Operation and Financial Matters Question 1(a)

The net allowance for expected credit loss shown an increase of RM11.0million in FY 2022 as compared to RM3.75 million in FY 2021. (Page 77 of AR)
What was the reason for the higher allowance for expected credit loss in FY 2022?

• These were debts long outstanding that the management has decided to provide for expected credit loss during FY 2022.

Question 1(b)

Please provide the allowance for expected credit loss by category of assets; financial assets at amortised cost, contract assets; and financial guarantee contracts respectively for both FYs 2022 and 2021. (Page 98 of AR)

• All allowance for expected credit loss is from financial assets at amortised cost for both FYs 2022 and 2021.

Question 1(c)

What are the measures taken to mitigate the rising allowance for expected credit loss going forward?

• The Company always has stringent credit assessment policies and aggressive debts collection measures.

Question 1(d)

Is there any potential for the allowance for expected credit loss to be written back in the coming financial year? If yes, what is the expected amount and from which class of asset?

• Management does not expect the allowance for expected credit loss to be written back in the coming financial year. However, we shall write back the allowance for expected credit loss immediately when it is no longer required.

Question 2(a)

In the business segment reporting, the Investment and others, (“IOS”) that comprises of investments and others recorded an external revenue of RM0.15 million in FY 2022 as compared to RM0.125 million in FY 2021.
However, this segment recorded a loss after tax of RM3.73 million in FY 2022 as compared to profit after tax of RM16.84 million in FY 2021. (Pages 132 & 133 of AR)
Which sector of IOS recorded a loss after tax in FY 2022 as compared to FY 2021?

• The loss after tax of RM3.73 million in FY 2022 is mainly contributed byEcoFirst Consolidated Bhd’s operating expenses and the profit after tax ofRM16.84 million in FY 2021 is mainly due to the reversal of expected credit loss not required arising from the subsidiaries.

Question 2(b)

What is the outlook of the IOS business unit that recorded a loss after tax in FY 2023?

• There is not much activities in the IOS business unit other than the management fee charged to the subsidiaries and dividend income received from the unquoted investments in Malaysia.

Question 3(a)

The property development segment recorded a much higher loss after tax RM24.3 million in FY 2022 as compared to a loss after tax of RM7.65 million in FY 2021.
The External revenue from the property development segment was much lower at RM9.35 million in FY 2022 as compared to RM28.2 million in FY 2021. (Pages132 & 133 of AR)
What was the reason the property development segment recorded a lower external revenue but a higher loss after tax in FY 2022?

• There were no on-going projects in FY 2022 due to delay caused by pandemic and relevant authorities.
• The revenue from the property development segment of FY 2022 was derived from the sale of completed units/ stocks, whereas revenue for FY2021 was derived from sale of properties of on-going projects then.
• The loss after tax in FY 2022 is higher than FY 2021 mainly due to the expected credit loss and preliminary project expenses incurred on upcoming projects.

Question 3(b)

What is the outlook of the property development segment in FY 2023?

• 1 project with an estimated total GDV of approximately RM1.0 billion will be launched in December 2022 / FY 2023.
• 1 project with an estimated total GDV of approximately RM500 million will be launched in FY 2024.

Question 4(a)

The Company manages the leasing and administrative functions for South City Plaza mall and the retail areas in Liberty Arc @ Ampang Ukay. (Page 25 of AR) What is the gross rental income per annum from the leasing of the Liberty Arc@Ampang Ukay?

• Gross rental income per annum from the leasing of Liberty Arc @Ampang Ukay for FY 2022 is RM0.64 million.
• We expect the rental income to marginally increase in FY 2023 due to weak retail sector.

Question 4(b)

What is the occupancy rate of the rental areas in Liberty Arc @ Ampang Ukay?

• 73.68% as at 31.10.2022.

Corporate Governance Matters Question 1(a)

The Internal Auditors (“IA”) uses the Committee of Sponsoring Organisations of the Treadway Commission (“COSO”) Internal Control – Integrated Framework as a basis for evaluating the effectiveness of the internal control systems. (Page 64 of AR)
Why does the Internal auditor use the COSO internal Control as the basis for evaluating the effectiveness of the internal control systems?
This is different from the norm as many internal auditors, whether outsourced or internal set up use the International Professional Practices Framework (“IPPF”)issued by the Institute of Internal Auditors.

• The Group’s internal audit function is carried out by an independent external firm of professional Internal Auditors, Sterling Business Alignment Consulting Sdn Bhd (“Sterling”).
• For Sterling’s internal management, they are guided by IPPF in discharging their internal audit assignments.
• For Sterling’s clients, they apply COSO when reviewing and conducting internal audit reviews for specified processes, procedures, functions, subsidiaries, etc.

Question 1(b)

What are the main differences between these two internal audit frameworks?

• IPPF is a set of conceptual framework that guides the Internal Auditors.
• COSO is a set of framework that is applied for the review of internal control and conduct of internal audit review which its objectives are divided into three (3) categories: operations, reporting and compliance.

Question 2

The Company has not fully applied Practice 11.2 as it has not disclosed the name and qualification of the person responsible for internal audit.
Please provide such details.

• The Company’s outsourced IA, Sterling is headed by its Principal Director, Ms So Hsien Ying, who is a Certified Internal Control Professional and an Associate Member of the Institute of Internal Auditors Malaysia.