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Additional Compliance Information

Status of utilization of proceeds raised from corporate exercise

Pursuant to the Restructuring Exercise undertaken by IHMB in 2002/2003, the total proceeds arising from the Shares Subscription, Rights Share Issue and Rights Issue of ICULS-B amounting to RM211.916 million have been utilized as follows : 

 

Approved Utilization RM’000

Utilized as at 31.12.2007
RM’000

Utilized as at 31.12.2008
RM’000

Repayment to Scheme Creditors

188,394

188,394

188,394

Repayment to bank borrowings

139

139

139

Defray expenses of the Restructuring Exercise

8,000

6,834

7,016

Working capital

16,540

16,540

16,540


213,073

211,907

212,089

The balance of the proceeds which have not been utilized is due to a litigation action taken against CIMB Investment Bank Berhad.

Imposition of Sanctions/Penalties

On 27 August 2007, Bursa Securities imposed private reprimand on the Company for the breach of paragraph 9.16(1)(a) of the Listing Requirements in relation to the deviation of more than 40% between the unaudited results and the annual audited accounts for the financial year ended 31 December 2006.

On 18 October 2007, Bursa Securities imposed public reprimand on the Company for the breach of paragraph 9.16(1)(a) of Bursa Securities Listing Requirements in respect on the announcements made on 16 July 2007 and 17 July 2007 respectively; for failure to ensure that each announcement made is factual, clear, unambiguous and accurate.

Share buy-back

During the financial years ended 31 December 2007 and 31 December 2008 respectively, there were no share buy-back of the Company’s own shares.

American Depository Receipts (“ADR”) and Global Depository Receipts (“GDR”)

During the financial years ended 31 December 2007 and 31 December 2008 respectively, the Company did not sponsor any ADR or GDR program.

Options, Warrants or Convertible Securities

During the financial year ended 31 December 2007, 113,359,991 Irredeemable Convertible Unsecured Loan Stocks-B 2003/2008 (“ICULS-B”) have been converted into ordinary shares. 

During the financial year ended 31 December 2008, 60,419,288 ICULS-B have been converted into ordinary shares.  There was no ICULS-B conversion exercise prior maturity date on 14 November 2008.


 

Non-audit Fees

The amount of non-audit fees paid to the external auditors by the Group and by the Company for the financial years ended 31 December 2007 and 31 December 2008 respectively is disclosed in Note X to the financial statements. 

 

UNAUDITED RESULTS, PROFIT ESTIMATE, FORECAST OR PROJECTIONS

Unaudited Results

The audited results for the financial year ended 31 December 2008 differ by more than 10% from the unaudited results previously announced on 27 February 2009 as follows:

 

 

Group

Unaudited
Results
31.12.2008
Group
RM’000

Audited Results
31.12.2008
Group
RM’000

Difference

 

RM’000

 

 

 

 

Profit after tax and minority interest

(10,406)

(26,274)

(15,868)

The deviation was mainly due to the following :

  •  Increase in provision for outstanding claims

 

(26,464)

(b) Increase in provision for doubtful debts

(7,313)
                   

(c)   Provision for interest on cash collaterals

(d)   Reversal of unearned premium reserve

(e)   Write off of bank balances for closed accounts

(f)   Write back of provision for IBNR claims

(g)  Others

(435)

926

(1,239)

18,983

(326)

      Total Deviation

(15,868)

 

Profit Estimate, Forecast or Projection

No profit estimate, forecast or projection were announced during the financial years ended 31 December 2007 and 31 December 2008 respectively.

Profit Guarantee

During the financial years ended 31 December 2007 and 31 December 2008 respectively, there were no profit guarantees given by the Company.

 

Revaluation Policy on Landed Properties

The Company does not have a policy of regular revaluation of landed properties.

Material Contracts

There was no material contracts entered into between the Company and the Directors of the Company during the financial years ended 31 December 2007 and 31 December 2008 respectively.

 

Recurrent Related Party Transactions

There was no material contracts entered into by the Company or its subsidiaries involving Directors and major shareholders’ interests during the financial years ended 31 December 2007 and 31 December 2008 respectively. 

AUDIT COMMITTEE REPORT

The Board of Directors is pleased to present the Audit Committee Report for the financial years ended 31 December 2007 and 31 December 2008 respectively.

Members

The present members of the Audit Committee are:-
           


Name of Member

Designation

(a)     Tuan Haji Hussein bin Hamzah
         (Chairman)

Independent Non-Executive Director

(b)     Dato’ Ab. Halim bin Mohyiddin

Independent Non-Executive Director

(c)     Dr. Radzuan bin Abdul Rahman

Independent Non-Executive Director

(d)   Brig. Jen. (B) Dato’ Pahlawan Hj
         Jamil bin Tahir
      

Independent Non-Executive Director

Meetings

A total of five (5) Audit Committee meetings were held during the financial year ended 31 December 2007 and 31 December 2008 respectively.  The details of attendance of members are as follows :

No.

Name of Member

Number of Meetings Attended in FYE 2007

Number of Meetings Attended in FYE 2008

1.

Tuan Haji Hussein bin Hamzah
(Independent Non-Executive Director)

4 of 5

3 of 5

2.

Dato’ Ab. Halim bin Mohyiddin
(Independent Non-Executive Director)

5 of 5

5 of 5

3.

Brig. Jen. (B) Dato’ Pahlawan Hj Jamil bin Tahir
(Independent Non-Executive Director)

3 of 5

5 of 5

4.

Dr. Radzuan bin Abdul Rahman
(Independent Non-Executive Director)

5 of 5

5 of 5

 

TERMS OF REFERENCE

1.         Composition of members
   
The Board shall appoint the Audit Committee members from amongst themselves, comprising no fewer than three (3) non-executive directors. The majority of the Audit Committee members shall be independent directors.

In this respect, the Board adopts the definition of “independent director” as defined under the Listing Requirements of Bursa Malaysia Securities Berhad (“Bursa Securities”) and any practice notes issued thereto.
All members of the Audit Committee shall be financially literate and at least one (1) member of the Audit Committee must be:-
(a)   a member of the Malaysian Institute of Accountant (“MIA”); or
(b)  if he is not a member of MIA, he must have at least three (3) years of working experience      and:

  • he must have passed the examinations specified in Part I of the First Schedule of the Accountants Act 1967; or
  • he must be a member of one of the associations of the accountants specified in Part II of the First Schedule of the Accountants Act 1967; or

(c)  fulfils such other requirements as prescribed or approved by Bursa Securities.

No alternate director of the Board shall be appointed as a member of the Audit Committee.

The term of office and performance of the Audit Committee and each of its members shall be reviewed by the Board at least once every three (3) years to determine whether such Audit Committee and members have carried out their duties in accordance with their terms of reference.

Retirement and resignation

If a member of the Audit Committee resigns, dies, or for any reason ceases to be a member resulting in non-compliance to the composition criteria as stated above in Clause 1, the Board shall within three (3) months of the event appoint such number of the new members as may be required to fill the vacancy.

2.         Chairman

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

In the absence of the Chairman of the Audit Committee, the other members of the Audit Committee shall amongst themselves elect a Chairman who must be independent director to chair the meeting.

3.         Secretary

The Company Secretary shall be the Secretary of the Audit Committee and as a reporting procedure, the Minutes shall be circulated to all members of the Board.

4.         Meetings

The Audit Committee shall meet regularly, with due notice of issues to be discussed, and shall record its conclusions in discharging its duties and responsibilities. In addition, the Chairman may call for additional meetings at any time at the Chairman’s discretion.

Upon the request of the external auditor, the Chairman of the Audit Committee shall convene a meeting of the Audit Committee to consider any matter the external auditor believes should be brought to the attention of the directors or shareholders.

 

Notice of Audit Committee meetings shall be given to all the Audit Committee members unless the Audit Committee waives such requirement.

The Chairman of the Audit Committee shall engage on a continuous basis with senior management, such as the Chairman, the Chief Executive Officer, the Head of Finance & Administration Department, the Head of Internal Audit and the external auditors in order to be kept informed of matters affecting the Company.

The Head of Finance & Administration Department, the Head of Internal Audit and a representative of the external auditors should normally attend meetings. Other Board members and employees may attend meetings upon the invitation of the Audit Committee. The Audit Committee shall be able to convene meetings with the external auditors, the internal auditors or both, without executive Board members or employees present whenever deemed necessary and at least twice a year with the external auditors.

Questions arising at any meeting of the Audit Committee shall be decided by a majority of votes of the members present, and in the case of equality of votes, the Chairman of the Audit Committee shall have a second or casting vote.

5.         Minutes

Minutes of each meeting shall be kept at the registered office and distributed to each member of the Audit Committee and also to the other members of the Board. The Audit Committee Chairman shall report on each meeting to the Board.

The minutes of the Audit Committee meeting shall be signed by the Chairman of the meeting at which the proceedings were held or by the Chairman of the next succeeding meeting.

6.         Quorum

The quorum for the Audit Committee meeting shall be the majority of members present whom must be independent directors.

7.         Objectives

The principal objectives of the Audit Committee are to assist the Board in discharging its statutory duties and responsibilities relating to accounting and reporting practices of the holding company and each of its subsidiaries. In addition, the Audit Committee shall:-

  • Evaluate the quality of the audits performed by the internal and external auditors;

 

  • Provide assurance that the financial information presented by management is relevant, reliable and timely;
  • Oversee compliance with laws and regulations and observance of a proper code of conduct; and

 

  • Determine the quality, adequacy and effectiveness of the Group's control environment.

8.         Authority

The Audit Committee shall, in accordance with a procedure to be determined by the Board and at the expense of the Company :-

(a)       Have explicit authority to investigate any matter within its terms of reference, the resources to do so, and full access to information. All employees shall be directed to co-operate as requested by members of the Audit Committee.

(b)       Have full and unlimited/unrestricted access to all information and documents/resources which are required to perform its duties as well as to the internal and external auditors and senior management of the Company and Group.

(c)        Obtain independent professional or other advice and to invite outsiders with relevant experience to attend, if necessary.

(d)       Have direct communication channels with the external auditors and person(s) carrying out the internal audit function or activity (if any).

  • Where the Audit Committee is of the view that the matter reported by it to the Board has not been satisfactorily resolved resulting in a breach of the Listing Requirements, the Audit Committee shall promptly report such matter to Bursa Securities.

 

  • Duties and Responsibilities

The duties and responsibilities of the Audit Committee are as follows:-

      • To consider the appointment of the external auditor, the audit fee and any question of resignation or dismissal;

 

      • To discuss with the external auditor before the audit commences, the nature and scope of the audit, and ensure co-ordination where more than one audit firm is involved;

(c)        To review with the external auditor his evaluation of the system of internal controls and his audit report;

(d)       To review the quarterly and year-end financial statements of the Board, focusing particularly on –

  • any change in accounting policies and practices;

 

  • significant adjustments arising from the audit;
  • the going concern assumption; and

 

  • compliance with accounting standards and other legal requirements.

(e)       To discuss problems and reservations arising from the interim and final audits, and any matter the auditor may wish to discuss (in the absence of management, where necessary);

(f)        To review the external auditor’s management letter and management’s response;

 

  • To do the following, in relation to the internal audit function:-
  • Review the adequacy of the scope, functions competency and resources of the internal audit function, and that it has the necessary authority to carry out its work;

 

  • Review the internal audit programme and results of the internal audit process and, where necessary, ensure that appropriate actions are taken on the recommendations of the internal audit function;
  • Review any appraisal or assessment of the performance of members of the internal audit function;

 

  • Approve any appointment or termination of senior staff members of the internal audit function; and
  • Take cognizance of resignations of internal audit staff members and provide the resigning staff member an opportunity to submit his reasons for resigning.

 

  • To consider any related party transactions and conflict of interest situation that may arise within the Company or Group including any transaction, procedure or course of conduct that raises questions of management integrity;
  • To report its findings on the financial and management performance, and other material matters to the Board;

 

  • To consider the major findings of internal investigations and management’s response;
  • To verify the allocation of employees’ share option scheme (“ESOS”) in compliance with the criteria as stipulated in the by-laws of ESOS of the Company, if any;

 

  • To determine the remit of the internal audit function;
  • The assistance given by the employees of the listed issuer to the external auditor.

 

  • To consider other topics as defined by the Board; and
  • To consider and examine such other matters as the Audit Committee considers appropriate.

 

Summary Activities of the Audit Committee

During the financial years ended 31 December 2007 and 31 December 2008 respectively under review, the activities undertaken by the Audit Committee includes :-

  • Reviewed the quarterly unaudited financial results and announcements for the financial quarters prior to submission to the Board of Directors for consideration and approval.
  • Reviewed with the external auditors on their audit planning memorandum of the Group.
  • Reviewed and ensured the adequacy of the scope and coverage of the audit plan proposed by the internal auditors and approved the audit plan for audit execution.
  • Reviewed the internal audit reports of the Company’s subsidiaries, highlighting the audit issues, recommendations and management’s responses.

 

  • Reviewed related party transactions and considered conflict of interest situations that may arise within the Group.
  • Reviewed and revised Audit Committee Charter in compliance with the Listing Requirements of Bursa Securities.

 

 

Summary Activities of the Internal Audit Function

The Company outsourced its internal audit function to an internal audit consulting firm.  The head of internal audit reports directly to the Audit Committee.  The cost incurred on this function was approximately RM36,685.00 for both financial years ended 31 December 2007 and 31 December 2008.  The internal audit assists the Company in the discharge of its duties and responsibilities.  Its role is to provide independent and reasonable assurance that the systems of internal controls are adequate and effective. 

The activities of the internal audit function for the year includes :

  • Conducted internal audit reviews in accordance with the internal audit plan approved by the Audit Committee.
  • Reported the results of internal audits and made recommendations for improvements to the Audit Committee on a periodic basis.
  • Followed-up on the implementation of audit recommendations and agreed upon Management action plans.

STATEMENT OF INTERNAL CONTROL

Introduction

The Board of Idaman Unggul Berhad recognizes the commitment to continuously progress in formalizing the internal control system and the framework on risk management.  The Board is pleased to present the following Statement of Internal Control pursuant to Paragraph 15.27(b) of the Listing Requirements of Bursa Malaysia Securities Berhad.

Responsibility

The Board affirms and acknowledges its overall responsibility for the Group’s internal control system in instituting a system of internal controls that covers all aspects of the business including strategic, commercial, operational and financial areas. It recognizes that reviewing the Group’s system of internal control is a concerted and continuing process, designed to manage rather than eliminate the risk of failure to achieve business objectives. Thus, the Board is pleased to provide the following statement on the state of internal control of the Group. For the purposes of this statement, the Group refers to the Company and its subsidiaries, excluding its associated companies.

Internal Control System

The Board confirms that there is a continuous process for identifying, evaluating and managing the significant risks faced by the Group, which has been in place for the financial year under review and up to date of approval of the annual report and financial statements. The process is regularly reviewed by the Board and is in accordance with the guidance as contained in the publication - Statement of Internal Control : Guidance for Directors of Public Listed Companies.

The key elements of the internal control structure and assurance processes, inter alia, encompass the following :-

  • The Group is headed by the Executive Chairman and assisted by the management team. There is an operating structure in place, with clear defined lines of accountability.

 

  • The Audit Committee was established to assist the Board in discharging its duties.
  • Periodical Board and Audit Committee meetings are held. Quarterly financial results and status of corporate proposals are presented during these meetings.

 

  • Regular management meetings are conducted to obtain feedback on the progress of activities undertaken in order to rectify any shortcomings or problems affecting the implementation plan.
  • The Group has engaged an internal auditor, which will report directly to the Audit Committee. The internal auditor has the objective to carry out reviews of the internal control systems to determine if accepted accounting and control procedures have been complied with as well as to identify recommendations to strengthen the overall internal control environment.

 

  • The Board of the active subsidiaries, particularly the insurance subsidiary, receives and reviews regular reports from the management on key operating statistics, legal, environmental and regulatory matters. The Head of the respective subsidiaries reports regularly to management and occasionally to the Board.

 

  • Each active business unit submits a Business Plan annually for approval by the Board of the respective subsidiaries. The results of each line of business are reported monthly and variances against budgets are analyzed.
  • At its core insurance subsidiary, regular meetings are held by its Board, Investment Committee, Management Committee and Audit Committee to review the performances and internal controls.  The Internal Audit function also assists the Audit Committee in discharging their duties.  The Board and management of the insurance subsidiary are continuously evaluating the effectiveness of its Credit Control Department to enhance the monitoring of its receivables.

In addition, there is a Risk Management Committee comprising three (3) Independent Non-Executive Directors and one (1) Executive Director to review and recommend risk management strategies, policies and risk tolerance limits for the Board’s approval.

Conclusion

The Board is of the view that the Group’s system of internal controls is adequate to safeguard shareholders’ investments and the Group’s assets and that there is no significant weakness or deficiency in the system of internal controls for the financial years ended 31 December 2007 and 31 December 2008 respectively.  However, the Board is also cognizant of the fact that the Group’s system of internal control and risk management practices must continuously evolve to meet the changing and challenging business environment.  Therefore, the Board will, when necessary, put in place appropriate action plans to further enhance the system of internal controls.

This statement was approved by the Board of Directors on xx December 2009.

 
Contact Us
Unit A-9-09, Capital 1,
Oasis Square,
2, Jalan PJU 1A/7A,
Oasis Damansara,
47301 Petaling Jaya
Selangor Darul Ehsan
Malaysia
Tel: 603 7832 1188/1189
Tel: 603 2719 3130