuan Insan Sarawak (YAKIN), and Chairman of State Library Sarawak. Besides that, he is a council member of the Institute of Integrity Malaysia and National Water Resource Council and also a member of the Malaysian Anti-Corruption Commission Advisory Committee.

He was the recipient of an Excellence Award from the American Association of Conservation Biology.

Details of any board committee to which he belongs

: • ChairmanofRiskManagementCommittee• MemberofRemuneration&NominationCommittee

Other directorships in public companies

: • SimeDarbyBerhad• SapuraKencanaPetroleumBerhad• SapuraResourcesBerhad• SarawakConsolidatedIndustriesBerhad

Securities holdings in the Company and its subsidiaries

: Name Direct Indirect

Zecon Berhad

No. of shares % No. of

shares %

4,514,200 3.79 – –

Relationship with directors : None

Relationship with substantial shareholders

: None

Conflict of interest : None

List of convictions for offences within the past 10 years other than traffic offences

: None

No. of board meetings attended in the financial year

: 7/8


DIRECTORS’ BIODATA (CONT’D)

Name of Director : Datuk Dr. Haji Yusof @ Josree bin Haji Yacob

Age : 58


Qualification : • DegreeinDoctorofMedicine(MD),UKM-1981.• Master of Science in PublicHealth (MScPH),NUS (Singapore) –

1985.Position held : Deputy Independent Non-Executive Chairman


: Datuk Dr. Yusof was appointed to the Board of Directors of the Company on 09 June 2008. He started his career in 1981 by joining Kuala Lumpur General Hospital as Medical Officer. He was in medical field for nine (9) years until he joined political sector in 1990.

During his political arena, he held various positions within the United Malays National Organisation (UMNO) and Barisan Nasional Division Sabah. From 1991-1999, he was appointed the Head of UMNO in Sipitang Division. He was elected as Member of Parliament of Sipitang, Sabah in 1996 and Dewan Rakyat Deputy Speaker till February 2008. From 2006-2008, he was appointed as member of Executive Central Committee of Commonwealth Parliamentarian Association.

He was the Chairman of Bank Kerjasama Rakyat Malaysia Berhad from 1994-2000, Saham Sabah Berhad, Sabah Medical Centre and Sedcovest Holdings Sdn Bhd till 2004. Besides, he was also appointed to the Board of other private limited companies and charitable organizations. He is currently sitting in the Board of Sutera Harbour Golf and Country Club Berhad, Chairman of Afie Enterprise Sdn Bhd and Ahli Majlis Amanah Rakyat.


: Chairman of Remuneration & Nomination Committee


: None


: None



: None



: None


: 7/8


Name of Director : Datuk Haji Zainal Abidin bin Haji Ahmad

Age : 56


Qualification : • MasterofArtsdegreeinManagementfromtheUniversityofKentat Canterbury, England.

• UniversityDiplomainAccountingfromtheUniversityofKentatCanterbury, England.

• BachelorofArtsfromUniversityKebangsaanMalaysia.

Position held : Group Managing Director


: Datuk Zainal was appointed to the Board of Zecon on 28 July 1994 as Director and subsequently as Executive Chairman on 30 November 1996. On 24 April 2001, he was appointed the Group Managing Director/Chief Executive Officer. He started his career by joining the Sarawak Civil Service in 1981 until he moved to private sector in 1987. Under his leadership, Zecon Group has undertaken dynamic diversification in recent years and has even positioned itself for international ventures.


: None


: Nil



Zecon Berhad Sarmax Sdn Bhd Teknik PS Sdn Bhd Zecon Construction Sdn Bhd


shares %

3,655,200 30,000 34,000

49

3.07 30.0 14.2 49.0

65,689,475 – – –

55.15 – – –

Relationship with directors : Brother to Haji Zainurin bin Haji Ahmad Relationship with substantial shareholders

: Director and major shareholder of Dawla Capital Sdn Bhd

Conflict of interest : No conflict of interest apart for the related party transactions, which have been disclosed in the Notes to the Accounts.


: None


: 7/8



Name of Director : Haji Zainurin bin Haji Ahmad

Age : 53


Qualification : • Master of Commerce Degree in Business Administration fromUniversity of Canterbury, Christchurch, New Zealand.

• B Sc. in Business Administration from Indiana Institute ofTechnology, Indiana, USA.

• DiplomainBusinessStudiesfromUniversitiTeknologiMARA.

Position held : Deputy Managing Director


: Haji Zainurin was appointed to the Board on 12 June 1998 as a Director and subsequently as Executive Director on 16 April 1999. He was appointed as Deputy Managing Director on 1 June 2008. Prior to joining Zecon, he spent 13 years in financial and commercial sectors where his last position was the General Manager of Advance Finance Berhad.


: Member of Risk Management Committee


: None



Zecon Berhad

No. of shares

% No. of shares

%

525,000 0.44 – –Relationship with directors : Brother to Datuk Haji Zainal Abidin bin Haji Ahmad


: None

Conflict of interest : No conflict of interest apart for the related party transactions, which have been disclosed in the Notes to the Accounts.


: None


: 8/8



Name of Director : Poh Lik Gan @ Poh Li Thong

Age : 69


Qualification : • B.Sc in Quantity Surveying from Reading University, London in1969.

• Diploma in Quantity Surveying from College Of EstateManagement, London in 1968.

• FellowoftheRoyalInstitutionofCharteredSurveyors.• FellowofTheInstitutionofSurveyorsMalaysia.

Position held : Independent Non-Executive Director


: Appointed to the Board of Directors of the Company on 25 October 2004. He began his career as an Assistant Quantity Surveyor with Philip Pank & Partners (“PP&P”), London in 1968. From 1969 to 1973, he was with Jabatan Kerja Raya, Sarawak in Kuching Division. Subsequently, he started Contract Services Consultants and retired in 1988 as a Senior Partner. He is currently the Project Director of Jurudaya Construction Sdn Bhd, a post which he held since 1989.


: • ChairmanofAuditCommittee• MemberofRemuneration&NominationCommittee


: None



Zecon Berhad


shares %

40,000 0.04 – –Relationship with directors : None


: None



: None


: 7/8



Name of Director : Dato’ Abdul Majit Bin Ahmad Khan

Age : 68


Qualification : • BachelorofEconomics(Hons)fromUniversityofMalaya



: Appointed to the Board of Directors of the Company on 16 May 2007. He had served in the Prime Minister’s Department and the Ministry of Foreign Affairs as well as in several mission abroad and senior position in the Ministry of Foreign Affairs for thirty-four years.

He was also the Under Secretary of West Asia and the Organisation of Islamic Cooperation (OIC) and has participated in several Ministerial and Prime Ministerial visits to West Asian Countries and OIC Meetings.

He was also a Director General of Association of Southeast Asian Nations (ASEAN) and he actively participated in the organization of the 30th ASEAN Ministerial Meeting held in Kuala Lumpur as well as the ASEAN Head of Summit and the 10+3 Summit Meetings in Malaysia.

In 1998, he was appointed as the Ambassador of Malaysia to the People’s Republic of China and concurrently accredited to the Democratic People’s Republic of Korea until his retirement on 2 January 2005.

He is currently the President of the Malaysia-China Friendship Association (PPMC), Exco Member of the Malaysia-China Business Council.


: None


: • HongLeongIslamicBank• HLAssetHLGUnitTrustBerhad• OSKHoldingsBerhad• VTIVintageBerhad


: None



: None



: None


: 8/8




Name of Director : Richard Kiew Jiat Fong

Age : 60


Qualification : • AmemberofTheMalaysianInstituteofAccountants;• FellowofTheInstituteofCharteredAccountantsinEnglandand

Wales;• Fellow of The Association of Chartered Certified Accountants,

UnitedKingdom;• FellowofTheInstituteofSingaporeCharteredAccountants;and• FellowofTheCharteredTaxInstituteofMalaysia.



: Richard Kiew was appointed to the Board of Directors of the Company on 01 June 2008. He has seven years working experience in England with firms of Chartered Accountants. When he came back to Malaysia, he worked as an audit manager for four years before starting his own audit firm in 1986 as a sole practitioner.


: • MemberoftheAuditCommittee


: Sarawak Consolidated Industries Berhad



Zecon Berhad


shares %

– – 63,000 0.05



: None



: None


: 7/8



Name of Director : Datuk Hj Bolhassan bin Hj Di @ Ahmad bin Di

Age : 61


Qualification : • B. Eng, University of Sheffield, The United Kingdom.

Position held : Non Independent & Non Executive


: Datuk Bolhassan was appointed to the Board of Directors of the Company on 02 August 2010. He began his career as an Engineer with Sarawak Shell Berhad in 1979. In 1987, he was appointed Chairman to Miri Port Authority and then Kuching Port Authority, a post which he held until 1997. From 1998 to 2006, he was appointed the Assistant Minister in the Chief Ministers Department. In 2006, he was appointed Assistant Minister in the Chief Ministers Office and also Ministry of Infrastructure Development and Communication, a post he held until 2009.


: None


: None



Zecon Berhad


shares %

11,500,000 9.66 – –



: None



: None


: 6/8


CORPORATE GOVERNANCE


CORPORATE GOVERNANCE STATEMENT

The Board of Directors (“Board”) of Zecon Berhad (“Zecon” or “the Company”) acknowledges the importance of good corporate governance as fundamental in maintaining the long-term sustainable business growth, enhancing stakeholders’ value and increasing investors’ confidence. The Board is fully committed towards compliance with the principles and recommendations as set out in the Malaysian Code on Corporate Governance 2012 (“Code”) and the provisions of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad (“MLR”) with the ultimate aim of protecting and maximising shareholders’ and stakeholders’ value and the financial performance of the Zecon Group.

BOARD CHARTER

The Company had put in place the Board Charter (“Charter”) which in accordance with the Recommendation of the Code. The Charter provides guidance to the Board in the fulfilment of its obligations. It clearly outlines amongst others, the roles and responsibilities of the Board and Board Committees, separation of duties between Chairman and the Group Managing Director, code of ethics, the right balance and composition of the Board as well as the relationship between the Board with its management and shareholders.

Forming part of the Charter is the Directors’ Code of Ethics which set out the principles and standards of business ethics and conduct of the Board in carrying out their duties and responsibilities in an ethical manner and to uphold the highest standards of professionalism and exemplary corporate conduct.

The Board shall updates the Charter as and when need arises to reflect changes to the Company’s policies, procedures as well as to comply with the latest regulations and legislations. The full Charter is available on our corporate website at www.zecon.com.my.

1. THE BOARD

a) Board Composition and Balance There are currently eight (8) Directors on

the Zecon Board which comprise of two (2) Executive Directors, five (5) Independent Non-Executive Directors (“INED”) and one (1) Non-Independent Non-Executive Director (“NINED”). The composition of the Board is in

compliance with the independent directors criteria pursuant to paragraph 15.02 of the MLR. The profiles of the Directors are set out on pages 10 to 17 of this Annual Report.

A clear division of responsibilities between the Chairman and the Executive Directors exists to ensure a balance of power and authority. Formal position descriptions for the Chairman and the Executive Directors outlining their respective roles and responsibilities are set out in the Charter. The Chairman leads the Board and is responsible for ensuring the effectiveness of the Board. The Executive Directors are responsible for the implementation of the Board’s policies and decisions monitoring the operations, managing the development and implementation of business and corporate strategies, as well as the running of the daily businesses.

The INED and NINED are not involved in the

day-to-day management of the Company and there are free of any relationship which could materially interfere with the exercise of their independent judgement. No individual or group of individuals dominates the Board’s decision making.

In accordance with Recommendation 2.1 of the Code, the Deputy Independent Chairman, who is also the Chairman of the Remuneration & Nomination Committee (“RNC”), Datuk Dr. Haji Yusof @ Josree bin Haji Yacob had been appointed as the Senior Independent Director.

b) Duties and Responsibilities of the Board

The Board is responsible for governing the management of the Company, exercise their judgement to act in the manner they reasonably believe to be in the best interest of the Company. In general, the Board is responsible for amongst others, the following:-

• developing, reviewing, adoptingandmonitoring the implementation of the Group’sstrategicplansandpolicies;

• providingentrepreneurialleadershiptotheGroup;


CORPORATE GOVERNANCE STATEMENT (CONT’D)

• ensuring that the internal controlsystems is adequate and is capable of identifying and managing principal risks to facilitate efficiency in operations and astablefinancialenvironment;

• identifyingprincipalrisksandensuringthat appropriate risk management systemisinplacetomanagetherisks;

• formulating successionplans for theGroup toensurebusiness continuity;and

• ensuring compliancewith corporategovernancepractices;

The INED play an important role in provid ing indepe nde nt advice, judgement, ensuring an impartial Board decision making process as well as safeguarding the interests of other parties such as the minority shareholders, stakeholders etc.

There is a clear separation of duties between the Chairman and the Group Managing Director.

c) Appointment and Re-election The identification and appointment of new

Directors undergo a process led by the RNC. The details of the responsibilities of the RNC are set out on page 22 to 23 of this Annual Report. Thereafter upon approval by the Board, the Company provides an induction programme for the new Directors to allow them to understand the business and ultimately to enable them to contribute effectively at Board meetings. The Board will ensure that all newly appointed Directors undergo the Mandatory Accreditation Programme as required under the MLR within four (4) months after their appointments. There was no appointment of Director during the financial year 30 June 2014 (“FY 2014”).

In accordance to the Articles of Association of the Company, at least one-third (1/3) of the Board is subject to retirement by rotation at each Annual General Meeting (“AGM”). The retiring Directors can offer themselves for re-election. Directors who are appointed

during the financial year shall hold office only until the next AGM and shall be eligible for re-election.

The Board has no immediate plans to implement a gender diversity policy or target as it is of the view that Board membership is dependent on each candidate’s skills, experience, core competencies and other qualities, regardless of gender.

d) Board Meetings

The Board Meetings are held at quarterly interval with additional meetings held as and when necessary. During FY 2014, the Board had met eight (8) times. All Directors had complied with the minimum fifty percent (50%) of attendance requirement in respect of Board Meeting as stipulated in the MLR.

The attendance record of each Director for FY 2014 is as follows:-

Name of Director Attendance 1. Tan Sri Datuk Amar

(Dr.) Hamid bin Bugo 7/8 2. Datuk Dr. Haji Yusof @

Josree bin Haji Yacob 7/8 3. Datuk Haji Zainal Abidin

bin Haji Ahmad 6/8 4. Haji Zainurin bin Haji Ahmad 8/8 5. Poh Lik Gan @ Poh Lik Thong 7/8 6. Dato’ Abdul Majit bin

Ahmad Khan 8/8 7. Richard Kiew Jiat Fong 7/8 8. Datuk Haji Bolhassan bin Di

@ Ahmad bin Di 6/8 Based on the attendance record of the

Directors at Board and Board Committee Meetings, the Board is contented with the level of time commitment given by the Directors in fulfilling their roles and responsibilities. Besides, the Directors also attend meetings, site visits with the relevant Ministries, Government Offices with regards to projects undertaken by the Company together with the management personnel.



e) Directors’ Training The Board recognizes the importance for

the Directors to continuously enhance their skills and knowledge to keep abreast of the latest development in the industry, economy and technology, regulations and legislations, to facilitate them to carry out their roles and responsibilities effectively. The Board is constantly being updated on the latest amendments and new statutory and regulatory requirements.

All the Directors have attended the Mandatory Accreditation Program in accordance with the MLR. The Company has on an ongoing basis identified seminars and courses which are of relevance to the Directors in delivering their duties. In addition, each Director may determine the areas of training that he require for his personal enhancement as a Director or as a member of the Board Committees. The Company Secretary shall arrange for the Directors’ attendance at the training programmes, which are conducted either in-house or by external service provider.

During the FY 2014, the Directors have attended numerous seminars and briefings which they considered useful in discharging their roles and responsibilities. The details of the seminars attended by the Directors are set out on pages 25 to 26 of this Annual Report.

f) Supply of information The Company Secretary will ensure that

notices, agendas and board papers of each meeting are distributed to the Directors in a timely manner prior to respective meetings and on an ongoing basis to enable the Directors to peruse, consider, obtain additional information and seek further clarification when necessary.

There is a list of matters, which are reserved specifically for Board’s consideration and these include Group’s strategic plans and policies, formulating succession plans for the Group to ensure business continuity, budgets for the Group and business development issues.

Material acquisitions and disposals of assets, and potential investments by the Group are also considered extensively at Board level.

Senior Management Officers were invited to attend Board Meetings or Committee Meetings when necessary to furnish the Board with explanations and clarifications on the matters tabled at the meetings.

The Directors have full access to all information in relation to the Group’s businesses and affairs to enable them to discharge their duties. They also have unrestricted access to the advice and services of the Senior Management and the Company Secretary. The Directors are encouraged to obtain independent professional advice from external consultants in the furtherance of their duties at the Company’s expenses.

The Directors will be constantly updated by the

Company Secretary on latest amendments and new statutory and regulatory requirements relating to their duties and responsibilities. The Board will ensure that the Company Secretary attend all Board Meetings.

g) Directors’ Remuneration In line with the Code, the Board has formally

adopted the Remuneration Policy which outlines the terms and conditions for the employment and remuneration of the Board. This policy shall be reviewed on a yearly basis by the RNC of the Company.

The remuneration of Directors is set at levels which enable the Group to effectively attract and retain Directors with the relevant experience and expertise required for stewardship of the Group. The remuneration of Executive Directors shall be reviewed by the RNC and recommended for Board’s approval. The Executive Directors play no part in determining their own remuneration package.

In the case of Non-Executive Directors, their remuneration package is decided by the Board upon recommendation by the RNC,



individual Director do not participate in the discussion and decision of their own remuneration. The Company has provided an appropriate range of remuneration taking into account the experience, the specific role and responsibilities of the individual member and the amount of time that they are expected to devote to their role.

The remuneration package of Non-Executive Directors comprises of Directors’ fees, monthly allowance, meeting allowances for attending Board/Board Committees meetings, holiday package and hand phone allowance.

The remuneration for Executive Directors

shall consist of a fixed salary, allowances, bonus, gratuity plan, benefits-in-kind i.e cars, healthcare, holiday package, insurance coverage. The Non-Executive Directors shall receive fees, allowances, and other benefits. The Directors shall also be entitled to be repaid all travelling and hotel expenses properly incurred by them respectively in discharging their duties as Directors. Whereas for the Executive Director’s fixed salary, the NRC shall review the level of salary to ensure that it is competitive and provides proper compensation and incentives to the Executive Directors.

In l ine with the MLR, the aggregate

remuneration of the Directors is disclosed on page 90 of this Annual Report.

h) Company Secretary The Company Secretary is responsible

for advising and updating the Board on issues relating to compliance with relevant regulatory requirements, codes, rules and regulations affecting the Company. She is also responsible for advising the Board on their obligations and duties pertaining to disclosure of interest in securities, disclosure of conflict of interest with regards to transaction involving the Company, prohibition on dealings in Company’s securities, prohibition on insider trading, etc.

Apart from the above, the Company Secretary attends Board and Board Committee meetings, ensure that all deliberations at the aforesaid meetings are well captured and minuted and subsequently communicated the Board’s decisions for Management’s attention and further action.

The Company Secretary ensuring that all announcements are released to the Regulatory Bodies on a timely manner.

All Directors have access to the advice and services of the Company Secretary.

2. BOARD COMMITTEES The Board delegates specif ic duties and

responsibilities to the respective Committees of the Board namely, Audit Committee, Remuneration & Nomination Committee and Risk Management Committee in order to augment the business and corporate efficiency.

The Chairman of the relevant Board Committee will report to the Board on the key issues deliberated by the Board Committee at its Board Meeting and the minutes of the respective Board Committees Meetings shall be presented to the Board for information and decision.

i) Audit Committee The Audit Committee (“AC”), comprising

wholly of INED, is responsible to assist the Board in fulfilling its responsibilities relating to accounting and reporting practices of the Group and to monitor the work of the Internal Audit Function as well as ensuring that an objective professional relationship is maintained with the external auditors. Further details on the AC are set out in the AC Report on pages 29 to 31 of this Annual Report.

ii) Remuneration & Nomination

Committee The RNC comprises exclusively of Non-

Executive Director, of whom all are INED. The RNC is chaired by the Senior Independent Director of the Company.



The responsibilities of the RNC include, amongst others, the following:-

• Todevelop,maintain and review the

criteria to be used in the recruitment process and annual assessment of Directors.

• To recommend cand idates fo rappointment to the Board and Board Committees and recommend to the Boardfordecisionandapproval;

• To determine the remunerationpackages of the Directors and to ensure that their remuneration commensurate withtheirexperienceandperformance;

• ToreviewthecompositionoftheBoardand experiences and mix of skills of the directors and also to ensure that there is balance between executive, non-executive,andindependentdirectors;

• ToassessannuallytheeffectivenessoftheBoardasawhole;

• Toevaluate the termsandconditionsof the employment of the Executive Directors;

• To formulate formal and transparent remuneration policies and procedures to attract and retain directors.

For the FY 2014, the RNC had met twice with all members attended. The activities undertaken by RNC during the period under review include, amongst others, the following:-

• Reviewed and recommended to the

Board for approval on the extension of servicecontractoftheVicePresident;

• Determined thenecessity to appointadditional director to replace the outgoingdirector;

• Reviewed the remunerationpackagesfortheBoard;

• AnnualBoardassessmentfortheBoardoftheCompany;

• IdentifiedtrainingcoursesforDirectors;and

• Proposed Long Term Incentive Plan for Zecon Group.

iii) Risk Management Committee (“RMC”) The RMC comprises of three (3) members, of

whom majority are Independent Directors. The RMC reports its activities and findings directly to the Board for their information and further action, if necessary. The RMC is delegated with the following specific tasks:-

i) Establish and maintain the risk management frameworkwithintheGroup;

ii) Assess and evaluate the risk management processonaperiodicbasis;

iii) SettheriskappetiteoftheGroup;and

iv) Monitor and implement action plans to mitigate high risk areas within the Group

3. SHAREHOLDER AND INVESTOR RELATIONS

The Company maintains a regular policy of

disseminating information that is material for shareholders attention. In line with the regulatory requirements, various announcements, which amongst others, quarterly financial results, annual report, change in the composition of Board and Audit Committee, award of contract, etc are made available at Bursa Malaysia’s website and the Company’s corporate website within the stipulated statutory timelines electronically, thus provide the shareholders and the investing public with an overview of the Group’s performance and operations.

The Company has established a corporate website (www.zecon.com.my) which shareholders and members of the public can access the corporate information and updates relating to the Company and for channelling their queries.

During the AGM of the Company, the Directors welcome the opportunity to gather the views of shareholders. Notices of each general meeting are issued in a timely manner to all shareholders, and in the case of special businesses, a statement explaining the effect of the proposed resolutions is provided. All Directors are available to respond to questions from shareholders during the meeting.



The external auditor is also present to provide professional and independent clarifications on issues and concerns raised by the shareholders.

Our Corporate Division personnel will provide on-

going updates on the significant developments or activities of the Group with research/financial analysts, investors and institutional shareholders. The same presentation will also be made available to the media to capture a wider readership. However, discretion was exercised during these sessions to ensure sensitive information is not disclosed before the required announcement was released to Bursa Malaysia.

4. ACCOUNTABILITY AND AUDIT

4.1 Financial Reporting

To ensure a fair and reasonable assessment of the Company’s position and prospects, particularly in the financial reports, the Directors have implemented a quality control procedure to ensure that all financial reports have been prepared based on acceptable accounting standards and policies. These financial reports also undergo a review process by the AC prior to approval by the Board.

The Board understands that in order to strengthen the accountability aspect of financial reporting, the Company needs to maintain a sound system of internal control to safeguard shareholders’ investment and the Group’s assets. Hence the Company has developed a comprehensive system of internal control comprising of clear structures and accountabilities, well-understood policies and procedures and budgeting and review process.

4.2 Risk Management and Internal Control The effectiveness of the system of internal

control is then scrutinised by an Internal Auditor, who is independent from the day-to-day operations of the Company and report the outcome of review directly to the AC. The Statement on Risk Management and

Internal Control as set out from pages 27 to 28 of this Annual Report provides an overview of the mechanism and procedures of risk management and internal control within the Group.

4.3 Relationship with External Auditors

The Board also maintains an appropriate

relationship with the Company’s External Auditor, through formal and transparent arrangement with the Audit Committee. These arrangements are stated on pages 29 to 31 of the AC Report.

5. DIRECTORS’ RESPONSIBILITY IN RESPECT OF THE

FINANCIAL STATEMENTS The Companies Act, 1965 requires the Directors to

prepare financial statements for each financial year, which give a true and fair view of the state of the affairs of the Group and the Company at the end of the financial year, and of the profit and cash flows of the Group and the Company for the financial year.

In preparing the financial statements, the Directors

are also responsible for the adoption of suitable accounting policies and their consistent use in the financial statements, supported where necessary by reasonable and prudent judgements.

The Directors hereby confirm that the Company

and Group’s financial statements are drawn up in accordance with the applicable approved accounting standards and the Board of Directors has the responsibility of ensuring that the financial statements of the Company and the Group give a true and fair view of the affairs of the Company and the Group. The Directors also confirm that the Company maintains adequate accounting records and sufficient internal controls to safeguard the assets of the Group and the Company, and to prevent and detect fraud and other irregularities.

This Directors’ Responsibility Statement is made in

accordance with resolution of the Board of Directors dated 24 October 2014.

This Corporate Governance Statement is made

in accordance with the resolution of the Board of Directors’ Meeting held on 24 October 2014.



TRAINING/SEMINARS ATTENDED BY DIRECTORS OF ZECON BERHAD DURING THE FINANCIAL YEAR ENDED 30 JUNE 2014

No. Name of Director Type Course / Training Organiser / Presenter Date

1. Tan Sri Datuk Amar (Dr.) Tommy Bin Bugo @ Hamid Bin Bugo

a. Breakfast Talk with Natasha Kamaluddin, Managing Partner And Director, Ethos & Company - “Best of Corporate Malaysia Transformation”

Natasha Kamaluddin/ Malaysian Directors Academy (MINDA)

25 September 2013

b. Directors’ Forum (DF2/2013) “The Innovation Zone: Unleasing The Mindset”

Mark Rozario & Ross Dawson / Malaysian Directors Academy (MINDA)

20-22 October 2013

c. Megatrends Frost & Sullivan 11 January 2014

d. Guest Speaker at the Faculty Of Economics & Business Public Lecture Series 2014 – “Mindfulness”

Abdullah Zaidil / Universiti Malaysia Sarawak (UNIMAS)

15 May 2014

e. Anti-Money Laundering And Anti-Terrorism Financing For Directors And Senior Management

Ms Dang Phuong Heu Dang & Mr William Aubrey Chapman/PNB Investment Institute Sdn. Berhad

29 May 2014

f. Breakfast Talk with Bob Vanourek – Triple Crown Leadership: Building Excellent, Ethical and Enduring Organisations

Bob Vanourek / MINDA 18 June 2014

2. Datuk Dr. Haji Yusof @ Josree bin Haji Yacob

Annual Director Duties, Governance And Regulatory Updates Seminar 2014

Malaysian Institute of Corporate Governance

22 April 2014

3. Datuk Haji Zainal Abidin bin Haji Ahmad

Kursus Induksi Keselamatan Dan Kesihatan Bagi Pekerja Binaan.

SMD Management 24 September 2013

4. Haji Zainurin bin Haji Ahmad

Kursus Induksi Keselamatan Dan Kesihatan Bagi Pekerja Binaan.

SMD Management 24 September 2013



No. Name of Director Type Course / Training Organiser / Presenter Date

5. Poh Lik Gan @ Poh Li Thong Annual Director Duties, Governance And Regulatory Updates Seminar 2014


22 April 2014

6. Dato’ Abdul Majit bin Ahmad Khan

a. Advanced Risk Governance n Risk Management

Bank Negara Malaysia 10-11 March 2014

7. Richard Kiew Jiat Fong a. Essential Audit Quality Control Practice

Malaysian Institute of Accountants

11 & 12 September 2013

b. 2014 Budget Seminar CTIM Chartered Tax Institute of Malaysia

07 November 2013

c. IRBM-CTIM Tax Forum 2014

Lembaga Hasil Dalam Negeri Malaysia

10 April 2014

d. Annual Director Duties, Governance And Regulatory Updates Seminar 2014


22 April 2014

8. Datuk Haji Bolhassan bin Haji Di @ Ahmad bin Di

Annual Director Duties, Governance And Regulatory Updates Seminar 2014


22 April 2014


STATEMENT ON RISK MANAGEMENT & INTERNAL CONTROL

INTRODUCTION

The Board of Directors (“the Board”) is committed to maintain a sound system of risk management and internal control within the Group of Companies (“the Group”) and is pleased to provide the following Statement on Risk Management and Internal Control which outlines the nature and scope of risk management framework and system of internal control of the Group during the financial year ended 30 June 2014 in pursuant to Paragraph 15.26(b) of Main Market Listing Requirements of Bursa Malaysia Securities Berhad and guided by the Statement on Risk Management and Internal Control: Guidance for Directors of Listed Issuers.

RESPONSIBILITY OF THE BOARD The Board is ultimately responsible for the Group’s system of internal control, which includes the establishment of an appropriate control environment and framework as well as reviewing its adequacy and integrity. However, it should be noted that such systems are designed to manage rather than eliminate risks of failure to achieve corporate objectives. Hence, it can only provide reasonable and not absolute assurance against material misstatement or loss.

RISK MANAGEMENT FRAMEWORK

The Risk Management Framework established in May 2003, provides a structured approach in identifying, assessing and managing the key risks encountered by the Group. During the year, the Group has reviewed and updated the risk assessment framework, which covered the full spectrum of the Group’s operations. This involved reviewing and identifying the key risk exposures of the Group and providing an assessment on the risks identified, the strength of internal controls and/or action plans that mitigate and manage the risks and the residual tasks. The risks are being assessed continuously through the Risk Management Committee headed by the Company’s Chairman and Sub-Risk Management Committee at subsidiary level, headed by either Vice President or General Manager. Critical risk issues at subsidiary level are brought up and deliberated in the Risk Management Committee meeting. The chairman shall eventually highlight the critical risk issues to the Board for further deliberation and decisions.

KEY PROCESSES OF INTERNAL CONTROL

The key processes of internal control of the Group can be summarized as follow:

Internal Review and Audit: The system of internal control is continually being reviewed and enhanced. Apart from internal review on the Group’s policies and procedures, the Audit Division conducts periodic internal audits and evaluate the effectiveness of the system of internal control within the Group. The Internal Auditor provides the Audit Committee with independent and objectives reports on the state of internal controls and risk management, the extent of compliance with policies and procedures, recommendations and the management response thereof. The Audit Committee considers the report from internal audit and response from management and thereafter presents their conclusion to the Board.

Financial Policies and Procedure Manual: The Group has a clear structure whereby the responsibilities and scope of authorities are defined. This is clearly documented in the internal policies and operation procedures as set out in the Financial Policies and Procedures Manual. This manual is reviewed and updated by the management regularly. The Group has also put in place policies and procedures on tender and contracts which has been approved by the Board to be implemented effective 24 February 2009.

Financial Reporting: Quarterly results, annual financial statements and comparison of actual results against approved budgets are reviewed and deliberated by the Audit Committee before being recommended to the Board for approval. Thereafter, the results are announced to Bursa Malaysia Securities Berhad as required.


STATEMENT ON RISK MANAGEMENT & INTERNAL CONTROL (CONT’D)

Operational Risk: The risks inherent in the construction and properties sectors are mainly related to market conditions, procurement and tendering, execution of construction works and completion of project within the contract period. Construction schedules, cost of projects and quality are controlled through monthly project meetings and progress reports to the management. The risks related with toll operations has been mitigated by way of a contractual agreement with the State Government of Sarawak on its tenure, rates increment, extension clause, etc. The Group’s Risk Management framework and risk management sub-committee at project and subsidiary levels had been set up with a common objective to identify, evaluate, control, mitigate and minimize risks.

ISO 9001:2008: Regular audits to ensure compliance with all requirement of ISO 9001:2008. The ISO certification serves as a quality assurance approach where customers are assured of continuous delivery of the highest quality of products and services provided by the Group.

Related Party Transaction: The Group has in place adequate procedures and processes to monitor, trace and identify related party transactions in a timely and orderly manner and such procedures and processes are reviewed on a yearly basis or whenever the need arises.

This statement does not include the state of internal controls in joint ventures and associated companies, which have not been dealt with as part of the Group.

ASSURANCE

The Board has received reasonable assurance from the Chief Executive Officer and Chief Financial Officer that the Group’s risk management and internal control system is operating adequately and effectively, in all material aspects based on the risk management and internal control system of the Group.

BOARD’S CONCLUSION

The Board of Directors is pleased to disclose that the risk management processes and system of internal control are appropriate to the Group’s operations. Nevertheless, the process in identifying, evaluating and managing the significant risks faced by the Group will be ongoing to meet any changing needs.


REPORT OF AUDIT COMMITTEE

The Audit Committee of Zecon Berhad is pleased to present its Audit Committee (“AC” or “Committee”) Report (“Report”) for the current financial year ended 30 June 2014 (“FY 2014”). The Board has approved this Report via circular resolution dated 24 October 2014.

1. MEMBERSHIP AND MEETINGS

During the FY 2014, the AC had held six (6) meetings against the minimum of four (4) meetings as per its term of reference. The Internal Auditor who is the Secretary was in attendance during all the meetings. The Chief Financial Officer and other officers were invited to the meeting to deliberate on matters within their purview as and when requested by the AC. After each meeting, the AC Chairman submits a report on matters being deliberated to the Board of Directors for their information and actions where necessary. The Company Secretary shall record decisions made and circulate it to the Management for their further action.

AC members, designation and attendances at the AC meetings held during the FY 2014 are as follows:

Committee Members Status of Directorship Attendance

Poh Lik Gan @ Poh Li Thong Chairman

Independent Non-Executive Director 6/6

Richard Kiew Jiat Fong Member


Dato’ Abdul Majit Bin Ahmad Khan Member


2. SUMMARY OF ACTIVITIES OF AUDIT COMMITTEE

In line with the terms of reference of the Committee, the following activities were carried out:-

(i) External Audit ‹ Reviewed and approved the External auditor’s audit plan and the scope of annual audit.

‹ Deliberated and reported the results of the annual audit to the Board of Directors.

‹ Attend to concerns raised by the External Auditor without the presence of Management.

‹ Assessed the performance of the External Auditors and recommended their appointment and remuneration to the Board of Directors.

(ii) Internal Audit ‹ Reviewed and approved Internal Audit’s structure, budget and Annual Audit Plan to ensure adequacy of resources, competencies and coverage of auditable entities with significant and high risks.

‹ Reviewed the internal audit reports issued by Internal Auditor on the effectiveness and adequacy of financial, operational and compliance process.

‹ Reviewed the adequacy and effectiveness of corrective actions taken by Management on all significant matters raised.

(iii) Financial Results ‹ Reviewed the Quarterly and Annual Financial Statements of the Company and Group including announcements, and recommended them to the Board for approval.


(iv) Related Party Transactions

‹ Reviewed the system for identifying, monitoring and disclosing related party transactions entered into by Zecon Berhad and its subsidiaries.

(v) Annual Reporting ‹ Reviewed and recommended the Statement on Risk Management and Internal Control as well as AC Report to the Board for approval.

3. SUMMARIES OF ACTIVITIES OF THE INTERNAL AUDIT DIVISION

The Internal Audit Division was established on 1 April 2002 and it reports directly to the AC.

For the FY 2014, the activities of the internal audit are as follows:-

(i) Preparation of Audit Planning Memorandum and the Internal Audit Plan for the year.(ii) Conducting Risk Management activities and also act as Secretary and administrator to Risk Management

Committee of Zecon Berhad and its Group of companies.(iii) Secretary to AC.(iv) Conduct internal audit assignments as per Internal Audit Plan and special audit assignments on an ad-hoc

basis based on the requests of the Senior Management.(v) The General Manager for Internal Audit is also the Quality Management Representative (QMR) responsible

in managing the Quality Management System. (vi) Preparation of AC Report and Statement on Risk Management and Internal Controls for the Company’s

Annual Report 2014.

4. TERMS OF REFERENCE

(i) Composition

a. TheCommitteeshallbeappointedbytheBoardandshallconsistofnotlessthanthree(3)members;

b. All the AC members must be non-executive directors and with a majority of them being independent directors;

c. AnalternateDirectorshallnotbeappointedasamemberoftheCommittee;

d. AtleastonememberoftheACmustbeamemberoftheMalaysianInstituteofAccountant;orifheisnot a member of the Malaysian Institute of Accountants, he must have at least three (3) years’ working experience and:-i. he must have passed the examinations specified in Part 1 of the 1st Schedule of the Accountants

Act1967;orii. he must be a member of one (1) of the Associations of Accountants specified in Part II of the

1st Schedule of the Accountants Act 1967.

e. The members of the Committee shall elect a Chairman from amongst their number who shall be an independent Director.

f. If the number of members of the Committee is reduced below three (3), the Board shall within three (3) months appoint such number of new members as may be required to make up the minimum of three (3) members.

(ii) Authority

a. The Committee shall, in accordance with a procedure to be determined by the Board and at the cost

of the Company:-

b. havetheauthoritytoinvestigateanymatterwithinitstermsofreference;

REPORT OF AUDIT COMMITTEE (CONT’D)


REPORT OF AUDIT COMMITTEE (CONT’D)

c. havetheresourceswhicharerequiredtoperformitsduties;

d. havefullandunrestrictedaccesstoanyinformationpertainingtotheCompany;

e. havedirectcommunicationchannelswithboththeexternalandinternalauditors;

f. beabletoobtainindependentprofessionalopinionorotheradvice;and

g. be able to convene meetings with the external auditors, excluding the attendance of the executive members of the Board, whenever deemed necessary.

(iii) Duties

The duties and scopes of the CommitteeshallbetoreviewthefollowingandreportthesametotheBoard;-

a. with the external auditors:(i) thescopeoftheirauditplan;(ii) theirevaluationofthesystemofinternalcontrol;(iii) theauditreportsonthefinancialstatements;(iv) theassistancegivenbytheCompany’semployeestotheexternalauditor;(v) anyletterofresignationfromtheexternalauditors;and(vi) nomination of the external auditors and the determination of audit fees.

b. the effectiveness of the internal control systems including the internal audit programmes, process, results of internal audit programmes, processes or investigation undertaken and whether or not appropriate actions have been taken on recommendations of internal audit functions.

c. the quarterly results and year end financial statements of the Company and the Group, prior to submission to the Board for approval, focusing particularly on:-(i) changesinorimplementationofaccountingpolicy;(ii) significantandunusualevent;and(iii) compliance with accounting standards and other legal requirements.

d. any related party transactions and conflict of interest situation that may arise within the Company or Group.

e. verify the allocation of options to employees under the relevant criteria decided by the Option Committee.

f. any other functions as may be agreed by the Committee and the Board or as may be required or empowered by statutory legislation or guidelines issued by the relevant governing authorities.

Where the Committee is of the view that any matter reported to the Board has not been satisfactorily resolved resulting in breach of the MLR, the Committee must promptly report such matter to Bursa Malaysia Securities Berhad.

The Committee members’ term of office and performance are subject to review by the Board every three (3) years to determine whether the Committee has carried out their duties in accordance with the Terms of Reference.

(iv) Frequency and Attendance

The Committee shall hold at least four (4) regular meetings a year and such additional meetings as the Chairman shall decide in order to fulfill its duties. The Committee at its discretion, may invite any person to its AC meeting. A quorum for the Committee shall be two (2) members and majority of members present must be independent directors.

The General Manager for Internal Audit shall be the Secretary to the AC. The Chairman shall table any material issues raised in the AC meeting at the subsequent Board Meeting of the Company.


1. SHARE BUY-BACKS

The Company did not enter into any share buy-back transaction during the financial year ended 30 June 2014.

2. OPTIONS, WARRANTS OR CONVERTIBLE SECURITIES

There were no issuance of options, warrants or convertible securities by the Company for the financial year ended 30 June 2014.

3. AMERICAN DEPOSITORY RECEIPT (“ADR”) OR GLOBAL DEPOSITORY RECEIPT (“GDR”) PROGRAMME

The Company did not sponsor any ADR or GDR programme during the financial year ended 30 June 2014.

4. IMPOSITION OF SANCTIONS OR PENALTIES

There were no sanctions or penalties imposed by the relevant regulatory bodies on the Company or its subsidiaries, directors or management during the financial year ended 30 June 2014.

5. NON-AUDIT FEES

The non-audit fees paid by the Company to the External Auditors, Messrs. Ernst & Young for the financial year ended 30 June 2014 was amounted to RM5,500.00.

6. VARIATION IN RESULTS

There was no variance of 10% or more between the unaudited results announced and the audited results for the financial year ended 30 June 2014.

7. PROFIT GUARANTEE

There were no transactions that require profit guarantee during the financial year ended 30 June 2014. 8. MATERIAL CONTRACTS

There were no material contracts of the Company and its subsidiaries involving directors and substantial shareholders either still subsisting at the end of the financial year ended 30 June 2014 or entered into since the end of previous financial year.

ADDITIONAL DISCLOSURES


ADDITIONAL DISCLOSURES (CONT’D)

9. RECURRENT RELATED PARTY TRANSACTIONS OF A REVENUE OR TRADING NATURE

The Company had on 16 December 2013 obtained Shareholders’ Mandate for the Group to carry out the Recurrent Related Party Transactions of revenue or trading nature (“RRPT”).

In accordance with Paragraph 3.15 of Practice Note 12 of the Bursa Malaysia Securities Berhad, the details of RRPT transacted during the financial year ended 30 June 2014 are as follows:-

Related Party Interested Director/Connected person

Nature of Transaction Amount(RM)

SCIB Concrete Manufacturing Sdn Bhd

Tan Sri Datuk Amar (Dr.) Tommy Bin Bugo @ Hamid Bin Bugo Datuk & Hj Zainal Abidin Bin Hj Ahmad

Purchase of construction materials

4,397,620.39

Mary Bolhassan, Noreda Ahmad & Co

Datuk Hj Zainal Abidin Bin Hj Ahmad & Hj Zainurin bin Hj Ahmad

Provision of legal and professional services

7,291.80

TKY Consultant Sdn Bhd Hj Abg Azahari bin Abg Osman Provision of engineering consultancy and project management

840,204.58

Perunding KAZ Sdn Bhd Datuk Hj Zainal Abidin Bin Hj Ahmad & Hj Zainurin bin Hj Ahmad

Engineering consultancy and project management

216,428.95


CORPORATE SOCIAL RESPONSIBILITY ACTIVITIES

Zecon Achievement Awards to staff’s children who achieved excellent results in various public examinations – 31 March 2014

Sarawak Regatta held in conjunction with Merdeka and Malaysia Day – 07 September 2013

Ramah Tamah Merdeka Raya held in conjunction with Hari Raya Aidilfitri and Merdeka Day – 30 August 2013

Gifts Exchange for Christmas 2013 – 17 December 2013

Zecon Appreciation Dinner for awarding long service awards to the employees – 15 September 2013

Bowling Tournament – 07 June 2014


ZECON’S PROJECTS


Unmias Faculty of Health & Science, Kota Samarahan, Sarawak

Petra Jaya Hospital, Kuching, Sarawak Triang Project, Package 2, Negeri Sembilan

Sime Darby Commercial Building, Gombak, Selangor Mydin Supermall, Kuching, Sarawak

ZECON’S PROJECTS


FINANCIALSTATEMENTS

DIRECTORS’ REPORT ................................................ 38

STATEMENT BY DIRECTORS AND STATUTORY DECLARATION ................................... 42

INDEPENDENT AUDITOR’S REPORT ................... 43

STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME ..................... 45

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION .............................................. 47

COMPANY STATEMENTS OF FINANCIAL POSITION .............................................. 49

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY ............................................... 51

COMPANY STATEMENT OF CHANGES IN EQUITY ............................................... 52

CONSOLIDATED STATEMENT OF CASH FLOWS .............................................................. 53

COMPANY STATEMENT OF CASH FLOWS ......... 55

NOTES TO THE FINANCIAL STATEMENTS .......... 57

SUPPLEMENTARY INFORMATION......................141


DIRECTORS’ REPORT

The directors present their report together with the audited financial statements of the Group and of the Company for the financial year ended 30 June 2014.

PrinciPal activities

The principal activities of the Company are foundation engineering, civil engineering and building contracting works and their related activities.

The principal activities of the subsidiaries are set out in Note 16 to the financial statements.

There have been no significant changes in the nature of the principal activities of the Group and of the Company during the financial year.

results

Group company rM rM

(Loss)/profit for the year, net of tax (14,867,020) 7,113,559

Attributable to:Equity holders of the Company (19,936,525) 7,113,559Non-controlling interests 5,069,505 –

(14,867,020) 7,113,559

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

In the opinion of the directors, the results of the operations of the Group and of the Company during the financial year were not substantially affected by any item, transaction or event of a material and unusual nature.

Directors

The names of the directors of the Company in office since the date of the last report and at the date of this report are:

Tan Sri Datuk Amar (Dr.) Tommy Bin Bugo @ Hamid Bin Bugo Datuk Dr. Haji Yusof @ Josree Bin Haji YacobDatuk Haji Zainal Abidin Bin Haji Ahmad Haji Zainurin Bin Haji Ahmad Poh Lik Gan @ Poh Li Thong Dato’ Abdul Majit Bin Ahmad Khan Datuk Haji Bolhassan Bin Di @ Ahmad Bin DiRichard Kiew Jiat Fong


DIRECTORS’ REPORT (CONT’D)

Directors’ benefits

Neither at the end of the financial year, nor at any time during that period, did there subsist any arrangement to which the Company was a party, whereby the directors might acquire benefits by means of the acquisition of shares in or debentures of the Company or any other body corporate.

Since the end of the previous financial period, no director has received or become entitled to receive a benefit (other than benefits included in the aggregate amount of emoluments received or due and receivable by the directors or the fixed salary of a full-time employee of the Company (as shown in Note 9 to the financial statements) by reason of a contract made by the Company or a related corporation with any director or with a firm of which he is a member, or with a company in which he has a substantial financial interest, except as disclosed in Note 34 to the financial statements.

reMuneration anD noMination coMMittee

The Remuneration and Nomination Committee carries out the annual review of the Group’s remuneration policy in general, and determines the remuneration packages of Executive Directors of the Company. The Remuneration and Nomination Committee proposes, subject to the approval of the Board of Directors of the Company, the remuneration to be paid to each Director for his services as a Member of the Board as well as committees of the Board.

The members of the Remuneration and Nomination Committee comprising the independent Non-Executive Directors of the Company, who have served since the date of the last report, are:

Datuk Haji Yusof @ Josree Bin Haji Yacob (Chairman) Tan Sri Datuk Amar (Dr.) Tommy Bin Bugo @ Hamid Bin BugoPoh Lik Gan @ Poh Li Thong

Directors’ interests

According to register of directors’ shareholdings, the interests of directors in office at the end of the financial year in shares in the Company and its related corporations during the financial year were as follows:

number of ordinary shares of rM1 each at at 01.07.2013 acquired sold 30.06.2014the company

Direct interest:

Datuk Haji Zainal Abidin Bin Haji Ahmad 3,655,200 – – 3,655,200Poh Lik Gan @ Poh Li Thong 40,000 – – 40,000Haji Zainurin Bin Haji Ahmad 525,000 – – 525,000Richard Kiew Jiat Fong 63,000 – – 63,000Tan Sri Datuk Amar (Dr.) Tommy Bin Bugo @ Hamid Bin Bugo 2,400,000 2,114,200 – 4,514,200Datuk Haji Bolhassan Bin Di @ Ahmad Bin Di 8,500,000 3,000,000 – 11,500,000

Indirect interest:

Datuk Haji Zainal Abidin Bin Haji Ahmad 65,689,475 – – 65,689,475



Directors’ interests (cont’D)

According to register of directors’ shareholdings, the interests of directors in office at the end of the financial year in shares in the Company and its related corporations during the financial year were as follows:

number of ordinary shares of rM1 each at at 01.07.2013 acquired sold 30.06.2014related companies

Direct interest:

teknik Ps sdn. bhd.

Datuk Haji Zainal Abidin Bin Haji Ahmad 34,000 – – 34,000

Zecon construction sdn. bhd.

Datuk Haji Zainal Abidin Bin Haji Ahmad 49 – – 49

sarmax sdn. bhd.

Datuk Haji Zainal Abidin Bin Haji Ahmad 30,000 – – 30,000

There were no other movements in shares of the Company or its related corporations during the financial year other than as disclosed.

Datuk Haji Zainal Abidin Bin Haji Ahmad, by virtue of his interest in the Company, is also deemed interested in shares of all the Company’s subsidiaries to the extent the Company has an interest.

None of the other directors in office at the end of the financial year had any interest in shares in the Company or its related corporations during the financial year.

other statutory inforMation

(a) Before the statements of profit or loss and other comprehensive income and statements of financial position of the Group and of the Company were made out, the directors took reasonable steps:

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

(ii) to ensure that any current assets which were unlikely to realise their value as shown in the accounting records in the ordinary course of business had been written down to an amount which they might be expected so to realise.

(b) At the date of this report, the directors are not aware of any circumstances which would render:

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

(ii) the values attributed to the current assets in the financial statements of the Group and of the Company misleading.



other statutory inforMation (cont’D)

(c) At the date of this report, the directors are not aware of any circumstances which have arisen which would render adherence to the existing method of valuation of assets or liabilities of the Group and of the Company misleading or inappropriate.

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

(e) As at the date of this report, there does not exist:

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

(ii) any contingent liability of the Group or of the Company which has arisen since the end of the financial year.

(f ) In the opinion of the directors:

(i) no contingent or other liability has become enforceable or is likely to become enforceable within the period of twelve months after the end of the financial year which will or may affect the ability of the Group or of the Company to meet their obligations when they fall due; and

(ii) no item, transaction or event of a material and unusual nature has arisen in the interval between the end of the financial year and the date of this report which is likely to affect substantially the results of the operations of the Group or of the Company for the financial year in which this report is made.

siGnificant events

Details of significant events are disclosed in Note 38 to the financial statements.

auDitors

The auditors, Ernst & Young, are not seeking for re-appointment. A resolution to appoint a new auditor will be proposed at the forthcoming Annual General Meeting.

Signed on behalf of the Board in accordance with a resolution of the directors dated

tan sri Datuk amar (Dr.) tommy bin bugo Datuk haji Zainal abidin @ hamid bin bugo bin haji ahmad


We, tan sri Datuk amar (Dr.) tommy bin bugo @ hamid bin bugo and Datuk haji Zainal abidin bin haji ahmad, being two of the directors of Zecon berhad, do hereby state that, in the opinion of the directors, the accompanying financial statements set out on pages 45 to 140 are drawn up in accordance with the provisions of the Companies Act, 1965 and Financial Reporting Standards in Malaysia so as to give a true and fair view of the financial position of the Group and of the Company as at 30 June 2014 and of their financial performance and the cash flows for the year then ended.

The supplementary information set out in Note 39 to the financial statements have been prepared in accordance with the Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants.

Signed on behalf of the Board in accordance with a resolution of the directors dated

tan sri Datuk amar (Dr.) tommy bin bugo Datuk haji Zainal abidin @ hamid bin bugo bin haji ahmad

Statutory DeclarationPuRSuaNT TO SECTION 169(16) Of ThE COmPaNIES aCT, 1965

I, Jamil bin Jamaludin, being the officer primarily responsible for the financial management of Zecon berhad, do solemnly and sincerely declare that the accompanying financial statements set out on pages 45 to 141 are in my opinion 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 abovenamed Jamil bin Jamaludinat Kuching in the State of Sarawak on Jamil bin Jamaludin

Before me,

STATEmENT By DIRECTORSPuRSuaNT TO SECTION 169(15) Of ThE COmPaNIES aCT, 1965


INDEPENDENT AuDITORS’ REPORTTO ThE mEmbERS Of ZECON bERhaD

(INCORPORaTED IN malaySIa)

rePort on the financial stateMents

We have audited the financial statements of Zecon berhad, which comprise statements of financial position as at 30 June 2014 of the Group and of the Company, and statements of profit or loss and other comprehensive income, statements of changes in equity and statements of cash flows of the Group and of the Company for the year then ended, and a summary of significant accounting policies and other explanatory information, as set out on pages 45 to 140.

Directors’ responsibility for the financial statements

The directors of the Company are responsible for the preparation of financial statements so as to give a true and fair view in accordance with Financial Reporting Standards and the requirements of the Companies Act 1965 in Malaysia. The directors are also responsible 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.

Auditors’ responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with approved standards on auditing in Malaysia. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on our judgment, including the assessment of risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the entity’s preparation of financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the financial statements give a true and fair view of the financial position of the Group and of the Company as at 30 June 2014 and of their financial performance and cash flows for the year then ended in accordance with Financial Reporting Standards and the requirements of the Companies Act 1965 in Malaysia.

rePort on other leGal anD reGulatory requireMents

In accordance with the requirements of the Companies Act 1965 in Malaysia, we also report the following:

(a) In our opinion, the accounting and other records and the registers required by the Act to be kept by the Company and its subsidiaries 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 of all the subsidiaries of which we have not acted as auditors, which are indicated in Note 16 to the financial statements, being financial statements that have been included in the consolidated financial statements.


INDEPENDENT auDITORS’ REPORT (CONT’D)TO ThE mEmbERS Of ZECON bERhaD(INCORPORaTED IN malaySIa)

rePort on other leGal anD reGulatory requireMents (cont’D)

(c) We are satisfied that the financial statements of the subsidiaries that have been consolidated with the financial statements of the Company are in form and content appropriate and proper for the purposes of the preparation of the consolidated 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 and did not include any comment required to be made under Section 174(3) of the Act.

other rePortinG resPonsibilities

The supplementary information set out in Note 39 on page 141 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 the Guidance on Special Matter No.1, Determination of Realised and Unrealised Profit or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants (“MIA Guidance”) and the directive of Bursa Malaysia Securities Berhad. In our opinion, the supplementary information is prepared, in all material respects, in accordance with the MIA Guidance and the directive of Bursa Malaysia Securities Berhad.

other Matters

This report is made solely to the members of the Company, as a body, in accordance with Section 174 of the Companies Act 1965 in Malaysia and for no other purpose. We do not assume responsibility to any other person for the content of this report.

ernst & younG yonG voon KarAF: 0039 1769/04/16 (J/PH)Chartered Accountants Chartered Accountant

Kuching, Malaysia

Date:


Group company 01.07.2013 01.01.2012 01.07.2013 01.01.2012 to to to to note 30.06.2014 30.06.2013 30.06.2014 30.06.2013 rM rM rM rM

revenue 3 208,595,336 237,821,051 139,038,390 181,439,579

Cost of sales 4 (184,515,896) (201,002,612) (131,137,308) (172,205,594)

Gross profit 24,079,440 36,818,439 7,901,082 9,233,985

Other income 5 2,718,927 4,059,040 14,479,827 8,777,978 Administrative expenses (17,085,318) (20,090,743) (12,118,966) (17,582,972)Other expenses (6,076,177) (26,128,573) – –

operating profit/(loss) 3,636,872 (5,341,837) 10,261,943 428,991 Finance costs 6 (8,470,635) (14,241,302) (95,225) (1,664,008) Share of profit of associate 363,960 332,163 – –

(loss)/profit before tax 7 (4,469,803) (19,250,976) 10,166,718 (1,235,017)

Income tax expense 10 (10,397,217) (5,688,671) (3,053,159) 1,231,896

(loss)/profit for the year/period (14,867,020) (24,939,647) 7,113,559 (3,121)

other comprehensive income that will be reclassified to profit or loss in subsequent periods:

Foreign currency translation, net of tax (1,491) 4,014 – –Net fair value changes on available for sale financial assets (134,025) 51,285 (134,025) 51,285

other comprehensive income for the year/period, net of tax (135,516) 55,299 (134,025) 51,285

total comprehensive income for the year/period (15,002,536) (24,884,348) 6,979,534 48,164

STATEmENTS Of PROfIT OR LOSSAND OTHER COmPREHENSIvE INCOmE

fOR ThE fINaNCIal yEaR ENDED 30 JuNE 2014


Group company 01.07.2013 01.01.2012 01.07.2013 01.01.2012 to to to to note 30.06.2014 30.06.2013 30.06.2014 30.06.2013 rM rM rM rM

(loss)/profit attributable to:Equity holders of the Company (19,936,525) (24,702,542) 7,113,559 (3,121) Non-controlling interests 5,069,505 (237,105) – –

(14,867,020) (24,939,647) 7,113,559 (3,121)

total comprehensive income attributable to:Equity holders of the Company (20,072,041) (24,647,243) 6,979,534 48,164 Non-controlling interests 5,069,505 (237,105) – –

(15,002,536) (24,884,348) 6,979,534 48,164

earnings per ordinary share attributable to equity holders of the company (sen per share):

Group 01.07.2013 01.01.2012 to to note 30.06.2014 30.06.2013 sen sen Basic 11 (16.74) (20.74)

The accompanying accounting policies and explanatory notes form an integral part of the financial statements.

STaTEmENTS Of PROfIT OR lOSS aND OThER COmPREhENSIvE INCOmE (CONT’D)fOR ThE fINaNCIal yEaR ENDED 30 JuNE 2014


Group note 2014 2013 rM rM

assets

non-current assets

Property, plant and equipment 12 14,755,455 15,259,174Prepaid land lease payments 13 124,520 127,669Land held for development 14(a) 91,954,946 113,165,600Intangible assets 15 13,808,617 13,804,904Investment in associates 17 1,592,655 1,228,695Investment in jointly controlled entity 18 – –Other investments 19 182,718 316,743Trade and other receivables 22 1,500 232,520Deferred tax assets 29 1,815,843 4,317,175

124,236,254 148,452,480

current assets

Development costs 14(b) 22,413,117 33,535,396Inventories 20 2,914,939 2,914,939Other current assets 23 54,175,160 49,008,526Trade and other receivables 22 83,078,478 84,181,959Cash and bank balances 24 53,743,793 46,530,439

216,325,487 216,171,259

total assets 340,561,741 364,623,739

equity anD liabilities

current liabilities

Borrowings 25 35,490,289 35,805,606 Trade and other payables 27 85,016,599 93,548,594 Other current liabilities 28 17,769,632 –

Income tax payable 11,632,350 12,351,456

149,908,870 141,705,656

net current assets 66,416,617 74,465,603

CONSOLIDATED STATEmENTS Of fINANCIAL POSITION

aS aT 30 JuNE 2014


Group note 2014 2013 rM rM


non-current liabilities

Borrowings 25 104,302,693 111,524,369Trade and other payables 27 101,250 116,250

104,403,943 111,640,619

total liabilities 254,312,813 253,346,275

net assets 86,248,928 111,277,464

equity attributable to equity holders of the company

Share capital 30 119,106,150 119,106,150 Share premium 30 3,558,768 3,558,768Other reserves 31 4,977,461 5,112,977Accumulated losses (50,399,793) (20,437,268)

77,242,586 107,340,627

non-controlling interests 9,006,342 3,936,837

total equity 86,248,928 111,277,464

total equity anD liabilities 340,561,741 364,623,739

CONSOlIDaTED STaTEmENTS Of fINaNCIal POSITION (CONT’D)aS aT 30 JuNE 2014



COmPANy STATEmENTS OffINANCIAL POSITION

aS aT 30 JuNE 2014

company note 2014 2013 rM rM

assets

non-current assets Property, plant and equipment 12 9,245,295 10,793,727Prepaid land lease payments 13 124,520 127,669Investment in subsidiaries 16 64,394,797 57,994,907Investment in associates 17 175,000 175,000Investment in jointly controlled entity 18 – –Other investments 19 182,718 316,743Deferred tax assets 29 2,000,000 4,836,775Trade and other receivables 22 1,500 232,520

76,123,830 74,477,341

current assets

Development costs 14(b) 34,254 65,616Inventories 20 810,000 810,000Trade and other receivables 22 108,141,254 102,841,226Other current assets 23 12,706,223 10,365,890

Cash and bank balances 24 35,437,679 28,318,272

157,129,410 142,401,004

total assets 231,453,240 216,878,345


current liabilities

Borrowings 25 21,223,151 22,043,203Trade and other payables 27 102,013,314 98,417,279Other current liabilities 28 26,131,943 18,962,752Income tax payable 336,573 176,572

149,704,981 139,599,806

net current assets 7,424,429 2,801,198


company note 2014 2013 rM rM

non-current liabilities

Borrowings 25 437,532 1,147,346

total liabilities 150,142,513 140,747,152

net assets 81,310,727 76,131,193

equity attributable to equity holders of the company Share capital 30 119,106,150 119,106,150Share premium 30 3,558,768 3,558,768Other reserves 31 4,975,661 5,109,686Accumulated losses (44,529,852) (51,643,411)

total equity 83,110,727 76,131,193

total equity anD liabilities 231,453,240 216,878,345

COmPaNy STaTEmENTS Of fINaNCIal POSITION (CONT’D)aS aT 30 JuNE 2014




Non- controlling Attributable to equity holders of the Company interests Non-distributable Total equity (Accumulated attributable Foreign Fair value losses)/ to owners Share Share exchange Other Revaluation adjustment retained of the capital premium reserve reserves reserve reserve earnings Company (Note 30) (Note 30) (Note 31) (Note 31) (Note 31) (Note 31) RM RM RM RM RM RM RM RM RM

Group

At 1 July 2013 119,106,150 3,558,768 3,291 4,416,854 692,832 – (20,437,268) 107,340,627 3,936,837

Loss for the year – – – – – – (19,936,525) (20,072,041) 5,205,021Other comprehensive income – – (1,491) – – (134,025) – – (135,516)

Total comprehensive income for the year – – (1,491) – – (134,025) (19,936,525) (20,072,041) 5,069,505

Dividend paid to non- controlling interests – – – – – – (10,026,000) (10,026,000) –

At 30 June 2014 119,106,150 3,558,768 1,800 4,416,854 692,832 (134,025) (50,399,793) 77,242,586 9,006,342

At 1 January 2012 119,106,150 3,558,768 (723) 4,416,854 692,832 (51,285) 17,857,419 145,580,015 4,572,801

Loss for the period – – – – – – (24,702,542) (24,647,243) (292,402)Other comprehensive income – – 4,014 – – 51,285 – – 55,299

Total comprehensive income for the period – – 4,014 – – 51,285 (24,702,542) (24,647,243) (237,105)

Transactions with non- controlling interests – – – – – – (13,592,145) (13,592,145) (398,859)

At 30 June 2013 119,106,150 3,558,768 3,291 4,416,854 692,832 – (20,437,268) 107,340,627 3,936,837

CONSOLIDATED STATEmENTOf CHANgES IN EquITy



non-Distributable fair value share share other adjustment accumulated total capital premium reserves reserve losses equity (note 30) (note 30) (note 31) (note 31) rM rM rM rM rM rM

company

At 1 July 2013 119,106,150 3,558,768 5,109,686 – (51,643,411) 76,131,193

Profit net of tax, representing total comprehensive income for the year – – – (134,025) 7,113,559 6,979,534

at 30 June 2014 119,106,150 3,558,768 5,109,686 (134,025) (44,529,852) 83,110,727

at 1 January 2012 119,106,150 3,558,768 5,109,686 (51,285) (51,640,290) 76,083,029

Loss net of tax, representing total comprehensive income for the period – – – 51,285 (3,121) 48,164

at 30 June 2013 119,106,150 3,558,768 5,109,686 – (51,643,411) 76,131,193

COmPANy STATEmENTOf CHANgES IN EquITyfOR ThE fINaNCIal yEaR ENDED 30 JuNE 2014



01.07.2013 01.01.2012 to to note 30.06.2014 30.06.2013 rM rM

cash flows from operating activities

Loss before tax (4,469,803) (19,250,976)

Adjustments for: Amortisation of prepaid land lease payments 7 3,149 4,722 Bad debt written off, net 7 5,677,734 169,905 Impairment loss on receivables 7 – 19,994,286 Depreciation of property, plant and equipment 7 3,595,787 3,829,461 Development costs written off 7 48,392 – Gain on disposal of property, plant and equipment 7 (1,278,052) (1,369,524) Gain on disposal of land held for development 7 (26,197,721) – Interest expense 7 8,470,635 14,241,302 Interest income 7 (1,115,721) (1,352,179) Investment in joint venture written off 7 – 4,061,200 Impairment loss on goodwill 7 – 798,278 Property, plant and equipment written-off 7 – 1 Reversal of impairment loss on receivables 7 – (18,432) Share of profit of associate (363,960) (332,163)

Operating (loss)/profit before changes in working capital (15,629,560) 20,775,881

Decrease/(increase) in development costs 12,098,360 (6,554,566) Decrease in land held for development 47,408,375 4,362,896 Decrease/(increase) in amount due from customer on contract 10,098,275 (10,445,920) (Increase)/decrease in receivables (5,299,827) 12,951,519 (Decrease)/increase in payables (7,159,311) 10,163,104

Cash generated from operating activities 41,516,312 31,252,914 Interest paid (10,715,232) (17,566,316) Interest received 1,115,721 1,235,030 Tax paid, net of refund (8,614,991) (6,195,914)

Net cash from operating activities 23,301,810 8,725,714

cash flows from investing activities

Acquisition of subsidiary, net of cash (3,713) –Transaction with non-controlling interests – (13,991,006)Purchase of property, plant and equipment (5,642,380) (400,906)Proceeds from disposal of property, plant and equipment 2,665,001 2,851,638

Net cash used in investing activities (2,981,092) (11,540,274)

CONSOLIDATED STATEmENTOf CASH fLOwS



01.07.2013 01.01.2012 to to note 30.06.2014 30.06.2013 rM rM

cash flows from financing activities Repayment of term loans (18,126,759) (103,465,792) Repayment of hire purchase payables (1,273,908) (1,552,020)Repayment of bankers’ acceptances and revolving credit facilities (44,333,613) (75,933,090)Proceeds from drawdown of term loans 24,364,327 122,843,723Proceeds from drawdown of bankers’ acceptances and revolving credit facilities 31,468,585 71,447,766(Placement)/withdrawal of fixed deposits pledged, net (2,782,747) (9,153,574)Dividend paid (4,626,000) –

Net cash (used in)/from financing activities (15,310,115) 4,187,013

net increase in cash and cash equivalents 5,010,603 1,372,453

cash and cash equivalents at the beginning of the year/period 7,714,910 6,342,457

cash and cash equivalents at the end of the year/period 24 12,725,513 7,714,910

(i) During the year/period, the Group acquired property, plant and equipment by the following means:

Group 01.07.2013 01.01.2012 to to note 30.06.2014 30.06.2013 rM rM

Cash 5,642,380 400,906 Hire purchase and finance lease arrangements 1,083,100 2,469,000

6,725,480 2,869,906


CONSOlIDaTED STaTEmENT Of CaSh flOwS (CONT’D)fOR ThE fINaNCIal yEaR ENDED 30 JuNE 2014


01.07.2013 01.01.2012 to to note 30.06.2014 30.06.2013 rM rM

cash flows from operating activities

Profit/(loss) before tax 10,166,718 (1,235,017)

Adjustments for: Amortisation of prepaid land lease payment 7 3,149 4,722 Depreciation of property, plant and equipment 7 1,986,389 3,056,561 Gain on disposal of property, plant and equipment 7 (848,062) (1,156,023) Development costs written-off 7 48,392 – Reversal of impairment loss on receivables 7 (12,026) (823,164) Interest expense 7 95,225 1,664,008 Interest income 7 (733,603) (1,004,476) Dividend income 5 (12,450,000) –

Operating profit before changes in working capital 1,743,818 506,611

Decrease in amount due from customer on contract 7,048,073 5,828,804 Increase in development costs (17,030) (3,491,264)(Increase)/decrease in receivables (5,056,982) 19,894,778Increase in payables 3,596,035 14,611,410

Cash generated from operating activities 3,826,278 37,350,339

Interest paid (1,299,661) (5,109,474) Interest received 733,603 1,004,476 Tax paid, net of refund (56,383) 465,468

Net cash from operating activities 3,203,837 33,710,809

cash flows from investing activities

Purchase of property, plant and equipment (2,591,602) (87,196) Proceeds from disposal of property, plant and equipment 2,235,001 2,550,000 Additional investment in subsidiaries 16 (6,399,890) (2,300,000) Dividend received 12,450,000 –

Net cash from investing activities 5,693,509 162,804

COmPANy STATEmENTOf CASH fLOwS



01.07.2013 01.01.2012 to to note 30.06.2014 30.06.2013 rM rM

cash flows from financing activities

(Placement)/withdrawal of fixed deposit pledged, net (1,407,026) 1,591,190 Proceeds from drawdown of term loans 12,945,176 6,778,513 Repayment of term loans (182,113) (35,466,376)Repayment of hire purchase payables (1,095,978) (1,098,485)Proceeds from revolving credit facility 31,468,585 71,447,766Repayment from bankers’ acceptances and revolving credit facilities (44,333,613) (79,502,165)

Net cash used in financing activities (2,604,969) (36,249,557)

net increase/(decrease) in cash and cash equivalents 6,292,377 (2,375,944)

cash and cash equivalents at the beginning of the year/period 372,564 2,748,508

cash and cash equivalents at the end of the year/period 24 6,664,941 372,564

(i) During the year/period, the Company acquired property, plant and equipment by the following means:

company 01.07.2013 01.01.2012 to to note 30.06.2014 30.06.2013 rM rM

Cash 2,591,602 87,196 Hire purchase and finance lease arrangements 386,800 2,055,000

2,978,402 2,142,196


COmPaNy STaTEmENT Of CaSh flOwS (CONT’D)fOR ThE fINaNCIal yEaR ENDED 30 JuNE 2014


1. corPorate inforMation

The Company is a public limited liability company, incorporated and domiciled in Malaysia and listed on the Main Market of Bursa Malaysia Securities Berhad. The registered office is located at 8th Floor, Menara Zecon, No. 92, Lot 393, Section 5, KTLD, Jalan Satok, 93400 Kuching, Sarawak.

The principal activities of the Company are foundation engineering, civil engineering and building contracting works and their related activities. The principal activities of the subsidiaries are disclosed in Note 16 to the financial statements. There have been no significant changes in the nature of the principal activities of the Group and of the Company during the financial year.

The financial statements were authorised for issue by the Board of Directors in accordance with a resolution of

the directors on .

2. suMMary of siGnificant accountinG Policies

2.1 basis of preparation

The financial statements of the Group and of the Company have been prepared in accordance with Financial Reporting Standards (“FRS”) and the Companies Act, 1965 in Malaysia. At the beginning of the current financial year, the Group and the Company adopted new and revised FRS which are mandatory for financial periods beginning on or after 1 July 2013 as described fully in Note 2.2.

The financial statements have been prepared on the historical cost basis except as disclosed in the accounting policies below.

The financial statements are presented in Ringgit Malaysia (RM).

2.2 changes in accounting policies

The accounting policies adopted are consistent with those of the previous financial year except as follows:

On 1 July 2013, the Group adopted the following new and amended FRS Standards mandatory for annual financial periods beginning on or after 1 July 2013:

• AmendmentstoFRS7,FinancialInstruments:Disclosures-OffsettingFinancialAssetsandFinancialLiabilities

• FRS10,ConsolidatedFinancialStatements• FRS11,JointArrangements• FRS12,DisclosureofInterestsinOtherEntities• AmendmentstoFRS10,FRS11andFRS12,ConsolidatedFinancialStatements,JointArrangements

and Disclosure of Interests in Other Entities: Transition Guidance• FRS13,FairValueMeasurement• FRS119,EmployeeBenefits• FRS127,SeparateFinancialStatements• FRS128,InvestmentsinAssociatesandJointVentures(IAS28asamendedbyIASBinMay2011)• AmendmentstoFRS1,FRS101,FRS116,FRS132andFRS134(ImprovementstoFRSs(2012))• AmendmenttoICInterpretation2,Members’SharesinCo-operativeEntitiesandSimilarInstruments

(Improvements to FRSs (2012))

NOTES TO THEfINANCIAL STATEmENTS



NOTES TO ThE fINaNCIal STaTEmENTS (CONT’D)fOR ThE fINaNCIal yEaR ENDED 30 JuNE 2014

2. suMMary of siGnificant accountinG Policies (cont’D)

2.2 changes in accounting policies (cont’d)

• ICInterpretation20,StrippingCostsintheProductionPhaseofaSurfaceMine• AmendmentstoFRS1,GovernmentLoans• AmendmentstoFRS10,FRS11andFRS12,ConsolidatedFinancialStatements,JointArrangements

and Disclosure of Interest in Other Entities: Transition Guidance

The adoption of the above standards and interpretations did not have any effect on the financial performance or position of the Group, except as discussed below:

frs 10, consolidated financial statements FRS 10 replaces part of FRS 127, Consolidated and Separate Financial Statements that deals with consolidated

financial statements and IC Interpretation 112 Consolidation - Special Purpose Entities.

Under FRS 10, an investor controls an investee when (a) the investor has power over an investee, (b) the investor has exposure, or rights, to variable returns from its involvement with the investee, and (c) the investor has ability to use its power over the investee to affect the amount of the investor’s returns. Under FRS 127 Consolidated and Separate Financial Statements, control was defined as the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities.

FRS 10 includes detailed guidance to explain when an investor has control over the investee. FRS 10 requires the investor to take into account all relevant facts and circumstances.

The application of this new standard is expected to have no impact on the financial statements of the Group.

frs 11, Joint arrangements

FRS11replacesFRS131InterestsinJointVenturesandICInterpretation113Jointly-ControlledEntities-Non-monetaryContributionsbyVenturers.

The classification of joint arrangements under FRS 11 is determined based on the rights and obligations of the parties to the joint arrangements by considering the structure, the legal form, the contractual terms agreed by the parties to the arrangement and when relevant, other facts and circumstances. Under FRS 11, joint arrangements are classified as either joint operations or joint ventures.

A joint operation is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the assets, and obligations for the liabilities, relating to the arrangement. A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the arrangement.

FRS 11 removes the option to account for jointly controlled entities (“JCE”) using proportionate consolidation. Instead, JCE that meet the definition of a joint venture must be accounted for using the equity method.

The adoption of this standard is expected to have no impact on the financial statements of the Group.




2.2 changes in accounting policies (cont’d)

frs 12, Disclosures of interests in other entities

FRS 12 includes all disclosure requirements for interests in subsidiaries, joint arrangements, associates and structured entities. A number of new disclosures are required. This standard affects disclosures only and has no impact on the Group’s financial position or performance.

frs 13, fair value Measurement

FRS 13 establishes a single source of guidance under FRS for all fair value measurements. FRS 13 does not change when an entity is required to use fair value, but rather provides guidance on how to measure fair value under FRS when fair value is required or permitted. As a result of the guidance of FRS 13, the Group re-assessed its policies for measuring fair values, in particular, its valuation inputs such as non-performance risk for fair value measurement of liabilities. FRS 13 also required additional disclosures.

Application of FRS 13 has not materially impacted the fair value measurement of the Group. Additional disclosures were required, are provided in the individual notes relating to the assets and liabilities whose fair values were determined.

frs 127, separate financial statements

As a consequence of the new FRS 10 and FRS 12, FRS 127 is limited to accounting for subsidiaries, jointly controlled entities and associates in separate financial statements.

frs 128, investments in associates and Joint ventures

As a consequence of the new FRS 11 and FRS 12, FRS 128 is renamed as FRS 128 Investments in Associates andJointVentures.Thisnewstandarddescribestheapplicationoftheequitymethodtoinvestmentsinjoint ventures in addition to associates.

amendments to frs 7, Disclosures - offsetting financial assets and financial liabilities

The amendments require additional information to be disclosed to enable users of financial statements to evaluate the effect or potential effect of netting arrangements, including rights of set-off associated with the entity’s recognised financial assets and recognised financial liabilities, on the entity’s financial position. The amendment affects disclosure only and has no impact on the Group’s financial position or performance.




2.3 amendments/standards issued but not yet effective

The amendments/standards issued but not yet effective up to the date of issuance of the Group’s financial statements are listed below. The Group intends to adopt these amendments/standards, if applicable, when they become effective.

frs effective for annual periods beginning on or after 1 January 2014

• AmendmentstoFRS10,FRS12andFRS127,InvestmentEntities• AmendmentstoFRS132,OffsettingFinancialAssetsandFinancialLiabilities• AmendmentstoFRS136,RecoverableAmountDisclosuresforNon-FinancialAssets• AmendmentstoFRS139,NovationofDerivativesandContinuationofHedgeAccounting• ICInterpretation21,Levies

frs effective for annual periods beginning on or after 1 July 2014

• AmendmentstoFRS2,FRS3,FRS8,FRS116,FRS124andFRS138(AnnualImprovementstoFRSs2010-2012 Cycle)

• AmendmentstoFRS3,FRS13andFRS140(AnnualImprovementstoFRSs2011-2013Cycle)• AmendmentstoFRS119,DefinedBenefitsPlans:Employeecontributions


• AmendmentstoFRS116,Property,PlantandEquipmentandFRS138,IntangibleAssets:Clarificationof Acceptable Methods of Depreciation and Amortisation

• AmendmentstoFRS11,JointArrangementsBenefits:AccountingforAcquisitionsofInterestinJointOperations

• FRS14,RegulatoryDeferralAccounts

frs effective date to be announced

• FRS9,FinancialInstruments(IFRS9issuedbyIASBinNovember2009)• FRS9,FinancialInstruments(IFRS9issuedbyIASBinOctober2010)• FRS9,FinancialInstruments:HedgeAccountingandamendmentstoFRS9,FRS7andFRS139

The directors expect that the adoption of the amendments/standards above will have no material impact on the financial statements of the Group in the period of initial application. The nature of the impending changes in accounting policies on adoption of applicable amendments/standards are described below:


• AmendmentstoFRS10,FRS12,andFRS127,InvestmentEntities

These amendments are effective for annual periods beginning on or after 1 January 2014 provide an exception to the consolidation requirement for entities that meet the definition of an investment entity under FRS 10. The exception to consolidation requires investment entities to account for subsidiaries at fair value through profit or loss. It is expected that this amendment would not be relevant to the Group, since none of the entities in the Group would qualify to be an investment entity under FRS 10.




2.3 amendments/standards issued but not yet effective (cont’d)

• AmendmentstoFRS132,OffsettingFinancialAssetsandFinancialLiabilities

The amendments to FRS 132 clarified that a legally enforceable right to set off is a right of set off that must not be contingent on a future event; and must be legally enforceable in the normal course of business, the event of default and the event of insolvency or bankruptcy of the entity and all of the counterparties. The amendments further clarified that an entity will meet the net settlement criterion as provided in FRS 132 if the entity can settle amounts in a manner that the outcome is, in effect, equivalent to net settlement.

• AmendmentstoFRS139,NovationofDerivativesandContinuationofHedgeAccounting

These amendments provide relief from discontinuing hedge accounting when novation of a derivative designated as a hedging instrument meets certain criteria. The Company has not novated its derivatives during the current period. However, these amendments would be considered for future novation.

• AmendmentstoFRS136,RecoverableAmountDisclosuresforNon-FinancialAssets

The amendments to FRS 136 clarified that recoverable amount (determined based on fair value less costs of disposal) is required to be disclosed only when an impairment loss is recognised or reversed. In addition, there are new disclosure requirements about fair value measurement when impairment or reversal of impairment is recognised.

The amendments to FRS 136 are to be applied retrospectively for annual periods beginning on or after 1 January 2014.

The amendments affect disclosures only and have no impact on the Group’s financial position or performance.

• ICInterpretation21,Levies

The Interpretation clarifies that an entity should recognise a liability to pay a levy when it is within the scope of FRS 137 Provisions, Contingent Liabilities and Contingent Assets. It also explains that the obligating event that gives rise to a liability to pay a levy is the activity described in the relevant legislation that triggers the payment of the levy. For example, if the activity that triggers the payment of the levy is the generation of revenue in the current period and the calculation of that levy is based on the revenue that was generated in the previous period, the obligating event for that levy is the generation of revenue in the current period. The generation of revenue in the previous period is necessary, but not sufficient, to create a present obligation.

The Interpretation also clarifies that the liability to pay a levy is recognised progressively if the obligating event occurs over a period of time. If an obligation to pay a levy is triggered when a minimum threshold is reached, the liability to pay a levy is recognised when that minimum activity threshold is reached.





• ICInterpretation21,Levies(cont’d)

The Interpretation is to be applied retrospectively for annual periods beginning on or after 1 January 2014.

The Group is currently assessing the impact that this standard will have on the financial position and performance of the Group.

annual periods beginning on or after 1 January 2016

• Amendments toFRS116,Property,PlantandEquipmentandFRS138, IntangibleAssets:clarification of acceptable Methods of Depreciation and amortisation

FRS 116 and FRS 138 both establish the principle for the basis of depreciation and amortisation as being the expected pattern of consumption of the future economic benefits of an asset.

The amendments to FRS 116 prohibit revenue-based depreciation because revenue does not, as a matter of principle, reflect the way in which an item of property, plant and equipment is used or consumed. For example, revenue is affected by other inputs and processes, selling activities and changes in sales volumes and prices. The price component may be affected by inflation, which has no bearing upon the way in which an asset is consumed.

The amendments to FRS 138 introduce a rebuttable presumption that an amortisation method that is based on the revalue generated by an activity that includes the use of an intangible asset is inappropriate (for the same reasons as the amendments to FRS 116). This presumption can be overcome only in the limited circumstances:

(a) in which the intangible asset is expressed as a measure of revenue, i.e. in the circumstance in which the predominant limiting factor that is inherent in an intangible asset is the achievement of a revenue threshold; or

(b) when it can be demonstrated that revenue and the consumption of the economic benefits of the intangible asset are highly correlated.

The amendments apply prospectively and are effective for annual periods beginning on or after 1 January 2016.





frs effective date to be announced

• FRS9,FinancialInstruments:ClassificationandMeasurement

FRS 9 reflects the first phase of work on the replacement of FRS 139 and applies to classification and measurement of financial assets and financial liabilities as defined in FRS 139. The standard was initially effective for annual periods beginning on or after 1 January 2013, but Amendments to FRS 9: Mandatory Effective Date of FRS 9 and Transition Disclosures, issued in March 2012, moved the mandatory effective date to 1 January 2015. Subsequently, on 14 February 2014, it was announced that the new effective date will be decided when the project is closer to completion. The adoption of the first phase of FRS 9 will have an effect on the classification and measurement of the Group’s financial assets, but will not have an impact on classification and measurement of the Group’s financial liabilities. The Group will quantify the effect in conjunction with the other phases, when the final standard including all phases is issued.

Malaysian financial reporting standards

On 19 November 2011, the Malaysian Accounting Standards Board (“MASB”) issued a new MASB approved accounting framework, the Malaysian Financial Reporting Standards (“MFRS Framework”).

The MFRS Framework is to be applied by all Entities Other Than Private Entities for annual periods beginning on or after 1 January 2012, with the exception of entities that are within the scope of MFRS 141 Agriculture (MFRS 141) and IC Interpretation 15 Agreements for Construction of Real Estate (IC 15), including its parent, significant investor and venturer (herein called ‘Transitioning Entities’).

Transitioning Entities will be allowed to defer adoption of the new MFRS Framework for additional three years. Consequently, adoption of the MFRS Framework by Transitioning Entities will be mandatory for annual periods beginning on or after 1 January 2015. Subsequently, on 2 September 2014, MASB has issued the following standards:

(i) MFRS 15, Revenue from Contracts with Customers(ii) Agriculture: Bearer Plants (Amendments to MFRS 116, Property, Plant and Equipment and MFRS 141,

Agriculture).

With the issuance of MFRS 14 and the Bearer Plants Amendment, all Transitioning Entities would be required to adopt the MFRS Framework latest by 1 January 2017.





Malaysian financial reporting standards (cont’d)

The Group falls within the scope definition of Transitioning Entities and accordingly, will be required to prepare financial statements using the MFRS Framework in its first MFRS financial statements for the year ending 30 June 2018. In presenting its first MFRS financial statements, the Group will be required to restate the comparative financial statements to amount reflecting the application of MFRS Framework. The majority of the adjustments required on transition will be made, retrospectively, against opening retained profits.

At the date of these financial statements, the Group has not completed its quantification of the financial effects of the differences between Financial Reporting Standards and accounting standards under the MFRS Framework due to the ongoing assessment by the project team. Accordingly, the financial performance and financial position as disclosed in these financial statements for the period ended 30 June 2014 could be different if prepared under the MFRS Framework.

The Group considers that it is achieving its scheduled milestones and expects to be in a position to fully

comply with the requirements of the MFRS Framework for the financial year ending 30 June 2018.

2.4 significant accounting policies

(a) basic of consolidation

The consolidated financial statements comprise the financial statements of the Company and its subsidiaries as at the reporting date. The financial statements of the subsidiaries used in the preparation of the consolidated financial statements are prepared for the same reporting date as the Company. Consistent accounting policies are applied for like transactions and events in similar circumstances.

The Company controls an investee if and only if the Company has all the following:

(i) Power over the investee (i.e existing rights that give it the current ability to direct the relevant activities of the investee);

(ii) Exposure, or rights, to variable returns from its investment with the investee; and (iii) The ability to use its power over the investee to affect its returns.

When the Company has less than a majority of the voting rights of an investee, the Company considers the following in assessing whether or not the Company’s voting rights in an investee are sufficient to give it power over the investee:

(i) The size of the Company’s holding of voting rights relative to the size and dispersion of holdings of the other vote holders;

(ii) Potential voting rights held by the Company, other vote holders or other parties;(iii) Rights arising from other contractual arrangements; and (iv) Any additional facts and circumstances that indicate that the Company has, or does not have,

the current ability to direct the relevant activities at the time that decisions need to be made, including voting patterns at previous shareholders’ meetings.




2.4 significant accounting policies (cont’d)

(a) basic of consolidation (cont’d)

Subsidiaries are consolidated when the Company obtains control over the subsidiary and ceases when the Company loses control of the subsidiary. All intra-group balances, income and expenses and unrealised gains and losses resulting from intra-group transactions are eliminated in full.

Losses within a subsidiary are attributed to the non-controlling interests even if that results in a deficit balance.

Changes in the Group’s ownership interests in subsidiaries that do not result in the Group losing control over the subsidiaries are accounted for as equity transactions. The carrying amounts of the Group’s interests and the non-controlling interests are adjusted to reflect the changes in their relative interests in the subsidiaries. The resulting difference is recognised directly in equity and attributed to owners of the Company.

When the Group loses control of a subsidiary, a gain or loss calculated as the difference between (i) the aggregate of the fair value of the consideration received and the fair value of any retained interest and (ii) the previous carrying amount of the assets and liabilities of the subsidiary and any non-controlling interests, is recognised in profit or loss. The subsidiary’s cumulative gain or loss which has been recognised in other comprehensive income and accumulated in equity are reclassified to profit or loss or where applicable, transferred directly to retained earnings. The fair value of any investment retained in the former subsidiary at the date control is lost is regarded as the cost on initial recognition of the investment.

business combinations

Acquisitions of subsidiaries are accounted for using the acquisition method. The cost of an acquisition is measured as the aggregate of the consideration transferred, measured at acquisition date fair value and the amount of any non-controlling interests in the acquiree. The Group elects on a transaction-by-transaction basis whether to measure the non-controlling interests in the acquiree either at fair value or at the proportionate share of the acquiree’s identifiable net assets. Transaction costs incurred are expensed and included in administrative expenses.

Any contingent consideration to be transferred by the acquirer will be recognised at fair value at the acquisition date. Subsequent changes in the fair value of the contingent consideration which is deemed to be an asset or liability, will be recognised in accordance with FRS 139 either in profit or loss or as a change to other comprehensive income. If the contingent consideration is classified as equity, it will not be remeasured. Subsequent settlement is accounted for within equity. In instances where the contingent consideration does not fall within the scope of FRS 139, it is measured in accordance with the appropriate FRS.

When the Group acquires a business, it assesses the financial assets and liabilities assumed for appropriate classification and designation in accordance with the contractual terms, economic circumstances and pertinent conditions as at the acquisition date. This includes the separation of embedded derivatives in host contracts by the acquiree.





(a) basic of consolidation (cont’d)

business combinations (cont’d)

If the business combination is achieved in stages, the acquisition date fair value of the acquirer’s previously held equity interest in the acquiree is remeasured to fair value at the acquisition date through profit or loss.

Goodwill is initially measured at cost, being the excess of the aggregate of the consideration transferred and the amount recognised for non-controlling interests over the net identifiable assets acquired and liabilities assumed. If this consideration is lower than fair value of the net assets of the subsidiary acquired, the difference is recognised in profit or loss.

(b) subsidiaries

A subsidiary is an entity over which the Group has all the following:

(i) Power over the investee (i.e existing rights that give it the current ability to direct the relevant activities of the investee);

(ii) Exposure, or rights, to variable returns from its investment with the investee; and (iii) The ability to use its power over the investee to affect its returns.

In the Company’s separate financial statements, investments in subsidiaries are accounted for at cost less impairment losses. On disposal of such investments, the difference between net disposal proceeds and their carrying amounts is included in profit or loss.

(c) investments in associates and joint ventures

An associate is an entity in which the Group has significant influence. Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control over those policies.

A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the joint arrangement. Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require the unanimous consent of the parties sharing control.

On acquisition of an investment in associate or joint venture, any excess of the cost of investment over the Group’s share of the net fair value of the identifiable assets and liabilities of the investee is recognised as goodwill and included in the carrying amount of the investment. Any excess of the Group’s share of the net fair value of the identifiable assets and liabilities of the investee over the cost of investment is excluded from the carrying amount of the investment and is instead included as income in the determination of the Group’s share of the associate’s or joint venture’s profit or loss for the period in which the investment is acquired.





(c) investments in associates and joint ventures (cont’d)

An associate or a joint venture is equity accounted for from the date on which the investee becomes an associate or a joint venture.

Under the equity method, on initial recognition the investment in an associate or a joint venture is recognised at cost, and the carrying amount is increased or decreased to recognise the Group’s share of the profit or loss and other comprehensive income of the associate or joint venture after the date of acquisition. When the Group’s share of losses in an associate or a joint venture equal or exceeds its interest in the associate or joint venture, the Group does not recognise further losses, unless it has incurred legal or constructive obligations or made payments on behalf of the associate or joint venture.

Profits and losses resulting from upstream and downstream transactions between the Group and its associate or joint venture are recognised in the Group’s financial statements only to the extent of unrelated investors’ interests in the associate or joint venture. Unrealised losses are eliminated unless the transaction provides evidence of an impairment of the asset transferred.

The financial statements of the associates and joint ventures are prepared as of the same reporting date as the Company. Where necessary, adjustments are made to bring the accounting policies in line with those of the Group.

After application of the equity method, the Group applies MFRS 139 Financial Instruments: Recognition and Measurement to determine whether it is necessary to recognise any additional impairment loss with respect to its net investment in the associate or joint venture. When necessary, the entire carrying amount of the investment is tested for impairment in accordance with MFRS 136 Impairment of Assets as a single asset, by comparing its recoverable amount (higher of value in use and fair value less costs to sell) with its carrying amount. Any impairment loss is recognised in profit or loss. Reversal of an impairment loss is recognised to the extent that the recoverable amount of the investment subsequently increases.

In the Company’s separate financial statements, investments in associates and joint ventures are accounted for at cost less impairment losses. On disposal of such investments, the difference between net disposal proceeds and their carrying amounts is included in profit or loss.

(d) intangible assets

(i) Goodwill

Goodwill acquired in a business combination is initially measured at cost, being the excess of the cost of business combination over the Group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities. Following the initial recognition, goodwill is measured at cost less any accumulated impairment losses.





(d) intangible assets (cont’d)

(ii) toll concession

Zecon Toll Concessionaire Sdn. Bhd. (“ZTCSB”), a wholly-owned subsidiary of the Company, entered into a Concession Agreement with the State Government of Sarawak on the 17 July 1998. Under this agreement, the State Government of Sarawak commissioned ZTCSB under a privatisation Scheme to design, build, operate and maintain a dual three lane carriageway (Second Kuching Bridge crossing) over the Sarawak River in Kuching, Sarawak.

As part of the consideration of the construction agreement, the State Government of Sarawak granted ZTCSB the right to collect toll for the usage over the Second Kuching Bridge for a period up to 2037 and a further 19 years at the option of the State Government of Sarawak.

The Group considers the cost of the toll concession as the amount forgone in respect of the consideration receivable from the State Government of Sarawak under the Concession Agreement and is amortised over the concession period based on the following formula:

Traffic Cost of toll Accumulated volume to date X concession less amortisation Estimated total traffic

volume of the concession period

The information on traffic volume is derived based on independent traffic consultant’s report and the carrying value of the toll concession is subject to an annual review.

(e) Property, plant and equipment and depreciation

All items of property, plant and equipment are initially recorded at cost. The cost of an item of property, plant and equipment is recognised as an asset if, and only if, 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.

Subsequent to recognition, property, plant and equipment, except for freehold land, are measured at cost less accumulated depreciation and accumulated impairment losses. When significant parts of property, plant and equipment are required to be replaced in intervals, the Group recognises such parts as individual assets with specific useful lives and depreciation, respectively. Likewise, when a major inspection is performed, its cost is recognised in the carrying amount of the plant and equipment as a replacement if the recognition criteria are satisfied. All other repair and maintenance costs are recognised in profit or loss as incurred.





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

Freehold land has an unlimited useful life and therefore is not depreciated. Leasehold land is depreciated over the remaining useful life. Depreciation of property, plant and equipment is provided for 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:

Motor vehicles 20%Vesselsanddredgers 15%Office furniture, fittings, equipment and renovation 10% - 331/3%Plant, machinery and equipment 10% - 15%Buildings 2%

Work-in-progress is not depreciated as these assets are not available for use.

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.

An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. The difference between the net disposal proceeds, if any and the net carrying amount is recognised in profit or loss and the unutilised portion of the revaluation surplus on that item is taken directly to retained earnings.

(f) land held for development and development costs

(i) land held for development

Land held for 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 assets and is stated at cost less any accumulated impairment losses.

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





(f) land held for development and development costs (cont’d)

(ii) Property development costs

Property development costs comprise all costs that are directly 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 profit or loss by using the stage of completion method based on certification by professional architects. 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 reliable 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 period 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 are recognised as an asset, which is measured at the lower of cost and net realisable value.

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

(g) construction contracts

Where the outcome of a construction contract can be estimated reliably, 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.

When it is probable that total contract costs will exceed total contract revenue, the expected loss is recognised as an expense immediately.

When the total of costs incurred on construction contracts plus, recognised profits (less recognised

losses), exceeds progress billings, the balance is classified as amount due from customers on contracts. When progress billings exceed costs incurred plus, recognised profits (less recognised losses), the balance is classified as amount due to customers on contracts.





(h) impairment of non-financial assets

The carrying amounts of assets, other than construction contract assets, property development costs, inventories, and deferred tax assets, 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 to determine the amount of impairment loss.

For goodwill, intangible assets that have an indefinite useful life and intangible assets that are not yet available for use, the recoverable amount is estimated at each reporting date or more frequently when indicators of impairment are identified.

For the purpose of impairment testing of these assets, recoverable amount is determined on an individual asset basis unless the asset does not generate cash flows that are largely independent of those from other assets. If this is the case, recoverable amount is determined for the cash-generating unit (CGU) to which the asset belongs to. Goodwill acquired in a business combination is, from the acquisition date, allocated to each of the Group’s CGUs, or groups of CGUs, that are expected to benefit from the synergies of the combination, irrespective of whether other assets or liabilities of the Group are assigned to those units or groups of units.

An asset’s recoverable amount is the higher of an asset’s or CGU’s fair value less costs to sell and its value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. Where the carrying amount of an asset exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. Impairment losses recognised in respect of a CGU or groups of CGUs are allocated first to reduce the carrying amount of any goodwill allocated to those units or groups of units and then, to reduce the carrying amount of the other assets in the unit or groups of units on a pro-rata basis.

An impairment loss is recognised in 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 the asset revaluation reserve for the same asset.

Impairment loss on goodwill is not reversed in a subsequent period. An impairment loss for an asset other than goodwill is reversed if, and only if, there has been a change in the estimates used to determine the asset’s recoverable amount since the last impairment loss was recognised. The carrying amount of an asset other than goodwill is increased to its revised recoverable amount, provided that this amount does not exceed the carrying amount that would have been determined (net of amortisation or depreciation) had no impairment loss been recognised for the asset in prior years. A reversal of impairment loss for an asset other than goodwill is recognised in profit or loss, unless the asset is carried at revalued amount, in which case, such reversal is treated as a revaluation increase.





(i) inventories

Inventories are stated at the lower of cost and net realisable value and are valued on a first-in-first-out basis. In arriving at the net realisable value due allowance is made for all damaged, obsolete and slow-moving items.

Cost of work-in-progress include cost of raw materials, direct labour and attributable production overheads. Cost of raw materials and supplies include expenses incurred in bringing them to their present location and condition. The cost of unsold properties comprises cost associated with the acquisition of land, direct costs and appropriate proportions of common cost.

(j) leases

(i) classification

A lease is recognised as a finance lease if it transfers substantially to the Group all the risks and rewards incidental to ownership. Leases of land and buildings are classified as operating or finance leases in the same way as leases of other assets and the land and buildings elements of a lease of land and buildings are considered separately for the purposes of lease classification. All leases that do not transfer substantially all the risks and rewards are classified as operating leases, with the following exceptions:

- Property held under operating leases that would otherwise meet the definition of an investment property is classified as an investment property on a property-by-property basis and, if classified as investment property, is accounted for as if held under a finance lease; and

- Land held for own use under an operating lease, the fair value of which cannot be measured separately from the fair value of a building situated thereon at the inception of the lease, is accounted for as being held under a finance lease, unless the building is also clearly held under an operating lease.

(ii) finance leases - the group as lessee

Assets acquired by way of hire purchase or finance leases are stated at an amount equal to the lower of their fair values and the present value of the minimum lease payments at the inception of the leases, less accumulated depreciation and impairment losses. The corresponding liability is included in the statement of financial position as borrowings. In calculating the present value of the minimum lease payments, the discount factor used is the interest rate implicit in the lease, when it is practicable to determine; otherwise, the Group’s incremental borrowing rate is used. Any initial direct costs are also added to the carrying amount of such assets.





(j) leases (cont’d)

(ii) finance leases - the group as lessee (cont’d)

Lease payments are apportioned between the finance costs and the reduction of the outstanding liability. Finance costs, which represent the difference between the total leasing commitments and the fair value of the assets acquired, are recognised in profit or loss over the term of the relevant lease so as to produce a constant periodic rate of charge on the remaining balance of the obligations for each accounting period.

The depreciation policy for leased assets is in accordance with that for depreciable property, plant and equipment, as disclosed in Note 2.4(e).

(iii) operating leases - the group as lessee

Operating lease payments are recognised as an expense on a straight-line basis over the term of the relevant lease. The aggregate benefit of incentives provided by the lessor is recognised as a reduction of rental expense over the lease term on a straight-line basis.

In the case of a lease of land and buildings, the minimum lease payments or the up-front payments made are allocated, whenever necessary, between the land and the buildings elements in proportion to the relative fair values for leasehold interests in the land element and buildings element of the lease at the inception of the lease. The up-front payment represents prepaid land lease payments and are amortised on a straight-line basis over the lease term.

(iv) operating leases - the group as lessor

Assets leased out under operating leases are presented on the statement of financial position according to the nature of the assets. Rental income from operating leases is recognised on a straight-line basis over the term of the relevant lease. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised on a straight-line basis over the lease term.

(k) 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 by the reporting date.





(k) income tax (cont’d)

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. Deferred tax is not recognised if the temporary difference arises from goodwill or negative goodwill or from the initial recognition of an asset or liability in a transaction which is not a business combination and at the time of the transaction, affects neither accounting profit nor taxable profit.

Deferred tax is measured at the tax rates that are expected to apply in the period when the asset is realised or the liability is settled, based on tax rates that have been enacted or substantively enacted at the reporting date. Deferred tax is recognised as an income or an expense and included in profit or loss for the year, except when it arises from a transaction which is recognised directly in equity, in which case the deferred tax is also recognised directly in equity, or when it arises from a business combination that is an acquisition, in which case the deferred tax is included in the resulting goodwill or the amount of any excess of the acquirer’s interest in the net fair value of the acquiree’s identifiable assets, liabilities and contingent liabilities over the cost of the combination.

(l) 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. 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

Defined contribution plans are post-employment benefit plans under which the Group pays fixed contributions into separate entities or funds and will have no legal or constructive obligation to pay further contributions if any of the funds do not hold sufficient assets to pay all employee benefits relating to employee services in the current and preceding financial years. Such contributions are recognised as an expense in profit or loss as incurred. As required by law, companies in Malaysia make such contributions to the Employees Provident Fund (“EPF”). Some of the Group’s foreign subsidiaries also make contributions to their respective countries’ statutory pension schemes.





(m) 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 (“the functional currency”). The consolidated financial statements are presented in Ringgit Malaysia (RM), which is also the Company’s functional currency.

(ii) foreign currency transactions

In preparing the financial statements of the individual entities, transactions in currencies other than the entity’s functional currency (foreign currencies) are recorded in the functional currencies using the exchange rates prevailing at the dates of the transactions. At each reporting date, monetary items denominated in foreign currencies are translated at the rates prevailing on the reporting date. Non-monetary items carried at fair value that are denominated in foreign currencies are translated at the rates prevailing on the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not translated.

Exchange differences arising on the settlement of monetary items, and on the translation of monetary items, are included in profit or loss for the period except for exchange differences arising on monetary items that form part of the Group’s net investment in foreign operation. Exchange differences arising on monetary items that form part of the Group’s net investment in foreign operation, where that monetary item is denominated in either the functional currency of the reporting entity or the foreign operation, are initially taken directly to the foreign currency translation reserve within equity until the disposal of the foreign operations, at which time they are recognised in profit or loss.

Exchange differences arising on monetary items that form part of the Group’s net investment in foreign operation, where that monetary item is denominated in a currency other than the functional currency of either the reporting entity or the foreign operation, are recognised in profit or loss for the period. Exchange differences arising on monetary items that form part of the Company’s net investment in foreign operation, regardless of the currency of the monetary item, are recognised in profit or loss in the Company’s financial statements or the individual financial statements of the foreign operation, as appropriate.

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.





(m) foreign currencies (cont’d)

(iii) foreign operations

The results and financial position of foreign operations that have a functional currency different from the presentation currency (RM) of the consolidated financial statements are translated into RM as follows:

- Assets and liabilities for each statement of financial position presented are translated at the closing rate prevailing at the reporting date;

- Income and expenses for each statement of comprehensive income are translated at average exchange rates for the year, which approximates the exchange rates at the dates of the transactions; and

- All resulting exchange differences are taken to the foreign currency translation reserve within equity.

(n) revenue recognition

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured. The following specific recognition criteria must also be met before revenue is recognised:

(i) Property development

Revenue from sale of properties is accounted for by the stage of completion method as described in Note 2.4(f ).

(ii) construction contracts

Revenue from construction and other contracts is accounted for by the percentage of completion method as described in Note 2.4(g).

(iii) toll concession

Toll revenue is accounted for as at when toll is chargeable for the usage of the Second Kuching Bridge crossing.

(iv) Dividend income

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

(v) interest income

Interest income is recognised on a time proportion basis that reflects the effective yield on the asset.





(o) routine maintenance costs

Routine maintenance costs on the toll bridge shall be charged to profit or loss when incurred.

(p) Provisions

Provisions are recognised when the Group has a present obligation as a result of a past event and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate of the amount can be made. Provisions are reviewed at each reporting date and adjusted to reflect the current best estimate. Where the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, where appropriate, the risks specific to the liability. Where discounting is used, the increase in the provision due to the passage of time is recognised as finance cost.

(q) borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale. Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation.

All other borrowing costs are recognised in profit or loss in the period in which they are incurred.

(r) financial assets

Financial assets are recognised in the statements of financial position when, and only when, the Group and the Company become a party to the contractual provisions of the financial instrument.

When financial assets are recognised initially, they are measured at fair value, plus, in the case of financial assets not at fair value through profit or loss, directly attributable transaction costs.

The Group and the Company determine the classification of their financial assets at initial recognition, and the categories include financial assets at fair value through profit or loss, loans and receivables, held-to-maturity investments and available-for-sale financial assets.

(a) financial assets at fair value through profit or loss

Financial assets are classified as financial assets at fair value through profit or loss if they are held for trading or are designated as such upon initial recognition. Financial assets held for trading are derivatives (including separated embedded derivatives) or financial assets acquired principally for the purpose of selling in the near term.





(r) financial assets (cont’d)

(a) financial assets at fair value through profit or loss (cont’d)

Subsequent to initial recognition, financial assets at fair value through profit or loss are measured at fair value. Any gains or losses arising from changes in fair value are recognised in profit or loss. Net gains or net losses on financial assets at fair value through profit or loss do not include exchange differences, interest and dividend income. Exchange differences, interest and dividend income on financial assets at fair value through profit or loss are recognised separately in profit or loss as part of other losses or other income.

Financial assets at fair value through profit or loss could be presented as current or non-current. Financial assets that are held primarily for trading purposes are presented as current whereas financial assets that are not held primarily for trading purposes are presented as current or non-current based on the settlement date.

(b) 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 or 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.

(c) held-to-maturity investments Financial assets with fixed or determinable payments and fixed maturity are classified as held-

to-maturity when the Group has the positive intention and ability to hold the investment to maturity.

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

Held-to-maturity investments are classified as non-current assets, except for those having maturity within 12 months after the reporting date which are classified as current.





(r) financial assets (cont’d)

(d) 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 from changes in fair value of the financial asset 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 cumulative 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 the effective interest method is recognised in profit or loss. Dividends on an available-for-sale equity instrument are recognised in profit or loss when the Group and the Company’s right to receive payment is established.

Investments 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.

A financial asset is derecognised where the contractual right to receive cash flows from the asset has expired. On derecognition of a financial asset in its entirety, the difference between the carrying amount and the sum of the consideration received and any cumulative gain or loss that had been recognised in other comprehensive income is recognised in profit or loss.

Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the period generally established by regulation or convention in the marketplace concerned. All regular way purchases and sales of financial assets are recognised or derecognised on the trade date i.e., the date that the Group and the Company commit to purchase or sell the asset.

(s) 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.





(s) impairment of financial assets (cont’d)

(a) 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 based 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 increase 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 exists, 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 the impairment loss decreases and the decrease can be related objectively to an event occurring after the 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.

(b) 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.





(s) impairment of financial assets (cont’d)

(c) 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 an available-for-sale financial asset 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. For available-for-sale debt investments, impairment losses are subsequently reversed in profit or loss if an increase in the fair value of the investment can be objectively related to an event occurring after the recognition of the impairment loss in profit or loss.

(t) financial liabilities

Financial liabilities are classified according to the substance of the contractual arrangements entered into and the definitions of a financial liability.

Financial liabilities, within the scope of FRS 139, are recognised in the statement of financial position when, and only when, the Group and the Company become a party to the contractual provisions of the financial instrument. Financial liabilities are classified as either financial liabilities at fair value through profit or loss or other financial liabilities.

(a) financial liabilities at fair value through profit or loss

Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated upon initial recognition as at fair value through profit or loss.

Financial liabilities held for trading include derivatives entered into by the Group and the Company that do not meet the hedge accounting criteria. Derivative liabilities are initially measured at fair value and subsequently stated at fair value, with any resultant gains or losses recognised in profit or loss. Net gains or losses on derivatives include exchange differences.

The Group and the Company have not designated any financial liabilities as at fair value through profit or loss.





(t) financial liabilities (cont’d)

(b) other financial liabilities

The Group’s and the Company’s other financial liabilities include trade payables, other payables and loans and borrowings.

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

Loans and 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.

For other financial liabilities, gains and losses are recognised in profit or loss when the liabilities are derecognised, and through the amortisation process.

A financial liability is derecognised when the obligation under the liability is extinguished. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognised in profit or loss.

(u) financial guarantee contracts

A financial guarantee contract 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.

(v) segment reporting

For management purposes, the Group is organised into operating segments based on their products and services which are independently managed by the respective segment managers responsible for the performance of the respective segments under their charge. The segment managers report directly to the management of the Company who regularly review the segment results in order to allocate resources to the segments and to assess the segment performance. Additional disclosures on each of these segments are shown in Note 32, including the factors used to identify the reportable segments and the measurement basis of segment information.





(w) contingencies

A contingent liability or asset is a possible obligation or asset that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of uncertain future event(s) not wholly within the control of the Group.

Contingent liabilities and assets are not recognised in the statements of financial position of the Group.

(x) fair value measurement

The Group and the Company measure financial instruments at fair value at each reporting date. On initial recognition, the fair value of a financial instrument is the transaction price, i.e. the fair value

of the consideration given or received. Subsequent to initial recognition, the fair values of financial instruments measured at fair value are measured in accordance with the valuation methodologies as set out in Note 36.

The Group and the Company use valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs. The appropriate quoted market price for an asset held or liability to be issued is usually the current bid price without any deduction for transaction costs that may be incurred on sale or other disposal and, for any asset to be acquired or liability held.

Investments in unquoted equity instruments whose fair value cannot be reliably measured are

measured at cost, and assessed for impairment at each reporting date. The carrying values of current financial instruments approximate their fair value due to the short-term maturity of these instruments and the disclosures of fair values are not made when the carrying amount of current financial instruments is a reasonable approximation of the fair values. The fair values of non-current financial instruments are disclosed separately unless there are significant differences at the end of the reporting date.

For assets and liabilities that are recognised in the financial statements on a recurring basis, the Group and the Company determine whether transfers have occurred between levels in the hierarchy by re-assessing categorisation (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting date.




2.5 significant accounting judgments and estimates

The preparation of the Group’s financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the disclosure of contingent liabilities at the reporting date. However, uncertainty about these assumptions and estimates could result in outcomes that could require a material adjustment to the carrying amount of the asset or liability affected in the future.

Key sources of estimation uncertainty

The key assumptions concerning the future 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 are discussed below.

(i) impairment of goodwill on consolidation

Goodwill is tested for impairment annually and at other times when such indicators exist. This requires an estimation of the value in use of the cash-generating units to which goodwill and brands are allocated.

When value in use calculations are undertaken, management must estimate the expected future cash

flows from the asset or cash-generating unit and choose a suitable discount rate in order to calculate the present value of those cash flows. Further details of the carrying value, the key assumptions applied in the impairment assessment of goodwill and sensitivity analysis to changes in the assumptions are given in Note 15.

(ii) constructions contracts and property development

The Group recognises construction contracts and 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 construction contracts costs and property development costs incurred for work performed to date bear to the estimated total construction costs and property development costs.

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

The carrying amounts of assets and liabilities of the Group arising from construction contracts and property development activities are disclosed in Note 21 and Note 14(b) respectively.




2.5 significant accounting judgments and estimates (cont’d)

Key sources of estimation uncertainty (cont’d)

(iii) useful life of property, plant and equipment

Property, plant and equipment are depreciated on a straight-line basis over their estimated useful lives. Management estimates the useful lives of the property, plant and equipment to be within 3 to 50 years. Changes in the expected level of usage and technological developments could impact the economic useful lives and the residual values of these assets, therefore future depreciation charges could be revised. The cost of plant and machinery is depreciated on a straight-line basis over the assets’ useful lives. Management estimates the useful lives of these plant and machinery to be within 7 to 10 years. These are common life expectancies applied in the construction industry. Changes in the expected level of usage and technological developments could impact the economic useful lives and the residual values of these assets, therefore future depreciation charges could be revised.

(iv) Deferred tax assets

Deferred tax assets are recognised for all unutilised tax losses and unabsorbed capital allowances to the extent that it is probable that future taxable profit will be available against which the losses and capital allowances can be utilised. Significant management judgement is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and level of future taxable profits together with future tax planning strategies.

Assumptions about generation of future taxable profits depend on management’s estimates of future cash flows. These depend on estimates of future production and sales volume, operating costs, capital expenditure, dividends and other capital management transactions. Judgement is also required about application of income tax legislation. These judgements and assumptions are subject to risks and uncertainty, hence there is a possibility that changes in circumstances will alter expectations, which may impact the amount of deferred tax assets recognised in the statements of financial position and the amount of unrecognised tax losses and unrecognised temporary differences.

(v) impairment of loans and receivables

The Group assesses at each reporting date whether there is any objective evidence that a financial asset is impaired. To determine whether there is objective evidence of impairment, the Group considers factors such as the probability of insolvency or significant financial difficulties of the debtor and default or significant delay in payments.

Where there is objective evidence of impairment, the amount and timing of future cash flows are estimated based on historical loss experience for assets with similar credit risk characteristics. The carrying amount of the Group’s loans and receivable at the reporting date is disclosed in Note 22.



3. revenue

Group company 01.07.2013 01.01.2012 01.07.2013 01.01.2012 to to to to 30.06.2014 30.06.2013 30.06.2014 30.06.2013 rM rM rM rM

Construction contracts 141,549,017 204,987,603 139,038,390 181,439,579 Toll concession 15,206,239 19,893,257 – –Property development 25,244,445 12,787,670 – –Gain on disposal of land held for development 26,536,197 – – –Others 59,438 152,521 – –

208,595,336 237,821,051 139,038,390 181,439,579

4. cost of sales


Construction contract costs 155,178,510 188,950,520 131,137,308 172,205,594Toll concession 2,835,512 2,999,996 – –Property development 25,850,653 8,346,761 – –Others 651,221 705,335 – –

184,515,896 201,002,612 131,137,308 172,205,594



5. other incoMe


Dividend income – – 12,450,000 –Gain on disposal of property, plant and equipment (Note 7) 1,278,052 1,369,524 848,062 1,156,023Interest income (Note7) 1,115,721 1,352,179 733,603 1,004,476Management fee income – – 12,000 18,000Rental income 174,200 996,146 319,908 2,248,385Reversal of impairment loss on receivable – 18,432 12,026 4,305,350Others 150,954 322,759 104,228 45,744

2,718,927 4,059,040 14,479,827 8,777,978

6. finance costs


Interest expense on:Bank borrowings 10,552,149 17,596,523 1,180,021 4,942,030 Hire purchase and finance lease liabilities 163,083 232,590 119,640 167,444 Trade payables – 375,677 – –

Total interest expense 10,715,232 18,204,790 1,299,661 5,109,474

Less: Interest capitalised in qualifying assets:Costs of construction contracts (Note 21) (1,225,024) (3,482,966) (1,204,436) (3,445,466) Property development costs (Note 14(b)) (1,019,573) (480,522) – –

Interest expense (Note 7) 8,470,635 14,241,302 95,225 1,664,008



7. (loss)/Profit before taX

The following amounts have been included in arriving at (loss)/profit before tax:


Amortisation of prepaid land lease payments (Note 13) 3,149 4,722 3,149 4,722 Auditors’ remuneration Statutory audit - current year 270,000 357,830 100,000 140,000 - (over)/under provision in prior year (32,333) 19,693 (21,034) 5,000 Bad debt written off, net 5,677,734 169,905 – –Depreciation of property, plant and equipment (Note 12) 3,595,787 3,829,461 1,986,389 3,056,561 Development costs written off (Note 14) 48,392 – 48,392 –Employee benefits expense (Note 8) 16,297,108 20,299,842 6,164,309 6,060,490 Gain on disposal of property, plant and equipment (Note 5) (1,278,052) (1,369,524) (848,062) (1,156,023)Gain on disposal of land held for development (26,197,721) – – –Impairment loss on goodwill – 798,278 – –Impairment loss on receivables – 19,994,286 –Investment in joint venture written off (Note 18) – 4,061,200 – –Interest expense (Note 6) 8,470,635 14,241,302 95,225 1,664,008Interest income (Note 5) (1,115,721) (1,352,179) (733,603) (1,004,476)Non-executive directors’ remuneration (Note 9) 413,300 357,600 413,300 357,600Property, plant and equipment written-off – 1 – –Reversal of impairment loss on receivables – (18,432) (12,026) (823,164) Rental expense 1,132,130 1,292,508 1,109,480 1,270,536



8. eMPloyee benefits eXPense


Salaries, allowances, bonus and wages 12,885,778 16,401,074 4,409,354 4,620,059Executive directors’ remuneration (Note 9) 1,977,118 1,884,496 1,244,334 843,082Provident fund contributions 1,288,355 1,548,144 481,885 566,226Social security costs 145,857 396,128 28,736 31,123

16,297,108 20,229,842 6,164,309 6,060,490

Number of employees at the end of the year/period 366 332 98 77

9. DIRECtORS’REMuNERAtION


Executive:Salaries, bonus and other emoluments 1,656,262 1,683,365 979,824 743,715 Fees 147,900 35,920 147,900 25,920 Defined contribution plan 172,956 165,211 116,610 73,447

Total Executive Directors’ remuneration 1,977,118 1,884,496 1,244,334 843,082

Non-executive: Fees 116,400 112,800 116,400 112,800 Other emoluments 296,400 244,800 296,400 244,800

Total Non-executive Directors’ remuneration (Note 7) 413,300 357,600 413,000 357,600

Total Directors’ remuneration (Note 34) 2,390,418 2,242,096 1,657,634 1,200,682



9. DIRECtORS’REMuNERAtION(CONt’D)

The number of directors of the Company whose total remuneration during the financial year/period fell within the following bands is analysed below:

number of directorsrange of remuneration executive non-executive


Below 50,000 – – – 7RM50,001 - RM100,000 – – 6 –RM100,001 - RM150,000 – – – –RM150,001 - RM200,000 – – – –RM200,001 - RM250,000 – – – –RM250,001 - RM300,000 – 1 – –RM300,001 - RM350,000 1 – – –RM350,001 - RM400,000 – – – –RM400,001 - RM450,000 – – – –RM450,001 - RM500,000 – 1 – –RM500,001 - RM550,000 – – – –RM550,001 - RM600,000 – – – –RM600,001 - RM750,000 1 – – –

10. incoMe taX eXPense


Current income tax: Malaysian income tax 8,052,255 7,424,974 200,400 121,000(Over)/under provision in prior period/year (156,370) (1,392,676) 15,984 (1,352,896)

7,895,885 6,032,298 216,384 (1,231,896)

Deferred tax (Note 29):Relating to origination and reversal of temporary differences 2,987,177 (63,524) 2,836,775 –Over provision in prior period/year (485,845) (280,103) – –

2,501,332 (343,627) 2,836,775 –

Total income tax expense 10,397,217 5,688,671 3,053,159 (1,231,896)



10. incoMe taX eXPense (cont’D)

Domestic income tax is calculated at the Malaysian statutory tax rate of 25% (2013: 25%) of the estimated assessable profit for the year/period. The Malaysian corporate tax rate is expected to reduce from 25% to 24% as announced in the 2014 Budget.

Taxation for other jurisdictions is calculated at the rates prevailing in the respective jurisdictions. During the current financial year/period, the income tax rate applicable to the subsidiary in Australia is 30% (2013: 30%).

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

01.07.2013 01.01.2012 to to 30.06.2014 30.06.2013 rM rM

Group

Loss before tax (4,469,803) (19,250,976)

Taxation at statutory tax rate of 25% (2013: 25%) (1,117,451) (4,812,744) Effect of expenses not deductible for tax purposes 12,848,946 11,773,639 Income not subject to tax (4,257,964) –Utilisation of previously unutilised business losses and unabsorbed capital allowances (2,836,775) (28,315) Deferred tax assets not recognised on unabsorbed capital allowances and business losses 6,402,676 428,870 Over provision of deferred tax in prior period/year (485,845) (280,103) Over provision of income tax expense in prior period/year (156,370) (1,392,676)

Income tax expense for the year/period 10,397,217 5,688,671

company

Profit/(loss) before tax 10,166,718 (1,235,017)

Taxation at Malaysian statutory tax rate of 25% (2011: 25%) 2,541,680 (308,754) Effect of expenses not deductible for tax purposes 6,657,049 504,450 Income not subject to tax (3,324,779) (74,696) Utilisation of previously unutilised business losses and unabsorbed capital allowances (2,836,775) –Under/(over) provision of income tax expense in prior period/year 15,984 (1,352,896)

Income tax expense for the year/period 3,053,159 (1,231,896)



11. earninGs Per share

basic

Basic earnings per share amounts are calculated by dividing loss for the year/period attributable to ordinary equity holders of the Company by the weighted average number of ordinary shares in issue during the financial year/period.

01.07.2013 01.01.2012 to to 30.06.2014 30.06.2013 rM rM

Loss attributable to ordinary equity holders of the Company (19,936,525) (24,702,542)

Weighted average number of ordinary shares in issue 119,106,150 119,106,150

01.07.2013 01.01.2012 to to 30.06.2014 30.06.2013 sen sen

Basic earnings per share for:Loss for the year/period (16.74) (20.74)

There are no dilutive potential ordinary shares. As such, the diluted earnings per share of the Group is equivalent to basic earnings per share.



12. ProPerty, Plant anD equiPMent

office furnitures Plant fittings, machinery vessels equipment leasehold Motor and and and land building vehicles equipment dredgers renovation total rM rM rM rM rM rM rMGroup

2014

cost

At 1 July 2013 716,000 5,007,166 11,308,359 42,412,762 1,400,000 9,414,005 70,258,292Additions – 1,850,000 3,691,392 511,827 – 672,261 6,725,480Disposals – (1,702,802) (966,303) – – – (2,669,105)

At 30 June 2014 716,000 5,154,364 14,033,448 42,924,589 1,400,000 10,086,266 74,314,667

accumulated depreciation

At 1 July 2013 181,636 1,033,135 10,301,998 34,023,154 1,400,000 8,059,195 54,999,118Depreciation charge for the year 13,509 88,082 1,112,900 3,951,190 – 676,438 5,842,250 Recognised in profit or loss (Note 7) 13,509 88,082 552,579 2,411,241 – 530,375 3,595,787Capitalised in development costs (Note 14(b)) – – 4,870 30 – – 4,900Capitalised in construction costs (Note 21) – – 555,451 1,540,050 – 146,063 2,241,563Disposals – (315,863) (966,293) – – – (1,282,156)

At 30 June 2014 195,145 805,354 10,448,605 37,974,344 1,400,000 8,735,633 59,559,212

net carrying amount

At 30 June 2014 520,855 4,349,010 3,584,843 4,950,245 – 1,350,633 14,755,455



12. ProPerty, Plant anD equiPMent (cont’D)

office furnitures Plant fittings, machinery vessels equipment leasehold Motor and and and land building vehicles equipment dredgers renovation totalGroup rM rM rM rM rM rM rM

2013

cost

At 1 January 2012 716,000 6,651,507 11,317,079 40,290,613 1,400,000 9,572,755 69,947,954Additions – – 470,527 2,218,596 – 180,783 2,869,906Disposals – (1,644,341) (479,247) (434,600) – (1,380) (2,559,568)Transfer – – – 338,153 – (338,153) –

At 30 June 2013 716,000 5,007,166 11,308,359 42,412,762 1,400,000 9,414,005 70,258,292


At 1 January 2012 161,371 1,127,398 9,307,328 28,429,220 1,400,000 7,259,127 47,684,444Depreciation charge for the period 20,265 156,101 1,456,278 5,758,850 – 1,000,634 8,392,128

Recognised in profit or loss (Note 7) 20,265 156,101 248,833 3,038,320 – 365,942 3,829,461Capitalised in development costs (Note 14(b)) – – – – – 12,674 12,674Capitalised in construction costs (Note 21) – – 1,207,445 2,720,530 – 622,018 4,549,993Disposals – (250,364) (461,608) (364,769) – (713) (1,077,454)Transfer – – – 199,853 – (199,853) –

At 30 June 2013 181,636 1,033,135 10,301,998 34,023,154 1,400,000 8,059,195 54,999,118

net carrying amount

At 30 June 2013 534,364 3,974,031 1,006,361 8,389,608 – 1,354,810 15,259,174




office furnitures Plant fittings, machinery vessels equipment leasehold Motor and and and land building vehicles equipment dredgers renovation total rM rM rM rM rM rM rMcompany

2014

cost

At 1 July 2013 716,000 5,007,166 5,128,736 31,175,166 1,400,000 4,400,507 47,827,575Additions – 1,850,000 538,940 353,040 – 236,422 2,978,402Disposals – (1,702,802) – – – – (1,702,802)

At 30 June 2014 716,000 5,154,364 5,667,676 31,528,206 1,400,000 4,636,929 49,103,175

accumulated depreciation At 1 July 2013 181,636 1,033,135 4,907,791 25,370,959 1,400,000 4,140,327 37,033,848Depreciation charge for the year 13,509 88,082 247,827 2,605,522 – 124,955 3,139,895 Recognised in profit or loss (Note 7) 13,509 88,082 56,824 1,724,910 – 103,063 1,986,389Capitalised in construction costs (Note 21) – – 191,003 940,612 – 21,892 1,153,506Disposals – (315,863) – – – – (315,863)

At 30 June 2014 195,145 805,354 5,155,618 28,036,481 1,400,000 4,265,282 39,857,880

net carrying amount

At 30 June 2014 520,855 4,349,010 512,058 3,491,725 – 371,647 9,245,295




office furnitures Plant fittings, machinery vessels equipment leasehold Motor and and and land building vehicles equipment dredgers renovation total rM rM rM rM rM rM rMcompany

2013

cost

At 1 January 2012 716,000 6,651,507 5,125,436 29,120,166 1,400,000 4,316,611 47,329,720Additions – – 3,300 2,055,000 – 83,896 2,142,196Disposals – (1,644,341) – – – – (1,644,341)

At 30 June 2013 716,000 5,007,166 5,128,736 31,175,166 1,400,000 4,400,507 47,827,575


At 1 January 2012 161,371 1,127,398 4,651,564 21,594,739 1,400,000 3,940,445 32,875,517Depreciation charge for the period 20,265 156,101 256,227 3,776,220 – 199,882 4,408,695 Recognised in profit or loss (Note 7) 20,265 156,101 70,267 2,648,955 – 160,973 3,056,561Capitalised in construction costs (Note 21) – – 185,960 1,127,265 – 38,909 1,352,134Disposals – (250,364) – – – – (250,364)

At 30 June 2013 181,636 1,033,135 4,907,791 25,370,959 1,400,000 4,140,327 37,033,848

net carrying amount

At 30 June 2013 534,364 3,974,031 220,945 5,804,207 – 260,180 10,793,727




During the financial year/period, the Group and the Company acquired property, plant and equipment at aggregate costs of RM6,725,480 (2013: RM2,869,906) and RM 2,978,402 (2013: RM2,142,196), respectively, of which RM1,083,100 (2013: RM2,469,000) and RM386,800 (2013: RM2,055,000), respectively, were acquired by means of hire purchase and finance lease arrangements. Net carrying amounts of property, plant and equipment held under hire purchase and finance lease arrangements are as follows:

Group company 2014 2013 2014 2013 rM rM rM rM

Plant, machinery and equipment 1,515,563 2,477,875 1,515,563 2,477,875Motor vehicles 1,569,214 862,386 451,312 208,834

3,084,777 3,340,261 1,966,875 2,686,709

Details of the terms and conditions of the hire purchase and finance lease arrangements are disclosed in Note 26.

Net carrying amounts of property, plant and equipment pledged as securities for borrowings as disclosed in Note 25 are as follows:


assets under term loans

Motor vehicle 3,081 4,007 – –Plant and machinery 1,204 1,573 – –Computer and accessories 154,469 163,478 – –Furniture and fittings 93,624 71,070 – –Equipment 107,831 62,589 – –Office renovation 2,656 4,024 – –Building 1,453,410 1,488,573 1,453,410 1,488,573

1,816,275 1,795,314 1,453,410 1,488,573



13. PrePaiD lanD lease PayMents

Group/company rM rM

cost

At 1 July 2013/1 January 2012 and 30 June 2014/2013 170,000 170,000

accumulated amortisation

At 1 July 2013/1 January 2012 42,331 37,609 Amortisation for the year (Note 7) 3,149 4,722

At 30 June 2014/2013 45,480 42,331

net carrying amount

At 30 June 2014/2013 124,520 127,669

Amount to be amortised:- not later than one year 3,148 3,148

- later than one year but not later than five year 12,592 12,592 - later than five years 108,780 111,929

14. lanD helD for ProPerty DeveloPMent anD DeveloPMents costs

(a) land held for property development

short- term long-term freehold leaseholdGroup land land total rM rM rM2014

cost

At 1 July 2013 1,159,125 112,006,475 113,165,600Disposal – (21,210,654) (21,210,654)

At 30 June 2014 1,159,125 90,795,821 91,954,946



14. lanD helD for ProPerty DeveloPMent anD DeveloPMents costs (cont’D)

(a) land held for property development (cont’d)

short- term long-term freehold leaseholdGroup (cont’d) land land total rM rM rM2013

cost At 1 January 2012 1,159,125 116,369,371 117,528,496Disposal – (4,362,896) (4,362,896)

At 30 June 2013 1,159,125 112,006,475 113,165,600

Leasehold land with carrying amount of RM Nil (2013: RM 29,352,013) have been pledged as security for banking facilities granted to the Group (Note 25).

(b) Development costs

leasehold Development land costs total rM rM rMGroup

2014

cumulative development costs

At 1 July 2013 4,837,174 39,856,524 44,693,698Costs incurred during the year – 15,248,280 15,248,280Costs written off during the year (Note 7) – (48,392) (48,392)Reclassification (2,263,572) – (2,263,572)

At 30 June 2014 2,573,602 55,056,412 57,630,014




(b) Development costs (cont’d)

leasehold Development land costs total rM rM rMGroup (cont’d)

2014

cumulative costs recognised in statements of comprehensive income

At 1 July 2013 – 11,158,302 11,158,302Recognised during the year – 24,058,595 24,058,595

At 30 June 2014 – 35,216,897 35,216,897

Development costs at 30 June 2014 2,573,602 19,839,515 22,413,117

2013


At 1 January 2012 4,837,174 28,722,347 33,559,521Costs incurred during the period – 11,134,177 11,134,177

At 30 June 2013 4,837,174 39,856,524 44,693,698

cumulative costs recognised in statements of comprehensive income

At 1 January 2012 – 7,071,888 7,071,888Recognised during the period – 4,086,414 4,086,414

At 30 June 2013 – 11,158,302 11,158,302

Development costs at 30 June 2013 4,837,174 28,698,222 33,535,396




(b) Development costs (cont’d)

leasehold Development land costs total rM rM rMcompany

2014


At 1 July 2013 – 65,616 65,616Costs incurred during the year – 17,030 17,030Costs written off during the year (Note 7) – (48,392) (48,392)

Development costs at 30 June 2014 – 34,254 34,254

2013


At 1 January 2012 – – –Costs incurred during the period – 65,616 65,616

Development costs at 30 June 2013 – 65,616 65,616

Included in property development costs incurred during the financial period/year are:


Depreciation of property, plant and equipment (Note 12) 4,900 12,674 – –Directors’ remuneration – 934,347 – –Interest expense (Note 6) 1,019,573 480,522 – –Employee benefits expense – 1,350,370 – –



15. intanGible assets

tollGroup Goodwill concessions total rM rM rMcost

At 1 January 2012/1 July 2013 and at 30 June 2013 2,757,114 13,117,032 15,874,146Additions 3,713 – 3,713

At 30 June 2014 2,760,827 13,117,032 15,877,859

accumulated amortisation and impairment

At 1 January 2012 29,942 1,241,022 1,270,964Impairment 798,278 – 798,278

At 30 June 2013 and at 1 July 2013 828,220 1,241,022 2,069,242Impairment – – –

At 30 June 2014 828,220 1,241,022 2,069,242

net carrying amount

At 30 June 2014 1,932,607 11,876,010 13,808,617

At 30 June 2013 1,928,894 11,876,010 13,804,904

(a) impairment tests for goodwill

allocation of goodwill

Goodwill has been allocated to the Group’s CGUs identified according to the business segment as follows:

total rMat 30 June 2014

Property development 1,932,607

at 30 June 2013

Property development 1,928,894



15. intanGible assets (cont’D)

(a) impairment tests for goodwill (cont’d)

Key assumptions used in value-in-use calculations:

The recoverable amount of a CGU is determined based on value-in-use calculations using cash flow projections based on financial budgets approved by management covering a five year period. The assumption used for value-in-use calculations are:

Growth rates Discount rates 2014 2013 2014 2014 % % % %

Property development 2 - 5 2 - 5 14 - 16 14 - 16Toll concession 3 - 6 3 - 6 14 - 16 14 - 16

Discount rates

Discount rates reflect the current market assessment of the risks specific to the business segment. The discount rate was estimated based on the average percentage of a weighted average cost of capital for the industry. This rate was further adjusted to reflect the market assessment of any risk specific to the cash-generating unit for which future estimates of cash-flows have not been adjusted.

With regard to the assessment of value-in-use of the segment units, management believes that no reasonably possible change in any of the above key assumptions would cause the carrying value of the unit to materially exceed its recoverable amount.

(b) toll concession

Details of the toll concession are disclosed in Note 2.4(d)(ii) of the financial statements. The rights of the Group to the toll concession have been pledged to a licensed bank for banking facilities granted to a subsidiary as disclosed in Note 25 of the financial statements.

16. investMent in subsiDiaries

company 2014 2013 rM rM

Unquoted shares at cost 64,394,797 57,994,907



16. investMent in subsiDiaries (cont’D)

Details of the subsidiaries are as follows:

Proportion of ownership country of interestname of subsidiaries incorporation Principal activities 2014 2013 % %held by the company

Zecon Toll Concessionaire Malaysia Operation and maintenance 100 100 Sdn. Bhd.* of toll bridge and collection of toll revenue

Zecon Water Corporation Malaysia Water related services 100 100 Sdn. Bhd.*

Zecon Land Sdn. Bhd.* Malaysia Property development 100 100 Zecon Geotechnical Malaysia Foundation engineering 100 100 Services Sdn. Bhd.* and piling

Zecon Resources Malaysia Property development 96 96 Sdn. Bhd.*

Teknik PS Sdn. Bhd.* Malaysia Dormant 55 55

ZeconInternational BritishVirgin Foundationengineering 100 100 Limited* Islands and construction

Zecon Piling Sdn. Bhd.* Malaysia Dormant 100 100

Zecon Mutiara Sdn. Bhd.* Malaysia Construction of medium 100 100 and low cost houses

Zecon Dredging Malaysia Sand, dredging, earthworks 70 70 Sdn. Bhd.* and material transportation services

Zecon Energy Sdn. Bhd.* Malaysia Energy management and 51 51 other energy related services Zecon Assets Sdn. Bhd.* Malaysia Management, maintenance 100 100 and rental services in relation to machineries, motor vehicles and hardware of every descriptions




Proportion of ownership country of interestname of subsidiaries incorporation Principal activities 2014 2013 % %held by the company (cont’d)

Zecon Australia Pty. Ltd.** Australia Dormant 100 100 Zecon Construction Malaysia Dormant 51 51 Sdn. Bhd.*

Zecon Construction Malaysia Construction and housing 100 100 (Sarawak) Sdn. Bhd.* development

Zecon Designtech Malaysia Dormant 100 100 Sdn. Bhd.*

Zecon Fab Sdn. Bhd.* Malaysia Engineering, design, onshore/ 51 51 offshore fabrication,

platform installation, pipe laying, production facility hookup and platform maintenance

Matang Highway Malaysia Special purpose vehicle 100 100 Sdn. Bhd.* for financing purposes

Zecon MidEast Ltd.* Labuan Dormant 100 100

Zecon (Saudi Arabia) Labuan Dormant 100 100 International Ltd.*

Demak Concessionaires Malaysia Dormant 100 100 Sdn. Bhd.*

Zecon Medicare Sdn. Bhd.* Malaysia General construction, and 100 100 dealing with all kind

medical and surgical equipment

Zecon Engineering & Malaysia Civil engineering contractor 100 – Construction Sdn. Bhd.*

Permata Facilities Malaysia Dormant 100 – Management Sdn. Bhd.*




Proportion of ownership country of interestname of subsidiaries incorporation Principal activities 2014 2013 % %held through subsidiaries:

subsidiary of Zecon resources sdn. bhd.

Sarmax Sdn. Bhd.* Malaysia Dormant 50.1 50.1

subsidiary of teknik Ps sdn. bhd.

TPS Medicare Sdn. Bhd.* Malaysia Dormant 100 100 subsidiary of Zecon land sdn. bhd.

Zecon Petra Jaya Malaysia Property development 55 55 Sdn. Bhd.*

Zecon Demak Jaya Malaysia Property development 82 82 Sdn. Bhd.*

subsidiary of Zecon Mutiara sdn bhd.

IR Concept (M) Sdn. Bhd.* Malaysia Supplier of electrical or 100 100 electronic equipment and services

ZPM Satu Sdn. Bhd.* Malaysia Property sales and 100 100 management

Zalpoint Tanah Putih Malaysia Property development 100 100 Sdn. Bhd.*

Agrowell Quarry Malaysia Dormant 100 100 Sdn. Bhd. * subsidiary of Zecon energy sdn. bhd.

Zecon Well Services Malaysia Oil and gas services 60 60 Sdn. Bhd.*




Proportion of ownership country of interestname of subsidiaries incorporation Principal activities 2014 2013 % %held through subsidiaries:

subsidiary of Zalpoint tanah Putih sdn. bhd.

CreativeVenture Malaysia Dormant 100 100 Sdn. Bhd.*

* Audited by Ernst & Young, Malaysia** Audited by firms other than Ernst & Young

(a) acquisition of subsidiaries – Zecon engineering & construction sdn. bhd.

On August 2013, Zecon Berhad has acquired 3 ordinary shares of RM1 each of Zecon Engineering & Construction Sdn Bhd, representing 100% of equity interest, for a total consideration of RM3.

(b) acquisition of subsidiaries – Permata facilities Management sdn. bhd.

On 30 December 2013, Zecon Berhad acquired 2 ordinary shares of RM1 each in Permata Facilities Management Sdn Bhd, representing 100% of equity interest, for a total consideration of RM2.

(c) increase in paid-up share capital

During the year, Zecon Asset Sdn. Bhd. had increased the issued and paid up ordinary share capital of the Company to RM500,000 by the issuance of 449,887 shares of RM1 each; Zecon Construction (Sarawak) Sdn. Bhd. increased the issued and paid up ordinary shares capital of the Company to RM500,000 by the issuance of 249,998 shares of RM1 each; and Zecon Medicare Sdn. Bhd. also increased its issued and paid-up ordinary share capital from RM2,300,000 to RM8,000,000 by way of the issuance of 5,700,000 new ordinary shares of RM1 each for cash.



17. investMent in associates


Unquoted shares at cost 12,541,128 12,541,128 12,541,128 12,541,128 Share of post-acquisition reserves (10,948,473) (11,312,433) – –

1,592,655 1,228,695 12,541,128 12,541,128

Impairment in value of investment – – (12,366,128) (12,366,128)

1,592,655 1,228,695 175,000 175,000

Details of the associates are as follows:

Proportion of ownership country of interestname of entities incorporation Principal activities 2014 2013 % %

L.C.S. Trading Co. Malaysia Trading in hardware, building 35 35 Sdn. Bhd.* materials and related products

* Audited by a firm of auditors other than Ernst & Young

The summarised financial information of the Group’s investment in associates are:

Group 2014 2013 rM rMassets and liabilities

Current assets 11,177,201 12,478,638 Non-current assets 3,071,542 3,052,673

Total assets 14,248,743 15,531,311

Current liabilities 7,739,201 10,120,060 Non-current liabilities 114,907 87,800

Total liabilities 7,854,108 10,207,860

results

Revenue 32,829,206 40,784,840 Profit for the year/period 1,039,885 1,294,323



18. investMent in Jointly controlleD entity


Unquoted share, at cost – 4,061,200 – –Less: Written off (Note 7) – (4,061,200) – –

– – – –

Details of the jointly controlled entity are as follows:

Proportion of ownership country of interestname of entities incorporation Principal activities 2014 2013 % %

Ramco-Zecon WLL Qatar Dormant – –

19. OtHERINvEStMENtS

Group/company 2014 2013 rM rM

Quoted shares at fair value 316,743 265,458Changes in fair value (134,025) 51,285

182,718 316,743 Unquoted shares at cost – 400,000Impairment loss on value of investment – (400,000)

Total 182,718 316,743

Market value of quoted shares 182,718 316,743

20. inventories


At cost:Properties held for sale 2,914,939 2,914,939 810,000 810,000



21. aMounts Due froM/(to) custoMer on contract


Construction contract costs incurred to date 924,645,488 721,746,817 866,525,539 792,789,497 Attributable profits less recognised losses 56,648,630 79,965,958 62,971,908 57,670,465

981,294,118 801,982,775 929,497,447 850,459,962

Less: Progress billings (938,917,280) (752,704,249) (942,923,167) (859,056,824)

42,376,838 49,008,526 (13,425,720) (8,596,862)

Presented as: Amount due from customer on contract (Note 23) 53,357,295 49,008,526 12,706,223 10,365,890 Amount due to customer on contract (Note 28) (10,980,457) – (26,131,943) (18,962,752)

42,376,838 49,008,526 (13,425,720) (8,596,862)

Retention sum on contracts, included within trade payables (Note 27) 8,566,088 9,493,935 – 691,374

Retention sum on contracts, included within trade receivables (Note 22) 2,782,762 1,634,403 2,765,629 1,617,270

The costs incurred to date as construction contracts include the following charges made during the year/period:


Depreciation of property, plant and equipment (Note 12) 2,241,563 4,549,993 1,153,506 1,352,134Hire of equipment, plant and machinery 330,395 1,279,236 8,400 –Rental expense of buildings 86,189 158,279 25,200 –Interest expense (Note 6) 1,225,024 3,482,966 1,204,436 3,445,466Employee benefits expense 5,560,715 8,092,261 353,327 705,517



22. traDe anD other receivables

Group company 2014 2013 2014 2013 rM rM rM rMtrade receivables

Trade receivables 86,385,092 115,525,394 25,231,084 34,461,358Progress billings receivables 3,572,651 3,584,651 3,217,882 3,217,882Amount due from subsidiaries – – 4,529,658 29,229,826Amount due from associate 866,359 866,349 866,359 866,349Retention sums (Note 21) 2,782,762 1,634,403 2,765,629 1,617,270

93,606,864 121,610,797 36,610,612 69,392,685Less: Allowance for impairment (35,297,665) (59,516,257) (14,900,205) (14,900,205)

Trade receivables 58,309,199 62,094,540 21,710,407 54,492,480

other receivables

Non Current Other receivables 1,500 232,520 1,500 232,520

Current Other receivables 34,372,274 31,603,118 9,090,756 10,266,356 Interest receivable – 117,149 – –Amount due from joint ventures 937,334 7,741 937,334 7,741 Amount due from subsidiaries – – 83,090,083 48,467,095

35,309,608 31,728,008 93,118,173 58,741,192Less: Allowance for impairment (10,540,329) (9,640,589) (6,688,826) (10,392,446)

24,769,279 22,087,419 86,429,347 48,348,746

Total other receivables 24,770,779 22,319,939 86,430,847 48,581,266

Total trade and other receivables 83,079,978 84,414,479 108,141,254 103,073,746

Analysis:Current 83,078,478 84,181,959 108,141,254 102,841,226 Non-current 1,500 232,520 1,500 232,520

Total current and non-current receivables 83,079,978 84,414,479 108,142,754 103,073,746 Add: Cash and bank balances (Note 24) 53,743,793 46,530,439 35,437,679 28,318,272

Total loans and receivables 136,823,271 130,944,918 143,580,433 131,392,018



22. traDe anD other receivables (cont’D)

(a) trade receivables

The Group’s and the Company’s normal trade credit terms range from 30 to 90 days (2013: 30 to 90 days). Other credit terms are assessed and approved on a case-by-case basis.

The Group and the Company have significant concentration of credit risk that may arise from exposures to a single debtor or to groups of debtors. However, the Board does not consider this to pose significant credit risk to the Group and the Company.

Ageing analysis of trade receivables The ageing analysis of the Group’s and Company’s trade receivables is as follows:


Neither past due nor impaired 24,154,665 2,832,146 20,844,048 39,117,639

1 to 30 days past due not impaired 22,865 10,155,770 – 8,439,43531 to 60 days past due not impaired 50 5,677,047 – 3,615,00961 to 90 days past due not impaired 98 3,006,583 – –More than 91 days past due not impaired 9,428,670 40,422,994 866,359 3,320,397

9,451,683 59,262,394 866,359 15,374,841Impaired 60,000,516 59,516,257 14,900,205 14,900,205

93,606,864 121,610,797 36,610,612 69,392,685

receivables that are neither past due nor impaired

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

None of the Group’s and the Company’s trade receivables that are neither past due nor impaired have been renegotiated during the financial year.



22. traDe anD other receivables (cont’D)

(a) trade receivables (cont’d)

receivables that are past due but not impaired

The Group’s and the Company have trade receivables amounting to RM9,451,683 (2013: RM59,262,394) and RM866,359 (2013: RM15,575,193), respectively, that are past due at the reporting date but not impaired.

receivables that are impaired

The Group’s and Company’s trade receivables that are individually impaired at the reporting date and the movement of the allowance accounts used to record the impairment are as follows:


Trade receivables 60,000,516 59,516,257 14,900,205 14,900,205Less: Allowance for impairment (35,297,665) (59,516,257) (14,900,205) (14,900,205)

24,702,851 – – –

Movement in allowance accounts:

Group company rM rM rM rM

At 1 July 2013/1 January 2012 59,516,257 41,327,837 14,900,205 10,549,204Charge for the year/period – 18,206,852 – 4,369,433 Written off (24,206,592) – – –Reversal (12,000) (18,432) – (18,432)

At 30 June 2014/2013 35,297,665 59,516,257 14,900,205 14,900,205

Trade receivables that are individually determined to be impaired at the reporting date relate to debtors that are in financial difficulties and have defaulted on payments and debtors that have usually settled their debts beyond the prescribed credit terms. The directors are in the opinion that the allowance for impairment is adequate.

(b) amount due from related companies/subsidiaries/associates/joint venture

The amounts due from related companies/subsidiaries/associates/joint ventures are unsecured, interest-free and have no fixed term of repayment.



23. other current assets


Prepaid operating expenses 13,787 – – –Accrued billings in respect of property development costs 804,078 – – –Amount due from customers on contract (Note 21) 53,357,295 49,008,526 12,706,233 10,365,890

54,175,160 49,008,526 12,706,233 10,365,890

24. cash anD banK balances


Cash on hand and at banks 11,593,567 8,207,302 7,060,447 1,348,066 Deposits with licensed banks 42,150,226 38,323,137 28,377,232 26,970,206

Cash and bank balances 53,743,793 46,530,439 35,437,679 28,318,272

Deposits with licensed banks amounting to RM40,622,774 (2013: RM37,840,027) and RM28,377,232 (2013: RM26,970,206) of the Group and of the Company, respectively are pledged to bankers for borrowings and bankers’ guarantees granted to the Group and the Company. The interest rate for deposits with licensed banks range from 3.5% to 5.0% (2013: 3.5% to 5.0%) per annum.

Included in the deposits with licensed banks is a sinking fund account, amounting to RM40,035,232 (2013:

RM37,814,196), created for the purpose of capturing the progressive monthly remittance of funds from the project revenue account. Such funds shall be utilised towards the repayment of the revolving credit facility.

For the purpose of the cash flow statements, cash and cash equivalents comprise the following as at the reporting date:


Cash on hand and at banks 11,593,567 8,207,302 7,060,447 1,348,066Fixed deposits at bank 1,527,452 483,110 – –Bank overdrafts (Note 25) (395,506) (975,502) (395,506) (975,502)

Total cash and cash equivalents 12,725,513 7,714,910 6,664,941 372,564



25. borrowinGs

Group company 2014 2013 2014 2013 rM rM rM rMshort term

Secured:Term loan (i) 230,874 256,746 230,874 256,746Term loan (ii) 19,706,821 6,778,513 19,706,821 6,778,513Term loan (iii) 7,977,640 – – –

27,915,335 7,035,259 19,937,695 7,035,259

Bank overdrafts 395,506 975,502 395,506 975,502Revolving credit – 26,406,891 – 12,903,755Ijarah facility 6,000,000 – – –Hire purchase payables (Note 26) 1,179,448 1,287,954 889,950 1,028,687

35,490,289 35,705,606 21,223,151 21,943,203

Unsecured:Revolving credit – 100,000 – 100,000

35,490,289 35,805,606 21,223,151 22,043,203

long term

Secured:Term loan (i) – 139,373 – 139,373 Ijarah facility 103,000,000 110,000,000 – –Hire purchase payables (Note 26) 1,302,693 1,384,996 437,532 1,007,973

104,302,693 111,524,369 437,532 1,147,346

total borrowings

Bank overdrafts (Note 24) 395,506 975,502 395,506 975,502Revolving credit – 26,506,891 – 13,003,755Term loans 27,915,335 7,174,632 19,937,695 7,174,632Ijarah facility 109,000,000 110,000,000 – –Hire purchase payables (Note 26) 2,482,141 2,672,950 1,327,482 2,036,660

139,792,982 147,329,975 21,660,683 23,190,549



25. borrowinGs (cont’D)

The remaining maturities of the loans and borrowings as at year/period end are as follows:


On demand or within one year 35,464,164 35,805,606 21,223,151 22,043,203 More than 1 year and less than 2 years 26,317,096 29,383,635 271,759 952,873 More than 2 years and less than 5 years 78,011,722 82,140,734 165,773 194,473

139,792,982 147,329,975 21,660,683 23,190,549

Term loan (i)

Term loan (i) is secured by a deed of assignment over certain landed properties of the Group.

Term loan (ii) & (iii)

Term loan (ii) & (iii) are secured by the contract proceeds receivable by the Group and a legal charge over the project and sinking fund account.

Bank overdrafts

The bank overdrafts of the Group and of the Company amounting to RM395,506 (2013: RM975,502) are secured by certain landed properties of a subsidiary.

Revolving credit

The revolving credits of the Group are secured by certain landed properties of a subsidiary, pledge by way of Memorandum of Deposit over Fixed Deposit Receipt and assignment over contract proceeds receivable by the Company from its client in respect of the project financing.




Ijarah facility

The principal portion of Ijarah facility shall be payable on monthly basis commencing on the twenty-fifth (25th) month from the first drawdown date in accordance with the following schedule:

Month Principal amount tenor (years) (primary notes) rM’000

25th – 36th 6,000 137th – 48th 6,000 249th – 60th 6,504 361st – 72nd 6,504 473th – 84th 6,504 585th – 96th 6,504 697th – 108th 6,500 7109th – 120th 6,500 8121th – 132th 10,008 9133th – 144th 10,008 10145th – 156th 11,004 11157th – 168th 12,000 12169th – 179th 12,837 13180th – xxth 3,127 14

110,000

The Ijarah facility obtained by one of the subsidiaries represents the Islamic financing facility obtained from Kuwait Finance House (Malaysia) Berhad. The borrowing is secured by:

(i) transfer of beneficial/ownership in the 339-metre ‘Tun Abang Salahuddin Bridge’ operated and maintained by one of the subsidiaries as the concessionaire and corporate guarantee from the Company.

(ii) fixed deposits of RM10.1 million (2013: RM10.1 million).

(iii) debenture over fixed and floating assets of the subsidiary

(iv) legal charge over the designated account of the subsidiary




Ijarah facility (cont’d)

The interest rates of the Group and of the Company are as follows:

Group company 2014 2013 2014 2013 % % % %

Bankers’ acceptances – 1.00 – 1.00Bank overdrafts 8.10 - 8.35 7.60 - 7.85 8.10 - 8.35 7.60 - 8.50Hire purchase payables 2.38 - 4.48 2.45 - 4.92 2.45 - 3.80 2.45 - 3.80Ijarah facility 7.60 7.60 – –Revolving credit – 4.72 - 8.40 – 8.10 - 8.40Term loans 7.15 - 8.35 6.50 - 8.38 7.15 - 8.35 8.35

26. hire Purchase Payables


future minimum lease payments: Not later than 1 year 1,281,217 1,411,758 942,946 1,125,906Later than 1 year and not later than 2 years 623,788 1,008,876 283,323 856,210Later than 2 years and not later than 5 years 758,999 449,030 173,455 196,587More than 5 years 13,045 – – –

2,677,049 2,869,664 1,399,724 2,178,703 Less: Future finance charges (194,908) (196,714) (72,242) (142,043)

Present value of finance lease liabilities (Note 25) 2,482,141 2,672,950 1,327,482 2,036,660



26. hire Purchase Payables (cont’D)


analysis of present value of finance lease liabilities: Not later than 1 year 1,179,343 1,286,786 889,950 1,027,519Later than 1 year and not later than 2 years 569,675 955,115 271,759 814,668Later than 2 years and not later than 5 years 720,216 431,049 165,773 194,473More than 5 years 12,907 – – –

2,482,141 2,672,950 1,327,482 2,036,660 Less: Amount due within 12 months (1,179,448) (1,287,954) (889,950) (1,028,687)

Due after 12 months 1,302,693 1,384,996 437,532 1,007,973

The Group has finance leases and hire purchase contracts for various items of property, plant and equipment (see Note 12).

27. traDe anD other Payables


trade payables

CurrentTrade payables 58,943,507 70,370,099 8,839,009 19,615,558Retention sums (Note 21) 8,566,088 9,493,935 – 691,374Amount due to subsidiaries – – 36,177,894 46,906,052

Trade payables 67,509,595 79,864,034 45,016,903 67,212,984



27. traDe anD other Payables (cont’D)


other payables

Non CurrentDeferred revenue 101,250 116,250 – –

CurrentOther payables 17,416,347 12,982,120 4,711,325 4,621,429Deferred revenue 41,723 15,000 – –Amount due to subsidiaries – – 52,236,152 26,533,900Amount due to associate 48,934 48,966 48,934 48,966Interest payable – 638,474 – –

17,507,004 13,684,560 56,996,411 31,204,295

Total other payables 17,608,254 13,800,810 56,996,411 31,204,295

Total trade and other payables 85,117,849 93,664,844 102,013,314 98,417,279

Analysis:Current 85,016,599 93,548,594 102,013,314 98,417,279Non-current 101,250 116,250 – –

Total current and non-current payables 85,117,849 93,664,844 102,013,314 98,417,279Add: borrowings (Note 25) 139,792,982 147,329,975 21,660,683 23,190,549

Total financial liabilities carried at amortised cost 222,910,831 240,994,819 123,673,997 121,607,828

(a) trade payables

The normal trade credit terms granted to the Group and to the Company range from 30 to 90 days (2013: 30 to 90 days).

Included in the 2013 trade payables of the Group was an amount of RM5,472,771 which bore interest at

8.05% per annum and was repayable on demand. This unsecured amount was fully settled during the financial year.

The remaining trade payables are unsecured, interest free and are repayable on demand.



27. traDe anD other Payables (cont’D)

(b) other payables

Included in the other payables of the Group and the Company are amounts due to directors of RM13,963,038 (2013: RM1,750,000) and RM2,740,250 (2013: RM1,400,000), respectively.

(c) amounts due to subsidiaries/associate

The amounts due to subsidiaries/associate are unsecured, interest-free and have no fixed term of repayment.

28. other current liabilities


Amount due to customers on contract works (Note 21) 10,980,457 – 26,131,943 18,962,752Progress billings in respect of property development costs 6,789,175 – – –

17,769,632 – 26,131,943 18,962,752

29. DEFERREDtAx

Group company 2014 2013 2014 2013 rM rM rM rM At 1 July 2013/1 January 2012 (4,317,175) (3,973,548) (4,836,775) (4,836,775)Recognised in income statement (Note 10) 2,501,332 (343,627) 2,836,775 –

At 30 June (1,815,843) (4,317,175) (2,000,000) (4,836,775)

Presented after appropriate offsetting as follows:

Deferred tax assets (3,049,796) (6,068,155) (3,156,201) (5,992,976)Deferred tax liabilities 1,233,953 1,750,980 1,156,201 1,156,201

(1,815,843) (4,317,175) (2,000,000) (4,836,775)



29. DEFERREDtAx(CONt’D)

The components and movements of deferred tax liabilities and assets during the financial year prior to offsetting are as follows:

Deferred tax liabilities

Property, plant and equipment rMGroup

At 1 July 2013 1,750,980Recognised during the year (517,027)

At 30 June 2014 1,233,953

At 1 January 2012 2,030,428Recognised during the period (279,448)

At 30 June 2013 1,750,980

company At 1 July 2013/1 January 2012 and 30 June 2014/2013 1,156,201

Deferred tax assets

unutilised tax losses and unabsorbed capital allowances rMGroup

At 1 July 2013 (6,068,155) Recognised during the year 3,018,359

At 30 June 2014 (3,049,796)

At 1 January 2012 (6,003,976)Recognised during the period (64,179)

At 30 June 2013 (6,068,155)



29. DEFERREDtAx(CONt’D)

The components and movements of deferred tax liabilities and assets during the financial year prior to offsetting are as follows (cont’d):

Deferred tax assets

unutilised tax losses and unabsorbed capital allowances rMcompany

At 1 July 2013 (5,992,976)Recognised during the year 2,836,775

At 30 June 2014 (3,156,201)

At 1 January 2012 and 30 June 2013 (5,992,976)

Deferred tax assets have no t been recognised in respect of the following items:


Unutilised tax losses 22,559,290 10,570,785 3,104,979 7,374,738 Unabsorbed capital allowances and industrial building allowances 2,146,547 1,536,949 – –Provision for foreseeable loss 104,461 – – –

24,810,298 12,107,734 3,104,979 7,374,738

The availability of the unutilised tax losses and unabsorbed capital and industrial building allowances for offsetting against future taxable profit of the Group and the company are subject to no substantial changes in shareholdings of the Group and the company under Section 44(5A) and (5B) of Income Tax Act, 1967.



30. share caPital anD share PreMiuM

issued and fully paid number of ordinary shares of rM1 each amount

rM rM

Group/company

At 1 July 2013/1 January 2012 and 30 June 2014/2013 119,106,150 119,106,150 119,106,150 119,106,150

share premium

At 1 July 2013/1 January 2012 and 30 June 2014/2013 – – 3,558,768 3,558,768

authorised share capital

At 1 July 2013/ 1 January 2012 and 30 June 2014/2013 500,000,000 500,000,000 500,000,000 500,000,000

The holders of ordinary shares entitled to receive dividends as and when declared by the Company. All ordinary shares carry one vote per share without restrictions and rank equally with regard to the Company’s residual assets.

31. other reserves

asset revaluation foreign reserve- currency fair value freehold translation warrant adjustment total land reserve reserve reserve reserves rM rM rM rM rMGroup

At 1 July 2013 692,832 3,291 4,416,854 – 5,112,977Net fair value change on available for sale financial assets – – – (134,025) (134,025)Foreign currency translation – (1,491) – – (1,491)

At 30 June 2013 692,832 1,800 4,416,854 (134,025) 4,977,461



31. other reserves (cont’D)

asset revaluation foreign reserve- currency fair value freehold translation warrant adjustment total land reserve reserve reserve reserves rM rM rM rM rMGroup (cont’d)

At 1 January 2012 692,832 (723) 4,416,854 (51,285) 5,057,678Net fair value change on available for sale financial assets – – – 51,285 51,285Foreign currency translation – 4,014 – – 4,014

At 30 June 2013 692,832 3,291 4,416,854 – 5,112,977

asset revaluation reserve- fair value freehold warrant adjustment total land reserve reserve reserves

rM rM rM rMcompany

At 1 July 2013 692,832 4,416,854 – 5,109,686Net fair value change on available for sale financial assets – – (134,025) (134,025) At 30 June 2014 692,832 4,416,854 (134,025) 4,975,661

At 1 January 2012 692,832 4,416,854 (51,285) 5,058,401Net fair value change on available for sale financial assets – – 51,285 51,285

At 30 June 2013 692,832 4,416,854 – 5,109,686

The nature and purpose of each category of reserve are as follows:

(a) asset revaluation reserve

The asset revaluation reserve is used to record increases in the fair value of freehold land and decreases to the extent that such decrease relates to an increase on the same asset previously recognised in equity.



31. other reserves (cont’D)

(b) foreign currency translation reserve

The foreign currency translation reserve is used to record exchange differences arising from the translation of the financial statements of foreign operations whose functional currencies are different from that of the Group’s presentation currency. It is also used to record the exchange differences arising from monetary items which form part of the Group’s net investment in foreign operations, where the monetary item is denominated in either the functional currency of the reporting entity or the foreign operation.

(c) warrant reserve

On 6 March 2007, the Company undertook a renounceable rights issue of 44,168,540 new Warrants (“Warrants”) at an issue price of RM0.10 per Warrant on the basis of one (1) new Warrant for every two (2) existing ordinary shares of RM1 each held in the Company. The Warrants were subsequently listed on the Main Market of Bursa Malaysia Securities Berhad on 13 March 2007 and will expire in 2017.

(d) fair value adjustment reserve

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

32. seGMental rePortinG

(a) reporting format

The primary segment reporting format is determined to be business segments as the Group’s risks and rates of return are affected predominantly by differences in the products and services produced. No geographical analysis has been prepared as the Group’s business interests are predominantly located in Malaysia. The operating businesses are organised and managed separately according to the nature of the products and services provided, with each segment representing a strategic business unit that offers different products and services and different markets.

(b) business segments

The Group comprises the following main business segments:

(i) Construction - piling works, foundation engineering and building construction;(ii) Property development - property holding and development; (iii) Toll concession - operation and maintenance of toll bridge and collection of toll revenue; and(iv) Others - management services.

The directors are of the opinion that all inter-segment transactions having been entered into in the normal course of business and have been transacted on normal commercial terms.



32. seGMental rePortinG (cont’D)

Property toll Group construction development concession others eliminations total rM rM rM rM rM rM30 June 2014

revenue

Sales to external customers 141,324,505 51,780,642 15,206,239 283,950 – 208,595,336Inter-segment sales (6,267,389) 6,491,901 – (224,512) – –

Total revenue 135,057,116 58,272,543 15,206,239 59,438 – 208,595,336

results

Segment results (32,360,488) 24,431,464 12,503,170 (937,274) – 3,636,872

Finance costs (8,470,635) Share of profit of associates 363,960

Profit before tax (4,469,803)Income tax expense (10,397,217)

Profit for the year (14,867,020)

assets

Segment assets 390,295,184 234,470,717 151,953,161 18,434,518 (458,117,101) 337,036,479 Investments in associates 1,592,655Unallocated assets 1,932,607

Total assets 340,561,741

liabilities

Segment liabilities/ total liabilities 345,374,522 192,541,590 115,697,081 26,989,012 (426,289,392) 254,312,813

other segment information Capital expenditure 4,418,788 865 216,027 2,089,800 – 6,725,480Depreciation 2,241,563 4,900 116,679 3,479,108 – 5,842,250Amortisation 3,149 – – – – 3,149



32. seGMental rePortinG (cont’D)

Property toll Group construction development concession others eliminations total rM rM rM rM rM rM30 June 2013

revenue

Sales to external customers 204,987,603 12,787,670 19,893,257 152,521 – 237,821,051Inter-segment sales 149,654,103 – – 2,638,274 (152,292,377) –

Total revenue 354,641,706 12,787,670 19,893,257 2,790,795 (152,292,377) 237,821,051

results

Segment results (22,621,914) 2,679,571 16,063,011 (1,462,505) – (5,341,837)

Finance costs (14,241,302) Share of profit of associates 332,163

Profit before tax (19,250,976)Income tax expense (5,688,671)

Loss for the period (24,939,647)

assets

Segment assets 352,369,356 217,683,887 151,778,899 17,015,001 (377,380,993) 361,466,150Investments in associates 1,228,695Unallocated assets 1,928,894

Total assets 364,623,739

liabilities

Segment liabilities/ total liabilities 292,660,344 170,693,089 117,756,281 24,450,919 (352,214,358) 253,346,275

other segment information

Capital expenditure 2,577,572 6,216 248,589 37,529 – 2,869,906Depreciation 7,917,978 57,019 164,342 252,789 – 8,392,128Amortisation 4,722 – – – – 4,722Other significant non-cash expenses: Provisions 20,490,432 15,102,745 164,115 134,771 (15,897,777) 19,994,286



34. siGnificant relateD Party transactions

During the financial year/period, the Group and the Company had, in the normal course of business transacted on normal commercial terms the following transactions:

(a) sales and purchases of goods and services

The subsidiaries

During the year/period, the subcontractor fees paid to Zecon Water Corporation Sdn. Bhd. is RM12,061,015 (2013: RM39,985,156 ).

During the year/period, the subcontractor fees paid to Zecon Fab Sdn. Bhd. is RM Nil (2013: RM8,521,668).

During the year/period, the subcontractor fees paid to Zecon Construction (Sarawak) Sdn. Bhd. is RM21,899,088 (2013: RM59,173,054 ).

During the year/period, the subcontractor fees paid to Zecon Engineering & Construction Sdn. Bhd. is RM12,496,305 (2013: RM Nil).

During the year/period, the subcontractor fees paid to and the rental income received from Zecon Dredging Sdn. Bhd. are RM Nil (2013: RM43,306,389 ) and RM Nil (2013: RM 10,800) respectively.

During the year/period, the rental income received from Zecon Assets Sdn. Bhd. on rental of plant and

machinery is RM203,508 (2013: RM 1,476,443).

During the year/period, the rental income received from Sarmax Sdn. Bhd. is RM12,000 (2013: RM18,000).

There were no other transactions with the other subsidiaries during the financial year/period.

The directors are of the opinion that all the transactions above 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.

The related parties LCS Trading Co. Sdn. Bhd., LCS Metals Works Sdn. Bhd., LCS Equipment Rental Sdn. Bhd., LCS Apex Sdn.

Bhd., and Halifax Capital Bhd. are associated companies of the Company.

Perunding KAZ Sdn. Bhd., Al Quds Travel Sdn. Bhd., SCIB Concrete Manufacturing Sdn. Bhd., Oricon Sdn. Bhd., Mary Bolhassan, Noreda Ahmad & Co., and TKY Consultant Sdn. Bhd. are companies in which the close family members of certain directors of the Company have substantial financial interests.

Datuk Haji Zainal Abidin Bin Haji Ahmad has substantial financial interests in SCIB Concrete Manufacturing

Sdn. Bhd.

Haji Abang Azahari Abang Osman has substantial financial interests in TKY Consultant Sdn. Bhd.



34. siGnificant relateD Party transactions (cont’D) (a) sales and purchases of goods and services (cont’d)

The related parties (cont’d)

During the year/period, the Group has purchase construction materials from SCIB Concrete Manufacturing Sdn.Bhd.amountingRM4,397,620(2013:RM835,308).Nevertheless,theGrouphassoldoneunitofVistaTunku Shoplot to SCIB Concrete Manufacturing Sdn. Bhd. with total consideration of RM1,600,000.

During the year/period, the legal and professional fees paid to Mary Bolhassan, Noreda Ahmad & Co. is RM7,292 (2013: RM55,915 ).

During the year/period, the consultancy fees paid to TKY Consultant Sdn. Bhd. is RM840,205 (2013: RM2,127,808).

During the year/period, the consultancy fees paid to Perunding KAZ Sdn. Bhd. is RM216,429 (2013: RM113,571).

The directors are of the opinion that all the transactions above 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.

(b) compensation of key management personnel

The remuneration of directors and other members of key management during the year/period was as follows:


Directors’ remuneration (Note 9) 2,390,418 2,242,096 1,657,634 1,200,682Other key management personnel 1,669,511 2,591,416 1,409,109 2,171,647

4,059,929 4,833,512 3,066,743 3,372,329



35. financial risK ManaGeMent obJectives anD Policies

The Group’s financial risk management policy seeks to ensure that adequate financial resources are available for the development of the Group’s businesses whilst managing its interest rate, foreign exchange, liquidity and credit risks. The Board reviews and agrees policies for managing each of these risks and they are summarised below. It is and has been throughout the year under review, the Group’s policy that no trading in derivative financial instruments shall be undertaken. (a) interest rate risk

Cash flow interest rate risk is the risk that the future cash flows of a financial instrument will fluctuate because of changes in market interest rates. Fair value interest rate risk is the risk that the value of a financial instrument will fluctuate due to changes in market interest rates. As the Group has no significant interest-bearing financial assets, the Group’s income and operating cash flows are substantially independent of changes in market interest rates.

The Group’s interest-bearing financial assets are mainly short term in nature and have been mostly placed in fixed deposits or occasionally, in short term commercial papers.

The Group’s interest rate risk arises primarily from interest-bearing borrowings. Borrowings at floating rates expose the Group to cash flow interest rate risk. Borrowings obtained at fixed rates expose the Group to fair value interest rate risk. The Group manages its interest rate exposure by maintaining a mix of fixed and floating rate borrowings.

sensitivity analysis for interest rate risk

At the reporting date, it is estimated that a hundred basis points increase in interest rate, with all other variables held constant, would decrease the Group’s and the companies profit net of tax by approximately RM1,373,108 (2013: RM388,324) and RM203,332 (2013: RM236,413), respectively, arising mainly as a result of higher interest expense on net floating borrowing position. A decrease in interest rate would have had the equal but opposite effect on the aforesaid amount, on the basis that all other variables remain constant.

(b) foreign currency risk The Group is exposed to currency risk in respect of its foreign investments in subsidiaries. These are, however,

not significant.

(c) liquidity risk

The Group manages its debt maturity profile, operating cash flows and the availability of funding so as to ensure that refinancing, repayment and funding needs are met. As part of its overall liquidity management, the Group maintains sufficient levels of cash or cash convertible investments to meet its working capital requirements. In addition, the Group strives to maintain available banking facilities at a reasonable level to its overall debt position.

Liquidity risk is the risk that the Group or the Company will encounter difficulty in meeting financial obligation

due to shortage of funds. The Group’s and the Company’s exposure to liquidity risk arise primarily from mismatches of the maturities of financial assets and liabilities. The Group’s and the Company’s objective is to maintain a balance between continuity of funding and flexibility through the use of stand-by credit facilities.



35. financial risK ManaGeMent obJectives anD Policies (cont’D)

(c) liquidity risk (cont’d)

analysis of financial instruments by remaining contractual maturities The table below summarises the maturity profile of the Group’s and the Company’s liabilities at the reporting

date based on contractual undiscounted repayment obligation.

on demand or within one to five over five one year years years total

rM rM rM rMas at 30 June 2014

Group

financial liabilitiesTrade and other payables 85,016,599 60,000 41,250 85,117,849 Hire purchase payables 1,218,951 635,026 173,455 2,207,432Borrowings 44,587,800 59,671,439 143,684,646 247,943,885

Total undiscounted financial liabilities 130,823,350 60,306,465 143,858,101 335,269,166

as at 30 June 2013

Group

financial liabilitiesTrade and other payables 93,548,594 60,000 56,250 93,664,844Hire purchase payables 1,411,758 1,457,906 – 2,869,664Borrowings 45,106,912 54,625,595 116,103,061 215,835,568

Total undiscounted financial liabilities 140,067,264 56,143,501 116,159,311 312,370,076




(c) liquidity risk (cont’d)

analysis of financial instruments by remaining contractual maturities (cont’d)

on demand or within one to five over five one year years years total

rM rM rM rMas at 30 June 2014

company

financial liabilitiesTrade and other payables, excluding financial guarantees* 102,013,314 – – 102,013,314Hire purchase payables 942,946 283,323 173,455 1,399,724Borrowings 22,028,253 – – 22,028,253

Total undiscounted financial liabilities 124,984,513 283,323 173,455 125,441,291

as at 30 June 2013

company

financial liabilitiesTrade and other payables, excluding financial guarantees* 98,417,279 – – 98,417,279 Hire purchase payables 1,125,906 1,052,797 – 2,178,703Borrowings 22,727,688 139,373 – 22,867,061

Total undiscounted financial liabilities 122,270,873 1,192,170 – 123,463,043

* At the reporting date, the counterparties to the financial guarantees do not have a right to demand cash as the defaults have not occurred. Accordingly, financial guarantees under the scope of FRS 139 are not included in the above maturity profile analysis.




(d) credit risk

Credit risk is the risk of loss that may arise on outstanding financial instruments should a counterparty default on its obligations. The Group’s and the Company’s exposure to credit risk arises primarily from trade and other receivables. For other financial assets (including investment securities and cash and bank balances), the Group and the Company minimise credit risk by dealing with good credit rating counterparties.

The Group’s objective is to seek continual revenue growth while minimising losses incurred due to increased credit risk exposure. The Group trades with good creditworthy third parties. It is the Group’s policy that all customers who wish to trade on credit terms are subject to credit verification procedures and receivable balances are monitored on an ongoing basis.

Exposure to credit risk

At the reporting date, the Group’s and the Company’s maximum exposure to credit risk is represented by the carrying amount of each class of financial assets recognised in the statements of financial position.

Credit risk concentrations profile

The Group and Company have significant concentration of credit risk that may arise from exposure to a single debtor or to groups of debtors. However, the Board does not consider this to pose significant credit risk to the Group and the Company.

Financial assets that are neither past due nor impaired Information regarding trade and other receivables that are neither past due nor impaired is disclosed in

Note 22. Deposits with banks and other financial institutions that are neither past due nor impaired are placed with or entered into with reputable financial institutions or companies with high credit ratings and no history of default.

36. fair value MeasureMents

(a) Determination of fair value

The following methods and assumptions are used to estimate the fair value of each class of financial instruments for which it is practicable to estimate that value:

(i) cash and bank deposits, other receivables and other payables The carrying amounts of these balances approximate their fair values due to the relatively short term

nature of these financial instruments.



36. fair value MeasureMents (cont’D)

(a) Determination of fair value (cont’d)

(ii) trade receivables and trade payables

The carrying amounts of trade receivables and trade payables approximate their fair values because they are subject to normal trade credit terms.

(iii) amounts due from/to related companies

The carrying values of amounts due from/to related companies in current assets and current liabilities approximate their fair values due to the short term nature. No disclosure of fair value is made for non-current amounts due from/to related companies as it is not practicable to determine their fair values with sufficient reliability since these balances have no fixed terms of repayment.

(iv) investment securities

The fair values of quoted investment securities are determined by reference to their stock exchange quoted closing bid price at the end of the reporting period.

The unquoted investment securities do not have quoted market prices in an active market. In order to determine the fair value of such securities, the observable market prices in an open active market or dealer price quotations are used.

The unquoted available-for-sale financial assets are carried at cost as there are no other methods of reasonably estimating the fair values. It is not practicable to estimate the fair values with sufficient reliability without incurring excessive costs.

The following methods and assumptions are used to estimate the fair value of each class of financial instruments for which it is practicable to estimate that value: (cont’d)

(v) bank borrowings and term loan

The carrying values of bank borrowings and term loan approximate their fair values as they bear interest rates which approximate the current incremental borrowing rates for similar types of lending and borrowing arrangements.

(vi) financial guarantees

Fair value is determined based on the probability weighted discounted cash flow method. The probability has been estimated and assigned for the following key assumptions:

- The likelihood of the guaranteed party defaulting within the guaranteed period;- The exposure on the portion that is not expected to be recovered due to the guaranteed party’s

default; and- The estimated loss exposure if the party guaranteed were to default.



36. fair value MeasureMents (cont’D)

(b) fair value hierarchy

FRS13FairValueMeasurementrequireseachclassofassetsandliabilitiesmeasuredatfairvalueinthestatements of financial position after initial recognition to be categories according to a hierarchy that reflects the significance of inputs used in making the measurements, in particular, whether the inputs used are observable or unobservable. The following levels of hierarchy are used for determining and disclosing the fair value of those financial instruments and non-financial assets:

Level 1: quoted (unadjusted) prices in active markets for identical assets or liabilities;

Level 2: other techniques for which all inputs that have a significant effect on the recorded fair value are observable, either directly or indirectly; and

Level 3: techniques which use inputs that have a significant effect on the recorded fair value that are not based on observable market data

The following table shows an analysis of financial instruments recorded at fair value by level of the fair value hierarchy:

note level 1 level 2 level 3 total rM rM rM rMfinancial assets Group/company at 30 June 2014Financial investment available-for-sale financial assets - Quoted investments (Note 19) 182,718 – – 182,718

at 30 June 2013Financial investment available-for-sale financial assets - Quoted investments (Note 19) 316,743 – – 316,743

The methods and assumptions used by management to determine fair values of financial instruments other than those whose carrying amounts reasonably approximate their fair values are as follows:

other investments - quoted shares

The fair value of quoted shares is determined by reference to stock exchange quoted market bid prices at the close of the business on the reporting date.



37. caPital ManaGeMent

The primary objective of the Group’s capital management is to ensure that it maintains a strong credit rating and healthy capital rations in order to support its business and maximise shareholder value.

The Group manages its capital structure and makes adjustment to it, in light of changes in economic conditions. To maintain or adjust the capital structure, the Group may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares. No changes were made in the objectives, policies or processes during the year ended 30 June 2014 and period ended 30 June 2013.

The Group monitors capital using a gearing ratio, which is net debt divided by total capital plus net debt. The Group’s policy is to keep the gearing ratio as minimal as possible. The Group includes within net debt, loans and borrowings, trade and other payables, less cash and bank balances. Capital includes equity attributable to the owners of the Company net of the fair value adjustment reserve.


Loans and borrowings 139,792,982 147,329,975 21,660,683 23,190,549Trade and other payables 85,117,849 93,664,844 102,013,314 98,417,279Cash and bank balances (53,743,793) (46,530,439) (35,437,679) (28,318,272)

Net debt 171,167,038 194,464,380 88,236,318 93,289,556 Total capital, net of fair value reserve 77,376,611 107,340,627 83,244,752 76,131,193

Capital and net debt 248,543,649 301,805,007 171,481,070 169,420,749

Gearing ratio 69% 64% 51% 55%

38. siGnificant events

(a) Proposed privatisation

On 15 July 2013, the Company announced the receipt of the letter (“offer letter”) from Dawla Capital Sdn Bhd (“Dcsb”), Datuk Haji Zainal Abidin Bin Haji Ahmad (“DZa”), in their capacity as the major shareholders of the Company, together with Tan Sri Datuk Amar (Dr.) Tommy Bin Bugo @ Hamid bin Bugo (“tsh”) and Haji Zainurin Bin Haji Ahmad (“hZa”) (collectively referred to as “non-entitled shareholders”), informing the Company’s Board of Directors (“board”) that the Non-Entitled Shareholders intend to privatise the Company and proposed that the Company undertakes the following corporate exercises:

(i) a selective capital reduction and repayment exercise pursuant to Section 64 of the Companies Act, 1965 (“act”) (“Proposed scr”); and

(ii) the acceleration of the maturity of all outstanding 2007/2017 warrants in the Company (“warrants”) and cancellation thereof (“Proposed wac”).



38. siGnificant events (cont’D)

(a) Proposed privatisation (cont’d)

As at 11 July 2013 (“lPD”), the Non-Entitled Shareholders hold in aggregate 74,383,875 ordinary shares of RM1 each in the Company’s shares representing approximately 62.45% of the issued and paid-up share capital.

Upon successful completion of the Proposals, the Non-Entitled Shareholders will hold 100% equity interest in the Company.

Details pertaining to the Proposals are set out in below:

(i) Proposed scr

The Proposed SCR shall involve the Company undertaking a selective share capital reduction and a corresponding capital repayment to all shareholders of the Company other than the Non-Entitled Shareholders (“entitled shareholders”) whose names appear in the Record of Depositors as at the close of business on an entitlement date to be determined at a later date (“entitlement Date”).

Under the Proposed SCR, all Entitled Shareholders will receive a total cash payment of RM35,777,820 which represents a cash repayment of RM0.80 for each of the Company’s shares held by the Entitled Shareholders on the Entitlement Date (“scr offer Price”).

As at the date of the financial statements, the Company’s issued and paid-up share capital stand at RM119,106,150 comprising 119,106,150 shares of RM1 each. The issued and paid-up share capital of the Company will be reduced by way of cancellation of the Company’s shares held by the Entitled Shareholders. Accordingly, 44,722,275 shares held by the Entitled Shareholders will be cancelled pursuant to the Proposed SCR and a total capital repayment of RM35,777,820 will be made to the Entitled Shareholders. This will result in the reduction of the issued and paid-up share capital of the Company from RM119,106,150 comprising 119,106,150 shares of RM1 each to RM74,383,875 comprising 74,383,875 shares.

The Proposed SCR can be summarised as follows:

issued and paid-up number of ordinary shares Par value share capital rM rM rMcost

Existing issued and paid-up share 119,106,150 1.00 119,106,150Shares to be cancelled pursuant to the Proposed SCR (44,722,275) 1.00 (44,722,275)

issued and paid-up share capital upon completion of the Proposed scr 74,383,875 1.00 74,383,875





(i) Proposed scr (cont’d)

The Non-Entitled Shareholders have proposed that the total cash capital repayment under the Proposed SCR be funded by the Company’s internally generated funds and/or via bank borrowings to be obtained by the Company.

Upon successful completion of the Proposed SCR, the Non-Entitled Shareholders do not intend to maintain the listing status of the Company on the Main Market of Bursa Malaysia Securities Berhad (“bursa securities”). The Non-Entitled Shareholders have requested the Company to make an application to Bursa Securities to de-list and withdraw the Company from the Official List of Bursa Securities upon successful completion of the Proposed SCR.

(ii) Proposed wac

In conjunction with the Non-Entitled Shareholders’ proposal to take the Company private via the Proposed SCR, the Non-Entitled Shareholders had also proposed for the Company to undertake the Proposed WAC. The Proposed WAC involves the acceleration of the maturity of all outstanding Warrants and the cancellation of the Warrants.

Under the Proposed WAC, all of the warrantholders (excluding the Non-Entitled Shareholders) whose names appear in the Record of Depositors as at the close of business on the Entitlement Date (“entitled warrantholders”) will receive a cash amount of 5 sen for each Warrant held on the Entitlement Date (“wac offer Price”).

As at the date of the financial statements, the Company had 44,168,540 Warrants in issue, of which a total of 21,461,710 Warrants, representing approximately 48.59% of the Warrants in issue, are held directly by the Non-Entitled Shareholders. Accordingly, 44,168,540 Warrants held by the Entitled Warrantholders and the Non-Entitled Shareholders will be cancelled pursuant to the Proposed WAC and a cash payment of RM1,135,342 will be made to the Entitled Warrantholders. The Non-Entitled Shareholders shall waive their entitlements to any payment to be made for their holding of the Warrants pursuant to the Proposed WAC.

The Non-Entitled Shareholders have proposed that the total cash consideration for the Proposed WAC be funded by the Company’s internally generated funds and/or via bank borrowings to be obtained by the Company.

To facilitate the implementation of the Proposed WAC, the warrant deed poll dated 9 January 2007 (“warrant Deed Poll”) is to be modified by way of a memorandum of a supplemental deed, to allow for the early expiration of the Warrants.

Pursuant to the terms of the Warrant Deed Poll, any modification to the Warrant Deed Poll is subject to the approval of the warrantholders at a general meeting to be convened.

The Warrants will be de-listed from the Official List of Bursa Securities concurrently with the de-listing of the Company’s shares upon the successful completion of the Proposed SCR and/or upon maturity of the Warrants pursuant to the Proposed WAC as approved by the Entitled Warrantholders.





On 1 April 2014, the Company received a letter from Datuk Haji Bolhassan Bin Di @ Ahmad Bin Di (“Datuk bolhassan”), a Non-Independent Non-Executive Director and a substantial shareholder of the Company, informing of his decision, following his further review, to vote against the Proposed SCR (“Notification Letter”) at the Extraordinary General Meeting (“EGM”) of Zecon to be convened in relation to the Proposed SCR. Datuk Bolhassan directly holds 11,500,000 of the Company’s shares, representing approximately 9.66% equity interest in the Company or approximately 25.71% of the voting shares held by the Entitled Shareholders.

The Company had via its Board Resolution dated 21 April 2014 and together with the Non-Entitled Shareholders resolved to withdraw the Proposals subject to the consent of the Securities Commission of Malaysia (“the SC”).

The SC had, via its letter dated 12 June 2014, approved the withdrawal of the Proposed SCR to be undertaken by the Company. As such the EGM and Warrrantholders’ meeting to secure the approval of the Entitled Shareholders and Entitled Warrantholders respectively for the Proposals will not be convened. Announcement of the same has been made to Bursa Malaysia Securities Berhad accordingly.

(b) concession agreement

One of its subsidiaries, Zecon Medicare, had on 23 August 2013 signed a Concession Agreement with the Government of Malaysia, represented by the Ministry of Education and Universiti Kebangsaan Malaysia (“UKM”), in relation to the planning, designing, financing, development, construction, landscaping, equipping, installation, completion, testing, commissioning of the Facilities and Infrastructure of a Children’s Specialist Hospital located at UKM and carry out the Asset Management Services (“the Agreement”).

Under the terms and conditions of the Agreement, the Concession Period is for 30 years and the total construction cost for the said Facilities and Infrastructure is RM606,000,000. The construction for the Facilities and Infrastructure is expected to be completed within fifty-four (54) months from the commencement of the construction period.

The said Asset Management Services, which covers the Asset Management Programme and Maintenance Services to be provided in respect of the Facilities and Infrastructure, would commence upon the issuance of Certificate of Acceptance on the Facilities and Infrastructure by the Government. The total estimated payment for the Maintenance Services Charges is RM4,477,124 per month.

The project (comprising of construction of the Facilities and Infrastructure and Asset Management Services) is not expected to contribute positively towards the earnings and net assets of the Group for the next 4 and 1/2 years.

None of the Directors, major shareholders or persons connected to the directors and major shareholders of the Company have any interest, direct or indirect, in the Agreement.

As at 30 June 2014, the Company is in the final stage of negotiation for banking facilities amounting to about RM600 million.

The Company has incurred some initial cost for the project amounting to RM7,861,318 (2013: RM2,431,575) as at 30 June 2014.



39. SuPPLEMENtARyINFORMAtION–bREAkDOwNOFACCuMuLAtEDLOSSESINtOREALISEDANDunrealiseD

The breakdown of the accumulated losses of the Group and of the Company as at 30 June 2014 and 30 June 2013 into realised and unrealised losses 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 Requirement, as issued by the Malaysian Institute of Accountants.


Total accumulated losses of the company and its subsidiaries- Unrealised 1,815,843 4,317,175 2,000,000 4,836,775 - Realised (41,267,163) (13,442,010) (46,529,852) (56,480,186)

(39,451,320) (9,124,835) (44,529,852) (51,643,411) Total share of losses from associate- Realised (10,948,473) (11,312,433) – –

Accumulated losses as per financial statements (50,399,793) (20,437,268) (44,529,852) (51,643,411)


share caPital

Authorised Capital : RM500,000,000.00Issued and Paid up Capital : RM119,106,150.00Class of Share : Ordinary Shares of RM1.00 each

Distribution of shareholDinGs

size of shareholdings no. of no. of % of shareholders shares shares

Less than 100 68 2,835 0.00100 to 1,000 137 91,675 0.081,001 to 10,000 712 3,132,590 2.6310,001 – 100,000 265 8,777,625 7.37100,001 to less than 5% 40 29,911,950 25.115% and above 2 77,189,475 64.81

tOtAL 1,224 119,106,150 100

substantial shareholDers as Per reGister of substantial shareholDers

no. of shares held Direct % indirect %

1. Dawla Capital Sdn Bhd 65,689,475 55.15 – –2. Datuk Haji Bolhassan bin Di @ Ahmad bin Di 11,500,000 9.66 – –3. Haji Zainal Abidin bin Haji Ahmad 3,655,200 3.07 65,689,475 * 5.15

Note:

* Deemed interested by virtue of his interest in Dawla Capital Sdn Bhd

Directors’ interests


the coMPany Tan Sri Datuk Amar (Dr.) Tommy Bin Bugo @ Hamid Bin Bugo 4,514,200 3.79 – –Datuk Haji Zainal Abidin bin Haji Ahmad 3,655,200 3.07 65,689,475 * 55.15Datuk Haji Bolhassan bin Di @ Ahmad bin Di 11,500,000 9.66 – –Haji Zainurin bin Haji Ahmad 525,000 0.44 – –Poh Lik Gan @ Poh Li Thong 40,000 0.04 – –Richard Kiew Jiat Fong 63,000 0.05 – –

ANALySIS Of SHAREHOLDINgS aS aT 17 OCTObER 2014


aNalySIS Of ShaREhOlDINgS (CONT’D) aS aT 17 OCTObER 2014

Directors’ interests (cont’D)


relateD coMPanies

teknik Ps sdn bhd

Datuk Haji Zainal Abidin bin Haji Ahmad 34,000 14.20 – –

Zecon construction sdn bhd

Datuk Haji Zainal Abidin bin Haji Ahmad 49 49.00 – –

sarmax sdn bhd

Datuk Haji Zainal Abidin bin Haji Ahmad 30,000 30.00 – –

thirty (30) larGest share holDers as at 17 october 2014.

no. ofno. name of shareholders shares %

1. Dawla Capital Sdn Bhd 65,689,475 55.15

2. Kenanga Nominees (Tempatan) Sdn Bhd 11,500,000 9.66 Pledged Securities Account For Bolhassan bin Di @ Ahmad bin Din

3. HSBC Nominees (Asing) Sdn Bhd 5,000,000 4.20 Exempt An for Credit Suisse

4. Maybank Nominees (Tempatan) Sdn Bhd 4,485.000 3.77 Pledged Securities Account for Tommy bin Bugo @ Hamid bin Bugo

5. Maybank Nominees (Tempatan) Sdn Bhd 4,070,500 3.42 Pledged Securities Account for Lee Swee Eng

6. Zainal Abidin bin Ahmad 2,967,875 2.49

7. Alliancegroup Nominees (Tempatan) Sdn Bhd 1,300,000 1.09 Pledged Securities Account for Wong Hai Ong

8. AMSEC Nominees (Tempatan) Sdn Bhd 1,052,600 0.88 Pledged Securities Account for Kong Leh Ping

9. VictorLawThianTeck 1,000,000 0.84

10. Affin Hwang Nominees (Tempatan) Sdn Bhd 948,400 0.80 Pledged Securities Account for Yu Kuan Chon


thirty (30) larGest share holDers as at 17 october 2014 (cont’D)


11. Alliancegroup Nominees (Tempatan) Sdn Bhd 656,000 0.55 Pledged Securities Account for Chan Sow Keng

12. Kenanga Nominees (Tempatan) Sdn Bhd 597,700 0.50 Pledged Securities Account for Zainal Abidin bin Ahmad

13. CIMSEC Nominees (Tempatan) Sdn Bhd 547,700 0.46 CIMB Bank for Yu Kuan Chon

14. Zainurin bin Ahmad 525,000 0.44

15. Jenny Wong 452,100 0.38

16. Chuan Thong Huat 442,100 0.37

17. Rachel Lim Li Mae 408,700 0.34

18. Teng Long Cheong @ Paul Tang 402,000 0.34

19. Alliancegroup Nominees (Tempatan) Sdn Bhd 380,100 0.32 Pledged Securities Account for Yu Kuan Chon

20. Kenanga Nominees (Tempatan) Sdn Bhd 368,450 0.31 Pledged Securities Account for Hamni bin Juni

21. CIMSEC Nominees (Tempatan) Sdn Bhd 337,225 0.28 CIMB Bank for Mohamad Safri bin Sharkawi

22. Tie Pek Ha @ Tie Pik Ha 304,200 0.26

23. John Lim Foung Su 300,000 0.25

24. Affin Hwang Nominees (Tempatan) Sdn Bhd 280,000 0.24 Pledged Securities Account for CYK-COM Corporation Sdn Bhd

25. Citigroup Nominees (Tempatan) Sdn Bhd 250,000 0.21 Pledged Securities Account for Mohd Zaidi bin Razali

26. Hui Kok Yuan 250,000 0.21

27. RHB Capital Nominees (Tempatan) Sdn Bhd 240,000 0.20 Pledged Securities Account for Yiak Ting Tiong

28. Tu Yieng Hoon 220,000 0.18

29. Maimumah binti Zailani 207,400 0.17

30. Affin Hwang Nominees (Asing) Sdn Bhd 200,000 0.17 DBSVickersSEC(S)PteLtdforNgCheeMeng

total 105,382,525 88.48

aNalySIS Of ShaREhOlDINgS (CONT’D) aS aT 17 OCTObER 2014


No. of Warrants in issued : 44,168,540Exercise Price of Warrants : RM1.06Expiry Date of Warrants : 05 March 2017VotingRights : OneVoteperwarrantheld

size of holdings no. of no. of % of holders warrants warrants

Less than 100 14 670 0.00100 to 1,000 65 46,350 0.101,001 to 10,000 288 1,352,890 3.0610,001 – 100,000 179 6,449,930 14.60100,001 to less than 5% 49 15,173,320 34.355% and above 1 21,145,380 47.87

tOtAL 596 44,168,540 100

substantial warrant holDers as Per reGister of sustantial warrant holDers

no. of warrants held

no. name of warrant holders Direct % indirect %

1. Dawla Capital Sdn Bhd 21,145,380 47.87 – –2. Datuk Haji Zainal Abidin bin Haji Ahmad 188,000 0.43 21,145,380 * 47.87

list of Directors’ warrant holDinGs

no. of warrants held Direct % indirect %

1. Tan Sri Datuk Amar (Dr.) Tommy Bin Bugo 220,500 0.50 – – @ Hamid Bin Bugo

2. Datuk Haji Zainal Abidin bin Haji Ahmad 188,000 0.43 21,145,380 * 47.87

Note: Deemed interested by virtue of his interest in Dawla Capital Sdn Bhd

ANALySIS Of wARRANT HOLDINgSaS aT 17 OCTObER 2014


thirty (30) larGest warrant holDers as at 17 october 2014


1. Dawla Capital Sdn Bhd 21,145,380 47.87

2. Mohd Seth bin Haron 1,886,200 4.27

3. Chuan Toong Soong @ Tay Toong Soong 1,108,900 2.51

4. Leong Hon Wah 1,002,200 2.27

5. Chuan Thong Huat 868,000 1.97

6. Saw Guat Ngoh 750,000 1.70

7. Mohd Fauzi bin Mohd Anuar 518,500 1.17

8. Kenanga Nominees (Tempatan) Sdn Bhd 515,500 1.17 Pledged Securities Account for Hamni bin Juni

9. AMSEC Nominees (Tempatan) Sdn Bhd 509,200 1.15 Pledged Securities Account – AmBank (M) Berhad for Tan Swee San (Smart)

10. Digital Network Sdn Bhd 499,000 1.13

11. Lam Pun Ying 400,000 0.91

12. David Ling Howe Kim 334,200 0.76

13. Toh Pik Chai 284,900 0.65

14. Affin Hwang Nominees (Tempatan) Sdn Bhd 264,000 0.60 Pledged Securities Account for Mohd Seth bin Haron

15. Lim Juat Cher 230,000 0.52

16. Kenanga Nominees (Tempatan) Sdn Bhd 225,000 0.51 Pledged Securities Account for Koh Keng Aun

17. UOB Kay Hian Nominees (Tempatan) Sdn Bhd 225,000 0.51 Exempt An for UOB Kay Hian Pte LTD

18. Gan Lee Choo 223,500 0.51

19. Maybank Nominees (Tempatan) Sdn Bhd 220,500 0.50 Tommy bin Bugo @ Hamid bin Bugo

aNalySIS Of waRRaNT hOlDINgS (CONT’D) aS aT 17 OCTObER 2014


thirty (30) larGest warrant holDers as at 17 october 2014 (cont’D)


20. Woon Siew Lin 211,600 0.48

21. Tan Yee Kong 210,000 0.48

22. Sj Sec Nominees (Tempatan) Sdn Bhd 206,500 0.47 Pledged Securities Account for Fancis Ho Ik Sing

23. Poh Siaw Ling 201,000 0.46

24. CIMSEC Nominees (Tempatan) Sdn Bhd 200,020 0.45 CIMB Bank for Hasnandi bin Mohammad Jennis

25. Goh Ha San 200,000 0.45

26. Lee Kim Seng 200,000 0.45

27. Sun Chu Tiam @ Soon Chu Tiam 200,000 0.45

28. Maybank Securities Nominees (Tempatan) Sdn Bhd 198,000 0.45 Pledged Securities Account for Teo Kim Poh

29. Chong Sim Yuen 197,000 0.45

30. Tan Ee Hung 190,000 0.43

total 33,424,100 75.67

aNalySIS Of waRRaNT hOlDINgS (CONT’D) aS aT 17 OCTObER 2014


LIST Of PROPERTIES

location area (approximately

more or less)

tenure Description year ofacquisition

existing use net book value

30 June2014(rM)

1. Lot 464, Block 15Salak Land DistrictKuching, Sarawak.

42.19acre

Leasehold (99 years),Mixed Zone Land,

Expiring in Year 2098

Leasehold Land

1999 Commercial &Residential

Development

2,531,334

2. Lot 470, Block 15Salak Land DistrictKuching, Sarawak.

1178.44acre



Leasehold Land


Development

70,711,866

3. Lot 4871, Block 18,Salak Land District,Kuching, Sarawak.

8.03acre



Leasehold Land


Development

8,141,359

4. Lot 10740, Section 64,KTLD, Kuching,Sarawak

1.60acre



Leasehold Land

1999 Commercial & Residential

Development

3,534,759

5. Lot 10741, Section 64,KTLD, Kuching,Sarawak

3.84acre



Leasehold Land


Development

8,450,105

6. Lot 2260 & 2003, Block 233Kuching North LandKuching, Sarawak

3.21acre



Leasehold Land

1988 Residential 1,159,126

7. Crown Land,Lot No. 10049, 6th Miles,Simanggang Road,Kuching Town Land DistrictKuching, Sarawak

9.3acre



Leasehold Land

1991 VacantLand 520,854

8. Sublot No 54, Lot 530of Block 6, Matang Land District,Kuching, Sarawak

773.8sq metre



Detached lot 2005 VacantLand 130,000

9. Sublot No.84,Title Lot 7907,Pelita Heights,Kuching, Sarawak

174.2sq metre



Double-StoreyTerrace House

1994 Residential 124,521

10. Survey Lot 4086Private No.7Lot 1406-14631465 & Part of Lot 1472 of Block 14,Salak Land DistrictKuching, Sarawak

408.9sq metre

Leasehold (60 years),Mixed Zone Land

3-StoreyIntermediateShophouses

2005 Office Premises

610,000


lIST Of PROPERTIES (CONT’D)

location area (approximately

more or less)

tenure Description year ofacquisition

existing use net book value

30 June2014(rM)

11. Lot 948,Serian Town DistrictSerian, Sarawak

95.0sq metre

Leasehold (60 years),Mixed Zone Land

2-Storey IntermediateShop House

2002 Vacant 200,000

12. Parcel No. 6C, 6E & 10ALot 264 of Block 2,Jalan Salak DistrictKuching, Sarawak

455.4sq metre

Strata Title Apartment 2006 Vacant 1,054,850

13. Parcel No.2A-11-2,11th Floor Plaza SentralKL Building No.Block 2A,Lot 78, Section 70,Kuala Lumpur

361.8sq metre

Strata Title Office Suite 2006 Office Premise 1,453,410

14. Parcel B7-1-9, B7-5-9, B7-6-8, B7-B-9, B6-1-1a, B6-1-2a, B6-2-1, B6-4-1, B6-4-2 of Lot 742,Section 64,KTLD, Kuching,Sarawak

1 399.03 sq metre

Strata Title Commercial Tower

2002 Office Premises

2,104,938

15. Parcel A-33A, Level 33A,Suasana Sentral Loft Condominium,Jalan Stesen Sentral 5,KL Sentral,50470 Kuala Lumpur

279.1sq metre

Strata Title Condominium 2013 Corporate Use 1,840,750


NOTICE Of THE TwENTy-NINTHANNuAL gENERAL mEETINg

notice is hereby Given that the Twenty-Ninth (29th) Annual General Meeting (“AGM”) of Zecon Berhad (“Zecon” or “the Company”) will be held at Conference Room, 8th Floor, Menara Zecon, No. 92, Lot 393, Section 5 KTLD, Jalan Satok, 93400 Kuching, Sarawak on Monday, 08 December 2014 at 11.30 a.m. for the following purposes:

aGenDa

1. To receive the Audited Financial Statements for the financial year ended 30 June 2014 and the Reports of the Directors and Auditors thereon.

2. To approve the payment of Directors’ fees in respect of the financial year ended 30 June 2014.

3. To re-elect the following Directors who retire in accordance with Article 87 of the Company’s Articles of Association and being eligible, offer themselves for re-election:-

i) Datuk Haji Zainal Abidin Bin Haji Ahmad

ii) Datuk Haji Bolhassan bin Di @ Ahmad bin Di

4. To appoint auditors for the ensuing year of the Company and to authorise the Directors to fix their remuneration.

A Notice of Nomination pursuant to Section 172(11) of the Companies Act, 1965, a copy of which is annexed hereto as “Annexure A”, has been received by the Company for the nomination of Messrs Crowe Horwath who have given their consent to act, for the appointment as Auditors of the Company and to propose the following Ordinary Resolution:-

“THAT Messrs Crowe Horwath be and are hereby appointed as Auditors of the Company in place of the retiring Auditors, Messrs Ernst & Young and to hold office until the conclusion of the next AGM and that the Directors be authorized to determine their remuneration.”

as special business

To consider and if thought fit, pass the following resolutions as Ordinary Resolution:-

5. authority to issue shares Pursuant to section 132D of the coMPanies act, 1965

“THAT pursuant to Section 132D of the Companies Act, 1965 and subject always to the approval of the relevant authorities, the Directors of the Company be and are hereby empowered to issue shares in the Company from time to time and upon such terms and conditions and for such purposes as the Directors may deem fit provided that the aggregate number of shares to be issued during the preceding twelve (12) months pursuant to this resolution does not exceed 10% of the issued and paid-up share capital (excluding treasury shares) of the Company for the time being and that the Directors be and are also empowered to obtain the approval for the listing of and quotation for the additional shares so issued on Bursa Malaysia Securities Berhad and that such authority shall continue in force until the conclusion of the next Annual General Meeting of the Company unless revoked or varied by the Company at a general meeting.”

(See Note 1)

Resolution 1

Resolution 2

Resolution 3

Resolution 4

Resolution 5


NOTICE Of ThE TwENTy-NINTh aNNual gENERal mEETINg (CONT’D)

6. ProPoseD renewal of shareholDers’ ManDate for recurrent relateD Party transactions of a revenue or traDinG nature (“ProPoseD shareholDers’ ManDate”)

“THAT, subject always to the Main Market Listing Requirements of Bursa Malaysia Securities Berhad (“bursa securities”), the Company and its subsidiary companies shall be mandated to enter into the category of recurrent transactions of a revenue or trading nature and with those related parties as set out in the Circular to Shareholders dated 14 November 2014, provided that the transactions are in the ordinary course of business and are on terms not more favourable to the related parties than those generally available to the public and are not to the detriment of the minority shareholders of the Company.

THAT the authority conferred by the Proposed Shareholders’ Mandate shall only continue to be in force until:-

a) the conclusion of the next Annual General Meeting (“aGM”) of the Company, at which

time it will lapse, unless by a resolution passed at that meeting, the authority is renewed; b) the expiration of the period within which the next AGM of the Company after the date

it is required to be held pursuant to Section 143(1) of the Companies Act, 1965 (but shall not extend to such extension as may be allowed pursuant to Section 143(2) of the Companies Act, 1965); or

c) revoked or varied by resolution passed by the shareholders in general meeting,

whichever is earlier;

AND THAT the Directors of the Company and its subsidiaries be and are hereby authorised to complete and do such acts and things (including executing such documents as may be required) to give effect to the transactions contemplated and/or authorised by this Ordinary Resolution.”

7. To transact any other ordinary business of which due notice shall have been given in

accordance with the Company’s Articles of Association and the Companies Act, 1965.

Resolution 6

By order of the Board

Koh Fee Lee (MAICSA 7019845)Lim Poh Yen (MAICSA 7009745)Company Secretaries

Kuching

Dated: 14 November 2014



Notes:-

1. audited financial statements for the financial year ended 30 June 2014

The Audited Financial Statements in item 1 of the Agenda is meant for discussion only as approval from shareholders is not required pursuant to the provision of Section 169(1) of the Companies Act, 1965. Hence, this Agenda is not put forward for voting by shareholders of the Company.

2. appointment of Proxy

i) In respect of deposited securities, only members whose names appeared in the Record of Depositors as at 02 December 2014 shall be eligible to attend, speak and vote at the Meeting.

ii) A member entitled to attend and vote at this meeting is entitled to appoint not more than two (2) proxies to attend and vote in his stead. A proxy need not be a member of the Company and provision of Section 149 (1) (b) of the Companies Act, 1965 shall not apply to the Company.

There shall be no restriction as to the qualification of the proxy.

A proxy appointed to attend and vote at a meeting of the Company shall have the same rights as the Member to speak at the meeting

iii) Where a Member of the Company is an authorised nominee as defined in the Securities Industry (Central Depositories) Act, 1991 (“SICDA”), it may appoint not more than two (2) proxies in respect of each securities account it holds in ordinary shares of the Company standing to the credit of the said securities account.

iv) Where a Member of the Company is an exempt authorised nominee which holds ordinary shares in the Company for multiple beneficial owners in one (1) securities account (“omnibus account”), there is no limit to the number of proxies which the exempt authorised nominee may appoint in respect of each omnibus account it holds.

An exempt authorised nominee refers to an authorised nominee defined under the SICDA which is exempted from compliance with the provisions of subsection 25A(1) of SICDA.

v) Where a Member or an authorised nominee or an exempt authorised nominee appoints two (2) or more proxies, the proportion of shareholdings to be represented by each proxy must be specified in the instrument appointing the proxies.

vi) The instrument appointing a proxy shall be in writing under the hand of the appointor or his attorney duly authorised in writing, or if the appointor is a corporation, either under its Common Seal or under the hand of an officer or attorney duly authorised.

vii) The instrument appointing a proxy must be deposited at the registered office of the Company at 8th Floor, Menara Zecon, No. 92, Lot 393, Section 5 KTLD, Jalan Satok, 93400 Kuching, Sarawak not less than forty-eight (48) hours before the time appointed for holding the meeting or any adjournment thereof.



3. explanatory notes on special business

i) ordinary resolution 5 - authority to issue shares pursuant to section 132D of the companies act, 1965

The proposed Ordinary Resolution 5, if passed, will empower the Directors to issue shares from time to time provided that the aggregate nominal value of the shares to be issued during the preceding twelve (12) months does not exceeding 10% of the issued and paid-up share capital of the Company for the time being, for such purposes as the Directors consider would be in the interests of the Company. This authority unless revoked or varied at a general meeting will expire at the next Annual General Meeting (“AGM”).

The Company has not issued any new shares pursuant to Section 132D of the Companies Act, 1965 under the general authority which was approved by the shareholders of the Company at the Twenty-Eighth (28th) AGM held on 16 December 2013 and which will lapse at the conclusion of the 29th AGM to be held on 08 December 2014. A renewal of this authority is being sought at the 29th AGM under Ordinary Resolution 5.

The renewal of the general mandate is to provide flexibility to the Company to issue new securities without the need to convene separate general meeting to obtain its shareholders’ approval so as to avoid incurring additional cost and time. The purpose of this general mandate is for possible fund raising exercise including but not limited to further placement of shares for purpose of funding current and/or future investment projects, working capital, acquisition and/or for issuance of shares as settlement of purchase consideration.

ii) ordinary resolution 6 - Proposed shareholders’ Mandate

The proposed Ordinary Resolution 6 if passed, will authorise the Company and its subsidiaries to enter into recurrent transactions pursuant to Paragraph 10.09 of the Main Market Listing Requirements of Bursa Securities involving the interests of related parties, which are of a revenue or trading nature, subject to the transactions being carried out in the ordinary course of business and on terms not to the detriment of the minority shareholders of the Company. Further information on the Proposed Shareholders’ Mandate is set out in the Circular to Shareholders dated 14 November 2014, which is despatched together with the Company’s Annual Report 2014.

4. Tan Sri Datuk Amar (Dr.) Tommy Bin Hugo @ Hamid Bin Bugo, shall be subject to retirement in accordance with Article 87 of the Company’s Articles of Association, has indicated to the Company that he does not wish to seek for re-election at this 29th AGM.

5. Mr. Poh Lik Gan @ Poh Li Thong, who has served as an Independent Non-Executive Director of the Company for a cumulative term of more than nine years, has indicated to the Company that he will continue to serve the Company until the conclusion of this 29th AGM.


ANNExuRE A


✄

ZECON BERHAD (134463-X)(Incorporated in Malaysia)

forM of ProXy number of shares held

I/We ______________________________________________________________________________________________________(FULL NAME IN BLOCK LETTERS)

NRIC/Passport No./Company No. _______________________________________________________________________________

of ________________________________________________________________________________________________________

being a member/members of Zecon berhaD hereby appoint ______________________________________________________

NRIC/Passport No./Company No. _______________________________________________________________________________

of ________________________________________________________________________________________________________

or failing him/her, the Chairman of the meeting as my/our proxy to vote for me/us on my/our behalf at the Twenty-Ninth Annual General Meeting of the Company to be held at Conference Room, 8th Floor, Menara Zecon, No. 92, Lot 393, Section 5 KTLD, Jalan Satok, 93400 Kuching, Sarawak on Monday, 08 December2014 at 11.30 a.m. and any adjournment thereof.

My/Our proxy is to vote as indicated below:-

orDinary resolutions for aGainst

1. Payment of Directors’ fees

2. Re-election of Director – Datuk Haji Zainal Abidin Bin Haji Ahmad

3. Re-election of Director – Datuk Haji Bolhassan bin Di @ Ahmad bin Di

4. Appointment of Auditors and authorising Directors to fix their remuneration

5. Authority to issue shares pursuant to Section 132D of the Companies Act, 1965

6. Renewal of Shareholders’ Mandate for Recurrent Related Party Transactions of Revenue or Trading Nature

Please indicate with “X” in the appropriate spaces how you wish your vote to be cast. If you do not indicate how you wish your proxy to vote on any resolution, the proxy shall vote as he thinks fit, or at his discretion, abstain from voting.

Dated this _____________________ day of _________________ , 2014

Signature/Common Seal of Shareholder

Notes:

i) In respect of deposited securities, only members whose names appeared in the Record of Depositors as at 02 December 2014 shall be eligible to attend, speak and vote at the Meeting.

ii) A member entitled to attend and vote at this meeting is entitled to appoint not more than two (2) proxies to attend and vote in his stead. A proxy need not be a member of the Company and provision of Section 149 (1) (b) of the Companies Act, 1965 shall not apply to the Company.

There shall be no restriction as to the qualification of the proxy.

A proxy appointed to attend and vote at a meeting of the Company shall have the same rights as the Member to speak at the meeting.

iii) Where a Member of the Company is an authorised nominee as defined in the Securities Industry (Central Depositories) Act, 1991 (“SICDA”), it may appoint not more than two (2) proxies in respect of each securities account it holds in ordinary shares of the Company standing to the credit of the said securities account.

iv) Where a Member of the Company is an exempt authorised nominee which holds ordinary shares in the Company for multiple beneficial owners in one (1) securities account (“omnibus account”), there is no limit to the number of proxies which the exempt authorised nominee may appoint in respect of each omnibus account it holds.

An exempt authorised nominee refers to an authorised nominee defined under the SICDA which is exempted from compliance with the provisions of subsection 25A(1) of SICDA.

v) Where a Member or an authorised nominee or an exempt authorised nominee appoints two (2) or more proxies, the proportion of shareholdings to be represented by each proxy must be specified in the instrument appointing the proxies.

vi) The instrument appointing a proxy shall be in writing under the hand of the appointor or his attorney duly authorised in writing, or if the appointor is a corporation, either under its Common Seal or under the hand of an officer or attorney duly authorised.

vii) The instrument appointing a proxy must be deposited at the registered office of the Company at 8th Floor, Menara Zecon, No. 92, Lot 393, Section 5 KTLD, Jalan Satok, 93400 Kuching, Sarawak not less than forty-eight (48) hours before the time appointed for holding the meeting or any adjournment thereof.

AFFIXPOSTAGE

STAMP

Fold this flap for sealing

Then fold here

1st fold here

Zecon berhaD (134463-X)

8th Floor, Menara Zecon, No. 92 Lot 393,Section 5 KTLD, Jalan Satok,93400 Kuching, Sarawak, Malaysia.

Annual Report 2014

CORPORATE OFFICE:

8th floor, Menara Zecon,No. 92 Lot 393 Section 5 KTLD,Jalan Satok 93400 Kuching, Sarawak, Malaysia.

Tel : +6082-275555Fax : +6082-275500Email : [email protected]

ZECON BERHAD (134463-X)

KUALA LUMPUR OFFICE:

Suite 2A-11-2, Level 11, Block 2APlaza Sentral, Jalan Stesen Sentral 5,Kuala Lumpur Sentral50470 Kuala Lumpur, Malaysia.

Tel : +603-22723118Fax : +603-22743656

ZECON

BER

HA

D (134463-X)

ANN

UAL REPORT 2014

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