Reputable Graduate Business

School for a Sustainable

Tomorrow

AGW 610:
FINANCE AND ACCOUNTING FOR
MANAGEMENT
PROJECT:
ECO WORLD DEVELOPMENT BERHAD
vs
GLOMAC BERHAD
PREPARED BY:
NO NAME
1 FARAHZATUL SHIDA BT MOHD HARITH
FADZELLAH
2 MASYITAH BT RAZALI
3 NORIZANA BT JAMALUDDIN
4 NUR SYAFIQAH BT BOINAN
5 NURUL HUDA BT IBRAHIM
PREPARED FOR: PROF. DR. AZLAN AMRAN
DATE OF SUBMISSION: 30 NOVEMBER 2015
SEMESTER: SEMESTER 1
ACADEMIC SESSION: 2015/2016

MATRIX NO.
P-GSM0/15
P-GSM0/14
P-GSM0/15
P-GSM0/15
P-GSM0/15

1.0 INTRODUCTION
The property development is one of the most risky , dynamic and challenging
business even though the industry has a very poor reputation for managing risk such
as many major project failed to meet the deadlines and in some cases which is no
buyers even the units has been complete . The concept of development has been
changed from time to time. Nowadays, most of the developers build the building
based on urban and metropolitan together with the green concept. The green
concept including ecology friendly which is one of the responsibility of the business
to the society and environment in order to achieve business sustainability.
Malaysia as a development country generates the income from food and
electronic manufacturer and also service and hospitality industry. The plants has
provide job opportunities and it slowly develop to be a city/town in that particular area
which has basic facilities such as clinics , schools , mosques , fields , roads ,
transportations system , shops , malls and securities ( fireman , policeman etc. ) .
Since population has been increased significantly, these scenarios will create the
demand and the supply for the property and the real estate.
1.1 PROPERTY DEVELOPMENT AND REAL ESTATE INDUSTRY IN
MALAYSIA
Malaysia has been involved in several Asian financial crisis which hit in 19971998 and 2008, unfortunately Malaysia have been involved again in July 2015.
Malaysia as a development country has received too many impact according to this
situation especially in property development industry. The drastic drop of crude oil
and gas price and weakening of Malaysia Ringgit has drawn a mixed outlook on the
countrys economy. Several big projects have been frozen, abandoned or the scale
has been reduced.
Before the Malaysia Ringgit has been weak, Malaysia has implemented
Goods and Services Tax (GST) in earlier April in order to avoid double taxation,
which is only the value added at each stage is taxable. Property development has
not been excluded from the implementation of GST. According to C H Williams
Talhar & Wong Sdn Bhd in 2015 Property Market Report, the developer will charge
6% onto the purchaser and at the same time, he is allowed to claim tax rebates on
construction services. However, since developers are not required to make GST
payments for residential property sales, they are also not entitled to claim rebates.
Consequently all GST paid up to the residential development stage will be absorbed
as part of development costs. All GST costs will be passed on to the house

purchaser if the developer decides to maintain his historical gross margins or GST
costs could be partly absorbed if the developer decides accepts a lower gross
margin in order to maintain a more competitive price. The same report has been
estimate that Total Construction Cost having increases about 3.97% after the GST
implementation.
Malaysias property market faces an oversupply for 2014. The higher land
costs, construction material prices and labour costs plus the increased authority
requirements were the main factors behind the rise in property prices.
The drastic demand and supply for the property development and real estate
industry significantly happen in major city such as Kuala Lumpur, Pulau Pinang and
Johor Bahru. Malaysia is My Second Home which is a programme by Malaysia
government has penetrate the property development and real estate industry income
and profit.

2.0 COMPANIESS BACKGROUND

2.1

GLOMAC BERHAD

Glomac traces its corporate history back to 1988, when the two entrepreneurs
and founders of the Group, Tan Sri Dato' FD Mansor, Group Executive Chairman
and Datuk Richard Fong, Group Executive Vice Chairman, joined forces to start
Glomac. The company is currently helmed by Datuk Seri FD Iskandar, Group
Managing Director / Chief Executive Officer. Today, Glomac Berhad comprises more
than 55 subsidiaries with involvement in every face of the real estate business
encompassing property development, property investment, construction, property
management and car park management. Glomac Berhad was listed on the Main
Board of Bursa Malaysia Securities Berhad on 13 June 2000.
Property development remains the core focus of the Group since its inception.
With this, it continues to affirm the Group's reputation as a responsible and visionary
property developer with its sold record of developing townships, residential,
commercial and mixed development properties. To-date, the Group has completed
more than a total sales value over RM4 billion. Moving forward, Glomac is entering
into a new phase of growth as it is in the midst of launching more than RM802 million
worth of property. As a long term player committed to escalating our presence in the
real estate market particularly focusing in the prime area of the Greater KL, where
the Group is well established. Glomac is continuously planning and designing new
projects for our existing landbank, and evaluating new landbank opportunities and
looking out for new opportunities in the country.
Glomac vision is to help improve the quality of life by providing a better place
to live or work in. By carrying out this vision, we want to be recognised by our
customers, shareholders and employees as a world-class property developer. In
order to achieve vision, Glomac mission as a caring and reliable property developer
is to deliver outstanding service, quality products and value for money for our
customers. Through dedication, innovation and passion, we are confident about our
ability to achieve these goals.

2.2

ECO WORLD DEVELOPMENT GROUP BERHAD

Eco World Development Group Berhad is a public company listed on the Main
Market of Bursa Malaysia Securities Berhad which is principally involved in property
development.
The Companys projects are strategically located within matured and fast-growing
development corridors in the Klang Valley, Iskandar Malaysia and Penang. We have 12
projects under development in Malaysia spanning close to 5,000 acres which offer our
purchasers a wide array of products comprising affordable, upgrader and luxury homes,
integrated high-rise developments and green business parks. Through our associates, the
EcoWorld brand has also extended to the United Kingdom and Australia with several
exciting developments in London and Sydney lined up for launch in 2015.
The Company is helmed by some of the most well-known and respected industry
players who have transformed the Malaysian property landscape through their leadership of
ground-breaking, standard-setting and multiple award-winning developments. This wealth of
experience combined with the youthful energy and enthusiasm of our people powers Team
EcoWorlds efforts to scale ever greater heights as we seek to Create Tomorrow and
Beyond for the benefit of our customers, our shareholders and every stakeholder.

Eco World also have own vision where creating tomorrow and beyond. We
will achieve our vision trough a culture of excellent and teamwork by firstly creating
world class eco living in all our developments. Second mission is being a caring and
responsible organisation which actively contributes back to society. Third mission is
having a reputation for providing unmatched product and service quality to our
customer at all times. Fourth mission is leading with passion in the pursuit of
innovation and sustainability to crate enduring value. Fifth mission is delivering
exciting and consistent growth to our stakeholders and shareholders.
2.3

SIMILARITIES BETWEEN GLOMAC BERHAD AND ECO WORLD

DEVELOPMENT BERHAD

Both of this properties company maintain Green standard under corporate

social responsibility (CSR). Eco World Green Council has established an internal
rating tool to promote, inculcate and enforce practical, actionable and achievable
green solutions which is required to be adopted across all Eco World developments.
For example passive design features, maximisation of daylight into homes, water
efficiency, environmental protection, and improving indoor environment quality.

Glomac also making greener contribution begun to implement green friendly

initiatives such as a rain water harvesting systems for gardening and sewerage
purpose and planting of trees and building of footpaths alongside existing rivers and
lakes. As part to their efforts to sustain the green lungs created within townships, a
campaign title Giving Life Back to Sri Saujana Lake Cleaning Project was held in
December 2014 at the Groups township in Johor, Sri Saujana.

2.4

DIFFERENTIATES

BETWEEN GLOMAC BERHAD

AND

ECO

WORLD DEVELOPMENT BERHAD

EcoWorld has launched the Eco World Foundation. The foundation serves as
the charitable arm of Ecoworld with a focus on helping underprivileged students
along their quest for education through the Eco World Student Aid Programmed
(SAP). The main objective of the SAP is to keep disadvantages students in school by
providing for their educational requirements. Currently, the programme caters to
more than 3,000 primary secondary and tertiary students through Malaysia.
Glomac more on sustaining community contributions for example launched
activity such as Kongsi Rasa, Kongsi Idea With Chef Liza (Sri Saujana, Johor),
Ramadhan Contribution To Rumah Aman, The Edge Kuala Lumpur Rat Race 2014,
Sponsorship Of Supermokh Restaging 2014, and also Contribution To The
Malaysian Press Institutes 2015 Night. The group also regularly contributes to the
funds of orphanages, and charitable events. Many of these are sustained efforts as
they believe in forging strong bonds with our chosen causes by maintaining a long
term commitment.

3.0 FINANCIAL STATEMENT ANALYSIS

3.1

INTRODUCTION

The success and failure of companies will be measured based on their

financial position performance. It is very important for the entire stakeholders and
shareholders of companies to take a look at their companies financial position so as
to enable them to evaluate the company performance before making any investment
decision. So it is necessary to have a standardized method and criteria in evaluating
a companys performance in order to assist in the decision making process (Soon,
Mohammed, & Mostafa, 2014). There are a lot of methods that can be used in
determining companies financial health, and one the most famous methods is the
Altman Z-Score (Zeni & Ameer, 2010). Besides that, financial ratios from balance
sheets and income statements have been used widely by financial analysts.
Financial ratios are an important tool of financial statements analysis. A ratio
is a mathematical number calculated as a reference to relationship of two or more
numbers and can be expressed as a fraction, proportion, percentage and a number
of times. Based on the financial ratio analysis, a company can evaluate and assess
their performance over a period of time. If the analysis shows a negative result, the
management must take a corrective action as to improve the company performance.
Besides that, financial ratio analysis enables the comparison of financial
performance between other companies in the same industry. So, by having this type
of analysis, a company can set a benchmark in that particular industry they belong
to. The financial ratio analysis will allow the management to assess their risk, in term
of their financial risk. A company that have a high debt ratio will be considered as a
high risk company, as they need to bear high financial commitment in the future. So
by knowing the current debt ratio of a company, the management would be able to
make better planning and decision in the future. The financial ratio analysis also will
be useful to other external parties, liked existing or potential investors. This group of
users will evaluate a companys financial performance before make any investment
decision. Other than that, creditors, lender or banker also will take a look at a
company financial performance before make any credit or loan decisions.
In order to fulfil the requirement in this research project, the two companies
that had been chosen by us are Eco World and Glomac. There will be two scope of
financial ratios analysis done in this research project, which is internal comparison

and external comparison. The internal comparison is a financial ratio analysis done
for a particular company over a period of time, whereby the external comparison is a
financial ratio analysis done between different companies in a same industry.
Therefore, in this research project, the internal comparison of Eco World and Glomac
will be made for a period of two years, from 2013 to 2014. It compares present ratios
with past and future ratios in each of the selected companies. Then, the external
comparison will be based on the comparison of the average financial ratios between
these two companies in properties industry. This external comparison would be
useful in determining which company have a better financial ratio performance.

3.2

INTERNAL COMPARISONS OF FINANCIAL RATIOS OF GLOMAC

BERHAD AND ECO WORLD DEVELOPMENT BERHAD FOR YEAR
2013 AND 2014

Liquidity Ratio
It is a computation that is used to measure a company's ability to pay its shortterm debts. There are two common calculations that fall under the category of
liquidity ratios. One of the most common liquidity ratio used in financial statement
analysis is current ratio. The current ratio indicates the ability of a company to meet
its short-term obligation, whether a company has sufficient resources to repay its
debt over the next 12 months.

This ratio will be a very important indicator in

determining whether the company would be able to pay back in response to credit
given to them. If a company has high a current ratio, it indicates that the company is
liquid and efficient in transforming its product into cash. Some of the possible causes
of low liquidity are holding too much stocks, poor debt collection system and poor
cash management. Thus, the current ratio is measured as:

Current Ratio

Current Assets

Current Liabilities

2013

2014

Eco World

2.05

2.56

Glomac

2.78

2.14

The above grafts show the liquidity ratio, namely as current ratio of both
companies. As what can be seen in the graft of the liquidity ratio of Eco World, there
is a significant increase in the current ratio for year 2013 and 2014. The current ratio
in 2013 was recorded as 2.05, while in 2014 as 2.56. This indicates that Eco World
has improved its liquidity ratio by having a more effective debt collection system and
cash control system. These significant differences might be due to an increase in
some current assets owned by this company.
Then, as what can be seen in the graft of the liquidity ratio of Glomac, there is
a significant difference in the ratio where the current ratio has dramatically
decreased in year 2014. The current ratio in 2013 was recorded as 2.78, while in
2014 as 2.14. This indicates that Glomac is more liquid and efficient in managing its
current assets and current liabilities in 2014. The decrease in the liquidity ratio was
due to an increase in the loan and amount due in the companys current liabilities,
which had lead to an increase in the companys obligation to fulfil all those short term
liabilities. So, in order to overcome this liquidity problem, Eco World should have to
enhance the amount of current assets, liked the amount of cash in hand or banks, by
having an effective and efficient debt collection system. Other than that, company
should try to adapt to an appropriate inventory control system, which requires a
company not holding unnecessary inventory in hand.

Efficiency Ratio
The efficiency ratios measure how effective the firm is managing its assets in
generating sales. These ratios will indicate whether the assets are too high, too low
or reasonable for the firms current and projected operating levels. The two types of
efficiency ratios used in this research project are inventory turnover ratio and asset
turnover ratio.
The inventory turnover ratio is an efficiency ratio that shows how effectively
inventory is managed by comparing cost of goods sold with average inventory for a
period. This measures how many times average inventory is sold during a period.
The asset turnover ratio is an efficiency ratio that measures a company's
ability to generate sales from its assets by comparing net sales with average total
assets. In other words, this ratio shows how efficiently a company can use its assets
to generate sales. Efficiency ratio includes inventory turnover ratio, and asset
turnover ratio. Thus, the inventory turnover ratio and asset turnover ratios was
measures as:

Inventory Turnover Ratio

Cost of Goods Sold

Average Inventory

Asset Turnover Ratio

Net Sales

Average Total Assets

Eco World

Glomac

2013

2014

Inventory turnover ratio

5.46

4.28

Asset turnover ratio

0.64

0.43

Inventory turnover ratio

9.96

10.22

Asset turnover ratio

0.85

0.79

The above grafts show the efficiency ratios, namely as inventory turnover ratio
and asset turnover ratio of both companies. As what can be seen in the graft of the
efficiency ratios of Eco World, there are a slight decrease for both ratios, namely as
inventory turnover ratio and asset turnover ratio. The inventory turnover ratio was
recorded as 5.46 in 2013 and 4.28 in 2014. This indicates that the companys sales
had been reducing slightly in year 2014. Besides that, the decrease in this ratio was
also due to the improper stock control system which had lead to overstocking. Then,
the asset turnover ratio was recorded as 0.64 in 2013 and 0.43 in 2014. The
reduction in the asset turnover ratio was due to the decrease in sales and increase in
total assets value. The company had purchased new plant and equipment,
inventories and other receivables.
Then, as what can be seen in the graft of the efficiency ratios of Glomac,
there is a slight increase in inventory turnover ratio and decrease in total asset
turnover ratio. The inventory turnover ratio was recorded as 9.96 in 2013 and 10.22
in 2014. This increase has indicated that the company are more efficient in
managing their sales and inventories, where there is no overstocking problem. Then,
the total asset turnover ratio was recorded as 0.85 in 2013 and 0.79 in 2014. There

is a slight decrease in total asset turnover ratio that was due to a decrease of sales
and increase in total assets value.

Leverage Ratio
Companies are relying on a mixture of owners equity and debt to finance their
operations. A leverage ratio is any one of several financial measurements that look
at how much capital comes in the form of debt (loans) or assesses the ability of a
company to meet financial obligations. This ratio will be useful in measuring the
companys leverage and the percentage of debt used by the company to finance
their assets. A lower debt to asset ratio will indicate that a company be less
depending on debt as compared to equity in financing its assets. The higher the debt
to asset ratio, the higher debt proportion in companys financing. Thus, a company
was more likely to face a high leverage due to high interest cost which will
subsequently increase the companys risk towards financial distress. This, the debt
to asset ratio is measured as:
Debt Ratio

Total Debt
Total Assets

2013

2014

Eco World

0.34

0.53

Glomac

0.47

0.45

The above grafts show the leverage ratio namely as debt ratio of both
companies. As what can be seen in the graft of the leverage ratio of Eco World,
there is a slight difference in the debt ratio for year 2013 and 2014. The debt ratio in
2013 was recorded as 0.34, while in 2014 as 0.53. The company has taking
additional loans in year 2014, which had resulted in an increase in debt ratio.
However, the companys debt ratio can still be consider relevant and moderate,
where, in 2014 the company approximately used 53% of debt to finance its assets,
and the remaining by using its equity.
Then, as what can be seen in the graft of the leverage ratio of Glomac, there
is a slight decrease in the debt ratio, where in 2013 it was recorded as 0.47 and in
2014 as 0.45. This slight reduction in the debt ratio was due to the settlement made
by company towards its long term liabilities. The companys debt ratio can still be
consider relevant and low, where, in 2014 the company approximately used 45% of
debt to finance its assets, and the remaining by using its equity.

Profitability Ratio
Ratios that used to assess a companies ability to generate earnings as compared to
its expenses and other relevant costs incurred during a specific period time. For most of
these ratios, having a higher value relative to a competitors ratio or the same ratio from a
previous period is indicative that the company is doing well. The commonly used profitability
ratios are net profit margin, return on asset and return on equity.
The profit margin ratio, also called the return on sales ratio or gross profit ratio, is a
profitability ratio that measures the amount of net income earned with each dollar of sales
generated by comparing the net income and net sales of a company. In other words, the
profit margin ratio shows what percentage of sales are left over after all expenses are paid
by the business. Creditors and investors use this ratio to measure how effectively a company
can convert sales into net income. Investors want to make sure profits are high enough to

distribute dividends while creditors want to make sure the company has enough profits to
pay back its loans.
The second profitability ratio used in this research project is return on asset. This
ratio will be used to measure the level of earnings that are able to be generated from the
invested capital which is assets. Companies will usually fund their business operations by
using debt or equity. A higher return on asset ratio would be higher because it indicates that
a company is able to generate a higher profit on a smaller amount of invested capital.

The return on equity ratio or ROE is a profitability ratio that measures the
ability of a firm to generate profits from its shareholders investments in the company.
In other words, the return on equity ratio shows how much profit each dollar of
common stockholders' equity generates. Thus, the net profit margin, return on asset
and return on equity ratio are measured as:
Net Profit Margin

Net income available to common stockholders

Sales

Return on Assets

Net Income available to common stockholders

Total Assets

Return on Equity

Net income available to common stockholders

Common Equity

Eco World

Glomac

2013

2014

Net profit margin

0.16

0.05

Return on assets

0.05

0.01

Return on equity

0.08

0.02

Net profit margin

0.16

0.17

Return on assets

0.07

0.07

Return on equity

0.13

0.12

The above grafts show the profitability ratios, namely as net profit margin,
return on asset and return on equity of both companies. As what can be seen in the
graft of the profitability ratios of Eco World, there are downtrend in all of the
profitability ratios. In 2013, the net profit margin was recorded as 0.16 and 0.05 in
2014. This significant reduction in net profit margin was due to the reduction in
companys net earnings in that particular year. Besides that, the selling and
administrative expenses and administrative expenses had increase in 2014, which
had lead to a decrease in the net profit margin of Eco World. Then, the return on
asset had a slight reduction from year 2013 to 2014, where it had been recorded as
0.05 in 2013 and 0.01 in 2014. This reduction was also due to the downtrend of the
companys net earnings. The last profitability ratio, which is return on equity, has
shown a downtrend phenomenon also. This is where the return on equity was
recorded as 0.08 in 2013 and 0.2 in 2014. The reduction on return on equity was
consistence with the downtrend of the companys net earnings.
Then, as what can be seen in the graft of the profitability ratios of Glomac,
there are mixtrend in all of the profitability ratios. In 2013, the net profit margin was
recorded as 0.17 and 0.20 in 2014. Although company net earnings had been
decrease in 2014, but the company manage to reduce the amount expenses spent
for that particular period of time. Then, the return on asset gives a constant value

from year 2013 to 2014, which is at 0.07. The last profitability ratio, which is return on
equity, has shown a downtrend phenomenon also, where the return on equity was
recorded as 0.13 in 2013 and 0.12 in 2014. The reduction on return on equity was
consistence with the downtrend of the companys net earnings.

3.2

EXTERNAL COMPARISON OF FINANCIAL RATIOS BETWEEN

GLOMAC BERHAD AND ECO WORLD DEVELOPMENT BERHAD

Liquidity ratio

Current ratio
Eco World

2.30

Glomac

2.46

The above chart shows the comparison of liquidity ratio, namely as current
ratio of both companies. As what can be seen in the above chart, Glomac is more
liquid as compared to Eco World. However, the liquidity ratios of both companies are
above the ideal ratio, which are two. So, it indicates that, both companies did not
have any liquidity problem, and they have the ability to meet its short term
obligations towards its creditors. Both companies are efficient in managing their cash
and have a high ability to meet its short term obligations over the next 12 months.

Efficiency ratio
Inventory turnover ratio

Asset

turnover

ratio
Eco World

4.86

0.54

Glomac

10.09

0.82

.
The above chart shows the comparison of efficiency ratios namely as,
inventory turnover ratio and asset turnover ratio of both companies. As what can be
seen in the above chart, Glomac have higher efficiency ratios as compared to Eco
World. This, it indicates that Glomac is more efficient in managing its assets to
generate sales. In order to cope with low efficiency ratio, the management of Eco
World need to have an effective inventory control system as to avoid overstocking.
Besides that, Eco World should avoid to purchase an idle asset which will not be
useful in the business production and operation.

Leverage ratio
Debt ratio
Eco World

0.44

Glomac

0.46

The above chart shows the comparison of leverage ratio, namely as debt ratio
of both companies. As what can be seen in the above chart, there was only a slight
differences in both ratios, where Eco Worlds debt ratio was recorded as 0.44 and
Glomac as 0.46. This has indicates that both companies had used less than 50% of
the debt in financing its assets. Its good for a company to have low debt ratio, as it
will help to reduce the risk of insolvency due to the inability to fulfil its financial
obligations towards the creditors.

Profitability ratio

Net profit margin

Return on asset

Return on equity

Eco World

0.11

0.03

0.05

Glomac

0.16

0.07

0.12

The above chart shows the comparison of profitability ratios, namely net profit
margin, return on asset and return on equity of both companies. As what can be
seen in the above chart, Glomac have better and higher profitability ratios as
compared to Eco World. This significant difference was due to the downtrend
phenomenon in the Eco Worlds net earnings in year 2014. So, in order to improve
these profitability ratios, Eco Worlds management should try improving the sales by
doing excessive promotion and minimizing the operating expenses.

4.0 CORPORATE GOVERNANCE

Corporate Governance refers to the way a corporation is governed. It is the
technique which is the company process and structure used to direct and manage
the business and affairs of the company towards enhancing business prosperity and
corporate accountability with the ultimate objective of realizing long term
shareholders value, whilst taking into account the interest of other stakeholders. In
can divided into three function, board of directors, internal control system and audit
committee.

4.1 BOARD OF DIRECTORS

4.1.1 SIMILARITIES
The Board and its Responsibilities
Both companies, Glomac Berhad and Eco World Development Group Berhad
has mentioned that the Board has the overall responsibilities for corporate
governance, strategic direction, formulation of policies, implementing an
appropriate system of risk management, ensuring the adequacy and integrity of
the companies system of internal control and overseeing their investment and
business.
The Board Meeting and Supply of Information
Besides that, The Board meeting for both companies is held at least quarterly
to discuss and review the quarterly results of the companies for announcement to
BMSB, and annual meetings are held to discuss and approve the companies
annual budget and business plan. The Board also will held additional meeting if
there had necessary to discuss various corporate matters or business issues that
require the urgent decision of the Board. Both companies also had held five
board meetings during the financial year
In order to persistence their duties, The Board has access to the advice and
services of the Company Secretaries and may take independent professional
advice at the companies expense as and when necessary. Then the removal of
Company Secretaries would be decided by the Board.
Board Committees
The Board delegates certain functions to committees namely Nomination
Committee and Remuneration Committee that can help to support and assist in
discharging its fiduciaries duties and responsibilities. The respective committees
report to the Board on matters considered and their recommendations. The

ultimate responsibility for the final decision on all matters however lies with the
Board.
Re-election of Directors
By performing re-election of Directors, the Board has to comply with
Companys Articles Association which all Directors who are appointed by the
Board are subjected to re-election by shareholders at the next Annual General
Meeting (AGM) following their appointment. All Directors are also to retire from
office and submit themselves for re-election at least once in every 3 years in
compliance with the Listing Requirement of BMSB and the Directors to retire in
each year shall be those who have been longest in office since their last election
as pursuant to Section 129 of Companies Act 1965.

4.1.2 DIFFERENCES
Table 1.0
ECOWORLD

DIFFERENT

GLOMAC BERHAD

DEVELOPMENT

GROUP

BERHAD

Composition of Board (3) Executive Director

(3) Executive Directors

of Directors

(4)Independent Non-

(3) Independent Non-

Executive Directors

Executive Directors

Nomination Committee

Consists exclusively of

Comprised (3) members

and Remuneration

(3) independent Non-

of all the independent

Committee

Executive Directors

Non-Executive Directors

Re-election of Directors

AOA provides 1/3 of

AOA provide director

directors subjected to

shall retire at least in

retirement by rotation at

every 3years and are

every AGM at least once

eligible to offer

every 3years.

themselves for re-election

at the AGM.

4.2 AUDIT COMMITTEES

4.2.1 SIMILARITIES
Chairman
The Chairman of the Audit Committee shall be elected by the members of the
Audit Committee and shall be an independent Non-Executive Directors. This is

important to balance up the Board structure and give independent view and
judgment in the Board decision making.
Main Objective
Both companies have similar main objective. The Audit Committee is to assist
the Board of Directors in meeting its responsibilities relating to accounting and
reporting practices of the Company and its subsidiary companies.

Authority
The Audit Committee shall be necessary and reasonable for the Company to
perform its duties, in accordance with procedures to be determined by the Board
of Directors and at the cost of the Company. They have authority on to
investigate any activities within its terms of reference, to seek any information it
requires from any employees and all employees are directed to co-operate with
any requests made by Audit Committee and to obtain outside legal or other
independent professional advice and to secure the attendance of outsiders with
relevant experience and expertise if it considers this necessary.
Meeting
The Audit Committee for both of companies have similar frequency of meeting
that they shall meet at least 4 times a year. The Audit Committee shall meet at
least twice during the financial year with the external auditors and internal
auditors without presence of the Executive Board members, other directors and
employees of the Group.

4.2.2 DIFFERENCES
TABLE 1.1
ECOWORLD

DIFFERENT

GLOMAC BERHAD

DEVELOPMENT

GROUP

BERHAD

Composition

of

Audit Committee

the Compromise

three

independent
Executive Directors

(3) Compromise

three

(4)

Non- Non-Executive Directors

4.3 INTERNAL CONTROL

Pursuant to paragraph 15.26(b) of the Main Market Listing Requirement of
Bursa Malaysia Securities Berhad, the Board of Directors for both companies, are
pleased to provide the following statement on the state of internal control of the
Group for the financial year, which has been prepared in accordance with the
Statement on Internal Control Guidance for Directors of public Listed Companies
issued by Bursa Securities.
Based on The Malaysian Code on Corporate Governance stipulates that the
Board of Directors (The Board) of listed companies should maintain a sound system
of internal control to safeguard shareholders investments and Groups assets. In
dealing with its stewardship responsibilities, the Board of Directors recognises that
effective risk management is an integral part of good business management
practice.
The internal control systems of the Glomac Berhad are established by the
existing of the Audit Committee which empowered to seek assurance on the
adequacy and integrity of the internal control system. They establish the procedure
and policies that will implement by every part of their business such as the
procedures and the policies in determination of the product quality, the policy in
recruit the employees. While for Eco World Development Group Berhad, the internal
audit function of the Group was outsourced to KPMG Management & Risk
Consulting Sdn Bhd, an independent professional services firm which reported
directly to the Audit Committee.

5.0 CORPORATE SOCIAL RESPONSIBILITY

Corporate Social Responsibility can be defined as continuing commitment by
business to behave ethically and contribute to economic development while
improving the quality of life of the workforce and their families as well as of the local
community and society at large. Meaning that, an organization or a business will not
only considering in making profit to maximize shareholder wealth but by taking into
consideration to maximize stakeholder wealth as a whole by providing economic
development to the community. It respects cultural differences and finds the
business opportunities in building the skills of employee and the community. By
implementing corporate social responsibility, some cost will be incurred by the
company that does not give back financial benefit to the company, but it can promote
positive social and environmental change. Corporate Social Responsibility is about
business giving back to society. Social responsibility becomes an integral part of the
wealth creation process which if managed properly should enhance the
competitiveness of business and maximize the value of wealth creation to society.
In Annual Report of 2013 and 2014, both of companies have voluntary
disclosure their Corporate Social Responsibility (CSR) on their annual report.

Eco World Development Group Berhad

During the financial year of 2013, no activities were conducted by the Group in
relation to Corporate Social Responsibility. However the Group has time to time
contributed to humanitarian causes through donations and sponsorship..
However Eco World Foundation was launched in September 2014 to fulfil the
companys responsibilities towards uplifting the lot of the less privileged members of
society. The Foundation serves as the charitable arm of Eco World with a focus on
helping underprivileged students along their quest for education through the Eco
World Student Aid Programme (SAP).
With an annual budget of RM5 million, the main objective of the SAP is to keep
disadvantaged students in school by providing for their educational requirements.
Currently, the programme caters to more than 3,000 primary, secondary and tertiary
students throughout Malaysia.
Other activities which will be undertaken as part of the programme include
annual UPSR Motivational Camps to prepare Standard 6 students for their
examinations. The Foundation will also organise annual UPSR Excellence Awards
Ceremony where top scorers, deserving teachers and outstanding schools are

recognised at a grand awards dinner. Students who do well in their UPSR

examinations are eligible to apply for continuation of support through to secondary
education and subsequently to tertiary level as well. The SAP includes 21 tertiary
students currently in local institutions of higher learning.

Glomac Berhad
In order to enhance corporate social responsibility to all their stakeholders the
following areas such as workplace, marketplace, community, and environment also
have been identified by Glomac Berhad. Various activities were organized by the
Group in both Financial Years, 2013 and 2014.
Annually, significant resources are invested by the Group in various training
programmes to meet the needs and requirements of workforce in various fields.
Comprehensive training and development courses focusing on quality leadership,
teamwork and effective performance are provided to employees at all levels to
further enhance their capabilities and knowledge.

Attention was given to the

professional and personal development of the employees as this is important for the
growth of the Group and as well as to the business. The employees also benefit from
comprehensive medical benefits including the provision of insurance coverage under
hospitalisation and surgical, group term life and personal accident. On May 2014,
Glomac Berhad had introduced Employee Share Scheme (ESS) for eligible
employees and directors as a way of appreciating and recognizing their contributions
towards the Group.
For the marketplace, Glomac Berhad maintains an active and open channel of
communication to ensure transparency of the Groups performance and position.
Their Executive Directors regularly reach out to engage with the investing community
via visits to project sites, small group meetings, luncheons and participating in road
shows and investor conferences. Every year, the Group holds an Annual General
Meeting followed by a media press conference to provide its shareholders with the
Groups financial performance and the latest corporate and property developments
of the Group.
Relationship with the communities was maintained by the Group to ensure
they actively involved in diverse community events. Several events were organized
in 2013 and 2014 to recognize and appreciate the customers, as well as uplift the
community with value added activities as follows:

1) Contribution to Rumah Aman

Glomac annually contributes to the Rumah Aman orphanage during the
month of Ramadhan. During this event, the children received sports attire,
gifts and green packets. Glomac also contributed RM1.55 million to Rumah
Aman. The contribution was handed over by Glomac Berhads Group
Executive Chairman, Tan Sri Dato Mohamed Mansor to the Founder of
Rumah Aman, Mr Rehman Dakri. In 2014, Glomac gave a second home to
Rumah Aman located at Sungai Buloh Country Resort and was known as
Rumah Aman 2. The new home allows them to house more than 80 children
compared to the first home that only can house about 30 childrens.
2) The Edge Bursa Malaysia Kuala Lumpur Rat Race
Glomac has been participating in this annual event for 12 consecutive years
as this is another platform for Glomac to help the less fortunate while at the
same time encouraging their employees to devote their personal time and
energy to a healthy and worthy cause.

3) The New Straits Times School Sponsorship Programme

Started from 2007 till 2013, Glomac was collaborated with The New Straits
Times Press Berhad in providing newspapers to the primary and secondary
schools within their township development of Bandar Saujana Utama, Sungai
Buloh namely Sekolah Kebangsaan Saujana Utama and Sekolah
Menengah Saujana Utama. The objective of this contribution is to improve
and empower the students command of the English language through regular
reading of one of the main newspapers in Malaysia.

4) Contribution to National Press Club Annual dinner and Permata Seni

Musical
Furthering its support of the national media and journalistic responsibility in
building stronger communities, Glomac contributed to Malam Wartawan
Malaysia 2013 and 2014 organised by the Malaysian Press Institute. Permata
Seni is an education programme aimed at developingthe artistic talents of
Malaysian children. The musical was organised to raise funds to be
channeled towards children in need worldwide.

5) Cooking Workshop and Family Day in Glomac Township

Cooking workshop was held in Bandar Saujana Utama and this full day event
was a collaborative effort with Celebrity Chef, Chef Liza to help Glomac build
and foster relationship with the residents. Family Day was held in Saujana
Rawang to show their appreciation and provide opportunities for Glomac staff
to interact with the residents.

6.0 ENVIROMENTAL ISSUES

Eco World Development Group Berhad and Glomac Berhad

have

successfully implemented all their activities related to the environmental issues as to

show they are concerned in preservation and conservation in environment. All their
activities are tabulate in the table below.

ECO WORLD GROUP BERHAD

The

EcoWorld

Green

Council

GLOMAC BERHAD
has Glomac has actively preserve the beauty

established an internal rating tool to of natural surroundings, promote lush

promote, inculcate and enforce practical, greenery within township environment
actionable and achievable green solutions and as well as utilise environmentally
which is required to be adopted across all friendly materials for the developments.
EcoWorld developments.
Environmentally friendly practices

Environmentally friendly practices

The Ecoworld Green Standard has been As one of the nations leading developers,
practice as follows:

the company seek to reduce their impact

on the environment by implemented

1. Passive design features - Local climate

several initiatives as follows:

conditions are taken into account in order

to

maintain

comfortable

indoor 1.

temperature.

Monitoring

and

reducing

carbon

footprint, waste, electricity consumption,

2. Maximisation of daylight into homes

emissions and environmental risk. Reuse

paper and recycle waste.

Homes are designed to let in light without

heat and glare.

2. Planting trees and building attractive

3. Water efficiency Rainwater harvesting

can

help

reduce

the

potable

water 3. Established a rain water harvesting

consumption.
4. Environmental protection Mature trees
are carefully identified in the new project
areas.

lake-front footpaths.

system for gardening and sewerage

purposes

in

developments.

one

of

their

township

5. Improving indoor environment qualityUsing low VOC paints and other certified
eco-friendly materials.

REFERENCES

C H Williams Talhar & Wong Sdn Bhd. (2015). Kuala Lumpur. Retrieved from
http://www.wtw.com.my/en/latest-release/market-report/market-report-2015.html
Rider Levett Bucknall. (2015). Kuala Lumpur. Retrieved from http://rlb.com/wpcontent/uploads/2015/01/malaysia-report-december-14.pdf
Soon, Ng Kim, Mohammed, Ali Abusalah Elmabrok, & Mostafa, Mousa Rahil. (2014).
Using Altman's Z-Score Model to Predict the Financial Hardship of Companies 81
Listed In the Trading Services Sector of Malaysian Stock Exchange. Australian
Journal of Basic and Applied Sciences, 8(6), 379-384.

Zeni, Syahida Binti Md, & Ameer, Rashid. (2010). Turnaround prediction of
distressed companies: evidence from Malaysia. Journal of Financial Reporting and
Accounting, 8(2), 143-159.

Shailer, Greg. An Introduction to Corporate Governance in Australia, Pearson

Education Australia, Sydney, 2004
Jump up ^ The Corporate Governance of Iconic Executives, 87 Notre Dame Law
Review 351 (2011), available at: http://ssrn.com/abstract=2040922
Jump up to: a b c d "OECD Principles of Corporate Governance, 2004". OECD.
Retrieved 2013-05-18.
The

Initiative

Defining

http://www.harvard.edu

Corporate

Social

Responsibility,retrieved

from

APPENDIX

ECO WORLD DEVELOPMENT BERHAD vs GLOMAC BERHAD

RATIO

ECO WORLD

GLOMAC

2013

2014

2013

2014

CURRENT ASSETS

186,533,538

379,462,065

940,756,537

988,557,536

CURRENT LIABILITIES

91,104,398

148,264,563

338,114,807

461,037,606

COGS

108,034,011

106,078,676

471,800,810

459,046,036

INVENTORY

39,570,490

49,561,521

94,763,251

89,859,369

AVERAGE INVENTORY

19,785,245

24,780,761

47,381,626

44,929,685

SALES

156,325,502

148,395,395

680,933,511

676,661,153

TOTAL ASSETS

489,229,331

686,856,296

1,596,153,770

1,711,864,812

AVERAGE TOTAL ASSETS

244,614,666

343,428,148

798,076,885

855,932,406

TOTAL DEBT

168,007,337

360,995,411

757,963,698

775,496,357

NET INCOME

24,267,813

7,178,010

108,257,310

112,888,223

EQUITY

321,221,994

325,860,885

838,190,072

936,368,455

INTERNAL COMPARISON
RATIO

ECO WORLD

DESCRIPTION

GLOMAC

2013

CURRENT ASSETS
CURRENT RATIO
CURRENT LIABILITIES
COGS
INVENTORY TURNOVER RATIO
AVERAGE INVENTORY
NET SALES
ASSET TURNOVER RATIO
AVERAGE TOTAL ASSETS
TOTAL DEBTS
DEBT RATIO
TOTAL ASSETS
NET INCOME
NET PROFIT MARGIN
SALES
NET INCOME
RETURN ON ASSETS
TOTAL ASSETS
NET INCOME
RETURN ON EQUITY
COMMON EQUITY

186,533,538
91,104,398
108,034,011
19,785,245
156325502
244614666
168,007,337
489,229,331
24,267,813
156,325,502
24,267,813
489,229,331
24,267,813
321,221,994

2014
379,462,065
148,264,563
106078676
24780761
148,395,395
343428148
360,995,411
686,856,296
7,178,010
148,395,395
7,178,010
686,856,296
7,178,010
325,860,885

2.05
5.46
0.64
0.34
0.16
0.05
0.08

2013
2.56
4.28
0.43
0.53
0.05
0.01
0.02

940,756,537
338,114,807
471800810
47381626
680,933,511
798076885
757,963,698
1,596,153,770
108,257,310
680,933,511
108,257,310
1,596,153,770
108,257,310
838,190,072

2.78
9.96
0.85
0.47
0.16
0.07
0.13

2014
988,557,536
461,037,606
459046036
44929685
676,661,153
855932406
775,496,357
1,711,864,812
112,888,223
676,661,153
112,888,223
1,711,864,812
112,888,223
936,368,455

2.14
10.22
0.79
0.45
0.17
0.07
0.12

EXTERNAL C0MPARISON
RATIO

CURRENT ASSETS
CURRENT LIABILITIES
COGS
INVENTORY TURNOVER RATIO
AVERAGE INVENTORY
NET SALES
ASSET TURNOVER RATIO
AVERAGE TOTAL SALES
TOTAL DEBTS
DEBT RATIO
TOTAL ASSETS
NET INCOME
NET PROFIT MARGIN
SALES
NET INCOME
RETURN ON ASSETS
TOTAL ASSETS
NET INCOME
RETURN ON EQUITY
COMMON EQUITY
CURRENT RATIO

ECO WORLD

DESCRIPTION

2013
186,533,538
91,104,398
108,034,011
19,785,245
156325502
244614666
168,007,337
489,229,331
24,267,813
156,325,502
24,267,813
489,229,331
24,267,813
321,221,994

AVERAGE

2014
2.05
5.46
0.64
0.34
0.16
0.05
0.08

379,462,065
148,264,563
106078676
24780761
148395395
343428148
360,995,411
686,856,296
7,178,010
148,395,395
7,178,010
686,856,296
7,178,010
325,860,885

2.56

2.30

4.28

4.87

0.43

0.54

0.53

0.43

0.05

0.10

0.01

0.03

0.02

0.05

GLOMAC
2013
940,756,537
338,114,807
471800810
47381626
680933511
798076885
757,963,698
1,596,153,770
108,257,310
680,933,511
108,257,310
1,596,153,770
108,257,310
838,190,072

AVERAGE

2014
2.78
9.96
0.85
0.47
0.16
0.07
0.13

988,557,536
461,037,606
459046036
44929685
676661153
855932406
775,496,357
1,711,864,812
112,888,223
676,661,153
112,888,223
1,711,864,812
112,888,223
936,368,455

2.14

2.46

10.22

10.09

0.79

0.82

0.45

0.46

0.17

0.16

0.07

0.07

0.12

0.12