MKH BERHAD (197901006663 (50948-T))

ANNUAL REPORT 2019

www.mkhberhad.com

Sustaining Future
Sustaining Future
A N N U A L R E P O R T 2 0 1 9

A N N U A L R E P O R T 2 0 1 9

MKH Berhad (197901006663 (50948-T))

5th Floor, Wisma MKH, Jalan Semenyih

43000 Kajang, Selangor Darul Ehsan
SCAN ME
for instant access to the Annual Report 2019
Tel : +603 8737 8228 which is also available at
Fax : +603 8736 5436 http://mkhberhad.com/shareholders-meeting/
 Sustaining
Future
MKH Berhad commits to inspire the future generation.

Distinguished by its resilience, transforming into a

metropolitan property developer hence improving the
quality of people’s lives through integrated townships,
quality developments and well-designed communities as
home for customers.

Sustaining Future
A N N U A L R E P O R T 2 0 1 9
Visionary in sustainable future with its oil palm plantation
trees at the prime age.

Businesses in Property Development and Construction,

Plantation, Hotel and Property Investment, Trading and
Furniture Manufacturing to provide sustainable growth.

To be a leading corporation in delivering sustainable

growth, MKH is nurturing future generation, building
future communities and sustainable future.
CONTENTS CORPORATE INFORMATION

002 Vision, Mission and Corporate Values

004 Corporate Milestones
006 Company Profile
008 Awards and Achievements
009 FY2019 Highlights
010 5 Years Group Financial Highlights
012 Corporate Information
013 Corporate Structure

CORPORATE GOVERNANCE
016 Chairman’s Statement
047 Corporate Governance Overview 022 Management Discussion and Analysis Report

Statement 030 Sustainability Report

063 Audit Committee Report 042 Directors’ Profile

069 Statement on Risk Management 045 Profile of Key Senior Management

and Internal Control

073 Additional Compliance Information
074 Financial Statements

OTHER CORPORATE INFORMATION

239 List of Properties

246 Analysis of Shareholdings
249 Directors’ Shareholdings
250 Notice of Fortieth
Annual General Meeting
256 Statement Accompanying
Notice of Fortieth
Annual General Meeting

Form of Proxy
002 ANNUAL REPORT 2019

To be a leading corporation in
delivering sustainable growth.

► To lead the market by continually

developing and innovating quality
products and projects that meet and
exceed market expectations.
► To be responsive to market trends and
customer needs.
► To provide conducive working
environment that will encourage the
application of creative energy that is
guided by best industry practices.
► To be a good and responsible corporate
citizen.
► To provide a sustainable return to
shareholders.
MKH BERHAD
003

CORE
values
At MKH, we take pride in living a set of shared core values that define our culture and
business operations, thus helping us to create value for our clients, our people and
our organisation.

STABLE
We use our expertise,
business acumen and
financial resources to
provide a holistic value
to all stakeholders and
customers.

RESPONSIVE
We proactively engage
with the community
to understand their PROFESSIONAL
needs and concerns We deal with our
with the aim of stakeholders and
delivering solutions customers in an efficient,
for betterment of the knowledgeable and
situations. responsive manner.

DYNAMIC
We are always
enthusiastic in
looking out for new
opportunities and
delivering innovative
products into the
FRIENDLY
We greet our colleagues,
market.
customers and
stakeholders in an
approachable manner
RELIABLE with a smile and are
We utilise our experience considerate for each
and financial strength to other’s feelings.
deliver on our promises
and complete all projects
on time or earlier.
004 ANNUAL REPORT 2019

19
79
► Established as private
limited company:
19
93
► Built first joint venture
development with Selangor
Srijang Bena Sdn. Bhd. state government:
Bandar Teknologi Kajang
► Built first landed
residential ► Built first high-rise
development: development in Kajang
Taman Bukit Indah

19
83
► Established building
materials trading division:
Metro Kajang Trading Sdn. Bhd.

20
19
► JOURNEY TO BE
CONTINUED
20
17
► PT Maju Kalimantan
Hadapan achieved
20
14
► Metro Kajang
Trading
Indonesian Sustainable Sdn. Bhd.
Palm Oil certification rebranded:
MKH Building
Materials Sdn.
Bhd.
MKH BERHAD
005

CORPORATE
milestones
Guided by visionary leadership, we
have forged a strong foundation through
successful diversification of businesses

94
that empowers the creation of true value
19 for our stakeholders.

► Established property

95
We are committed to continually enhance
investment sector

► Built first shopping complex in

19 our business models to ensure long-term
success for the decades to come.
Kajang: Plaza Metro Kajang
► Srijang Bena Sdn. Bhd. rebranded:
Metro Kajang Holdings Berhad

► Officially listed on Bursa Malaysia

as “MKH” under stock code “6114”

20
00
► Established Furniture
Manufacturing Division in
China :
Vast Furniture
Manufacturing
(Kunshan) Co. Ltd.

20
07
► Built second shopping
complex in Kajang:
Metro Point Complex

20
11
► Metro Kajang Holdings
Berhad rebranded:
20
08
► Established oil palm
plantation sector
MKH Berhad
► Acquired PT Maju
Kalimantan Hadapan
(“PT MKH”)
006
006
ANNUAL REPORT 2019
ANNUAL REPORT 2019

Situated within the matured residential development of Puchong, Putrajaya, Subang and Cyberjaya, Saville @ D’Lake,
Puchong offers an idyllic lifestyle and stunning view.

COMPANY
MKH Berhad (“MKH” or “the Group”) is a Malaysian public
listed company with its headquarters in Kajang that has
established a prominent brand presence in Selangor,

profile
Kuala Lumpur and East Kalimantan, Indonesia.

Distinguished for its contribution in transforming

Kajang, MKH has expanded its property footprints into
Klang Valley and other parts of Selangor. Our property
portfolio comprises well-planned landed residentials,
MKH Core Businesses townships and integrated high rises in Kajang, Petaling
Jaya, Cheras, Puchong, Shah Alam North as well as
► Property Development and affluent neighbourhoods in Kuala Lumpur such as south
Construction of Bangsar and Mon’t Kiara.

► Plantation The Group also owns 18,388 hectares of oil palm plantation
in East Kalimantan, Indonesia together with a 90MT per
► Property Investment hour crude palm oil (“CPO”) mill. This division contributes
as one of the Group’s core businesses that will continue
► Building Materials Trading to generate sustainable income in the long run.
MKH BERHAD
MKH BERHAD 007
007

Following the successful completion of the Group’s

first shopping complex Plaza Metro Kajang in 1996, our
property investment portfolio has since grown to include
Metro Point Complex, RHR Hotel @ Kajang and Rafflesia
International and Private Schools among others, while our
Building Materials Trading Division is well-established as
a supplier of quality building materials to local property
related business since 2002. In addition, we also own land The Company’s roots
and factory buildings in China for furniture manufacturing. can be traced back to
its establishment in

1979
Guided by its core values and beliefs, MKH is mindful
of the need to have a sustainable growth strategy and
supports it by taking into account sustainable practices in
economic, environmental and social aspects.

Through meaningful social investment and community

engagement, we aspire to foster stable relationships with Listed on the Main
our key stakeholders as well as the greater community Market of Bursa
and are driven by determination in our journey forward Malaysia Securities
towards a sustainable future.
Berhad in

1995
008 ANNUAL REPORT 2019

AWARDS
and achievements

In FY2019, MKH was ranked 12th among

Top 30 Property Developers in Malaysia
recognised at The Edge Malaysia’s Property
Excellence Award for maintaining a property
portfolio of good product quality with
seasoned industry expertise that ensures
value creation for our home buyers and
investors.

PROPERTY

Our Plantation Divison, PT Maju Kalimantan

Hadapan was awarded by the Provincial
Government of East Kalimantan for Zero
Accident Award on 20 April 2019.

PLANTATION

COMPANY
MKH BERHAD
009
009

FY2019
highlights

Achieved Group Launched a total of three (3)

Revenue of new projects namely Kajang

1.12
East Precinct 1, MKH Boulevard
2 and Nexus @ Kajang.
RM FY2019 new sales was
billion
RM 823.5
million

Workforce of over
Ranked

12th
among Top 30
4,300 people
Property Developers
at The Edge
Malaysia’s Property
Excellence Award

72% Male 28% Female

Solar photovoltaic
panels were
installed at our
16,408
shopping malls in
hectares
PT Maju Kalimantan Hadapan is planted with
Kajang. Reduction
14,877 hectares of oil palm trees aged within
of utility bills by up to
the range of 8 to 11 years old and PT Sawit

22% Prima Sakti is planted with 1,531 hectares of

oil palm trees aged 2 to 8 years old.
010 ANNUAL REPORT 2019

5 YEARS GROUP
financial highlights
2019 2018 2017 2016 2015
RM'000 RM'000 RM'000 RM'000 RM'000
(Restated)

INCOME STATEMENT
Revenue 1,121,657 1,081,701 1,068,834 1,265,872 1,041,898
Profit Before Taxation 158,373 128,232 193,592 304,669 137,314
Profit After Taxation 97,477 76,613 124,843 214,178 96,630
Profit Attributable to Shareholders 82,561 70,865 128,207 205,041 86,961
of the Company

BALANCE SHEET
Issued and Paid up Capital 654,459* 654,459* 613,315* 419,444 419,407
Shareholders' Equity 1,615,885 1,552,635 1,476,995 1,276,285 1,104,653

RATIOS
Single Tier Dividend Per Share (sen) 4.00 3.50 5.00 7.00 7.00
@ Net Earnings Per Share (sen) 14.26 12.26 24.18 40.01^ 16.97^
Net Assets Per Share (RM) 2.79 2.67 2.62 2.53^ 2.19^
Debt/Equity ratio (%) 42.4 43.3 52.3 65.7 72.5
Return on Shareholders' Equity (%) 5.1 4.6 8.7 16.1 7.9

* With the Companies Act 2016 (“the Act”) coming into effect on 31 January 2017, the credit standing in the share
premium account has been transferred into the share capital account pursuant to the transitional provisions set
out in Section 618 (2) of the Act.

@ Attributable to the equity holders of the Company.

^ The preceding years’ net earnings per share and net assets per share have been restated to effect the Bonus
Issues made.

The financial statements for FY2019 and FY2018 (Restated) are prepared in accordance with Malaysian Financial
Reporting Standards. The financial statements of the previous financial years (FY2015 to FY2017) were prepared in
accordance with Financial Reporting Standards in Malaysia.
MKH BERHAD
011
5 YEARS GROUP FINANCIAL HIGHLIGHTS

REVENUE (RM’000) PROFIT BEFORE

TAXATION (RM’000)

304,669
1,265,872

1,121,657
1,081,701
1,068,834

193,592
1,041,898

158,373
137,314

128,232
’15 ’16 ’17 ’18 ’19 ’15 ’16 ’17 ’18 ’19

PROFIT ATTRIBUTABLE TO SHAREHOLDERS’

SHAREHOLDERS OF THE EQUITY (RM’000)
COMPANY (RM’000)

1,615,885
205,041

1,552,635
1,476,995
1,276,285
128,207

1,104,653
86,961

82,561
70,865

’15 ’16 ’17 ’18 ’19 ’15 ’16 ’17 ’18 ’19
012 ANNUAL REPORT 2019

CORPORATE
information
BOARD OF DIRECTORS
Y. Bhg. Tan Sri Dato’ Chen Kooi Chiew @ Cheng Ngi Chong Group Executive Chairman

Y. Bhg. Tan Sri Datuk Chen Lok Loi Group Managing Director

Y. Bhg. Datuk Chen Fook Wah Deputy Managing Director

Y. Bhg. Datuk Mohammad bin Maidon Independent Non-Executive Director

Haji Mohammed Chudi bin Haji Ghazali Senior Independent Non-Executive Director

Jeffrey bin Bosra Independent Non-Executive Director

Haji Hasan Aziz bin Mohd Johan Independent Non-Executive Director

Audit Committee Panel Solicitors Registrar

Jeffrey bin Bosra (Chairman) Khaled Mutang Chan & Lim Tricor Investor & Issuing House
Haji Mohammed Chudi bin Haji Ling & Theng Book Services Sdn. Bhd.
Ghazali (Member) Markiman & Associates Unit 32-01, Level 32, Tower A
Haji Hasan Aziz bin Mohd Johan Michael Chen & Co. Vertical Business Suite
(Member) Raja, Darryl & Loh Avenue 3, Bangsar South
Steven Tai, Wong & Partners No. 8, Jalan Kerinchi
Nomination Committee 59200 Kuala Lumpur
Haji Mohammed Chudi bin Haji Principal Bankers Tel No : (603) 2783 9299
Ghazali (Chairman) •• Affin Bank Berhad Fax No: (603) 2783 9222
Y. Bhg. Datuk Mohammad bin Maidon •• Al Rajhi Banking & Investment
(Member) Corporation (Malaysia) Bhd Registered Office
•• AmBank (M) Berhad Suite 1, 5th Floor
Remuneration Committee •• AmBank Islamic Berhad Wisma MKH, Jalan Semenyih
Y. Bhg. Datuk Mohammad bin Maidon •• Bank of China (Malaysia)
 43000 Kajang
(Chairman) Berhad Selangor Darul Ehsan
Jeffrey bin Bosra (Member) •• Bank Islam Malaysia Berhad Tel No : (603) 8737 8228
•• Bank
 Muamalat Malaysia Fax No: (603) 8736 5436
Chief Financial Officer Berhad
Kok Siew Yin (MIA 15343) •• CIMB Islamic Bank Berhad Stock Exchange Listing
•• Hong Leong Bank Berhad Main Market of Bursa Malaysia
Group Company Secretary •• Hong Leong Islamic Bank
 Securities Berhad
Tan Wan San (MIA 10195) Berhad Stock Code : MKH
•• ICICI Bank Limited Stock No : 6114
External Auditors •• Industrial and Commercial

Deloitte PLT (AF 0080) Bank of China (Malaysia) Corporate Website
Level 16, Menara LGB Berhad www.mkhberhad.com
1, Jalan Wan Kadir •• Malayan Banking Berhad
Taman Tun Dr. Ismail •• Maybank Islamic Berhad
60000 Kuala Lumpur •• OCBC Bank (Malaysia) Berhad
Tel No : (603) 7610 8888 •• OCBC Al-Amin Bank Berhad
Fax No: (603) 7726 8986 •• RHB Bank Berhad
•• RHB Islamic Bank Berhad
•• United
 Overseas Bank
(Malaysia) Berhad
MKH BERHAD
013

CORPORATE
structure

PROPERTY AND CONSTRUCTION DIVISION ► MKH IHS Precast S/B (100%)

► Achieve Acres S/B (85%) ► MKH Land (Aust) Pty Ltd (100%)
► Aliran Perkasa S/B (100%) ► Nexus Starship S/B (100%)
► Budi Bidara S/B (100%) Quantum Density S/B
► Danau Saujana S/B (51%) (50.0004%)
► Dapat Jaya Builder S/B (100%) ► Pelangi Binaraya S/B (100%)
Rimbunan Melati S/B (45%) ► Pelangi Semenyih S/B (100%)
► Everland Asia Development S/B (100%) ► Pelangi Seri Alam Development
► Gabung Wajib S/B (100%) S/B (100%)
Alif Mesra S/B (65%) Hillpark Resources S/B (100%)
Amona Metro Development S/B (60%) ► Perkasa Bernas (M) S/B (100%)
Temara Pekeliling S/B (84%) Daksina Harta S/B (40%)
► Gerak Teguh S/B (100%) ► Petik Mekar S/B (100%)
► GK Resort Berhad (100%) ► Serba Sentosa S/B (100%)
PNSB-GK Resort S/B (70%) ► Serentak Maju Corporation S/B
► Intelek Kekal (M) S/B (100%) (100%)
► Intra Tegas (M) S/B (100%) ► Srijang Kemajuan S/B (99.99%)
► Kajang Resources Corporation S/B (100%) ► Stand Allied Corporation S/B
MKH Property Ventures S/B (51%) (100%)
Panasonic Homes MKH Malaysia S/B ► Sumber Lengkap S/B (100%)
(49%) ► Suria Villa S/B (100%)
► Kumpulan Indah Bersatu S/B (100%) ► Vista Haruman Development S/B
Palga S/B (100%) (55%)
Hiliran Juara S/B (100%)
► Metro K.L. City S/B (100%)
► Metro Kajang Construction S/B (100%)
► MKH Development S/B (100%)

NON-PROPERTY DIVISION ► MKH Credit Corporation S/B (100%)

► Detik Merdu S/B (100%) ► MKH Food S/B (100%)
 PT Maju Kalimantan Hadapan (95%) ► MKH Management S/B (100%)
PT Nusantara Makmur Jaya (100%) ► MKH Resources S/B (100%)
►Global Landscape Creation S/B (51%) ► Srijang Indah S/B (100%)
► MKH Plantation S/B (100%) Laju Jaya S/B (100%)
PT Sawit Prima Sakti (75%) Maha Usaha S/B (100%)
► Intelek Murni (M) Berhad (100%) Metro Emart S/B (100%)
► Metro Kajang (Oversea) S/B (100%) Europixel S/B (100%)
Vast Furniture Manufacturing (Kunshan) Hexapace S/B (100%)
Co. Ltd. (100%) Mercu Jasakita S/B (100%)
► Metro Nusantara S/B (100%)
► Metro Readymix S/B (100%)
► Metro Tiara (M) S/B (100%)
► MKH Building Materials S/B (100%)
014 ANNUAL REPORT 2019

MKH
MKH BERHAD
015

WE CREATE
distinction
We develop smart and sustainable
township for our home buyers.
016
016
ANNUAL REPORT 2019
ANNUAL REPORT 2019

CHAIRMAN’S
statement
MKH BERHAD
MKH BERHAD 017
017

Dear Shareholders,

On behalf of the Board of Directors and the In line with the rising trend of transit-oriented
management, it is my great pleasure to present to you urban development model (“TOD”), MKH has been
the Annual Report of MKH Berhad (“MKH”, or “the developing TOD projects that are well-located along
Group”) for the financial year ended 30 September the Klang Valley transit system such as Saville @ Cheras
2019 (“FY2019”). (completed project), MKH Boulevard 2 and Nexus @
Kajang (ongoing projects) and the upcoming Nexus @
The Malaysian economy remained resilient although Taman Pertama in Cheras and TR2 Residence @ Jalan
gross domestic product (“GDP”) moderated to 4.4% Tun Razak, Kuala Lumpur.
for the third quarter of 2019 (Q2 2019: 4.9%) mainly
due to lower growth in key sectors and a decline in the As at 30 September 2019, the Group recorded an
mining and construction activities. unbilled sales of RM1.12 billion that is mainly attributable
to new and ongoing property projects namely Kajang
For FY2019, the Group recorded a commendable East Precinct 1, MKH Boulevard 2, Nexus @ Kajang,
performance, building on our strong vision and mission. Bandar Teknologi Kajang shops, TR Residence @ Jalan
The Group’s revenue increased by 3.7% to RM1.12 billion Tun Razak, Inspirasi Mont’ Kiara, Hillpark @ Shah Alam
and profit before tax (“PBT”) increased by 23.5% to North, Kajang 2 Precinct 2 and Hillpark Residence.
RM158.4 million, which were mainly contributed by the
Property Development and Construction Division. In recognising the importance of innovation in value
creation for our businesses, our oil palm plantation
A more detailed review of the Group’s performance is located in East Kalimantan, Indonesia continue to
covered under the section on “Management Discussion expand on the use of mechanical-assisted collection
and Analysis Report” in this Annual Report. of fresh fruits bunches to increase productivity. The
announcement by the Indonesian Government on the
The Group continue to leverage on strong demand for shifting of the administrative capital of Indonesia to East
affordable housing emphasising on affordable pricing, Kalimantan have a positive effect as it will accelerate
good location and the right product mix. In FY2019, the economic and infrastructure development in East
the Group launched a total of three (3) new projects Kalimantan where our plantation is located.
namely Kajang East Precinct 1, MKH Boulevard 2
and Nexus @ Kajang and these 3 new projects have
contributed 64% of the total FY2019 new sales of
RM823.5 million.
018 ANNUAL REPORT 2019

CHAIRMAN’S STATEMENT

Our Building Materials Trading Division has also

established its own ironmongeries trademarked
“EGON” to fit the aesthetically needs of modern
residential and commercial projects that can
enhance the prestige of the property.

At our Hotel and Property Investment Division,

I am pleased to note that our shopping complexes
namely Plaza Metro Kajang and Metro Point Complex
maintained a relatively good tenants’ occupancy
rate of approximately 93% for the reporting year.

During the financial year, the Group have

contributed approximately RM786,770 in
community engagement that benefitted 113
educational institutions, community clubs and
charitable organisations.

In our continuous quest in driving growth and enhancing

the sustainability of our business operations, we are
humbled to be consecutively recognised by The Edge
Malaysia as the Top 12th Developer in Malaysia at The
Edge Malaysia’s Property Excellence Award 2019.

MKH’s sustainability progress is further detailed in the

section on “Sustainability Report” within this report, from
page 30 to page 41.

During the financial year, the Company repurchased

3,475,000 of ordinary shares, representing 0.59% of the
total number of shares, at an average price of RM1.20
per share, amounting to approximately RM4.2 million
including transaction costs. The exercise was financed by
internally generated funds.

For FY2019, a first interim dividend of 4 sen per ordinary

share amounting to approximately RM23.16 million was
declared on 27 November 2019 and paid on 3 January
Harvesting a ripe bunch with a sickle. 2020. This represents a distribution of approximately
28.1% of the Group’s net profit attributable to shareholders.
MKH BERHAD
019
CHAIRMAN’S STATEMENT

Kajang 2 is an award-winning integrated township

with excellent connectivity.

(Artist’s impression only)

RM 1.12 On behalf of the Board of Directors, I would like to

express our sincere appreciation and thanks to our
valued shareholders, customers, bankers, business
billion associates and regulatory authorities for their
continued support towards the Group. I would also
unbilled sales like to extend my heartfelt gratitude to my Board
members, management team and all employees
Moving forward, we are confident that the Group is well for their commitment and teamwork towards the
positioned to create sustainable businesses with our TOD Group’s success.
model. While the Klang Valley residential market in general
is foreseen to remain challenging, we are confident that I believe that MKH Berhad is well positioned to
our strategy of building affordable housing at good achieve greater success in year 2020 with the
location with TOD concept will continue to receive good continued support from all of our stakeholders.
take up rate.
Thank you.
We are also optimistic that crude palm oil (“CPO”) prices
will remain well supported in 2020 with the current CPO
price trading above RM3,000/MT as at 10 January 2020 Tan Sri Dato’ Alex Chen Kooi Chiew
at Malaysia Derivatives Exchange. The adoption of B20 Group Executive Chairman
and B30 biodiesel mandate in Malaysia and Indonesia
respectively in year 2020 will further increase the
demand for CPO. We will continue to focus on our efforts
to maximise CPO production and operation efficiency.
020 ANNUAL REPORT 2019
MKH BERHAD
021

WE CREATE
environment
As we believe that green spaces
provide substantial environmental
benefits to our communities, we
allocated about 60 acres of forest park
and central lake in Hillpark @ Shah
Alam North, one of our eco-themed
township development.

Inspired to bring nature to its

residents, this award-winning
township has a large reforested public
community park built with various
recreational facilities and an innovative
ant colony themed playground to
encourage healthy community living.
022 ANNUAL REPORT 2019

MANAGEMENT DISCUSSION
and analysis report
This Statement provides a discussion and For the financial year ended 30 September 2019, the
analysis of the Group’s financial performance Group’s revenue increased by 3.7% to RM1.12 billion
for the year ended 30 September 2019 (FY2018: RM1.08 billion) mainly due to higher recognition
(“FY 2019”), including explanations for of revenue and profit from new and ongoing projects
significant fluctuations over the previous from property development and construction division.
financial year.
The Group’s profit before tax (“PBT”) increased by
The Group’s principal business segments, which remained 23.5% to RM158.4 million (FY2018: RM128.2 million)
unchanged from the preceding year, comprise Property which was mainly due to higher contribution from the
Development and Construction; Plantation; Hotel and property and construction division from its new and
Property Investment; and Others. The segment “Others” ongoing projects and following the adoption of Malaysia
comprises Trading, Manufacturing, Investment Holding Financial Reporting Standards (“MFRS”) 15 Revenue from
and other non-reportable operations. Contracts with Customers (“MFRS 15”), which resulted in
legal fees and sales commission expenses progressively
FY2019 FINANCIAL HIGHLIGHTS charged to income statement instead of immediately
charged out as and when incurred previously.
The Group’s revenue and profit before tax for the financial
year under review and the preceding year are summarised
Our eco-themed township project, Hillpark @ Shah
as follows:
Alam North has a unique 60 acres of forest park
which provides an affordable green living and create
2019 2018 Changes
a sustainable living for residents.
RM’000 RM’000 (%)

Group Revenue 1,121,657 1,081,701 3.7

Segments
•• Property 775,923 702,687 10.4
Development and
Construction
•• Plantation 229,762 263,197 (12.7)
•• Hotel and 31,192 32,957 (5.4)
Property
In addition, the Group also recorded unrealised foreign
Investment
exchange gains of RM14.0 million as compared to the
•• Others 84,780 82,860 2.3
preceding year unrealised foreign exchange losses of
RM36.4 million for the plantation division following
Group Profit Before the strengthening of Indonesian Rupiah against its
158,373 128,232 23.5
Tax borrowings in United States (“US”) Dollar.

Segments Excluding the unrealised foreign exchange gains of

•• Property 122,239 76,565 59.7 RM14.0 million (FY2018: unrealised foreign exchange
Development and losses of RM36.4 million), the Group’s PBT was lower
Construction by 12.3% at RM144.4 million (FY2018: RM164.6 million)
•• Plantation 5,936 11,961 (50.4) which was mainly due to lower average selling price for
•• Hotel and 1,784 11,761 (84.8) crude palm oil (“CPO”) and higher average production
Property cost incurred from the plantation division, inclusion
Investment of loss on changes in fair value of investment properties
•• Others 28,414 27,945 1.7 totalling RM6.2 million (FY2018: RM317,000) from the
MKH BERHAD
023
MANAGEMENT DISCUSSION
AND ANALYSIS REPORT

The oil palm plantation in Kalimantan.

Net cash generated 2019 2018 Changes

from/ (used in) RM’000 RM’000 (%)

Operating activities 250,579 97,384 157.3

Investing activities (58,431) (66,593) 12.3

Financing activities (13,308) (72,423) 81.6

Increase/
(Decrease) in
178,840 (41,632) 529.6
cash and cash
equivalents
hotel and property investment division and impairment
loss on trade and other receivables totalling RM5.3 million
(FY2018: RM78,000) from the property development For FY2019, the Group recorded vast improvement
and construction and trading divisions. in cash flows from operating activities following the
handing over of vacant possession (“HOVP”) of The
Further details of the Group’s financial performance are Pinang and The Palm (phase 1A & 1B1) @ Hillpark Shah
discussed in the segments below. Alam North and Saville @ D’Lake Puchong. The cashflows
used in investing activities was also reduced with lower
LIQUIDITY AND CAPITAL RESOURCES upfront development expenditure incurred in land held
for property development.
During FY2019, the cash and cash equivalents of the
Group increased significantly by RM178.8 million to The cashflows used in financing activities was also
RM374.1 million as at 30 September 2019 (FY2018: reduced significantly following a net drawdown of
decreased by RM41.6 million to RM194.7 million as at bank borrowings totalling RM11.8 million in FY2019 as
30 September 2018), which was culminated from the compared to a net repayment of bank borrowings totalling
following cash flows activities: RM92.2 million in FY2018.
024 ANNUAL REPORT 2019

MANAGEMENT DISCUSSION
AND ANALYSIS REPORT

Group’s revenue increased by

3.7%
to RM1.12 billion
(FY2018: RM1.08 billion)

The Group’s capital resources comprise primarily

of cash flows generated from operating activities,
cash and cash equivalents, term deposits, fixed
income funds and available lines of credit. As
at 30 September 2019, the Group’s net gearing
improved to 0.17 times (FY2018: 0.29 times), largely
due to the above mentioned as well as prudent
cash flow management. The Group continues to
maintain a prudent approach towards managing its
capital resources to ensure adequacy in meeting
operational requirements and capital expenditure
from time to time. As at 30 September 2019, the gross development value
of nine (9) new and ongoing projects amounted to
SEGMENT RESULTS AND ANALYSIS RM2.30 billion with unbilled sales totalling RM1.12 billion
(FY2018: RM1.06 billion) namely, Hillpark @ Shah Alam
Property Development and Construction North, Hillpark Residence, TR Residence @ Jalan Tun
Razak, Kajang 2 Precinct 2, Inspirasi Mont’ Kiara, Kajang
The Group’s revenue was driven by this segment East Precinct 1, MKH Boulevard 2, Nexus @ Kajang and
with the contribution from nine (9) key projects Bandar Teknologi Kajang shops.
located in Kuala Lumpur, Mont’ Kiara, Kajang,
Semenyih and Hillpark @ Shah Alam North of which The Group is well-positioned to unlock the value of its
three (3) new projects were launched in FY2019, existing development landbank in Kuala Lumpur, Kajang,
namely, Kajang East Precinct 1, MKH Boulevard 2 Semenyih and Puncak Alam vicinities.
and Nexus @ Kajang and these 3 new projects have
contributed 64% of the total FY2019 new sales of Paired with good product design and strategic location
RM823.5 million (FY2018: RM815.0 million). essential lifestyle amenities, our ongoing projects
recorded an average take up rate of 85%.
This division achieved higher revenue and PBT
of RM775.9 million (FY2018: RM702.7 million)
and RM122.2 million (FY2018: RM76.6 million)
respectively from its ongoing projects namely, TR
Residence @ Jalan Tun Razak, Inspirasi Mont’ Kiara,
Hillpark @ Shah Alam North and Hillpark Residence
coupled with HOVP of The Pinang and The Palm
(phase 1A & 1B1) @ Hillpark Shah Alam North and
Saville @ D’Lake Puchong. This division’s PBT was
further improve by the adoption of MFRS 15.
MKH BERHAD
025
MANAGEMENT DISCUSSION
AND ANALYSIS REPORT

Inspired by Japanese culture, Kajang 2 Precinct 2 creates tranquil living for residents, delicately designed with
Zen gardens, Sakura boulevard main entrance and a lakeside deck which is equipped with jetty and gazebo for
recreational pleasures.

Plantation

The following table summarises the performance of the

division for the past three (3) years: -

Production for FY 2017 FY 2018 FY 2019

Estate (MT)

Fresh Fruit Bunches 398,000* 465,000* 459,000*

(“FFB”)

Crude Palm Oil 83,000* 101,000* 100,000*

(“CPO”)

Average CPO Price RM2,530 RM2,163 RM1,856

Oil Extraction Rate 20% 21% 21%

(“OER”)

PT MKH – FFB 26 MT 30 MT 29 MT
Yield/hectare

Note: Figures exclude CPO purchased from outside Inspirasi Mont’ Kiara applies a minimalist concept
parties for resale. which features 46-storey residential towers that
* rounded up to nearest thousand provide a modern yet holistic living environment.
026 ANNUAL REPORT 2019

MANAGEMENT DISCUSSION
AND ANALYSIS REPORT

Group Executive Chairman, Tan Sri Dato’ Chen Kooi Chiew (second from
right) and team inspecting the oil palm plantation.

For FY2019, the plantation division recorded a aged between 8 and 11 years old, while PT Sawit Prima
decrease in revenue by 12.7% to RM229.8 million Sakti is planted with 1,531 hectares of oil palm trees
(FY2018: RM263.2 million) mainly attributable to aged 2 to 8 years old.
lower average CPO price of RM1,856 per metric ton
(MT) in FY2019 as compared to RM2,163 per MT in Hotel and Property Investment
FY2018. This division’s PBT was lower by 50.4% to
RM5.9 million (FY2018: RM12.0 million) mainly due For FY2019, this division recorded a lower revenue and
to lower average CPO price and couple with higher PBT of RM31.2 million (FY2018: RM33.0 million) and
average production cost incurred as a result of RM1.8 million (FY2018: RM11.8 million) respectively due to
lower production of fresh fruit bunches of 459,000 inclusion of loss on changes in fair value of investment
MT in FY2019 (FY2018: 465,000 MT) due to dry properties totalling RM6.2 million in FY2019 (FY2018:
weather. RM317,000), absence of gain on disposal of an associate
in FY2019 (FY2018: RM2.0 million), reduction in average
This division recorded unrealised foreign exchange rental rates for tenants to sustain the occupancy rates and
gains of RM14.0 million in FY2019 (FY2018: the newly refurbished 3-star hotel namely RHR Hotel @
unrealised foreign exchange losses of RM36.4 Kajang has yet to achieve its breakeven occupancy rates.
million) following the strengthening of Indonesian
Rupiah against its borrowings in US Dollar. PROSPECTS
Excluding the unrealised foreign exchange gains
or losses, this division recorded loss before tax of The Board is optimistic and expecting to achieve
RM8.1 million as compared to PBT of RM48.4 million satisfactory results for the financial year ending
in FY2018 due to the above mentioned factors. 30 September 2020 (“FY 2020”) mainly from the
following principal business segments: -
As at 30 September 2019, the total area planted for
this division was about 16,408 hectares (FY2018:
16,408 hectares) with 15,623 hectares (FY2018: HOTEL
15,623 hectares) have reached the mature age for
harvest. Presently, PT Maju Kalimantan Hadapan
is planted with 14,877 hectares of oil palm trees
MKH BERHAD
027
MANAGEMENT DISCUSSION
AND ANALYSIS REPORT

and Indonesia respectively and the anticipated tighther

CPO supply from the oil palm industry. CPO prices
have rebounded strongly from its low and was trading
at above RM3,000 per MT (as at 10 January 2020) at
Malaysia Derivatives Exchange which augurs well for the
plantation division.

Property Investment

This division is expected to continue in providing a steady

income stream to the Group by maintaining an average
rental yield of approximately 5% per annum based on fair
values of the properties as at 30 September 2019.

7.5%
2.8%

Kajang East offers modern double-storey terraces

and semi-detached homes nestled in lush greenery
for tranquil living. 20.5%

Property Development and Construction Group

Revenue
With the unbilled sales of RM1.12 billion as at
30 September 2019, the Group is well positioned 69.2%
for FY2020 with new and ongoing developments,
such as, TR Residence @ Jalan Tun Razak, Inspirasi
Mont’ Kiara, Hillpark @ Shah Alam North, Kajang 2
Precinct 2, Hillpark Residence, Kajang East
Precinct 1, MKH Boulevard 2 and Nexus @ Kajang. 17.9%

Our FY2020 planned launches with total estimated

1.1%
GDV of RM1.48 billion are in line with the Government’s
3.8%
encouragement for more affordable housing and
transit-oriented developments, comprising mainly Group Profit
of affordable to mid-ranged landed residential and Before Tax
high-rises located near the public transportation
system.
77.2%

In addition, we continuously explore joint venture

opportunities with potential partners with the aim
to create value for the Group.

Plantation Property Development and Construction

Moving forward, our plantation division is expected to Plantation

contribute positively to the Group’s future earnings.
We expect the price of CPO to be well supported in Hotel and Property Investment
2020 mainly due to the demand from the adoption
of B20 and B30 biodiesel programmes by Malaysia Others
028 ANNUAL REPORT 2019
MKH BERHAD
029

WE CREATE
sustainable
future
In our continuous pursuit of excellence,
the Group is mindful of its responsibility
as a corporate citizen towards
sustainable practices in the economic,
environment and social aspects.

The Group is committed to maintain

a high standard of governance in
our operations to have a positive
sustainable impact on the business,
environment and its key stakeholders.
030 ANNUAL REPORT 2019

SUSTAINABILITY
report

The content of this Sustainability

Report (“Report”) narrates
MKH’s sustainability efforts from
1 October 2018 to 30 September
2019, encompass the Group’s
operations in Malaysia and
Indonesia, which are the locations
of the Group’s key businesses.
We provide job opportunities and shares knowledge
in planting, estate management and the transfer of
Through this Report, the Group demonstrates our technology to the local community in our oil palm
commitment in integrating sustainability practices across plantation.
all facets of its businesses. This Report was prepared
in accordance with the Listing Requirements of Bursa ORGANISATIONAL STRUCTURE FOR SUSTAINABILITY
Malaysia Securities Berhad (“Bursa”), sets out what the COMMITTEE
Board considers as material sustainability risks and
opportunities, collectively known as Material Sustainability MKH’s Sustainability Committee, led by the Group
Matters, that impact the way the Group’s operations are Managing Director Tan Sri Datuk Chen Lok Loi, oversees
carried out as well as how such Material Sustainability the planning and execution of sustainability strategies to
Matters are managed. In preparing this Report the Board ensure that our sustainability matters are implemented
has considered the Sustainability Reporting Guide and its throughout our business operations.
accompanying toolkits, issued by Bursa.
Together, the Sustainability Committee identifies,
SUSTAINABILITY GOVERNANCE evaluates, monitors and manages risks as well as
opportunities in our business operations relating to
In MKH Berhad, we hold firmly to the principles of ethical economic, environmental and social aspects.
conduct to ensure our business is conducted with integrity
through good governance, in line with the best industry
practices as well as the applicable rules and regulations. MKH Berhad’s Sustainability Committee comprises:-

Our business operating units are guided by the Group’s ► Group Managing Director
policies and its respective standard operating procedures. ► Key Senior Management
The Board of Directors and the senior management meet
regularly to ensure that the planning, decision-making and
execution of the Group’s business operations are carried
out professionally.

We have an Internal Audit Division to undertake an

independent and systematic assessment of the Group’s
system of risk management and internal controls as
established by management in addressing the principal
business risks faced by the Group.
Various programmes are conducted by engaging with
Full disclosure on our Corporate Governance Report is
other health associations for the employees to achieve
available for reference on www.mkhberhad.com.
a positive work-life balance.
MKH BERHAD
031
SUSTAINABILITY REPORT

The functions of the key management members are defined in sustainability management.

Board of Directors of MKH Group Managing Director of Sustainability Committee

MKH
► Review the Group’s sustainability ► Lead and drive the sustainability ► Responsible for assessing
matters and provide advice and initiatives in the Group. and identifying sustainability
direction on sustainability for the ► Discuss, review and monitor matters.
Group as and when necessary. progress of sustainability ► Oversee the planning and
► Approve sustainability report. matters regularly. execution of sustainability
► Report to the Board of Directors strategies.
on sustainability matters. ► Undertake actions as and
when necessary to address
sustainability concerns.

MKH’s SUSTAINABILITY GOALS

MKH defines and aligns its key topics and core principles with reference to the United Nation’s 17 Sustainable
Development Goals (“SDGs”) enacted in 2015 by the United Nation General Assembly. We share our responsibilities in
supporting the efforts of tackling the economic, environmental and social challenges through the implementation of
sustainable practices as follows:-

To drive economic, growth and innovation by using our

resources efficiently to create value for shareholders via
sustainable planning, decision making and implementation of
business processes.
To operate transparently in compliance with ethical codes of
conduct and adopt shared values approach in business and
social collaborations that bring positive impact towards internal
and external communities.
To responsibly utilise resources with emphasis on recycling
waste and energy savings, as well as to initiate continuous
development of environmentally-friendly initiatives.

To provide a healthy, safe and empowering environmental

that encourages the health, growth and productivity of our
employees and communities.

To foster diversity and social inclusion by creating an

environment where employees are valued without
discrimination against gender, race and religion.

To support education for the community and employees with

the provision of education aid or access to better learning
environment towards academic excellence.
032 ANNUAL REPORT 2019

SUSTAINABILITY REPORT

MKH’S MATERIALITY MATRIX STAKEHOLDER ENGAGEMENT

The key sustainability matters most relevant to our business operations We engage our stakeholders
relating to the economic, environmental and social aspects as well as to regularly to develop a deeper
our internal and external stakeholders, is illustrated below. understanding of how we can
address their needs while further
High
carrying our corporate mission.
Maintaining a good relationship,
Economic & Business Performance recognising and valuing each of
Community Investment
Governance, Ethics & Intergrity them such as our business partners
Brand
Management Risk Management and understanding their interest
and needs are vital aspects that
Important to Stakeholders

Customer Satisfaction
Stakeholders Occupational Health & Safety ensure our business success.
Engagement Employee Engagement & Retention

Responsible
Traceability & Sustainable Procurement Our stakeholder universe consists
Marketing Assurance & Certification of shareholders, investors,
Energy Consumption Innovation customers, employees, community
Waste & by-product Green Development
members, regulators, financial
Management institutions, industry group,
business associates, consultants,
suppliers and the media.

Working with stakeholders

improves our ability to address
priorities. In line with our corporate
core values, we strive to engage
Low Important to MKH Berhad High with our stakeholders, respectfully
in an efficient, knowledgeable and
We believe these 16 key material matters are keys to creating value for responsive manner in our journey
all our stakeholders, building mutual trust and allowing better insight to deliver holistic value. We listen
on community needs as well as market trends in our journey towards a to and learn from stakeholders.
sustainable future. We also provide stakeholders with
accurate information so that they
can understand our actions and
intentions with greater clarity.

The ongoing transit-oriented high-rise development namely TR Residence

@ Jalan Tun Razak is located next to major highway which is connected to
the entire Klang Valley.
MKH BERHAD
033
SUSTAINABILITY REPORT

The following groups are key stakeholders who have the greatest impact on our organisation and with whom we
engage regularly.

FREQUENCY OF
No. STAKEHOLDERS TYPE OF ENGAGEMENT
ENGAGEMENT

1 Customers ••  ritten, Social Media & Email Communication

W •• Daily
•• Centralised Sales Galleries •• Daily
•• Customer Feedback Management •• Daily
•• Outreach Events/Roadshow/Open Day •• Ad hoc

2 Employees ••  mployee Engagement Activities

E •• Regular
•• Written Communications •• Regular
•• Departmental Meetings •• Regular
•• Employee Development Trainings & Workshops •• Regular

3 Government Agencies/ Local •• Reports •• Regular

Authorities •• Written Communications •• Regular
•• Formal Meetings •• Ad hoc

4 Industry Group •• Formal Meetings •• Regular

•• Written Communications •• Regular

5 Investors/Analysts/Fund •• Formal Meetings/ Briefing •• Ad hoc

Managers/Private Equity Firms •• Written Communications •• Ad hoc

6 Financial Institutions •• Formal Meetings •• Regular

•• Written Communications •• Regular

7 JV Partners/Business •• Formal Meetings •• Regular

Associates •• Written Communications •• Regular

8 Local Communities/ •• Formal Meetings •• Regular

Residents’ Associations/Joint •• Written Communications •• Regular
Management Bodies

9 Media •• Press Releases •• Regular

•• Written Communications •• Regular
•• Networking Sessions •• Ad hoc

10 Shareholders •• Written Communications •• Regular

•• Quarterly Financial Report •• Quarterly
•• Annual General Meeting •• Annual

11 Vendors/Suppliers/ •• Formal Meetings •• Regular

Contractors/Consultants •• Project Tender •• Regular
•• Written Communications •• Regular
034 ANNUAL REPORT 2019

SUSTAINABILITY REPORT

Towards the Economy

SUSTAINABILITY EFFORTS
With more than 40 years in the property industry, the
At MKH, we are guided by the best industry Group actively engage with various chamber associations
practices in our business operations to produce and and professional groups to gain latest insight on industries
deliver quality products to our customers, while which are relevant to our business operations.
also being cognizant of the economic, environment
and social aspects of our communities. Our adaptation of Industrialised Building System (“IBS”)
in property development proves to accentuate our
To-date, MKH’s diverse property portfolio comprises expertise in creating value for our home buyers through
the building of affordable yet quality housing.

10
Of recent years, the palm oil industry had been largely
facing challenges in terms of manpower shortage, weather
anomalies and fluctuating CPO prices. The Plantation
Division recognised that we have to continuously improve
► Townships
our operational and production efficiencies and have

29
► Mixed developments carried out the necessary steps. The Group has also been
developing and testing software applications (“App”) to
further complement the management of our plantation.
For example, RondaApp enabled the plantation
management team to monitor and take timely steps to
► Landed
mitigate or resolve matters such as maintenance and
► High-rise residential repair work to roads and machineries. Such Apps are
developments being continuously tested and improved over time to suit

10
our plantation usage.

► Boutique serviced

7
apartments

► Transit-oriented Fresh fruit bunches are harvested at the right time.

developments

9
► Commercial
Developments

that are strategically located within Kajang and

across the Klang Valley. CASCADA’s hand shower represents the second
trademarked product which is established by our
Building Material Trading Division in FY2019.
MKH BERHAD
035
SUSTAINABILITY REPORT

Building Materials Trading Division managed to deliver

its first trademarked product namely EGON to 329 units
of Kajang East development. In addition, our Building
Materials Trading Division has also established its
second trademarked product namely CASCADA, a hand
shower which was delivered to 552 units of our Kajang 2
Precinct 2 project.

We emphasise on traceability in our operational activities

by ensuring responsible sourcing from our supply chain
through taking steps to understand respective practices Artist impression of ongoing double-storey terraces
of our suppliers, regular reviews and renegotiating Kajang 2 Precinct 2 Phase 4 “HIROKI” with Japanese
terms of trade in efforts to ensure a sustainable business inspired living concept.
relationships in the long run. At our oil palm plantation, we
also focus on the traceability of external crops procured Our Building Materials Trading Division continues to
under the Indonesian Plasma Programme. produce quality ironmongery for our customers to
meet current needs and also to ensure a sustainable
Our Property Development and Construction Division has trade business among industry peers.
developed a wide range of successful property products
to include integrated townships, transit-oriented MKH engages certified architects, engineers and
developments (“TOD”) and affordable homes that caters contractors for its property development projects
to various market demands. through strict tender process. In addition, our Quality
Assurance personnel carry out regular inspection
We constantly explore joint-venture opportunities to throughout the construction and processes in order
expand our land bank which enable the Group to carry to achieve minimum scores of 75% in QLASSIC
out development with relatively lower upfront financial assessments for all our developments.
commitment.
In FY2019, we were ranked 12th among Top 30 Property
Partnering to develop projects also enable our Property Developers in Malaysia at The Edge Malaysia’s Property
Development and Construction Division the opportunity Excellence Awards 2019, with high scores in good
to adopt new specialised knowledge in the construction quality of development projects that create value for
industry, which further enhances our product offerings our home buyers and investors.
for the greater community. We began to apply the
Japanese inspired living for the development project Given our Plantation Division’s constant innovations,
namely Kajang 2 Precinct 2 Phase 3 “MIDORI” & the local authorities have been making study trips to
Phase 4 “HIROKI”, offering a total of 184 units of double- our plantation. The local province have implemented
storey terraces in Kajang 2. The Japanese inspired some of our innovations such as the setting up of Quick
concept emphasize on holistic and eco-friendly living. Response Units for fire prevention and control during
dry season.
Our Plantation Division’s continuous research and
development on mechanisation over the years had Our Plantation Division had been recognised by the
enabled more efficient FFB crop evacuation, even Governor of East Kalimantan Province and other local
during festive seasons when more workers go on leave authorities as one of the most efficient plantations
and during monsoon seasons when road access is more in East Kalimantan for its good estate management
challenging. The consistent crop evacuation in a timely practices and innovations, as could be evidenced
manner enabled our production and sales of CPO to be by our multiple awards. Besides, we also believed in
better managed. establishing health and safety programs to further
educate and improve on the living standards of our
workers and surrounding local communities.
036 ANNUAL REPORT 2019

SUSTAINABILITY REPORT

Towards the Environment

Certified green building materials and fittings are
also part of our Building Materials Trade Division’s
Our Property Development and Construction Division
product offering to contractors.
incorporates a sustainable approach and focuses on
the innovative concept and design which aim to reduce
In addition, our employees practise energy saving
energy consumption in our residential development.
faithfully at the workplace by switching lights and
appliances off when not in use and reducing paper
At the construction sites, existing top soil is preserved
printing.
where possible for future landscape use, while buildings
are constructed in the north-south orientation, where
We are committed to preserve a healthy ecosystem
possible, to create cooler living environment for residents.
at our plantation estates via good estate
In addition, wastes generated from the construction sites
management practices such as practise zero-
are either recycled for reuse, or timely transported to
burning policy in the planting of oil palm trees
designated disposal sites.
and putting up various signboards on environment
preservation and wildlife protection as a constant
As we believe that green spaces provide substantial
reminder to in-field workers as they carry out their
environmental benefits to our communities, we allocated
daily duties.
about 60 acres of forest park and central lake park in
Hillpark @ Shah Alam North, one of our eco-themed
To ensure that our estates are responsibly managed,
township development. Inspired to bring nature to its
we work closely with the Indonesian Department of
residents, this award-winning township has a large
Environment. Drainage and irrigation systems are
reforested public community park built with various
built to ensure optimum water levels to promote
recreational facilities and an innovative ant colony-themed
growth of oil palm trees and we also reduce
playground to encourage healthy community living.
application of agrochemicals through the use of
natural alternatives such as planting of beneficial
In recognising the importance for sustainable living
plant to combat pests.
environment, we practises energy saving faithfully by
using natural renewable energy. Solar photovoltaic
Effluents from our CPO mill are treated using
panels were installed at our shopping malls in Kajang
anaerobic, aerobic and facultative ponding system
and successfully reduced utility bills by up to 22%.
and subsequently used as natural soil fertiliser.

An innovative ant colony-themed playground at Hillpark @ Shah Alam North.

MKH BERHAD
037
SUSTAINABILITY REPORT

While the practice to reduce, reuse and recycle is

observed, recycle bins are provided at our high-rise
residences, shopping complexes and workplace.
Organic wastes are periodically collected and recycled
into natural composts at our headquarters, which are used
as fertilisers in our developments’ landscape. Waste paper
and plastic materials are collected from headquarters
periodically to be sent to respective recycling service
providers for further processing.

In support to reduce carbon-footprints and encourage

public transportation ridership, we have also taken to
build transit-oriented developments that are connected
or well-within walking distances to public transit points.

Our employees are encouraged to practise water-saving

Organic wastes such as fruit skins are regularly
habits by minimising water wastage in the washrooms
collected from our headquarters and processed into
and pantries, while at our investment properties, notices
natural compost for our development’s landscape.
and posters encouraging efficient water usage are put up
at designated areas to encourage tenants, customers and
guests to use water responsibly.
The committee will meet regularly to discuss
and identify any safety health issues and form
Towards the Society
the Emergency Response Team (“ERT”) as a
precautionary measure against fire or emergency
As a responsible corporate citizen, MKH aspires to
in the workplace. Additionally, regular trainings
foster a stable relationship while creating value for our
are carried out for our employees to ensure that
key stakeholders, comprising customers, shareholders,
they are equipped with the proper knowledge of
regulators and the greater community within the
standard precautions while carrying out in-field and
environment where our businesses operate in.
on-site duties in their respective work environments
without risking injuries.
We believe respect in the workplace is fundamental to
good performance and engagement. We appreciate the
wide range of experiences and socio-cultural differences
that exist in our MKH family and believe the unique traits
of our people add to our strength and resilience as a
visionary company. As at end-September 2019, we have
a dedicated workforce of over 4,300 people, comprising
72% male and 28% female employees of respective local
origins ethnicity backgrounds.

We place great importance on staff safety and health

by providing a safe and secure work environment.
The Safety and Health Committee (“SHC”) is established
to develop in-house safety and health rules, review
the policies and ensure that all employees are in a safe
working environment at our headquarters.

Our employees regularly participate in blood

donation drive that is held at our headquarters.
038 ANNUAL REPORT 2019

SUSTAINABILITY REPORT

Our headquarters in Kajang, Selangor is equipped

with a studio gym within the office building where
employees can enjoy at their leisure and provision
of membership subsidy for gym-goers to external
fitness centres to promote positive work-life
balance among the employees. A daily 10-minute
exercise regime is also practised before working
hours in the mornings and weekly after-work
Qi Gong, Yoga and Zumba classes are also provided,
while fresh fruits and herbal teas are provided on
alternate days for the employees’ well being.

Promoting a harmonious work culture is always

a priority for the Group. The Group respects and
The workers use proper equipment for the job at hand. appreciates diversity in our workforce and does
not tolerate discrimination against anyone on the
The Property Development and Construction Division basis of race, religion and gender. Our Human
supervises site safety by following specific project safety Resource (“HR”) and Administration Department
plans which are drawn up by the appointed contractors hosted the major festive celebrations such as
before commencement of any construction activity at site. Chinese New Year, Hari Raya and Deepavali
gatherings to promote employees engagement.
Additionally, our employees are required to attend
the training programmes to increase motivation and
teamwork spirit among others as well as to create
a harmonious workplace. Various programmes and
activities were conducted as part of our efforts
in maintaining a good relationship between staff.
The relevant training is provided in developing our
employees’ functional development, leadership skills as
well as soft skills throughout the year of 2019.

MKH cares about the welfare of its employees. We

progressively create an integrated work culture that
emphasises on providing various welfare benefits
such as dental and health care in recognition and
appreciation of the dedicated hard work by fellow
employees. Special arrangements such as designated
Harmonious work culture is always a priority to
parking for pregnant employees are also provided for
the Group.
mobility convenience and birthdays are celebrated with
the giving of gift vouchers.
MKH BERHAD
039
SUSTAINABILITY REPORT

We ensure that our residential developments are ideal for multigenerational living with recreational and landscape
creation as well as provision of various outdoor exercise facilities at Hillpark @ Shah Alam North.

We are mindful of the need to constantly upskill our

workforce and provide equal opportunities of personal
and career enhancement within the Group. A total of
136 trainings and workshops amounting to 4,061 training
hours were organised within the reporting year to educate
MKH employees on proper precaution against hazards
associated with their respective responsibilities. For the
year ended 30 September 2019, a total of 2,442 training
hours were conducted outside of the Company while
1,619 training hours were carried out in the headquarters.

The Group greatly appreciates the employees who

have consistently shown a high level of commitment
and achievement throughout the year. To provide fair
remuneration to our employees, we determine their annual
performance through the evaluation of key performance
indicators (“KPI”) and practise the internal promotions
for eligible employees to assume greater responsibility. Qi-Gong class is one of the ongoing efforts with the
In addition, bonuses and salary increment are awarded to aim to encourage a healthy lifestyle for the employees.
each individual’s effort through the years.
040 ANNUAL REPORT 2019

SUSTAINABILITY REPORT

In the social realm, we strive to foster high quality working

relationship with local authorities, interest groups,
joint-venture partners, bankers, suppliers, contractors
and also agencies in our mission to create and deliver
sustainable value to all our stakeholders. We work
closely with industry associations, participate in
multi-sector forums and meet with socially responsible
investors to gain diverse and valuable perspectives as
we continuously improve our sustainable development
programs and initiatives. Our key management members
also play active roles in advocating the growth and Over 800 children of our estate workers are provided
advancement of the industry with present memberships with schooling opportunities while their parents are at work.
in non-governmental organisations that also contribute
to improving the welfare of the greater community. During the financial year, we contributed approximately
RM786,770 in the community engagement that supported
We recognise that the journey towards a sustainable future a total 113 beneficiaries included educational institutions,
begins with ourselves therefore we are committed to fulfil community clubs and welfare organisations.
our role as a responsible corporate citizen in our mission
to generate long-term growth for our businesses and also The Group had been continuously upgrading essential
ensure value creation for our immediate communities. facilities and infrastructure built for the benefit of
approximately 10,000 of our employees and family
In supporting and adding value to the communities- members within our oil palm plantation. Amongst the
in-need where our employees live and work in, we facilities provided were 24-hour community clinic,
ensure that our residential developments are ideal for pre-school and primary school, mini market, mosques,
multi-generational living with the adoption of universal churches and ATM for banking.
designs, recreational and landscape creation as well as
provision of various outdoor exercise facilities.

In enhancing the living experience for residents of our

projects, we set up online portals for certain newly handed
over projects that provide communication channels to
the building management and various residence services,
such as monthly maintenance payments and booking of
common facilities. Initially a mobile application (“App”)
and this pilot programme has evolved to include a website
platform for residents’ convenience. A total of
Being mindful of the need to invest in the community,
we proactively engage with its community through
various corporate social responsibility (“CSR”) activities
136
trainings and workshops amounting to

4,061
such as welfare homes visitations, charity donation
drives and festive celebrations. With our aim to nurture a
healthy young mind, we organised a 12-week community
badminton outreach programme for residents at
Lembah Subang 2, Petaling Jaya. The objectives of the training hours
programme were crafted under the guidelines of the
ministry’s National Community Policy, to engage and
transform the lives of those in the B40 groups through
empowerment and sustainability.
MKH BERHAD
041
SUSTAINABILITY REPORT

Badminton Outreach Programme 2019 is part of MKH commitment in support of Ministry of Housing and Local
Government’s National Community Policy, to engage and transform the lives of B40 group through empowerment
and sustainability.

The Plasma Programme was an initiative

implemented by the Indonesian government
and the Group’s Plantation Division strongly
supported this endeavour to improve the local
communities’ livelihood. Vide this programme,
we provided job opportunities to them and embark
on educating them in terms of estate knowledge
and management, as well as transfer of technology
to the plasma plantation. Our Plantation Division
had previously won the best plasma award from
the local Regent and was a source of pride to the
local communities. Moving forward, our Plantation MKH volunteer helping out the residents by cleaning
Division will continue to further strengthen its the yard at Sincere Home Kajang.
sustainability initiative to ensure long term growth.

As a seasoned builder of mass market and affordable

housing, we commit to escalate our brand presence
in the real estate industry and also engage the
community where the company operates through
responsible marketing campaigns.

The Board is of the view that the existing

sustainability practices adopted are adequate and
pertinent to steer the Group’s sustainable growth.
Nonetheless, it will consider the need to implement
other sustainability practise, as appropriate, to
complement existing ones as the Board monitors
The 5km walking challenge, MKH Walk 2018 received
the sustainability performance of the Group’s
very good response from the Kajang community.
operations on an ongoing basis.
042 ANNUAL REPORT 2019

DIRECTORS’
profile

Tan Sri Dato Chen Kooi Chiew @ Tan Sri Datuk Chen Lok Loi
Cheng Ngi Chong Group Managing Director
Group Executive Chairman Aged 67, Male, Malaysian
Aged 76, Male, Malaysian

Tan Sri Dato’ Chen Kooi Chiew @ Cheng Ngi Chong Tan Sri Datuk Chen Lok Loi holds a Bachelor of
serves as the Group Executive Chairman since Business Studies (Marketing) from Monash University,
30 October 2006. He was appointed to the Board Australia. He was appointed to the Board on
on 27 September 1979 and is also a member of the 31 July 1984 and holding the present position as
Group’s Board of Directors and Executive Committee Group Managing Director since 19 January 2005.
as well as Director of Intelek Murni (M) Berhad, He is also a member of the Executive Committee and
a subsidiary of MKH Berhad. a Director of GK Resort Berhad and Intelek Murni (M)
Berhad, both subsidiaries of MKH Berhad.
Other than real estate and property development,
he has successfully led the Group to establish and He is the recipient of “The Edge Malaysia Outstanding
develop oil palm plantation as one of MKH’s present Property CEO Award 2018”, “CIDB’s Malaysian
core businesses. To-date, he has been involved in Construction Industry Excellence Awards CEO of
business for about 59 years, of which 41 years were The Year Award 2015” and “Real Estate and Housing
in property development and construction industry
Developers’ Association (“REHDA”) Personality
and 27 years were in plantation sector.
Award 2013”. He has 38 years of experience in
property development and construction related
In recognition of his vast knowledge and experience in
businesses and has been appointed as the Chairman
the business industry, he was the recipient of “World
Chinese Economic Summit Lifetime Achievement of Perbadanan PR1MA Malaysia (“PR1MA”) on
Award 2017” and “The International Real Estate 1 October 2018. He is a patron of REHDA Malaysia
Federation (FIABCI) Malaysia Property Man of the and serves as a National Council and Executive
Year 2013”. Committee Member of REHDA Malaysia as well as
the Board of Advisors for Malaysia Shopping Malls
He is generous in supporting community and Association.
educational causes and is also the Chairman for Hulu
Langat Chinese & Commerce Association as well as He is an active committee member in various
Chairman for Yu Hua National Primary and Secondary government-private sector organisations that
School Board. formulate policies governing the housing and real
estate industry; holding current positions as the
Tan Sri Dato’ Chen Kooi Chiew @ Cheng Ngi Chong is Advisory Council Member of Construction Labour
the brother of Tan Sri Datuk Chen Lok Loi and Datuk Exchange Centre Berhad and member of PEMUDAH
Chen Fook Wah. He has no conflict of interest with Special Task Force on Kuala Lumpur City Hall.
the Company. An advocate of healthy living, he is also the President
of the Race Walkers’ Association of Malaysia.

Tan Sri Datuk Chen Lok Loi is the brother of

Tan Sri Dato’ Chen Kooi Chiew @ Cheng Ngi Chong
and Datuk Chen Fook Wah. Notwithstanding his
appointment as the Chairman of PR1MA, he has no
conflict of interest with the Group as his role is to
preside over meetings of PR1MA and to share views
and give suggestions based on his vast experience in
the property development industry. The policies and
business directions of PR1MA are jointly formulated
by Members of PR1MA Corporation comprising
of the Chairman, representatives of the Federal
Government, other members and the Chief Executive
Officer (“CEO”). The CEO of PR1MA is responsible
in carrying out the overall administration and
management affairs of PR1MA.
MKH BERHAD
043
DIRECTORS’ PROFILE

Datuk Chen Fook Wah Datuk Chen Fook Wah holds a Master of Business Administration
from University of Wales. He was appointed to the Board on
Deputy Managing Director
25 November 1999 and holding the present position as
Aged 63, Male, Malaysian
Deputy Managing Director since 19 January 2005. He is currently
a member of the Executive Committee and also a Director of GK
Resort Berhad, a subsidiary of MKH Berhad. He was admitted to
the Board of Valuers and Real Estate Agent of Malaysia in 1986.
Prior to joining the Group, he was with Guthrie Trading Sdn. Bhd.
from 1973 to 1974 and Hilton Realty from 1975 to 1978.

He is the brother of Tan Sri Dato’ Chen Kooi Chiew @

Cheng Ngi Chong and Tan Sri Datuk Chen Lok Loi. He has no conflict
of interest with the Company.

Datuk Mohammad Datuk Mohammad bin Maidon was appointed to the Board on
27 February 2014. He is also the Chairman of the Remuneration
bin Maidon Committee and a member of the Nomination Committee. He holds a
Independent Degree in Business Administration from Universiti Teknologi MARA.
Non-Executive Director
Aged 78, Male, Malaysian He started his career in the marketing division of Colgate-Palmolive
(Malaysia) Sdn. Bhd. (“Colgate-Palmolive”) in 1965 as Product
Manager. In 1975, he was promoted to Marketing Director of
Colgate-Palmolive (Indonesia) based in Surabaya until end of 1979.
Back in Malaysia, he assumed the position of Human Resources
Director until his retirement in 2000. He was responsible for the
Halal program of Colgate-Palmolive and had been working closely
with Jabatan Kemajuan Islam Malaysia and Halal Development
Corporation. He was an active member of the Halal Management
Team of Colgate-Palmolive from 1980 to 2000 and is still a board
member of Colgate-Palmolive as at this date.

He does not have any family relationship with any other Directors
and/or major shareholders of the Company and has no conflict of
interest with the Company.

Haji Mohammed Haji Mohammed Chudi bin Haji Ghazali was appointed to the Board
on 19 March 2003. He is also a member of the Audit Committee
Chudi bin Haji and Chairman of the Nomination Committee. He was attached to
Ghazali Standard Chartered Bank Malaysia Berhad for 36 years and was
Senior Independent a Senior Manager prior to his retirement in 1999. He has attended
Non-Executive Director banking courses conducted at National Westminister Bank Staff
Aged 76, Male, Malaysian College, Oxford and Manchester University Business School.

He does not have any family relationship with any other Directors
and/or major shareholders of the Company and has no conflict of
interest with the Company.
044 ANNUAL REPORT 2019

DIRECTORS’ PROFILE

En. Jeffrey bin Bosra En. Jeffrey bin Bosra was appointed to the Board on 1 August 2008.
He is also the Chairman of the Audit Committee and a member
Independent
of the Remuneration Committee. He is currently a member of The
Non-Executive Director
Malaysian Institute of Certified Public Accountants (“MICPA”) and
Aged 51, Male, Malaysian
The Malaysian Institute of Accountants (“MIA”). He started his
professional career with Arthur Andersen & Co. focusing on external
audits and business advisory works. He later joined an established
commercial group as the Finance Manager from 1996 to 2000.
He then joined Ernst & Young as the Senior Manager specialising
in corporate governance, risk management, internal audits,
special investigation and turnaround management related service.
He left Ernst & Young in 2004 and started his own audit firm.

He does not have any family relationship with any other Directors
and/or major shareholders of the Company and has no conflict of
interest with the Company.

Haji Hasan Aziz bin Haji Hasan Aziz bin Mohd Johan was appointed to the Board on
18 July 2013. He is also a member of the Audit Committee. He
Mohd Johan holds a Diploma in Agriculture Malaya from College of Agriculture,
Independent Serdang, Selangor Darul Ehsan. He started his career in 1962 at the
Non-Executive Director Department of Agriculture, Kuantan, Pahang under the Ministry of
Aged 80, Male, Malaysian Agriculture (soil science division). He was appointed as the advisor
to an oil palm plantation company, Watawala Plantations Ltd in
Sri Lanka from 2001 to 2003 and later engaged as a Visiting Agent
for some of FELCRA Berhad’s plantations from 2009 till 2010.

He does not have any family relationship with any other Directors
and/or major shareholders of the Company and has no conflict of
interest with the Company.

Additional Information:
1. Save as disclosed in the profile of Directors, Tan Sri Dato’ Chen Kooi Chiew @ Cheng Ngi Chong,
Tan Sri Datuk Chen Lok Loi and Datuk Chen Fook Wah have no other directorship in public companies
and listed issuers.
2. Save for Tan Sri Dato’ Chen Kooi Chiew @ Cheng Ngi Chong, Tan Sri Datuk Chen Lok Loi and
Datuk Chen Fook Wah, none of the other Directors have any family relationship with any Director and/or
major shareholder of the Company.
3. None of the Directors have:
(i) any conflict of interest with the Company;
(ii) been convicted of any offence (other than traffic offences, if any) within the past 5 years; and
(iii) been imposed with any public sanction or penalty imposed by the relevant regulatory bodies during
the financial year.
4. Details of the Directors’ attendance at Board meetings are set out in the Corporate Governance Overview
Statement on page 53 to page 54.
MKH BERHAD
045

PROFILE OF
key senior management

Dato’ Chong Yong Han He was appointed as a Property Manager in Property Development
Department of MKH Berhad and was later promoted to General
Property Director
Manager of Property Department in December 2002, Group Senior
Aged 48, Male, Malaysian
General Manager in April 2007 and Property Director in March 2013.

He graduated from Lincoln University, New Zealand with Bachelor

of Commerce (Valuation and Property Management) in year 1994
and obtained his MBA (Real Estate) in year 2000 from University of
Western Sydney, Australia.

He has more than 18 years of experience in property development

and construction related businesses. He specialises in development
planning and marketing.

He holds a Bachelor of Science (Honours) in Economics and

Dato’ Lee Khee Meng Management from University of London, UK. He had further
Plantation Director undertaken Certified Credit Professional examinations from the
Aged 41, Male, Malaysian Institute of Bankers Malaysia.

Having started his career as a corporate banker in Malaysia, he

moved on to management roles in other industries, with exposure
in Southeast Asia and Europe. In 2011, he began his career in MKH
Berhad and currently heads the Group’s agriculture division.

He is passionate about sustainable palm oil practices and has been

an international delegate at Indonesia Palm Oil Conferences since
2012. He has been regularly invited by authorities and industry
players to share his views on policies, initiatives and innovative
practices relevant to the oil palm industry.

Dato’ Chen Way Kian He holds a Bachelor of Business from University of Technology,
Sydney. He joined MKH Berhad in 2005 and has been appointed
Deputy Property Director
as the Deputy Property Director of MKH Berhad on March 2015.
Aged 35, Male, Malaysian
Prior to his appointment to the present position, he was Special
Assistant to the Group Executive Chairman since 2011. He has been
in the property development and agricultural sectors for more than
13 years.

He is the son of Tan Sri Dato’ Chen Kooi Chiew @ Cheng Ngi Chong
and the nephew of Tan Sri Datuk Chen Lok Loi and Datuk Chen Fook
Wah who are members of the Board of the Company.
046 ANNUAL REPORT 2019

PROFILE OF KEY SENIOR MANAGEMENT

Ms. Kok Siew Yin She is a fellow member of the Association of Chartered Certified
Accountants (FCCA) and a member of the Malaysian Institute of
Chief Financial Officer
Accountants (MIA).
Aged 47, Female, Malaysian

She is the Chief Financial Officer for MKH Berhad group of

companies. She has more than 15 years of audit experience in
property development, construction, hotels, retail, manufacturing
and timber plantation industry. She was also involved in corporate
advisory and has experience in financial valuation and financial
due diligence for companies. She joined MKH Group in 2004 as
a Corporate Finance Manager and was promoted to Financial
Controller in 2008 and Chief Financial Officer in 2015.

Mr. Tan Wan San He is the Chief Treasury Officer and Group Company Secretary
for MKH Berhad group of companies. Prior to joining MKH Berhad
Chief Treasury Officer /
Group in 1996, he was with a bank. He graduated from Universiti
Group Company Secretary
Utara Malaysia with a Bachelor Degree in Accountancy (Honours)
Aged 51, Male, Malaysian
and is a Chartered Accountant registered with the Malaysian
Institute of Accountants and is a member of Certified Practising
Accountant (CPA), Australia. He was promoted to Chief Treasury
Officer in 2015.

He has more than 26 years of senior-level management experience

in company secretarial, legal and treasury matters.

He was appointed as a Senior Manager in Property Development

En. Ahmad Yani Department of MKH Berhad in 2007 and was promoted to General
Sulaiman Manager in 2016.
General Manager
Aged 53, Male, Malaysian He started his career as an auditor in 1991 upon graduating from
ITM in Accounting Studies.

In 2001, he joined a property developer and was overseeing the

sales and marketing portfolio and was later re-designated to be a
Project Manager overseeing property development.

Save as disclosed, none of the Key Senior Management have:-

•• Any directorship in public companies and listed issuers;

•• Any family relationship with any Directors and/or major shareholders of the Company;
•• Any conflict of interest with the Company;
•• Any conviction for offences within the past 5 years other than traffic offences, if any; and
•• Any public sanction or penalty imposed by the relevant regulatory bodies during the financial year.
MKH Berhad
047

CORPORATE GOVERNANCE
overview statement

The Board of Directors (“Board”) of MKH Berhad recognise the importance of promoting good corporate governance
to ensure long term sustainability, growth and delivering value.

The Board is pleased to present the Corporate Governance Overview Statement (“CG Overview Statement”), which is
made pursuant to Paragraph 15.25(1) of the Main Market Listing Requirements (“MMLR”) of Bursa Malaysia Securities
Berhad (“Bursa Securities”) to the shareholders on the manner MKH Berhad (“MKH” or “the Company”) and its
subsidiaries (“the Group”) has applied the key Principles and Practices in accordance with the Malaysian Code on
Corporate Governance 2017 (“the Code”) during the financial year ended 30 September 2019.

This overview statement is to be read together with the Corporate Governance Report (“CG Report”), made pursuant
to Paragraph 15.25(2) of the MMLR which articulates the application of the Company’s corporate governance practices
as set out in the CG Report. The CG Report is available on the Company’s website at www.mkhberhad.com and Bursa
Malaysia website.

PRINCIPLE A: BOARD LEADERSHIP AND EFFECTIVENESS

I. BOARD RESPONSIBILITIES

1. Board Duties and Responsibilities

The Board is primarily responsible for the Group’s overall strategic plans, business performance, overseeing
the proper conduct of the Group’s business, risk management, succession planning, investor relations,
shareholders’ communication, internal control, corporate governance practices and statutory matters.

To ensure effective discharge of its responsibilities, the Board delegates specific powers to other Board
Committees and the management as prescribed under the Code namely, Executive Committee, Audit
Committee, Nomination Committee, Remuneration Committee, Risk Management Committee and
Sustainability Committee to ensure appropriate checks and balances in discharging its oversight function.
These committees operates under clearly defined terms of reference as approved by the Board to oversee
and deliberate matters within their purviews.

The Board Charter, which was last reviewed in December 2018, would be periodically reviewed by the
Board as and when required. The Board Charter which outlines the duties and responsibilities of the Board
and matters specifically reserved for collective decision of the Board, serves as a source of reference and
primary induction literature for Directors in discharging their duties. The Board Charter is available for
viewing at www.mkhberhad.com.

2. Chairman of the Board

The Board is led by an experienced Executive Chairman, who is accountable for ensuring the integrity and
effectiveness of the governance process of the Board.

The Executive Chairman is primarily responsible for the orderly conduct of the Board meetings and ensure
effectiveness of the Board as well as to ensure that all strategic and critical issues are discussed by the
Board in a timely manner.
048 ANNUAL REPORT 2019

CORPORATE GOVERNANCE OVERVIEW STATEMENT

PRINCIPLE A: BOARD LEADERSHIP AND EFFECTIVENESS (CONT’D)

I. BOARD RESPONSIBILITIES (CONT’D)

3. Separation of Position of Chairman and Chief Executive Officer (“CEO”)

The roles and responsibilities of CEO in the Company is assumed by the Managing Director (“MD”). There is
a clear division of responsibilities to ensure a balance of authority and power as the roles of the Chairman
and the Managing Director are held by two different individuals. The responsibilities of the Chairman and
the MD are set out in the Board Charter.

The MD is responsible for the development and implementation of the Board policies and business
direction, formulating business strategies for the Group’s business operation based on effective risk
management controls and overseeing and managing the day-to-day operation of the Group, including
defining the limits of Management’s responsibilities.

4. Qualified and Competent Company Secretary

The Board is supported by a qualified and competent Company Secretary in carrying out its roles and
responsibilities and ensuring that Board meeting procedures are followed. The Board has direct access
to the professional advice and services of the Company Secretary especially relating to procedural and
regulatory requirements such as company and securities laws and regulations, governance matters and
MMLR of Bursa Securities. The profile of the Company Secretary is provided on page 46.

The Company Secretary attends the Board Meetings and Board Committees’ meetings to ensure that all
deliberation of issues discussed and decisions/conclusions made are recorded accurately. The Company
Secretary also facilitates timely communication of decisions made by the Board at Board Meetings to the
Senior Management team for action and work closely with the Senior Management team to ensure that
there are timely and appropriate information flow within and to the Board and Board Committees and
between the Non-Executive Directors and the management.

The Company Secretary constantly keep himself abreast with the latest regulatory changes and/or
development in corporate governance by attending the necessary trainings, conferences, seminars and/or
workshops to ensure effective discharge of his advisory role to the Board.

5. Access to Information and Advice

The Board have access to all information within the Company on matters requiring information for
deliberation. The Board may seek independent professional advice, at the Company’s expense, if required
in furtherance of their duties.

The Notice of Board meeting and the Board papers (non-financial meeting materials) are circulated at
least seven (7) days prior to the meeting whilst the financial meeting materials are circulated at least three
(3) days prior to the meeting.

The Board papers are issued in advance thus given sufficient time for the Board members to peruse the
matters that will be tabled at the Board meeting and this enhances the overall decision-making process.
The MD, Chief Financial Officer and Group Company Secretary would lead the presentation of board
papers and provide comprehensive explanations of business plans, business performance, corporate
proposals (if any), progress reports on operations in relation to the risk management and other pertinent
issues.
MKH Berhad
049
CORPORATE GOVERNANCE OVERVIEW STATEMENT

PRINCIPLE A: BOARD LEADERSHIP AND EFFECTIVENESS (CONT’D)

I. BOARD RESPONSIBILITIES (CONT’D)

5. Access to Information and Advice (Cont’d)

The Board has full access to both internal and external auditors and received reports on audit findings via
the Audit Committee. All matters raised, discussions, deliberations, decisions and conclusions including
dissenting views made at the meeting are recorded in the minutes of meeting.

The Board is also regularly updated and kept informed by the Company Secretary and the management on
corporate disclosures and compliance with company and securities regulations and listing requirements
such as restriction in dealing with the securities of the Company and updates on the latest developments
in legislations and regulatory framework affecting the Group issued by the various regulatory authorities.

6. Board Charter

The Board has adopted a Charter, which sets out the Board’s strategic intent and outlines the Board’s
roles and responsibilities including the vision and mission and principles of the Company and the policies
and strategy development of the Group. The Charter also serves as a source of reference and primary
induction literature, providing insights to new Board members and matters specifically reserved for
collective decision of the Board.

The Charter will be periodically reviewed and updated in accordance with the objectives and
responsibilities of the Board and any new regulations that may have an impact on the discharge of the
Board’s responsibilities.

In December 2018, the Board had reviewed and approved the Board Charter to enhance governance
practices on the Board in line with the principles of good corporate governance of the Code and
requirements of MMLR of Bursa Securities.

7. Code of Ethics and Conduct

The Board is committed to create a corporate culture that adhere to the best practices of corporate
governance and to uphold high standard of corporate conduct. The Code of Ethics and Conduct (“the
Ethics Conduct”) which set out the ethical standards and appropriate conduct at work adopted by the
Group and is applicable to all employees and Directors of the Group.

The Ethics Conduct covers the areas of conflict of interest, confidential information, insider information
and securities trading, protection of Group’s assets and etc. The details of the Ethics Conduct are available
for reference at the Company’s website at www.mkhberhad.com.

8. Whistleblowing Policy

The Board has put in place Whistleblowing Policy, a mechanism for its employees and stakeholders to
report any concerns relating to possible improper conduct within the Company in matters relating to
financial, compliance, misconduct, wrongdoing and other malpractices in an appropriate manner. The
Group encourages its employees to raise genuine concerns within the Group in an appropriate way without
the fear of retaliation and the identity of the whistleblower will be protected and kept confidential. The
Whistleblowing Policy is posted on the Company’s website at www.mkhberhad.com for ease of reference.
050 ANNUAL REPORT 2019

CORPORATE GOVERNANCE OVERVIEW STATEMENT

PRINCIPLE A: BOARD LEADERSHIP AND EFFECTIVENESS (CONT’D)

II. BOARD COMPOSITION

The Board presently have Seven (7) members comprising three (3) Executive Directors including the Chairman
and Managing Director and four (4) other Independent Non-Executive Directors. This is in line with Chapter 15.02
of the MMLR of Bursa Securities, which requires that at least two (2) Directors or one-third (1/3) of the Board of
the Company, whichever is the higher, are independent directors and the best practice where the Board must
comprise a majority of independent directors where the Chairman of the Board is not an independent director.

The Board has identified and appointed Haji Mohammed Chudi bin Haji Ghazali as the Senior Independent
Non-Executive Director to whom concerns of shareholders, management, employees and others may be
conveyed by way of writing to the Company’s registered address or electronic mail to [email protected] or
contact via Tel: +603-8737 8228.

The Independent Directors led by Haji Mohammed Chudi bin Haji Ghazali provide a broader view, independent
and balanced assessment of proposals from the Executive Directors.

The Board having reviewed its size and composition is satisfied that its current size and composition is well
balanced, with diverse professional background, skills, expertise and knowledge in discharging its responsibilities
for the proper functioning of the Board and fairly reflects the investment in the Company by shareholders apart
from the largest shareholder. Furthermore, the current number of Board members is conducive for efficient
deliberations at Board meetings and effective conduct of Board decision-making.

Brief profile of each Director is detailed under Profile of Directors in this Annual Report.

1. Independence

The Board supports the highest standards of corporate governance and the development of best practices
for the Company. The concept of independence adopted by the Board is in line with the definition of an
Independent Director under Paragraph 1.01 and Practice Note 13 of the MMLR of Bursa Securities, i.e.
independent from management and are free from any business or other relationships that could materially
interfere with the exercise of their independent judgement. Independent Non-Executive Directors are
required to voice their reservations of any Board decisions in areas such as policies and strategies which
could be detrimental to the interest of the minority shareholders.

2. Tenure of Independent Directors

The Board is mindful of the recommendation of the Code that the tenure of an Independent Director
should not exceed a cumulative term of nine (9) years. Upon completion of nine (9) years, an Independent
Director may continue to serve on the Board subject to being re-designated as a Non-Independent Non-
Executive Director.

However, the Company does not have term limits for its Independent Directors as the Board believes that
continued contribution provides benefits to the Board and the Company as a whole. The length of service
on the Board does not in any way interfere the exercising of independent judgement, expressing views
and in participating in deliberations and decision making of the Board and Board Committees.
MKH Berhad
051
CORPORATE GOVERNANCE OVERVIEW STATEMENT

PRINCIPLE A: BOARD LEADERSHIP AND EFFECTIVENESS (CONT’D)

II. BOARD COMPOSITION (CONT’D)

2. Tenure of Independent Directors (Cont’d)

There are four (4) Independent Non-Executive Directors on the Board presently. As at this date, two (2)
Independent Directors, namely En. Jeffrey bin Bosra and Haji Mohammed Chudi bin Haji Ghazali, both
have served on the Board for a cumulative term of more than nine (9) and twelve (12) years respectively.

The Board upon the recommendation of the Nomination Committee has approved and intends to seek
shareholder’s approval at the forthcoming AGM to retain En. Jeffrey bin Bosra, who has served on the
Board for a cumulative term of more than nine (9) years to be retained as an Independent Director.

The Board will continue to undertake a two-tier voting to seek shareholder’s approval at the forthcoming
AGM to retain Haji Mohammed Chudi bin Haji Ghazali, who has served on the Board for a cumulative term
of more than 12 years to be retained as Senior Independent Non-Executive Director of the Company.

3. Board Diversity

The Board comprise of members who are specialised in the property development and construction
sector, banking sector, plantation/agriculture sector, professional in accounting sector and human resource
sector. This wide spectrum of competencies, capabilities, skills and relevant business experience provide
the Board with a diverse set of expertise and knowledge in discharging its responsibilities for the proper
functioning of the Board and ensure that the Group continues to be competitive within its diverse industry
segment.

The current Board composition in terms of each of the Director’s industry and/or background experience
and age is as follows:

Directors Industry/Background Age Composition

Experience
and Construction
Property Development

Banking

Plantation/Agriculture

Professional in Accounting

Human Resource

40 to 49 years

50 to 59 years

60 to 69 years

70 to 79 years

80 to 89 years

Tan Sri Dato’ Chen Kooi Chiew @ Cheng Ngi Chong √ √ √

Tan Sri Datuk Chen Lok Loi √ √
Datuk Chen Fook Wah √ √
Datuk Mohammad bin Maidon √ √
Haji Mohammed Chudi bin Haji Ghazali √ √
En. Jeffrey bin Bosra √ √
Haji Hasan Aziz bin Mohd Johan √ √
052 ANNUAL REPORT 2019

CORPORATE GOVERNANCE OVERVIEW STATEMENT

PRINCIPLE A: BOARD LEADERSHIP AND EFFECTIVENESS (CONT’D)

II. BOARD COMPOSITION (CONT’D)

4. Gender Diversity

The Board acknowledges the importance of diversity in its membership, including gender, ethnicity and
age and strives to maintain the right balance for effective functioning of the Board. The Board is mindful
of the recommendation of the Code to have at least 30% women decision-makers in the corporate sector
for Large Companies. However, the Board has not established the policy on gender diversity.

Nevertheless, the Nomination Committee would take steps to ensure suitable woman candidates are
sought for appointment as the Board encourages a dynamic and diverse composition by nurturing suitable
and potential candidates equipped with the competency, skills, experience, character, time commitment,
integrity and other qualities in meeting the future needs of the Company so as to ensure balances gender
and skills diversity, ethnicity and age within the Group.

5. Nomination Committee

The Nomination Committee was established on 27 November 2012 and comprises of two (2) members,
all of whom are Independent Non-Executive Directors and they are responsible to make independent
recommendations for new appointments to the Board. The members of the Nomination Committee and
their attendance at the Nomination Committee meeting held during the year under review are as follows:

Name Designation Attendance Percentage

Haji Mohammed Chudi bin Haji Ghazali Chairman 1/1 100%
Datuk Mohammad bin Maidon Member 1/1 100%

The summary activities undertaken by the Nomination Committee in the discharge of its duty for the
financial year under review are as follows:

i) reviewed the Directors who were due for re-election by rotation and/or re-appointment;
ii) reviewed the Board’s required mix of skills, current size and composition, experience and other
qualities including the core competencies which Independent Non-Executive Directors should bring
to the Board;
iii) evaluated the independence of the Independent Non-Executive Directors based on the criteria of
“Independence” as prescribed in the MMLR and the Corporate Governance Guide issued by Bursa
Securities;
iv) assessed and evaluated the effectiveness of the Board based on specific criteria such as Board
composition and structure, principal responsibilities of the Board, the Board process and Board
governance;
v) assessed and evaluated the individual Directors’ performance and the effectiveness of the Board as
a whole together with the Audit Committees’ performance;
vi) identified suitable training programmes for the Directors and Audit Committee; and
vii) deliberated on the findings of the assessments and reported the findings to the Board.

The terms of reference of the Nomination Committee are available for reference at www.mkhberhad.com.
MKH Berhad
053
CORPORATE GOVERNANCE OVERVIEW STATEMENT

PRINCIPLE A: BOARD LEADERSHIP AND EFFECTIVENESS (CONT’D)

II. BOARD COMPOSITION (CONT’D)

6. Board and Board Committee Evaluation

The Nomination Committee also assesses the effectiveness of the Board as a whole and Audit Committee
and the contribution of each individual Director, including Independent Non-Executive Directors on an
annual basis. The evaluation process was led by the Nomination Committee’s Chairman and supported
by the Company Secretary. The evaluation results were considered by the Nomination Committee, which
then made recommendations to the Board with the aim of helping the Board to discharge its duties and
responsibilities. The evaluation was based on specific criteria such as Board composition and structure,
principal responsibilities of the Board, the Board process and Board governance.

The Nomination Committee conducted the Board members performance evaluation via questionnaires
which covers Board’s effectiveness as a whole together with Directors’ self-assessment. The Directors’
self-assessment was conducted to evaluate the mix of skills, experience and the individual Director’s
ability to contribute and exercise independent judgement towards the effective functioning of the Board.
The Nomination Committee also conducted the review of the Audit Committee members’ performance
via questionnaire and self and peer evaluation form to ensure a balanced and objective review by the
Directors and the Audit Committee for the abovementioned key areas.

The Nomination Committee also evaluates the independence of the Independent Non-Executive Directors
based on the criteria of “Independence” as prescribed in the MMLR of Bursa Securities.

During the deliberation of the performance of an individual Director who is also a member of the
Nomination Committee, that member will abstains from the deliberation of his or her own performance to
avoid any conflict of interests.

The Nomination Committee, pursuant to the annual review that was carried out, was satisfied that the
size of the Board is optimum, well-balanced with the appropriate mix of skills and experience for the
composition of the Board and its Committees. All assessments and valuation carried out by the Nomination
Committee in discharging its duties were also properly documented.

7. Board Meetings

The Board meets at least four (4) times a year and has a formal schedule of matters reserved to it.
Additional meetings are held on an ad-hoc basis to deliberate on matters requiring its immediate attention.
The Board is supplied with full and timely information to enable it to discharge its responsibilities. During
these meetings, the Board reviews the Group’s financial performance, business operations, reports of the
various Board Committees and results are deliberated and considered. Management and performance
of the Group and any other strategic issues that affect or may affect the Group’s businesses are also
deliberated.

During the financial year, the Board met five (5) times; whereat it deliberated and considered a variety
of matters affecting the Company’s operations including the Group’s financial results, business plan and
direction of the Group.

The attendance record of each Director is as follows:

054 ANNUAL REPORT 2019

CORPORATE GOVERNANCE OVERVIEW STATEMENT

PRINCIPLE A: BOARD LEADERSHIP AND EFFECTIVENESS (CONT’D)

II. BOARD COMPOSITION (CONT’D)

7. Board Meetings (Cont’d)

Name No. of Meetings

Attended Percentage
Tan Sri Dato’ Chen Kooi Chiew @ 5/5 100%
Cheng Ngi Chong
Tan Sri Datuk Chen Lok Loi 5/5 100%
Datuk Chen Fook Wah 5/5 100%
Datuk Mohammad bin Maidon 5/5 100%
Haji Mohammed Chudi bin Haji Ghazali 5/5 100%
Haji Hasan Aziz bin Mohd Johan 5/5 100%
En. Jeffrey bin Bosra 5/5 100%

In the intervals between Board meetings, any matters requiring urgent Board decisions and/or approval will
be sought via circular resolutions which are supported with all the relevant information and explanations
required for an informed decision to be made.

In fostering the commitment of the Board to devote sufficient time to carry out their responsibilities,
each Director is required to notify the Chairman of the Board prior to accepting directorships outside
the Group. Similarly, the Chairman of the Board shall also do likewise before taking up any additional
appointment of directorships. The notification will also include an approximate indication of time that will
be spent by the Directors on the new directorships.

All Directors shall not hold more than five (5) directorships in other public listed companies as required
under Paragraph 15.06 of the MMLR of Bursa Securities.

8. Retirement and Re-election

In accordance with the Company’s Constitution, all Directors who are appointed by the Board are subjected
to re-election by the shareholders in the next AGM subsequent to their appointment. At least one-third
(1/3) of the Directors are required to retire from office by rotation annually and subject to re-election at
each AGM. All Directors shall retire from office at least once in every three (3) years but shall be eligible
for re-election which is in line with the MMLR of Bursa Securities.

Any person appointed by the Board either to fill a casual vacancy or as an addition to the existing Directors,
shall hold office until the conclusion of the next AGM and shall then be eligible for re-election.

The Directors due for re-election by rotation pursuant to Clause 112(1) of the Company’s Constitution at
the forthcoming AGM are Tan Sri Dato’ Chen Kooi Chiew @ Cheng Ngi Chong, Datuk Chen Fook Wah and
Haji Mohammed Chudi bin Haji Ghazali.
MKH Berhad
055
CORPORATE GOVERNANCE OVERVIEW STATEMENT

PRINCIPLE A: BOARD LEADERSHIP AND EFFECTIVENESS (CONT’D)

II. BOARD COMPOSITION (CONT’D)

9. Directors’ Training

The Nomination Committee has taken on the responsibility in evaluating and determining the specific
and continuous training needs of the Directors on a regular basis. The Directors have attended courses/
conferences and/or in house training from time to time to enhance their skills and knowledge and to keep
abreast with the relevant changes in laws, listing requirements, regulations and business environment in
order to discharge their duties more effectively.

All the Directors had completed the Mandatory Accreditation Programme as specified by MMLR of Bursa
Securities.

The Directors are mindful that they should continually attend seminars and courses to keep themselves
abreast with the latest economic and corporate developments as well as new regulations and statutory
requirements. The Directors are also encouraged to evaluate their own training needs on a continuous
basis and to determine the relevant programmes, seminars, briefings or dialogues available that would
best enable them to enhance their knowledge and contributions to the Board.

The Board is also updated by the Company Secretary on the latest update/amendments on the MMLR of
Bursa Securities and other regulatory requirements relating to the discharge of the Directors’ duties and
responsibilities.

The training programmes, seminars and/or conferences attended by the Directors during the financial
year are as follows:

Director Training/Seminars/Conferences
Tan Sri Dato’ Chen Kooi Chiew @ • Global Investors Week by icapital on 13 and 14 April 2019
Cheng Ngi Chong
Tan Sri Datuk Chen Lok Loi • Industrialised Building System (“IBS”) Roundtable: Innovate
to Transform organised by Real Estate & Housing Developers’
Association (REHDA) Institute
• IBS Conference: Affordable Housing Delivery Through Modern
Construction Technologies by REHDA Institute
 ig Data Analytics for Real Estate & Property Development -
•B
Property Data Made Easy by REHDA Institute
• International Housing Association 2019 Interim Meeting in
Taipei, Taiwan
Datuk Chen Fook Wah • C
 yber Security: Cyber Proofing for the Next Wave by Securities
Industry Development Corporation
Datuk Mohammad bin Maidon • B
 uilding an Enterprise Risk Management ("ERM") Framework -
A Step-By-Step Approach in Fitting in The “Bolts and Nuts” to
Fortify a Holistic & Robust Framework organised by Malaysian
Institute of Corporate Governance on 7 November 2018
• “Audit Committee Conference 2019 - Meeting the New
Expectations” by Malaysian Institute of Accountants on 15 April
2019
056 ANNUAL REPORT 2019

CORPORATE GOVERNANCE OVERVIEW STATEMENT

PRINCIPLE A: BOARD LEADERSHIP AND EFFECTIVENESS (CONT’D)

II. BOARD COMPOSITION (CONT’D)

9. Directors’ Training (Cont’d)

Director Training/Seminars/Conferences
Haji Mohammed Chudi bin Haji • “Audit Committee Conference 2019 - Meeting the New
Ghazali Expectations” by Malaysian Institute of Accountants on 15 April
2019
•C
 G Watch: How Does Malaysia Rank? by The Iclif Leadership
and Governance Centre on 3 May 2019
Haji Hasan Aziz bin Mohd Johan •B
 uilding an ERM Framework - A Step-By-Step Approach in
Fitting in The “Bolts and Nuts” to Fortify a Holistic & Robust
Framework organised by Malaysian Institute of Corporate
Governance on 7 November 2018
• “Audit Committee Conference 2019 - Meeting the New
Expectations” by Malaysian Institute of Accountants on 15
April 2019
• CG Watch: How Does Malaysia Rank? by The Iclif Leadership
and Governance Centre on 3 May 2019
•D
 emystifying The Diversity Conundrum: The Road to Business
Excellence by Bursa Malaysia and the Institute of Corporate
Directors Malaysia on 14 August 2019
En. Jeffrey bin Bosra •D
 emystifying The Diversity Conundrum: The Road to Business
Excellence by Bursa Malaysia and the Institute of Corporate
Directors Malaysia on 14 August 2019

III. REMUNERATION

The levels of remuneration for Executive Directors are linked to experience, scope of responsibilities, service
seniority, performance of the Executive Directors and published market survey information in order to attract,
retain and motivate the Executive Directors to run the Group successfully. The components of the remuneration
package for the Executive Directors include fixed salary, allowance, bonus, performance incentive and benefits-
in-kind.

The levels of remuneration for Independent Non-Executive Directors are based on their contribution to the
Group in terms of their knowledge, experience and level of responsibilities undertaken by the Independent Non-
Executive Directors concerned. The determination of Directors’ fees for all Independent Non-Executive Directors
shall be a matter for the Board as a whole.

1. Remuneration Committee

The Remuneration Committee was established on 27 November 2012 and comprises of two (2) members,
all of whom are Independent Non-Executive Directors. The members of the Remuneration Committee
and their attendance at the Remuneration Committee meetings held during the year under review are as
follows:-

Name Designation Attendance Percentage

Datuk Mohammad bin Maidon Chairman 1/1 100%
En. Jeffrey bin Bosra Member 1/1 100%
MKH Berhad
057
CORPORATE GOVERNANCE OVERVIEW STATEMENT

PRINCIPLE A: BOARD LEADERSHIP AND EFFECTIVENESS (CONT’D)

III. REMUNERATION (CONT’D)

1. Remuneration Committee (Cont’d)

The Remuneration Committee is responsible for recommending to the Board on the remuneration
framework and packages of all Directors and in the case of Non-Executive Directors’ fees including Board
Committees’ fees, the approval of the shareholders is required. The Directors shall abstain from deliberation
and voting on their own remuneration.

During the financial year under review, the Committee held one (1) meeting to deliberate on the following:

(a) review of the salaries, bonuses and incentives of Senior Management of the Group; and
(b) approve the remuneration package and bonus for the Executive Directors.

The terms of reference of the Remuneration Committee are available for reference at www.mkhberhad.com.

2. Directors’ Remuneration

The details of the remuneration of Directors during the financial year are as follows:-

Company Level

Directors’ Salaries and Allowance Benefits in Other Total

Fees bonuses kind emoluments^
Name RM RM RM RM RM RM
Company Level
Executive Directors
Tan Sri Dato’ Chen Kooi - - - - - -
Chiew @ Cheng Ngi
Chong
Tan Sri Datuk Chen Lok - - - - - -
Loi
Datuk Chen Fook Wah - - - - - -

Independent
Non-Executive
Directors
Datuk Mohammad bin 50,000 - 6,000 - - 56,000
Maidon
Haji Mohammed Chudi 50,000 - 9,000 - - 59,000
bin Haji Ghazali
Haji Hasan Aziz bin 50,000 - 8,250 - - 58,250
Mohd Johan
Jeffrey bin Bosra 50,000 - 9,000 - - 59,000
Total 200,000 - 32,250 - - 232,250
058 ANNUAL REPORT 2019

CORPORATE GOVERNANCE OVERVIEW STATEMENT

PRINCIPLE A: BOARD LEADERSHIP AND EFFECTIVENESS (CONT’D)

III. REMUNERATION (CONT’D)

2. Directors’ Remuneration (Cont’d)

Group Level

Name Directors’ Salaries and Allowance Benefits in Other Total

Fees bonuses kind emoluments^
RM RM RM RM RM RM
Group Level
Executive Directors
Tan Sri Dato’ Chen - 6,396,300 - 38,528 1,216,648 7,651,476
Kooi Chiew @ Cheng
Ngi Chong
Tan Sri Datuk Chen - 4,892,500 - 42,364 930,826 5,865,690
Lok Loi
Datuk Chen Fook Wah - 1,699,500 - 22,700 322,914 2,045,114

Independent
Non-Executive
Directors
Datuk Mohammad bin 50,000 - *18,775 - - 68,775
Maidon
Haji Mohammed Chudi 50,000 - *36,665 - - 86,665
bin Haji Ghazali
Haji Hasan Aziz bin 50,000 - 8,250 - - 58,250
Mohd Johan
Jeffrey bin Bosra 50,000 - 9,000 - - 59,000
Total 200,000 12,988,300 72,690 103,592 2,470,388 15,834,970

Note:-
^ Post-employment benefits.
* Inclusive of Employees Provident Fund
MKH Berhad
059
CORPORATE GOVERNANCE OVERVIEW STATEMENT

PRINCIPLE B: EFFECTIVE AUDIT AND RISK MANAGEMENT

I. AUDIT COMMITTEE

1. Composition of Audit Committee

The Audit Committee comprise of three (3) members, all of whom are Independent Non-Executive
Directors. The Chairman of the Audit Committee, En. Jeffrey bin Bosra is a member of the Malaysian
Institute of Certified Public Accountants (“MICPA”) and the Malaysian Institute of Accountants (“MIA”).
The other members of the Audit Committee are Haji Mohammed Chudi bin Haji Ghazali and Haji Hasan
Aziz bin Mohd Johan.

2. Relationship with Auditors

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

The Board through the Audit Committee maintains a transparent and professional relationship with the
external auditors. The external auditors will communicate to the Audit Committee and the Board when
they become aware of any significant weaknesses in the Company’s system of internal control, including
fraud, during the course of their audit that may require the attention of the Audit Committee and the
Board. The role of the Audit Committee in relation to the external auditors is set out on pages 63 to 65.

For the financial year under review, the external auditors had attended all the Audit Committee meetings
and general meeting of the Company and had five (5) meetings with the Audit Committee without
the presence of any Executive Director and management, to discuss the audit findings and any other
observations they may have during the audit process.

The external auditors have also confirmed that they are and have been, independent throughout the
conduct of the audit engagement in accordance with the independence criteria as set out by the MIA By-
Laws and have provided the declaration in their annual audit plan presented to the Audit Committee of
the Company.

The Audit Committee together with the Chief Financial Officer had undertaken an annual assessment of
the competency and independence of the external auditors pursuant to the External Auditors Assessment
Policy, which has outlined the guidelines and procedures for the assessment on the suitability of the
external auditors on 27 November 2019.

The Board, on the recommendation of the Audit Committee, is of the view that the declaration of
independence, integrity and objectivity made by the external auditors in their audit report for each
financial year under review is sufficient to serve as a written assurance from the external auditors on their
independence and integrity throughout the conduct of the audit engagement in accordance with the
independence criteria as set out by MIA By-Laws, has recommended their re-appointment to the Board,
upon which the shareholders’ approval will be sought at the AGM.

The details of the External Auditors Assessment Policy are available for reference at www.mkhberhad.com.
060 ANNUAL REPORT 2019

CORPORATE GOVERNANCE OVERVIEW STATEMENT

PRINCIPLE B: EFFECTIVE AUDIT AND RISK MANAGEMENT (CONT’D)

I. AUDIT COMMITTEE (CONT’D)

3. Directors’ Responsibility Statement

The Directors are required by the Companies Act, 2016 to prepare financial statements for each financial
year which give a true and fair view of the state of affairs of the Group and of the Company as at the end
of the financial year and the results of the operations, changes in equity and cash flows of the Group and
of the Company for the financial year. Where there are new accounting standards or policies that become
effective during the year, the impact of these new treatments would be stated in the notes to the financial
statements, accordingly.

In preparing those financial statements, the Directors ensure that management have:

• adopted appropriate accounting policies and consistently apply them;

• made judgements and estimates that are reasonable and prudent;
• state whether applicable approved accounting standards have been followed, subject to any
material departures disclosed and explained in the financial statements; and
• prepared financial statements on the going concern basis as the Directors have a reasonable
expectation, having made enquiries, that the Group and the Company have adequate resources to
continue in operational existence for the foreseeable future.

The Directors have responsibility for ensuring that the Company keeps proper accounting records, which
disclose with reasonable accuracy at any time the financial position of the Group and the Company and to
enable them to ensure that the financial statements comply with the Companies Act, 2016.

The Directors have taken such steps as are necessary to safeguard the assets of the Group and the
Company to prevent fraud and other irregularities.

II. Risk Management and Internal Control

The Risk Management Committee presently comprised of five (5) members comprising one (1) Group Managing
Director and four (4) other members from the Key Senior Management assists the Audit Committee and the
Board in discharging its risk management and control responsibilities. The terms of reference of the Risk
Management Committee are available on the Company’s website at www.mkhberhad.com. The members of the
Risk Management Committee are as follows:-

Name Designation Business Occupation

Tan Sri Datuk Chen Lok Loi Chairman Group Managing Director
Dato’ Chong Yong Han Member Property Director
Dato’ Lee Khee Meng Member Plantation Director
Kok Siew Yin Member Chief Financial Officer
Tan Wan San Member Chief Treasury Officer/ Group Company Secretary
MKH Berhad
061
CORPORATE GOVERNANCE OVERVIEW STATEMENT

PRINCIPLE B: EFFECTIVE AUDIT AND RISK MANAGEMENT (CONT’D)

II. Risk Management and Internal Control (Cont’d)

In fulfilling the primary objectives, the Risk Management Committee has been tasked to identify and communicate
the existing and potential critical risk areas faced by the Group and the management action plans to mitigate
such risks by working with the internal auditors in providing periodic reports and updates to the Audit Committee
on a quarterly basis.

The Group’s Statement on Risk Management and Internal Control provides an overview of the risk management
framework and state of internal control within the Group is set out on pages 69 to 72.

PRINCIPLE C: INTEGRITY IN CORPORATE REPORTING AND MEANINGFUL RELATIONSHIP WITH STAKEHOLDERS

I. Communication with Stakeholders

The Board recognises the need for stakeholders and the wider investment community to ensure that they are
kept informed of all material business matters affecting the Group. This is done through timely dissemination of
information on the Group’s performance and major developments which are communicated via the following
channels:

a) the Annual Report and relevant circulars despatched to shareholders and published in the Company’s
website and Bursa Malaysia;
b) the convening of AGM and/or Extraordinary General Meeting;
c) the release of various disclosures and announcements including quarterly financial announcements; and
d) press releases and analysts briefings.

The Company leverages on the use of information technology by maintaining a corporate website at http://
www.mkhberhad.com for effective dissemination of information which shareholders or other stakeholders can
easily access to the latest corporate information of the Group. All information released to Bursa Malaysia is
posted on the Investor Relations section of the website at http://mkh.irplc.com.

The Group’s investor relationship is helmed by the Group Managing Director, Chief Financial Officer, Property
Director and Deputy Property Director, who attends to various investors namely fund managers and investment
analysts, while the Corporate Communications Department will communicate with members of the media.

The Group has appointed Ms. Kok Siew Yin, the Chief Financial Officer to respond to investor queries and concerns
pertaining to financial performance (Tel: +603-8737 8228, Fax: +603-8736 5436, E-mail: [email protected]),
whereas Company developments related queries may be referred to the Deputy Property Director, Dato’ Chen
Way Kian (Tel: +603-8737 8228, Fax: +603-8736 5436, E-mail: [email protected]).

In addition, stakeholders who wish to reach the respective divisions of the Group may do so through the “Contact
Us” page for enquiries and feedback purpose.
062 ANNUAL REPORT 2019

CORPORATE GOVERNANCE OVERVIEW STATEMENT

PRINCIPLE C: INTEGRITY IN CORPORATE REPORTING AND MEANINGFUL RELATIONSHIP WITH STAKEHOLDERS

(CONT’D)

II. Conduct of General Meetings

The AGM which is held once a year is the principal forum for dialogue with individual shareholders. At the
Company’s AGM, shareholders have direct access to the Board and are given the opportunity to ask questions
during the AGM. The shareholders are encouraged to ask questions both about the resolutions being proposed
or about the Company’s operations in general. The Chairman of the Board also addresses the shareholders on
the review of the Company’s operations for the financial year and outlines the prospects of the Company for the
new financial year. Additionally, immediately after the AGM, the Board also meets members of the press.

The external auditors of the Company are invited to attend the AGM to answer any questions relating to the
conduct of the audit and contents of the Auditor’s Report.

Statement on Compliance

The Board having duly considered the rationale for the said exception as explained in the CG Report is committed to
comply with the key Principles and Practices of the Code.

This Corporate Governance Overview Statement has been approved by the Board on 26 December 2019.
MKH Berhad
063

AUDIT COMMITTEE
report

During the financial year under review, the Audit Committee had carried out its duties and responsibilities namely
held discussion with external auditors, in-house internal auditors, risk management committee and relevant members
of management in accordance with its terms of reference. The Audit Committee is of the view that no material
misstatement, contingencies or uncertainties and significant deficiencies in internal control have arisen, based on the
reviews made and discussion held.

Composition and Meetings

The Audit Committee is appointed by the Board of Directors from amongst Non-Executive Directors and comprise of
three (3) members, all of whom are Independent Non-Executive Directors.

The Chairman of the Audit Committee, En. Jeffrey bin Bosra is a member of the Malaysian Institute of Certified Public
Accountants (“MICPA”) and the Malaysian Institute of Accountants (“MIA”). The other members of the Audit Committee
are Haji Mohammed Chudi bin Haji Ghazali and Haji Hasan Aziz bin Mohd Johan.

The Audit Committee meetings were structured through the use of agendas and relevant board papers which were
distributed to the Audit Committee prior to such meetings. During the financial year, five (5) meetings were held with
the attendance of the Chief Financial Officer, Chief Treasury Officer/ Group Company Secretary, Group Accountant,
Partners and/or Managers from the external auditors and in-house internal audit team also attended the meetings
upon invitation where matters relating to the external and internal audit were discussed. The Audit Committee also
met with the external auditors without the presence of management during each of the Audit Committee meeting. The
Chairman of the Audit Committee will report and highlights key issues discussed at each Audit Committee meeting to
the Board accordingly.

Details of the Audit Committee members’ attendance are appended below:

No. of
Name of Directors Directorship Meetings Attended
En. Jeffrey bin Bosra Independent Non-Executive Director 5/5
(Chairman)

Haji Mohammed Chudi bin Haji Ghazali Senior Independent Non-Executive 5/5
(Member) Director

Haji Hasan Aziz bin Mohd Johan Independent Non-Executive Director 5/5
(Member)

For the financial year under review, the performance and effectiveness of the Audit Committee has been evaluated
through Audit Committee members’ self and peer evaluation conducted by the Audit Committee and endorsed by the
Nomination Committee. Having reviewed the Audit Committee’s performance, the Board is satisfied that the Audit
Committee members have been able to discharge their functions, duties and responsibilities in accordance with the
terms of reference of the Audit Committee.

The details of the terms of reference of the Audit Committee are available for reference at www.mkhberhad.com.
064 ANNUAL REPORT 2019

AUDIT COMMITTEE REPORT

Summary of Work of the Audit Committee

During the financial year ended 30 September 2019 (“FY 2019”), the Audit Committee had worked closely with the
external auditors, in-house internal audit team and management to carry out its functions and duties in line with the
terms of reference.

The summary of the work of the Audit Committee in discharging its duties during the financial year under review
includes the following:-

(a) Financial Reporting

• Reviewed all the four (4) quarter’s unaudited financial results and audited financial statements of the
Company and the Group for the FY 2019 together with the external auditors prior to recommending the
same for approval by the Board.

• Reviewed the impacts of any changes in accounting policies and adoption of new accounting standards
together with significant matters highlighted in the financial statements.

• Confirmed with management and external auditors that the Company’s and Group’s annual audited
financial statements have been prepared in compliance with applicable approved accounting and financial
reporting standards.

(b) Internal Audit

• Reviewed and approved the scope of annual audit plan for the FY 2019 proposed by the in-house internal
audit team to ensure the adequacy of the scope and coverage of work on the Group’s activities.

• Reviewed the internal audit reports, which highlighted the audit issues, recommendations and
management’s responses. Discussed with management on actions taken to improve the system of internal
control based on improvement opportunities identified in the internal audit reports.

• Reviewed and approved the follow-up reports on the status of implementation of those control weaknesses
as highlighted by in-house internal audit team.

• Reported to the Board on significant audit issues and concerns discussed during the Audit Committee
meetings which may have significant impact on the Group from time to time, for consideration and
deliberation by the Board.

(c) External Audit

• Reviewed and approved the external auditors annual audit planning memorandum of the Group for the
FY 2019, external auditor’s fees, audit strategy and scope of work for the year in connection with their
audit.

• Reviewed the findings of the external auditors reports particularly on key audit matter and areas of
concern highlighted in the progress report, including management’s response to the concerns raised by
the external auditors.
MKH Berhad
065
AUDIT COMMITTEE REPORT

Summary of Work of the Audit Committee (Cont’d)

(c) External Audit (Cont’d)

• 
Held private sessions with the external auditors without the presence of Executive Directors and
management, to discuss the audit findings and any other observations they may have during the audit
process. There were no major concerns/issues raised by the external auditors at the meetings.

• Discussed with external auditors on significant accounting and auditing updates arising from new
or proposed changes in accounting standard and regulatory requirements in relation to the financial
statements.

• Evaluated the performance and assessed the independence and objectivity of the external auditors
in providing their services and made recommendations to the Board on their re-appointment and
remuneration.

(d) Risk Management Committee

• Reviewed the Risk Management Committee’s reports regarding the Group’s risk exposures, including
review risk assessment model used to monitor the risk exposures and management’s views/responses
on the acceptable and appropriate level of risks faced by Group’s business unit as well as the proposed
recommendations for improvements to be implemented.

(e) Related Party Transactions

• Reviewed on a quarterly basis if there is any related party transaction(s) entered into by the Group and
any conflict of interest situation that may arise within the Group, which are required to be transacted at an
arm’s length basis and not detrimental to the interest of the minority shareholders.

• Reviewed the annual confirmation from the Board and Audit Committee on related party transaction(s)
entered into (if any) for the financial year under review.

(f) Annual Reporting

• Reviewed the Audit Committee Report, Statement on Risk Management and Internal Control and Corporate
Governance Overview Statement to ensure compliance with relevant regulatory reporting requirements
prior to recommend the same to the Board for approval.

 he Audit Committee having reviewed the extent of assistance rendered by management in the course of the audit and
T
based on feedback from the external auditors was satisfied that management had co-operated fully and the external
auditors were able to obtain information requested to carry out their work. Based on the review carried out and the
report from the external auditors, the Audit Committee recommended the audited financial statements for the FY 2019
to the Board of Directors for approval on 26 December 2019.

The Audit Committee was satisfied with the conduct of external auditors professional work and the timeliness of
completion of their works to meet reporting deadline. Accordingly, the Audit Committee recommended the
re-appointment of the external auditors, Deloitte PLT at the forthcoming Annual General Meeting.
066 ANNUAL REPORT 2019

AUDIT COMMITTEE REPORT

Training

During the year, all the Audit Committee have attended various seminars, training programmes and conferences. The
list of trainings attended is disclosed on the Corporate Governance Overview Statement at page 56 of the Annual
Report.

The Internal Audit Function And Its Role

The Company has set-up an in-house Internal Audit Department (“IAD”) effective 1 October 2016.

The IAD comprises four (4) staff members, led by Mr. Kannan A/L Sevakrishnavelu, an Associate Member of the Institute
of Internal Auditors Malaysia (“IIA Malaysia”) who has over 13 years of experience in internal audit. IAD report directly
to the Audit Committee and is guided by its Internal Audit Charter. The IAD adopts the International Standards for the
Professional Practice of Internal Auditing as well as established internal auditing guidelines to enhance its competency
and proficiency.

The principal role of the internal audit function is to undertake, on a prioritised approach, an independent and
systematic assessment of the Group’s system of risk management and internal controls as established by management
in addressing the principal business risks faced by the Group. In conducting internal audit of the Group, the internal
audit function deployed professional standards promulgated by the IIA Malaysia. During the financial year under review,
weaknesses noted in the said system and areas that required improvement, including the recommendations thereof
and action plans agreed to be deployed by management to address the issues raised, were highlighted by the internal
audit function by way of internal audit reports issued to the Audit Committee.

(a) Internal Audit Work Carried Out During The Financial Year Under Review

The internal audit function conducted its work based on an annual internal audit plan which was tabled before
and approved by, the Audit Committee. The main activities of work carried out by the internal audit function are
set out below:

(i) Conduct Of Internal Audit

The internal audit function adopted a risk-based approach in identifying specific areas and processes to
be covered. During the financial year under review, the internal audit function focused on selected key
processes of the Group’s as follows:-

Entity Key Processes

Laju Jaya Sdn. Bhd. • Revenue cycle
- Prescott Hotel Kajang • Sales and marketing
• Cost efficiency
• Housekeeping
• Purchasing
• Store management
• Repair and maintenance
• Customers complaint
MKH Berhad
067
AUDIT COMMITTEE REPORT

The Internal Audit Function And Its Role (Cont’d)

(a) Internal Audit Work Carried Out During The Financial Year Under Review (Cont’d)

(i) Conduct Of Internal Audit (Cont’d)

Entity Key Processes

PT. Maju Kalimantan Hadapan •E
 states - harvesting practices, field practices, store management,
nursery, employment and checkroll and fixed asset management
•M
 ill production, store management, oil losses analysis, crude
palm oil and palm kernel dispatch and jetty management
Hillpark Resources Sdn. Bhd. • Project management
• Quality
• Sales and marketing
• Progress claims
Head Office (Sales & Marketing) • Overall sales activities
• Marketing activities
• Unsold stocks
• Sales management and monitoring
Achieve Acres Sdn. Bhd. • Project management
• Quality
• Progress claims
Temara Pekeliling Sdn. Bhd. • Project management
• Quality
• Progress claims
MKH Building Materials Sdn. Bhd. • Travelling claims

 Based on the internal audit reviews carried out, the findings of the internal audit, including the
recommendations to address areas of control deficiencies as well as opportunities for improvements, were
discussed with Senior Management and subsequently presented to the Audit Committee.
068 ANNUAL REPORT 2019

AUDIT COMMITTEE REPORT

The Internal Audit Function And Its Role (Cont’d)

(a) Internal Audit Work Carried Out During The Financial Year Under Review (Cont’d)

(ii) Follow-Up On Internal Audit

During the financial year under review, the internal audit function also performed a follow-up to assess
the status of management-agreed action plans on recommendations raised in preceding cycles of internal
audit. The outcome thereof was summarised in a follow-up report to the Audit Committee, highlighting
those issues that had yet to be fully addressed by management, including specific timelines for those
outstanding matters to be resolved.

Whilst reports issued by the internal audit function for the financial year under review were tabled at
Audit Committee meetings, management was present at such meetings to provide pertinent clarification
or additional information to address questions raised by Audit Committee members pertaining to matters
raised by the internal audit function.

(b) Cost Of Internal Audit

The cost of the internal audit function for the financial year under review amounted to approximately RM462,043
(2018: RM405,773).

This Audit Committee Report has been approved by the Board on 26 December 2019.
MKH Berhad
069

STATEMENT ON RISK
MANAGEMENT
and internal control
The Malaysian Code on Corporate Governance 2017 (“the Code”) set out the Principles and Practices for the Board of
a company listed on the Bursa Malaysia Securities Berhad (“Bursa Securities”) to establish a sound risk management
framework and internal controls system to safeguard shareholders’ investment and the Group’s assets. The Board
is committed to establish a sound framework to manage risks and is pleased to provide the following statement
in accordance with paragraph 15.26(b) of Bursa Securities Main Market Listing Requirements and guided by the
“Statement on Risk Management & Internal Control: Guidelines for Directors of Listed Issuers”.

Board’s Responsibilities

The Board acknowledges its responsibilities for establishing a sound risk management framework and internal control
system to manage risks in accordance with Principle B of the Code to safeguard the interest of shareholders, customers,
employees and the Group’s assets. The Board’s responsibilities include:-

(a) determine the Group’s level of risk tolerance and actively identify, assess and monitor key business risks to
safeguard shareholders’ investments and the Group’s assets;

(b) committed to articulating, implementing and reviewing the Group’s internal controls system for risk management;
and

(c) periodic review and/or conduct of the effectiveness and adequacy of the internal controls procedures and
processes to ensure that the system is viable and robust.

However, due to the limitations inherent in any internal control system, it should be noted that such system is designed
to manage rather than to eliminate the risk of failure to achieve the Group’s business objectives. Therefore, the system
can only provide a reasonable and not absolute assurance against material misstatement or loss. The internal control
system or framework of the Group covers, inter-alia, risk management, financial, operational and compliance controls.
This process has been in place for the year under review and up to the date of approval of this statement for inclusion
in the Annual Report.

Accompanying the maintenance of an appropriate internal control system, is an on-going process to identify, evaluate,
monitor and manage principal risks faced by the Group and this process is reviewed quarterly by the Board. The Group
identified major risk areas of concern which included demand for properties, fluctuating commodity prices, foreign
exchange rates fluctuation and change in regulatory environments.

The Board has reviewed the adequacy and effectiveness of the Group’s risk management and internal control system
for the year under review.

Risk Management And Internal Control Processes

The Board has put in place an organisational structure with formally defined lines of responsibility and delegation of
authority. A process of hierarchical reporting has been established which provides for a documented and auditable trail
of accountability as appended below:-

• The Executive Committee, comprising Executive Directors and assisted by certain Key Senior Management was
established to review the operations of the Group’s operating divisions, the monthly financial information which
includes actual results compare against budget as approved by the Board, explanation on significant variances
and management actions taken, where necessary.
070 ANNUAL REPORT 2019

STATEMENT ON RISK MANAGEMENT

AND INTERNAL CONTROL

Risk Management And Internal Control Processes (Cont’d)

• The Audit Committee with the assistance of the Internal Audit team and Risk Management Committee (“RMC”),
reviews the internal control processes and evaluates the adequacy and effectiveness of the risk management and
internal control system. Further details are set out in the Audit Committee Report and Corporate Governance
Overview Statement.

• The RMC was established to review and monitor Group’s risk management framework and activities. The RMC
members are Property Director, Plantation Director, Chief Financial Officer and Chief Treasury Officer/Group
Company Secretary. The RMC reports to the Audit Committee on a quarterly basis where key risks and mitigating
action are discussed and implemented.

• The head of business unit to follow-up on those potential risks identified and the management action plans to
mitigate such risks based on the findings from internal audit reports prepared by our Internal Audit team and
approved by the Audit Committee. Any significant findings of non-compliance or implementation by respective
business units will be reported to the Audit Committee during quarterly meeting.

• Sufficient insurance coverage and physical safeguards on major assets are in place to ensure the Group’s assets
are adequately covered against any mishap that could result in material loss.

Risk Management Framework

The Board recognises that an effective risk management framework will allow the Group to identify, evaluate and
manage risks that affect the achievement of the Group’s business objectives within defined risk parameters in a timely
and effective manner. The Group is exposed to operational risks and various financial risks as follows:-

(a) Operational Risks

Operational risks arise from the execution of the Group core businesses (i.e. property development and
construction, plantation, investment property and hotel and trading) and competencies of the management
in managing the risks relating to health and safety, quality, inadequate skilled workforce and adverse climatic
conditions. The management is guided by approved standard operating procedures and quality controls to
ensure that all business units are functional.

The Group continue to offer competitive compensation that is benchmarked against the best performing
companies in the same industry and rewards framework that is closely linked to employees’ performance to
attract and retain a skilled workforce to meet existing and future needs. The plantation division emphasise on
good agricultural practices to ensure high production yields of fresh fruit bunches.

(b) Financial Risks

(a) Credit and liquidity risks arise from the inability to recover debts in a timely manner which may adversely
affect the Group’s profitability, cash flow and funding. In order to minimise such exposures, tightening of
credit control, close monitoring of collections and overdue debts were carried out.

(b) Interest rate risk arise mainly from the Group’s borrowings in the form of term loan, overdraft and revolving
credit facilities to meet capital expenditures and working capital requirements.
MKH Berhad
071
STATEMENT ON RISK MANAGEMENT
AND INTERNAL CONTROL

Risk Management Framework (Cont’d)

(b) Financial Risks (Cont’d)

(c) Commodity risk arises from the volatility of commodity prices such as crude palm oil (“CPO”) and palm
kernel which are affected by factors such as weather, government policies, supply and demand and
competition from substitution products as well as currency fluctuation.

(d) Foreign exchange risk arises from movements in foreign currency exchange rates. The Group’s reporting
currency is Malaysian Ringgit (“RM”). The majority of the Group’s plantation division borrowing is
denominated in United States Dollar (“USD”) and RM, while the majority of the Group’s expenses is
denominated in Indonesian Rupiah (“IDR”) and sales of CPO is denominated in IDR and USD while sale of
palm kernel is denominated in IDR.

As the CPO is an internationally traded commodity mainly in USD, there is a natural hedge as the selling
price of the CPO in IDR has a positive correlation with the strengthening of the USD currency. In addition,
the Group constantly monitors and compare the selling price of CPO in the local Indonesian market (in
Rupiah) and the Malaysia Derivation Exchange (in RM) and the foreign exchange rate to ensure that the
Group is selling the CPO at the best possible price.

The Board with the assistance of the Audit Committee, RMC and Internal Audit team have continuously review existing
risks and identify new risks that the Group faces and management action plans to manage the risks.

To further enhance the risk management process within the culture of the Group, review of existing risks and
identification of new risks is also conducted annually with involvement of selected management staff. In additions,
nominated key management personnel in each business unit have prepared action plans to address key risks and
control issues highlighted by the Internal Audit team.

During the financial year ended 30 September 2019, the RMC has:

(a) reviewed management action plans presented by the nominated key management of certain business units of
the Group;

(b) reviewed the Group’s quarterly financial and non-financial performances measured against the approved budget
with major variances being reviewed and management actions taken as necessary;

(c) reported its findings on major issues relating to risks and risk management to the Audit Committee on quarterly
basis which then reports to the Board;

(d) reviewed new property development projects and business investment in the subsidiaries;

(e) reviewed quarterly the property development outlook with appropriate product differentiation and pricing to
suit the market demand; and

(f) monitored financial performances and the progress of corrective actions/implementation for highlighted issues.
072 ANNUAL REPORT 2019

STATEMENT ON RISK MANAGEMENT

AND INTERNAL CONTROL

Internal Audit Function

During the financial year, the Audit Committee worked closely with the Internal Audit team, distinct from the external
auditors, to provide independent internal audit services to the Group, who reports independently to the Audit
Committee. The internal audit function provides the Audit Committee with quarterly reports, based on the audits
conducted, highlighting observations, recommendations and management action plans to improve the internal control
system and contribute towards improving the Group’s risk management.

The key role of the internal audit function is to assess management’s adherence to establish policies and procedures
as well as to act as an independent sounding board to the Audit Committee concerning areas of weaknesses or
deficiencies in the risk management, governance and control processes for appropriate remedial measures to be
carried out by the management.

Review By The External Auditors

As required by paragraph 15.23 of Bursa Securities Main Market Listing Requirements, the external auditors have
conducted a limited assurance engagement on this Statement on Risk Management and Internal Control. Their limited
assurance engagement was performed in accordance with Malaysian Approved Standard on Assurance Engagements,
International Standard on Assurance Engagements, ISAE 3000, Assurance Engagements other than Audits or Reviews
of Historical Financial Information and Audit and Assurance Practice Guide 3 (“AAPG 3”): Guidance for Auditors on
Engagements to Report on the Statement of Risk Management and Internal Control included in the Annual Report.

Based on their procedures performed, the external auditors have reported to the Board that nothing has come to their
attention that causes them to believe that the Statement on Risk Management and Internal Control is not prepared,
in all material aspects, in accordance with disclosure required by paragraphs 41 and 42 of the Statement of Risk
Management and Internal Controls: Guidance for Directors of Listed Issuers to be set out, nor is factually inaccurate.
AAPG 3 does not require the external auditors to consider whether the Statement on Risk Management and Internal
Control covers all risks and controls, or to form an opinion on the adequacy and effectiveness of the Group’s risk
management and control system including the assessment and opinion by the Board and management thereon. The
external auditors are not required to consider whether the processes described to deal with material internal control
aspects of any significant problems disclosed in the Annual Report will, in fact, remedy the problems. The report
from the external auditors was made solely for and directed solely to the Board of Directors in connection with their
compliance with the Bursa Securities Main Market Listing Requirements and for no other purposes or parties.

Management Assurance

In accordance with the requirements of the Statement on Risk Management and Internal Control: Guidelines for Directors
of Listed Issuers, the Group Managing Director and the Chief Financial Officer have given reasonable assurance to the
Board that the Group’s risk management and internal control system, in all material aspects, is operating adequately
and effectively.

Board’s Conclusion

The Board is of the view that an appropriate risk management and internal control system, procedures and processes
in operation during the year in review was reasonably adequate and effective to safeguard the assets of the Group and
interest of shareholders. For the financial year under review, no significant control failures or weaknesses that result in
material losses and require disclosure in the Group’s Annual Report were identified.

This Statement has been approved by the Board on 26 December 2019.

MKH Berhad
073

ADDITIONAL COMPLIANCE
information

1. Utilisation of Proceeds Raised from Corporate Proposals

The utilisation of rights issue proceeds as at 30 September 2019 are as follows:

Proposed Actual Balance

Utilisation Utilisation Unutilised
RM’000 RM’000 RM’000 Revised timeframe
Infrastructure and property development 37,190 28,736 8,454 Within 30 months^
Payment of landowners’ entitlements 20,000 20,000 - Completed
Construction of KTM Komuter station 21,400 6,055 15,345 Within 30 months#
Working capital 372 372 - Completed
Estimated expenses for the rights with bonus issue 1,600 1,600 - Completed
Total 80,562 56,763 23,799

Notes:
^ Construction works completed and pending finalisation of claims.
# Construction works in progress.
The time frame for the utilisation of the proceeds raised from the rights with bonus issue has been extended for
another 10 months period from 30 November 2019 (i.e. 1st revised time frame from 1 June 2017 till 30 November
2019) up to 30 September 2020.

2. Audit and Non-Audit Fees

The amount of audit fees and non-audit fees paid by the Company and its subsidiaries to the external auditors
for the financial year ended 30 September 2019 are as follows:-

Group Company
(RM) (RM)
Audit Fees 607,149 52,000
Non-audit Fees 15,900 15,900
Total 623,049 67,900

The non-audit fees was payment towards reviewing the statement on risk management and internal control as
well as conducting training for Malaysia Financial Reporting Standards 9, 15 and 141.

3. Material Contracts Involving Directors and Major Shareholders’ Interest

There were no material contracts entered into by the Company and its subsidiaries involving Directors’ and/or
major shareholders’ interests during the financial year.

4. Sanctions and/or Penalties

There were no material publics sanctions and/or penalties imposed on the Company and its subsidiaries, Directors
or management by the relevant regulatory bodies during the financial year.
074 ANNUAL REPORT 2019

FINANCIAL
STATEMENTS
075 Directors’ Report
081 Statement by Directors
081 Statutory Declaration
082 Independent Auditors’ Report
087 Statements of Profit or Loss and
Other Comprehensive Income
089 Statements of Financial Position
Consolidated Statement of Changes
092 
in Equity
096 Statements of Changes in Equity
098 Statements of Cash Flows
102 Notes to the Financial Statements
MKH Berhad
075

DIRECTORS’
report
The directors have pleasure in presenting their report to the members together with the audited financial statements
of the Group and of the Company for the financial year ended 30 September 2019.

PRINCIPAL ACTIVITIES

The principal activities of the Company are investment holding and providing management services.

The information on the name, place of incorporation, principal activities and percentage of issued share capital held by
the Company in each subsidiaries are as disclosed in Note 14 to the Financial Statements.

RESULTS OF OPERATIONS

The Group The Company

RM RM
Profit for the financial year 97,476,769 47,853,009

Profit attributable to:

Owners of the parent 82,561,117 47,853,009
Non-controlling interests 14,915,652 -

97,476,769 47,853,009

DIVIDEND

Since the end of the previous financial year, a first interim single tier dividend of 3.5 sen per ordinary share in respect
of financial year ended 30 September 2018 amounting to RM20,268,891 was declared on 30 November 2018 and paid
on 10 January 2019 as reported in the directors’ report of that year.

A first interim single tier dividend of 4.0 sen per ordinary share in respect of financial year ended 30 September
2019 amounting to RM23,161,383 was declared on 27 November 2019 and to be paid on 3 January 2020. The financial
statements for the current financial year do not reflect the dividend. Such dividend will be accounted in equity as an
appropriation of retained earnings in the financial year ending 30 September 2020.

The directors do not recommend any final dividend payment in respect of the financial year ended 30 September 2019.

ISSUES OF SHARES

The Company has not issued any new shares or debentures during the financial year.
076 ANNUAL REPORT 2019

DIRECTORS’ REPORT

DIRECTORS

The directors of the Company in office during the financial year and during the period from the end of the financial
year to the date of this report are:

Tan Sri Dato’ Chen Kooi Chiew @ Cheng Ngi Chong

Tan Sri Datuk Chen Lok Loi
Datuk Chen Fook Wah
Datuk Mohammad bin Maidon
Mohammed Chudi bin Haji Ghazali
Jeffrey bin Bosra
Hasan Aziz bin Mohd Johan

LIST OF DIRECTORS OF SUBSIDIARIES

Tan Sri Dato’ Chen Kooi Chiew @ Cheng Ngi Chong

Tan Sri Datuk Chen Lok Loi
Datuk Chen Fook Wah
Datuk Mohammad bin Maidon
Dato’ Chong Yong Han
Dato’ Chen Way Kian
Dato’ Lee Khee Meng
Dato’ Mazbar bin Abu Bakar
Mohammed Chudi bin Haji Ghazali
Datuk Hj. Johan bin Abd. Aziz
Chen Wei Chyong
Chen Way Liang
Chen Yunn Shin
Tan Wan San
Tang Wai Hoong
Tang Hee Teik
Teh Lee Lean
Ahmad Yani bin Sulaiman
Kok Siew Yin
Datuk Muztaza bin Mohamad
Ra Adrina binti Muztaza (Alternate director to Datuk Muztaza bin Mohamad)
Dzulkeflee bin Khairuddin
Yap Yoon Soong (Alternate director to Dzulkeflee bin Khairuddin)
Abd Manaf bin Ahmad
Mohd Adib bin Othman
Hafiz bin Othman
Che Hasnadi bin Che Hassan
Drs. Haji Khairil Anwar
Morlifa Elanda
Mirza Aulia
MKH Berhad
077
DIRECTORS’ REPORT

LIST OF DIRECTORS OF SUBSIDIARIES (CONT’D)

Keiichi Tokushima
Isso Suzuki
Chen Wei Sern (Appointed on 4 June 2019)
Siti Norbaya binti Abdul Jabar (Appointed on 17 June 2019)
Kaisyah binti Abu Khalil (Appointed on 17 June 2019)
Mikiya Ishizako (Appointed on 19 June 2019)
Shigeki Watanabe (Appointed on 19 June 2019)
Yasuhito Imamura (Resigned on 19 June 2019)
Yasuhiro Nishikawa (Resigned on 19 June 2019)

DIRECTORS’ INTERESTS

The holdings and deemed holdings in the ordinary shares of the Company and of its related corporations of those who
were directors at financial year end as recorded in the Register of Directors’ Shareholdings are as follows:

(a) Shareholdings in the Company

Number of ordinary shares

At Bought Sold At
1 October 30 September
2018 2019
Direct interests:
Tan Sri Dato’ Chen Kooi Chiew @
Cheng Ngi Chong 1,487,080 - - 1,487,080
Tan Sri Datuk Chen Lok Loi 10,602,844 - - 10,602,844
Datuk Chen Fook Wah 1,734,311 249,600 - 1,983,911
Mohammed Chudi bin Haji Ghazali 67,361 - - 67,361
Deemed interests:
Tan Sri Dato’ Chen Kooi Chiew @
Cheng Ngi Chong^ 251,385,358 72,800 - 251,458,158
Tan Sri Datuk Chen Lok Loi# 243,736,368 831,719 - 244,568,087
Datuk Chen Fook Wah* 236,325,454 12,000 - 236,337,454

^ Deemed interest through shares held in Chen Choy & Sons Realty Sdn. Bhd. (“CCSR”), Lotus Way Sdn.
Bhd. and a nominee company.
# Deemed interest through shares held in CCSR and a nominee company.
* Deemed interest through shares held in CCSR and Activest Sdn. Bhd.
078 ANNUAL REPORT 2019

DIRECTORS’ REPORT

DIRECTORS’ INTERESTS (CONT’D)

(b) Shareholdings in subsidiary

- Srijang Kemajuan Sdn. Bhd.

Number of ordinary shares

At Bought Sold At
1 October 30 September
2018 2019
Direct interests:
Tan Sri Dato’ Chen Kooi Chiew @ 1 - - 1
Cheng Ngi Chong

DIRECTORS’ BENEFITS

Since the end of the previous financial year, no director of the Company has received or become entitled to receive
any benefit (other than a benefit included in the aggregate amount of emoluments received or due and receivable by
directors as shown in the financial statements or the fixed salary of a full time employee of the Company) by reason
of a contract made by the Company or a related corporation with the director or with a firm of which the director is a
member, or with a company in which the director has a substantial financial interest other than any benefits which may
be deemed to have arisen from transactions entered into in the ordinary course of business as disclosed in Note 35 to
the financial statements.

During and at the end of the financial year, no arrangements subsisted to which the Company is a party, being
arrangements with the object of enabling directors of the Company to acquire benefits by means of the acquisition of
shares in, or debentures of, the Company or any other body corporate.

RESERVES AND PROVISIONS

All material transfers to or from reserves and provisions during the financial year are disclosed in the financial statements.

STATUTORY INFORMATION ON THE FINANCIAL STATEMENTS

Before financial statements of the Group and of the Company were prepared, 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
allowance for doubtful debts and had satisfied themselves that all known bad debts had been written off and
that adequate allowance had been made for doubtful debts; and

(ii) to ensure that any current assets which were unlikely to realise in the ordinary course of business including
their values as shown in the accounting records of the Group and of the Company had been written down to an
amount which they might be expected so to realise.
MKH Berhad
079
DIRECTORS’ REPORT

STATUTORY INFORMATION ON THE FINANCIAL STATEMENTS (CONT’D)

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

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

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

(iii) 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; or

(iv) not otherwise dealt with in this report or the financial statements which would render any amount stated in the
financial statements misleading.

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 liability 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.

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, in the opinion of the directors, will or may affect the ability of the
Group and of the Company to meet their obligations when they fall due.

In the opinion of the directors:

(i) 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; and

(ii) there has not arisen in the interval between the end of the financial year and the date of this report any item,
transaction or event of a material and unusual nature likely to affect substantially the results of the operations of
the Group and of the Company for the financial year in which this report is made.

TREASURY SHARES

Treasury shares relate to ordinary shares of the Company that are repurchased and held by the Company in accordance
with the requirements of Section 127(4)(b) of the Companies Act, 2016 in Malaysia.

During the financial year, the Company repurchased 3,475,000 of its issued ordinary shares from the open market at
an average price of RM1.20 per share. The total consideration paid for the repurchase including transaction costs was
RM4,199,140.

As at 30 September 2019, the Company held 7,513,600 treasury shares out of its 586,548,168 issued and paid-up
ordinary shares. Such treasury shares are held at a carrying amount of RM9,637,077. Further details are disclosed in
Note 25 to the financial statements.
080 ANNUAL REPORT 2019

DIRECTORS’ REPORT

INDEMNITY AND INSURANCE FOR DIRECTORS, OFFICERS AND AUDITORS

The Company maintains directors’ and officers’ liability insurance for purposes of Section 289 of the Companies
Act, 2016, throughout the year, which provides appropriate insurance coverage for the Directors and Officers of the
Company. The amount of insurance premium paid during the year amounted to RM40,290.

There was no indemnity given to or insurance effected for auditors of the Company.

SIGNIFICANT EVENTS

Details of significant events during the financial year are disclosed in Note 37 to the financial statements.

AUDITORS

The auditors, Deloitte PLT, have expressed their willingness to continue in office.

AUDITORS’ REMUNERATION

The amount paid or payable by the Group and the Company as remuneration of the auditors for audit services for the
financial year ended 30 September 2019 amounting to RM607,149 and RM52,000 respectively.

Signed on behalf of the Board in accordance with a resolution of the directors dated 26 December 2019.

TAN SRI DATO’ CHEN KOOI CHIEW @ TAN SRI DATUK CHEN LOK LOI
CHENG NGI CHONG
MKH Berhad
081

STATEMENT
by directors
PURSUANT TO SECTION 251(2) OF THE COMPANIES ACT, 2016

We, Tan Sri Dato’ Chen Kooi Chiew @ Cheng Ngi Chong and Tan Sri Datuk Chen Lok Loi, being two of the directors of
the Company, do hereby state that in the opinion of the directors, the accompanying financial statements as set out
on pages 87 to 238, are drawn up in accordance with Malaysian Financial Reporting Standards, International Financial
Reporting Standards and the requirements of the Companies Act, 2016 in Malaysia so as to give a true and fair view of
the financial position of the Group and of the Company as at 30 September 2019 and of their financial performance
and cash flows for the financial year then ended.

Signed on behalf of the Board in accordance with a resolution of the directors dated 26 December 2019.

TAN SRI DATO’ CHEN KOOI CHIEW @ TAN SRI DATUK CHEN LOK LOI
CHENG NGI CHONG

STATUTORY
declaration
PURSUANT TO SECTION 251(1)(b) OF THE COMPANIES ACT, 2016

I, Kok Siew Yin, being the person primarily responsible for the financial management of MKH BERHAD, do solemnly
and sincerely declare that, to the best of my knowledge and belief, the financial statements as set out on pages 87 to
238, in my opinion, are correct and I make this solemn declaration conscientiously believing the same to be true and by
virtue of the provisions of the Statutory Declarations Act 1960.

Subscribed and solemnly declared by the above named at

Kajang in the State of Selangor
on 26 December 2019

KOK SIEW YIN

MIA MEMBERSHIP NO: 15343

Before me

BADLISHAM TALHAH (B475)

Commissioner for Oaths
082 ANNUAL REPORT 2019

INDEPENDENT AUDITORS’
report
TO THE MEMBERS OF MKH BERHAD (Incorporated in Malaysia)

Report on the Audit of the Financial Statements

Opinion

We have audited the financial statements of MKH BERHAD, which comprise the statements of financial position of the
Group and of the Company as at 30 September 2019 and the statements of profit or loss and other comprehensive
income, statements of changes in equity and statements of cash flows of the Group and of the Company for the year
then ended and notes to the financial statements, including a summary of significant accounting policies and other
explanatory information, as set out on pages 87 to 238.

In our opinion, the accompanying financial statements of the Group and of the Company give a true and fair view of the
financial position of the Group and of the Company as at 30 September 2019 and of their financial performance and
their cash flows for the year then ended in accordance with the Malaysian Financial Reporting Standards, International
Financial Reporting Standards and the requirements of the Companies Act, 2016 in Malaysia.

Basis for Opinion

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

Independence and Other Ethical Responsibilities

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

Key Audit Matters

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

Key audit matter How the matter was addressed in the audit
Revenue from property development activities Our audit procedures included, among others:

The Group recognises property development revenue • Obtained an understanding of the relevant controls put
using the cost-based input method, which is measured on in place by the Group in respect of revenue recognition
the basis of the Group’s efforts or inputs to the property for property development activities and performed
development costs incurred to date relative to the total procedures to evaluate the design and implementation
expected property development costs. and test operating effectiveness of such controls.
MKH Berhad
083
INDEPENDENT AUDITORS’ REPORT
TO THE MEMBERS OF MKH BERHAD (Incorporated in Malaysia)

Key Audit Matters (Cont’d)

Key audit matter (Cont’d) How the matter was addressed in the audit (Cont’d)
Revenue from property development activities (Cont’d) Our audit procedures included, among others: (Cont’d)

Significant judgement is required in the estimation of • Performed site visits for individually significant projects
total property development costs. Where the actual to arrive at an overall assessment as to whether
total property development costs is different from information provided by management is reasonable.
the estimated total property development costs, such
difference will impact the property development profits • Reviewed management prepared budgets for property
recognised. development projects and ensured that budgets are
appropriate and reflected cost incurred and cost to
Refer to “Significant accounting estimates and complete, current cost of operations and computation
judgements” in Note 2(c)(i) to the financial statements. of profit recognition.

•C
hallenged management assumptions used in the
preparation of the respective budgets, and performed
a retrospective review to establish the reliability of
management-prepared budgets and considered the
implication of any changes in assumption used in the
budgets.

•V
 erified the gross development value by reviewing the
sale and purchase agreement entered into between the
purchasers and the Group.

•C
 hecked the mathematical accuracy of the revenue and
profit based on percentage of completion calculations
and considered the implications of any changes in
estimate.

We have determined that there are no key audit matters in the audit of the separate financial statements of the
Company to be communicated in our auditors’ report.

Information Other than the Financial Statements and Auditors’ Report Thereon

The directors of the Company are responsible for the other information. The other information comprises the
information included in the annual report of the Group but does not include the financial statements of the Group and
of the Company and our auditor’s report thereon, which we obtained prior to the date of this auditors’ report and the
Analysis of Shareholdings and Directors’ Shareholdings, which are expected to be made available to us after that date.

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

In connection with our audit of the financial statements of the Group and of the Company, our responsibility is to
read the other information and, in doing so, consider whether the other information is materially inconsistent with the
financial statements of the Group and of the Company or our knowledge obtained in the audit or otherwise appears
to be materially misstated.
084 ANNUAL REPORT 2019

INDEPENDENT AUDITORS’ REPORT

TO THE MEMBERS OF MKH BERHAD (Incorporated in Malaysia)

If, based on the work we have performed, we conclude that there is a material misstatement of the other information,
we are required to report that fact. We have nothing to report in this regard.

When we read the Analysis of Shareholdings and Directors’ Shareholdings, if we conclude that there is a material
misstatement therein, we are required to communicate the matter to those charged with governance and request
management to correct the other information accordingly.

Responsibilities of the Directors for the Financial Statements

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

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

Auditors’ Responsibilities for the Audit of the Financial Statements

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

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

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

• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the
Group’s and the Company’s internal control.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and
related disclosures made by the directors.
MKH Berhad
085
INDEPENDENT AUDITORS’ REPORT
TO THE MEMBERS OF MKH BERHAD (Incorporated in Malaysia)

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

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

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

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

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

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

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

Report on Other Legal and Regulatory Requirements

In accordance with the requirements of the Companies Act, 2016 in Malaysia, we report that the subsidiaries of which
we have not acted as auditors, as disclosed in Note 14 to the financial statements.
086 ANNUAL REPORT 2019

INDEPENDENT AUDITORS’ REPORT

TO THE MEMBERS OF MKH BERHAD (Incorporated in Malaysia)

Other Matters

(a) As stated in Note 2 to the financial statements, the Group and the Company adopted Malaysian Financial
Reporting Standards on 1 October 2018 with a transition date of 1 October 2017. These standards were applied
retrospectively by directors to the comparative information in these financial statements, including the statements
of financial position as at 30 September 2018 and 1 October 2017 and the statements of profit or loss and other
comprehensive income, statements of changes in equity and statements of cash flows for the year ended 30
September 2018 and related disclosures. We were not engaged to report on these comparative information
which are now presented in accordance with Malaysian Financial Reporting Standards and hence, it is unaudited.
Our responsibilities as part of our audit of the financial statements of the Group and the Company for the
year ended 30 September 2019 have, in these circumstances, included obtaining sufficient appropriate audit
evidence that the opening balances as at 1 October 2018 do not contain misstatements that materially affect the
financial position as at 30 September 2019 and financial performance and cash flows for the year then ended.

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

DELOITTE PLT (LLP0010145-LCA)

Chartered Accountants (AF0080)

TEO SWEE CHUA

Partner - 02846/01/2020 J
Chartered Accountant

Kuala Lumpur
26 December 2019
MKH Berhad
087

STATEMENTS OF PROFIT OR LOSS

and other comprehensive income
FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2019

The Group The Company

2019 2018 2019 2018
Note RM RM RM RM
(Restated)

Revenue 4 1,121,656,628 1,081,700,915 30,903,675 32,516,500

Cost of sales 5 (807,161,744) (733,529,731) - -

Gross profit 314,494,884 348,171,184 30,903,675 32,516,500
Other income 37,338,444 19,606,549 30,844,155 36,779,251
Sales and marketing expenses (34,653,975) (50,364,180) - -
Administrative expenses (92,618,557) (89,658,855) (1,755,140) (3,053,866)
Other expenses (24,912,857) (65,634,431) (559,127) (873,518)

Profit from operations 199,647,939 162,120,267 59,433,563 65,368,367
Finance costs (40,389,950) (34,249,204) (7,192,376) (3,216,910)
Share of results of associates 15 (885,173) 360,579 - -

Profit before tax 6 158,372,816 128,231,642 52,241,187 62,151,457
Tax expense 8 (60,896,047) (51,618,640) (4,388,178) (4,138,084)

Profit for the financial year 97,476,769 76,613,002 47,853,009 58,013,373

Other comprehensive income/(loss)

Items that will not be reclassified
 subsequently to profit or loss:

Remeasurement gains on defined benefit plans 27 4,090,635 2,200,700 - -
Income tax relating to components of other
 comprehensive loss 8 (997,750) (504,607) - -

3,092,885 1,696,093 - -
Items that may be reclassified subsequently
 to profit or loss:
Foreign currency translation differences 2,233,731 (3,068,794) - -
Changes in tax rate relating to surplus arising
 from revaluation of land and buildings 8 - (131,500) - (26,500)

2,233,731 (3,200,294) - (26,500)

Total comprehensive income for the

  financial year 102,803,385 75,108,801 47,853,009 57,986,873

Profit attributable to:
Owners of the parent 82,561,117 70,864,939 47,853,009 58,013,373
Non-controlling interests 14,915,652 5,748,063 - -

97,476,769 76,613,002 47,853,009 58,013,373
088 ANNUAL REPORT 2019

STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2019

The Group The Company

2019 2018 2019 2018
Note RM RM RM RM
(Restated)

Total comprehensive income attributable to:

Owners of the parent 87,718,201 68,947,116 47,853,009 57,986,873
Non-controlling interests 15,085,184 6,161,685 - -

102,803,385 75,108,801 47,853,009 57,986,873

Basic earnings per share (sen) 9 14.26 12.26

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

MKH Berhad
089

STATEMENTS OF
financial position
AS AT 30 SEPTEMBER 2019

The Group
30.9.2019 30.9.2018 1.10.2017
Note RM RM RM
(Restated) (Restated)

ASSETS

Non-Current Assets
Property, plant and equipment 10 447,611,595 435,224,789 493,609,706
Intangible assets 11 30,448,679 26,353,749 22,014,685
Prepaid lease payments 12 43,397,363 44,675,754 45,724,238
Investment properties 13 312,440,000 318,620,000 318,937,000
Investment in associates 15 14,990,213 14,250,386 13,889,807
Land held for property development 16 873,949,964 866,759,029 915,911,610
Deferred tax assets 17 47,382,713 49,602,802 33,933,101
Tax recoverable 1,148,290 1,082,118 1,282,296
Receivables, deposits and prepayments 18 36,161,916 32,383,712 32,356,488

Total Non-Current Assets 1,807,530,733 1,788,952,339 1,877,658,931

Current Assets
Property development costs 19 416,739,609 466,714,197 474,969,277
Inventories 20 193,850,605 273,584,830 153,184,911
Contract assets 21 281,297,699 198,704,864 152,556,850
Biological assets 22 5,181,734 5,960,459 5,041,948
Receivables, deposits and prepayments 18 229,730,104 263,860,689 266,765,819
Current tax assets 19,491,707 19,885,707 12,214,337
Cash, bank balances, term deposits and fixed income funds 23 405,156,006 227,726,216 264,609,775

1,551,447,464 1,456,436,962 1,329,342,917
Non-current assets classified as held for sale 24 1,543,550 - 22,549,538

Total Current Assets 1,552,991,014 1,456,436,962 1,351,892,455

Total Assets 3,360,521,747 3,245,389,301 3,229,551,386

EQUITY AND LIABILITIES

Capital and Reserves
Share capital 25 654,458,655 654,458,655 613,315,284
Treasury shares 25 (9,637,077) (5,437,937) -
Reserves 26 971,063,777 903,614,467 868,443,625

Equity attributable to owners of the parent 1,615,885,355 1,552,635,185 1,481,758,909
Non-controlling interests 14 71,249,104 56,038,921 31,103,757

Total Equity 1,687,134,459 1,608,674,106 1,512,862,666
090 ANNUAL REPORT 2019

STATEMENTS OF FINANCIAL POSITION

AS AT 30 SEPTEMBER 2019

The Group
30.9.2019 30.9.2018 1.10.2017
Note RM RM RM
(Restated) (Restated)

Non-Current Liabilities
Deferred tax liabilities 17 64,327,355 64,124,182 59,037,723
Provisions 27 14,561,360 8,732,893 11,453,546
Payables and accruals 28 309,712,190 289,306,920 346,511,714
Loans and borrowings 29 313,682,979 350,491,183 444,139,353

Total Non-Current Liabilities 702,283,884 712,655,178 861,142,336

Current Liabilities
Provisions 27 20,183,386 20,183,386 20,183,386
Contract liabilities 21 2,141,093 - 870,000
Payables and accruals 28 566,679,889 573,303,432 497,500,699
Loans and borrowings 29 371,081,282 322,265,493 328,377,464
Current tax liabilities 11,017,754 8,307,706 8,614,835

Total Current Liabilities 971,103,404 924,060,017 855,546,384

Total Liabilities 1,673,387,288 1,636,715,195 1,716,688,720

Total Equity and Liabilities 3,360,521,747 3,245,389,301 3,229,551,386

Net assets per share (RM) 9 2.79 2.67 2.63
MKH Berhad
091
STATEMENTS OF FINANCIAL POSITION
AS AT 30 SEPTEMBER 2019

The Company
30.9.2019 30.9.2018 1.10.2017
Note RM RM RM

ASSETS

Non-Current Assets
Property, plant and equipment 10 1,180,051 1,198,845 1,218,418
Investment in subsidiaries 14 795,015,054 752,462,754 713,212,031
Receivables, deposits and prepayments 18 379,265,402 336,596,078 296,512,339

Total Non-Current Assets 1,175,460,507 1,090,257,677 1,010,942,788

Current Assets
Receivables, deposits and prepayments 18 20,555,215 25,869,463 4,378,683
Cash, bank balances, term deposits and
fixed income funds 23 593,455 3,941,479 12,145,700

Total Current Assets 21,148,670 29,810,942 16,524,383

Total Assets 1,196,609,177 1,120,068,619 1,027,467,171

EQUITY AND LIABILITIES

Capital and Reserves
Share capital 25 654,458,655 654,458,655 613,315,284
Treasury shares 25 (9,637,077) (5,437,937) -
Reserves 26 402,717,148 375,133,030 350,922,431

Total Equity 1,047,538,726 1,024,153,748 964,237,715

Non-Current Liabilities
Deferred tax liabilities 17 93,500 92,226 64,326

Total Non-Current Liabilities 93,500 92,226 64,326

Current Liabilities
Payables and accruals 28 769,521 539,936 1,344,734
Loans and borrowings 29 146,469,068 93,701,813 60,500,000
Current tax liabilities 1,738,362 1,580,896 1,320,396

Total Current Liabilities 148,976,951 95,822,645 63,165,130

Total Liabilities 149,070,451 95,914,871 63,229,456

Total Equity and Liabilities 1,196,609,177 1,120,068,619 1,027,467,171

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

 Non-distributable Distributable Attributable Non -
Share Treasury Warrant Translation Revaluation Retained to owners of controlling Total
092

capital shares reserve reserve reserve earnings the parent interests equity
RM RM RM RM RM RM RM RM RM

At 1 October 2018
  (As reported) 654,458,655 (5,437,937) - (6,240,848) 23,402,037 880,819,793 1,547,001,700 55,711,947 1,602,713,647
Effect of adoption
 of MFRS 141 - - - (548,928) - 6,182,413 5,633,485 326,974 5,960,459


At 1 October 2018
 (Restated) 654,458,655 (5,437,937) - (6,789,776) 23,402,037 887,002,206 1,552,635,185 56,038,921 1,608,674,106

Comprehensive
 income
Profit for the
 financial year - - - - - 82,561,117 82,561,117 14,915,652 97,476,769
Other
 comprehensive
 income
Foreign currency
 translation
 differences - - - 2,238,770 - - 2,238,770 (5,039) 2,233,731
Remeasurement
of changes in equity

 gains on defined
 benefit plans
FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2019

 - net of tax - - - - - 2,918,314 2,918,314 174,571 3,092,885

Total
 comprehensive
 income - - - 2,238,770 - 85,479,431 87,718,201 15,085,184 102,803,385
CONSOLIDATED STATEMENT
ANNUAL REPORT 2019
 Non-distributable Distributable Attributable Non -
Share Treasury Warrant Translation Revaluation Retained to owners of controlling Total
capital shares reserve reserve reserve earnings the parent interests equity
Note RM RM RM RM RM RM RM RM RM
MKH Berhad

Transactions
  with owners
Issuance of
 shares by
 subsidiaries
 to non-
 controlling
 shareholder - - - - - - - 124,999 124,999
Share buy
 back - (4,199,140) - - - - (4,199,140) - (4,199,140)
Dividend 30 - - - - - (20,268,891) (20,268,891) - (20,268,891)

Total
 transactions
 with owners - (4,199,140) - - - (20,268,891) (24,468,031) 124,999 (24,343,032)
FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2019

At 30
 September
  2019 654,458,655 (9,637,077) - (4,551,006) 23,402,037 952,212,746 1,615,885,355 71,249,104 1,687,134,459
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
093
 Non-distributable Distributable Attributable Non -
Share Treasury Warrant Translation Revaluation Retained to owners of controlling Total
094

capital shares reserve reserve reserve earnings the parent interests equity
RM RM RM RM RM RM RM RM RM

At 1 October 2017
  (As reported) 613,315,284 - 4,761,173 (3,428,618) 23,533,537 838,813,182 1,476,994,558 30,826,160 1,507,820,718
Effect of adoption
 of MFRS 141 - - - - - 4,764,351 4,764,351 277,597 5,041,948


At 1 October 2017
 (Restated) 613,315,284 - 4,761,173 (3,428,618) 23,533,537 843,577,533 1,481,758,909 31,103,757 1,512,862,666


Comprehensive
 income
Profit for the
 financial year - - - - - 70,864,939 70,864,939 5,748,063 76,613,002
Other
 comprehensive
 income
Foreign currency
 translation
 differences - - - (3,361,158) - - (3,361,158) 292,364 (3,068,794)
Remeasurement
 gains on defined
 benefit plans
 - net of tax - - - - - 1,574,835 1,574,835 121,258 1,696,093
Changes in tax rate
 relating to surplus
 arising from
 revaluation of land
 and buildings - - - - (131,500) - (131,500) - (131,500)

Total comprehensive
 income - - - (3,361,158) (131,500) 72,439,774 68,947,116 6,161,685 75,108,801
FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2019
ANNUAL REPORT 2019

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

 Non-distributable Distributable Attributable Non -
Share Treasury Warrant Translation Revaluation Retained to owners of controlling Total
capital shares reserve reserve reserve earnings the parent interests equity
Note RM RM RM RM RM RM RM RM RM
MKH Berhad

Transactions
  with owners
Issuance of
 shares pursuant
 to warrants 41,143,371 - (4,491,689) - - - 36,651,682 - 36,651,682
Warrants expired - - (269,484) - - 269,484 - - -
Issuance of
 shares by
 subsidiaries
 to non-
 controlling
 shareholder - - - - - - - 22,648,519 22,648,519
Share buy back - (5,437,937) - - - - (5,437,937) - (5,437,937)
Dividend 30 - - - - - (29,284,585) (29,284,585) - (29,284,585)
Dividend paid
FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2019

 to non-
 controlling
 interests - - - - - - - (3,875,040) (3,875,040)

Total transactions
 with owners 41,143,371 (5,437,937) (4,761,173) - - (29,015,101) 1,929,160 18,773,479 20,702,639
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

At 30
 September
 2018 654,458,655 (5,437,937) - (6,789,776) 23,402,037 887,002,206 1,552,635,185 56,038,921 1,608,674,106
095
 Non-distributable Distributable
Note Share Treasury Warrant Revaluation Retained Total
096

capital shares reserve reserve earnings equity

RM RM RM RM RM RM


At 1 October 2018 654,458,655 (5,437,937) - 620,407 374,512,623 1,024,153,748


Comprehensive income
Profit for the financial year, representing
 total comprehensive income for
 the financial year - - - - 47,853,009 47,853,009


Transactions with owners
Share buy back - (4,199,140) - - - (4,199,140)
Dividend 30 - - - - (20,268,891) (20,268,891)


changes in equity

Total transactions with owners - (4,199,140) - - (20,268,891) (24,468,031)

STATEMENTS OF

At 30 September 2019 654,458,655 (9,637,077) - 620,407 402,096,741 1,047,538,726
FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2019
ANNUAL REPORT 2019
 Non-distributable Distributable
Note Share Treasury Warrant Revaluation Retained Total
capital shares reserve reserve earnings equity
RM RM RM RM RM RM
MKH Berhad

At 1 October 2017 613,315,284 - 4,761,173 646,907 345,514,351 964,237,715


Comprehensive income
Profit for the financial year - - - - 58,013,373 58,013,373
Other comprehensive income
Changes in tax rate relating to surplus
arising from revaluation of land and
buildings - - - (26,500) - (26,500)

Total comprehensive income - - - (26,500) 58,013,373 57,986,873
STATEMENTS OF CHANGES IN EQUITY

FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2019

Transactions with owners

Issuance of shares pursuant to warrants 41,143,371 - (4,491,689) - - 36,651,682
Warrants expired - - (269,484) - 269,484 -
Share issue expenses - (5,437,937) - - - (5,437,937)
Dividend 30 - - - - (29,284,585) (29,284,585)


Total transactions with owners 41,143,371 (5,437,937) (4,761,173) - (29,015,101) 1,929,160

At 30 September 2018 654,458,655 (5,437,937) - 620,407 374,512,623 1,024,153,748

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

097
098 ANNUAL REPORT 2019

STATEMENTS
of cash flows
FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2019

The Group The Company

2019 2018 2019 2018
RM RM RM RM
(Restated)

CASH FLOWS FROM/(USED IN)

  OPERATING ACTIVITIES
Profit before tax 158,372,816 128,231,642 52,241,187 62,151,457
Adjustments for:
Amortisation of prepaid lease payments 1,513,413 1,509,763 - -
Bad debts written off 88,742 216,368 980 -
Changes in fair value of biological assets 1,170,893 (1,533,164) - -
Changes in fair value of investment properties 6,180,000 317,000 - -
Depreciation of property, plant and equipment 36,697,383 34,707,953 18,794 19,573
Deposits written off - 2,000 - -
Dividend income - - (30,903,675) (32,516,500)
Impairment loss on:
 Finance lease receivables - 890 - -
 Loan receivables 116,286 - - -
 Trade receivables 626,174 77,374 - -
 Other receivables 4,531,362 - - -
Inventories written down 137,658 940,057 - -
Inventories written off 20,995 2,193 - -
Allowance for slow moving inventories 45,180 - - -
Interest expense 40,389,950 34,249,204 7,192,376 3,216,910
Unrealised (gains)/losses on foreign exchange - net (13,967,232) 36,440,727 23,650 -
Property, plant and equipment written off 91,893 1,344,910 - -
Land donation - 9,461,450 - -
Provision for post-employment benefit obligations 10,117,286 1,497,090 - -
Gain on investment in subsidiary arising from
 realisation of bonus share - - (10,000,000) (18,000,000)
Gain on disposal of an associate - (2,000,000) - -
Gain on disposal of non-current assets classified
 as held for sale - (1,055,182) - -
Gain on disposal of property, plant and equipment (111,833) (26,176) - -
Gain on retention sum measured at amortised cost (466,060) (161,806) - -
Interest income (6,937,093) (6,145,101) (20,772,898) (18,663,455)
Impairment loss no longer required on:
 Finance lease receivables (500) (200) - -
 Trade receivables (250,778) (25,662) - -
 Other receivables (23,528) (32,200) (2,700) (7,200)
 Share of results of associates 885,173 (360,579) - -
MKH Berhad
099
STATEMENTS OF CASH FLOWS
FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2019

The Group The Company

2019 2018 2019 2018
RM RM RM RM
(Restated)

Operating Profit/(Loss) Before Changes in

 Working Capital 239,228,180 237,658,551 (2,202,286) (3,799,215)

Change in property development costs 131,921,470 45,320,989 - -
Change in inventories 60,904,977 36,129,663 - -
Change in contract assets (80,451,742) (47,018,014) - -
Change in receivables, deposits and prepayments 25,997,779 (42,203,941) 23,315,968 (483,580)
Change in payables and accruals (35,882,102) (28,579,077) 229,585 (804,798)

Cash Generated From/(Used In) Operations 341,718,562 201,308,171 21,343,267 (5,087,593)
Interest received 6,203,937 5,451,093 20,772,898 18,663,455
Interest paid (39,889,386) (38,036,963) (7,192,376) (3,216,910)
Tax paid (65,926,993) (71,440,492) (4,229,438) (3,876,184)
Tax refunded 9,259,085 1,133,539 - -
Retirement benefit obligations paid (785,667) (1,031,517) - -

Net Cash From Operating Activities 250,579,538 97,383,831 30,694,351 6,482,768

CASH FLOWS FROM/(USED IN) INVESTING ACTIVITIES

Acquisition of subsidiaries, net
 of cash acquired - - (1) (2)
Advances to subsidiaries - - (42,669,324) (40,083,739)
Subscription of shares in an associate (5,000,000) - - -
Acquisition of property, plant
 and equipment (26,712,383) (21,649,535) - -
Additions to intangible assets (3,796,311) (4,971,433) - -
Additions to land held for
 property development (30,903,244) (47,739,819) - -
Subscription of additional shares
 in subsidiaries - - (50,552,299) (42,250,721)
Dividends received from
 subsidiaries - - 30,903,675 32,516,500
Withdrawal/(Placement) of deposits with
 licensed banks 4,479,568 (5,458,455) - -
Proceeds from disposal of an
 associate - 2,000,000 - -
Proceeds from disposal of
 property, plant and equipment 126,221 143,944 - -
Proceeds from disposal of
 non-current assets classified as
 held for sale - 11,082,732 - -
Proceeds from capital reduction in an associate 3,375,000 - - -

Net Cash Used In Investing
 Activities (58,431,149) (66,592,566) (62,317,949) (49,817,962)
100 ANNUAL REPORT 2019

STATEMENTS OF CASH FLOWS

FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2019

The Group The Company

2019 2018 2019 2018
RM RM RM RM
(Restated)

CASH FLOWS FROM/(USED IN)

  FINANCING ACTIVITIES
Drawdown of revolving credits 178,133,193 197,676,598 116,485,350 144,000,000
Drawdown of term loans 41,691,795 37,637,657 - -
Repayments of bridging loan - (6,306,911) - -
Repayments of revolving credits (103,551,959) (166,296,231) (66,000,000) (112,400,000)
Repayments of term loans (104,503,140) (154,899,423) - -
Payments of finance lease (735,349) (938,042) - -
Proceeds from issuance of
 shares pursuant to warrants - 36,651,682 - 36,651,682
Shares buy back (4,199,140) (5,437,937) (4,199,140) (5,437,937)
Proceeds from issuance of
 shares by subsidiaries to
 non-controlling shareholders 124,999 22,648,519 - -
Dividend paid to non-controlling
 shareholders - (3,875,040) - -
Dividend paid (20,268,891) (29,284,585) (20,268,891) (29,284,585)

Net Cash (Used In)/From
 Financing Activities (13,308,492) (72,423,713) 26,017,319 33,529,160

NET INCREASE/(DECREASE) IN CASH AND
  CASH EQUIVALENTS 178,839,897 (41,632,448) (5,606,279) (9,806,034)
Effect of exchange rate
 fluctuations 564,918 (3,003,261) - -

CASH AND CASH EQUIVALENTS AT
  BEGINNING OF THE FINANCIAL YEAR 194,661,350 239,297,059 2,339,666 12,145,700

CASH AND CASH EQUIVALENTS AT END OF
  THE FINANCIAL YEAR 374,066,165 194,661,350 (3,266,613) 2,339,666
MKH Berhad
101
STATEMENTS OF CASH FLOWS
FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2019

Cash and cash equivalents

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

The Group The Company

2019 2018 2019 2018
Note RM RM RM RM

Deposits with licensed banks 23 10,325,296 12,611,412 - -

Cash and bank balances 23 128,387,261 106,698,370 593,455 3,941,479
Cash held under housing development
 accounts 23 241,678,107 78,206,979 - -
Fixed income funds:
 Redeemable at call 23 8,862,827 1,476,808 - -
 Redeemable upon 1 day notice 23 13,643,057 17,953,612 - -
 Redeemable upon 5 days notice 23 2,259,458 10,779,035 - -

405,156,006 227,726,216 593,455 3,941,479
Bank overdrafts 29 (7,293,959) (4,789,416) (3,860,068) (1,601,813)

397,862,047 222,936,800 (3,266,613) 2,339,666
Less: Non short-term and highly liquid
 fixed deposits (8,113,020) (10,105,200) - -
Less: Deposits and bank balances pledged
 for credit facilities (15,682,862) (18,170,250) - -

374,066,165 194,661,350 (3,266,613) 2,339,666

Acquisition of property, plant and equipment

During the financial year, the Group acquired property, plant and equipment by the following means:

The Group
2019 2018
RM RM
(Restated)

Finance lease arrangement 281,000 650,000
Interest capitalised 645,200 940,699
Cash payments 26,712,383 21,649,535

27,638,583 23,240,234

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

102 ANNUAL REPORT 2019

NOTES TO THE
financial statements
FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2019

1. GENERAL INFORMATION

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

The principal activities of the Company are investment holding and providing management services.

The information on the name, place of incorporation, principal activities and percentage of issued share capital
held by the Company in each subsidiaries are as disclosed in Note 14.

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

The registered office of the Company is located at Suite 1, 5th Floor, Wisma MKH, Jalan Semenyih, 43000 Kajang,
Selangor Darul Ehsan.

The principal place of business of the Company is located at 5th Floor, Wisma MKH, Jalan Semenyih, 43000
Kajang, Selangor Darul Ehsan.

The financial statements were approved and authorised for issue in accordance with a Board of Directors’
resolution dated 26 December 2019.

2. BASIS OF PREPARATION OF THE FINANCIAL STATEMENTS

(a) Statement of compliance

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

The financial statements of the Group and of the Company have been prepared under the historical cost
basis, except as disclosed in the significant accounting policies in Note 3.

The preparation of financial statements in conformity with MFRSs requires the use of certain critical
accounting estimates and assumptions that affect the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities at the date of the financial statements and the reported
amounts of the revenue and expenses during the reported period. It also requires directors to exercise
their judgements in the process of applying the Group’s and the Company’s accounting policies. Although
these estimates and judgements are based on the directors’ best knowledge of current events and actions,
actual results may differ.

The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates
are significant to the financial statements are disclosed in Note 2(c).
MKH Berhad
103
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2019

2. BASIS OF PREPARATION OF THE FINANCIAL STATEMENTS (CONT’D)

(a) Statement of compliance (Cont’d)

Transitioning to MFRS Framework

The Group and the Company’s financial statements for the financial year ended 30 September 2019 have
been prepared in accordance with MFRSs for the first time. In the previous financial years, the financial
statements were prepared in accordance with Financial Reporting Standards (“FRSs”).

The financial statements of the Group and of the Company for the financial year ended 30 September 2019
are the first set of financial statements prepared in accordance with MFRS, including MFRS 1 First-time
Adoption of Malaysian Financial Reporting Standards. The MFRS Framework is effective for the Group and
the Company from 1 October 2018 and the date of transition to the MFRS Framework for the purpose of
preparation of the MFRS compliant financial statements is on 1 October 2017.

As provided in MFRS 1, a first-time adopter of MFRS Framework can elect optional exemptions from full
retrospective application of MFRS. The Group has elected not to apply MFRS 3 Business Combinations,
MFRS 9 Financial Instruments and MFRS 10 Consolidated Financial Statements retrospectively, that is not
to restate any of its business combinations that occurred before the date of transition to MFRS.

During the financial year, the Group has early adopted IFRIC Agenda Decision on MFRS 123 Borrowing
Costs as detailed in Note 3.

The transition to MFRS framework did not result in significant changes in the accounting policies of the
Group and the Company and have no significant effect on the financial performance or position of the
Group and the Company, except as disclosed below:

Impact of initial application of MFRS 9 Financial Instruments

In the current year, the Group and the Company have applied MFRS 9 Financial Instruments and the related
consequential amendments to other MFRS Standards that are effective for an annual period that begins
on or after 1 January 2018. The transition provisions of MFRS 9 allow an entity not to restate comparative
information, accordingly, the Group and the Company have applied MFRS 9 prospectively and have not
elected to restate comparative information. As a result, the comparative information provided continues
to be accounted for in accordance with the Group’s and the Company’s previous accounting policy as
disclosed in Note 3.

MFRS 9 introduced new requirements for:

(1) The classification and measurement of financial assets and financial liabilities; and
(2) Impairment of financial assets.

Details of these new requirements as well as their impact on the Group’s and the Company’s financial
statements are described below. The Group and the Company have applied MFRS 9 in accordance with
the transitional provisions set out in MFRS 9.

104 ANNUAL REPORT 2019

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2019

2. BASIS OF PREPARATION OF THE FINANCIAL STATEMENTS (CONT’D)

(a) Statement of compliance (Cont’d)

Impact of initial application of MFRS 9 Financial Instruments (Cont’d)

Classification and measurement of financial assets

The date of initial application (i.e. the date on which the Group and the Company have assessed its
existing financial assets and financial liabilities in terms of the requirements of MFRS 9) is on 1 October
2018. Accordingly, the Group and the Company have applied the requirements of MFRS 9 to instruments
that continue to be recognised as at 1 October 2018 and have not applied the requirements to instruments
that have already been derecognised as at 1 October 2018.

All recognised financial assets that are within the scope of MFRS 9 are required to be measured
subsequently at amortised cost or fair value on the basis of the business model for managing the financial
assets and the contractual cash flow characteristics of the financial assets.

The directors of the Group and the Company reviewed and assessed the Group’s and the Company’s
existing financial assets as at 1 October 2018 based on the facts and circumstances that existed at that date
and concluded that the initial application of MFRS 9 has had a classification and measurement impact on
the Group’s and the Company’s financial assets. Financial assets classified as loans and receivables under
MFRS 139 that were measured at amortised cost continue to be measured at amortised cost under MFRS
9 as they are held within the business model to collect contractual cash flows and these cash flows consist
solely of payments of principal and interest on the principal amount outstanding.

None of the above reclassifications of financial assets have had any impact on the Group and the Company’s
financial position, profit or loss, other comprehensive income or total comprehensive income.

Impairment

In relation to the impairment of financial assets, MFRS 9 requires an expected credit loss (“ECL”) model,
as opposed to an incurred loss model under MFRS 139. The expected credit loss model requires the Group
and the Company to account for expected credit losses and changes in those expected credit losses
at each reporting date to reflect changes in credit risk since initial recognition. In other words, it is no
longer necessary for a credit event to have occurred before credit losses are recognised. MFRS 9 requires
a simplified approach for measuring the loss allowance at an amount equal to lifetime ECL for trade
receivables, contract assets and lease receivables in certain circumstances.

The application of expected credit loss model of MFRS 9 has had no material impact to the Group’s and
the Company’s financial statements.

MKH Berhad
105
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2019

2. BASIS OF PREPARATION OF THE FINANCIAL STATEMENTS (CONT’D)

(a) Statement of compliance (Cont’d)

Impact of initial application of MFRS 9 Financial Instruments (Cont’d)

Classification and measurement of financial liabilities

With regard to the measurement of financial liabilities designated as at fair value through profit or loss,
MFRS 9 requires that the amount of change in the fair value of the financial liability that is attributable
to changes in the credit risk of that liability, is presented in other comprehensive income, unless the
recognition of the effects of changes in the liability’s credit risk in other comprehensive income would
create or enlarge an accounting mismatch in profit or loss. Changes in fair value attributable to a financial
liability’s credit risk are not subsequently reclassified to profit or loss. Previously, under MFRS 139, the
entire amount of the change in the fair value of the financial liability designated as at fair value through
profit or loss was presented in profit or loss.

The application of MFRS 9 has had no impact on the classification and measurement of the Group’s and
the Company’s financial liabilities as the Group and the Company have no financial liabilities designated at
FVTPL.

Disclosures in relation to the initial application of MFRS 9

There were no financial assets or financial liabilities which the Group and the Company had previously
designated as at FVTPL under MFRS 139 that were subject to reclassification or which the Group and the
Company have elected to reclassify upon the application of MFRS 9. There were no financial assets or
financial liabilities which the Group and the Company have elected to designate as at FVTPL at the date
of initial application of MFRS 9.

The application of MFRS 9 has had no impact on the financial statements of the Group and the Company.

Impact of initial application of MFRS 15 Revenue from Contract with Customers

MFRS 15 establishes a single comprehensive model for entities to use in accounting for revenue arising
from contracts with customers. MFRS 15 supersedes the current revenue recognition guidance including
MFRS 118 Revenue, MFRS 111 Construction Contracts and the related interpretation.

The core principle of MFRS 15 is that an entity should recognise revenue to depict the transfer of promised
goods or services to customers in an amount that reflects the consideration to which the entity expects
to be entitled in exchange for those goods or services. Specifically, the Standard introduces a 5-step
approach to revenue recognition.

Step 1 : Identify the contract(s) with a customer

Step 2 : Identify the performance obligations in the contract
Step 3 : Determine the transaction price
Step 4 : Allocate the transaction price to the performance obligations in the contract
Step 5 : Recognise revenue when (or as) the entity satisfies a performance obligation
106 ANNUAL REPORT 2019

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2019

2. BASIS OF PREPARATION OF THE FINANCIAL STATEMENTS (CONT’D)

(a) Statement of compliance (Cont’d)

Impact of initial application of MFRS 15 Revenue from Contract with Customers (Cont’d)

Under MFRS 15, an entity recognises revenue when (or as) a performance obligation is satisfied, i.e. when
‘control’ of the goods or services underlying the particular performance obligation is transferred to the
customer. Far more prescriptive guidance has been added in MFRS 15 to deal with specific scenarios.
Furthermore, extensive disclosures are required by MFRS 15.

The directors have applied full retrospective method of transition to MFRS 15 and the application of MFRS
15 has no material impact on the Group’s and the Company’s financial statements.

Impact of initial application of MFRS 141 Agriculture and Amendments to MFRS 116 and MFRS 141
Agriculture: Bearer Plants

MFRS 141 prescribes the accounting treatment, financial statements presentation and disclosures related
to agricultural activity. It requires measurement of fair value less costs to sell, from initial recognition of
biological assets up to the point of harvest.

The amendments to MFRS 141 on 2 September 2014 introduces a new category for biological asset, i.e.
the bearer plants. A bearer plant is accounted for in the same way as self-constructed items of property,
plant and equipment. Bearer plants are measured either at cost or revalued amounts, less accumulated
depreciation and impairment losses in accordance with MFRS 116 - Property, Plant and Equipment.
Agricultural produce growing on bearer plants continue to be measured at fair value less costs to sell in
accordance with MFRS 141, with fair value changes recognised in profit or loss as the produce grows.

The Group currently adopts the capitalisation and amortisation model on its bearer plants (previously
termed as biological assets) whereby the expenditure on new planting was capitalised as biological assets
at cost. Replanting of same crops expenditure was charged to the profit or loss in the financial year in
which the expenditure was incurred.

Upon the adoption of the MFRS, bearer plants (both new planting and replanting) will be accounted for
in the same way as self-constructed items of property, plant and equipment. Expenditure on new planting
and replanting of bearer plants are capitalised at cost and depreciated on a straight-line basis over the
economic useful lives of 20 years for its oil palm trees. The bearer plants will be classified as property,
plant and equipment. The bearer plants will be assessed for indicator of impairment and if indication
exists, an impairment test will be performed in accordance with MFRS 136 - Impairment of Assets.

The biological assets of the Group comprise fresh fruit bunches (“FFB”) prior to harvest. The valuation
model adopted by the Group considers the present value of the net cash flows expected to be generated
from the sale of FFB.

To arrive at the fair value of FFB, the management considered the oil content of the unripe FFB and
derived the assumption that the net cash flow to be generated from FFB prior to more than 15 days to
harvest to be negligible, therefore quantity of unripe FFB on bearer plant of up to 15 days prior to harvest
was used for valuation purpose. Costs to sell, which include harvesting and transport cost, are deducted
in arriving at the net cash flow to be generated.
MKH Berhad
107
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2019

2. BASIS OF PREPARATION OF THE FINANCIAL STATEMENTS (CONT’D)

(a) Statement of compliance (Cont’d)

Impact of initial application of MFRS 141 Agriculture and Amendments to MFRS 116 and MFRS 141
Agriculture: Bearer Plants (Cont’d)

The adoption of MFRS 141 has been applied retrospectively and comparatives were restated. The adoption
has resulted in additional depreciation charges to profit or loss in the current and previous financial years.

The effects of the transition to MFRS Framework are presented in Note 44.

Standards, Amendments and IC Interpretations in Issue But Not Yet Effective

At the date of authorisation for issue of these financial statements, the new and revised MFRSs, amendments
to MFRSs and Issues Committee Interpretations (“IC Interpretations”) which were in issue but not yet
effective and not early adopted by the Group and the Company are as listed below:

MFRS 16 Leases1
MFRS 17 Insurance Contracts3
MFRSs  Amendments to Reference to the Conceptual Framework in MFRS
Standards2
Amendments to MFRS 3 Definition of a Business2
Amendments to MFRS 9 Prepayments Features with Negative Compensation1
Amendments to MFRS 10 Sale or Contribution of Assets between an Investor and its Associate or
 and MFRS 128  Joint Venture4

Amendments to MFRS 101 Definition of Material2

 and MFRS 108
Amendments to MFRS 119 Plan Amendment, Curtailment or Settlement1
Amendments to MFRS 128 Long Term Interest in Associates and Joint Venture1
Amendments to MFRSs Annual Improvements to MFRSs 2015 - 2017 Cycle1
IC Interpretation 23 Uncertainty Over Income Tax Treatments1

1 Effective for annual periods beginning on or after 1 January 2019.

2 Effective for annual periods beginning on or after 1 January 2020.
3 Effective for annual periods beginning on or after 1 January 2021.
4 Effective date deferred to a date to be announced by MASB.

The directors anticipate that the abovementioned MFRSs, amendments to MFRSs and IC Interpretations
will be adopted in the annual financial statements of the Group and the Company when they become
effective and that the adoption of these Standards will have no material impact on the financial statements
of the Group and the Company in the period of initial application except as disclosed below.
108 ANNUAL REPORT 2019

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2019

2. BASIS OF PREPARATION OF THE FINANCIAL STATEMENTS (CONT’D)

(a) Statement of compliance (Cont’d)

MFRS 16 Leases

MFRS 16 introduces a single lessee accounting model and requires a lessee to recognise assets and
liabilities, except for short-term leases and leases of low value assets. A lessee is required to recognise a
right-of-use (“ROU”) asset representing its rights to use the underlying leased asset and a lease liability
representing its obligation to make lease payments.

The Standard will affect primarily the accounting for the Group leases previously recognised as operating
leases under MFRS 117 Leases.

At the date of initial application, all ROU assets will be measured at an amount equal to the lease liabilities
measured at present value of the remaining lease payments discounted using the incremental borrowing
rate at the date of initial application.

The Group intends to apply the simplified transition approach and will not restate comparative amounts
for the financial year prior to first adoption. ROU assets for property leases will be measured on transition
as if the new rules had always been applied. Based on assessment undertaken to-date, the adoption of
this Standard would impact on the Group’s financial position with the recognition of ROU assets and lease
liabilities.

The Group is currently assessing the impact on the financial statements consequent upon adopting the
above standard on the effective dates.

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

(c) Significant accounting estimates and judgements

Significant areas of estimation, uncertainty and critical judgements used in applying accounting principles
that have significant effect on the amount recognised in the financial statements are described in the
following paragraphs:

(i) Revenue and cost of sales recognition (Notes 4 and 5) – revenue is recognised as and when the
control of the asset is transferred to customers and it is probable that the Group will collect the
consideration to which it will be entitled in exchange for the asset that will be transferred to the
customer.

The Group recognises revenue from property development over the period of the contract by
reference to the progress towards complete satisfaction of that performance obligation. Significant
judgement is required in determining the progress towards complete satisfaction of that performance
obligation, based on the Group’s efforts or inputs to the satisfaction of the performance obligation
(e.g. by reference to the property development costs incurred to date as a percentage of the
estimated total costs of development of the contract).
MKH Berhad
109
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2019

2. BASIS OF PREPARATION OF THE FINANCIAL STATEMENTS (CONT’D)

(c) Significant accounting estimates and judgements (Cont’d)

The total estimated costs are based on approved budgets, which require assessments and
judgements to be made on changes in, for example, work scope, changes in costs and costs to
completion. In making these judgements, management relies on past experience and the work of
specialists.

 As at 30 September 2019, the Group recognised revenue of RM698,864,661 and cost of RM510,596,216,
respectively arising from the property development activities recognised over time using the cost-
based input method.

(ii) Tax expense (Note 8) - significant judgement is required in determining the capital allowances and
deductibility of certain expenses when estimating the tax expense. There were transactions during
the ordinary course of business for which the ultimate tax determination of whether additional taxes
will be due is uncertain. The Group recognises liabilities for tax based on estimates of assessment of
the tax liability due. Where the final tax outcome of these matters is different from the amounts that
were initially recorded, such differences will impact the current tax and deferred tax in the periods
in which the outcome is known.

Valuation of land and buildings (Note 10) - the valuation of land and buildings performed by
(iii) 
management is based on independent professional valuations with reference to direct comparison
method, being comparison of current prices in an active market for similar properties in the same
location and condition and when necessary, adjusting for location, accessibility, visibility, time,
terrain, size, present market trends and other differences, cost method of valuation, being assumed
to have a direct relationship with its cost of construction, is then adjusted to allow for cost of
finance, profit and demand to reflect its profitable present market value. The management believes
that the chosen valuation techniques and assumptions are appropriate in determining the valuation
of the Group’s and of the Company’s land and buildings.

(iv) Depreciation of property, plant and equipment (Note 10) - the cost of property, plant and equipment
is depreciated on a straight line basis over the assets’ useful lives. Management estimates the useful
lives of these property, plant and equipment to be within 5 to 50 years based on past experience
with similar assets or/and common life expectancies of the industries. Changes in the expected
level of usage and technological developments could impact the economic useful lives and the
residual values of these assets resulting in revision of future depreciation or amortisation charges.
Depreciation of bearer plants is charged so as to write off the cost of mature plantations, using the
straight-line method, over the estimated useful lives of 20 years or over the lease period, whichever
is shorter.

(v) Impairment of goodwill (Note 11) - significant judgement is used in the estimation of the present
value of future cash flows generated by the cash-generating units which involve uncertainties and
are based on assumptions used and judgement made regarding estimates of future cash flows and
discount rate.
110 ANNUAL REPORT 2019

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2019

2. BASIS OF PREPARATION OF THE FINANCIAL STATEMENTS (CONT’D)

(c) Significant accounting estimates and judgements (Cont’d)

(vi) Fair values of investment properties (Note 13) - the measurement of the fair values for investment
properties performed by management is based on independent professional valuations with
reference to direct comparison method, being comparison of current prices in an active market for
similar properties in the same location and condition and where necessary, adjusting for location,
accessibility, visibility, time, terrain, size, present market trends and other differences, investment
method, being the projected net income and other benefits that the subject property can generate
over the life of the property capitalised at market derived yields to arrive at the present value of
the property and cost method of valuation, being assumed to have a direct relationship with its
cost of construction, is then adjusted to allow for cost of finance, profit and demand to reflect its
profitable present market value. The management believes that the chosen valuation techniques
and assumptions are appropriate in determining the fair values of the Group’s investment properties.

(vii) 
Deferred tax assets (Note 17) - deferred tax assets are recognised for deductible temporary
differences, unused tax losses and unabsorbed capital allowances based on the projected future
profits of the Group to the extent that is probable that taxable profits will be available against which
the deductible temporary differences, unused tax losses and unabsorbed capital allowances can be
utilised. Significant management judgement is required to determine the amount of deferred tax
assets that can be recognised, based on the future financial performance of the Group.

(viii) Impairment loss on receivables (Note 18) - the Group accounts for expected credit losses and
changes in those expected credit losses at each reporting date to reflect changes in credit risk
since initial recognition. The Group uses a simplified approach for measuring the loss allowance at
an amount equal to lifetime ECL for trade receivables, contract assets and lease receivables.

(ix) Inventories (Note 20) - the saleability of inventories are reviewed by management on a periodic basis.
This review involves comparison of the carrying value of the inventory items with the respective net
realisable value. The purpose is to ascertain whether a write down to net realisable value is required
to be made.

(x) Fair values of biological assets (Note 22) - to arrive at the fair value of FFB, the management
considered the oil content of the unripe FFB and derived the assumption that the net cash flow to
be generated from FFB prior to more than 15 days to harvest to be negligible, therefore quantity of
unripe FFB on bearer plant of up to 15 days prior to harvest was used for valuation purpose. Costs
to sell, which include harvesting and transport cost, are deducted in arriving at the net cash flow to
be generated.

(xi) Provision of post-employment benefit obligations (Note 27) - the provision is determined using
actuarial valuation prepared by an independent actuary. The actuarial valuation involved making
assumptions about discount rate, future salary increase, mortality rates, resignation rate and normal
retirement age. As such, this estimated provision amount is subject to significant uncertainty.

(xii) Revenue and cost recognition for intangible asset model (Note 11) - a subsidiary, which adopts the
intangible asset model has recognised a construction margin of 7% in the construction of commuter
station. Income and expenses associated with the said construction are recognised based on
percentage of completion method. The estimated margin is based on relative comparison with
general industry trend although actual margins may differ due to location, materials and other
pricing considerations.
MKH Berhad
111
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2019

2. BASIS OF PREPARATION OF THE FINANCIAL STATEMENTS (CONT’D)

(c) Significant accounting estimates and judgements (Cont’d)

(xiii) Tax litigation in Indonesia (Note 33) - significant judgement is required in determining the tax
litigation status in Indonesia. This judgement involves the understanding of relevant case facts, past
experience and updates on the tax assessment status from time to time. Should it be probable that
an outflow of resources will be required to settle the obligation, a provision may be required.

(xiv) Liquidated ascertained damages in relation to the construction of KTM Komuter Station (Note 33) -
significant judgement is required in determining the potential liquidated ascertained damages. This
judgement involves the understanding of relevant case facts, past experience and updates on the
legal assessment status from time to time. Should it be probable that an outflow of resources will
be required to settle the obligation, a provision may be required.

3. SIGNIFICANT ACCOUNTING POLICIES

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

(a) Basis of consolidation

The consolidated financial statements incorporate the financial statements of the Company and entities
controlled by the Company and its subsidiaries.

Control is achieved when the Group:

• has power over the investee;

• is exposed, or has rights, to variable returns from its involvement with the investee; and
• has the ability to use its power to affect its returns.

The Group reassesses whether or not it controls an investee if facts and circumstances indicate that there
are changes to one or more of the three elements of control listed above.

When the Group has less than a majority of the voting rights of an investee, it has power over the investee
when the voting rights are sufficient to give it the practical ability to direct the relevant activities of the
investee unilaterally. The Group considers all relevant facts and circumstances in assessing whether or not
the Group’s voting rights in an investee are sufficient to give it power, including:

• the size of the Company’s holding of voting rights relative to the size and dispersion of holdings of
the other vote holders;
• potential voting rights held by the Group, other vote holders or other parties;
• rights arising from other contractual arrangements; and
• any additional facts and circumstances that indicate that the Group 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.
112 ANNUAL REPORT 2019

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2019

3. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

(a) Basis of consolidation (Cont’d)

Consolidation of a subsidiary begins when the Group obtains control over the subsidiary and ceases when
the Group loses control of the subsidiary. Specifically, income and expenses of a subsidiary acquired or
disposed of during the year are included in the statement of profit or loss and other comprehensive income
from the date the Group gains control until the date when the Group ceases to control the subsidiary.

Profit or loss and each component of other comprehensive income are attributed to the owners of the
Company and to the non-controlling interests. Total comprehensive income of subsidiaries is attributed to
the owners of the Company and to the non-controlling interests even if this results in the non-controlling
interests having a deficit balance.

Where necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting
policies into line with those used by other members of the Group.

All intra-group assets and liabilities, equity, income and expenses and cash flows relating to transactions
between members of the Group are eliminated in full on consolidation.

Changes in the Group’s ownership interests in subsidiaries that do not result in the Group losing control
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. Any
difference between the amount by which the non-controlling interests are adjusted at the fair value of the
consideration paid or received is recognised directly in equity and attributed to owners of the Company.

When the Group loses control of a subsidiary, a gain or a loss is recognised and is 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 (including goodwill) and
liabilities of the subsidiary and any non-controlling interests. All amounts previously recognised in other
comprehensive income in relation to the subsidiary are accounted for as if the Group had directly disposed
of the relevant assets or liabilities of the subsidiary (i.e. reclassified to profit or loss or transferred to
another category of equity as specified/permitted by applicable MFRSs). The fair value of any investment
retained in the former subsidiary at the date when control is lost is regarded as the fair value on initial
recognition for subsequent accounting under MFRS 9 Financial Instruments or, when applicable, the cost
on initial recognition of an investment in an associate or joint venture.

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

(b) Business combinations

Acquisitions of subsidiaries and businesses are accounted for using the acquisition method. The
consideration transferred in a business combination is measured at fair value, which is calculated as the
sum of the acquisition date fair value of assets transferred by the Group, liabilities incurred by the Group
to the former owners of the acquiree and equity instruments issued by the Group in exchange for control
of the acquiree. Acquisition-related costs are recognised in profit or loss as incurred.
MKH Berhad
113
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2019

3. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

(b) Business combinations (Cont’d)

At acquisition date, the identifiable assets acquired and liabilities assumed are recognised at their fair
value, except that:

• deferred tax assets or liabilities and liabilities or assets related to employee benefit arrangements
are recognised and measured in accordance with MFRS 112 Income Taxes and MFRS 119 Employee
Benefits respectively;
• liabilities or equity instruments related to the share-based payment arrangements of the acquiree
or share-based payment arrangements of the Group entered into to replace share-based payment
arrangements of the acquiree are measured in accordance with MFRS 2 Share-based Payment at
the acquisition date; and
• assets (or disposal groups) that are classified as held for sale in accordance with MFRS 5 Non-
current Assets Held for Sale and Discontinued Operations are measured in accordance with that
Standard.

Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any non-
controlling interests in the acquiree and the fair value of the acquirer’s previously held equity interest in
the acquiree (if any) over the net of the acquisition date amounts of the identifiable assets acquired and
liabilities assumed. If, after reassessment, the net of the acquisition-date amounts of the identifiable assets
acquired and liabilities assumed exceeds the sum of the consideration transferred, the amount of any non-
controlling interests in the acquiree and the fair value of the acquirer’s previously held equity interest in
the acquiree (if any), the excess is recognised immediately in profit or loss as a bargain purchase gain.

When the consideration transferred by the Group in a business combination includes assets or liabilities
resulting from a contingent consideration arrangement, the contingent consideration is measured at
its acquisition date fair value. Changes in the fair value of the contingent consideration that qualify as
measurement period adjustments are adjusted retrospectively, with corresponding adjustments against
goodwill. Measurement period adjustments are adjustments that arise from additional information
obtained during the ‘measurement period’ (which cannot exceed one year from the acquisition date)
about facts and circumstances that existed at the acquisition date.

The subsequent accounting for changes in the fair value contingent consideration that do not qualify as
measurement period adjustments depends on how the contingent consideration is classified. Contingent
consideration that is classified as equity is not remeasured at subsequent reporting dates and its
subsequent settlement is accounted for within equity. Contingent consideration that is classified as an
asset or liability is remeasured at subsequent reporting dates in accordance with MFRS 9 or MFRS 137
Provisions, Contingent Liabilities and Contingent Assets, as appropriate, with the corresponding gain or
loss being recognised in profit or loss.

When a business combination is achieved in stages, the Group’s previously held interests in the acquired
entity are remeasured to fair value at the acquisition date and the resulting gain or loss, if any, is recognised
in profit or loss. Amounts arising from interests in the acquiree prior to the acquisition date that have
previously been recognised in other comprehensive income are reclassified to profit or loss, where such
treatment would be appropriate if that interest were disposed of.

If the initial accounting for a business combination is incomplete at the reporting date in which the
combination occurs, the Group reports provisional amounts for the items of which the accounting is
incomplete. Those provisional amounts are adjusted during the measurement period, or additional assets
or liabilities are recognised, to reflect new information obtained about facts and circumstances that existed
as of the acquisition date that, if known, would have affected the amounts recognised at that date.
114 ANNUAL REPORT 2019

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2019

3. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

(c) Investment in Associates

An associate is an entity over 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.

The results, assets and liabilities of associate are incorporated in these financial statements using the
equity method of accounting, except when the investment is classified as held for sale, in which case it is
accounted for in accordance with MFRS 5 Non-current Assets Held for Sale and Discontinued Operations.
Under the equity method, investments in associate are initially recognised in the consolidated statements
of financial position at cost and adjusted thereafter to recognise the Group’s share of the profit or loss and
other comprehensive income of the associate, less any impairment in the value of individual investments.
When the Group’s share of losses of an associate exceeds the Group’s interest in that associate (which
includes any long-term interests that, in substance, form part of the Group’s net investment in the
associate), the Group discontinues recognising its share of further losses. Additional losses are recognised
only to the extent that the Group has incurred legal or constructive obligations or made payments on
behalf of the associate.

An investment in associate is accounted for using the equity method from the date on which the investee
becomes an associate. On acquisition of the investment in an associate, any excess of the cost of the
investment over the Group’s share of the net fair value of the identifiable assets and liabilities of the
investee is recognised as goodwill, which is included within the carrying amount of the investment. Any
excess of the Group’s share of the net fair value of the identifiable assets and liabilities over the cost of
the investment, after reassessment, is recognised immediately in profit or loss in the period in which the
investment is acquired.

When necessary, the entire carrying amount of the investment (including goodwill) 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
recognised forms part of the carrying amount of the investment. Any reversal of that impairment loss is
recognised in accordance with MFRS 136 to the extent that the recoverable amount of the investment
subsequently increases.

The Group discontinues the use of the equity method from the date when investment ceases to be an
associate, or when the investment is classified as held for sale. When the Group retains an interest in the
former associate and the retained interest is a financial asset, the Group measures the retained interest
at fair value at that date and the fair value is regarded as its fair value on initial recognition in accordance
with MFRS 9.

The difference between the carrying amount of the associate at the date the equity method was
discontinued and the fair value of any retained interest and any proceeds from disposing of the associate
is included in the determination of the gain or loss on disposal of the associate. In addition, the Group
accounts for all amounts previously recognised in other comprehensive income in relation to that associate
on the same basis as would be required if that associate had directly disposed of the related assets and
liabilities. Therefore, if a gain or a loss previously recognised in other comprehensive income by that
associate would be reclassified to profit or loss on the disposal of the related assets or liabilities, the Group
reclassifies the gain or loss from equity to profit or loss (as a reclassification adjustment) when the equity
method is discontinued.
MKH Berhad
115
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2019

3. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

(c) Investment in Associates (Cont’d)

When the Group reduces its ownership interest in an associate but the Group continues to use the equity
method, the Group reclassifies to profit or loss the proportion of the gain or loss that had previously been
recognised in other comprehensive income relating to that reduction in ownership interest if that gain or
loss would be reclassified to profit or loss on the disposal of the related assets or liabilities.

When a group entity transacts with its associate of the Group, profits or losses resulting from the
transactions with the associate are recognised in the Group’s consolidated financial statements only to
the extent of the Group’s interest in the associate that are not related to the Group.

(d) Foreign currency

(i) Foreign currency transactions

In preparing the financial statements of the individual entities, transactions in currencies other
than the Group entities’ functional currency (foreign currencies) are recorded in the Group entities’
functional currency at the exchange rates prevailing at the date of the transaction. Monetary items
denominated in foreign currencies at the reporting date are translated to the functional currency
at the exchange rate at that date. Non-monetary items denominated in foreign currencies are not
retranslated at the reporting date except for those that are measured at fair value are retranslated
to the functional currency at the exchange rate at the date that the fair value was determined.

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. These are
initially taken directly to the 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 operations are recognised in profit or loss in the Company’s separate 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.
116 ANNUAL REPORT 2019

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2019

3. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

(d) Foreign currency (Cont’d)

(ii) Operations denominated in functional currencies other than Ringgit Malaysia

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:

(i) assets and liabilities for each reporting date presented are translated at the closing rate
prevailing at the reporting date;
(ii) income and expenses are translated at average exchange rates for the year, which approximates
the exchange rates at the dates of the transactions; and
(iii) all resulting exchange differences are taken to other comprehensive income.

Goodwill and fair value adjustments arising on the acquisition of foreign operations on or after 1
January 2006 are treated as assets and liabilities of the foreign operations and are recorded in the
functional currency of the foreign operations and translated at the closing rate at the reporting date.
Goodwill and fair value adjustments which arose on the acquisition of foreign subsidiaries before 1
January 2006 are deemed to be assets and liabilities of the parent company and are recorded in RM
at the rate prevailing at the date of acquisition.

Upon disposal of a foreign subsidiary, the cumulative amount of translation differences accumulated
in equity at the date of disposal of the subsidiary is reclassified to the consolidated profit or loss.

(e) Revenue recognition

Revenue is recognised when or as a performance obligation in the contract with customer is satisfied, i.e.
when the “control” of the goods or services underlying the particular performance obligation is transferred
to the customer.

A performance obligation is a promise to transfer a distinct goods or service (or a series of distinct goods
or services that are substantially the same and that have the same pattern of transfer) to the customer
that is explicitly stated in the contract and implied in the Group’s customary business practices.

Revenue is measured at the amount of consideration to which the Group expects to be entitled in exchange
for transferring the promised goods or services to the customers, excluding amounts collected on behalf
of third parties such as sales taxes or goods and services taxes. If the amount of consideration varies due
to discounts, rebates, refunds, credits, incentives, penalties or other similar items, the Group estimates
the amount of consideration to which it will be entitled based on the expected value or the most likely
outcome. If the contract with customer contains more than one performance obligation, the amount of
consideration is allocated to each performance obligation based on the relative stand-alone selling prices
of the goods or services promised in the contract.

The revenue is recognised to the extent that it is highly probable that a significant reversal in the amount
of cumulative revenue recognised will not occur when the uncertainty associated with the variable
consideration is subsequently resolved.
MKH Berhad
117
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2019

3. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

(e) Revenue recognition (Cont’d)

The control of the promised goods or services may be transferred over time or at a point in time. The
control over the goods or services is transferred over time and revenue is recognised over time if:

• the customer simultaneously receives and consumes the benefits provided by the Group’s
performance as the Group performs;
• the Group’s performance creates or enhances an asset that the customer controls as the asset is
created or enhanced; or
• the Group’s performance does not create an asset with an alternative use and the Group has an
enforceable right to payment for performance completed to date.

Revenue for performance obligation that is not satisfied over time is recognised at the point in time at
which the customer obtains control of the promised goods or services.

(i) Development properties

The Group recognises revenue from property development over time if it creates an asset with no
alternative use to the Group and the Group has an enforceable right to payment for performance
completed to date. Revenue is recognised over the period of the contract by reference to the
progress towards complete satisfaction of that performance obligation.

The progress towards complete satisfaction of the performance obligation is measured based on
the Group’s efforts or inputs to the satisfaction of the performance obligation (e.g. by reference to
the property development costs incurred to date as a percentage of the estimated total costs of
development of the contract).

(ii) Sales of completed properties

Revenue from sale of completed properties is recognised at a point in time upon the finalisation
of sale and purchase agreements and when the control of the properties has been passed to the
customers.

(iii) Investment properties

Revenue from sale of investment properties is measured at fair value of the consideration received
or receivable. Revenue is recognised when the control of the ownership have been transferred to
the buyer, recovery of the consideration is probable, the associated costs and possible return of
investment properties can be estimated reliably and there is no continuing management involvement
with the properties.

(iv) Construction contract

Revenue from rendering of services relating to construction contracts is recognised over time based
on efforts or inputs to the satisfaction of the performance obligation.
118 ANNUAL REPORT 2019

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2019

3. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

(e) Revenue recognition (Cont’d)

(v) Sale of goods

Revenue from sale of goods, crude palm oil and palm kernel is measured at fair value of the
consideration received or receivable, net of returns and allowances, trade discounts and volume
rebates.

Revenue is recognised by the Group at a point in time when control of the goods underlying the
performance obligation is transferred to the buyers.

(vi) Services

Revenue from services is recognised as and when services are rendered.

(vii) Entrance and subscription fees

Entrance and subscription fees received from club members are recognised on an accrual basis.
When members account become inactive, subscription fee is suspended until it is realised on a cash
basis. Members’ accounts are deemed to be inactive where subscriptions are in arrears for more
than 6 months.

(viii) Rental income

Rental income is recognised on a straight-line basis over the lease terms.

(ix) Interest income

Interest income is recognised on an accrual basis using the effective interest method.

Interest income from hire-purchase financing, housing loan and term loan are recognised on an
accrual basis as follows:

(a) interest earned on hire-purchase financing is recognised using the ‘sum-of-digits’ method so
as to produce a constant periodic rate of interest on the balance for each period. Unearned
interest is deducted in arriving at the net balance of the hire-purchase debts; and

(b) interest earned on housing loan and term loan is calculated on a monthly rest basis.

(x) Dividend income

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

(xi) Income from fixed income fund

Income from fixed income fund is recognised when the right to receive payment is established.
MKH Berhad
119
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2019

3. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

(f) Employee benefits

(i) Short-term employee benefits

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

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

The Group’s contributions to the Employees Provident Fund or other defined contributable plans
are charged to profit or loss in the year to which they relate. Once the contributions have been paid,
the Group has no further payment obligations.

(ii) Defined benefit plans

Certain foreign subsidiaries of the Company operate unfunded defined benefit schemes. The
foreign subsidiaries’ obligations under the schemes are determined based on external actuarial
valuation in accordance with the labour law requirements in that country where the amount of
benefits that employees have earned in return for their service in the current and prior years is
estimated. For defined benefit retirement benefit plans, the cost of providing benefits is determined
using the projected unit credit method, with actuarial valuations being carried out at the end of
each annual reporting date. Remeasurement, comprising actuarial gains and losses, the effect of
the changes to the asset ceiling (if applicable) and the return on plan assets (excluding interest), is
reflected immediately in the statements of financial position with a charge or credit recognised in
other comprehensive income in the period in which they occur. Remeasurement recognised in other
comprehensive income is reflected immediately in retained earnings and will not be classified to
profit or loss. Past service cost is recognised in profit or loss in the period of a plan amendment. Net
interest is calculated by applying the discount rate at the beginning of the period to the net defined
benefit liability or asset. Defined benefit costs are categorised as follows:

• service cost (including current service cost and past service cost);
• net interest expense or income; and
• remeasurement.

The amount recognised at the reporting date represents the present value of the defined benefit
obligations adjusted for unrecognised actuarial gains and losses and unrecognised past service cost
and reduced by the fair value of plan assets. Plan assets resulting from this calculation are to be
used only to settle the employee benefit obligations and only can be returned to the Group if the
remaining assets of the fund are sufficient to meet the plan’s obligation to pay the related employee
benefits directly.

120 ANNUAL REPORT 2019

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2019

3. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

(f) Employee benefits (Cont’d)

(iii) Retirement gratuity scheme

The Company established a retirement gratuity scheme in 2005 for certain Executive Directors of
the Company. The amount of retirement gratuity payable is determined by the Board of Directors
in relation to the past services rendered and it does not account for the director’s services to be
rendered in later years up to retirement. The retirement gratuity is calculated based on the last
drawn monthly salaries of the eligible directors and contribution to Employees Provident Fund for
three years. The retirement gratuity payable is vested upon the directors reaching retirement age
and is classified as current liabilities.

(g) Borrowing costs

All borrowing costs are recognised in profit or loss using the effective interest method, in the period in
which they are incurred except to the extent that they are capitalised as being directly attributable to the
acquisition, construction or production of an asset which necessarily takes a substantial period of time to
be prepared for its intended use.

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

In the previous financial years, under FRSs framework, borrowing costs incurred on property under
development were capitalised in property development costs. In March 2019, the IFRS Interpretations
Committee (“IFRIC”) has issued an agenda decision concluding that receivable, contract asset and
inventory (work-in-progress) for unsold units under construction are not qualifying assets in relation to
the construction of a residential multi-unit real estate development (building). Accordingly, an entity does
not capitalise borrowing costs on those assets in accordance to the principle and requirements of IAS 23
Borrowing Costs.

Upon adoption of MFRSs framework, the Group changed its accounting policy of not capitalising borrowing
costs incurred on property under development when the properties are ready for their intended sale in
their current condition. The change in accounting policy was applied retrospectively from the date of
transition as permitted in MFRS 1: First-time Adoption of Malaysian Financial Reporting Standards. The
Group elected to apply the optional exemption to not restate the borrowing costs that were capitalised
under FRSs framework and that were included in the carrying amount of the assets at the date of
transition and shall account for borrowing costs, incurred on or after that date in accordance with MFRS
123: Borrowing Costs, including those borrowing costs incurred on or after that date on qualifying assets
already under construction.

(h) Leases

(i) Finance leases - The Group as lessee

Leases of property, plant and equipment where the Group and the Company assume substantially
all the benefits and risks of ownership are classified as finance leases.
MKH Berhad
121
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2019

3. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

(h) Leases (Cont’d)

(i) Finance leases - The Group as lessee (Cont’d)

Finance leases are capitalised at the inception of the lease at the lower of the fair value of the leased
property and the present value of the minimum lease payments. Each lease payment is allocated
between the liability and finance charges so as to achieve a periodic constant rate of interest on
the remaining balance. The corresponding rental obligations, net of finance charges, are included in
borrowings. The interest element of the finance charge is charged to the profit or loss over the lease
period so as to produce a constant periodic rate of interest on the remaining balance of the liability
for each period.

(ii) 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 the straight-line basis. The up-front payment for
lease of land represents prepaid land lease payments and are amortised on a straight-line basis over
the lease term.

(iii) Finance leases - The Group as lessor

Leases where the Group transfers substantially all the risks and rewards of ownership of the asset are
classified as finance leases. Initial direct costs are included in the initial measurement of the finance
lease receivable and reduce the amount of income recognised over the lease term. The interest
earned on hire purchase or finance lease financing is recognised using the ‘sum-of-digits’ method so
as to produce a constant periodic rate of interest on the balance for each period. Unearned interest
is deducted in arriving at the net balance of the hire purchase or finance lease debts.

(i) Tax expense

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

Deferred tax is recognised 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
future taxable profit will be available against which the deductible temporary differences, unused tax
losses and unused tax credits can be utilised.

The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent
that it is no longer probable that sufficient future taxable profits will be available to allow all or part of the
asset to be recovered.

122 ANNUAL REPORT 2019

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2019

3. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

(i) Tax expense (Cont’d)

Deferred tax is measured at 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 in profit or loss, except when it arises from a transaction which
is recognised directly in equity, in which case the deferred tax is also charged or credited directly in equity.

For the purposes of measuring deferred tax liabilities and deferred tax assets for investment properties
that are measured using the fair value model, the carrying amounts of such properties are presumed to
be recovered entirely through sale, unless the presumption is rebutted. The presumption is rebutted when
the investment property is depreciable and is held within a business model whose objective is to consume
substantially all of the economic benefits embodied in the investment property over time, rather than
through sale.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current
tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation
authority and the Group intends to settle the current tax assets and liabilities on a net basis.

(j) Property, plant and equipment

(i) Recognition and measurement

All items of property, plant and equipment are initially recorded at cost. Subsequent to recognition,
property, plant and equipment, except for freehold land and buildings, are stated at cost less
accumulated depreciation and impairment loss, if any. Freehold land is stated at valuation, which is
the fair value at the date of valuation, less impairment loss, if any. Buildings are stated at valuation,
which is the fair value at the date of the valuation, less accumulated depreciation and impairment
loss, if any.

The Group revalues its land and building every five years from the last date of valuation or at
shorter intervals whenever the fair value of the said assets is expected to differ substantially from
its carrying amounts.

Surplus arising from revaluation are transferred to revaluation reserve. Any deficits are offset against
the previously recognised revaluation surplus to the extent of a previous increase for the same
property and the balance is thereafter recognised in profit or loss. Upon disposal or retirement of
an asset, any unutilised revaluation reserve relating to the particular asset is transferred to retained
earnings.

Cost includes expenditures that are directly attributable to the acquisition of the asset. The cost
of self-constructed assets includes the cost of materials and direct labour, any other costs directly
attributable to bringing the asset to working condition for its intended use and the costs of
dismantling and removing the items and restoring the site on which they are located. Purchased
software that is integral to the functionality of the related equipment is capitalised as part of that
equipment.

When significant parts of an item of property, plant and equipment have different useful lives, they
are accounted for as separate items (major components) of property, plant and equipment.
MKH Berhad
123
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2019

3. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

(j) Property, plant and equipment (Cont’d)

(i) Recognition and measurement (Cont’d)

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.

(ii) Subsequent costs

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

(iii)
Depreciation

Depreciation is recognised in profit or loss on a straight-line basis over the estimated useful lives of
each part of an item of property, plant and equipment. Freehold land is not depreciated. Property,
plant and equipment under construction are not depreciated until these assets are ready for their
intended use.

The principal annual rates for the current and comparative financial years are as follows:

Long-term leasehold land Over lease period of 78 to 99 years

Bearer plants 20 years, or over the lease period if shorter
Buildings 2% to 12.5%
Motor vehicles, plant and machinery 5% to 20%
Furniture, fittings and equipment 10% to 25%
Plantation infrastructure 12.5%

The depreciable amount is determined after deducting the residual value.

Depreciation methods, useful lives and residual values are reassessed at the reporting date.

Fully depreciated property, plant and equipment are retained in the financial statements until they
are no longer in use and no further charge for depreciation is made in respect of these property,
plant and equipment.

Bearer plants are living plants that are used in the production or supply of agricultural produce,
which are expected to bear produce for more than one period and has a remote likelihood of being
sold as agricultural produce, except for incidental scrap sales.

Bearer plants (oil palm trees) include mature plantations and immature plantations that are
established or acquired by the Group.
124 ANNUAL REPORT 2019

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2019

3. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

(j) Property, plant and equipment (Cont’d)

(iii)
Depreciation (Cont’d)

Mature plantations are stated at cost, less accumulated depreciation and any impairment losses
where the recoverable amount of the asset is estimated to be lower than its carrying amount.
Depreciation is charged so as to write off the cost of mature plantations, using the straight-line
method, over the estimated useful lives of 20 years or over the lease period, whichever is shorter.

Immature plantations are stated at cost. The costs of immature plantations consist mainly of the
accumulated cost of planting, fertilising and maintaining the plantation, including borrowing costs
on such borrowings and other indirect overhead costs up to the time the trees are harvestable and
to the extent appropriate. An oil palm plantation is considered mature when such plantation starts
to produce at the end of the fourth year.

Bearer plants are derecognised upon disposal or when no future economic benefits are expected
from its use. Any gains or losses on disposal of bearer plants are recognised in the income statement
in the year of disposal.

The residual values and useful lives of bearer plants are reviewed and adjusted as appropriate, at the
end of each reporting period.

(k) Intangible assets

(i) Goodwill

Goodwill arises on the acquisition of subsidiaries is identified as any excess of the consideration
paid over the Group’s share of fair value of the identifiable assets, liabilities and contingent liabilities
acquired as at the date of acquisition. Goodwill is initially measured at cost less any accumulated
impairment losses. Goodwill is not amortised but instead, it is reviewed for impairment annually
or more frequently if events or changes in circumstances indicate that the carrying value may be
impaired.

Goodwill acquired is allocated to the cash-generating units (“CGU”) expected to benefit from the
acquisition synergies. An impairment loss is recognised in profit or loss when the carrying amount
of the CGU, including the goodwill, exceeds the recoverable amount of the CGU. The recoverable
amount is the higher of the CGU’s fair value less costs to sell and its value in use. Gains and losses
on the disposal of an entity include the carrying amount of goodwill relating to the entity sold.

The total impairment loss is allocated first to reduce the carrying amount of goodwill allocated to
the CGU and then to the other assets of the CGU pro-rata on the basis of the carrying amount of
each assets in the CGU. Impairment loss on goodwill is not reversed in a subsequent period.
MKH Berhad
125
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2019

3. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

(k) Intangible assets (Cont’d)

(ii) Other intangible assets

Other intangible assets acquired by the Group are measured on initial recognition at cost. The cost of
intangible assets acquired in a business combination is their fair values as at the date of acquisition.
Following initial recognition, intangible assets are carried at cost less any accumulated amortisation
and any accumulated impairment losses. The useful lives of intangible assets are assessed to be
either finite or indefinite.

Intangible assets with finite lives are amortised on a straight-line basis over the estimated useful
lives and assessed for impairment whenever there is an indication that the intangible assets may be
impaired. The amortisation period and the amortisation method for an intangible asset with a finite
useful life are reviewed at least at each reporting date.

Intangible assets with indefinite useful lives are not amortised but tested for impairment annually or
more frequently if the events or changes in circumstances indicate that the carrying value may be
impaired either individually or at the cash generating unit level.

(l) Biological assets

Biological assets comprise produce growing on bearer plants. Biological assets are measured at fair value
less costs to sell. Any gains or losses arising from changes in the fair value less costs to sell are recognised
in profit or loss. Fair value is determined based on the present value of expected net cash flows from
the produce growing on bearer plants. The expected net cash flow are estimated using expected output
method and the estimated market price of the produce growing on bearer plants.

Biological assets are classified as current assets for bearer plants that are expected to be harvested on a date
not more than 12 months after the reporting date.

(m) Investment properties

Investment properties are properties which are owned or held to earn rental income or for capital
appreciation or for both. These include land held for a currently undetermined future use. Properties that
are occupied by the companies within the Group are accounted for as owner’s occupied rather than as
investment properties.

All investment properties are measured initially and subsequently at fair value with any change therein
recognised in profit or loss.

Investment property under construction is classified as investment property. Where the fair value of the
investment property under construction is not reliably determinable, the investment property under
construction is measured at cost until either its fair value becomes reliably determinable or construction
is complete, whichever is earlier.

A property interest under an operating lease is classified and accounted for as an investment property on
a property-by-property basis when the Group holds it to earn rentals or for capital appreciation or both.
Any such property interest under an operating lease classified as an investment property is carried at fair
value.
126 ANNUAL REPORT 2019

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2019

3. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

(n) Land held for property development

Land held for property development consists of land on which no significant development work has been
undertaken or where development activities are not expected to be completed within the normal operating
cycle. Such land is classified as non-current asset and is stated at lower of cost and net realisable value.

Costs associated with the acquisition of land include the purchase price of the land, professional fees,
stamp duties, commissions, conversion fees and other relevant levies.

Land held for property development is transferred to property development costs (under current assets)
where development activities have commenced and where the development activities can be completed
within the normal operating cycle.

(o) Property development costs

Property development costs are determined on a specific identification basis. Property development costs
comprise costs associated with the acquisition of land and all costs directly attributable to development
activities or that meet the definition of inventories are recognised as an asset and stated at lower of
cost and net realisable value. Net realisable value is the estimated selling price in the ordinary course of
business, less the costs of completion and applicable variable selling expenses. The asset is subsequently
recognised as an expense in profit or loss when or as the control of the asset is transferred to the customer
over time or at a point in time.

Property development cost of unsold unit is transferred to completed development unit once the
development is completed.

(p) Inventories

(i) Completed properties

Inventories are valued at the lower of cost and net realisable value. The cost of completed
development properties is determined based on the specific identification basis and includes land,
construction and appropriate development overheads.

Net realisable value is the estimated selling price in the ordinary course of business, less the
estimated costs of completion and selling expenses.

(ii) Materials and goods

Inventories are valued at the lower of cost and net realisable value. The cost of inventories is
based on the specific identification, first-in first-out and weighted average principles and includes
expenditure incurred in acquiring the inventories and bringing them to their existing location and
condition. In the case of work-in-progress and finished goods, cost includes raw materials, direct
labour and an appropriate production overheads based on normal operating capacity. Net realisable
value is the estimated selling price in the ordinary course of business, less the estimated costs of
completion and selling expenses.
MKH Berhad
127
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2019

3. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

(q) Contract assets and contract liabilities

Contract asset is the right to consideration for goods or services transferred to the customers. The Group’s
contract asset is the excess of cumulative revenue earned over the billings to-date. Where there is objective
evidence of impairment, the amount of impairment losses is determined by comparing the contract asset’s
carrying amount and the present value of estimated future cash flows to be generated by the contract
asset.

Contract asset is reclassified to trade receivables at the point at which invoices have been billed to
customers.

Contract liability is the obligation to transfer goods or services to customers for which the Group has
received the consideration or has billed the customers. The Group’s contract liability is the excess of the
billings to-date over the cumulative revenue earned. Contract liability is recognised as revenue when the
Group performs its obligation under the contracts.

(r) Contract costs

The Group recognises the incremental costs of obtaining a contract with a customer, which are expected
to be recovered, as an asset. The incremental costs of obtaining a contract are costs incur to obtain a
contract with a customer that it would not have incurred if the contract had not been obtained. These
contract costs are initially measured at cost and amortised on a systematic basis that is consistent with
the pattern of revenue recognition to which the asset relates.

An impairment loss is recognised in profit and loss when the carrying amount of the contract cost asset
exceeds the expected revenue less expected costs that will be incurred.

(s) Impairment of non-financial assets

The carrying amounts of assets are reviewed at each reporting date to determine whether there is any
indication of impairment. If such an indication exists, the asset’s recoverable amount is estimated. An
impairment loss is recognised whenever the carrying amount of an asset or its cash-generating unit
exceeds its recoverable amount.

Recoverable amount is the higher of fair value less costs to sell and 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 for
which the estimates of future cash flows have not been adjusted.

If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying
amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount.
An impairment loss is recognised immediately in profit or loss unless it reverses a previous revaluation in
which case it is charged to the revaluation surplus.

Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating
unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying
amount does not exceed the carrying amount that would have been determined had no impairment loss
been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is
recognised immediately in profit or loss, unless it reverses an impairment loss on revalued assets, in which
case, the reversal is treated as a revaluation increase.
128 ANNUAL REPORT 2019

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2019

3. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

(t) Non-current assets classified as held for sale

Non-current assets (or disposal groups) are classified as held for sale if their carrying amount will be
recovered principally through a sale transaction rather than through continuing use and the sale is
expected to be completed within one year from the date of classification. This condition is regarded as
met only when the sale is highly probable and the asset (or disposal group) is available for immediate sale
in its present condition.

Non-current assets (or disposal groups) classified as held for sale are measured at the lower of their
previous carrying amount and fair value less costs to sell. Any differences are included in profit or loss.

(u) Financial instruments

Financial assets and financial liabilities are recognised when the Group and the Company become a party
to the contractual provision of the instrument.

Financial assets and liabilities are initially measured at fair value. Transaction costs that are directly
attributable to the acquisition or issue of financial assets and financial liabilities (other than financial
assets and financial liabilities at fair value through profit and loss) are added to or deducted from the fair
value measured on initial recognition of financial asset or financial liability. The transaction costs directly
attributable to the acquisition of financial assets and financial liabilities at fair value through profit and
loss are immediately recognised in the statements of profit and loss. Where the fair value of a financial
asset at initial recognition is different from its transaction price, the difference between the fair value and
the transaction price is recognised as a gain or loss in the statements of profit or loss. However, trade
receivables that do not contain a significant financing component are measured at transaction price.

(i) Financial assets

Financial assets measured at amortised cost

Financial assets are subsequently measured at amortised cost if these financial assets are held
within a business model whose objective is to hold these assets in order to collect contractual cash
flows and the contractual terms of the financial asset give rise on specified dates to cash flows that
are solely payments of principal and interest on the principal amount outstanding.

The effective interest method is a method of calculating the amortised cost of a financial instrument
and of allocating interest income or expense over the relevant period. The effective interest rate is
the rate that exactly discounts future cash receipts or payments through the expected life of the
financial instrument, or where appropriate, a shorter period.

Financial assets measured at fair value through other comprehensive income (“FVTOCI”)

Financial assets are measured at fair value through other comprehensive income if these financial
assets are held within a business model whose objective is to hold these assets in order to collect
contractual cash flows or to sell these financial assets and the contractual terms of the financial
asset give rise on specified dates to cash flows that are solely payments of principal and interest on
the principal amount outstanding.
MKH Berhad
129
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2019

3. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

(u) Financial instruments (Cont’d)

(i) Financial assets

Financial assets measured at fair value through other comprehensive income (“FVTOCI”) (Cont’d)

Interest income calculated using the effective interest method, foreign exchange gains and losses
and impairment are recognised in profit or loss. Dividends are recognised as income in profit or loss
unless the dividend clearly represents a recovery of part of the cost of investment. Other net gains
and losses are recognised in other comprehensive income.

Financial assets measured at fair value through profit or loss (“FVTPL”)

Financial asset not measured at amortised cost or at fair value through other comprehensive income
is carried at fair value through the statements of profit and loss. Fair value changes are recognised
in the statements of profit or loss at each reporting period.

Impairment of financial assets

Loss allowance for expected credit losses is recognised for financial assets measured at amortised
cost and fair value through other comprehensive income. The Group and the Company recognise
life time expected credit losses for all trade receivables and contact assets that do not constitute
a financing transaction. For financial assets whose credit risk has not significantly increased since
initial recognition, loss allowance equal to twelve months expected credit losses is recognised. Loss
allowance equal to the lifetime expected credit losses is recognised if the credit risk on the financial
instruments has significantly increased since initial recognition. The impairment losses and reversals
are recognised in the statements of profit or loss.

Derecognition of financial assets

The Group and the Company derecognise a financial asset only when the contractual rights to the
cash flows from the asset expire, or when it transfers the financial asset and substantially all the
risks and rewards of ownership of the asset to another entity. If the Group and the Company neither
transfer nor retain substantially all the risks and rewards of ownership and continues to control the
transferred asset, the Group and the Company recognise its retained interest in the asset and an
associated liability for amounts it may have to pay.

If the Group and the Company retain substantially all the risks and rewards of ownership of a
transferred financial asset, the Group and the Company continue to recognise the financial asset
and also recognises a collateralised borrowing for the proceeds received. On the recognition of
a financial asset (except for financial assets measured at FVTOCI), the difference between the
carrying amount and the consideration received is recognised in the statements of profit or loss.
130 ANNUAL REPORT 2019

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2019

3. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

(u) Financial instruments (Cont’d)

(ii) Financial liabilities and equity instruments


Classification as debt or equity

Financial liabilities and equity instruments issued by the Group and the Company are classified
according to the substance of the contractual arrangements entered into and the definitions of a
financial liability and an equity instrument.

Equity instruments

An equity instrument is any contract that evidences a residual interest in the assets of an entity
after deducting all of its liabilities. Equity instruments issued by the Group and the Company are
recognised at the proceeds received, net of direct issue costs.

Financial liabilities

Payables are initially measured at fair value, net of transaction costs and are subsequently measured
at amortised cost, using the effective interest rate method where the time value of money is
significant. Interest bearing bank loans, overdrafts and issued debt are initially measured at fair
value and are subsequently measured at amortised cost using the effective interest rate method.
Any difference between the proceeds (net of transaction costs) and the settlement or redemption
of borrowings is recognised over the term of the borrowings in the statements of profit or loss.

The effective interest method is a method of calculating the amortised cost of a financial liability
and of allocating interest expense over the relevant period. The effective interest rate is the rate that
exactly discounts estimated future cash payments through the expected life of the financial liability,
or a shorter period, to the net carrying amount on initial recognition.

Derecognition of financial liabilities

The Group and the Company derecognise financial liabilities when and only when, the Group’s and
the Company’s obligations are discharged, cancelled or they expire. The differences between the
carrying amount of the financial liability derecognised and the consideration paid is recognised in
the statements of profit or loss.

Prior to the adoption of MFRS 9, the accounting policies of the Group and the Company for financial
instruments are as follows:

Financial instruments

(i) Initial recognition and measurement

Financial instruments are recognised in the statements of financial position when and only when, the
Group and the Company becomes a party to the contractual provisions of the financial instruments.
MKH Berhad
131
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2019

3. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

(u) Financial instruments (Cont’d)

Financial instruments (Cont’d)

(i) Initial recognition and measurement (Cont’d)

Financial assets and financial liabilities are initially measured at fair value. Transaction costs that
are directly attributable to the acquisition or issue of the financial assets and financial liabilities
(other than financial assets and financial liabilities at fair value through profit or loss) are added to
or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial
recognition. Transaction costs that are directly attributable to the acquisition of financial assets or
financial liabilities at fair value through profit or loss are recognised immediately in profit or loss.

(ii) Financial instrument categories and subsequent measurement

Financial assets

Financial assets are classified into the following specified categories: financial assets “at fair value
through profit or loss” (FVTPL), “held-to-maturity” investments, “available-for-sale” (AFS) financial
assets and “loans and receivables”. The classification depends on the nature and purpose of the
financial assets and is determined at the time of initial recognition.

A financial asset is any asset that is cash, a contractual right to receive cash or another financial
asset from another enterprise, a contractual right to exchange financial instruments with another
enterprise under conditions that are potentially favourable, or an equity instrument of another
enterprise.

(a) Financial assets at FVTPL

 Financial assets are classified as at FVTPL when the financial assets are either held for trading
or is designated as at FVTPL. Financial assets at FVTPL are stated at fair value with any gains
or losses arising on remeasurement recognised in profit or loss.

(b) Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments
that are not quoted in an active market (including fixed deposits with financial institutions).
Loans and receivables are measured at amortised cost using the effective interest method,
less any impairment. Interest income is recognised by applying the effective interest rate,
except for short-term receivables when the recognition of interest would be immaterial.

The effective interest method is a method of calculating the amortised cost of a financial
asset and of allocating interest income over the relevant period. The effective interest rate is
the rate that exactly discounts estimated future cash receipts (including all fees and points
paid or received that form an integral part of the effective interest rate, transaction costs
and other premiums or discounts) through the expected life of the financial asset, or (where
appropriate) a shorter period, to the net carrying amount on initial recognition.

Income from financial assets is recognised on an effective interest method for debt instruments
other than those financial assets classified as at FVTPL.
132 ANNUAL REPORT 2019

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2019

3. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

(u) Financial instruments (Cont’d)

Financial instruments (Cont’d)

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

Equity instruments

(a) Classification as debt or equity

Debt and equity instruments are classified as either financial liabilities or as equity in
accordance with the substance of the contractual arrangement.

(b) Equity instruments

An equity instrument is any contract that evidences a residual interest in the assets of an
entity after deducting all of its liabilities. Equity instruments issued by the Group and the
Company are recognised at the proceeds received, net of direct issue costs.

Financial liabilities

A financial liability is any liability that is a contractual obligation to deliver cash or another financial
asset to another enterprise, or to exchange financial instruments with another enterprise under
conditions that are potentially unfavourable. Financial liabilities are classified as either financial
liabilities “at FVTPL” or “other financial liabilities”.

(a) Financial liabilities at FVTPL

Financial liabilities are classified as at FVTPL when financial liabilities are either held for
trading or is designated as at FVTPL. Financial liabilities at FVTPL are stated at fair value,
with any gains or losses arising on remeasurement recognised in profit or loss.

(b) Other financial liabilities

Other financial liabilities are initially measured at fair value, net of transaction costs.

Other financial liabilities are subsequently measured at amortised cost using the effective
interest method, with interest expense recognised on an effective yield basis.

The effective interest method is a method of calculating the amortised cost of a financial
liability and of allocating interest expense over the relevant period. The effective interest rate
is the rate that exactly discounts estimated future cash payments through the expected life
of the financial liability, or, where appropriate, a shorter period.
MKH Berhad
133
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2019

3. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

(u) Financial instruments (Cont’d)

Financial instruments (Cont’d)

(iii)
Derecognition

A financial asset or part of it is derecognised when and only when the contractual rights to the cash
flows from the financial asset expire, or when it transfers the financial asset and substantially all the
risks and rewards of ownership of the asset to another entity. On derecognition of a financial asset,
the difference between carrying amount and the sum of the consideration received (including any
new asset obtained less any new liability assumed) and any cumulative gain or loss that had been
recognised in equity is recognised in profit or loss.

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

(iv) Impairment of financial assets

Financial assets are assessed for indicators of impairment at each reporting date. Financial assets
are considered to be impaired when there is objective evidence that, as a result of one or more
events that occurred after the initial recognition of the financial asset, the estimated future cash
flows of the investment have been affected.

Objective evidence of impairment could include:

• significant financial difficulty of the issuer or counterparty; or

• default or delinquency in interest or principal payments; or
• it becoming probable that the borrower will enter bankruptcy or financial reorganisation.

Receivables assessed not to be impaired individually are, in addition, assessed for impairment on a
collective basis. 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, as well as observable changes in
national or local economic conditions that correlate with default on receivables.

In respect of receivables carried at amortised cost, the amount of the impairment loss recognised is
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 carrying amount of the financial asset is reduced by the impairment loss directly for all financial
assets with the exception of receivables, where the carrying amount is reduced through the use of
an allowance account. When a trade receivable is considered uncollectible, it is written off against
the allowance account.
134 ANNUAL REPORT 2019

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2019

3. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

(u) Financial instruments (Cont’d)

Financial instruments (Cont’d)

(iv) Impairment of financial assets (Cont’d)

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 through profit or loss to the extent that the carrying amount
of the investment at the date the impairment is reversed does not exceed what the amortised cost
would have been had the impairment not been recognised.

(v) Cash and cash equivalents

The Group and the Company adopt the indirect method in the preparation of the statements of cash flows.
Cash and cash equivalents are short-term and highly liquid investments and are readily convertible to cash
with insignificant risk of changes in value. For the purpose of the statements of cash flows, cash and cash
equivalents are presented net of bank overdrafts.

(w) Provisions

Provisions are made when the Group has a present legal or constructive obligation as a result of past
events, when it is probable that an outflow of resources will be required to settle the obligation and
when a reliable estimate of the amount of the obligation can be made. Provisions are measured at the
management’s best estimate of the amount required to settle the obligation at the reporting date and are
discounted to present value where the effect is material.

At the reporting date, provisions are reviewed by the management and adjusted to reflect the current best
estimate. Provisions are reversed if it is no longer probable that the Group will be required to settle the
obligation.

(x) Treasury shares

When share capital recognised as equity is repurchased, the amount of consideration paid is recognised
directly in equity. Repurchased shares that have not been cancelled including any attributable costs are
classified as treasury shares and presented as deduction from total equity.

When treasury shares are sold or reissued subsequently, the difference between the sales consideration
and the carrying amount is presented as a movement in equity.

(y) Warrant reserve

Warrant reserve arose from the issuance of renounceable rights issue together with free detachable
warrants in prior years, which was measured at fair value on the date of issuance. Warrants reserve is
transferred to the share capital account upon the exercise of warrant and the warrant reserve in relation
to unexercised warrants at the expiry of the warrants period will be transferred to retained earnings.
MKH Berhad
135
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2019

3. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

(z) Contingencies

The Group does not recognise a contingent liability but discloses its existence in the financial statements. A
contingent liability is a possible obligation that arises from past events whose existence will be confirmed
by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the
Group or a present obligation that is not recognised because it is not probable that an outflow of resources
will be required to settle the obligation. A contingent liability also arises in the extremely rare case where
there is a liability that cannot be recognised because it cannot be measured reliably.

A contingent asset is a possible asset that arises from past events whose existence will be confirmed by
the occurrence or non-occurrence of one or more uncertain future events beyond the control of the Group.
The Group does not recognise contingent assets but discloses its existence where inflows of economic
benefits are probable, but not virtually certain.

(aa) Segment reporting

For management purposes, the Group is organised into operating segments based on their products and
services which are independently managed by their respective segment managers responsible for the
performance of the respective segments under their charge. The segment managers report directly to chief
operating decision maker 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
disclosed in Note 35, including the factors used to identify the reportable segments and the measurement
basis of segment information.

(ab) Fair value measurement

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date, regardless of whether that price is
directly observable or estimated using another valuation technique. In estimating the fair value of an asset
or a liability, the Group and the Company take into account the characteristics of the asset or liability at
the measurement date.

Fair value for measurement and/or disclosure purposes in these financial statements is determined on
such a basis, except for share-based payment transactions that are within the scope of MFRS 2, leasing
transactions that are within the scope of MFRS 117 and measurements that have some similarities to fair
value but are not fair value, such as net realisable value in MFRS 102 Inventories or value in use in MFRS
136 Impairment of Assets.

In addition, for financial reporting purposes, fair value measurements are categorised into Level 1, 2 or 3
based on the degree to which the inputs to the fair value measurements are observable and the significance
of the inputs to the fair value measurement in its entirely, which are described as follows:

• Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that
the entity can access at the measurement date;
• Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for
the asset or liability, either directly or indirectly; and
• Level 3 inputs are unobservable inputs for the asset or liability.
136 ANNUAL REPORT 2019

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2019

4. REVENUE

The Group The Company

2019 2018 2019 2018
RM RM RM RM

Revenue from contracts

  with customers:
Property development:
Attributable revenue from
  sale of uncompleted
 development properties 698,864,661 616,381,006 - -
Attributable revenue from sale
 of completed development
 properties 73,162,259 70,251,578 - -
Attributable revenue from
 construction contracts 3,796,311 4,971,433 - -

775,823,231 691,604,017 - -
Sale of goods 83,227,682 81,501,366 - -
Sale of crude palm oil
 and palm kernel 229,761,671 263,196,707 - -
Revenue from hotel operations 2,213,484 2,617,170 - -
Services rendered 1,008,873 849,633 - -
Sale of non-current
 assets classified as
 held for sale - 11,082,732 - -

1,092,034,941 1,050,851,625 - -

Revenue from other sources:
Dividend income from
 subsidiaries - - 30,903,675 32,516,500
Interest income from
 money lending 1,583,960 1,542,788 - -
Rental income 180,685 178,475 - -
Rental income from
 investment properties 27,857,042 29,128,027 - -

1,121,656,628 1,081,700,915 30,903,675 32,516,500

Group revenue excludes intra-group transactions.

MKH Berhad
137
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2019

4. REVENUE (CONT’D)

The Group The Company

2019 2018 2019 2018
RM RM RM RM

Timing of revenue recognition

Point in time 389,373,969 429,499,186 - -
Over time 702,660,972 621,352,439 - -

1,092,034,941 1,050,851,625 - -

5. COST OF SALES

The Group
2019 2018
RM RM

Attributable property development costs 510,596,216 431,829,074

Attributable cost of completed development properties sold 49,567,575 46,067,304
Overprovision of property development costs for completed projects (24,653,375) (502,669)
Attributable construction contract costs 3,547,954 4,646,199
Direct operating expenses from investment properties generating rental
 income 11,831,599 10,986,928
Cost of goods sold 79,358,292 78,005,902
Cost of non-current assets classified as held for sale - 10,027,550
Cost of sales of crude palm oil and palm kernel 176,312,352 151,754,590
Cost of services 601,131 714,853

807,161,744 733,529,731
138 ANNUAL REPORT 2019

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2019

6. PROFIT BEFORE TAX

The Group The Company

2019 2018 2019 2018
RM RM RM RM
(Restated)

Profit before tax is arrived at

  after charging:
Amortisation of prepaid
 lease payments 1,513,413 1,509,763 - -
Auditors’ remuneration:
 Audit services 607,149 539,438 52,000 50,000
 Other services by
  auditors of the Company 15,900 35,000 15,900 15,000
Bad debts written off 88,742 216,368 980 -
Changes in fair value of
 biological assets 1,170,893 - - -
Changes in fair value of
 investment properties 6,180,000 317,000 - -
Deposits written off - 2,000 - -
Depreciation of property,
 plant and equipment 36,697,383 34,707,953 18,794 19,573
Interest expense:
 Loans and borrowings 39,244,186 30,905,456 7,192,376 3,216,910
 Unwinding of discount 1,145,764 3,343,748 - -
Inventories written down 137,658 940,057 - -
Inventories written off 20,995 2,193 - -
Impairment loss on:
 Finance lease receivables - 890 - -
 Loan receivables 116,286 - - -
 Trade receivables 626,174 77,374 - -
 Other receivables 4,531,362 - - -
Land donation - 9,461,450 - -
Net losses on foreign
 exchange:
 Realised - 3,949,785 - -
 Unrealised - 36,440,727 23,650 -
Personnel expenses
 (including key management personnel):
 Contributions to Employees
  Provident Fund 6,297,817 6,234,943 - -
 Provision for post-employment
  benefit obligations 10,117,286 1,497,090 - -
 Wages, salaries and others 55,987,896 57,147,728 245,681 291,881
Property, plant and
 equipment written off 91,893 1,344,910 - -
MKH Berhad
139
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2019

6. PROFIT BEFORE TAX (CONT’D)

The Group The Company

2019 2018 2019 2018
RM RM RM RM
(Restated)

Allowance for slow

 moving inventories 45,180 - - -
Rental of motor vehicles,
 equipment and machinery 615,468 1,029,691 - -
Rental of premises 308,691 66,744 - -

and after crediting:
Bad debts recovered - 9,187 - -
Changes in fair value of biological assets - 1,533,164 - -
Gain on disposal of an associate - 2,000,000 - -
Gain on disposal of non-current assets
 classified as held for sale - 1,055,182 - -
Gain arising from derivatives financial assets 8,850 - - -
Gain on disposal of property, plant and equipment 111,833 26,176 - -
Gain on retention sum measured at
 amortised cost 466,060 161,806 - -
Gain on investment in subsidiary arising
 from realisation of bonus shares - - 10,000,000 18,000,000
Interest income:
 Advances to subsidiaries - - 20,717,522 18,351,865
 Bank balances, term deposits and fixed
  income funds 6,203,937 5,451,093 55,376 311,590
 Accretion of interest 733,156 694,008 - -
Net gain on foreign exchange:
 Realised 4,022,045 - 68,507 108,590
 Unrealised 13,967,232 - - -
Rental income on land and buildings 32,407,631 32,792,687 - -
Impairment loss no longer required on:
 Finance lease receivables 500 200 - -
 Trade receivables 250,778 25,662 - -
 Other receivables 23,528 32,200 2,700 7,200
140 ANNUAL REPORT 2019

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2019

7. DIRECTORS’ REMUNERATION

The Group The Company

2019 2018 2019 2018
RM RM RM RM

Directors of the Company

Executive Directors:
 Other emoluments 15,458,688
15,973,580 - -

Non-Executive Directors:
 Fees 200,000 233,333 200,000 233,333
 Other emoluments 72,690 75,240 32,250 33,000

272,690 308,573 232,250 266,333

15,731,378 16,282,153 232,250 266,333

Directors of subsidiaries
Executive Directors:
 Other emoluments 5,116,475
5,660,927 - -

20,847,853 21,943,080 232,250 266,333

Estimated monetary
  value of benefits-in-kind
Directors of the Company
 - Executive Directors 103,592 100,653 - -
Directors of subsidiaries
 - Executive Directors 30,405 199,825 - -

133,997 300,478 - -

20,981,850 22,243,558 232,250 266,333

MKH Berhad
141
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2019

8. TAX EXPENSE

The Group The Company

2019 2018 2019 2018
RM RM RM RM

Current tax
Malaysia:
 Current financial year 48,410,320 51,861,840 4,382,900 4,112,100
 Prior financial year 4,773,044 716,418 4,004 24,584
Overseas:
 Current financial year 6,588,592 8,602,400 - -
 Prior financial year - 957,212 - -

59,771,956 62,137,870 4,386,904 4,136,684

Deferred tax (Note 17):
Origination and reversal of temporary
 differences 879,105 (10,254,508) 1,274 1,400
Under/(Over)provision in prior financial year 244,986 (264,722) - -

1,124,091 (10,519,230) 1,274 1,400

Total tax expense recognised in profit or loss 60,896,047 51,618,640 4,388,178 4,138,084

Deferred tax related to other comprehensive
 income (Note 17):
  Remeasurement loss on defined
benefit plans 997,750 504,607 - -
  Changes in tax rate relating to surplus
arising from revaluation of land and
buildings - 131,500 - 26,500

Total tax expense recognised in other
 comprehensive income 997,750 636,107 - 26,500
142 ANNUAL REPORT 2019

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2019

8. TAX EXPENSE (CONT’D)

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

The Group The Company

2019 2018 2019 2018
RM RM RM RM
(Restated)

Profit before tax 158,372,816 128,231,642 52,241,187 62,151,457

Tax calculated using Malaysian
 tax rate of 24% (2018:24%) 38,009,500 30,775,600 12,537,900 14,916,400
Tax effects of:
 Non-deductible expenses 9,518,797 11,355,307 1,663,174 1,321,100
 Non-taxable income (4,959,224) (3,289,322) (9,816,900) (12,124,000)
 Share of results of associates 212,442 (86,539) - -
Effect of changes in tax rate:
 Investment properties 870,000 60,230 - -
 Real property gains tax - 6,496,070 - -
Effect of differences in overseas tax rate:
 The People’s Republic of China 33,800 9,000 - -
 Republic of Indonesia 65,637 182,646 - -
Deferred tax assets not recognised 8,261,570 6,477,740 - -
Realisation of deferred tax assets not
 recognised in prior financial years (705) (1,704,700) - -
Reversal of deferred tax assets
 recognised in prior year 3,963,700 - - -
Utilisation of reinvestment allowance (97,500) (66,300) - -
Under/(Over)provision in prior financial year:
 Current tax 4,773,044 1,673,630 4,004 24,584
 Deferred tax 244,986 (264,722) - -

Tax expense 60,896,047 51,618,640 4,388,178 4,138,084

MKH Berhad
143
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2019

8. TAX EXPENSE (CONT’D)

As mentioned in Note 3, the tax effects of deductible temporary differences, unused tax losses and unused tax
credits which would give rise to net deferred tax assets are recognised to the extent that it is probable that
future taxable profits will be available against which the deductible temporary differences, unused tax losses
and unused tax credits can be utilised. As of 30 September 2019, the estimated amount of deductible temporary
differences, unused tax losses and unused tax credits, for which the net deferred tax assets are not recognised
in the financial statements due to uncertainty of realisation, is as follows:

The Group
2019 2018
RM RM

Unused tax losses 47,675,561 32,329,597

Unabsorbed capital allowances 144,249 108,856
Other temporary differences 130,565,977 95,008,800

178,385,787 127,447,253

Based on Finance Act, 2018, the untilised tax losses which are available to offset against future taxable profits up
to year of assessment (“YA”) 2019 can only be carried forward up to seven (7) consecutive YAs to YA 2026.
144 ANNUAL REPORT 2019

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2019

9. EARNINGS AND NET ASSETS PER SHARE

Basic earnings per share

The basic earnings per share is calculated by dividing the Group’s profit attributable to owners of the parent by
the weighted average number of ordinary shares in issue during the financial year.

Basic earnings per share are calculated as follows:

The Group
2019 2018
RM RM
(Restated)

Profit attributable to owners of the parent 82,561,117 70,864,939

Number of ordinary shares in issue at beginning of the financial year 586,548,168 562,901,922
Effect of exercise of warrants - 19,270,137

586,548,168 582,172,059
Treasury shares (7,513,600) (4,038,600)

Weighted average number of ordinary shares in issue 579,034,568 578,133,459

Basic earnings per share (sen) 14.26 12.26

Net assets per share

The net assets per share is calculated by dividing the total equity attributable to owners of the parent by the
number of ordinary shares in issue, net of treasury shares at the reporting date as disclosed in Note 25.
10. PROPERTY, PLANT AND EQUIPMENT

Long-term Motor vehicles, Furniture,

The Group Freehold leasehold plant and fittings and Plantation Bearer Under
2019 land land Buildings machinery equipment infrastructure plants construction Total
MKH Berhad

RM RM RM RM RM RM RM RM RM

Cost/
Valuation
At 1 October
 2018
 (Restated) 12,240,000 6,400,000 88,990,387 95,118,171 35,313,267 45,791,934 284,760,464 30,001,482 598,615,705
Additions - - - 8,103,646 3,842,192 - - 15,692,745 27,638,583
Disposals - - - (471,050) (30,937) - - - (501,987)
Write-offs - - (2,363) (1,207,358) (1,651,818) - - - (2,861,539)
Reclassification - - 2,812,445 94,448 96,520 3,346,459 16,750,157 (23,100,029) -
Effect of
 movements
 in exchange
 rates - - 2,297,043 5,199,848 296,615 2,790,342 17,127,633 1,626,555 29,338,036
NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2019

At 30
 September
 2019 12,240,000 6,400,000 94,097,512 106,837,705 37,865,839 51,928,735 318,638,254 24,220,753 652,228,798

Accumulated
 Depreciation
At 1 October
 2018
 (Restated) - 260,340 22,643,052 40,867,457 18,287,071 13,105,264 68,227,732 - 163,390,916
Charge for the
 financial year - 86,780 6,904,427 7,956,657 4,004,104 2,533,194 15,212,221 - 36,697,383
Disposals - - - (471,048) (16,551) - - - (487,599)
Write-offs - - - (1,173,553) (1,596,093) - - - (2,769,646)
Effect of
 movements
 in exchange
 rates - - 1,112,258 1,254,324 247,266 793,082 4,379,219 - 7,786,149

At 30
 September
 2019 - 347,120 30,659,737 48,433,837 20,925,797 16,431,540 87,819,172 - 204,617,203

Net Carrying
 Amount
At 30
 September
 2019 12,240,000 6,052,880 63,437,775 58,403,868 16,940,042 35,497,195 230,819,082 24,220,753 447,611,595
145
10. PROPERTY, PLANT AND EQUIPMENT (CONT’D)
146

Long-term Motor vehicles, Furniture,

The Group Freehold leasehold plant and fittings and Plantation Bearer Under
2018 land land Buildings machinery equipment infrastructure plants construction Total
(Restated) RM RM RM RM RM RM RM RM RM

Cost/
 Valuation
At 1 October
 2017 12,240,000 6,400,000 93,477,876 99,064,626 33,259,629 48,649,545 322,082,977 25,359,081 640,533,734
Additions - - 307,125 7,625,156 3,826,797 107,244 - 11,373,912 23,240,234
Disposals - - - (421,000) - - - - (421,000)
Write-offs - - (2,413) (1,135,828) (903,095) - (1,130,667) - (3,172,003)
Reclassification - - 1,595,319 2,258 - 2,622,199 - (4,219,776) -
Effect of
 movements
 in exchange
 rates - - (6,387,520) (10,017,041) (870,064) (5,587,054) (36,191,846) (2,511,735) (61,565,260)

At 30
  September
 2018 12,240,000 6,400,000 88,990,387 95,118,171 35,313,267 45,791,934 284,760,464 30,001,482 598,615,705

Accumulated
 Depreciation
At 1 October
 2017 - 173,560 18,055,027 39,565,863 16,099,556 12,276,716 60,753,306 - 146,924,028
Charge for the
 financial year - 86,780 6,479,328 7,396,851 3,522,242 2,245,008 14,977,744 - 34,707,953
Disposals - - - (303,232) - - - - (303,232)
Write-offs - - - (947,149) (879,944) - - - (1,827,093)
Effect of
 movements
 in exchange
 rates - - (1,891,303) (4,844,876) (454,783) (1,416,460) (7,503,318) - (16,110,740)

At 30
 September
 2018 - 260,340 22,643,052 40,867,457 18,287,071 13,105,264 68,227,732 - 163,390,916

Net Carrying
 Amount
At 30
 September
 2018 12,240,000 6,139,660 66,347,335 54,250,714 17,026,196 32,686,670 216,532,732 30,001,482 435,224,789

At 1 October
 2017 12,240,000 6,226,440 75,422,849 59,498,763 17,160,073 36,372,829 261,329,671 25,359,081 493,609,706
FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2019
NOTES TO THE FINANCIAL STATEMENTS
ANNUAL REPORT 2019
10. PROPERTY, PLANT AND EQUIPMENT (CONT’D)

The freehold and leasehold land and buildings stated at valuation were revalued by the directors in September 2015 based on independent
professional valuation on the market value basis using the cost and direct comparison of valuation methods, except for certain buildings located
at oil palm plantation with carrying amounts (included current year additions) totalling RM13,858,801 (30.9.2018: RM12,392,952; 1.10.2017:
MKH Berhad

RM13,963,159) were not revalued as at 30 September 2015. The directors are of the view that it is not practicable to fair value these buildings as
these are mainly staff quarters and amenities which were built at the oil palm plantation for use by the plantation workers and there is a lack of
active market for the buildings.

Long-term Motor vehicles, Furniture,

The Group Freehold leasehold plant and fittings and Plantation Bearer Under
30.9.2019 land land Buildings machinery equipment infrastructure plants construction Total
RM RM RM RM RM RM RM RM RM

Analysis of
 Cost
 and
 Valuation
NOTES TO THE FINANCIAL STATEMENTS

At valuation
FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2019

 - 2015 12,240,000 6,400,000 68,530,440 - - - - - 87,170,440

At cost - - 25,567,072 106,837,705 37,865,839 51,928,735 318,638,254 24,220,753 565,058,358


12,240,000 6,400,000 94,097,512 106,837,705 37,865,839 51,928,735 318,638,254 24,220,753 652,228,798


Net Carrying
 Amount

At valuation
  - 2015 12,240,000 6,052,880 49,578,974 - - - - - 67,871,854
At cost - - 13,858,801 58,403,868 16,940,042 35,497,195 230,819,082 24,220,753 379,739,741


12,240,000 6,052,880 63,437,775 58,403,868 16,940,042 35,497,195 230,819,082 24,220,753 447,611,595
147
10. PROPERTY, PLANT AND EQUIPMENT (CONT’D)
148

Long-term Motor vehicles, Furniture,

The Group Freehold leasehold plant and fittings and Plantation Bearer Under
30.9.2018 land land Buildings machinery equipment infrastructure plants construction Total
(Restated) RM RM RM RM RM RM RM RM RM

Analysis of
 Cost
 and
 Valuation
At valuation
  - 2015 12,240,000 6,400,000 67,540,137 - - - - - 86,180,137
At cost - - 21,450,250 95,118,171 35,313,267 45,791,934 284,760,464 30,001,482 512,435,568

12,240,000 6,400,000 88,990,387 95,118,171 35,313,267 45,791,934 284,760,464 30,001,482 598,615,705

Net Carrying
 Amount
At valuation
 - 2015 12,240,000 6,139,660 53,954,383 - - - - - 72,334,043
At cost - - 12,392,952 54,250,714 17,026,196 32,686,670 216,532,732 30,001,482 362,890,746

12,240,000 6,139,660 66,347,335 54,250,714 17,026,196 32,686,670 216,532,732 30,001,482 435,224,789

The Group
1.10.2017
(Restated)

Analysis of
 Cost
 and
 Valuation
At valuation
 - 2015 12,240,000 6,400,000 71,392,241 - - - - - 90,032,241
At cost - - 22,085,635 99,064,626 33,259,629 48,649,545 322,082,977 25,359,081 550,501,493

12,240,000 6,400,000 93,477,876 99,064,626 33,259,629 48,649,545 322,082,977 25,359,081 640,533,734

Net Carrying
 Amount
At valuation
 - 2015 12,240,000 6,226,440 61,459,690 - - - - - 79,926,130
At cost - - 13,963,159 59,498,763 17,160,073 36,372,829 261,329,671 25,359,081 413,683,576

12,240,000 6,226,440 75,422,849 59,498,763 17,160,073 36,372,829 261,329,671 25,359,081 493,609,706
FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2019
NOTES TO THE FINANCIAL STATEMENTS
ANNUAL REPORT 2019
MKH Berhad
149
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2019

10. PROPERTY, PLANT AND EQUIPMENT (CONT’D)

Furniture,
Freehold fittings and
land Buildings equipment Total
RM RM RM RM

The Company
2019

Cost/Valuation
At 1 October 2018/
 30 September 2019 640,000 590,000 68,434 1,298,434

Accumulated Depreciation
At 1 October 2018 - 40,227 59,362 99,589
Charge for the financial year - 13,409 5,385 18,794

At 30 September 2019 - 53,636 64,747 118,383

Net Carrying Amount
At 30 September 2019 640,000 536,364 3,687 1,180,051

2018

Cost/Valuation
At 1 October 2017/
 30 September 2018 640,000 590,000 68,434 1,298,434

Accumulated Depreciation
At 1 October 2017 - 26,818 53,198 80,016
Charge for the financial year - 13,409 6,164 19,573

At 30 September 2018 - 40,227 59,362 99,589

Net Carrying Amount
At 30 September 2018 640,000 549,773 9,072 1,198,845

At 1 October 2017 640,000 563,182 15,236 1,218,418
150 ANNUAL REPORT 2019

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2019

10. PROPERTY, PLANT AND EQUIPMENT (CONT’D)

Furniture,
Freehold fittings and
land Buildings equipment Total
RM RM RM RM

The Company
30.9.2019

Analysis of Cost and Valuation

At valuation - 2015 640,000 590,000 - 1,230,000
At cost - - 68,434 68,434

640,000 590,000 68,434 1,298,434

Net Carrying Amount
At valuation - 2015 640,000 536,364 - 1,176,364
At cost - - 3,687 3,687

640,000 536,364 3,687 1,180,051

30.9.2018

Analysis of Cost and Valuation
At valuation - 2015 640,000 590,000 - 1,230,000
At cost - - 68,434 68,434

640,000 590,000 68,434 1,298,434

Net Carrying Amount
At valuation - 2015 640,000 549,773 - 1,189,773
At cost - - 9,072 9,072

640,000 549,773 9,072 1,198,845

1.10.2017

Analysis of Cost and Valuation
At valuation - 2015 640,000 590,000 - 1,230,000
At cost - - 68,434 68,434

640,000 590,000 68,434 1,298,434

Net Carrying Amount
At valuation - 2015 640,000 563,182 - 1,203,182
At cost - - 15,236 15,236

640,000 563,182 15,236 1,218,418
MKH Berhad
151
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2019

10. PROPERTY, PLANT AND EQUIPMENT (CONT’D)

The net carrying amount of revalued assets had they been carried at cost would have been as follows:

The Group
30.9.2019 30.9.2018 1.10.2017
RM RM RM

Freehold land 666,424 666,424 666,424

Long-term leasehold land 948,869 962,473 976,077
Buildings 35,802,261 36,796,235 40,708,588

37,417,554 38,425,132 42,351,089

The Company
30.9.2019 30.9.2018 1.10.2017
RM RM RM

Freehold land 110,000 110,000 110,000

Buildings 365,700 374,900 384,100

475,700 484,900 494,100

Included in the above property, plant and equipment are:

(a) Motor vehicles, plant and machinery analysed as follows:

Motor Plant and
The Group vehicles machinery Total
RM RM RM

30.9.2019
Cost 17,505,575 89,332,130 106,837,705
Accumulated depreciation (11,974,673) (36,459,164) (48,433,837)

Net carrying amount 5,530,902 52,872,966 58,403,868

30.9.2018
Cost 16,131,899 78,986,272 95,118,171
Accumulated depreciation (10,466,997) (30,400,460) (40,867,457)

Net carrying amount 5,664,902 48,585,812 54,250,714

1.10.2017
Cost 16,235,403 82,829,223 99,064,626
Accumulated depreciation (9,546,648) (30,019,215) (39,565,863)

Net carrying amount 6,688,755 52,810,008 59,498,763
152 ANNUAL REPORT 2019

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2019

10. PROPERTY, PLANT AND EQUIPMENT (CONT’D)

(b) Property, plant and equipment pledged as security for bank guarantee and credit facilities granted to
certain subsidiaries as disclosed in Note 29 are as follows:
The Group
30.9.2019 30.9.2018 1.10.2017
RM RM RM
(Restated) (Restated)

Cost/Valuation
Buildings 24,000,000 24,000,000 24,000,000
Bearer plants 318,638,254 284,760,464 322,082,977

342,638,254 308,760,464 346,082,977

Net Carrying Amount
Buildings 21,658,536 22,243,902 22,829,268
Bearer plants 230,819,082 216,532,732 261,329,671

252,477,618 238,776,634 284,158,939

(c) Motor vehicles under finance lease arrangements are as follows:

The Group
30.9.2019 30.9.2018 1.10.2017
RM RM RM

Cost 5,216,689 5,201,170 5,561,811

Net carrying amount 1,301,535 1,728,568 2,025,083

(d) Bearer plants comprise of oil palm trees.

(e) Property, plant and equipment under construction are mainly immature bearer plants, construction of
buildings, plant and machinery in oil palm plantation.

Included in addition to the property, plant and equipment under construction are:
The Group
2019 2018
RM RM
(Restated)

Interest capitalised 645,200 940,699

Personnel expenses:
 Wages, salaries and others 883,596 831,284

The interest on borrowings for the financial year is capitalised at rates ranging from 5.00% to 5.75%
(30.9.2018: 5.30% to 5.40%) per annum.

(f) The long-term leasehold land of the Group has remaining unexpired lease period of more than 50 years.
MKH Berhad
153
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2019

11. INTANGIBLE ASSETS

The Group
30.9.2019 30.9.2018 1.10.2017
RM RM RM

Goodwill (Note 11.1) 5,214,288 4,915,669 5,548,038

Other intangible asset (Note 11.2) 25,234,391 21,438,080 16,466,647

Net carrying amount 30,448,679 26,353,749 22,014,685

11.1 Goodwill
The Group
2019 2018
RM RM

Goodwill on acquisition - At cost

At beginning of year 5,019,897 5,652,266
Effect of movements in exchange rate 298,619 (632,369)

At end of year 5,318,516 5,019,897

Accumulated impairment loss
At beginning and end of year (104,228) (104,228)

Net carrying amount 5,214,288 4,915,669

Impairment test of goodwill

Goodwill on acquisition is allocated to the Group’s cash-generating units (“CGUs”), business segments as
follows:

The Group
30.9.2019 30.9.2018 1.10.2017
RM RM RM

Plantation 5,181,919 4,883,300 5,515,669

Property development 32,369 32,369 32,369

5,214,288 4,915,669 5,548,038

The goodwill allocated to property development segment is not significant in comparison with the Group’s
total carrying amount of goodwill.
154 ANNUAL REPORT 2019

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2019

11. INTANGIBLE ASSETS (CONT’D)

11.1 Goodwill (Cont’d)

Impairment test of goodwill (Cont’d)

Key assumptions used in the value-in-use calculations based on a 11 years (30.9.2018: 12 years; 1.10.2017:
13 years) cash flows projection in respect of impairment test for goodwill on the plantation segment are:

(i) discount rate of 11.5% (30.9.2018 and 1.10.2017: 11.5%) which is pre-tax and reflected specific risks of
the plantation segment in Indonesia;

(ii) oil palm trees with an average life of 25 (30.9.2018 and 1.10.2017: 25) years with the first three years
as immature and remaining years as mature which is the average life cycle of the trees;

(iii) crude palm oil (“CPO”) average selling price of RM2,000 (30.9.2018: RM1,984; 1.10.2017: RM2,323)
per metric tonne based on the management’s estimate;

(iv) average CPO extraction rate of 22% (30.9.2018 and 1.10.2017: 22%) based on the industry trend and
past performance; and

(v) average annual oil palm yield per hectare of 30 to 33 (30.9.2018: 30 to 34; 1.10.2017: 28 to 33) metric
tonnes based on management’s estimate and historical yield.

In assessing the value-in-use, management does not foresee any possible changes in the above key
assumptions that would cause the carrying amounts of the goodwill to materially exceed its recoverable
amounts.

. 11.2 Other intangible asset

The Group
2019 2018
RM RM

Capitalised development
At beginning of year 21,438,080 16,466,647
Additions 3,796,311 4,971,433

At end of year 25,234,391 21,438,080

Other intangible asset represents expenditure incurred to construct a commuter station for Perbadanan
Aset Keretapi (“PAK”) in consideration for the right to lease a plot of land from PAK for a period of
60 years. The total estimated construction costs of the commuter station is approximately RM53,154,136
(30.9.2018 and 1.10.2017: RM40,139,000). The status of the construction as disclosed in Note 33.
MKH Berhad
155
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2019

12. PREPAID LEASE PAYMENTS

The Group
2019 2018
RM RM

At beginning of year 44,675,754 45,724,238

Transfer from prepayments (Note 18 (j) (i)) - 1,290,188
Amortisation for the financial year (1,513,413) (1,509,763)
Effect of movements in exchange rate 235,022 (828,909)

At end of year 43,397,363 44,675,754

The above is short-term leasehold land with remaining unexpired lease period of less than 50 years.

The short-term leasehold land of RM39,082,912 (30.9.2018: RM40,251,790; 1.10.2017: RM42,156,888) is pledged as
security for credit facilities granted to the Group as disclosed in Note 29

13. INVESTMENT PROPERTIES

The Group
2019 2018
RM RM

At beginning of year 318,620,000 318,937,000

Changes in fair values (6,180,000) (317,000)

At end of year 312,440,000 318,620,000

Included in the above are:

The Group
30.9.2019 30.9.2018 1.10.2017
RM RM RM

Freehold land and buildings - at fair value

Freehold land 47,100,000 46,200,000 46,200,000
Buildings 54,250,000 55,330,000 55,347,000

101,350,000 101,530,000 101,547,000

Leasehold land and buildings - at fair value
Leasehold land with unexpired lease period
 of more than 50 years 66,900,000 65,800,000 66,600,000
Buildings 144,190,000 151,290,000 150,790,000

211,090,000 217,090,000 217,390,000

312,440,000 318,620,000 318,937,000
156 ANNUAL REPORT 2019

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2019

13. INVESTMENT PROPERTIES (CONT’D)

Fair value measurement disclosures for investment properties are disclosed in Note 42.

Included in the above are land and buildings amounting to RM250,450,000 (30.9.2018: RM265,030,000; 1.10.2017:
RM254,847,000) pledged for credit facilities granted to subsidiaries as disclosed in Note 29.

14. INVESTMENT IN SUBSIDIARIES

The Company
30.9.2019 30.9.2018 1.10.2017
RM RM RM

Unquoted shares - at cost

Ordinary shares 518,339,268 475,786,968 436,536,245
Redeemable convertible preference
 shares (“RCPS”) 279,500,000 279,500,000 279,500,000

797,839,268 755,286,968 716,036,245

Accumulated impairment loss
At beginning and end of year (2,824,214) (2,824,214) (2,824,214)

Net book value 795,015,054 752,462,754 713,212,031

Details of the subsidiaries are as follows:

Proportion of ownership
interest and voting power
Country of Principal held by the Group
Name of subsidiary incorporation activities 30.9.2019 30.9.2018 1.10.2017

Achieve Acres Sdn. Bhd. Malaysia Property development 85% 85% 85%

Aliran Perkasa Sdn. Bhd. Malaysia Property development 100% 100% 100%

Budi Bidara Sdn. Bhd. Malaysia Property development 100% 100% 100%

Dapat Jaya Builder Malaysia Building and civil works 100% 100% 100%
 Sdn. Bhd.  contracting and project
 management services

Danau Saujana Malaysia Dormant 51% 51% 51%

 Sdn. Bhd.
€@ Detik Merdu Sdn. Bhd. Malaysia Investment holding and 100% 100% 100%
 trading of building
 materials and household
 related products
MKH Berhad
157
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2019

14. INVESTMENT IN SUBSIDIARIES (CONT’D)

Proportion of ownership
interest and voting power
Country of Principal held by the Group
Name of subsidiary incorporation activities 30.9.2019 30.9.2018 1.10.2017

Everland Asia Malaysia Investment holding 100% 100% 100%

 Development
 Sdn. Bhd.

Gabung Wajib Malaysia Property development 100% 100% 100%
 Sdn. Bhd.

Gerak Teguh Sdn. Bhd. Malaysia Property development 100% 100% 100%

GK Resort Berhad Malaysia Investment holding 100% 100% 100%

Global Landscape Malaysia Dormant 51% 51% 51%
 Creation Sdn. Bhd.

Intelek Kekal (M) Malaysia Management services 100% 100% 100%
 Sdn. Bhd.

Intelek Murni (M) Malaysia Operating a 100% 100% 100%
 Berhad  recreational club

Intra Tegas (M) Malaysia Property development 100% 100% 100%
 Sdn. Bhd.

Kajang Resources Malaysia Property development 100% 100% 100%

 Corporation Sdn. Bhd.

Kumpulan Indah Bersatu Malaysia Property development 100% 100% 100%

 Sdn. Bhd.

Ω Metro Kajang Malaysia Building and civil works 100% 100% 100%
 Construction Sdn. Bhd.  contracting and
 project and building
 management services

Metro Kajang (Oversea) Malaysia Investment holding and 100% 100% 100%
 Sdn. Bhd.  treasury management
 services

Metro K.L. City Malaysia Property development 100% 100% 100%
 Sdn. Bhd.

Metro Nusantara Malaysia Dormant 100% 100% 100%
 Sdn. Bhd.
158 ANNUAL REPORT 2019

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2019

14. INVESTMENT IN SUBSIDIARIES (CONT’D)

Proportion of ownership
interest and voting power
Country of Principal held by the Group
Name of subsidiary incorporation activities 30.9.2019 30.9.2018 1.10.2017

∞ Metro Readymix Malaysia Dormant 100% 100% -

 Sdn. Bhd.

Metro Tiara (M) Malaysia Property investment 100% 100% 100%
 Sdn. Bhd.

MKH Building Materials Malaysia Trading of building 100% 100% 100%
 Sdn. Bhd.  materials and household
 related products

MKH Credit Malaysia Money lending, 100% 100% 100%

 Corporation Sdn. Bhd.  hire-purchase and  
   leasing finance
 

MKH Development Malaysia Property Development 100% 100% 100%
 Sdn. Bhd.

MKH Food Sdn. Bhd. Malaysia Dormant 100% 100% 100%

! MKH Land (Aust) Pty Ltd. Australia Dormant 100% 100% 100%

MKH IHS Precast Malaysia Dormant 100% 100% 100%
 Sdn. Bhd.

MKH Management Malaysia Management, secretarial 100% 100% 100%
 Sdn. Bhd.  services and insurance
 agency

MKH Plantation Malaysia Investment holding 100% 100% 100%
 Sdn. Bhd.

MKH Resources Malaysia Management services 100% 100% 100%
 Sdn. Bhd.

~ € Nexus Starship Malaysia Investment holding 100% - -

 Sdn. Bhd. (Note 31)

Pelangi Binaraya Malaysia Property development 100% 100% 100%

 Sdn. Bhd.

Pelangi Seri Alam Malaysia Building and civil works 100% 100% 100%
 Development Sdn. Bhd.  contracting
MKH Berhad
159
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2019

14. INVESTMENT IN SUBSIDIARIES (CONT’D)

Proportion of ownership
interest and voting power
Country of Principal held by the Group
Name of subsidiary incorporation activities 30.9.2019 30.9.2018 1.10.2017

* Pelangi Semenyih Malaysia Property development 100% 100% 100%

 Sdn. Bhd.

Perkasa Bernas (M) Malaysia Property development 100% 100% 100%

 Sdn. Bhd.  and management
 services

Petik Mekar Sdn. Bhd. Malaysia Property development 100% 100% 100%

Serba Sentosa Sdn. Bhd. Malaysia Property development 100% 100% 100%

Serentak Maju Malaysia Property development 100% 100% 100%

 Corporation Sdn. Bhd.

€ Srijang Indah Sdn. Bhd. Malaysia Property investment and 100% 100% 100%
 management and
 investment holding

€ Srijang Kemajuan Malaysia Property development 99.99% 99.99% 99.99%

 Sdn. Bhd.  and property investment

€ Stand Allied Malaysia Property development 100% 100% 100%
 Corporation
 Sdn. Bhd.

Sumber Lengkap Malaysia Property development 100% 100% 100%
 Sdn. Bhd.

€ Suria Villa Sdn. Bhd. Malaysia Property development 100% 100% 100%

Vista Haruman Malaysia Property development 55% 55% 55%
 Development
 Sdn. Bhd.

Subsidiaries of Detik
  Merdu Sdn. Bhd.
#@ PT Maju Kalimantan Republic of Oil palm plantation 95% 95% 95%
 Hadapan Indonesia

# PT Nusantara Republic of Dormant 100% 100% 100%

 Makmur Jaya Indonesia
160 ANNUAL REPORT 2019

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2019

14. INVESTMENT IN SUBSIDIARIES (CONT’D)

Proportion of ownership
interest and voting power
Country of Principal held by the Group
Name of subsidiary incorporation activities 30.9.2019 30.9.2018 1.10.2017

Subsidiaries of MKH
  Plantation Sdn. Bhd.
#@ PT Sawit Prima Sakti Republic of Oil palm plantation 75% 75% 75%
Indonesia
Subsidiaries of Gabung
  Wajib Sdn. Bhd.
Amona Metro Malaysia Property development 60% 60% 60%
 Development Sdn. Bhd.

Alif Mesra Sdn. Bhd. Malaysia Property development 65% 65% 65%

Subsidiary of GK
  Resort Berhad
PNSB-GK Resort Malaysia Property development 70% 70% 70%
 Sdn. Bhd.

Subsidiary of
  Kumpulan Indah
  Bersatu Sdn. Bhd.
Palga Sdn. Bhd. Malaysia Investment holding 100% 100% 100%

Subsidiary of Pelangi
  Seri Alam Development
  Sdn. Bhd.
Hillpark Resources Malaysia Property development 100% 100% 100%
 Sdn. Bhd.

Subsidiary of Metro
  Kajang (Oversea)
  Sdn. Bhd.
Vast Furniture The People’s Furniture manufacturing 100% 100% 100%
 Manufacturing Republic of
 (Kunshan) Co. Ltd. China

Subsidiary of Palga
  Sdn. Bhd.
Hiliran Juara Sdn. Bhd. Malaysia Property development 100% 100% 100%

Subsidiary of Amona
  Metro Development
  Sdn. Bhd.
Temara Pekeliling Malaysia Property development 50.4% 50.4% 50.4%
 Sdn. Bhd.
MKH Berhad
161
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2019

14. INVESTMENT IN SUBSIDIARIES (CONT’D)

Proportion of ownership
interest and voting power
Country of Principal held by the Group
Name of subsidiary incorporation activities 30.9.2019 30.9.2018 1.10.2017

Subsidiary of Kajang
  Resources Corporation
  Sdn. Bhd.
MKH Property Ventures Malaysia Property development 51% 51% -
 Sdn. Bhd.

Subsidiary of Nexus
  Starship Sdn. Bhd.
  (Note 31)
Quantum Density Malaysia Property development 50.0004% - -
 Sdn. Bhd.

Subsidiaries of Srijang
  Indah Sdn. Bhd.
Laju Jaya Sdn. Bhd. Malaysia Hotel business and 100% 100% 100%
 property investment

Maha Usaha Sdn. Bhd. Malaysia Property investment 100% 100% 100%
 and management

Metro Emart Sdn. Bhd. Malaysia E-commerce 100% 100% 100%

Subsidiaries of Metro
  Emart Sdn. Bhd.
  (Note 31)
Europixel Sdn. Bhd. Malaysia Dormant 100% - -

Hexapace Sdn. Bhd. Malaysia Dormant 100% - -

Mercu Jasakita Malaysia Dormant 100% - -
 Sdn. Bhd.

~ During the financial year, the Company acquired the subsidiary for total cash consideration of RM1.

€ During the financial year, the Company subscribed for additional 35,968,000 (30.9.2018: 26,600,000;
1.10.2017: Nil) new ordinary shares in Detik Merdu Sdn. Bhd., 2,000,000 (30.9.2018: 1,000,000; 1.10.2017:
Nil) new ordinary shares in Srijang Indah Sdn. Bhd., 1,620,000 (30.9.2018: 3,495,394; 1.10.2017: 940,606)
new ordinary shares in Srijang Kemajuan Sdn. Bhd., 10,764,300 (30.9.2018: 11,155,327; 1.10.2017: 28,226,373)
new ordinary shares in Suria Villa Sdn. Bhd., Nil (30.9.2018: Nil; 1.10.2017: 2,500,000) new ordinary shares in
Stand Allied Corporation Sdn. Bhd. and 199,999 (30.9.2018 and 1.10.2017: Nil) new ordinary shares in Nexus
Starship Sdn. Bhd..
162 ANNUAL REPORT 2019

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2019

14. INVESTMENT IN SUBSIDIARIES (CONT’D)

Ω In the previous financial year, the Company received bonus shares of 10,000,000 ordinary shares from
Metro Kajang Construction Sdn. Bhd. (“MKCSB”). On 5 November 2018, MKCSB reduced its ordinary share
capital from RM20,000,000 to RM2,000,000 via cancellation of 18,000,000 ordinary shares comprising
7,759,506 cash and 10,240,494 non-cash allotment. This has resulted the Company recognised a gain on
investment in subsidiary arising from realisation of bonus share of RM10,000,000 in the current year.

* In the previous financial year, the Company received bonus shares of 18,000,000 ordinary shares from
Pelangi Semenyih Sdn. Bhd. (“PSSB”). On 28 September 2018, PSSB reduced its share capital from
RM23,000,000 to RM2,000,000 via cancellation of 21,000,000 ordinary shares comprising 3,000,000
cash and 18,000,000 non-cash allotment. This has resulted the Company recognised a gain on investment
in subsidiary arising from realisation of bonus share of RM18,000,000 in the previous financial year.

∞ In the previous financial year, the Company acquired the subsidiary for a total cash consideration of RM2.

# Subsidiaries audited by firms of auditors other than Deloitte PLT.

@ The investment in shares have been pledged as security for credit facilities granted to subsidiaries as
disclosed in Note 29.

! The company is not audited by Deloitte PLT. As the company is dormant, no statutory audit is required
under the Australian Corporations Act.

Redeemable Convertible Preference Shares

The salient features of the Redeemable Convertible Preference Shares (“RCPS”) of the subsidiaries are as follows:

(a) Dividends

The holder has the right to be paid, out of such profits of the subsidiary available for distribution determined
by the directors at their discretion to be distributed in respect of each financial year or other accounting
period of the subsidiary, a dividend at a rate as the Board of Directors shall determine from time to time.

(b) Voting rights

The RCPS carry rights to vote at any general meeting of the subsidiary if:

(i) any resolution is proposed for the winding up of the subsidiary, in which case the holder of the
RCPS may only then vote at such general meeting on the election of a chairman, any motion for
adjournment and the resolution for winding up; or

(ii) the meeting is convened for the purpose of considering the reduction of the capital of the subsidiary;
or

(iii) the meeting is relating to any dividend or part thereof unpaid on any RCPS; or
MKH Berhad
163
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2019

14. INVESTMENT IN SUBSIDIARIES (CONT’D)

Redeemable Convertible Preference Shares (Cont’d)

(b) Voting rights (Cont’d)

The RCPS carry rights to vote at any general meeting of the subsidiary if: (Cont’d)

(iv) the proposition which is submitted to the meeting proposes to abrogate or vary or otherwise
directly affects the special rights and privileges attaching to the RCPS; in which event the holder
of the RCPS shall have such number of votes for each RCPS registered in his name equivalent to
the number of ordinary shares, which solely for the purpose of calculating the number of votes of
the holder of the RCPS is entitled to, one RCPS held by the holder of RCPS shall be deemed to be
equivalent to one of ordinary share of the subsidiary. The holder of the RCPS shall further be entitled
to speak, demand a poll, to move resolutions and participate in the meeting of the shareholders of
RCPS of the subsidiary.

(c) Redemption

(i) Subject to the provision of Section 72 of the Companies Act, 2016, the subsidiary shall have the right
to redeem all or any of the RCPS at RM100 only per RCPS at anytime after the date of issuance of
RCPS; and

(ii) no RCPS redeemed by the subsidiary shall be capable of reissue.

(d) Conversion

The subsidiary is entitled, at any time during the period commencing on the date of issuance of RCPS to
convert all or any of the RCPS registered in the name of each holder of the RCPS. Each RCPS is convertible
into 100 ordinary shares in the share capital of the subsidiary.

(e) Capital

The holder has the right on winding up or other return of capital (other than on the redemption of the
RCPS) to receive, in priority to the holders of any other class of shares in the capital of the subsidiary.
14. INVESTMENT IN SUBSIDIARIES (CONT’D)
164

Non-controlling Interests

The subsidiaries that have material non-controlling interests (“NCI”) are as follows:

Amona Vista MKH

Metro PT Maju Haruman Property Individually
Development Kalimantan Alif Mesra PT Sawit Development Ventures immaterial
Sdn. Bhd. Hadapan Sdn. Bhd. Prima Sakti Sdn. Bhd. Sdn. Bhd. subsidiaries Total
RM RM RM RM RM RM RM RM

2019

NCI percentage of
 ownership interest
 and voting power 40% 5% 35% 25% 45% 49% - -

Carrying amount
 of NCI 21,384,160 5,410,195 9,362,530 1,010,849 11,781,461 17,727,961 4,571,948 71,249,104


Profit/(Loss)
 allocated
 to NCI 4,014,168 77,958 7,269,114 286,605 1,821,729 (1,320,417) 2,766,495 14,915,652


Total comprehensive
 income/(loss)
 allocated
 to NCI 4,014,168 493,091 7,269,114 41,004 1,821,729 (1,320,417) 2,766,495 15,085,184

2018 (Restated)

NCI percentage of
 ownership interest
 and voting power 40% 5% 35% 25% 45% 49% - -


Carrying amount
 of NCI 17,369,992 4,917,104 2,093,416 969,841 9,959,732 19,048,378 1,680,458 56,038,921


Profit/(Loss)
 allocated
 to NCI 2,789,128 586,681 (2,372,308) (1,902,303) 5,800,839 (551,622) 1,397,648 5,748,063


Total comprehensive
 income/(loss)
 allocated to NCI 2,789,128 512,396 (2,372,308) (1,414,396) 5,800,839 (551,622) 1,397,648 6,161,685
FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2019
NOTES TO THE FINANCIAL STATEMENTS
ANNUAL REPORT 2019
14. INVESTMENT IN SUBSIDIARIES (CONT’D)

The financial information of the subsidiaries that have material NCI before intra-group elimination are as follows:

Vista MKH
MKH Berhad

Amona Metro PT Maju Haruman Property

Development Kalimantan Alif Mesra PT Sawit Development Ventures
Sdn. Bhd. Hadapan Sdn. Bhd. Prima Sakti Sdn. Bhd. Sdn. Bhd.
RM RM RM RM RM RM

2019
Assets and liabilities
Non-current assets 303,100 320,771,275 2,344,500 76,114,757 257,200 -
Current assets 152,864,120 109,152,966 133,738,315 4,444,951 38,886,367 36,462,115
Non-current liabilities (65,741,788) (173,211,294) (80,161,255) (5,233,600) - -
Current liabilities (30,049,626) (148,509,051) (29,171,474) (71,282,713) (12,962,543) (282,603)
Non-controlling interests (3,915,405) - - - - -

Net assets 53,460,401 108,203,896 26,750,086 4,043,395 26,181,024 36,179,512


NOTES TO THE FINANCIAL STATEMENTS

Results
FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2019

Revenue 82,135,779 229,761,671 106,396,980 6,516,930 13,025,710 -
Profit/(Loss) for the financial year 10,035,420 1,559,150 20,768,898 1,146,420 4,048,286 (2,694,729)
Total comprehensive income 10,035,420 9,861,819 20,768,898 164,019 4,048,286 (2,694,729)

2018 (Restated)
Assets and liabilities
Non-current assets - 313,569,274 3,058,200 68,248,030 278,000 -
Current assets 118,075,418 121,422,625 89,391,157 6,093,901 123,567,676 39,105,841
Non-current liabilities (45,920,794) (234,689,999) (57,102,511) (56,810,590) (2,988,200) -
Current liabilities (27,139,709) (101,959,823) (29,365,658) (13,651,978) (98,724,738) (231,600)
Non-controlling interests (1,589,934) - - - - -

Net assets 43,424,981 98,342,077 5,981,188 3,879,363 22,132,738 38,874,241

Results
Revenue 55,542,976 263,196,707 - 5,734,677 94,701,403 -
Profit/(Loss) for the financial year 6,972,819 11,733,620 (6,778,022) (7,609,211) 12,890,754 (1,125,759)
Total comprehensive income 6,972,819 10,247,914 (6,778,022) (5,657,584) 12,890,754 (1,125,759)
165
14. INVESTMENT IN SUBSIDIARIES (CONT’D)
Vista MKH
166

Amona Metro PT Maju Haruman Property

Development Kalimantan Alif Mesra PT Sawit Development Ventures
Sdn. Bhd. Hadapan Sdn. Bhd. Prima Sakti Sdn. Bhd. Sdn. Bhd.
RM RM RM RM RM RM

2019
Cash flows from/(used in):
 Operating activities (25,096,514) 37,173,414 (19,003,749) 4,582,284 47,505,003 (2,705,756)
 Investing activities - (16,228,792) - (6,903,264) - -
 Financing activities 22,817,680 (19,603,025) 21,777,973 278,171 (37,588,359) -

Net increase/(decrease) in cash
 and cash equivalents (2,278,834) 1,341,597 2,774,224 (2,042,809) 9,916,644 (2,705,756)

Dividends paid to NCI - - - - - -

2018
Cash flows from/(used in):
 Operating activities 9,454,857 8,097,562 (21,014,757) (4,521,323) 45,729 (23,509,179)
 Investing activities - 13,532,141 - (5,087,357) - -
 Financing activities (9,110,950) (26,402,202) 21,243,597 10,381,732 (7,011,804) 40,000,000

Net increase/(decrease) in cash
 and cash equivalents 343,907 (4,772,499) 228,840 773,052 (6,966,075) 16,490,821

Dividends paid to NCI 3,875,040 - - - - -

There are no significant restrictions on the Company’s ability to access or use the assets and to settle the liabilities of the Group
except for the covenants of the bank term loans taken by PT Maju Kalimantan Hadapan and PT Sawit Prima Sakti, subsidiaries
of the Company, which restrict the ability of the subsidiaries to provide advances to other companies within the Group and to
declare dividends to its shareholders until full settlement of the loans unless prior written consent is obtained from the lenders.
The assets to which such restrictions apply are the cash and cash equivalents of the subsidiaries included in the consolidated
financial statements amounting to RM12,399,248 (30.9.2018: RM14,337,332; 1.10.2017: RM14,679,964).
FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2019
NOTES TO THE FINANCIAL STATEMENTS
ANNUAL REPORT 2019
MKH Berhad
167
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2019

15. INVESTMENT IN ASSOCIATES

The Group
30.9.2019 30.9.2018 1.10.2017
RM RM RM

At cost:
Unquoted shares 6,660,000 8,660,000 6,700,000
Additions 5,000,000 - 1,960,000
Disposals - (2,000,000) -
Capital reductions (3,375,000) - -

8,285,000 6,660,000 8,660,000

Share of post-acquisition reserves 6,705,213 7,590,386 5,229,807

14,990,213 14,250,386 13,889,807

The details of the associates, incorporated in Malaysia, are as follows:

Proportion of ownership
interest and voting power Financial
Principal held by the Group year end
Name of associate activities 30.9.2019 30.9.2018 1.10.2017

Ω Daksina Harta Property 40% - - 31 December

 Sdn. Bhd. (“DHSB”)  development


~ Panasonic Homes General 49% 49% 49% 31 March
 MKH Malaysia construction
 Sdn. Bhd. (“PHMMSB”)

* Rimbunan Melati Property 45% 45% 45% 31 December

 Sdn. Bhd. (“RMSB”) development

^ Rafflesia School Education - - 20% 31 December

 (Kajang) Sdn. Bhd.  centre and tenant
 of the Group’s
 investment
 property
168 ANNUAL REPORT 2019

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2019

15. INVESTMENT IN ASSOCIATES (CONT’D)

The details of the associates, incorporated in Malaysia, are as follows: (Cont’d)

Ω Interest held through Perkasa Bernas (M) Sdn. Bhd. (“PBSB”).

~ Interest held through Kajang Resources Corporation Sdn. Bhd. (“KRC”).
* Interest held through Dapat Jaya Builder Sdn. Bhd..
^ Interest disposed at cash consideration of RM2,000,000 in 2018.

The above associates are accounted for using the equity method in the consolidated financial statements.

The following table summarises the information of the Group’s material associate, adjusted for any differences
in accounting policies and reconciles the information to the carrying amount of the Group’s interest in the
associate.

The Group
RMSB PHMMSB DHSB
RM RM RM

2019
Non-current assets 108 3,375,597 -
Current assets 17,454,611 15,039,695 88,200,198
Current liabilities (4,805,741) (9,463,505) (75,920,713)

Net assets 12,648,978 8,951,787 12,279,485

Results
Revenue - 68,919,741 -
Loss for the financial year (198,014) (1,444,614) (220,514)
Total comprehensive loss (198,014) (1,444,614) (220,514)

2018
Non-current assets 356 5,117,474 -
Current assets 24,939,789 22,198,983 -
Current liabilities (4,593,153) (16,920,054) -

Net assets 20,346,992 10,396,403 -

Results
Revenue - 79,269,622 -
(Loss)/Profit for the financial year (1,205,454) 1,842,926 -
Total comprehensive (loss)/profit (1,205,454) 1,842,926 -
MKH Berhad
169
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2019

15. INVESTMENT IN ASSOCIATES (CONT’D)

The reconciliation of net assets to carrying amount of the associates is as follows:

RMSB PHMMSB DHSB Total

RM RM RM RM

2019
Group’s share of net assets 5,692,040 4,386,376 4,911,797 14,990,213

Group’s share of results in associates (89,106) (707,861) (88,206) (885,173)

Dividend received from associates - - - -

2018
Group’s share of net assets 9,156,147 5,094,239 - 14,250,386

Group’s share of results in associates (542,455) 903,034 - 360,579

Dividend received from associates - - - -

16. LAND HELD FOR PROPERTY DEVELOPMENT

The Group
2019 2018
RM RM

Freehold land
At beginning of year 463,848,960 510,261,469
Additions 11,279,551 27,467,524
Reclassification to development
 cost - (10,637,689)
Charged out to profit or loss as land
 donation - (3,608,106)
Reclassification from leasehold land - 59,121
Transfer to property development costs
 (Note 19) (4,586,972) (59,693,359)

At end of year 470,541,539 463,848,960

Leasehold land
At beginning of year 142,191,590 155,342,976
Additions 34,296,161 -
Reversal of provision for landowners’
 entitlement - (734,875)
Transfer (to)/from non-current assets
 held for sale (Note 24) (643,458) 5,920,445
Reclassification to freehold land - (59,121)
Transfer to property development costs
 (Note 19) (11,552,782) (18,277,835)

At end of year 164,291,511 142,191,590

Total land 634,833,050

606,040,550
170 ANNUAL REPORT 2019

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2019

16. LAND HELD FOR PROPERTY DEVELOPMENT (CONT’D)

The Group
2019 2018
RM RM

Development costs
At beginning of year 267,003,467 256,592,153
Additions 30,903,244 21,007,170
Reclassification from freehold land
 cost - 10,637,689
Charged out to profit or loss as land
 donation - (5,853,344)
Transfer (to)/from non-current assets
 held for sale (Note 24) (900,092) 6,601,543
Transfer to property development costs
 (Note 19) (51,604,717) (21,981,744)

At end of year 245,401,902 267,003,467

Total land and development costs 880,234,952 873,044,017

Less: Accumulated impairment loss
At beginning and end of year (6,284,988) (6,284,988)

873,949,964 866,759,029

Included in land held for property development are:

(i) freehold land amounting to RM143,414,505 (30.9.2018: RM127,530,916; 1.10.2017: RM169,678,150) which
have been pledged for term loan and revolving credit facilities granted to certain subsidiaries as disclosed
in Note 29;

(ii) leasehold land amounting to RM19,040,009 (30.9.2018 and 1.10.2017: RM19,040,009) which have been
charged for revolving credit facilities granted to certain subsidiaries as disclosed in Note 29; and

(iii) 
freehold and leasehold land amounting to RM295,900,485 (30.9.2018: RM284,461,990; 1.10.2017:
RM257,621,706) represent entitlements of the landowners pursuant to joint land development agreements
to undertake property development projects. The titles to the development land will be transferred from
landowners to the property purchasers.
MKH Berhad
171
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2019

17. DEFERRED TAX ASSETS AND LIABILITIES

The Group
2019 2018
RM RM

Deferred tax assets

At beginning of year 49,602,802 33,933,101
Recognised in profit or loss (Note 8) (2,220,089) 15,669,701

At end of year 47,382,713 49,602,802

Deferred tax liabilities
At beginning of year (64,124,182) (59,037,723)
Recognised in profit or loss (Note 8) 1,095,998 (5,150,471)
Recognised in other comprehensive income (Note 8) (997,750) (636,107)
Effect of movements in exchange rate (301,421) 700,119

At end of year (64,327,355) (64,124,182)

The Company
2019 2018
RM RM

Deferred tax liabilities

At beginning of year (92,226) (64,326)
Recognised in profit or loss (Note 8) (1,274) (1,400)
Recognised in other comprehensive income (Note 8) - (26,500)

At end of year (93,500) (92,226)

172 ANNUAL REPORT 2019

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2019

17. DEFERRED TAX ASSETS AND LIABILITIES (CONT’D)

Deferred tax assets and liabilities are attributable to the following:

The Group
30.9.2019 30.9.2018 1.10.2017
RM RM RM

Deferred tax assets

Deductible temporary differences arising from:
 Property, plant and equipment (37,316) (23,398) 703,943
 Land held for property development 1,775,900 1,241,600 903,700
 Property development costs 35,518,000 34,185,400 21,022,200
 Receivables and deposits 131,799 21,370 542,128
 Payables and accruals 7,884,730 10,161,430 9,844,330
Unused tax losses 2,090,700 4,006,800 916,800
Unabsorbed capital allowance 18,900 9,600 -

47,382,713 49,602,802 33,933,101

Deferred tax liabilities

Taxable temporary differences arising from:
 Property, plant and equipment (11,554,318) (10,008,069) (9,243,497)
 Investment properties (3,001,506) (3,001,706) (2,957,506)
 Property development costs 62,908 2,468,208 2,220,508
 Inventories 513,300 440,400 765,900
 Receivables and deposits (598,100) (574,900) (192,225)
 Provisions 3,348,989 2,026,421 2,863,387
 Payables and accruals (796,600) (753,900) (1,050,200)
Surplus arising from revaluation of
 land and buildings (6,302,267) (6,498,755) (6,835,817)
Fair value adjustment in respect of
 investment properties (12,526,593) (13,142,593) (6,656,265)
Fair value adjustment in respect of
 subsidiaries acquired (34,865,468) (36,861,388) (39,431,108)
Unused tax losses 353,700 840,700 1,137,800
Unabsorbed capital allowances 746,100 559,100 341,300
Unutilised reinvestment allowances 292,500 382,300 -

(64,327,355) (64,124,182) (59,037,723)

The Company
30.9.2019 30.9.2018 1.10.2017
RM RM RM

Deferred tax liabilities

Taxable temporary differences arising from:
 Property, plant and equipment 4,830 6,104 7,504
 Surplus arising from revaluation of
  land and buildings (98,330) (98,330) (71,830)

(93,500) (92,226) (64,326)

The deferred tax assets and liabilities are not available for set-off as they arise from different taxable entities
within the Group.
MKH Berhad
173
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2019

18. RECEIVABLES, DEPOSITS AND PREPAYMENTS

The Group
30.9.2019 30.9.2018 1.10.2017
RM RM RM
Note (Restated) (Restated)

Non-current
Trade
Loan receivables (a) 23,920,529 20,989,966 20,766,372
Trade receivables (d) - - 855,493

Prepayments (b) 11,132,825 10,362,080 9,564,650

Other receivables (c) 1,108,562 1,031,666 1,169,973

36,161,916 32,383,712 32,356,488

Current
Trade
Trade receivables 128,846,387 189,976,534 162,995,590
Less: Allowance for impairment loss (1,053,868) (825,130) (915,545)

(d) 127,792,519 189,151,404 162,080,045

Finance lease receivables (e) - - 890
Loan receivables (a) 674,239 2,609,781 266,307
Less: Allowance for impairment loss (116,286) - -

557,953 2,609,781 266,307

128,350,472 191,761,185 162,347,242

Current
Non-trade
Other receivables (g) 45,686,181 35,306,484 24,022,155
Less: Allowance for impairment loss (5,026,398) (518,564) (550,764)

40,659,783 34,787,920 23,471,391

Deposits for development land acquisition 100,000 100,000 100,000
Joint venture deposits for land development (h) 20,954,000 1,344,474 16,104,969
Other deposits (i) 21,852,363 18,247,150 17,922,259
Prepayments (j) 17,813,486 17,619,960 46,819,958

229,730,104 263,860,689 266,765,819

174 ANNUAL REPORT 2019

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2019

18. RECEIVABLES, DEPOSITS AND PREPAYMENTS (CONT’D)

The Company
30.9.2019 30.9.2018 1.10.2017
Note RM RM RM

Non-Current
Non-trade
Amount due from subsidiaries (f) 379,443,402 336,774,078 296,690,339
Less: Allowance for impairment loss (178,000) (178,000) (178,000)

379,265,402 336,596,078 296,512,339

Current
Non-trade
Amount due from subsidiaries (f) 5,525,215 25,838,363 4,344,703

Other receivables (g) 33,830 37,630 44,710

Less: Allowance for impairment loss (33,830) (36,530) (43,730)
- 1,100 980
Joint venture deposits for land development (h) 15,000,000 - -
Other deposits 30,000 30,000 33,000

20,555,215 25,869,463 4,378,683

(a) Loan receivables

The Group
30.9.2019 30.9.2018 1.10.2017
RM RM RM

Term loan (business) 24,594,768 23,599,747 21,028,947

Other loan - - 3,732

24,594,768 23,599,747 21,032,679

The maturity profile of loan receivables is as follows:

Term loan Other loan Total

RM RM RM

30.9.2019
Fixed rate instruments
Receivable within 1 year 674,239 - 674,239
Receivable after 1 year but not later than 2 years 19,815,647 - 19,815,647
Receivable after 2 years but not later than 3 years 4,070,647 - 4,070,647
Receivable after 3 years but not later than 4 years 34,235 - 34,235

24,594,768 - 24,594,768
MKH Berhad
175
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2019

18. RECEIVABLES, DEPOSITS AND PREPAYMENTS (CONT’D)

(a) Loan receivables (Cont’d)

The maturity profile of loan receivables is as follows:

Term loan Other loan Total
RM RM RM

30.9.2018
Fixed rate instruments
Receivable within 1 year 2,609,781 - 2,609,781
Receivable after 1 year but not later than 2 years 3,351,872 - 3,351,872
Receivable after 2 years but not later than 3 years 17,088,521 - 17,088,521
Receivable after 3 years but not later than 4 years 549,573 - 549,573

23,599,747 - 23,599,747

1.10.2017
Fixed rate instruments
Receivable within 1 year 262,575 3,732 266,307
Receivable after 1 year but not later than 2 years 5,435,192 - 5,435,192
Receivable after 2 years but not later than 3 years 158,180 - 158,180
Receivable after 3 years but not later than 4 years 15,173,000 - 15,173,000

21,028,947 3,732 21,032,679

The loan receivables bear effective interest at rates ranging from 5.0% to 8.5% (30.9.2018 and 1.10.2017:
5.0% to 12.0%) per annum.

The movement of allowance account used to record the impairment of loan receivables is as follows:

The Group
2019 2018
RM RM

At beginning of year - -
Additions 116,286 -

At end of year 116,286 -

(b) Included in non-current prepayments of the Group is an amount of RM9,485,916 (30.9.2018: RM9,333,363;
1.10.2017: RM8,152,285) in respect of property infrastructure costs incurred on a plot of land leased from
PAK for a period of 60 years for future construction of a retail mall.

(c) This is in respect of an amount due from Plasma Farmers Cooperative in Indonesia. In accordance with the
Indonesian Government policy, a subsidiary assumes the responsibilities to develop plantation for small
land holders (known as Plasma Farmers) in addition to its own plantation. The subsidiary is also required
to train and supervise the Plasma Farmers and purchase the fresh fruit bunches from the farmers at prices
determined by the Government. The amount is unsecured, interest-free, to be settled in cash not within
one year.
176 ANNUAL REPORT 2019

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2019

18. RECEIVABLES, DEPOSITS AND PREPAYMENTS (CONT’D)

(d) Trade receivables

(i) The Group’s normal trade credit term ranges from 7 to 90 days (30.9.2018 and 1.10.2017: 7 to 90
days).

(ii) The ageing analysis of the Group’s trade receivables is as follows:

The Group
30.9.2019 30.9.2018 1.10.2017
RM RM RM

Neither past due nor impaired 105,624,308 166,700,611 147,235,616

1 to 30 days past due not impaired 12,591,096 9,371,488 9,649,393

31 to 60 days past due not impaired 6,916,293 4,396,999 3,224,736
61 to 90 days past due not impaired 869,024 1,651,926 775,930
More than 90 days past due not impaired 1,791,798 7,030,380 2,049,863

22,168,211 22,450,793 15,699,922

Past due and impaired 1,053,868 825,130 915,545

128,846,387 189,976,534 163,851,083

Receivables that are neither past due nor impaired

Trade receivables that are neither past due nor impaired comprise property purchasers mostly
are with end financing facilities from reputable end-financiers whilst the others are creditworthy
customers with good payment records.

None of the Group’s trade receivables that are neither past due nor impaired have been renegotiated
during the financial year.

Receivables that are past due but not impaired

Trade receivables of the Group amounting to RM22,168,211 (30.9.2018: RM22,450,793; 1.10.2017:


RM15,699,922) which are past due but not impaired because there have been no significant changes
in credit quality of the debtors and the amounts are still considered recoverable. The Group does
not hold any collateral or other credit enhancements over these balances.

Receivables that are impaired

The movement of allowance accounts used to record the impairment is as follows:

The Group
30.9.2019 30.9.2018
RM RM

At beginning of year 825,130 915,545

Addition 626,174 77,374
No longer required (250,778) (25,662)
Written off (146,658) (142,127)

At end of year 1,053,868 825,130
MKH Berhad
177
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2019

18. RECEIVABLES, DEPOSITS AND PREPAYMENTS (CONT’D)

(d) Trade receivables (Cont’d)

Receivables that are impaired (Cont’d)

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

The Group always measures the loss allowance for trade receivables at an amount equal to lifetime
expected credit loss (“ECLs”). The ECLs on trade receivables are estimated by reference to past
default experience of the debtor and an analysis of the debtor’s current financial position, adjusted
for factors that are specific to the debtors, general economic conditions of the industry in which
the debtors operate and an assessment of both the current as well as the forecast direction of
conditions at the reporting date.

There has been no change in the estimation techniques or significant assumptions made during the
current reporting period.

(iii) Included in trade receivables of the Group are:

(a) retention sums amounting to RM47,508,022 (30.9.2018: RM61,444,985; 1.10.2017: RM71,415,710)

held by stakeholders;

(b) amount of RM130,225 (30.9.2018: RM149,495 and 1.10.2017: RMNil) due from key management
personnel of the Group in respect of purchase of development properties of the Group
which include retention sum of RM43,525 (30.9.2018: RM43,525; 1.10.2017: RMNil) held by
stakeholders;

(c) amount of RMNil (30.9.2018: RMNil; 1.10.2017: RM387,504) due from a corporate shareholder
of a subsidiary in respect of purchase of development properties of the said subsidiary;

(d) amount of RMNil (30.9.2018: RM6,200; 1.10.2017: RMNil) due from a corporate in which a
director of the Company has substantial interest in respect of purchase of development
properties of the Group which include retention sum of RMNil (30.9.2018: RM6,200; 1.10.2017:
RMNil) held by stakeholders;

(e) amount of RMNil (30.9.2018: RM10,075; 1.10.2017: RM20,150) due from a director of the
Company in respect of purchase of development properties of the Group which represent
retention sum of RMNil (30.9.2018: RM10,075; 1.10.2017: RM20,150) held by stakeholders;

(f) 
amount of RM79,550 (30.9.2018: RM256,080; 1.10.2017: RM73,725) due from a person
connected to certain directors of the Company in respect of purchase of development
properties of the Group which include retention sum of RM79,550 (30.9.2018: RM79,550;
1.10.2017: RM73,725) held by stakeholders; and
178 ANNUAL REPORT 2019

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2019

18. RECEIVABLES, DEPOSITS AND PREPAYMENTS (CONT’D)

(d) Trade receivables (Cont’d)

(iii) Included in trade receivables of the Group are: (Cont’d)

(g) amount of RM28,719 (30.9.2018: RM6,009,426; 1.10.2017: RM2,160,395) due from an associate.

(e) Finance lease receivables

The Group
30.9.2019 30.9.2018
RM RM

Receivable within 1 year

Gross investment in finance lease
 receivables 1,108,695 1,109,195
Less: Unearned finance income (88,856) (88,856)

Present value of minimum lease
 payment receivables 1,019,839 1,020,339
Less: Allowance for impairment loss
At beginning of year (1,020,339) (1,019,649)
Additions - (890)
No longer required 500 200

At end of year (1,019,839) (1,020,339)

- -

The finance lease receivables bear effective interest at 8.15% (30.9.2018 and 1.10.2017: 8.15%) per annum.

The maturity profile of finance lease receivables is as follows:

The Group
30.9.2019 30.9.2018 1.10.2017
RM RM RM

Fixed rate instrument

Receivable within 1 year - - 890

(f) Included in amount due from subsidiaries are unsecured amounts of:

(i) RM379,265,402 (30.9.2018: RM336,596,078; 1.10.2017: RM296,512,339) which bears interest at 5.79%
(30.9.2018: 5.99%; 1.10.2017: 5.85%) per annum and is not expected to be settled within the next 12
months; and

(ii) RM5,525,215 (30.9.2018: RM25,838,363; 1.10.2017: RM4,344,703) which is interest-free and repayable
on demand.
MKH Berhad
179
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2019

18. RECEIVABLES, DEPOSITS AND PREPAYMENTS (CONT’D)

(g) Included in other receivables of the Group and the Company are:

(i) an amount of RM17,124,894 (30.9.2018: RM8,752,676; 1.10.2017: RM3,621,392) being indirect taxes
paid in advance to tax authorities;

(ii) an amount of RM5,996,149 (30.9.2018: RM4,825,917; 1.10.2017: RM4,198,434) being amount due from
Plasma Farmers Cooperative in Indonesia; and

The movement of allowance account used to record the impairment of other receivables is as
follows:

The Group
2019 2018
RM RM

At beginning of year 518,564 550,764

Additions 4,531,362 -
No longer required (23,528) (32,200)

At end of year 5,026,398 518,564

The Company
2019 2018
RM RM

At beginning of year 36,530 43,730

No longer required (2,700) (7,200)

At end of year 33,830 36,530

The impaired other receivables at the reporting date relate to debtors that have defaulted on
payment. These receivables are not secured by any collateral or credit enhancements.

(h) The joint venture deposits of the Group and of the Company are paid to landowners in respect of Joint
Venture Agreements (“Agreements”) whereby the Group and the Company are responsible to implement
and undertake the overall development projects on the land owned by the third parties upon fulfilment
of the terms and conditions as stipulated in the Agreements. In the previous financial year, the Group
reclassified joint venture deposits amounted to RM15,265,716 to property development costs upon
fulfilment of terms and conditions stipulated in the Agreements as disclosed in Note 19.

(i) Included in other deposits of the Group is RM14,589,339 (30.9.2018: RM13,759,524; 1.10.2017: RM13,440,271)
paid to the relevant authorities for property development projects.
180 ANNUAL REPORT 2019

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2019

18. RECEIVABLES, DEPOSITS AND PREPAYMENTS (CONT’D)

(j) Included in prepayments of the Group are:

(i) RMNil (30.9.2018: RMNil; 1.10.2017: RM1,290,188) paid for the acquisition of land in Indonesia. In the
previous financial year, the Group reclassified prepayments amounted to RM1,290,188 to prepaid
lease payments as disclosed in Note 12;

(ii) RM6,155,837 (30.9.2018: RM5,668,010; 1.10.2017: RM28,612,485) preliminary costs incurred in respect
of future property development projects. In the previous financial year, the Group reclassified
certain prepayments pertaining to joint venture projects amounted to RM28,597,733 to property
development costs upon fulfilment of terms and conditions as stipulated in the agreement as
disclosed in Note 19; and

(iii) 
an amount of RM8,706,155 (30.9.2018: RM11,349,748; 1.10.2017: RM12,669,284) paid to Trustee
accounts for joint development of infrastructure projects with other developers.

19. PROPERTY DEVELOPMENT COSTS

The Group
2019 2018
RM RM

At cost:

Freehold land
At beginning of year 204,227,635 110,620,937
Additions 29,632,449 69,675,547
Reclassify to development costs (18,392,560) -
Transfer from land held for property development (Note 16) 4,586,972 59,693,359
Transfer from joint venture deposits (Note 18 (h)) - 15,265,716
Transfer from prepayments (Note 18 (j) (ii)) - 22,970,197
Transfer to inventories - (14,288,605)
Adjustment on completion of projects - (59,709,516)

At end of year 220,054,496 204,227,635

Leasehold land
At beginning of year 185,805,272 228,498,496
Additions 3,572,508 119,886
Reversal of provision for landowners’ entitlement (305,988) (2,154,229)
Transfer from land held for property development (Note 16) 11,552,782 18,277,835
Transfer to inventories (5,066,956) (9,341,879)
Adjustment on completion of projects (52,589,086) (49,594,837)

At end of year 142,968,532 185,805,272
MKH Berhad
181
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2019

19. PROPERTY DEVELOPMENT COSTS (CONT’D)

The Group
2019 2018
RM RM

Development costs
At beginning of year 374,024,725 531,191,372
Additions 378,982,524 398,290,689
Reclassify from freehold land 18,392,560 -
Transfer from prepayments
 (Note 18 (j) (ii)) - 5,627,536
Transfer from land held for property
 development (Note 16) 51,604,717 21,981,744
Transfer to inventories (13,937,380) (162,543,802)
Adjustment on completion of projects (215,941,375) (420,522,814)

At end of year 593,125,771 374,024,725

Total land and development costs 956,148,799 764,057,632

Less: Costs recognised as an

    expense in profit or loss
At beginning of year 297,343,435 395,341,528
Additions (Note 5) 510,596,216 431,829,074
Adjustment on completion of projects (268,530,461) (529,827,167)

At end of year 539,409,190 297,343,435

416,739,609 466,714,197

Included in the above are:

(i) interest on borrowing capitalised for the financial year amounting to RMNil (30.9.2018: RM6,190,808;
1.10.2017: RM6,836,527);

(ii) titles of freehold land amounting to RM14,831,054 (30.9.2018: RM8,644,397; 1.10.2017: RM8,734,375) which
have been pledged with a financial institution for term loan facility granted to certain subsidiaries as
disclosed in Note 29;

(iii) titles of leasehold land amounting to RM62,643,600 (30.9.2018: RM62,643,600; 1.10.2017: RM116,905,077)
which have been pledged with a financial institution for term loan facility granted to certain subsidiaries
as disclosed in Note 29; and

(iv) 
freehold and leasehold land amounting to RM224,348,703 (30.9.2018: RM254,221,979; 1.10.2017:
RM181,145,276) represent entitlements of the landowners pursuant to joint venture and joint land
development agreements to undertake property development projects. The titles to the development
land will be transferred from landowners to the property purchasers.
182 ANNUAL REPORT 2019

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2019

20. INVENTORIES

The Group
30.9.2019 30.9.2018 1.10.2017
RM RM RM

At cost:
Raw materials 268,940 461,498 512,371
Work-in-progress 169,600 260,665 639,863
Finished goods 1,083,362 1,651,881 1,424,203
Food and beverages 40,333 30,762 43,047
Plantation consumables 8,317,720 6,324,812 6,231,775
Fertilizers 9,051,615 9,226,966 1,508,120
Crude palm oil and palm kernel 3,526,480 15,905,043 7,455,514
Completed development properties 159,342,555 227,673,203 134,970,018

181,800,605 261,534,830 152,784,911

At net realisable value:
Completed development properties 12,050,000 12,050,000 400,000

193,850,605 273,584,830 153,184,911

During the financial year, the cost of inventories recognised as an expense in cost of sales of the Group is
RM280,359,101 (30.9.2018: RM279,412,883; 1.10.2017: RM270,014,521).

Included in inventories of the Group is an amount of RMNil (30.9.2018: RM37,629,751; 1.10.2017: RM28,702,454)
being entitlements of the landowner pursuant to Joint Venture Agreements to undertake a property development
projects.

21. CONTRACT ASSETS AND LIABILITIES

The Group
30.9.2019 30.9.2018 1.10.2017
RM RM RM

Contract assets 281,297,699 198,704,864 152,556,850

Contract liabilities (2,141,093) - (870,000)

Net 279,156,606 198,704,864 151,686,850

The Group
2019 2018
RM RM

At beginning of the year 198,704,864 151,686,850

Consideration paid/payable to customers 169,975,605 110,566,052
Revenue recognised during the year (Note 4) 698,864,661 616,381,006
Progress billing during the year (788,388,524) (679,929,044)

279,156,606 198,704,864
MKH Berhad
183
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2019

21. CONTRACT ASSETS AND LIABILITIES (CONT’D)

Revenue from property development activities is recognised over time using the cost-based input method,
which is measured on the basis of the Group’s efforts or inputs to the property development costs incurred to
date relative to the total expected property development costs.

The transaction price allocated to the unsatisfied performance obligations as at 30 September 2019 is
RM1,115,128,882. The remaining performance obligations are expected to be recognised within the remaining 4
years.

The Group has applied the practical expedient in MFRS 15 whereby the transaction price allocated to unsatisfied
or partially unsatisfied performance obligations as at 30 September 2018 is not disclosed.

22. BIOLOGICAL ASSETS

The Group
2019 2018
RM RM
(Restated)

Net Book Value

At beginning of year 5,960,459 5,041,948
Changes in fair value (1,170,893) 1,533,164
Effect of movements in exchange rate 392,168 (614,653)

At end of year 5,181,734 5,960,459

The biological assets of the Group comprise fresh fruit bunches (“FFB”) prior to harvest. Management has
considered FFB less than 15 days before harvesting in the calculation of fair value. FFB more than 15 days before
harvesting are excluded from the valuation as their fair values are considered negligible.

The fair value measurement of the biological assets is valued using present value of net cashflows expected to be
generated from the sale of FFB, adjusted for estimated oil content of unharvested FFB, less harvesting, transport
and other costs to sell and is categorised within Level 3 of the fair value hierarchy is disclosed in Note 42.

During the financial year, the Group harvested approximately 459,222 metric tonnes (“MT”) of FFB (30.9.2018:
464,774 MT; 1.10.2017: 397,569 MT).

23. CASH, BANK BALANCES, TERM DEPOSITS AND FIXED INCOME FUNDS

The Group
30.9.2019 30.9.2018 1.10.2017
RM RM RM

Deposits with licensed banks 10,325,296 12,611,412 8,830,105

Cash and bank balances 128,387,261 106,698,370 132,260,508
Cash held under housing development accounts 241,678,107 78,206,979 91,347,222
Fixed income funds:
 Redeemable at call 8,862,827 1,476,808 10,378,499
 Redeemable upon 1 day notice 13,643,057 17,953,612 11,183,738
 Redeemable upon 5 days notice 2,259,458 10,779,035 10,609,703

405,156,006 227,726,216 264,609,775

184 ANNUAL REPORT 2019

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2019

23. CASH, BANK BALANCES, TERM DEPOSITS AND FIXED INCOME FUNDS (CONT’D)

The Company
30.9.2019 30.9.2018 1.10.2017
RM RM RM

Cash and bank balances 593,455 3,941,479 12,145,700

The deposits bear effective interest at rates ranging from 2.19% to 3.86% (30.9.2018: 1.56% to 5.05%; 1.10.2017:
1.56% to 3.67%) per annum with maturity period ranging from 30 days to 365 days (30.9.2018 and 1.10.2017: 15
days to 365 days).

Fixed income funds represent investment in highly liquid money market funds, which are readily convertible to
known amounts of cash and are subject to an insignificant risk of changes in value.

Cash held under housing development accounts represent amounts placed in Housing Development Accounts
(“HDA”) in accordance with Section 7(A) of the Housing Development (Control and Licensing) Act, 1966
(Amended 2002). These HDA accounts, which consist of monies received from purchasers, are for the payment
of property development costs incurred. The surplus monies in these accounts, if any, will be released to the
Group in accordance with the provisions of the Act.

The non-short term and highly liquid fixed deposits of RM8,113,020 (30.9.2018: RM10,105,200; 1.10.2017:
RM4,312,380) included in deposit with licensed banks have maturity period of more than 3 months.

Cash and cash equivalents held by the Group which are not freely available for general use are as follows:

(i) deposits amounting to RM2,000,000 (30.9.2018 and 1.10.2017: RM2,000,000) pledged for bank guarantee
facilities granted to a subsidiary;

(ii) bank balances of RM13,649,248 (30.9.2018: RM16,142,455; 1.10.2017: RM16,480,238) pledged as restricted
fund held as security for the credit facilities as disclosed in Note 29; and

(iii) deposit and bank balances of RM33,614 (30.9.2018: RM27,795; 1.10.2017: RM24,377) held under sinking
fund account for the recreational club.

24. NON-CURRENT ASSETS CLASSIFIED AS HELD FOR SALE

The Group
2019 2018
RM RM

At cost:
At beginning of year - 22,549,538
Transfer (to)/from land held for property
 development (Note 16) 1,543,550 (12,521,988)
Disposals - (10,027,550)

At end of year 1,543,550 -
MKH Berhad
185
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2019

24. NON-CURRENT ASSETS CLASSFIED AS HELD FOR SALE (CONT’D)

This was in respect of the sales and purchase agreement entered into between a subsidiary and third parties for
disposal of leasehold land held under land held for property development:

2019:

(i) on 3 December 2018 for the disposal of a piece of leasehold land located at Hillpark Shah Alam for a total
cash consideration of RM298,427; and

(ii) on 3 December 2018 for the disposal of a piece of leasehold land located at Hillpark Shah Alam for a total
cash consideration of RM1,441,996.

2018:

(i) on 6 January 2016 for the disposal of a piece of leasehold land located at Hillpark Shah Alam for a total
cash consideration of RM9,500,000;

(ii) on 16 January 2017 for the disposal of a piece of leasehold land located at Hillpark Shah Alam for a total
cash consideration of RM7,587,739;

(iii) on 16 May 2017 for the disposal of a piece of leasehold land located at Hillpark Shah Alam for a total cash
consideration of RM11,273,000; and

(iv) on 9 February 2018 for the disposal of a piece of leasehold land located at Hillpark Shah Alam for a total
cash consideration of RM2,247,696.

The sales and purchase agreements entered on 16 January 2017 and 16 May 2017 respectively have been revoked
in the previous financial year and the land cost has been transferred to land held for property development.

The disposals of leasehold land located at Hillpark Shah Alam as mentioned in 2018 (i) and (iv) above were
completed in the previous financial year.

25. SHARE CAPITAL

The Group and The Company
Number of shares Amount
Share capital Share capital
(issued and Treasury (issued and Treasury
fully paid-up) shares fully paid-up) shares
RM RM

2019
At beginning of year 586,548,168 (4,038,600) 654,458,655 (5,437,937)
Share buy back - (3,475,000) - (4,199,140)

At end of year 586,548,168 (7,513,600) 654,458,655 (9,637,077)

2018
At beginning of year 562,901,922 - 613,315,284 -
Issuance of shares
 pursuant to warrants 23,646,246 - 41,143,371 -
Share buy back - (4,038,600) - (5,437,937)

At end of year 586,548,168 (4,038,600) 654,458,655 (5,437,937)

186 ANNUAL REPORT 2019

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2019

25. SHARE CAPITAL (CONT’D)

(a) Share capital

The holders of ordinary shares are entitled to receive dividends as declared from time to time and are
entitled to one vote per share at meetings of the Company. All ordinary shares rank equally with regard to
the Company’s residual assets.

(b) Treasury shares

Treasury shares relate to ordinary shares of the Company that are held by the Company. The amount
consists of the acquisition costs of treasury shares net of the proceeds received on their subsequent sale
or issuance.

The Company acquired 3,475,000 (30.9.2018: 4,038,600; 1.10.2017: Nil) shares in the Company through
purchases on the Bursa Malaysia Securities Berhad during the financial year. The total amount paid to
acquire the shares including transaction costs was RM4,199,140 (30.9.2018: RM5,437,937; 1.10.2017: RMNil)
and this was presented as a component within shareholders’ equity.

The directors of the Company are committed to enhancing the value of the Company for its shareholders and
believe that the repurchase plan can be applied in the best interests of the Company and its shareholders.
The repurchase transactions were financed by internally generated funds. The shares repurchased are held
as treasury shares.

26. RESERVES

The Group
30.9.2019 30.9.2018 1.10.2017
RM RM RM
(Restated) (Restated)

Non-distributable
Translation reserve (4,551,006) (6,789,776) (3,428,618)
Revaluation reserve 23,402,037 23,402,037 23,533,537
Warrant reserve - - 4,761,173

18,851,031 16,612,261 24,866,092
Distributable
Retained earnings 952,212,746 887,002,206 843,577,533

971,063,777 903,614,467 868,443,625
MKH Berhad
187
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2019

26. RESERVES (CONT’D)

The Company
30.9.2019 30.9.2018 1.10.2017
RM RM RM

Non-distributable
Revaluation reserve 620,407 620,407 646,907
Warrant reserve - - 4,761,173

620,407 620,407 5,408,080
Distributable
Retained earnings 402,096,741 374,512,623 345,514,351

402,717,148 375,133,030 350,922,431

Translation reserve

The translation reserve comprises all foreign currency differences arising from the translation of the financial
statements of foreign operations as well as the foreign currency 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 or another currency.

Revaluation reserve

The revaluation reserve relates to the revaluation of land and buildings.

Warrant reserve

On 31 December 2012, the Company allotted and issued 29,104,378 free warrants constituted under the deed poll
dated 23 November 2012.

The salient features of the warrants are as follows:

(i) entitles its registered holders to subscribe for one (1) new ordinary share at the exercise price during the
exercise period;

(ii) the exercise price is RM2.26 per share subject to adjustments in accordance with the provisions of the
deed poll executed; and

(iii) the warrants may be exercised at any time for a period of five years from 31 December 2012 to 30 December
2017 (“exercise period”). Warrants that are not exercised during the exercise period will thereafter lapse
and become void.

The warrants expired on 29 December 2017.

Retained earnings

Distributable reserves are those available for distribution as dividends. The entire retained earnings of the
Company are available to be distributed as single tier dividends to the shareholders of the Company.
188 ANNUAL REPORT 2019

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2019

27. PROVISIONS

Post-employment
benefit Retirement
obligations gratuity Total
RM RM RM

The Group
2019
At beginning of year 8,732,893 20,183,386 28,916,279
Provision during the financial year 10,117,286 - 10,117,286
Incurred during the financial year (785,667) - (785,667)
Remeasurement gain on defined benefit plans:
 Actuarial gain arising from experience adjustments (4,090,635) - (4,090,635)
Effect of movements in exchange rate 587,483 - 587,483

At end of year 14,561,360 20,183,386 34,744,746

2018
At beginning of year 11,453,546 20,183,386 31,636,932
Provision during the financial year 1,497,090 - 1,497,090
Incurred during the financial year (1,031,517) - (1,031,517)
Remeasurement gain on defined benefit plans:
 Actuarial gain arising from experience adjustments (2,200,700) - (2,200,700)
Effect of movements in exchange rate (985,526) - (985,526)

At end of year 8,732,893 20,183,386 28,916,279

The above provisions are classified as follows:

Post-employment
benefit Retirement
obligations gratuity Total
RM RM RM

The Group
30.9.2019
Non-current 14,561,360 - 14,561,360
Current - 20,183,386 20,183,386

14,561,360 20,183,386 34,744,746

30.9.2018
Non-current 8,732,893 - 8,732,893
Current - 20,183,386 20,183,386

8,732,893 20,183,386 28,916,279

1.10.2017
Non-current 11,453,546 - 11,453,546
Current - 20,183,386 20,183,386

11,453,546 20,183,386 31,636,932

MKH Berhad
189
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2019

27. PROVISIONS (CONT’D)

(a) Post-employment benefit obligations

Two subsidiaries of the Company in Indonesia operate unfunded defined benefit schemes, as required
under the Labour Law of the Republic of Indonesia. The defined benefit schemes expose the Group to
actuarial risks, such as longetivity risk and interest rate risk.

The amount recognised in the consolidated statements of financial position is determined as follows:

The Group
30.9.2019 30.9.2018 1.10.2017
RM RM RM

Present value of obligations 14,561,360 8,732,893 11,453,546

Movement in the present value of unfunded defined benefit scheme in the current financial year are as
follows:

The Group
2019 2018
RM RM

At beginning of year 8,732,893 11,453,546

Amounts recognised in
profit or loss (Note 6):
Current service costs 3,983,020 4,283,727
Interest on obligation 1,281,687 775,264
Past service cost 4,852,579 (3,561,901)

10,117,286 1,497,090
Amounts recognised in other comprehensive income:
 Remeasurement gain (4,090,635) (2,200,700)
Benefit paid (785,667) (1,031,517)
Effect of movements in
exchange rates 587,483 (985,526)

At end of year 14,561,360 8,732,893
190 ANNUAL REPORT 2019

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2019

27. PROVISIONS (CONT’D)

(a) Post-employment benefit obligations (Cont’d)

The defined benefit obligation expenses were determined based on actuarial valuations prepared by an
independent actuary using the projected unit credit method. Principal assumptions at reporting date are
as follows:

The Group
30.9.2019 30.9.2018 1.10.2017
RM RM RM

Discount rate 8.25% 9.25% - 9.75% 7.5%

Future salary increase 8% 10% 10%
Mortality rate 100%TMI3 100%TMI3 100%TMI3
Resignation rate 4% - 9% until 4% - 9% until 4% - 9% until
age of 30 - 32 age of 30 - 32 age of 30 - 32
then decrease then decrease then decrease
linearly to 0% linearly to 0% linearly to 0%
at age of 57 at age of 56 at age of 55

Disability 5% of mortality 5% of mortality 5% of mortality
rate rate rate
Normal retirement age 57 56 55

Sensitivity analysis

The sensitivity analysis below has been determined based on reasonably possible changes in the discount
rate and future salary increase occurring at the reporting date, while holding all other assumptions
constant.

The Group
Increase/(Decrease) in profit
30.9.2019 30.9.2018 1.10.2017
RM RM RM

Discount rate increase by 1% 1,411,923 829,352 1,260,891

Discount rate decrease by 1% (1,665,602) (1,159,590) (1,507,646)
Future salary increase by 1% (1,675,289) (1,153,089) (1,472,743)
Future salary decrease by 1% 1,445,264 841,389 1,258,670

The sensitivity analysis presented above has been determined using deterministic method and may not
be representative of the actual change in the defined benefit obligation as it is unlikely that the change in
assumptions would occur in isolation of one another as some of the assumptions may be correlated.

At 30 September 2019, the weighted-average duration of the defined benefit obligation was 15.52 to 18.50
years (30.9.2018: 18.28 to 22.18 years; 1.10.2017: 17.95 to 21.90 years).
MKH Berhad
191
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2019

27. PROVISIONS (CONT’D)

(a) Post-employment benefit obligations (Cont’d)

Sensitivity analysis (Cont’d)

The benefits, which reflect the expected future services, as appropriate are expected to be paid as follows:

The Group
30.9.2019 30.9.2018 1.10.2017
RM RM RM

Within 1 year 862,263 469,189 577,278

Between 2 and 5 years 6,661,519 3,984,844 4,440,283
After 5 years 16,848,935 11,852,637 15,087,817

24,372,717 16,306,670 20,105,378

(b) Retirement gratuity

Provision for retirement gratuity are for certain eligible directors. The accounting policy in respect of the
retirement gratuity scheme is disclosed in Note 3(f)(iii).

28. PAYABLES AND ACCRUALS

The Group
30.9.2019 30.9.2018 1.10.2017
Note RM RM RM

Non-current
Landowners’ entitlement (a) 294,501,382 273,233,000 326,856,547
Retention sum payable to subcontractors after one year 15,210,808 16,073,920 19,655,167

309,712,190 289,306,920 346,511,714

Current
Trade
Trade payables (b) 277,270,307 279,167,694 225,103,708
Landowners’ entitlement (a) 130,036,194 144,978,155 108,362,901
Retention sum payable to subcontractors within one year 46,050,150 44,171,905 52,638,403

Non-trade
Deferred revenue (d) 9,839,466 9,158,189 16,308,921
Other payables 49,525,019 27,955,538 25,227,206
Deposits received (e) 13,684,831 14,857,889 16,752,330
Advances from customers (f) 9,847,132 7,353,983 5,997,888
Accruals (g) 30,426,790 45,660,079 47,109,342

566,679,889 573,303,432 497,500,699

192 ANNUAL REPORT 2019

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2019

28. PAYABLES AND ACCRUALS (CONT’D)

The Company
30.9.2019 30.9.2018 1.10.2017
Note RM RM RM

Current
Non-trade
Amount due to subsidiaries (c) 12,343 8,160 12,720
Other payables 55,960 65,800 341,247
Accruals (g) 701,218 465,976 990,767

769,521 539,936 1,344,734

(a) These are in respect of payable for landowners’ entitlement under deferred payment term pursuant to
the joint land development agreements and joint venture agreements entered into with the landowners.
Pursuant to the said agreements, the entitlements are determined based on agreed percentage on the
total development units and/or total gross development value net of trade discount, where applicable, of
the property development projects. These deferred payables are measured at amortised cost at imputed
interest rates ranging from 5.56% to 10.00% (30.9.2018: 5.81% to 10.00%; 1.10.2017: 5.61% to 10.00%) per
annum.

(b) The normal trade credit term granted to the Group ranges from 7 to 90 days (30.9.2018 and 1.10.2017: 7 to
90 days) unless as specified in the agreements.

Included in trade payables is amount due to an associate of the Group of RM7,465,019 (30.9.2018:
RM6,587,169; 1.10.2017: RM2,668,949) which include retention sum of RM7,465,019 (30.9.2018: RM5,675,820;
1.10.2017: RM2,668,949).

(c) Amount due to subsidiaries of the Company is unsecured, interest-free and is repayable on demand.

(d) The deferred revenue arises in respect of the progress billings issued in relation to the disposal of
inventories and is expected to be recognised within 12 months.

(e) Included in deposits received of the Group are:

(i) an amount of RM8,027,806 (30.9.2018: RM8,930,313; 1.10.2017: RM8,894,376) being rental, utilities
and other deposits received from tenants; and

(ii) an amount of RM4,112,332 (30.9.2018: RM3,564,929; 1.10.2017: RM2,616,463) being downpayment
from purchasers of development properties.

(f) Advances from customers of the Group is downpayment from purchasers of crude palm oil and palm
kernel.

(g) 
Included in accruals of the Group are accrued legal and professional fees and agents commission
totalling RM17,871,219 (30.9.2018: RM33,502,220; 1.10.2017: RM35,179,447) in respect of on-going property
development projects.
MKH Berhad
193
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2019

29. LOANS AND BORROWINGS

The Group
30.9.2019 30.9.2018 1.10.2017
RM RM RM

Non-current
Term loans
 Secured:
  RM 66,089,198 54,536,695 108,043,061
  United States Dollar 93,375,783 137,183,569 193,813,565

Revolving credits
 Secured:
  RM 153,522,750 157,815,750 141,130,907
Finance lease liabilities
  RM 695,248 955,169 1,151,820

313,682,979 350,491,183 444,139,353

Current
Term loans
 Secured:
  RM 5,557,345 39,028,182 55,833,339
  United States Dollar 24,729,898 32,812,595 28,504,262
 Unsecured:
  RM - - 3,000,000
  United States Dollar 16,725,320 - -

Bridging loan
 Secured:
  RM - - 6,306,911

Revolving credits
 Secured:
  RM 113,000,000 100,453,407 117,476,301
  United States Dollar 56,447,955 44,050,466 53,438,636
 Unsecured:
  RM 138,000,000 92,100,000 60,500,000
  United States Dollar 8,790,330 8,300,524 -

Bank overdrafts
 Secured:
  RM 3,315,044 3,187,603 1,987,551
 Unsecured:
  RM 3,978,915 1,601,813 508,170

Finance lease liabilities

 RM 536,475 730,903 822,294

371,081,282 322,265,493 328,377,464

684,764,261 672,756,676 772,516,817

194 ANNUAL REPORT 2019

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2019

29. LOANS AND BORROWINGS (CONT’D)

The Company
30.9.2019 30.9.2018 1.10.2017
RM RM RM

Current
Revolving credits
 Unsecured:
  RM 138,000,000 92,100,000 60,500,000
  United States Dollar 4,609,000 - -

Bank overdrafts
 Unsecured:
  RM 3,860,068 1,601,813 -

146,469,068 93,701,813 60,500,000

29. LOANS AND BORROWINGS (CONT’D)

The maturity profile of loans and borrowings of the Group is as follows:

The Group Carrying Within More than

MKH Berhad

30.9.2019 amount 1 year 1-2 years 2-3 years 3-4 years 4-5 years 5 years
RM RM RM RM RM RM RM

Fixed rate instrument

Finance lease liabilities
 RM 1,231,723 536,475 272,829 201,286 165,201 55,932 -

Floating rate instruments

Term loans
 Secured:
    RM 71,646,543 5,557,345 40,994,325 20,172,462 1,947,643 337,662 2,637,106
  United States Dollar 118,105,681 24,729,898 44,983,092 40,049,123 8,343,568 - -
 Unsecured:
  United States Dollar 16,725,320 16,725,320 - - - - -
NOTES TO THE FINANCIAL STATEMENTS

Revolving credits
FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2019

 Secured:
  RM 266,522,750 113,000,000 54,300,000 46,878,750 12,900,000 10,000,000 29,444,000
  United States Dollar 56,447,955 56,447,955 - - - - -
 Unsecured:
  RM 138,000,000 138,000,000 - - - - -
  United States Dollar 8,790,330 8,790,330 - - - - -
Bank overdrafts
 Secured:
  RM 3,315,044 3,315,044 - - - - -
 Unsecured:
  RM 3,978,915 3,978,915 - - - - -

683,532,538 370,544,807 140,277,417 107,100,335 23,191,211 10,337,662 32,081,106

684,764,261 371,081,282 140,550,246 107,301,621 23,356,412 10,393,594 32,081,106
195
29. LOANS AND BORROWINGS (CONT’D)
196

The maturity profile of loans and borrowings of the Group is as follows (Cont’d):

The Group Carrying Within More than

30.9.2018 amount 1 year 1-2 years 2-3 years 3-4 years 4-5 years 5 years
RM RM RM RM RM RM RM

Fixed rate instrument

Finance lease liabilities
 RM 1,686,072 730,903 485,198 218,967 144,837 106,167 -

Floating rate instruments

Term loans
 Secured:
  RM 93,564,877 39,028,182 36,420,532 12,967,852 1,539,227 851,283 2,757,801
  United States Dollar 169,996,164 32,812,595 44,545,823 44,628,828 39,731,519 8,277,399 -
Revolving credits
 Secured:
  RM 258,269,157 100,453,407 32,281,750 45,090,000 36,000,000 5,000,000 39,444,000
  United States Dollar 44,050,466 44,050,466 - - - - -
 Unsecured:
  RM 92,100,000 92,100,000 - - - - -
  United States Dollar 8,300,524 8,300,524 - - - - -
Bank overdrafts
 Secured:
  RM 3,187,603 3,187,603 - - - - -
 Unsecured:
  RM 1,601,813 1,601,813 - - - - -

671,070,604 321,534,590 113,248,105 102,686,680 77,270,746 14,128,682 42,201,801

672,756,676 322,265,493 113,733,303 102,905,647 77,415,583 14,234,849 42,201,801
FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2019
NOTES TO THE FINANCIAL STATEMENTS
ANNUAL REPORT 2019
29. LOANS AND BORROWINGS (CONT’D)

The maturity profile of loans and borrowings of the Group is as follows (Cont’d):

The Group Carrying Within More than

MKH Berhad

1.10.2017 amount 1 year 1-2 years 2-3 years 3-4 years 4-5 years 5 years
RM RM RM RM RM RM RM

Fixed rate instrument

Finance lease liabilities
 RM 1,974,114 822,294 675,813 381,818 87,304 6,885 -

Floating rate instruments
Term loans
 Secured:
  RM 163,876,400 55,833,339 50,371,199 22,863,163 12,839,227 12,839,227 9,130,245
  United States Dollar 222,317,827 28,504,262 53,797,516 45,387,965 45,539,940 40,610,389 8,477,755
 Unsecured:
  RM 3,000,000 3,000,000 - - - - -
NOTES TO THE FINANCIAL STATEMENTS

Bridging loan
FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2019

 Secured:
  RM 6,306,911 6,306,911 - - - - -
Revolving credits
 Secured:
  RM 258,607,208 117,476,301 34,766,227 22,881,750 22,000,000 61,482,930 -
  United States Dollar 53,438,636 53,438,636 - - - - -
 Unsecured:
   RM 60,500,000 60,500,000 - - - - -
Bank overdrafts
 Secured:
  RM 1,987,551 1,987,551 - - - - -
 Unsecured:
  RM 508,170 508,170 - - - - -

770,542,703 327,555,170 138,934,942 91,132,878 80,379,167 114,932,546 17,608,000

772,516,817 328,377,464 139,610,755 91,514,696 80,466,471 114,939,431 17,608,000

197
29. LOANS AND BORROWINGS (CONT’D)
198

The maturity profile of loans and borrowings of the Group is as follows (Cont’d):

Carrying Within More than

The Company amount 1 year 1-2 years 2-3 years 3-4 years 4-5 years 5 years
RM RM RM RM RM RM RM

30.9.2019
Floating rate instruments
Revolving credits
 Unsecured:
  RM 138,000,000
138,000,000 - - - - -
  United States Dollar 4,609,000 4,609,000 - - - - -
Bank overdraft
 Unsecured:
  RM 3,860,068 3,860,068 - - - - -

146,469,068
146,469,068 - - - - -

30.9.2018
Floating rate instruments
Revolving credits
 Unsecured:
  RM 92,100,000 92,100,000 - - - - -
Bank overdraft
 Unsecured:
  RM 1,601,813 1,601,813 - - - - -

93,701,813
93,701,813 - - - - -

1.10.2017
Floating rate instruments
Revolving credits
 Unsecured:
  RM 60,500,000
60,500,000 - - - - -
FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2019
NOTES TO THE FINANCIAL STATEMENTS
ANNUAL REPORT 2019
29. LOANS AND BORROWINGS (CONT’D)

Finance lease liabilities

Finance lease liabilities are payable as follows:

MKH Berhad

30.9.2019 30.9.2018 1.10.2017

Present Present Present
Future value of Future value of Future value of
minimum minimum minimum minimum minimum minimum
lease Finance lease lease Finance lease lease Finance lease
The Group payments charges
payments payments charges payments payments charges payments
RM RM RM RM RM RM RM RM RM

Less than
 one year 580,545 44,070 536,475 792,448 61,545 730,903 895,491 73,197 822,294
Between
 one and
 five years 741,938 46,690 695,248 1,014,223 59,054 955,169 1,203,428 51,608 1,151,820
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2019

1,322,483 90,760 1,231,723 1,806,671 120,599 1,686,072 2,098,919 124,805 1,974,114

199
200 ANNUAL REPORT 2019

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2019

29. LOANS AND BORROWINGS (CONT’D)

The finance lease liabilities bear effective interest at rates ranging from 1.71% to 6.00% (30.9.2018: 1.71% to 6.59%;
1.10.2017: 1.71% to 6.59%) per annum.

The term loans, bridging loan and revolving credits bear effective interest at rates ranging from 3.68% to 5.95%
(30.9.2018: 4.47% to 5.87%; 1.10.2017: 3.90% to 7.20%) per annum.

The bank overdrafts bear effective interest at rates ranging from 6.70% to 7.95% (30.9.2018: 7.32% to 7.90%;
1.10.2017: 7.60% to 7.65%) per annum.

 ecured revolving credit I of RM49,444,000 (30.9.2018 and 1.10.2017: RM49,444,000) is part of the total
S
revolving credit of RM50,000,000 which is repayable by way of redemption upon the full settlement of
secured revolving credit II. Secured revolving credit II of RM66,000,000 (30.9.2018: RM78,038,930; 1.10.2017:
RM100,038,930) is part of the total revolving credit of RM110,000,000 which is repayable by 10 equal half
yearly principal instalments of RM11,000,000 each over 8 years commencing on the first day of the 42nd month
following the date of first drawdown or payment by way of redemption whichever is earlier. Secured revolving
credit III of RM29,578,750 (30.9.2018: RM26,690,000; 1.10.2017: RMNil) is part of the total revolving credit of
RM90,000,000 which is repayable by 18 equal quarterly principal instalments of RM5,000,000 each over 4 1/2
year commencing on the first day of the 31st month following the date of first drawdown or payment by way of
redemption whichever is earlier. The revolving credits are secured and supported as follows:

(a) legal charge over the freehold land for property development of a subsidiary;

(b) corporate guarantee of the Company; and

(c) 3rd party specific debenture by way of fixed and floating charge over the land held for property
development of a subsidiary.

 erm loan I of RMNil (30.9.2018: RM7,724,980; 1.10.2017: RM15,044,980) is part of total term loan of RM22,000,000
T
which is repayable by 11 quarterly principal instalments of RM1,830,000 each and final payment of RM1,870,000
or any balance outstanding with the first repayment to commence on 39th month from the date of first
reimbursement or payment by way of redemption whichever is earlier. Term loan II of RM3,458,409 (30.9.2018:
RM22,033,429; 1.10.2017: RM35,393,429) is part of the total term loan of RM40,000,000 which is repayable
by 11 equal quarterly principal instalments of RM3,340,000 each and final payment of RM3,260,000 or any
balance outstanding with the first repayment to commence on 39th month from the day of first reimbursement
or payment by way of redemption whichever is earlier. The secured term loans are secured and supported as
follows:

(a) specific debenture over the project land of a subsidiary;

(b) corporate guarantee of the Company; and

(c) legal charge over freehold land held for property development of a subsidiary.
MKH Berhad
201
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2019

29. LOANS AND BORROWINGS (CONT’D)


Term loan III of RM26,059,530 (30.9.2018: RM30,178,625; 1.10.2017: RM50,000,000) is repayable by 16 quarterly
principal instalments of RM3,125,000 each commencing April 2019 and is secured and supported as follows:

(a) legal charge over leasehold land held for property development of a subsidiary;

(b) joint and several guarantee of the directors of a subsidiary; and

(c) corporate guarantee of the Company.

 erm loan IV of RM16,334,800 (30.9.2018: RM7,898,025; 1.10.2017: RMNil) is part of total term loan of RM27,500,000
T
and is repayable by 8 quarterly principal instalments of RM3,437,500 each and commencing 27 months from
the date of the disbursement or by way of redemption whichever is earlier. Secured revolving credit IV of
RM10,000,000 (30.9.2018: RM10,000,000; 1.10.2017: RMNil) is repayable by 4 quarterly principal instalments of
RM2,500,000 each and commencing 39 months from the date of the disbursement. The term loan and revolving
credit are secured and supported as follows:

(a) legal charge over the leasehold land of a subsidiary;

(b) specific debenture over the project land of a subsidiary;

(c) assignment over all applicable insurance policies;

(d) deed of assignment over designated accounts; and

(e) corporate guarantee of the Company.


Secured revolving credit V of RM20,000,000 (30.9.2018: RM20,000,000; 1.10.2017: RM20,000,000) and secured
bank overdraft I of RMNil (30.9.2018: RM3,187,603; 1.10.2017: RMNil) are repayable on demand and are secured
and supported as follows:

(a) legal charge over the leasehold land held for property development of a subsidiary; and

(b) corporate guarantee of the Company.

 erm loan V of RMNil (30.9.2018: RM6,994,304; 1.10.2017: RM20,994,304) is repayable by 10 quarterly principal
T
instalments of RM3,500,000 each commencing December 2016 and is secured and supported as follows:

(a) legal charge over freehold land held for property development of a subsidiary; and

(b) corporate guarantee of the Company.

202 ANNUAL REPORT 2019

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2019

29. LOANS AND BORROWINGS (CONT’D)

Term loan VI of RM1,335,093 (30.9.2018 and 1.10.2017: RMNil) is part of the total term loan of RM10,000,000 and
is repayable by 4 quarterly principal instalments of RM2,500,000 each with the first repayment to commence on
27th month following the date of first drawdown and is secured and supported as follows:

(a) specific debenture over the project land of a subsidiary;

(b) assignment over all applicable insurance policies;

(c) assignment over designated accounts; and

(d) corporate guarantee of the Company.

Term loan VII of RMNil (30.9.2018: RMNil; 1.10.2017: RM384,253) is part of the total term loan of RM13,000,000
and is repayable by 5 quarterly principal instalments of RM2,167,000 each and final principal instalment of
RM2,165,000 or any balance outstanding with the first repayment to commence on the 33rd month following
the date of first drawdown or payment by way of redemption whichever is earlier. Secured revolving credit
VI of RMNil (30.9.2018: RM4,000,000; 1.10.2017: RMNil) is part of total revolving credit of RM5,000,000 and is
repayable by 4 quarterly principal instalments of RM1,250,000 each with the first repayment to commence on
39th month following the date of first drawdown or payment by way of redemption whichever is earlier. The term
loan and revolving credit are secured and supported as follows:

(a) legal charge over the freehold land held for property development of a subsidiary;

(b) specific debenture over the project land of a subsidiary; and

(c) corporate guarantee of the Company

Term loan VIII of RM13,121,570 (30.9.2018: RM4,843,597; 1.10.2017: RMNil) is part of the total term loan of
RM55,000,000 and repayable by 9 quarterly principal instalments over 3 years commencing on the first day
of the 30th month following the date of first drawdown or payment by way of redemption whichever is earlier.
Secured revolving credit VII of RM12,900,000 (30.9.2018: RM1,400,000; 1.10.2017: RMNil) is part of the total
revolving credit of RM15,000,000 is repayable by 3 quarterly principal instalments of RM5,000,000 each over 2
years commencing on the first day of the 36th month following the date of first drawdown or payment by way
of redemption whichever is earlier. The term loan and revolving credit are secured and supported as follows:

(a) specific charge and assignment over all designated accounts to be opened with the bank of a subsidiary;

(b) specific debenture by way of fixed and floating charge over all present of future assets in relation to the
project of a subsidiary; and

(c) corporate guarantee of the Company.

MKH Berhad
203
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2019

29. LOANS AND BORROWINGS (CONT’D)

Secured revolving credits VIII of RM2,300,000 (30.9.2018 and 1.10.2017: RMNil) is part of the total revolving
credits of RM8,000,000 and is repayable by 3 yearly repayment commencing 24 months from the day of first
drawdown or payment by way of redemption whichever is earlier. The revolving credit is secured and supported
as follows:

(a) specific debenture by way of fixed and floating charge over all present of future assets in relation to the
projects of a subsidiary;

(b) assignment of sales proceeds to be deposited into the designated accounts;

(c) assignment over all applicable insurance policies;

(d) legal charge over the all designated accounts; and

(e) corporate guarantee of the Company;

Term loan IX of RM2,300,000 (30.9.2018 and 1.10.2017: RMNil) is part of the total term loan of RM28,000,000
and is repayable by 6 quarterly principal instalments of RM4,700,000 each and final payment of RM4,500,000
or any balance outstanding with the first repayment to commence on 33rd month following the date of first
drawdown or payment by way of redemption whichever is earlier. Secured revolving credits IX of RM10,300,000
(30.9.2018 and 1.10.2017: RMNil) is part of the total revolving credits of RM15,000,000 and is repayable by 4
quarterly principal instalments of RM3,750,000 each or any balance outstanding with the first repayment to
commence 39th month of first drawdown or payment by way of redemption whichever is earlier. The term loan
and revolving credit are secured and supported as follows:

(a) specific debenture over the project land of a subsidiary;

(b) assignment over all applicable insurance policies;

(c) legal charge over the designated accounts; and

(d) corporate guarantee of the Company.

Term loan X of RM108,321,369 (30.9.2018: RM147,169,723; 1.10.2017: RM190,544,167) is repayable in 20 quarterly

principal instalments commencing 9th month from the day of first drawdown. Secured revolving credit X of
RM56,447,955 (30.9.2018: RM44,050,466; 1.10.2017: RM53,438,636) is repayable on demand. The term loan and
revolving credits are secured and supported as follows:

(a) legal charge over the oil palm plantation land of a subsidiary in Indonesia;

(b) pledged of shares of a subsidiary; and

(c) corporate guarantee of the Company.

204 ANNUAL REPORT 2019

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2019

29. LOANS AND BORROWINGS (CONT’D)


Term loan XI of RMNil (30.9.2018: RM8,300,524; 1.10.2017: RM16,945,952) is repayable in 12 quarterly principal
instalments commencing 61st month from the day of first drawdown. Term loan XII of RM9,784,312 (30.9.2018:
RM14,525,917; 1.10.2017: RM14,827,708) is repayable in 12 quarterly principal instalments commencing 48th month
from the day of first drawdown. The term loans are secured and supported as follows:

(a) facility agreement and security sharing agreement;

(b) legal charge over the oil palm plantation land of a subsidiary in Indonesia;

(c) deed of fiduciary by way of fixed and floating charge over the oil palm plantation in Indonesia;

(d) charge over a designated bank account of a subsidiary in Indonesia;

(e) pledge of 95% shares of a subsidiary;

(f) assignment over all applicable insurance policies;

(g) negative pledge over a subsidiary’s assets; and

(h) corporate guarantee of the Company.

 Term loan XIII of RMNil (30.9.2018: RM68,816; 1.10.2017: RM684,129) is repayable by 96 monthly instalments of
RM52,875 each commencing December 2010 and is secured and supported as follows:

(a) by way of charge over the freehold buildings of a subsidiary upon issuance of titles;

(b) first party open monies deed of assignment; and

(c) corporate guarantee of the Company.

Term loan XIV of RMNil (30.9.2018: RM495,835; 1.10.2017: RM1,855,084) is repayable in 19 quarterly principal
instalments of RM471,076 each and final instalment to be calculated and advised by the bank commencing on
4th month after the first drawdown. Secured revolving credit XI RM21,000,000 (30.9.2018: RM23,700,000;
1.10.2017: RM24,400,000) is repayable on demand. The term loan and revolving credit are secured and supported
as follows:

(a) facility agreement;

(b) legal charge over the leasehold land and building of a subsidiary;

(c) legal assignment over debt service account;

(d) legal assignment over all tenancy and rent agreements;

(e) specific debenture on fixed and floating charge over the leasehold land and building of a subsidiary;

(f) deed of subordinate in respect of shareholders advances and loans to the subsidiary;

(g) legal assignment of all of the subsidiary’s present and future rights, title and benefits in and under such
insurance policies procure in respect of the charge; and

(h) corporate guarantee of the Company.

MKH Berhad
205
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2019

29. LOANS AND BORROWINGS (CONT’D)

Term loan XV of RM4,325,416 (30.9.2018: RM4,453,936; 1.10.2017: RM4,576,379) is repayable in 300 monthly
principal instalments of RM28,269 each, commencing November 2014 and is secured and supported as follows:

(a) legal charge over the freehold buildings of a subsidiary;

(b) first party open monies deed of assignment; and

(c) corporate guarantee of the Company.

Term loan XVI of RM561,274 (30.9.2018: RM3,561,274; 1.10.2017: RM6,561,274) is repayable by 84 monthly principal
instalments commencing 19th month from the date of first drawdown or on 1 January 2014, whichever is earlier.
The term loan is secured and supported as follows:

(a) legal charge over the freehold land of a subsidiary;

(b) a limited debenture by way of a fixed and floating charge over construction costs for a private and
international school developed on the said freehold land;

(c) legal assignment over a subsidiary and/or the customer’s rights and interest under an offer to lease and
purchase;

(d) legal assignment over all rents and other monies payables; and

(e) corporate guarantee of the Company.

Term loan XVII of RM4,150,451 (30.9.2018: RM5,312,056; 1.10.2017: RMNil) is repayable by 60 monthly instalments
of RM100,000 each, commencing on 1st month from date of disbursement and is secured and supported as
follows:

(a) legal charge over the leasehold building of a subsidiary;

(b) assignment of all rights, title and interest in respect of rental proceeds from leasehold building of subsidiary;
and

(c) corporate guarantee of the Company.


Secured revolving credit XII of RMNil (30.9.2018: RM10,277,977; 1.10.2017: RM20,251,028) is repayable by 18
quarterly principal instalments of RM2,500,000 each commencing December 2014. Secured revolving credit
XIII of RM45,000,000 (30.9.2018: RM34,718,250; 1.10.2017: RM34,718,250) is repayable on demand. All revolving
credits are secured and supported as follows:

(a) legal charge over the leasehold land and building of a subsidiary;

(b) specific debenture by way of fixed and floating charge over the leasehold land and building of a subsidiary;

(c) legal assignment of rental proceeds from the investment property of a subsidiary; and

(d) corporate guarantee of the Company.

206 ANNUAL REPORT 2019

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2019

29. LOANS AND BORROWINGS (CONT’D)

Secured bank overdraft II of RM3,315,044 (30.9.2018 and 1.10.2017: RMNil) is repayable on demand and is secured
and supported as follows:

(a) legal charge over the leasehold land and building of a subsidiary;

(b) joint and secured guarantee of the directors of the subsidiary; and

(c) corporate guarantee of the Company.

Secured revolving credit XIV of RMNil (30.9.2018: RMNil; 1.10.2017: RM4,510,000) is rollover quarterly and
repayable on demand. Bridging loan of RMNil (30.9.2018: RMNil; 1.10.2017: RM6,306,911) is part of total loan of
RM17,000,000 and is repayable by 4 quarterly principal instalments of RM4,250,000 or any balance outstanding
with first repayment to commence upon expiry of availability period or on 28th month following the date of full
drawdown or payment by way of redemption whichever is earlier. The revolving credit and bridging loan are
secured and supported as follows:

(a) specific debenture over the project land of a subsidiary;

(b) legal charge over leasehold land held for property development of a subsidiary; and

(c) corporate guarantee of the Company.

Term loan XVIII of RMNil (30.9.2018: RMNil; 1.10.2017: RM5,317,922) is repayable by 8 quarterly principal
instalments of RM1,250,000 each with the first repayment to commence on 13th month following the date of
first drawdown. Term loan XIX of RMNil (30.9.2018: RMNil; 1.10.2017: RM5,000,000) is repayable by 8 quarterly
instalments of RM625,000 each and commencing 13th month following the date of first drawdown and is secured
and supported as follows:

(a) legal charge over Housing Development Account and Project Account;

(b) legal charge over the Financial Service Reserve Account; and

(c) corporate guarantee of the Company.

Term loan XX of RMNil (30.9.2018: RMNil; 1.10.2017: RM3,740,000) is part of total term loan of RM10,000,000
and is repayable by 5 quarterly principal instalments of RM1,667,000 each and a final payment of RM1,665,000
with the first repayment to commence on 21st month from the day of first drawdown. Secured revolving credit
XV of RMNil (30.9.2018: RMNil; 1.10.2017: RM3,370,000) is part of the total revolving credit of RM5,000,000 and
is repayable by 6 quarterly repayment commencing 24th month from the day of first drawdown or by way of
redemption whichever is earlier. The term loan and revolving credit are secured and supported as follows:

(a) legal charge over designated account and the credit balances;

(b) assignment over all applicable insurance policies;

(c) facility agreement; and

(d) corporate guarantee of the Company.

MKH Berhad
207
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2019

29. LOANS AND BORROWINGS (CONT’D)

Secured revolving credit XVI of RMNil (30.9.2018: RMNil; 1.10.2017: RM1,875,000) is repayable by 8 quarterly
principal instalments of RM1,875,000 each commencing on the 39th month from the date of first drawdown.
Secured bank overdraft III of RMNil (30.9.2018: RMNil; 1.10.2017: RM1,987,551) is repayable on demand. The
revolving credit and bank overdraft are secured and supported as follows:

(a) legal charge over leasehold land and building of a subsidiary; and

(b) corporate guarantee of the Company.

Term loan XXI of RMNil (30.9.2018: RMNil; 1.10.2017: RM14,324,646) is repayable by 48 monthly principal
instalments commencing from the 4th year following to the date of the first drawdown or payment by way of
redemption, whichever is earlier and is secured and supported as follows:

(a) specific debentures by way of fixed and floating charge for all present and future assets of the project of
a subsidiary;

(b) deed of assignment over the rights under the joint development agreement;

(c) legal assignment and charge over all sales proceeds; and

(d) corporate guarantee of the Company.

Unsecured term loan of RM16,725,320 (30.9.2018: RMNil; 1.10.2017: RM3,000,000), Unsecured revolving credit
of RM4,181,330 (30.9.2018: RM8,300,524; 1.10.2017: RMNil) and Unsecured bank overdraft of RMNil (30.9.2018:
RM118,847; 1.10.2017: RM508,170) of the Group are repayable on demand and are supported by corporate
guarantee of the Company.

Unsecured revolving credits of RM142,609,000 (30.9.2018: RM92,100,000; 1.10.2017: RM60,500,000), and

Unsecured bank overdrafts of RM3,860,068 (30.9.2018: RM1,601,813; 1.10.2017: RMNil) of the Company are
repayable on demand.
29. LOANS AND BORROWINGS (CONT’D)
208

Reconciliation of loans and borrowings arising from financing activities

Acquisition Acquisition
of property, of property,
plant and plant and Effect of
equipment Effect of equipment movements
by finance movements by finance in
As of Financing lease in exchange As of Financing lease exchange As of
1.10.2017 cash flows payment rate 30.9.2018 cash flows payment rate 30.9.2019
RM RM RM RM RM RM RM RM RM

THE GROUP

Term
 loans 389,194,227 (117,261,766) - (8,371,420) 263,561,041 (62,811,345) - 5,727,848 206,477,544
Bridging
 loan 6,306,911 (6,306,911) - - - - - - -
Revolving
 credits 372,545,844 31,380,367 - (1,206,064) 402,720,147 74,581,234 - (7,540,346) 469,761,035
Finance
 lease
 liabilities 1,974,114 (938,042) 650,000 - 1,686,072 (735,349) 281,000 - 1,231,723

770,021,096 (93,126,352) 650,000 (9,577,484) 667,967,260 11,034,540 281,000 (1,812,498) 677,470,302

THE COMPANY

Revolving
 credits 60,500,000 31,600,000 - - 92,100,000 50,485,350 - 23,650 142,609,000
FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2019
NOTES TO THE FINANCIAL STATEMENTS
ANNUAL REPORT 2019
MKH Berhad
209
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2019

30. DIVIDEND

Net dividend Total

per share amount Date of payment
Sen RM

30.9.2019
Interim single tier dividend of 3.5
sen per ordinary share in respect
of financial year ended
30 September 2018 3.5 20,268,891 10 January 2019

30.9.2018
Interim single tier dividend of 5.0
sen per ordinary share in respect
of financial year ended
30 September 2017 5.0 29,284,585 11 January 2018

A first interim single tier dividend of 4.0 sen per ordinary share in respect of financial year ended 30 September
2019 amounting to RM23,161,383 was declared on 27 November 2019 and to be paid on 3 January 2020. The
financial statements for the current financial year do not reflect the dividend. Such dividend will be accounted in
equity as an appropriation of retained earnings in the financial year ending 30 September 2020.

The directors do not recommend any final dividend payment in respect of the financial year ended 30 September
2019.

31. ACQUISITION OF SUBSIDIARIES AND ASSOCIATES

During the financial year

(a) On 26 October 2018, Perkasa Bernas (M) Sdn. Bhd. (“PBSB”), a wholly-owned subsidiary of the Company,
acquired 4 ordinary shares representing 40% of the equity interest of Daksina Harta Sdn. Bhd., for a cash
consideration of RM5,000,000. The Group has on 9 November 2018 completed the acquisition. The said
acquisition did not give rise to a material impact on the financial statements of the Group.

(b) On 19 December 2018, the Company acquired 1 share representing 100% of the equity interest of Nexus
Starship Sdn. Bhd. (“NSSB”), for a cash consideration of RM1. The said acquisition did not give rise to a
material impact on the financial statements of the Group and the Company.

(c) On 20 December 2018, NSSB, a wholly-owned subsidiary of the Company, acquired 1 ordinary shares
representing 100% of the equity interest of Quantum Density Sdn. Bhd. (“QDSB”), for a cash consideration
of RM1. Subsequently on 20 September 2019, NSSB subscribed for RM125,000, representing 50.0004% of
total allotment of 249,999 new ordinary shares in QDSB. The said acquisition did not give rise to a material
impact on the financial statements of the Group.

(d) On 28 June 2019, Metro Emart Sdn. Bhd., a wholly-owned subsidiary of the Company has acquired 1
ordinary share each representing 100% of the equity interest of Hexapace Sdn. Bhd., Europixel Sdn. Bhd.
and Mercu Jasakita Sdn. Bhd., for total cash consideration of RM3. The said acquisitions did not give rise
to a material impact on the financial statements of the Group.
210 ANNUAL REPORT 2019

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2019

31. ACQUISITION OF SUBSIDIARIES AND ASSOCIATES (CONT’D)

In the previous financial year

(a) On 16 January 2018, Kajang Resources Corporation Sdn. Bhd. (“KRC”), a wholly owned subsidiary of the
Company, acquired 2 ordinary shares representing 100% of the equity interest in MKH Property Ventures
Sdn. Bhd. (“MPVSB”), for a cash consideration of RM2. Subsequently on 28 February 2018 and 27 March
2018, KRC subscribed for 509,998 and 19,890,000 new ordinary shares in MPVSB, representing 51% of the
total allotment of 999,998 and 39,000,000 new ordinary shares respectively. The said acquisition did not
give rise to a material impact on the financial statements of the Group.

(b) On 17 January 2018, the Company acquired 2 ordinary shares representing 100% of the equity interest
in Metro Readymix Sdn. Bhd., for a cash consideration of RM2. The said acquisition did not give rise to a
material impact on the financial statements of the Group.

32. FINANCIAL GUARANTEE

The Company
2019 2018
RM RM

Corporate guarantees given by the Company to
financial institutions and creditors for banking and
credit facilities granted to the subsidiaries:
 Outstanding as at financial year end 638,519,708 646,246,556

The financial guarantees have not been recognised since the fair value on initial recognition was immaterial
as the financial guarantees provided by the Company did not contribute towards credit enhancement of the
subsidiaries’ borrowings in view of the securities pledged by the subsidiaries and it is not probable that the
counterparties to financial guarantee contracts will claim under the contracts.

33. CONTINGENT LIABILITIES

(a) On 18 April 2016, PT Maju Kalimantan Hadapan (“PTMKH”), a subsidiary of the Company, received a
tax assessment letter from the Indonesia’s Director General of Tax (“DGT”) for the year of assessment
2012, to restrict the claims on net realised and unrealised foreign exchange losses incurred amounted to
IDR97,700 million, equivalent to RM30.7 million. According to the tax objection in Balikpapan, Indonesia,
on 19 June 2017, DGT restricted PTMKH’s claims on net realised and unrealised foreign exchange losses
up to IDR7,414 million, equivalent to RM2.3 million instead of abovementioned IDR97,700 million. Based
on applicable corporate income tax rate of 25%, the restricted amount of the net realised and unrealised
foreign currency exchange losses of IDR90,286 million, equivalent to RM28.4 million will result in over-
recognition of tax benefit of IDR22,571 million, equivalent to RM7.1 million in the financial statements of
the Group and PTMKH. On 6 August 2018, PTMKH received official verdict letter from the DGT for year of
assessment 2012’s tax appeal. The entire net realised and unrealised foreign exchange losses of IDR90,286
million, equivalent to RM28.4 million is allowable to claim as expenses in the tax return submitted by
PTMKH.
MKH Berhad
211
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2019

33. CONTINGENT LIABILITIES (CONT’D)

On 29 August 2017, PTMKH received tax assessment letter from DGT for the year of assessment 2013, to
restrict the claims on net realised and unrealised foreign exchange losses incurred amounted to IDR188,875
million, equivalent to RM59.3 million. According to the tax assessment letter, DGT restricted PTMKH’s
claims on net realised and unrealised foreign exchange losses up to IDR44,405 million, equivalent to
RM13.9 million instead of abovementioned IDR188,875 million. Based on applicable corporate income tax
rate of 25%, the restricted amount of the realised and unrealised foreign exchange losses of IDR144,470
million, equivalent to RM45.4 million will result in over-recognition of tax benefit of IDR36,118 million,
equivalent to RM11.3 million in the financial statements of the Group and PTMKH. On 27 November 2017,
PTMKH filed an objection letter in reply to tax assessment letter for the year of assessment 2013. The
objection letter has been rejected by tax appeal office in Balikpapan, Indonesia. On 19 December 2018,
PTMKH filed an appeal to tax court in Jakarta, Indonesia.

Based on consultation with the local tax experts, the directors of PTMKH are of the opinion that PTMKH
has a valid defense against DGT’s assessments for both years of assessment 2012 and 2013. Accordingly,
PTMKH has not made any adjustments in respect of the tax assessments in the financial statements.

(b) On 11 January 2019, the recipient of KTM Komuter Station, Perbadanan Aset Keretapi (“PAK”) has issued
a certificate of non-completion (“CNC”) to Srijang Kemajuan Sdn. Bhd. (“SKSB”), a 99.99% owned
subsidiary of the Company and stating that SKSB has failed to complete the construction of KTM Komuter
Station (“Construction Works”) by 10 December 2016 and therefore PAK is entitled to impose liquidated
ascertained damages (“LAD”) pursuant to the Development cum Lease Agreement (“DCLA”) dated 12
October 2012 entered into between PAK and SKSB. The LAD will be calculated daily at a rate of RM4,438.36
from the revised completion date on 10 December 2016 (extension of time number 1) until the completion
of the Construction Works.

 On 28 February 2019, SKSB has written to dispute the validity of the CNC on the grounds that SKSB had
on 10 January 2017 submitted extension of time (“EOT”) number 2 of which PAK has yet to assess SKSB’s
application for EOT number 2 and on the same day, SKSB submitted EOT number 3 in view of the delay by
relevant authorities in approving the change of building design and use of building materials. On 19 August
2019, PAK granted SKSB’s EOT number 2, for a period of up to 8 January 2017 (“EOT 2”).

Based on legal opinion obtained, the directors of SKSB are of the opinion that SKSB’s LAD could not be
estimated until and unless PAK has completed the assessment of EOT number 3 as the date by which
SKSB is required to complete the Construction Works remains uncertain. In view of the uncertainty, there
is no date from which the LAD could be computed and PAK’s right to impose LAD pursuant to DCLA
cannot be triggered. Accordingly, SKSB has not made any provision in the financial statements and only
disclosed as contingent liabilities. Based on EOT 2, the potential LAD as at 30 September 2019 will be
approximately RM4.4 million.

34. CAPITAL COMMITMENTS

As at the reporting date, the Group has the following capital commitments:
The Group
2019 2018
RM RM

Approved and contracted for 29,570,593 19,009,639

Approved and not contracted for 4,863,934 21,007,796

34,434,527 40,017,435
212 ANNUAL REPORT 2019

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2019

35. RELATED PARTY DISCLOSURES

(a) Identity of related parties

For the purposes of these financial statements, parties are considered to be related to the Group if the
Group has the ability, directly or indirectly, to control the party or exercise significant influence over the
party in making financial and operating decision, or vice versa, or where the Group and the party are
subject to common control or common significant influence. Related parties may be individuals or other
entities.

The Group has a related party relationship with its subsidiaries, associates and key management personnel.

(b) Key management personnel compensation

The key management personnel compensation is as follows:

The group
2019 2018
RM RM

Directors of the Company

Other short-term emoluments 12,983,860 13,414,660
Post-employment benefits 2,474,828 2,558,920

15,458,688 15,973,580
Estimated monetary value of benefits-in-kind 103,592 100,653

15,562,280 16,074,233

Other key management personnel

Remuneration 9,007,441 9,497,906
Other short-term employee benefits 30,405 199,825

Total short-term employee benefits 9,037,846 9,697,731

Post-employment benefit 1,073,095 1,182,846

10,110,941 10,880,577

Total key management personnel compensation 25,673,221 26,954,810

Other key management personnel comprises persons other than the directors of Company, having
authority and responsibility for planning, directing and controlling the activities of the Group, either
directly or indirectly.
MKH Berhad
213
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2019

35. RELATED PARTY DISCLOSURES (CONT’D)

(c) Related party transactions and balances of the Company

The Company
2019 2018
RM RM

Received or receivable from subsidiaries

Gross dividend (30,903,675) (32,516,500)
Interest income (20,717,522) (18,351,865)

Paid or payable to subsidiaries

Management fee 24,000 24,000
Secretarial fee 9,600 9,600

Information on outstanding balances with related companies of the Company are disclosed in Notes 18
and 28.

(d) Related party transactions and balances of the Group

The Group
2019 2018
RM RM

Paid and payable to associate

Progress billings 81,405,394 64,529,829

Received and receivables from associate

Sale of goods 11,725,187 20,969,992

Received and receivable from company in

  which a director has substantial equity interests
Secretarial fees 1,080 1,440

Received and receivable from other related parties

Progress billings to:
(i) a corporate shareholder of a subsidiary - 3,487,536
(ii) a corporate in which a director of the
 Company has substantial interests 133,900 -
(iii) a person connected to a director of the
 Company - 1,035,900
(iv) certain key management personnel of
 the Group 230,380 855,668

Information on outstanding balances with related parties of the Group is disclosed in Notes 18 and 28.
214 ANNUAL REPORT 2019

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2019

36. SEGMENT INFORMATION

For management purposes, the Group is organised into business segments based on their products and services.
The Group’s chief operation decision maker reviews the information of each business segment on at least monthly
basis for the purposes of resource allocation and assessment of segment performance. Therefore, the Group’s
reportable segments under MFRS 8 are as follows:

(i)
Property development and construction - property development, building and civil works
contracting.
(ii) Plantation -  oil palm cultivation.
(iii) Hotel and property investment - hotel business and property investment and
management.
(iv) Trading - trading in building materials and household related
products and general trading.
(v) Manufacturing - furniture manufacturing.
(vi) Investment holding - investment holding and management services.

Non-reportable segments comprise recreational club operation, money lending and provision of insurance
broking services.

Segment revenue and results

The accounting policies of the reportable segments are the same as the Group’s accounting policies described
in Note 3. Segment results represents profit before tax of the segment. Inter-segment transactions are entered
into in the ordinary course of business based on terms mutually agreed upon by the parties concerned.

Segment assets

Segment assets are measured based on all assets (including goodwill) of the segment, excluding investment in
associates, deferred tax assets and current tax asset.

Segment liabilities

Segment liabilities are measured based on all liabilities, excluding current tax liabilities, interest bearing loans
and borrowings and deferred tax liabilities.
36. SEGMENT INFORMATION (CONT’D)

Segment revenue and results

Property
MKH Berhad

Development Hotel and Non-

and property Investment reportable
Construction Plantation investment Trading Manufacturing holding segments Elimination Total
2019 RM RM RM RM RM RM RM RM RM

Revenue
Total
 external
 revenue 775,923,231 229,761,671 31,192,449 72,999,437 9,287,007 - 2,492,833 - 1,121,656,628
Inter
 -segment
 revenue - 6,516,930 1,747,500 478,673 - 101,156,486 - (109,899,589) -

Total
 segment
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2019

 revenue 775,923,231 236,278,601 32,939,949 73,478,110 9,287,007 101,156,486 2,492,833 (109,899,589) 1,121,656,628

Results
Operating
 results 161,546,070 23,691,557 3,743,073 2,192,767 2,925,230 39,082,593 475,923 (40,946,367) 192,710,846
Interest
 expense (47,450,183) (18,095,067) (1,971,358) (3,035) - (33,848,667) (3,932,845) 64,911,205 (40,389,950)
Interest
 income 9,028,052 339,888 12,536 66,325 435,281 21,006,941 12,908 (23,964,838) 6,937,093
Share of
 results of
 associates (885,173) - - - - - - - (885,173)

Segment
 results 122,238,766 5,936,378 1,784,251 2,256,057 3,360,511 26,240,867 (3,444,014) - 158,372,816
Tax
 expense (45,456,137) (3,667,866) (2,110,391) (531,455) (817,990) (8,082,154) (230,054) - (60,896,047)

Profit/(Loss)
  for the
 financial
 year 76,782,629 2,268,512 (326,140) 1,724,602 2,542,521 18,158,713 (3,674,068) - 97,476,769
215
36. SEGMENT INFORMATION (CONT’D)
216

Segment revenue and results (Cont’d)

Property
Development Hotel and Non-
and property Investment reportable
Construction Plantation investment Trading Manufacturing holding segments Elimination Total
2019 RM RM RM RM RM RM RM RM RM

Other
 segment
 information

Bad debts
 written off - - 20,091 67,671 - 980 - - 88,742
Depreciation
 and
 amortisation 1,171,383 32,880,071 2,876,193 44,911 732,751 377,160 128,327 - 38,210,796
Changes in
 fair value of
 biological
 assets - 1,170,893 - - - - - - 1,170,893
Changes in
 fair value of
 investment
 properties - - 6,180,000 - - - - - 6,180,000
(Gain)/Loss
 on disposal
 of property,
 plant and
 equipment (112,823) - 990 - - - - - (111,833)
Gain on
 retention
 sum
 measured
 at amortised
 cost (466,060) - - - - - - - (466,060)
Inventories
 written down 137,658 - - - - - - - 137,658
Inventories
 written off - 20,995 - - - - - - 20,995
Allowance for
 slow moving
 inventories - - 45,180 - - - - - 45,180
Impairment loss
 on trade and
 other
 receivables 4,531,362 - 74,962 549,163 - - 118,335 - 5,273,822
Property, plant
 and
 equipment
 written off 8,301 28,666 28,913 460 25,288 263 2 - 91,893
Provision for
 retirement
 benefit
 obligation - 10,117,286 - - - - - - 10,117,286
FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2019
NOTES TO THE FINANCIAL STATEMENTS
ANNUAL REPORT 2019
36. SEGMENT INFORMATION (CONT’D)
Segment revenue and results (Cont’d)

Property
Development Hotel and Non-
MKH Berhad

and property Investment reportable

Construction Plantation investment Trading Manufacturing holding segments Elimination Total
2019 RM RM RM RM RM RM RM RM RM

(Gain)/Loss on
 foreign
 exchange:
  Realised - (3,854,113) - - (71,383) (96,549) - - (4,022,045)
  Unrealised - (14,009,143) - - - 41,911 - - (13,967,232)
Impairment
 loss
 no longer
 required
 on trade
 and other
 receivables (42,428) - (151,804) (77,374) - (2,700) (500) - (274,806)
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2019

2018
(Restated)

Revenue
Total external
 revenue 702,686,749 263,196,707 32,956,734 72,886,083 7,582,221 - 2,392,421 - 1,081,700,915
Inter-segment
 revenue 10,377,358 5,734,677 1,803,600 111,077 - 100,044,502 - (118,071,214) -

Total segment
 revenue 713,064,107 268,931,384 34,760,334 72,997,160 7,582,221 100,044,502 2,392,421 (118,071,214) 1,081,700,915

Results
Operating
 results 109,557,569 33,044,571 13,884,932 2,843,653 505,626 37,231,490 506,651 (41,599,326) 155,975,166
Interest
 expense (42,618,785) (21,814,550) (2,180,251) (3,644) - (29,715,394) (2,914,612) 64,998,032 (34,249,204)
Interest
 income 9,265,142 730,662 55,938 90,543 297,827 19,095,342 8,353 (23,398,706) 6,145,101
Share of
 results of
 associates 360,579 - - - - - - - 360,579

Segment
 results 76,564,505 11,960,683 11,760,619 2,930,552 803,453 26,611,438 (2,399,608) - 128,231,642
Tax expense (25,220,826) (9,708,556) (8,296,045) (683,004) (210,705) (7,295,598) (203,906) - (51,618,640)

Profit/(Loss)
  for the
 financial
 year 51,343,679 2,252,127 3,464,574 2,247,548 592,748 19,315,840 (2,603,514) - 76,613,002
217
36. SEGMENT INFORMATION (CONT’D)
218

Segment revenue and results (Cont’d)

Property
Development Hotel and Non-
and property Investment reportable
2018 Construction Plantation investment Trading Manufacturing holding segments Elimination Total
(Restated) RM RM RM RM RM RM RM RM RM

Other segment
 information
Bad debts
 written off - 212,636 - - - - 3,732 - 216,368
Deposits
 written off 2,000 - - - - - - - 2,000
Depreciation
 and
 amortisation 1,319,116 31,108,778 2,445,451 46,480 741,490 427,583 128,818 - 36,217,716
Changes in
 fair value of
 biological
 assets - (1,533,164) - - - - - - (1,533,164)
Changes in
 fair value of
 investment
 properties - - 317,000 - - - - - 317,000
Gain on
 disposal of
 property,
 plant and
 equipment (25,233) - (943) - - - - - (26,176)
Gain on
 retention
 sum
 measured
 at amortised
 cost (161,806) - - - - - - - (161,806)
Inventories
 written down 940,057 - - - - - - - 940,057
Inventories
 written off - - 2,193 - - - - - 2,193
Impairment
 loss on trade
 and other
 receivables - - - 77,374 - - 890 - 78,264
Land donation 9,461,450 - - - - - - - 9,461,450
Property, plant
 and
 equipment
 written off 11,221 1,276,174 877 - 56,638 - - - 1,344,910
Provision for
 post
 -employment
 benefit
 obligations - 1,497,090 - - - - - - 1,497,090
FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2019
NOTES TO THE FINANCIAL STATEMENTS
ANNUAL REPORT 2019
36. SEGMENT INFORMATION (CONT’D)

Segment revenue and results (Cont’d)

Property
Development Hotel and Non-
MKH Berhad

and property Investment reportable

2018 Construction Plantation investment Trading Manufacturing holding segments Elimination Total
(Restated) RM RM RM RM RM RM RM RM RM

Loss on foreign
 exchange:
  Realised 1,388 3,542,135 - - 161,052 245,210 - - 3,949,785
  Unrealised -
36,440,727 - - - - - - 36,440,727
Impairment loss
 no longer
 required on
 trade and
 other
 receivables (25,000) - (25,662) - - (7,200) (200) - (58,062)

2019
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2019

Assets
Segment
 assets 2,281,916,080 508,990,254 365,470,169 27,321,416 29,113,608 21,741,210 42,956,087 - 3,277,508,824
Investment
 in
 associates 14,990,213 - - - - - - - 14,990,213
Deferred tax
 assets 42,437,900 - 9,300 127,513 - 4,808,000 - - 47,382,713
Tax
 recoverable - 1,148,290 - - - - - - 1,148,290
Current tax
 assets 3,785,794 15,556,633 115,849 28,703 - - 4,728 - 19,491,707

Total assets 2,343,129,987 525,695,177 365,595,318 27,477,632 29,113,608 26,549,210 42,960,815 - 3,360,521,747

Liabilities
Segment
 liabilities 811,806,665 59,005,569 10,071,373 6,438,810 3,291,830 21,534,359 1,129,312 - 913,277,918
Current tax
 liabilities 6,829,237 - 701,520 - 415,599 2,998,630 72,768 - 11,017,754
Interest
 bearing
 liabilities 267,495,439 195,460,286 30,107,694 46,299 - 191,654,543 - - 684,764,261
Deferred tax
 liabilities 26,727,400 17,151,566 18,290,400 - 1,828,769 93,500 235,720 - 64,327,355

Total liabilities 1,112,858,741 271,617,421 59,170,987 6,485,109 5,536,198 216,281,032 1,437,800 - 1,673,387,288
219
36. SEGMENT INFORMATION (CONT’D)
220

Segment revenue and results (Cont’d)

Property
Development Hotel and Non-
and property Investment reportable
Construction Plantation investment Trading Manufacturing holding segments Elimination Total
2019 RM RM RM RM RM RM RM RM RM

Other segment
 information

Additions to
 non-current
 assets other
 than financial
 instruments
 and deferred
 tax assets 80,720,527
23,990,911
3,005,831
9,953 182,829 - - - 107,910,051

2018
(Restated)

Assets
Segment
 assets 2,161,050,903 492,889,831 371,819,633 32,064,419 33,019,121 28,576,775 41,147,606 - 3,160,568,288
Investment in
 associates 14,250,386 - - - - - - - 14,250,386
Deferred tax
 assets 44,741,800 - 27,200 15,302 - 4,818,500 - - 49,602,802
Tax
 recoverable - 1,082,118 - - - - - - 1,082,118
Current tax
 assets 14,791,342 4,805,483 39,279 213,603 - - 36,000 - 19,885,707

Total assets 2,234,834,431 498,777,432 371,886,112 32,293,324 33,019,121 33,395,275 41,183,606 - 3,245,389,301
FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2019
NOTES TO THE FINANCIAL STATEMENTS
ANNUAL REPORT 2019
36. SEGMENT INFORMATION (CONT’D)

Segment revenue and results (Cont’d)

Property
Development Hotel and Non-
MKH Berhad

and property Investment reportable

2018 Construction Plantation investment Trading Manufacturing holding segments Elimination Total
(Restated) RM RM RM RM RM RM RM RM RM

Liabilities
Segment
 liabilities 799,936,246 44,009,160 10,324,716 11,378,605 3,433,100 21,347,711 1,097,093 - 891,526,631
Current tax
 liabilities 5,308,486 - 774,869 - 147,928 2,029,499 46,924 - 8,307,706
Interest
 bearing
 liabilities 273,588,344 222,347,154 37,591,917 64,595 - 139,164,666 - - 672,756,676
Deferred tax
 liabilities 25,144,600 17,914,835 18,848,257 - 1,871,074 92,226 253,190 - 64,124,182

Total
NOTES TO THE FINANCIAL STATEMENTS

 liabilities 1,103,977,676 284,271,149 67,539,759 11,443,200 5,452,102 162,634,102 1,397,207 - 1,636,715,195

FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2019

Other
 segment
 information

Additions to
 non-current
 assets other
 than financial
 instruments
 and deferred
 tax assets 56,465,094 18,880,677 1,696,010 92,698 176,642 - 1,430 - 77,312,551
221
222 ANNUAL REPORT 2019

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2019

36. SEGMENT INFORMATION (CONT’D)

Geographical information

Revenue and non-current assets information is presented based on the segment’s country of domicile. Revenue
from external customers based on the location of its customers has not been disclosed as revenue earned outside
the segment’s country of domicile is insignificant. Non-current assets do not include financial instruments,
investment in associates, deferred tax assets and tax recoverable.

Revenue Non-current assets

2019 2018 2019 2018
RM RM RM RM
(Restated)

Malaysia 882,607,950 810,921,987 1,269,871,704 1,266,249,928

Republic of Indonesia 229,761,671 263,196,707 419,364,346 405,646,453
The Peoples’ Republic
 of China 9,287,007 7,582,221 18,611,551 19,736,940

1,121,656,628 1,081,700,915 1,707,847,601 1,691,633,321

Major customer information

There is no single customer with revenue equal or more than 10% of the Group revenue.

37. SIGNIFICANT EVENTS DURING THE FINANCIAL YEAR

(a) On 26 October 2018, Perkasa Bernas (M) Sdn. Bhd. (“PBSB”), a wholly owned subsidiary of the Company
acquired 4 ordinary shares representing 40% of the equity interest of Daksina Harta Sdn. Bhd. (“DHSB”),
for a cash consideration of RM5,000,000. The Group has on 9 November 2018 completed the acquisition.
As a result, DHSB become an associate of PBSB and of the Group;

(b) On 19 December 2018, the Company acquired 1 ordinary share representing 100% of the equity interest
of Nexus Starship Sdn. Bhd. (“NSSB”), for a cash consideration of RM1. As a result, NSSB became a 100%
owned subsidiary of the Company;

(c) On 20 December 2018, NSSB, a wholly-owned subsidiary of the Company acquired 1 ordinary share
representing 100% of the equity interest of Quantum Density Sdn. Bhd. (“QDSB”), for a cash consideration
of RM1. Subsequently on 20 September 2019, NSSB subscribed for RM125,000, representing 50.0004%
of total allotment of 249,999 new ordinary shares in QDSB. As a result, QDSB became a 50.0004% owned
subsidiary of NSSB and of the Group; and

(d) On 28 June 2019, Metro Emart Sdn. Bhd. (“MESB”), a wholly-owned subsidiary of the Company has
acquired 1 ordinary share each representing 100% of the equity interest of Hexapace Sdn. Bhd. (“HPSB”),
Europixel Sdn. Bhd. (“EPSB”) and Mercu Jasakita Sdn. Bhd. (“MJSB”), for total cash consideration of RM3.
As a result, HPSB, EPSB and MJSB became a 100% owned subsidiary of MESB and of the Group.
MKH Berhad
223
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2019

38. OPERATING LEASE ARRANGEMENTS - THE GROUP AS LESSOR

The Group has entered into property leases on its investment properties, which comprise freehold and leasehold
land and buildings, with non-cancellable lease terms ranging from 12 to 30 years. The lease contracts contain
fixed upward revision of the rental charges over the lease period.

Future minimum rental receivables under non-cancellable operating leases at the reporting date but not
recognised as receivables, are as follows:
The Group
2019 2018
RM RM

Not later than 1 year 4,319,287 4,008,356
Later than 1 year but not later than 5 years 17,985,249 17,620,009
Later than 5 years 35,797,148 40,481,302

58,101,684 62,109,667

39. FINANCIAL INSTRUMENTS

Categories of financial instruments

The following table analyses the financial assets and liabilities in the statements of financial position by the class
of financial instruments to which they are assigned and therefore by the measurement basis:

The Group The Company

30.9.2019 30.9.2018 1.10.2017 30.9. 2019 30.9. 2018 1.10.2017
RM RM RM RM RM RM

Financial assets
At amortised cost:
 Receivables and deposits 215,891,709 - - 399,820,617 - -
 Cash, bank balances,
  term deposits and
  fixed income funds 405,156,006 - - 593,455 - -

Loans and receivables:

 Receivables and deposits - 266,817,887 226,532,730 - 362,465,541 300,891,022
 Cash, bank balances,
  term deposits and
  fixed income funds - 227,726,216 264,609,775 - 3,941,479 12,145,700

Financial liabilities
At amortised cost:
 Payables and accruals 856,705,481 - - 769,521 - -
 Loans and borrowings 684,764,261 - - 146,469,068 - -

Other financial liabilities:
 Payables and accruals - 846,098,180 821,705,604 - 539,936 1,344,734
 Loans and borrowings - 672,756,676 772,516,817 - 93,701,813 60,500,000
224 ANNUAL REPORT 2019

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2019

40. 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 risks. The Group operates within clearly defined
guidelines that are approved by the Board and the Group’s policy is not to engage in speculative transactions.

The main risks and corresponding management policies arising from the Group’s normal course of business are
as follows:

(i) 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 primarily arises from the receivables. For other
financial assets, the Group minimises credit risk by dealing with high credit rating counterparties. The
maximum risk associated with recognised financial assets is the carrying amounts as presented in
the statements of financial position and corporate guarantee provided by the Company to banks on
subsidiaries’ credit facilities.

The Group has a credit policy in place and the exposure to credit risk is managed through the application
of credit approvals, credit limits and monitoring procedures.

The Group determines concentrations of credit risk by monitoring the country of its trade receivables on
an ongoing basis. The credit risk concentration profile of the Group’s net trade related receivables at the
reporting date are as follows:

The Group
2019 2018
RM % of total RM % of total

By country:
Malaysia 149,341,922 98.08% 210,803,186 99.09%
Republic of Indonesia 2,289,022 1.50% 1,323,558 0.62%
The Peoples’ Republic
of China 640,057 0.42% 624,407 0.29%

152,271,001 100.00% 212,751,151 100.00%

The Group does not have any significant exposure to any individual customer at the reporting date.

Financial guarantee

The Company provides unsecured financial guarantees to banks in respect of banking facilities granted to
subsidiaries and creditors for credit terms granted to subsidiaries.

The Company monitors on an ongoing basis the repayments made by the subsidiaries and their financial
performance.
MKH Berhad
225
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2019

40. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONT’D)

(i) Credit risk (Cont’d)

Financial guarantee (Cont’d)

The maximum exposure to credit risk amounts to RM638,519,708 (30.9.2018: RM646,246,556; 1.10.2017:
RM781,034,663) representing the outstanding credit facilities of the subsidiaries guaranteed by the
Company at the reporting date. At the reporting date, there was no indication that the subsidiaries would
default on their repayment.

The financial guarantees have not been recognised since the fair value on initial recognition was immaterial
as the financial guarantees provided by the Company did not contribute towards credit enhancement of
the subsidiaries’ borrowings in view of the securities pledged by the subsidiaries and it was not probable
that the counterparties to financial guarantee contracts will claim under the contracts.

(ii) Liquidity risk

Liquidity risk is the risk that the Group will encounter difficulty in meeting financial obligations when
they fall due. The Group’s exposure to liquidity risk arises primarily from mismatches of the maturities
of financial assets and liabilities. The Group’s objective is to maintain a balance between continuity of
funding and flexibility through use of stand-by credit facilities.

The Group actively manages its operating cash flows and the availability of funding so as to ensure that
all repayment and funding needs are met. As part of its overall prudent 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 of a reasonable level to its overall debt
position. As far as possible, the Group raises committed funding from both capital markets and financial
institutions so as to achieve overall cost effectiveness.
40. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONT’D)
226

(ii) Liquidity risk (Cont’d)

Analysis of financial instruments by remaining contractual maturities

 The table below summaries the maturity profile of the Group’s and of the Company’s financial liabilities at the reporting
date based on contractual undiscounted repayment of obligations.

Total On demand
Carrying contractual or within 2 to 5 Over 5
amount amount 1 year 1-2 years years years
RM RM RM RM RM RM

The Group
2019
Financial liabilities:
 Payables and accruals 856,705,481 919,788,221 566,679,897 77,952,472 275,155,852 -
 Loans and borrowings 684,764,261 741,081,115 403,396,331 152,543,845 150,262,164 34,878,775

1,541,469,742 1,660,869,336 970,076,228 230,496,317 425,418,016 34,878,775

The Company
2019
Financial liabilities:
 Payables and accruals 769,521 769,521 769,521 - - -
 Loans and borrowings 146,469,068 150,321,242 150,321,242 - - -

147,238,589 151,090,763 151,090,763 - - -

FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2019
NOTES TO THE FINANCIAL STATEMENTS
ANNUAL REPORT 2019
40. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONT’D)

(ii) Liquidity risk (Cont’d)

Analysis of financial instruments by remaining contractual maturities (Cont’d)

MKH Berhad

Total On demand
Carrying contractual or within 2 to 5 Over 5
amount amount 1 year 1-2 years years years
RM RM RM RM RM RM

The Group
2018
Financial liabilities:
 Payables and accruals 846,098,180 903,668,757 556,791,260 80,543,608 256,222,630 10,111,259
 Loans and borrowings 672,756,676 743,090,852 353,508,518 134,526,619 208,005,590 47,050,125

1,518,854,856 1,646,759,609 910,299,778 215,070,227 464,228,220 57,161,384

The Company
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2019

2018
Financial liabilities:
 Payables and accruals 539,936 539,936 539,936 - - -
 Loans and borrowings 93,701,813 99,007,528 99,007,528 - - -

94,241,749 99,547,464 99,547,464 - - -

227
228 ANNUAL REPORT 2019

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2019

40. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONT’D)

(iii) Foreign currency risk

Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will
fluctuate because of changes in foreign exchange rates.

The Group is exposed to foreign currency risk when the currency denomination differs from its functional
currency.

The Group has transactional currency exposures arising from sales or purchases that are denominated
in a currency other than the respective functional currencies of the Group entities, primarily Ringgit
Malaysia (“RM”), Indonesian Rupiah (“IDR”) and Chinese Renminbi (“RMB”). The foreign currency in which
these transactions are denominated is mainly United States Dollar (“USD”). Foreign currency exposure
in transactions and currencies other than functional currencies of the operating entities are kept to an
acceptable level.

The Group also holds cash and bank balances denominated in USD for working capital purposes.

The Group is also exposed to currency translation risk arising from its net investments in foreign operations.
The Group’s net investment in The Peoples’ Republic of China and Republic of Indonesia are not hedged
as currency positions in RMB and IDR are considered to be long-term in nature.

Financial assets and liabilities denominated in USD are as follows:

The Group
2019 2018
RM RM

USD
Cash and bank balances 19,608,925 31,686,906
Trade receivables 640,057 624,407
Loans and borrowings (200,069,286) (222,347,154)
MKH Berhad
229
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2019

40. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONT’D)

(c) Foreign currency risk (Cont’d)

Sensitivity analysis for foreign currency risk

The following table demonstrates the sensitivity of the Group’s profit for the financial year to a reasonably
possible change in the USD exchange rate against their respective functional currencies, with all other
variables held constant.

Profit for the financial year
The Group 2019 2018
RM RM

USD/RM
 Strengthened 5% (87,700) 410,400
 Weakened 5% 87,700 (410,400)

USD/RMB
 Strengthened 3% 15,900 34,600
 Weakened 3% (15,900) (34,600)

USD/IDR
 Strengthened 5% (6,683,200) (7,589,100)
 Weakened 5% 6,683,200 7,589,100

Translation reserve
The Group 2019 2018
RM RM

IDR/RM
 Strengthened 5% 4,531,000 3,689,200
 Weakened 5% (4,531,000) (3,689,200)

RMB/RM
 Strengthened 3% 707,300 827,100
 Weakened 3% (707,300) (827,100)

(iv) Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of the Group’s financial instruments will
fluctuate because of changes in market interest rates.

The Group’s exposure to interest rate risk relates to interest bearing financial assets and financial liabilities.
Interest bearing financial assets include finance lease receivables, loan receivables and deposits with
licensed banks. Deposits are placed for better yield returns than cash at banks and to satisfy conditions
for bank guarantee.
230 ANNUAL REPORT 2019

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2019

40. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONT’D)

(iv) Interest rate risk (Cont’d)

The Group’s interest bearing financial liabilities comprise finance lease, bank overdrafts, revolving credits,
bridging loan and term loans.

The fixed deposits placed with licensed banks and loan receivables at fixed rate exposes the Group to
fair value interest rate risk. The bank overdrafts, revolving credits, bridging loan and term loans totalling
RM683,532,538 (30.9.2018: RM671,070,604; 1.10.2017: RM770,542,703) at floating rate expose the Group
to cash flow interest rate risk whilst finance lease of RM1,231,723 (30.9.2018: RM1,686,072; 1.10.2017:
RM1,974,114) at fixed rate expose the Group to fair value interest rate risk.

The Group manages its interest rate exposure by maintaining a prudent mix of fixed and floating rate
borrowings. The Group also actively reviews its debts portfolio to ensure favourable rates are obtained,
taking into account the investment holding period and nature of assets.

As at the reporting date, a change of 50 basis points in interest rates, with all other variables held constant,
would decrease/increase the total equity and profit after tax by approximately RM2,597,000 (30.9.2018:
RM2,550,000; 1.10.2017: RM2,928,100), arising mainly as a result of higher/lower interest expense on
floating rate loans and borrowings.

41. FAIR VALUE OF FINANCIAL INSTRUMENTS

The methods and assumptions used to estimate the fair value of the following classes of financial assets and
liabilities are as follows:

(i) Cash and cash equivalents, trade and other receivables and payables

The carrying amounts approximate their fair values due to the relatively short-term maturities of these
financial assets and liabilities.

(ii) Long-term trade receivables and payables, loan receivables and finance lease receivables

The fair values of long-term trade receivables and payables, loan receivables and finance lease receivables
are estimated using expected future cash flows of contractual instalment payments discounted at current
prevailing rates offered for similar types of credit or lending arrangements.

(iii) Borrowings

The carrying amounts of bank overdrafts, short-term revolving credits, bridging loan and short-term loans
approximate fair values due to the relatively short-term maturity of these financial liabilities.

The carrying amounts of long-term floating rate revolving credits and loans approximate their fair values
as the loans will be re-priced to market interest rate on or near reporting date.

The fair value of finance lease is estimated using discounted cash flow analysis, based on current lending
rates for similar types of lending arrangements.
MKH Berhad
231
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2019

41. FAIR VALUE OF FINANCIAL INSTRUMENTS (CONT’D)

(iii) Borrowings (Cont’d)

The carrying amounts of long-term floating rate revolving credits and loans approximate their fair values
as the loans will be re-priced to market interest rate on or near reporting date.

The fair value of finance lease is estimated using discounted cash flow analysis, based on current lending
rates for similar types of lending arrangements.

The carrying amounts and fair value of financial instruments, other than the carrying amounts which are
reasonable approximation of fair values, are as follows:

The Group
Carrying Fair
amount value
RM RM

2019
Financial assets
Long-term other receivables 1,108,562 489,745
Loan receivables 24,594,768 22,983,281

Financial liabilities

Finance lease liabilities 1,231,723 1,302,756

2018
Financial assets
Long-term other receivables 1,031,666 455,774
Loan receivables 23,599,747 21,278,374

Financial liabilities

Finance lease liabilities 1,686,072 1,719,296
232 ANNUAL REPORT 2019

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2019

42. FAIR VALUE HIERARCHY

The following table provides the fair value measurement hierarchy of the Group’s assets and liabilities at the

reporting date:

Fair value measurement using

The Group Level 1 Level 2 Level 3 Total
2019 RM RM RM RM

Investment properties (Note 13)

Commercial properties - - 237,500,000 237,500,000
Office and shoplot - - 29,940,000 29,940,000
Education centre - - 45,000,000 45,000,000

- - 312,440,000 312,440,000

Biological assets (Note 22) - - 5,181,734 5,181,734

Liability for which fair value is disclosed (Note 41)

Finance lease payables - 1,302,756 - 1,302,756

Asset for which fair value is disclosed (Note 41)

Long-term other receivables - 489,745 - 489,745
Loan receivables - 22,983,281 - 22,983,281

- 23,473,026 - 23,473,026

The Group
2018

Investment properties (Note 13)

Commercial properties - - 243,500,000 243,500,000
Office and shoplot - - 30,120,000 30,120,000
Education centre - - 45,000,000 45,000,000

- - 318,620,000 318,620,000

Biological assets (Note 22) - - 5,960,459 5,960,459

Liability for which fair value is disclosed (Note 41)

Finance lease payables - 1,719,296 - 1,719,296

Asset for which fair value is disclosed (Note 41)

Long-term other receivables - 455,774 - 455,774
Loan receivables - 21,278,374 - 21,278,374

21,734,148
- 21,734,148 -
MKH Berhad
233
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2019

42. FAIR VALUE HIERARCHY (CONT’D)

The land and building under property, plant and equipment were revalued by directors in September 2015 based
on independent professional valuation. The fair value of these assets are within level 3 of the fair value hierarchy
using significant unobservable inputs. There is no fair value determined for the current financial year as the
Group revalues its land and building every five years or at a shorter intervals whenever fair value of the said
assets is expected to differ substantially from the carrying amounts

Fair value reconciliation of investment properties measured at level 3 are as follows:

The Group Commercial Office and Education

2019 properties shoplot centre Total
RM RM RM RM

Investment properties
At beginning of year 243,500,000 30,120,000 45,000,000 318,620,000
Changes in fair values (6,000,000) (180,000) - (6,180,000)

At end of year 237,500,000 29,940,000 45,000,000 312,440,000

2018
Investment properties
At beginning of year 244,300,000 29,637,000 45,000,000 318,937,000
Changes in fair values (800,000) 483,000 - (317,000)

At end of year 243,500,000 30,120,000 45,000,000 318,620,000

234 ANNUAL REPORT 2019

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2019

42. FAIR VALUE HIERARCHY (CONT’D)

Description of valuation techniques used and key unobservable inputs to valuation on investment properties
measured at level 3 are as follows:

Property category Valuation technique Significant unobservable inputs Range

Investment properties
Commercial properties Comparison method Market value per square feet RM120 - RM1,639
Commercial properties Investment method Estimated average rental rate RM3.53 - RM4.97
 per square feet per month

Estimated outgoings per square RM1.49 - RM1.75

 feet per month
Term yield 6% - 7%
Sinking fund 3% - 4%
Void rate 10%

Commercial properties Cost method Construction price per square RM120

 feet

Office and shoplot Investment method Estimated price per parking bay RM17,000 - RM28,300

Estimated outgoings per square RM0.25

 feet per month
Term yield 6%
Void rate 5%

Education centre Investment method Estimated average rental rate RM0.72 - RM0.85
 per square feet per month

Estimated outgoings per square RM0.04 - RM0.05

 feet per month

Term yield 5%
Reversionary yield 6%
Void rate 10%
MKH Berhad
235
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2019

42. FAIR VALUE HIERARCHY (CONT’D)

The estimated fair value would increase/(decrease) if:

• Estimated rental/average rental rate per square feet per month were higher/(lower)
• Estimated price per parking bay per month were higher/(lower)
• Estimated outgoings per square feet per month lower/(higher)
• Rent growth rate per annum were higher/(lower)
• Void rate lower/(higher)
• Term yield rate lower/(higher)
• Reversionary yield rate lower/(higher)
• Sinking fund rate lower/(higher)
• Construction price per square feet higher/(lower)

Direct comparison method

Under the direct comparison method, a property’s fair value is estimated based on comparison of current prices
in an active market for similar properties in the same location and condition and where necessary, adjusting
for location, accessibility, visibility, time, terrain, size, present market trends and other differences. Fair value of
properties derived using direct comparison method have been generally included in Level 3 fair value hierarchy
due to the adjustments mentioned above. The most significant input into this valuation approach is price per
square feet of comparable properties.

Investment method

In the investment method of valuation, the projected net income and other benefits that the subject property
can generate over the life of the property is capitalised at market derived term yields to arrive at the present
market value of the property. Net income is the residue of gross annual rental less annual expenses (outgoings)
required to sustain the rental with allowance for void.

Cost method of valuation

In the cost method of valuation, the market value of the subject property is the sum of the market value of the
land and building. The value of the building is assumed to have a direct relationship with its cost of construction.
The cost of construction is then adjusted to allow for cost of finance, profit and demand to reflect its profitable
present market value.

Valuation processes applied by the Group

The fair value of land and buildings under property, plant and equipment is determined by external, independent
property valuers, having appropriate recognised professional qualifications and recent experience in the location
and category of property being valued. The Group revalues its land and buildings every five years or at shorter
intervals whenever the fair value of the said assets is expected to differ substantially from the carrying amounts.

The fair value of investment properties is determined by external, independent property valuers, having
appropriate recognised professional qualifications and recent experience in the location and category of property
being valued. The independent professional valuer provides the fair value of the Group’s investment property
annually.
236 ANNUAL REPORT 2019

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2019

42. FAIR VALUE HIERARCHY (CONT’D)

Policy on transfer between levels

The fair value of an asset to be transferred between levels is determined as of the date of the event or change in
circumstances that caused the transfer.

Transfer between Level 1 and 2 fair value

There is no transfer between Level 1 and 2 fair values during the financial year.

43. CAPITAL MANAGEMENT

The primary objective of the Group’s capital management is to ensure that it maintains a strong credit rating and
healthy capital ratio in order to sustain future development of the businesses so that it can continue to maximise
returns for shareholders and benefits for other stakeholders.

The Group manages its capital structure and makes adjustments to it, in light of changes in economic conditions.
To maintain or adjust capital structure, the Group may adjust the dividend payment to shareholders, return
capital to shareholders, issue new shares, obtain new borrowings or repay existing borrowings. No changes
were made in the objectives, policies and processes during the financial years ended 30 September 2019 and 30
September 2018.

The debt-to-equity ratio is calculated as total debts divided by total capital of the Group. Total debts comprise
interest bearing loans and borrowings whilst total capital is the total equity attributable to owners of the parent.
The Group’s policy is to keep the debt-to-equity ratio of not exceeding 80%. The debt-to-equity ratio as at 30
September 2019 and 2018, which are within the Group’s objectives of capital management are as follows:

The Group
2019 2018
RM RM
(Restated)

Loans and borrowings 684,764,261 672,756,676

Total equity attributable to owners of the parent 1,615,885,355 1,552,635,185

Debt-to-equity ratio (%) 42% 43%

The Group is not subject to any externally imposed capital requirements other than PT Maju Kalimantan Hadapan
and PT Sawit Prima Sakti which are required to maintain a debt-to-equity ratio of 75:25 and 65:35 respectively
as well as loan-to-value ratio of not more than 75% and 65% respectively in respect of the term loan facilities.
Based on the proforma financial information provided to the financial institutions, the Group has complied with
this capital requirement.
MKH Berhad
237
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2019

44. RESTATEMENT OF COMPARATIVE FIGURES

As mentioned in Note 2, these are the first financial statements of the Group and of the Company prepared in
accordance with MFRSs.

The accounting policies set on in Note 3 have been applied in preparing the financial statements of the Group
and of the Company for the financial year ended 30 September 2019. Adjusted corresponding comparative
information for the financial year ended 30 September 2018 and in the preparation of opening MFRSs statement
of financial position at 1 October 2017 (the Group’s date of transition to MFRSs) was presented.

In preparing the opening consolidated financial statement at 1 October 2017, the Group has adjusted amounts
reported previously in financial statements prepared in accordance with FRSs. The effect of the transition from
FRSs to MFRSs are set out as follows:

As previously As
reported Adjustments restated
RM RM RM

The Group
Statements of Financial Position:
As at 30 September 2018
Non-current assets
 Property, plant and equipment 192,936,110 242,288,679 435,224,789
 Biological assets 243,317,396 (243,317,396) -
 Receivables, deposits and
  prepayments 31,354,995 1,028,717 32,383,712

Current assets
  Biological assets - 5,960,459 5,960,459

Capital and reserves

 Reserves 897,980,982 5,633,485 903,614,467
 Non-controlling interests 55,711,947 326,974 56,038,921

The Group
Statements of Financial Position:
As at 1 October 2017
Non-current assets
 Property, plant and equipment 210,046,563 283,563,143 493,609,706
 Biological assets 284,975,508 (284,975,508) -
 Receivables, deposits and prepayments 30,944,123 1,412,365 32,356,488

Current assets
 Biological assets - 5,041,948 5,041,948

Capital and reserves

 Reserves 863,679,274 4,764,351 868,443,625
 Non-controlling interests 30,826,160 277,597 31,103,757
238 ANNUAL REPORT 2019

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2019

44. RESTATEMENT OF COMPARATIVE FIGURES (CONT’D)

As previously As
reported Adjustments restated
RM RM RM

The Group
Statement of Profit or Loss and
Other Comprehensive Income
for the financial year ended
30 September 2018
Other income 18,073,385 1,533,164 19,606,549

Other comprehensive loss:

 Foreign currency translation differences (2,454,141) (614,653) (3,068,794)

Profit attributable to:

 Owners of the parent 69,446,877 1,418,062 70,864,939
 Non-controlling interests 5,632,961 115,102 5,748,063

75,079,838 1,533,164 76,613,002

Total comprehensive income

  attributable to:
 Owners of the parent 68,077,982 869,134 68,947,116
 Non-controlling interests 6,112,308 49,377 6,161,685

74,190,290 918,511 75,108,801

The Group
Statement of Cash Flows for the
financial year ended
30 September 2018

Cash flow from Operating Activities
Profit before tax 126,698,478 1,533,164 128,231,642

Adjustment for:
 Amortisation of biological assets 14,977,744 (14,977,744) -
 Biological assets written off 1,130,667 (1,130,667) -
 Changes in fair value of biological assets - (1,533,164) (1,533,164)
 Depreciation of property, plant and equipment 19,428,065 15,279,888 34,707,953
 Property, plant and equipment written off 214,243 1,130,667 1,344,910

Cash flow from Investing Activities

Acquisition of property, plant and equipment (16,919,649) (4,729,886) (21,649,535)
Acquisition to biological assets (4,427,742) 4,427,742 -
MKH Berhad
239

LIST OF
properties
AS AT 30 SEPTEMBER 2019

*Date of
Carrying Amount Revaluation/
Description Land Area As At 30-9-2019 Date of
Location and Existing Use (acres) Tenure RM’000 Acquisition
Aliran Perkasa Sdn. Bhd.
Lot 42195, Mukim Kajang, Agricultural title 3.088 Freehold 1,353 01.04.2004
Daerah Ulu Langat, Existing use: Vacant land
Selangor
Lot 42182, Seksyen 10, Land approved 1.495 Freehold 664 07.02.2005
Bandar Kajang, Daerah for development
Ulu Langat, Selangor Existing use: Rubber
trees
PT 47267, Mukim Land approved for 1.067 Freehold 22.03.2010
Semenyih, Daerah Ulu development
Langat, Selangor Existing use: Vacant land
PT 37451 - PT 37465 & Land approved for 0.832 Freehold 990 22.03.2010
PT 37466, Mukim development
Semenyih, Daerah Ulu Existing use: Vacant land
Langat, Selangor
PT 37334, Mukim Land approved for 3.790 Freehold 7,162 22.03.2010
Semenyih, Daerah Ulu development
Langat, Selangor Existing use: Vacant land
Lot 2006, Mukim Agricultural title 10.394 Freehold 7,198 25.10.2011
Semenyih, Daerah Ulu Existing use: Vacant land
Langat, Selangor
PT 37330, Mukim Land approved for 6.870 Freehold 9,612 22.03.2010
Semenyih, Daerah Ulu development
Langat, Selangor Existing use: Vacant land
PT 37331, Mukim Land approved for 5.612 Freehold 8,054 01.07.2010
Semenyih, Daerah Ulu development
Langat, Selangor Existing use: Vacant land
Budi Bidara Sdn. Bhd.
PT 68858 to PT 68941 Individual titles 5.240 Leasehold
(total 84 lots) and approved for of 99 years
PT 68973 (1 lot), Mukim commercial use (84 lots) expiring in
Kajang, Daerah Ulu and residential (1 lot) 2107
Langat, Selangor 58,645 06.02.2013
PT 688942 to PT 688972 Individual titles 1.232 Leasehold
(total 31 lots) Mukim approved for residential of 99 years
Kajang, Daerah Ulu use expiring in
Langat, Selangor Existing use: Vacant land 2107
240 ANNUAL REPORT 2019

LIST OF PROPERTIES
AS AT 30 SEPTEMBER 2019

*Date of
Carrying Amount Revaluation/
Description Land Area As At 30-9-2019 Date of
Location and Existing Use (acres) Tenure RM’000 Acquisition
Gerak Teguh Sdn. Bhd.
All of the parcels of land held by this subsidiary are located at Mukim Semenyih, Daerah Ulu Langat, Selangor and
form part of the mixed development project of Taman Pelangi Semenyih
PT 26791 Vacant residential land 16.140 Freehold 1,703 08.10.2001
PT 26792 Vacant commercial land 0.500 Freehold 139 08.10.2001
PT 26793 Existing use: 1-storey 2.530 Freehold 513 08.10.2001
clubhouse, car park and
swimming pool (built-
up area of 17,797 sq. ft.,
Building age: 11 years)
and part of the land is
vacant
PT 26794 Existing use: Lease out 2.200 Freehold 11,000 30.09.2019
for commercial building (Investment
Properties
stated at fair
value)
PT 26795 Existing use: Lease out 6.900 Freehold 15,000 30.09.2019
for commercial building (Investment
Properties
stated at fair
value)
**Hillpark Resources Sdn. Bhd.
Lot PT 834, Mukim Ijok Agricultural title 44.970 Leasehold 103,908 25.06.2013
and PT 1092, Mukim Existing use: Vacant land expiring
Jeram, in year 2091
District of Kuala Selangor,
Selangor
Hiliran Juara Sdn. Bhd.
PT 417 to 427 (11 lots), Land approved for 11.980 Leasehold 21,804 14.01.2005
Pekan Baru Sungai residential and expiring
Besi, Daerah Petaling, commercial in year 2100
Selangor development
Existing use: Partly
vacant and partly
occupied by building
MKH Berhad
241
LIST OF PROPERTIES
AS AT 30 SEPTEMBER 2019

*Date of
Carrying Amount Revaluation/
Description Land Area As At 30-9-2019 Date of
Location and Existing Use (acres) Tenure RM’000 Acquisition
Intelek Murni (M) Berhad
PT 25624, Taman Bukit 3-storey clubhouse, car 4.840 Freehold 14,207 * 30.09.2015
Mewah, Kajang, Selangor park and swimming
pool, all known as
Mewah Club (built-up
area of 39,478 sq. ft.)
(Building age: 25 years)
Kajang Resources Corporation Sdn. Bhd.
All of the parcels of land held by this subsidiary are located at Batu 18, Jalan Semenyih, Mukim Semenyih, Daerah
Ulu Langat, Selangor
PT Nos. 50 and 51 Residential land 9.659 Leasehold 2,800 1991
Existing use: Oil palm expiring
plantation in year
2089
PT Nos. 131 and 132 Vacant residential land 1.572 Freehold 323 19.08.1997
Lot 27977 Agricultural title 9.219 Freehold 4,994 26.05.1994
Existing use: Vacant land
PT 42777 Land approved for 2.220 Freehold 2,234 08.12.2010 -
development 07.04.2011
Existing use: Vacant land
PT 42107 Land approved 2.000 Freehold 1,945 08.12.2010 -
for development 07.04.2011
Existing use: Vacant land
Lot 2227 Agricultural title 7.006 Freehold 4,718 14.01.2011
Existing use: Vacant land
Lot 2229 Agricultural title 7.387 Freehold 7,388 27.04.2011
Existing use: Vacant land
Lot 2236 Agricultural title 11.044 Freehold 15,886 28.10.2010
Existing use: Vacant land
Laju Jaya Sdn. Bhd.
PT Nos. 19379 to 19391 Wisma MKH. A 6-storey 0.585 Leasehold 27,711 * 30.09.2015
(13 lots) Jalan Semenyih, hotel cum office building expiring in
Kajang, Selangor with built-up area of 2089
171,935 sq. ft. Existing
use: 100% tenanted
(Building age: 25 years)
242 ANNUAL REPORT 2019

LIST OF PROPERTIES
AS AT 30 SEPTEMBER 2019

*Date of
Carrying Amount Revaluation/
Description Land Area As At 30-9-2019 Date of
Location and Existing Use (acres) Tenure RM’000 Acquisition
Maha Usaha Sdn. Bhd.
PT No. 19482, Bandar Commercial complex 2.226 Leasehold 138,500 30.09.2019
Kajang, Daerah Ulu with built-up area of expiring in (Investment
Langat, Selangor approximately 600,000 2089 Properties
sq. ft. Existing use: 99% stated at fair
tenanted (Building age: value)
23 years)
Lot 10502, Seksyen 7, 1 unit of 6-storey Shop/ 0.112 Leasehold 11,000 30.09.2019
Bandar Kajang, Daerah Office in MKH Avenue expiring in (Investment
Ulu Langat, Selangor (Building age: 2 years) 2107 Properties
stated at fair
value)
Metro Tiara (M) Sdn. Bhd.
Unit 1-1, Tingkat 1, Dataran 1 unit of stratified office 2,971 sq. Leasehold 2,590 30.09.2019
Pelangi Utama, Pelangi lot within a block of ft. (net expiring in (Investment
Utama, Jalan Masjid, 6-storey shop offices lettable year 2101 Properties
PJU6A, Petaling Jaya, with 58 bays of car park. area) stated at fair
Selangor (Building age: 11.5 years) value)
PT No. 76622, Bandar Private school complex 5.000 Freehold 45,000 30.09.2019
Kajang, Daerah Ulu with built-up area of (Investment
Langat, Selangor approximately 224,736 Properties
sq. ft. (Building age: 6 stated at fair
years) value)
Petik Mekar Sdn. Bhd.
Lot 1014, Mukim Semenyih, Agricultural title 64.607 Freehold 56,127 10.07.2013
Daerah Ulu Langat, Existing use: Vacant land
Selangor
Lot 21740, Mukim Agricultural title 10.544 Freehold 10,658 05.07.2013
Semenyih, Daerah Ulu Existing use: Vacant land
Langat, Selangor
PT. Maju Kalimantan Hadapan
East Kalimantan, Oil palm plantation 39,395 Leasehold 228,710 * 25.09.2015
Indonesia and office building and of 35 years
estate quarter (built-up expiring in
area of approximately year 2042
3,973,971 sq. ft.) with an
option to
renew for
a further
period of 25
years and ^
^ generally can be further renewed for another period of 35 years upon fulfilment of conditions
MKH Berhad
243
LIST OF PROPERTIES
AS AT 30 SEPTEMBER 2019

*Date of
Carrying Amount Revaluation/
Description Land Area As At 30-9-2019 Date of
Location and Existing Use (acres) Tenure RM’000 Acquisition
PT. Sawit Prima Sakti
East Kalimantan, Oil palm plantation and 6,043 Leasehold 81,798 02.06.2016
Indonesia estate quarter (built-up of 35 years
area of approximately expiring in
91,752 sq. ft.) year 2045
with an
option to
renew for
a further
period of 25
years and ^
^ generally can be further renewed for another period of 35 years upon fulfilment of conditions
PT. Nusantara Makmur Jaya
East Kalimantan, Land approved for 42.698 Leasehold 1,212 19.05.2017
Indonesia construction of Jetty of 20 years
and ancillary facilities expiring in
building and office year 2037
(built-up area of
approximately 10,979
sq. ft.)
Serba Sentosa Sdn. Bhd.
Lot 456, Seksyen 7, Existing use: Lease out 1.047 Leasehold 11,000 30.09.2019
Bandar Kajang, Daerah for commercial building expiring in (Investment
Ulu Langat, Selangor year 2096 Properties
stated at fair
value)
PT 35799, Bandar Kajang, Land approved 1.210 Leasehold 3,026 25.07.1995
Daerah Ulu Langat, for commercial expiring in
Selangor development year 2096
Existing use: Office
Lot 42275, Seksyen 9, Land approved 1.857 Leasehold 4,985 25.07.1995
Bandar Kajang, Daerah for commercial expiring in
Ulu Langat, Selangor development year 2096
Existing use: Vacant land
PT 56159, Bandar Kajang, Land approved 3.720 Leasehold 10,300 25.07.1995
Daerah Ulu Langat, for commercial expiring in
Selangor development year 2103
Existing use: Vacant land
PT 69670, Bandar Kajang, Vacant commercial land 1.194 Leasehold 3,869 25.07.1995
Daerah Ulu Langat, expiring in
Selangor year 2107
Lot 41078 and Lot 41086 Vacant residential land 1.011 Freehold 953 05.08.2004
Seksyen 10, Bandar
Kajang, Daerah Ulu
Langat, Selangor
244 ANNUAL REPORT 2019

LIST OF PROPERTIES
AS AT 30 SEPTEMBER 2019

*Date of
Carrying Amount Revaluation/
Description Land Area As At 30-9-2019 Date of
Location and Existing Use (acres) Tenure RM’000 Acquisition
Srijang Indah Sdn. Bhd.
Lot 501, Seksyen 7, Bandar 4-storey commercial 1.774 Leasehold 48,000 30.09.2019
Kajang, Daerah Ulu complex with built-up expiring in (Investment
Langat, Selangor area of approximately year 2102 Properties
358,707 sq. ft. Existing stated at fair
use: 97% tenanted value)
(Building age: 12.5 years)
Lot 43402, Bandar Baru 1.5-storey hypermarket 1.770 Freehold 14,000 30.09.2019
Bangi, Daerah Ulu Langat, building with built-up (Investment
Selangor area of approximately Properties
67,089 sq. ft. (Building stated at fair
age: 16 years) value)
Unit G-1, G-2 & G-3, 3 units of strata shop 11,077 sq. Freehold 8,400 30.09.2019
Idaman KL 128 (Saville lot within a block of ft. (total (Investment
Residence), 128, Jalan 30-storey serviced net lettable Properties
Klang Lama, Kuala apartment with 79 bays area) stated at fair
Lumpur of car park (Building value)
age: 9 years)
Unit G-3A, 1-3A, G-5, 1-5, 6 units of strata shop 11,162 sq. ft. Freehold 7,950 30.09.2019
G-6 & 1-6, Pangsapuri and office lot within (total net (Investment
Khidmat Melawati two blocks of 24-storey lettable Properties
(Saville@ Melawati), No. serviced apartment with area) stated at fair
2, Jalan Kolam Air, Desa 128 bays of car park value)
Melawati, Kuala Lumpur (Building age: 5 years)
Srijang Kemajuan Sdn. Bhd.
Part of Lot 660, 661, 662 Land approved for 235.049 Freehold 05.05.2008
and 663, Seksyen 10, mixed development
Bandar Kajang, Part of Existing use: Vacant land
Lot 246, 300, 1029, 1070
and 1127, Mukim Kajang,
all in Daerah Hulu Langat,
Selangor 190,248

Geran 94270, Lot 38631 Agricultural title 4.052 Freehold 04.01.2011

and Geran 94269, Lot Existing use: Partly
38636, Bandar Kajang, occupied
Daerah Hulu Langat,
Selangor
Stand Allied Corporation Sdn. Bhd.
PT 5188, Seksyen 40, Vacant commercial land 1.531 Freehold 10,591 18.07.2014
Bandar Petaling Jaya,
Daerah Petaling, Selangor
MKH Berhad
245
LIST OF PROPERTIES
AS AT 30 SEPTEMBER 2019

*Date of
Carrying Amount Revaluation/
Description Land Area As At 30-9-2019 Date of
Location and Existing Use (acres) Tenure RM’000 Acquisition
Sumber Lengkap Sdn. Bhd.
Lot 15694, Mukim Vacant residential land 3.105 Freehold 30.04.1999
Semenyih, Daerah Ulu
Langat, Selangor
1,605
Lot 15683, Mukim Vacant residential land 3.184 Freehold 30.04.1999
Semenyih, Daerah Ulu
Langat, Selangor
Part of Lot 15703, Mukim Partly vacant residential 1.770 Freehold 467 30.04.1999
Semenyih, Daerah Ulu land
Langat, Selangor

**Suria Villa Sdn. Bhd.

Lot 12684, Mukim Land approved for mixed 9.581 Freehold 07.08.2015
Semenyih, Daerah Ulu development
Langat, Selangor Existing use: Vacant land
Lot 935, 1933, 1934, Existing use: Vacant land 74.474 Freehold 07.08.2015
PT29942, 29943, Lot 1077
&1640, Mukim Semenyih,
Daerah Ulu Langat,
Selangor
313,553
PT 9781 & PT9782, Mukim Existing use: Vacant land 14.560 Leasehold 07.08.2015
Semenyih, Daerah Ulu of 99 years
Langat, Selangor expiring in
2096
Lot 1935, 1936, & PT 29946, Existing use: Vacant land 39.119 Freehold 19.08.2016
Mukim Semenyih,
Daerah Ulu Langt,
Selangor
Vast Furniture Manufacturing (Kunshan) Co. Ltd.
Lot 1120101015 & Lot Office, factory buildings 10.000 Leasehold 18,255 * 30.09.2015
1120101009, 588 Airport & partial vacant land of 50 years
Road, Shipu Town, (Building age: 19 years), expiring in
Kunshan City, Jiangsu new factory building 2049
Province, Republic of (Building age: 14 years)
China
MKH Berhad
Lot No. 2 and Lot No. 8, Two units of 2-storey 4,401 sq. ft. Freehold 1,176 * 30.09.2015
Jalan Bukit Mewah 66, shop house with built-up total land
Kajang, Selangor area of approximately area
8,802 sq. ft. (Building
age: 21 years)
* A ll revalued assets were as of 30 September 2015, except PT. Maju Kalimantan Hadapan, which was at
25 September 2015
** Joint venture land
246 ANNUAL REPORT 2019

ANALYSIS
of shareholdings
AS AT 31 DECEMBER 2019

Issued and fully paid-up capital : RM654,458,655

No. of shares issued and paid-up : 586,548,168
(inclusive of 7,513,600 shares bought-back by the Company and retained as
treasury shares as at 31 December 2019)
Class of equity securities : Ordinary shares
Voting rights by show of hand : One vote for every member
Voting rights by poll : One vote for every share held
No. of shareholders : 6,467

ANALYSIS OF SHAREHOLDINGS

Size of Shareholdings No. of Holders % Total Holdings %

1 - 99 566 8.752 20,086 0.003
100 - 1,000 587 9.077 325,227 0.056
1,001 - 10,000 3,067 47.425 14,160,063 2.446
10,001 - 100,000 1,867 28.870 58,017,365 10.020
100,001 - 28,951,727 376 5.814 344,808,693 59.549
28,951,728 and above 4 0.062 161,703,134 27.926
Total 6,467 100.000 579,034,568 100.000

SUBSTANTIAL SHAREHOLDERS

No. of Shares Held

Name of Shareholder Direct Interest % Indirect Interest %
1 Chen Choy & Sons Realty Sdn. Bhd.* (“CCSR”) 43,359,954 7.488 192,965,500 33.325
2 Public Bank Group Officers’ Retirement 53,352,059 9.214 - -
 Benefits Fund
3 Tan Sri Dato’ Chen Kooi Chiew @ 1,487,080 0.257 251,458,158 43.427
 Cheng Ngi Chong#
4 Tan Sri Datuk Chen Lok Loi^ 10,602,844 1.831 244,568,087 42.237
5 Datuk Chen Fook Wah+ 1,983,911 0.343 236,337,454 40.816

Notes :
* Deemed interest through shares held in nominee companies.
#
Deemed interest through shares held in CCSR, Lotus Way Sdn. Bhd. and a nominee company.
^ Deemed interest through shares held in CCSR and a nominee company.
+
Deemed interest through shares held in CCSR and Activest Sdn. Bhd..
MKH Berhad
247
ANALYSIS OF SHAREHOLDINGS
AS AT 31 DECEMBER 2019

LIST OF TOP 30 SHAREHOLDERS

(Without Aggregating Securities From Different Securities Accounts Belonging To The Same Registered Holder)

No. Name Shareholdings % (~)

1 Kenanga Nominees (Tempatan) Sdn. Bhd. 56,750,000 9.801

Qualifier: Pledged Securities Account For Chen Choy & Sons Realty Sdn. Bhd.

2 Amsec Nominees (Tempatan) Sdn. Bhd. 37,400,000 6.459

Qualifier: Pledged Securities Account – AmBank (M) Berhad For Chen Choy &
 Sons Realty Sdn. Bhd.

3 Kenanga Nominees (Tempatan) Sdn. Bhd. 34,553,134 5.967

Qualifier: Public Bank Group Officers’ Retirement Benefits Fund

4 Affin Hwang Nominees (Tempatan) Sdn. Bhd. 33,000,000 5.699

Qualifier: Pledged Securities Account For Chen Choy & Sons Realty Sdn. Bhd.

5 Alliancegroup Nominees (Tempatan) Sdn. Bhd. 22,980,000 3.969

Qualifier: Pledged Securities Account For Chen Choy & Sons Realty Sdn. Bhd.

6 Chen Choy & Sons Realty Sdn. Berhad 18,879,704 3.260

7 Public Invest Nominees (Tempatan) Sdn. Bhd. 18,798,925 3.247

Qualifier: Public Bank Group Officers’ Retirement Benefits Fund

8 UOBM Nominees (Tempatan) Sdn. Bhd. 16,700,000 2.884

Qualifier: Pledged Securities Account For Chen Choy & Sons Realty Sdn. Bhd.

9 HLB Nominees (Tempatan) Sdn. Bhd. 15,280,500 2.639

Qualifier: Pledged Securities Account For Chen Choy & Sons Realty Sdn. Bhd.

10 Chen Choy & Sons Realty Sdn. Bhd. 12,399,592 2.141

11 Chen Choy & Sons Realty Sdn. Bhd. 12,080,658 2.086

12 RHB Capital Nominees (Tempatan) Sdn. Bhd. 10,855,000 1.875

Qualifier: Pledged Securities Account For Chen Choy & Sons Realty Sdn.
 Berhad

13 Tan Sri Datuk Chen Lok Loi 10,602,844 1.831

14 RHB Nominees (Tempatan) Sdn. Bhd. 7,687,747 1.328

Qualifier: Pledged Securities Account For Cau Vong Holdings Sdn. Bhd.

15 Alliancegroup Nominees (Tempatan) Sdn. Bhd. 6,675,000 1.153

Qualifier: Pledged Securities Account For Tan Sri Dato’ Chen Kooi Chiew @
 Cheng Ngi Chong
248 ANNUAL REPORT 2019

ANALYSIS OF SHAREHOLDINGS
AS AT 31 DECEMBER 2019

LIST OF TOP 30 SHAREHOLDERS (CONT’D)

(Without Aggregating Securities From Different Securities Accounts Belonging To The Same Registered Holder)

No. Name Shareholdings % (~)

16 Lotus Way Sdn. Bhd. 5,707,704 0.986

17 Public Nominees (Tempatan) Sdn. Bhd. 5,499,500 0.950

Qualifier: Pledged Securities Account For Kong Goon Khing

18 Alliancegroup Nominees (Tempatan) Sdn. Bhd. 5,442,633 0.940

Qualifier: Pledged Securities Account For Liberty Alliance (M) Sdn. Bhd.

19 Tan Sou Yee 4,321,494 0.746

20 Citigroup Nominees (Asing) Sdn. Bhd. 4,076,477 0.704

Qualifier: CBNY For Dimensional Emerging Markets Value Fund

21 Neoh Choo Ee & Company, Sdn. Berhad 4,000,000 0.691

22 Yong Moh Lim 3,800,941 0.656

23 Goh Thong Beng 3,315,100 0.572

24 Low Siew Lian 3,273,787 0.565

25 Wong Ah Tim @ Ong Ah Tin 3,200,000 0.553

26 Key Development Sdn. Berhad 3,101,748 0.536

27 Citigroup Nominees (Asing) Sdn. Bhd. 2,992,375 0.517

Qualifier: CBNY For Emerging Market Core Equity Portfolio DFA Investment
 Dimensions Group Inc

28 Citigroup Nominees (Tempatan) Sdn. Bhd. 2,818,030 0.487

Qualifier: Employees Provident Fund Board

29 Alliancegroup Nominees (Tempatan) Sdn. Bhd. 2,800,000 0.483

Qualifier: Pledged Securities Account For Liberty Alliance (M) Sdn. Bhd.

30 Cau Vong Holdings Sdn. Bhd. 2,778,364 0.480

TOTAL 371,771,257 64.205

Note:
(~)
Based on 579,034,568 ordinary shares (excluding 7,513,600 treasury shares).
MKH Berhad
249

DIRECTORS’
shareholdings
AS AT 31 DECEMBER 2019

MKH BERHAD

No. of Ordinary Shares Held

Name of Director Direct Interest % Indirect Interest %

Tan Sri Dato’ Chen Kooi Chiew @ 1,487,080 0.257 251,458,158 43.427
 Cheng Ngi Chong*
Tan Sri Datuk Chen Lok Loi^ 10,602,844 1.831 244,568,087 42.237
Datuk Chen Fook Wah# 1,983,911 0.343 236,337,454 40.816
Haji Mohammed Chudi bin Haji Ghazali 67,361 0.012 - -

Notes :-
* Deemed interest through shares held in Chen Choy & Sons Realty Sdn. Bhd. (“CCSR”), Lotus Way Sdn. Bhd. and
a nominee company.
^ Deemed interest through shares held in CCSR and a nominee company.
#
Deemed interest through shares held in CCSR and Activest Sdn. Bhd..

RELATED COMPANY
- Srijang Kemajuan Sdn. Bhd.

No. of Ordinary Shares Held

Name of Director Direct Interest % Indirect Interest %

Tan Sri Dato’ Chen Kooi Chiew @ 1 Negligible - -

 Cheng Ngi Chong
250 ANNUAL REPORT 2019

NOTICE OF FORTIETH
annual general meeting
NOTICE IS HEREBY GIVEN THAT the Fortieth Annual General Meeting (“40th AGM”) of MKH Berhad will be held at
Emerald Ballroom, 1st Floor, RHR Hotel @ Kajang, Jalan Semenyih, 43000 Kajang, Selangor Darul Ehsan on Thursday,
5 March 2020 at 10.00 a.m. to transact the following businesses:

ORDINARY BUSINESS:

1. 
To receive the Audited Financial Statements for the financial year ended (Please refer to
30 September 2019 together with the Directors’ and Auditors’ reports thereon. Explanatory Note A)

2. To approve the payment of Directors’ fees amounting to RM200,000-00 for the
financial year ended 30 September 2019 to the Non-Executive Directors. (Ordinary Resolution 1)

3. To approve the payment of Directors’ benefits (excluding Directors’ fees) to the
Non-Executive Directors from 5 March 2020 until the next Annual General Meeting
of the Company. (Ordinary Resolution 2)

4. To re-elect the following Directors who retire by rotation pursuant to Clause 112(1)
of the Company’s Constitution and being eligible, have offered themselves for
re-election:-

(a) Tan Sri Dato’ Chen Kooi Chiew @ Cheng Ngi Chong (Ordinary Resolution 3)
(b) Datuk Chen Fook Wah (Ordinary Resolution 4)
(c) Haji Mohammed Chudi bin Haji Ghazali (Ordinary Resolution 5)

5. To re-appoint Deloitte PLT as the Company’s Auditors for the financial year ending
30 September 2020 and to authorise the Directors to fix their remuneration. (Ordinary Resolution 6)

SPECIAL BUSINESS:

To consider and if thought fit, to pass the following ordinary resolutions:

6. Ordinary Resolution
 Authority To Issue Shares Pursuant To Sections 75 and 76 Of The Companies Act
2016

“THAT subject always to the Companies Act 2016, the Main Market Listing
Requirements of Bursa Malaysia Securities Berhad, the Company’s Constitution
and the approvals of the relevant government and/or regulatory authorities, the
Directors be and are hereby empowered pursuant to Sections 75 and 76 of the
Companies Act 2016, to issue and allot new shares in the Company at any time at
such price, upon such terms and conditions, for such purposes and to such person(s)
or party(ies) whomsoever as the Directors may in their absolute discretion, deem
fit and expedient in the best interest of the Company, provided that the aggregate
number of shares issued pursuant to this resolution does not exceed ten per centum
(10%) of the total number of issued shares of the Company for the time being AND
THAT the Directors 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 to be in force until the conclusion of the
next Annual General Meeting of the Company.” (Ordinary Resolution 7)
MKH Berhad
251
NOTICE OF FORTIETH ANNUAL GENERAL MEETING

7. Ordinary Resolution
Proposed Renewal of Authority for the Company to Purchase Its Own Shares

“THAT subject to the Companies Act 2016 (the “Act”), rules, regulations and orders
made pursuant to the Act, provisions of the Constitution of the Company, the Main
Market Listing Requirements of Bursa Malaysia Securities Berhad (“Bursa Securities”)
and any other relevant authorities, the Directors of the Company be and are hereby
authorised to exercise the power of the Company to purchase such amount of
ordinary shares in the Company from time to time through Bursa Securities upon
such terms and conditions as the Directors may deem fit and expedient in the best
interest of the Company (“Proposed Renewal of Share Buy-Back”) subject further to
the following:

(i) the aggregate number of shares purchased does not exceed 10% of the
existing number of shares of the Company (“Purchased Shares”) at the point
of purchase;

(ii) 
the maximum funds to be allocated by the Company for the purpose of
purchasing the Purchased Shares shall not exceed the total retained profits of
the Company at the time of the purchase(s); and

(iii) the authority conferred by this resolution will commence immediately upon
passing of this resolution and will continue to be in force until:
(a)  the conclusion of the next Annual General Meeting (“AGM”) of the
Company unless the authority is renewed subject to conditions; or
(b) the expiration of the period within which the next AGM after that date
is required by law to be held; or
(c) it is revoked or varied by ordinary resolution passed by the shareholders
of the Company in general meeting;
whichever occurs first,

(iv) upon the completion of the purchase(s) of the Purchased Shares, the Directors
of the Company be and are hereby authorised to deal with the Purchased
Shares in the following manner:-
(a) to cancel the Purchased Shares so purchased; or
(b) to retain the Purchased Shares so purchased as treasury shares for
distribution as dividends to the shareholders and/or resold on the
market of Bursa Securities; or
(c) to retain part of the Purchased Shares so purchased as treasury shares
and cancel the remainder; or
(d) to deal in such other manner as prescribed by the Act, rules, regulations
and orders made pursuant to the Act and the requirements of the Bursa
Securities and any other relevant authorities may allow from time to
time.

AND THAT the Directors of the Company be and are hereby authorised to take

all such steps as are necessary to implement, finalise and give full effect to the
Proposed Renewal of Share Buy-Back with full power to assent to any conditions,
modifications, variations and/or amendments (if any) as may be imposed by the
relevant authorities and with fullest power to do all such acts and things thereafter
as the Directors may deem fit and expedient in the best interest of the Company.” (Ordinary Resolution 8)
252 ANNUAL REPORT 2019

NOTICE OF FORTIETH ANNUAL GENERAL MEETING

8. Ordinary Resolution
 Retention of Independent Directors/Continuing in Office as Independent
Non-Executive Directors

(a) “THAT approval be and is hereby given to En. Jeffrey bin Bosra who has
served as an Independent Non-Executive Director of the Company for a
cumulative term of more than 9 years, to continue to serve as an Independent
Non-Executive Director of the Company in accordance with the Malaysian
Code on Corporate Governance 2017.” (Ordinary Resolution 9)

(b) “THAT subject to the passing of Ordinary Resolution 5, approval be and is

hereby given to Haji Mohammed Chudi bin Haji Ghazali who has served as
an Independent Non-Executive Director of the Company for a cumulative
term of more than 12 years, to continue to serve as an Independent
Non-Executive Director of the Company until the conclusion of the next AGM
of the Company in accordance with the required two-tier voting process of
the Malaysian Code on Corporate Governance 2017.” (Ordinary Resolution 10)

ANY OTHER BUSINESS:

9. To transact any other business of the Company of which due notice shall have been
given in accordance with the Company’s Constitution and the Companies Act 2016.

By Order of the Board,

TAN WAN SAN (MIA 10195)

Group Company Secretary
Kajang, Selangor Darul Ehsan
Date : 21 January 2020

Notes:

1. Appointment of Proxy

(a) A member entitled to attend and vote at the meeting is entitled to attend and vote in person or by proxy
or by attorney or by duly authorised representative. A proxy or attorney or duly authorised representative
may but need not be a member of the Company.

(b) The power of attorney or an office copy or a notarially certified copy thereof or the instrument appointing
a proxy shall be in writing under the hand of the appointor or of his attorney duly authorised in writing. If
the appointor is a corporation, it must be executed under its common seal or in the manner authorised by
its constitution.

(c) Where a member of the Company is an exempt authorised nominee which holds ordinary shares in the
Company for multiple beneficial owners in one securities account (“omnibus account”), the exempt
authorised nominee may appoint any number of proxy (no limit) in respect of each omnibus account it
holds.
MKH Berhad
253
NOTICE OF FORTIETH ANNUAL GENERAL MEETING

(d) If the Form of Proxy is returned without any indication as to how the proxy shall vote, the proxy will vote
or abstain as he thinks fit. Where a member appoints more than one (1) proxy, the appointment shall be
invalid unless he specifies the proportion of his holdings to be represented by each proxy.

(e) Only members whose names appear in the Record of Depositors as at 27 February 2020 will be entitled
to attend and vote at the meeting or appoint a proxy or proxies to attend and vote in his/her stead.

(f) The instrument appointing a proxy together with the power of attorney (if any) under which it is signed
or an office copy or a notarially certified copy thereof must be deposited at the registered office at Suite
1, 5th Floor, Wisma MKH, Jalan Semenyih, 43000 Kajang, Selangor Darul Ehsan, at least 48 hours before
the time appointed for holding the meeting.

2. To receive the Audited Financial Statements - Explanatory Note A

This Agenda item is meant for discussion only as the provision of Section 340(1)(a) of the Act, does not require
a formal approval of the shareholders for the audited financial statements. As such, this item is not put forward
for voting.

3. Ordinary Resolution 1 - Payments of Directors’ Fees to Non-Executive Directors for Financial Year Ended
30 September 2019

The Proposed Directors’ fees of RM200,000-00 for the financial year ended 30 September 2019 to be shared by
the following Non-Executive Directors of the Company:-

Datuk Mohammad bin Maidon : RM 50,000-00

Haji Mohammed Chudi bin Haji Ghazali : RM 50,000-00
Haji Hasan Aziz bin Mohd Johan : RM 50,000-00
En. Jeffrey bin Bosra : RM 50,000-00

Total : RM200,000-00

4. Ordinary Resolution 2 - Payments of Directors’ Benefits (excluding Directors’ fees) to Non-Executive Directors

Pursuant to Section 230 of the Act, any fees and benefits payable to the Directors of a listed company and its
subsidiaries shall be approved at a general meeting.

The Company is seeking shareholders’ approval on the benefits/emoluments payable to the Non-Executive
Directors which comprises of the following:-

(a) meeting allowance of RM1,000.00 per meeting to be given to the Board and Board Committees;
(b) lodging allowance of RM250.00 and food allowance of RM220.00 per day as well as traveling allowance
of up to RM650.00 to be given to outstation Non-Executive Director(s);

in relation to attending the meeting of the Board and Board Committees for the period commencing
5 March 2020 until the next AGM of the Company.

254 ANNUAL REPORT 2019

NOTICE OF FORTIETH ANNUAL GENERAL MEETING

5. Explanatory Statement Pertaining to Special Business

Ordinary Resolution 7

The Proposed Ordinary Resolution 7 is for the purpose of granting a renewed mandate (“General Mandate”) and
empowering the Directors of the Company, pursuant to Sections 75 and 76 of the Act, to issue and allot new
shares in the Company from time to time at such price provided that the aggregate number of shares issued
pursuant to the General Mandate does not exceed 10% of the total number of issued shares of the Company for
the time being. The General Mandate, unless revoked or varied by the Company in general meeting, will expire at
the conclusion of the next AGM of the Company.

The General Mandate will provide flexibility to the Company for any possible fundraising activities, including but
not limited to further placing of shares, for purpose of funding future investment project(s), working capital and/
or acquisition(s).

As at the date of this Notice, no new shares in the Company were issued pursuant to the mandate granted to
the Directors at the Thirty-Ninth (39th) AGM which will lapse at the conclusion of the 40th AGM to be held on
5 March 2020.

Ordinary Resolution 8

The Proposed Ordinary Resolution 8, if passed, will give authority to the Directors of the Company to exercise
the power of the Company to purchase up to 10% of the existing number of shares of the Company for the time
being. This authority, unless revoked or varied at a general meeting, will expire at the conclusion of the next
AGM of the Company or the expiration of the period within which the next AGM is required by law to be held,
whichever is the earlier.

As at 31 December 2019, a total of 7,513,600 existing shares of the Company were purchased and held as
Treasury Shares.

The detailed information on the Proposed Renewal of Share Buy-Back is set out in the Statement to Shareholders
dated 21 January 2020 which is dispatched together with the Annual Report 2019.

Ordinary Resolutions 9 and 10

The Nomination Committee has assessed the independence of the following Directors, who have served as
an Independent Non-Executive Director of the Company for a cumulative term of more than 9 years and 12
years respectively and recommended them to continue to act as Independent Non-Executive Directors of the
Company based on the following justifications:-

Ordinary Resolution 9: En. Jeffrey bin Bosra

(i) He fulfilled the criteria of independence contained in the Corporate Governance Guide issued by Bursa
Securities and thus, he would be able to function as check and balance, provide a broader view and brings
an element of objectivity to the Board.
MKH Berhad
255
NOTICE OF FORTIETH ANNUAL GENERAL MEETING

(ii) His vast experience in the auditing industry enabled him to provide the Board with proven experience
and competency in advising the management and Board in term of significant accounting policies and
practices that enhanced the Company’s risk management as he has good knowledge of the business of
the Company and is able to exercise independent and objective judgement without fear or favour and act
in the best interest of the Company.

(iii) He has contributed sufficient time and effort in his capacity as an Audit Committee Chairman and has
attended all the meetings of the Board and Board Committees which he sits on for informed and balanced
decision making.

Ordinary Resolution 10: Haji Mohammed Chudi bin Haji Ghazali

(i) He fulfilled the criteria of independence contained in the Corporate Governance Guide issued by Bursa
Securities and thus, he would be able to function as check and balance, provide a broader view and brings
an element of objectivity to the Board.

(ii) His vast experience in the banking industry enabled him to provide the Board with a diverse set of
experience, expertise and independent judgement.

(iii) He has performed his duty diligently and in the best interest of the Company and provides a broader view,
independent and balanced assessment of proposals from the management.

(iv) He has contributed sufficient time and effort in his capacity as Senior Independent Non-Executive Director
and has attended all the meetings of the Board and Audit Committee which he sits on and has participated
actively in the Board and Board Committees deliberations.

Personal Data Privacy:

By submitting an instrument appointing a proxy(ies) and/or representative(s) to attend, speak and vote at the AGM
and/or any adjournment thereof, a member of the Company (i) consents to the collection, use and disclosure of the
member’s personal data by the Company (or its agents) for the purpose of the processing and administration by the
Company (or its agents) of proxies and representatives appointed for the AGM (including any adjournment thereof) and
the preparation and compilation of the attendance lists, minutes and other documents relating to the AGM (including
any adjournment thereof) and in order for the Company (or its agents) to comply with any applicable laws, listing rules,
regulations and/or guidelines (collectively, the “Purposes”), (ii) warrants that where the member discloses the personal
data of the member’s proxy(ies) and/or representative(s) to the Company (or its agents), the member has obtained
the prior consent of such proxy(ies) and/or representatives for the collection, use and disclosure by the Company (or
its agents) of the personal data of such proxy(ies) and/or representative(s) for the Purposes and (iii) agrees that the
member will indemnify the Company in respect of any penalties, liabilities, claims, demands, losses and damages as a
result of the member’s breach of warranty.
256 ANNUAL REPORT 2019

Statement Accompanying Notice

of fortieth annual general meeting
(Pursuant to Paragraph 8.27(2) of the Main Market Listing Requirements of Bursa Malaysia
Securities Berhad)

The profiles of the Directors who are standing for re-election (as per Resolutions 3 to 5 as stated above) at the
40th Annual General Meeting of MKH Berhad are set out in the profile of Directors’ section from pages 42 to 43 of the
Company’s Annual Report.

The information relating to the shareholding of the above Directors in the Company and its related corporation are set
out on page 249 of the Company’s Annual Report.
 MKH BERHAD
Registration No. 197901006663 (50948-T)
(Incorporated in Malaysia)
Form of Proxy
I/We
NRIC/Passport/Company No.: Mobile Phone No.:
CDS Account No.: Number of Shares Held:
Address:
being a member of MKH Berhad hereby appoint:

1) Name of Proxy: NRIC/Passport/Company No.:

Address:
Number of Shares Represented:
^ or failing him/her
2) Name of Proxy: NRIC/Passport/Company No.:
Address:
Number of Shares Represented:

* or failing him/her, the Chairman of the Meeting as my/our proxy/proxies to vote for me/us on my/our behalf at the
Fortieth Annual General Meeting of the Company to be held at the Emerald Ballroom, 1st Floor, RHR Hotel @ Kajang,
Jalan Semenyih, 43000 Kajang, Selangor Darul Ehsan on Thursday, 5 March 2020 at 10.00 a.m. and at any adjournment
thereof.

The proxy is to vote on the Resolutions set out in the Notice of Meeting with “X” in the appropriate spaces. If no specific
direction as to voting is given, the proxy will vote or abstain from voting at his/her discretion.

Resolutions For Against

Ordinary Resolution 1 Payment of Directors’ Fees for financial year ended 30 September 2019
Ordinary Resolution 2 Payment of Directors’ benefits (excluding Directors’ fees) to the
Non-Executive Directors of the Company
Ordinary Resolution 3 Re-election of retiring Director, Tan Sri Dato’ Chen Kooi Chiew @
Cheng Ngi Chong
Ordinary Resolution 4 Re-election of retiring Director, Datuk Chen Fook Wah
Ordinary Resolution 5 Re-election of retiring Director, Haji Mohammed Chudi bin Haji
Ghazali
Ordinary Resolution 6 Re-appointment of Deloitte PLT as Auditors of the Company
and to authorise the Directors to fix their remuneration
Ordinary Resolution 7 Authority for Directors to Issue Shares pursuant to Sections 75
and 76 of the Companies Act 2016
Ordinary Resolution 8 Proposed Renewal of Authority for Share Buy-Back
Ordinary Resolution 9 Retention of Encik Jeffrey bin Bosra as Independent
Non-Executive Director
Ordinary Resolution 10 Retention of Haji Mohammed Chudi bin Haji Ghazali as
Independent Non-Executive Director

Dated this day of 2020

__________________________________
Signature/Common Seal of Member
* Delete the words “or failing him/her, the Chairman of the Meeting” if you do not wish to appoint the Chairman of the meeting to be your proxy
^ Delete if inapplicable
Notes:-
1. A member entitled to attend and vote at the meeting is entitled 4. If the Form of Proxy is returned without any indication as to how the
to attend and vote in person or by proxy or by attorney or by duly proxy shall vote, the proxy will vote or abstain as he thinks fit. Where
authorised representative. A proxy or attorney or duly authorised a member appoints more than one (1) proxy, the appointment shall
representative may but need not be a member of the Company. be invalid unless he specifies the proportion of his holdings to be
2. The power of attorney or an office copy or a notarially certified represented by each proxy.
copy thereof or the instrument appointing a proxy shall be in writing 5. Only members whose names appear in the Record of Depositors as at
under the hand of the appointor or of his attorney duly authorised in 27 February 2020 will be entitled to attend and vote at the meeting or
writing. If the appointor is a corporation, it must be executed under its appoint a proxy or proxies to attend and vote in his/her stead.
common seal or in the manner authorised by its constitution. 6. The instrument appointing a proxy together with the power of attorney
3. Where a member of the Company is an exempt authorised nominee (if any) under which it is signed or an office copy or a notarially certified
which holds ordinary shares in the Company for multiple beneficial copy thereof must be deposited at the registered office at Suite 1, 5th
owners in one securities account (“omnibus account”), the exempt Floor, Wisma MKH, Jalan Semenyih, 43000 Kajang, Selangor Darul
authorised nominee may appoint any number of proxy (no limit) in Ehsan, at least 48 hours before the time appointed for holding the
respect of each omnibus account it holds. meeting.
7. Pursuant to Paragraph 8.29A(1) of the Main Market Listing Requirements
of Bursa Malaysia Securities Berhad, all the Resolutions set out in the
Notice of 40th Annual General Meeting will be put to vote by poll.
Please fold here

AFFIX
STAMP

THE COMPANY SECRETARY

MKH BERHAD
Registration No. 197901006663 (50948-T)
Suite 1, 5th Floor
Wisma MKH
Jalan Semenyih
43000 Kajang
Selangor Darul Ehsan

Please fold here


MKH BERHAD (197901006663 (50948-T)) ANNUAL REPORT 2019
www.mkhberhad.com

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MKH Berhad (197901006663 (50948-T))

5th Floor, Wisma MKH, Jalan Semenyih

43000 Kajang, Selangor Darul Ehsan
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