AnnuAl RepoRt 2019 - Pantech...PANTECH CORPORATION SDN. BHD. (176321-P) Johor Bahru Head Office PTD 204334 Jalan Platinum Utama Kawasan Perindustrian Pasir Gudang Zon 12B 81700 Pasir

PANTECH CORPORATION SDN. BHD.(176321-P)

Johor Bahru Head OfficePTD 204334Jalan Platinum UtamaKawasan Perindustrian Pasir GudangZon 12B81700 Pasir GudangJohor Darul Takzim, MalaysiaTel: +607 259 7979Fax: + 607 256 7588/7589Email: [email protected]

Shah Alam Office & WarehouseNo. 3, Jalan Trompet 33/8Seksyen 33, 40400 Shah AlamSelangor Darul Ehsan, MalaysiaTel: +603 5192 7995Fax: +603 5192 7992Email: [email protected]

Port Klang Free Zone WarehousePersiaran Port Klang FZ 7, Jalan FZ 6-P1Port Klang Free Zone / KS 1242920 Pulau IndahSelangor Darul Ehsan, MalaysiaTel: +603 3101 3767Fax: +603 3101 4767Email: [email protected]

Pengerang WarehouseLot LO129, Kampung Bukit Gelugur81600 PengerangJohor Darul Takzim, MalaysiaTel: +607 826 5235Fax: +607 826 6237Email: [email protected]

PANTECH (KUANTAN) SDN. BHD.(191606-U)

Kuantan Sales Office & WarehouseLot 5, Jalan Industri Semambu 2Kawasan Perindustrian Semambu25350 KuantanPahang Darul Makmur, MalaysiaTel: +609 568 7550Fax: +609 568 7553Email: [email protected]

PANAFLO CONTROLS PTE. LTD.(200413822 D)

No. 7, Soon Lee Street#04-02 ISpaceSingapore 627608Tel: +65 6562 3048Fax: +65 6562 3148Email: [email protected]

PANTECH INTERNATIONAL (KSA)SDN. BHD. (890670-K)

PTD 204334Jalan Platinum UtamaKawasan Perindustrian Pasir GudangZon 12B81700 Pasir GudangJohor Darul Takzim, MalaysiaEmail: [email protected]

PANTECH STEEL INDUSTRIESSDN. BHD. (509731-A)

ManufacturerLot 13258 & 13259Jalan Haji Abdul Manan, Off Jalan Meru42200 KaparSelangor Darul Ehsan, MalaysiaTel: +603 3393 1633Fax: +603 3392 8966Email: [email protected]

PANTECH STAINLESS &ALLOY INDUSTRIES SDN. BHD.(733428-W)

ManufacturerPTD 204334Jalan Platinum UtamaKawasan Perindustrian Pasir GudangZon 12B81700 Pasir GudangJohor Darul Takzim, MalaysiaTel: +607 251 8888Fax:+607 251 9999Email: [email protected]

NAUTIC STEELS LIMITED,UNITED KINGDOM (02302004)

ManufacturerNautic House, Claymore,Tame Valley Industrial Estate,Tamworth, Staffordshire,England, B77 5DQTel: +44 (0)1827 281111Fax:+44 (0)1827 281444Email: [email protected]

PANTECH GALVANISING SDN. BHD.(1162100-W)

Hot-dip Galvanising PlantPLO 7, Jalan Rumbia 4Kawasan Perindustrian Tanjung Langsat81700 Pasir GudangJohor Darul Takzim, MalaysiaTel: +607 257 5800Fax: +607 257 5888Email: [email protected]

AnnuAl RepoRt 2 0 1 9

Financial Highlights 02

Corporate Information 03

Group Structure 04

Directors’ Profile 05

Key Senior Management Profile 08

Executive Chairman’s Statement 09

Management Discussion and Analysis 11

Sustainability Statement 14

Corporate Event 27

Audit Committee Report 28

Statement on Risk Management and Internal Control 32

Corporate Governance Overview Statement 35

Additional Compliance Statement 44

Financial Statements 46

List of Properties 162

Notice of Thirteenth Annual General Meeting 163

Analysis of Shareholdings 168

Analysis of Warrant Holdings 171

Proxy Form

CONTENTS

02

Pantech Group Holdings Berhad (733607-W)ANNUAL REPORT 2019

FINANCIALHIGHLIGHTS

609,

215

525,

772

513,

293

479,

349

614,

771

1918171615 19

REVENUERM’000

PROFIT AFTER TAXATIONRM’000

47,4

58

43,1

52

37,9

45

18171615

28,4

09

45,6

80

6.40

1918171615 1918171615

EARNING PER SHARESEN

SHAREHOLDERS’ EQUITYRM’000

586,

450

467,

405

509,

297

6.09

5.19

4.03

6.36

524,

401

553,

454

Total net dividend declared for FY2019 is

RM14.97 million,representing

31.5% of our PAT

NTA stands at

RM585.26 milliontranslating to a

NTA/share of RM0.79

FYE28 Feb 2015

FYE29 Feb 2016

FYE28 Feb 2017

FYE28 Feb 2018

FYE28 Feb 2019

Revenue 525,772 513,293 479,349 614,771 609,215

EBITDA 81,352 75,240 59,409 83,284 87,161

Profit Before Tax 58,702 53,076 39,096 58,133 60,792

Profit After Tax 43,152 37,945 28,409 45,680 47,458

Profit Attributable to Shareholders 43,152 37,973 29,718 47,127 47,458

Paid-Up Capital 120,597 123,294 203,929 207,544 208,298

Shareholders’ Equity 467,405 509,297 524,401 553,454 586,450

Total Assets 747,369 720,307 791,318 790,776 891,685

Total Net Tangible Assets 466,041 508,015 523,188 552,256 585,260

Total Borrowings 215,000 159,665 163,889 176,571 243,738

Basic Earnings Per Share (sen) 6.09 5.19 4.03 6.36 6.40

Diluted Earnings Per Share (sen) 5.73 5.19 3.79 6.08 6.32

Total Net Dividend Declared 22,546 16,528 12,069 18,574 14,970

Net Dividend Per Share (sen) 3.76 2.70 1.80 2.50 2.01

Net Tangible Assets Per Share (RM) 0.77 0.82 0.71 0.74 0.79

03


CORPORATEINFORMATION

BOARD OF DIRECTORS

Dato’ Chew Ting LengExecutive Chairman / Group Managing Director

Dato’ Goh Teoh KeanGroup Deputy Managing Director

Mr. Tan Ang AngExecutive Director

Mr. To Tai WaiExecutive Director

Ms. Ng Lee LeeExecutive Director

Mr. Lim Yoong XaoIndependent Non-Executive Director

Dato’ Sri Yap Tian LeongIndependent Non-Executive Director

Puan Nooraini Binti Mohd YasinIndependent Non-Executive Director

Puan Sakinah Binti SallehNon-Independent Non-Executive Director

AUDIT COMMITTEE

ChairmanMr. Lim Yoong Xao

MembersDato’ Sri Yap Tian Leong Puan Nooraini Binti Mohd Yasin

REMUNERATION COMMITTEE

ChairmanPuan Nooraini Binti Mohd Yasin

MembersDato’ Sri Yap Tian Leong Mr. Lim Yoong Xao

NOMINATING COMMITTEE

ChairmanDato’ Sri Yap Tian Leong

Members Mr. Lim Yoong Xao Puan Nooraini Binti Mohd Yasin

COMPANY SECRETARIES

Ms. Siew Suet Wei(MAICSA NO.: 7011254)

Ms. Liang Siew Ching(MAICSA NO.: 7000168)

REGISTERED OFFICE

No. 5-9A The Boulevard OfficesMid Valley CityLingkaran Syed Putra59200 Kuala LumpurTel No.: 03-2282 6331Fax No.: 03-2201 9331

SHARE REGISTRAR

Tricor Investor & Issuing House Services Sdn Bhd(Company No.: 11324-H)

Unit 32-01, Level 32, Tower A,Vertical Business SuiteAvenue 3, Bangsar SouthNo.8, Jalan Kerinchi 59200 Kuala Lumpur Tel No.: 03-2783 9299Fax No. : 03-2783 9222

PRINCIPAL BANKERS

Alliance Bank Malaysia Berhad

Alliance Islamic Bank Berhad

AmBank (M) Berhad

AmBank Islamic Berhad

CIMB Islamic Bank Berhad

Citibank Berhad

Hong Leong Bank Berhad

Hong Leong Islamic Bank Berhad

HSBC Amanah Malaysia Berhad

HSBC Bank Malaysia Berhad

HSBC Bank Plc

OCBC Bank (Malaysia) Berhad

The Bank of Nova Scotia Berhad

United Overseas Bank Limited

United Overseas Bank (Malaysia) Berhad

SOLICITORS

Ng Kee Chong & Company

AUDITORS

Messrs Grant Thornton Malaysia(Member of Grant Thornton International Ltd)Chartered Accountants Suite 28.01, 28th Floor, Menara ZurichNo. 15, Jalan Dato’ Abdullah Tahir80300 Johor Bahru

STOCK EXCHANGE LISTING

Main MarketBursa Malaysia Securities Berhad

STOCK CODE

5125

04


GROUPSTRUCTURE

PANTECH (KUANTAN) SDN. BHD.

TUAH NUSA SDN. BHD.

100%

40%

PANTECH REALTY SDN. BHD. 100%

NAUTIC STEELS LIMITED100%

100% PANTECH CORPORATION SDN. BHD.

100% PANTECH STEEL INDUSTRIES SDN. BHD.

100% PANTECH STAINLESS & ALLOY INDUSTRIES SDN. BHD.

100% PANAFLO CONTROLS PTE. LTD.

100% NAUTIC STEELS (HOLDINGS) LIMITED

100% PANTECH GALVANISING SDN. BHD.

100% PANTECH INTERNATIONAL (KSA) SDN. BHD.

100% NAUTIC STEELS SDN. BHD.

05


DIRECTORS’PROFILE

DATO’ CHEW TING LENGExecutive Chairman / Group Managing Director(Aged 64, Male, Malaysian)

Dato’ Chew Ting Leng is one of the co-founders of the Group. He has more than 30 years of experience in the Pipes, Valves and Fittings (“PVF”) solutions industries. He was appointed as Group Managing Director and Executive Chairman of Pantech Group Holdings Berhad on 11 November 2006 and 13 November 2006 respectively.

He does not hold any directorship in any other public companies.

He has no conflict of interest with the Group and has not been convicted for offences within the past five years. There were no sanctions and/or penalties imposed on him by any regulatory body during the financial year.

DATO’ GOH TEOH KEANGroup Deputy Managing Director(Aged 63, Male, Malaysian)

Dato’ Goh Teoh Kean graduated with Diploma in Commerce (Financial Accounting) from Tunku Abdul Rahman College.

He has more than 20 years of experience in the PVF solutions industry. He is one of the co-founders of the Group and was appointed as the Group Deputy Managing Director on 11 November 2006. He is responsible for the financial functions of the Group.



TAN ANG ANGExecutive Director(Aged 63, Male, Malaysian)

Mr. Adrian Tan was appointed as the Executive Director on 11 November 2006. He is responsible for the overall operation and performance of the Group’s manufacturing business and is also the Managing Director of Pantech Steel Industries Sdn. Bhd., Pantech Stainless & Alloy Industries Sdn. Bhd. and Nautic Steels Limited. He obtained his professional Diploma from the Chartered Institute of Marketing in 1989.



06


Directors’ Profile (cont’d)

TO TAI WAIExecutive Director(Aged 48, Male, Malaysian)

Mr. David To was appointed as the Executive Director on 11 November 2006. He started his career in Pantech Corporation Sdn. Bhd. since 1989 and has more than 25 years of experience in the PVF solution industries. He is primarily responsible for the domestic, international and project sales activities of the Group’s trading division and trading operation in Malaysia.



NG LEE LEEExecutive Director(Aged 52, Female, Malaysian)

Ms. Ng Lee Lee was appointed as the Executive Director on 8 May 2013. She started her career in Pantech Corporation Sdn. Bhd. since 1990. She is primarily responsible for the human resources, administration and project sales division.

She does not hold any directorship in any other public companies.

She has no conflict of interest with the Group and has not been convicted for offences within the past five years. There were no sanctions and/or penalties imposed on her by any regulatory body during the financial year.

SAKINAH BINTI SALLEHNon-Independent Non-Executive Director (Aged 50, Female, Malaysian)

Pn. Sakinah Binti Sal leh was appointed as Non-Independent Non-Executive Director on 21 July 2016. She graduated from Mara University of Technology (UITM) with Bachelor (Hons) in Accountancy. She is a Chartered Accountant and a member of Malaysian Institute of Accountants (MIA) since 2002. She has a Master of Business Administration (MBA) from University of Georgia (UNIES/University Institute for International and European Studies) from Kerkrade, Nertherlands.

She joined Koperasi Permodalan Felda Malaysia Berhad (“KPF”) as a Manager, Accountant & Investment from August 2000 to 2004. Subsequently, she was promoted to General Manager, Investment & Finance, KPF from January 2004 to 2010 and Deputy Chief Executive Officer, KPF from January 2010 to 2014.

She was Acting Chief Executive Officer in January 2014. She was promoted to Chief Executive Officer & Group Senior Executive Director since November 2014 until to-date.



LIM YOONG XAOIndependent Non-Executive Director(Aged 44, Male, Malaysian)

Mr. Lim Yoong Xao was appointed as an Independent Non-Executive Director on 26 July 2017. He completed his Bachelor of Commerce in Accounting from University of Otago, New Zealand in 1996. He is a Chartered Accountant of the Malaysian Institute of Accountants. He is also a member of Chartered Global Management Accountant (AICPA) and Associate Chartered Management Accountant (CIMA), UK.

Mr. Lim Yoong Xao started his career as a Cost Accountant in 2002 with Monsanto (Malaysia) Sdn Bhd and later held various managerial positions in multi-national companies between 2007 to 2012. From 2013 until 2017, he was a Director/SEA Regional Finance Manager of United Creation Packaging Solutions, South East Asia Division. From 2017 until present, he is the Asia Financial Controller of Samtec Asia Pacific (M) Sdn Bhd.

He is the Chairman of the Audit Committee and a member of both the Nominating and Remuneration Committees. He does not hold any directorship in any other public companies.


07


Directors’ Profile (cont’d)

DATO’ SRI YAP TIAN LEONGIndependent Non-Executive Director(Aged 60, Male, Malaysian)

Dato’ Sri Yap Tian Leong was appointed as an Independent Non-Executive Director on 26 July 2017. He is a member of the Malaysian Association of Company Secretaries, Institute of Company Secretaries Malaysia, Al l iance of Approved Companies Secretaries, and Malaysian Association of Accounting Technicians.

Dato’ Sri Yap Tian Leong is currently the Group Managing Partner of MM Group of Companies.

He is the Chairman of the Nominating Committee and a member of both the Audit and Remuneration Committees.



NOORAINI BINTI MOHD YASINIndependent Non-Executive Director(Aged 60, Female, Malaysian)

Puan Nooraini Binti Mohd Yasin was appointed as an Independent Non-Executive Director on 26 July 2017. She graduated from University of Buckingham, UK, with a BSc (Econs), Accounting and Financial Management degree.

Puan Nooraini gained experience in banking and journalism before moving into stockbroking with JB Securities Sdn Bhd where she was promoted to head the Research Department in the 90’s. She holds a remisier’s license and that of Certified Financial Planner with the Financial Planning Association of Malayisa (FPAM).

Puan Nooraini founded Sri Ara Private and International Schools and is Chairman of the Board of Governors. She served as President of Non-Governmental Organisation, Soroptimist International Club of Johor Baru and is Charter President of Soroptimist International Club of Iskandar Puteri. She also serves as the Member Development Convenor on the Executive Committee of Soroptimist International Region of Malaysia.

She is the Chairperson of the Remunerat ion Commit tee and a member of both the Audit and Nominating Committees.



OTHER INFORMATION:-

Directors’ Shareholdings

Details of Directors’ Shareholdings in the Company are as disclosed on page 169 of the Annual Report 2019.

Family relationship with Directors and/or Major Shareholders

Dato’ Chew Ting Leng and his spouse, Datin Shum Kah Lin are major shareholders of Pantech Group Holdings Berhad (“PGHB”) by virtue of their substantial shareholdings in CTL Capital Holding Sdn. Bhd. pursuant to Section 8 of the Companies Act 2016.

Dato’ Goh Teoh Kean and his spouse, Datin Lee Sock Kee are major shareholders of PGHB by virtue of their substantial shareholdings in GL Management Agency Sdn. Bhd. pursuant to Section 8 of the Companies Act 2016.

Conflict of Interest

All Directors have no family relationship with each other or major shareholders of PGHB. They have no conflict of interest in PGHB.

Attendance at Board Meetings

The attendance of the Directors is disclosed in the Corporate Governance Overview Statement on page 39 of this Annual Report 2019.

08


KEY SENIORMANAGEMENT PROFILE

DATO’ CHEW TING LENGExecutive Chairman / Group Managing Director(Aged 64, Male, Malaysian)

Please refer to his Director’s Profile appearing in Page 05 of this Annual Report 2019.

DATO’ GOH TEOH KEANGroup Deputy Managing Director(Aged 63, Male, Malaysian)


TAN ANG ANGExecutive Director(Aged 63, Male, Malaysian)


TO TAI WAIExecutive Director(Aged 48, Male, Malaysian)


NG LEE LEEExecutive Director(Aged 52, Female, Malaysian)

Please refer to her Director’s Profile appearing in Page 06 of this Annual Report 2019.

WANG WOON CHINChief Financial Officer(Aged 44, Male, Malaysian)

Mr. Wang Woon Chin is the Chief Financial Officer of the Group. He graduated in 1996 from University of Otago, New Zealand with a Bachelor of Commerce (Accounting) degree. He is a Chartered Accountant of the Malaysian Institute of Accountants (MIA) and a Fellow Chartered Certified Accountant (FCCA).

He has many years of experience in the field of audit, finance, accounting, taxat ion and human resource management before he joined the Group. He joined Pantech Group in February 2006 as Group Finance Manager and was promoted to Chief Financial Officer effective 1 August 2013. He is currently responsible for the finance and accounts function of the Group.

He does not hold any directorship in any other public listed companies.

He does not have any fami ly relationship with any Director and/or major shareholder of the Company and does not have any conflict of interest with the Company. He has not been convicted for offences within the past five years. There were no sanctions and/or penalties imposed on him by any regulatory body during the financial year.

EXECUTIVE CHAIRMAN’S STATEMENT

Dear Shareholders,

Oil prices in the past financial year have been stable, albeit with a slump towards the end of the calendar year 2018 due to surplus, hovering above the USD60 per barrel mark. The Organisation of Petroleum Exporting Countries (OPEC) and its crude-producing allies have formed a ‘cartel’ known as OPEC+ and they have effectively continued the suppression of production volume by 1.2 million barrel per day. In place since January 2019 and expected to last through June 2019, this in turn has led to wider oil and gas industry recovery. At the same time, OPEC+ does not appear to be in a hurry to extend or discontinue this cut as yet.

10


Executive Chairman’s Statement (cont’d)

Hovering over this stabilising crude prices is the trade war between the United States and China. Barbs and firm stands between two of the world’s superpowers are causing uncertainties. Whilst some reports see it as opportunity of growth for Southeast Asian economies as Chinese companies seek calmer havens as production bases, others highlighted that these same emerging economies will be most affected. Among these is Malaysia which is one of the top countries that will be most affected by the US tariffs on Chinese goods via supply chain. It is critical to remain vigilant against this development that will have a far-reaching impact.

Hence, I laud the collective vision shared by our leaders, the commitment of our people, and the trust given by our stakeholders to Pantech Group to weather the storm and navigate ourselves to clearer skies. The journey is far from simple but we have proven that together we are able to persevere and emerge stronger in particular after receiving the notice of the preliminary affirmative anti-circumvention determination from the US Department of Commerce on carbon steel bautt-weld pipe fittings from Malaysia.

It is on such a note that I am well pleased to announce Pantech Group’s maintained in the green for the period under review ended 28 February 2019. Our outlook for medium and long-term prospects look to be positive. Meanwhile, we anticipate the short-term to be neutral due to taking a prudent approach from market uncertainties arising from trade disputes among global superpowers.

For the financial year 2019 Pantech Group reaped a profit before tax (PBT) of RM60.79 million on the back of RM609.21 million revenue. In terms of year-on-year performance, PBT expanded by 4.6% with a slight slide of 0.9% in revenue. This is highly commendable considering the circumstances of the US Department of Commerce on preliminary affirmative anti-circumvention determination.

The Trading division charted higher growth to record better revenue while the manufacturing division felt the effects of the suspension of shipments to the United States. The Trading division returned a 11.2% increase in revenue whereas the Manufacturing division saw a 16.7% decline.

While the Manufacturing division was affected by the affirmative action, overall the Group still delivered a creditable performance courtesy of the RAPID project in Pengerang. Having premises strategically located near the site allows Pantech to be first responders with fast turnaround time to cater to the projects’ needs. The Group’s head office which is consolidated with manufacturing and warehousing facilities sits just 80 kilometres from RAPID.

Pantech Group’s balance sheet remains healthy with gearing standing at 0.42. Short term borrowings were put to use to support the working capital requirements arising from manufacturing capacity expansion as well as enlargement of inventory range. The latter resulted in inventory held rising by RM80 million in value over the preceding year. Stocking over 30,000 types of products, Pantech’s value proposition as a One-Stop Centre for pipes, valves and fittings (PVF) is perpetuated.

Efforts to further streamline operations to increase capacity by up to 10% in the coming period and minimise bottlenecks while expanding warehousing capacity has seen a total

of approximately RM29.75 million investment in the past financial year. We are looking to expand our product range for stainless steel fittings with additional capital allotment in the coming financial period even as a new warehouse is being commissioned on the 7-acre land bank across from our head office in Zone 12B in Pasir Gudang to improve warehouse management and storage capacity.

Our home base of Malaysia remains the Group’s core market, even though Pantech Group has product presence in 69 countries.

In line with a resilient performance, we are once again on track to share the spoils with loyal shareholders. Upon shareholder approval at the 13th Annual General Meeting, the total dividend payout will be about RM14.97 million, or 31.50% of after tax profit (PAT).

CORPORATE GOVERNANCE

Pantech Group is steadfast in its adoption of corporate governance best practices and ethics in approach to operations. We balance shareholder interest with prudence and in doing so, also uphold our integrity and core values of conducting ourselves appropriately for transactions and dealings regardless of economic pressures. Pantech will resolutely safeguard the goodwill and trust earned from our track record throughout the years as we understand its value.

Our corporate governance overview statement are on pages 35 to 43.

ACKNOWLEDGEMENT

Once again, I salute the directors for their mindfulness, to the management for their perceptiveness, to the team for their commitment, to shareholders for their trust and most of all, to our customers who have given us their unwavering trust. Pantech Group is built on cohesiveness and unity, and we appreciate the roles all our stakeholders play in ensuring we remain competitive in the industry.

We are humbled by the faith and trust shown in us especially when situations arose; it has reinforced our commitment on integrity and transparency as we strive to deliver the best solutions to our customers. We hold ourselves accountable to provide the best possible products and adhere to the tightest of standards demanded. Our goal is to create increasing shared value for all stakeholders.

While there are silver linings on the road ahead with our facilities for stainless steel pipes and fittings and galvanising firing on all cylinders as well as improved warehousing and trading activities, we are cognisant of the need to be unwavering in our disciplined approach. The plans and strategy undertaken have seen us through a tumultuous second half of FY2019 but we remain vigilant in evaluating all potential ventures and opportunities. Grounded in prudence, we are steadfast in ensuring that we continue to be resilient to deliver values.

Dato’ Chew Ting Leng (Jimmy)Executive Chairman

11


MANAGEMENT DISCUSSIONAND ANALYSIS

The financial year under review (FY2019) of 1 March 2018 to 28 February 2019 saw stabilisation of oil prices, uplifting the entire oil and gas industry in the process. Downstream activities have also seen a pick-up in pace. Albeit FY2019 also threw Pantech Group curve balls as our integrity and transparency resulted in unexpected repercussions that we have since overcome. Overall, we came out stronger of the situations that tested our mettle. The outcome places Pantech Group in a strengthened position and reinforced our resolve to rise above situations in the future and consistently return positive performance and create shared value for stakeholders.

BUSINESS AND OPERATIONS

Pantech Group has forged a reputation for our unassailable value proposition as a One-Stop Centre for pipes, valves and fittings (PVF). In addition to PVF, we also manufacture and trade other components for the oil and gas industry, supplemented by project management consultancy for fluid transmission solutions.

FY2019 was a period of turning on valves to channel the flow of capacity building undertaken in FY2018. At the same time, new customers and projects complemented close relationships fashioned over the years delivered orders that translated into revenue.

The Group’s performance closely mirrors the developments in the oil and gas industry as a whole. Performance shifts based on sector and is dependent on the robustness of oil and gas projects rather than seasonal or cyclical factors.

The business and operations of Pantech Group are conducted through two parallel but interdependent core divisions:

Trading Division

Pantech Group’s Trading division plays a crucial role in meeting demands of customers in oil and gas, gas reticulation, marine, onshore and offshore heavy engineering, power generation, petrochemicals, palm oil refining, and other related industries which are predominantly located in Malaysia. The Trading division is a recognised and approved supplier of high pressure seamless and specialised steel pipes, valves, fittings, flanges and other fluid transmission related products for these named industries.

With a wide-ranging inventory of over 30,000 stock keeping units (SKU), Pantech is also a distributor for reputable vendors across the globe. Our own manufacturing division also produces items that are traded through this sister division. To ensure a healthy and optimum level of stock to service customer requirements with efficient turnaround time, a systematic warehouse management is employed.

Such a system is critical as our warehouses are strategically located in five locations, which are in a free trade zone or near ports or close to customer sites. In FY2019, we expanded on this warehousing capacity by developing the 7-acre land bank adjacent to our fully-developed 26-acre land which houses a consolidated trading, manufacturing

and corporate administration office. As at 28 February 2019, we have utilized 80% of the allocated RM15 million for this purpose on this land bank which was held by Pantech Group since 2013 to turn it into a functioning warehouse. This expansion helped solve the warehousing bottleneck and will heighten the Group’s warehousing capabilities as it enhances our ability to hold better product mix.

Planning with foresight has enabled Pantech Group to meet the demanding turnaround especially in supplying to projects in Pengerang, Johor. Coupled with new orders from local oil and gas, petrochemical as well as power industries, we have managed to chart good trading returns. This is also no less attributable to the Pantech brand which has become synonymous with dependability for reliable delivery and quality. Our reputation is constantly enhanced through every project that we are involved in, and has made us the go-to PVF provider for large fabricators and multinational companies operating in Malaysia.

Marketing activities that included participation in international related exhibitions have helped further elevate the Pantech brand name while generating new leads. Among the select events in key locales that had Pantech as an exhibitor were Offshore Technology Conference Asia (OTC) 2018 organised by Society of Petroleum Engineers, Tube Düsseldorf 2018 (International Trade Fair for Tube and Pipe), The 6th International Construction, Power & Mining Exhibition, Offshore South East Asia Conference and Exhibition (OSEA 2018), and Abu Dhabi International Petroleum Exhibition & Conference 2018.

In FY2019, sales in the Trading division recorded a year-on-year increase of approximately 11%, as orders from RAPID continued and new orders from local oil and gas industries flowed in. This increase raised the contribution of the Trading division to the total Group revenue from 57% in FY2018 to 64% this financial year.

Manufacturing Division

With a total of approximately 87,000 square metres of factory floor space dotted in four locations, Pantech Group’s Manufacturing division produces standard and customised ranges of pipes and fittings of diverse materials such as carbon steel, stainless steel, nickel alloys, duplex and other alloys. Pantech Group’s Manufacturing division also has a specialised facility to produce galvanised products. All the items produced by the Manufacturing division, including elbows, tees, reducers, stub ends and end-caps, comply with international standards.

Following the ramping up of capacity at Pantech Stainless & Alloy Industries Sdn Bhd (PSA) in FY2018, the output of this manufacturing facility that focuses on stainless steel pipes and fittings is now at 90% with an annual production of 16,500 metric tonnes this financial year. Additional new machines installed in December 2018 have further improved production efficiency while increasing the range of fittings and sizes. The capacity impact of this deployment is expected to be experienced in the next financial year.

12


Another manufacturing plant, operated under Pantech Galvanising Sdn Bhd owns the largest hot-dip galvanising bath in Southern Peninsular Malaysia. With the output increasing from 50% last financial year to 65% in FY2019, the performance of this plant has turned black. This performance of profitability within three years of its inception was in line with expectations and contributed positively to Pantech Group; and it is expected to progress as anticipated going forward.

The activities at the carbon steel fittings manufacturing plant slowed down tremendously in the second half of FY2019 following an affirmative determination in the anti-circumvention inquiry on the anti-dumping duty order on certain carbon steel butt-weld fittings from Malaysia by the United States Department of Commerce. Pantech Steel Industries Sdn Bhd (PSI) has faithfully and transparently complied with all documentations and review of our carbon steel fittings exported to the United States and has never intentionally circumvented the anti-dumping duty order concerning China. Our products bear the stamp of Made in Malaysia and should be classified as originating in Malaysia. Whilst PSI’s legal counsel in the United States is taking all possible legal steps to reverse the preliminary determination, we have prudently reduced the production output at the plant from 90% to 30%.

Meanwhile, operations at Nautic Steels Limited (Nautic) is producing at 65% of the 800 metric tonnes annual capacity, and its performance has stabilised.

With an established track record built since 1987, Pantech products can today be found in 69 countries. Nevertheless, a patriotic Pantech Group continues to put confidence in its home market and it has been reciprocated with a contribution that amounted to approximately 67% of Group revenue.

FINANCIAL RESULTS & CONDITIONS

Pantech Group’s reaped tangible results from its strategy and resilience in a testing FY2019. The positive performance achieved is a reflection of the Group’s foresight, discipline, tenacity and concerted effort establish and maintain healthy business relationships with customers alongside its planned expansion.

Pantech Group closed FY2019 with 4.6% increase in profit before tax (PBT) to RM60.79 million compared to the preceding year, in spite of a slight year-on-year drop in revenue to RM609.21 million from RM614.77 million. Improvement in PBT also translated to better PBT margin, rising 0.52% to 9.98% over the previous financial period. This performance correlates to the upturn in the oil and gas industry, which accounts for the lion’s share (60%) of Pantech Group's revenue over the past few years.

In a highly regulated business such as Pantech's, the foresight to anticipate the right product mix is crucial. Pantech Group’s long-established history, experience and knowledge of the oil and gas industry have held us in good stead in this aspect.

Delving into the segments, the Trading division saw better revenue and segment profit before finance costs and interest income (“segment profit”) in the year under review. FY2019 revenue increased by RM39.13 million to RM387.10 million, or 11.24% increase while segment profit grew to RM52.93 million. Concurrently, segment profit margin saw an improvement as well from 12.65% to 13.67%. This performance can be credited to better sales demand and delivery to local oil and gas as well as new projects.

Performance of the Manufacturing division took a considerable dip, falling to RM222.11 million from RM266.80 million and segment profit margin sliding slightly to 9.31% from 10.29%. The slump can be attributed primarily to the substantial depressed sales contribution from the carbon steel manufacturing plant due to suspension of shipments to the United States arising from the preliminary affirmative anti-circumvention determination on Malaysia by the United States Department of Commerce. Pantech is seeking legal recourse on this to rectify the issue at hand. However, the void created pursuant to the determination by the United States Department of Commerce was covered by the improved performance of the stainless steel pipes and fittings manufacturing and galvanising activities as well as the Trading division.

In line with our One-Stop Centre positioning, the Group holds an extensive inventory, and this was valued at RM356.27 million as at 28 February 2019. This value was just over RM80 million more than the same period last year, translating to an increase of 29.04% in inventory. The inventory holding underscores the Group’s mindfulness in evaluating and expanding the range of product mix to be available on demand, to best serve customers with minimal turnaround.

As at the end of FY2019, cash flow stood at RM49.04 million, a RM21.18 million decrease from FY2018 due to the slower business activities at the manufacturing front. With financial prudence, we tap financial facilities to fund expansion for growth while balancing well to maintain a healthy gearing.

Strong performance and stringent fiduciary management allowed Pantech Group to continue sharing earned profits with loyal shareholders. The Group paid out the following dividends for FY2019:

• First interimsingletierdividendof0.5senpershare paid on 18 January 2019 with total payout amounting to approximately RM3.70 million;

• Secondinterimdividendof0.51senassharedividend via distribution of treasury shares on the basis of 1 treasury share per 100 ordinary shares held was distributed on 12 April 2019 with total payout amounting to approximately RM3.78 million;

A third and final single tier dividend of 1.00 sen per share has been proposed by the Board and will be tabled to shareholders during the 13th Annual General Meeting. If approved, the total dividend payout for FY2019 will be RM14.97 million, or 31.50% of profit after tax (PAT).

Management Discussion and Analysis (cont’d)

13


CHALLENGES

As a supplier to the oil and gas industry, fluctuations in oil prices have an impact on our business. Typically, the industry errs on the side of caution, in spite of price stabilisation, better outlook and more projects coming online.

Trade tensions around the world lean towards a protectionist one, and this in turn poses major challenges to our export business to the United States. As at time of writing, PSI continues to suspend shipment of carbon steel butt-weld fittings to the United States pending outcome of the legal recourse following the United States Department of Commerce's preliminary affirmative anti-circumvention determination on Malaysia. Regardless of the outcome of our legal appeal, this situation has proven that Pantech can rise stronger as a group that can face headwinds without buckling.

TREND AND OUTLOOK

The oil and gas industry is projected to remain relatively stable in 2019. At present, crude brent is trading around the USD60 per barrel range, but has been forecast to increase to average USD67 per barrel by US Energy Information Administration. The coming together of Organisation of Petroleum Exporting Countries (OPEC) plus several non-OPEC countries have formed a super cartel (OPEC+) that is poised to be able to suppress supply and rebalance the effects of Trumponomics, and expectations are that demand will rise within the year.

The tentacles of the ongoing US-China trade war have penetrated industries in our nation as demonstrated by the preliminary affirmative anti-circumvention determination concerning carbon steel butt-weld pipe fittings from Malaysia. International pundits have given mixed commentaries with some believing that the US will not escalate trade tensions further as US consumers will bear the brunt of new tariff hikes. However, it remains uncertain with no clear possible resolution at current stage. This sends shivers of caution across emerging markets.

On local shores, a stable labour market is feeling private consumption which in turn, is driving the economy. As a result, the World Bank has maintained Malaysia’s gross domestic product (GDP) growth at 4.7%.

Closer to Pantech Group’s home, the Pengerang Refining and Petrochemical (PRefChem), a strategic venture between Petronas and Saudi Aramco, has reached 96% mechanical completion. Its operations have commenced with the firing up of the complex’s crude distillation unit. Commercial operations are anticipated to begin in earnest towards the tail end of 2019.

With a stable economy and barring unforeseen shockwaves, domestic orders will continue to be the principal revenue contributor for Pantech, in particular the continued flow of maintenance contracts. At present, maintenance contributes roughly 40% to Pantech Group’s revenue from the oil and gas sector. Maintenance works are essentially perpetual as they are critical in ensuring safety and optimal operations in this industry.

In other developments, Petronas has once again increased its capex allocation for the year to RM50 billion, predominantly for upstream segment, including under-development green fields and recent discoveries. Pantech Group anticipates to be a beneficiary of this development as we are on the list of international vendors for specified items for Petronas and can supply PVF and other components which we manufacture and trade for their offshore fabrication works locally. Pantech is the only locally owned pipe supplier under the “Petronas Global Framework Agreement”.

The experiences of recovering from unexpected situations have tempered Pantech Group with a refining fire that proved the veracity of our strategy. We will rise stronger to expand on existing business and continue to seek growth opportunities by enhancing our internal production capacity and range. We are optimistic on the long term prospects of the economy and as a One-Stop Centre of pipes, valves and fittings, we are buoyant of the business as these items have no substitute and cannot be compromised for industries involved in gas and fluid transmission.

Management Discussion and Analysis (cont’d)

14


SUSTAINAbILITY STATEMENT

We do not inherit the earth from our ancestors; we borrow it from our children.

Native American Saying

Our Sustainability Context

This is the first detailed Sustainability Statement from our organization in line with the BURSA listing requirements. Pantech Group has made every effort to produce a statement that is balanced and truthful and that reflects the importance that Sustainability holds for the organization. We acknowledge that there is still much room for improvement both in our sustainability efforts and in the way we report on it.

Pantech Group strongly believes in being an organization that creates value for its Stakeholders in a responsible and socially acceptable manner. This includes integrating Sustainability into our culture and in all aspects of our business. Our view of Sustainability is to operate our business in such a way that it will not impede future generations and their ability to have the quality of life they need and deserve.

Pantech Group considers all forms of Sustainability, namely Environmental, Economic and Social, are equally important and is dedicated to find the right balance between the three aspects to create the optimum value for the organization and all its stakeholders.

Scope of the Statement

The scope of this Sustainability Statement comprises of the business entities and operations of Pantech Group within Malaysia.

The group structure of Pantech Group in Malaysia can be found on page 04 of the Annual report 2019.

15


Pantech Group and the UN Sustainable Development Goals

Pantech Group realizes that it is not an isolated business but also part of society as a whole and therefore needs to contribute to society where it can. In this respect, the United Nations Sustainable Development Goals (“SDGs”) are of special interest to Pantech Group. The SDGs are global goals that were agreed upon in 2015 which are aimed to be achieved by 2030. The SDGs apply to both government and businesses and only by working closely together on all levels of society will the SDGs have any chance to be achieved.

Pantech Group aspires to be a socially responsible organization. We understand that true sustainability does not end at the gates of our facility but needs to be addressed on every level, be it local, national or international level. As such, Pantech Group wants to contribute in achieving the SDGs wherever it is possible and applicable.

Whilst it is a challenge to operationalize all 17 SDGs, Pantech Group has identified a number of SDGs in which the Group believes that it can contributes positively and make significant impact:

ECONOMIC Pantech Group is aware that its products are based on finite natural resources. This awareness leads to a special focus on reduction of waste of raw materials in the production processes and the highest possible level of recycling.

ENVIRONMENT Pantech Group makes every effort to avoid polluting any water that leaves the facilities.

Reduces energy and water consumption wherever possible.

Investment in place in reducing greenhouse gas emissions to a minimum where possible.

Sustainability Statement (cont’d)

16


SOCIAL The health, safety and well-being of employees are Pantech Group’s primary focus. Besides providing a safety working environment, Pantech also provide adequate medical benefits to all employees. Additionally, Pantech Group makes every effort to avoid any health hazards for the community living near our facilities.

Promote further education amongst its employees by offering on the job training and by stimulating staff to enrol in training programs.

Strives for a good balance between genders on every level of the organization where appropriate. There are no differences in career opportunities and remuneration between the genders.

Pantech Group aims to provide employees fulfilling jobs, good working conditions and career opportunities as it acknowledges that employees are valuable assets and key to success of an organisation.

Pantech Group engage in corporate social responsibility activities to achieve a positive impact on society as a whole.

Sustainability Governance

Pantech Group is committed to the best possible governance of Sustainability within the organization. Our commitment to Sustainability comes from the top of the organization and is underwritten by our Board of Directors.

The Board of Directors will have the overall accountability for Sustainability within Pantech Group. The Board will discuss Sustainability on a regular basis as an integral part of the board meetings and will approve the Sustainability strategy of the Group.

In order to create the most effective governance structure for Sustainability, Pantech Group is in the process of creating a dedicated Sustainability Management Committee. This committee, chaired by a member of the Board of Directors will have overall responsibility regarding the management of Sustainability within the group.

The committee will consist of members of the senior management team and the Head of Departments that have involvement in Sustainability such as Human Resources, Operations, Procurement, Sales, Health & Safety, Quality Control and etc. The committee will undergo activities such as:

• RefiningtheSustainabilityStrategyofPantechGroupandobtainingBoardapproval

• ImplementingtheapprovedSustainabilityStrategy

• TranslatingtheoverallGroupStrategyintoactionplansfortheinvolveddepartments

• Guiding the involveddepartments incollectingandproviding thenecessary inputanddata for theannual Sustainability Statement

• PreparingtheannualSustainabilityStatementandobtainingBoardapproval

Pantech Group understands that Sustainability Governance is new to the organization and requires improvement in the time to come. In the past year, Sustainability Awareness programs have been conducted for key managers involved in the sustainability activities of the company.


17


Stakeholders and Stakeholder Engagement

Pantech Group puts great value on the opinion of its Stakeholders with regard to Sustainability. The engagement with stakeholders will help the Group to focus on inclusiveness, responsiveness and building continuous relationships between the Group and its stakeholders. After internal discussions and brainstorming sessions, Pantech Group has defined the following Stakeholder mapping:

STAKEHOLDER GROUP METHOD OF ENGAGEMENT

EMPLOYEES • Meetings

• Facetofacediscussions

• Employeeperformanceappraisal

• Employeesurvey

• Learninganddevelopmenttrainings

• Festivalscelebration

• Companyevent

INVESTORS AND SHAREHOLDERS

• AGM/EGM

• AnnualReport

• CorporateWebsite

• Analystreportspublishedbyresearchhouses

• Investorrelationssessions

• Companyannouncements

CUSTOMERS • Meetingandbusinesscommunication

• CustomerSatisfactionsurveys

• Exhibition

• Customerfeedbacks

• Corporatewebsite

SUPPLIERS • Meetingandbusinesscommunication

• Supplierevaluationandregistration

GOVERNMENT • Statutorysubmissions

• Meetings/verbalcommunication

FINANCIERS • Facilityreview

• Meetingsandbusinesscommunication


18


Based on the mapping above, Pantech Group, in the coming year, will move from ad-hoc engagements to more predetermined and structured engagements with its stakeholders on Sustainability Issues. Any adjustment to the material topics which arose from the stakeholder engagements will be reported accordingly in the next Sustainability Statement.

International Certifications

In relation to Sustainability, Pantech Group is in the possession of the following international certifications:

Sustainability Issues and Materiality

Through workshops and internal discussions, Pantech Group has defined a list of Sustainability Issues that it believes have an impact on the organization or can be impacted by the organization. Based on the 3 aspects of sustainability, the overall list is:

ENVIRONMENTAL ECONOMIC SOCIAL

A. Energy

B. Water

C. Waste and effluents

D. Materials

E. Emissions

F. Environmental compliance

G. Transport

H. Procurement practices

I. Economic performance

J. Indirect economic impact

K. Employment

L. Labour practices /Labour-Management Relations

M. Occupational Safety and Health

N. Training and education

O. Diversity and equal opportunity

P. Grievance mechanism

Q. Anti-corruption/bribery

R. Social compliance

S. Local communities

The Sustainability Issues listed above form the basis in determining which issues are material to the organization. Anything deemed material will be managed closely and will receive close attention in the day-to-day operation of the Sustainability.


19


Based on the engagements with some of our Stakeholders and the understanding we have of our stakeholders, we have developed the following prioritization of the issues:

Based on the materiality matrix, Pantech Group considers the following Sustainability topics material to the organization.

1. Occupational Safety and Health

Wellbeing of Pantech Group staff is paramount to us and safe working environments are crucial in mitigating potential unwanted incidents to maximise productivity. We continuously seek improvement in providing a safe and healthy work environment for our staff.

In order to emphasize this importance, Pantech Group has developed CARE policy:

Comply and exceed where practicable, with the relevant legal and other requirements

Aim to be an organisation free from pollution accident and ill health

Redesign our work activities and storage area to reduce adverse impacts and risks

Enhance our system performance continually by setting new objectives and targets periodically

To this end, relevant briefings and trainings for our staff are held on a regular basis. Health, safety and environment (HSE) awareness and personal protective equipment (PPE) trainings to increase proficiency in identifying and communicating potential hazards as well as fire and evacuation drills were recurring activities. To ensure that the hearing of staff is not impaired and enabling them to be alert to potential dangers, audiometric tests were conducted as well.


20


In addition, basic life support and first aid skills such as proper cardiopulmonary resuscitation (CPR) technique and treatment of bleeding, burns, shocks, and fractures were taught to staff to enhance emergency preparedness and survivability in event of a mishap. To date, 21 of Pantech’s staff are Qualified First Aider, complying with the legal provision under the Occupational Safety & Health Act 1994.

Emergency response trainings (ERT) were also arranged, conducted by the Fire and Rescue Department of Malaysia (BOMBA) on emergency protocols and use of firefighting equipment. Over the course of the year under review, a total of seven CPR, ERT and first aid training sessions across three of Pantech’s entities were conducted, in addition to weekly HSE briefings and forklift operation trainings.

These efforts culminated in a reduction in Lost Time Injury Frequency Rate (LTIFR) by 80 basis points over the past year, despite a greater number of safety incidences. Pantech Group sees room for improvement in these two metrics and aim to further reduce the number of safety incidences and LTIFR in the coming years.

INDICATOR (AVERAGE FOR PANTECH GROUP) 2018 2019

Number of Safety Incidents 17 21

Lost Time Injury Frequency Rate (LTIFR) 6.23 5.43


21


At the same time, Pantech also encourages staff to maintain a healthy lifestyle by organizing weekly sports and activities for them to participate.

2. Our Employees (Labour Practices, Diversity and Training & Education)

Without its dedicated staff and contract workers, Pantech Group would not have reached the same level of success. Our human capital is the driving force behind our business and through its achievements made Pantech Group in what it is today.

Women in the workforce

Even though we realize that the steel manufacturing for oil and gas industries is traditionally male dominated, Pantech Group strives to create the optimum balance between female and male staff. We strongly advocate women and their abilities. Pantech Group has 3 female board members which makes up one-third of the board seats. Their knowledge and advice has been invaluable to help steer the company, even in trying markets.

Throughout Pantech Group, there are approximately 40% of our local employees are women. Wherever possible, we intend to raise that percentage even higher.

Age Diversity

At Pantech Group we believe that we have a well-balanced group of employees regarding age diversity.

Our age breakdown over the past two years are as follows:

NUMBER OF LOCAL EMPLOYEES

BY AGE GROUP

2018 2019

<30 265 285

30-40 168 189

41-50 84 87

>50 28 30


22


Training and Upskilling

It is our firm belief that developing employee skills and knowledge through training and workshops and providing adequate employee benefits is key to attract and retain top talent. Successfully retaining talent translates to having a considerable number of long service staff.

The following table shows the amount of training hours:

NUMBER OF TRAINING HOURS 2018 2019

Total Number of hours 1985 2819

Training hours per local employee 3.64 4.77

Pantech Group recognises that the success of the Company depends on the employee loyalty and in appreciation of their valuable contribution in the year, the Group has organised Appreciation Dinners in which long service awards and cash-in-kind awards were presented to the staffs who have worked for 5 years, 10 years, 15 years and 20 years in Pantech Group.

Pantech Group also organised team building activities in order to motivate its employees and to enhance their social relations, communication and problem solving skills.


23


3. Energy

Even though by nature of our business, our manufacturing plant uses high amount of energy, Pantech Group strives to reduce its energy footprint to the minimum. Several initiatives are underway to reduce energy usage both in operations and in the office environment, such as the use of translucent roofing in our warehouse as well as practices in place in creating awareness on energy saving in the workplace.

Our current energy consumption is:

ENERGY CONSUMPTION 2018 2019

Electricity Usage kWh/Tonne Production* 437 388

* Measures only on manufacturing division

4. Water

For our operations in Pantech Galvanising Sdn Bhd (PGSB) and Pantech Stainless & Alloy Industries Sdn Bhd (PSA), the blessing of regular rainfall due to Malaysia being a tropical country, is a boon. Both plants have Rainwater Harvesting Systems to collect, filter, store and reuse rainwater for production purposes as well as for toilets, reducing the need for fresh water consumption. A total of seven rainwater catchment tanks are employed in both PGSB and PSA. Each tank has the capacity to hold 10,000 gallons, giving Pantech Group an internal water reservoir of 70,000 gallons.

WATER USAGE 2018 2019

Water Usage M3/Tonne Production* 1.38 1.29

* Measures only on manufacturing division

Rain Water Harvesting System


24


5. Effluents, Waste and Emissions

Both PGSB and PSA have installed Industrial Effluent Treatment System which comprise of waste water and sludge treatment facilities. These facilities are able to treat and neutralise up to 240 cubic metres of acid water from pickling tanks daily before being discharged to general sewerage. The treated sludge is then disposed to licensed vendors to properly handle and process further.

Industrial Effluent Treatment System

On the emissions front, PGSB and PSA are equipped with scrubber system. These scrubbers neutralise and remove acid fumes emitted during the pickling process. Furthermore, dust collector systems are installed in PGSB. These systems filter the air to prevent dust particles generated by the manufacturing processes from being discharged into the atmosphere, and thereby minimising emissions from the plants.

Air Scrubber System

In addition, there are a few green initiatives introduced to create an environmental friendly workplace. Amongst other things Pantech has initiated to reduce the usage of plastic items in the canteen as well as the use of plastic water bottles within the premises. Pantech also encourage the usage of recycling paper and reuse of archive files and paper boxes in the workplace.


Dust Collector System

25


6. Anti-Corruption and Procurement Practices

Pantech Group maintains very strict policies with regard to working with its suppliers, contractors and customers. Any misconduct by Pantech Group staff will not be tolerated and will have severe consequences.

Pantech Group has introduced a Code of Ethics for all its staff and ensures the familiarity of all staff with this Code of Ethics through induction training and briefings

Pantech Group also introduced a Whistle Blowing policy for staff to report any misconduct to senior management. Through briefings all staff has been made aware of this policy.

In the current reporting year, there are no incidents reported.

Corporate Responsibility

Interwoven into the very fabric of society and community are businesses. Pantech Group wants to be a business that is well accepted by the community. We want to live harmoniously alongside communities in which we operate in and impact them positively through corporate responsibility initiatives.

Pantech Group contributed to the development of a second National Stroke Association of Malaysia (NASAM) rehabilitation centre in Johor. NASAM is a non-profit organisation established to provide affordable post-rehabilitation services to stroke survivors.

Another contribution that was made was to an environmental project dubbed ‘Love Gaia’ organised by Soroptimist International Club Iskandar Puteri for SKPK Princess Elizabeth for the visually impaired in collaboration with Sri Ara International School. This project is approved by the Ministry of Education and aims to, among other things, promote the use of composting methods generated by using food waste instead of chemicals that are harmful to the ecosystem and harvesting rain water for the use in plant irrigation. Admirably, they also provide an opportunity to the physically, intellectually and visually challenged to express their creativity in caring for and nurturing plants.


26


In keeping with promoting access to education for children, Pantech hosted its annual Back to School programme whereby cost of school expenses are subsidised for employees’ children. This initiative is applicable for Pantech’s confirmed staff who have children attending primary and/or secondary school in 2019. A total of over RM10,000 was distributed through this programme.

Also, in conjunction with the release of Johnny English Strikes Again, the Group sponsored less privileged children from several orphanages, including orang asli and refugee communities to a day out at the movies.


27


CORPORATEEVENT

20 - 23March2018

11 - 13October

2018

27 - 29November

2018

16 - 20April2018

12 - 15November

2018

Offshore Technology Conference Asia (OTC) 2018

Kuala Lumpur Convention Centre, Malaysia

The 6th International Construction, Power & Mining Exhibition

Yangon Convention Centre (YCC), Yangon

Offshore South East AsiaConference and Exhibition (OSEA 2018)

Marina Bay Sands, Singapore

Tube Düsseldorf, InternationalTube and Pipe Trade Fair

Düsseldorf, Germany

Abu Dhabi International Petroleum Exhibition & Conference 2018

Abu Dhabi National Exhibition Centre (ADNEC), Abu Dhabi

28


AUDIT COMMITTEEREPORT

The primary objective of the Audit Committee is to assist the Board in the effective discharge of its fiduciary responsibilities for corporate governance, financial reporting process and internal control system.

The Audit Committee have adopted practices aimed at maintaining appropriate standards of responsibility, integrity and accountability to all the Company’s shareholders.

MEMBERSHIP

The Audit Committee comprises of three (3) members of which all are Independent Non-Executive Directors, in compliance with Paragraph 15.09 of the Main Market Listing Requirements (“MMLR”) of Bursa Malaysia Securities Berhad (“Bursa Securities”).

The members of the Audit Committee and details of their attendance at the Audit Committee Meetings during the financial year ended 28 February 2019 are as follows:

Name Designation

Number ofMeeting(s)Attended

Lim Yoong Xao ^ Chairman, Independent Non-Executive Director 5/5

Dato’ Sri Yap Tian Leong Member, Independent Non-Executive Director 5/5

Nooraini Binti Mohd Yasin Member, Independent Non-Executive Director 5/5

^ Member of the Malaysian Institute of Accountants

MEETINGS

The Audit Committee met five (5) times during the financial year. Other Board members and senior management staff attended the meetings by invitation of the Audit Committee. The representatives of internal and external auditors were also present during deliberations of the subjects which required their input and advices. During the financial year, the Audit Committee also met with the representatives of the internal auditors and external auditors, both without the presence of Executive Directors and Management team.

TERMS OF REFERENCE

The Terms of Reference of the Audit Committee are aligned with the MMLR of Bursa Securities and recommendations of the Malaysian Code on Corporate Governance. The Terms of Reference will be revised accordingly, to cater for changes, if any. The Terms of Reference is available at the Company’s website at www.pantech-group.com.

29


Audit Committee Report (cont’d)

SUMMARY OF ACTIVITIES OF AUDIT COMMITTEE

In line with the Terms of Reference of the Audit Committee, the following is a summary of work undertaken by the Audit Committee during the financial year ended 28 February 2019 in discharging its functions and duties:

Date of Meeting Subject

27 April 2018 • ReviewofFourthQuarterResultsended28February2018• ReviewofAuditCommitteeReport• ExternalAuditStatusReportforFYE28February2018• ReviewofInternalAuditReport

11 June 2018 • ReviewofAuditedFinancialStatementsFYE28February2018• ReviewofStatementonRiskManagementandInternalControl• ReviewofRiskManagementReport• InternalAuditPlanFYE28February2019

26 July 2018 • ReviewofFirstQuarterResultsended31May2018

24 October 2018 • ReviewofSecondQuarterResultsended31August2018• ExternalAuditPlanforFYE28February2019

17 January 2019 • ReviewofThirdQuarterResultsended30November2018• ReviewofInternalAuditReport

1. Financial Reporting

a) The Audit Committee had reviewed all the four (4) unaudited quarterly financial results of the Group and ensured that it is in compliance with the Malaysian Financial Reporting Standards (“MFRS”) and Appendix 9B of the MMLR.

b) The Audit Committee had reviewed and made recommendation to the Board in respect of the annual Audited Financial Statements of the Group and the Company for the financial year ended 28 February 2018 to ensure that the financial statements of the Group and the Company give a true and fair view in accordance with MFRSs, International Financial Reporting Standards (“IFRS”) and the requirements of the Companies Act, 2016 in Malaysia.

2. Annual Reporting

The Audit Committee had reviewed the Audit Committee Report and Statement on Risk Management & Internal Control in respect of the Annual Report 2018 to ensure compliance to the regulatory reporting requirements and recommended the same to the Board for approval.

3. External Audit

a) Deliberated on the external auditors’ report at its meeting on 11 June 2018 with regards to the relevant disclosures in the annual audited financial statement for the financial year ended 28 February 2018.

b) Reviewed the external auditors’ findings arising from audits, particularly comments and response in management letters in order to be satisfied that appropriate action is being taken.

c) Discussed and reviewed with the external auditors the applicability and the impact of the new accounting standards issued by the Malaysian Accounting Standards Board.

30


SUMMARY OF ACTIVITIES OF AUDIT COMMITTEE (CONT’D)

3. External Audit (cont’d)

d) Private sessions held with the external auditors, without the presence of the Executive Directors and management.

e) Evaluated the external auditors’ independence and objectivity, as well as their ability to serve the Group in terms of technical competencies and manpower resource sufficiency and reviewed the reasonableness of the proposed audit fees against the size and complexity of the Group.

f) Reviewed and evaluated the performance and effectiveness of the external auditors. The Audit Committee assessed the integrity, capability, professionalism and work ethics of the external auditors. The Audit Committee was satisfied with the external auditor’s performance and therefore, the Audit Committee had recommended to the Board, the re-appointment of the external auditors at the Annual General Meeting.

g) On 24 October 2018, the Audit Committee discussed and reviewed the external auditors’ Audit Plan for the financial year ended 28 February 2019 outlining the auditors’ responsibilities, engagement team, significant risks and areas of audit focus, proposed scope of work, independence policies and procedures and audit fees.

4. Internal Audit

a) The Group has an in-house internal audit function to assist the Audit Committee in discharging their responsibilities and duties. The role of the internal audit function is to undertake independent, regular and systematic reviews of the system of internal controls so as to provide reasonable assurance that such systems continue to operate satisfactory and effectively.

b) During the financial year ended 28 February 2019, the Audit Committee:

i) Reviewed the Internal Audit Reports for the subsidiaries in scope and assessed the internal audits’ findings, recommendations together with the Management’s comments. The audit areas covered the functions such as procurement, inventory management, production and maintenance.

ii) Reviewed the adequacy and performance of Internal Audit function and its comprehensiveness of the coverage of activities within the Group.

iii) Reviewed and approved the Risk Management Report.

iv) Reviewed and approved the Internal Audit Plan for the financial year ended 28 February 2019.

c) The cost incurred in respect of the internal audit function for the financial year ended 28 February 2019 was RM195,955.

d) The main role of the internal audit function is stated in the Statement on Risk Management and Internal Control of this Annual Report. During the financial year under review, the Internal Audit Department activities were:

i) Presented and obtained approval from the Audit Committee the annual internal audit plan, its audit

strategy and scope of audit work.

ii) Performed audits according to the annual internal audit plan, to review the adequacy and effectiveness of the internal control system, compliance with policies and procedures and reported ineffective and inadequate controls and made recommendations to improve their effectiveness.


31



SUMMARY OF ACTIVITIES OF AUDIT COMMITTEE (CONT’D)

5. Related Party Transaction

The Audit Committee also reviewed related party transactions and conflict of interest situation that may arise within the Company and the Group including any transaction, procedure or course of conduct that raises the questions on management integrity.

6. Review of Employees’ Share Option Scheme (ESOS) Allocation

Pursuant to paragraph 8.17(2) of the Listing Requirements, the Audit Committee verified that the allocation of ESOS as at 28 February 2019 is in compliance with the criteria for allocation of options pursuant to the ESOS Bye-Laws to ensure the quantum of ESOS offered is within the approved limit and to eligible employees only.

32


The Board of Directors (“the Board”) is pleased to present this Statement on Risk Management and Internal Control (“Statement”) which has been prepared pursuant to paragraph 15.26(b) of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad and as guided by the Statement on Risk Management and Internal Control: Guidelines for Directors of Listed Issuers and Malaysian Code of Corporate Governance. This Statement outlines the state of risk management and internal control of the Group.

BOARD RESPONSIBILITY

The Board acknowledges its overall responsibility in establishing an effective risk management and internal control system and has in place an on-going process for identifying, evaluating and managing the significant risks faced by the Group in its achievement of business objectives and strategies during the financial year and up to the date of approval of this statement for inclusion in the Annual Report. The risk management and internal control system are designed to manage and mitigate, rather than eliminate the risk that may impede the achievement of the Group’s business objectives and strategies. Due to the inherent limitations of internal controls, the system can only provide reasonable but not absolute assurance against material misstatement, loss or fraud.

The Board also takes into consideration the need to balance the business risks and the potential returns to stakeholders in its daily operations, with the dynamic business climate it operates in. The Board recognises the need for a concerted effort from management, head of departments and senior staff members in ensuring that the integrity, effectiveness and adequacy of the control mechanism are monitored and maintained throughout the financial year.

ENTERPRISE RISK MANAGEMENT FRAMEWORK

During the financial year, the Group monitored significant risks and implement risk mitigation strategies on an ongoing basis through its Executive Directors, management and Risk Management Committee (“RMC”) within its risk appetite.

The Board has established a Risk Management Committee (“RMC”) which comprises of Executive Directors and Senior Management of the Group. Executive Directors, senior management personnel and Departmental Heads are responsible for identifying, assessing and managing the risks of their respective business units, operational units and departments. The specific business risks identified encompasses risks on finance, operations, regulatory compliance, reputation, cyber security and sustainability, including respective internal controls in place to manage the risks. During the financial year under review, a reassessment of business risks was conducted and the report has been submitted to the Audit Committee and the Board. Significant issues and risks identified are also discussed during Executive Group Directors Meeting and Monthly Management Meeting which are attended by Executive Directors and senior management personnel on a monthly basis.

INTERNAL AUDIT FUNCTION

The Group has an in-house internal audit function who reports directly to the Audit Committee on its findings and recommendations for improvements. An internal audit plan has been submitted and approved by the Audit Committee.

For the financial year under review, the internal auditors have carried out their review according to the approved internal audit plan. The review covered the assessment on the adequacy and effectiveness of the Group’s risk management and internal control system. Upon completion, the internal audit observations, recommendations and management comments were reported to the Audit Committee. The Audit Committee reviews internal control matters and updates the Board on significant issues for the Board’s attention and action.

Total cost incurred for the internal audit function in respect of the financial year ended 28 February 2019 was RM195,955.

STATEMENT ON RISK MANAGEMENTAND INTERNAL CONTROL

33


KEY ELEMENTS OF THE GROUP’S INTERNAL CONTROL SYSTEM

• ResponsibilitiesoftheBoardandmanagementaredefinedtoensureeffectivedischargeofrolesandresponsibilities;

• TheBoardandtheAuditCommitteemeeteveryquartertodiscussmatter(s)raisedbyManagementand/orInternalAuditoronbusinessandoperationalmattersincludingpotentialrisksandcontrolissues;

• TheBoardandAuditCommitteereceivefeedbackfromtheExternalAuditorontheriskandcontrolissues(ifany)highlightedduringthecourseoftheirstatutoryaudit;

• TheBoardhasestablishedanddocumentedaScheduleofMattersReservedfortheBoardtofacilitatetheeffectivereporting and operation of the Board at regular Board meeting. Major capital investment, acquisition, disposals or any other transaction that are not in the ordinary course of business exceeding a certain threshold must be referred totheBoardforapproval;

• Management reports to theBoardonmaterialfindingsand/orvariances, ifany,and theBoardwill review theirimplicationstotheGroupandadviseaccordingly;

• Annualbudgetingprocessisinplaceandperformanceismonitoredonanongoingbasis;

• SeniorManagementattendsmanagementmeetingsonaregularbasistoaddressbudgets,operationalandfinancialperformance,businessplanning,controlenvironmentandotherkeyissues;

• Keypersonnel fromrespectivesubsidiariesprovidemonthly reports to thecorporateofficeon thesubsidiaries’performance;

• Communicationchannelshavebeenestablishedbetweensubsidiaries,businessunits,divisionsandemployeesthrough internal memorandums, staff briefings and operational meetings to achieve the Group’s overall business objectives;

• CloseandactiveinvolvementoftheExecutiveDirectorsontheday-to-daybusinessoperationsoftheGroup;

• Health,SafetyandEnvironmentalCommitteehasbeenestablishedinordertoreviewandensurecompliancewithoccupationalsafetyandhealthpoliciesandproceduresonacontinuousbasis;

• Systemaccesscontrolsareestablishedtoensuretheinformationsystemsaredulysafeguardedandsecuredfromunauthorised access. Regular review on user access rights for the Enterprise Resource Planning Systems is also in place;and

• TheGrouphasadoptedawhistleblowingpolicy,providinganavenueforemployeesandexternalpartiestoraiseconcerns, in confidence, about actual or suspected misconduct, malpractice or irregularities in any matters related to the Group.

CONCLUSION

In reviewing the risk management and internal control system of the Group, the Board has, through the Audit Committee, received reports from External Auditors and Internal Auditors in relation to the findings on risk and internal control system. The Board has also received reasonable assurance from the Group Managing Director and Chief Financial Officer that the Group’s risk management and internal control system is operating adequately and effectively, in all material respects.

No major weaknesses in the internal control system were noted that may have resulted in any material losses, contingencies or uncertainties that would require disclosure in the Group’s Annual Report.

The Board is of the opinion that the risk management and internal control system in place is adequate and effective at its current level of operations and will continuously strive to enhance the Group’s risk management and internal control system in safeguarding stakeholders’ interest, shareholders’ investment and Group’s assets.

Statement on Risk Management and Internal Control (cont’d)

34


REVIEW OF THE STATEMENT BY EXTERNAL AUDITORS

Pursuant to Paragraph 15.23 of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad, this Statement has been reviewed by the external auditors for inclusion in the Annual Report for the financial year ended 28 February 2019. The review was conducted in accordance with the Recommended Practice Guide (“RPG”) 5 (Revised): Guidance for Auditors on Engagements to Report on the Statement on Risk Management and Internal Control issued by the Malaysian Institute of Accountants. Based on their review, the external auditors have reported to the Board that nothing had come to their attention that causes them to believe that this Statement is inconsistent with their understanding of the risk management and internal control processes implemented by the Group.

Statement on Risk Management and Internal Control (cont’d)

35


CORPORATE GOVERNANCEOVERVIEW STATEMENT

The Board of Directors (“the Board”) of Pantech Group Holdings Berhad (“Pantech” or “the Company”) recognises the importance of practicing and maintaining good corporate governance in managing and directing the board matters and business conduct throughout the Company and its subsidiaries (“the Group”) to ensure sustainable long term growth and enhancement of shareholders’ value and financial performance. The Board believes that good corporate governance practices are pivotal towards enhancing business prosperity and corporate accountability with the ultimate objective of realizing long-term shareholder value, whilst taking into account the interests of other stakeholders.

This Corporate Governance Overview Statement is made pursuant to Paragraph 15.25(1) of the Main Market Listing Requirements (“Listing Requirements”) of Bursa Malaysia Securities Berhad (“Bursa Securities”) and guidance was drawn from Practice Note 9 of Bursa Securities’ Listing Requirements and the Corporate Governance Guide (3rd Edition) issued by Bursa Securities.

The overview statement is to be read together with the CG Report 2019 (“CG Report”) of the Company which is available on the Company’s website at www.pantech-group.com. The detailed explanation on the application of the corporate governance practices are reported under the CG Report.

PRINCIPLE A: BOARD LEADERSHIP AND EFFECTIVENESS

PART I - BOARD RESPONSIBILITIES

Strategic plans and directions

The Board takes full responsibility for the oversight and overall performance of the Group and provides leadership within a framework of prudent and effective controls which enables risk to be appropriately assessed and managed. The primary role of the Board is to provide effective governance over the Group’s affairs to ensure that the interests of shareholders are protected and the confidence of the investment market is maintained whilst having regard for the interests of all stakeholders including customers, employees, suppliers and local communities. The Board guides and monitors the businesses and affairs of the Company and its subsidiaries on behalf of the shareholders by whom they are elected and to whom they are accountable.

The Board recognises the key role it plays in charting the strategic direction of the Company and has assumed the following principal responsibilities in discharging its fiduciary and leadership functions:

i) reviewingandadoptingastrategicplanfortheCompany,addressingthesustainabilityoftheGroup’sbusiness;ii) overseeingtheconductoftheGroup’sbusinessandevaluatingifitsbusinessesarebeingproperlymanaged;iii) identify principal business risks faced by the Group and ensuring the implementation of appropriate internal controls

andmitigatingmeasurestoaddresssuchrisks;iv) ensuring that all candidates appointed to senior management positions are of sufficient calibre, including the orderly

successionofseniormanagementpersonnel;v) overseeing the development and implementation of a shareholder communications policy, including an investor

relationsprogrammefortheCompany;andvi) reviewing the adequacy and integrity of the Group’s internal control and management information systems.

The Executive Directors are responsible for implementing policies of the Board, overseeing the Group’s operations and developing the Group’s business strategies for the Board’s review and adoption. The Independent Directors fulfil a pivotal role in corporate accountability by providing independent views, advices and judgement to enable a balanced and unbiased decision-making process in safeguarding shareholders’ interest.

To assist in the discharge of its stewardship role, the Board has established Board Committees, namely the Audit Committee, Nominating Committee and Remuneration Committee to examine specific issues within their respective terms of reference as approved by the Board and report to the Board with their recommendations. The ultimate responsibility for decision making, however, lies with the Board.

36


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

PART I - BOARD RESPONSIBILITIES (CONT’D)

Chairman and Group Managing Director

Our Executive Chairman, Dato’ Chew Ting Leng is primarily responsible for the vision and strategic planning of the Group and to provide leadership and ensure effective conduct of the Board. He ensures the adequacy and effectiveness of the Board’s governance process and acts as a facilitator at Board meetings to ensure all Directors participate and deliberated at all Board meetings and that no Board member dominates discussion. Dato’ Chew Ting Leng also holds the role of Group Managing Director. He implements the Group’s strategies, policies and decision adopted by the Board and is supported byDato’GohTeohKean,DeputyGroupManagingDirectorandthree(3)ExecutiveDirectors.Hehasextensiveexposureand experience in the businesses of the Group and has shown great commitment and exercised due care in managing the operations of the Group’s businesses in the best interest of the shareholders. The Board believes that for its current size, it is more expedient for the two roles to be held by the same person as long as there are pertinent checks and balance to ensure no one person in the Board has unfettered powers to make major decisions for the Company unilaterally.

Qualified and Competent Company Secretaries

The Board is supported by suitably qualified and competent Company Secretaries who are members of the relevant professional bodies. The appointment of Company Secretaries is based on the capability and proficiency determined by the Board. The Constitution of the Company permits the removal of Company Secretaries by the Board. All members of the Board, whether as a whole or in their individual capacity, have access to the advice and services of the Company Secretaries on all matters relating to the Group in order to assist them in the furtherance of their duties. The Company Secretaries regularly update and keep the Board informed of the regulatory requirements such as restriction in dealing with the securities of the Company and updates issued by various regulatory authorities including the latest developments in the legislations and regulatory framework affecting the Group.

Access to information and advice

The Board recognizes that the decision-making process is highly contingent on the quality of information furnished. As such, all Directors have unrestricted access to any information pertaining to the Company and the Group. All the Directors are supplied with relevant information and reports on financial, operational, corporate, regulatory, business development and audit matters, by way of Board reports or upon specific requests, for decisions to be made on an informed basis and effective discharge of Board’s responsibilities.

The Executive Directors and/or other relevant Board members will furnish comprehensive explanation on pertinent issues and recommendations by Management. The issues are then deliberated and discussed thoroughly by the Board prior to decision making. In addition, the Board members are updated on the Company’s activities and its operations on a regular basis.

External advisers are invited to attend meetings to provide insights and professional views, advice and explanation on specific items on the meeting agenda, when required. All Board members to have equal access to the latest updates and developments of business operations of the Group presented by the Management team.

All proceedings at the Board meetings are minuted and signed by the Chairman of the meetings. Every Director has also unhindered access to the advice and services of the Company Secretaries as and when required to enable them to discharge their duties effectively.

Corporate Governance Overview Statement (cont’d)

37



PART I - BOARD RESPONSIBILITIES (CONT’D)

Board Charter

The Board is guided by a Board Charter which sets out the principles governing the Board of Directors of the Company and adopts the principles of good governance and practices in accordance with applicable laws, rules and regulations in Malaysia. The Board Charter also sets out the respective roles and responsibilities of the Board, board committees, individual directors and Company Secretary as well as a schedule of matters reserved for the Board.

The Board will review the Board Charter from time to time to ensure that the Board Charter remains consistent with the Board’s objectives, current law and practices. The Board Charter is published on the Company’s website at www.pantech-group.com.

Code of Ethics

The Board adopted a Code of Ethics setting out the proper ethical behavior expected of the Board members and the employees which includes the principles relating to legal obligations, conflict of interest, confidentiality, dealings in securities, money laundering and social responsibility.

Whistle-Blowing Policy

The Company has a whistle-blowing policy which provides an avenue to voice genuine concerns of any suspected wrongdoings, business misconduct and malpractices impacting the interest of the Group. The Whistle Blowing Policy sets out the protection to any reporting individual who has made the disclosure/report in good faith, the confidentiality and safeguarding in dealing with such disclosure/report, the communication channel and the procedurals flow of making the disclosure/report.

The Board Charter, Code of Ethics, and Whistle-Blowing Policy are periodically reviewed and updated and are made available for reference on the Company’s website at www.pantech-group.com.

PART II - BOARD COMPOSITION

Board Composition and Balance

The Board is committed in ensuring that its composition not only reflects the diversity as recommended by the Code, as best as it can, but also the right mix of skills and balance to contribute to the achievement of the Group’s goal and business objectives.

During the financial year under review, the Board consists of nine (9) members and comprising five (5) Executive Directors and four (4) Non-Executive Directors out of which three (3) are Independent Directors. The Board is in full compliance with the provisions of the Listing Requirements of Bursa Securities for independent non-executive directors to make up at least one third (1/3rd) of the Board membership and for a director who is qualified under Paragraph 15.09 (1)(c) of Bursa Securities’ Listing Requirements to sit on the Audit Committee.

The Directors play an active role in the Board’s decision-making process, offering vast experience and knowledge as well as independence and objectivity, acting in the best interests of the Company. All Independent Non-Executive Directors are independent from the management and free from any relationship with any Director and/or major shareholder of the Group.

During the financial year, our Nominating Committee (“NC”) assisted the Board in its annual assessment of the Board committees, the effectiveness of the Board as a whole as well as the contribution of each individual Directors. The NC also assessed the independence of the Independent Non-Executive Directors.


38



PART II - BOARD COMPOSITION (CONT’D)

Tenure of Independent Non-Executive Directors

Our Independent Non-Executive Directors were all appointed on 26 July 2017. Thus, the tenure of the Independent Directors does not exceed a cumulative term limit of nine (9) years.

In accordance with the Company’s Constitution, one-third (1/3) of the Directors shall retire by rotation from office and be eligible for re-election at the annual general meeting and all new Directors appointed by the Board are subject to re-election by shareholders at the first opportunity after their appointment. Furthermore, each Director shall retire from office at least once in every three (3) years. Three (3) Independent Non-Executive Directors who were appointed on 26 July 2017 were re-elected at the last Annual General Meeting held on 26 July 2018.

Diverse Board and Senior Management Team

The appointments of our Board members and Senior Management are made based on merit, in the context of diversity in skills, experience, age, background, gender, ethnicity and other factors which is in the best interests of our Group.

The current Board composition reflects a balance of Executive and Independent Non-Executive Directors with a mix of qualified professionals and extensive industry experiences in the field of engineering, finance, accountancy and corporate finance. The combination of different professions and skills will enable an effective deliberation among Board members with objective assessment and insights.

Gender Diversity Policy

The Board does not establish any diversity policy for the Board and workforce in terms of gender, age and ethnicity or setting any target as it is of the view that appointment of directors and employees should be based strictly on merits and not driven by any nationality, racial, age or gender bias. Currently, the Board comprises of 30% women directors.

The evaluation of the suitability of candidates as the new Board member or as a member of the workforce is based on the candidates’ competency, skills, character, time commitment, knowledge, experience and other qualities in meeting the needs of the Group, regardless of gender.

Directors’ Commitment

To facilitate the Directors’ time planning, the annual meeting calendar is prepared and discussed in advance during Board meetings. The calendar provides Directors with scheduled dates for Board meetings, Board Committees meetings and Annual General Meeting (“AGM”).

The Board ordinarily meets at least four (4) times a year to review the operations, financial performance, reports from the various Board Committees and other significant matters of the Group. Additional meetings will also be convened when urgent and important decisions are required to be made in between scheduled meetings.


39




Directors’ Commitment (cont’d)

During the financial year ended 28 February 2019, the attendance of each Director at Board and Committees meetings were as follows:

Board ofDirectors

AuditCommittee

NominatingCommittee

RemunerationCommittee

Dato’ Chew Ting Leng 5/5 – – –

Dato’GohTeohKean 5/5 – – –

Tan Ang Ang 4/5 – – –

To Tai Wai 5/5 – – –

Ng Lee Lee 5/5 – – –

Sakinah binti Salleh 5/5 – – –

Lim Yoong Xao 5/5 5/5 1/1 1/1

Dato’ Sri Yap Tian Leong 5/5 5/5 1/1 1/1

Nooraini binti Mohd Yasin 5/5 5/5 1/1 1/1

Chairman

Member The Board is satisfied with the time commitment given by the Directors and is confident that the Directors are able to devote sufficient time commitment to their roles and responsibilities as Directors of the Company.

Nominating Committee (“NC”)

The Board as a whole is responsible for recommending suitable candidates for Directorships to the Board. In evaluating potential candidates, the Board through the NC will assess the directorship suitability based on objective criteria, including:

• Qualification;• Requiredcompetencies,skills,expertiseandexperience;• Specialistknowledgeortechnicalskills;• Professionalismandintegrity;and• TimecommitmenttotheCompany

In searching for suitable candidates, the Board may receive suggestions from existing Board Members, Management, and major shareholders. The Board is also open to referrals from external sources available, such as industry and professional associations, as well as independent search firms.

The current composition of NC comprises of three (3) members, all of whom are Independent Non-Executive Directors and chaired by Dato’ Seri Yap Tian Leong. The terms of reference of NC are available for reference on the Company’s website at www.pantech-group.com.


40




Nominating Committee (“NC”) (cont’d)

All Directors are encouraged to attend training programmes which they have individually or collectively considered relevant or those identified by the Company, to enable them to discharge their duties effectively and to keep abreast with relevant new development on the rules and regulations, economic, industry and technical developments on a continuous basis. The Directors are also regularly updated by the Management and Company Secretary of changes in statutory requirements, accounting standards and other relevant laws and regulations.

The training and development programmes attended by the Directors during the financial year were as follows:

Name of Director Training Date

Dato’ Chew Ting Leng The Praxis Experience Excellence Through Empowerment 25 July 2018

Dato’GohTeohKean The Praxis Experience Excellence Through Empowerment 25 July 2018

Tan Ang Ang The Praxis Experience Excellence Through Empowerment 25 July 2018

To Tai Wai The Praxis Experience Excellence Through Empowerment 25 July 2018

Ng Lee Lee The Praxis Experience Excellence Through Empowerment 25 July 2018

Sakinah Binti Salleh Budget Review Workshop 18 – 19 July 2018

The Praxis Experience Excellence Through Empowerment 25 July 2018

MIA International Accountants Conference 9 – 10 October 2018

Lim Yoong Xao The Praxis Experience Excellence Through Empowerment 25 July 2018

Dato’ Sri Yap Tian Leong The Praxis Experience Excellence Through Empowerment 25 July 2018

Nooraini Binti Mohd Yasin The Praxis Experience Excellence Through Empowerment 25 July 2018

International Professional Practices FrameworkFor Audit Committee Workshop

28 August 2018

Annual Assessment

The Board conducted an annual assessment to evaluate the effectiveness of the Board and the Board Committees as well as the performance of each individual Director through the NC for the financial year ended 28 February 2019.

The evaluation involves individual Directors and Committee members completing separate evaluation questionnaires regarding the processes of the Board and its Committees, their effectiveness and where improvements could be considered.

All assessments and evaluations carried out will be documented and minuted by the Company Secretary. The results of all assessments and comments by Directors are summarised and deliberated at the NC meeting and thereafter reported to the Board for deliberation.


41



PART III - REMUNERATION

Remuneration Committee (“RC”)

The current composition of RC comprises of three (3) members, all of whom are Independent Non-Executive Directors. The RC is chaired by Puan Nooraini binti Mohd Yasin. The terms of reference of RC are available for reference on the Company’s website at www.pantech-group.com.

The remuneration of Directors is determined at levels which enables the Company to attract and retain Directors with the relevant experience and expertise to manage the businesses of the Group effectively.

Remuneration Policy

The primary function of the RC is to review the remuneration and recommend to the Board the remuneration packages of all the Directors according to the skills, level of responsibilities, experience and performance of the Directors.

Individual Director is not allowed to participate in discussion of his/her own remuneration. The Board will recommend the Directors’ fees and other benefits payable to Directors and table for shareholders’ approval at the forthcoming AGM.

The Board is of the view that the disclosure of the key Senior Management’s remuneration components (other than Executive Directors) will not be in the best interest of the Group given the competitive human resources environment as such disclosure may give rise to talent recruitment and retention issue. Also premised on the confidentiality of the remuneration package of our key Senior Management.

The details of the remuneration of the Directors for the financial year under review are provided in the CG Report.

PRINCIPLE B: EFFECTIVE AUDIT AND RISK MANAGEMENT

PART I - AUDIT COMMITTEE

The Audit Committee (“AC”) of the Company comprises all Independent Non-Executive Directors and is chaired by Mr Lim Yoong Xao. The AC members possess an appropriate range of experience and qualifications, including the appropriate financial literacy to meet the objectives of AC.

The AC assesses the suitability and independence of the external auditors on an annual basis. Areas of assessment including amongst others, the external auditor’s objectivity and independence, audit fees, size and competency of the audit team, audit strategy, audit reporting and partner involvement. The inputs/opinions from the Company’s personnel who had constantly contacted with the external audit team throughout the year would also be used as a tool in the judgement of the suitability of the external auditor.

The external auditors, in supporting their independence, will provide the Audit Committee with a written assurance confirming their independence throughout the conduct of the audit engagement in accordance with the relevant professional and regulatory requirements. The external auditors have provided such declaration in their annual audit plan presented to the Audit Committee of the Company during the financial year.


42


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

PART II - RISK MANAGEMENT AND INTERNAL CONTROL FRAMEWORK

The Board has ultimate responsibility for reviewing the Company’s risks, approving the risk management framework and policy and overseeing the Company’s strategic risk management and internal control framework to achieve its objectives within an acceptable risk profile as well as safeguarding the interest of stakeholders and shareholders and the Group’s assets.

The Company has established a Risk Management Committee (“RMC”) and is headed by the Executive Directors and members of key management team of the respective division. The Board delegates to the RMC the responsibility for evaluating, reviewing and monitoring the vital enterprise risks that affecting the business and operations on an on-going basis. The Board is committed to the development and implementation of an effective Enterprise Risk Management framework (“ERM”) to assist the Group to manage all key business risks with the intent to strengthening the risk management and internal control system as a whole. The RMC will report to the Board on the risk management at least once yearly.

Further information on the Group’s risk management and internal control framework is made available in the Statement of Risk Management and Internal Control of this Annual Report 2019.

PRINCIPLE C: INTEGRITY IN CORPORATE REPORTING MEANINGFUL RELATIONSHIP WITH STAKEHOLDERS

PART I - COMMUNICATION WITH STAKEHOLDERS

The Board is committed to provide effective, transparent and regular communication with its shareholders and other stakeholders regarding the business, operations and financial performance of the Group to enable them to make informed decisions.

Presently the Board and the Senior Management of the Group communicate regularly with its shareholders and other stakeholders through corporate announcement made via Bursa Securities website and the Company’s website, www.pantech-group.com.

The AGM also serves as a principal forum for dialogue with the shareholders where they will be given the opportunity to seek and clarify any issues on the resolutions being proposed and also matters relating to the performance, developments within and the future direction of the Group.

PART II - CONDUCT OF GENERAL MEETINGS

General meetings are the important and effective platforms for Directors and Senior Management to communicate with the shareholders and other stakeholders. Shareholders are able to participate, engage the Board and Senior Management effectively and make informed voting decisions at general meetings.

Shareholders will receive annual reports and notices of AGM, which will be sent out at least 28 calendar days before the date of the AGM. In addition, the Notice of AGM and/or Extraordinary General Meeting (“EGM”) will be advertised in the newspapers. The Board encourages shareholders to attend the forthcoming AGM and undertakes to answer all questions raised by shareholders.

Pursuant to the Listing Requirements of Bursa Securities, any resolution set out in the notice of any general meeting, or in any notice of resolution which may properly be moved and is intended to be moved at any general meeting, must be voted by poll. Hence, voting for all resolutions as set out in the Notice of the forthcoming AGM and future general meetings will be conducted by poll. An independent scrutineer will be appointed to validate the votes cast at the general meetings. Pantech has also adopted electronic voting in the AGM to ensure the mandatory poll voting process are carried out efficiently.

Barring unforeseen circumstances, all Directors as well as the Chairman of the respective Board Committees will be present at the forthcoming AGM of the Group to enable the shareholders to raise questions and concerns directly to those responsible.


43


COMPLIANCE STATEMENT

Saved as disclosed above, the Board is satisfied that throughout the financial year ended 28 February 2019, the Company has applied the principles and recommendations of the corporate governance set out in MCCG, where necessary and appropriate.

This Statement is made at the Board of Directors’ Meeting held on 12 June 2019.


44


1. UTILISATION OF PROCEEDS

During the financial year ended 28 February 2019, there were no proceeds raised from any corporate proposal.

2. OPTIONS, WARRANTS OF CONVERTIBLE SECURITIES EXERCISED

During the financial year ended 28 February 2019, there were no warrants exercised.

During the financial year ended 28 February 2019, 1,462,500 ESOS was exercised under the Company’s ESOS at the exercise price of RM0.415 per unit.

3. EMPLOYEES SHARE OPTION SCHEME

The Employees’ Share Option Scheme of the Company (“ESOS” or “Scheme”) was implemented on 23 January 2017 and shall be in force for a duration of ten (10) years.

There is one ESOS in existence during the financial year. The total number of options granted, exercised and outstanding under the ESOS are set out in the table below:

Description

Number of Options(Since commencement of ESOS to 28 February 2019)

All Eligible Employeesincluding Directorsand Chief Executive

Directors andChief Executive

(a) Total options granted 49,869,000 10,300,000

(b) Total options exercised 7,157,100 1,740,000

(c) Total options outstanding 38,211,800 8,560,000

There was no ESOS granted during the financial year ended 28 February 2019.

In accordance with the Company’s ESOS Bye-Laws, not more than forty per centum (40%) of the Company’s ordinary shares available under the Scheme shall be allocated, in aggregate, to Directors and senior management of the Group. Since the commencement of the Scheme up to the financial year ended 28 February 2019, the Company has granted approximately 27.44% of options to the Directors and senior management.

No options were granted to the Non-Executive Directors during the financial year. Options exercised by the Non-Executive Directors during the financial year are as follows:

Name of DirectorNumber of options granted

since commencementNumber of options exercised

during the financial year

Sakinah Binti Salleh 300,000 45,000

ADDITIONAL COMPLIANCESTATEMENT

45


4. MATERIAL CONTRACTS AND CONTRACTS RELATING TO LOANS

There were no contracts relating to loan and material contracts of the Company and its subsidiaries involving the interests of the Directors or major shareholders during the financial year or since the end of the previous financial year.

5. RECURRENT RELATED PARTY TRANSACTIONS OF A REVENUE AND TRADING NATURE (“RRPT”)

There was no RRPT entered during the financial year.

Additional Compliance Statement (cont’d)

Directors’ Report 47

Statement by Directors 54

Statutory Declaration 54

Independent Auditors’ Report 55

Statements of Financial Position 59

Statements of Profit or Loss

and Other Comprehensive Income 61

Statements of Changes in Equity 63

Statements of Cash Flows 67

Notes to the Financial Statements 71

FINANCIAL STATEMENTS

47


DIRECTORS’REPORT

The Directors of Pantech Group Holdings Berhad have pleasure in submitting their report together with the audited financial statements of the Group and of the Company for the financial year ended 28 February 2019.

PRINCIPAL ACTIVITIES

The Company is principally engaged in investment holding and provision of management services.

The principal activities and details of the subsidiary companies and associate company are disclosed in Notes 9 and 10 to the Financial Statements respectively.

There have been no significant changes in the nature of these activities of the Company, its subsidiary companies and associate company during the financial year.

RESULTS

Group Company RM RM

Profit for the financial year 47,458,190 14,595,186

Attributable to:- Owners of the Company 47,458,190 14,595,186

RESERVES AND PROVISIONS

There were no material transfers to or from reserves or provisions during the financial year.

DIVIDENDS

The amount of dividends paid and declared since the end of the last financial year were as follows:-

RM

Final single tier dividend of 0.50 sen per ordinary share in respect of the financial year ended 28 February 2018 and paid on 20 August 2018. 3,719,205

First interim single tier dividend of 0.50 sen per ordinary share in respect of the financial year ended 28 February 2019 and paid on 18 January 2019. 3,698,909

Second interim share dividend via distribution of treasury shares on the basis of 1 treasury share for every 100 existing ordinary shares in respect of the financial year ended 28 February 2019 and distributed on 12 April 2019. 3,776,960

At the forthcoming Annual General Meeting, a final single tier dividend, in respect of the financial year ended 28 February 2019, of 1.00 sen per ordinary share will be proposed for shareholders’ approval. The financial statements for current financial year do not reflect this proposed dividend. Such dividend, if approved by the shareholders, will be accounted for in equity as an appropriation of unappropriated profit in the financial year ending 29 February 2020.

48


DIRECTORS

The Directors who held office during the financial year and up to the date of this report are as follows:-

Dato’ Chew Ting Leng (Executive Chairman/Group Managing Director)*Dato’GohTeohKean(GroupDeputyManagingDirector)*Tan Ang Ang (Executive Director)*To Tai Wai (Executive Director)*Ng Lee Lee (Executive Director)*Sakinah Binti Salleh (Non-Independent Non-Executive Director)Dato’ Sri Yap Tian Leong (Independent Non-Executive Director) Lim Yoong Xao (Independent Non-Executive Director)Nooraini Binti Mohd Yasin (Independent Non-Executive Director) * Directors of the Company and its subsidiary company(ies).

The Directors of the subsidiary companies who held office during the financial year and up to the date of this report, not including those Directors listed above are as follows:-

Chew Soon JiatFreddie Chew Sun GheeJairus Tan Vern HsienKongChiongLeeLim Soon BengTeo Tiong TeckWang Woon Chin

DIRECTORS’ INTERESTS

According to the Register of Directors’ Shareholdings, the beneficial interests of those who were Directors at the end of the financial year in shares, Employee Share Option Scheme (“ESOS”) and warrants of the Company and its related corporations are as follows:-

Number of ordinary shares As at Exercise As at 1.3.2018 of ESOS (Sold) 28.2.2019

Dato’ Chew Ting Leng - direct interest 7,808,540 – – 7,808,540- deemed interest through CTL Capital Holding Sdn. Bhd. 132,948,174 – – 132,948,174- deemed interest through his daughter, Chew Zhiyin 150,000 – – 150,000

Dato’GohTeohKean- direct interest 5,808,540 300,000 – 6,108,540- deemed interest through GL Management Agency Sdn. Bhd. 95,839,830 – – 95,839,830

Directors’ Report (cont’d)

49


DIRECTORS’ INTERESTS (CONT’D)

According to the Register of Directors’ Shareholdings, the beneficial interests of those who were Directors at the end of the financial year in shares, Employee Share Option Scheme (“ESOS”) and warrants of the Company and its related corporations are as follows (cont’d):-

Number of ordinary shares As at Exercise As at 1.3.2018 of ESOS (Sold) 28.2.2019

Tan Ang Ang - direct interest 12,108,253 150,000 – 12,258,253- deemed interest through his spouse, YongYuiKiew 1,998,987 – – 1,998,987- deemed interest through his son, Jairus Tan Vern Hsein 150,000 – – 150,000

To Tai Wai- direct interest 14,305,587 – – 14,305,587 Ng Lee Lee- direct interest 8,733,632 – – 8,733,632- deemed interest through her spouse, Wong Chong Peng 192,764 – – 192,764

Lim Yoong Xao - deemed interest through his spouse, Wong Hui Chin 2,000 – – 2,000

Sakinah Binti Salleh - direct interest 45,000 45,000 – 90,000

Number of ordinary shares under Employee Share Option Scheme Unexercised Unexercised as at as at 1.3.2018 (Exercised) (Expired) (Lapsed) 28.2.2019 Dato’ Chew Ting Leng 1,700,000 – – – 1,700,000 Dato’GohTeohKean 1,700,000 (300,000) – – 1,400,000 Tan Ang Ang 1,700,000 (150,000) – – 1,550,000 To Tai Wai 1,700,000 – – – 1,700,000 Ng Lee Lee 2,000,000 – – – 2,000,000 Sakinah Binti Salleh 255,000 (45,000) – – 210,000


50


DIRECTORS’ INTERESTS (CONT’D)

According to the Register of Directors’ Shareholdings, the beneficial interests of those who were Directors at the end of the financial year in shares, Employee Share Option Scheme (“ESOS”) and warrants of the Company and its related corporations are as follows (cont’d):-

Number of Warrants A (2010/2020) As at As at 1.3.2018 (Exercised) (Sold) 28.2.2019

Dato’ Chew Ting Leng - deemed interest through CTL Capital Holding Sdn. Bhd. 20,815,677 – – 20,815,677

Dato’GohTeohKean - deemed interest through GL Management Agency Sdn. Bhd. 15,405,756 – – 15,405,756

Number of Warrants B (2016/2021) As at As at 1.3.2018 (Exercised) (Sold) 28.2.2019

Dato’ Chew Ting Leng - direct interest 459,045 – – 459,045- deemed interest through CTL Capital Holding Sdn. Bhd. 11,079,014 – – 11,079,014

Dato’GohTeohKean - direct interest 459,045 – – 459,045- deemed interest through GL Management Agency Sdn. Bhd. 7,986,651 – – 7,986,651

Tan Ang Ang - direct interest 533,768 – – 533,768- deemed interest through his spouse, YongYuiKiew 166,582 – – 166,582

To Tai Wai- direct interest 884,406 – – 884,406

Ng Lee Lee - direct interest 727,802 – – 727,802- deemed interest through her spouse, Wong Chong Peng 16,063 – – 16,063

Except as disclosed, none of the Directors of the Company, who were Directors at the end of the financial year, held any interest in shares of the Company or its related corporations during the financial year.


51


DIRECTORS’ BENEFITS

During and at the end of the financial year, no arrangements subsisted to which the Company is a party, with the object or objects of enabling the Directors of the Company to acquire any benefits by means of the acquisition of shares in or debentures of the Company or any other body corporate, other than those arising from the share options granted under the Employees Share Option Scheme.

Since the end of the previous financial year, no Director has received or become entitled to receive any benefit (other than as disclosed in Note 32 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’ REMUNERATION

The Directors’ remuneration is disclosed in Notes 32 and 35 to the Financial Statements.

The Company maintains Directors’ and Officers’ liability insurance for purposes of Section 289 of the Companies Act, 2016, throughout the financial year, which provides appropriate insurance cover for the Directors and Officers of the Company. The amount of insurance premium paid during the financial year amounted to RM20,448.

ISSUE OF SHARES AND DEBENTURES

During the current financial year, the Company had increased its issued and fully paid-up ordinary share capital from RM207,543,729 to RM208,298,243 by way of 1,462,500 new ordinary shares arising from the exercise of employee’s share option at an exercise price of RM0.415 per ordinary share.

All the new ordinary shares issued during the financial year ranked pari passu in all respects with the existing ordinary shares of the Company.

There were no issuance of debentures during the financial year.

TREASURY SHARES

The shareholders of the Company, through the Annual General Meeting held on 21 August 2008, approved the Company’s plan to repurchase up to 10% of the issued and paid-up share capital of the Company (“Share Buy Back”). The authority granted by the shareholders was subsequently renewed in every Annual General Meeting held and it was last renewed in the Annual General Meeting held on 26 July 2018. The Directors of the Company are committed to enhancing the value of the Company to its shareholders and believe that the purchase plan can be applied in the best interest of the Company and its shareholders.

During the financial year ended 28 February 2019, the Company repurchased 6,781,400 ordinary shares of its issued share capital from the open market. The average price paid for the repurchased shares was RM0.51 per share. The repurchased transactions were financed by internally generated funds. These repurchased shares were held as treasury shares and treated in accordance with the requirements of Section 127 of the Companies Act, 2016.

The Company has the right to cancel, resell these shares and/or distributes as dividends at a later date. As treasury shares, the rights attached to voting, dividends and participation in other distribution is suspended. None of the treasury shares repurchased had been sold as at the reporting date.

As at financial year end, the number of ordinary shares issued and fully paid-up after deducting treasury shares against equity is 739,683,900 ordinary shares.


52


OPTIONS GRANTED OVER UNISSUED SHARES

No options were granted to any person to take up unissued shares of the Company during the financial year apart from the issuance of options pursuant to the Employee Share Option Scheme (“ESOS”).

At an extraordinary general meeting held on 2 December 2016, the Company’s shareholders approved the establishment of an ESOS of not more than 10% of the issued and paid-up share capital of the Company (excluding treasury shares) to eligible Directors and employees of the Group.

The salient features and other terms of the ESOS are disclosed in the Note 36 to the Financial Statements.

WARRANTS

The salient features of the Warrants are disclosed in Note 24 to the Financial Statements.

Details of Warrants issued to the Directors are disclosed in the Directors’ Interest section of this report.

OTHER STATUTORY INFORMATION

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

(a) to ascertain that action had been taken in relation to the writing off of bad debts and the making of provision for doubtful debts and satisfied themselves that all known bad debts had been written off and adequate provision had beenmadefordoubtfuldebts;and

(b) to ensure that any current assets which were unlikely to realise their values in the ordinary course of business as shown in the accounting records 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 provision for doubtful debts in the financial statementsoftheGroupandoftheCompanyinadequatetoanysubstantialextent;or

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

(c) which have arisen which would render adherence to the existing method of valuation of assets or liabilities of the GroupandoftheCompanymisleadingorinappropriate;or

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

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

(a) any charge on the assets of the Group and of the Company which has arisen since the end of the financial year whichsecurestheliabilityofanyotherperson;or

(b) any contingent liability of the Group and of the Company which has arisen since the end of the financial year.


53


OTHER STATUTORY INFORMATION (CONT’D)

In the opinion of the Directors:-

(a) no contingent liability 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 oftheGroupandoftheCompanytomeettheirobligationsasandwhentheyfalldue;

(b) the results of operations of the Group and of the Company during the financial year were not substantially affected byanyitem,transactionoreventofamaterialandunusualnature;and

(c) 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 operations of the Group and of the Company for the current financial year in which this report is made.

AUDITORS’ REMUNERATION

The Auditors’ remuneration is disclosed in Note 32 to the Financial Statements.

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

SIGNIFICANT EVENT

The significant event is disclosed in Note 42 to the Financial Statements.

AUDITORS

The Auditors, Messrs Grant Thornton Malaysia, have expressed their willingness to continue in office.

Signed on behalf of the Board of Directors in accordance with a resolution of the Board of Directors.

.............................................................. )DATO’ CHEW TING LENG ) ) ) ) DIRECTORS ) ).............................................................. )DATO’ GOH TEOH KEAN )

Johor Bahru12 June 2019


54


STATEMENT BYDIRECTORS

In the opinion of the Directors, the financial statements set out on pages 59 to 161 are drawn up in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act, 2016 in Malaysia so as to give a true and fair view of the financial position of the Group and of the Company as at 28 February 2019 and of their financial performance and cash flows for the financial year then ended.

Signed on behalf of the Board of Directors in accordance with a resolution of the Board of Directors.

............................................................... ........................................................... DATO’ CHEW TING LENG DATO’ GOH TEOH KEAN

Johor Bahru12 June 2019

STATUTORYDECLARATION

I, Wang Woon Chin, being the Officer primarily responsible for the financial management of Pantech Group Holdings Berhad, do solemnly and sincerely declare that to the best of my knowledge and belief, the financial statements set out on pages 59 to 161 are correct and I make this solemn declaration conscientiously believing the same to be true and by virtue of the Statutory Declarations Act 1960.

Subscribed and solemnly declared by )the abovenamed at Johor Bahru in the )State of Johor this day of ) 12 June 2019 ) ........................................................... WANG WOON CHIN (MIA No. 19232)

Before me:

VASANTHI A/P VADIVELOONo. J258Commissioner for Oaths

55


INDEPENDENTAUDITORS’ REPORT

to the Members of Pantech Group Holdings Berhad(Incorporated in Malaysia) (Company No: 733607 W)

REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS

Opinion

We have audited the financial statements of Pantech Group Holdings Berhad (“the Company”), which comprise the statements of financial position as at 28 February 2019, and the statements of profit or loss and other comprehensive income, statements of changes in equity and statements of cash flows for the financial year then ended, and notes to the financial statements, including a summary of significant accounting policies, as set out on pages 59 to 161.

In our opinion, the accompanying financial statements give a true and fair view of the financial position of the Group and of the Company as at 28 February 2019, and of their financial performance and cash flows for the financial year then ended in accordance with Malaysian Financial Reporting Standards (“MFRSs”), International Financial Reporting Standards (“IFRSs”) and the requirements of the Companies Act, 2016 in Malaysia.

Basis for Opinion

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

Independence and Other Ethical Responsibilities

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

KEY AUDIT MATTERS

Keyauditmattersarethosemattersthat, inourprofessional judgement,wereofmostsignificanceinourauditofthefinancial statements of the Group for the current financial year. These matters were addressed in the context of our audit of the financial statements of the Group as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Impairment on doubtful receivables

The riskReferring to Note 44(c) to the financial statements. We focused on this area because the Group has trade receivables that are past due but not impaired. The key associate risk was the recoverability of billed trade receivables as management judgement is required in determining the completeness of the trade receivables provision and in assessing its adequacy through considering the expected recoverability of the year-end trade receivables.

Our responseWe have obtained an understanding of the Group’s policy on impairment of trade receivables and evaluated management’s judgement in calculating the allowance for impairment of trade receivables. This includes reviewing the ageing of receivables and testing the integrity of ageing by calculating the due date for a sample of invoices. We also checked the recoverability of outstanding receivables through examination of subsequent cash receipts and tested the operating effectiveness of the relevant policies and control procedures that management has in place.

The basis of management’s judgement over the recoverability of billed trade receivables are disclosed in Notes 3.8 and 44(c) to the Financial Statements.

56


KEY AUDIT MATTERS (CONT’D)

Inventory valuation

The riskRefer to Note 14 to the Financial Statements. The Group’s inventories is subject to a risk that the inventories become slow-moving or obsolete and rendering it not saleable or can only be sold for selling prices that are less than the carrying value. There is inherent subjectivity and estimation involved in determining the accuracy of inventory obsolescence provision and in making an assessment of its adequacy due to risks of inventory prices not valid and inventory not stated at the lower of cost or market.

Our responseWe have obtained an understanding on the Group’s accounting policy in making the accounting estimates for inventories write-down which is in line with its business environment. We have also attended the year-end physical inventories count to validate counts performed by the Group. Besides that, we also tested a sample of inventories to ensure that they were held at the lower of cost and net realisable value. We have also evaluated management judgement and Group’s accounting policy with regards to the application of provision to the inventories.

We have determined that there are no key audit matters to communicate in our report in relation to our audit of the financial statements of the Company.

INFORMATION OTHER THAN THE FINANCIAL STATEMENTS AND AUDITORS’ REPORT THEREON

The Directors of the Company are responsible for the other information. The other information comprises the information included in the annual report, but does not include the financial statements of the Group and of the Company and our auditors’ report thereon.

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

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

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

RESPONSIBILITIES OF DIRECTORS FOR THE FINANCIAL STATEMENTS

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

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

Independent Auditors’ Report (cont’d)

57


AUDITORS’ RESPONSIBILITIES FOR THE AUDIT OF THE FINANCIAL STATEMENTS

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

As part of an audit in accordance with approved standards on auditing in Malaysia and ISAs, we exercise professional judgement and maintain professional skepticism throughout the audit. We also:-

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

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

- Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Directors.

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

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

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

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

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

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


58


OTHER MATTERS

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

GRANT THORNTON MALAYSIA DATO’ N.K. JASANI (NO. AF: 0737) (NO: 00708/03/2020 J) CHARTERED ACCOUNTANTS CHARTERED ACCOUNTANT

Johor Bahru 12 June 2019


59


STATEMENTS OFFINANCIAL POSITION

as at 28 February 2019

Group Company Note 2019 2018 2019 2018 RM RM RM RM

ASSETSNon-current assets Property, plant and equipment 5 230,563,255 221,403,827 – – Prepaid land lease payments 6 32,551,772 33,133,816 – – Capital work-in-progress 7 13,690,978 3,814,747 – – Investment properties 8 6,300,000 6,600,000 – – Investment in subsidiary companies 9 – – 244,860,458 244,860,458 Investment in an associate company 10 2,782,458 2,063,165 – – Goodwill on acquisition 11 1,190,129 1,198,088 – – Derivatives financial instruments 12 43,015 624,766 43,015 – Deferred tax assets 13 2,016,401 1,851,363 – –

Total non-current assets 289,138,008 270,689,772 244,903,473 244,860,458

Current assets Inventories 14 356,265,984 276,094,356 – – Trade receivables 15 129,804,623 144,893,264 – – Other receivables 16 26,176,237 20,587,082 5,595 51,309 Amount due from subsidiary companies 9 – – 5,211,122 17,453 Amount due from an associate company 10 36,517,705 6,657,833 – – Derivatives financial instruments 12 796,810 627,258 35,449 – Tax recoverable 1,832,051 1,003,522 – – Fixed deposits with licensed banks 17 2,546,650 2,476,995 – – Cash and bank balances 18 48,606,847 67,746,034 1,859,094 2,307,581

Total current assets 602,546,907 520,086,344 7,111,260 2,376,343

Total assets 891,684,915 790,776,116 252,014,733 247,236,801

EQUITY AND LIABILITIESEQUITYShare capital 19 208,298,243 207,543,729 208,298,243 207,543,729 Treasury shares 20 (4,171,344) (811,264) (4,171,344) (811,264)Revaluation reserve 21 12,134,168 12,333,172 – –Employees share option reserve 22 2,960,508 2,080,383 2,960,508 2,080,383 Cash flow hedge reserve 23 839,825 1,144,267 78,464 (103,357)Warrants reserve 24 14,748,628 14,748,628 14,748,628 14,748,628 Exchange translation reserve 8,309,009 9,546,271 – –Unappropriated profit 25 343,330,869 306,868,749 16,049,594 12,649,482

Total equity 586,449,906 553,453,935 237,964,093 236,107,601

60



LIABILITIESNon-current liabilities Finance lease creditors 26 5,104,325 6,071,674 – – Derivatives financial instruments 12 – 55,339 – 55,339 Borrowings 27 43,750,027 35,279,033 2,550,000 4,590,000 Other payables 28 264,649 259,745 – – Deferred tax liabilities 29 4,521,074 5,156,759 – –

Total non-current liabilities 53,640,075 46,822,550 2,550,000 4,645,339

Current liabilities Trade payables 30 34,238,989 30,975,893 – – Other payables 28 14,792,810 15,826,957 315,581 302,986 Derivatives financial instruments 12 – 48,018 – 48,018 Amount due to subsidiary companies 9 – – 424 – Amount due to an associate company 10 319,874 215,566 – – Finance lease creditors 26 2,464,310 2,672,480 – – Borrowings 27 192,419,404 132,547,739 7,147,383 2,096,752 Dividend payable 3,776,960 3,723,070 3,776,960 3,723,070 Tax payable 3,582,587 4,489,908 260,292 313,035

Total current liabilities 251,594,934 190,499,631 11,500,640 6,483,861

Total liabilities 305,235,009 237,322,181 14,050,640 11,129,200

Total equity and liabilities 891,684,915 790,776,116 252,014,733 247,236,801

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

Statements of Financial Position (cont’d)

61



Revenue 31 609,214,562 614,771,219 19,767,593 30,772,881

Cost of sales (469,515,809) (471,512,604) – –

Gross profit 139,698,753 143,258,615 19,767,593 30,772,881

Other income 7,858,822 6,944,898 100,733 55,402

Selling and distribution expenses (19,114,817) (23,437,384) – –

Administration expenses (54,170,636) (48,345,081) (3,987,674) (4,641,097)

Other expenses (3,690,133) (10,693,115) (6,753) (92,566)

Finance costs (10,509,124) (9,382,831) (382,484) (485,672)

Profit from operations 60,072,865 58,345,102 15,491,415 25,608,948

Share of profit/(loss) in associate company 719,293 (211,972) – –

Profit before tax 32 60,792,158 58,133,130 15,491,415 25,608,948

Tax expense 33 (13,333,968) (12,453,306) (896,229) (932,212)

Profit for the financial year 47,458,190 45,679,824 14,595,186 24,676,736

Other comprehensive income/(loss), net of taxItems that will not be reclassified subsequently to profit or loss Realisation of revaluation reserve upon depreciation of revalued assets 199,004 300,977 – – Transfer of revaluation reserve to unappropriated profit (199,004) (300,977) – –

– – – –

STATEMENTS OF PROFIT OR LOSSAND OTHER COMPREHENSIVE INCOME

for the financial year ended 28 February 2019

62



Items that may be reclassified subsequently to profit or loss Fair value (loss)/gain on cash flow hedge (304,442) (3,376,127) 181,821 (1,012,618) Foreign currency translation differences for foreign operations, net of tax (1,237,262) (491,878) – –

(1,541,704) (3,868,005) 181,821 (1,012,618)

Other comprehensive (loss)/income for the financial year, net of tax (1,541,704) (3,868,005) 181,821 (1,012,618)

Total comprehensive income for the financial year 45,916,486 41,811,819 14,777,007 23,664,118

Profit/(Loss) attributable to:- Owners of the Company 47,458,190 47,126,801 14,595,186 24,676,736 Non-controlling interest – (1,446,977) – –

Profit for the financial year 47,458,190 45,679,824 14,595,186 24,676,736

Total comprehensive income attributable to:-Owners of the Company 45,916,486 43,258,796 14,777,007 23,664,118 Non-controlling interest – (1,446,977) – –

Total comprehensive income for the financial year 45,916,486 41,811,819 14,777,007 23,664,118

Earnings per share attributable to owners of the CompanyEarnings per ordinary share- Basic (sen) 34 6.40 6.36 – –

- Diluted (sen) 34 6.32 6.08 – –


Statements of Profit or Loss and Other Comprehensive Income (cont’d)

63


STATEMENTS OFCHANGES IN EQUITY


At

tribu

table

to ow

ners

of the

Com

pany

Non

-dist

ributa

ble

Di

stribu

table

Emplo

yees

Ca

sh flo

w

Exch

ange

No

n-

Share

Tre

asury

Re

valua

tion

share

optio

n he

dge

Warra

nts

trans

lation

Un

appro

priat

ed

co

ntroll

ing

Total

ca

pital

share

s res

erve

reserv

e res

erve

reserv

e res

erve

profit

Total

int

erest

equit

y

RM

RM

RM

RM

RM

RM

RM

RM

RM

RM

RM

Grou

p

Balan

ce at

1 Ma

rch 20

17

203,9

28,58

7 (5

53,11

1) 12

,634,1

49

960,3

48

4,52

0,394

14

,869,0

37

10,03

8,149

27

8,003

,771

524,4

01,32

4 8,

462,9

77

532,8

64,30

1

Trans

actio

ns w

ith ow

ners:

-

Share

optio

n gran

ted un

der E

SOS

– –

– 1,

699,3

75

– –

– –

1,699

,375

– 1,6

99,37

5

Issua

nce o

f sha

res pu

rsuan

t to ex

ercise

of w

arran

ts 67

2,542

–

– –

– (12

0,409

) –

– 55

2,133

–

552,1

33

Exerc

ise of

ESOS

2,

942,6

00

– –

(579

,340)

– –

– –

2,363

,260

– 2,3

63,26

0

Acqu

isition

of tre

asury

share

s –

(258,1

53)

– –

– –

– –

(258,1

53)

– (25

8,153

)

Final

single

tier d

ividen

d of 0

.50 se

n per

share

–

– –

– –

– –

(3,70

6,752

) (3,

706,7

52)

– (3,

706,7

52)

First

interi

m sin

gle tie

r divid

end o

f 0.50

sen p

er sh

are

and s

pecia

l sing

le tie

r divid

end o

f 0.50

sen p

er sh

are

– –

– –

– –

– (7,

417,2

27)

(7,41

7,227

) –

(7,41

7,227

)

Seco

nd in

terim

sing

le tie

r divid

end o

f 0.50

sen p

er sh

are

– –

– –

– –

– (3,

715,7

51)

(3,71

5,751

) –

(3,71

5,751

)

Third

inter

im si

ngle

tier d

ividen

d of 0

.50 se

n per

share

–

– –

– –

– –

(3,72

3,070

) (3,

723,0

70)

– (3,

723,0

70)

Acqu

isition

of sh

ares f

rom no

n-con

trollin

g inte

rest

– –

– –

– –

– –

– (7,

016,0

00)

(7,01

6,000

)

Total

trans

actio

ns w

ith ow

ners

3,61

5,142

(2

58,15

3) –

1,120

,035

– (1

20,40

9) –

(18,56

2,800

) (14

,206,1

85)

(7,01

6,000

) (21

,222,1

85)

Profit

for th

e fina

ncial

year

– –

– –

– –

– 47

,126,8

01

47,12

6,801

(1,

446,9

77)

45,67

9,824

Ot

her c

ompre

hens

ive in

come

for th

e fina

ncial

year

– –

(300

,977)

– (3,

376,1

27)

– (4

91,87

8) 30

0,977

(3,

868,0

05)

– (3,

868,0

05)

Total

comp

rehen

sive i

ncom

e for

the fin

ancia

l yea

r –

– (3

00,97

7) –

(3,37

6,127

) –

(491

,878)

47,42

7,778

43

,258,7

96

(1,44

6,977

) 41

,811,8

19

Balan

ce at

28 Fe

bruary

2018

20

7,543

,729

(811

,264)

12,33

3,172

2,

080,3

83

1,14

4,267

14

,748,6

28

9,54

6,271

30

6,868

,749

553,4

53,93

5 –

553,4

53,93

5

64


At

tribu

table

to ow

ners

of the

Com

pany

Non

-dist

ributa

ble

Di

stribu

table

Emplo

yees

Ca

sh flo

w

Exch

ange

No

n-

Share

Tre

asury

Re

valua

tion

share

optio

n he

dge

Warra

nts

trans

lation

Un

appro

priat

ed

co

ntroll

ing

Total

ca

pital

share

s res

erve

reserv

e res

erve

reserv

e res

erve

profit

Total

int

erest

equit

y

RM

RM

RM

RM

RM

RM

RM

RM

RM

RM

RM

Grou

p (co

nt’d)

Balan

ce at

1 Ma

rch 20

18

207,5

43,72

9 (8

11,26

4) 12

,333,1

72

2,08

0,383

1,

144,2

67

14,74

8,628

9,

546,2

71

306,8

68,74

9 55

3,453

,935

– 55

3,453

,935

Trans

actio

ns w

ith ow

ners:

-

Share

optio

n gran

ted un

der E

SOS

– –

– 1,0

27,70

2 –

– –

– 1,0

27,70

2 –

1,027

,702

Exerc

ise of

ESOS

75

4,514

–

– (14

7,577

) –

– –

– 60

6,937

–

606,9

37

Acqu

isition

of tre

asury

share

s –

(3,36

0,080

) –

– –

– –

– (3,

360,0

80)

– (3,

360,0

80)

Final

single

tier d

ividen

d of 0

.50 se

n per

share

–

– –

– –

– –

(3,71

9,205

) (3,

719,2

05)

– (3,

719,2

05)

First

interi

m sin

gle tie

r divid

end o

f 0.50

sen p

er sh

are

– –

– –

– –

– (3,

698,9

09)

(3,69

8,909

) –

(3,69

8,909

)

Seco

nd in

terim

share

divid

end v

ia dis

tributi

on of

tre

asury

share

s on t

he ba

sis of

1 tre

asury

share

for

every

100 e

xistin

g ordi

nary

share

s –

– –

– –

– –

(3,77

6,960

) (3,

776,9

60)

– (3,

776,9

60)

Total

trans

actio

ns w

ith ow

ners

754,5

14

(3,36

0,080

) –

880,1

25

– –

– (11

,195,0

74)

(12,92

0,515

) –

(12,92

0,515

)

Profit

for th

e fina

ncial

year

– –

– –

– –

– 47

,458,1

90

47,45

8,190

–

47,45

8,190

Ot

her c

ompre

hens

ive in

come

for th

e fina

ncial

year

– –

(199

,004)

– (30

4,442

) –

(1,23

7,262

) 19

9,004

(1,

541,7

04)

– (1,

541,7

04)

Total

comp

rehen

sive i

ncom

e for

the fin

ancia

l yea

r –

– (19

9,004

) –

(304

,442)

– (1

,237,2

62)

47,65

7,194

45

,916,4

86

– 45

,916,4

86

Balan

ce at

28 Fe

bruary

2019

20

8,298

,243

(4,17

1,344

) 12

,134,1

68

2,960

,508

839,8

25

14,74

8,628

8,3

09,00

9 34

3,330

,869

586,4

49,90

6 –

586,4

49,90

6

Statements of Changes in Equity (cont’d)

65


N

on-d

istri

buta

ble

Di

strib

utab

le

Empl

oyee

s Ca

sh fl

ow

Shar

e Tr

easu

ry

shar

e op

tion

hedg

e W

arra

nts

Unap

prop

riate

d

capi

tal

shar

es

rese

rve

rese

rve

rese

rve

profi

t To

tal

RM

RM

RM

RM

RM

RM

RM

Com

pany

Bala

nce

at 1

Mar

ch 2

017

203,

928,

587

(553

,111

) 96

0,34

8 90

9,26

1 14

,869

,037

6,

535,

546

226,

649,

668

Tran

sact

ions

with

ow

ners

:-

Shar

e op

tion

gran

ted

unde

r ESO

S –

– 1

,699

,375

–

– –

1,69

9,37

5

Exer

cise

of E

SOS

2,94

2,60

0 –

(579

,340

) –

– –

2,36

3,26

0

Issu

ance

of s

hare

s pu

rsua

nt to

exe

rcise

of w

arra

nts

672

,542

–

– –

(120

,409

) –

552,

133

Acqu

isitio

n of

trea

sury

sha

res

– (2

58,1

53)

– –

– –

(258

,153

)

Fina

l sin

gle

tier d

ivide

nd o

f 0.5

0 se

n pe

r sha

re

– –

– –

– (3

,706

,752

) (3

,706

,752

)

Firs

t int

erim

sin

gle

tier d

ivide

nd o

f 0.5

0 se

n pe

r sha

re

and

spec

ial s

ingl

e tie

r divi

dend

of 0

.50

sen

per s

hare

–

– –

– –

(7,4

17,2

27)

(7,4

17,2

27)

Seco

nd in

terim

sin

gle

tier d

ivide

nd o

f 0.5

0 se

n pe

r sha

re

– –

– –

– (3

,715

,751

) (3

,715

,751

)

Third

inte

rim s

ingl

e tie

r divi

dend

of 0

.50

sen

per s

hare

–

– –

– –

(3,7

23,0

70)

(3,7

23,0

70)

Tota

l tra

nsac

tions

with

ow

ners

3,

615,

142

(2

58,1

53)

1,1

20,0

35

– (1

20,4

09)

(18,

562,

800)

(1

4,20

6,18

5)

Profi

t for

the

finan

cial

yea

r –

– –

– –

24,6

76,7

36

24,6

76,7

36

Oth

er c

ompr

ehen

sive

inco

me

for t

he fi

nanc

ial y

ear

– –

– (1

,012

,618

) –

– (1

,012

,618

)

Tota

l com

preh

ensiv

e in

com

e fo

r the

fina

ncia

l yea

r –

– –

(1,0

12,6

18)

– 24

,676

,736

23

,664

,118

Bala

nce

at 2

8 Fe

brua

ry 2

018

207

,543

,729

(8

11,2

64)

2,0

80,3

83

(103

,357

) 1

4,74

8,62

8 12

,649

,482

23

6,10

7,60

1


66


N

on-d

istri

buta

ble

Di

strib

utab

le

Empl

oyee

s Ca

sh fl

ow

Shar

e Tr

easu

ry

shar

e op

tion

hedg

e W

arra

nts

Unap

prop

riate

d

capi

tal

shar

es

rese

rve

rese

rve

rese

rve

profi

t To

tal

RM

RM

RM

RM

RM

RM

RM

Com

pany

(con

t’d)

Bala

nce

at 1

Mar

ch 2

018

207

,543

,729

(8

11,2

64)

2,0

80,3

83

(103

,357

) 1

4,74

8,62

8 12

,649

,482

23

6,10

7,60

1

Tran

sact

ions

with

ow

ners

:-

Shar

e op

tion

gran

ted

unde

r ESO

S –

– 1,

027,

702

– –

– 1,

027,

702

Exer

cise

of E

SOS

754,

514

– (1

47,5

77)

– –

– 60

6,93

7

Acqu

isitio

n of

trea

sury

sha

res

– (3

,360

,080

) –

– –

– (3

,360

,080

)

Fina

l sin

gle

tier d

ivide

nd o

f 0.5

0 se

n pe

r sha

re

– –

–

– –

(3,7

19,2

05)

(3,7

19,2

05)

Firs

t int

erim

sin

gle

tier d

ivide

nd o

f 0.5

0 se

n pe

r sha

re

– –

– –

– (3

,698

,909

) (3

,698

,909

)

Seco

nd in

terim

sha

re d

ivide

nd v

ia d

istrib

utio

n of

tre

asur

y sh

ares

on

the

basis

of 1

trea

sury

sha

re

for e

very

100

exi

stin

g or

dina

ry s

hare

s –

– –

– –

(3,7

76,9

60)

(3,7

76,9

60)

Tota

l tra

nsac

tions

with

ow

ners

75

4,51

4 (3

,360

,080

) 88

0,12

5 –

– (1

1,19

5,07

4)

(12,

920,

515)

Profi

t for

the

finan

cial

yea

r –

– –

– –

14,5

95,1

86

14,5

95,1

86

Oth

er c

ompr

ehen

sive

inco

me

for t

he fi

nanc

ial y

ear

– –

– 18

1,82

1 –

– 18

1,82

1

Tota

l com

preh

ensiv

e in

com

e fo

r the

fina

ncia

l yea

r –

– –

181,

821

– 14

,595

,186

14

,777

,007

Bala

nce

at 2

8 Fe

brua

ry 2

019

208,

298,

243

(4

,171

,344

) 2

,960

,508

7

8,46

4

14,

748,

628

16,0

49,5

94

237,

964,

093

The

acco

mp

anyi

ng n

otes

form

an

inte

gral

par

t of

the

fina

ncia

l sta

tem

ents

.


67


STATEMENTS OFCASH FLOWS



OPERATING ACTIVITIES Profit before tax 60,792,158 58,133,130 15,491,415 25,608,948

Adjustments for:- Allowance for impairment of receivables 3,237,495 4,130,429 – – Bad debts written off 17,706 – – – Inventories written down 2,536,300 1,155,136 – – Amortisation of prepaid land lease payments 582,044 582,043 – – Depreciation of property, plant and equipment 16,438,348 16,426,299 – – Interest expense 9,348,400 8,142,031 380,634 448,422 Property, plant and equipment written off 14,774 174,515 – – Reversal of inventories written down (84,069) (199,057) – – Employees Share Option Scheme expenses 1,027,702 1,699,375 1,027,702 1,699,375 Interest income (919,112) (1,017,401) (100,203) (54,099) Share of (profit)/loss from associate company (719,293) 211,972 – – Dividend income – – (15,626,040) (26,622,475) Overprovision of leave entitlement – (60,991) – – Gain on disposal of property, plant and equipment (90,765) (559,603) – – Loss from cross currency swap – 242 – 242 Fair value loss/(gain) on derivatives financial instruments 4,400 (4,400) – – Fair value loss adjustment on investment properties 300,000 – – – Allowance for impairment of receivables no longer required (4,402,242) (1,974,697) – – Unrealised loss/(gain) on foreign exchange 1,515 455,218 – (55)

Operating profit before working capital changes 88,085,361 87,294,241 1,173,508 1,080,358

Changes in working capital:- Inventories (82,623,859) (14,624,144) – – Receivables 11,687,525 (18,425,268) 45,714 343 Payables 2,379,127 (37,144,344) (38,036) 35,766 Associate company (30,068,479) 4,317,755 – –

Cash flows (used in)/from operations (10,540,325) 21,418,240 1,181,186 1,116,467

Tax refund – 397,024 – –Tax paid (15,866,518) (12,839,784) (948,972) (750,295)

Net cash flows (used in)/from operating activities (26,406,843) 8,975,480 232,214 366,172

68



INVESTING ACTIVITIES Dividend received – – 15,626,040 26,622,475 Interest received 919,112 1,017,401 100,203 54,099 Purchase of property, plant and equipment A (20,293,262) (3,485,275) – – Investment in subsidiary companies – – – (2,550,000) Acquisition of interest in subsidiary from non-controlling interest – (7,016,000) – (7,016,000) Proceeds from disposal of property, plant and equipment 114,500 2,100,494 – – Capital work-in-progress incurred (13,775,093) (4,360,830) – –

Net cash flows (used in)/from investing activities (33,034,743) (11,744,210) 15,726,243 17,110,574

FINANCING ACTIVITIES Advance to subsidiary companies – – (5,193,245) (3,962) Dividend paid (11,141,184) (17,055,692) (11,141,184) (17,055,692) Proceeds from issuance of share capital 606,937 2,915,393 606,937 2,915,393 Purchase of treasury shares (3,360,080) (258,153) (3,360,080) (258,153) Interest paid (9,369,817) (8,163,448) (330,003) (469,839) Repayment of finance lease creditors (2,742,828) (3,092,242) – – Drawndown of short-term borrowings 56,363,448 20,693,654 5,069,389 – Repayment of term loans (13,577,759) (16,270,408) (2,058,758) (3,290,000) Drawndown of term loans 22,633,977 3,041,228 – –

Net cash flows from/(used in) financing activities 39,412,694 (18,189,668) (16,406,944) (18,162,253) CASH AND CASH EQUIVALENTS Net changes (20,028,892) (20,958,398) (448,487) (685,507) Effect of exchange rate changes (1,155,187) (411,076) – (187) At beginning of financial year 70,223,029 91,592,503 2,307,581 2,993,275

At end of financial year B 49,038,950 70,223,029 1,859,094 2,307,581

Statements of Cash Flows (cont’d)

69


NOTES TO THE STATEMENTS OF CASH FLOWS

A. PURCHASE OF PROPERTY, PLANT AND EQUIPMENT

Group Company 2019 2018 2019 2018 RM RM RM RM

Acquired by means of finance lease 1,565,958 7,303,324 – –Cash payments 20,293,262 3,485,275 – –

21,859,220 10,788,599 – –

B. CASH AND CASH EQUIVALENTS

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


Cash and bank balances 48,606,847 67,746,034 1,859,094 2,307,581 Fixed deposits with licensed banks 2,546,650 2,476,995 – –Bank overdraft (2,114,547) – – –

49,038,950 70,223,029 1,859,094 2,307,581

Reconciliation of liabilities arising from financing activities

Group Foreign 1 March Net exchange 28 February 2018 cash flows movement 2019 RM RM RM RM

Finance lease creditors 8,744,154 (1,176,870) 1,351 7,568,635 Term loans 49,595,614 9,056,218 (21,417) 58,630,415 Short-term borrowings 118,231,158 56,363,448 829,863 175,424,469

Total liabilities from financing activities 176,570,926 64,242,796 809,797 241,623,519

Group Foreign 1 March Net exchange 28 February 2017 cash flows movement 2018 RM RM RM RM

Finance lease creditors 4,557,282 4,211,082 (24,210) 8,744,154 Term loans 62,846,211 (13,229,180) (21,417) 49,595,614 Short-term borrowings 96,485,649 20,693,654 1,051,855 118,231,158

Total liabilities from financing activities 163,889,142 11,675,556 1,006,228 176,570,926


70


NOTES TO THE STATEMENTS OF CASH FLOWS (CONT’D)

B. CASH AND CASH EQUIVALENTS (CONT’D)

Cash and cash equivalents included in the statements of cash flows comprise the following statements of financial position amounts (cont’d):-

Reconciliation of liabilities arising from financing activities (cont’d)

Company Foreign 1 March Net exchange 28 February 2018 cash flows movement 2019 RM RM RM RM

Term loans 6,686,752 (2,058,758) – 4,627,994 Short-term borrowings – 5,069,389 – 5,069,389

Total liabilities from financing activities 6,686,752 3,010,631 – 9,697,383

Company Foreign 1 March Net exchange 28 February 2017 cash flows movement 2018 RM RM RM RM

Term loans 9,998,169 (3,290,000) (21,417) 6,686,752

Total liabilities from financing activities 9,998,169 (3,290,000) (21,417) 6,686,752



71


NOTES TO THEFINANCIAL STATEMENTS

- 28 February 2019

1. GENERAL INFORMATION

The Company is principally engaged in investment holding and provision of management services.

The principal activities of the subsidiary companies and associate company are disclosed in Notes 9 and 10 to the Financial Statements respectively.

There have been no significant changes in the nature of these activities of the Company, its subsidiary companies and associate company during the financial year.

The Company is a public limited liability company, incorporated and domiciled in Malaysia and listed on the Main Market of the Bursa Malaysia Securities Berhad. The registered office of the Company is located at No. 5-9A, The BoulevardOffice,MidValleyCity,LingkaranSyedPutra,59200KualaLumpur.TheprincipalplaceofbusinessoftheCompanyislocatedatPTD204334,JalanPlatinumUtama,KawasanPerindustrianPasirGudang,Zon12B,81700Pasir Gudang, Johor Darul Takzim.

The financial statements were authorised for issue by the Board of Directors in accordance with a resolution of the Directors on 12 June 2019.

2. BASIS OF PREPARATION OF THE FINANCIAL STATEMENTS

2.1 Statement of compliance

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

2.2 Basis of measurement

The financial statements of the Group and of the Company are prepared under historical cost convention, except for certain buildings and freehold land and financial instruments that are measured at revalued amount or fair value at the end of each reporting period as indicated in the summary of significant accounting policies.

Historical cost is generally based on the fair value of the consideration given in exchange for goods and services.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date and its measurement assumes that the transaction to sell the asset or transfer the liability takes place either in the principal market for the asset or liability, or in the absence of a principal market, in the most advantageous market for the asset or liability. The principal or the most advantageous market must be accessible to by the Group and the Company.

The fair value of an asset or a liability is measured using the assumptions that market participants would use

when pricing the asset or liability, assuming that market participants act in their economic best interest.

A fair value measurement of a non-financial asset takes into account a market participant’s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.

The Group and the Company use valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.

72


Notes to the Financial Statements (cont’d)

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

2.2 Basis of measurement (cont’d)

All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy, described as follows, based on the lowest level input that is significant to their fair value measurement as a whole:-

Level1 – Quoted(unadjusted)marketpricesinactivemarketsforidenticalassetsorliabilities.Level 2 – Valuation techniques for which the lowest level input that is significant to their fair value measurement

is directly or indirectly observable. Level 3 – Valuation techniques for which the lowest level input that is significant to their fair value measurement

is unobservable.

For assets and liabilities that are recognised in the financial statements on a recurring basis, the Group and the Company determine whether transfers have occurred between levels in the hierarchy by re-assessing categorisation (based on the lowest level input that is significant to their fair value measurement as a whole) at the end of each reporting period.

The Group and the Company have established control framework in respect of measurement of fair values of financial instruments. The Board of Directors has overall responsibility for overseeing all significant fair value measurements. The Board of Directors regularly reviews significant unobservable inputs and valuation adjustments.

For the purpose of fair value disclosures, the Group and the Company have determined classes of assets and liabilities on the basis of the nature, characteristics and risks of the asset or liability and the level of fair value hierarchy as explained above.

2.3 Functional and presentation currency

The financial statements are presented in Ringgit Malaysia (“RM”) which is the Company’s functional currency and all values are rounded to the nearest RM except when otherwise stated.

2.4 MFRSs

2.4.1 Adoption of new or revised MFRSs

The accounting policies adopted by the Group and the Company are consistent with those of the prior financial year except for the new and revised MFRSs and IC Interpretations approved by the Malaysian Accounting Standards Board (“MASB”) and applicable for current financial year. Application of the new and revised MFRSs and interpretations has no material impact on financial statements of the Group and of the Company except for those explanations as disclosed in Note 4 to the Financial Statements.

2.4.2 Standards Issued But Not Yet Effective

At the date of authorisation of these financial statements, the MASB has approved certain new standards, amendments and interpretations to existing standards which are not yet effective, and have not been early adopted by the Group and the Company.

73




2.4 MFRSs (cont’d)

2.4.2 Standards Issued But Not Yet Effective (cont’d)

The management anticipates that all of the relevant pronouncements will be adopted in the Group’s and the Company’s accounting policies for the first period beginning after the effective date of the pronouncement. The initial application of the new standards, amendments and interpretations are not expected to have any material impacts to the financial statements of the Group and the Company except as mentioned below:-

2.4.2.1 MFRS 16 Leases

MFRS 16, Leases becomes mandatory with annual periods beginning on or after 1 January 2019. The new Standard replaces the guidance in MFRS 117, Leases, IC Interpretation 4 Determining Whether an Arrangement Contains A Lease, SIC-15 Operating Leases – Incentives and SIC-27 Evaluating the Substance of Transactions Involving The Legal Form of A Lease.

Essentially, the new Standard requires all lease arrangements (“right of use assets”) to be recognised on the statements of financial position. The structure of the statements of profit or loss will change as the previous lease expense will be replaced by a depreciation charge on the right of use assets and the interest expense on the corresponding lease liability. The related cash flows will be divided into a repayment of the lease liability and interest portion, thus changing the structure of the cash flows.

The Group will apply MFRS 16 for the first time using the modified retrospective method of which the comparative amounts for the period prior to the first adoption of the new Standard will not be restated and the management is currently assessing the financial impact of adopting MFRS 16.

2.5 Significant Accounting Estimates and Judgements

The preparation of financial statements for the Group and the Company requires the use of certain judgements, estimates and assumptions. Accounting estimates and judgements are being constantly reviewed against historical experience and other factors, such as expectations of future events that are believed to be reasonable under the circumstances. However, because of uncertainty in determining future events and its impact, actual results could differ from these estimates.

2.5.1 Estimation uncertainty

Information about significant estimates and assumptions that have the most significant effect on recognition and measurement of assets, liabilities, income and expenses are discussed below.

Useful lives of depreciable assets

The management estimates the useful lives of the property, plant and equipment to be within 3 to 50 years and reviews the useful lives of depreciable assets at each reporting date. At 28 February 2019, the management assesses that the useful lives represent the expected utility of the assets to the Group. The carrying amounts are analysed in Note 5 to the Financial Statements. Actual results, however, may vary due to change in the expected level of usage and technological developments, which result in adjustment to the Group’s assets.

A 3% (2018: 3%) difference in the expected useful lives of the property, plant and equipment from the management’s estimate would result in approximately 1.04% (2018: 1.08%) variance in the Group’s profit for the financial year.

74




2.5 Significant Accounting Estimates and Judgements (cont’d)

2.5.1 Estimation uncertainty (cont’d)

Impairment of inventories

The management reviews inventories to identify damaged, obsolete and slow-moving inventories which require judgement and changes in such estimates could result in revision to valuation of inventories.

The carrying amount of the Group’s inventories at the end of the reporting period is disclosed in Note 14 to the Financial Statements.

A 2% (2018: 2%) difference in the management’s estimation of net realisable values of the inventories would result in approximately 0.11% (2018: 0.04%) variance in the Group’s profit for the financial year.

Provision for expected credit losses (“ECLs”) for trade receivables

The Group uses a provision matrix to calculate ECLs for trade receivables. The provision rates are based on days past due for grouping of various customer segments that have similar loss patterns such as customer type and rating and other forms of credit insurance.

The provision matrix is initially based on the Group’s historical observed default rates. The Group will calibrate the matrix to adjust the historical credit loss experience with forward-looking information. On each quarterly reporting date, the historical observed default rates are updated and changes in the forward-looking estimates are analysed.

The assessment of the correlation between historical observed rates, forecast of economic conditions and ECLs is a significant estimate. The amount of ECLs is sensitive to changes in circumstances and forecast of economic conditions. The Group’s historical credit loss experience and forecast of economic conditions may not be representative of customers’ actual default rate in the future. The information about the ECLs on the Group’s trade receivables is disclosed in Note 15 to the Financial Statements.

Impairment of property, plant and equipment and prepaid land lease payments

The Group carries out impairment tests based on a variety of estimation including value-in-use of cash-generating unit to which the property, plant and equipment and prepaid land lease payments are allocated. Estimating the value-in-use requires the Group to make an estimate of the expected future cash flows from cash-generating unit and also to choose a suitable discount rate in order to calculate present value of those cash flows.

Impairment of non-financial assets

An impairment loss is recognised for the amount by which the asset’s or cash generating unit’s carrying amount exceeds its recoverable amount. To determine the recoverable amount, management estimates expected future cash flows from each cash-generating unit and determines a suitable interest rate in order to calculate the present value of those cash flows. In the process of measuring expected future cash flows, management makes assumptions about future operating results. These assumptions relate to future events and circumstances. The actual results may vary,and may cause significant adjustments to the Group’s assets within the next financial year.

In most cases, determining the applicable discount rate involves estimating the appropriate adjustment to market risk and the appropriate adjustment to asset-specific risk factors.

Further details of the carrying values, key assumptions applied in the impairment assessment of goodwill and sensitivity analysis to changes in the assumptions are disclosed in Note 11 to the Financial Statements.

75






Income taxes/Deferred tax liabilities

Significant judgement is involved in determining the Group-wide provision for income taxes. There are certain transactions and computations for which the ultimate tax determination is uncertain during the ordinary course of business. The Group and the Company recognise tax liabilities based on estimates of whether additional taxes will be due. Where the final tax outcome is different from the amounts that were initially recognised, such difference will impact the income tax and deferred tax provisions in the period in which such determination is made.

Deferred tax assets

Deferred tax assets are recognised for all deductible temporary differences, unutilised tax losses, unabsorbed capital allowances and unused tax credits to the extent that it is probable that taxable profit will be available against which all the deductible temporary differences, unutilised tax losses and unabsorbed capital allowances can be utilised. Significant management judgement is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and level of future taxable profits together with future tax planning strategies.

Assumptions about generation of future taxable profits depend on management’s estimates of future cash flows. These depend on estimates of future production and sales volume, operating costs, capital expenditure, dividends and other capital management transactions. Judgement is also required about application of income tax legislation. These judgements and assumptions are subject to risks and uncertainty, hence there is a possibility that changes in circumstances will alter expectations, which may impact the amount of deferred tax assets recognised in the statements of financial position and the amount of unrecognised tax losses and unrecognised temporary differences.

Employees share option The Group measures the cost of equity-settled transactions with employees by reference to the fair value

of the equity instruments at the date at which they are granted. Estimating fair value for share-based payment transactions requires determining the most appropriate valuation model, which is dependent on the terms and conditions of the grant. This estimate also require determining the most appropriate inputs to the valuation model including the expected life of the share option, volatility and dividend yield and making assumptions about them.

The assumptions and model used for estimating fair value for share-based payment transactions, sensitivity analysis and the carrying amounts are disclosed in Note 36 to the Financial Statements.

76






Fair value measurement and valuation processes

Some of the Group’s assets and liabilities are measured at fair value for financial reporting. Significant judgement is involved in determining the appropriate valuation techniques and inputs for fair value measurements where active market quotes are not available.

In estimating the fair value of an asset or a liability, the Group uses market-observable data to the extent it is available. Management makes maximum use of market inputs, and uses estimates and assumptions that are, as far as possible, consistent with observable data that market participants would use in measuring the assets and liabilities. Where Level 1 inputs are not available, management uses its best estimate about the assumptions that market participants would make. These estimates may vary from the actual prices that would be achieved in an arm’s length transaction at the end of the reporting date. For the valuation of land and buildings, the Group engages third party qualified valuers to perform the valuation.

Information about the valuation techniques and inputs used in determining the fair value of various assets

and liabilities are disclosed in the Notes 5 and 8 to the Financial Statements.

2.5.2 Significant management judgements

The following are significant management judgements in applying the accounting policies of the Group that have the most significant effect on the financial statements.

Classification between investment properties and owner-occupied properties

The Group determines whether a property qualifies as an investment property, and has developed criteria in making that judgement. Investment property is a property held to earn rentals or for capital appreciation or both. Therefore, the Group considers whether a property generates cash flows largely independently of the other assets held by the Group.

Some properties comprise a portion that is held to earn rentals or for capital appreciation and another portion that is held for use in the production or supply of goods or services or for administrative purposes. The Group accounts for the portions separately if the portions could be sold separately (or leased out separately under a finance lease). If the portions could not be sold separately, the property is an investment property only if an insignificant portion is held for use in the production or supply of goods or services or for administrative purposes.

Judgement is made on an individual property basis to determine whether ancillary services are so significant that a property does not qualify as an investment property.

Deferred tax assets

The assessment of the probability of future taxable income in which deferred tax assets can be utilised is based on the Group’s latest approved budget forecast, which is adjusted for significant non-taxable income and expenses and specific limits to the use of any unused tax loss or credit. The tax rules in the numerous jurisdictions in which the Group operates are also carefully taken into consideration. If a positive forecast of taxable income indicates the probable use of a deferred tax asset, especially when it can be utilised without a time limit, that deferred tax asset is usually recognised in full. The recognition of deferred tax assets that are subject to certain legal or economic limits or uncertainties is assessed individually by management based on the specific facts and circumstances.

77



3. SIGNIFICANT ACCOUNTING POLICIES

The Group and the Company apply the significant accounting policies, as summarised below, consistently throughout all periods presented in the financial statements.

3.1 Consolidation

3.1.1 Subsidiary companies

Subsidiary companies are entities, including structured entities, controlled by the Company. Control exists when the Group is exposed, or has rights, to variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Potential voting rights are considered when assessing control only when such rights are substantive. Besides, the Group considers it has de facto power over an investee when, despite not having the majority of voting rights, it has the current ability to direct the activities of the investee that significantly affect the investee’s return.

Investment in subsidiary companies is stated at cost in the Company’s statement of financial position. Where an indication of impairment exists, the carrying amount of the subsidiary companies is assessed and written down immediately to their recoverable amount.

Upon the disposal of investment in a subsidiary company, the difference between the net disposal proceeds and its carrying amount is included in profit or loss.

3.1.2 Basis of consolidation

The Group’s financial statements consolidate the audited financial statements of the Company and all of its subsidiary companies, which have been prepared in accordance with the Group’s accounting policies. Amounts reported in the financial statements of subsidiary companies have been adjusted where necessary to ensure consistency with the accounting policies adopted by the Group. The financial statements of the Company and its subsidiary companies are all drawn up to the same reporting period.

All intra-group balances, income and expenses and unrealised gains and losses resulting from intra-group transactions are eliminated in full in preparing the consolidated financial statements. Intra-group losses may indicate an impairment that requires recognition in the consolidated financial statements.

Subsidiaries are consolidated from the date on which control is transferred to the Group and are no longer consolidated from the date that control ceases.

Changes in the Company owners’ ownership interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions. In such circumstances, the carrying amounts of the controlling and non-controlling interests are adjusted to reflect the changes in their relative interests in the subsidiary company. Any difference between the amount by which the non-controlling interest is adjusted and the fair value of the consideration paid or received is recognised directly in equity and attributed to owners of the parent.

78



3. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

3.1 Consolidation (cont’d)

3.1.3 Business combinations and goodwill

Business combinations are accounted for using the acquisition method. The cost of an acquisition is measured as the aggregate of the consideration transferred, measured at acquisition date fair value and the amount of any non-controlling interest in the acquiree. For each business combination, the Group elects whether it measures the non-controlling interest in the acquiree either at fair value or at the proportionate share of the acquiree’s identifiable net assets. Acquisition costs incurred are expensed and included in administrative expenses.

When the Group acquires a business, it assesses the financial assets and liabilities assumed for appropriate classification and designation in accordance with the contractual terms, economic circumstances and pertinent conditions as at the acquisition date. This includes the separation of embedded derivatives in host contracts by the acquiree.

If the business combination is achieved in stages, the acquisition date fair value of the acquirer’s previously held equity interest in the acquiree is remeasured to fair value at the acquisition date through profit or loss.

Any contingent consideration to be transferred by the acquirer will be recognised at fair value at the acquisition date. Subsequent changes in the fair value of the contingent consideration which is deemed to be an asset or liability will be recognised in accordance with MFRS 139 either in profit or loss or as a change to other comprehensive income. If the contingent consideration is classified as equity, it will not be remeasured. Subsequent settlement is accounted for within equity. In instances where the contingent consideration does not fall within the scope of MFRS 139, it is measured in accordance with the appropriate MFRS.

Goodwill is initially measured at cost, being the excess of the aggregate of the consideration transferred and the amount recognised for non-controlling interest over the net identifiable assets acquired and liabilities assumed. If this consideration is lower than the fair value of the net assets of the subsidiary acquired, the difference is recognised in profit or loss.

After initial recognition, goodwill is measured at cost less any accumulated impairment losses. For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to each of the Group’s cash-generating units that are expected to benefit from the combination, irrespective of whether other assets or liabilities of the acquiree are assigned to those units.

Where goodwill forms part of a cash-generating unit and part of the operation within that unit is disposed of, the goodwill associated with the operation disposed of is included in the carrying amount of the operation when determining the gain or loss on disposal of the operation. Goodwill disposed of in this circumstance is measured based on the relative values of the operation disposed of and the portion of the cash-generating unit retained.

3.1.4 Loss of control

Upon the loss of control of a subsidiary company, the Group derecognises the assets and liabilities of the subsidiary company, any non-controlling interests and the other components of the equity related to the subsidiary company. Any surplus or deficit arising on the loss of control is recognised in profit or loss.

If the Group retains any interest in the previous subsidiary company, then such interest is measured at fair value at the date that control is lost. Subsequently, it is accounted for as an equity accounted investee or as an available-for-sale financial asset depending on the level of influence retained.

79




3.1 Consolidation (cont’d)

3.1.5 Associate company

An associate company is an entity in which the Group has significant influence, but no control, over its financial and operating policies.

The Group’s investment in associate company is accounted for using the equity method. Under the equity method, investment in an associate company is carried in the consolidated statement of financial position at cost plus post acquisition changes in the Group’s share of net assets of the associate company. Goodwill relating to the associate company is included in the carrying amount of the investment and is neither amortised nor individually tested for impairment.

The share of the result of an associate company is reflected in profit or loss. This is the profit attributable to equity holders of the associate company and therefore is the profit after tax and non-controlling interests in the associate company. When the Group’s share of losses exceeds its interest in an associate company, the carrying amount of that interest including any long-term investment is reduced to zero, and the recognition of further losses is discontinued except to the extent that the Group has an obligation or has made payments on behalf of the associate company.

Where there has been a change recognised directly in the equity of an associate company, the Group recognises its share of any changes and discloses this, when applicable, in the consolidated statement of changes in equity.

The financial statements of the associate company are prepared as of the same reporting period as the Company. Where necessary, adjustments are made to bring the accounting policies of the associate company in line with those of the Group.

After application of the equity method, the Group determines whether it is necessary to recognise an additional impairment loss on the Group’s investment in its associate company. The Group determines at each end of the reporting period whether there is any objective evidence that the investment in the associate company is impaired. If this is the case, the Group calculates the amount of impairment as the difference between the recoverable amount of the associate company and their carrying value and recognise the amount in the “share of profit of associates” in profit or loss.

Upon loss of significant influence over an associate company, the Group measures and recognises any retaining investment at its fair value. Any difference between the carrying amount of the associate company upon loss of significant influence and the fair value of the retaining investment and proceeds from disposal is recognised in profit or loss.

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

80




3.2 Property, plant and equipment

Property, plant and equipment are initially stated at cost. Land and buildings are subsequently shown at market value, based on valuations by external valuers, less subsequent depreciation and any impairment losses. All other property, plant and equipment are stated at historical cost less accumulated depreciation and any impairment losses.

Revaluation is made at least once in every five years based on valuation by an independent valuer on an open market value basis. Any revaluation increase is credited to equity as a revaluation surplus, except to the extent that it reverses a revaluation decrease for the same asset previously recognised as an expense, in which case, the increase is recognised in profit or loss to the extent of the decrease previously recognised. A revaluation decrease is first offset against an increase on unutilised valuation surplus in respect of the same asset and is thereafter recognised as an expense. Upon the disposal of revalued assets, the attributable revaluation surplus remaining in the revaluation reserve is transferred to unappropriated profit.

Depreciation is provided on the straight-line method in order to write off the cost of each asset over its estimated useful life. No depreciation is provided on freehold land.

The principal annual depreciation rates used are as follows:-

Factory buildings 2.00% - 5.50%Renovation, warehouse extension and electrical installation 10.00% - 33.33%Computers and software 20.00% - 33.33%Crane, plant and machinery 7.00% - 20.00%Factory equipment 10.00% - 25.00%Office equipment, telecommunication system, furniture and fittings 10.00% - 20.00%Forklift, mobile crane and motor vehicles 20.00% - 25.00%

Restoration cost relating to an item of property, plant and equipment is capitalised only if such expenditure is

expected to increase the future benefits from the existing property, plant and equipment beyond its previously assessed standard of performance.

Property, plant and equipment are written down to recoverable amount if, in the opinion of the Directors, it is less than their carrying value. Recoverable amount is the net selling price of the property, plant and equipment i.e. the amount obtainable from the sale of an asset in an arm’s length transaction between knowledgeable, willing parties, less the costs of disposal.

The residual values, useful life and depreciation method are reviewed at each financial year end to ensure that the amount, method and period of depreciation are consistent with previous estimates and the expected pattern of consumption of the future economic benefits embodied in the items of property, plant and equipment.

An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset is included in profit or loss in the financial year in which the asset is derecognised.

81




3.3 Investment properties

Investment properties consist of land and buildings held for capital appreciation or rental purpose and not occupied by the Group or only an insignificant portion is occupied for use in the operations of the Group. Investment properties are treated as long-term investments and are measured initially at cost, including transaction costs. The carrying amount includes the cost of replacing part of an existing investment property at the time that cost is incurred if the recognition criteria are met and excludes the costs of day-to-day servicing of an investment property.

Subsequent to initial recognition, investment properties are stated at fair value, which reflects market conditions at the reporting date. Gains or losses arising from changes in the fair values of investment properties are included in profit or loss in the financial year in which they arise.

Investment properties are derecognised when either they are disposed of or when they are permanently withdrawn from use and no future economic benefit is expected from the disposal. Any gain or loss on the retirement or disposal of an investment property is recognised in profit or loss in the financial year of retirement or disposal.

3.4 Inventories

Inventories comprising of raw materials, work-in-progress and finished goods are stated at the lower of cost and net realisable value.

The costs of inventories are determined on weighted average method.

Cost of trading finished goods and raw materials refers to invoiced cost of goods purchased plus incidental handling and freight charges.

Cost of work-in-progress and finished goods include raw materials, direct labour, other direct costs and an appropriate proportion of manufacturing overheads.

Net realisable value represents the estimated selling price in the ordinary course of business less selling and distribution costs and all other estimated costs to completion.

3.5 Assets acquired under lease agreements

Accounting by lessees

Finance leases

Lease of property, plant and equipment acquired under hire purchase and finance lease arrangements which transfer substantially all the risks and rewards of ownership to the Group are capitalised. The depreciation policy on these assets is similar to that of the Group’s property, plant and equipment depreciation policy.

Outstanding obligation due under hire purchase and finance lease arrangements after deducting finance expenses are included as liabilities in the financial statements. Finance charges on hire purchase and finance lease arrangements are allocated to profit or loss over the period of the respective agreements.

82




3.5 Assets acquired under lease agreements (cont’d)

Accounting by lessees (cont’d)

Operating leases

Leased payments for operating leases, where substantially all the risk and benefits remain with the lessor, are charged as expenses in the period in which they are incurred.

Leased assets

Leasehold land that normally has an indefinite economic life and title is not expected to pass to the Group by the end of the lease term is treated as operating lease. The payment made on entering into or acquiring a leasehold land is accounted for as prepaid land lease payment and is amortised over the respective lease term ranging from 59 to 88 years (2018: 59 to 88 years).

3.6 Foreign currency translation

The Group’s consolidated financial statements are presented in RM, which is also the parent company’s functional currency.

3.6.1 Foreign currency transactions and balances

Transactions in foreign currencies are initially recorded at the functional currency rates prevailing at the date of the transaction.

Monetary assets and liabilities denominated in foreign currencies are retranslated at the functional currency spot rate of exchange ruling at the reporting date.

All differences are taken to the profit or loss with the exception of all monetary items that forms part of a net investment in a foreign operation. These are recognised in other comprehensive income until the disposal of the net investment, at which time they are reclassified to profit or loss. Tax charges and credits attributable to exchange differences on those monetary items are also recorded in other comprehensive income.

Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates as at the dates of the initial transactions. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value is determined. The gain or loss arising in translation of non-monetary items is recognised in line with the gain or loss of the item that gave rise to the translation difference (translation differences on items whose gain or loss is recognised in other comprehensive income or profit or loss is also recognised in other comprehensive income or profit or loss respectively).

83




3.6 Foreign currency translation (cont’d)

3.6.2 Foreign operations

The assets and liabilities of operations denominated in functional currencies other than RM, including goodwill and fair value adjustments arising on acquisition, are translated to RM at exchange rates at the end of the reporting period, except for goodwill and fair value adjustments arising from business combination before 1 March 2011 (the date when the Group and the Company first adopted MFRSs) which are treated as assets and liabilities of the Company. The income and expenses of foreign operations are translated to RM at exchange rates at the date of the transactions.

Foreign currency differences are recognised in other comprehensive income and accumulated in the foreign currency translation reserve in equity. However, if the operation is a non-wholly-owned subsidiary company, then the relevant proportionate share of the translation difference is allocated to the non-controlling interests. When a foreign operation is disposed of such that control, significant influence or joint control is lost, the cumulative amount in the foreign currency translation reserve related to that foreign operation is reclassified to profit or loss as part of the profit or loss on disposal.

When the Group disposes of only part of its interest in a subsidiary company that includes a foreign operation, the relevant proportion of the cumulative amount is reattributed to non-controlling interests. When the Group disposes of only part of its investment in an associate company or joint venture company that includes a foreign operation while retaining significant influence or joint control, the relevant proportion of the cumulative amount is reclassified to profit or loss.

In the consolidated financial statements, when settlement of a monetary item receivable from or payable to a foreign operation is neither planned nor likely in the foreseeable future, foreign exchange gains and losses arising from such a monetary item are considered to form part of a net investment in a foreign operation and are recognised in other comprehensive income, and are presented in foreign currency translation reserve in equity.

3.7 Taxes

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

Deferred tax liabilities and assets are provided for under the liability method at the current tax rate in respect of all temporary differences at the reporting date between the carrying amount of an asset or liability in the statements of financial position and its tax base including unused tax losses and capital allowances.

Deferred tax asset are recognised only to the extent that it is probable that taxable profit will be available against which the deductible temporary differences can be utilised. The carrying amount of a deferred tax asset is reviewed at each reporting date. If it is no longer probable that sufficient taxable profit will be available to allow the benefit of part or that entire deferred tax asset to be utilised, the carrying amount of the deferred tax asset will be reduced accordingly. When it becomes probable that sufficient taxable profit will be available, such reductions will be reversed to the extent of the taxable profit.

84




3.7 Taxes (cont’d)

Current tax expense and deferred tax are recognised in profit or loss, except when it arises from a transaction which is recognised directly in equity, in which case the deferred tax is also charged or credited directly in equity, or when it arises from a business combination that is an acquisition, in which case the deferred tax is included in the resulting goodwill.

Deferred tax is measured at the tax rates that are expected to apply in the period when the asset is realised or the liability is settled, based on tax rates that have been enacted or substantively enacted by the reporting date.

Goods and services tax (“GST”)

GST is a consumption tax based on value-added concept. GST is imposed on goods and services at every production and distribution stage in the supply chain including importation of goods and services, at the applicable tax rate of 6%. Input GST that the Company paid on purchases of business inputs can be deducted from output GST.

Revenue, expenses, assets and liabilities are recognised net of the amount of GST except:-

(i) where the GST incurred in a purchase of assets or services is not recoverable from the authority, in which case the GST is recognised as part of receivables or payables in the statement of financial position.

(ii) receivables and payables that are stated with the amount of GST included.

The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the statement of financial position.

The Malaysian Government has zero rated the GST effective from 1 June 2018. This means that the GST rate on the supplies of goods or services or on the importation of goods has been revised from 6% to 0%.

The GST has been replaced with Sales and Services Tax effective from 1 September 2018. The rate for sales tax is fixed at 5% or 10%, while the rate for services tax is fixed at 6%.

3.8 Financial instruments

3.8.1 Financial assets

3.8.1.1 Classification

Accounting policies applied until 28 February 2018

The Group and the Company categorise financial assets as follows:-

• Financialassetsatfairvaluethroughprofitorloss;and• Loansandreceivables.

85




3.8 Financial instruments (cont’d)

3.8.1 Financial assets (cont’d)

3.8.1.1 Classification (cont’d)

Accounting policies applied from 1 March 2018

The classification of financial assets at initial recognition depends on the financial asset’s contractual cash flow characteristics and the Company’s business model for managing them.

From 1 March 2018, the Group and the Company classify their financial assets in the following measurement categories:-

• Thosetobemeasuredsubsequentlyatfairvalue(eitherthroughothercomprehensiveincome(“OCI”)orthroughprofitorloss);and

• Thosetobemeasuredatamortisedcost.

3.8.1.2 Recognition and derecognition


Financial assets are recognised when the Group and the Company become a party to the contractual provisions of the financial instrument.

A financial asset or part of it is derecognised when, and only when the contractual rights to the cash flows from the financial asset has expired or control of the asset is not retained or substantially all of the risks and rewards of ownership of the financial asset are transferred to another party. If the Group neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Group recognises its retained interest in the asset and associated liability for amounts it may have to pay. If the Group retains substantially all the risks and rewards of ownership of a transferred asset, the Group continues to recognise the financial asset and also recognises a collateralised borrowing for the proceeds received.

On derecognition of a financial asset, the difference between the carrying amount and the sum of the consideration received (including any new asset obtained less any new liability assumed) and any cumulative gain or loss that had been recognised in equity is recognised in the profit or loss.


A financial asset is recognised in the statements of financial position when, and only when, the Group and the Company become a party to the contractual provisions of the instrument. Regular way purchases and sales of financial assets are recognised on trade-date, the date on which the Group and the Company commit to purchase or sell the asset.

Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired or have been transferred and the Group has transferred substantially all the risks and rewards of ownership. On derecognition of a financial asset, the difference between the carrying amount (measured at the date of derecognition) and the consideration received (including any new asset obtained less any new liability assumed) is recognised in profit or loss.

86






3.8.1.3 Initial measurement


Financial assets are measured initially at fair value plus transaction costs that are directly attributable to the acquisition or issue of the financial instrument, except for financial instrument carried at fair value through profit or loss, which are measured initially at fair value.


With the exception of trade receivables that do not contain a significant financing component or for which the Group and the Company have applied the practical expedient, the Group and the Company initially measure a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss (“FVTPL”), transaction costs that are directly attributable to the acquisition of the financial asset. Trade receivables that do not contain a significant financing component or for which the Group and the Company have applied the practical expedient are measured at the transaction price determined under MFRS 15.

3.8.1.4 Subsequent measurement


The Group and the Company categorise financial instruments as follows and all financial assets, except for those measured at fair value through profit or loss, are subject to review for impairment:-

(i) Financial assets at fair value through profit or loss

Financial assets at fair value through profit or loss comprise of financial assets which are held for trading or those designated at fair value through profit or loss upon initial recognition. All derivative financial instruments (including separated embedded derivatives) which are acquired principally for the purpose of selling in the near term and contingent consideration in a business combination fall into this category, except for those that are financial guarantee contracts or those designated and effective as hedging instruments.

Subsequent to initial recognition, financial assets at fair value through profit or loss are measured at fair value, with any gains or losses arising on remeasurement recognised in profit or loss. Net gains or net losses on financial assets at fair value through profit or loss do not include exchange differences, interest and dividend income. Exchange differences, interest and dividend income on financial assets at fair value through profit or loss are recognised separately in profit or loss as part of other income or other expenses.

Financial assets at fair value through profit or loss could be presented as current or non-current. Financial assets which are held primarily for trading purposes are presented as current whereas financial assets which are not held primarily for trading purposes are presented as current or non-current based on the settlement date.

87






3.8.1.4 Subsequent measurement (cont’d)

Accounting policies applied until 28 February 2018 (cont’d)

(ii) Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are subsequently measured at amortised cost using effective interest method, less provision for impairment. Gains and losses from loans and receivables are recognised in profit or loss through amortisation process or upon derecognition or impairment. Discounting is omitted where the effect of discounting is immaterial in subsequent measurement.

Loans and receivables are classified as current assets, except for those having maturity dates later than 12 months after the end of the reporting period which are classified as non-current.

Financial assets included in loans and receivables are cash and cash equivalents, amount due from associates, amount due from subsidiaries, trade and most of the other receivables.


Financial assets are subsequently measured at the four categories:-

(i) Amortised cost

Assets that are held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest (“SPPI”) are measured at amortised cost.

Financial assets at amortised cost are subsequently measured using effective interest method and are subject to impairment. Gains and losses are recognised in profit or loss when the asset is derecognised, modified or impaired.

The Group’s and the Company’s financial assets at amortised cost include trade receivables, most of the other receivables, amount due from subsidiaries, amount due from associates and cash and cash equivalents.

(ii) Fair value at other comprehensive income (“FVTOCI”) (debt instruments)

Assets that are held for collection of contractual cash flows and for selling the financial assets, where the assets’ cash flows represent SPPI, are measured at FVTOCI.

For debt instruments at FVTOCI, interest income, foreign exchange revaluation and impairment losses or reversals are recognised in the statements of profit or loss and computed in the same manner as for financial assets measured at amortised cost. The remaining fair value changes are recognised in other comprehensive income. Upon derecognition, the cumulative fair value change recognised in other comprehensive income is reclassified from equity to profit or loss.

88







Accounting policies applied from 1 March 2018 (cont’d)

(iii) Designated at fair value at other comprehensive income (“FVTOCI”) (equity instruments)

The Group’s and the Company’s management may make an irrevocable election at initial recognition to present subsequent changes in fair value gains and losses on equity investments in OCI. There is no subsequent reclassification of fair value gains and losses to profit or loss following the derecognition of the investment. Dividends are recognised as other income in the statements of profit or loss when the right of payment has been established, except when the benefits from such proceeds as a recovery of part of the cost of the financial asset, such gains are recorded in other comprehensive income. Equity instruments designated at FVTOCI are not subject to impairment assessment.

The Group and the Company have not elected to designate any equity investments at FVTOCI.

(iv) FVTPL

Financial assets that do not meet the criteria for amortised cost or FVTOCI are measured at FVTPL. The Group may also irrevocably designate financial assets at FVTPL if doing so significantly reduces or eliminates a mismatch created by assets and liabilities being measured on different bases. Net changes in fair value is recognised in profit or loss in the period which it arises.

This category includes derivative instruments and listed equity investments of which the Group had not irrevocably elected to classify as FVTOCI. Dividends on listed equity investments are also recognised in the statements of profit or loss when the right of payment has been established.

3.8.1.5 Impairment of financial assets


All financial assets (except for financial assets categorised as investment in subsidiaries and investment in associates) are assessed at each reporting date whether there is any objective evidence of impairment as a result of one or more events having an impact on the estimated future cash flows of the asset. Losses expected as a result of future events, no matter how likely, are not recognised.

89






3.8.1.5 Impairment of financial assets (cont’d)

Accounting policies applied until 28 February 2018 (cont’d)

Trade and other receivables and other financial assets carried at amortised cost

An impairment loss in respect of loans and receivables is recognised in profit or loss. The Group and the Company consider factors such as significant delay in payment, default or the probability of insolvency of the loans and receivables to determine whether there is objective evidence that an impairment loss has occurred. If such evidence exists, the amount of impairment loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at the asset’s original effective interest rate. The carrying amount of the asset is reduced through the use of an allowance account.


The Group and the Company assess on a forward looking basis the expected credit losses (“ECLs”) for all debt instruments not held at FVTPL. ECLs represent probability-weighted estimate of the difference between the contractual cash flows due in accordance with the contract and all cash flows that the Group and the Company expect to receive, discounted at an approximation of the original effective interest rate. The expected cash flows include cash flows from the sale of collateral held or other credit enhancements that are integral to the contractual terms. The impairment methodology applied depends on whether there has been a significant increase in credit risk.

The measurement of ECL reflects:

• anunbiasedandprobability-weightedamountthatisdeterminedbyevaluatingarangeofpossibleoutcomes;

• thetimevalueofmoney;and• reasonableandsupportableinformationthatisavailablewithoutunduecostoreffortat

the reporting date about past events, current conditions and forecasts of future economic conditions.

ECLs are measured on either of the following basis:-

• 12-monthECLs:theportionoflifetimeexpectedcreditlosslossesthatresultfrompossibledefaulteventsonafinancialinstrumentwithinthe12monthsafterthereportingdate;and

• LifetimeECLs:theexpectedcreditlossthatresultfromallpossibledefaulteventsoverthe expected life o a financial instrument.

90






3.8.1.5 Impairment of financial assets (cont’d)


The maximum period considered when estimating ECLs is the maximum contractual period (including extension options) over which the Group and the Company are exposed to credit risk.

For trade receivables, the Group and the Company apply a simplified approach in calculating ECLs. Therefore, the Group and the Company do not track changes in credit risk, but instead recognises a loss allowance based on lifetime ECLs at each reporting date. The Group and the Company have established a provision matrix that is based on its historical credit loss experience, adjusted for forward looking factors specific to the debtors and economic environment.

For all other financial instruments, the Group and the Company recognise a loss allowance equal to 12-month ECLs unless there has been a significant increase in credit risk of the financial instrument since initial recognition, in which case the loss allowance is measured at an amount equal to lifetime ECLs.

ECLs are re-measured at each reporting date to reflect changes in the financial instrument’s credit risk since initial recognition. Any change in the ECLs amount is recognised as an impairment gain or loss in profit or loss. The Group and the Company recognise an impairment gain or loss for all financial instruments with a corresponding adjustment to their carrying amount through a loss allowance account, except for investments in debt securities that are measured at FVTOCI (recycling), for which the loss allowance is recognised in other comprehensive income and accumulated in the fair value reserve (recycling).

The gross carrying amount of a financial asset is written off (either partially or in full) to the extent that there is no realistic prospect of recovery. This is generally the case when the Group and the Company determine that the debtor does not have any assets or sources of income that could generate sufficient cash flows to repay the amount subject to the write-off.

3.8.2 Financial liabilities

3.8.2.1 Classification


The Group and the Company categorise financial liabilities as follows:-

• Financialliabilitiesatfairvaluethroughprofitorloss;and• Otherliabilitiesmeasuredatamortisedcost.


From 1 January 2018, the Group and the Company classify their financial liabilities in the following measurement categories:-

• Thosetobemeasuredsubsequentlyatfairvaluethroughprofitorloss;and• Thosetobemeasuredatamortisedcost.

91





3.8.2 Financial liabilities (cont’d)

3.8.2.2 Recognition and derecognition


Financial liabilities are recognised when the Group and the Company become a party to the contractual provisions of the financial instrument.

The Group and the Company derecognise a financial liability when its contractual obligations are discharged or cancelled or expired. The difference between the carrying amount of the financial liability derecognised and the consideration paid and payable, including any non-cash assets transferred or liabilities assumed, is recognised in profit or loss.


A financial liability is recognised in the statements of financial position when, and only when, the Group and the Company become a party to the contractual provisions of the financial instrument.

A financial liability (or a part of a financial liability) from its statements of financial position when, and only when, the obligation specified in the contract is discharged or cancelled or expired. A financial liability is also derecognised when its terms are modified and the cash flows of the modified liability are substantially different, in which case, a new financial liability based on modified terms is recognised at fair value.

On derecognition of a financial liability, the difference between the carrying amount of the financial liability (or part of the financial liability) extinguished or transferred to another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in profit or loss.

3.8.2.3 Initial measurement

Accounting policies applied until 28 February 2018 and Accounting policies applied from 1 March 2018

The Group and the Company initially measure a financial liability at its fair value plus, in the case of a financial liability not at FVTPL, transaction costs that are directly attributable to the acquisition of the financial liability.

92






3.8.2.4 Subsequent measurement


All financial liabilities are subsequently measured at amortised cost other than those categorised as FVTPL.

(i) Financial liabilities at FVTPL

Financial liabilities at FVTPL include financial liabilities held for trading, contingent consideration in a business combination and financial liabilities designated upon initial recognition as at fair value through profit or loss.

Financial liabilities held for trading include derivatives entered into by the Group and the Company that are not financial guarantee contracts or do not meet the hedge accounting criteria. Derivative liabilities are initially measured at fair value and subsequently stated at fair value, with any resultant gains or losses recognised in profit or loss. Net gains or losses recognised on derivatives include exchange differences.

(ii) Other liabilities measured at amortised cost

Other financial liabilities including finance lease creditors, borrowings, amount due to subsidiaries, amount due to associate, trade and most of the other payables are initially measured at fair value and subsequently measured at amortised cost using the effective interest method. Borrowings are classified as current liabilities unless the Group and the Company have unconditional right to defer settlement of the liability for at least 12 months after the end of the reporting period.


The subsequent measurement of financial liabilities depends on their classification, as described below:- (i) FVTPL

Financial liabilities at FVTPL include financial liabilities that are derivatives (except for a derivative that is a financial guarantee contract or a designated and effective hedging instrument), contingent consideration in a business combination and financial liabilities designated upon initial recognition as at FVTPL.

At initial recognition, the Group and the Company may irrevocably designate a financial liability that otherwise meets the requirements to be measured at amortised cost as at fair value through profit or loss:-

• Ifdoingsoeliminatesorsignificantlyreducesanaccountingmismatchthatwouldotherwisearise;

• Agroupoffinancialliabilitiesorfinancialassetsandfinancialliabilitiesismanagedand its performance is evaluated on a fair value basis, in accordance with a documented risk management or investment strategy, and information about the group is provided internally on that basis to the Group’s and the Company’s key management personnel.

93








The subsequent measurement of financial liabilities depends on their classification, as described below (cont’d):-

(i) FVTPL (cont’d)

Derivative liabilities are initially measured at fair value and subsequently stated at fair value, with any resultant gains or losses recognised in profit or loss. Net gains or losses recognised on derivatives include exchange differences.

For financial liability that is designated as at fair value through profit or loss upon initial recognition, the Group and the Company recognise the amount of change in the fair value of the financial liability that is attributable to changes in the credit risk in other comprehensive income and the remaining amount of the change in the fair value in profit or loss, unless the treatment of the effects of changes in the liability’s credit risk would create or enlarge an accounting mismatch.

The Group and the Company have not elected to designate any financial liability at fair value through profit or loss.

(ii) Amortised cost

Other financial liabilities not categorised as FVTPL are subsequently measured at amortised cost using the effective interest method.

Interest expense and foreign exchange gains and losses are recognised in the profit or loss. Any gains or losses on derecognition are also recognised in the profit or loss.

The Group’s and the Company’s financial liabilities at amortised cost include finance lease creditors, borrowings, amount due to subsidiaries, amount due to associate, trade and most of the other payables. Borrowings are classified as current liabilities unless the Group and the Company have unconditional right to defer settlement of the liability for at least 12 months after the end of the reporting period.

94




3.9 Revenue recognition

The Group and the Company apply five-step model revenue recognition under MFRS 15 Revenue from Contracts with Customers effective 1 January 2018. The adoption of this standard results in changes in the accounting policy for revenue recognition, and has no material financial impact from the MFRS 118 Revenue applied previously.

The Group and the Company recognise revenue from contracts with customers for goods or services based on the five-step model as set out in this Standards:-

i. Identify contracts with a customer. A contract is defined as an agreement between two or more parties that creates enforceable rights and obligations and sets out the criteria that must be met.

ii. Identify performance obligations in the contract. A performance obligation is a promise in a contract with a customer to transfer goods or services to the customer that is distinct or a series of distinct goods or services that are substantially the same and that have the same pattern of transfer to the customer.

iii. Determine the transaction price. The transaction price is the amount of consideration to which the Group and the Company expect to be entitled in exchange for transferring promised goods or services to a customer, excluding amounts collected on behalf of third parties.

iv. Allocate the transaction price to the performance obligations in the contract. For a contract that has more than one performance obligation, the Group and the Company allocate transaction price to each performance obligation in an amount that depicts the amount of consideration to which the Group and the Company expect to be entitled in exchange for satisfying each performance obligation.

v. Recognise revenue when (or as) the Group and the Company satisfy a performance obligation. An asset is transferred when (or as) the customer obtains control of the asset.

The Group and the Company satisfy a performance obligation and recognise revenue over time if the Group’s and the Company’s performance:-

i. Do not create an asset with an alternative use to the Group and the Company and have an enforceable righttopaymentforperformancecompletedto-date;or

ii. Createorenhanceanassetthatthecustomercontrolsastheassetiscreatedorenhanced;oriii. Provide benefits that the customer simultaneously receives and consumes as the Group and the Company

perform.

For performance obligations where any one of the above conditions are not met, revenue is recognised at a point in time at which the performance obligation is satisfied.

When the Group and the Company satisfy a performance obligation by delivering the promised goods or services, it creates a contract based on asset on the amount of consideration earned by the performance. Where the amount of consideration received from a customer exceeds the amount of revenue recognised, this give rise to a contract liability.

95




3.9 Revenue recognition (cont’d)

3.9.1 Sales of goods

All revenue is recognised at a point in time, which is typically on delivery. An asset is transferred when (or as) the customer obtains control of the asset. All the contracts are completed at the adoption date. The revenue is recognised net of any related rebates, discounts and tax. The Company shall disaggregate revenue recognised from contracts with customers into categories that depict how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors.

3.9.2 Interest income

Interest income is recognised as it accrued using effective interest method in profit or loss except for interest income arising from temporary investment of borrowings taken specifically for the purpose of obtaining a qualified asset which is accounted for in accordance with the accounting policy on borrowing costs.

3.9.3 Rental income

Rental income is recognised in profit or loss on a straight-line basis over the term of the lease.

3.9.4 Dividend income

Dividend income is recognised when the Group’s right to receive payments is established.

3.10 Employee benefits

(a) Short term employees benefits

Wages, salaries, bonuses and social security contributions are recognised as an expense in the financial year, in which the associated services are rendered by employees of the Group. Short term accumulating compensated absences such as paid annual leave are recognised when services are rendered by employees that increase their entitlement to future compensated absences, and short term non-accumulating compensated absences such as sick leave are recognised when the absences occur.

(b) Defined contribution plans

Defined contribution plans are post-employment benefit plans under which the Group pays fixed contributions into separate entities or funds and will have no legal or constructive obligation to pay further contribution if any of the funds do not hold sufficient assets to pay all employee benefits relating to employee services in the current and preceding financial years.

Such contributions are recognised as expenses in the profit or loss as incurred. As required by law, companies in Malaysia make such contributions to the Employees Provident Fund (“EPF”). Some of the Group’s foreign subsidiaries also make contributions to their respective countries’ statutory pension schemes.

96




3.11 Share-based payment transactions

Share-based payment transactions of the Company

Equity-settled share-based payments to employees and others providing similar services are measured at the fair value of the equity instruments at the grant date. Details regarding the determination of the fair value of equity-settled share-based transactions are set out in Note 36 to the Financial Statements.

The fair value determined at the grant date of the equity-settled share-based payments is expensed on a

straight-line basis over the vesting period, based on the Group’s estimate of equity instruments that will eventually vest, with a corresponding increase in equity. At the end of each reporting period, the Group revises its estimate of the number of equity instruments expected to vest. The impact of the revision of the original estimates, if any, is recognised in profit or loss such that the cumulative expense reflects the revised estimate, with a corresponding adjustment to the equity-settled employee benefits reserve.

The policy described above is applied to all equity-settled share-based payment transactions that were granted after 31 December 2004 and vested after 1 January 2006. No amounts have been recognised in the consolidated financial statements in respect of other equity-settled shared-based payments.

Equity-settled share-based payment transactions with parties other than employees are measured at the fair value of the goods or services received, except where that fair value cannot be estimated reliably, in which case they are measured at the fair value of the equity instruments granted, measured at the date the entity obtains the goods or the counterparty renders the service.

For cash-settled share-based payments, a liability is recognised for the goods or services acquired, measured initially at the fair value of the liability. At the end of each reporting period until the liability is settled, and at the date of settlement, the fair value of the liability is remeasured, with any changes in fair value recognised in profit or loss for the year.

Share-based payment transactions of the acquiree in a business combination

When the share-based payment awards held by the employees of an acquiree (acquiree awards) are replaced by the Group’s share-based payment awards (replacement awards), both the acquiree awards and the replacement awards are measured in accordance with MFRS 2 Share-based Payment (“market-based measure”) at the acquisition date. The portion of the replacement awards that is included in measuring the consideration transferred in a business combination equals the market-based measure of the acquiree awards multiplied by the ratio of the portion of the vesting period completed to the greater of the total vesting period or the original vesting period of the acquiree award. The excess of the market-based measure of the replacement awards over the market-based measure of the acquiree awards included in measuring the consideration transferred is recognised as remuneration cost for post-combination service.

However, when the acquiree awards expire as a consequence of a business combination and the Group

replaces those awards when it does not have an obligation to do so, the replacement awards are measured at their market-based measure in accordance with MFRS 2. All of the market-based measure of the replacement awards is recognised as remuneration cost for post-combination service.

97




3.11 Share-based payment transactions (cont’d)

Share-based payment transactions of the acquiree in a business combination (cont’d)

At the acquisition date, when the outstanding equity-settled share-based payment transactions held by the employees of an acquiree are not exchanged by the Group for its share-based payment transactions, the acquiree share-based payment transactions are measured at their market-based measure at the acquisition date. If the share-based payment transactions have vested by the acquisition date, they are included as part of the non-controlling interest in the acquiree. However, if the share-based payment transactions have not vested by the acquisition date, the market-based measure of the unvested share-based payment transactions is allocated to the non-controlling interest in the acquiree based on the ratio of the portion of the vesting period completed to the greater of the total vesting period or the original vesting period of the share-based payment transaction. The balance is recognised as remuneration cost for post-combination service.

3.12 Dividends

Interim dividends are simultaneously proposed and declared, because the articles of association of the Company grant the Directors the authority to declare interim dividends. Consequently, interim dividends are recognised directly as a liability when they are proposed and declared.

Final dividends proposed by the Directors are not accounted for in shareholders’ equity as an appropriation of unappropriated profit, until they have been approved by the shareholders in a general meeting. When these dividends have been approved by the shareholders and declared, they are recognised as a liability.

3.13 Financial guarantee contracts

A financial guarantee contract is a contract that requires the issuer to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payment when due.

Financial guarantee contracts are recognised initially as a liability at fair value, net of transaction costs. Subsequent to initial recognition, financial guarantee contracts are recognised as income in profit or loss over the period of the guarantee. If the debtor fails to make payment relating to financial guarantee contract when it is due and the Group, as the issuer, is required to reimburse the holder for the associated loss, the liability is measured at the higher of the best estimate of the expenditure required to settle the present obligation at the reporting date and the amount initially recognised less cumulative amortisation.

3.14 Provisions

Provisions are recognised when there is a present legal or constructive obligation that can be estimated reliably, as a result of a past event, when it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Provisions are not recognised for future operating losses.

Any reimbursement that the Group can be virtually certain to collect from a third party with respect to the obligation is recognised as a separate asset. However, this asset may not exceed the amount of the related provision.

Provisions are reviewed at each reporting date and adjusted to reflect the current best estimate. If it is no longer probable that an outflow of economic resources will be required to settle the obligation, the provision is reversed. Where the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, where appropriate, the risks specific to the liability. When discounting is used, the increase in the provisions due to the passage of time is recognised as a finance cost.

98




3.15 Cash and cash equivalents

Cash and cash equivalents comprise cash on hand, bank balances, short term demand deposits and highly liquid investments which are readily convertible to known amount of cash and which are subject to an insignificant risk of changes in value.

For the purpose of the statements of financial position, cash and cash equivalents restricted to be used to settle a liability of 12 months or more after the reporting date are classified as non-current asset.

3.16 Equity instrument and reserves

An equity instrument is any contract that evidences a residual interest in the assets of the Group and the Company after deducting all of their liabilities. Ordinary shares are equity instruments.

The revaluation reserve within equity comprises gains and losses due to the revaluation of property, plant and equipment.

Foreign currency translation differences arising on the translation of the Group’s foreign entities are included in the exchange translation reserve.

Gains and losses on certain financial instruments are included in reserve for cash-flow hedges.

Unappropriated profits include all current and prior period unappropriated profits.

All transactions with owners of the Company are recorded separately within equity.

3.17 Treasury shares When issued share of the Company are repurchased, the consideration paid, including directly attributable

costs is presented as a change in equity. Repurchased shares that have not been cancelled are classify as treasury shares and presented as a deduction from equity. No gain or loss is recognised in the profit or loss on the sale, reissuance or cancellation of treasury shares.

When treasury shares are distributed as share dividends, the cost of the treasury shares is applied in the

reduction of the treasury shares account or distributable reserves, or both.

When treasury shares are reissued by resale, the difference between the sale consideration net of directly attributable costs and the carrying amount of the treasury shares is shown as a movement in equity.

3.18 Capital work-in-progress

Capital work-in-progress consists of property, plant and equipment under construction/installation for intended use as production facilities. The amount is stated at cost and includes capitalisation of interest incurred on borrowings related to property, plant and equipment under construction/installation until the property, plant and equipment are ready for their intended use.

99




3.19 Goodwill/Negative goodwill

Goodwill/(Negative goodwill) represents the excess/(deficit) of the cost of acquisition of subsidiary company acquired over the Group’s share of the fair values of their separable net assets at the date of acquisition.

The goodwill is retained in the consolidated statement of financial position and subject to annual impairment review. The negative goodwill is credited immediately to profit or loss as it arises.

3.20 Contingent liabilities

A contingent liability is a possible obligation that arises from past events and whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Group. It can also be a present obligation arising from past events that is not recognised because it is not probable that an outflow of economic resources will be required or the amount of obligation cannot be measured reliably.

3.21 Warrants

Warrants are classified as equity instruments and its value is allocated based on the Black Scholes model upon issuance. The issuance of ordinary shares upon exercise of the warrants is treated as new subscription of ordinary shares for the consideration equivalent to the exercise price of the warrants.

Upon exercise of warrants, the proceeds are credited to share capital. The warrants reserve in relation to the unexercised warrants at the expiry of the warrants will be reversed.

3.22 Earnings per Share

The Group presents basic and diluted earnings per share (“EPS”) data for its ordinary shares.

Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the financial period.

Diluted EPS is determined by adjusting the profit or loss attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding for the effects of all dilutive potential ordinary shares, which comprise convertible notes and share options granted to employees.

3.23 Related parties

A related party is a person or entity that is related to the Group. A related party transaction is a transfer of resources, services or obligations between the Group and its related party, regardless of whether a price is charged.

(a) A person or a close member of that person’s family is related to the Group if that person:-

(i) HascontrolorjointcontrolovertheGroup;(ii) HassignificantinfluenceovertheGroup;or(iii) Is a member of the key management personnel of the Group.

100




3.23 Related parties (cont’d)

(b) An entity is related to the Group if any of the following conditions applies:-

(i) The entity and the Group are members of the same group.(ii) The entity is an associate or joint venture of the Group.(iii) The Group and the entity are joint ventures of the same third party.(iv) The Group is a joint venture of a third entity and the other entity is an associate of the same third

entity.(v) The entity is a post-employment benefit plan for the benefits of employees of either the Group or

an entity related to the Group.(vi) The entity is controlled or jointly-controlled by a person identified in (a) above.(vii) A person identified in (a)(i) above has significant influence over the entity or is a member of the

key management personnel of the entity.(viii) The entity, or any member of a group of which it is a party, provides key management personnel

services to the Group.

3.24 Operating segments

An operating segment is a component of the Group that engages in business activities from which it may earn revenues and incur expenses, including revenue and expenses that relate to transactions with any of the Group’s other components. All operating segments’ operating results are reviewed regularly by the chief operating decision maker to make decisions about resources to be allocated to the segment and to assess its performance, and for which discrete financial information is available.

3.25 Derivative financial instruments and hedging activities

Derivatives are initially recognised at fair value on the date a derivative contract is entered into and subsequently remeasured at their fair value. The method of recognising the resulting gain or loss depends on whether the derivatives designated as hedging instrument, and if so, the nature of the item being hedged. The Group designates certain derivatives as follows:-

Derivative financial instruments

The Group holds derivative financial instruments to hedge its foreign currency exposures.

Forward foreign exchange contracts used are accounted for on an equivalent basis as the underlying assets, liabilities or net positions. Any profit or loss arising is recognised on the same basis as those arising from the related assets, liabilities or net position.

Exchange gains or losses on contracts are recognised when settled at which time they are included in the measurement of the transaction hedged.

The fair value of foreign currency forward contract is determined using the forward exchange market rates at the reporting date.

101




3.25 Derivative financial instruments and hedging activities (cont’d)

Cash flow hedge

A cash flow hedge is a hedge of exposure to variability in cash flows that is attributable to a particular risk associated with a recognised asset or liability or a highly probable forecast transaction and could affect the profit or loss. In a cash flow hedge, the portion of the gain or loss on the hedging instrument that is determined to be an effective hedge is recognised in other comprehensive income and the ineffective portion is recognised in profit or loss.

Subsequently, the cumulative gain or loss recognised in other comprehensive income is reclassified from equity into profit or loss in the same period or periods during which the hedge forecast cash flows affect profit or loss. If the hedge item is a non-financial asset or liability, the associated gain or loss recognised in other comprehensive income is removed from equity and included in the initial amount of the asset or liability. However, loss recognised in other comprehensive income that will not be recovered in one or more future periods is reclassified from equity into profit or loss.

Cash flow hedge accounting is discontinued prospectively when the hedging instrument expires or is sold, terminated or exercised, the hedge is no longer highly effective, the forecast transaction is no longer expected to occur or the hedge designation is revoked. If the hedge is for a forecast transaction, the cumulative gain or loss on the hedging instrument remains in other comprehensive income until the forecast transaction occurs. When the forecast transaction is no longer expected to occur, any related cumulative gain or loss recognised in other comprehensive income on the hedging instrument is reclassified from equity to profit or loss.

3.26 Borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset are capitalised as part of the cost of the assets during the period of time that is necessary to complete and prepare the asset for its intended use or sale.

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

All other borrowing costs are expensed in the period in which they are incurred. Borrowing costs consist of interest and other costs that Group and the Company incurred in connection with the borrowing of funds.

3.27 Government grant

Government grants are recognised at fair value when there is reasonable assurance that the Group and the Company will comply with the conditions attaching to them and the grants will be received.

Government grants relating to expenditure on property, plant and equipment are credited to profit or loss on the straight-line basis over the expected lives of the related property, plant and equipment. Government grants used for financial support, assistance or to reimburse costs incurred by the Group and the Company are recognised in profit or loss of the period in which they become receivable.

102



4. CHANGES IN ACCOUNTING POLICIES

4.1 MFRS 9 Financial Instruments

The Group and the Company have adopted MFRS 9 on 1 March 2018. MFRS 9 introduces new requirements which have resulted in changes in accounting policies for recognition, classification and measurement of financial instruments and impairment of financial assets.

The Group and the Company have applied MFRS 9 retrospectively on the initial application date in accordance with the transitional provision and the comparative information was not restated.

4.1.1 Classification and measurement of financial instruments

Financial assets

Under MFRS 9, at initial recognition, financial assets are classified and measured at amortised cost, FVTOCI and FVTPL. The classification above depends on the Group’s and the Company’s business model for managing the financial assets and the terms of contractual cash flows. Based on the assessment, the financial assets held by the Group and the Company as at 1 March 2018 are reclassified to the following categories:-

Group Company Measurement Carrying amount Carrying amount category as at 1 March 2018 as at 1 March 2018 Note Original New Original New Original New (MFRS 139) (MFRS 9) (MFRS 139) (MFRS 9) (MFRS 139) (MFRS 9) RM RM RM RM

Financial assets:-

Trade receivables (1) LAR* Amortised cost 144,893,264 144,893,264 – –

Other receivables (1) LAR* Amortised cost 16,274,529 16,274,529 46,655 46,655

Amount due from subsidiaries (1) LAR* Amortised cost – – 17,453 17,453 Amount due from associate (1) LAR* Amortised cost 6,657,833 6,657,833 – –

Cash and bank balances (1) LAR* Amortised cost 67,746,034 67,746,034 2,307,581 2,307,581

Fixed deposits with licensed banks (1) LAR* Amortised cost 2,476,995 2,476,995 – –

* LAR - Loans and Receivables

Note:-(1) Trade receivables, other receivables, amount due from subsidiaries, amount due from associate,

cash and bank balances and fixed deposits with licensed banks that were previously classified as loans and receivables are now reclassified to amortised cost. The Group and the Company intend to hold the assets to maturity to collect contractual cash flows and these cash flows are solely payments of principal and interest on the principal amount outstanding.

103



4. CHANGES IN ACCOUNTING POLICIES (CONT’D)

4.1 MFRS 9 Financial Instruments (cont’d)

4.1.1 Classification and measurement of financial instruments (cont’d)

Financial liabilities

MFRS 9 largely retains the existing requirements in MFRS 139 for the classification of financial liabilities.

However, under MFRS 139 all fair value changes of liabilities designated as FVTPL are recognised in profit or loss, whereas under MFRS 9 these fair value changes are generally presented as follows:-

• theamountofchangeinthefairvaluethatisattributabletochangesinthecreditriskoftheliabilityispresentedinothercomprehensiveincome;and

• theremainingamountofchangeinthefairvalueispresentedinprofitorloss.

The Group’s and the Company’s assessment did not identify any requirements to reclassify financial liabilities at 1 March 2018 and they have not designated any financial liabilities at FVTPL and they have no intention to do so.

4.1.2 Impairment of financial assets

MFRS 9 introduces an expected credit loss (“ECL”) model on impairment that replaces the incurred loss impairment model used in MFRS 139. The ECL model is forward-looking and eliminates the need for a trigger event to have occurred before credit losses are recognised.

The Group applied the simplified approach and calculated expected credit losses based on lifetime expected credit losses on all trade receivables. The Group established a provision matrix that is based on its historical credit loss experience with trade receivables of similar credit risk characteristics, adjusted for forward-looking factors specific to the category of debtors and the economic environment.

The Group’s and the Company’s assessment concludes no significant impact on the impairment of financial assets at 1 March 2018.

104



4. CHANGES IN ACCOUNTING POLICIES (CONT’D)

4.2 MFRS 15 Revenue from Contracts with Customers

MFRS 15 establishes a comprehensive framework for determining how and when revenue is recognised. Under MFRS 15, revenue is recognised when control of the goods or services transfers to the customer at an amount that reflects the consideration to which the Group and the Company expect to be entitled in exchange for those goods and services.

The Group manufactures and sells pipes, valves, fittings and other related products while the Company acts as an investment holding. The Group sells to customers solely based on purchase orders. The Group also enters into a variety of arrangements with customers, including pricing arrangements and master supply arrangements which outline the terms under which the Group does businesses with specific customers.

The Company provides management services to its subsidiaries.

Revenue is recognised for these arrangements over time or at a point in time depending on the Group’s evaluation of when the customer obtains control of the promised goods or services. The Group has reviewed its performance obligations, customer contracts and evaluated the impact of MFRS 15 based on the amount and timing of revenue recognition.

All revenue is recognised at a point in time, which is typically on delivery. An asset is transferred when (or as) the customer obtains control of the asset. All the contracts are completed at the adoption date. The revenue is recognised net of any related rebates, discounts and tax. Detailed disclosure on disaggregated revenue is shown in Note 31 to the Financial Statements.

In conclusion, the adoption of MFRS 15 has no significant impact on the substance of the principles applied by the Group and the Company to the amount and timing of revenue recognition. The revenue recognition principles and delivery terms applied by the Group and the Company remain generally unaltered. No adjustment to the opening balance of retained earnings has been made as there are no changes in timing of the revenue recognition.

105



5.

PR

OP

ER

TY,

PLA

NT

AN

D E

QU

IPM

EN

T

Gro

up

Cra

ne,

Fork

lift,

R

eno

vati

on

mac

hine

ry,

mo

bile

Tota

l an

d

equi

pm

ents

, cr

ane

Free

hold

land

and

el

ectr

ical

fu

rnit

ure

and

mo

tor

land

B

uild

ing

s b

uild

ing

s in

stal

lati

on

and

fitt

ing

s ve

hicl

es

Tota

l

R

M

RM

R

M

RM

R

M

RM

R

M

Co

st/V

alua

tio

n

At

1 M

arch

201

7 24

,158

,800

10

6,62

6,99

7 13

0,78

5,79

7 4,

598,

731

127,

043,

670

13,2

75,6

42

275,

703,

840

Ad

diti

ons

– 86

6,52

2 86

6,52

2 3,

120

7,19

0,21

3 2,

728,

744

10,7

88,5

99D

isp

osal

s –

(1,4

94,1

60)

(1,4

94,1

60)

– (2

45,8

38)

(2

,076

,850

) (3

,816

,848

)W

ritte

n of

f –

(100

,300

) (1

00,3

00)

– (1

81,8

48)

–

(282

,148

)Tr

ansf

erre

d fr

om c

apita

l

wor

k-in

-pro

gres

s –

11,9

81,3

11

11,9

81,3

11

667,

102

16,4

63,2

86

–

29,1

11,6

99R

ecla

ssifi

catio

n –

(8,8

00)

(8,8

00)

– 8,

800

–

–C

urre

ncy

tran

slat

ion

diff

eren

ce

(4,6

08)

(138

,749

) (1

43,3

57)

(42,

820)

(2

61,6

52)

(21

,181

) (4

69,0

10)

A

t 28

Feb

ruar

y 20

18

24,1

54,1

92

117,

732,

821

141,

887,

013

5,22

6,13

3 15

0,01

6,63

1 13

,906

,355

31

1,03

6,13

2

Rep

rese

ntin

g:-

At

cost

–

23,5

41,3

81

23,5

41,3

81

5,22

6,13

3 15

0,01

6,63

1 13

,906

,355

19

2,69

0,50

0A

t va

luat

ion:

201

6 24

,154

,192

94

,191

,440

11

8,34

5,63

2 –

– –

118,

345,

632

A

t 1

Mar

ch 2

018

24,1

54,1

92

117,

732,

821

141,

887,

013

5,22

6,13

3 15

0,01

6,63

1 13

,906

,355

31

1,03

6,13

2A

dd

ition

s –

1,85

1,84

6 1,

851,

846

392,

200

18,6

50,4

43

964,

731

21,8

59,2

20D

isp

osal

s –

– –

– (3

03,0

02)

(322

,589

) (6

25,5

91)

Writ

ten

off

– –

– –

(178

,000

) –

(178

,000

)Tr

ansf

erre

d fr

om c

apita

l

wor

k-in

-pro

gres

s –

3,58

8,94

1 3,

588,

941

45,8

08

264,

113

– 3,

898,

862

Cur

renc

y tr

ansl

atio

n d

iffer

ence

(2

,353

) (7

2,76

2)

(75,

115)

11

,665

(8

5,81

2)

4,99

5 (1

44,2

67)

A

t 28

Feb

ruar

y 20

19

24,1

51,8

39

123,

100,

846

147,

252,

685

5,67

5,80

6 16

8,36

4,37

3 14

,553

,492

33

5,84

6,35

6

Rep

rese

ntin

g:-

A

t co

st

– 28

,982

,168

28

,982

,168

5,

675,

806

168,

364,

373

14,5

53,4

92

217,

575,

839

At

valu

atio

n: 2

016

24,1

51,8

39

94,1

18,6

78

118,

270,

517

– –

– 11

8,27

0,51

7

At

28 F

ebru

ary

2019

24

,151

,839

12

3,10

0,84

6 14

7,25

2,68

5 5,

675,

806

168,

364,

373

14,5

53,4

92

335,

846,

356

106



5.

PR

OP

ER

TY,

PLA

NT

AN

D E

QU

IPM

EN

T (C

ON

T’D

)

Gro

up

Cra

ne,

Fork

lift,

R

eno

vati

on

mac

hine

ry,

mo

bile

Tota

l an

d

equi

pm

ents

, cr

ane

Free

hold

land

and

el

ectr

ical

fu

rnit

ure

and

mo

tor

land

B

uild

ing

s b

uild

ing

s in

stal

lati

on

and

fitt

ing

s ve

hicl

es

Tota

l

R

M

RM

R

M

RM

R

M

RM

R

M

Acc

umul

ated

dep

reci

atio

n

At

1 M

arch

201

7 –

2,71

1,16

7 2,

711,

167

3,83

6,30

7 58

,457

,750

10

,785

,127

75

,790

,351

Cha

rge

for

the

finan

cial

yea

r –

3,06

5,13

2 3,

065,

132

497,

206

11,4

56,2

08

1,40

7,75

3 16

,426

,299

Dis

pos

als

– (5

7,07

1)

(57,

071)

–

(136

,392

) (2

,035

,977

) (2

,229

,440

)W

ritte

n of

f –

(8,0

24)

(8,0

24)

– (9

9,60

9)

– (1

07,6

33)

Cur

renc

y tr

ansl

atio

n d

iffer

ence

–

(10,

446)

(1

0,44

6)

(38,

141)

(1

79,4

88)

(19,

197)

(2

47,2

72)

At

28 F

ebru

ary

2018

–

5,70

0,75

8 5,

700,

758

4,29

5,37

2 69

,498

,469

10

,137

,706

89

,632

,305

Cha

rge

for

the

finan

cial

yea

r –

3,07

4,40

5 3,

074,

405

347,

811

11,7

17,6

56

1,29

8,47

6 16

,438

,348

Dis

pos

als

– –

– –

(279

,267

) (3

22,5

89)

(601

,856

)W

ritte

n of

f –

– –

– (1

63,2

26)

– (1

63,2

26)

Cur

renc

y tr

ansl

atio

n d

iffer

ence

–

(1,0

74)

(1,0

74)

11,1

23

(37,

582)

5,

063

(22,

470)

A

t 28

Feb

ruar

y 20

19

– 8,

774,

089

8,77

4,08

9 4,

654,

306

80,7

36,0

50

11,1

18,6

56

105,

283,

101

Net

car

ryin

g a

mo

unt

At

28 F

ebru

ary

2018

24

,154

,192

11

2,03

2,06

3 13

6,18

6,25

5 93

0,76

1 80

,518

,162

3,

768,

649

221,

403,

827

At

28 F

ebru

ary

2019

24

,151

,839

11

4,32

6,75

7 13

8,47

8,59

6 1,

021,

500

87,6

28,3

23

3,43

4,83

6 23

0,56

3,25

5

107



5. PROPERTY, PLANT AND EQUIPMENT (CONT’D)

On 31 December 2015 and on 28 February 2016, the Directors revalued the freehold land and buildings based on professionalrevaluationsmadebySr.LoKinWeng,BSc.(Hons)EstateMgt.MRICS,MRISMandRegisteredValuer(V917) of CH Williams Talhar & Wong Sdn. Bhd. and Steve Smith B.Sc. (Hons) MRICS MNAVA and RICS Registered Valuer of Ernest Hawk Chartered Surveyors respectively. Both are independent professional valuers having recent experience in the location and category of properties being valued. The freehold land and buildings were revalued based on the market value basis. The valuations were incorporated in the financial statements for the financial year ended 28 February 2016.

The market value is defined as the estimated amount for which an asset or liability should exchange on the valuation date between a willing buyer and a willing seller in an arm’s length transaction after proper marketing and where the parties had each acted knowledgeably, prudently and without compulsion. The market value of the freehold land and buildings were determined based on the comparison approach and depreciated replacement cost approach respectively.

Freehold land and buildings at valuation are categorised at Level 2 fair value.

Level 2 Fair Value

Level 2 fair value of freehold land has been generally derived using the comparison method approach. Sales price of comparable properties in close proximity are adjusted for differences in key attributes such as property size. The most significant input into this valuation approach is price per square foot of comparable properties.

Level 2 fair value of buildings has been generally derived using the depreciated replacement cost approach. The most significant input into this valuation approach is the adjustment for factors such as physical deterioration, functional and economic obsolescence.

5.1 Comparison approach

The comparison approach entails comparing the property with comparable property which have been sold or are being offered for sale and making adjustments for factors which affect value such as location and accessibility, market conditions, size, shape and terrain of land, tenurial interest and restriction if any, occupancy status, built-up area, building construction, finishes and services, age and condition of building and other relevant characteristics.

5.2 Depreciated replacement approach

In the depreciated replacement cost approach, the building value is taken to be equal the cost of replacing the building in its existing condition. This is determined by taking the current replacement cost of the building as new and allowing for depreciation for physical, functional and economic obsolescence.

108



5. PROPERTY, PLANT AND EQUIPMENT (CONT’D)

At the reporting date, had the revalued freehold land and buildings of the Group been carried under the cost model, the net carrying amount would have been as follows:-

Freehold land Buildings Total RM RM RM

2019 Cost 16,181,219 104,250,745 120,431,964Accumulated depreciation – (23,158,396) (23,158,396)

Net carrying amount 16,181,219 81,092,349 97,273,568

2018 Cost 16,181,219 104,250,745 120,431,964Accumulated depreciation – (21,179,971) (21,179,971)

Net carrying amount 16,181,219 83,070,774 99,251,993

The net carrying amount of property, plant and equipment of the Group which are acquired under finance lease arrangements amounted to RM10,329,520 (2018: RM11,726,099).

6. PREPAID LAND LEASE PAYMENTS

Group 2019 2018 RM RM

Leasehold land:-

Cost At 1 March and 28 February 36,073,234 36,073,234 Accumulated amortisation At 1 March 2,939,418 2,357,375Charge for the financial year 582,044 582,043 At 28 February 3,521,462 2,939,418 Net carrying amount 32,551,772 33,133,816

Amount to be amortised - Not later than one year 582,044 582,043- Later than one year but not later than five years 2,328,176 2,328,172- Later than five years 29,641,552 30,223,601

32,551,772 33,133,816

The prepaid land lease payments are amortised over the leasehold period of 59 to 88 (2018: 59 to 88) years.

109



7. CAPITAL WORK-IN-PROGRESS

Group Crane, machinery, equipment, furniture and fittings, renovation and Buildings electrical installation Total RM RM RM

Balance as at 1 March 2017 11,904,237 16,661,379 28,565,616Addition 3,568,132 792,698 4,360,830Transferred to property, plant and equipment (11,981,311) (17,130,388) (29,111,699) Balance as at 28 February 2018 3,491,058 323,689 3,814,747Addition 12,680,142 1,094,951 13,775,093Transferred to property, plant and equipment (3,588,941) (309,921) (3,898,862) Balance as at 28 February 2019 12,582,259 1,108,719 13,690,978

The carrying amount of capital work-in-progress of the Group includes RMNil (2018: RM61,584) of term loan interest capitalised during the financial year.

8. INVESTMENT PROPERTIES

Freehold land Leasehold Total land and and shophouse land Buildings buildings building Total RM RM RM RM RM

GroupAt fair value:-

At 1 March 2017, 28 February 2018 and 1 March 2018 2,600,000 3,400,000 6,000,000 600,000 6,600,000Fair value loss adjustment (100,000) (200,000) (300,000) – (300,000) At 28 February 2019 2,500,000 3,200,000 5,700,000 600,000 6,300,000

The investment properties consist of land and buildings and are valued annually at fair value, comprising market value, by an external independent professionally qualified valuer having appropriate recognised professional qualifications and recent experience in the location and category of properties being valued.

The market value is defined as the estimated amount for which an asset or liability should exchange on the valuation date between a willing buyer and a willing seller in an arm’s length transaction after proper marketing and where the parties had each acted knowledgeably, prudently and without compulsion. The market value of the land and buildings were determined based on the comparison approach and depreciated replacement cost approach respectively.

Land and buildings at valuation are categorised at Level 2 fair value.

Level 2 Fair Value

Level 2 fair value of land has been generally derived using the comparison method approach. Sales price of comparable properties in close proximity are adjusted for differences in key attributes such as property size. The most significant input into this valuation approach is price per square foot of comparable properties.

110



8. INVESTMENT PROPERTIES (CONT’D)

Level 2 Fair Value (cont’d)

Level 2 fair value of buildings has been generally derived using the depreciated replacement cost approach. The most significant input into this valuation approach is the adjustment for factors such as physical deterioration, functional and economic obsolescence.

8.1 Comparison approach

The comparison approach entails comparing the property with comparable property which have been sold or are being offered for sale and making adjustments for factors which affect value such as location and accessibility, market conditions, size, shape and terrain of land, tenurial interest and restriction if any, occupancy status, built-up area, building construction, finishes and services, age and condition of building and other relevant characteristics.

8.2 Depreciated replacement approach

In the depreciated replacement cost approach, the building value is taken to be equal the cost of replacing the building in its existing condition. This is determined by taking the current replacement cost of the building as new and allowing for depreciation for physical, functional and economic obsolescence.

9. SUBSIDIARY COMPANIES

(a) Investment in subsidiary companies

Company 2019 2018 RM RM

Unquoted shares - At cost:- At beginning of financial year 244,860,458 235,294,458 Additional investments made – 9,566,000

At end of financial year 244,860,458 244,860,458

111



9. SUBSIDIARY COMPANIES (CONT’D)

(a) Investment in subsidiary companies (cont’d)

The particulars of the subsidiary companies are as follows:-

Name of companyPlace of

incorporationEffective

equity interest Principal activities

2019%

2018%

1. Pantech Corporation Sdn. Bhd.

Malaysia 100 100 Trading, supply and stocking of high pressure seamless and specialised steel pipes, fittings, flanges, valves and other related products for use in the oil and gas, gas reticulation, marine, onshore and offshore heavy engineering, power generation, petrochemicals, palm oil refining and other related industries.

Subsidiary companies of Pantech Corporation Sdn. Bhd.:-

1.1 Pantech Realty Sdn. Bhd.

Malaysia 100 100 Investment holding and property investment.

1.2 Pantech(Kuantan) Sdn. Bhd.

Malaysia 100 100 Trading and supply of high pressure seamless and specialised steel pipes, fittings, flanges, valves and other related products for use in the oil and gas, gas reticulation, marine, onshore and offshore heavy engineering, power generation, petrochemicals, palm oil refining and other related industries.

2. Pantech Steel Industries Sdn. Bhd.

Malaysia 100 100 Manufacturing and supply of butt-welded carbon steel fittings such as elbows, tees, reducers, end-caps and high frequency induction long bends for use in the oil and gas and other related industries.

3. Panaflo Controls Pte. Ltd.#

Singapore 100 100 Supplier of flow control solutions such as valves, actuators and controls for the oil and gas, petrochemicals, water treatment and other related industries and trading of specialised steel pipes and related products.

112



9. SUBSIDIARY COMPANIES (CONT’D)

(a) Investment in subsidiary companies (cont’d)

The particulars of the subsidiary companies are as follows (cont’d):-




2019%

2018%

4. Pantech Stainless & Alloy Industries Sdn. Bhd.

Malaysia 100 100 Manufacturing and supply of stainless steel and alloy pipes, fittings and related products for use in the oil and gas, marine, onshore and offshore heavy engineering, petrochemical and chemical, palm oil refinery and oleochemical, power generation, pharmaceutical, water and other related industries.

5. Pantech International (KSA)Sdn.Bhd.

Malaysia 100 100 Dormant.

6. Nautic Steels (Holdings) Limited#

UnitedKingdom

100 100 Investment holdings.

Subsidiary company of Nautic Steels (Holdings) Limited:-

6.1 Nautic Steels Limited#

UnitedKingdom

100 100 Milling, machining and welding of tube and pipe fittings in special metals for the oil industry.

7. Nautic Steels Sdn. Bhd.

Malaysia 100 100 Dormant.

8. Pantech Galvanising Sdn. Bhd.

Malaysia 100 100 Hot dip galvanising, treatment and coating of metals and its related activities, engineering fabrication works and its related activities and manufacturing of industrial consumable products.

# Not audited by Grant Thornton Malaysia.

(b) Amount due from/to subsidiary companies

The amount due from/to subsidiary companies is non-trade in-nature, bears no interest and repayable upon demand, except for a temporary loan to a subsidiary company amounted to RM5,000,000 (2018: RM Nil) which bears interest at the rate of 5.59% (2018: Nil) per annum.

The amount due from/to subsidiary companies is denominated in Ringgit Malaysia.

113



10. ASSOCIATE COMPANY

(a) Investment in an associate company


Unquoted shares - at cost 288,717 288,717 Share of post acquisition profit - At beginning of financial year 2,219,948 2,431,920- Share of post acquisition profit(loss) during the financial year 719,293 (211,972)

- At end of financial year 2,939,241 2,219,948 Less: Dividend received (cumulative) (445,500) (445,500)

2,782,458 2,063,165

Represented by:-Share of net assets 2,782,458 2,063,165

Summarised financial information of associate company is as follows:-


Assets and liabilitiesCurrent assets 41,986,412 9,378,120Non-current assets 2,319,543 2,638,311 Total assets 44,305,955 12,016,431

Current liabilities 37,340,994 6,833,438Non-current liabilities 8,514 25,077 Total liabilities 37,349,508 6,858,515

Results Revenue 68,958,834 20,955,402Profit/(Loss) for the financial year 1,798,231 (529,929)

There is no share of commitments and contingent liabilities from the associate company to the Group.

114



10. ASSOCIATE COMPANY (CONT’D)

(a) Investment in an associate company (cont’d)

The particulars of the associate company are as follows:-




2019%

2018%

Tuah Nusa Sdn. Bhd. Malaysia 40 40 Manufacturing of butt-welded fittings and high frequency induction long bends as well as trading and supply of specialised industrial products, alloys and ferrous materials for the oil and gas and related industries.

(b) Amount due from/to an associate company

The amount due from/to an associate company is trade in-nature, unsecured, bears no interest and repayable upon demand.

The currency exposure profile of the amount due from an associate company is as follows (foreign currency balance is unhedged):-


Ringgit Malaysia 21,660,600 6,657,833US Dollar 14,857,105 – 36,517,705 6,657,833

The amount due to an associate company is denominated in Ringgit Malaysia.

11. GOODWILL ON ACQUISITION


At cost and at net carrying amount:-At beginning of financial year 1,198,088 1,213,677Currency translation difference (7,959) (15,589)


The goodwill arise from the acquisition of a new subsidiary company on 7 March 2012.

115



11. GOODWILL ON ACQUISITION (CONT’D)

Impairment tests for goodwill

(a) Allocation of goodwill

For the purpose of impairment testing, goodwill is allocated to the Group’s cash generating units (“CGU”) identified as follows:-


Subsidiary companyNautic Steels (Holdings) Limited 1,190,129 1,198,088

1,190,129 1,198,088

The recoverable amount of the above is based on its value-in-use and the recoverable amount is higher than the carrying amount of the above goodwill allocated. Thus, there is no impairment loss recognised for the financial years ended 28 February 2018 and 28 February 2019.

(b) Key assumptions used in value-in-use calculations

The recoverable amount of a CGU is determined based on value-in-use calculations using cash flow projections basedonfinancialbudgetsapprovedbymanagementcoveringaperiodofoneyear.Keyassumptionsandmanagement’s approach to determine the values assigned to each key assumption are as follows:-

(i) Budgeted gross profit margin

The basis used to determine the value assigned to the budgeted gross profit margin of 20% (2018: 22%) is the average gross margins achieved in the year immediately before the budgeted year and revised for expected demand of their products.

(ii) Revenue growth rate

The revenue growth rate of approximately 23% (2018: 17%) per annum is based on management’s estimate of revenue growth rate based on the past and current trends of the industry.

(iii) Discount rate

A pre-tax discount rate of 3% (2018: 3%) is applied. The discount rate reflects specific risks relating to the relevant business operations.

The Directors believe that any reasonably possible changes in the above key assumptions applied are not likely to materially cause the recoverable amount to be lower than its carrying amount except for the changes in prevailing operating environment which is not ascertainable.

116



12. DERIVATIVES FINANCIAL INSTRUMENTS

Hedging activities – Cash flow hedges

Cross currency swap

Contract/ Notional amount Assets Liabilities NetGroup RM RM RM RMAsset 2019 Hedging derivatives:- Cash flow hedges - Cross currency swap 8,699,831 8,699,831 7,860,006 839,825 8,699,831 8,699,831 7,860,006 839,825

2018 Hedging derivatives:- Cash flow hedges - Cross currency swap 7,759,837 7,759,837 6,512,213 1,247,624

Non-hedging derivatives:- Forward currency contracts 787,260 787,260 782,860 4,400

8,547,097 8,547,097 7,295,073 1,252,024

2019 2018 RM RM

Analysed as:- - Within 1 year 796,810 627,258 - More than 1 year but less than 5 years 43,015 624,766

839,825 1,252,024

117



12. DERIVATIVES FINANCIAL INSTRUMENTS (CONT’D)

Hedging activities – Cash flow hedges (cont’d)

Cross currency swap (cont’d)

Contract/ Notional amount Assets Liabilities NetGroup (cont’d) RM RM RM RMLiability 2019 Hedging derivatives:- Cash flow hedges - Cross currency swap – – – –

2018 Hedging derivatives:- Cash flow hedges - Cross currency swap 6,666,097 6,562,740 6,666,097 (103,357)

2019 2018 RM RM

Analysed as:- - Wihin 1 year – (48,018) - More than 1 year but less than 5 years – (55,339)

– (103,357)

Contract/ Notional amount Assets Liabilities NetCompany RM RM RM RMAsset 2019 Hedging derivatives:- Cash flow hedges - Cross currency swap 4,669,638 4,669,638 4,591,174 78,464

2018 Hedging derivatives:- Cash flow hedges - Cross currency swap – – – –

2019 2018 RM RM

Analysed as:- - Within 1 year 35,449 – - More than 1 year but less than 5 years 43,015 –

78,464 –

118






Contract/ Notional amount Assets Liabilities NetCompany (cont’d) RM RM RM RMLiability 2019 Hedging derivatives:- Cash flow hedges - Cross currency swap – – – –

2018 Hedging derivatives:- Cash flow hedges - Cross currency swap 6,666,097 6,562,740 6,666,097 (103,357)

2019 2018 RM RM

Analysed as:- - Wihin 1 year – (48,018) - More than 1 year but less than 5 years – (55,339)

– (103,357)

The full fair value of a derivative is classified as a non-current asset or liability if the remaining maturity of the hedged item is more than 12 months and, as a current asset or liability, if the maturity of the hedged item is less than 12 months.

The Group and the Company held cross currency swap contracts designated as hedges of cash flow currency risk for certain borrowings.

The terms of the cross currency swap contracts have been negotiated to match the terms of the borrowings.

119






The following table indicates the periods in which the cash flows associated with the cross currency swap are expected to occur and affect profit or loss:-

Carrying Expected Less than Between More than amount cash flows 1 year 1 to 5 years 5 yearsGroup RM RM RM RM RM2019 Cross currency swap 7,908,000 8,230,434 5,581,940 2,648,494 – 2018 Cross currency swap 13,266,000 14,112,734 5,881,638 8,231,096 – Company 2019 Cross currency swap 4,590,000 4,883,377 2,234,883 2,648,494 –

2018 Cross currency swap 6,630,000 7,227,295 2,341,814 4,885,481 –

The cash flow hedges of the borrowings were assessed to be highly effective and a net unrealised loss of RM304,442 and net unrealised gain of RM181,821 (2018: loss of RM3,376,127 and loss of RM1,012,618) of the Group and of the Company respectively relating to the hedging instruments are included in other comprehensive income. None was reclassified from equity to profit or loss during the current and previous financial year.

Non-hedging activities

The Group uses forward currency contracts to manage some of the transaction exposure. Trading derivatives are classified as a current asset or liability. The full fair value of a derivative is classified as a non-current asset or liability if the remaining maturity of the hedged item is more than 12 months and, as a current asset or liability, if the maturity of the hedged item is less than 12 months.

These contracts are not designated as cash flow or fair value hedges and are entered into for periods consistent with currency transaction exposure and fair value changes exposure. Such derivatives do not qualify for hedge accounting.

120



13. DEFERRED TAX ASSETS


At beginning of financial year 1,851,363 927,225Transferred from profit or loss (Note 33) 165,038 924,138


The balance in the deferred tax assets made up of temporary differences arising from:-


Carrying amount of qualifying property, plant and equipment in excess of their tax base (733,623) (644,000)Inventories written down 1,409,000 1,190,000Allowance for impairment of receivables 1,168,000 1,292,000Revaluation of buildings 13,363 13,363Provision of expenses 159,661 –

2,016,401 1,851,363

The following temporary differences have not been recognised in the financial statements:-


Carrying amount of qualifying property, plant and equipment in excess of their tax base (50,301,207) (46,705,393)Inventories written down 833,243 624,021Unabsorbed business losses 14,088,084 12,594,782Unabsorbed value of increased exports incentive 18,959,000 18,959,000Unutilised leave entitlement 3,130 3,231Unutilised capital allowances 25,469,450 37,058,450

9,051,700 22,534,091

The unabsorbed business losses, unabsorbed value of increased exports incentive and unutilised capital allowances are available for offset against future taxable profits of the subsidiary companies in which those items arose. Deferred tax assets have not been recognised in respect of these items as they may not be used to offset taxable profits of other subsidiary companies in the Group and they have arisen in subsidiary companies that have a recent history of losses.

121



14. INVENTORIES


Raw materials 62,719,855 36,317,128Work-in-progress 22,743,355 20,315,587Finished goods 270,802,774 219,461,641

Total inventories 356,265,984 276,094,356

Recognised in profit or loss:- Inventories recognised in cost of sales 398,244,500 403,051,453 Inventories written down 2,536,300 1,155,136 Reversal of inventories written down (84,069) (199,057)

The reversal of inventories written down was made when the related inventories were subsequently sold above their carrying amounts and increased in net realisable value because of changed economic circumstances.

15. TRADE RECEIVABLES


Trade receivables 137,035,974 153,340,733Less: Allowance for impairment of trade receivables (7,231,351) (8,447,469)

129,804,623 144,893,264

Movement in allowance for impairment of trade receivables:-


At 1 March (8,447,469) (6,715,191)Charge for the financial year (3,237,495) (4,130,429)Reversal of impairment - payment received 4,402,242 1,974,697- write off against allowance for impairment 6,381 365,443Currency translation difference 44,990 58,011 At 28 February (7,231,351) (8,447,469)

122



15. TRADE RECEIVABLES (CONT’D)

The currency exposure profile of the trade receivables is as follows (foreign currency balances are unhedged):-


Ringgit Malaysia 83,293,887 93,699,089US Dollar 46,264,270 49,943,911Singapore Dollar 1,716,284 2,491,876Great Britain Pound Sterling 5,761,533 7,186,518EURO – 19,339

137,035,974 153,340,733

Trade receivables comprise amounts receivable from sales of goods. The credit terms granted on sales of goods ranged from 7 days to 90 days (2018: 7 days to 90 days). Allowance has been made for estimated irrecoverable of trade receivables based on the default experience of the Group.

An impairment analysis is performed at each reporting date using a provision matrix to measure ECLs. Information regarding the Group’s and the Company’s exposure to the credit risk and ECLs for trade receivables is disclosed in Note 44 (c) to the Financial Statements.

16. OTHER RECEIVABLES


Non-trade receivables 185,125 183,345 – –Advance payment to suppliers 6,941,740 15,144,967 – –Deposit for purchase of property, plant and equipment 822,967 356,679 – –Deposits 14,048,865 589,538 – 46,655Prepayment of expenses 2,610,220 2,065,433 5,177 4,654GST receivable 1,567,320 2,247,120 418 – 26,176,237 20,587,082 5,595 51,309

123



16. OTHER RECEIVABLES (CONT’D)

The currency exposure profile of the other receivables is as follows (foreign currency balances are unhedged):-


Ringgit Malaysia 5,530,326 4,146,655 5,595 51,309US Dollar 19,398,328 15,018,554 – –Great Britain Pound Sterling 489,221 938,569 – –EURO 632,194 206,217 – –Singapore Dollar 126,168 277,087 – – 26,176,237 20,587,082 5,595 51,309

17. FIXED DEPOSITS WITH LICENSED BANKS

Group 2019 2018

RM RM

Current 2,546,650 2,476,995

The fixed deposits with licensed banks of the Group are on fixed rate basis and will mature within 1 month to 6

months (2018: 1 month to 12 months) period.

The effective interest rates on fixed deposits with licensed banks ranged from 2.60% to 2.90% (2018: 2.00% to 3.10%) per annum.

All fixed deposits with licensed banks are denominated in Ringgit Malaysia.

124



18. CASH AND BANK BALANCES

The currency exposure profile of the cash and bank balances is as follows (foreign currency balances are unhedged):-


Ringgit Malaysia 35,388,540 39,205,725 1,783,075 2,084,648US Dollar 3,689,593 16,225,269 – –EURO 118,756 41,508 – –Singapore Dollar 2,019,323 3,648,107 – –Great Britain Pound Sterling 7,390,635 8,625,425 76,019 222,933

48,606,847 67,746,034 1,859,094 2,307,581

19. SHARE CAPITAL AND SHARE PREMIUM

Share capital

2019 2019 2018 2018 Unit RM Unit RM

Group and CompanyIssued and fully paid-up:- Ordinary shares At beginning of financial year 746,394,724 207,543,729 739,595,856 203,928,587 Exercise of warrants - - 1,104,268 672,542 Pursuant to exercise of ESOS 1,462,500 754,514 5,694,600 2,942,600

At end of financial year 747,857,224 208,298,243 746,394,724 207,543,729

New ordinary shares issued during the financial year ranked pari passu in all respect with the existing ordinary shares of the Company.

Share Premium

In the financial year ended 2017, in line with the abolishment of the concept of authorised share capital and par value of share capital, the amount standing to the credit of the share premium account of RM56,009,416 became part of the Group’s and the Company’s share capital pursuant to the transitional provisions set out in Section 618 (2) of the Companies Act, 2016 (“the Act”). Notwithstanding this provision, the Company may within 24 months from the commencement of the Act (up to 31 January 2019), use the amount standing to the credit of its share premium account of RM56,009,416 for purposes as set out in Section 618 (3) of the Act. There is no impact in the numbers of ordinary shares in issue or the relative entitlement of any of the members as a result of this transition.

125



20. TREASURY SHARES

Group and Company

The shareholders of the Company, through the Annual General Meeting held on 21 August 2008, approved the Company’s plan to repurchase up to 10% of the issued and paid-up share capital of the Company (“Share Buy Back”). The authority granted by the shareholders was subsequently renewed in every Annual General Meeting held and it was last renewed in the Annual General Meeting held on 26 July 2018. The Directors of the Company are committed to enhancing the value of the Company to its shareholders and believe that the purchase plan can be applied in the best interest of the Company and its shareholders.

The Company repurchased 6,781,400 (2018: 450,000) ordinary shares of its issued share capital from the open market. The average price paid for the repurchased shares was RM0.51 (2018: RM0.57) per share. The repurchased transactions were financed by internally generated funds. These repurchased shares were held as treasury shares and treated in accordance with the requirements of Section 127 of the Companies Act, 2016.

The shares purchased were retained as treasury shares. The Company has the right to re-issue these shares at a later date. As treasury shares, the rights attached as to voting, dividends and participation in other distribution are suspended.

As at the financial year end, the Company held 8,173,324 (2018: 1,391,924) of the Company’s shares and the number of outstanding shares in issue after setting treasury shares off against equity are 739,683,900 (2018: 745,002,800).

No treasury shares were sold during the current and previous financial year.

21. REVALUATION RESERVE

Group

The revaluation reserve arose from the revaluation of land and buildings and is not available for distribution as dividends.

22. EMPLOYEES SHARE OPTION RESERVE

Group and Company

Employees share option reserve represents the equity-settled share option granted to employees. The reserve is made up of the cumulative value of services received from employees recorded over the vesting period commencing from the grant date of equity-settled share option, and is reduced by the expiry or exercise of the share option.

The employees share option reserve is not available for distribution as dividends.

23. CASH FLOW HEDGE RESERVE

The cash flow hedge reserve contains the effective portion of the gain or loss on hedging instruments in cash flow hedges and is not available for distribution as dividends.

126



24. WARRANTS RESERVE

Group and Company

Warrant A Warrant B 2010/2020 2016/2021 Total RM RM RM

At 1 March 2017 7,481,637 7,387,400 14,869,037Exercise of warrant (27,507) (92,902) (120,409)

At 28 February 2018, 1 March 2018 and 28 February 2019 7,454,130 7,294,498 14,748,628

(a) Warrants 2010/2020 (“Warrant A”)

On 22 December 2010, the Company issued 748,410,400 Irredeemable Convertible Unsecured Loan Stocks (“ICULS”) at the nominal value of RM0.10, together with 74,841,040 free detachable warrants to the holders of the ICULS on the basis of one free detachable warrants for every ten ICULS subscribed.

The fair value of the warrants is estimated using the Black Scholes model, taking into account the terms and conditions upon which the warrants are acquired. The fair value of the warrants measured at issuance date and the assumptions are as follows:-

Style VanillaExercise type AmericanTenure 10 years5-day volume weighted average price of Pantech share at 23 December 2010 RM0.58Conversion price RM0.60Volatility rate 20%

Each warrant entitles the registered holder of warrant to subscribe for one new ordinary share in the Company at any time on or after 22 December 2010 up to the date of expiry on 21 December 2020, at an exercise price of RM0.60 per share or such adjusted price in accordance with the provisions in the Deed Poll. The warrants were listed on the Bursa Malaysia Securities Berhad on 27 December 2010.

On 22 December 2016, the Company completed a Bonus Issue of Shares. Pursuant to this Bonus Issue of Shares, the exercise price of Warrant A of RM0.60 is adjusted to RM0.50 and a total of 14,963,269 additional Warrant A is issued, listed and quoted on the Main Market of Bursa Malaysia Securities Berhad on 22 December 2016.

During the previous financial year, a total of 330,088 units of Warrants A were exercised and converted to ordinary shares.

As at the reporting date, 89,449,551 (2018: 89,449,551) Warrant A remained unexcercised.

127



24. WARRANTS RESERVE (CONT’D)

Group and Company (cont’d)

(b) Warrants 2016/2021 (“Warrant B”)

On 22 December 2016, the Company issued 61,561,667 free warrants on the basis of one (1) Warrant B for every ten (10) existing ordinary shares held on the same entitlement date as the Bonus Issue of Shares.

The fair value of the warrants is estimated using the Black Scholes model, taking into account the terms and conditions upon which the warrants are acquired. The fair value of the warrants measured at issuance date and the assumptions are as follows:-

Style VanillaExercise type AmericanTenure 5 years5-day volume weighted average price of Pantech share at 2 December 2016 RM0.534Conversion price RM0.50Volatility rate 28.805 %

Each warrant entitles the registered holder of warrant to subscribe for one new ordinary share in the Company at any time on or after 22 December 2016 up to the date of expiry on the 21 December 2021, at an exercise price of RM0.50 per share or such adjusted price in accordance with the provisions in the Deed Poll. The warrants were listed on the Bursa Malaysia Securities Berhad on 29 December 2016.

During the previous financial year, a total of 774,180 units of Warrants B were exercised and converted to ordinary shares.

As at the reporting date, 60,787,487 (2018: 60,787,487) Warrant B remained unexercised.

25. UNAPPROPRIATED PROFIT

Effective from 1 January 2014, the Company is required by the Income Tax Act 1967 to pay dividend under single tier income tax system. As such, the Company may frank the payment of dividends out of its entire unappropriated profit.

128



26. FINANCE LEASE CREDITORS

Group 2019 2018

RM RM

Minimum lease payment- within 1 year 2,804,795 3,069,879- after 1 year but not later than 5 years 5,449,979 6,569,731

8,254,774 9,639,610Less: Interest in suspense (686,139) (895,456)

7,568,635 8,744,154

Total principal sum payable- within 1 year 2,464,310 2,672,480- after 1 year but not later than 5 years 5,104,325 6,071,674

7,568,635 8,744,154

The interest rates on the finance lease ranged from 2.26% to 5.50% (2018: 2.26% to 4.78%) per annum.

Included in the above total principal sum payable is an amount of RM137,169 (2018: RM71,428) denominated in Singapore Dollar and RM154,538 (2018: RM722,060) denominated in Great Britain Pound Sterling.

27. BORROWINGS


CurrentUnsecured:- Term loans 8,270,573 10,626,838 2,077,994 2,096,752 Term loans-i 6,609,815 3,689,743 – – Trade loans:- - Accepted bills-i 20,047,173 4,509,233 – – - Bankers’ acceptance 133,139,120 96,403,000 – – - Bank overdraft 2,114,547 – – – - Onshore foreign currency loans 3,688,056 15,384,260 – – - Clean import loans 980,731 1,934,665 – – - Revolving credit 17,569,389 – 5,069,389 –

Total current 192,419,404 132,547,739 7,147,383 2,096,752

Non-currentUnsecured:- Term loans 10,275,017 18,521,263 2,550,000 4,590,000 Term loans-i 33,475,010 16,757,770 – –

Total non-current 43,750,027 35,279,033 2,550,000 4,590,000

Total borrowings 236,169,431 167,826,772 9,697,383 6,686,752

129



27. BORROWINGS (CONT’D)

(i) The term loans, term loans-i, accepted bills-i, bankers’ acceptance, bank overdraft, clean import loans and revolving credit are obtained by way of corporate guarantee from the Company and negative pledge on subsidiary companies’ assets.

A term loan of a subsidiary company is obtained by way of facility agreement and corporate guarantee from the Company.

The term loans bear interest at rates ranging from 5.15% to 5.77% (2018: 4.60% to 5.60%) per annum.

The term loans-i bear interest at rates ranging from 4.98% to 5.34% (2018: 5.09% to 5.34%) per annum.

All term loans are repayable by monthly, quarterly or yearly installments.

The accepted bills-i bears interest at rates ranging from 4.14% to 4.70% (2018: 3.67% to 4.82%) per annum.

The bankers’ acceptance bears interest at rates ranging from 3.80% to 4.91% (2018: 3.35% to 4.93%) per annum.

The bank overdraft bears interest at rates ranging from 7.95% to 8.64% (2018: 8.10% to 8.30%) per annum.

The clean import loans bear interest at the rate of 1.05% (2018: 1.05%) per annum.

The revolving credits bear interest at rates ranging from 5.36% to 5.60% (2018: Nil) per annum.

(ii) The onshore foreign currency loans are obtained by way of corporate guarantee from the Company. Certain onshore foreign currency loans are obtained by way of negative pledge on subsidiary companies’ assets.

It bears interest at rates ranging from 2.15% to 3.40% (2018: 1.60% to 2.59%) per annum.

The currency exposure profile of the borrowings is as follows (foreign currency balances are unhedged):-


Ringgit Malaysia 231,500,644 150,507,847 9,697,383 6,176,752US Dollar 3,688,056 15,384,260 – –Great Britain Pound Sterling 980,731 1,934,665 – 510,000

236,169,431 167,826,772 9,697,383 6,686,752

130



28. OTHER PAYABLES


CurrentNon-trade payables 6,581,940 4,909,443 70,080 9,180Deposits received 150,550 122,950 – –Accrual of expenses 5,549,067 5,620,712 245,501 243,684Advance payment from customers 2,496,134 4,326,850 – –GST payable – 847,002 – 50,122SST payable 15,119 – – –

Total current 14,792,810 15,826,957 315,581 302,986

Non-currentProvision for reinstatement cost 264,649 259,745 – –

Total non-current 264,649 259,745 – –

Total other payables 15,057,459 16,086,702 315,581 302,986

Provision for reinstatement cost refers to estimated costs made by a subsidiary company required to reinstate its

office premise to its original state according to the terms and conditions of the respective tenancy agreements.

Movement in the provision for reinstatement cost:-

Group 2019 2018

RM RM

At beginning of financial year 259,745 277,745Currency translation difference 4,904 (18,000)

At end of financial year 264,649 259,745

The currency exposure profile of the other payables is as follows (foreign currency balances are unhedged):-


Ringgit Malaysia 12,127,372 13,759,992 315,581 302,986US Dollar 2,477,975 1,233,354 – –Singapore Dollar 452,112 380,630 – –Great Britain Pound Sterling – 712,726 – –

15,057,459 16,086,702 315,581 302,986

131



29. DEFERRED TAX LIABILITIES

Group 2019 2018

RM RM

At beginning of financial year 5,156,759 5,608,891Transferred to profit or loss (Note 33) (571,656) (386,073)Realisation of deferred tax liabilities upon depreciation of revalued assets (60,954) (60,955)Currency translation difference (3,075) (5,104)


The balance in the deferred tax liabilities made up of temporary differences arising from:-

Group 2019 2018

RM RM

Carrying amount of qualifying property, plant and equipment in excess of their tax base 3,082,689 3,342,420Revaluation of land and building 1,753,385 1,814,339Unabsorbed capital allowance (315,000) –

4,521,074 5,156,759

30. TRADE PAYABLES

Group Trade payables comprise amounts outstanding for trade purchases. The credit terms granted to the Group ranged

from 30 days to 90 days (2018: 30 days to 90 days).

The currency exposure profile of the trade payables is as follows (foreign currency balances are unhedged):-

Group 2019 2018

RM RM

Ringgit Malaysia 22,940,126 21,226,881US Dollar 6,063,451 4,077,652Singapore Dollar 3,460,627 4,198,556Great Britain Pound Sterling 809,330 1,148,527EURO 965,455 324,277

34,238,989 30,975,893

132



31. REVENUE

Revenue for the Group comprise of revenue from contract with customers.

31.1 Disaggregation of revenue from contract with customers

Revenue from contracts with customers is disaggregated by major products, primary geographical markets and timing of revenue recognition as follows:-

2019 2018Group RM RM Major products Manufacturing and trading of pipes, fittings, flanges, valves and other related products 609,214,562 614,771,219

Primary geographical markets Malaysia 404,787,580 367,568,235Other countries 204,426,982 247,202,984

609,214,562 614,771,219

Timing of revenue recognition Products transferred at a point in time 609,214,562 614,771,219

2019 2018Company RM RM Dividend income 15,626,040 26,622,475Management fee 4,141,553 4,150,406

19,767,593 30,772,881

133



32. PROFIT BEFORE TAX

Profit before tax has been determined after charging/(crediting), amongst others, the following items:-

Group Company 2019 2018 2019 2018 RM RM RM RMAuditors’ remuneration - statutory 168,000 157,000 20,000 19,000- non-statutory 121,300 72,200 74,700 28,200- other auditors 132,296 119,914 – –Direct operating expenses:- - revenue generating investment properties during the financial year 113,003 165,212 – –Directors’ fee 647,640 506,203 157,640 166,203Rental expense - premises 1,324,786 1,179,989 – –- factory and warehouse 631,184 620,207 – –- crane – 13,500 – –- forklift 240,643 216,029 – –- office equipment 183,948 140,659 – –Realised (gain)/loss on foreign exchange (567,824) 4,970,064 6,753 92,324Rental income (1,229,800) (1,281,720) – –

The estimated monetary value of benefits provided to the Directors of the Company during the financial year by way of usage of the Group’s assets and other benefits amounted to RM 127,946 (2018: RM134,796).

The remuneration paid (Company and Group basis) to the Directors of the Company is categorised as follows:-

Other Benefits- Fees emoluments in-kind Total RM RM RM RMGroup 2019 Executive Directors 380,000 5,923,015 127,946 6,430,961Non-Executive Directors 157,640 – – 157,640 Total 537,640 5,923,015 127,946 6,588,601

2018 Executive Directors 305,000 5,893,214 134,796 6,333,010Non-Executive Directors 166,203 – – 166,203 Total 471,203 5,893,214 134,796 6,499,213

134



32. PROFIT BEFORE TAX (CONT’D)

The remuneration paid (Company and Group basis) to the Directors of the Company is categorised as follows (cont’d):-

Other Benefits- Fees emoluments in-kind Total RM RM RM RM

Company 2019 Executive Directors – 1,648,853 – 1,648,853Non-Executive Directors 157,640 – – 157,640 Total 157,640 1,648,853 – 1,806,493

2018 Executive Directors – 1,652,404 – 1,652,404Non-Executive Directors 166,203 – – 166,203 Total 166,203 1,652,404 – 1,818,607

The remuneration paid to the Directors of the Company analysed into bands are as follows:-

RM100,000 RM1,000,001 to toNumber of Directors <RM100,000 RM1,000,000 RM2,000,000

2019 Executive Directors – 1 4Non-Executive Directors 4 – – 2018 Executive Directors – 1 4Non-Executive Directors 4 – –

135



33. TAX EXPENSE

Tax recognised in profit or loss

Group Company 2019 2018 2019 2018 RM RM RM RMIn Malaysia Current year’s tax expense 14,629,903 13,573,719 896,229 930,035(Over)/Under provision of tax expense in prior financial year (490,494) 116,616 – 2,177Realisation of deferred tax liabilities upon depreciation of revalued assets (60,954) (60,955) – –Transferred from deferred tax liabilities (Note 29) (534,161) (329,323) – –Transferred to deferred tax assets (Note 13) (165,038) (924,138) – –

13,379,256 12,375,919 896,229 932,212

Outside Malaysia

Current year’s tax expense – 132,321 – –(Over)/Under provision of tax expense in prior financial year (7,793) 1,816 – –Transferred from deferred tax liabilities (Note 29) (37,495) (56,750) – –

(45,288) 77,387 – –

Total 13,333,968 12,453,306 896,229 932,212

Malaysian income tax is calculated at the statutory tax rate of 24% (2018: 24%) of the estimated taxable profits for the financial year.

136



33. TAX EXPENSE (CONT’D)

The reconciliations of income tax expense applicable to profit before tax at the statutory tax rate to the income tax expense at the effective tax rate of the Group and of the Company are as follows:-

Group Company 2019 2018 2019 2018 RM RM RM RM Profit before tax 60,792,158 58,133,130 15,491,415 25,608,948

Tax expense at Malaysian statutory tax rate of 24% (2018: 24%) 14,590,118 13,951,951 3,717,939 6,146,148 Tax effects in respect of:- Expenses not deductible for tax purposes 2,555,036 3,145,706 928,666 1,174,079Income not subject to tax (103,491) (909,186) (3,750,376) (6,390,192)Deferred tax assets not recognised in current financial year (3,235,774) (2,211,928) – –Under/(Over) provision of deferred tax liabilities in prior financial year 89,000 (13,573) – –(Under)/Over provision of deferred tax assets in prior financial year (1,680) 1,000 – –(Over)/Under provision of tax expense in prior financial year (498,287) 118,432 – 2,177Utilisation of allowance on value of increase export – (1,568,141) – –Realisation of deferred tax liabilities upon depreciation of revalued assets (60,954) (60,955) – –

Total tax expense 13,333,968 12,453,306 896,229 932,212

The Group has unutilised capital allowances, unabsorbed value of increased exports incentive and unabsorbed

business losses which can be carried forward to offset against future taxable profit amounted to approximately RM25,469,450, RM18,959,000 and RM14,088,084 (2018: RM37,058,450, RM18,959,000 and RM12,594,782) respectively.

137



34. EARNINGS PER ORDINARY SHARE

Group

Basic earnings per ordinary share

The calculation of basic earnings per ordinary share was based on Group’s profit for the financial year attributable to owners of the Company and weighted average number of ordinary shares calculated as follows:-

Group 2019 2018 Profit after tax for the financial year attributable to owners of the Company (RM) 47,458,190 47,126,801 Weighted average number of ordinary shares in issue 740,963,412 741,539,393 Basic earnings per ordinary share (sen) 6.40 6.36

Diluted earnings per ordinary share

The calculation of diluted earnings per ordinary shares was based on Group’s profit attributable to ordinary shareholders and a weighted average number of ordinary shares outstanding after adjustment for the effects of all dilutive potential ordinary shares.

Group 2019 2018 Profit after tax for the financial year attributable to owners of the Company (RM) 47,458,190 47,126,801 Weighted average number of ordinary shares in issue (basic) 740,963,412 741,539,393 Adjustment for dilutive effect on exercise of ESOS 7,754,539 6,462,667Adjustment for dilutive effect on warrant 2,091,467 27,705,697 Weighted average number of ordinary shares in issue (diluted) 750,809,418 775,707,757 Diluted earnings per ordinary share (sen) 6.32 6.08

138



35. EMPLOYEE BENEFITS EXPENSE

Group Company 2019 2018 2019 2018 RM RM RM RM Staff costs 48,876,677 47,306,646 2,187,640 2,121,574

Employee benefits expense of the Group and of the Company consists of, amongst others, the following items:-

Group Company 2019 2018 2019 2018 RM RM RM RM Directors’ remuneration - Salaries, allowances and bonuses 5,513,300 5,464,515 1,532,400 1,532,400- others 409,715 428,699 116,453 120,004 Defined contribution plan – staff EPF 2,734,043 2,766,239 57,830 50,492

36. EMPLOYEE SHARE OPTION SCHEME

At an extraordinary general meeting held on 2 December 2016, the Company’s shareholders approved the establishment of Employee Share Option Scheme (“ESOS” or “Scheme”) for the eligible Directors and employees of the Group. The Scheme shall be in force for a duration of ten (10) years from the date of commencement from 23 January 2017 (“Duration of the Scheme”). During the previous financial year, the Company has granted an option under the Scheme and the option is exercisable within a period of five (5) years from the date commencing from 24 January 2017.

The salient features of the Scheme are as follows:-

(a) The maximum number of new ordinary shares in the Company (“Shares”) which may be available under the Scheme shall not be more than ten per centum (10%) of the issued and fully paid-up share capital (excluding treasury shares) of the Company at any point in time during the Duration of the Scheme.

(b) The Company will for the Duration of the Scheme make available sufficient number of new Shares in the unissued share capital of the Company to satisfy all outstanding options, which may be exercisable from time to time.

(c) Any employee or Director of any company comprised in the Group (save for any subsidiaries which are dormant) shall be eligible to participate in the ESOS if, as at the date of offer, the employee is at least eighteen (18) yearsofageorabove;andisemployedonacontinuousfulltimebasis(eitherpermanentoroncontract)andon the payroll of that corporation comprised in the Group and has been given notification in writing that the employee is a confirmed employee.

(d) The option price shall be determined by the Board of Directors of the Company upon recommendation of the Option Committee at a discount of not more than 10% from the volume weighted average market price of the Company’s shares as quoted on Bursa Malaysia Securities Berhad for the five (5) market days immediately preceding the date of the offer.

(e) The shares under options shall remain unissued until the options are exercised and shall, on allotment, rank pari passu in all respects with the existing issued and fully paid-up Shares at the time of allotment save that they will not entitle the holders thereof to receive any rights and bonus issues announced or to any dividend or other distribution declared to the shareholders of the Company as at a date which precedes the date of the exercise of the options.

139



36. EMPLOYEE SHARE OPTION SCHEME (CONT’D)

Number of unexercised share option

Company 2019 2018 At beginning of financial year 40,405,400 49,869,000Exercised during the financial year (1,462,500) (5,694,600)Forfeited during the financial year (731,100) (3,769,000) At end of financial year 38,211,800 40,405,400

Analysed as:-Exercisable in financial year 2018 – 8,358,000Exercisable in financial year 2019 15,783,300 9,156,400Exercisable in financial year 2020 11,214,250 11,445,500Exercisable in financial year 2021 11,214,250 11,445,500 38,211,800 40,405,400

Option price

Company RM Option granted - on grant date 0.415

Share option exercised during the financial year

During the financial year, 1,462,500 (2018: 5,694,600) number of ordinary shares were issued under the Company’s ESOS. Fair value of share option granted

The fair value of share option granted was estimated by an external valuer using the Binomial Tree Method, taking into consideration the terms and conditions upon which the option was granted.

The fair value of the share option measured at grant date and the assumptions are as follow:-

Fair value of share option granted on 24 January 2017 based on vesting date (RM) - 24 January 2017 0.102343- 24 January 2018 0.099692- 24 January 2019 0.100360- 24 January 2020 0.100640- 24 January 2021 0.099612 Expected volatility of Company’s share price (%) 30.00Option term (years) 5Risk free rate of interest per annum (%) 3.60Expected dividend yield per annum (%) 5.00

140



37. RELATED PARTY DISCLOSURES

(a) The transactions of the Group and of the Company with the related parties were as follows:-

Group Company 2019 2018 2019 2018 RM RM RM RM Transactions with subsidiary companies:- - management fee received – – 4,141,553 4,150,406 - dividend received (net) – – 15,626,040 26,622,475 - loan interest received – – 72,747 – - loan interest paid – – 26,624 58,573Transactions with an associate company:- - sales 65,872,357 19,179,809 – – - purchases 89,255 88,835 – – - machine servicing charged 721,000 980,000 – – - rental received 225,000 192,000 – –

(b) The outstanding balances arising from related party transactions as at the reporting date are disclosed in Notes 9 and 10 to the Financial Statements.

(c) The remuneration of key management personnel is same with the Directors’ remunerations as disclosed in Notes32and35totheFinancialStatements.Keymanagementpersonnelisdefinedasthosepersonshavingauthority and responsibility for planning, directing and controlling the activities of the Company either directly or indirectly and entity that provides key management personnel services to the Company. The Company has no other members of key management personnel apart from the Board of Directors.

38. CAPITAL COMMITMENTS

Group 2019 2018 RM RM Authorised and contracted for:- Purchase of - crane, machinery, equipments furniture and fittings 3,227,660 739,678 - buildings 3,089,742 551,754 - leasehold land 3,110,184 –

39. RENTAL COMMITMENTS

The future non-cancellable rental expense commitments are as follows:-

Group 2019 2018 RM RM Year 2019 – 2,142,171Year 2020 793,632 940,650Year 2021 to 2037 11,142,295 10,132,361

11,935,927 13,215,182

141



40. OPERATING LEASE ARRANGEMENTS

The Group has entered into operating lease agreements on its assets. These leases have remaining lease terms of between 8 to 25 months (2018: 1 to 20 months).

The future minimum lease payments receivable under non-cancellable operating leases contracted for as at the reporting date but not recognised as receivables are as follows:-

Group 2019 2018 RM RM Within the next twelve months 511,200 310,800After the next twelve months 468,000 19,200

979,200 330,000

41. CONTINGENT LIABILITIES

Company 2019 2018 RM RM Unsecured:- Corporate guarantees given to licensed financial institutions for credit facilities granted to subsidiary companies 754,005,208 713,901,694Corporate guarantees given to finance lease creditors for finance lease facilities granted to subsidiary companies 10,272,900 11,385,752Corporate guarantees given to third parties for supply of goods and services to subsidiary companies 5,000,498 5,022,298

769,278,606 730,309,744

The corporate guarantees do not have determinable effect on the terms of the credit facilities due to the banks requiring guarantee as a pre-condition for approving the credit facilities granted to the subsidiary companies. The actual terms of the credit facilities are likely to be the best indicator of “at market” terms and hence the fair value of the credit facilities are equal to the credit facilities and contract bond amount received by the subsidiary companies. As such, there is no value on the corporate guarantee to be recognised in the financial statements.

142



42. SIGNIFICANT EVENTS

Significant event after the financial year

At the forthcoming Annual General Meeting, a final single tier dividend, in respect of the financial year ended 28 February 2019, of 1.00 sen per ordinary share will be proposed for shareholders’ approval. The financial statements for current financial year do not reflect this proposed dividend. Such dividend, if approved by the shareholders, will be accounted for in equity as an appropriation of unappropriated profit in the financial year ending 29 February 2020.

43. OPERATING SEGMENTS - GROUP

(a) Business segments

The Group is organised on three major operating segments. These operating segments are monitored separately for the purpose of making decisions about resource allocation and performance assessment. Segment performance is evaluated based on operating profit or loss which, in certain respects as explained in the table below, is measured differently from operating profit in the consolidated financial statements. The following summary describes the operations in each of the Group’s reportable segments:-

Operating segments Business activities

Trading Trading, supply and stocking of high pressure seamless and specialised steel pipes, fittings, flanges, valves and other related products for use in the oil and gas, gas reticulation, marine, onshore and offshore heavy engineering, power generation, petrochemicals, palm oil refining and other related industries.

Manufacturing Manufacturing and supply of butt-welded carbon steel fittings such as elbows, tees, reducers, end-caps and high frequency induction long bends, manufacturing and supply of stainless steel and alloy pipes, fittings and related products, as well as milling, machining and welding of tube and pipe fitting in special metals for use in the oil and gas, marine, onshore and offshore heavy engineering, petrochemical and chemical, palm oil refinery and oleochemical, power generation, pharmaceutical, water and other related industries, hot dip galvanizing, treatment and coating of metals, engineering fabrication works and manufacturing and trading of industrial consumable products.

Investment holding Investment holding, property investment and management service.

Transfer prices between operating segments are on negotiated basis.

The Group has aggregated certain operating segments to form a reportable segment due to the similar nature and operational characteristics of the services.

143



43.

OP

ER

AT

ING

SE

GM

EN

TS

– G

RO

UP

(CO

NT

’D)

(a)

Bus

ines

s se

gm

ents

(co

nt’d

)

Cons

olid

atio

n

Trad

ing

Man

ufac

turin

g In

vest

men

t hol

ding

ad

just

men

ts

Note

s Co

nsol

idat

ed

20

19

2018

20

19

2018

20

19

2018

20

19

2018

2019

20

18

RM

RM

RM

RM

RM

RM

RM

RM

RM

RM

Re

venu

e

Ex

tern

al re

venu

e 38

7,10

3,22

2 34

7,97

4,01

3 22

2,11

1,34

0 26

6,79

7,20

6 –

– –

–

609,

214,

562

614,

771,

219

Int

er-se

gmen

t

re

venu

e 27

,837

,354

34

,435

,693

56

,870

,191

50

,408

,810

19

,767

,593

30

,772

,881

(10

4,47

5,13

8) (11

5,61

7,38

4) A

– –

To

tal re

venu

e 41

4,94

0,57

6 38

2,40

9,70

6 27

8,98

1,53

1 31

7,20

6,01

6 19

,767

,593

30

,772

,881

(10

4,47

5,13

8) (11

5,61

7,38

4)

609,

214,

562

614,

771,

219

Re

sults

Se

gmen

t pro

fit/(lo

ss)

52,9

33,4

62

44,0

12,0

96

20,6

87,1

65

27,4

60,9

08

(3,95

7,75

0) (4,

762,

472)

– –

B 69

,662

,877

66

,710

,532

Int

eres

t inco

me

1,76

7,05

3 1,

347,

814

656,

180

782,

637

128,

630

79,0

27

(1,63

2,75

1) (1,

192,

077)

91

9,11

2 1,

017,

401

Fin

ance

costs

(4,

182,

400)

(3,40

4,71

8) (7,

093,

382)

(6,37

8,92

1) (86

6,09

3) (79

1,26

9) 1,

632,

751

1,19

2,07

7

(10,5

09,1

24)

(9,38

2,83

1)

De

prec

iation

and

amor

tisat

ion

(3,33

1,86

0) (3,

624,

294)

(13,1

78,7

82)

(12,8

50,2

99)

(110,

677)

(132,

811)

(399,

073)

(400,

938)

(17

,020

,392

) (17

,008

,342

)

Sh

are o

f res

ults

of as

socia

te

co

mpa

ny

719,

293

(211,

972)

– –

– –

– –

71

9,29

3 (21

1,97

2)

Inc

ome t

ax ex

pens

e (12

,725

,750

) (10

,926

,682

) 36

0,12

0 (56

8,36

4) (99

4,71

3) (98

4,63

5) 26

,375

26

,375

(13,3

33,9

68)

(12,4

53,3

06)

Ot

her n

on-c

ash

(expe

nses

)/inco

me

3,05

3,59

7 (3,

030,

241)

(1,08

2,79

5) 30

3,51

8 4,

068,

838

(1,69

9,37

5) (8,

596,

541)

– C

(2,55

6,90

1) (4,

426,

098)

144



43. OPERATING SEGMENTS – GROUP (CONT’D)

(a) Business segments (cont’d)

Investment Consolidation Trading Manufacturing holding adjustments Notes Consolidated 2019 RM RM RM RM RM

Assets

Segment assets 454,952,803 458,902,620 286,713,318 (315,514,736) D 885,054,005 Investment in an associate company 2,782,458 – – – 2,782,458

Additions to non- current assets other than financial instruments and deferred tax assets 4,690,008 22,833,262 – 8,111,043 E 35,634,313

Liabilities

Segment liabilities 50,430,587 53,749,889 18,217,373 (69,004,567) F 53,393,282

2018

Assets

Segment assets 391,401,478 427,526,619 262,540,311 (295,610,342) D 785,858,066 Investment in an associate company 2,063,165 – – – 2,063,165 Additions to non- current assets other than financial instruments and deferred tax assets 5,308,131 9,722,470 – 118,828 E 15,149,429

Liabilities

Segment liabilities 48,064,632 38,197,810 13,628,564 (48,786,418) F 51,104,588

145





Notes to the nature of adjustments and eliminations to arrive at amounts reported in the consolidated financial statements:

A. Inter-segment revenues are eliminated on consolidation.

B. The following items are added to/(deducted from) segment profit to arrive at “profit before tax” presented in the consolidated income profit or loss:-

2019 2018 RM RM

Segment profit 69,662,877 66,710,532Interest income 919,112 1,017,401Finance costs (10,509,124) (9,382,831)Share of results of associate company 719,293 (211,972)

Profit before tax 60,792,158 58,133,130

C. Other non-cash income/(expenses) consist of the following items as presented in the respective notes to the financial statements:-

2019 2018 RM RM

Allowance for impairment of receivables (3,237,495) (4,130,429)Bad debts written off (17,706) –Property, plant and equipment written off (14,774) (174,515)Inventories written down (2,536,300) (1,155,136)Reversal of inventories written down 84,069 199,057Allowance for impairment of receivables no longer required 4,402,242 1,974,697Fair value loss adjustment on investment properties (300,000) –Gain on disposal of property, plant and equipment 90,765 559,603Employees Share Option Scheme expenses (1,027,702) (1,699,375)

(2,556,901) (4,426,098)

146





Notes to the nature of adjustments and eliminations to arrive at amounts reported in the consolidated financial statements (cont’d):-

D. The following items are added to segment assets to arrive at total assets reported in the consolidated statement of financial position:-

2019 2018 RM RM Segment assets 885,054,005 785,858,066Investment in an associate company 2,782,458 2,063,165Deferred tax assets 2,016,401 1,851,363Tax recoverable 1,832,051 1,003,522

Total assets 891,684,915 790,776,116

E. Additions to non-current assets other than financial instruments and deferred tax assets consist of:-

2019 2018 RM RM

Property, plant and equipment 21,859,220 10,788,599Capital work-in-progress 13,775,093 4,360,830

35,634,313 15,149,429

F. The following items are added to segment liabilities to arrive at total liabilities reported in the consolidated

statement of financial position:-

2019 2018 RM RM

Segment liabilities 53,393,282 51,104,588Finance lease creditors 7,568,635 8,744,154Borrowings 236,169,431 167,826,772Tax payable 3,582,587 4,489,908Deferred tax liabilities 4,521,074 5,156,759

Total liabilities 305,235,009 237,322,181

147




(b) Geographical information

The Group’s revenue and non-current assets information based on geographical location are as follows:-

Revenue Non-current assets 2019 2018 2019 2018 RM RM RM RM

Malaysia * 579,899,991 574,516,100 275,493,311 256,275,345Republic of Singapore 10,814,041 18,091,866 520,780 603,917UnitedKingdom 18,500,530 22,163,253 13,123,917 13,810,510

609,214,562 614,771,219 289,138,008 270,689,772

* Company’s home country

Non-current assets information presented above consist of the following items as presented in the consolidated statement of financial position:-

2019 2018 RM RM

Property, plant and equipment 230,563,255 221,403,827Prepaid land lease payments 32,551,772 33,133,816Capital work-in-progress 13,690,978 3,814,747Investment in an associate company 2,782,458 2,063,165Deferred tax assets 2,016,401 1,851,363Derivatives financial instruments 43,015 624,766Goodwill on acquisition 1,190,129 1,198,088Investment properties 6,300,000 6,600,000

289,138,008 270,689,772

(c) Major customers

The Group does not have any revenue from a single external customer which represents 10% or more of the Group’s revenue.

148



44. FINANCIAL INSTRUMENTS

Categories of Financial Instruments

The table below provides an analysis of financial instruments categorised as follows:

- Amortisedcost(AC);- Fairvaluethroughothercomprehensiveincome(FVTOCI);- Loansandreceivables(L&R);and- Other liabilities measured at amortised cost (AC).

Group 2019 Carrying amount AC FVTOCI RM RM RM

Financial assetsDerivatives financial instruments 839,825 – 839,825Trade receivables 129,804,623 129,804,623 –Other receivables 21,998,697 21,998,697 –Amount due from an associate company 36,517,705 36,517,705 –Fixed deposits with licensed banks 2,546,650 2,546,650 –Cash and bank balances 48,606,847 48,606,847 – 240,314,347 239,474,522 839,825

Financial liabilities Finance lease creditors 7,568,635 7,568,635 –Borrowings 236,169,431 236,169,431 –Amount due to an associate company 319,874 319,874 –Trade payables 34,238,989 34,238,989 –Other payables 15,042,340 15,042,340 –

293,339,269 293,339,269 –

149



44. FINANCIAL INSTRUMENTS (CONT’D)

Categories of Financial Instruments (cont’d)

Group (cont’d) 2018 Carrying amount L&R FVTOCI RM RM RM

Financial assetsDerivatives financial instruments 1,252,024 – 1,252,024Trade receivables 144,893,264 144,893,264 –Other receivables 16,274,529 16,274,529 –Amount due from an associate company 6,657,833 6,657,833 –Fixed deposits with licensed banks 2,476,995 2,476,995 –Cash and bank balances 67,746,034 67,746,034 –

239,300,679 238,048,655 1,252,024

Financial liabilitiesDerivatives financial instruments 103,357 – 103,357Finance lease creditors 8,744,154 8,744,154 –Borrowings 167,826,772 167,826,772 –Amount due to an associate company 215,566 215,566 –Trade payables 30,975,893 30,975,893 –Other payables 15,239,700 15,239,700 –

223,105,442 223,002,085 103,357

Company 2019 Carrying amount AC FVTOCI RM RM RM

Financial assetsDerivatives financial instruments 78,464 – 78,464Amount due from subsidiary companies 5,211,122 5,211,122 –Cash and bank balances 1,859,094 1,859,094 –

7,148,680 7,070,216 78,464

Financial liabilitiesBorrowings 9,697,383 9,697,383 –Amount due to subsidiary companies 424 424 –Other payables 315,581 315,581 – 10,013,388 10,013,388 –

150




Categories of Financial Instruments (cont’d)

Company (cont’d) 2018 Carrying amount L&R FVTOCI RM RM RM

Financial assetsOther receivables 46,655 46,655 –Amount due from subsidiary companies 17,453 17,453 –Cash and bank balances 2,307,581 2,307,581 – 2,371,689 2,371,689 –

Financial liabilitiesDerivatives financial instruments 103,357 – 103,357Borrowings 6,686,752 6,686,752 –Other payables 252,864 252,864 –

7,042,973 6,939,616 103,357

Net gains and losses arising from financial instruments


Net gains/(losses) on: - Financial assets categorised as L&R – (1,138,331) – 54,099- Financial assets categorised as AC 2,066,153 – 100,203 –- Financial liabilities categorised as L&R – (8,142,031) – (448,422)- Financial liabilities categorised as AC (9,348,400) – (380,634) –

(7,282,247) (9,280,362) (280,431) (394,323)

Risk management objectives and policies

The Group is exposed to various risks in relation to financial instruments. The Group’s financial assets and liabilities by category are summarised in Note 3.8.1 and 3.8.2 respectively. The main types of risks are foreign currency risk, interest rate risk, credit risk and liquidity risk.

Financial risk management policy is established to ensure that adequate resources are available for the development of the Group’s businesses whilst managing its foreign currency risk, interest rate risk, credit risk and liquidity risk. The Group operates within clearly defined policies and procedures that are approved by the Board of Directors to ensure the effectiveness of the risk management process.

151




Risk management objectives and policies (cont’d)

(a) Foreign currency risk

Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates.

The Group is exposed to foreign currency risk mostly on its sales and purchases that are denominated in a currency other than the functional currency of the Group. The currencies giving rise to this risk are primarily US Dollar (“USD”), Singapore Dollar (“SGD”), Great Britain Pound Sterling (“GBP”) and EURO.

The Group uses forward exchange contracts to hedge its foreign currency risk and forward exchange contracts have maturities of less than one year from the reporting date. Where necessary, the forward exchange contracts are rolled over at maturity.

Based on carrying amounts as at the reporting date, foreign currency denominated financial assets and financial liabilities which expose the Group and the Company to currency risk are disclosed below:-

USD SGD GBP EURO RM RM RM RMGroup2019Financial assets Trade receivables 46,264,270 1,716,284 5,761,533 – Other receivables 19,398,328 126,168 489,221 632,194Amount due from an associate company 14,857,105 – – – Cash and bank balances 3,689,593 2,019,323 7,390,635 118,756 84,209,296 3,861,775 13,641,389 750,950

Financial liabilitiesBorrowings (3,688,056) – (980,731) –Finance lease creditors – (137,169) (154,538) – Trade payables (6,063,451) (3,460,627) (809,330) (965,455)Other payables (2,477,975) (452,112) – – (12,229,482) (4,049,908) (1,944,599) (965,455) Net exposure 71,979,814 (188,133) 11,696,790 (214,505)

152





(a) Foreign currency risk (cont’d)

Based on carrying amounts as at the reporting date, foreign currency denominated financial assets and financial liabilities which expose the Group and the Company to currency risk are disclosed below (cont’d):-

USD SGD GBP EURO RM RM RM RMGroup (cont’d)2018 Financial assetsTrade receivables 49,943,911 2,491,876 7,186,518 19,339Other receivables 15,018,554 277,087 938,569 206,217Cash and bank balances 16,225,269 3,648,107 8,625,425 41,508

81,187,734 6,417,070 16,750,512 267,064

Financial liabilitiesBorrowings (15,384,260) – (1,934,665) –Finance lease creditors – (71,428) (722,060) –Trade payables (4,077,652) (4,198,556) (1,148,527) (324,277)Other payables (1,233,354) (380,630) (712,726) –

(20,695,266) (4,650,614) (4,517,978) (324,277)

Net exposure 60,492,468 1,766,456 12,232,534 (57,213)

Company2019Financial assetCash and bank balances – – 76,019 –

Net exposure – – 76,019 –

2018Financial assetCash and bank balances – – 222,933 –

Financial liabilityBorrowings – – (510,000) –

Net exposure – – (287,067) –

153





(a) Foreign currency risk (cont’d)

Foreign currency sensitivity analysis

The following table illustrates the sensitivity of profit in regards to the Group’s and the Company’s financial assets and financial liabilities and the RM/USD exchange rate, RM/SGD exchange rate, RM/GBP exchange rate and RM/EURO exchange rate with ‘all other things are being equal’.

It assumes a +/- 3% (2018: 3%) change of the RM/USD, RM/SGD, RM/GBP and RM/EURO exchange rates respectively. The percentage has been determined based on the average market volatility in exchange rates in the previous 12 months. The sensitivity analysis is based on the Group’s and the Company’s foreign currency denominated financial instruments held at each reporting date and also takes into account forward exchange contracts that offset effects from changes in currency exchange rates.

If the RM had strengthened against the USD, SGD, GBP and EURO by 3% (2018: 3%) respectively, this would have the following impact:-

Increase/(Decrease) on profit for the financial yearGroup USD SGD GBP EURO Total RM RM RM RM RM

2019 (2,159,394) 5,644 (350,904) 6,435 (2,498,219)

2018 (1,814,774) (52,994) (366,976) 1,716 (2,233,028)

Company USD SGD GBP EURO Total RM RM RM RM RM

2019 – – (2,281) – (2,281)

2018 – – 8,612 – 8,612

If the RM had weakened against the USD, SGD, GBP and EURO by 3% (2018: 3%) respectively, then the impact to profit for the financial year would be the opposite effect.

Exposures to foreign exchange rates vary during the financial year depending on the volume of overseas transactions. Nonetheless, the analysis above is considered to be representative of the Group’s and the Company’s exposures to foreign currency risk.

154





(b) Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of the Group’s and the Company’s financial instruments will fluctuate because of changes in market interest rates.

The Group’s and the Company’s fixed rate borrowings are exposed to a risk of change in their fair value due to changes in interest rates. The Group’s variable rate borrowings are exposed to the risk of change in cash flows due to changes in interest rates. Investment in equity securities and short term receivables and payables are not significantly exposed to interest rate risk.

The Group’s interest rate management objective is to manage interest expenses consistent with maintaining an acceptable level of exposure to interest rate fluctuation.

Interest rate sensitivity

The Group and the Company are exposed to changes in market interest rates through bank borrowings at variable interest rates. Other borrowings are at fixed interest rates. The exposure to interest rates for the Group’s short term placement is considered immaterial.

The interest rate profile of the Group’s and of the Company’s significant interest-bearing financial instruments, based on carrying amounts as at the end of the reporting period is as follows:-

Group Company2019 RM RMFixed rate instrumentsFinancial asset Fixed deposits with licensed banks 2,546,650 – Financial liabilities Finance lease creditors (7,568,635) – Accepted bills-i (20,047,173) – Bankers’ acceptance (133,139,120) – Onshore foreign currency loans (3,688,056) – Clean import loans (980,731) – Revolving credit (17,569,389) (5,069,389) Term loans (4,627,994) (4,627,994)

(185,074,448) (9,697,383)

Floating rate instrumentsFinancial liabilities Term loans (13,917,596) – Term loans-i (40,084,825) – Bank overdraft (2,114,547) –

Net financial liabilities (56,116,968) –

155





(b) Interest rate risk (cont’d)

Interest rate sensitivity (cont’d)

The interest rate profile of the Group’s and of the Company’s significant interest-bearing financial instruments, based on carrying amounts as at the end of the reporting period is as follows (cont’d):-

Group Company2018 RM RMFixed rate instrumentsFinancial asset Fixed deposits with licensed banks 2,476,995 – Financial liabilities Finance lease creditors (8,744,154) – Accepted bills-i (4,509,233) – Bankers’ acceptance (96,403,000) – Onshore foreign currency loans (15,384,260) – Clean import loans (1,934,665) – Term loans (6,686,752) (6,686,752)

(131,185,069) (6,686,752)

Floating rate instrumentsFinancial liabilities Term loans (22,461,349) – Term loans-i (20,447,513) – Net financial liabilities (42,908,862) –

The following table illustrates the sensitivity of profit to a reasonably possible change in interest rates of +/- 25 (2018: 25) basis points (“bp”). These changes are considered to be reasonably possible based on observation of current market conditions. The calculations are based on a change in the average market interest rates for each period, and the financial instruments held at each reporting date that are sensitive to changes in interest rates. All other variables are held constant.

(Decrease)/Increase on profit for the financial year + 25 bp - 25 bpGroup RM RM 28 February 2019 (140,292) 140,292

28 February 2018 (107,272) 107,272

156





(c) Credit risk

Credit risk is the risk that counterparty fails to discharge an obligation to the Group and the Company. The Group’s and the Company’s maximum exposure to credit risk is limited to the carrying amount of financial assets summarised at the reporting date, as summarised below:-


Classes of financial assets – carrying amounts:-Cash and cash equivalents 51,153,497 70,223,029 1,859,094 2,307,581Trade receivables 129,804,623 144,893,264 – –Other receivables 21,998,697 16,274,529 – 46,655Amount due from an associate company 36,517,705 6,657,833 – –Amount due from subsidiary companies – – 5,211,122 17,453

239,474,522 238,048,655 7,070,216 2,371,689

The Group continuously monitors defaults of customers and other counterparties, identified either individually or by group, and incorporate this information into its credit risk controls. Where available at reasonable cost, external credit ratings and/or reports on customers and other counterparties are obtained and used. The Group’s policy is to deal only with creditworthy counterparties.

The Group’s management considers that all the above financial assets that are not impaired or past due for each of the reporting dates under review are of good credit quality.

The ageing analysis of trade receivables of the Group is as follows:-

Allowance for impairment loss Expected Expected credit loss credit loss (individually (collectively Gross impaired) impaired) Total Net RM RM RM RM RM

2019Within terms 46,973,787 – – – 46,973,787Past due 1 to 30 days 25,670,980 – – – 25,670,980Past due 31 to 60 days 16,284,569 – – – 16,284,569Past due 61 to 90 days 16,886,387 – – – 16,886,387Past due 91 to 120 days 6,056,146 – – – 6,056,146Past due more than 120 days 25,164,105 7,231,351 – 7,231,351 17,932,754

137,035,974 7,231,351 – 7,231,351 129,804,623

157





(c) Credit risk (cont’d)

The ageing analysis of trade receivables of the Group is as follows (cont’d):-

Allowance for impairment loss Expected Expected credit loss credit loss (individually (collectively Gross impaired) impaired) Total Net RM RM RM RM RM

2018 Within terms 65,001,800 – – – 65,001,800Past due 1 to 30 days 32,260,689 – – – 32,260,689Past due 31 to 60 days 10,845,046 – – – 10,845,046Past due 61 to 90 days 9,845,752 – – – 9,845,752Past due 91 to 120 days 7,908,292 – – – 7,908,292Past due more than 120 days 27,479,154 8,447,469 – 8,447,469 19,031,685

153,340,733 8,447,469 – 8,447,469 144,893,264

None of the Group’s financial assets are secured by collateral or other credit enhancements and none of the

carrying amount of financial assets whose terms have been renegotiated that would otherwise be past due or impaired.

In respect of trade and other receivables, the Group is not exposed to any significant credit risk exposure to

any single counterparty or any group of counterparties having similar characteristics. Trade receivables consist of a large number of customers in various industries and geographical areas. Based on historical information about customer default rates, the management consider the credit quality of trade receivables that are not past due or impaired to be good.

The credit risk for cash and cash equivalents and short term placements is considered negligible, since the counterparties are reputable banks with high quality external credit ratings.

Financial guarantee The Company provides unsecured financial guarantees to financial institutions, finance lease creditors and

third parties in respect of credit facilities granted to certain subsidiary companies. The maximum exposure to credit risk is as disclosed in Note 41 as at the reporting date. The Company monitors on an ongoing basis the results of the subsidiary companies and repayments made by the subsidiary companies. As at the end of the reporting period, there was no indication that the subsidiary companies would default in payment.

(d) Liquidity risk

Liquidity risk is the risk arising from the Group and the Company not being able to meet their obligations due to shortage of funds.

In managing their exposures to liquidity risk, the Group and the Company maintain a level of cash and cash equivalents and bank credit facilities deemed adequate by the management to ensure that they will have sufficient liquidity to meet their liabilities as and when they fall due.

158



44.

FIN

AN

CIA

L IN

ST

RU

ME

NT

S (C

ON

T’D

)

Ris

k m

anag

emen

t o

bje

ctiv

es a

nd p

olic

ies

(co

nt’d

)

(d)

Liq

uid

ity

risk

(co

nt’d

)

Th

e fo

llow

ing

tab

le s

how

s th

e ar

eas

whe

re t

he G

roup

and

the

Com

pan

y ar

e ex

pos

ed t

o liq

uid

ity r

isk:

-

Gro

up

Co

mp

any

Cur

rent

N

on-

curr

ent

C

urre

nt

No

n-cu

rren

t

Le

ss t

han

Bet

wee

n M

ore

tha

n Le

ss t

han

Bet

wee

n M

ore

tha

n

1

year

1

to 5

yea

rs

5 y

ears

1

yea

r 1

to 5

yea

rs

5 ye

ars

RM

R

M

RM

R

M

RM

R

M

2019

No

n-d

eriv

ativ

e fi

nanc

ial l

iab

iliti

esTe

rm lo

ans

9,50

0,42

2 11

,707

,996

–

2,22

0,04

1 2,

626,

708

–Te

rm lo

ans-

i 8,

251,

879

33,3

46,6

11

4,77

7,52

2 –

– –

Ban

kers

’ acc

epta

nce

and

acc

epte

d b

ills-

i 15

3,18

6,29

3 –

– –

– –

Ban

k ov

erd

raft

2,

114,

547

– –

– –

–C

lean

imp

ort

loan

s 98

0,73

1 –

– –

– –

Ons

hore

fore

ign

curr

ency

loan

s 3,

688,

056

– –

– –

–Fi

nanc

e le

ase

cred

itors

2,

804,

795

5,44

9,97

9 –

– –

–Tr

ade

pay

able

s 34

,238

,989

–

– –

– –

Oth

er p

ayab

les

15,0

90,3

86

264,

649

– 31

5,58

1 –

–R

evol

ving

cre

dit

17,5

69,3

89

– –

5,06

9,38

9 –

–A

mou

nt d

ue t

o an

ass

ocia

te c

omp

any

319,

874

– –

– –

–

Tota

l und

isco

unte

d fi

nanc

ial l

iab

ilitie

s 24

7,74

5,36

1 50

,769

,235

4,

777,

522

7,60

5,01

1 2,

626,

708

–

Fina

ncia

l gua

rant

ees*

76

9,27

8,60

6 –

– –

– –

159



44.

FIN

AN

CIA

L IN

ST

RU

ME

NT

S (C

ON

T’D

)

Ris

k m

anag

emen

t o

bje

ctiv

es a

nd p

olic

ies

(co

nt’d

)

(d)

Liq

uid

ity

risk

(co

nt’d

)

Th

e fo

llow

ing

tab

le s

how

s th

e ar

eas

whe

re t

he G

roup

and

the

Com

pan

y ar

e ex

pos

ed t

o liq

uid

ity r

isk

(con

t’d

):-

Gro

up

Co

mp

any

Cur

rent

N

on-

curr

ent

C

urre

nt

No

n-cu

rren

t

Le

ss t

han

Bet

wee

n M

ore

tha

n Le

ss t

han

Bet

wee

n M

ore

tha

n

1

year

1

to 5

yea

rs

5 y

ears

1

yea

r 1

to 5

yea

rs

5 ye

ars

RM

R

M

RM

R

M

RM

R

M

2018

No

n-d

eriv

ativ

e fi

nanc

ial l

iab

iliti

esTe

rm lo

ans

11,3

60,0

10

18,6

27,9

11

2,37

0,58

4 2,

324,

526

4,84

6,74

9 –

Term

loan

s-i

4,64

4,91

6 17

,755

,663

91

6,18

2 –

– –

Ban

kers

’ acc

epta

nce

and

acc

epte

d b

ills-

i 10

0,91

2,23

3 –

– –

– –

Cle

an im

por

t lo

ans

1,93

4,66

5 –

– –

– –

Ons

hore

fore

ign

curr

ency

loan

s 15

,384

,260

–

– –

– –

Fina

nce

leas

e cr

edito

rs

3,06

9,87

9 6,

569,

731

– –

– –

Trad

e p

ayab

les

30,9

75,8

93

– –

– –

–O

ther

pay

able

s 14

,979

,955

25

9,74

5 –

252,

864

– –

Am

ount

due

to

an a

ssoc

iate

com

pan

y 21

5,56

6 –

– –

– –

183,

477,

377

43,2

13,0

50

3,28

6,76

6 2,

577,

390

4,84

6,74

9 –

Der

ivat

ive

fina

ncia

l lia

bili

ties

Out

flow

6,

666,

097

– –

6,66

6,09

7 –

–In

flow

(6

,562

,740

) –

– (6

,562

,740

) –

–

103,

357

– –

103,

357

– –

Tota

l und

isco

unte

d fi

nanc

ial l

iab

ilitie

s 18

3,58

0,73

4 43

,213

,050

3,

286,

766

2,6

80,7

47

4,8

46,7

49

–

Fina

ncia

l gua

rant

ees*

73

0,30

9,74

4 –

– –

– –

* Th

is e

xpos

ure

is in

clud

ed in

liq

uid

ity ri

sk fo

r illu

stra

tion

only

. No

finan

cial

gua

rant

ee w

as c

alle

d u

pon

by

the

hold

ers

as a

t the

end

of t

he re

por

ting

per

iod

.

160





(d) Liquidity risk (cont’d)

The above amounts reflect the contractual undiscounted cash flows, which may differ from the carrying values of the financial liabilities at the reporting date.

45. CAPITAL MANAGEMENT OBJECTIVE

The primary capital management objective of the Group is to maintain a strong capital base and safeguard the Group’s ability to continue as a going concern, so as to sustain future development of the business. There is no change to the objectives in financial years ended 2019 and 2018.

The Group manages its capital by regularly monitoring its current and expected liquidity requirement and modify the combination of equity and borrowings from time to time to meet the needs. Shareholders’ equity and gearing ratio of the Group and of the Company are as follows:-


Total equity 586,449,906 553,453,935 237,964,093 236,107,601Borrowings 243,738,066 176,570,926 9,697,383 6,686,752

Debt-to-equity ratio 0.42 0.32 0.04 0.03

The Group has complied with Practice Note No. 17 (Revision on 3 August 2009, 22 September 2011 and 25 March

2015) of Main Market Listing Requirements of Bursa Malaysia Securities Berhad which requires the Group to maintain a consolidated shareholders’ equity not less than 25% of the issued and paid-up capital of the Company and such shareholders’ equity is not less than RM40 million.

46. FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying amounts of financial assets and liabilities of the Group and of the Company as at the reporting date are approximately at their fair values due to their short term nature or they are floating rate instruments that are re-priced to market interest rates on or near the reporting date.

161



46. FAIR VALUE OF FINANCIAL INSTRUMENTS (CONT’D)

Fair value hierarchy

The following table provides an analysis of financial instruments that are measured subsequent to initial recognition at fair value, grouped into Levels 1 to 3 based on the degree to which the fair value is observable.

Quoted in Significant active markets other Significant for identical observable unobservable instruments inputs inputs Total Level 1 Level 2 Level 3 RM RM RM RMGROUP

2019Financial assetDerivatives- Cross currency swap – 839,825 – 839,825

– 839,825 – 839,825

2018Financial assetsDerivatives - Cross currency swap – 1,247,624 – 1,247,624- Forward currency contracts – 4,400 – 4,400

– 1,252,024 – 1,252,024

Financial liabilityDerivatives- Cross currency swap – (103,357) – (103,357)

COMPANY

2019Financial assetDerivatives- Cross currency swap – 78,464 – 78,464

2018Financial liabilityDerivatives - Cross currency swap – (103,357) – (103,357)

There were no transfers between Level 1 and 2 in the reporting period.

162


LIST OFPROPERTIESas at 28 February 2019

No. Tittle deed Address

(Land area)Gross build-

up areaSq.ft. Tenure

Description/Existing use

Net BookValue @

28.2.2019RM’000

Approximateage of

buildingyears

Date oflast

revaluation

1 HS(D) 484896, PTD 204334,Mukim Plentong,District of Johor Bahru,Johor Darul Takzim

PTD 204334,Jalan Platinum Utama,Pasir Gudang Industrial Estate,Zone 12B, 81700 Pasir Gudang,Johor Darul Takzim

(899,775)522,610

Leaseholdexpiring on18.08.2070

4 blocks single storeyfactory buildings with1 unit 3-storey officeand 1 unit 5-storeycorporate office andancillary buildings

63,538 6-9 31.12.2015

2 Geran 95058, 95059and 95060. Lot No. 23190,23191 and 23192MukimKapar,DistrictofKlang,Selangor Darul Ehsan

Lot 13257, 13258 and 13259,Jalan Haji Abdul Manan,OffJalanMeru,41050Klang,Selangor Darul Ehsan

(544,353)346,523

Freehold 6 units of single storeydetached factories

(Identified for referenceas Factory A, B, C, D,

E and F)

41,087 Factory A,B,C - 29Factory D - 27Factory E - 12Factory F - 7

31.12.2015

3 HS(D) 563306, PTD 5020,Mukim Sungai Tiram,District of Johor Bahru,Johor Darul Takzim.

PLO 7, Jalan Rumbia 4,KawasanPerindustrianTanjung Langsat,81700 Pasir Gudang,Johor Darul Takzim

(189,790)93,266


A single storeydetached factory

and 1 unit 3-storeyoffice building

19,980 2 –


PLO 641, Jalan Plantinum 1,Pasir Gudang Industrial Estate,Zone 12B, 81700 Pasir Gudang,Johor Darul Takzim

(254,566) 104,370


2 units of single storeydetached warehouse

with 1 unit doublestorey office

15,947 7 31.12.2015

5 HS(D) 564272, PTD 222449,Mukim Plentong,District of Johor Bahru,Johor Darul Takzim.

PLO749,JalanKampungPasir Gudang Baru,Pasir Gudang Industrial Estate,Zone 12B, 81700 Pasir Gudang,Johor Darul Takzim.

(318,032)–


A parcel ofindustrial land

7,581 – 31.12.2015


PLO 234, Jalan Tembaga Satu,Pasir Gudang Industrial Estate,81700 Pasir Gudang,Johor Darul Takzim

(87,123) 42,300


A single storeydetached warehousewith 3-storey officebuildings annexed

5,700 20 31.12.2015

7 HS(M) 135, PTD 14174 &PTD 14175 (Lot 1433),Mukim Pantai Timor,District of Pengerang,Johor Darul Takzim

PTD 14174,KampungBukitGelugur,81600 Pengerang,Johor Darul Takzim

(127,617)54,600

Freehold A single storey warehouse andan office block

5,383 1 31.12.2015

8 SF209083, SF318990,SF211845, SF318991,SF184517 Claymore,Tame Valley Industrial Estate,Tamworth

Claymore Tame ValleyIndustrial Estate, Tamworth,Staffordshire,B775DQ,UnitedKingdom

(63,310) 33,570

Freehold 5 units of buildingcomprising of

factories, warehousesand offices

5,313 31-37 29.2.2016

9 HS(M) 29537, Lot PT 34277,MukimandDistrictofKlang,HS(D) 114965, Lot PT 17296,Pekan Baru Hicom,District of Petaling,Selangor Darul Ehsan

No. 3, Jalan Trompet 33/8,Seksyen 33, 40400 Shah Alam,Selangor Darul Ehsan

(123,548) 25,968

Leasehold expiring on11.12.2096

&28.11.2096

A single storeydetached warehousewith 2-storey officebuilding annexed

5,262 21 31.12.2015

10 SF211341, Brent, Tame ValleyIndustrial Estate,Wilnecote, Tamworth

Unit 2, Brent, Tame ValleyIndustrial Estate, Wilnecote,Tamworth, Staffordshire,B775DF, UnitedKingdom

(46,760) 22,323

Freehold A single storeydetached factoryand warehouse

4,821 29 29.2.2016

163


NOTICE OF THIRTEENTH ANNUAL GENERAL MEETING

NOTICE IS HEREBY GIVEN that the Thirteenth (13th) Annual General Meeting of Pantech Group Holdings Berhad (“Pantech” or the “Company”) will be held at Grand Ballroom 1, Level 11, Doubletree By Hilton Johor Bahru, 12, Jalan Ngee Heng, 80000 Johor Bahru, Johor on Thursday, 25 July 2019 at 11.00 a.m. for the following purposes:-

AGENDA

AS ORDINARY BUSINESS

1. To receive the Audited Financial Statements for the financial year ended 28 February 2019 together with the Directors’ and Auditors’ Reports thereon.

(Please refer toExplanatory Note A)

2. To approve the payment of a Final Single Tier Dividend of 1.0 sen per ordinary share for the financial year ended 28 February 2019.

Resolution 1

3. To approve the payment of Directors’ fees and benefits up to the amount of RM200,000 for the financial year ending 29 February 2020.

Resolution 2

4. To re-elect the following Directors retiring pursuant to the Article 122 of Company’s Constitution and being eligible, offered themselves for re-election:

4.1 Dato’ Chew Ting Leng4.2 Mr To Tai Wai4.3 Puan Sakinah binti Salleh

Resolution 3Resolution 4Resolution 5

5. To re-appoint Messrs Grant Thornton Malaysia as Auditors of the Company and to authorise the Directors to fix their remuneration.

Resolution 6

AS SPECIAL BUSINESS

To consider, and if thought fit, to pass the following Resolutions:

6. ORDINARY RESOLUTION

AUTHORITY TO ISSUE SHARES BY THE COMPANY PURSUANT TO SECTIONS 75 AND 76 OF THE COMPANIES ACT 2016

“THAT subject always to the Companies Act 2016 (“the Act”), and approvals from any other governmental/regulatory authorities, the Directors of the Company be and are hereby empowered, pursuant to Sections 75 and 76 of the Act, to issue shares in the Company at any time and upon such terms and conditions and for such purposes as the Directors of the Company may, in their absolute discretion, deem fit provided that the aggregate number of shares to be issued pursuant to this resolution does not exceed 10% of the total number of issued shares of the Company at the time of submission to the authority AND THAT the Directors of the Company be and are hereby empowered to obtain the approval for the listing of and quotation for the additional shares so issued on Bursa Malaysia Securities Berhad (“Bursa Securities”) AND FURTHER THAT such authority shall continue to be in force until the conclusion of the next Annual General Meeting of the Company.”

Resolution 7

164


7. ORDINARY RESOLUTION

PROPOSED RENEWAL OF SHARE BUY-BACK AUTHORITY

“THAT subject to compliance with all applicable rules, regulations and orders made pursuant to the Companies Act 2016 (“the Act”), provisions in the Company’s Constitution, the Listing Requirements of Bursa Securities and any other relevant authorities, the Company be and is hereby authorised to purchase such number of ordinary shares of the Company (“Proposed Renewal of Share Buy-Back”) as may be determined by the Directors of the Company from time to time through Bursa Securities upon such terms and conditions as the Directors may deem fit and expedient in the interest of the Company PROVIDED THAT:

(1) the aggregate number of shares purchased or held does not exceed ten per centum (10%) of the total number of issued shares of the Company as quoted on Bursa Securitiesasatthepointofpurchase;

(2) the maximum fund to be allocated by the Company for the purpose of purchasing such number of ordinary shares shall not exceed the retained profit account of the Company. As at the latest financial year ended 28 February 2019, the audited retainedprofitaccountoftheCompanystoodatRM16,049,594;

(3) the authority conferred by this resolution will commence immediately upon passing of this resolution and will continue to be in force until:

(a) at the conclusion of the next Annual General Meeting (“AGM”) of the Company following the general meeting in which the authorisation is obtained, at which time it shall lapse unless by ordinary resolution passed at that meeting, the authority is renewed either unconditionally or subject toconditions;or

(b) the expiration of the period within which the next AGM of the Company is requiredbylawtobeheld;or

(c) revoked or varied by ordinary resolution passed by the shareholders of the Company in a general meeting.

whicheveroccursfirst;

AND THAT upon completion of the purchase(s) of the ordinary shares of the Company, the Directors of the Company be and are hereby authorised to deal with the ordinary shares so purchased in the following manner:

(a) tocanceltheordinarysharessopurchased;or(b) to retain the ordinary shares so purchased as treasury shares for distribution

as dividend to shareholders and/or resell on Bursa Securities or subsequently cancelled;or

(c) to retain part of the ordinary shares so purchased as treasury shares and cancel theremainder;or

(d) in any other manner prescribed by the Act, rules, regulations and orders made to the Act, the Listing Requirements of Bursa Securities and any other relevant authorities for the time being in force.

AND THAT the Board of the Company be and are hereby authorised to take all such steps as are necessary or expedient to implement, finalise or to effect the aforesaid share buy-back with full powers to assent to any conditions, modifications, variations, and/or amendments as may be required or imposed by the relevant authorities and to do all such acts and things (including executing all documents) as the Board may deem fit and expedient in the best interest of the Company.”

Resolution 8

Notice of Thirteenth Annual General Meeting (cont’d)

165



8. SPECIAL RESOLUTION

PROPOSED ADOPTION OF NEW CONSTITUTION OF THE COMPANY

“THAT approval be and is hereby given to revoke the existing Constitution (previously referred to as the Memorandum and Articles of Association) of the Company with immediate effect and in place thereof, the proposed new Constitution of the Company, as set out in Appendix A of the Circular to Shareholders dated 28 June 2019 be adopted as the Constitution of the Company AND THAT the Directors of the Company be authorised to assent to any modification, variation and/or amendment as may be required by the relevant authorities and to do all acts and things and take all such steps as may be considered necessary to give full effect to the foregoing.”

Resolution 9

9. To transact any other business for which due notice shall have been given.

NOTICE OF DIVIDEND ENTITLEMENT AND PAYMENT Subject to the approval of the shareholders, a Final Single Tier Dividend of 1.0 sen per ordinary share for the financial year ended 28 February 2019 will be paid on 23 August 2019 to Depositors registered in the Record of Depositors at the closed of business at 5.00 p.m. on 9 August 2019.

A Depositor shall qualify for entitlement only in respect of: (a) Shares transferred into the Depositor’s Securities Account before 4.30 p.m. on 9 August 2019, in respect of ordinary

shares;and (b) Shares bought on Bursa Securities on a cum entitlement basis according to the Rules of the Bursa Securities.

By order of the Board,

SIEW SUET WEI (MAICSA 7011254)LIANG SIEW CHING (MAICSA 7000168)Company Secretaries

KualaLumpurDated : 28 June 2019

166



Notes :

1. For the purpose of determining a member who shall be entitled to attend, speak and vote at the AGM, the Company shall be requesting the Record of Depositors as at 19 July 2019. Only a depositor whose name appears on the Record of Depositors as at 19 July 2019 shall be entitled to attend the said meeting or appoint proxies to attend, speak and vote on his/her behalf.

2. A member entitled to attend and vote at the Meeting is entitled to appoint a proxy to attend and vote in his/her stead. A member may appoint up to two (2) proxies to attend the same meeting provided that he/she specifies the proportion of his/her shareholding to be represented by each proxy. A proxy may but need not be a member of the Company.

3. Where a member is an authorised nominee as defined under the Securities Industry (Central Depositories) Act, 1991,

it may appoint at least one (1) proxy but not more than two (2) proxies in respect of each Securities account it holds with ordinary shares of the Company standing to the credit of the said securities account.

4. Where a member is an exempt authorised nominee, it may appoint multiple proxies for each omnibus account it holds.

5. The instrument appointing a proxy shall be in writing under the hand of the appointer or his/her attorney duly authorized in writing or, if the appointer is a corporation, either under the Corporation’s Common Seal or under the hand of an officer or attorney so authorized.

6. The Proxy Form must be deposited at the Share Registrar’s office, Tricor Investor & Issuing House Services Sdn Bhd atUnit32-01,Level32,TowerA,VerticalBusinessSuite,Avenue3,BangsarSouth,No.8,JalanKerinchi,59200KualaLumpur,oralternatively,TricorCustomerServiceCentreatUnitG-3,GroundFloor,VerticalPodium,Avenue3,BangsarSouth,No.8,JalanKerinchi,59200KualaLumpurnotlessthan48hoursbeforethetimesetforholdingthe meeting or any adjournment thereof.

7. Explanatory Note A This Agenda is meant for discussion only as under the provisions of Section 340(1) of the Companies Act 2016, the

audited financial statements do not require the approval of the shareholders. As such, this matter will not be put forward for voting.

8. Explanatory Notes on Special Businesses: Resolution 7 - Authority to issue shares by the Company pursuant to Sections 75 and 76 of the Companies

Act 2016

The proposed Resolution 7 is a renewal of mandate given by the shareholders at the previous AGM held on 26 July 2018, primarily to give flexibility to the Board of Directors to issue and allot shares at any time in their absolute discretion and for such purposes as they consider would be in the interest of the Company without convening a general meeting. This authority, unless revoked or varied at a general meeting, will expire at the next annual general meeting of the Company.

The Company continues to consider opportunities to broaden its earnings potential. If any of the expansion/diversification proposals involves the issue of new shares, the Directors, under certain circumstance when the opportunity arises, would have to convene a general meeting to approve the issue of new shares even though the number involved may be less than 10% of the total number of issued shares.

In order to avoid any delay and costs involved in convening a general meeting to approve such issue of shares, it is thus considered appropriate that the Directors be empowered to issue shares in the Company, up to any amount not exceeding in total 10% of the total number of issued shares of the Company. The renewed authority will provide flexibility to the Company for the issuance of shares for the purpose of the possible fund-raising activities for the purpose of funding future project/investment, working capital and/or acquisitions. This authority, unless revoked or varied at a general meeting will expire at the conclusion of the next AGM of the Company.

No shares have been issued and allotted by the Company since obtaining the said authority from its shareholders at the last AGM held on 26 July 2018.

167


Notes:- (cont’d)

8. Explanatory Notes on Special Businesses: (cont’d)

Resolution 8 – Proposed Renewal of Share Buy-Back Authority

This resolution will empower the Directors of the Company to purchase the Company’s shares up to ten per centum (10%) of the total number of issued shares of the Company by utilising the funds allocated which shall not exceed the total retained profits of the Company. This authority, unless revoked or varied at a general meeting, will expire at the conclusion of the next AGM of the Company.

Further information on the Proposed Renewal of Share Buy-Back Authority are set out in the Share Buy-Back Statement dated 28 June 2019 which has been despatched together with the Company’s Annual Report 2019.

Resolution 9 – Proposed Adoption of New Constitution of the Company

The proposed adoption of new Constitution (formerly known as the Memorandum and Articles of Association) of the Company is primarily for the purposes of streamlining the Company’s existing M&A to be aligned with the Companies Act 2016 which was implemented with effect from 31 January 2017 and the amendments to Bursa Malaysia Securities Berhad Main Market Listing Requirements and the prevailing statutory and regulatory requirement applicable to the Company.

In view of the numerous amendments which would entail substantial amendments to the existing Memorandum and Articles of Association, the Board had proposed that a new Constitution be adopted. Please refer to Part A of the Circular to Shareholders dated 28 June 2019 which is despatched together with Annual Report 2019 for further information. The proposed adoption shall take effect immediately once this Special Resolution is passed by a majority of not less than seventy-five per centum (75%) of such members who are entitled to vote and vote in person or by proxy at the 13th AGM.

STATEMENT ACCOMPANYING NOTICE OF 13TH ANNUAL GENERAL MEETING

Pursuant to Paragraph 8.27(2) of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad, there is no person standing for election as Director of the Company at this 13th AGM (excluding directors standing for re-election).


168


ANALYSIS OFSHAREHOLDINGSas at 31 May 2019

Number of Shares Issued : 750,136,424Voting Rights : One Vote Per Ordinary ShareNo. of Shareholders : 9,114

DISTRIBUTION OF SHAREHOLDINGS AS AT 31 MAY 2019

No. of % of No. of % of Category Shareholders Shareholders Shares* Shares*

Less than 100 1,150 12.62 43,576 0.01100 – 1,000 548 6.01 169,023 0.021,001 – 10,000 3,112 34.15 14,767,474 1.9710,001 – 100,000 3,752 41.17 101,223,985 13.51100,001 – less than 5% of issued shares 548 6.01 408,934,939 54.575% and above of issued shares 4 0.04 224,226,548 29.92

Total 9,114 100.00 749,365,545 100.00

Note: * Excluding 770,879 treasury shares retained by the Company

LIST OF SUBSTANTIAL SHAREHOLDERS AS AT 31 MAY 2019

Direct Indirect No. of No. ofNo. Names Shares %* Shares %*

1. CTL Capital Holding Sdn Bhd 134,277,654 17.92 – – –2. GL Management Agency Sdn Bhd 96,798,228 12.92 – – –3. KoperasiPermodalanFeldaMalaysiaBerhad 50,023,280 6.68 – – –4. Dato’ Chew Ting Leng 7,886,625 1.05 134,429,154 17.94 (a)

5. DatinShumKahLin – – 142,315,779 18.99 (b)

6. Dato’GohTeohKean 6,169,625 0.82 96,798,228 12.92 (c)

7. DatinLeeSockKee – – 102,967,853 13.74 (d)

Note:* Excluding a total of 770,879 shares bought-back by the Company and retained as treasury shares

169


DIRECTORS’ INTERESTS IN SHARES AS AT 31 MAY 2019

Direct Indirect No. of No. ofNo. Names Shares %* Shares %*

1. Dato’ Chew Ting Leng 7,886,625 1.05 134,429,154 17.94 (a)

2. Dato’GohTeohKean 6,169,625 0.82 96,798,228 12.92 (c)

3. Tan Ang Ang 12,380,834 1.65 2,170,476 0.29 (e)

4. To Tai Wai 14,448,641 1.93 – – –5. Ng Lee Lee 8,820,967 1.18 194,691 0.03 (f)

6. Sakinah Binti Salleh 90,900 0.01 – – –7. Lim Yoong Xao – – 2,020 0.00 (g)

8. Nooraini Binti Mohd Yasin – – – – –9. Dato’ Sri Yap Tian Leong – – – – –

Notes:(a) DeemedinterestedbyvirtueofhisandhisspouseDatinShumKahLin’sinterestsinCTLCapitalHoldingSdnBhd

pursuant to Section 8 of the Companies Act, 2016 (“Act”) and by virtue of his daughter Ms Chew Zhiyin’s direct shareholding in the Company pursuant to Section 59(11) of the Act.

(b) Deemed interested by virtue of her and her spouse Dato’ Chew Ting Leng’s interests in CTL Capital Holding Sdn Bhd pursuant to Section 8 of the Act, and by virtue of her spouse Dato’ Chew Ting Leng’s and daughter, Ms Chew Zhiyin’s direct shareholdings in the Company pursuant to Section 59(11) of the Act.

(c) DeemedinterestedbyvirtueofhisandhisspouseDatinLeeSockKee’sinterestsinGLManagementAgencySdnBhd pursuant to Section 8 of the Act.

(d) DeemedinterestedbyvirtueofherandherspouseDato’GohTeohKean’sinterestsinGLManagementAgencySdnBhdpursuanttoSection8oftheAct,andbyvirtueofherspouseDato’GohTeohKean’sdirectshareholdingintheCompany pursuant to Section 59(11) of the Act.

(e) Deemed interestedbyvirtueofhisspouseMadamYongYuiKiew’sandson,MrJairusTanVernHsien’sdirectshareholdings in the Company pursuant to Section 59(11) of the Act.

(f) Deemed interested by virtue of her spouse Mr Wong Chong Peng’s direct shareholding in the Company pursuant to Section 59(11) of the Act.

(g) Deemed interested by virtue of his spouse Madam Wong Hui Chin’s direct shareholding in the Company pursuant to Section 59(11) of the Act.

* Excluding a total of 770,879 shares bought-back by the Company and retained as treasury shares

Analysis of Shareholdings (cont’d)

170


30 LARGEST SHAREHOLDERS AS AT 31 MAY 2019

No. Shareholders Shareholdings %*

1. CTL CAPITAL HOLDING SDN BHD 71,862,928 9.592. GL MANAGEMENT AGENCY SDN BHD 53,034,898 7.083. KOPERASIPERMODALANFELDAMALAYSIABERHAD 50,023,280 6.684. AMSEC NOMINEES (TEMPATAN) SDN BHD 43,763,330 5.84 PLEDGEDSECURITIESACCOUNT-AMBANK(M)BERHAD FOR GL MANAGEMENT AGENCY SDN BHD5. ALLIANCEGROUP NOMINEES (TEMPATAN) SDN BHD 36,349,019 4.85 PLEDGED SECURITIES ACCOUNT FOR CTL CAPITAL HOLDING SDN BHD6. CITIGROUP NOMINEES (TEMPATAN) SDN BHD 22,618,174 3.02 EMPLOYEES PROVIDENT FUND BOARD7. LEE LIANG MONG 22,336,608 2.988. ALLIANCEGROUP NOMINEES (TEMPATAN) SDN BHD 20,523,595 2.74 PLEDGED SECURITIES ACCOUNT FOR CTL CAPITAL HOLDING SDN BHD9. CITIGROUP NOMINEES (ASING) SDN BHD 17,381,292 2.32 EXEMPTANFORCITIBANKNEWYORK(NORGESBANK14)10. CITIGROUP NOMINEES (TEMPATAN) SDN BHD 9,744,682 1.30 EMPLOYEES PROVIDENT FUND BOARD (RHBISLAMIC)11. CHEW TING LENG 7,886,625 1.0512. TO TAI WAI 7,689,002 1.0313. KONGCHIONGLEE 6,189,854 0.8314. GOHTEOHKEAN 6,169,625 0.8215. CTL CAPITAL HOLDING SDN BHD 5,542,112 0.7416. TAN ANG ANG 5,146,412 0.6917. CITIGROUP NOMINEES (TEMPATAN) SDN BHD 5,050,000 0.67 EMPLOYEES PROVIDENT FUND BOARD (AMUNDI) 18. PUBLIC NOMINEES (TEMPATAN) SDN BHD 5,050,000 0.67 PLEDGEDSECURITIESACCOUNTFORCHONGKHONGSHOONG 19. CIMSEC NOMINEES (TEMPATAN) SDN BHD 4,886,885 0.65 CIMBFORLEEKENGHONG20. MAYBANKNOMINEES(TEMPATAN)SDNBHD 4,545,000 0.61 PLEDGEDSECURITIESACCOUNTFORCHONGKHONGSHOONG21. NG LEE LEE 4,520,433 0.6022. CITIGROUP NOMINEES (ASING) SDN BHD 4,490,772 0.60 CBNYFORDIMENSIONALEMERGINGMARKETSVALUEFUND23. CIMB GROUP NOMINEES (ASING) SDN BHD 4,466,119 0.59 EXEMPTANFORDBSBANKLTD24. NG LEE LEE 4,300,534 0.5725. LEE LIANG MONG 4,196,332 0.5626. TO TAI WAI 3,943,399 0.5327. HSBC NOMINEES (TEMPATAN) SDN BHD 3,939,000 0.53 HSBC (M) TRUSTEE BHD FOR RHB SMALL CAP OPPORTUNITY UNIT TRUST 28. CIMSEC NOMINEES (TEMPATAN) SDN BHD 3,750,000 0.50 CIMBBANKFORCHONGKHONGSHOONG 29. MAYBANKSECURITIESNOMINEES(TEMPATAN)SDNBHD 3,709,083 0.49 PLEDGED SECURITIES ACCOUNT FOR TAN ANG ANG30. TAN ANG ANG 3,525,339 0.47

TOTAL : 446,634,332 59.60

* Excluding a total of 770,879 shares bought-back by the Company and retained as treasury shares

Analysis of Shareholdings (cont’d)

171


ANALYSIS OFWARRANT HOLDINGS

as at 31 May 2019

No. Warrants Issued : 89,449,551 Warrants 2010/2020 (“Warrant A”)Exercise Price of Warrants : RM0.50Expiry Date of Warrants : 21/12/2020No Of Warrant Holders : 1,210

DISTRIBUTION OF WARRANT A HOLDINGS

No. of % of No. of % of Warrant Warrant Warrant WarrantSize of Holdings Holders Holders Holdings Holdings

Less than 100 185 15.29 7,294 0.01100 – 1,000 137 11.32 64,252 0.071,001 – 10,000 386 31.90 1,452,432 1.6210,001 – 100,000 396 32.73 13,216,392 14.78100,001 – less than 5% issued Warrants 104 8.59 38,487,748 43.035% and above of issued Warrants 2 0.17 36,221,433 40.49

1,210 100.00 89,449,551 100.00

DIRECTORS’ INTERESTS IN WARRANT A AS AT 31 MAY 2019

Direct Indirect No. of No. ofNo. Names Warrants % Warrants %

1. Dato’ Chew Ting Leng – – 20,815,677 23.27 (a)

2. Dato’GohTeohKean – – 15,405,756 17.22 (b)

3. Tan Ang Ang – – – – –4. To Tai Wai – – – – –5. Ng Lee Lee – – – – –6. Sakinah Binti Salleh – – – – –7. Lim Yoong Xao – – – – –8. Nooraini Binti Mohd Yasin – – – – –9. Dato’ Sri Yap Tian Leong – – – – –

Notes:(a) Deemed interested by virtue of his interest in CTL Capital Holding Sdn Bhd pursuant to Section 8 of the Act. (b) Deemed interested by virtue of his interest in GL Management Agency Sdn Bhd pursuant to Section 8 of the Act.

172


30 LARGEST WARRANT A HOLDERS AS AT 31 MAY 2019

No. Warrant Holders Warrant Holdings %

1. CTL CAPITAL HOLDING SDN BHD 20,815,677 23.272. AMSEC NOMINEES (TEMPATAN) SDN BHD 15,405,756 17.22 PLEDGEDSECURITIESACCOUNT-AMBANK(M)BERHAD FOR GL MANAGEMENT AGENCY SDN BHD3. MAYBANKNOMINEES(TEMPATAN)SDNBHD 4,020,000 4.49 PLEDGEDSECURITIESACCOUNTFORCHONGKHONGSHOONG4. ANG HING TAY 1,488,580 1.665. KENANGANOMINEES(TEMPATAN)SDNBHD 1,228,060 1.37 PLEDGED SECURITIES ACCOUNT FOR TIMMY GAN VE LI6. AMSEC NOMINEES (TEMPATAN) SDN BHD 1,216,000 1.36 PLEDGEDSECURITIESACCOUNT-AMBANK(M)BERHADFORLEELIANGMONG7. MAYBANKNOMINEES(TEMPATAN)SDNBHD 1,000,000 1.12 PLEDGED SECURITIES ACCOUNT FOR WONG LAI MOEY8. CIMSEC NOMINEES (TEMPATAN) SDN BHD 992,300 1.11 CIMBBANKFORNORAZMIBINABDULRAHMAN9. CIMSEC NOMINEES (TEMPATAN) SDN BHD 960,000 1.07 CIMBBANKFORWONGLAIMOEY10. ONG SOO THIAH 906,000 1.0111. MAYBANKNOMINEES(TEMPATAN)SDNBHD 900,000 1.01 PLEDGEDSECURITIESACCOUNTFORLEEKOKHONG12. EE LI CHEN 867,840 0.9713. CIMSEC NOMINEES (TEMPATAN) SDN BHD 850,000 0.95 CIMBBANKFORCHONGKHONGSHOONG14. RHB NOMINEES (TEMPATAN) SDN BHD 840,500 0.94 PLEDGED SECURITIES ACCOUNT FOR WONG TOONG YEW 15. WILLIE LAU CHIENG 778,920 0.8716. AFFIN HWANG NOMINEES (TEMPATAN) SDN. BHD. 740,000 0.83 PLEDGED SECURITIES ACCOUNT FOR LAI SOON MING 17. PANG CHIAW YING 649,200 0.7318. BEH ENG PAR 606,000 0.6819. LIMTENHOCK 585,000 0.6520. LIMKOKSEONG 550,000 0.6221. MAYBANKNOMINEES(TEMPATAN)SDNBHD 547,600 0.61 SUKHBIRSINGHA/LTARASINGH22. MAYBANKNOMINEES(TEMPATAN)SDNBHD 541,400 0.61 PLEDGEDSECURITIESACCOUNTFORLOWKOKANG23. CHANSIEWKUEN 519,600 0.5824. CHEONG YUEN LAI 500,000 0.5625. NGAN LAY HOON 500,000 0.5626. KENANGANOMINEES(TEMPATAN)SDNBHD 473,100 0.53 PLEDGED SECURITIES ACCOUNT FOR JULIZA BINTI JAMALUDIN27. CHOO WENG HONG 454,660 0.5128. CITIGROUP NOMINEES (TEMPATAN) SDN BHD 437,400 0.49 PLEDGED SECURITIES ACCOUNT FOR CHONG WAN TAT 29. LEECHEEKEONG 432,000 0.4830. YEAP CHIN YIN 428,400 0.48

TOTAL : 60,233,993 67.34

Analysis of Warrant Holdings (cont’d)

173



No. Warrants Issued : 60,787,487 Warrants 2016/2021 (“Warrant B”)Exercise Price of Warrants : RM0.50Expiry Date of Warrants : 21/12/2021No Of Warrant Holders : 6,568

DISTRIBUTION OF WARRANT B HOLDINGS

No. of % of No. of % of Warrant Warrant Warrant WarrantSize of Holdings Holders Holders Holdings Holdings

Less than 100 1,452 22.11 29,984 0.05100 – 1,000 2,328 35.44 970,856 1.601,001 – 10,000 2,282 34.74 5,785,447 9.5210,001 – 100,000 418 6.36 12,552,492 20.65100,001 – less than 5% issued Warrants 85 1.30 27,075,503 44.545% and above of issued Warrants 3 0.05 14,373,205 23.64

6,568 100.00 60,787,487 100.00

DIRECTORS’ INTERESTS IN WARRANT B AS AT 31 MAY 2019

Direct Indirect No. of No. ofNo. Names Warrants % Warrants %

1. Dato’ Chew Ting Leng 459,045 0.76 11,079,014 18.23 (a)

2. Dato’GohTeohKean 459,045 0.76 7,986,651 13.14 (b)

3. Tan Ang Ang 533,768 0.88 166,582 0.27 (c)

4. To Tai Wai 884,406 1.45 – – –5. Ng Lee Lee 727,802 1.20 16,063 0.03 (d)

6. Sakinah Binti Salleh – – – – –7. Lim Yoong Xao – – – – –8. Nooraini Binti Mohd Yasin – – – – –9. Dato’ Sri Yap Tian Leong – – – – –

Notes:(a) Deemed interested by virtue of his interest in CTL Capital Holding Sdn Bhd pursuant to Section 8 of the Act. (b) Deemed interested by virtue of his interest in GL Management Agency Sdn Bhd pursuant to Section 8 of the Act.(c) DeemedinterestedbyvirtueofhisspouseMadamYongYuiKiew’sdirectwarrantholdingintheCompanypursuant

to Section 59(11) of the Act.(d) Deemed interested by virtue of her spouse, Mr Wong Chong Peng’s direct warrant holding in the Company pursuant

to Section 59(11) of the Act.

174



30 LARGEST WARRANT B HOLDERS AS AT 31 MAY 2019

No. Warrant Holders Warrant Holdings %

1. CTL CAPITAL HOLDING SDN BHD 5,929,284 9.752. GL MANAGEMENT AGENCY SDN BHD 4,375,816 7.203. AMSEC NOMINEES (TEMPATAN) SDN BHD 3,610,835 5.94 PLEDGEDSECURITIESACCOUNT-AMBANK(M)BERHAD FOR GL MANAGEMENT AGENCY SDN BHD 4. ALLIANCEGROUP NOMINEES (TEMPATAN) SDN BHD 2,999,094 4.93 PLEDGED SECURITIES ACCOUNT FOR CTL CAPITAL HOLDING SDN BHD 5. ALLIANCEGROUP NOMINEES (TEMPATAN) SDN BHD 1,693,366 2.79 PLEDGED SECURITIES ACCOUNT FOR CTL CAPITAL HOLDING SDN BHD 6. LOOI BOON FUI 1,656,000 2.727. TO TAI WAI 884,406 1.458. GAN EE CHORNG 820,600 1.359. LEEKEEHUAT 650,000 1.0710. CHUJINKANG 550,000 0.9011. ANG HING TAY 543,200 0.8912. KONGCHIONGLEE 473,214 0.7813. CHAN HING 469,700 0.7714. CHEW TING LENG 459,045 0.7615. GOHTEOHKEAN 459,045 0.7616. CTL CAPITAL HOLDING SDN BHD 457,270 0.7517. KENANGANOMINEES(TEMPATAN)SDNBHD 450,100 0.74 RAKUTENTRADESDNBHDFORLEEKOKHONG18. RHB NOMINEES (TEMPATAN) SDN BHD 445,000 0.73 PLEDGED SECURITIES ACCOUNT FOR WONG TOONG YEW 19. CIMSEC NOMINEES (TEMPATAN) SDN BHD 438,805 0.72 PLEDGEDSECURITIESACCOUNTFORWONGYEEWAH@WONGMOKCHOON20. YONG SIEW MEE 400,000 0.6621. LEE HIEW CHET 375,000 0.6222. NG LEE LEE 372,973 0.6123. LAWKINGYONG 370,000 0.6124. NG LEE LEE 354,829 0.5825. PUBLIC NOMINEES (TEMPATAN) SDN BHD 350,000 0.58 PLEDGED SECURITIES ACCOUNT FOR WONG AH CHOON 26. MAYBANKNOMINEES(TEMPATAN)SDNBHD 344,541 0.57 PLEDGED SECURITIES ACCOUNT FOR CHAN BEE HWA 27. HLB NOMINEES (TEMPATAN) SDN BHD 327,200 0.54 PLEDGED SECURITIES ACCOUNT FOR LEE HIEW CHET 28. KENANGANOMINEES(TEMPATAN)SDNBHD 320,000 0.53 RAKUTENTRADESDNBHDFORLIAUMANMOH@LIAUMANFOONG29. CITIGROUP NOMINEES (ASING) SDN BHD 312,968 0.51 EXEMPTANFORCITIBANKNEWYORK(NORGESBANK1)30. LEW CHOON HONG 300,000 0.49

TOTAL : 31,192,291 51.30

PROXY FORM(Before completing this form please refer to the notes below)

I/We .......................................................................................................... I/C No./Co. No./ ................................................... (Full name in Capital Letters)

of ............................................................................................................................................................................................. (Full address)being a member/members of PANTECH GROUP HOLDINGS BERHAD, hereby appoint the following person(s):-

Name of proxy NRIC No.No. of shares or % of shares to be

represented by each proxy

1.

2.

or failing him/her, the Chairman of the Meeting as my/our proxy/proxies to attend and vote for me/us on my/our behalf at the Thirteenth Annual General Meeting (“AGM”) of the Company to be held at Grand Ballroom 1, Level 11, Doubletree By Hilton Johor Bahru, 12, Jalan Ngee Heng, 80000 Johor Bahru, Johor on Thursday, 25 July 2019 at 11.00 a.m. My/our proxy/proxies is to vote as indicated below:-

PROXY 1 PROXY 2

FOR AGAINST FOR AGAINST

ORDINARY RESOLUTION

1. To approve the payment of Final Single Tier Dividend of 1.0 sen per ordinary share for the financial year ended 28 February 2019.

2. To approve the payment of Directors’ fees and benefits up to the amount of RM200,000 for the financial year ending 29 February 2020.

3. To re-elect Dato’ Chew Ting Leng who retires pursuant to Article 122.

4. To re-elect Mr To Tai Wai who retires pursuant to Article 122.

5. To re-elect Puan Sakinah binti Salleh who retires pursuant to Article 122.

6. To re-appoint Messrs Grant Thornton Malaysia as Auditors of the Company and to authorise the Directors to fix their remuneration.

SPECIAL BUSINESS

7. Authority to issue shares by the Company pursuant to Sections 75 and 76 of the Companies Act, 2016.

8. Proposed Renewal of Share Buy-Back Authority.

SPECIAL RESOLUTION

9. Proposed Adoption of New Constitution of the Company

Please indicate with a “√” or “X” in the space provided how you wish your vote to be cast. If no instruction as to voting is given, the proxy will vote or abstain from voting at his/her discretion.

______________________________________Signature of Shareholder(s)/Common Seal Signed this ................. day of .............................. 2019

Notes:1. For the purpose of determining a member who shall be entitled to attend, speak and vote at the AGM, the Company shall be

requesting the Record of Depositors as at 19 July 2019. Only a depositor whose name appears on the Record of Depositors as at 19 July 2019 shall be entitled to attend the said meeting or appoint proxies to attend, speak and vote on his/her behalf.

2. A member entitled to attend and vote at the Meeting is entitled to appoint a proxy to attend and vote in his/her stead. A member may appoint up to two (2) proxies to attend the same meeting provided that he/she specifies the proportion of his/her shareholding to be represented by each proxy. A proxy may but need not be a member of the Company.

3. Where a member is an authorised nominee as defined under the Securities Industry (Central Depositories) Act, 1991, it may appoint at least one (1) proxy but not more than two (2) proxies in respect of each Securities account it holds with ordinary shares of the Company standing to the credit of the said securities account.

4. Where a member is an exempt authorised nominee, it may appoint multiple proxies for each omnibus account it holds.5. The instrument appointing a proxy shall be in writing under the hand of the appointer or his/her attorney duly authorised in writing

or, if the appointer is a corporation, either under the Corporation’s Common Seal or under the hand of an officer or attorney so authorised.

6. The Proxy Form must be deposited at the Share Registrar’s office, Tricor Investor & Issuing House Services Sdn Bhd at Unit 32-01, Level 32, Tower A, Vertical Business Suite, Avenue 3, Bangsar South, No. 8, Jalan Kerinchi, 59200 Kuala Lumpur, or alternatively, Tricor Customer Service Centre at Unit G-3, Ground Floor, Vertical Podium, Avenue 3, Bangsar South, No. 8, Jalan Kerinchi, 59200 Kuala Lumpur not less than forty-eight (48) hours before the time set for holding the meeting or any adjournment thereof.

✄

No. of ordinary shares held

CDS Account No.

Fold This Flap For Sealing

2nd Fold Here

1st Fold Here

AFFIXSTAMP

THE SHARE REGISTRARTricor Investor & Issuing House Services Sdn BhdUnit 32-01, Level 32, Tower AVertical Business Suite, Avenue 3BangsarSouth,No.8,JalanKerinchi59200KualaLumpur

PANTECH CORPORATION SDN. BHD.(176321-P)

Johor Bahru Head OfficePTD 204334Jalan Platinum UtamaKawasan Perindustrian Pasir GudangZon 12B81700 Pasir GudangJohor Darul Takzim, MalaysiaTel: +607 259 7979Fax: + 607 256 7588/7589Email: [email protected]

Shah Alam Office & WarehouseNo. 3, Jalan Trompet 33/8Seksyen 33, 40400 Shah AlamSelangor Darul Ehsan, MalaysiaTel: +603 5192 7995Fax: +603 5192 7992Email: [email protected]

Port Klang Free Zone WarehousePersiaran Port Klang FZ 7, Jalan FZ 6-P1Port Klang Free Zone / KS 1242920 Pulau IndahSelangor Darul Ehsan, MalaysiaTel: +603 3101 3767Fax: +603 3101 4767Email: [email protected]

Pengerang WarehouseLot LO129, Kampung Bukit Gelugur81600 PengerangJohor Darul Takzim, MalaysiaTel: +607 826 5235Fax: +607 826 6237Email: [email protected]

PANTECH (KUANTAN) SDN. BHD.(191606-U)

Kuantan Sales Office & WarehouseLot 5, Jalan Industri Semambu 2Kawasan Perindustrian Semambu25350 KuantanPahang Darul Makmur, MalaysiaTel: +609 568 7550Fax: +609 568 7553Email: [email protected]

PANAFLO CONTROLS PTE. LTD.(200413822 D)

No. 7, Soon Lee Street#04-02 ISpaceSingapore 627608Tel: +65 6562 3048Fax: +65 6562 3148Email: [email protected]

PANTECH INTERNATIONAL (KSA)SDN. BHD. (890670-K)

PTD 204334Jalan Platinum UtamaKawasan Perindustrian Pasir GudangZon 12B81700 Pasir GudangJohor Darul Takzim, MalaysiaEmail: [email protected]

PANTECH STEEL INDUSTRIESSDN. BHD. (509731-A)

ManufacturerLot 13258 & 13259Jalan Haji Abdul Manan, Off Jalan Meru42200 KaparSelangor Darul Ehsan, MalaysiaTel: +603 3393 1633Fax: +603 3392 8966Email: [email protected]

PANTECH STAINLESS &ALLOY INDUSTRIES SDN. BHD.(733428-W)

ManufacturerPTD 204334Jalan Platinum UtamaKawasan Perindustrian Pasir GudangZon 12B81700 Pasir GudangJohor Darul Takzim, MalaysiaTel: +607 251 8888Fax:+607 251 9999Email: [email protected]

NAUTIC STEELS LIMITED,UNITED KINGDOM (02302004)

ManufacturerNautic House, Claymore,Tame Valley Industrial Estate,Tamworth, Staffordshire,England, B77 5DQTel: +44 (0)1827 281111Fax:+44 (0)1827 281444Email: [email protected]

PANTECH GALVANISING SDN. BHD.(1162100-W)

Hot-dip Galvanising PlantPLO 7, Jalan Rumbia 4Kawasan Perindustrian Tanjung Langsat81700 Pasir GudangJohor Darul Takzim, MalaysiaTel: +607 257 5800Fax: +607 257 5888Email: [email protected]

AnnuAl RepoRt 2 0 1 9

Documents

AnnuAl RepoRt 2019 - Pantech...PANTECH CORPORATION SDN. BHD. (176321-P) Johor Bahru Head Office PTD 204334 Jalan Platinum Utama Kawasan Perindustrian Pasir Gudang Zon 12B 81700 Pasir