ONE-STOP CENTRE...Pantech Grou P h oldin G s Berhad (733607-W) Annu A l Repo R t 2018 ANNUAL REPOR T...

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18 A N N U A L R E P O R T 2 0 1 8

ONE-STOP CENTRE P I P E S • VA LV E S • F I T T I N G S

PANTECH CORPORATION SDN. BHD. (176321-P)

Johor Bahru Head OfficePTD 204334

Jalan Platinum Utama Kawasan Perindustrian Pasir Gudang

Zon 12B 81700 Pasir Gudang

Johor Darul Takzim, Malaysia

Tel: +607 259 7979 Fax: + 607 256 7588/7589

Email: [email protected]

Shah Alam Office & WarehouseNo. 3, Jalan Trompet 33/8

Seksyen 33, 40400 Shah Alam Selangor Darul Ehsan, Malaysia

Tel: +603 5192 7995 Fax: +603 5192 7992


Port Klang Free Zone WarehousePersiaran Port Klang FZ 7, Jalan FZ 6-P1

Port Klang Free Zone / KS 12 42920 Pulau Indah

Selangor Darul Ehsan, Malaysia

Tel: +603 3101 3767 Fax: +603 3101 4767


Pengerang WarehouseLot LO129, Kampung Bukit Gelugur

81600 Pengerang Johor Darul Takzim, Malaysia

Tel: +607 826 5235 Fax: +607 826 6237


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

Kuantan Sales Office & Warehouse Lot 5, Jalan Industri Semambu 2

Kawasan Perindustrian Semambu 25350 Kuantan

Pahang Darul Makmur, Malaysia

Tel: +609 568 7550 Fax: +609 568 7553


PANAFLO CONTROLS PTE. LTD. (200413822 D)

Singapore Sales Office & WarehouseNo. 22, Pioneer Crescent

#02-06 West Park Biz Central Singapore 628556

Tel: +65 6562 3048 Fax: +65 6562 3148


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

PTD 204334 Jalan Platinum Utama

Kawasan Perindustrian Pasir Gudang Zon 12B

81700 Pasir Gudang Johor Darul Takzim, Malaysia


PANTECH STEEL INDUSTRIES SDN. BHD. (509731-A)

ManufacturerLot 13258 & 13259

Jalan Haji Abdul Manan, Off Jalan Meru 42200 Kapar


Tel: +603 3393 1633 Fax: +603 3392 8966


PANTECH STAINLESS & ALLOY INDUSTRIES SDN. BHD.

(733428-W)

ManufacturerPTD 204334




Tel: +607 251 8888 Fax:+607 251 9999


NAUTIC STEELS LIMITED, UNITED KINGDOM (02302004)

ManufacturerNautic House, Claymore,

Tame Valley Industrial Estate, Tamworth, Staffordshire,

England, B77 5DQ

Tel: +44 (0)1827 281111 Fax:+44 (0)1827 281444


PANTECH GALVANISING SDN. BHD. (1162100-W)

Hot-dip Galvanising PlantPLO 7, Jalan Rumbia 4

Kawasan Perindustrian Tanjung Langsat 81700 Pasir Gudang


Tel: +607 257 5800 Fax: +607 257 5888


Financial Highlights 02

Corporate Information 03

Group Structure 04

Directors’ Profile 05

Key Senior Management Profile 09

Executive Chairman’s Statement 10

Management Discussion and Analysis 13

Sustainability and Corporate Social Responsibility 16

Audit Committee Report 20

Statement on Risk Management and Internal Control 23

Corporate Governance Statement 26

Additional Compliance Statement 39

Financial Statements 41

List of Properties 155

Notice of Twelfth Annual General Meeting 156

Analysis of Shareholdings 162

Analysis of Warrant Holdings 165

Proxy Form

CONTENTS

02

Pantech Group Holdings Berhad (733607-W)

FINANCIALHIGHLIGHTS

FYE28 Feb 2014

FYE28 Feb 2015

FYE29 Feb 2016

FYE28 Feb 2017

FYE28 Feb 2018

Revenue 575,610 525,772 513,293 479,349 614,771

EBITDA 96,272 81,352 75,240 59,409 83,284

Profit Before Tax 75,227 58,702 53,076 39,096 58,133

Profit After Tax 54,637 43,152 37,945 28,409 45,680

Profit Attributable to Shareholders 54,638 43,152 37,973 29,718 47,127

Paid-Up Capital 113,909 120,597 123,294 203,929 207,544

Shareholders’ Equity 426,229 467,405 509,297 524,401 553,454

Total Assets 690,465 747,369 720,307 791,318 790,776

Total Net Tangible Assets 425,023 466,041 508,015 523,188 552,256

Total Borrowings 195,915 215,000 159,665 163,889 176,571

Basic Earnings Per Share (sen) 8.17 6.09 5.19 4.03 6.36

Diluted Earnings Per Share (sen) 7.14 5.73 5.19 3.79 6.08

Total Net Dividend Declared 24,916 22,546 16,528 12,069 18,574

Net Dividend Per Share (sen) 4.40 3.76 2.70 1.80 2.50

Net Tangible Assets Per Share (RM) 0.75 0.77 0.82 0.71 0.74

426,

229

467,

405

509,

297

524,

401

553,

454

54,6

37

43,1

52

37,9

45525,

772

513,

293

479,

349

614,

771

8.17

6.09

5.19

4.03

6.36

1817161514

1817161514

1817161514

1817161514

REVENUERM’000

EARNINGS PER SHARESEN

PROFIT AFTER TAXATIONRM’000

SHAREHOLDERS’ EQUITYRM’000

Total net dividend declared for FY2018 is

RM18.57 million,representing

40.7% of our PAT

NTA stands at

RM552.26 milliontranslating to a

NTA/share of RM0.74

28,4

09 45,6

80

575,

610

03

ANNUAL REPORT 2018

CORPORATEINFORMATION

BOARD OF DIRECTORS

Dato’ Chew Ting Leng Executive Chairman / Group Managing Director

Dato’ Goh Teoh Kean Group Deputy Managing Director

Mr. Tan Ang Ang Executive Director

Mr. To Tai Wai Executive Director

Ms. Ng Lee Lee Executive Director

Mr. Lim Yoong Xao Independent Non-Executive Director

Dato’ Sri Yap Tian Leong Independent Non-Executive Director

Puan Nooraini Binti Mohd Yasin Independent Non-Executive Director

Puan Sakinah Binti Salleh Non-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

NOMINATION 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 BerhadAlliance Islamic Bank BerhadAmBank (M) BerhadAmBank Islamic BerhadCIMB Islamic Bank BerhadCitibank BerhadHong Leong Bank BerhadHong Leong Islamic Bank BerhadHSBC Amanah Malaysia BerhadHSBC Bank Malaysia BerhadHSBC Bank Plc

OCBC Bank (Malaysia) BerhadThe Bank of Nova Scotia BerhadUnited Overseas Bank LimitedUnited Overseas Bank (Malaysia) Berhad

SOLICITORS

Ng Kee Chong & Company

AUDITORS

Messrs Grant Thornton Malaysia(Member of Grant Thornton International Ltd)Chartered Accountants Unit 29-08, Level 29Menara Landmark12, Jalan Ngee Heng80000 Johor Bahru, Johor

STOCK EXCHANGE LISTING

Main MarketBursa Malaysia Securities Berhad

STOCK CODE

5125

04


GROUPSTRUCTURE

Nautic Steels Limited100%

Pantech (Kuantan) Sdn. Bhd.

Tuah Nusa Sdn. Bhd.

100%

40%

Pantech Realty Sdn. Bhd. 100%

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% NAUTIC STEELS SDN. BHD.

100% PANTECH INTERNATIONAL (KSA) SDN. BHD.

100% PANTECH GALVANISING SDN. BHD.

05

ANNUAL REPORT 2018

DIRECTORS’PROFILE

DATO’ CHEW TING LENGExecutive Chairman / Group Managing Director(Aged 63, 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 directorships in any other public listed 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 62, 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 62, 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 47, 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 51, 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 directorships in any other public listed 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 49, Female, Malaysian)

Pn. Sakinah Binti Salleh 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 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.

She does not hold any directorships in any other public listed 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.

07

ANNUAL REPORT 2018


LIM YOONG XAOIndependent Non-Executive Director(Aged 43, 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 Nomination and Remuneration Committees. He does not hold any directorships in any other public listed companies.


DATO’ SRI YAP TIAN LEONGIndependent Non-Executive Director(Aged 59, 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, Alliance 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 Nomination Committee and a member of both the Audit and Remuneration Committees.



08



NOORAINI BINTI MOHD YASINIndependent Non-Executive Director(Aged 59, 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 Remuneration Committee and a member of both the Audit and Nomination Committees.She does not hold any directorships in any other public listed companies.

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

OTHER INFORMATION :-

Directors’ Shareholdings

Details of Directors’ Shareholdings in the Company are as disclosed on page 163 of the Annual Report 2018.

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 Statement on page 28 of this Annual Report 2018.

09

ANNUAL REPORT 2018

1. DATO’ CHEW TING LENG Male, Executive Chairman / Group Managing Director (Aged 63, Malaysian)

Please refer to his Director’s Profile appearing in Page 5 of this Annual Report 2018.

2. DATO’ GOH TEOH KEAN Male, Group Deputy Managing Director (Aged 62, Malaysian)


3. TAN ANG ANG Male, Executive Director (Aged 62, Malaysian)


4. TO TAI WAI Male, Executive Director (Aged 47, Malaysian)


5. NG LEE LEE Female, Executive Director (Aged 51, Malaysian)

Please refer to her Director’s Profile appearing in Page 6 of this Annual Report 2018.

6. WANG WOON CHIN Male, Chief Financial Officer (Aged 43, 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, taxation 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 have any family 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.

KEY SENIORMANAGEMENT PROFILE

10


EXECUTIVE CHAIRMAN’S

S T A T E M E N T

Dear Shareholders,

After two very challenging years, the oil and gas industry witnessed a gradual stabilisation towards recovery. Industry players globally while remaining somewhat cautious, have begun to step up downstream activity. Oil exploration has also resumed following the previous halt during the weak market and suppressed prices. The Organisation of Petroleum Exporting Countries’ (OPEC) decision to curb production paid dividends as attested by the rise in average oil prices.

11

ANNUAL REPORT 2018

Executive Chairman’sStatement (cont’d)

This trend is likely to continue well into 2018. Companies resilient in weathering the storm, including Pantech Group, are beginning to see blue horizons ahead. For that, management at all levels are to be applauded for navigating through choppy waters.

With that, I am pleased to announce Pantech Group’s continued profitability for the financial year ended 28 February 2018, bearing witness to the strategy and endurance of management. The medium-term and long-term prospects are shaping up to be positive.

Pantech Group recorded a revenue of RM614.77 million, with profit before tax (PBT) standing at RM58.13 million for the last financial year. This, when compared to the previous financial year, marked a significant 28.25% and 48.69% increase respectively.

Both the Trading and Manufacturing divisions benefitted from the recovering sector to post higher revenue. The Trading division posted a 12.23% increase in revenue while the Manufacturing division saw an impressive 57.59% growth.

This admirable performance was made possible due to the perseverance of the team in proactive engagement with the RAPID project in Pengerang, a major business contributor to Pantech Group. Despite challenges faced by the industry, RAPID is well underway to nearing completion by end 2019.

Throughout its construction, it has created over 50,000 jobs and has pulled in over RM110 billion in investments to-date, including RM27.44 billion from Saudi Arabian Oil Co (Saudi Aramco). The Group has benefitted from having a warehouse in a strategic location within the vicinity, while the Group’s main premises are just some 80 kilometres from RAPID.

With prudent financial management, the Group’s balance sheet has remained strong with gearing maintained at 0.32, which is a healthy range. Sales increased by 28.25% (RM135.42 million) over the financial period, while inventory value saw a 5% increase to RM276.09 million. With more than 30,000 types of products held, Pantech’s value proposition as a One Stop Centre for pipes, valves and fittings (PVF) is perpetuated. Some RM5.44 million investment has also been made to capital assets to increase capacity and reduce bottlenecks.

Through the course of the previous financial year, Pantech Galvanising Sdn Bhd, a hot-dip galvanising facility that was previously 51% owned had become a wholly-owned subsidiary of Pantech Group. The galvanising plant commenced operations in December 2016 and its utilisation is on track, currently operating at 50% capacity.

The Group has product presence in 68 countries. Malaysia remains the core market even though export sales has seen a greater margin in the past year.

With the improved performance, we are well placed to reward loyal shareholders once again for their support for us. Upon shareholder approval at the 12th Annual General Meeting, the total dividend payout will amount to approximately RM18.57 million, or 40.70% of our profit after tax (PAT).

CORPORATE GOVERNANCE

Corporate governance best practices and ethics remain a cornerstone in Pantech Group’s approach to operations. It is paramount that we conduct ourselves with integrity in all transactions and dealings regardless of economic pressures in a fragile environment. Shareholder interest will be balanced through business acumen and prudence. We dearly guard the goodwill and trust earned from our reputable track record and will uphold these values unwaveringly that have stood us well.

Our corporate governance statement and reports are on pages 26 to 38.

12


Executive Chairman’sStatement (cont’d)

ACKNOWLEDGEMENT

I would like to offer my heartfelt appreciation to the directors for their vigilance, to the management for their attentiveness, to the team for their diligence, to shareholders for their belief and most of all, to our customers who have unceasingly placed their confidence in us. They have all been tremendously important throughout our journey and we truly appreciate the cohesive effort and unity that makes Pantech Group what it is today.

My sincere gratitude extends also to all stakeholders who retain their faith and continue to trust in Pantech Group to adhere to and deliver the highest standards.

I would also like to record a special note to our independent non-executive directors Puan Nooraini Binti Mohd Yasin, Dato’ Sri Yap Tian Leong and Mr Lim Yoong Xao. They have just served their first year on the board and have been generous with their advice and guidance; sharing best practices that have been key to steering us on course.

The year ahead promises to be exciting for the industry as a whole as it picks up after several lacklustre periods. We will continue the disciplined hard work, evaluating all potential ventures and transactions thoroughly and will remain to do so as we focus on delivering values to all stakeholders.

Dato’ Chew Ting Leng (Jimmy)Executive Chairman

13

ANNUAL REPORT 2018

MANAGEMENT DISCUSSIONAND ANALYSIS

The past financial year 2018 (FY2018) of 1 March 2017 to 28 February 2018 was an exciting period for Pantech Group. Oil prices saw gradual recovery which resulted in an upturn of the oil and gas industry as a whole. Downstream activities have resumed more earnestly. These developments were positive for Pantech Group, enabling us to post an impressive performance for the financial year under review.

BUSINESS AND OPERATIONS

FY2018 was a period of reaping the returns from prior years of investment and continued investment into the close relationship forged with long-term customers.

Pantech Group takes pride in being recognised for our strong track record and reputation for unassailable value proposition as a One Stop Centre for pipes, valves and fittings (PVF). In addition to PVF, the group also manufactures and trades other components for the oil and gas industry, complemented by project management consultancy for fluid transmission solutions.

The Group’s performance is correlated to the oil and gas industry as a whole. Performance fluctuates according to the sector and is dependent on the vibrancy of oil and gas projects and as such, is not affected by seasonal or cyclical factors.

Pantech Group serves the oil and gas industry through two complementary core divisions:

Trading Division

The Trading division trades, supplies and stocks high pressure seamless and specialised steel pipes, valves, fittings, flanges and other fluid transmission related products for use in oil and gas, gas reticulation, marine, onshore and offshore heavy engineering, power generation, petrochemicals, palm oil refining, and other related industries, mainly in Malaysia.

This division holds over 30,000 stock keeping units (SKU). This extensive inventory is courtesy of being a distributor for reputable vendors from around the world, including our own manufacturing division. Stock levels are closely monitored to ensure an optimum level to meet customer requirements. We continue adjusting our range of products accordingly to enlarge our ability to serve customers better and with rapid turnaround.

Warehouses are located in five locations, including in a free trade zone or near ports and customer sites. This places us in prime locations to conduct business with international parties, particularly in Southeast Asia. Our close locale to Pengerang in the Southeastern region of Johor facilitates an even more rapid turnaround for the RAPID project.

Trading division has seen an overall increase in sales of roughly 12% as it benefitted from RAPID orders, which contributed substantially to this improvement.

There are plans to extend with another dedicated and integrated warehouse in Pasir Gudang, Johor. This move will see the utilisation of the 7-acre land adjacent to the Pantech Group head office in Zone 12B. This will expand the Group’s warehousing capabilities and enhance its ability to hold better product mix. At the same time, warehouse management streamlining is also being undertaken to further improve the Group’s ability to meet customers’ urgent requirements.

The Trading division actively participates, on ongoing basis, in relevant oil and gas related trade exhibitions such as Oil and Gas Asia (OGA) and Offshore Technology Conference (OTC) Asia in Kuala Lumpur, Tube in Dusseldorf, Germany and Offshore South East Asia (OSEA) in Singapore. These events provided Pantech Group the opportunity to keep abreast of industry developments and maintain brand presence while establishing and nurturing relationships.

Manufacturing Division

The Manufacturing division has plants in Malaysia and United Kingdom, producing a standard and customised range of pipes and fittings of diverse materials such as carbon steel, stainless steel, nickel alloys, duplex and other alloys on a total factory floor space of approximately 87,000 square metres. Some of the items produced include elbows, tees, reducers, stub ends and end-caps that comply with international standards.

This division also houses the largest hot-dip galvanising bath in Southern Peninsular Malaysia which is capable of galvanising 48,000 metric tonnes of items annually. This bath is operated by Pantech Galvanising Sdn Bhd (PGSB), which has over the course of the financial year become a wholly-owned unit of Pantech Group. It has been over a year since operations began and it is currently operating at 50% capacity. Start-up losses of PGSB have been fully experienced.

14


Annual manufacturing capacity of Pantech Stainless & Alloy Industries Sdn Bhd (PSA) has expanded from 14,400 to 16,500 metric tonnes annually following an investment into four additional machineries to reduce bottlenecks. The capacities of Pantech Steel Industries Sdn Bhd (PSI) and Nautic Steels Limited (Nautic) remain unchanged at 21,000 and 800 metric tonnes respectively. Manufacturing outputs are at 90% for both PSA and PSI, and 65% for Nautic.

Capital has been allocated to procure additional machines for PSA which would increase the plant’s capacity by approximately another 15% per annum in the next two financial years. This is in line with our aim to further improve production efficiency as well as increase the production range for fittings.

The export market has been strong for the Manufacturing division throughout the year, with export sales being the main contributor to overall sales increase. The Manufacturing units in Malaysia have seen exports increase by an aggregate of 60% compared to the previous financial year. Meanwhile, Nautic has maintained its supply to Saudi Aramco, meeting some of the oil giant’s upstream project needs.

While Malaysia remained the principal market at 60% of total revenue despite increased export sales in FY2018, Pantech products are now present in 68 countries.

FINANCIAL RESULTS & CONDITIONS

FY2018 performance has been utmost rewarding for Pantech Group’s strategy and resilience. The quarterly revenue held steady at approximately RM150 million per quarter for four straight quarters. This consistent performance is an indicator of the Group’s foresight, discipline, tenacity and ability to establish and maintain good business relationships with customers to allow for a constant flow of projects.

Pantech Group ended the 2018 financial year with a profit before tax (PBT) of RM58.13 million on the back of RM614.77 million revenue. This topline figure has increased by 28.25% from the RM479.35 million recorded in FY2017. This performance reflected the fortunes of the recovering oil and gas industry - the sector which has accounted for over 60% of Pantech Group’s revenue over the past few years.

The RM58.13 million PBT was a hefty 48.69% or RM19.04 million increase compared to the RM39.10 million PBT in FY2017. The improved performance also translated to higher Group PBT margin, where it rose to 9.46% from the 8.16% recorded in the preceding year.

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

Segmentally, the Trading division saw better revenue and segmental profit before finance costs and interest income (“segment profit”) in FY2018. Revenue increased from RM310.05 million in FY2017 to RM347.97 million in FY2018. This translated to a 12.23% increase while at the same time, the segment profit margin saw improvement as well from 10.36% to 12.65%. This was mainly due to the increase in sales delivery to downstream oil and gas projects, especially from RAPID orders which contributed significantly to the increase in sales.

Performance of the Manufacturing division leapt back on track, with FY2018 revenue seeing a RM97.50 million increase to RM266.80 million. There were higher contributions from local manufacturing plants arising from better overseas sales demand. Exports to the United States of America, Indonesia and Europe experienced by PSI and PSA contributed to the strong performance. Segment profit margin hovered at 10% and this was accomplished due to cost passthroughs that were put in place. This was achieved despite the greater freight cost incurred due to the proportionately larger volumes shipped overseas.

Inventory holding at the end of the FY2018 was valued at RM276.09 million, a RM13.67 million increase from the same period last year. This again attested to the Group’s vigilance in constantly evaluating the right inventory mix to stock and expanding the range in order to best serve customers with least turnaround time.

Cash flow of the group saw a decrease from RM91.59 million to RM70.22 million. A major portion of cash outlay was utilised to acquire the remaining 49% in PGSB that were not already held by Pantech Group previously, to the tune of RM7 million. Capital was also spent on securing additional machineries to increase capacity and output as well addressing bottlenecks for PSA. A special dividend was also paid from the Group’s profits, thus further reducing the cash at hand.

Management Discussionand Analysis (cont’d)

15

ANNUAL REPORT 2018

Pantech Group believes in sharing earned profits with our loyal shareholders. A strong stable performance and stringent financial management has allowed Pantech Group to continue do so via dividends. The Group paid out the following dividends for FY2018:

• Firstinterimsingletierdividendof0.5senperordinaryshareandspecialsingletierdividendof0.5senperordinaryshare was paid on 24 October 2017 with total payout amounting to approximately RM7.42 million;• Secondinterimsingletierdividendof0.5senperordinarysharewaspaidon19January2018withtotalpayoutamounting to approximately RM3.72 million;• Thirdinterimsingletierdividendof0.5senperordinarysharewaspaidon20April2018withtotalpayoutamountingto approximately RM3.72 million.

A fourth and final single tier dividend of 0.5 sen per share has been proposed by the Board and will be tabled to shareholders during the 12th Annual General Meeting. Should it be approved by shareholders, it would bring the total dividend payout for FY2018 to approximately RM18.57 million, or 40.70% of profit after tax (PAT).

CHALLENGES

It should come as no surprise that being in the oil and gas industry, we are affected by oil prices that have yet to fully recover to what it once was. Industry players remain somewhat cautious, despite the better outlook and more downstream projects coming online. Upstream developments however, appear to be lagging. A more stabilised oil price will provide better predictability for the industry.

Malaysia is also being used as a transit hub by some companies which do not invest into building their bases or manufacturing plants here. These practices are negatively affecting the image of Malaysia as a global supplier. Our well-established brand and reputation have helped to contribute confidence in the quality assurance of our products. We are constantly on guard against certain market practices of price undercutting with supply of non-standards compliant products in the market.

The unpredictable policy changes in the United States may also pose a cause for concern. Sanctions proposed and imposed by them, compounded with the safeguards that the European Union are looking into where their markets are becoming more closed and protectionist due to national agenda could affect our operations. We are vigilant to take preemptive measures to minimise this risk when necessary.

TREND AND OUTLOOK

It is anticipated that the oil and gas industry will continue to recover in 2018 as mooted by various parties. At the time of writing, oil is trading at around the USD65 mark per barrel. This is a much better state than it was in the preceding financial year where it was fluctuating at USD50 per barrel. The decision by key oil producing nations to curb oil production in order to stabilise prices has borne fruit.

At home, the completion of the RAPID project stands at 87% and is on track to be fully operational by end-2019. A steam cracker plant, petrochemical complex, air separation unit (ASU) and Pengerang Deepwater 2 have yet to be completed while the raw water supply project (Pamer), Pengerang Cogeneration Plant and Regassification Terminal 2 (RGT2) are already operational. Saudi Aramco has earlier in the year completed its RM27.44 billion investment into RAPID, and it has spurred prospects.

Maintenance contracts of RAPID once completed will be a good avenue of income. As it stands, maintenance contributes about 40% to Pantech Group’s revenue from the oil and gas sector. Being in this industry, maintenance works are essentially perpetual as they are critical in ensuring safety and optimal operations.

In other developments, Petronas is aiming a slightly higher upstream capex compared to last year. This bodes well for Pantech Group as it could translate to more requirements for PVF and other components which we supply, especially considering that Pantech Group is on the list of international vendors for specified items for Petronas.

Pantech Group will continue to expand on existing business and seek growth opportunities by improving and expanding capacity and product range. We remain optimistic on the long term outlook of the industry moving forward, and anticipate a continued positive trend of our performance in the coming financial year.

Management Discussionand Analysis (cont’d)

16


Sustainable development is the pathway to the future we want for all. It offers a framework to generate economic growth, achieve social justice, exercise environmental stewardship and strengthen governance.

Ban Ki-moon

SUSTAINABILITY ANDCORPORATE SOCIAL RESPONSIBILITY

The word of the season then appears to be sustainability. However, Pantech Group does not believe in waxing lyrical about sustainability. Through the years, the Group has practised a phrase borrowed from a song by Elvis Presley, “A little less conversation, a little more action”. We are firm in the belief that being a conscious corporate citizen is a necessity and is a cornerstone in driving future growth towards creating shared value for all.

We have reviewed our operations holistically to continuously walk the talk.

Businesses play an undeniably important role in society. The first step is to safeguard the wellbeing of our employees in order to sustain and develop the business in the longterm, in harmony with the communities in which we operate and impact.

We classified our activities into three main pillars: workplace and business continuity, responsible consumption and production, and education and community. Some of the initiatives broadly classified into one pillar may have overlapped with another.

Workplace and Business Continuity

In this section, we address the initiatives and activities in place that are best aligned with: • Ensuringhealthylivesandpromotingwellbeingforall at all ages;• Achievinggenderequalityandempoweringallwomen and girls; and• Promotingsustained,inclusiveandsustainableeconomic growth, full and productive employment and decent work for all.

Pantech Group is dependent on the robustness of the oil and gas industry as a whole and the availability of projects. Having said this, the oil and gas industry relies heavily on continuous maintenance works to ensure safe operations and compliance with international standards. To this end, Pantech Group is buffered against downturns in oil and gas activities as the Group has a steady flow of maintenance contracts that will be ongoing regardless of the overall state of the industry.

The oil and gas industry is one where regulations and compliance are absolutely critical. All products manufactured for use in the oil and gas sector must meet stringent standards, both domestically and internationally. Pantech

Group products are all certified by relevant bodies and the Trading division sources from certified mills with appropriate ISO standards whose products are of international standards. The procurement department conducts thorough strict checks to ensure suppliers comply with regulatory requirements.

Pantech Group views workplace safety as paramount, and safe working environments are crucial in allowing for maximum productivity without distractions or mishaps. We continue to conduct relevant briefings and trainings for our staff on a regular basis.

Health, safety and environment (HSE) awareness and personal protective equipment (PPE) trainings to identify and communicate potential dangers in specific tasks and the workplace in general as well as fire and evacuation drills were regular occurrences.

Fire Drill & Evacuation Practice

Audiometric Test

17

ANNUAL REPORT 2018

Sustainability andCorporate Social Responsibility (cont’d)

Other activities initiated to improve employee health and wellbeing include audiometric tests to ensure staff can remain alert to potential dangers and as a noise conservation programme, basic first aid workshops, emergency response trainings (ERT) by the Fire and Rescue Department of Malaysia (BOMBA) to teach proper use of fire-fighting equipment and emergency protocols. Some sessions included emergency responses to scenarios involving electricity and chemical spillage.

At Pantech Group, we strongly advocate women and their abilities. Our board comprises 30% women directors. Their knowledge and advice has been invaluable to helping steer the company, even in trying markets.

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

Basic First Aid Practice

Annual Dinner 2017 - Recipients of long service awards

Annual Dinner 2017

In turn, we organise annual dinners in which we recognise staff with long service awards for those who have worked for 5 years, 10 years and 15 years in Pantech Group.

Pantech Group is also actively engaging with local communities to provide employment to locals. Together with increased automation on the factory floor, it will reduce dependency on foreign labour.

Responsible Consumption and Production

Under responsible consumption and production, we have included the four tenets of:

• Ensuringaccesstoaffordable,reliable,sustainableand modern energy for all;• Ensuring sustainable consumption and production patterns;• Ensuring availability and sustainability ofwater and sanitation for all; and• Takingactiontocombatclimatechange.

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, store and recycle rainwater for production

Rainwater Harvesting System

18


purposes as well as for toilets, reducing the need for fresh water consumption. A total of seven rainwater catchment tanks are employed, three in PGSB and four in PSA. Each tank has the capacity to hold 10,000 gallons, giving Pantech Group an internal water reservoir of 70,000 gallons.

In addition to that, both PGSB and PSA have their own dedicated waste water and sludge treatment facilities. These facilities 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.

On the emissions front, PGSB and PSA are equipped with a scrubber system. These scrubbers neutralise and remove acid fumes emitted during the pickling process.

Waste Water Treatment Plant

Air Scrubber System

Dust Collector System

Further caring for the environment, 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.

Education and Community

The final pillar focuses on the areas of: • Ensuringinclusiveandequitablequalityeducationand promoting lifelong learning opportunities for all; and• Reducinginequality.

In our effort to facilitate children to receive education, we organise a yearly back to school initiative applicable for all our staff members who have children in primary or secondary school. Each was given cash vouchers for them to purchase the necessary materials needed for the school year, such as textbooks, revision books or even uniforms. Furthermore, the Group assists in applying for education awards from certain Associations for those children who fulfill the criteria set by the Associations. It is hoped that receiving these awards and recognition will spur the children academically and encourage them to further their studies.


19

ANNUAL REPORT 2018

Pantech Donation Drive Raises Funds forPenang Flood Victims

Staff visiting underprivileged families with contributions

Pantech Group also conducted several outreach programmes to assist those in need. One such initiative was the donation drive for flood victims in Penang in November 2017. During the month of Ramadhan, Pantech Group directors, senior management and staff visited underprivileged and ailing families in Johor personally and contributed daily necessities such as rice, flour, sugar, cooking oil and cash. There is no greater deed to mankind than helping those in need. A little effort goes a long way for them.

Diversity is essential to a thriving organisation. As an organisation that values the contributions of foreign workers who play their role in the performance of the company, we held special appreciation for them in the form of annual dinner and vacation trip. Our workers regardless of origin are treated with the same respect and recognised for their contribution to the company.

Every entity has common but differentiated responsibilities. Pantech Group will continue to walk the talk on this path of a good and accountable steward of the trust of all stakeholders.



20

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 2018 are as follows:-

Name Designation

Number ofMeeting(s)Attended

Tan Sui Hin (*) Chairman, Senior Independent Non-Executive Director 2/2

Tuan Haji Yusoff Bin Mohamed (*) Member, Independent Non-Executive Director 2/2

Loh Wei Tak (*) Member, Independent Non-Executive Director 2/2

Lim Yoong Xao ^ (#) Chairman, Independent Non-Executive Director 3/3

Dato’ Sri Yap Tian Leong (#) Member, Independent Non-Executive Director 3/3

Nooraini Binti Mohd Yasin (#) Member, Independent Non-Executive Director 3/3

(*) Retired on 26 July 2017(#) Appointed on 26 July 2017^ 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 met with the representatives of the internal auditors and external auditors, both without the presence of Executive Directors and Management team.

AUDIT COMMITTEEREPORT

ANNUAL REPORT 2018

21

SUMMARY OF THE WORK OF THE 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 2018 in discharging its functions and duties:-

Financial Performance & Reporting

• ReviewedtheunauditedquarterlyfinancialannouncementsandannualfinancialstatementsoftheGrouppriortosubmissionto the Board of Directors for their perusal and approval. This was to ensure compliance of the financial statements with the provisions of the Companies Act, Malaysian Financial Reporting Standards, International Financial Reporting Standards and applicable Listing Requirements of Bursa Malaysia Securities Berhad.

• ReportedtotheBoardonsignificantaudit issuesandconcernsdiscussedduringtheAuditCommitteemeetingsforconsideration and deliberation by the Board.

• ReviewedtheAuditCommitteeReportandtheStatementonRiskManagementandInternalControlpriortosubmissionof the same to the Board for consideration and inclusion in the Annual Report of the Company.

External Auditors

• Discussedandreviewedtheexternalauditors’auditplanningmemorandumforthefinancialyearended28February2018outlining their auditors’ responsibilities, engagement team, significant risks and areas of audit focus, proposed scope of work, independence policies and procedures and audit fees.

• Deliberatedontheexternalauditors’reportatitsmeetingwithregardtotherelevantdisclosuresintheannualauditedfinancial statement for the financial year ended 28 February 2018.

• Reviewedtheexternalauditors’findingsarisingfromaudits,particularlycommentsandresponseinmanagementlettersin order to be satisfied that appropriate action is being taken.

• Discussedandreviewedwiththeexternalauditorstheapplicabilityandtheimpactofthenewaccountingstandardsissued by the Malaysian Accounting Standards Board.

• Dialoguesessionwiththeexternalauditors,withoutthepresenceoftheExecutiveDirectorsandmanagement.• Evaluatedtheexternalauditors’independenceandobjectivity,aswellastheirabilitytoservetheGroupintermsoftechnical

competencies and manpower resource sufficiency and reviewed the reasonableness of the proposed audit fees against thesizeandcomplexityoftheGroup.

• Reviewedandevaluatedtheperformanceandeffectivenessoftheexternalauditors.TheAuditCommitteeassessedtheintegrity, 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 oftheexternalauditorsattheAnnualGeneralMeeting.

Internal Audit

TheGrouphasanin-houseinternalauditfunctiontoassisttheAuditCommitteeindischargingtheirresponsibilitiesandduties.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. During the financial year, the AC:

• ReviewedtheInternalAuditReportforthefinancialyearended28February2018fromInternalAuditDepartmentandassessed the internal audits’ findings, recommendations together with the Management’s comments.

• ReviewedtheadequacyandperformanceofInternalAuditfunctionanditscomprehensivenessofthecoverageofactivitieswithintheGroup.

The cost incurred in respect of the internal audit function for the financial year ended 28 February 2018 was RM177,527.

The main role of the internal audit function is stated in the Statement on Risk Management and Internal Control of this Annual Report.

Audit CommitteeReport (cont’d)


22

SUMMARY OF THE WORK OF THE AUDIT COMMITTEE (CONT’D)

Internal Audit (cont’d)

During the period under review, the summary of works undertaken by the Internal Auditors comprised the following:-

a) Presented and obtained approval from the Audit Committee the annual internal audit plan, its audit strategy and scope of audit work;

b) 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; and

c) Performed follow-up reviews in assessing the progress of the agreed management’s action plans and report to the management and Audit Committee.

Related Party Transaction

• ReviewedrelatedpartytransactionsandconflictofinterestsituationthatmayarisewithintheCompanyandtheGroupincluding any transaction, procedure or course of conduct that raises the questions on management integrity.

Review of Employees’ Share Option Scheme (ESOS) Allocation

• TheCompanyhadgranted49,869,000ESOStotheeligibleemployeeson24January2017.• TheAuditCommitteeverifiedthattheallocationofESOSisincompliancewiththecriteriaforallocationofoptionspursuant

to the ESOS Bye-Laws to ensure the quantum of ESOS offered is within the approved limit and to eligible employees only as at the financial year ended 28 February 2018 pursuant to paragraph 8.17(2) of the Listing Requirements.

The Audit Committee members were served with meeting agendas and relevant Board papers which were distributed before the meetings. The Company Secretary is the secretary of the Audit Committee.

The Audit Committee members have undergone relevant training during the financial year to stay abreast with the regulatory changesandcontemporaryissuesthatmayaffecttheGroup.DetailsoftheAuditCommitteemembers’trainingareshownintheCompany’sCorporateGovernanceStatementincludedinthisAnnualReport.

Audit CommitteeReport (cont’d)

ANNUAL REPORT 2018

23

STATEMENT ON RISK MANAGEMENTAND INTERNAL CONTROL

The Board of Directors (“the Board”) is pleased to present this Statement on Risk Management and Internal Control (“Statement”) whichhasbeenpreparedpursuanttoparagraph15.26(b)oftheMainMarketListingRequirementsofBursaMalaysiaSecuritiesBerhadandasguidedbytheStatementonRiskManagementandInternalControl:GuidelinesforDirectorsofListedIssuers.ThisStatementoutlinesthestateofriskmanagementandinternalcontroloftheGroup.

BOARD RESPONSIBILITY

The Board acknowledges its overall responsibility in establishing an effective risk management and internal control system andhasinplaceanon-goingprocessforidentifying,evaluatingandmanagingthesignificantrisksfacedbytheGroupinitsachievement 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, ratherthaneliminatetheriskthatmayimpedetheachievementoftheGroup’sbusinessobjectivesandstrategies.Duetotheinherent 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

Duringthefinancialyear,theGroupmonitoredsignificantrisksandimplementriskmitigationstrategiesonanongoingbasisthrough 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 theGroup.ExecutiveDirectors, seniormanagement personnel andDepartmentalHeads are responsiblefor 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 review and update of business risks was conducted and the report has been submitted to the Audit Committee and the Board. SignificantissuesandrisksidentifiedarealsodiscussedduringExecutiveGroupDirectorsMeetingandMonthlyManagementMeeting which are attended by Executive Directors and senior management personnel on a monthly basis.

INTERNAL AUDIT FUNCTION

TheGrouphasanin-houseinternalauditfunctionwhoreportsdirectlytotheAuditCommitteeonitsfindingsandrecommendationsfor 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.ThereviewcoveredtheassessmentontheadequacyandeffectivenessoftheGroup’sriskmanagementandinternalcontrol 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 2018 was RM177,527.


24

KEY ELEMENTS OF THE GROUP’S INTERNAL CONTROL SYSTEM

• ResponsibilitiesoftheBoardandmanagementaredefinedtoensureeffectivedischargeofrolesandresponsibilities;

• TheBoardandtheAuditCommitteemeeteveryquartertodiscussmatter(s)raisedbyManagementand/orInternalAuditon business and operational matters including potential risks and control issues;

• 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 to the Board for approval;

• ManagementreportstotheBoardonmaterialfindingsand/orvariances,ifany,andtheBoardwillreviewtheirimplicationstotheGroupandadviseaccordingly;

• Annualbudgetingprocessisinplaceandperformanceismonitoredonanongoingbasis;

• SeniorManagementattendsmanagementmeetingsonaregularbasistoaddressbudgets,operationalandfinancialperformance, business planning, control environment and other key issues;

• Keypersonnelfromrespectivesubsidiariesprovidemonthlyreportstothecorporateofficeonthesubsidiaries’performance;

• Communicationchannelshavebeenestablishedbetweensubsidiaries,businessunits,divisionsandemployeesthroughinternalmemorandums,staffbriefingsandoperationalmeetingstoachievetheGroup’soverallbusinessobjectives;

• CloseandactiveinvolvementoftheExecutiveDirectorsontheday-to-daybusinessoperationsoftheGroup;

• Health,Safety andEnvironmentalCommittee hasbeen established in order to reviewand ensure compliancewithoccupational safety and health policies and procedures on a continuous basis;

• Systemaccesscontrolsareestablished toensure the informationsystemsareduly safeguardedandsecured fromunauthorised access. Regular review on user access rights for the Enterprise Resource Planning Systems is also in place; and

• TheGrouphasadoptedawhistleblowingpolicy,providinganavenueforemployeesandexternalpartiestoraiseconcerns,inconfidence,aboutactualorsuspectedmisconduct,malpracticeorirregularitiesinanymattersrelatedtotheGroup.

CONCLUSION

Inreviewingtheriskmanagementand internalcontrolsystemoftheGroup,theBoardhas,throughtheAuditCommittee,received reports from External Auditors and Internal Auditors in relation to the findings on risk and internal control system. The BoardhasalsoreceivedreasonableassurancefromtheGroupManagingDirectorandChiefFinancialOfficerthattheGroup’srisk 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 oruncertaintiesthatwouldrequiredisclosureintheGroup’sAnnualReport.

The Board is of the opinion that the risk management and internal control system in place is adequate and effective at its currentlevelofoperationsandwillcontinuouslystrivetoenhancetheGroup’sriskmanagementandinternalcontrolsysteminsafeguardingstakeholders’interest,shareholders’investmentandGroup’sassets.

Statement on Risk Managementand Internal Control (cont’d)

ANNUAL REPORT 2018

25

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 2018. ThereviewwasconductedinaccordancewiththeRecommendedPracticeGuide(“RPG”)5(Revised):GuidanceforAuditorson 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 controlprocessesimplementedbytheGroup.

Statement on Risk Managementand Internal Control (cont’d)


26

CORPORATE GOVERNANCESTATEMENT

TheBoardofDirectors(“theBoard”)ofPantechGroupHoldingsBerhad(“Pantech”or“theCompany”)recognisestheimportanceof practicing and maintaining good corporate governance in managing and directing the board matters and business conduct throughout theCompany and its subsidiaries (“theGroup”) to ensure sustainable long termgrowth and enhancement ofshareholders’ 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 otherstakeholders.Hence,theBoardisfullydedicatedtocontinuouslyappraisetheGroup’scorporategovernancepracticesand procedures to ensure that the principles and recommendations in corporate governance are applied and adhered to in the best interests of the stakeholders.

ThisstatementsetsoutthemannerinwhichtheGrouphasappliedthethree(3)principlesprescribedintheMalaysianCodeonCorporateGovernanceissuedon26April2017(“MCCG”)andtheextenttowhichithascompliedwiththeMCCG:-

Principle A: Board Leadership and Effectiveness;Principle B: Effective Audit and Risk Management; andPrinciple C: Integrity in Corporate Reporting and Meaningful Relationship with Stakeholders.

TheCorporateGovernanceReportisavailableontheGroup’swebsite,www.pantech-group.com.

PRINCIPLE A: BOARD LEADERSHIP AND EFFECTIVENESS

I BOARD RESPONSIBILITIES

1.0 Every company is headed by a board, which assumes responsibility for the company’s leadership and is collectively responsible for meeting the objectives and goals of the company.

1.1 TheBoard takes full responsibility for theoversightandoverallperformanceof theGroupandprovidesleadership within a framework of prudent and effective controls which enables risk to be appropriately assessed andmanaged.TheprimaryroleoftheBoardistoprovideeffectivegovernanceovertheGroup’saffairsto 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) identifyprincipalbusinessrisksfacedbytheGroupandensuringtheimplementationofappropriateinternal controls and mitigating measures to address such risks;

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

v) overseeing the development and implementation of a shareholder communications policy, including an investor relations programme for the Company; and

vi) reviewing theadequacyand integrityof theGroup’s internalcontrolandmanagement informationsystems.

To assist in the discharge of its stewardship role, the Board has established Board Committees, namely the Audit Committee, Nomination Committee, Remuneration Committee and Risk Management 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.

ANNUAL REPORT 2018

27

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

I BOARD RESPONSIBILITIES (CONT’D)

1.0 Every company is headed by a board, which assumes responsibility for the company’s leadership and is collectively responsible for meeting the objectives and goals of the company. (cont’d)

1.2 TheExecutiveChairmanisprimarilyresponsibleforthevisionandstrategicplanningoftheGroupandtoprovide 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. As the GroupManagingDirector,supportedbyfellowExecutiveDirectors,heimplementstheGroup’sstrategies,policies and decision adopted by the Board and oversees the operations and business development of the Group.TheNon-ExecutiveDirectorsfulfillapivotalroleincorporategovernanceaccountabilitybyprovidingunbiased and independent views and advice on management proposals.

1.3 TherolesoftheChairmanandGroupManagingDirectorareheldbythesameDirector.TheExecutiveChairmanhasextensiveexposureandexperienceinthebusinessesoftheGroupandhasshowngreatcommitmentandexercisedduecareinmanagingtheoperationsoftheGroup’sbusinessesinthebestinterestoftheshareholders. 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. The Board is also of the view that the current balance composition of Independent and Non-Independent Directors is adequate and sufficient to demonstrate independency. The Independent Directors continued to exercise independent judgements to ensure fair and objective deliberation at board meetings.

1.4 TheBoardissupportedbyqualifiedandcompetentCompanySecretarieswhofacilitateoverallcompliancewiththeCompaniesAct2016,theMainMarketListingRequirements(“MMLR”)ofBursaMalaysiaSecuritiesBerhad and other laws and regulations. Both are qualified to act as company secretary under Section 235(2) oftheCompaniesAct2016.TheCompanySecretariesareresponsibleforthefollowinginrespectofeffectiveBoard operation:-

• theadministrationoftheBoardandensureadherencetorulesandcompliancewiththeMainMarketListing Requirements (“MMLR”) of Bursa Malaysia Securities Berhad and other laws and regulations. The Board is regularly updated by the Company Secretaries on changes in statutory and regulatory requirements impacting the discharging of the Directors’ duties;

• ToensuregoodinformationflowswithintheBoardanditsCommittees,betweenseniormanagementand Non-Executive Directors;

• ToprovideadvicetotheBoardofallcorporategovernanceobligationsanddevelopments inbestpractice; and

• Toberesponsibleforcommunicatingwithshareholdersasappropriate.

Corporate GovernanceStatement (cont’d)


28



1.0 Every company is headed by a board, which assumes responsibility for the company’s leadership and is collectively responsible for meeting the objectives and goals of the company. (cont’d)

1.5 The Board meets on a scheduled basis at least once every quarter with additional meetings held as and when urgent issues and important decisions are required to be taken between the scheduled meetings. Prior to the Board Meetings, all Directors are provided with an agenda at least 5 business days from the date of Board Meetings and the relevant reports to facilitate discussion and to enable them to make informed decision. There is a formal schedule of matters reserved for Board’s decisions. These include approval of key policies, significant acquisitions and disposals of assets, significant investments and approval of budgets and corporate plans.

All proceedings of the Board Meetings are properly recorded in the minutes of meetings by the Company Secretary and circulated in a timely manner. The Board also resolved and approved the Company’s matters through circular resolutions during the financial year.

The Board has full and unrestricted access to information and the advice of Management on a timely basis necessary for the discharge of their duties effectively. The Board may seek independent professional advice in the furtherance of their duties at the Company’s expense. Senior Management personnel and/or external advisors may be invited to attend the Board meetings to advise on issues under their respective purview.

During the financial year ended 28 February 2018, the Board met five (5) times where it deliberated on andconsideredmatters relating to theGroup’s financial performance, operational, corporate, businessdevelopment, and any other matters that require the Board’s approval. All the current Directors are committed and had devoted sufficient time to discharge their duties, as demonstrated by their full attendance at the Board Meetings detailed below:

Name DesignationNumber of

Meetings Attended

Dato’ Chew Ting Leng Executive Chairman/GroupManagingDirector

5/5

Dato’GohTeohKean GroupDeputyManagingDirector 5/5

Tan Ang Ang Executive Director 5/5

To Tai Wai Executive Director 5/5

Ng Lee Lee Executive Director 5/5

Sakinah Binti Salleh Non-Independent Non-Executive Director 5/5

Lim Yoong Xao (#) Independent Non-Executive Director 3/3

Dato’ Sri Yap Tian Leong (#) Independent Non-Executive Director 3/3

Nooraini Binti Mohd Yasin (#) Independent Non-Executive Director 3/3

(#) Appointed on 26 July 2017


ANNUAL REPORT 2018

29



2.0 There is demarcation of responsibilities between the Board, Committees and Management. There is clarity in the authority of the Board, its Committees and individual directors.

The responsibilities and functions reserved for the Board and those delegated to the Management were clearly defined in the Board Charter. It also provides a basis to the Board in assessing its own performance and that of its individual Directors. The Board Charter is available on the Company’s website www.pantech-group.com.

The Board will periodically review the Board Charter and make any changes whenever necessary. The Board Charterwaslastreviewedon11June2018.

3.0 The Board is committed to promoting good business conduct and maintaining a healthy corporate culture that engenders integrity, transparency and fairness. The board, management, employees and other stakeholders are clear on what is considered acceptable behaviour and practice in the company.

The Board adopted a Code of Ethics setting out the proper ethical behavior expected of the Board members and theemployeeswhichincludestheprinciplesrelatingtolegalobligations,conflictofinterest,confidentiality,dealingsin securities, money laundering and social responsibility.

The Company also has a whistle-blowing policy which provides an avenue to voice genuine concerns of any suspectedwrongdoings,businessmisconductandmalpracticesimpactingtheinterestoftheGroup.BoththeCode of Ethics and Whistle-blowing policy are available on the Company’s website www.pantech-group.com.

II BOARD COMPOSITION

4.0 Board decisions are made objectively in the best interests of the Company taking into account diverse perspective and insights.

4.1 TheBoardcurrentlyhasnine(9)members,comprisingofanExecutiveChairmanwhoisalsotheGroupManagingDirector, one (1)GroupDeputyManagingDirector, three (3) ExecutiveDirectors, three (3)Independent Non-Executive Directors and one (1) Non-Independent Non-Executive Director. The Board composition is in compliance with the Bursa Malaysia Securities Berhad’s Main Market Listing Requirements (“MMLR”) which requires at least two (2) directors or one-third (1/3) of the board, whichever is the higher, to be independent directors.

The profile of each Director is set out in this Annual Report. The Directors, with their differing backgrounds and specializations, collectively bring with them a wide range of experience and expertise in areas such as finance; accounting and audit; corporate affairs; marketing and operations. The Board considers its current Boardcompositionandsizetobeappropriateandeffective,takingintoaccountthenatureoftheGroup’soperation. When determining the composition, due consideration is given to the Director’s industry experience and mix of skills or competencies for an effective Board.

4.2 TheBoardhasthree(3)IndependentDirectorswhichwereappointedon26July2017.Thus,thetenureofthe Independent Directors does not exceed a cumulative term limit of nine (9) years.

4.3 TheBoardhasadoptedthe9-yeartenurefor independentDirectorsandaccordingly,three independentDirectors who had served the Board for more than 9 years namely Mr Tan Sui Hin, Mr Loh Wei Tak and Tuan HajiYusoffBinMohameddidnotseekre-electionandretiredattheconclusionofthe11thAGMheldon26July2017.



30


II BOARD COMPOSITION (CONT’D)

4.0 Board decisions are made objectively in the best interests of the Company taking into account diverse perspective and insights. (cont’d)

4.4 Theappointmentofnewboardmembersandseniormanagementwillbeguidedbytheskills,competencies,knowledge, experience, commitment and integrity of the candidate.

4.5 TheBoarddoesnotestablishanydiversitypolicyfortheBoardandworkforceintermsofgender,ageand

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.

4.6 TheNominationCommittee (“NC”) has established a procedure for sourcing and selection criteria ofdirectors. In selecting and assessing the candidate for Board appointment, the NC shall have regard to the candidate’s qualification, character, skills, industry knowledge, expertise, experience, professionalism, integrity, competence and time availability and in the case of candidate for the position of independent director, the independence criteria as set out in the MMLR as well as the ability to bring independent and objective judgement to discharge his duty as independent director. The selection process involves drawing up specifications required of a candidate, sourcing through external providers or internally initiated by the Chairman, identifying, assessing and evaluating suitability of candidate against selection criteria taking into consideration the size of Board, mix of skills, experiences and other qualities of the candidate before making recommendation to the Board for appointment. In identifying candidates for appointment of directors, the Board does not solely rely on recommendations from existing board members, management or major shareholders. The Board also utilizes independent sources to identify suitably qualified candidates. The final decision as to who shall be appointed remains the responsibility of the Board as a whole. The Company Secretary will ensure all appointments are properly made and regulatory requirements are complied with.

4.7 TheNCconsistsofthree(3)members.TheNCischairedbyanIndependentDirectorandthemembersand details of their attendance at the NC Meeting during the financial year are as follows:-


Meetings Attended

Loh Wei Tak (*) Chairman, Independent Non-Executive Director

1/1

Tan Sui Hin (*) Member, Senior Independent Non-Executive Director

1/1

Tuan Haji Yusoff Bin Mohamed (*) Member, Independent Non-Executive Director

1/1

Dato’ Sri Yap Tian Leong (#) Chairman, Independent Non-Executive Director

–

Nooraini Binti Mohd Yasin (#) Member, Independent Non-Executive Director

–

Lim Yoong Xao (#) Member, Independent Non-Executive Director

–

(*) Retired on 26 July 2017(#) Appointed on 26 July 2017


ANNUAL REPORT 2018

31



4.0 Board decisions are made objectively in the best interests of the Company taking into account diverse perspective and insights. (cont’d)

The NC has a set of Terms of Reference defining its scope of authorities, responsibilities and duties. The Terms of Reference of NC is available on the Company’s website www.pantech-group.com. The NC shall perform the functions as specified in the MMLR and the recommendations of the Code, which broadly includes to assess and recommend the appointment of directors, re-appointment and re-election of directors, evaluate the performance of directors and the effectiveness of board and board committees.

During the financial year, the NC has undertaken the following activities:-

(i) Assessed the contribution and performance of each individual Director and the effectiveness of the Board as a whole and the Board Committees.

(ii) Assessed the mix of skills, experience, size and composition of the Board.(iii) Assessed the independence of the Independent Directors.(iv) Reviewed the experience, knowledge, integrity, competence and time commitment of the Directors.(v) Reviewed and recommended to the Board the re-appointment and re-election of Directors for

shareholders’ approval at annual general meeting.

4.8 InaccordancewiththeCompany’sConstitution,one-third(1/3)oftheDirectorsshallretirebyrotationfromoffice 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.

4.9 The election of eachdirector is votedon separately. To assist shareholders in their decision, sufficientinformationsuchaspersonalprofile,meetingsattendanceandtheirshareholdings in theGroupofeachDirectorstandingforelectionarefurnishedintheAnnualReportaccompanyingtheNoticeofAnnualGeneralMeeting.



32



5.0 The Stakeholders are able to form an opinion on the overall effectiveness of the Board and individual directors

5.1 The NC also conducts annual assessment via questionnaires, of individual Directors in respect of their skills, experiences, contributions, other core competencies and the ability to discharge their duties with unbiased judgement as well as the effectiveness of the board as a whole and various board committees in terms of mix of skills and expertise. The results of the assessment were reported to the Board.

The Board via the NC has also developed assessment criteria for the following:

I. BOARD

(a) appropriateness of Board composition (b) mix of skills and experience (c) effectiveness of Board as a team (d) balance mix between Independent and Non-Independent Directors (e) adequacy of information supplied to the Board (f) effectiveness of Board in setting strategic plan (g) adequacyofBoardinidentifyingandmanagingsignificantriskstotheGroup(h) effectiveness of Board in monitoring operational and financial performance

II. BOARD COMMITTEES

(a) terms of reference (b) skills and competencies (c) meeting administration (d) conduct of meeting (e) communication to the Board (f) areas of focus specific to each Board Committee

III. INDIVIDUAL DIRECTORS

(a) contribution of the Director in meetings (b) quality of input provided by the Director (c) the Director’s understanding of his or her roles and responsibilities

5.2 Independent Directors are important to assure the necessary check and balance to the Board. The NC evaluates the independence of the Independent Directors on an annual basis. The annual review indicated that all Independent Directors complied with the criteria of independence as prescribed in MMLR and the Board consists of sufficient independent directors whom are independent from management and have been consistently providing objective, unfettered and unbiased views and judgement and exercise impartiality in decision-making during board meetings.


ANNUAL REPORT 2018

33



5.0 The Stakeholders are able to form an opinion on the overall effectiveness of the Board and individual directors (cont’d)

5.3 All Directors have attended and completed the Mandatory Accreditation Programme as required pursuant to the MMLR. The 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 a continuous basis on rules and regulations, economic, industry and technical developments to further enhance their skills and knowledge. The Directors are also regularly updated by Management and Company Secretary of changes in statutory requirements, accounting standards and other relevant laws and regulations.

Following are the training and development programmes attended by the Directors during the financial year:-

Name of Director Training Date

Dato’ Chew Ting Leng LeadingSelfandOtherstoGreaterHeightsbyIdentifying Leadership Styles and Tendencies

25July2017

Dato’GohTeohKean LeadingSelfandOtherstoGreaterHeightsbyIdentifying Leadership Styles and Tendencies

25July2017

Tan Ang Ang LeadingSelfandOtherstoGreaterHeightsbyIdentifying Leadership Styles and Tendencies

25July2017

To Tai Wai LeadingSelfandOtherstoGreaterHeightsbyIdentifying Leadership Styles and Tendencies

25July2017

Ng Lee Lee LeadingSelfandOtherstoGreaterHeightsbyIdentifying Leadership Styles and Tendencies

25July2017

Sakinah Binti Salleh LeadingSelfandOtherstoGreaterHeightsbyIdentifying Leadership Styles and Tendencies

Invest Malaysia 2018

25July2017

23&24January2018

Lim Yoong Xao LeadingSelfandOtherstoGreaterHeightsbyIdentifying Leadership Styles and Tendencies

Mandatory Accreditation Programme

25July2017

28 & 29 September 2017

Dato’ Sri Yap Tian Leong LeadingSelfandOtherstoGreaterHeightsbyIdentifying Leadership Styles and Tendencies


25July2017

13&16October2017

Nooraini Binti Mohd Yasin LeadingSelfandOtherstoGreaterHeightsbyIdentifying Leadership Styles and Tendencies


25July2017

28 & 29 September 2017



34


III REMUNERATION

6.0 The level and composition of remuneration of Directors and Senior Management take into account the company’s desire to attract and retain the right talent in the Board and Senior Management to drive the Company’s long-term objectives. The remuneration policies and decisions are made through a transparent and independent process.

6.1 TheRemunerationCommittee (“RC”) hasa set of TermsofReferencedefining its scopeof authorities,responsibilities and duties which are available for reference at the Company’s website at www.pantech-group.com. The RC is entrusted under its terms of reference to assist the Board, amongst others, to recommend to the Board the remuneration of the Executive Directors. In the case of Non-Executive Directors, the level ofremunerationshallreflecttheexperienceandlevelofresponsibilitiesundertakenbytheNon-ExecutiveDirectors concerned. In all instances, Directors do not participate in the discussion of their own remuneration.

The objective of the remuneration policy is to structure the component of remuneration for Executive Director so as to link rewards to corporate and individual performance towards achievement of the Company’s strategic objectives and for Non-Executive Directors, to link the level of remuneration to the experience and responsibilities undertaken by the Non-Executive Directors. During the financial year, the RC met once to review the Directors’ remuneration and fees. The proposed fees for the Non-Executive Directors will be tabled forshareholders’approvalattheforthcomingAGM.

6.2 TheRCconsistsofthree(3)members.ThemembersanddetailsoftheirattendanceattheRCMeetingduring the financial year are as follows:-


Meetings Attended

Tuan Haji Yusoff Bin Mohamed (*) Chairman, Independent Non-Executive Director

1/1

Dato’ Chew Ting Leng (^) Member, Executive Chairman/GroupManagingDirector

1/1

Tan Sui Hin (*) Member, Senior Independent Non-Executive Director

1/1

Nooraini Binti Mohd Yasin (#) Chairperson, Independent Non-Executive Director

–

Dato’ Sri Yap Tian Leong (#) Member, Independent Non-Executive Director

–

Lim Yoong Xao (#) Member, Independent Non-Executive Director

–

(*) Retired on 26 July 2017(^) Resigned as member of RC on 26 January 2018 in compliance of MCCG(#) Appointed on 26 July 2017


ANNUAL REPORT 2018

35


III REMUNERATION (CONT’D)

7.0 Stakeholders are able to assess whether the remuneration of Directors and Senior Management is commensurate with their individual performance, taking into consideration the Company’s performance.

The details of the remuneration of Directors of the Company comprising remuneration received/receivable from the Company and subsidiary companies during the financial year ended 28 February 2018 are as follows.

7.1 Aggregate remuneration of Directors categorised into appropriate components are as follows:

Category

Company Group

FeesOther

Emoluments*

DefinedContribution

Plan FeesOther

Emoluments*

Defined Contribution

PlanBenefits-in-kind

(RM’000) (RM’000) (RM’000) (RM’000) (RM’000) (RM’000) (RM’000)

Group

Executive Directors:

Dato’ Chew Ting Leng – 462 28 85 1,676 101 35

Dato’GohTeohKean – 357 21 85 1,168 70 33

Tan Ang Ang – 304 18 35 1,230 64 28

To Tai Wai – 291 35 50 855 102 15

Ng Lee Lee – 121 14 50 561 67 23

Non-ExecutiveDirectors:

Sakinah Binti Salleh 38 – – 38 – – –

Loh Wei Tak (*) 18 – – 18 – – –

Tan Sui Hin (*) 21 – – 21 – – –

Tuan Haji YusoffBin Mohamed (*)

18 – – 18 – – –

Lim Yoong Xao (#) 26 – – 26 – – –

Dato’ Sri YapTian Leong (#)

23 – – 23 – – –

Nooraini BintiMohd Yasin (#)

23 – – 23 – – –

* Other emoluments consist of monthly salary, bonuses, and contribution to SOCSO(*) Retired on 26 July 2017(#) Appointed on 26 July 2017

7.2 The Company has identifed its top five (5) Senior Management positions shall comprise of 5 Executive DirectorswhosenamesandprofilesaredisclosedonPages5to6ofthisAnnualReport.Therefore,thedetailed remuneration has been appropriately set out in Paragraph 7.1 above.



36

PRINCIPLE B: EFFECTIVE AUDIT AND RISK MANAGEMENT

I AUDIT COMMITTEE

8.0 There is an effective and independent Audit Committee. The Board is able to objectively review the Audit Committee’s findings and recommendations. The Company’s financial statement is a reliable source of information.

TheBoardaimstoprovideandpresentabalancedandmeaningfulassessmentoftheGroup’sfinancialperformanceand prospects at the end of the financial year, primarily through the annual financial statements and quarterly announcementoffinancialresults.TheBoardisassistedbytheAuditCommittee(“AC”)tooverseetheGroup’sfinancial reporting processes and the quality of its financial reporting. The composition of AC together with its report are set out in the “Audit Committee Report” section of this Annual Report.

8.1 The Chairman of the AC, Mr Lim Yoong Xao is not the Chairman of the Board and members of the AC comprise of only Independent Non-Executive Directors.

8.2 The AC of the Company has incorporated a policy in the Terms of Reference that requires a former key audit partner to observe a cooling-off at least two years before being appointed as a member of AC. The Terms of Reference of AC are available for reference at the Company’s website at www.pantech-group.com.

8.3 The Company has always maintained a transparent relationship with its External Auditors in seeking their professional advice and ensuring compliance with applicable approved accounting standards in Malaysia. The AC has direct and unrestricted access to the Internal and External Auditors. The role of AC in relation to the auditors is described in the Audit Committee Report section in this Annual Report.

The External Auditors are invited to attend the AC meetings and annual general meetings and are available to answer shareholders’ question on the conduct of the statutory audit and the preparation and content of their audit report.

During the financial year, the AC met with the External Auditors to discuss their audit planning, audit findings and the Company’s financial statements. The AC also met with the External Auditors without the presence of executive Board members or management to discuss the concern areas of the External Auditors arising from the audit of the financial statements.

The AC conducted an annual assessment via questionnaires on the suitability and independence of the External Auditors, including their performance, quality of audit process, adequacy of audit scope, independence and non-audit services, taking also into consideration the comments of Management. Considering the expertise and business knowledge of the External Auditors, the AC is of the opinion that the External Auditors are suitable and independent and recommended their re-appointment to the Board and for the shareholders’ approval at the upcoming annual general meeting.

The External Auditors have declared their independence to the AC and their compliance 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”). The AC has also obtained a written assurance from the External Auditors confirming that they are and have been independent throughout the conduct of the audit engagement in accordance with the terms of all relevant professional and regulatory requirements.

8.4 Annually,thecompositionofACisreviewedbyNCandrecommendedtotheBoardforitsapproval.TheNC in maintaining an independent and effective AC, will ensure that only an Independent Non-Executive Director who is financially literate, has the relevant expertise and experience, and the strong understanding of the Company’s business would be considered for appointment on AC. All the AC members will continue to attend training to keep themselves abreast of recent developments in accounting and auditing standards, practices and rules.


ANNUAL REPORT 2018

37

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

I AUDIT COMMITTEE (CONT’D)

9.0 Company makes informed decisions about the level of risk they want to take and implement necessary controls to pursue their objectives. The Board is provided with reasonable assurance that adverse impact arising from a foreseeable future event or situation on the Company’s objectives is mitigated and managed.

9.1 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 aneffectiveEnterpriseRiskManagementframework(“ERM”)toassisttheGrouptomanageallkeybusinessrisks 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.

10.0 Company has an effective governance, risk management and internal control framework and stakeholders are able to assess the effectiveness of such a framework.

10.1 TheGrouphasanin-houseinternalauditfunctionwhosework isperformedwith impartiality,proficiencyanddueprofessionalcare.ItundertakesregularreviewsoftheadequacyandeffectivenessoftheGroup’ssystem of internal controls and risk management process, as well as appropriateness and effectiveness of the corporate governance practices. Further details on the internal audit function can be seen in the Audit Committee Report and the Statement on Risk Management and Internal Control in this Annual Report.

The Internal Auditor reports directly to the Audit Committee and report their findings to the Audit Committee duringitsquarterlymeetings.TheGroup’sriskmanagementandinternalcontrolframeworkispresentedinthe Statement on Risk Management and Internal Control.

10.2 The AC conducted annual assessment via questionnaires on the suitability and independence of the Internal Auditors, including their performance, quality of audit process, adequacy of audit scope, independence and non-audit services, taking into consideration the comments of Management.

The results of assessments conducted by the AC which was recommended and approved by the Board, it was concluded that:

• Theinternalauditdepartmentisfreefromanyrelationshipsorconflictsofinterest,whichcouldimpairtheir objectivity; and

• ThenumberofresourcesintheinternalauditfirmarequalifiedandadequateforthemtodischargetheirdutiesasInternalAuditorfortheGroup.



38

PRINCIPLE C: INTEGRITY IN CORPORATE REPORTING AND MEANINGFUL RELATIONSHIP WITH STAKEHOLDERS

I COMMUNICATION WITH STAKEHOLDERS

11.0 There is continuous communication between the Company and stakeholders to facilitate mutual understanding of each other’s objectives and expectations. Stakeholders are able to make informed decisions with respect to the business of the Company, its policies on governance, the environment and social responsibility.

11.1 The Board believes that a constructive and effective investor relationship is an essential factor in enhancing value for its shareholders.

The Board also recognises the importance of being transparent and accountable to the Company’s investors and, as such, has various channels to maintain communication with them. The various channels of communications are through the quarterly announcements on financial results to Bursa Malaysia, relevant announcementsandcirculars,whennecessary,theAnnualandExtraordinaryGeneralMeetingsandthroughtheGroup’swebsite atwww.pantech-group.com where shareholders can access pertinent information concerningtheGroup.

II CONDUCT OF GENERAL MEETINGS

12.0 Shareholders are able to participate, engage the Board and Senior Management effectively and make informed voting decisions at general meetings.

12.1 TheAnnualGeneralMeeting(“AGM”)istheprincipalforumfordialoguewithshareholders,whoaregiventheopportunitytoenquireandseekclarificationontheoperationsandfinancialperformanceoftheGroup.TheAGMprovidesanopportunityforshareholderstoraisequestionswiththeBoard,theChairmanofallrelevantcommittees and Senior Management team, both formal and informal sessions. The Company complied with therequirementtosendtheNoticeoftheAnnualGeneralMeetingandrelatedcirculartoitsshareholdersatleast twenty eight (28) days before the meeting.

12.2 All resolutions set out in the notice of general meetings will be carried out by poll voting. The Board make announcement of the detailed results showing the number of votes cast for and against each resolution at general meetings to facilitate greater shareholder participation. All members of the Board recorded full attendanceatthelastAGMheldon26July2017andwerepresenttoattendtothequestionsraisedbytheshareholders.

COMPLIANCE STATEMENT

Saved as disclosed above, the Board is satisfied that throughout the financial year ended 28 February 2018, the Company has appliedtheprinciplesandrecommendationsofthecorporategovernanceset-outinMCCG,wherenecessaryandappropriate.

ThisstatementismadeinaccordancewitharesolutionoftheBoarddated11June2018.


ANNUAL REPORT 2018

39

ADDITIONAL COMPLIANCESTATEMENT

1. UTILISATION OF PROCEEDS

During the financial year ended 28 February 2018, there were no proceeds raised from any corporate proposal.

2. OPTIONS, WARRANTS OF CONVERTIBLE SECURITIES EXERCISED

Duringthefinancialyearended28February2018,atotalof330,088unitsofWarrantsAand774,180unitsofWarrantsB were exercised at the exercise price of RM0.50 per unit.

Duringthefinancialyearended28February2018,5,694,600ESOSwasexercisedundertheCompany’sESOSattheexercisepriceofRM0.415perunit.

3. EMPLOYEES SHARE OPTION SCHEME TheEmployees’ShareOptionSchemeoftheCompany(“ESOS”or“Scheme”)wasimplementedon23January2017

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 2018)

All Eligible Employeesincluding Directorsand Chief Executive

Directors andChief Executive

(a) Total options granted 49,869,000 11,200,000

(b) Total options exercised 5,694,600 1,245,000

(c) Total options outstanding 40,405,400 9,055,000

There was no ESOS granted during the financial year ended 28 February 2018.

InaccordancewiththeCompany’sESOSBye-Laws,notmorethanfortypercentum(40%)oftheCompany’sordinarysharesavailableundertheSchemeshallbeallocated,inaggregate,toDirectorsandseniormanagementoftheGroup.Since the commencement of the Scheme up to the financial year ended 28 February 2018, the Company has granted 27.30% 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 commencement Number of options exercised

Sakinah Binti Salleh 300,000 45,000


40

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 ComplianceStatement (cont’d)

Directors’ Report 42

Statement by Directors 52

Statutory Declaration 52

Independent Auditors’ Report 53

Statements of Financial Position 57

Statements of Profit or Loss

and Other Comprehensive Income 59

Statements of Changes in Equity 61

Statements of Cash Flows 65

Notes to the Financial Statements 68

FINANCIAL STATEMENTS


42

DIRECTORS’REPORT

TheDirectorsofPantechGroupHoldingsBerhadhavepleasureinsubmittingtheirreporttogetherwiththeauditedfinancialstatementsoftheGroupandoftheCompanyforthefinancialyearended28February2018.

PRINCIPAL ACTIVITIES

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

The principal activities and details of the subsidiary companies, associate company and joint venture are disclosed in Notes 8, 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, associate company and joint venture during the financial year.

RESULTS

Group Company RM RM

Profitforthefinancialyear 45,679,824 24,676,736

Attributable to:- OwnersoftheCompany 47,126,801 24,676,736 Non-controllinginterest (1,446,977) –

45,679,824 24,676,736

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 0.5 sen per ordinary share in respect of the financialyearended28February2017andpaidon24August2017. 3,706,752

First interim single tier dividend of 0.5 sen per ordinary share and special single tier dividend of 0.5 sen per ordinary share in respect of the financial yearended28February2018andpaidon24October2017. 7,417,227

ANNUAL REPORT 2018

43

DIVIDENDS (CONT’D)

The amount of dividends paid and declared since the end of the last financial year were as follows (cont’d):-

RM

Second interim single tier dividend of 0.5 sen per ordinary share in respect of the financialyearended28February2018andpaidon19January2018. 3,715,751

Third interim single tier dividend of 0.5 sen per ordinary share in respect of the financial year ended 28 February 2018 and paid on 20 April 2018. 3,723,070

AttheforthcomingAnnualGeneralMeeting,afinalsingletierdividend,inrespectofthefinancialyearended28February2018,of 0.50 sen per ordinary share will be proposed for shareholders’ approval. The financial statements for current financial year donotreflectthisproposeddividend.Suchdividend,ifapprovedbytheshareholders,willbeaccountedforinequityasanappropriation of unappropriated profit in the financial year ending 28 February 2019.

DIRECTORS

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

Dato’ChewTingLeng(ExecutiveChairman/GroupManagingDirector)*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) (appointed on 26.7.2017)Lim Yoong Xao (Independent Non-Executive Director) (appointed on 26.7.2017)Nooraini Binti Mohd Yasin (Independent Non-Executive Director) (appointed on 26.7.2017)Tan Sui Hin (Senior Independent Non-Executive Director) (retired on 26.7.2017)Loh Wei Tak (Independent Non-Executive Director) (retired on 26.7.2017)Yusoff Bin Mohamed (Independent Non-Executive Director) (retired on 26.7.2017)

* 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:-

ChewSoonJiatFreddieChewSunGheeGanTeckYeow(resigned on 25.10.2017)Hoon Tai Woei (resigned on 25.10.2017)

Directors’Report (cont’d)


44

DIRECTORS (CONT’D)

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 (cont’d):-

JairusTanVernHsienKongChiongLeeLim Soon BengLing Ching (resigned on 25.10.2017)LingJuLoong(alternatedirectorforLingChing)(resigned on 25.10.2017)Teo 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 and warrants of the Company and its related corporations are as follows:-

Number of ordinary shares As at Exercise Exercise of As at 1.3.2017 of ESOS Warrant (Sold) 28.2.2018

Dato’ Chew Ting Leng-directinterest 7,508,540 300,000 – – 7,808,540- deemed interest through CTLCapitalHoldingSdn.Bhd. 132,948,174 – – – 132,948,174- deemed interest through his daughter, Chew Zhiyin – 150,000 – – 150,000

Dato’GohTeohKean-directinterest 5,508,540 300,000 – – 5,808,540- deemed interest through GLManagementAgencySdn.Bhd. 95,839,830 – – – 95,839,830

Tan Ang Ang-directinterest 11,208,253 300,000 600,000 – 12,108,253- deemed interest through his spouse, YongYuiKiew 1,998,987 – – – 1,998,987- deemed interest through his son, JairusTanVernHsein – 150,000 – – 150,000

To Tai Wai-directinterest 13,513,840 300,000 491,747 – 14,305,587

Ng Lee Lee-directinterest 8,733,632 – – – 8,733,632- deemed interest through her spouse, WongChongPeng 192,764 – – – 192,764


ANNUAL REPORT 2018

45

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 and warrants of the Company and its related corporations are as follows (cont’d):-

Number of ordinary shares As at Exercise Exercise of As at 1.3.2017 of ESOS Warrant (Sold) 28.2.2018

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

Sakinah Binti Salleh-directinterest – 45,000 – – 45,000

*Asat26.7.2017

Number of ordinary shares under Employee Share Option Scheme Unexercised Unexercised as at as at 1.3.2017 (Exercised) (Expired) (Lapsed) 28.2.2018

Dato’ Chew Ting Leng 2,000,000 (300,000) – – 1,700,000

Dato’GohTeohKean 2,000,000 (300,000) – – 1,700,000

Tan Ang Ang 2,000,000 (300,000) – – 1,700,000

To Tai Wai 2,000,000 (300,000) – – 1,700,000

Ng Lee Lee 2,000,000 – – – 2,000,000

SakinahBintiSalleh 300,000 (45,000) – – 255,000



46



Number of Warrants A (2010/2020) As at As at 1.3.2017 (Exercised) (Sold) 28.2.2018

Dato’ Chew Ting Leng- deemed interest through CTLCapitalHoldingSdn.Bhd. 20,815,677 – – 20,815,677

Dato’GohTeohKean- deemed interest through GLManagementAgencySdn.Bhd. 15,405,756 – – 15,405,756

Tan Ang Ang -directinterest 1,616,688 (330,088) (1,286,600) –- deemed interest through his spouse, YongYuiKiew 255,600 – (255,600) –

To Tai Wai -directinterest 2,534,256 – (2,534,256) –

Ng Lee Lee -directinterest 1,333,428 – (1,333,428) –- deemed interest through her spouse, WongChongPeng 24,648 – (24,648) –


ANNUAL REPORT 2018

47



Number of Warrants B (2016/2021) As at As at 1.3.2017 (Exercised) (Sold) 28.2.2018

Dato’ Chew Ting Leng-directinterest 459,045 – – 459,045- deemed interest through CTLCapitalHoldingSdn.Bhd. 11,079,014 – – 11,079,014

Dato’GohTeohKean -directinterest 459,045 – – 459,045- deemed interest through GLManagementAgencySdn.Bhd. 7,986,651 – – 7,986,651

Tan Ang Ang -directinterest 1,100,687 (269,912) (297,007) 533,768- deemed interest through his spouse, YongYuiKiew 166,582 – – 166,582

To Tai Wai -directinterest 1,376,153 (491,747) – 884,406

Ng Lee Lee- direct interest 727,802 – – 727,802- deemed interest through her spouse, WongChongPeng 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.



48

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.

TheCompanymaintainsDirectors’andOfficers’liabilityinsuranceforpurposesofSection289oftheCompaniesAct,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 RM9,208.

ISSUE OF SHARES AND DEBENTURES

During the current financial year, the Company had increased its issued and fully paid-up ordinary share capital from RM203,928,587toRM207,543,729bywayof:-

(a) 5,694,600newordinarysharesarisingfromtheexerciseofemployee’sshareoptionatanexercisepriceofRM0.415perordinary share; and

(b) 1,104,268newordinarysharesarisingfromtheexerciseofwarrantsataconversionpriceofRM0.50perordinaryshare. 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

TheshareholdersoftheCompany,throughtheAnnualGeneralMeetingheldon21August2008,approvedtheCompany’splanto repurchase up to 10% of the issued and paid-up share capital of the Company (“Share Buy Back”). The authority granted bytheshareholderswassubsequentlyrenewedineveryAnnualGeneralMeetingheldanditwaslastrenewedintheAnnualGeneralMeetingheldon26July2017.TheDirectorsoftheCompanyarecommittedtoenhancingthevalueoftheCompanyto its shareholders and believe that the purchase plan can be applied in the best interest of the Company and its shareholders.

The Company has distributed a share dividend via distribution of treasury shares on the basis of 1 treasury share for every 100 existingordinarysharesinrespectofthefinancialyearended29February2016anddistributedon18August2016.


ANNUAL REPORT 2018

49

TREASURY SHARES (CONT’D)

Duringthefinancialyearended28February2018,theCompanyrepurchased450,000ordinarysharesof its issuedsharecapital from the open market. The average price paid for the repurchased shares was RM0.57 per share. The repurchased transactions were financed by internally generated funds. These repurchased shares were held as treasury shares and treated inaccordancewiththerequirementsofSection127oftheCompaniesAct,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 is745,002,800ordinaryshares.

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”).

Atanextraordinarygeneralmeetingheldon2December2016,theCompany’sshareholdersapprovedtheestablishmentofan ESOS of not more than 10% of the issued and paid-up share capital of the Company (excluding treasury shares) to eligible DirectorsandemployeesoftheGroup.

ThesalientfeaturesandothertermsoftheESOSaredisclosedintheNote36totheFinancialStatements.

WARRANTS

ThesalientfeaturesoftheWarrantsaredisclosedinNote24totheFinancialStatements.

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



50

OTHER STATUTORY INFORMATION

BeforethefinancialstatementsoftheGroupandoftheCompanyweremadeout,theDirectorstookreasonablesteps:-

(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 been made for doubtful debts; 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) whichwouldrenderthevaluesattributedtocurrentassetsinthefinancialstatementsoftheGroupandoftheCompanymisleading; or

(c) whichhavearisenwhichwouldrenderadherencetotheexistingmethodofvaluationofassetsorliabilitiesoftheGroupand of the Company misleading or inappropriate; 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) anychargeontheassetsoftheGroupandoftheCompanywhichhasarisensincetheendofthefinancialyearwhichsecures the liability of any other person; or

(b) anycontingentliabilityoftheGroupandoftheCompanywhichhasarisensincetheendofthefinancialyear.

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 of the GroupandoftheCompanytomeettheirobligationsasandwhentheyfalldue;

(b) theresultsofoperationsoftheGroupandoftheCompanyduringthefinancialyearwerenotsubstantiallyaffectedbyany item, transaction or event of a material and unusual nature; 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 oreventofamaterialandunusualnaturelikelytoaffectsubstantiallytheresultsofoperationsoftheGroupandoftheCompany for the current financial year in which this report is made.


ANNUAL REPORT 2018

51

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

ThesignificanteventisdisclosedinNote42totheFinancialStatements.

AUDITORS

TheAuditors,MessrsGrantThorntonMalaysia,haveexpressedtheirwillingnesstocontinueinoffice.

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 )

JohorBahru11June2018



52

STATEMENT BYDIRECTORS

IntheopinionoftheDirectors,thefinancialstatementssetoutonpages57to154aredrawnupinaccordancewithMalaysianFinancialReportingStandards,InternationalFinancialReportingStandardsandtherequirementsoftheCompaniesAct,2016inMalaysiasoastogiveatrueandfairviewofthefinancialpositionoftheGroupandoftheCompanyasat28February2018andoftheirfinancialperformanceandcashflowsforthefinancialyearthenended.

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

JohorBahru11June2018

STATUTORYDECLARATION

I,WangWoonChin,beingtheOfficerprimarilyresponsibleforthefinancialmanagementofPantechGroupHoldingsBerhad,do solemnly and sincerely declare that to the best of my knowledge and belief, the financial statements set out on pages 57 to 154arecorrectandImakethissolemndeclarationconscientiouslybelievingthesametobetrueandbyvirtueoftheStatutoryDeclarationsAct1960.

Subscribed and solemnly declared by )theabovenamedatJohorBahruinthe )StateofJohorthisdayof )11June2018 ) ........................................................... WANG WOON CHIN (MIA No. 19232)

Before me:

LIM JIT NGOHNo.J265Commissioner for Oaths

ANNUAL REPORT 2018

53

REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS

Opinion

WehaveauditedthefinancialstatementsofPantechGroupHoldingsBerhad(“theCompany”),whichcomprisethestatementsof financial position as at 28 February 2018, and the statements of profit or loss and other comprehensive income, statements ofchangesinequityandstatementsofcashflowsforthefinancialyearthenended,andnotestothefinancialstatements,includingasummaryofsignificantaccountingpolicies,assetoutonpages57to154.

Inouropinion,theaccompanyingfinancialstatementsgiveatrueandfairviewofthefinancialpositionoftheGroupandoftheCompanyasat28February2018,andoftheirfinancialperformanceandcashflowsforthefinancialyearthenendedinaccordance with Malaysian Financial Reporting Standards (“MFRSs”), International Financial Reporting Standards (“IFRSs”) and therequirementsoftheCompaniesAct,2016inMalaysia.

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

WeareindependentoftheGroupandoftheCompanyinaccordancewiththeBy-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,inourprofessionaljudgement,wereofmostsignificanceinourauditofthefinancialstatementsoftheGroupforthecurrentfinancialyear.ThesematterswereaddressedinthecontextofourauditofthefinancialstatementsoftheGroupasawhole,andinformingouropinionthereon,andwedonotprovideaseparateopiniononthesematters.

Allowance for impairment of trade receivables

The riskRefertoNote44(c)totheFinancialStatements.WefocusedonthisareabecausetheGrouphastradereceivablesthatarepastdue 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 responseWehaveobtainedanunderstandingoftheGroup’spolicyonimpairmentoftradereceivablesandevaluatedmanagement’sjudgement 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.

Thebasisofmanagement’sjudgementovertherecoverabilityofbilledtradereceivablesaredisclosedinNote3.8and44(c)tothe Financial Statements.

INDEPENDENTAUDITORS’ REPORT

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


54

KEY AUDIT MATTERS (CONT’D)

Inventory valuation

The riskRefertoNote14totheFinancialStatements.TheGroup’sinventoriesissubjecttoariskthattheinventoriesbecomeslow-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 responseWehaveobtainedanunderstandingontheGroup’saccountingpolicyinmakingtheaccountingestimatesforinventorieswrite-down which is in line with its business environment. We have also attended the year-end physical inventories count to validate countsperformedbytheGroup.Besidesthat,wealsotestedasampleofinventoriestoensurethattheywereheldatthelowerofcostandnetrealisablevalue.WehavealsoevaluatedmanagementjudgementandGroup’saccountingpolicywithregardsto 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 includedintheannualreport,butdoesnotincludethefinancialstatementsoftheGroupandoftheCompanyandourauditors’report thereon.

OuropiniononthefinancialstatementsoftheGroupandoftheCompanydoesnotcovertheotherinformationandwedonotexpress any form of assurance conclusion thereon.

InconnectionwithourauditofthefinancialstatementsoftheGroupandoftheCompany,ourresponsibilityistoreadtheotherinformation and, in doing so, consider whether the other information is materially inconsistent with the financial statements of theGroupandoftheCompanyorourknowledgeobtainedintheauditorotherwiseappearstobemateriallymisstated.

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

TheDirectorsoftheCompanyareresponsibleforthepreparationoffinancialstatementsoftheGroupandoftheCompanythatgiveatrueandfairviewinaccordancewithMFRSs,IFRSsandtherequirementsoftheCompaniesAct,2016inMalaysia.The Directors are also responsible for such internal control as the Directors determine is necessary to enable the preparation of financialstatementsoftheGroupandoftheCompanythatarefreefrommaterialmisstatement,whetherduetofraudorerror.

InpreparingthefinancialstatementsoftheGroupandoftheCompany,theDirectorsareresponsibleforassessingtheGroup’sand the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using thegoingconcernbasisofaccountingunlesstheDirectorseitherintendtoliquidatetheGrouportheCompanyortoceaseoperations, or have no realistic alternative but to do so.

IndependentAuditors’ Report (cont’d)

ANNUAL REPORT 2018

55

AUDITORS’ RESPONSIBILITIES FOR THE AUDIT OF THE FINANCIAL STATEMENTS

OurobjectivesaretoobtainreasonableassuranceaboutwhetherthefinancialstatementsoftheGroupandoftheCompanyas 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 toinfluencetheeconomicdecisionsofuserstakenonthebasisofthesefinancialstatements.

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:-

- IdentifyandassesstherisksofmaterialmisstatementofthefinancialstatementsoftheGroupandoftheCompany,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 inthecircumstances,butnotforthepurposeofexpressinganopinionontheeffectivenessoftheGroup’sandoftheCompany’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 ontheGroup’sandtheCompany’sabilitytocontinueasagoingconcern.Ifweconcludethatamaterialuncertaintyexists, we are required to draw attention in our auditors’ report to the related disclosures in the financial statements of theGroupandoftheCompanyor,ifsuchdisclosuresareinadequate,tomodifyouropinion.Ourconclusionsarebasedon the audit evidence obtained up to the date of our auditors’ report. However, future events or conditions may cause theGrouportheCompanytoceasetocontinueasagoingconcern.

- Evaluatetheoverallpresentation,structureandcontentofthefinancialstatementsoftheGroupandoftheCompany,includingthedisclosures,andwhetherthefinancialstatementsoftheGroupandoftheCompanyrepresenttheunderlyingtransactions and events in a manner.

- Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within theGrouptoexpressanopiniononthefinancialstatementsoftheGroup.Weareresponsibleforthedirection,supervisionand 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 financialstatementsoftheGroupandoftheCompanyforthecurrentfinancialyearandarethereforethekeyauditmatters.Wedescribed 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.



56

OTHER MATTERS

ThisreportismadesolelytothemembersoftheCompany,asabody,inaccordancewithSection266oftheCompaniesAct,2016inMalaysiaandfornootherpurpose.Wedonotassumeresponsibilitytoanyotherpersonforthecontentofthisreport.

GRANT THORNTON MALAYSIA TAN CHEE BENG (NO.AF:0737) (NO:2664/02/19(J)) CHARTERED ACCOUNTANTS CHARTERED ACCOUNTANT

JohorBahru 11June2018


ANNUAL REPORT 2018

57

STATEMENTS OFFINANCIAL POSITION

as at 28 February 2018

Group Company Note 2018 2017 2018 2017 RM RM RM RM

ASSETSNon-current assets Property,plantandequipment 4 221,403,827 199,913,489 – – Prepaidlandleasepayments 5 33,133,816 33,715,859 – – Capitalwork-in-progress 6 3,814,747 28,565,616 – – Investmentproperties 7 6,600,000 6,600,000 – – Investmentinsubsidiarycompanies 8 – – 244,860,458 235,294,458 Investmentinanassociatecompany 9 2,063,165 2,275,137 – – Investment in a joint venture company 10 – – – – Goodwillonacquisition 11 1,198,088 1,213,677 – – Derivativesfinancialinstruments 12 624,766 3,275,874 – 831,429 Deferredtaxassets 13 1,851,363 927,225 – –

Totalnon-currentassets 270,689,772 276,486,877 244,860,458 236,125,887

Current assets Inventories 14 276,094,356 262,426,291 – – Tradereceivables 15 144,893,264 133,392,544 – – Otherreceivables 16 20,587,082 14,637,214 51,309 51,652 Amountduefromsubsidiarycompanies 8 – – 17,453 13,491 Amountduefromanassociatecompany 9 6,657,833 11,043,435 – – Derivativesfinancialinstruments 12 627,258 1,343,786 – 177,098 Tax recoverable 1,003,522 395,089 – – Fixeddepositswithlicensedbanks 17 2,476,995 2,436,327 – – Cashandbankbalances 18 67,746,034 89,156,176 2,307,581 2,993,275

Totalcurrentassets 520,086,344 514,830,862 2,376,343 3,235,516

Total assets 790,776,116 791,317,739 247,236,801 239,361,403

EQUITY AND LIABILITIESEQUITYSharecapital 19 207,543,729 203,928,587 207,543,729 203,928,587Share premium 19 – – – - Treasuryshares 20 (811,264) (553,111) (811,264) (553,111)Revaluationreserve 21 12,333,172 12,634,149 – –Employeesshareoptionreserve 22 2,080,383 960,348 2,080,383 960,348Cashflowhedgereserve 23 1,144,267 4,520,394 (103,357) 909,261Warrantsreserve 24 14,748,628 14,869,037 14,748,628 14,869,037Exchangetranslationreserve 9,546,271 10,038,149 – –Unappropriatedprofit 25 306,868,749 278,003,771 12,649,482 6,535,546

Equity attributable to owners oftheCompany 553,453,935 524,401,324 236,107,601 226,649,668Non-controllinginterest – 8,462,977 – –

Total equity 553,453,935 532,864,301 236,107,601 226,649,668


58


LIABILITIESNon-current liabilities Financeleasecreditors 26 6,071,674 2,391,038 – – Derivatives financial instruments 12 55,339 – 55,339 – Borrowings 27 35,279,033 44,546,710 4,590,000 6,630,000 Otherpayables 28 259,745 277,745 – – Deferredtaxliabilities 29 5,156,759 5,608,891 – –

Totalnon-currentliabilities 46,822,550 52,824,384 4,645,339 6,630,000

Current liabilities Tradepayables 30 30,975,893 64,166,675 – – Otherpayables 28 15,826,957 19,436,288 302,986 267,220 Derivativesfinancialinstruments 12 48,018 99,266 48,018 99,266 Amountduetoanassociatecompany 9 215,566 258,462 – – Financeleasecreditors 26 2,672,480 2,166,244 – – Borrowings 27 132,547,739 114,785,150 2,096,752 3,368,169 Dividendpayable 3,723,070 2,215,962 3,723,070 2,215,962 Taxpayable 4,489,908 2,501,007 313,035 131,118

Totalcurrentliabilities 190,499,631 205,629,054 6,483,861 6,081,735

Total liabilities 237,322,181 258,453,438 11,129,200 12,711,735

Total equity and liabilities 790,776,116 791,317,739 247,236,801 239,361,403

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

Statements ofFinancial Position (cont’d)

ANNUAL REPORT 2018

59

STATEMENTS OF PROFIT OR LOSSAND OTHER COMPREHENSIVE INCOME

for the financial year ended 28 February 2018


Revenue 31 614,771,219 479,348,907 30,772,881 24,391,992

Costofsales (471,512,604) (378,512,005) – –

Grossprofit 143,258,615 100,836,902 30,772,881 24,391,992

Otherincome 6,944,898 9,133,146 55,402 85,570

Sellinganddistributionexpenses (23,437,384) (14,659,312) – –

Administrationexpenses (48,345,081) (44,013,038) (4,641,097) (4,341,924)

Otherexpenses (10,693,115) (5,254,937) (92,566) (358,218)

Financecosts (9,382,831) (6,977,505) (485,672) (771,740)

Profitfromoperations 58,345,102 39,065,256 25,608,948 19,005,680

Shareof(loss)/profitinassociatecompany (211,972) 41,425 – –

Shareoflossinjointventurecompany – (11,049) – –

Profitbeforetax 32 58,133,130 39,095,632 25,608,948 19,005,680

Taxexpense 33 (12,453,306) (10,686,975) (932,212) (524,665)

Profitforthefinancialyear 45,679,824 28,408,657 24,676,736 18,481,015

Other comprehensive income/(loss), net of taxItems that will not be reclassified subsequently to profit or loss Realisation of revaluation reserve upondepreciationofrevaluedassets 300,977 120,481 – – Transfer of revaluation reserve to unappropriatedprofit (300,977) (120,481) – –

– – – –


60


Items that may be reclassified subsequently to profit or loss Fairvalue(loss)/gainoncashflowhedge (3,376,127) 1,258,376 (1,012,618) 1,636,713 Foreign currency translation differences forforeignoperations,netoftax (491,878) (4,140,059) – –

(3,868,005) (2,881,683) (1,012,618) 1,636,713

Other comprehensive (loss)/income for the financial year, net of tax (3,868,005) (2,881,683) (1,012,618) 1,636,713

Total comprehensive income for the financial year 41,811,819 25,526,974 23,664,118 20,117,728

Profit/(Loss) attributable to:- OwnersoftheCompany 47,126,801 29,718,280 24,676,736 18,481,015 Non-controllinginterest (1,446,977) (1,309,623) – –

Profitforthefinancialyear 45,679,824 28,408,657 24,676,736 18,481,015

Total comprehensive income attributable to:-OwnersoftheCompany 43,258,796 26,836,597 23,664,118 20,117,728Non-controllinginterest (1,446,977) (1,309,623) – –

Total comprehensive income for the financial year 41,811,819 25,526,974 23,664,118 20,117,728

Earnings per share attributable to owners of the CompanyEarnings per ordinary share-Basic(sen) 34 6.36 4.03 – –

-Diluted(sen) 34 6.08 3.79 – –


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

ANNUAL REPORT 2018

61

STATEMENTS OFCHANGES IN EQUITY


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,213

(27,35

1)50

9,269

,862

Trans

actio

ns w

ith ow

ners:

-

Increa

se in

inves

tmen

t in a

subs

idiary

comp

any

– –

– –

– –

– –

– –

9,799

,951

9,799

,951

Share

optio

ngran

tedun

derE

SOS

––

––

960,3

48

––

––

960,3

48

–96

0,348

Issua

nceo

fwarr

ants

––

––

––

7,38

7,400

–

(7,38

7,400

)–

––

Issua

nceo

fsha

resfro

mbo

nusis

sue

24,62

4,875

(2

4,624

,875)

––

––

––

––

––

Acqu

isition

oftre

asury

share

s–

–(1,

272,6

16)

––

––

––

(1,27

2,616

)–

(1,27

2,616

)

Finals

inglet

ierdi

viden

dof0

.50se

nper

share

–

––

––

––

–(3,

047,9

32)

(3,04

7,932

)–

(3,04

7,932

)

Final s

hare

divide

nd via

distr

ibutio

n of

tre

asury

share

s on t

he ba

sis of

1 tre

asury

sh

arefo

rever

y100

existi

ngor

dinary

share

s–

–3,6

68,03

0–

––

––

(3,66

8,030

)–

––

First

interi

msin

gletie

rdivid

endo

f0.50

senp

ersh

are

––

––

––

––

(3,07

8,162

)(3,

078,1

62)

–(3,

078,1

62)

Seco

ndin

terim

single

tierd

ividen

dof0

.50se

nper

share

–

––

––

––

–(3,

078,1

62)

(3,07

8,162

)–

(3,07

8,162

)

Third

inter

imsin

gletie

rdivid

endo

f0.30

senp

ersh

are

––

––

––

––

(2,21

5,962

)(2,

215,9

62)

–(2,

215,9

62)

Totaltra

nsac

tions

with

owne

rs24

,624,8

75

(24,6

24,87

5)2,

395,4

14

–96

0,348

–

7,38

7,400

–

(22,4

75,64

8)(1

1,732

,486)

9,79

9,951

(1,

932,5

35)

Profit

forth

efina

ncial

year

––

––

––

––

29,71

8,280

29

,718,2

80

(1,30

9,623

)28

,408,6

57

Othe

rcom

prehe

nsive

inco

mefo

rthefi

nanc

ialyea

r–

––

(120

,481)

–1,

258,3

76

–(4

,140,0

59)

120,4

81

(2,88

1,683

)–

(2,88

1,683

)

Totalco

mpreh

ensiv

einco

mefo

rthefi

nanc

ialyea

r–

––

(120

,481)

–1,

258,3

76

–(4

,140,0

59)

29,83

8,761

26

,836,5

97

(1,30

9,623

)25

,526,9

74

Trans

ferpu

rsuan

ttoSe

ction

618(

2)of

the

Comp

anies

Act,2

016(

Note

19)

56,00

9,416

(5

6,009

,416)

––

––

––

––

––

Balan

ceat

28Fe

bruary

2017

20

3,928

,587

–(55

3,111

)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

48,4

62,97

753

2,864

,301


62

At

tribu

table

to ow

ners

of the

Com

pany

Non

-dist

ributa

ble

Di

stribu

table

Em

ploye

es

Cash

flow

Ex

chan

ge

Non-

Sh

are

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

premi

um

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

RM

Grou

p (co

nt’d)

Balan

ceat

1Ma

rch20

17

203,9

28,58

7–

(553,1

11)

12,63

4,149

96

0,348

4,

520,3

94

14,86

9,037

10

,038,1

49

278,0

03,77

152

4,401

,324

8,462

,977

532,8

64,30

1

Trans

actio

ns w

ith ow

ners:

-

Share

optio

ngran

tedun

derE

SOS

––

––

1,69

9,375

–

––

–1,6

99,37

5–

1,699

,375

Issua

nceo

fsha

respu

rsuan

ttoex

ercise

ofw

arran

ts67

2,542

–

––

–

–(12

0,409

)–

–55

2,133

–

552,1

33

Exerc

iseof

ESOS

2,

942,6

00

––

–(57

9,340

)–

––

–2,3

63,26

0–

2,363

,260

Acqu

isition

of tre

asury

share

s –

– (25

8,153

) –

– –

– –

– (25

8,153

) –

(258,1

53)

Finals

inglet

ierdi

viden

dof0

.50se

nper

share

–

––

––

––

–(3,

706,7

52)

(3,70

6,752

)–

(3,70

6,752

)

First

interi

m sin

gle tie

r divid

end o

f 0.50

sen p

er sh

are

ands

pecia

lsing

letier

divid

endo

f0.50

senp

ersh

are

––

––

––

––

(7,41

7,227

)(7,

417,2

27)

–(7,

417,2

27)

Seco

nd in

terim

single

tier d

ividen

d of 0

.50 se

n per

share

–

– –

– –

– –

– (3,

715,7

51)

(3,71

5,751

) –

(3,71

5,751

)

Third

inter

im sin

gle tie

r divid

end o

f 0.50

sen p

er sh

are

– –

– –

– –

– –

(3,72

3,070

) (3,

723,0

70)

– (3,

723,0

70)

Acqu

isition

ofsh

aresf

romno

n-con

trollin

ginte

rest

––

––

––

––

––

(7,01

6,000

)(7,

016,0

00)

Totaltra

nsac

tions

with

owne

rs3,

615,1

42

–(25

8,153

)–

1,120

,035

–(12

0,409

)–

(18,56

2,800

)(14

,206,1

85)

(7,01

6,000

)(21

,222,1

85)

Profit

forth

efina

ncial

year

––

––

––

––

47,12

6,801

47

,126,8

01

(1,44

6,977

)45

,679,8

24

Othe

rcom

prehe

nsive

inco

mefo

rthefi

nanc

ialyea

r–

––

(300

,977)

–(3,

376,1

27)

–(49

1,878

)30

0,977

(3,

868,0

05)

–(3,

868,0

05)

Totalco

mpreh

ensiv

einco

mefo

rthefi

nanc

ialyea

r–

––

(300,9

77)

–(3,

376,1

27)

–(49

1,878

)47

,427,7

78

43,25

8,796

(1,

446,9

77)

41,81

1,819

Balan

ceat

28Fe

bruary

2018

20

7,543

,729

–(81

1,264

)12

,333,1

72

2,08

0,383

1,

144,2

67

14,74

8,628

9,

546,2

71

306,8

68,74

955

3,453

,935

–55

3,453

,935

Statements ofChanges in Equity (cont’d)

ANNUAL REPORT 2018

63

N

on-d

istrib

utable

Distr

ibutab

le

Emplo

yees

Ca

sh flo

w

Exch

ange

Sh

are

Share

Tre

asury

Re

valua

tion

share

optio

n he

dge

Warra

nts

trans

lation

Un

appro

priat

ed

capit

al pre

mium

sh

ares

reserv

e res

erve

reserv

e res

erve

reserv

e pro

fit To

tal

RM

RM

RM

RM

RM

RM

RM

RM

RM

RM

Comp

any

Balan

ceat

1Ma

rch20

16

123,2

94,29

680

,634,2

91

(2,94

8,525

)–

–(72

7,452

)7,

481,6

37

–10

,530,1

79

218,2

64,42

6

Trans

actio

ns w

ith ow

ners:

-

Share

optio

ngran

tedun

derE

SOS

––

––

960,3

48

––

––

960,3

48

Issua

nceo

fWarr

ants

––

––

––

7,38

7,400

–

(7,38

7,400

)–

Issua

nceo

fsha

resfro

mbo

nusis

sue

24,62

4,875

(2

4,624

,875)

––

––

––

––

Acqu

isition

oftre

asury

share

s–

–(1,

272,6

16)

––

––

––

(1,27

2,616

)

Finals

inglet

ierdi

viden

dof0

.50se

nper

share

–

––

––

––

–(3,

047,9

32)

(3,04

7,932

)

Final s

hare

divide

nd via

distr

ibutio

n of tr

easu

ry sh

ares o

n the

basis

of

1trea

sury

share

fore

very1

00ex

isting

ordin

arysh

ares

––

3,66

8,030

–

––

––

(3,66

8,030

)–

First

interi

msin

gletie

rdivid

endo

f0.50

senp

ersh

are

––

––

––

––

(3,07

8,162

)(3,

078,1

62)

Seco

ndin

terim

single

tierd

ividen

dof0

.50se

nper

share

–

––

––

––

–(3,

078,1

62)

(3,07

8,162

)

Third

inter

imsin

gletie

rdivid

endo

f0.30

senp

ersh

are

––

––

––

––

(2,21

5,962

)(2,

215,9

62)

Totaltra

nsac

tions

with

owne

rs24

,624,8

75

(24,6

24,87

5)2,

395,4

14

–96

0,348

–

7,38

7,400

–

(22,47

5,648

)(11

,732,4

86)

Profit

forth

efina

ncial

year

––

––

––

––

18,48

1,015

18

,481,0

15

Othe

rcom

prehe

nsive

inco

mefo

rthefi

nanc

ialyea

r–

––

––

1,63

6,713

–

––

1,636

,713

Totalco

mpreh

ensiv

einco

mefo

rthefi

nanc

ialyea

r–

––

––

1,63

6,713

–

–18

,481,0

15

20,11

7,728

Trans

ferpu

rsuan

ttoSe

ction

618(

2)of

theCo

mpan

ies

Act,2

016(

Note

19)

56,00

9,416

(5

6,009

,416)

––

––

––

––

Balan

ceat

28Fe

bruary

2017

20

3,928

,587

–(55

3,111

)–

960,3

48

909,2

61

14,86

9,037

–

6,535

,546

226,6

49,66

8



64

N

on-d

istrib

utable

Distr

ibutab

le

Emplo

yees

Ca

sh flo

w

Exch

ange

Sh

are

Share

Tre

asury

Re

valua

tion

share

optio

n he

dge

Warra

nts

trans

lation

Un

appro

priat

ed

capit

al pre

mium

sh

ares

reserv

e res

erve

reserv

e res

erve

reserv

e pro

fit To

tal

RM

RM

RM

RM

RM

RM

RM

RM

RM

RM

Comp

any (

cont’

d)

Balan

ceat

1Ma

rch20

17

203,9

28,58

7–

(553

,111)

–96

0,348

90

9,261

14

,869,0

37

–6,

535,5

46

226,6

49,66

8

Trans

actio

ns w

ith ow

ners:

-

Share

optio

ngran

tedun

derE

SOS

––

––

1,69

9,375

–

––

–1,6

99,37

5

Exerc

iseof

ESOS

2,

942,6

00

––

–(5

79,34

0)–

––

–2,3

63,26

0

Issua

nceo

fsha

respu

rsuan

ttoex

ercise

ofw

arran

ts67

2,542

–

––

––

(120

,409)

––

552,1

33

Acqu

isition

of tre

asury

share

s –

– (25

8,153

) –

– –

– –

– (25

8,153

)

Finals

inglet

ierdi

viden

dof0

.50se

nper

share

–

––

––

––

–(3,

706,7

52)

(3,70

6,752

)

First

interi

m sin

gle tie

r divid

end o

f 0.50

sen p

er sh

are an

d

spec

ialsin

gletie

rdivid

endo

f0.50

senp

ersh

are

––

––

––

––

(7,41

7,227

)(7,

417,2

27)

Seco

nd in

terim

single

tier d

ividen

d of 0

.50 se

n per

share

–

– –

– –

– –

– (3,

715,7

51)

(3,71

5,751

)

Third

inter

im sin

gle tie

r divid

end o

f 0.50

sen p

er sh

are

– –

– –

– –

– –

(3,72

3,070

) (3,

723,0

70)

Totaltra

nsac

tions

with

owne

rs3,

615,1

42

–(2

58,15

3)–

1,12

0,035

–

(120

,409)

–(1

8,562

,800)

(14,20

6,185

)

Profit

forth

efina

ncial

year

––

––

––

––

24,67

6,736

24

,676,7

36

Othe

rcom

prehe

nsive

inco

mefo

rthefi

nanc

ialyea

r–

––

––

(1,01

2,618

)–

––

(1,01

2,618

)

Totalco

mpreh

ensiv

einco

mefo

rthefi

nanc

ialyea

r–

––

––

(1,01

2,618

)–

–24

,676,7

36

23,66

4,118

Balan

ceat

28Fe

bruary

2018

20

7,543

,729

–(81

1,264

)–

2,08

0,383

(1

03,35

7)14

,748,6

28

–12

,649,4

82

236,1

07,60

1

The

acco

mpa

nyin

g no

tes

form

an

inte

gral

par

t of t

he fi

nanc

ial s

tate

men

ts.


ANNUAL REPORT 2018

65

STATEMENTS OFCASH FLOWS



OPERATING ACTIVITIES Profitbeforetax 58,133,130 39,095,632 25,608,948 19,005,680

Adjustments for:- Allowanceforimpairmentofreceivables 4,130,429 4,011,565 – – Inventorieswrittendown 1,155,136 622,503 – – Amortisation of prepaid landleasepayments 582,043 570,976 – – Depreciation of property, plant andequipment 16,426,299 13,850,139 – – Interestexpense 8,142,031 5,892,479 448,422 703,092 Property,plantandequipmentwrittenoff 174,515 6,361 – – Reversal of inventories written down (199,057) (110,259) – – Baddebtswrittenoff – 40,601 – – Employees Share Option Schemeexpenses 1,699,375 960,348 1,699,375 960,348 Interestincome (1,017,401) (1,011,073) (54,099) (80,550) Shareoflossfromjointventurecompany – 11,049 – – Share of loss/(profit) from associatecompany 211,972 (41,425) – – Dividendincome – – (26,622,475) (21,841,052) Overprovisionofleaveentitlement (60,991) – – – Governmentgrantincome – (23,000) – – Gainondisposalofproperty,plant andequipment (559,603) (960,717) – – Gainondisposalofjointventurecompany – (55,750) – – Lossfromcrosscurrencyswap 242 10,144 242 10,144 Fair value (gain)/loss on derivatives financialinstruments (4,400) 8,260 – – Fair value gain adjustment on investment properties – (100,000) – – Allowance for impairment of receivablesnolongerrequired (1,974,697) (3,922,073) – – Unrealisedloss/(gain)onforeignexchange 455,218 (237,880) (55) (1,393)

Operating profit/(loss) before working capitalchanges 87,294,241 58,617,880 1,080,358 (1,243,731)

Changes in working capital:- Inventories (14,624,144) (9,571,061) – – Receivables (18,425,268) (28,487,038) 343 (7,348) Payables (37,144,344) 45,130,079 35,766 (66,563) Associatecompany 4,317,755 6,260,101 – – Jointventurecompany – (802,034) – –

Cashflowsfrom/(usedin)operations 21,418,240 71,147,927 1,116,467 (1,317,642)

Taxrefund 397,024 142,287 – –Taxpaid (12,839,784) (10,652,456) (750,295) (513,062)

Netcashflowsfrom/(usedin) operatingactivities 8,975,480 60,637,758 366,172 (1,830,704)


66


INVESTING ACTIVITIES Dividendreceived – – 26,622,475 21,841,052 Repayment from subsidiary companies – – – 5,000,000 Interestreceived 1,017,401 1,011,073 54,099 80,550 Purchase of property, plant andequipment A (3,485,275) (4,299,271) – – Investmentinsubsidiarycompanies – – (2,550,000) (10,199,949) Acquisition of interest in subsidiary fromnon-controllinginterest (7,016,000) – (7,016,000) – Proceeds from disposal of joint venture – 850,892 – – Proceeds from disposal of property, plantandequipment 2,100,494 2,596,027 – – Capitalwork-in-progressincurred (4,360,830) (28,650,306) – –

Netcashflows(usedin)/from investingactivities (11,744,210) (28,491,585) 17,110,574 16,721,653

FINANCING ACTIVITIES (Advance to)/Repayment from subsidiarycompanies – – (3,962) 311,190 Dividendpaid (17,055,692) (12,262,781) (17,055,692) (12,262,781) Proceedsfromnon-controllinginterest B – 2,587,896 – – Proceeds from issuance of share capital 2,915,393 – 2,915,393 – Purchaseoftreasuryshares (258,153) (1,272,616) (258,153) (1,272,616) Governmentgrantreceived – 23,000 – – Interestpaid (8,163,448) (5,845,571) (469,839) (647,523) Repaymentoffinanceleasecreditors (3,092,242) (3,771,520) – – Drawndown/(Repayment of) short-term borrowings 20,693,654 (2,227,236) – (5,000,000) Repaymentoftermloans (16,270,408) (20,823,787) (3,290,000) (6,530,000) Drawndownoftermloans 3,041,228 28,732,039 – 10,200,000

Netcashflowsusedinfinancingactivities (18,189,668) (14,860,576) (18,162,253) (15,201,730)

CASH AND CASH EQUIVALENTS Netchanges (20,958,398) 17,285,597 (685,507) (310,781) Effectofexchangeratechanges (411,076) (2,644,258) (187) (10,144) Atbeginningoffinancialyear 91,592,503 76,951,164 2,993,275 3,314,200

At end of financial year C 70,223,029 91,592,503 2,307,581 2,993,275

Statements ofCash Flows (cont’d)

ANNUAL REPORT 2018

67

NOTES TO THE STATEMENTS OF CASH FLOWS

A. PURCHASE OF PROPERTY, PLANT AND EQUIPMENT

Group Company 2018 2017 2018 2017 RM RM RM RM

Acquiredbymeansoffinancelease 7,303,324 1,316,000 – –Cashpayments 3,485,275 4,299,271 – –

10,788,599 5,615,271 – –

B. PROCEEDS FROM NON-CONTROLLING INTEREST

Duringthepreviousfinancialyear,theGroupincreasedtheissuedandpaid-upsharecapitalofasubsidiarycompanyfromRM49toRM9,800,000bywayofissuanceof9,799,951unitsofnewordinarysharesforacashconsiderationofRM2,587,896andnon-cashconsiderationofRM7,212,055toitsnon-controllinginterest.

The issuance of non-cash consideration of 7,212,055 units of new ordinary shares was in relation to the acquisition of a leasehold land (Note 5).

C. CASH AND CASH EQUIVALENTS

Cashandcashequivalentsincludedinthestatementsofcashflowscomprisethefollowingstatementsoffinancialpositionamounts:-


Cashandbankbalances 67,746,034 89,156,176 2,307,581 2,993,275Fixeddepositswithlicensedbanks 2,476,995 2,436,327 – –

70,223,029 91,592,503 2,307,581 2,993,275

Reconciliation of liabilities arising from financing activities

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

Financeleasecreditors 4,557,282 4,211,082 (24,210) 8,744,154Termloans 62,846,211 (13,229,180) (21,417) 49,595,614Short-termborrowings 96,485,649 20,693,654 1,051,855 118,231,158

Totalliabilitiesfromfinancingactivities 163,889,142 11,675,556 1,006,228 176,570,926


Statements ofCash Flows (cont’d)


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NOTES TO THEFINANCIAL STATEMENTS

- 28 February 2018

1. GENERAL INFORMATION

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

The principal activities of the subsidiary companies, associate company and joint venture are disclosed in Notes 8, 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, associate company and joint venture 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 Boulevard Office,MidValleyCity,LingkaranSyedPutra,59200KualaLumpur.TheprincipalplaceofbusinessoftheCompanyislocatedatPTD204334,JalanPlatinumUtama,KawasanPerindustrianPasirGudang,Zon12B,81700PasirGudang,JohorDarulTakzim.

The financial statements were authorised for issue by the Board of Directors in accordance with a resolution of the Directorson11June2018.

2. BASIS OF PREPARATION OF THE FINANCIAL STATEMENTS

2.1 Statement of compliance

ThefinancialstatementsoftheGroupandoftheCompanyhavebeenpreparedinaccordancewithMalaysianFinancial Reporting Standards (“MFRSs”), International Financial Reporting Standards (“IFRSs”) and the requirements oftheCompaniesAct,2016inMalaysia.

2.2 Basis of measurement

ThefinancialstatementsoftheGroupandoftheCompanyarepreparedunderhistoricalcostconvention,exceptfor 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 marketmustbeaccessibletobytheGroupandtheCompany.

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.

TheGroupandtheCompanyusevaluationtechniquesthatareappropriateinthecircumstancesandforwhichsufficient data are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.

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Notes to theFinancial 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:-

Level 1 – Quoted (unadjusted) market prices in active markets for identical assets or liabilities. Level2 – Valuationtechniquesforwhichthelowestlevelinputthatissignificanttotheirfairvaluemeasurement

is directly or indirectly observable. Level3 – Valuationtechniquesforwhichthelowestlevelinputthatissignificanttotheirfairvaluemeasurement

is unobservable.

Forassetsandliabilitiesthatarerecognisedinthefinancialstatementsonarecurringbasis,theGroupandtheCompany 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.

TheGroupandtheCompanyhaveestablishedcontrolframeworkinrespectofmeasurementoffairvaluesoffinancialinstruments. 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.

Forthepurposeoffairvaluedisclosures,theGroupandtheCompanyhavedeterminedclassesofassetsandliabilities 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

TheGroupandtheCompanyhaveconsistentlyappliedtheaccountingpoliciessetout inNote3totheFinancial Statements to all periods presented in these financial statements.

Atthebeginningofthecurrentfinancialyear,theGroupandtheCompanyadoptedamendmentstoMFRSsandICInterpretationswhicharemandatoryforthefinancialperiodsbeginningonorafter1January2017.

Initial application of all the relevant new and revised MFRSs and amendments/improvements to MFRSs and ICInterpretationsthatareeffectivedidnothavematerialimpacttothefinancialstatementsoftheGroupandof the Company except for:-

Amendments to MFRS 107 Statement of Cash Flows: Disclosure Initiative

TheGroupandtheCompanyhaveappliedtheseamendmentsfor thefirst time inthecurrentyear.Theamendments require entities to provide disclosure of changes in their liabilities arising from financing activities, includingbothchangesarisingfromcashflowsandnon-cashchanges.Theinformationisprovidedatthenotetothestatementsofcashflows.Consistentwiththetransitionprovisionsoftheamendments,theGroupand the Company have not disclosed comparative information for the prior period.


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2.4 MFRSs (cont’d)

2.4.2 Standards Issued But Not Yet Effective

At the date of authorisation of these financial statements, the Malaysian Accounting Standards Board (“MASB”) has approved certain new standards, amendments and interpretations to existing standards which are not yeteffective,andhavenotbeenearlyadoptedbytheGroupandtheCompany.

ThemanagementanticipatesthatalloftherelevantpronouncementswillbeadoptedintheGroup’sandtheCompany’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 materialimpactstothefinancialstatementsoftheGroupandtheCompanyexceptasmentionedbelow:-

Amendment to MFRS 112 Recognition of deferred tax assets for unrealised losses

The amendment to MFRS 112 clarified the accounting treatment of deferred tax assets for unrealised losses on fixed-rate debt instruments measured at fair value. The adoption of the amendment is not expected to haveanyfinancialimpactontheGroupandtheCompany.

Theseamendmentsareeffectiveforannualperiodsbeginningonorafter1January2018,withearlyapplicationpermitted. If an entity applies these amendments for an earlier period, it must disclose that fact.

Amendment to MFRS 2 Share-based Payment: Classification and Measurement of Share-based Payment Transactions

Amendments to MFRS 2 Share-based payment addressed three main areas: the effects of vesting conditions on the measurement of a cash-settled share-based payment transaction; the classification of a share-based payment transaction with net settlement features for withholding tax obligations; and accounting where a modification to the terms and conditions of a share-based payment transaction changes its classification from cash settled to equity settled.

On adoption, entities are required to apply the amendments without restating prior periods, but retrospective application is permitted if elected for all three amendments and other criteria are met. The amendments areeffectiveforannualperiodsbeginningonorafter1January2018,withearlyapplicationpermitted.TheGroupisassessingthepotentialeffectoftheamendmentsonitsfinancialstatements.

MFRS 9 Financial Instruments

MFRS 9 Financial Instruments replaces MFRS 139 Financial Instruments: Recognition and Measurement and all previous versions of MFRS 9. MFRS 9 brings together all three aspects of the accounting for financial instruments project: classification and measurement, impairment and hedge accounting. MFRS 9 is effective forannualperiodsbeginningonorafter1January2018,withearlyapplicationpermitted.Exceptforhedgeaccounting, retrospective application is required but providing comparative information is not compulsory. For hedge accounting, the requirements are generally applied prospectively, with some limited exceptions.

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

MFRS 9 Financial Instruments (cont’d)

TheGroupandtheCompanyplantoadoptthenewstandardontherequiredeffectivedateandwillnotrestatecomparativeinformation.Duringyear2017,theGroupandtheCompanyhaveperformedadetailedimpactassessment of all three aspects of MFRS 9. This assessment is based on currently available information and may be subject to changes arising from further reasonable and supportable information being made availabletotheGroupandtheCompanyinyear2018whentheGroupandtheCompanywilladoptMFRS9.Overall,theGroupandtheCompanyexpectnosignificantimpactontheirstatementsoffinancialpositionandequityexceptfortheeffectofapplyingtheimpairmentrequirementsofMFRS9.Inaddition,theGroupand the Company will implement changes in classification of certain financial instruments.

(a) Classification and measurement of financial assets

TheGroupand theCompanydonot expect a significant impact on their statementsof financialposition or equity on applying the classification and measurement requirements of MFRS 9. It expects to continue measuring at fair value all financial assets currently held at fair value.

Loansandreceivablesareheldtocollectcontractualcashflowsandareexpectedtogiverisetocashflowsrepresentingsolelypaymentsofprincipalandinterest.TheGroupandtheCompanyanalysedthecontractualcashflowcharacteristicsofthoseinstrumentsandconcludedthattheymeetthecriteriafor amortised cost measurement under MFRS 9. Therefore, reclassification for these instruments is not required.

(b) Impairment

MFRS9requirestheGroupandtheCompanytorecordexpectedcreditlossesonallofitsloanandreceivables,eitherona12-monthorlifetimebasis.TheGroupandtheCompanyhaveassessedtheestimated impact that this expected credit losses will have on their financial statements as at 1 March 2018andbasedontheassessmentundertakentodate,theGroupandtheCompanydonotexpectthe impact to be material.

MFRS 15 Revenue from contracts with customers

MFRS 15 establishes a five-step model to account for revenue arising from contracts with customers. Under MFRS15,revenueisrecognisedatanamountthatreflectstheconsiderationtowhichanentityexpectstobe entitled for transferring goods or services to a customer.

The new revenue standard will supersede all current revenue recognition requirements under MFRS, including MFRS 111 Construction Contracts, MFRS 118 Revenue, IC Interpretation 13 Customer Loyalty Programmes, IC Interpretation 15 Agreements for Construction of Real Estate, IC Interpretation 18 Transfers of Assets from Customers and IC Interpretation 131 Revenue – Barter Transaction Involving Advertising Services.

Either a full retrospective application or a modified retrospective application is required for annual periods beginningonorafter1January2018,withearlyadoptionpermitted.TheadoptionofMFRS15willresultinachangeinaccountingpolicy.Overall,theGroupandtheCompanyexpectnosignificantfinancialimpacton their statements of financial position.


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MFRS 15 Revenue from contracts with customers (cont’d)

(a) Sale of goods

Contractswithcustomersinwhichthesalesofpipes,fittings,flanges,valvesandotherrelatedproductsis generally expected to be the only performance obligation is not expected to have any impact on theGroup’sprofitorloss.TheGroupexpectstherevenuerecognitiontooccuratapointintimewhencontrol of the asset is transferred to the customer, generally on delivery of the goods.

InpreparingtoMFRS15,theGroupconsidersvariableconsiderationofthesalestransaction.Somecontracts with customers provide a right of return, trade discounts or volume rebates. Currently, the Grouprecognisesrevenuefromthesalesofpipes,fittings,flanges,valvesandotherrelatesproductsmeasured at the fair value of the consideration received or receivable, net of returns and allowances, tradediscountsandvolumerebates.Ifrevenuecannotbereliablymeasured,theGroupdefersrevenuerecognition until the uncertainty is resolved. Such provisions give rise to variable consideration under MFRS 15 and will be required to be estimated at contract inception.

MFRS 15 requires the estimated variable consideration to be constrained to prevent over-recognition ofrevenue.TheGroupcontinuestoassessindividualcontractstodeterminetheestimatedvariableconsideration and related constraint.

(b) Advances received from customers

Generally,theGroupreceivesonlyshort-termadvancesfromitscustomers.Theyarepresentedaspart of other payables.

UnderMFRS15,theGroupmustdeterminewhetherthereisasignificantfinancingcomponentinitscontracts.However,theGroupdecidedtousethepracticalexpedientprovidedinMFRS15,andwillnotadjust the promised amount of the consideration for the effects of a significant financing components inthecontracts,wheretheGroupexpects,atcontractinception,thattheperiodbetweentheGrouptransfer of a promised good to a customer and when the customer pays for that good will be one year orless.Therefore,forshorttermadvances,theGroupwillaccountforafinancingcomponentevenifit is significant.

(c) Presentation and disclosure requirements

MFRS 15 provides presentation and disclosure requirements, which are more detailed than under current MFRS. The presentation requirements represent a significant change from current practice andsignificantly increases thevolumeofdisclosures required in theGroup’sfinancial statements.ManyofthedisclosurerequirementsinMFRS15arecompletelynew.TheGroupisintheprogressofdeveloping appropriate systems, internal controls, policies and procedures necessary to collect and disclose the required information.

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MFRS 16 Leases

MFRS16replacesMFRS117Leases,ICInterpretation4Determining 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.MFRS16setsouttheprinciplesfortherecognition,measurement,presentationand disclosure of leases and requires lessees to account for all leases under a single on-balance sheet model similar to the accounting for finance leases under MFRS 117. The standard includes two recognition exemptions for lessees – leases of ‘low-value’ assets (e.g., personal computers) and short-term leases (i.e., leases with a lease term of 12 months or less). At the commencement date of a lease, a lessee will recognise a liability to make lease payments (i.e., the lease liability) and an asset representing the right to use the underlying asset during the lease term (i.e., the right-of-use asset). Lessees will be required to separately recognise the interest expense on the lease liability and the depreciation expense on the right-of-use asset.

Lessees will be also required to remeasure the lease liability upon the occurrence of certain events (e.g., a change in the lease term, a change in future lease payments resulting from a change in an index or rate used to determine those payments). The lessee will generally recognise the amount of the remeasurement of the lease liability as an adjustment to the right-of-use asset.

LessoraccountingunderMFRS16issubstantiallyunchangedfromtoday’saccountingunderMFRS117.Lessors will continue to classify all leases using the same classification principle as in MFRS 117 and distinguish between two types of leases: operating and finance leases.

MFRS16alsorequireslesseesandlessorstomakemoreextensivedisclosuresthanunderMFRS117.

MFRS16iseffectiveforannualperiodsbeginningonorafter1January2019.Earlyapplicationispermitted,but not before an entity applies MFRS 15.

TheGroupplanstoaccessthepotentialeffectofMFRS16onitsconsolidatedfinancialstatementsinyear2019.

IC Interpretation 22 Foreign currency transactions and advance consideration

This interpretation addresses how to determine the date of the transaction for the purpose of determining the exchange rate to use on initial recognition of the related asset, expense or income (or part of it) on the derecognition of a non-monetary asset or non-monetary liability arising from the payment or receipt of advance consideration in a foreign currency.

If there are multiple payments or receipts in advance, the entity shall determine a date of the transaction for each payment or receipt of advance consideration.

Thisstandardwillcomeintoeffectonorafter1January2018withearlyadoptionpermitted.TheadoptionoftheseamendmentsisnotexpectedtohaveanyfinancialimpactontheGroup.


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Amendments to MFRS 140 Investment Property Transfer of Investment Property

The amendments clarify when an entity should transfer property, including property under construction or development into, or out of investment property. The amendments state that a change in use occurs when the property meets, or ceases to meet, the definition of investment property and there is evidence of the change in use. A mere change in management’s intentions for the use of a property does not provide evidence of a change in use.

Entities should apply the amendments prospectively to changed in use that occur on or after the beginning of the annual reporting period in which the entity first applies the amendments. An entity should reassess theclassificationofpropertyheldatthatdateand,ifapplicable,reclassifypropertytoreflecttheconditionsthat exists at that date.

2.5 Significant Accounting Estimates and Judgements

Estimates, assumptions concerning the future and judgements are made in the preparation of the financial statements. TheyaffecttheapplicationoftheGroup’saccountingpoliciesandreportedamountsofassets,liabilities,incomeand expenses, and disclosures made. Estimates and underlying assumptions are assessed on an on-going basis and are based on experience and relevant factors, including expectations of future events that are believed to be reasonable under the circumstances. The actual results may differ from the judgements, estimates, and assumptions made by management, and will seldom equal the estimated results.

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 2018, the management assessesthattheusefullivesrepresenttheexpectedutilityoftheassetstotheGroup.ThecarryingamountsareanalysedinNote4totheFinancialStatements.Actualresults,however,mayvaryduetochangeintheexpectedlevelofusageandtechnologicaldevelopments,whichresultinadjustmenttotheGroup’sassets.

A 3% (2017: 3%) difference in the expected useful lives of the property, plant and equipment from the management’sestimatewouldresultinapproximately1.08%(2017:1.15%)varianceintheGroup’sprofitfor the financial year.

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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.

ThecarryingamountoftheGroup’sinventoriesattheendofthereportingperiodisdisclosedinNote14tothe Financial Statements.

A 2% (2017: 2%) difference in the management’s estimation of net realisable values of the inventories would resultinapproximately0.04%(2017:0.05%)varianceintheGroup’sprofitforthefinancialyear.

Impairment of loans and receivables

TheGroupandtheCompanyassessatendofeachreportingdatewhetherthereisanyobjectiveevidencethat a financial asset is impaired. Factors such as probability of insolvency or significant financial difficulties of the receivables and default or significant delay in payments are considered in determining whether there is objective evidence of impairment.

Wherethereisobjectiveevidenceofimpairment,theamountandtimingoffuturecashflowsareestimatedbased on historical loss experience for assets with similar credit risk characteristics.

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

TheGroupcarriesout impairmenttestsbasedonavarietyofestimation includingvalue-in-useofcash-generating unit to which the property, plant and equipment and prepaid land lease payments are allocated. Estimatingthevalue-in-userequirestheGrouptomakeanestimateoftheexpectedfuturecashflowsfromcash-generating unit and also to choose a suitable discount rate in order to calculate present value of those cashflows.

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 expectedfuturecashflowsfromeachcash-generatingunitanddeterminesasuitableinterestrateinordertocalculatethepresentvalueofthosecashflows.Intheprocessofmeasuringexpectedfuturecashflows,management makes assumptions about future operating results. These assumptions relate to future events andcircumstances.Theactualresultsmayvary,andmaycausesignificantadjustmentstotheGroup’sassetswithin 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.


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Income taxes/Deferred tax liabilities

SignificantjudgementisinvolvedindeterminingtheGroup-wideprovisionforincometaxes.Therearecertaintransactions and computations for which the ultimate tax determination is uncertain during the ordinary course ofbusiness.TheGroupandtheCompanyrecognisetaxliabilitiesbasedonestimatesofwhetheradditionaltaxes 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.Thesedependonestimatesoffutureproductionandsalesvolume,operatingcosts,capitalexpenditure,dividendsandothercapitalmanagementtransactions.Judgementisalsorequiredaboutapplicationofincometax 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

TheGroupmeasuresthecostofequity-settledtransactionswithemployeesbyreferencetothefairvalueofthe 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 analysisandthecarryingamountsaredisclosedinNote36totheFinancialStatements.

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Fair value measurement and valuation processes

SomeoftheGroup’sassetsandliabilitiesaremeasuredatfairvalueforfinancialreporting.Significantjudgementis involved in determining the appropriate valuation techniques and inputs for fair value measurements where active market quotes are not available.

Inestimatingthefairvalueofanassetoraliability,theGroupusesmarket-observabledatatotheextentitis 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 andbuildings,theGroupengagesthirdpartyqualifiedvaluerstoperformthevaluation.

Information about the valuation techniques and inputs used in determining the fair value of various assets andliabilitiesaredisclosedintheNotes4and7totheFinancialStatements.

2.5.2 Significant management judgements

ThefollowingaresignificantmanagementjudgementsinapplyingtheaccountingpoliciesoftheGroupthathave the most significant effect on the financial statements.

Classification between investment properties and owner-occupied properties

TheGroupdetermineswhetherapropertyqualifiesasaninvestmentproperty,andhasdevelopedcriteriainmaking that judgement. Investment property is a property held to earn rentals or for capital appreciation or both.Therefore,theGroupconsiderswhetherapropertygeneratescashflowslargelyindependentlyoftheotherassetsheldbytheGroup.

Some properties comprise a portion that is held to earn rentals or for capital appreciation and another portion thatisheldforuseintheproductionorsupplyofgoodsorservicesorforadministrativepurposes.TheGroupaccounts 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.

Judgementismadeonanindividualpropertybasistodeterminewhetherancillaryservicesaresosignificantthat 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 basedontheGroup’slatestapprovedbudgetforecast,whichisadjustedforsignificantnon-taxableincomeand expenses and specific limits to the use of any unused tax loss or credit. The tax rules in the numerous jurisdictionsinwhichtheGroupoperatesarealsocarefullytakenintoconsideration.Ifapositiveforecastoftaxable 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.


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3. SIGNIFICANT ACCOUNTING POLICIES

TheGroupandtheCompanyapplythesignificantaccountingpolicies,assummarisedbelow,consistentlythroughoutall 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 whentheGroupisexposed,orhasrights,tovariablereturnsfromitsinvolvementwiththeentityandhastheability to affect those returns through its power over the entity. Potential voting rights are considered when assessingcontrolonlywhensuchrightsaresubstantive.Besides,theGroupconsidersithasde 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

TheGroup’sfinancialstatementsconsolidatetheauditedfinancialstatementsoftheCompanyandallofitssubsidiarycompanies,whichhavebeenpreparedinaccordancewiththeGroup’saccountingpolicies.Amounts reported in the financial statements of subsidiary companies have been adjusted where necessary toensureconsistencywiththeaccountingpoliciesadoptedbytheGroup.ThefinancialstatementsoftheCompany 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.

SubsidiariesareconsolidatedfromthedateonwhichcontrolistransferredtotheGroupandarenolongerconsolidated 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 andnon-controllinginterestsareadjustedtoreflectthechangesintheirrelativeinterestsinthesubsidiarycompany. 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.

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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 ofanynon-controllinginterestintheacquiree.Foreachbusinesscombination,theGroupelectswhetheritmeasures 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.

WhentheGroupacquiresabusiness,itassessesthefinancialassetsandliabilitiesassumedforappropriateclassification 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.

Goodwillisinitiallymeasuredatcost,beingtheexcessoftheaggregateoftheconsiderationtransferredandthe 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 toeachoftheGroup’scash-generatingunitsthatareexpectedtobenefitfromthecombination,irrespectiveof 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 whendeterminingthegainorlossondisposaloftheoperation.Goodwilldisposedofinthiscircumstanceismeasured based on the relative values of the operation disposed of and the portion of the cash-generating unit retained.


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3.1.4 Loss of control

Uponthelossofcontrolofasubsidiarycompany,theGroupderecognisestheassetsandliabilitiesofthesubsidiary 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.

IftheGroupretainsanyinterestintheprevioussubsidiarycompany,thensuchinterestismeasuredatfairvalue at the date that control is lost. Subsequently, it is accounted for as an equity accounted investee or as anavailable-for-salefinancialassetdependingonthelevelofinfluenceretained.

3.1.5 Non-controlling interests

Non-controlling interests at the end of the reporting period, being the equity in a subsidiary company not attributable directly or indirectly to the equity holders of the Company, are presented in the consolidated statement of financial position and statement of changes in equity within equity, separately from equity attributabletotheownersoftheCompany.Non-controllinginterestsintheresultsoftheGroupispresentedin the consolidated profit or loss and other comprehensive income as an allocation of the profit or loss and the comprehensive income for the financial year between non-controlling interests and the owners of the Company.

Losses applicable to the non-controlling interests in a subsidiary are allocated to the non-controlling interests

even if that results in a deficit balance.

3.1.6 Associate company

Anassociatecompany isanentity inwhich theGrouphassignificant influence,butnocontrol,over itsfinancial and operating policies.

TheGroup’sinvestmentinassociatecompanyisaccountedforusingtheequitymethod.Undertheequitymethod, investment in an associate company is carried in the consolidated statement of financial position atcostpluspostacquisitionchangesintheGroup’sshareofnetassetsoftheassociatecompany.Goodwillrelating to the associate company is included in the carrying amount of the investment and is neither amortised nor individually tested for impairment.

Theshareoftheresultofanassociatecompanyisreflectedinprofitorloss.Thisistheprofitattributabletoequity holders of the associate company and therefore is the profit after tax and non-controlling interests in theassociatecompany.WhentheGroup’sshareoflossesexceedsitsinterestinanassociatecompany,thecarrying amount of that interest including any long-term investment is reduced to zero, and the recognition of furtherlossesisdiscontinuedexcepttotheextentthattheGrouphasanobligationorhasmadepaymentson behalf of the associate company.

Where therehasbeena change recogniseddirectly in theequity of anassociate company, theGrouprecognises its share of any changes and discloses this, when applicable, in the consolidated statement of changes in equity.

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3.1.6 Associate company (cont’d)

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 inlinewiththoseoftheGroup.

Afterapplicationoftheequitymethod,theGroupdetermineswhetheritisnecessarytorecogniseanadditionalimpairmentlossontheGroup’sinvestmentinitsassociatecompany.TheGroupdeterminesateachendofthe reporting period whether there is any objective evidence that the investment in the associate company isimpaired.Ifthisisthecase,theGroupcalculatestheamountofimpairmentasthedifferencebetweenthe 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 lossofsignificant influenceoveranassociatecompany, theGroupmeasuresandrecognisesanyretaining investment at its fair value. Any difference between the carrying amount of the associate company uponlossofsignificantinfluenceandthefairvalueoftheretaininginvestmentandproceedsfromdisposalis 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.

3.1.7 Joint venture

A joint venture is a type of joint arrangement whereby the parties who have joint control of the arrangement haverightstothenetassetsofthejointventure.Jointcontroliscontractuallyagreedsharingofcontrolofan arrangement, which exists only when decisions about the relevant activities require unanimous consent of the parties sharing control.

TheGroup’sinterestsinjointly-controlledentitiesareaccountedforintheGroup’sfinancialstatementsusingtheequitymethodfromthedatetheGroupobtainsjointcontroluntilthedatetheGroupceasestohavejointcontrol over the joint venture.

The financial statements of the joint venture are prepared as of the same reporting period as the Company. Wherenecessary,adjustmentsaremadetobringtheaccountingpoliciesinlinewiththoseoftheGroup.

In the Company’s statement of financial position, investment in jointly-controlled entity is stated at cost less impairment losses. On disposal of such investment, the difference between net disposal proceeds and their carrying amount is included in the profit or loss.


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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.

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3.3 Investment properties

Investment properties consist of land and buildings held for capital appreciation or rental purpose and not occupied bytheGrouporonlyaninsignificantportionisoccupiedforuseintheoperationsoftheGroup.Investmentpropertiesare 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.

Subsequenttoinitialrecognition,investmentpropertiesarestatedatfairvalue,whichreflectsmarketconditionsatthereportingdate.Gainsorlossesarisingfromchangesinthefairvaluesofinvestmentpropertiesareincludedinprofit 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 transfersubstantiallyalltherisksandrewardsofownershiptotheGrouparecapitalised.ThedepreciationpolicyontheseassetsissimilartothatoftheGroup’sproperty,plantandequipmentdepreciationpolicy.

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.


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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

LeaseholdlandthatnormallyhasanindefiniteeconomiclifeandtitleisnotexpectedtopasstotheGroupbytheend 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 (2017: 59 to 88 years).

3.6 Foreign currency translation

TheGroup’sconsolidatedfinancialstatementsarepresentedinRM,whichisalsotheparentcompany’sfunctionalcurrency.

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).

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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 March2011(thedatewhentheGroupandtheCompanyfirstadoptedMFRSs)whicharetreatedasassetsand 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. Whenaforeignoperationisdisposedofsuchthatcontrol,significantinfluenceorjointcontrolislost,thecumulative 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.

WhentheGroupdisposesofonlypartofitsinterestinasubsidiarycompanythatincludesaforeignoperation,therelevantproportionofthecumulativeamountisreattributedtonon-controllinginterests.WhentheGroupdisposes of only part of its investment in an associate company or joint venture company that includes a foreignoperationwhileretainingsignificantinfluenceorjointcontrol,therelevantproportionofthecumulativeamount 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 Income tax

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.


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3.7 Income tax (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.

Value-added tax and goods services tax

Value-addedtax(“VAT”)orGoodsandServicesTax(“GST”)areconsumptiontaxbasedonvalue-addedconcept.VATandGSTareimposedongoodsandservicesateveryproductionanddistributionstageinthesupplychainincludingimportationofgoodsandservices,attheratesapplicableinthejurisdictionswheretheGroupoperates.InputtaxonpurchasescanbedeductedfromoutputVAT/GST.

Revenues,expensesandassetsarerecognisednetoftheamountofVAT/GSTexcept:-

- Where the taxes incurred on the purchase of assets or services is not recoverable from the taxation authority, in which case the tax incurred is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable; and

- Receivables and payables that are stated with the amount of taxes included.

ThenetamountofVAT/GSTrecoverablefrom,orpayabletotheauthorityisincludedaspartof“otherreceivables”or “other payables” in the statements of financial position.

3.8 Impairment of financial assets

TheGroupassessesateachreportingdatewhetherthereisanyobjectiveevidenceindicatingthatafinancialassetis impaired.

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

TheGroupconsidersfactorssuchastheprobabilityofinsolvencyorsignificantfinancialdifficultiesofthedebtorand default or significant delay in payments to determine whether there is objective evidence that an impairment loss has occurred. For certain categories of financial assets, such as trade receivables, assets that are assessed not to be impaired individually are subsequently assessed for impairment on a collective basis based on similar riskcharacteristics.ObjectiveevidenceofimpairmentforaportfolioofreceivablescouldincludetheGroup’spastexperience with industry group, increase in cases of delayed payments and observable changes in economic conditions.

If such evidence exists, the amount of impairment loss is measured as the difference between the asset’s carrying amountandthepresentvalueofestimatedfuturecashflowsdiscountedatthefinancialasset’soriginaleffectiveinterest rate and the loss is recognised in profit or loss.

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3.8 Impairment of financial assets (cont’d)

Trade and other receivables and other financial assets carried at amortised cost (cont’d)

The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception of receivables, where the carrying amount is reduced through the use of an allowance account. When a receivable becomes uncollectible, it is written off against the allowance account.

If in a subsequent period, the amount of the impairment loss decreases and the decrease related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed to the extent that the carrying amount of the asset does not exceed its amortised cost at the reversal date. The amount of reversal is recognised in profit or loss.

3.9 Impairment of non-financial assets

Ateachreportingdate,theGroupreviewsthecarryingamountsofnon-financialassetstodeterminewhetherthereis any indication of impairment.

If any such indication exists, or when annual impairment testing for an asset is required, the recoverable amount is estimated and an impairment loss is recognised whenever the recoverable amount of the asset or a cash-generating unit is less than its carrying amount. Recoverable amount of an asset or a cash-generating unit is the higher of its fair value less costs to sell and its value in use.

Inassessingvalueinuse,estimatedfuturecashflowsarediscountedtopresentvalueusingapre-taxdiscountratethatreflectscurrentmarketassessmentsofthetimevalueofmoneyandtherisksspecifictotheasset.Impairmentlosses of continuing operations are recognised in profit or loss in those expense categories consistent with the function of the impaired asset.

An impairment loss is recognised as an expense in profit or loss immediately, unless the asset is carried at a revalued amount. Any impairment loss of a revalued asset is treated as a revaluation decrease to the extent of previously recognised revaluation surplus for the same asset.

An assessment is made at each reporting date as to whether there is any indication that previously recognised impairment losses for an asset other than goodwill may no longer exist or may have decreased. If such indication exists, the recoverable amount is estimated. A previously recognised impairment loss is reversed only if there has been a change in the estimates used to determine the asset’s recoverable amount. That increased amount cannot exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised for the asset in prior years.

All reversals of impairment losses are recognised as income immediately in profit or loss unless the asset is carried at revalued amount, in which case, the reversal in excess of impairment loss previously recognised through profit or loss is treated as revaluation increase. After such a reversal, depreciation charge is adjusted in future periods to allocate the revised carrying amount of the asset, less any residual value, on a systematic basis over its remaining useful life.


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3.10 Financial assets

Financialassetsarerecognisedinthestatementsoffinancialpositionwhen,andonlywhen,theGroupbecomesa party to the contractual provisions of the financial instrument and they are derecognised when the contractual rightstothecashflowsfromthefinancialassetexpire,orwhenthefinancialassetandallsubstantialrisksandrewards are transferred.

Financial assets are measured initially at fair value plus transactions costs, except for financial assets carried at fair value through profit or loss, which are measured initially at fair value. Financial assets are subsequently measured as described below.

For the purpose of subsequent measurement, financial assets other than those designated and effective as hedging instruments are classified into the following categories upon initial recognition:-

a) Loans and receivablesb) Financial assets at fair value through profit or lossc) Held to maturity investmentsd) Available-for-sale financial assets

The category mentioned above determines subsequent measurement of a financial asset and whether any resulting income and expense is recognised in profit or loss or in statement of comprehensive income. All financial assets except for those at fair value through profit or loss are subject to review for impairment at least once at each reporting date. Financial assets are impaired when there is any objective evidence that a financial asset or a group of financial assets is impaired. Different criteria are applied to determine impairment for each category of financial assets, as described in Note 3.8.

All income and expenses relating to financial assets are recognised in profit or loss.

Otherthanloansandreceivables,theGroupdoesnothavefinancialassetsatfairvaluethroughprofitorloss,heldto maturity investments and available-for-sale financial assets.

Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market and they are measured at amortised cost using effective interest method, less provision for impairment subsequently. Discounting is omitted where the effect of discounting is immaterial in subsequent measurement. Cash and cash equivalents, amount due from an associate company, trade and most other receivables oftheGroupandoftheCompanyarefallintothiscategoryoffinancialinstruments.

Loans and receivables are classified as current assets and those that mature 12 months after the reporting date are classified as non-current.

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3.11 Financial liabilities

FinancialliabilitiesarerecognisedwhentheGroupbecomesapartytothecontractualprovisionsofthefinancialinstrument. Financial liability is derecognised when it is extinguished, discharged, cancelled or expires.

Financial liabilities are measured initially at fair value plus transactions costs, except for financial liabilities carried at fair value through profit or loss, which are measured initially at fair value. Subsequently, they are measured at amortised cost using the effective interest method except for financial liabilities held for trading or designated at fair value through profit or loss, that are carried subsequently at fair value with gains or losses recognised in profit or loss.

All derivative financial instruments which are not designated and effective as hedging instruments are accounted for at fair value through profit or loss.

TheGroup’sfinancialliabilitiesincludeborrowings,financeleasecreditors,amountduetoanassociatecompany,trade and other payables.

3.12 Revenue recognition

RevenueisrecognisedtotheextentthatitisprobablethattheeconomicbenefitswillflowtotheGroupandtherevenue can be reliably measured. Revenue is measured at the fair value of consideration received or receivable.

Revenue from sale of goods is recognised upon the transfer of significant risk and rewards of ownership of the goods to the customer. Revenue is not recognised to the extent where there are significant uncertainties regarding recovery of the consideration due, associated costs or the possible return of goods.

Rental income is recognised when the rent is due.

Interest income is accounted for on accrual basis.

DividendincomeisrecognisedwhentheGroup’srighttoreceivepaymentisestablished.

Salesandinter-companytransactionsbetweencompaniesoftheGroupareexcludedfromrevenueoftheGroup.

3.13 Interest-bearing borrowings

Interest-bearing borrowings are recorded at the amount of proceeds received, net of transaction costs incurred. Borrowing costs are recognised as an expense in profit or loss in the period in which they are incurred. However, borrowing costs incurred to finance the construction of property, plant and equipment are capitalised as part of the cost of those assets during the period of time that is required to complete and prepare the assets for its intended use.


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3.14 Employee benefits

(a) Short term benefits

Wages, salaries, bonuses and social security contributions are recognised as an expense in the financial year, in whichtheassociatedservicesarerenderedbyemployeesoftheGroup.Shorttermaccumulatingcompensatedabsences 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

Definedcontributionplansarepost-employmentbenefitplansunderwhichtheGrouppaysfixedcontributionsinto 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 inMalaysiamakesuchcontributionstotheEmployeesProvidentFund(“EPF”).SomeoftheGroup’sforeignsubsidiaries also make contributions to their respective countries’ statutory pension schemes.

3.15 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-settledshare-basedtransactionsaresetoutinNote36totheFinancialStatements.

The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basisoverthevestingperiod,basedontheGroup’sestimateofequityinstrumentsthatwilleventuallyvest,withacorrespondingincreaseinequity.Attheendofeachreportingperiod,theGrouprevisesitsestimateofthenumberof equity instruments expected to vest. The impact of the revision of the original estimates, if any, is recognised in profitorlosssuchthatthecumulativeexpensereflectstherevisedestimate,withacorrespondingadjustmenttothe equity-settled employee benefits reserve.

The policy described above is applied to all equity-settled share-based payment transactions that were granted after31December2004andvestedafter1January2006.Noamountshavebeenrecognisedintheconsolidatedfinancial 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.

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3.15 Share-based payment transactions (cont’d)

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’sshare-basedpaymentawards(replacementawards),boththeacquireeawardsandthereplacementawardsare 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,whentheacquireeawardsexpireasaconsequenceofabusinesscombinationandtheGroupreplaces

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.

At the acquisition date, when the outstanding equity-settled share-based payment transactions held by the employeesofanacquireearenotexchangedbytheGroupforitsshare-basedpaymenttransactions,theacquireeshare-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.

3.16 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.


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3.17 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.IfthedebtorfailstomakepaymentrelatingtofinancialguaranteecontractwhenitisdueandtheGroup,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.

3.18 Provisions

Provisions are recognised when there is a present legal or constructive obligation that can be estimated reliably, asaresultofapastevent,whenitisprobablethatanoutflowofresourcesembodyingeconomicbenefitswillberequired 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.

AnyreimbursementthattheGroupcanbevirtuallycertaintocollectfromathirdpartywithrespecttotheobligationis recognised as a separate asset. However, this asset may not exceed the amount of the related provision.

Provisionsarereviewedateachreportingdateandadjustedtoreflectthecurrentbestestimate.Ifitisnolongerprobablethatanoutflowofeconomicresourceswillberequiredtosettletheobligation,theprovisionisreversed.Where the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects,whereappropriate,therisksspecifictotheliability.Whendiscountingisused,theincreaseintheprovisionsdue to the passage of time is recognised as a finance cost.

3.19 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.

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3.20 Equity and reserves

AnequityinstrumentisanycontractthatevidencesaresidualinterestintheassetsoftheGroupandtheCompanyafter deducting all of their liabilities. Ordinary shares are equity instruments.

PriortoCompaniesAct,2016whichcameintooperationon31January2017,sharepremiumincludesanypremiums

received on issue of share capital. Any transaction costs associated with the issuing of shares are deducted from sharepremium,netofanyrelated incometaxbenefits.Effectiveon31January2017andsubsequentperiod,transaction costs associated with the issuing of shares are deducted against equity.

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

ForeigncurrencytranslationdifferencesarisingonthetranslationoftheGroup’sforeignentitiesareincludedintheexchange translation reserve.

Gainsandlossesoncertainfinancialinstrumentsareincludedinreserveforcash-flowhedges.

Unappropriated profits include all current and prior period unappropriated profits.

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

3.21 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.

3.22 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.


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3.23 Goodwill/Negative goodwill

Goodwill/(Negativegoodwill)representstheexcess/(deficit)ofthecostofacquisitionofsubsidiarycompanyacquiredovertheGroup’sshareofthefairvaluesoftheirseparablenetassetsatthedateofacquisition.

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.

3.24 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.Itcanalsobeapresentobligationarisingfrompasteventsthatisnotrecognisedbecauseitisnotprobablethatanoutflowofeconomicresourceswillberequiredortheamountofobligationcannotbemeasuredreliably.

3.25 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.

3.26 Earnings per Share

TheGrouppresentsbasicanddilutedearningspershare(“EPS”)dataforitsordinaryshares.

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.

3.27 Related parties

ArelatedpartyisapersonorentitythatisrelatedtotheGroup.Arelatedpartytransactionisatransferofresources,servicesorobligationsbetweentheGroupanditsrelatedparty,regardlessofwhetherapriceischarged.

(a) Apersonoraclosememberofthatperson’sfamilyisrelatedtotheGroupifthatperson:-

(i) HascontrolorjointcontrolovertheGroup;(ii) HassignificantinfluenceovertheGroup;or(iii) IsamemberofthekeymanagementpersonneloftheGroup.

ANNUAL REPORT 2018

95



3.27 Related parties (cont’d)

(b) AnentityisrelatedtotheGroupifanyofthefollowingconditionsapplies:-

(i) TheentityandtheGrouparemembersofthesamegroup.(ii) TheentityisanassociateorjointventureoftheGroup.(iii) TheGroupandtheentityarejointventuresofthesamethirdparty.(iv) TheGroupisajointventureofathirdentityandtheotherentityisanassociateofthesamethirdentity.(v) Theentityisapost-employmentbenefitplanforthebenefitsofemployeesofeithertheGrouporan

entityrelatedtotheGroup.(vi) The entity is controlled or jointly-controlled by a person identified in (a) above.(vii) Apersonidentifiedin(a)(i)abovehassignificantinfluenceovertheentityorisamemberofthekey

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

servicestotheGroup.

3.28 Operating segments

AnoperatingsegmentisacomponentoftheGroupthatengagesinbusinessactivitiesfromwhichitmayearnrevenuesandincurexpenses,includingrevenueandexpensesthatrelatetotransactionswithanyoftheGroup’sother 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.

3.29 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 designatedashedginginstrument,andifso,thenatureoftheitembeinghedged.TheGroupdesignatescertainderivatives as follows:-

Derivative financial instruments

TheGroupholdsderivativefinancialinstrumentstohedgeitsforeigncurrencyexposures.

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.


96



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

Cash flow hedge

Acashflowhedgeisahedgeofexposuretovariabilityincashflowsthatisattributabletoaparticularriskassociatedwith a recognised asset or liability or a highly probable forecast transaction and could affect the profit or loss. In acashflowhedge,theportionofthegainorlossonthehedginginstrumentthatisdeterminedtobeaneffectivehedge 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 intoprofitorlossinthesameperiodorperiodsduringwhichthehedgeforecastcashflowsaffectprofitorloss.Ifthe 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 prospectivelywhen 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.

3.30 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 andothercoststhatGroupandtheCompanyincurredinconnectionwiththeborrowingoffunds.

3.31 Government grant

GovernmentgrantsarerecognisedatfairvaluewhenthereisreasonableassurancethattheGroupandtheCompanywill comply with the conditions attaching to them and the grants will be received.

Governmentgrantsrelatingtoexpenditureonproperty,plantandequipmentarecreditedtoprofitorlossonthestraight-linebasisovertheexpectedlivesoftherelatedproperty,plantandequipment.Governmentgrantsusedforfinancialsupport,assistanceortoreimbursecostsincurredbytheGroupandtheCompanyarerecognisedinprofit or loss of the period in which they become receivable.

ANNUAL REPORT 2018

97


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ANNUAL REPORT 2018

99


4. PROPERTY, PLANT AND EQUIPMENT (CONT’D)

On31December2015andon28February2016,theDirectorsrevaluedalltheabovefreeholdlandandbuildingsbasedonprofessionalrevaluationsmadebySr.LoKinWeng,BSc.(Hons)EstateMgt.MRICS,MRISMandRegisteredValuer(V917)ofCHWilliamsTalhar&WongSdn.Bhd.andSteveSmithB.Sc.(Hons)MRICSMNAVAandRICSRegisteredValuerof Ernest Hawk Chartered Surveyors respectively. Both are independent professional valuers having recent experience in the location and category of properties being valued. All the above 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 February2016.

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.

Atthereportingdate,hadtherevaluedfreeholdlandandbuildingsoftheGroupbeencarriedunderthecostmodel,thenet carrying amount would have been as follows:-

Freehold land Buildings Total RM RM RM

2018Cost 16,181,219 104,250,745 120,431,964Accumulated depreciation – (21,179,971) (21,179,971)

Netcarryingamount 16,181,219 83,070,774 99,251,993

2017Cost 16,181,219 106,030,735 122,211,954Accumulateddepreciation – (19,447,350) (19,447,350)

Netcarryingamount 16,181,219 86,583,385 102,764,604

Thenetcarryingamountofproperty,plantandequipmentoftheGroupwhichareacquiredunderfinanceleasearrangementsamountedtoRM11,726,099(2017:RM6,893,592).


100


5. PREPAID LAND LEASE PAYMENTS

Group 2018 2017 RM RM

Leasehold land:-

CostAt1March 36,073,234 28,630,137Addition – 7,212,055Transferredfromotherreceivables – 231,042

At28February 36,073,234 36,073,234

Accumulated amortisationAt1March 2,357,375 1,786,399Chargeforthefinancialyear 582,043 570,976 At28February 2,939,418 2,357,375

Net carrying amount 33,133,816 33,715,859

Amount to be amortised

-Notlaterthanoneyear 582,043 570,976-Laterthanoneyearbutnotlaterthanfiveyears 2,328,172 2,283,904-Laterthanfiveyears 30,223,601 30,860,979

33,133,816 33,715,859

The prepaid land lease payments are amortised over the leasehold period of 59 to 88 (2017: 59 to 88) years.

ANNUAL REPORT 2018

101


6. CAPITAL WORK-IN-PROGRESS

Group Crane, machinery, equipment, furniture and fittings, renovation and Buildings electrical installation Total RM RM RM

Balanceasat1March2016 10,110,984 149,550 10,260,534Addition 12,687,650 15,962,656 28,650,306Transferredfromotherreceivables – 710,623 710,623Transferredtoproperty,plantandequipment (10,894,397) (161,450) (11,055,847) Balanceasat28February2017 11,904,237 16,661,379 28,565,616Addition 3,568,132 792,698 4,360,830Transferredtoproperty,plantandequipment (11,981,311) (17,130,388) (29,111,699)

Balanceasat28February2018 3,491,058 323,689 3,814,747

Thecarryingamountofcapitalwork-in-progressoftheGroupincludesRM61,584(2017:RM211,914)oftermloaninterestcapitalised during the financial year.

7. INVESTMENT PROPERTIES

Freehold land Leasehold Total land and and shophouse land Buildings buildings building Total RM RM RM RM RM

GroupAt fair value:-

At1March2016 2,600,000 3,400,000 6,000,000 500,000 6,500,000Fair value gain adjustment on investment properties – – – 100,000 100,000

At 28 February 2017 and 28February2018 2,600,000 3,400,000 6,000,000 600,000 6,600,000

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.


102


8. SUBSIDIARY COMPANIES

(a) Investment in subsidiary companies

Company 2018 2017 RM RM

Unquoted shares - At cost:-

Atbeginningoffinancialyear 235,294,458 225,094,509 Additionalinvestmentsmade 9,566,000 10,199,949 Atendoffinancialyear 244,860,458 235,294,458

The particulars of the subsidiary companies are as follows:-

Name of companyPlace of

incorporationEffective

equity interest Principal activities

2018%

2017%

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 relatedproducts 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, property investment and insurance agency.

1.2 Pantech(Kuantan) Sdn. Bhd.

Malaysia 100 100 Trading and supply of high pressure seamless andspecialisedsteelpipes,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.

ANNUAL REPORT 2018

103


8. SUBSIDIARY COMPANIES (CONT’D)

(a) Investment in subsidiary companies (cont’d)

The particulars of the subsidiary companies are as follows (cont’d):-




2018%

2017%

3. PanafloControls Pte. Ltd.#

Singapore 100 100 Supplier of flowcontrol solutions such asvalves, actuators and controls for the oil and gas, petrochemicals, water treatment and other related industries and trading of specialised steel pipes and related products.

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 NauticSteels 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. PantechGalvanising Sdn. Bhd.

Malaysia 100 51 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.

#NotauditedbyGrantThorntonMalaysia.

(b) Amount due from subsidiary companies

The amount due from subsidiary companies is non-trade in-nature, bears no interest and repayable upon demand.

The amount due from subsidiary companies is denominated in Ringgit Malaysia.


104


9. ASSOCIATE COMPANY

(a) Investment in an associate company


Unquoted shares - at cost 288,717 288,717

Share of post acquisition profit-Atbeginningoffinancialyear 2,431,920 2,390,495-Shareofpostacquisition(loss)/profitduringthefinancialyear (211,972) 41,425

-Atendoffinancialyear 2,219,948 2,431,920

Less:Dividendreceived(cumulative) (445,500) (445,500)

2,063,165 2,275,137

Represented by:-Shareofnetassets 2,063,165 2,275,137

Summarised financial information of associate company is as follows:-


Assets and liabilitiesCurrentassets 9,378,120 14,341,284Non-currentassets 2,638,311 2,962,002

Totalassets 12,016,431 17,303,286

Currentliabilities 6,833,438 11,574,582Non-currentliabilities 25,077 40,859

Totalliabilities 6,858,515 11,615,441

ResultsRevenue 20,955,402 29,129,560(Loss)/Profitforthefinancialyear (529,929) 103,563

ThereisnoshareofcommitmentsandcontingentliabilitiesfromtheassociatecompanytotheGroup.

ANNUAL REPORT 2018

105


9. ASSOCIATE COMPANY (CONT’D)

(a) Investment in an associate company (cont’d)

The particulars of the associate company are as follows:-




2018%

2017%

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 balances are unhedged):-


RinggitMalaysia 6,657,833 11,037,949USDollar – 5,486

6,657,833 11,043,435

The amount due to an associate company is denominated in Ringgit Malaysia.


106


10. JOINT VENTURE COMPANY

(a) Investment in a joint venture company


Unquoted shares - at costAtbeginningoffinancialyear – 160,440Disposal – (211,966)Currencytranslationdifference – 51,526

At end of financial year – –

Share of post acquisition profit-Atbeginningoffinancialyear – 636,464-Shareofpostacquisitionlossduringthefinancialyear – (11,049)-Disposal – (583,176)-Currencytranslationdifference – (42,239)

- At end of financial year – –

– –

Represented by:-Share of net assets – –

Inthepreviousfinancialyear,theGroupdisposeditsentire70%equityinterestinthejointventurecompanytoanother shareholder for the sale consideration of RM850,892.

ANNUAL REPORT 2018

107


10. JOINT VENTURE COMPANY (CONT’D)

(a) Investment in a joint venture company (cont’d)

Summarised financial information of joint venture company is as follows:-


Assets and liabilitiesCurrent assets – –Non-current assets – –

Total assets – –

Current liabilities – –Non-current liabilities – – Total liabilities – –

ResultsRevenue – 118,705Lossforthefinancialyear – (15,784)

The joint venture company had no capital commitment and contingent liabilities as at 28 February 2017.

The particulars of the joint venture company are as follows:-




2018%

2017%

JCFlowControls Pte. Ltd. *#

Singapore – – SalesanddistributionofJCproductssuchasBall,Gate,GlobeandCheckvalves forSouth East Asian markets.

* HeldthroughPanafloControlsPte.Ltd.# NotauditedbyGrantThorntonMalaysia.


108


11. GOODWILL ON ACQUISITION

Group 2018 2017 RM RM At cost and at net carrying amount:-Atbeginningoffinancialyear 1,213,677 1,282,166Currencytranslationdifference (15,589) (68,489)

Atendoffinancialyear 1,198,088 1,213,677

The goodwill arise from the acquisition of a new subsidiary company on 7 March 2012.

Impairment tests for goodwill

(a) Allocation of goodwill

Forthepurposeofimpairmenttesting,goodwillisallocatedtotheGroup’scashgeneratingunits(“CGU”)identifiedas follows:-


Subsidiary company NauticSteels(Holdings)Limited 1,198,088 1,213,677

1,198,088 1,213,677

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 2017 and 28 February 2018.

ANNUAL REPORT 2018

109


11. GOODWILL ON ACQUISITION (CONT’D)

Impairment tests for goodwill (cont’d)

(b) Key assumptions used in value-in-use calculations

TherecoverableamountofaCGUisdeterminedbasedonvalue-in-usecalculationsusingcashflowprojectionsbasedon financial budgets approvedbymanagement covering a period of one year.Key assumptions andmanagement’s approach to determine the values assigned to each key assumption are as follows:-

(i) Budgeted gross profit margin

Thebasisusedtodeterminethevalueassignedtothebudgetedgrossprofitmarginof22%(2017:16%)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 17% (2017: 15%) 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

Apre-taxdiscountrateof3%(2017:3%)isapplied.Thediscountratereflectsspecificrisksrelatingtotherelevant 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.


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12. DERIVATIVES FINANCIAL INSTRUMENTS

Hedging activities – Cash flow hedges

Cross currency swap

Contract/ Notional amount Assets Liabilities NetGroup RM RM RM RMAsset 2018Hedging derivatives:- Cashflowhedges-Crosscurrencyswap 7,759,837 7,759,837 6,512,213 1,247,624

Non-hedging derivatives:- Forwardcurrencycontracts 787,260 787,260 782,860 4,400

8,547,097 8,547,097 7,295,073 1,252,024

2017Hedging derivatives:- Cashflowhedges-Crosscurrencyswap 23,295,538 23,295,538 18,675,878 4,619,660

2018 2017 RM RM

Analysed as:- -Within1year 627,258 1,343,786 -Morethan1yearbutlessthan5years 624,766 3,275,874

1,252,024 4,619,660

Liability2018Hedging derivatives:- Cashflowhedges-Crosscurrencyswap 6,666,097 6,562,740 6,666,097 (103,357)

2017Hedging derivatives:- Cashflowhedges-Crosscurrencyswap 704,918 605,652 704,918 (99,266)

2018 2017 RM RM

Analysed as:- -Wihin1year (48,018) (99,266) - More than 1 year but less than 5 years (55,339) –

(103,357) (99,266)

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12. DERIVATIVES FINANCIAL INSTRUMENTS (CONT’D)

Hedging activities – Cash flow hedges (cont’d)

Cross currency swap (cont’d)

Contract/ Notional amount Assets Liabilities NetCompany RM RM RM RMAsset2018Hedging derivatives:- Cashflowhedges-Crosscurrencyswap – – – –

2017 Hedging derivatives:- Cashflowhedges-Crosscurrencyswap 9,852,129 9,852,129 8,843,602 1,008,527

2018 2017 RM RM

Analysed as:- - Within 1 year – 177,098 -Morethan1yearbutlessthan5years – 831,429

– 1,008,527

Liability2018Hedging derivatives:- Cashflowhedges-Crosscurrencyswap 6,666,097 6,562,740 6,666,097 (103,357)

2017 Hedging derivatives:- Cashflowhedges-Crosscurrencyswap 704,918 605,652 704,918 (99,266)

2018 2017 RM RM

Analysed as:- -Wihin1year (48,018) (99,266) - More than 1 year but less than 5 years (55,339) –

(103,357) (99,266)

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.


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12. DERIVATIVES FINANCIAL INSTRUMENTS (CONT’D)

Hedging activities – Cash flow hedges (cont’d)

Cross currency swap (cont’d)

TheGroupandtheCompanyheldcrosscurrencyswapcontractsdesignatedashedgesofcashflowcurrencyriskforcertain borrowings.

The terms of the cross currency swap contracts have been negotiated to match the terms of the borrowings.

Thefollowingtableindicatestheperiodsinwhichthecashflowsassociatedwiththecrosscurrencyswapareexpectedto 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 RM2018 Crosscurrencyswap 13,266,000 14,112,734 5,881,638 8,231,096 –

2017 Crosscurrencyswap 19,874,000 20,610,033 7,096,097 13,513,936 –

Company 2018 Crosscurrencyswap 6,630,000 7,227,295 2,341,814 4,885,481 –

2017 Crosscurrencyswap 9,920,000 9,998,169 3,368,169 6,630,000 –

ThecashflowhedgesoftheborrowingswereassessedtobehighlyeffectiveandanetunrealisedlossofRM3,376,127andnetunrealisedlossofRM1,012,618(2017:gainofRM1,258,376andgainofRM1,636,713)oftheGroupandofthe 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

TheGroupusesforwardcurrencycontractstomanagesomeofthetransactionexposure.Tradingderivativesareclassifiedas 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.

Thesecontractsarenotdesignatedascashfloworfairvaluehedgesandareenteredintoforperiodsconsistentwithcurrency transaction exposure and fair value changes exposure. Such derivatives do not qualify for hedge accounting.

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13. DEFERRED TAX ASSETS


Atbeginningoffinancialyear 927,225 1,413,087 – –Transferredfrom/(to)profitorloss(Note33) 924,138 (485,862) – –

Atendoffinancialyear 1,851,363 927,225 – –

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 taxbase (644,000) (787,138) – –Inventorieswrittendown 1,190,000 1,016,000 – –Allowanceforimpairmentofreceivables 1,292,000 685,000 – –Revaluationofbuildings 13,363 13,363 – – 1,851,363 927,225 – –

The following temporary differences have not been recognised in the financial statements:-


Carrying amount of qualifying property, plant and equipment inexcessoftheirtaxbase (43,303,042) (44,739,681)Inventorieswrittendown 562,990 366,205Unabsorbedbusinesslosses 14,725,077 13,079,022Unabsorbed value of increased exports incentive 9,577,000 9,577,000Unutilisedleaveentitlement 761 –Unutilisedcapitalallowances 33,139,862 45,798,483Allowance for impairment of receivables 71,000 –

14,773,648 24,081,029

The unabsorbed business losses, unabsorbed value of increased exports incentive and unutilised capital allowances are available indefinitely 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 ofothersubsidiarycompaniesintheGroupandtheyhaveariseninsubsidiarycompaniesthathavearecenthistoryoflosses.


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14. INVENTORIES


Rawmaterials 36,317,128 41,776,450Work-in-progress 20,315,587 19,416,286Finishedgoods 219,461,641 201,233,555

Totalinventories 276,094,356 262,426,291

Recognised in profit or loss:- Inventoriesrecognisedincostofsales 403,051,453 332,663,103 Inventorieswrittendown 1,155,136 622,503 Reversal of inventories written down (199,057) (110,259)

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


Tradereceivables 153,340,733 140,107,735Less:Allowanceforimpairmentoftradereceivables (8,447,469) (6,715,191)

144,893,264 133,392,544

Movement in allowance for impairment of trade receivables:-


At1March (6,715,191) (6,615,863)Chargeforthefinancialyear (4,130,429) (4,011,565)Reversal of impairment -paymentreceived 1,974,697 3,922,073-writeoffagainstallowanceforimpairment 365,443 –Currencytranslationdifference 58,011 (9,836) At28February (8,447,469) (6,715,191)

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15. TRADE RECEIVABLES (CONT’D)

The currency exposure profile of the trade receivables is as follows (foreign currency balances are unhedged):-


RinggitMalaysia 93,699,089 78,174,437USDollar 49,943,911 47,468,514SingaporeDollar 2,491,876 5,518,470GreatBritainPoundSterling 7,186,518 8,890,794EURO 19,339 55,520

153,340,733 140,107,735

Trade receivables comprise amounts receivable from sales of goods. The credit terms granted on sales of goods ranged from 7 days to 90 days (2017: 7 days to 90 days). Allowance has been made for estimated irrecoverable of trade receivablesbasedonthedefaultexperienceoftheGroup.

16. OTHER RECEIVABLES


Non-tradereceivables 183,345 92,317 – –Advancepaymenttosuppliers 15,144,967 6,093,292 – –Deposit for purchase of property, plantandequipment 356,679 1,370,613 – –Deposits 589,538 644,421 46,655 46,655Prepaymentofexpenses 2,065,433 1,969,606 4,654 4,997GSTreceivable 2,247,120 4,466,965 – –

20,587,082 14,637,214 51,309 51,652

The currency exposure profile of the other receivables is as follows (foreign currency balances are unhedged):-


RinggitMalaysia 4,146,655 6,629,010 51,309 51,652USDollar 15,018,554 7,154,926 – –GreatBritainPoundSterling 938,569 445,348 – –EURO 206,217 – – –SingaporeDollar 277,087 407,930 – –

20,587,082 14,637,214 51,309 51,652


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17. FIXED DEPOSITS WITH LICENSED BANKS


Current 2,476,995 2,436,327 – –

ThefixeddepositswithlicensedbanksoftheGroupareonfixedratebasisandwillmaturewithin1monthto6months(2017: 1 month to 12 months) period.

The effective interest rates on fixed deposits with licensed banks ranged from 2.00% to 3.10% (2017: 2.35% to 3.30%) per annum.

All fixed deposits with licensed banks are denominated in Ringgit Malaysia.

18. CASH AND BANK BALANCES

The currency exposure profile of the cash and bank balances is as follows (foreign currency balances are unhedged):-


RinggitMalaysia 39,205,725 46,986,453 2,084,648 2,266,138USDollar 16,225,269 31,931,702 – –EURO 41,508 105,378 – –SingaporeDollar 3,648,107 2,243,653 – –GreatBritainPoundSterling 8,625,425 7,888,990 222,933 727,137

67,746,034 89,156,176 2,307,581 2,993,275

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19. SHARE CAPITAL AND SHARE PREMIUM

Share capital

2018 2018 2017 2017 Unit RM Unit RM

Group and Company Issued and fully paid-up:- Ordinary shares Atbeginningoffinancialyear 739,595,856 203,928,587 616,471,480 123,294,296 Issued during the financial year -Exerciseofwarrants 1,104,268 672,542 – – -PursuanttoexerciseofESOS 5,694,600 2,942,600 – – -Pursuanttoissuanceofbonusshares – – 123,124,376 24,624,875TransferpursuanttoSection618(2)ofthe CompaniesAct,2016 – – – 56,009,416

Atendoffinancialyear 746,394,724 207,543,729 739,595,856 203,928,587

New ordinary shares issued during the financial year ranked pari passu in all respect with the existing ordinary shares of the Company.

ThenewCompaniesAct,2016(“theAct”),whichcameintooperationon31January2017,abolishedtheconceptofauthorised share capital and par value of share capital.

Share premium

Group and Company 2018 2017 RM RM At1March – 80,634,291Pursuanttoissuanceofbonusshares – (24,624,875)TransferpursuanttoSection618(2)oftheCompaniesAct,2016 – (56,009,416)

At 28 February – –

In the previous financial year, in line with the abolishment of the concept of authorised share capital and par value of sharecapital,theamountstandingtothecreditofthesharepremiumaccountofRM56,009,416becamepartoftheGroup’sandtheCompany’ssharecapitalpursuanttothetransitionalprovisionssetoutinSection618(2)oftheAct.Notwithstandingthisprovision,theCompanymaywithin24monthsfromthecommencementoftheAct,usetheamountstandingtothecreditofitssharepremiumaccountofRM56,009,416forpurposesassetoutinSection618(3)oftheAct. 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.


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20. TREASURY SHARES

Group and Company

TheshareholdersoftheCompany,throughtheAnnualGeneralMeetingheldon21August2008,approvedtheCompany’splan to repurchase up to 10% of the issued and paid-up share capital of the Company (“Share Buy Back”). The authority grantedbytheshareholderswassubsequentlyrenewedineveryAnnualGeneralMeetingheldanditwaslastrenewedintheAnnualGeneralMeetingheldon26July2017.TheDirectorsoftheCompanyarecommittedtoenhancingthevalue 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 has distributed a share dividend via distribution of treasury shares on the basis of 1 treasury share for every 100existingordinarysharesinrespectofthefinancialyearended29February2016andpaidon18August2016.

TheCompanyrepurchased450,000(2017:2,269,300)ordinarysharesofitsissuedsharecapitalfromtheopenmarket.The average price paid for the repurchased shares was RM0.57 (2017: RM0.59) per share. The repurchased transactions were financed by internally generated funds. These repurchased shares were held as treasury shares and treated in accordancewiththerequirementsofSection127oftheCompaniesAct,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.

Asatthefinancialyearend,theCompanyheld1,391,924(2017:941,924)oftheCompany’ssharesandthenumberofoutstandingsharesinissueaftersettingtreasurysharesoffagainstequityare745,002,800(2017:738,653,932).

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

Thecashflowhedgereservecontainstheeffectiveportionofthegainorlossonhedginginstrumentsincashflowhedgesand is not available for distribution as dividends.

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24. WARRANTS RESERVE

Group and Company

Warrant A Warrant B 2010/2020 2016/2021 Total RM RM RM At1March2016 7,481,637 – 7,481,637Issuedofwarrant – 7,387,400 7,387,400 At28February2017 7,481,637 7,387,400 14,869,037Exerciseofwarrant (27,507) (92,902) (120,409) At28February2018 7,454,130 7,294,498 14,748,628

(a) Warrants 2010/2020 (“Warrant A”)

On22December2010, theCompany issued748,410,400 IrredeemableConvertibleUnsecuredLoanStocks(“ICULS”)atthenominalvalueofRM0.10,togetherwith74,841,040freedetachablewarrantstotheholdersofthe 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 RM0.58Conversionprice RM0.60Volatilityrate 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 RM0.60pershareorsuchadjustedpriceinaccordancewiththeprovisionsintheDeedPoll.Thewarrantswerelisted on the Bursa Malaysia Securities Berhad on 27 December 2010.

On22December2016,theCompanycompletedaBonusIssueofShares.PursuanttothisBonusIssueofShares,theexercisepriceofWarrantAofRM0.60isadjustedtoRM0.50andatotalof14,963,269additionalWarrantAisissued,listedandquotedontheMainMarketofBursaMalaysiaSecuritiesBerhadon22December2016.

During the financial year, a total of 330,088 units of Warrants A were exercised and converted to ordinary shares.

Asatthereportingdate,89,449,551(2017:89,779,639)WarrantAremainedunexcercised.


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24. WARRANTS RESERVE (CONT’D)

(b) Warrants 2016/2021 (“Warrant B”)

On22December2016,theCompanyissued61,561,667freewarrantsonthebasisofone(1)WarrantBforeveryten (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-dayvolumeweightedaveragepriceofPantechshareat2December2016 RM0.534Conversion price RM0.50Volatilityrate 28.805%

Each warrant entitles the registered holder of warrant to subscribe for one new ordinary share in the Company at anytimeonorafter22December2016uptothedateofexpiryonthe21December2021,atanexercisepriceofRM0.50 per share or such adjusted price in accordance with the provisions in the Deed Poll. The warrants were listedontheBursaMalaysiaSecuritiesBerhadon29December2016.

Duringthefinancialyear,atotalof774,180unitsofWarrantsBwereexercisedandconvertedtoordinaryshares.

Asatthereportingdate,60,787,487(2017:61,561,667)WarrantBremainedunexercised.

25. UNAPPROPRIATED PROFIT

Effectivefrom1January2014,theCompanyisrequiredbytheIncomeTaxAct1967topaydividendundersingletierincome tax system. As such, the Company may frank the payment of dividends out of its entire unappropriated profit.

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26. FINANCE LEASE CREDITORS


Minimum lease payment -within1year 3,069,879 2,379,208-after1yearbutnotlaterthan5years 6,569,731 2,475,795

9,639,610 4,855,003Less:Interestinsuspense (895,456) (297,721)

8,744,154 4,557,282

Total principal sum payable -within1year 2,672,480 2,166,244-after1yearbutnotlaterthan5years 6,071,674 2,391,038

8,744,154 4,557,282

Theinterestratesonthefinanceleaserangedfrom2.26%to4.78%(2017:2.26%to4.78%)perannum.

IncludedintheabovetotalprincipalsumpayableisanamountofRM71,428(2017:RM109,129)denominatedinSingaporeDollarandRM722,060(2017:RM1,334,311)denominatedinGreatBritainPoundSterling.

27. BORROWINGS


CurrentUnsecured:- Termloans 10,626,838 15,229,563 2,096,752 3,368,169 Termloans-i 3,689,743 3,069,938 – – Trade loans:- -Acceptedbills-i 4,509,233 28,561,407 – – -Bankers’acceptance 96,403,000 57,870,000 – – -Onshoreforeigncurrencyloans 15,384,260 8,516,988 – – -Cleanimportloans 1,934,665 1,537,254 – –

Totalcurrent 132,547,739 114,785,150 2,096,752 3,368,169


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27. BORROWINGS (CONT’D)


Non-currentUnsecured:- Termloans 18,521,263 29,084,609 4,590,000 6,630,000 Termloans-i 16,757,770 15,462,101 – –

Totalnon-current 35,279,033 44,546,710 4,590,000 6,630,000

Totalborrowings 167,826,772 159,331,860 6,686,752 9,998,169

(i) The term loans, term loans-i, accepted bills-i, bankers’ acceptance, bank overdrafts and clean import loans 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.

Thetermloansbearinterestatratesrangingfrom4.60%to5.60%(2017:4.40%to6.10%)perannum.

Thetermloans-ibearinterestatratesrangingfrom5.09%to5.34%(2017:5.09%to5.17%)perannum.

All term loans are repayable by monthly, quarterly or yearly installments.

Theacceptedbills-ibearsinterestatratesrangingfrom3.67%to4.82%(2017:3.63%to4.82%)perannum.

Thebankers’acceptancebearsinterestatratesrangingfrom3.35%to4.93%(2017:3.38%to4.93%)perannum.

The bank overdraft bears interest at rates ranging from 8.10% to 8.30% (2017: 7.85% to 8.10%) per annum. It is unutilised as at the reporting date.

The clean import loans bear interest at the rate of 1.05% (2017: 1.05%) 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.

Itbearsinterestatratesrangingfrom1.60%to2.59%(2017:1.00%to1.83%)perannum.

The currency exposure profile of the borrowings is as follows (foreign currency balances are unhedged):-


RinggitMalaysia 150,507,847 148,652,618 6,176,752 9,373,169USDollar 15,384,260 8,516,988 – –GreatBritainPoundSterling 1,934,665 2,162,254 510,000 625,000

167,826,772 159,331,860 6,686,752 9,998,169

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28. OTHER PAYABLES


CurrentNon-tradepayables 4,909,443 8,072,284 9,180 59,239Deposits received 122,950 153,950 – –Accrualofexpenses 5,620,712 5,539,071 243,684 194,349Advancepaymentfromcustomers 4,326,850 5,048,112 – –GSTpayable 847,002 622,871 50,122 13,632

Totalcurrent 15,826,957 19,436,288 302,986 267,220

Non-currentProvisionforreinstatementcost 259,745 277,745 – –

Totalnon-current 259,745 277,745 – –

Totalotherpayables 16,086,702 19,714,033 302,986 267,220

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:-


Atbeginningoffinancialyear 277,745 262,569Currencytranslationdifference (18,000) 15,176 Atendoffinancialyear 259,745 277,745

The currency exposure profile of the other payables is as follows (foreign currency balances are unhedged):-


RinggitMalaysia 13,759,992 15,989,153 302,986 267,220USDollar 1,233,354 1,144,342 – –SingaporeDollar 380,630 1,513,053 – –GreatBritainPoundSterling 712,726 1,067,485 – –

16,086,702 19,714,033 302,986 267,220


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29. DEFERRED TAX LIABILITIES


Atbeginningoffinancialyear 5,608,891 5,891,999Transferredtoprofitorloss(Note33) (386,073) (194,674)Realisationofdeferredtaxliabilitiesupondepreciationofrevaluedassets (60,955) (60,955)Currencytranslationdifference (5,104) (27,479)


The balance in the deferred tax liabilities made up of temporary differences arising from:-


Carrying amount of qualifying property, plant and equipment in excessoftheirtaxbase 3,342,420 3,733,597Revaluationoflandandbuilding 1,814,339 1,875,294

5,156,759 5,608,891

30. TRADE PAYABLES

Group

Tradepayablescompriseamountsoutstandingfortradepurchases.ThecredittermsgrantedtotheGrouprangedfrom30 days to 90 days (2017: 30 days to 90 days).

The currency exposure profile of the trade payables is as follows (foreign currency balances are unhedged):-


RinggitMalaysia 21,226,881 35,567,688USDollar 4,077,652 24,145,669SingaporeDollar 4,198,556 3,414,618GreatBritainPoundSterling 1,148,527 555,264EURO 324,277 483,436

30,975,893 64,166,675

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31. REVENUE


Salesofgoods 614,771,219 479,348,907 – –Dividendincome – – 26,622,475 21,841,052Managementfee – – 4,150,406 2,550,940

614,771,219 479,348,907 30,772,881 24,391,992

32. PROFIT BEFORE TAX

Profit before tax has been determined after charging/(crediting), amongst others, the following items:-


Auditors’ remuneration- statutory 157,000 157,000 19,000 19,000-non-statutory 72,200 123,600 28,200 84,200-otherauditors 119,914 130,802 – –Direct operating expenses:- - revenue generating investment properties duringthefinancialyear 165,212 31,729 – –Directors’fee 506,203 513,206 166,203 163,206Rental expense- premises 1,179,989 1,302,077 – –-factoryandwarehouse 620,207 598,253 – –- crane 13,500 2,500 – –-forklift 216,029 200,350 – –-officeequipment 140,659 104,814 – –Realisedloss/(gain)onforeignexchange 4,970,064 (530,351) 92,324 347,970Rentalincome (892,920) (790,240) – –

The estimated monetary value of benefits provided to the Directors of the Company during the financial year by way of usageoftheGroup’sassetsandotherbenefitsamountedtoRM134,796(2017:RM208,178).


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32. PROFIT BEFORE TAX (CONT’D)

Theremunerationpaid(CompanyandGroupbasis)totheDirectorsoftheCompanyiscategorisedasfollows:-

Other Benefits- Fees emoluments in-kind Total RM RM RM RMGroup2018ExecutiveDirectors 305,000 5,893,214 134,796 6,333,010Non-ExecutiveDirectors 166,203 – – 166,203

Total 471,203 5,893,214 134,796 6,499,213

2017ExecutiveDirectors 312,500 5,451,969 208,178 5,972,647Non-ExecutiveDirectors 163,206 – – 163,206

Total 475,706 5,451,969 208,178 6,135,853

Company2018ExecutiveDirectors – 1,652,404 – 1,652,404Non-ExecutiveDirectors 166,203 – – 166,203

Total 166,203 1,652,404 – 1,818,607

2017ExecutiveDirectors – 1,680,234 – 1,680,234Non-ExecutiveDirectors 163,206 – – 163,206

Total 163,206 1,680,234 – 1,843,440

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

2018ExecutiveDirectors – 1 4Non-ExecutiveDirectors 4 – –

2017Executive Directors – 2 3Non-ExecutiveDirectors 4 – –

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33. TAX EXPENSE

Tax recognised in profit or loss


In Malaysia

Currentyear’staxexpense 13,573,719 10,579,647 930,035 559,988Under/(Over) provision of tax expense in prior financialyear 116,616 (95,036) 2,177 (35,323)Realisation of deferred tax liabilities upon depreciationofrevaluedassets (60,955) (60,955) – –Transferred from deferred tax liabilities (Note 29) (329,323) (173,999) – –Transferred (to)/from deferredtaxassets(Note13) (924,138) 485,862 – – 12,375,919 10,735,519 932,212 524,665

Outside Malaysia

Current year’s tax expense 132,321 – – –Under/(Over) provision of tax expense inpriorfinancialyear 1,816 (27,869) – –Transferred from deferred taxliabilities(Note29) (56,750) (20,675) – –

77,387 (48,544) – –

Total 12,453,306 10,686,975 932,212 524,665

Malaysianincometaxiscalculatedatthestatutorytaxrateof24%(2017:24%)oftheestimatedtaxableprofitsforthefinancial year.


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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 attheeffectivetaxrateoftheGroupandoftheCompanyareasfollows:-


Profitbeforetax 58,133,130 39,095,632 25,608,948 19,005,680

Tax expense at Malaysian statutory taxrateof24%(2017:24%) 13,951,951 9,382,952 6,146,148 4,561,363

Tax effects in respect of:-Expenses not deductible fortaxpurposes 3,145,706 2,701,407 1,174,079 1,240,812Incomenotsubjecttotax (909,186) (768,512) (6,390,192) (5,242,187)Deferred tax assets not recognized in current financial year (2,211,928) (538,292) – –(Over)/Under provision of deferred tax liabilities in prior financial year (13,573) 117,237 – –Over/(Under) provision of deferred tax assets inpriorfinancialyear 1,000 (6,000) – –Under/(Over) provision of tax expense inpriorfinancialyear 118,432 (122,905) 2,177 (35,323)Utilisation of allowance on value ofincreaseexport (1,568,141) – – –Realisation of deferred tax liabilities upondepreciationofrevaluedassets (60,955) (60,955) – –Effect of change in tax rate on opening deferred tax – (17,957) – –

Totaltaxexpense 12,453,306 10,686,975 932,212 524,665

TheGrouphasunutilisedcapitalallowances,unabsorbedvalueofincreasedexportsincentiveandunabsorbedbusinesslosseswhichcanbecarriedforwardtooffsetagainstfuturetaxableprofitamountedtoapproximatelyRM33,139,862RM9,577,000andRM14,725,077(2017:RM45,798,483,RM9,577,000andRM13,079,022)respectively.

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34. EARNINGS PER ORDINARY SHARE

Group

Basic earnings per ordinary share

ThecalculationofbasicearningsperordinarysharewasbasedonGroup’sprofitforthefinancialyearattributabletoowners of the Company and weighted average number of ordinary shares calculated as follows:-

Group 2018 2017

Profit after tax for the financial year attributable to ownersoftheCompany(RM) 47,126,801 29,718,280

Weightedaveragenumberofordinarysharesinissue 741,539,393 736,598,503

Basicearningsperordinaryshare(sen) 6.36 4.03

Diluted earnings per ordinary share

ThecalculationofdilutedearningsperordinaryshareswasbasedonGroup’sprofitattributabletoordinaryshareholdersand a weighted average number of ordinary shares outstanding after adjustment for the effects of all dilutive potential ordinary shares.

Group 2018 2017

Profit after tax for the financial year attributable to ownersoftheCompany(RM) 47,126,801 29,718,280

Weightedaveragenumberofordinarysharesinissue(basic) 741,539,393 736,598,503

AdjustmentfordilutiveeffectonexerciseofESOS 6,462,667 46,869,000Adjustmentfordilutiveeffectonwarrant 27,705,697 –

Weightedaveragenumberofordinarysharesinissue(diluted) 775,707,757 783,467,503

Dilutedearningsperordinaryshare(sen) 6.08 3.79


130


35. EMPLOYEE BENEFITS EXPENSE

Group Company 2018 2017 2018 2017

RM RM RM RM

Staffcosts 47,306,646 40,416,342 2,121,574 2,002,876

EmployeebenefitsexpenseoftheGroupandoftheCompanyconsistsof,amongstothers,thefollowingitems:-

Group Company 2018 2017 2018 2017

RM RM RM RM

Directors’ remuneration -Salaries,allowancesandbonuses 5,464,515 5,003,844 1,532,400 1,532,400-others 428,699 448,125 120,004 147,834

Definedcontributionplan–staffEPF 2,766,239 2,419,320 50,492 34,680

36. EMPLOYEE SHARE OPTION SCHEME

Atanextraordinarygeneralmeetingheldon2December2016,theCompany’sshareholdersapprovedtheestablishmentofEmployeeShareOptionScheme(“ESOS”or“Scheme”)fortheeligibleDirectorsandemployeesoftheGroup.TheSchemeshallbeinforceforadurationoften(10)yearsfromthedateofcommencementfrom23January2017(“Durationof the Scheme”). During the previous financial year, the Company has granted an option under the Scheme and the option isexercisablewithinaperiodoffive(5)yearsfromthedatecommencingfrom24January2017.

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) AnyemployeeorDirectorofanycompanycomprisedintheGroup(saveforanysubsidiarieswhicharedormant)shall be eligible to participate in the ESOS if, as at the date of offer, the employee is at least eighteen (18) years of age or above; and is employed on a continuous full time basis (either permanent or on contract) and on the payrollofthatcorporationcomprisedintheGroupandhasbeengivennotificationinwritingthattheemployeeisa 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.

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36. EMPLOYEE SHARE OPTION SCHEME (CONT’D)

Number of unexercised share option

Company 2018 2017

Atbeginningoffinancialyear 49,869,000 –Grantedduringthefinancialyear – 49,869,000Exercisedduringthefinancialyear (5,694,600) –Forfeitedduringthefinancialyear (3,769,000) –


Analysed as:-Exercisableinfinancialyear2017 – 7,480,350Exercisableinfinancialyear2018 8,358,000 7,480,350Exercisableinfinancialyear2019 9,156,400 9,973,800Exercisableinfinancialyear2020 11,445,500 12,467,250Exercisableinfinancialyear2021 11,445,500 12,467,250

40,405,400 49,869,000

Option price

Company RM

Option granted-ongrantdate 0.415

Share option exercised during the financial year

Duringthefinancialyear,5,694,600numberofordinaryshareswereissuedundertheCompany’sESOS.


132


36. EMPLOYEE SHARE OPTION SCHEME (CONT’D)

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:-

Fairvalueofshareoptiongrantedon24January2017basedonvestingdate(RM)-24January2017 0.102343-24January2018 0.099692-24January2019 0.100360-24January2020 0.100640-24January2021 0.099612 Expected volatility of Company’s share price (%) 30.00Option term (years) 5Riskfreerateofinterestperannum(%) 3.60Expected dividend yield per annum (%) 5.00

37. RELATED PARTY DISCLOSURES

(a) ThetransactionsoftheGroupandoftheCompanywiththerelatedpartieswereasfollows:-

Group Company 2018 2017 2018 2017

RM RM RM RM

Transactions with subsidiary companies:- -managementfeereceived – – 4,150,406 2,550,940 -dividendreceived(net) – – 26,622,475 21,841,052 -loaninterestreceived – – – 41,530 - loan interest paid – – 58,573 22,159Transactions with an associate company:- - sales 19,179,809 25,933,070 – – -purchases 88,835 169,098 – – - machine servicing charged 980,000 1,020,000 – – - rental received 192,000 192,000 – –Transaction with a joint venture company:- - purchases – 118,098 – –

(b) The outstanding balances arising from related party transactions as at the reporting date are disclosed in Notes 8, 9 and 10 to the Financial Statements.

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37. RELATED PARTY DISCLOSURES (CONT’D)

(c) The remuneration of key management personnel is same with the Directors’ remunerations as disclosed in Notes 32and35totheFinancialStatements.Keymanagementpersonnelisdefinedasthosepersonshavingauthorityand 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.

The following are movements in share option of key management personnel:-

Group 2018 2017

At beginning of financial year 11,200,000 –Grantedduringthefinancialyear – 11,200,000Exercisedduringthefinancialyear (1,245,000) –Forfeited during the financial year (900,000) –

At end of financial year 9,055,000 11,200,000

The share option was granted to key management personnel on terms and conditions similar to those offered to

employeesoftheGroupasdisclosedinNote36totheFinancialStatements.

38. CAPITAL COMMITMENTS


Authorised and contracted for:- Purchaseof-crane,machinery,equipmentsfurnitureandfittings 739,678 3,908,248 -buildings 551,754 300,058

39. RENTAL COMMITMENTS

The future non-cancellable rental expense commitments are as follows:-


Year2018 – 1,379,636Year2019 2,142,171 1,154,206Year2020to2037 11,073,011 369,463

13,215,182 2,903,305


134


40. OPERATING LEASE ARRANGEMENTS

TheGrouphasentered intooperating leaseagreementson itsassets.These leaseshave remaining lease termsofbetween 1 to 20 months (2017: 8 to 25 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:-


Withinthenexttwelvemonths 310,800 454,080After the next twelve months 19,200 78,000

330,000 532,080

41. CONTINGENT LIABILITIES

Company 2018 2017 RM RM

Unsecured:-Corporate guarantees given to licensed financial institutions forcreditfacilitiesgrantedtosubsidiarycompanies 713,901,694 770,046,198Corporate guarantees given to finance lease creditors forfinanceleasefacilitiesgrantedtosubsidiarycompanies 11,385,752 7,674,848Corporate guarantees given to third parties for supply ofgoodsandservicestosubsidiarycompanies 5,022,298 5,407,940

730,309,744 783,128,986

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.

42. SIGNIFICANT EVENTS

Significant event after the financial year

AttheforthcomingAnnualGeneralMeeting,afinalsingletierdividend,inrespectofthefinancialyearended28February2018, of 0.50 sen per ordinary share will be proposed for shareholders’ approval. The financial statements for current financialyeardonotreflectthisproposeddividend.Suchdividend,ifapprovedbytheshareholders,willbeaccountedfor in equity as an appropriation of unappropriated profit in the financial year ending 28 February 2019.

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43. OPERATING SEGMENTS - GROUP

(a) Business segments

TheGroupisorganisedonthreemajoroperatingsegments.Theseoperatingsegmentsaremonitoredseparatelyforthe 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 operationsineachoftheGroup’sreportablesegments:-

Operating segments Business activities Trading Trading, supply and stocking of high pressure seamless and specialised steel pipes,

fittings,flanges,valvesandotherrelatedproductsforuseintheoilandgas,gasreticulation, 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.

TheGrouphasaggregatedcertainoperatingsegmentstoformareportablesegmentduetothesimilarnatureandoperational characteristics of the services.


136


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ANNUAL REPORT 2018

137


43. OPERATING SEGMENTS – GROUP (CONT’D)

(a) Business segments (cont’d)

Investment Consolidation Trading Manufacturing holding adjustments Notes Consolidated 2018 RM RM RM RM RM

Assets

Segmentassets 391,401,478 427,526,619 262,540,311 (295,610,342) D 785,858,066 Investment in an associatecompany 2,063,165 – – – 2,063,165 Additions to non- current assets other than financial instruments and deferredtaxassets 5,308,131 9,722,470 – 118,828 E 15,149,429

Liabilities

Segmentliabilities 48,064,632 38,197,810 13,628,564 (48,786,418) F 51,104,588

2017 Assets Segmentassets 393,497,129 421,830,774 254,405,142 (282,012,757) D 787,720,288 Investment in an associate company 2,275,137 - - - 2,275,137 Additions to non- current assets other than financial instruments and deferredtaxassets 789,378 34,186,822 - - E 34,976,200

Liabilities

Segmentliabilities 77,707,025 42,199,538 11,470,887 (44,923,052) F 86,454,398


138




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:-

2018 2017 RM RM Segmentprofit 66,710,532 45,031,688 Interestincome 1,017,401 1,011,073 Financecosts (9,382,831) (6,977,505) Shareofresultsofassociatecompany (211,972) 41,425 Shareofresultsofjointventurecompany – (11,049)

Profitbeforetax 58,133,130 39,095,632

C. Other non-cash income/(expenses) consist of the following items as presented in the respective notes to the financial statements:-

2018 2017 RM RM Allowanceforimpairmentofreceivables (4,130,429) (4,011,565) Baddebtswrittenoff – (40,601) Property,plantandequipmentwrittenoff (174,515) (6,361) Inventorieswrittendown (1,155,136) (622,503) Reversal of inventories written down 199,057 110,259 Allowanceforimpairmentofreceivablesnolongerrequired 1,974,697 3,922,073 Fair value gain adjustment on investment properties – 100,000 Gainondisposalofjointventurecompany – 55,750 Gainondisposalofproperty,plantandequipment 559,603 960,717 EmployeesShareOptionSchemeexpenses (1,699,375) (960,348)

(4,426,098) (492,579)

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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:-

2018 2017 RM RM

Segmentassets 785,858,066 787,720,288 Investmentinanassociatecompany 2,063,165 2,275,137 Deferredtaxassets 1,851,363 927,225 Tax recoverable 1,003,522 395,089

Totalassets 790,776,116 791,317,739

E. Additions to non-current assets other than financial instruments and deferred tax assets consist of:-

2018 2017 RM RM

Property,plantandequipment 10,788,599 5,615,271 Capitalwork-in-progress 4,360,830 29,360,929

15,149,429 34,976,200

F. The following items are added to segment liabilities to arrive at total liabilities reported in the consolidated statement of financial position:-

2018 2017 RM RM

Segmentliabilities 51,104,588 86,454,398 Financeleasecreditors 8,744,154 4,557,282 Borrowings 167,826,772 159,331,860 Taxpayable 4,489,908 2,501,007 Deferredtaxliabilities 5,156,759 5,608,891

Totalliabilities 237,322,181 258,453,438


140



(b) Geographical information

TheGroup’srevenueandnon-currentassetsinformationbasedongeographicallocationareasfollows:-

Revenue Non-current assets 2018 2017 2018 2017 RM RM RM RM Malaysia* 574,516,100 435,802,140 256,275,345 259,103,663RepublicofSingapore 18,091,866 24,797,329 603,917 980,186UnitedKingdom 22,163,253 18,749,438 13,810,510 16,403,028 614,771,219 479,348,907 270,689,772 276,486,877

* Company’s home country

Non-current assets information presented above consist of the following items as presented in the consolidated statement of financial position:-

2018 2017 RM RM Property,plantandequipment 221,403,827 199,913,489Prepaidlandleasepayments 33,133,816 33,715,859Capitalwork-in-progress 3,814,747 28,565,616Investmentinanassociatecompany 2,063,165 2,275,137Deferredtaxassets 1,851,363 927,225Derivativesfinancialinstruments 624,766 3,275,874Goodwillonacquisition 1,198,088 1,213,677Investmentproperties 6,600,000 6,600,000 270,689,772 276,486,877

(c) Major customers

TheGroupdoesnothaveanyrevenuefromasingleexternalcustomerwhichrepresents10%ormoreof theGroup’srevenue.

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44. FINANCIAL INSTRUMENTS

Risk management objectives and policies

TheGroupisexposedtovariousrisksinrelationtofinancialinstruments.TheGroup’sfinancialassetsandliabilitiesbycategory are summarised in Note 3.10 and 3.11 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 oftheGroup’sbusinesseswhilstmanagingitsforeigncurrencyrisk,interestraterisk,creditriskandliquidityrisk.TheGroupoperateswithinclearlydefinedpoliciesandproceduresthatareapprovedbytheBoardofDirectorstoensuretheeffectiveness of the risk management process.

(a) Foreign currency risk

Foreigncurrencyriskistheriskthatthefairvalueorfuturecashflowsofafinancialinstrumentwillfluctuatebecauseof changes in foreign exchange rates.

TheGroupisexposedtoforeigncurrencyriskmostlyonitssalesandpurchasesthataredenominatedinacurrencyotherthanthefunctionalcurrencyoftheGroup.ThecurrenciesgivingrisetothisriskareprimarilyUSDollar(“USD”),SingaporeDollar(“SGD”),GreatBritainPoundSterling(“GBP”)andEURO.

TheGroupusesforwardexchangecontractstohedgeitsforeigncurrencyriskandforwardexchangecontractshave 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 liabilitieswhichexposetheGroupandtheCompanytocurrencyriskaredisclosedbelow:-

USD SGD GBP EURO RM RM RM RM

Group 2018 Financial assets Tradereceivables 49,943,911 2,491,876 7,186,518 19,339 Otherreceivables 15,018,554 277,087 938,569 206,217 Cashandbankbalances 16,225,269 3,648,107 8,625,425 41,508

81,187,734 6,417,070 16,750,512 267,064

Financial liabilities Borrowings (15,384,260) – (1,934,665) – Financeleasecreditors – (71,428) (722,060) – Tradepayables (4,077,652) (4,198,556) (1,148,527) (324,277) Otherpayables (1,233,354) (380,630) (712,726) – (20,695,266) (4,650,614) (4,517,978) (324,277) Netexposure 60,492,468 1,766,456 12,232,534 (57,213)


142


44. FINANCIAL INSTRUMENTS (CONT’D)

Risk management objectives and policies (cont’d)

(a) Foreign currency risk (cont’d)

Based on carrying amounts as at the reporting date, foreign currency denominated financial assets and financial liabilitieswhichexposetheGroupandtheCompanytocurrencyriskaredisclosedbelow(cont’d):-


Group (cont’d) 2017 Financial assets Tradereceivables 47,468,514 5,518,470 8,890,794 55,520 Otherreceivables 7,154,926 407,930 445,348 – Amount due from an associatecompany 5,486 – – – Cashandbankbalances 31,931,702 2,243,653 7,888,990 105,378 86,560,628 8,170,053 17,225,132 160,898 Financial liabilities Borrowings (8,516,988) – (2,162,254) – Financeleasecreditors – (109,129) (1,334,311) – Tradepayables (24,145,669) (3,414,618) (555,264) (483,436) Otherpayables (1,144,342) (1,513,053) (1,067,485) – (33,806,999) (5,036,800) (5,119,314) (483,436) Netexposure 52,753,629 3,133,253 12,105,818 (322,538)

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Based on carrying amounts as at the reporting date, foreign currency denominated financial assets and financial liabilitieswhichexposetheGroupandtheCompanytocurrencyriskaredisclosedbelow(cont’d):-


Company 2018 Financial asset Cash and bank balances – – 222,933 –

Financial liability Borrowings – – (510,000) – Netexposure – – (287,067) –

2017 Financial asset Amount due from subsidiary companies – – – – Cash and bank balances – – 727,137 – – – 727,137 –

Financial liability Borrowings – – (625,000) – Net exposure – – 102,137 –

Foreign currency sensitivity analysis

ThefollowingtableillustratesthesensitivityofprofitinregardstotheGroup’sandtheCompany’sfinancialassetsandfinancialliabilitiesandtheRM/USDexchangerate,RM/SGDexchangerate,RM/GBPexchangerateandRM/EURO exchange rate with ‘all other things are being equal’.

Itassumesa+/-3%(2017:4%)changeof theRM/USD,RM/SGD,RM/GBPandRM/EUROexchangeratesrespectively. The percentage has been determined based on the average market volatility in exchange rates in theprevious12months.Thesensitivityanalysis isbasedontheGroup'sandtheCompany’sforeigncurrencydenominated financial instruments held at each reporting date and also takes into account forward exchange contracts that offset effects from changes in currency exchange rates.


144





Foreign currency sensitivity analysis (cont’d)

IftheRMhadstrengthenedagainsttheUSD,SGD,GBPandEUROby3%(2017:4%)respectively,thiswouldhave the following impact:-

Increase/(Decrease) on profit for the financial year Group USD SGD GBP EURO Total RM RM RM RM RM

2018 (1,814,774) (52,994) (366,976) 1,716 (2,233,028)

2017 (2,110,145) (125,330) (484,233) 12,902 (2,706,806)

Company USD SGD GBP EURO Total RM RM RM RM RM

2018 – – 8,612 – 8,612

2017 – – (4,085) – (4,085)

IftheRMhadweakenedagainsttheUSD,SGD,GBPandEUROby3%(2017:4%)respectively,thentheimpactto 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,theanalysisaboveisconsideredtoberepresentativeoftheGroup’sandtheCompany’sexposuresto foreign currency risk.

(b) Interest rate risk

Interest raterisk is therisk that the fairvalueor futurecashflowsof theGroup’sandtheCompany’sfinancialinstrumentswillfluctuatebecauseofchangesinmarketinterestrates.

TheGroup’sandtheCompany’sfixedrateborrowingsareexposedtoariskofchangeintheirfairvalueduetochangesininterestrates.TheGroup’svariablerateborrowingsareexposedtotheriskofchangeincashflowsdue to changes in interest rates. Investment in equity securities and short term receivables and payables are not significantly exposed to interest rate risk.

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(b) Interest rate risk (cont’d)

TheGroup’sinterestratemanagementobjectiveistomanageinterestexpensesconsistentwithmaintaininganacceptablelevelofexposuretointerestratefluctuation.

Interest rate sensitivity

TheGroupandtheCompanyareexposedtochangesinmarketinterestratesthroughbankborrowingsatvariableinterestrates.Otherborrowingsareatfixedinterestrates.TheexposuretointerestratesfortheGroup’sshorttermplacement is considered immaterial.

TheinterestrateprofileoftheGroup’sandoftheCompany’ssignificantinterest-bearingfinancialinstruments,basedon carrying amounts as at the end of the reporting period is as follows:-

Group Company RM RM

2018Fixed rate instrumentsFinancial asset Fixeddepositswithlicensedbanks 2,476,995 –

Financial liabilities Financeleasecreditors (8,744,154) – Acceptedbills-i (4,509,233) – Bankers’acceptance (96,403,000) – Onshoreforeigncurrencyloans (15,384,260) – Cleanimportloans (1,934,665) – Termloans (6,686,752) (6,686,752)

(131,185,069) (6,686,752)

Floating rate instrumentsFinancial liabilities Termloans (22,461,349) – Termloans-i (20,447,513) –

Netfinancialliabilities (42,908,862) –


146





Interest rate sensitivity (cont’d)

TheinterestrateprofileoftheGroup’sandoftheCompany’ssignificantinterest-bearingfinancialinstruments,basedon carrying amounts as at the end of the reporting period is as follows (cont’d):-

Group Company RM RM

2017Fixed rate instrumentsFinancial asset Fixeddepositswithlicensedbanks 2,436,327 – Financial liabilities Financeleasecreditors (4,557,282) – Acceptedbills-i (28,561,407) – Bankers’ acceptance (57,870,000) – Onshoreforeigncurrencyloans (8,516,988) – Cleanimportloans (1,537,254) – Termloans (9,998,169) (9,998,169)

(108,604,773) (9,998,169)

Floating rate instrumentsFinancial liabilities Termloans (34,316,003) – Term loans-i (18,532,039) –

Netfinancialliabilities (52,848,042) –

ANNUAL REPORT 2018

147





Interest rate sensitivity (cont’d)

The following table illustrates the sensitivity of profit to a reasonably possible change in interest rates of +/- 25 (2017: 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 2018 (107,272) 107,272

28 February 2017 (132,120) 132,120

(c) Credit risk

CreditriskistheriskthatcounterpartyfailstodischargeanobligationtotheGroupandtheCompany.TheGroup’sand 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 70,223,029 91,592,503 2,307,581 2,993,275Tradereceivables 144,893,264 133,392,544 – –Otherreceivables 16,274,529 8,200,643 46,655 46,655Amount due from an associatecompany 6,657,833 11,043,435 – –Amount due from subsidiarycompanies – – 17,453 13,491

238,048,655 244,229,125 2,371,689 3,053,421


148




(c) Credit risk (cont’d)

TheGroupcontinuouslymonitorsdefaultsofcustomersandothercounterparties,identifiedeitherindividuallyorby group, and incorporate this information into its credit risk controls. Where available at reasonable cost, external creditratingsand/orreportsoncustomersandothercounterpartiesareobtainedandused.TheGroup’spolicyisto deal only with creditworthy counterparties.

TheGroup’smanagementconsidersthatalltheabovefinancialassetsthatarenotimpairedorpastdueforeachof the reporting dates under review are of good credit quality.

TheageinganalysisoftradereceivablesoftheGroupisasfollows:-

Allowance for impairment loss Individually Collectively Gross impaired impaired Total Net RM RM RM RM RM 2018Withinterms 65,001,800 – – – 65,001,800Pastdue1to30days 32,260,689 – – – 32,260,689Pastdue31to60days 10,845,046 – – – 10,845,046Pastdue61to90days 9,845,752 – – – 9,845,752Past due 91 to 120 days 7,908,292 – – – 7,908,292Pastduemorethan120days 27,479,154 8,447,469 – 8,447,469 19,031,685

153,340,733 8,447,469 – 8,447,469 144,893,264

2017Withinterms 76,003,419 – – – 76,003,419Pastdue1to30days 31,529,816 – – – 31,529,816Pastdue31to60days 12,935,418 – – – 12,935,418Pastdue61to90days 5,252,472 – – – 5,252,472Pastdue91to120days 2,456,880 – – – 2,456,880Pastduemorethan120days 11,929,730 6,715,191 – 6,715,191 5,214,539

140,107,735 6,715,191 – 6,715,191 133,392,544

NoneoftheGroup’sfinancialassetsaresecuredbycollateralorothercreditenhancementsandnoneofthecarryingamount of financial assets whose terms have been renegotiated that would otherwise be past due or impaired.

ANNUAL REPORT 2018

149




(c) Credit risk (cont’d)

Inrespectoftradeandotherreceivables,theGroupisnotexposedtoanysignificantcreditriskexposuretoanysingle 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.

(d) Liquidity risk

LiquidityriskistheriskarisingfromtheGroupandtheCompanynotbeingabletomeettheirobligationsduetoshortage of funds.

Inmanaging their exposures to liquidity risk, theGroupand theCompanymaintaina levelof cashandcashequivalents 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.


150


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

efollowingtablesh

owsthearea

swhe

reth

eGroup

and

theCom

panyareexp

osed

toliqu

idityrisk:-

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

year

1

to 5

yea

rs

5 ye

ars

RM

R

M

RM

R

M

RM

R

M20

18N

on-

der

ivat

ive

fina

ncia

l lia

bili

ties

Term

loan

s11

,360

,010

18

,627

,911

2,37

0,58

42,32

4,52

64,84

6,74

9–

Term

loan

s-i

4,64

4,91

617

,755

,663

91

6,18

2–

––

Ban

kers

’ acc

epta

nce

and

acce

pted

bi

lls-i

100,

912,

233

– –

– –

–Clean

impo

rtlo

ans

1,93

4,66

5–

––

––

Ons

horefo

reigncu

rren

cylo

ans

15,384

,260

–

––

––

Fina

nceleasecred

itors

3,06

9,87

96,56

9,73

1–

––

–Tr

ade

paya

bles

30

,975

,893

–

– –

– –

Otherpayab

les

14,979

,955

25

9,74

5–

252,86

4–

–Amou

ntdue

toanasso

ciateco

mpa

ny

215,56

6–

––

––

183,47

7,37

743

,213

,050

3,28

6,76

62,57

7,39

04,84

6,74

9–

Der

ivat

ive

fina

ncia

l lia

bili

ties

Outflow

6,66

6,09

7–

–6,66

6,09

7–

–Inflow

(6,562

,740

)–

–(6,562

,740

)–

–

103,

357

– –

103,

357

– –

Totalund

isco

untedfinan

cialliab

ilities

183,58

0,73

443

,213

,050

3,28

6,76

62,680

,747

4

,846

,749

–

Fina

ncialg

uarantee

s*

730,30

9,74

4–

––

––

ANNUAL REPORT 2018

151


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

)

Thefollowingtablesh

owsthearea

swhe

reth

eGroup

and

theCom

panyareexp

osed

toliqu

idityrisk(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

year

1

to 5

yea

rs

5 ye

ars

RM

R

M

RM

R

M

RM

R

M20

17N

on-

der

ivat

ive

fina

ncia

l lia

bili

ties

Term

loan

s16

,482

,832

27

,546

,049

5,74

1,50

83,68

4,55

57,17

1,27

5–

Term

loan

s-i

4,18

9,57

316

,352

,700

1,70

1,43

5–

––

Ban

kers’a

ccep

tanc

ean

dac

cepted

bills

-i86

,431

,407

–

––

––

Clean

impo

rtlo

ans

1,53

7,25

4–

––

––

Ons

horefo

reigncu

rren

cylo

ans

8,51

6,98

8–

––

––

Fina

nceleasecred

itors

2,37

9,20

82,47

5,79

5–

––

–Trad

epa

yables

64,166

,675

–

––

––

Otherpayab

les

18,813

,417

27

7,74

5–

253,58

8–

–Amou

ntdue

toanasso

ciateco

mpa

ny

258,46

2–

––

––

202,77

5,81

646

,652

,289

7,44

2,94

33,93

8,14

37,17

1,27

5–

Der

ivat

ive

fina

ncia

l lia

bili

ties

Outflow

704,91

8–

–70

4,91

8–

–Inflow

(605

,652

)–

–(605

,652

)–

–

99

,266

–

–99

,266

–

–

Totalund

isco

untedfinan

cialliab

ilities

202,87

5,08

246

,652

,289

7,44

2,94

34,03

7,40

97,17

1,27

5–

Fina

ncialg

uarantee

s*

783,12

8,98

6–

––

––

* Th

is e

xpos

ure

is in

clud

ed in

liqu

idity

risk

for i

llust

ratio

n on

ly. N

o fin

anci

al g

uara

ntee

was

cal

led

upon

by

the

hold

ers

as a

t the

end

of t

he

repo

rtin

g pe

riod.


152




(d) Liquidity risk (cont’d)

Theaboveamountsreflectthecontractualundiscountedcashflows,whichmaydifferfromthecarryingvaluesofthe financial liabilities at the reporting date.

45. CAPITAL MANAGEMENT OBJECTIVE

TheprimarycapitalmanagementobjectiveoftheGroupistomaintainastrongcapitalbaseandsafeguardtheGroup’sability 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 2018 and 2017.

TheGroupmanages itscapitalbyregularlymonitoring itscurrentandexpected liquidityrequirementandmodifythecombination of equity and borrowings from time to time to meet the needs. Shareholders’ equity and gearing ratio of the GroupandoftheCompanyareasfollows:-


Totalequity 553,453,935 532,864,301 236,107,601 226,649,668Borrowings 176,570,926 163,889,142 6,686,752 9,998,169

Debt-to-equityratio 0.32 0.31 0.03 0.04

TheGrouphascompliedwithPracticeNoteNo.17(Revisionon3August2009,22September2011and25March2015)ofMainMarketListingRequirementsofBursaMalaysiaSecuritiesBerhadwhichrequirestheGrouptomaintaina consolidated shareholders’ equity not less than 25% of the issued and paid-up capital of the Company and such shareholders’equityisnotlessthanRM40million.

46. FAIR VALUE OF FINANCIAL INSTRUMENTS

ThecarryingamountsoffinancialassetsandliabilitiesoftheGroupandoftheCompanyasatthereportingdateareapproximatelyattheirfairvaluesduetotheirshorttermnatureortheyarefloatingrateinstrumentsthatarere-pricedtomarket interest rates on or near the reporting date.

ANNUAL REPORT 2018

153


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

2018Financial assetsFreeholdland – 24,154,192 – 24,154,192Buildings – 90,104,516 – 112,032,063Investmentproperties – 6,600,000 – 6,600,000Derivatives-Crosscurrencyswap – 1,252,024 – 1,252,024

– 122,110,732 – 144,038,279

Financial liabilityDerivatives- Cross currency swap – (103,357) – (103,357) 2017Financial assetsFreeholdland – 24,158,800 – 24,158,800Buildings – 93,085,769 – 93,085,769Investmentproperties – 6,600,000 – 6,600,000Derivatives -Crosscurrencyswap – 4,619,660 – 4,619,660

– 128,464,229 – 128,464,229

Financial liability Derivatives-Crosscurrencyswap – (99,266) – (99,266)


154


46. FAIR VALUE OF FINANCIAL INSTRUMENTS (CONT’D)

Fair value hierarchy (cont’d)

Quoted in Significant active markets other Significant for identical observable unobservable instruments inputs inputs Total Level 1 Level 2 Level 3 RM RM RM RMCOMPANY

2018Financial assetDerivatives- Cross currency swap – – – –

Financial liability Derivatives- Cross currency swap – (103,357) – (103,357) 2017Financial assetDerivatives- Cross currency swap – 1,008,527 – 1,008,527

Financial liabilityDerivatives-Crosscurrencyswap – (99,266) – (99,266)

There were no transfers between Level 1 and 2 in the reporting period.

ANNUAL REPORT 2018

155

LIST OFPROPERTIES

as at 28 February 2018

No. Tittle deed Address

(Land area)Gross build-

up areaSq.ft. Tenure

Description/Existing use

Net BookValue @

28.2.2018RM’000

Approximateage of

buildingyears

Date oflast

revaluation

1 HS(D)484896,PTD204334,Mukim Plentong,DistrictofJohorBahru,JohorDarulTakzim

PTD204334,JalanPlatinumUtama,PasirGudangIndustrialEstate,Zone12B,81700PasirGudang,JohorDarulTakzim

(899,775)522,610

Leaseholdexpiring on18.08.2070

4blockssinglestoreyfactory buildings with1 unit 3-storey officeand 1 unit 5-storeycorporate office and

ancillary buildings

64,965 5-8 31.12.2015

2 Geran95058,95059and95060.LotNo.23190,23191 and 23192MukimKapar,DistrictofKlang,Selangor Darul Ehsan

Lot 13257, 13258 and 13259,JalanHajiAbdulManan,OffJalanMeru,41050Klang,Selangor Darul Ehsan

(544,353)346,523

Freehold 6unitsofsinglestoreydetached factories

(Identified for referenceas Factory A, B, C, D,

E and F)

41,725 Factory A,B,C - 28FactoryD-26Factory E - 11FactoryF-6

31.12.2015

3 HS(D)563306,PTD5020,Mukim Sungai Tiram,DistrictofJohorBahru,JohorDarulTakzim.

PLO7,JalanRumbia4,KawasanPerindustrianTanjung Langsat,81700PasirGudang,JohorDarulTakzim

(189,790)93,266


A single storeydetached factory

and 1 unit 3-storeyoffice building

19,597 1 –


PLO641,JalanPlantinum1,PasirGudangIndustrialEstate,Zone12B,81700PasirGudang,JohorDarulTakzim

(254,566) 104,370


2 units of single storeydetached warehouse

with 1 unit doublestorey office

16,028 6 31.12.2015

5 HS(D)564272,PTD222449,Mukim Plentong,DistrictofJohorBahru,JohorDarulTakzim.

PLO749,JalanKampungPasirGudangBaru,PasirGudangIndustrialEstate,Zone12B,81700PasirGudang,JohorDarulTakzim.

(318,032) Leaseholdexpiring on27.03.2076

A parcel ofindustrial land

7,714 – 31.12.2015


PLO234,JalanTembagaSatu,PasirGudangIndustrialEstate,81700PasirGudang,JohorDarulTakzim

(87,123) 42,300


A single storeydetached warehousewith 3-storey officebuildings annexed

6,000 19 31.12.2015

7 SF209083, SF318990,SF211845,SF318991,SF184517Claymore,TameValleyIndustrialEstate,Tamworth

ClaymoreTameValleyIndustrial Estate, Tamworth,Staffordshire, B77 5DQ,UnitedKingdom

(63,310) 33,570

Freehold 5 units of buildingcomprising of

factories, warehousesand offices

5,609 30-36 29.2.2016

8 HS(M)29537,LotPT34277,MukimandDistrictofKlang,HS(D)114965,LotPT17296,Pekan Baru Hicom,District of Petaling,Selangor Darul Ehsan

No.3,JalanTrompet33/8,Seksyen33,40400ShahAlam,Selangor Darul Ehsan

(123,548) 25,968

Leasehold expiring on11.12.2096

&28.11.2096

A single storeydetached warehousewith 2-storey officebuilding annexed

5,495 20 31.12.2015

9 SF211341,Brent,TameValleyIndustrial Estate,Wilnecote, Tamworth

Unit2,Brent,TameValleyIndustrial Estate, Wilnecote,Tamworth, Staffordshire,B775DF, UnitedKingdom

(46,760) 22,323

Freehold A single storeydetached factoryand warehouse

4,961 28 29.2.2016

10 HS(M)135,LotLO129(1433),Mukim Pantai Timor,District of Pengerang,JohorDarulTakzim

Lot LO129,KampungBukitGelugur,81600Pengerang,JohorDarulTakzim

(127,617) Freehold A parcel ofindustrial land

1,800 – 31.12.2015


156

NOTICE OF TWELFTHANNUAL GENERAL MEETING

NOTICE IS HEREBY GIVENthattheTwelfthAnnualGeneralMeetingofPantechGroupHoldingsBerhad(“Pantech”orthe“Company”)willbeheldatDiamondRoom3,Level10,HolidayVillaJohorBahruCityCentre,260,JalanDato’Sulaiman,TamanAbad,80250JohorBahru,JohoronThursday,26July2018at11.00a.m.forthefollowingpurposes:-

AGENDA

AS ORDINARY BUSINESS

1. To receive the Audited Financial Statements for the financial year ended 28 February 2018 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 0.50 sen per ordinary share for the financial year ended 28 February 2018.

Resolution 1

3. To approve the payment of Directors’ fees and benefits up to the amount of RM180,000 for the financial year ending 28 February 2019.

Resolution 2

4. Tore-electthefollowingDirectorsretiringpursuanttotheCompany’sArticlesofAssociationand being eligible, offered themselves for re-election:-

4.1MrTanAngAng(Article122)4.2MsNgLeeLee(Article122)4.3MrLimYoongXao(Article127)4.4Dato’SriYapTianLeong(Article127)4.5PuanNoorainibintiMohdYassin(Article127)

Resolution 3Resolution 4Resolution 5Resolution 6Resolution 7

5. Tore-appointMessrsGrantThorntonMalaysiaasAuditorsoftheCompanyandtoauthorisethe Directors to fix their remuneration.

Resolution 8

AS SPECIAL BUSINESS

To consider, and if thought fit, to pass the following Resolutions:

6. AUTHORITY TO ISSUE SHARES BY THE COMPANY PURSUANT TO SECTIONS 75 AND 76 OF THE COMPANIES ACT 2016

“THATsubjectalways to theCompaniesAct2016 (“theAct”),andapprovals fromanyother governmental/regulatory authorities, the Directors of the Company be and are hereby empowered,pursuanttoSections75and76oftheAct,toissuesharesintheCompanyatany 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 forceuntiltheconclusionofthenextAnnualGeneralMeetingoftheCompany.”

Resolution 9

ANNUAL REPORT 2018

157

7. PROPOSED RENEWAL OF SHARE BUY-BACK

“THAT subject to compliance with all applicable rules, regulations and orders made pursuant totheCompaniesAct2016(“theAct”),provisionsintheCompany’sConstitution,theListingRequirements 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 Securities as at the point of purchase;

(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 2018, the audited retained profitaccountoftheCompanystoodatRM12,649,482;

(3) the authority conferred by this resolution will commence immediately upon passing of this resolution and will continue to be in force until:-

(a) attheconclusionofthenextAnnualGeneralMeeting(“AGM”)oftheCompanyfollowing 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 to conditions; or

(b) theexpirationof theperiodwithinwhich thenextAGMof theCompany isrequired by law to be held; or

(c) revoked or varied by ordinary resolution passed by the shareholders of the Company in a general meeting.

whichever occurs first;

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) to cancel the ordinary shares so purchased; 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 the remainder; 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 10

Notice of TwelfthAnnual General Meeting (cont’d)


158

8. PROPOSED ALLOCATION OF ESOS OPTIONS TO LIM YOONG XAO

“THAT subject to the approval of all the relevant authorities including the approval of Bursa Malaysia Securities Berhad (“Bursa Securities”) for the listing of and quotation for the new ordinary shares of Pantech to be issued arising from the exercise of the options granted undertheEmployeeShareOptionScheme(“Scheme”approvedon2December2016)onthe Main Market of Bursa Securities, approval be and is hereby given to the Directors at any time and from time to time during the duration of the Scheme to offer and grant ESOS options to Lim Yoong Xao, an Independent Non-Executive Director of Pantech to subscribe for new ordinary shares of Pantech under the Scheme subject always to the following provisions:

(a) the Directors and senior management do not participate in the deliberation or discussion in respect of their own allocation;

(b) the number of new ordinary shares of Pantech allocated, in aggregate, to the Directors and senior management of Pantech and its subsidiaries which are not dormant shall notexceed40%ofthetotalnumberofnewordinarysharesofPantechtobeissuedunder the Scheme; and

(c) the number of new ordinary shares of Pantech allocated to any Eligible Employees (as defined in the Bye-Laws) who, either singly or collectively through persons connected with the Eligible Employees, holds 20% or more of the issued shares of the Company (excluding treasury shares), shall not exceed 10% of the total number of new ordinary shares of Pantech available under the Scheme.

(collectively known as the “Provisos”);

and also subject always to such terms and conditions and/or any adjustments which may be made in accordance with the provisions of the Bye-Laws of the Scheme and any prevailing guidelines issued by Bursa Securities, Main Market Listing Requirements of Bursa Securities or any other relevant authorities as amended from time to time.

AND THAT, authority be further given to the Directors to allot and issue such number of new ordinary shares of Pantech pursuant to the Scheme to Lim Yoong Xao from time to time pursuant to the exercise of such ESOS options.”

Resolution 11

9. PROPOSED ALLOCATION OF ESOS OPTIONS TO DATO’ SRI YAP TIAN LEONG

“THAT the Directors be and are hereby authorised at any time and from time to time during the duration of the Scheme to offer and grant ESOS options to Dato’ Sri Yap Tian Leong, an Independent Non-Executive Director of the Company, to subscribe for new ordinary shares of Pantech under the Scheme subject always to the Provisos referred to in Ordinary Resolution 11 above and also subject always to such terms and conditions and/or any adjustments which may be made in accordance with the provisions of the Bye-Laws of the Scheme and any prevailing guidelines issued by Bursa Securities, Main Market Listing Requirements of Bursa Securities or any other relevant authorities as amended from time to time.

AND THAT, authority be further given to the Directors to allot and issue such number of new ordinary shares of Pantech pursuant to the Scheme to Dato’ Sri Yap Tian Leong from time to time pursuant to the exercise of such ESOS options.”

Resolution 12


ANNUAL REPORT 2018

159

10. PROPOSED ALLOCATION OF ESOS OPTIONS TO NOORAINI BINTI MOHD YASIN

“THAT the Directors be and are hereby authorised at any time and from time to time during the duration of the Scheme to offer and grant ESOS options to Nooraini binti Mohd Yasin, an Independent Non-Executive Director of the Company, to subscribe for new ordinary shares of Pantech under the Scheme subject always to the Provisos referred to in Ordinary Resolution 11 above and also subject always to such terms and conditions and/or any adjustments which may be made in accordance with the provisions of the Bye-Laws of the Scheme and any prevailing guidelines issued by Bursa Securities, Main Market Listing Requirements of Bursa Securities or any other relevant authorities as amended from time to time.

AND THAT, authority be further given to the Directors to allot and issue such number of new ordinary shares of Pantech pursuant to the Scheme to Nooraini binti Mohd Yasin from time to time pursuant to the exercise of such ESOS options.”

Resolution 13

11. 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 0.50 sen per ordinary share for the financial year ended 28 February 2018 will be paid on 20 August 2018 to Depositors registered in the Record of Depositors at the closed of business at 5.00 p.m. on 2 August 2018.

A Depositor shall qualify for entitlement only in respect of:

(a) SharestransferredintotheDepositor’sSecuritiesAccountbefore4.00p.m.on2August2018,inrespectofordinaryshares; 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

KualaLumpurDate:28June2018



160

Notes:-

1. Forthepurposeofdeterminingamemberwhoshallbeentitledtoattend,speakandvoteattheAGM,theCompanyshallberequestingtheRecordofDepositorsasat19July2018.OnlyadepositorwhosenameappearsontheRecordofDepositorsasat19July2018shallbeentitledtoattendthesaidmeetingorappointproxiestoattend,speakandvoteon 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. Whereamemberisanexemptauthorisednominee,itmayappointmultipleproxiesforeachomnibusaccountitholds.

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. TheProxyFormmustbedepositedattheRegisteredOfficeoftheCompanyatNo.5-9ATheBoulevardOffices,MidValleyCity,LingkaranSyedPutra,59200KualaLumpurnotlessthan48hoursbeforethetimesetforholdingthemeetingor any adjournment thereof.

7. Explanatory Note A

ThisAgendaismeantfordiscussiononlyasundertheprovisionsofSection340(1)oftheCompaniesAct2016,theaudited 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 9 - Authority to issue shares by the Company pursuant to Sections 75 and 76 of the Companies Act 2016

TheproposedResolution9isarenewalofmandategivenbytheshareholdersatthepreviousAGMheldon26July2017,primarilytogiveflexibilitytotheBoardofDirectorstoissueandallotsharesatanytimeintheirabsolutediscretionandfor 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 intotal10%ofthetotalnumberofissuedsharesoftheCompany.TherenewedauthoritywillprovideflexibilitytotheCompany 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 expireattheconclusionofthenextAGMoftheCompany.

No shares have been issued and allotted by the Company since obtaining the said authority from its shareholders at the lastAGMheldon26July2017.


ANNUAL REPORT 2018

161

Notes:- (cont’d)

8. Explanatory Notes on Special Businesses: (cont’d)

Resolution 10 – Proposed Renewal of Share Buy-Back

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 conclusionofthenextAGMoftheCompany.

Further information on the Proposed Renewal of Share Buy-Back are set out in the Share Buy-Back Statement dated 28June2018whichhasbeendispatchedtogetherwiththeCompany’sAnnualReport2018.

Resolution 11, 12 and 13 – Proposed Allocation of ESOS Options

The proposed Resolutions 11, 12 and 13 in respect of the Proposed Allocation of ESOS Options to Lim Yoong Xao, Dato’ Sri Yap Tian Leong and Nooraini binti Mohd Yasin are intended to provide an opportunity for them to participate directly in the equity interest of the Company and to recognise their contributions and effort to the Company as they play aconstructiveroleincontributingtowardsthegrowthandperformanceoftheGroup.TheProposedAllocationofESOSOptions will also enable the Company to attract and retain capable individuals to act as non-executive directors of the CompanywhowillberesponsibleforcontributingtotheoverallstrategicdecisionsoftheGroup.

STATEMENT ACCOMPANYING NOTICE OF 12TH ANNUAL GENERAL MEETING

Pursuant to Paragraph 8.27(2) of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad, there is no person standingforelectionasDirectoroftheCompanyatthis12thAGM(excludingdirectorsstandingforre-election).



162

ANALYSIS OFSHAREHOLDINGS

as at 31 May 2018

NumberofSharesIssued : 743,550,000VotingRights : OneVotePerOrdinaryShareNo.ofShareholders : 8,541

DISTRIBUTION OF SHAREHOLDINGS AS AT 31 MAY 2018

No. of % of No. of % ofCategory Shareholders Shareholders Shares* Shares*

Lessthan100 969 11.35 36,560 0.00100–1,000 511 5.98 216,208 0.031,001–10,000 3,226 37.77 16,826,844 2.2610,001–100,000 3,326 38.94 93,867,176 12.63100,001–lessthan5%ofissuedshares 505 5.91 399,663,528 53.755%andaboveofissuedshares 4 0.05 232,939,684 31.33

Total 8,541 100.00 743,550,000 100.00

Note: * Excluding3,709,924treasurysharesretainedbytheCompany

LIST OF SUBSTANTIAL SHAREHOLDERS AS AT 31 MAY 2018

Direct Indirect No. of No. ofNo. Names Shares %* Shares %*

1. CTLCapitalHoldingSdnBhd 132,948,174 17.88 – – –2. GLManagementAgencySdnBhd 95,839,830 12.89 – – –3. KoperasiPermodalanFeldaMalaysiaBerhad 60,461,200 8.13 – – –4. EmployeesProvidentFundBoard 39,485,200 5.31 – – –5. Dato’ChewTingLeng 7,808,540 1.05 133,098,174 17.90 (a)

6. DatinShumKahLin – – 140,906,714 18.95 (b)

7. Dato’GohTeohKean 6,108,540 0.82 95,839,830 12.89 (c)

8. DatinLeeSockKee – – 101,948,370 13.71 (d)

Note:* Excludingatotalof3,709,924sharesbought-backbytheCompanyandretainedastreasuryshares

ANNUAL REPORT 2018

163

DIRECTORS’ INTERESTS IN SHARES AS AT 31 MAY 2018

Direct Indirect No. of No. ofNo. Names Shares %* Shares %*

1. Dato’ChewTingLeng 7,808,540 1.05 133,098,174 17.90 (a)

2. Dato’GohTeohKean 6,108,540 0.82 95,839,830 12.89 (c)

3. TanAngAng 12,108,253 1.63 2,148,987 0.29 (e)

4. ToTaiWai 14,305,587 1.92 – – –5. NgLeeLee 8,733,632 1.17 192,764 0.03 (f)

6. SakinahBintiSalleh 45,000 0.01 – – –7. Lim Yoong Xao – – 2,000 0.00 (g)

8. Nooraini Binti Mohd Yasin – – – – –9. Dato’ Sri Yap Tian Leong – – – – – Notes:(a) DeemedinterestedbyvirtueofhisandhisspouseDatinShumKahLin’sinterestsinCTLCapitalHoldingSdnBhdpursuant

toSection8oftheCompaniesAct,2016(“Act”),andbyvirtueofhisdaughterMsChewZhiyin’sdirectshareholdinginthe 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’sinterestsinGLManagementAgencySdnBhdpursuant to Section 8 of the Act.

(d) DeemedinterestedbyvirtueofherandherspouseDato’GohTeohKean’sinterestsinGLManagementAgencySdnBhdpursuanttoSection8oftheAct,andbyvirtueofherspouseDato’GohTeohKean’sdirectshareholdingintheCompanypursuant to Section 59(11) of the Act.

(e) DeemedinterestedbyvirtueofhisspouseMadamYongYuiKiew’sandson,MrJairusTanVernHsien’sdirectshareholdingsin 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.

* Excludingatotalof3,709,924sharesbought-backbytheCompanyandretainedastreasuryshares

Analysis ofShareholdings (cont’d)


164

30 LARGEST SHAREHOLDERS AS AT 31 MAY 2018

No. Shareholders Shareholdings %*

1. CTLCAPITALHOLDINGSDNBHD 71,151,414 9.572. KOPERASIPERMODALANFELDAMALAYSIABERHAD 60,461,200 8.133. AMSECNOMINEES(TEMPATAN)SDNBHD 43,330,030 5.83 PLEDGEDSECURITIESACCOUNT-AMBANK(M)BERHAD FORGLMANAGEMENTAGENCYSDNBHD 4. ALLIANCEGROUPNOMINEES(TEMPATAN)SDNBHD 35,989,128 4.84 PLEDGEDSECURITIESACCOUNTFORCTLCAPITALHOLDINGSDNBHD 5. GLMANAGEMENTAGENCYSDNBHD 28,303,807 3.816. GLMANAGEMENTAGENCYSDNBHD 24,205,993 3.257. CITIGROUPNOMINEES(TEMPATAN)SDNBHD 23,565,200 3.17 EMPLOYEESPROVIDENTFUNDBOARD 8. LEELIANGMONG 22,115,454 2.989. ALLIANCEGROUPNOMINEES(TEMPATAN)SDNBHD 20,320,392 2.73 PLEDGEDSECURITIESACCOUNTFORCTLCAPITALHOLDINGSDNBHD10. CITIGROUPNOMINEES(TEMPATAN)SDNBHD 10,401,800 1.40 EMPLOYEESPROVIDENTFUNDBOARD(AMUNDI)11. CITIGROUPNOMINEES(ASING)SDNBHD 9,243,800 1.24 EXEMPTANFORCITIBANKNEWYORK(NORGESBANK14)12. HSBCNOMINEES(TEMPATAN)SDNBHD 7,850,000 1.06 HSBC (M) TRUSTEE BHD FOR RHB SMALL CAP OPPORTUNITY UNIT TRUST 13. CHEWTINGLENG 7,808,540 1.0514. TOTAIWAI 7,612,874 1.0215. KONGCHIONGLEE 6,128,569 0.8216. GOHTEOHKEAN 6,108,540 0.8217. CITIGROUPNOMINEES(TEMPATAN)SDNBHD 5,518,200 0.74 EMPLOYEESPROVIDENTFUNDBOARD(RHBISLAMIC)18. CTLCAPITALHOLDINGSDNBHD 5,487,240 0.7419. TANANGANG 5,095,458 0.6920. PUBLICNOMINEES(TEMPATAN)SDNBHD 4,800,000 0.65 PLEDGEDSECURITIESACCOUNTFORCHONGKHONGSHOONG21. MAYBANKNOMINEES(TEMPATAN)SDNBHD 4,619,600 0.62 PLEDGEDSECURITIESACCOUNTFORCHONGKHONGSHOONG22. NGLEELEE 4,475,677 0.6023. CITIGROUPNOMINEES(ASING)SDNBHD 4,446,309 0.60 CBNYFORDIMENSIONALEMERGINGMARKETSVALUEFUND24. NGLEELEE 4,257,955 0.5725. LEELIANGMONG 4,154,785 0.5626. CIMBGROUPNOMINEES(TEMPATAN)SDNBHD 4,000,000 0.54 EXEMPT AN FOR PETROLIAM NASIONAL BERHAD (AMUNDI MALAYSIA) 27. TOTAIWAI 3,904,356 0.5328. MAYBANKSECURITIESNOMINEES(TEMPATAN)SDNBHD 3,672,360 0.49 PLEDGEDSECURITIESACCOUNTFORTANANGANG29. TANANGANG 3,340,435 0.4530. CITIGROUPNOMINEES(TEMPATAN)SDNBHD 3,000,000 0.40 KUMPULANWANGPERSARAAN(DIPERBADANKAN)(AMUNDISCEQ)

TOTAL : 445,369,116 59.90

* Excludingatotalof3,709,924sharesbought-backbytheCompanyandretainedastreasuryshares

Analysis ofShareholdings (cont’d)

ANNUAL REPORT 2018

165

ANALYSIS OFWARRANT HOLDINGS

as at 31 May 2018

No.ofWarrantsIssued : 89,449,551Warrants2010/2020(“WarrantA”)Exercise Price of Warrants : RM0.50Expiry Date of Warrants : 21/12/2020NoofWarrantHolders : 1,241

DISTRIBUTION OF WARRANT A HOLDINGS

No. of % of No. of % of Warrant Warrant Warrant WarrantSize of Holdings Holders Holders Holdings Holdings Lessthan100 178 14.34 7,057 0.01100-1,000 136 10.96 64,285 0.071,001–10,000 391 31.51 1,415,176 1.5810,001–100,000 425 34.25 13,957,352 15.60100,001–lessthan5%issuedWarrants 109 8.78 37,784,248 42.245%andaboveofissuedWarrants 2 0.16 36,221,433 40.50

1,241 100.00 89,449,551 100.00

DIRECTORS’ INTERESTS IN WARRANT A AS AT 31 MAY 2018

Direct Indirect No. of No. ofNo. Names Warrants % Warrants %

1. Dato’ChewTingLeng – – 20,815,677 23.27 (a)

2. Dato’GohTeohKean – – 15,405,756 17.22 (b)

3. Tan Ang Ang – – – – –4. ToTaiWai – – – – –5. Ng Lee Lee – – – – –6. SakinahBintiSalleh – – – – –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) DeemedinterestedbyvirtueofhisinterestinGLManagementAgencySdnBhdpursuanttoSection8oftheAct.


166

30 LARGEST WARRANT A HOLDERS AS AT 31 MAY 2018

No. Warrant Holders Warrant Holdings % 1. CTLCAPITALHOLDINGSDNBHD 20,815,677 23.272. AMSECNOMINEES(TEMPATAN)SDNBHD 15,405,756 17.22 PLEDGEDSECURITIESACCOUNT-AMBANK(M)BERHAD FORGLMANAGEMENTAGENCYSDNBHD 3. MAYBANKNOMINEES(TEMPATAN)SDNBHD 4,020,000 4.49 PLEDGEDSECURITIESACCOUNTFORCHONGKHONGSHOONG 4. ANGHINGTAY 1,464,080 1.645. KENANGANOMINEES(TEMPATAN)SDNBHD 1,228,060 1.37 PLEDGEDSECURITIESACCOUNTFORTIMMYGANVELI6. AMSECNOMINEES(TEMPATAN)SDNBHD 1,216,000 1.36 PLEDGEDSECURITIESACCOUNT-AMBANK(M)BERHADFORLEELIANGMONG7. ONGSOOTHIAH 906,000 1.018. CIMSEC NOMINEES (TEMPATAN) SDN BHD 900,000 1.01 CIMBBANKFORWONGLAIMOEY9. MAYBANKNOMINEES(TEMPATAN)SDNBHD 900,000 1.01 PLEDGEDSECURITIESACCOUNTFORWONGLAIMOEY10. MAYBANKNOMINEES(TEMPATAN)SDNBHD 900,000 1.01 PLEDGEDSECURITIESACCOUNTFORLEEKOKHONG11. EELICHEN 867,840 0.9712. CIMSEC NOMINEES (TEMPATAN) SDN BHD 850,000 0.95 CIMBBANKFORCHONGKHONGSHOONG13. WILLIELAUCHIENG 778,920 0.8714. CIMSECNOMINEES(TEMPATAN)SDNBHD 722,100 0.81 CIMBBANKFORNORAZMIBINABDULRAHMAN15. LIMKOKSEONG 690,000 0.7716. AFFINHWANGNOMINEES(TEMPATAN)SDN.BHD. 680,000 0.76 PLEDGEDSECURITIESACCOUNTFORLAISOONMING17. RHBNOMINEES(TEMPATAN)SDNBHD 613,300 0.69 PLEDGEDSECURITIESACCOUNTFORWONGTOONGYEW18. BEHENGPAR 606,000 0.6819. LIMTENHOCK 585,000 0.6520. MAYBANKNOMINEES(TEMPATAN)SDNBHD 547,600 0.61 SUKHBIRSINGHA/LTARASINGH21. MAYBANKNOMINEES(TEMPATAN)SDNBHD 541,400 0.60 PLEDGEDSECURITIESACCOUNTFORLOWKOKANG22. CHANSIEWKUEN 519,600 0.5823. CHEONGYUENLAI 500,000 0.5624. NGANLAYHOON 500,000 0.5625. CHOOWENGHONG 454,660 0.5126. CITIGROUPNOMINEES(TEMPATAN)SDNBHD 437,400 0.49 PLEDGEDSECURITIESACCOUNTFORCHONGWANTAT27. LEECHEEKEONG 432,000 0.4828. NGSZEYEE 400,000 0.4529. NGSENGNAM 397,000 0.4430. PUBLICNOMINEES(TEMPATAN)SDNBHD 377,400 0.42 PLEDGEDSECURITIESACCOUNTFOROOITHIANCHAI

TOTAL : 59,255,793 66.24

Analysis ofWarrant Holdings (cont’d)

ANNUAL REPORT 2018

167


No.ofWarrantsIssued : 60,787,487Warrants2016/2021(“WarrantB”)Exercise Price of Warrants : RM0.50Expiry Date of Warrants : 21/12/2021NoofWarrantHolders : 6,772

DISTRIBUTION OF WARRANT B HOLDINGS

No. of % of No. of % of Warrant Warrant Warrant WarrantSize of Holdings Holders Holders Holdings Holdings Lessthan100 1,341 19.80 27,495 0.04100-1,000 2,443 36.08 1,026,470 1.691,001–10,000 2,466 36.41 6,303,412 10.3710,001–100,000 437 6.45 12,833,902 21.11100,001–lessthan5%issuedWarrants 82 1.21 26,223,003 43.145%andaboveofissuedWarrants 3 0.05 14,373,205 23.65

6,772 100.00 60,787,487 100.00

DIRECTORS’ INTERESTS IN WARRANT B AS AT 31 MAY 2018

Direct Indirect No. of No. ofNo. Names Warrants % Warrants %

1. Dato’ChewTingLeng 459,045 0.76 11,079,014 18.23 (a)

2. Dato’GohTeohKean 459,045 0.76 7,986,651 13.14 (b)

3. TanAngAng 533,768 0.88 166,582 0.27 (c)

4. ToTaiWai 884,406 1.45 – – –5. NgLeeLee 727,802 1.20 16,063 0.03 (d)

6. SakinahBintiSalleh – – – – –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) DeemedinterestedbyvirtueofhisinterestinGLManagementAgencySdnBhdpursuanttoSection8oftheAct.(c) DeemedinterestedbyvirtueofhisspouseMadamYongYuiKiew’sdirectwarrantholdingintheCompanypursuantto

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.


168

30 LARGEST WARRANT B HOLDERS AS AT 31 MAY 2018

No. Warrant Holders Warrant Holdings %

1. CTLCAPITALHOLDINGSDNBHD 5,929,284 9.762. AMSECNOMINEES(TEMPATAN)SDNBHD 3,610,835 5.94 PLEDGEDSECURITIESACCOUNT-AMBANK(M)BERHAD FORGLMANAGEMENTAGENCYSDNBHD3. ALLIANCEGROUPNOMINEES(TEMPATAN)SDNBHD 2,999,094 4.93 PLEDGEDSECURITIESACCOUNTFORCTLCAPITALHOLDINGSDNBHD4. GLMANAGEMENTAGENCYSDNBHD 2,358,650 3.885. GLMANAGEMENTAGENCYSDNBHD 2,017,166 3.326. ALLIANCEGROUPNOMINEES(TEMPATAN)SDNBHD 1,693,366 2.79 PLEDGEDSECURITIESACCOUNTFORCTLCAPITALHOLDINGSDNBHD7. LOOIBOONFUI 1,437,800 2.378. TOTAIWAI 884,406 1.459. GANEECHORNG 820,600 1.3510. CHUJINKANG 500,000 0.8211. KONGCHIONGLEE 473,214 0.7812. CHEWTINGLENG 459,045 0.7613. GOHTEOHKEAN 459,045 0.7614. CTLCAPITALHOLDINGSDNBHD 457,270 0.7515. PUBLICNOMINEES(TEMPATAN)SDNBHD 450,000 0.74 PLEDGEDSECURITIESACCOUNTFORWONGAHCHOON16. RHBNOMINEES(TEMPATAN)SDNBHD 445,000 0.73 PLEDGEDSECURITIESACCOUNTFORWONGTOONGYEW17. KENANGANOMINEES(TEMPATAN)SDNBHD 418,600 0.69 RAKUTENTRADESDNBHDFORLEEKOKHONG18. WONGCHIEKIONG 400,000 0.6619. YONGSIEWKAT 400,000 0.6620. PUBLICNOMINEES(TEMPATAN)SDNBHD 398,718 0.65 PLEDGEDSECURITIESACCOUNTFOROOITHIANCHAI21. LOWEWEHUM 390,010 0.6422. MAYBANKNOMINEES(TEMPATAN)SDNBHD 386,001 0.63 PLEDGEDSECURITIESACCOUNTFORCHIAMUISENG23. LEEHIEWCHET 375,000 0.6224. NGLEELEE 372,973 0.6225. LAWKINGYONG 370,000 0.6126. LIMSOONBENG 369,516 0.6027. MAYBANKNOMINEES(TEMPATAN)SDNBHD 356,000 0.58 PLEDGEDSECURITIESACCOUNTFORTANCHINHOOI28. NGLEELEE 354,829 0.5829. W MOHD SHARIF BIN WAN MUDA 350,000 0.5730. MAYBANKNOMINEES(TEMPATAN)SDNBHD 344,541 0.57 PLEDGEDSECURITIESACCOUNTFORCHANBEEHWA

TOTAL : 30,280,963 49.81


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 TwelfthAnnualGeneralMeeting(“AGM”)oftheCompanytobeheldatDiamondRoom3,Level10,HolidayVillaJohorBahruCityCentre,260,JalanDato’Sulaiman,TamanAbad,80250JohorBahru,JohoronThursday,26July2018at11.00a.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 0.50 sen per ordinary share for the financial year ended 28 February 2018.

2. To approve the payment of Directors’ fees and benefits up to the amount of RM180,000 for the financial year ending 28 February 2019.

3. To re-elect Mr Tan Ang Ang who retires pursuant to Article 122.

4. To re-elect Ms Ng Lee Lee who retires pursuant to Article 122.

5. To re-elect Mr Lim Yoong Xao who retires pursuant to Article 127.

6. To re-elect Dato’ Sri Yap Tian Leong who retires pursuant to Article 127.

7. To re-elect Puan Nooraini Binti Mohd Yasin who retires pursuant to Article 127.

8. To re-appointMessrsGrant ThorntonMalaysia as Auditors of theCompany and to authorise the Directors to fix their remuneration.

SPECIAL BUSINESS

9. Authority to issue shares by the Company pursuant to Sections 75 and 76oftheCompaniesAct,2016.

10. Proposed Renewal of Share Buy-Back.

11. Proposed Allocation of ESOS Options to Lim Yoong Xao.

12. Proposed Allocation of ESOS Options to Dato’ Sri Yap Tian Leong.

13. Proposed Allocation of ESOS Options to Nooraini Binti Mohd Yasin.

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 .............................. 2018

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 2018. Only a depositor whose name appears on the Record of Depositors as at 19 July 2018 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 Registered Office of the Company at No. 5-9A The Boulevard Offices, Mid Valley City, Lingkaran

Syed Putra, 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.

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THE COMPANY SECRETARYPANTECH GROUP HOLDINGS BERHAD(733607-W)No. 5-9A The Boulevard OfficesMidValleyCityLingkaran Syed Putra59200KualaLumpur

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18 A N N U A L R E P O R T 2 0 1 8

ONE-STOP CENTRE P I P E S • VA LV E S • F I T T I N G S

PANTECH CORPORATION SDN. BHD. (176321-P)

Johor Bahru Head OfficePTD 204334




Tel: +607 259 7979 Fax: + 607 256 7588/7589


Shah Alam Office & WarehouseNo. 3, Jalan Trompet 33/8

Seksyen 33, 40400 Shah Alam Selangor Darul Ehsan, Malaysia

Tel: +603 5192 7995 Fax: +603 5192 7992


Port Klang Free Zone WarehousePersiaran Port Klang FZ 7, Jalan FZ 6-P1

Port Klang Free Zone / KS 12 42920 Pulau Indah


Tel: +603 3101 3767 Fax: +603 3101 4767


Pengerang WarehouseLot LO129, Kampung Bukit Gelugur

81600 Pengerang Johor Darul Takzim, Malaysia

Tel: +607 826 5235 Fax: +607 826 6237


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

Kuantan Sales Office & Warehouse Lot 5, Jalan Industri Semambu 2

Kawasan Perindustrian Semambu 25350 Kuantan

Pahang Darul Makmur, Malaysia

Tel: +609 568 7550 Fax: +609 568 7553


PANAFLO CONTROLS PTE. LTD. (200413822 D)

Singapore Sales Office & WarehouseNo. 22, Pioneer Crescent

#02-06 West Park Biz Central Singapore 628556

Tel: +65 6562 3048 Fax: +65 6562 3148


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

PTD 204334 Jalan Platinum Utama

Kawasan Perindustrian Pasir Gudang Zon 12B

81700 Pasir Gudang Johor Darul Takzim, Malaysia


PANTECH STEEL INDUSTRIES SDN. BHD. (509731-A)

ManufacturerLot 13258 & 13259

Jalan Haji Abdul Manan, Off Jalan Meru 42200 Kapar


Tel: +603 3393 1633 Fax: +603 3392 8966


PANTECH STAINLESS & ALLOY INDUSTRIES SDN. BHD.

(733428-W)

ManufacturerPTD 204334




Tel: +607 251 8888 Fax:+607 251 9999


NAUTIC STEELS LIMITED, UNITED KINGDOM (02302004)

ManufacturerNautic House, Claymore,

Tame Valley Industrial Estate, Tamworth, Staffordshire,

England, B77 5DQ

Tel: +44 (0)1827 281111 Fax:+44 (0)1827 281444


PANTECH GALVANISING SDN. BHD. (1162100-W)

Hot-dip Galvanising PlantPLO 7, Jalan Rumbia 4

Kawasan Perindustrian Tanjung Langsat 81700 Pasir Gudang


Tel: +607 257 5800 Fax: +607 257 5888


ONE-STOP CENTRE...Pantech Grou P h oldin G s Berhad (733607-W) Annu A l Repo R t 2018 ANNUAL REPOR T...

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