ZELAN BERHAD · 2015. 8. 24. · ZELAN BERHAD 27676-V 24th Floor, Wisma Zelan No.1 Jalan Tasik...

www.zelan.com

ZELAN BERHAD 27676-V24th Floor, Wisma ZelanNo.1 Jalan Tasik Permaisuri 2Bandar Tun Razak, Cheras 56000 Kuala Lumpur

Tel : +603 9173 9173Fax : +603 9171 8191

ZELAN

BERH

AD

27676-Va

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ua

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ort 2

01

1

Annual Report 2011

EnduringChallenges

INTRODUCTION

1 Mission2 At AGlance

HIgHlIgHTs

4 Financial Calendar5 5 Years’ Financial Highlights

leaDeRsHIp

6 Executive Chairman’s Statement & Review ofOperations11 Corporate Information12 Corporate Structure14 Board of Directors’ Profile19 SeniorManagement Team

CORpORaTe RespONsIbIlITy

20 Our Policies21 Corporate Responsibility (CR) Statement

aCCOUNTabIlITy

24 Statement on CorporateGovernance32 Audit Committee Report36 Statement on Internal Control

FINaNCIal INFORmaTION

38 Financial Statements

OTHeR INFORmaTION

134 List of Properties Held135 Disclosure of Recurrent Related

Party Transactions136 Shareholders’ Information139 NoticeofAnnualGeneralMeeting142 StatementAccompanyingNotice

of Annual GeneralMeeting143 Proxy Form

CONTeNTs

OuRgOalIS TOBEAT THE FOREFRONTOF INDuSTRIALTRANSFORMATIONBY:

> Offering technologically innovative designs and solutions

> Continuously pursuing the highest levels ofwork qualityand service excellence in our fields of specialisation

IN PLAYING THIS ROLE,wEwILL STRIvE TO:

> Ensure our activities and creations are beneficial to society

> Improve the quality of our environment, and

> ultimately, deliver value to our shareholders andstakeholders

TOACHIEvEOuRmIssIONwEwILL BuILDON:

> The strength of our teamwork

> Our track record and professional reputation

mIssION

Kingdom of Saudi Arabia

aT a glaNCe

Our business is currently focused on two corebusinesses namely Engineering & Construction andProperty &Development.

we have to date, participated in contruction anddevelopment projects in keymarkets notablymalaysia,theKingdom of saudi arabia,United arab emirates,India and Indonesia.

Indonesia

United Arab Emirates

[ 2 ]ZelaN beRHaD ANNuALREPORT 2011

Kingdom of Saudi Arabia

IndonesiaMalaysiaIndia

United Arab Emirates

[ 3 ] INTRODUCTION

SEPTEMBER 201127

aNNUal geNeRal meeTINg

FINaNCIalCaleNDaR

17 aUgUsT 2010FirstQuarter Ended 30 June 2010

19 NOvembeR 2010SecondQuarter Ended 30 September 2010

16 FebRUaRy 2011ThirdQuarter Ended 31 December 2010

27 may 2011FourthQuarter Ended 31March 2011

5 sepTembeR 2011Dispatch of Annual Report andNotice of AGM

aNNOUNCemeNT OF ResUlTs

FINaNCIal yeaR eNDeD 31 maRCH 2011

pUblIsHeD aNNUal RepORT aND FINaNCIal

sTaTemeNTs


5 sepTembeR 2011Dispatch of Annual Report andNotice of AGM

5 yeaRs’FINaNCIal HIgHlIgHTs

14 months

year ended year ended year ended period ended year ended

31.03.2011 31.03.2010 31.03.2009 31.03.2008 31.01.2007

Rm’000 Rm’000 Rm’000 Rm’000 Rm’000

ResUlTs

Revenue* 41,417 1,019,987 2,008,224 1,373,762 641,043

Gross Profit* (238,497) (190,656) (60,747) 192,682 99,150

Operating profit/(loss)* (295,914) (253,413) (131,019) 124,059 67,664

Profit/(loss) before taxation* (258,080) (270,373) (121,643) 185,723 121,281

Profit/(loss) attributable to shareholders* (257,428) (274,917) (137,227) 143,035 80,786

asseTs

Gross assets 1,069,680 1,407,396 1,427,041 1,873,257 1,129,526

Cash & Cash Equivalents 18,601 46,495 102,882 202,266 188,870

lIabIlITIes aND sHaReHOlDeRs FUNDs

Borrowings 201,561 273,941 139,879 45,155 9,506

Shareholders funds 269,471 441,029 475,179 818,794 715,337

FINaNCIal RaTIOs (%)

Debt to equity 74.8 62.1 29.4 5.5 1.3

Pre-tax return on shareholders’ funds (95.8) (61.3) (25.6) 22.7 17.0

sHaRe INFORmaTION

Dividends per share — — 5 14 8

Net assets**/ Net tangibleassets per share (sen) 0.48 0.78 0.84 145** 127**

Basic earnings per share (sen) (46) (49) (24) 25 14

* The results for the financial year ended 31 March 2011, 31 March 2010 and 31 March 2009 comprise results from continuing anddiscontinued operations.

** Thenetassetspershare,earnings/(loss)pershareanddividendpersharehadbeencalculatedbasedontheweightedaveragenumberof ordinary shareswhich hadbeen adjusted to take into consideration the enlarged share capital due to the share split exercisewhichwas completed on 18 July 2007. The comparative periods’ net assets per share had been adjusted accordingly.

[ 5 ] HIgHlIgHTs

Dear shareholders,On behalf of the Board of Directors of Zelan Berhad (“Zelan” or the“Group”), I hereby present theAnnual Report andAudited FinancialStatements for the Financial Year ended 31March 2011.

OpeRaTINg eNvIRONmeNT OveRvIeW

The year 2010 saw a continuation in global economicrecovery,which had begun in the second half of 2009,following amild reboundof the economyof theunitedStates (uS) and a sharp recovery inAsian economies.Nevertheless, the global economy remained highlyuncertain,weighed downby theuS and Europeandebt crisis and volatile commodity prices. As forMalaysia, after the downturn in 2009, the economyexperienced a strong resumption of growth in 2010with an expansion of approximately 7.2%.

Despite the improvement in the global andMalaysianeconomy, the year under review continued to be adifficult and challenging period for theGroup as itexperienced tight financial constraint due to significantdrop in revenue resulting in aweak cash flowsituation. To address the issue, theGroup hasobtained amandate from the shareholders to disposeup to 30,000,000 IJMCorporation Berhad (IJMCorp)shares, representing approximately 2.22% of the issuedand paid-up share capital of IJMCorp as at 10August2010 for cash. I would like to report that theproceeds from the disposal of IJMCorp shares havebeen utilised as repayment of borrowings andworkingcapital of theGroup.

Asmost of the overseas projects undertaken by theGroup have experienced cost overrunmainly due tomaterial price escalation and difficult operatingenvironment, theBoard continued to take thenecessary steps to ensure theCompany’s survival byemphasising on completing the projects andminimisinglosses. TheBoard is determined to ensure thatshareholders’ value is restored and towards this end,many drasticmeasures, such as reducing operationcosts, have been approved and taken in order toradically improve thewayZelan does business.

eXeCUTIve CHaIRmaN’ssTaTemeNT & RevIeW OF OpeRaTIONs

At Zelan,we are all about rising to challenges indifficult times.wewill focusmore on our growingdomesticmarket rather than overseas. Our ability torecover and overcoming obstacles, shows our strengthin character amidst adversity.

gROUp ResUlTs

For the financial year ended 31March 2011, the ZelanGroup recorded a net consolidated revenue of RM41.4million, after provision for gross liquidated ascertaineddamages (LAD) of RM97.1million, compared toRM1,019.9million achieved last year, a decrease ofRM978.5million,which is 96% year on year decrease.TheGroup recorded a loss before tax and loss aftertax andminority interest of RM258.1million andRM257.4million respectively. Thiswasmainly due tothe impact of cost overruns of the projects amountingto RM220.3million and the net provision for LADmade in respect of the Rembang Project in Indonesiaas stated above.

eNgINeeRINg & CONsTRUCTION bUsINess UNIT(“eCU”)

The Engineering and Construction Business unit hasrecorded revenue of RM19.5million, after provision forgross LAD of RM97.1million,which is a significantdrop of 98% compared to the preceding year. As aresult, ECu recorded a loss before tax of RM302.7million.

For the financial year ending 31March 2011, ECu’smain priority remained to ensure timely completionof projects as per the agreedmilestones and toimplementmeasures to stem further losses arisingfrom project delays and cost overruns.


Revenue (Rm)

41.4million

Total assets (Rm)

1,069.68million

In the uAE, theMeena Plaza had been temporarilysuspended due to substantial outstanding paymentsfrom theownerof theproject.However, in June2011, theGroupentered intoa supplementary agreementwith theownerofMeenaPlazawith termswhich include revisionof the contract sumdue to compensationamount for theloss andexpenseclaimduringproject suspensionandchanges in the scopeofwork, agreed repayment termsof theoutstandingprogressbillingspreviously certified,recommencementdateof July 2011 anda revisedcompletiondateof 21months from the recommencementdate. TheGrouphas since received somepayments andworkshave resumedalbeit in small scale as certainconditions relating to the recommencementofworkatsitehavenotbeingmet in full.

In the implementation of the Shuqaiq II Independentwater and Power Plant (IwPP) in the Kingdom ofSaudi Arabia, wherewe undertook the civilconstruction portion ofworks, both onshore andoffshore,we have completed all the constructionworks except for someminor rectificationworksespecially for the offshore portion of theworks.

In Indonesia, theGroup has completed the physicalworks of the Rembang Power Plant project and bothunits of the power plant are able to generate poweras per the contractual capacity. TheGroup is in themidst of performing the various tests, such as LoadRejection Test, Reliability Run Test and PerformanceTest, in accordancewith contract prior to the

achievement of commercial operations of the plant.At the same time, theGroup via the Consortium is indiscussionwith the owner towork out solutions forall outstanding issues relating to the project.

with the know-how gained and the lessons learntfrom the year under review, ECu has intensified theefforts to look for new jobs especially in the domesticmarket. On 21 July 2010, theGroup has received aletter fromunit KerjasamaAwam Swasta (uKAS),Jabatan PerdanaMenteri which states that theGovernment ofMalaysia has agreed that thedevelopment of the Integrated Transport Terminal(ITT) at Gombak, Selangorwill be implemented onthe basis of public private partnership (PPP) by thejoint venture between Zelan Berhad and LandasanKapital (M) Sdn Bhd. The joint venture is hoping tosign the ConcessionAgreementwith theGovernmentin the very near future.

[ 7 ] leaDeRsHIp

at Zelan, we are all about rising to challenges in difficult times. We will focus more on our growing domestic market rather than overseas. Our ability to recover and overcoming obstacles, shows our strength in character amidst adversity.

pROpeRTy & DevelOpmeNT bUsINess UNIT (“pDU”)

The Property &Development unit significantlydropped its contribution to theGroupwithrevenue of RM1.3million and recorded a lossbefore taxation of RM0.8million. Thiswasdue to completion of existing project and nonew project has been implemented.

Our 50% owned entity, Essential Amity Sdn.Bhd., is currently undertaking to complete ahousing project in Semenyihwith only a fewunits remain to be sold.

TheGroup does not foresee any substantialactivities by PDu in the near future.

DIvIDeND

In view of the adverse financial condition oftheGroup, the Board does not recommendthe payment of any dividend for the financialyear under review.


bUsINess OUTlOOK aND sTRaTegy

TheMalaysianeconomy isprojected toexpandbetween5.0% to6.0% in 2011,mainlydrivenbydomesticdemand.Private investment is expected toremain strongandenvisaged tocontribute significantly toeconomicgrowth.This is in linewith theexpected implementationof keyinitiatives announcedby theGovernmentunder theEconomicTransformationProgramme (ETP) andcommencementof 52PrivateFinanceInitiatives (PFIs) under 10thMalaysiaPlan (10MP).Furtherprogressofon-going infrastructureprojects and therevival of residential constructionactivities aswell asnewprojectsduefor implementationunder theETPareexpected toprovide the impetus forthe construction sectorwhich isenvisaged toexpandby4.4% in 2011.

Construction ofMeena Plazain progress

[ 9 ] leaDeRsHIp

In viewof the risk arising from focusingonpurelyconstructionbusinesswhich is cyclical and volatile innature, theGroupwill continue to explore otheropportunities under thePPP initiative under the 10MPasour strategy to increaseour recurring income stream.wehave sinceparticipated in a fewbids for other PFIprojects and the results of thosebidswill be known indue course. TheGroupwill also focus on thedomesticconstructionmarket bybidding formoreprojects andrefrain fromventuringoverseas in the near future.

In preparation to undertake newprojects and improvetheworking capital, theGroup had, in June 2011,obtained a bridging loan facility of RM170million for atenure of 5months,whichwill be secured on theavailable-for-sale financial assets of theGroup. Theproceeds from the newbridging loan facilitywill beutilised to repay certain existing borrowings amountingtoRM157million of theGroup,which are currentlysecured by the said available-for-sale financial assets.In addition, theGroup had, in July 2011, accepted theoffer letter for a new term loan facility of up toRM308million for a tenure of up to 3 years, the proceeds ofwhichwill be utilised to repay the bridging loan facilityand the other remaining existing borrowings of theGroup. The new term loan facilitywill be secured bythe said available-for-sale financial assets in due course.TheGroup anticipates signing the agreement of theterm loan facility by the second quarter of the financialyear ending 31March 2012.

we look forward to continuous support from all ourstakeholders aswe pursue our course in turning thisGroup back into profitability.with your support, theGroupwill overcome this difficult period and post animproved performance in the future.

we remain optimistic about theGroup’s future.weare proud to be involved in the ITTGombak project,one of the projects under theNational Key ResultArea (NKRA) of Improvingurban Public Transport.For the long term, theGroupwill continue to focus inboosting its recurring revenue base by securingmoredomestic projects.

CORpORaTe gOveRNaNCe

To ensure transparency, accountability and protectionof shareholders’ interests, the Board places greatimportance on ensuring that the highest standard ofcorporate governance is practiced throughout theGroup.Our statement on CorporateGovernance andrelated reports are on pages 24 to 31

eXeCUTIve CHaIRmaN’s sTaTemeNTs & RevIeW OF OpeRaTIONs (cont’d.)

RelaTeD paRTy TRaNsaCTIONs

Significant related party transactions of theGroup forthe year under review are disclosed in Note 35 to thefinancial statements.

aCKNOWleDgemeNTs

On behalf ofmy colleagues on the Board, I wish topay special tribute to each and every one of ouremployeeswho has remained loyal and dedicated tothe Company and continue to persevere throughoutthe year in review. To theManagement Team, I wouldlike to expressmy utmost appreciation for theirdedication and unrelenting commitment to steer theGroup out of its financial difficulties.

Tomy esteemed colleagues on the Board, I would liketo extendmy gratitude for yourwise counsel, astutefinancial insights and broad strategic thinking. TheBoardmembers have been instrumental in providingguidance and valuable insights to theManagementthroughout the year.

To our valued business associates, partners, bankersand shareholders, I am truly appreciative of yourunwavering confidence and continued support inseeing us through themost challenging period of ourGroup.we have built our business strategieswith youinmind and inmoving forward, be rest assured thatthe Boardwill continue to adhere to the higheststandards of corporate governance and ethicalbusiness practices to deliver value to you.

I am confident thatwith your continuing support inthe exciting times ahead,wewill endure thechallenges faced by theGroup andwe shall succeedin our concerted effort to return theGroup to profit.

DaTO’ aNWaR bIN ajIExecutive Chairman


CORpORaTeINFORmaTION

bOaRD OF DIReCTORs

Dato’ Anwar bin AjiExecutiveChairman

Dato’ Abdullah bin Mohd YusofIndependent, Non-ExecutiveDirector

Datuk Hj. Hasni bin HarunNon-Independent, Non-ExecutiveDirector

COmpaNy seCReTaRyMuhammad FirdausAbdullah(LS 0007918)

aUDITORsPricewaterhouseCoopersCharteredAccountants

sHaRe RegIsTRaRSymphonyShareRegistrarsSdn.Bhd.Level 6, SymphonyHouseBlockD13, Pusat DaganganDana 1Jalan PJu 1A/4647301 Petaling JayaSelangorTel : +603-7841 8000Fax : +603-7841 8151/8152

RegIsTeReD OFFICe24th Floor,wisma ZelanNo. 1, Jalan Tasik Permaisuri 2Bandar Tun Razak, Cheras56000Kuala Lumpur,MalaysiaTel : +603-9173 9173Fax : +603-9171 8191Email : [email protected]

pRINCIpal baNKeRsAl Rajhi Banking & Investment Corporation (Malaysia) Berhad

EONBank BerhadHSBCBankMalaysia BerhadMalayan Banking BerhadOCBCBank (Malaysia) BerhadAl Rajhi Bank, KSAThe Saudi British Bank, KSAHSBCBankMiddle East LimitedPT BankOCBCNISP Tbk., IndonesiaPT Bank (OCBC), Indonesia

sTOCK eXCHaNge lIsTINgMain Board of BursaMalaysiaSecurities BerhadStock Code: 2283

Uae OpeRaTIONsZelan Holdings (m) sdn. bhd.

abu Dhabi branchNo. 202, ADCBBuildingP.O. Box 106813, AbuDhabi, uAETel : +97 12 621 5667Fax : +97 12 621 5657

Dubai branchP.O. Box 184577, Dubai, uAE

saUDI aRabIaN OpeRaTIONsZelan Construction arabia Co. ltd (C.R.No 4030 163845)P.O. Box 3900, Jeddah 21481unit 213, 02nd Floor, DarAl TijarahOppositeMinistry ofAffairMadinahRoad /Al BaghdedeyyahJeddahKingdomof SaudiArabiaTel : +966 2 644 0989Fax : +966 2 642 2676

Zelan arabia Company limited2nd Floor, Al Toukhi BuildingKing Fahd Street, Riyadh 11424Kingdom of Saudi ArabiaTel : +966 14013239Fax : +966 14013297

INDONesIaN OpeRaTIONsp.T. Zelan IndonesiaSequis Centre, 4th FloorJl. Jend. Sudirman Kav. 71Jakarta 12190, IndonesiaTel : +62 21 5290 3940Fax : +62 21 5290 3954

INDIaN OpeRaTIONsZelan Construction (India) private limited Level 2, Block H&I, Shakti Towers766-Anna Salai, Chennai600 002 IndiaTel : +91 44 4267 8806Fax : +91 44 4267 8833

Cdr Mohd Farit bin Ibrahim RMN (Retd)Non-Independent, Non-ExecutiveDirector

Mr. Ooi Teik HuatIndependent, Non-ExecutiveDirector

[ 11 ] leaDeRsHIp

eNgINeeRINg & CONsTRUCTION

100% ZELANCONSTRuCTION SDN. BHD.

100% ZELANCONSTRuCTION (INDIA) PTE. LTD.

100% ZELANCONSTRuCTIONARABIACO. LTD.

100% ZELANCONSOLIDATED (OvERSEAS) SDN. BHD.

95% PT ZELAN INDONESIA

40% ZELANARABIACO. LTD.

ABuDHABI BRANCH

DuBAI BRANCH

INDONESIA BRANCH

pROpeRTy & DevelOpmeNT

100% ZELANCORPORATION SDN. BHD.

100% ZELANDEvELOPMENT SDN. BHD.

100% ZELAN PROPERTY SERvICES SDN. BHD.

100% PANDuANPELANGI SDN. BHD.

100% PADuAN LIMA SEJATI SDN. BHD.

100% SEJARABINA SDN. BHD.

50% ESSENTIALAMITY SDN. BHD.

CORpORaTe sTRUCTUReAs at 15 August 2011

Notes:*underMembers’ voluntary Liquidation

100% ZelaN HOlDINgs (m) sDN. bHD.

ZelaN beRHaD


4.84%Ijm CORpORaTION beRHaD

OTHeRs

100% TRONOHCONSOLIDATED (OvERSEAS) SDN. BHD.

100% TCMB POwER SDN. BHD.

100% TERMINALBERSEPADuGOMBAK SDN. BHD.

66.67% GOLDEN SOLITAIRE (AuSTRALIA) B.v.*

40% MMCZELAN SDN. BHD.

OTHeRs

100% ZELAN ENTERPRISE SDN. BHD.

100% vISPA SDN. BHD.

100% EMINENTHECTARES SDN. BHD.

Al-Reem Island Project in uAE.

[ 13 ] leaDeRsHIp

bOaRD OF DIReCTORs’pROFIle

DaTO’ aNWaR bIN ajIAge: 61Executive Chairman

Dato’ Anwar bin Aji, aMalaysian,wasappointed the Independent, Non-ExecutiveChairman of Zelan Berhad on 11 December2008. Hewas re-designated as ExecutiveChairman of the Company on 19 January 2011.

He graduated fromuniversity ofMalayawithHonours in Economics in 1973 and obtainedhisMasters in International Studies fromOhiouniversity, united States of America in 1982.He started his careerwith theGovernmentand had held various posts in theMinistry ofTrade and Industry, the PrimeMinister’sDepartment and theMinistry of Finance. Hejoined KhazanahNasional Berhad in 1994 andleft inMay 2004. His directorship in otherpublic companies includes CIMB Islamic BankBerhad, CIMBwealthAdvisors Berhad andCIMB-Principal AssetManagement Berhad.

Dato’Anwardoes not have any familyrelationshipwith and is not related to anydirectors of ZelanBerhad and/ormajorshareholders of ZelanBerhad anddoes nothave any conflict of interestwithZelanBerhad.


DaTO’ abDUllaH bIN mOHD yUsOFAge: 72Independent, Non-ExecutiveDirector

Dato’ Abdullah binMohd Yusof, joined the Board asIndependent, Non-ExecutiveDirector on 1 August 2002.He is also the Chairman of Remuneration Committee andamember of theAudit andNomination Committees.

Dato’ Abdullah is a Partner in the legal firm of Abdullah &Zainuddin. Dato’ Abdullah is aMalaysian citizen and holdsa LLB (Honours) Degree from the university of Singapore.

Dato’Abdullah is currently theChairman ofAeonCo. (M)Berhad,AeonCredit Service (M)Berhad and THRHotel(Selangor) Berhad.Dato’Abdullah is also a Boardmemberof TradewindsCorporationBerhad andMMCCorporationBerhad.

Dato’ Abdullah does not have any family relationshipwith andis not related to any directors of Zelan Berhad and/ormajorshareholders of Zelan Berhad and does not have any conflictof interestwith Zelan Berhad.

bOaRD OF DIReCTORs’ pROFIle (cont’d.)

[ 15 ] leaDeRsHIp

DaTUK Hj. HasNI bIN HaRUNAge: 54Non-Independent, Non-ExecutiveDirector

Datuk Hj. Hasni bin Harun, aMalaysian,was appointedas Director on 11 April 2008. He is also the Chairman ofNomination Committee and amember of theAudit andRemuneration Committees.

Datuk Hj. Hasni is currently theGroupManagingDirector ofMMCCorporation Berhad (“MMC”). He isamember of theMalaysian Institute of Accountants. Heholds aMasters Degree in Business Administration fromunited States International university, SanDiego,California, uSA and a Bachelor of Accounting(Honours) Degree fromuniversity ofMalaya.

Datuk Hj. Hasni held several senior positions in theAccountant General’sOffice from 1980 to 1994. Hewas the Senior GeneralManager of the InvestmentDepartment at the Employees Provident Fund fromMarch 1994 toMarch 2001, and theManagingDirectorof RHBAssetManagement Sdn. Bhd. fromApril 2001until April 2006. He then joinedDRB-HicomBerhad asGroupChief Financial Officer until December 2006 andjoinedMMC as theGroupChiefOperatingOfficer inJanuary 2007 until February 2008. InMarch 2008, hewas appointed as the Chief ExecutiveOfficerMalaysiaprior to his appointment as theGroupManagingDirector inMay 2010.

Datuk Hj. Hasni also sits on the Boards ofMMCCorporation Berhad,Malakoff Corporation Berhad,Johor Port Berhad, Aliran Ihsan Resources Berhad,MMC EngineeringGroup Berhad and several privatelimited companies.

DatukHj. Hasni has no family relationshipwith and isnot related to any directors and/ormajor shareholders ofZelanBerhad and does not have any conflict of interestwith ZelanBerhad, except by virtue of being a nomineeDirector ofMMC, amajor shareholder of ZelanBerhad.



mR. OOI TeIK HUaTAge: 51Independent, Non-ExecutiveDirector

Mr. Ooi Teik Huat, aMalaysian,was appointedto the Board as Independent, Non-ExecutiveDirectorof the Company on 10 July 2009. He is also theChairman of theAudit Committee and amemberof theNomination Committee.

Mr. Ooi Teik Huat is amember ofMalaysian Institute ofAccountants and CPAAustralia and holds a Bachelor ofEconomics Degree fromMonashuniversity, Australia. Hestarted his careerwithMessrs. Hew& Co. (now knownasMessrs. Mazars), CharteredAccountants, before joiningMalaysian InternationalMerchant Bankers Berhad (nowknown asMIMB Investment Bank Berhad). He subsequentlyjoined Pengkalen Securities Sdn. Bhd. (now known asPM Securities Sdn. Bhd.) as Head of Corporate Finance,before leaving to set upMeridian Solutions Sdn. Bhd.wherehe is presently a director.

His directorships in other public companies includeMMCCorporation Berhad, DRB-HICOMBerhad, Tradewinds(M) Berhad, Tradewinds Plantation Berhad and Johor PortBerhad.

Mr. Ooi does not have any family relationshipwith and isnot related to any directors of Zelan Berhad and/ormajorshareholders of Zelan Berhad and does not have anyconflict of interestwith Zelan Berhad.


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CDR mOHD FaRIT bIN IbRaHIm RmN (ReTD)Age: 60Non-Independent, Non-ExecutiveDirector

CdrMohd Farit bin IbrahimRMN (Retd),Malaysian, joinedthe Board as Non-Independent, Non-ExecutiveDirector on 16June 2008. He is also amember of the Remuneration Committee.

CdrMohdFarit (Retd) completed his formal education from theBoys’wingof theRoyalMilitaryCollege in SungaiBesi, KualaLumpur.Heproceeded to complete his tertiary education andgraduated from several prestigious institutions such as theBritanniaNavalCollege inDarthmouth, England, theNavalwarCollege inRhode Islands,unitedStates ofAmerica, theFuHsingKangCollege in Taipei, Taiwan and theSingapore Institute ofManagement.A specialist in the field ofmaritime activities, heserveddistinguishablywith theRoyalMalaysianNavy for 23 years.He retired from themilitary service in 1990with the rankofCommander after holdingmany appointments asCommandingOfficer ofwarships, naval bases and asDirector ofNavalIntelligence.

His career in civilian life started offwith Perwaja Steel Sdn. Bhd.(“Perwaja Steel”) in 1990when hewas appointed asManager andwas taskedwith the responsibility of setting upthe training division for the company and together turnedaround Perwaja Steel to a profitable company. He accomplishedthe objectivewith distinction andwas promoted toGroupManager in 1992. He joinedworldwideHoldings Berhad in 1992as SeniorManager forOperations andDevelopment and started anew division – Division ofMaritimeActivities. He left the companythe following year and became theManagingDirector of Southernwater Corporation Sdn. Bhd. – a position he assumed untilSeptember 2007. He played a vital role andwas instrumentalin securing the concession agreement for SouthernwaterCorporation Sdn. Bhd. to operate andmaintain fourteen(14)water treatment plants in the State of Johor Darul Takzim.His hardwork and prudence in business has brought Southernwater Corporation Sdn. Bhd. to be listed on theMain Boardof BursaMalaysia as Aliran Ihsan Resources Berhad inMarch2005 andwas its GroupManagingDirector until September 2007.Hewas also an ExecutiveDirector of Bina Puri Holdings Berhadfrom 1993 to 1995.

CdrMohd Farit (Retd) also holdsmany high appointments andsits on the Board of several private companies engaging inbusinesses in such diverse fields as township development,specialistmedical centres tomixed retail developments andsecurity business. He is amember of theMalaysian InstituteofManagement, Royal Institute of Navigation and theNauticalInstitute ofManagement.

CdrMohd Farit (Retd) has no family relationshipwith and isnot related to any directors and/ormajor shareholders of ZelanBerhad and does not have any conflict of interestwith ZelanBerhad, except by virtue of being a nomineeDirector ofMMCCorporation Berhad, amajor shareholder of Zelan Berhad.



CORpORaTe seRvICes

vINCeNT yap leNg KHImHead of Corporate Services

aNUaRIFaeI bIN mUsTapaGroupGeneralManager, Finance

amIRaH bINTI maNsORHead of Corporate Resources

KamaRUl aRIFFIN bIN abDUl samaDHead of Business Development & Strategy

mUHammaD FIRDaUs bIN abDUllaHCompany Secretary

OpeRaTIONs

HaZImI bIN baHaRUmHead ofOperations

Engineering & Construction Business unit

KamaRUDDIN bIN abD KaRImGeneralManager, Power Plant Division


jUlIaN sylvesTeR THeRavIamGeneralManager, Design & Technical


seNIORmaNagemeNT Team

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OUR pOlICIes

Safety & Health

TheGroup’s business policy is to provide totalsatisfaction to our customers by deliveringproducts and services that:

exceed customers’ expectations are in accordancewith statutory

requirements and relevant codes andpractices

arewithin stipulated schedule and budget

•we plan to achieve these through:

adopting an efficientmanagement system excellent engineering practices total projectmanagement and control

processes the implementation and continuous

improvement of the Company qualitymanagement system, complyingwithMSISO 9001:2008.

In this regard, theGroup has receivednumerous letters of commendation and awardsin recognition of the quality of its productsand services. TheGroup’s commitment to thecommunity is thatwewill undertake ourprojects in themost environmental friendlymanner, in accordancewith the prevailingstatutory requirements through good planning,innovative engineering and efficientworkpractice.we shall endeavour to preserve theenvironment byminimisingwastage of naturalresources and utilise only environmentalfriendlymaterialswhere possible.

It is also the policy of theGroup to provide, so far asis practicable, a safe and healthyworking environmentfor all our employees; and in the spirit of consultationand cooperation,Management and staff shall togetherstrive to achieve the established goals and objectivesof our business policy.More specifically, the Safety andHealth Policy of theGroup is as follows:

To provide andmaintain a safe place and systemofwork, enhance the safety standards andpromote safety awareness at all sites.

To ensure that all employees are informed,instructed, trained and supervised on how toperform their jobwithout risking their own andothers’ safety.

Tomotivate and guide all workers to appreciatethe importance ofworking together efficiently andstrive towards zero accident.

To investigate all incidents, near-misses andaccidents and take correctivemeasures to ensurethey do not recur.

To complywith all requirements on safety andhealthmatters as stipulated in theOccupationaland SafetyAct 1994 and the Factory andMachineryAct 1967 and the Regulationsmadeunder it and theApprovedCodes of Practice.

Business & Quality


CORpORaTe RespONsIbIlITy(CR) sTaTemeNT

IN FulFIllINg ITS ROle AS A gOOD CORpORATe CITIzeN,

zelAN BeRHAD IS FullY COMMITTeD TO pRACTISINg THe HIgHeST STANDARDS IN

CORpORATe gOveRNANCeAS well AS ACTIvelY

puRSuINg pOlICIeS AND ACTIONS THAT ARe IN

THe BeST INTeReSTS OF THe STAkeHOlDeRS AND

COMMuNITY.

[ 21 ] CORpORaTe RespONsIbIlITy

To this end, theGroup seeks to ensure that theinterest of its key stakeholders from shareholders,investors, customers, employees and the communitiesare cared for through our conscious endeavours tointegrate all our business plans and activitieswithcorporate responsibility values.

It is our sincerewish that aswe grow and prosper,we bring the same benefits to the communitiesweoperate in everyday – improving their lives and at thesame time, contributing strongly to our agenda ofmaintaining sustainable growth and development,internally and externally.

In this regard,we have undertaken the following inrelation to various aspects of our business:

bUsINess gOveRNaNCe & eTHICs

In linewith good corporate governance andtransparent business practices,we constantly reviewour policy statements and bestmanagement practicesto ensure theGroup ismanaged effectively andethicallywith adequate controlmechanisms tomanage risks and deliver accountability, sustainabilityand profitability. This includes the implementation ofinternal control systems such as a financial authorityframework and riskmanagement framework. Coupledwith this, theGroup’s Audit Committee periodicallyreview these internal control systems togetherwithrecommendations from internal auditors and advisors.

CORpORaTe RespONsIbIlITy(CR) sTaTemeNT (cont’d.)

CUsTOmeR saTIsFaCTION

we strive tomeet our standards of excellence byensuring the delivery of quality in project executionandmeeting all customer deliverables as specified inour contracts.

we aspire towards full realisation of ISO standardsthroughout our operations and the application ofestablished quality practices and policies.we are atpresent accreditedwith theMS ISO 9001:2008 forProvision of Design and Construction Services forBuilding and Civil Engineeringworks including relatedConstructionManagement activities.

HealTH & saFeTy

The safety of our people and communities isimperative to our operations. As a safety first entity,theGroup actively and continuously seek out a safetyfirstmindset in its operations.we ensure theirwellbeing by observing strict Safety andHealth standardsin ourworkplace.

Our standard operating policies (SOPs) includeincident and situationmanagement, andwell definedperformance indicators (Lost Time Injuries/AccidentsandNon-conformity reports). Project Safety andHealth Plans are implemented for each and everyprojectwe undertake in linewith theOccupationalSafety andHealth Act 1994monitored by experiencedand qualified safety officers.


INvesTORs RelaTIONs

Zelan Berhad continues to place great importance inopen and fair disclosure of information to ourstakeholders. The rights of all shareholders –institutional, retail orminority, to information arerespected and hence,we place priority in engagingthose shareholders through the Company’s AnnualGeneralMeeting, periodic dialogueswith institutionalinvestors, participation in investor’s forums andencouraging feedbacks through our officialwebsite.

OUR peOple

TheGroup values its people as its key business assetand competitive advantage. In this regard, continuousemphasis is placed on people development throughadequate training and learning opportunities. In return,it is our hope that thiswill create a truly internationalworkforce of diverse skills, talents and culturalbackgrounds, coming together as one entity in avibrant and dynamicworkplace.

whilstwe continuously seek to keepmorale high andimprove the performance of our people,we also striveto create a balancedworkforcewhereby socialgatherings and recreational activities are encouraged.These include festive celebrations, sports tournaments,regular sports events and the establishment of a staffrecreational facility

CaRINg FOR THe COmmUNITIes

As a socially conscious corporate citizen, theGrouphas continued to place efforts in its philanthropicendeavours throughmonetary and resourcescontributions to the community and various charitableorganisations. This also includesmaximisation ofusage of local labours andmaterials to spur economicactivities through the implementation of our projects.

CaRINg FOR THe eNvIRONmeNT

TheGroup believes that sustainability of its businessis not only achieved through long-term economicsuccess but also through caring for the environment.TheGroup is committed to the best practice inenvironmental protection by constantly implementingpre-emptive efforts to prevent damage to theenvironment.

These efforts include the carrying-out of controlledearthworks and the construction of temporaryretention ponds,where necessary to prevent floodingof surrounding low lying areas and the implementationof silt traps and slope stabilisation systems to preventsoil erosion and sedimentation.with regard toconstruction in the urban environment, efforts toreduce noise pollution are continuously implemented.

[ 23 ] CORpORaTe RespONsIbIlITy

sTaTemeNT ONCORpORaTe gOveRNaNCe

The Board of Directors of Zelan Berhad (“Zelan” or the “Company”) confirms that throughout

the financial year ended 31March 2011, it has continued to integrate good and effective

corporate governance practices in directing andmanaging the overall business of the

Company and its subsidiary companies (“ZelanGroup” or the “Group”), in compliancewith the

Best Practices of theMalaysian Code of CorporateGovernance (the “Code”).

The Board is determined and committed towardsensuringmaximum shareholders’ value and enhancinginvestors’ interest in linewith the application of theprinciples of the Code.

a. bOaRD OF DIReCTORs

1. Composition of the Board

TheBoard comprisesmemberswith relevantexperiences and expertise drawn from variousfields such as corporate finance, financial, publicservices, legal and military services. Together, theBoardwith theirwide experiences and diverseacademic backgrounds provide a collective rangeof skills, expertise and experiencewhich is vital forthe successful direction of theGroup.

At this date of this report, the Board has five (5)members. There are two (2) IndependentDirectors on the Board and this compositioncomplieswith the Listing Requirements of BursaMalaysia Securities (“BursaMalaysia”), whichrequires that at least one-third (1/3) of the Boardshould comprise of Independent Directors.

The Executive Chairman plays the dual role i.e.overall running of the Board andmanaging theday to day operations of the business.

The Independent Non-ExecutiveDirectors on theBoard fulfill their role by exercising independentjudgement and objective participation in theBoard’s deliberation. YBhg. Dato’ Abdullah binMohd Yusof is the Senior Independent Non-ExecutiveDirector towhom the shareholdersmaycommunicatewith.

The profile of eachDirector is set out on pages14 to 18 of this Annual Report.

2. Duties and Responsibilities of the Board

The Board retains full and effective control overthe affairs of the Company and theGroup. Thisincludes the responsibility for determining theCompany’s and theGroup’s development andoverall strategic directionswhich are as follows:

(i) Reviewing and providing guidance on theCompany’s and theGroup’s corporatestrategy and adopting a strategic plan forthe Company through the development ofrisk policy, annual budgets and long termbusiness plans, reviewingmajor capitalexpenditures, acquisition and disposal.

(ii) Monitoring corporate performance and theconduct of theGroup’s business and toensure compliances to best practices andprinciples of corporate governance.

(iii) Identifying and implementing appropriatesystem tomanage principal risks. The Boardundertakes this responsibility through theAudit Committee.


(iv) Reviewing the adequacy and soundness oftheGroup’s financial system, internal controlsystems andmanagement information systemand ensuring that they are in compliancewith the applicable standards, laws andregulations.

(v) Ensuring a transparent Board nomination and remuneration process including

succession planning for topmanagement,their remuneration and ensuring the skills

and experiences of theDirectors areadequate for dischargeof their responsibilitieswhilst the calibre of theNon-ExecutiveDirectors brings an independent judgement

in the decisionmaking process.

(vi) Developing and implementing an investors’relations program or shareholders’communications policy of the Company.

3. Supply of Information

The Company has adopted a policy of sendingBoard papers to theDirectors ahead of scheduledmeetings. This is to ensure that theDirectors aregiven ample time to review anymatters/issues tobe discussed at the scheduledmeeting.Minutesof every Boardmeeting are circulated in advanceso that Directors are given opportunity tomakeany comments or amendments, prior toconfirmation and approval at the subsequentBoardmeeting.

At every regularly scheduled Boardmeeting, theBoard deliberated and considered onmattersincluding the Company’s and theGroup’s financialperformance, business review, operatingperformance to-date against the annual budgetand the business strategies.

In addition to that, theDirectors and SeniorManagementwill also be notified on therestrictions imposed by BursaMalaysia on dealingin the securities of the Company during closedperiod, at least 30 calendar days prior to therelease of the quarterly financial resultsannouncement.

TheDirectors are also notified of any corporateannouncements released to BursaMalaysia,changes in the structure of theGroup, newprojects awarded and changes in the relevantlaws and regulations such as BursaMalaysia’sListing Requirements, Securities Industry Act andaccounting policies.

EachDirector has full and unrestricted access toSeniorManagement Teamwithin theGroup and isentitled to the advice and services of theCompany Secretary. TheDirectorsmay, ifnecessary, obtain independent professional advicerelating to the affairs of theGroup or indischarging their duties and responsibilities, atthe Company’s expense.

[ 25 ] aCCOUNTabIlITy

sTaTemeNT ONCORpORaTe gOveRNaNCe (cont’d.)

4. Committees established by the Board

The Board has delegated certain functions to the Committees it established to assist in the

execution of its responsibilities. The Committeesoperatewithin their clearly defined terms ofreference. These Committees,which comprise ofselected Boardmembers, are empowered todeliberate and examine issues delegated to themand report back to the Boardwith theirrecommendations and comments.

(a) Audit Committee

TheAudit Committeewas established on 18July 1994. TheAudit Committee comprisestwo (2) Independent Non-Executivemembersand one (1) Non-Independent Non-ExecutiveDirector. Themembership of theAuditCommittee is as follows:

Mr. Ooi Teik Huat (Chairman) Dato’ Abdullah binMohd Yusof Datuk Hj. Hasni bin Harun

The terms of reference and summary ofactivities of theAudit Committee arereported on pages 32 to 35 of theAnnualReport. For the financial year

ended 31March 2011, theAudit Committeemet five (5) times.

(b) executive Committee (“eXCO”)

The EXCOwas established on 18 July 1994.The EXCOwas discontinued by theBoard

ofDirectorswith effect from 19 January 2011.

During the financial year ended 31March2011, the EXCOmet six (6) times.

(c) Nomination Committee

TheNomination Committeewas establishedon 23March 2004. It consists ofwhollyNon-ExecutiveDirectors comprising of thefollowing:

Datuk Hj. Hasni bin Harun (Chairman) Dato’ Abdullah binMohd Yusof Mr. Ooi Teik Huat

TheNomination Committee is empowered by theBoard and its terms of reference include theresponsibility for recommending to the Board,suitable candidates for appointment as Directorson the Company’s Board andmembers to theBoard Committees. TheNomination Committee isalso responsible to consider and recommendmeasures to assess the effectiveness of theBoard, its Committee and contribution of eachindividual Director.

For the financial year under review, theNomination Committeemet two (2) times.

(d) Remuneration Committee

The Remuneration Committeewasestablished on 23March 2004 and consistsofwholly Non-ExecutiveDirectors. Thecurrentmembership is as follows:

Dato’AbdullahbinMohdYusof (Chairman) Datuk Hj. Hasni bin Harun CdrMohd Farit bin IbrahimRMN (Retd)

Themainduties and responsibilities of theRemunerationCommittee are to establish andto recommend to theBoard, the structure andremunerationpolicy of theExecutiveDirectors.In addition, theRemunerationCommittee alsoreviews and recommends to theBoardonmatters relating togeneral remunerationpolicyof theCompany and theGroup.

The Remuneration Committee hadmet twiceduring the financial year under review.

5. Board and Committee Meetings

Board and Committeemeetings are scheduled inadvance at the beginning of each new calendaryear to enable theDirectors to plan ahead.Special Boardmeetingswill be convened as andwhen necessary to deliberate and assesscorporate proposal or business issues that requireexpeditious decision from the Board.

During the financial year ended 31March 2011, a total of five (5) Boardmeetings and nine (9)

Special Boardmeetingswere held.


The record of attendance of eachDirector at Board and CommitteeMeetings held during the financial yearended 31March 2011 are as follows:

Name of Director BoardAudit

Committeeexecutive

CommitteeNominationCommittee

RemunerationCommittee

Dato’ Anwar bin Aji 14/14 — 6/6 2/2 2/2

Dato’ Abdullah binMohd. Yusof 14/14 5/5 4/6 2/2 2/2

Datuk Hj. Hasni bin Harun 11/14 5/5 6/6 2/2 2/2

CdrMohd Farit bin IbrahimRMN(Retd)

14/14 — 6/6 — —

Mr.Ooi Teik Huat 14/14 5/5 — — —

YMRaja Azmi bin Raja Nazuddin(Resigned on 30 July 2010)

5/5 — 3/3 — —

Notes: All directors attendedmore than 50%of themeetings held in the financial year ended 31March 2011

6. Appointment of Director

TheNomination Committee is responsible toensure an effective process for selection of newdirectors and assessment of the Board,Committees of the Board and individual Directorswhichwill result in the requiredmix of skills,experiences and responsibilities being present onthe Board.

7. Re-election

In accordancewith theArticles of Associationand in compliancewith the Listing Requirementsof BursaMalaysia, all Directors are required toretire from office at least once in every three (3)years and shall be eligible for re-election.

TheArticlesofAssociation also requires that atleast one third (1/3)of theBoardofDirectors shallretire at eachAnnualGeneralMeeting (“AGM”) andmayoffer themselves for re-election.

Additionally, directors of or over the age ofseventy (70) are to be re-appointed annually attheAGM, a requirement to be adhered pursuantto Section 129 of the Companies Act, 1965. Thisaffords shareholders the opportunity to reviewdirectors’ performance and also promote effectiveboards.


8. Training

Allmembers of the Board have attended theMandatoryAccreditation Program organised by BursaMalaysia and are aware of the requirements of the Continuing Education Programme set by BursaMalaysia.Directors also receive further training from time to time, particularly on relevant new laws and regulationsand changing commercial risks.

During the financial year under review, all Directors attended at least one (1) training session, includingthe following:

DirectorTraining/workshop/Seminar Attended

Organiser Date

Dato’ Anwar binAji

(i) Kursus InduksiKeselamatan & Kesihatanuntuk Pekerja Binaan

Construction IndustryDevelopment BoardMalaysia

28April 2011

(ii) “what directors shouldknow about the investormindset”

Malaysian InvestorRelationsAssociationBerhad

7 July 2011

Dato’ AbdullahbinMohd. Yusof

(i) Forum on FRS 139 Financial InstrumentsStandard/BursaMalaysiaBerhad

21 January 2010

(ii) Seminar on Recent TaxCases andDevelopment

Messrs. Lee HishamuddinAllen &Glendhill/MMCCorporation Berhad

9 July 2010

Datuk Hj. Hasnibin Harun

(i) 18thworld Congress ofAccountants

International Federation ofAccountants andMalaysianInstitute of Accountants

8 to 11 November 2010

(ii) Directors &OfficersLiability: Are YouExposed?

ACE Synergy Insurance andMP InsuranceBrokersBerhad/IJMCorporationBerhad

7April 2011

CdrMohd Faritbin IbrahimRMN(Retd)

(i) Corporate GovernanceGuide

- Towards BoardroomExcellence

Malaysian Institute ofAccountants

21 April 2011

Mr. Ooi TeikHuat

(i) Seminar on CorporateGovernance and TheMedia

MPHGroup 7 July 2010

(ii) Seminar on InvestmentOpportunities for 2010and Beyond for AsianCompanies and Investors

MPHGroup 8 July 2010

(iii) Seminar on Recent TaxCases andDevelopment

Messrs. Lee HishamuddinAllen &Glendhill/MMCCorporation Berhad

9 July 2010

(iv) Seminar on PreventingCorporateMisdeeds:Principal roles

Tradewinds (M) Berhad 9December 2010



b. DIReCTORs’ RemUNeRaTION

1. The level and Make-up of Remuneration

The remuneration of all Directors is determined atlevelswhich ensure that theCompany attracts andretainsDirectors having the right calibre neededto run theCompany successfully.

TheNon-ExecutiveDirectors are paid annual feeapproved by the shareholders at theAnnualGeneralMeeting.An attendance ormeetingallowance is also paid to theNon-ExecutiveDirectors for eachBoard or Committeemeetingthat they attend.

The ExecutiveDirectors are not paid annualDirector’s fees, however, they receive a totalremuneration packagewhich includes his basicsalary, bonus and other benefits.

2. policy and procedure

TheBoard has set the framework and benchmarkvalues on compensation and benefits in linewiththemarket norms and competitive pressures inthe industry. TheBoard strives to ensure faircompensation through comparable roles in similarorganisations of similar size,market sector andbusiness complexity.

TheRemunerationCommittee in consultationwiththeBoardwill set and recommend the basic salaryof the ExecutiveDirectors. This is done by takinginto consideration the performance of theExecutiveDirectors and the compensation practiceof other companieswithin the same industry. Theremuneration package is reviewed annually toreflect the currentmarket condition, scale ofresponsibilities and personal performance.

3. Disclosure

The details of theDirectors’ remuneration for thefinancial year ended 31March 2011 are as follows:

Categoryexecutive Directors

(in RM’000)

Non-executive Directors

(in RM’000)

Fee — 407

Salaries and bonus 670 —

Benefit-in-kind 4 —

EPFContribution 86 —

Other emoluments 44 113

The number ofDirectors of theCompany,whosetotal remuneration fallwithin the following bandsfor the financial year ended 31March 2011, are asfollows:

Range of Remuneration

executive Directors

Non-executive Directors

RM50,001 toRM100,000

— 2

RM100,001 toRM150,000

— 3

RM200,001 toRM250,000

1* —

RM600,001 toRM650,000

1 —

*-Redesignation fromNonExecutive toExecutiveChairman

C. sHaReHOlDeRs aND INvesTORs

1. Dialogue between the Company and Investors

TheBoard values its dialoguewith bothinstitutional shareholders and private investorsthrough timely dissemination of information on theCompany and theGroup’s performance and itsoperation via distribution ofAnnual Report,relevant circulars and press releases.

In addition, theCompany also posts itsmaterialannouncement and quarterly financial results viaBursa LINK to enable public community to beupdated on any latest development pertaining totheCompany’s business affairs and achievements.Shareholders can also view and access informationon theGroup’s operations and latest projects viaitswebsite:www.zelan.com

2. Annual general Meeting

TheAnnualGeneralMeeting is themain forumwhich provides opportunity to the shareholders tohave dialoguewith theBoard. Besides the normalagenda, theBoardwill also present reports andprovide opportunity for shareholders to raisequestions pertaining to theGroup’s businessactivities. TheBoardmembers are in attendanceto provide responses to questions from theshareholders during thesemeetings.


D. aCCOUNTabIlITy aND aUDIT

1. Financial Reporting

TheBoard aims topresent a true and fairassessment of theCompany’s financial performance,position andprospects to theCompany’sshareholders. TheBoard is also responsible toprovide appropriate level of disclosure to ensureintegrity and consistencyof financial reports.

TheCompany publishes itsAudited FinancialStatement annually and quarterly condensedfinancial statement as required by the ListingRequirements of BursaMalaysia.

2. Directors’ Responsibility Statement

TheDirectors are required by theCompaniesAct,1965 (the “Act”), to prepare the financialstatements for each financial year in accordancewith the applicable approved accounting standardsto give a true and fair view of the state of affairsof theGroup and theCompany at the end of thefinancial year. TheDirectors’ Statement incompliancewith the requirements under theAct isset out on page 42 of thisAnnual Report.

TheBoard is responsible in ensuring theGroupand theCompany keep sufficient accountingrecords for accurate disclosure of the financialposition of theGroup and theCompany, and toenable them to ensure that the financialstatements are prepared in accordancewith theprovisions of theAct and applicable accountingstandards inMalaysia.

TheBoard is also responsible for taking suchreasonable steps open to them, to safeguard theassets of theGroup and to prevent and detectfrauds and other irregularities.

3. Internal Control

TheBoard recognises its overall responsibility forcontinuousmaintenance of a sound systemofinternal control to safeguard the shareholders’investment and theGroup’s assets.

TheBoard reviews and discusses the effectivenessof theGroup’s Internal Control system. TheAuditCommittee togetherwith the outsourced InternalAuditors undertake reviewswhich cover thefinancial, operational and compliance control aswell as RiskManagement.


TheGroup’s Internal Control Statement is set outon page 36 to 37 of thisAnnual Report.

4. Relationship with the Auditors

The relationship of theAudit Committeewith theAuditors is disclosed in theAudit CommitteeReportwhich can be found on pages 32 to 35 ofthisAnnual Report.

e. COmplIaNCe WITH THe CODe ON CORpORaTe gOveRNaNCe

ZelanGroup has compliedwith the principles ofcorporate governance and best practices incorporate governance throughout the financialyear ended 31March 2011.

ADDITIONAl COMplIANCe INFORMATION

Conflict of Interest

None of theDirectors have any family relationshipwith other Directors ormajor shareholders of theCompany. None of theDirectors have anyconflict of interest in the Company except forDatuk Hj. Hasni bin Harun and CdrMohd Faritbin IbrahimRMN (Retd), being the nomineedirectors nominated byMMCCorporation Berhad.At the date of this reportMMCCorporationBerhad is amajor shareholder of the Company.

Convictions for Offences

None of theDirectors have been convicted foroffenceswithin the past ten (10) years other thantraffic offences (if any).

utilisation of proceeds

No proceedswere raised by the Company fromany corporate proposals.

Share Buy-Back

As at the date of this statement, the Companyhas not purchased any of its own shares.

Options, warrants or convertible securities

No options,warrants or convertible securitieswere issued by the Company during the financialyear.


American Depository Receipt (“ADR”) or global Depository Receipt (“gDR”) programme

During the financial year, the Company did notsponsor anyADR or GDR Programme.

Imposition of Sanctions and/or penalties

Therewere no sanctions and/or penaltiesimposed on the Company and/or its subsidiarycompanies, Directors orManagement arising fromany significant breach of rules/guidelines/legislation by the relevant regulatory bodies.

Non-Audit Fee

During the financial year ended 31March 2011, anon-audit fee of RM172,000.00was paid by theCompany to the External Auditors,Messrs.PricewaterhouseCoopers,Malaysia for servicesrendered in connectionwith the review of theCompany’s quarterly results, tax and othertechnical and accounting advisoryworks.

profit estimation, Forecast or projection

Therewas no profit estimation, forecast orprojectionmade or released by the Companyduring the financial year.

profit guarantee

Therewas no profit guarantee given by theCompany during the financial year.

Material Contracts

Therewere nomaterial contracts entered into bythe Company and/or its subsidiary companiesinvolvingDirectors’ ormajor shareholders’interests, during the financial year under review,except as disclosed in Note 35 of the FinancialStatements.

Contracts Relating to loan

During the financial year under review, therewereno contracts relating to loan by the CompanyinvolvingDirectors andmajor shareholders.

Revaluation policy of landed properties

The Company does not have a revaluation policyon landed properties.

This statement ismade in accordancewith aresolution of the Board of Directors dated 10August 2011.


aUDIT COmmITTeeRepORT

1. membeRsHIp aND meeTINgs

TheAudit Committee comprises two (2)Independent Non-ExecutiveDirectors and one (1)Non-Independent Non-ExecutiveDirectorwithMr.Ooi Teik Huat as Chairman.

The currentmembers are:

mr. Ooi Teik Huat - Chairman (Independent, Non-Executive)

Dato’ abdullah bin mohd yusof (Independent, Non-Executive)

Datuk Hj. Hasni bin Harun (Non-Independent, Non-Executive)

The term of office of eachmember is subject toreview by the Board.

During the financial year ended 31March 2011,theAudit Committee held a total of five (5)meetings. The details of attendance of theAuditCommitteemembers are as follows:

Name of Director Attendance

Mr.Ooi Teik Huat 5/5

Dato’ Abdullah binMohd. Yusof 5/5

Datuk Hj. Hasni bin Harun 5/5

The External Auditors attended five (5)meetings

during the year under review. The Committee hadtwo (2) private sessionswith the ExternalAuditorswithout the presence ofManagementduring the financial year under review.

2. TeRms OF ReFeReNCe OF THe aUDIT COmmITTee

2.1 membership

TheAudit Committeemembers shall beappointed by the Board amongst theDirectors and shall consist of not less thanthreemembers, amajority ofwhom shall beIndependent Directors. Themembers of theAudit Committee shall elect a Chairman fromamong theirmemberswho shall be anIndependent Director. AnAlternateDirectormust not be appointed as amember of theAudit Committee.

Allmembers of theAudit Committee shall beNon-ExecutiveDirectors.

At least one (1)member of theAuditCommittee:

i) must be amember of theMalaysianInstitute of Accountants; or

ii) if he is not amember of theMalaysianInstitute of Accountants, hemust haveat least three (3) years’ workingexperience, and

hemust have passed the examinationsspecified in Part I of the First Scheduleof theAccountants Act 1967; or

hemust be amember of one (1) of theAssociations of Accountants specified inPart II of the First Schedule of theAccountants Act 1967.


2.2 meeTINgs aND mINUTes

Meetings shall be held not less than four (4)times a year, andwill normally be attended bytheManagingDirector/Chief ExecutiveOfficer andGroupChief Financial Officer. The ExternalAuditors are requested to attend all AuditCommitteemeetings. Other Boardmembersmayattendmeetings upon the invitation of theAuditCommittee. At least twice a year theAuditCommittee shallmeetwith the External Auditorswithout any executive of theGroup beingpresent. TheAuditors, both Internal and External,may request ameeting if they consider necessary.Minutes of eachmeeting shall be distributed toeachmember of the Board. The Chairman of theAudit Committee shall report on eachmeeting tothe Board at the quarterly Boardmeetings.

2.3 QUORUm

A quorum shall be two (2) and shall compriseIndependent Directors.

2.4 seCReTaRy

The Secretary to theAudit Committee shall bethe Company Secretary.

2.5 aUTHORITy

TheAudit Committee shall have the followingauthority as empowered by the Board ofDirectors:

i) to investigate anymatterswithin its terms ofreference;

ii) to have access to the resourceswhich arerequired to perform its duties;

iii) to conduct investigations on irregularitiesonce reported;

iv) to have full, free and unrestricted access toany information, records, properties andpersonnel of the Company and any othercompanieswithin theGroup;

v) tohavedirect communicationchannelswith theExternalAuditors andperson(s) carryingoutthe InternalAudit functionor activity (if any);

vi) to be able to obtain independentprofessional or any other advice; and

vii) to be able to convenemeetingswith theExternal Auditors.

2.6 DUTIes

The duties of theAudit Committee are as follows:

i) to consider the appointment of the Externaland Internal Auditors, the audit fee and anyquestions of resignation or dismissal, andinquire into staffing and competence of theExternal and Internal Auditors in performingtheirwork.

ii) to discuss the nature and scope of the auditin general terms and any significant problemsthatmay be foreseenwith the External andInternal Auditors before the auditcommences and ensure that adequate teststo verify the financial statements andprocedures of theGroup are performed.

iii) to discuss the impact of any proposedchanges in accounting principles on futurefinancial statements.

iv) to review the results and findings of theaudit andmonitor the implementation of anyrecommendationsmade therein.

v) to review the quarterly announcements andaudited financial statements beforesubmission to the Board, focusing particularlyon:

any changes in accounting policies andpractices;

major judgmental areas;

significant adjustments resulting from theaudit;

the going concern assumptions;

compliancewith accounting standards;and

compliancewith stock exchange andlegal requirements.


vi) to discuss problems and reservations arisingfrom the interim and final audits, and anymatters the External Auditorsmaywish todiscuss (in the absence ofManagementwhere necessary).

vii) to review the assistance given by theemployees to the External Auditors.

viii) to ensure that the Internal Audit function isadequately resourced and has appropriatestandingwithin the Company.

ix) to review the Internal Audit programme,consider themajor findings of Internal Auditinvestigations andManagement’s responseand ensure coordination between the Internaland External Auditors.

x) to keep under review the effectiveness ofinternal control systems and in particular,review the External Auditors’managementletter andManagement’s response.

xi) tomonitor any related party transactionsthatmay arisewithin the Company andGroup and ensure that theDirectors reportsuch transactions accordingly to theshareholders in this Annual Report.

xii) to report promptly to BursaMalaysiaSecurities Berhad on anymatter reported byit to the Board of Directorswhich has notbeen satisfactorily resolved resulting in abreach of the BursaMalaysia SecuritiesBerhad’s Listing Requirements.

xiii) to review all prospective financial informationprovided to the regulators and/or the public.

xiv) to carry out such other assignments asdefined by the Board.

3. sUmmaRy OF aCTIvITIes

During the financial year, theAudit Committeemet five (5) times. The businesses covered by theAudit Committeewere as follows:

a) reviewed the Internal Audit plan andmajorfindings of Internal Audit reports;

aUDIT COmmITTeeRepORT (cont’d.)

b) reviewed the performance/operational audit ofsubsidiaries/associates and recommendationsrelating thereto;

c) reviewed the quarterly results/announcementsof theGroup/Company andmaderecommendations to the Board for approval;

d) discussed the proposed changes inaccounting policies;

e) discussed the significant areas highlighted bythe External Auditors;

f) reviewed the findings of the ExternalAuditors and followed up on therecommendations;

g) reviewed the related party transactions thatarosewithin the Company andGroup;

h) reviewed theAudited Financial Statements oftheGroup/Company andmade relevantrecommendations to the Board for approval;

i) reviewed the External Auditors’ programme;and

j) monitoring of the additional disclosurerequirements in accordancewith the BursaMalaysia Securities Berhad’s ListingRequirements.

4. INTeRNal aUDIT FUNCTION aND aCTIvITIes

The internal audit function is carried out byMessrs. Ernst & Young, towhom the function hasbeen outsourced. TheAudit Committee approvesthe Internal Audit Plan submitted byMessrs. Ernst& Young prior to the commencement of a newfinancial year. The scope of Internal Audit coversthe audits of all Business units and operations,includingHeadOffice functions.

The total Internal Audit fees incurred on servicesprovided byMessrs. Ernst & Young during thelast financial yearwas RM289,240.00.


Throughout the last financial year, auditassignments and follow-up reviewswere carriedout on units of operations and subsidiaries,withemphasis on overseas operations, in accordancewith the annual audit plan. The resulting reports ofthe audits undertakenwere presented to theAuditCommittee and forwarded to the partiesconcerned for their attention and necessary action.

Management is responsible for ensuring thatcorrective actions are taken on reportedweaknesseswithin the required timeframe.Management is also responsible for sending tothe Internal Auditors for review a status report ofaction plans taken before their subsequentpresentation to theAudit Committee.

During the financial year under review,Management had employed an Internal AuditExecutivewho had been assigned to assistMessrs. Ernst & Young in theAudit Plan in itseffort to establish an in-house Internal Audit/RiskManagement (“IA and RM”) functions.

A summary of the Internal Audit activities duringthe financial year are as follows:

Examine the controls over all significantGroup operations and systems to ascertainwhether they provide reasonable assurancethat theGroup’s objectives and goalswill bemet efficiently and economically;

Prepare the annual Audit Plan fordeliberation by theAudit Committee;

Act on suggestionsmade by the ExternalAuditors and/or SeniorManagement onconcerns over operations or control;

Carry out operational audits andmakerecommendations for improvement,whereweaknesses exist; and

Report onwhether corrective actions havebeen taken and achieving the desired results.


sTaTemeNT ONINTeRNal CONTROl

INTRODUCTION

The Board of Directors (Board) is responsible for theGroup’s system of internal controls and itseffectiveness to safeguard shareholders’ investmentand theGroup’s assets. This is in accordancewith therequirements set out by theMalaysian Code ofCorporateGovernance and BursaMalaysia SecuritiesBerhad (BMSB). In preparing the Statement of InternalControl, the Board is guided by BMSB’s Statement onInternal Control; Guidance for Directors of PublicListed Companies.

RespONsIbIlITy

The Board acknowledges its responsibility tomaintaina sound system of internal controls by ensuring itsadequacy and integrity through the process ofconstant review andmonitoring. However, such asystem is designed tomanage theGroup’s riskswithinan acceptable risk profile, rather than to eliminate therisk of failure to achieve the business objectives oftheGroup. Therefore, it can only provide reasonablebut not absolute assurance againstmaterialmisstatements of losses.

gROUp’s RIsK maNagemeNT FRameWORK

As an integral part of the system of internal control,there is an on-going groupwide riskmanagementprocess for identifying, evaluating andmanaging thesignificant risks thatmay affect the achievement oftheGroup’s business objective.

This process involves conducting riskmanagementworkshop and subsequent development of RiskManagement Profile to capture and prioritise key riskareas, delegate ownership of risks, attach timelines tomanagement control and action plans, and providecontinuousmonitoring and reporting of risks.

The Board,working togetherwith themanagement,continues to takemeasures to further strengthen theGroup’s riskmanagement system as one of themeansto achieve theGroup’s business objective.

INTeRNal CONTROl

During the year under review, theAudit Committeehas reviewed the internal control framework thatcurrently existswithin theGroup, and has assessedthe applicability of the existing controlswith regardsto their effectiveness and efficiency as reported byour outsourced Internal Auditors.

OTHeR Key elemeNTs OF INTeRNal CONTROl

The other key elements of theGroup’s internal controlsystem that are now in place are described below:

Performance reports are regularly provided to theDirectors and discussed at Boardmeetings;

Processes governing the appraisal and theapproval of investment expenditure and assetdisposal, and processes tomonitor and evaluatethe continuing performance of theGroup’sinvestments;

Processes governing the identification andevaluation of the risk factors before arriving at adecision to tender and the pricing of the tenderfor the contract thereon;

Financial authority limits framework;

RiskManagement framework;

Monitoring of Related Party Transactions; and

Safety Committee to ensure that all relevantsafetymeasures are in place towards achievingzero (0) Loss Time Injury (LTI).


Informulatingthestructureoftheprojectimplementation,the following factors are taken into consideration:

Scope ofworks involved;

Expertise level required;

Level ofmonitoring and supervision;

Management and supporting staff requirement;

Duration of project;

Periodical review by an outsourced InternalAuditor; and

where appropriate, companies to haveMS ISO9001: 2008 accreditation for their operationalprocesses.

TheBoard has reviewed the adequacy and integrity oftheGroup’s internal control systemandmanagementinformation system, including systems for compliancewith applicable laws, regulations, rules, directives andguidelines. TheBoard introduced steps to tighten thecontrol processes involving investmentdecisions and itsmonitoringprocess. Feasibility studieswill be thoroughlyevaluatedby independent and expert consultants, andthe requiredduediligence reviewwill be carriedoutbeforedecidingon an investment venture.Reviewsontheperformanceof the investmentswill be regularlyperformedby theBoard and thequality and typeofinformationprovided, carefully assessed.

The board of Directors

is responsible for the

group’s system of

internal controls and

its effectiveness to

safeguard shareholders’

investment and the

group’s assets

RelaTIONsHIp WITH THe aUDITORs

TheGroup’s relationshipswith the External andOutsourced Internal Auditors aremanaged by theAudit Committee. Key features underlying therelationships of theAudit Committeewith the ExternalandOutsourced Internal Auditors are included in theAudit Committee’s Terms of Reference.

assOCIaTes

Representatives are appointed to theBoardofDirectorsof the associate companies and attendBoardmeetings,forwhich key financial information is reviewed andsignificant risks are reported to theBoard.

aUDIT COmmITTee

The report by theAudit Committee for the yearunder review is set out on pages 32 to 35

CONClUsION

The Board believes that the development of thesystem of internal controls is an ongoing process andcontinues to take steps to improve the internal controlsystem. During the period under review, save forcertainweaknesses identified in the existing projectswhich have now been rectified, there is no othermaterial weaknesseswhichwould result in anymaterial losses, contingencies or uncertainties thatwould require disclosure in theGroup’s Annual Report.


[ 38 ]Zelan Berhad AnnuAl RepoRt 2011

39 Directors’ Report42 Statement By Directors42 Statutory Declaration43 Independent Auditors’ Report45 Statements of Comprehensive Income47 Statements of Financial postion49 Consolidated Statement of Changes In equity51 Company Statement of Changes In equity52 Statements of Cash Flow55 notes to the Financial Statements

FInanCIal STaTeMenTS

[ 39 ] FInanCIal InForMaTIon

the Directors hereby submit their annual report to the members together with the audited financial statements of the Group and the Company for the financial year ended 31 March 2011.

PrInCIPal aCTIVITIeS

the principal activity of the Company is investment holding. the principal activities of the Group are described in note 19 to the financial statements and consist of investment holding, construction of power plants and buildings, property development, civil engineering and building turnkey contractor, piling and civil engineer contractor, civil technical design and construction of civil and building works and management of residential properties.

there has been no significant change in the nature of these activities during the financial year except for the discontinued operation as a result of the disposal of a subsidiary as disclosed in note 5(a) to the financial statements.

FInanCIal reSUlTS

Group Company

RM’000 RM’000

loss for the financial year attributable to:

– equity holders of the Company (257,428) (156,224)

– Minority interest (126) —

loss for the financial year (257,554) (156,224)

dIVIdendS

no dividend has been paid or declared by the Company since the end of the previous financial year.

the Directors do not recommend the payment of a final dividend for the financial year ended 31 March 2011.

reSerVeS and ProVISIonS

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

dIreCTorS’ rePorTFor The Financial Year Ended 31 March 2011


dIreCTorS’ rePorTFor The Financial Year ended 31 March 2011 (cont’d.)

dIreCTorS

the Directors who have held office during the period since the date of the last report are as follows:

Dato’ Anwar bin Haji @ Aji, executive Chairman (redesignated as executive Chairman on 19.01.2011)

Dato’ Abdullah bin Mohd. Yusof

Datuk Haji Hasni bin Harun

Mohd Farit bin Ibrahim

ooi teik Huat

YM Raja Azmi bin Raja nazuddin (resigned on 30.07.2010)

dIreCTorS’ BeneFITS

During and at the end of the financial year, no arrangements subsisted to which the Company is a party, being arrangements with the object or objects 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.

Since the end of the previous financial year, no Director has received or become entitled to receive any benefit (other than Directors’ remuneration as disclosed in note 11 to the financial statements) by reason of a contract made by the Company or a related corporation with the Director or with a firm of which he is a member, or with a company in which he has a substantial financial interest.

dIreCTorS’ InTereSTS In ShareS

According to the register of Directors’ shareholdings, none of the Directors who held office at the end of the financial year held any interests in shares in the Company and its related corporations during the financial year.

STaTUTorY InForMaTIon on The FInanCIal STaTeMenTS

Before the statements of comprehensive income and financial position of the Group and the Company were made out, the Directors took reasonable steps:

(a) 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 satisfied themselves that all known bad debts had been written off and that adequate allowance had been made for doubtful debts; and

(b) to ensure that any current assets, other than debts, which were unlikely to realise in the ordinary course of business their values as shown in the accounting records of the Group and the Company had been written down to an amount which they might be expected so to realise.

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

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

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

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


STaTUTorY InForMaTIon on The FInanCIal STaTeMenTS (ConT’d.)

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 or the Company to meet their obligations when they fall due.

At the date of this report, there does not exist:

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

(b) any contingent liability of the Group or the Company which has arisen since the end of the financial year other than those disclosed in note 38 to the financial statements.

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

In the opinion of the Directors:

(a) the results of the Group’s and the Company’s operations during the financial year were not substantially affected by any item, transaction or event of a material and unusual nature except as disclosed in the statements of comprehensive income, note 2, note 36 and note 41 to the financial statements; and

(b) 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 or the Company for the financial year in which this report is made.

SIGnIFICanT eVenTS dUrInG The FInanCIal Year

Significant events during the financial year are as disclosed in note 5(a) and note 36 to the financial statements.

eVenTS SUBSeQUenT To The rePorTInG daTe

events subsequent to the reporting date are as disclosed in note 37 to the financial statements.

aUdITorS

the auditors, pricewaterhouseCoopers, have expressed their willingness to continue in office.

Signed on behalf of the Board of Directors in accordance with their resolution dated 29 July 2011.

daTo’ anWar BIn haJI @ aJI daTUK haJI haSnI BIn harUn

eXeCutIVe CHAIRMAn DIReCtoR


We, Dato’ Anwar bin Haji @ Aji and Datuk Haji Hasni bin Harun, two of the Directors of Zelan Berhad, state that, in the opinion of the Directors, the financial statements set out on pages 45 to 132 are drawn up so as to give a true and fair view of the state of affairs of the Group and the Company as at 31 March 2011 and of the results and cash flows of the Group and the Company for the financial year ended on that date in accordance with the provisions of the Companies Act, 1965 and the MASB Approved Accounting Standards in Malaysia for entities other than private entities.

the information set out in note 42 to the financial statements have been prepared in accordance with the Guidance on Special Matter no.1, Determination of Realised and unrealised profits or losses in the Context of Disclosure pursuant to Bursa Malaysia Securities Berhad listing Requirements, as issued by the Malaysian Institute of Accountants.

Signed on behalf of the Board of Directors in accordance with their resolution dated 29 July 2011.

daTo’ anWar BIn haJI @ aJI daTUK haJI haSnI BIn harUneXeCutIVe CHAIRMAn DIReCtoR

I, Anuarifaei bin Mustapa, the officer primarily responsible for the financial management of Zelan Berhad, do solemnly and sincerely declare that the financial statements set out on pages 45 to 133 are, in my opinion, correct and I make this solemn declaration conscientiously believing the same to be true, and by virtue of the provisions of the Statutory Declarations Act, 1960.

anUarIFaeI BIn MUSTaPa

Subscribed and solemnly declared by the abovenamed Anuarifaei bin Mustapa at Kuala lumpur on 29 July 2011.

Before me,

CoMMISSIoneR FoR oAtHS

STaTeMenT BY dIreCTorSPursuant To Section 169(15) Of The Companies Act, 1965

STaTUTorY deClaraTIonPursuant To Section 169(16) Of The Companies Act, 1965


rePorT on The FInanCIal STaTeMenTS

We have audited the financial statements of Zelan Berhad on pages 45 to 132 which comprise the statements of financial position as at 31 March 2011 of the Group and of the Company, and the statements of comprehensive income, changes in equity and cash flows of the Group and of the Company for the financial year then ended, and a summary of significant accounting policies and other explanatory notes, as set out on notes 1 to 41.

directors’ responsibility for the Financial Statements

the Directors of the Company are responsible for the preparation of financial statements that give a true and fair view in accordance with MASB Approved Accounting Standards in Malaysia for entities other than private entities and the provisions of the Companies Act, 1965 in Malaysia, and for such internal control as the Directors determine are necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

auditors’ responsibility

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

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

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

opinion

In our opinion, the financial statements have been properly drawn up in accordance with MASB Approved Accounting Standards in Malaysia for entities other than private entities and the provisions of the Companies Act, 1965 so as to give a true and fair view of the financial position of the Group and of the Company as of 31 March 2011 and of their financial performance and cash flows for the financial year then ended.

emphasis of Matter

Without qualifying our opinion, we draw attention to note 2 to the financial statements, which indicates that the Group and the Company incurred a net loss of RM257,554,000 and RM156,224,000 respectively during the financial year ended 31 March 2011, and as of that date, the current liabilities of the Group and the Company exceeded the current assets by RM201,878,000 and RM80,105,000, respectively; and describes the Group’s uncertainty on the outcome of negotiations with the owner of the project in Indonesia in respect of revised commercial operation dates of the project and the ability of the Group to complete the project based on the estimated commercial operation dates. these conditions indicate the existence of a material uncertainty about the Group and the Company continuing as a going concern.

IndePendenT aUdITorS’ rePorTTo The Members Of Zelan Berhad

(Incorporated In Malaysia) (Company No. 27676 V)


rePorT on oTher leGal and reGUlaTorY reQUIreMenTS

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

(a) In our opinion, the accounting and other records and the registers required by the Act to be kept by the Company and its subsidiaries of which we have acted as auditors have been properly kept in accordance with the provisions of the Act.

(b) We have considered the financial statements and the auditors’ reports of all the subsidiaries of which we have not acted as auditors, which are indicated in note 19 to the financial statements.

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

(d) the audit reports on the financial statements of the subsidiaries did not contain any qualification or any adverse comment made under Section 174(3) of the Act.

oTher rePorTInG reSPonSIBIlITIeS

the supplementary information set out in note 42 on page 133 is disclosed to meet the requirement of Bursa Malaysia Securities Berhad and is not part of the financial statements. the Directors are responsible for the preparation of the supplementary information in accordance with Guidance on Special Matter no. 1, Determination of Realised and unrealised profits or losses in the Context of Disclosure pursuant to Bursa Malaysia Securities Berhad listing Requirements, as issued by the Malaysian Institute of Accountants (“MIA Guidance”) and the directive of Bursa Malaysia Securities Berhad. In our opinion, the supplementary information is prepared, in all material respects, in accordance with the MIA Guidance and the directive of Bursa Malaysia Securities Berhad.

oTher MaTTerS

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

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