HO WAH GENTING BERHAD · Ho Wah Genting Berhad (272923-H) annual report 2017 1 NOTICE IS HEREBY...

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Wisma Ho Wah Genting, No. 35, Jalan Maharajalela, 50150 Kuala Lumpur

T 603 2143 8811 F 603 2141 7477

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1Notice of Annual General

Meeting

4Corporate Information

5Group Corporate Structure

6Board of Directors and Group

President

8Profile of Board of Directors

12Profile of Key Senior Management

14Group Executive Chairman’s

Statement

17Corporate Social Responsibility

Statement

21Management Discussion and

Analysis

34Corporate Governance

Overview Statement

48Audit Committee Report

50Sustainability Statement

52Statement On Risk Management

And Internal Control

54Directors’ Responsibility Statement

55Financial Statements

123Analysis of Shareholdings

125Analysis of Warrantholdings

127List of Properties

Proxy Form

Customer Oriented, Quality Assurance and Price Competitiveness”We aim to be a globally recognized Supplier of raw materials, semi finished and finished products.

VISION

MISSIONOur focus is:

Our Customers

Our Employees

Our Stockholders

Our Environment

Our Community

To provide quality products and services that fully meet their requirements and expectations. To develop new and innovative products to improve their competitiveness within their markets.

To provide a safe working environment that encourages trust, commitment and personal development and involvement.

To manage the business profitably for continuation and growth of the Company.

To respond pro-actively to environmental issues as a part of our business approach in the production process especially to adopt the practices of using the most environmental friendly, ecological and cost effective extraction method.

To promote good spirit of corporate citizenship culture and contribute towards fulfillment of social responsibility.

“

1Ho Wah Genting Berhad (272923-H) annual report 2017

NOTICE IS HEREBY GIVEN that the Twenty Fifth Annual General Meeting (“AGM”) of the Company will be held at Mandarin A, Level 6, Mandarin Court Hotel Kuala Lumpur, No. 55, Jalan Maharajalela, 50150 Kuala Lumpur on Wednesday, 30 May 2018 at 9:30 a.m. for the following businesses:

AGENDAAs Ordinary Business

1. To receive the audited Financial Statements of the Company for the financial year ended 31 December 2017 and the Reports of the Directors and Auditors thereon.

Please refer to Note A

2. To approve the payment of Directors’ fees and benefits payable amounting to RM157,857 for the financial year ended 31 December 2017.

Resolution 1

3. To approve the payment of Directors’ fees of RM30,000 per annum and meeting allowance of RM500 per day per Non-Executive Director for the financial year ending 31 December 2018.

Resolution 2

4. To re-elect the following Directors retiring pursuant to Article 99 of the Company’s Articles of Association:4.1 Mr. Wong Tuck Jeong

4.2 Mr. Tee Lay Peng

4.3 Mr. Lim Wee Kiat

Resolution 3

Resolution 4

Resolution 5

5. To re-appoint Messrs Russell Bedford LC & Company as Auditors and to authorize the Board of Directors to fix their remuneration.

Resolution 6

As Special Business To consider and if thought fit, to pass the following resolutions:

6. Ordinary ResolutionAuthority to Allot Shares Pursuant to Section 76 of the Companies Act, 2016 (“the Act”)“THAT subject to the Act, the Articles of Association of the Company, approval from Bursa Malaysia Securities Berhad and other relevant authorities, where such approval is necessary, authority be and is hereby given to the Board of Directors pursuant to Section 76 of the Act, to issue and allot shares in the Company at any time upon such terms and conditions and for such purposes as the Directors may in their discretion deem fit, provided always that the aggregate number of shares to be issued does not exceed ten percent (10%) of the total number of issued shares of the Company for the time being and the Directors be and are also empowered to obtain approval for the listing of and quotation on Bursa Malaysia Securities Berhad, for the additional shares so issued and THAT such authority shall continue to be in force until the conclusion of the next Annual General Meeting of the Company.”

Resolution 7

7. Ordinary ResolutionRetention of Independent Non-Executive Directors7.1 “THAT subject to the passing of Resolution 3, Mr. Wong Tuck Jeong be retained as Independent Non-

Executive Director of the Company pursuant to the Malaysian Code of Corporate Governance 2017.”

7.2 “THAT subject to the passing of Resolution 4, Mr. Tee Lay Peng be retained as Independent Non-Executive Director of the Company pursuant to the Malaysian Code of Corporate Governance 2017.”

7.3 “THAT Dato’ Mohd Shahar Bin Abdul Hamid be retained as Independent Non-Executive Director of the Company pursuant to the Malaysian Code of Corporate Governance 2017.”

Resolution 8

Resolution 9

Resolution 10

8. Ordinary Resolution Proposed Renewal of and New Shareholders’ Mandate for The Recurrent Related Party Transactions (“RRPT”) of a Revenue or Trading Nature“THAT subject to Bursa Malaysia Securities Berhad Main Market Listing Requirements, approval be and is hereby given to the Company and its subsidiaries (“the Group”) to enter into and to give effect to the category of recurrent related party transactions of a revenue or trading nature from time to time as specified in Section 2.4 of the Circular to Shareholders dated 30 April 2018, provided that such transactions are:

Resolution 11

Notice of Annual General Meeting

2 Ho Wah Genting Berhad (272923-H) annual report 2017

(i) recurrent transactions of a revenue or trading nature;

(ii) necessary for the Company’s day-to-day operations;

(iii) carried out in the ordinary course of business on normal commercial terms which are not more favourable to the related parties than those generally available to the public; and

(iv) not to the detriment of minority shareholders,

(the “mandate”);

AND THAT the authority conferred by such mandate shall commence immediately upon the passing of this ordinary resolution and continue to be in force until:

(a) the conclusion of the next Annual General Meeting (“AGM”) of the Company following this AGM at which such mandate was passed, at which time it will lapse, unless by a resolution passed at the next meeting, the authority is renewed;

(b) the expiration of the period within which the next AGM of the Company after that date is required to be held pursuant to Section 340(2) of the Act (but must not extend to such extension as may be allowed pursuant to Section 340(4) of the Act); or

(c) revoked or varied by resolution passed by the shareholders in general meeting;

whichever is the earlier;

AND FURTHER THAT the Directors of the Company be authorized to complete and do all such acts and things (including executing such documents as may be required), as they may consider expedient or necessary to give effect to the mandate.”

9. To transact any other business of which due notice shall have been given in accordance with the Act.

By Order of the Board

Coral Hong Kim Heong(MAICSA 7019696)Company Secretary

Kuala LumpurDate: 30 April 2018

Notice of Annual General Meeting (cont’d)

Notes:

A This Agenda item is meant for discussion only as the provision of Section 340(1)(a) of the Act and the Company’s Articles of Association do not require a formal approval of the shareholders and hence, is not put forward for voting.

1. Members Entitled To Attend: only members whose names appear in the Record of Depositors as at 23 May 2018 shall be entitled to attend the meeting.

2. Voting By Poll: Pursuant to Paragraph 8.29A(1) of the Main Market Listing Requirements of Bursa Malaysia Securities Bhd, all the resolutions set out in this Notice shall be put to vote by poll.

3. A member entitled to attend and vote at the meeting is entitled to appoint not more than two (2) proxies to attend and vote in his stead.

A proxy appointed to attend and vote shall have the same rights as the member to speak at the meeting. 4. Where a member of the Company is an authorized nominee as defined under the Securities Industry (Central Depositories) Act 1991, it

may appoint not more than two (2) proxies in respect of each securities account it holds.


Notice of Annual General Meeting (cont’d)

Notes (cont’d):

5. Where a member of the Company is an exempt authorized nominee which holds ordinary shares in the Company for multiple beneficial owners in one securities account (“Omnibus Account”), there is no limit to the number of proxies which the exempt authorized nominee may appoint in respect of each Omnibus Accounts it holds.

6. Where a member or the authorized nominee appoints two (2) proxies, or where an exempt authorized nominee appoints two (2) or more proxies, the appointment shall be invalid unless the member / authorized nominee / exempt authorized nominee specifies the proportions of shareholdings to be represented by each proxy.

7. The instrument appointing a proxy must be deposited at the registered office of the Company not less than twenty-four (24) hours before the time appointed for the meeting.

8. In the case of a corporate member, the instrument appointing a proxy must be executed under its Common Seal or under the hand of its attorney.

9. If the Proxy Form is returned without any indication as to how the proxy shall vote, the proxy will vote or abstain as he thinks fit.

Explanatory Notes:

10. The breakdown of payment of director fees and benefits in kind are as follows:

Type Amount (RM)Fees 120,000Benefits in Kind 37,857

11. The proposed Resolution No. 7, if passed, will give the Directors of the Company the continuing authority to issue shares in the Company up to an amount not exceeding in total 10% of the issued share capital of the Company for such purposes as the Directors consider would be in the interest of the Company. This authority, unless revoked or varied at a general meeting, will expire at the next AGM of the Company.

No new shares in the Company were issued pursuant to the mandate given to the Directors at the last Annual General Meeting in 2017.

The renewal of mandate pursuant to Section 76 of the Act, will provide flexibility to the Company for any possible fund-raising activities, including but not limited to further placing of shares, for purpose of funding future investment project(s), working capital and/or acquisitions, which the Directors deem necessary and feasible.

12. The proposed Resolutions No. 8, 9 and 10, if passed, will retain Mr. Wong Tuck Jeong, Mr. Tee Lay Peng and Dato’ Mohd Shahar Bin Abdul Hamid as Independent Non-Executive Directors of the Company.

The above three Directors have served for more than 9 years as they were appointed Independent Directors of the Company on 21 June 2001 (for Mr. Wong Tuck Jeong), 11 December 2007 (for Mr. Tee Lay Peng), and 3 March 2008 (Dato’ Mohd Shahar Bin Abdul Hamid). Pursuant to the Malaysian Code of Corporate Governance 2017, the Board of Directors through the Nomination and Remuneration Committee had in its February 2018 meeting reviewed the independence of the aforesaid three Directors and is satisfied that the aforesaid three Directors have been and can continue to bring independent and objective judgment to Board deliberations and decisions and have consistently question management in an effective and constructive manner. Therefore, the Board of Directors (save for the aforesaid three Directors) recommends to the shareholders for approval, the resolutions to retain Mr. Wong Tuck Jeong, Mr. Tee Lay Peng and Dato’ Mohd Shahar Bin Abdul Hamid as Independent Directors and that the resolution to retain Mr. Wong Tuck Jeong be voted through a two-tier voting process as he has served more than 12 years. The profile of the aforesaid three Directors are set out in the Annual Report 2017.

13. Proposed Renewal of and new shareholders’ mandate for the RRPT.

The proposed Ordinary Resolution No. 11, if passed, will enable the Company and its subsidiaries (“the Group”) to enter into RRPT to facilitate transactions in the normal course of business of the Group which are transacted from time to time with the specified classes of related parties, provided that they are carried out on an arm’s length basis and on normal commercial terms and are not prejudicial to the shareholders on terms not more favourable to the related parties than those generally available to the public and are not to the detriment of the minority shareholders of the Company.

The mandate, unless revoked or varied by the Company at a general meeting, will expire at the next Annual General Meeting of the Company.

Further information on the proposed renewal of shareholders’ mandate for the RRPT of the Company are contained in the Circular to Shareholders dated 30 April 2018, accompanying the Company’s Annual Report 2017.


GROUP PRESIDENT

Dato’ Lim Hui Boon

AUDIT COMMITTEE

Mr. Tee Lay Peng (Chairman)Independent Non-Executive Director

Dato’ Mohd Shahar Bin Abdul HamidSenior Independent Non-Executive Director

Mr. Wong Tuck JeongIndependent Non-Executive Director

Ms. Elaine Tan Ai LinIndependent Non-Executive Director

NOMINATION ANDREMUNERATION COMMITTEE

Dato’ Mohd Shahar Bin Abdul Hamid (Chairman)Senior Independent Non-Executive Director

Mr. Tee Lay PengIndependent Non-Executive Director



Encik Adanan Bin BaharumAdviser

EMPLOYEES’ SHARE OPTION SCHEME COMMITTEE

Datuk William Teo TiewGroup Executive Chairman

Mr. Song Kok SengVice President of Operations – PT. Ho Wah Genting

Encik Adanan Bin BaharumSenior Manager

COMPANY SECRETARY

Ms. Coral Hong Kim HeongMAICSA 7019696

REGISTERED OFFICE

Wisma Ho Wah Genting1st Floor, No. 35, Jalan Maharajalela50150 Kuala LumpurTel No.: 603 2143 8811Fax No.: 603 2141 7477e-mail: [email protected]: www.hwgenting.com.my

SUBSIDIARY COMPANIES’ WEBSITE

www.hw-genting.comwww.hwgwirecable.com.mywww.hwgholidays.comwww.hwgenting-mm2h.com

AUDITORS

Messrs Russell Bedford LC & Company (AF 1237)Chartered Accountants10th Floor, Bangunan Yee Seng15, Jalan Raja Chulan50200 Kuala LumpurTel No.: 603 2031 8223Fax No.: 603 2031 4223

REGISTRAR (SHARE AND WARRANT)

Symphony Share Registrars Sdn Bhd (378993-D)Level 6, Symphony House Pusat Dagangan Dana 1Jalan PJU 1A/4647301 Petaling Jaya, SelangorTel No.: 603 7849 0777 (Help desk)Fax No.: 603 7841 8151/52Email: [email protected]

PRINCIPAL BANKERS

CIMB Bank Berhad

Export-Import Bank of Malaysia Berhad

RHB Bank Berhad

HSBC Bank Malaysia Berhad

PT. Bank Negara Indonesia (Persero) Tbk.

The Hong Kong and Shanghai Banking Corporation Ltd.(Batam Branch, Indonesia)

STOCK ExCHANGE LISTING

Main Market of Bursa Malaysia Securities Berhad Sector : Industrial Products

SECURITIES STOCK STOCK NAME CODEShare : HWGB 9601Warrant D : HWGB-WD 9601WD(2016-2021)

Listed on 2nd Board on Bursa Malaysia on 28 December 1994 and transferred to Main Board (now known as Main Market) on 2 November 2000.

DOMICILE AND DATE OF INCORPORATION

Incorporated in Malaysia on 12 August 1993


Dato’ Lim Ooi HongManaging Director/Chief Executive Officer

Mr. Lim Wee KiatExecutive Director

Dato’ Mohd Shahar Bin Abdul HamidSenior Independent Non-Executive Director

Mr. Tee Lay PengIndependent Non-Executive Director



BoArd of directors

Corporate information


Investment holding and provision of management services

HO WAH GENTING KINTRON SDN BHD (187449-H)Investment Holding PT. HO WAH GENTING

(C-01844, HT.01.01.TH.2002)(Incorporated in Batam, Riau, Indonesia)Manufacturing of wire and cable, moulded power supply cord sets and cable assemblies for electrical and electronic devices and equipment.

HWG TRAVEL (MM2H) SDN BHD (723626-x)Rendering personalized services such as immigration matters and other related services to any person setting up their second home in Malaysia under the “Malaysia My Second Home” programme.

HWG MINERALS SDN BHD (748325-A)Investment Holding

REx ORIENTAL SDN BHD (1056831-K)Investment Holding

HO WAH GENTING (LABUAN) LTD (LL 01593) (Incorporated in Federal Territory of Labuan)Dormant

HWG DUTY FREE SDN BHD (1049687-D)Dormant

HWG CONSORTIUM SDN BHD (1006524-T)Dormant

HWG TIN MINING SDN BHD (780009-V)Tin Mining and its related activities

HO WAH GENTING TRADING SDN BHD (244973-P)Trading of wire and cable

HO WAH GENTING HOLIDAY SDN BHD (203789-P)Travel agent and tour related services

(272923-H)

Group corporate structure

100%

100%

6.4%

100%

100%

100%

100%

100%

51%

99.48%

93.6%

51%

Dufry HWG Shopping Sdn Bhd (1248672-U)Duty and tax free shop49%


Board of Directors and Group President

1. Datuk William Teo Tiew Group Executive Chairman

2. Dato’ Lim Hui Boon Group President

3. Dato’ Lim Ooi Hong Managing Director/ ChiefExecutiveOfficer

4. Mr. Lim Wee Kiat Executive Director

1

2

3

4


5. Mr. Tee Lay Peng Independent Non-Executive Director

6. Dato’ Mohd Shahar Bin Abdul Hamid Senior Independent Non-Executive Director

7. Mr. Wong Tuck Jeong Independent Non-Executive Director

8. Ms. Elaine Tan Ai Lin Independent Non-Executive Director

5

6

7

8


Profile of Board of directors

Datuk William Teo Tiew was the first Director of the Company since incorporation on 12 August 1993 and he is presently the Group Executive Chairman of the Company.

He is a fellow of the Chartered Association of Certified Accountants since 1984 and a member of the Malaysian Institute of Accountants since 9 April 1987. He joined Ho Wah Genting Group Sdn Bhd (“HWGG”) in 1990 as Group Accountant and Corporate Planner in charge of HWGG’s financial affairs, investment, corporate planning and overall management. He has no directorship in other public companies.

He began his career in auditing with Messrs Robert Teo, Kuan & Co, a public accounting firm with his last held position as Audit Manager, where he gained many years of experience in auditing a portfolio of clients ranging from manufacturing, trading, investment holding, property development, engineering and transportation.

On 14 October 2012, Tuan Yang Terutama Yang di-Pertua Negeri Melaka conferred on him the Darjah Pangkuan Seri Melaka (D.P.S.M.) which carries the title of “Datuk”.

Datuk William Teo Tiew holds 56,325 ordinary shares, 25,000 Warrant 2016/2021 and 750,000 ESOS in the Company. He does not have any family relationship with any other Directors and/or major shareholders of the Company and has no conflict of interest with the Company.

He has never been convicted for any offences within the past five years and neither been imposed any public sanction or penalty by any regulatory bodies during the financial year.

Dato’ Lim Ooi Hong was appointed as the Managing Director/Chief Executive Officer of the Company on 30 August 2012. He obtained his Bachelor Degree in Business (Business Administration) from RMIT University, Australia.

He was the Executive Director and Group Chief Executive Officer of Ding He Mining Holdings Limited (“DHM”) (formerly known as CVM Minerals Limited), a public company listed on the Stock Exchange of Hong Kong Limited from 1 June 2011 to 7 August 2012 and was appointed as Vice Chairman from 7 August 2012 to 8 May 2015 as he resigned from DHM. During his tenure of office with DHM, he oversees DHM’s construction and operation of the magnesium smelter situated in Perak, Malaysia. He has no directorship in other public companies.

On 26 December 2013, the Sultan of Pahang, Sultan Ahmad Shah conferred on him the Darjah Indera Mahkota Pahang (D.I.M.P.) which carries the title of “Dato’ ”.

Dato’ Lim Ooi Hong is deemed interested in the securities of the Company and its subsidiaries through Ho Wah Genting Holding Sdn Bhd, the major shareholder of the Company by virtue of Section 8(4) of the Companies Act, 2016. He also holds 625,000 ESOS in the Company. He is the son of Dato’ Lim Hui Boon, the Group President of the Company, and the brother of Mr. Lim Wee Kiat, an Executive Director and a substantial shareholder of the Company. He does not have any conflict of interest with the Company save and except for the transaction(s) disclosed in Note 30 to the Financial Statements. He has never been convicted for any offences within the past five years and neither been imposed any public sanction or penalty by any regulatory bodies during the financial year.

Datuk William Teo TiewGroup Executive ChairmanMember of Employees’ Share Option Scheme CommitteeAged 58, Male, Malaysian

Dato’ Lim Ooi HongManagingDirector/ChiefExecutiveOfficerAged 42, Male, Malaysian


Profile of Board of directors (cont’d)

Mr. Lim Wee Kiat was appointed an Executive Director of the Company on 25 June 2010. He holds a Bachelor of Science (Honours) in Computing and Information Systems from University of Nottingham, Nottingham, United Kingdom in 2003. He obtained a Postgraduate Certificate in Network Computing from University of Monash, Victoria, Melbourne in 2005. He also holds an Advance Diploma in Information Technology from Royal Melbourne Institute of Technology, Victoria, Melbourne in 2001.

Prior to joining the Group, he has over 9 years of experience in the Information Technology sector with his last position as System Engineer.

Mr. Lim Wee Kiat is deemed interested in the securities of the Company and its subsidiaries through Ho Wah Genting Holding Sdn Bhd, the major shareholder of the Company by virtue of Section 8(4) of the Companies Act, 2016. He also holds 500,000 ESOS in the Company. He is the son of Dato’ Lim Hui Boon, the Group President of the Company. He is the brother of Dato’ Lim Ooi Hong, the Managing Director/Chief Executive Officer and a substantial shareholder of the Company. He does not have any conflict of interest with the Company save and except for the transaction(s) disclosed in Note 30 to the Financial Statements.

He has no directorship in other public companies and has never been convicted for any offences within the past five years and neither been imposed any public sanction or penalty by any regulatory bodies during the financial year.

Dato’ Mohd Shahar Bin Abdul Hamid was appointed an Independent Non-Executive Director of the Company on 3 March 2008. He is the Senior Independent Director to whom concerns may be conveyed.

He obtained Grade 1 for his Senior Cambridge Examinations in 1954. He took up General Engineering Courses under the Training within Industry programme in the United Kingdom, funded by Shell Malaysia scholarship.

Dato’ Mohd Shahar served Shell Malaysia Trading Sdn Bhd in various senior positions from October 1960 to 1971.

In September 1971, Dato’ Mohd Shahar was invited to serve as Managing Director of Pernas Trading Sdn Bhd. In the years from 1971 to 1974, he was appointed the Deputy Leader of the First Malaysian Trade Delegations (Direct Trade) to China (The Canton Trade Fair) held twice a year in April and October. Thereafter, he was appointed the Leader for the Delegation for four consecutive trips. In 1974, he was appointed as the Managing Director of Pernas Edar Sdn Bhd.

In 1977, he was invited to serve as Managing Director of Gula Negeri Sembilan Sdn Bhd to carry out Project Reappraisal following which he ventured into housing development and fertilizer processing businesses.

Dato’ Mohd Shahar previously held positions as Independent Director of Antah Sdn Bhd which was subsequently listed on Bursa Malaysia Securities Berhad in 1984 under the name Antah Holdings Berhad of which he also acts as Audit Committee Chairman in 1994 until Sino Hua-An International Berhad (“Hua-An”) took over the listing status of Antah Holdings Berhad in March 2007. He was appointed as Independent Non-Executive Director and Audit Committee Chairman of Hua-An. He has no directorship in other public companies.

He is one of the founding members of Lembaga Pemegang Amanah Yayasan Negeri Sembilan until December 2006 and a Trustee of Tuanku Ja’afar Educational Trust.

Dato’ Mohd Shahar has been conferred the Darjah Paduka Tuanku Jaafar (D.P.T.J.) which carries the honourable title of “Dato’”, Darjah Setia Negeri Sembilan (D.S.N.), and Pingat Jasa Kebaktian (P.J.K.) by DYMM Yang di-Pertuan Besar Negeri Sembilan. He was conferred the Kesatria Mangku Negara (K.M.N.) by his Majesty the Yang di-Pertuan Agong.

Dato’ Mohd Shahar has no shareholdings whether direct or indirect in the Company and its subsidiaries. He has no family relationship with any Directors and/or major shareholders of the Company and has no conflict of interest with the Company.


Mr. Lim Wee KiatExecutive Director Aged 38, Male, Malaysian

Dato’ Mohd Shahar Bin Abdul HamidSenior Independent Non-Executive DirectorMember of Audit CommitteeChairman of Nomination and Remuneration CommitteeAged 82, Male, Malaysian



Mr. Tee Lay Peng was appointed an Independent Non-Executive Director of the Company on 11 December 2007.

Mr. Tee is a member of The Malaysian Institute of Certified Public Accountants since 1987 and a registered member of the Malaysian Institute of Accountants since 1988. He is also a Certified Financial Planner registered with the Financial Planning Association of Malaysia since 2003. Mr. Tee holds a Master of Business Administration from the University of Hull, London, United Kingdom.

He was formerly an Independent Non-Executive Director of DPS Resources Berhad and also the Chairman of its Audit Committee and Risk Management Committee. On 30 September 2013, he was appointed an Independent Non-Executive Director of Sycal Ventures Berhad.

He has more than 24 years of extensive experience in the fields of finance, accounting, auditing and management consultancy. In 1995, he set-up his own consulting firm providing financial and management advisory services. He also holds position as financial controller/corporate advisor in various non-listed companies. In 2010, he was appointed as the corporate advisor of an oil and gas company and subsequently appointed as Chief Executive Officer until 2015. During his tenure, he was tasked with the “turnaround” corporate exercise.

Save as disclosed above, he has no directorship in other public companies.

Mr. Tee has no shareholding whether direct or indirect in the Company and its subsidiaries. He does not have any family relationship with any other Directors and/or major shareholders of the Company and has no conflict of interest with the Company.


Mr. Wong Tuck Jeong was appointed an Independent Non-Executive Director of the Company on 21 June 2001.

Mr. Wong graduated with a Second Class (Honours) L.L.B. Degree from University of Southampton, England in 1984. He was a Barrister-at-Law in England and was called to the English Bar at Inner Temple, London in 1985.

He had chambered with Messrs Chua Brothers, Azzat and Xavier and was called to the Malaysian Bar in November 1986. He was a legal assistant with Messrs A.K. Lee & Co. from 1986 to 1988 before setting-up his own practice, Messrs Tuck Jeong & Lee in 1988. He has over 30 years of extensive experience in conveyance and litigation.

Mr. Wong has no directorship in other public companies and has no shareholding whether direct or indirect in the Company and its subsidiaries. He has no family relationship with any other Directors and/or major shareholders of the Company and has no conflict of interest with the Company.


Mr. Tee Lay PengIndependent Non-Executive DirectorChairman of Audit CommitteeMember of Nomination and Remuneration CommitteeAged 57, Male, Malaysian

Mr. Wong Tuck JeongIndependent Non-Executive DirectorMember of Audit CommitteeMember of Nomination and Remuneration CommitteeAged 58, Male, Malaysian



Ms. Elaine Tan Ai Lin was appointed an Independent Non-Executive Director of the Company on 2 January 2013. She was appointed on 19 March 2013 as a member of the Audit Committee, and a member of the Nomination and Remuneration Committee of the Company.

She holds a Bachelor of Laws from the University of Wales, Cardiff, United Kingdom. She was called to the Malaysian Bar in 2001. She chambered and practiced in several firms prior to joining Messrs Tan, Goh & Associates as a partner in 2011. She has over 16 years of experience practicing as an advocate and solicitor specializing in corporate finance, mergers and acquisitions and other corporate and commercial matters.

Ms. Elaine Tan has no shareholding whether direct or indirect in the Company and its subsidiaries. She does not have any family relationship with any other Directors and/or major shareholders of the Company and has no conflict of interest with the Company. She has no directorship in other public companies.

She has never been convicted for any offences within the past five years and neither been imposed any public sanction or penalty by any regulatory bodies during the financial year.

Note:Details of the Directors’ attendance at Board Meetings are set out in the Corporate Governance Overview Statement of this Annual Report 2017.

Ms. Elaine Tan Ai LinIndependent Non-Executive DirectorMember of Audit CommitteeMember of Nomination and Remuneration CommitteeAged 41, Female, Malaysian


Dato’ Lim was designated as the Group President and Advisor to the Board of HWGB after his resignation as an Executive Director and Chairman on 14th June, 2011.

He is the founder of HWGB Group of Companies and has been at the helm of HWGB Group since its inception in 1979. Dato’ Lim is a self-made businessman who, since his early ventures into the transportation business has, over the years, expanded into various sectors including hospitality, entertainment, large scale renovation and construction, mining, multi-level marketing and manufacturing.

Through Dato’ Lim’s leadership, HWGB was successfully listed on the Second Board of Kuala Lumpur Stock Exchange in December 1994, and later transferred to the Main Market of Bursa Malaysia Securities Bhd in November 2000.

On 12 May 2015, Dato’ Lim Hui Boon was awarded with an Honorary Professorship from the University of International Business Economics, Beijing, China.

Dato’ Lim is also the Group President for Vitaxel Group Limited and Ho Wah Genting Group Limited, both the companies listed on OTC Market, United States of America.

Dato’ Lim Hui Boon is the father to Dato’ Lim Ooi Hong and Mr. Lim Wee Kiat. Dato’ Lim Hui Boon holds 350,400 (0.11%) direct interest and 283,875 (0.08%) indirect interest in the Company via Ho Wah Genting Group Sdn Bhd. Dato’ Lim also holds 750,000 ESOS and 90,160 Warrant 2016/2021 in the Company. He does not have any conflict of interest or material contract with the Company.


Dato’ Lim Hui BoonGroup PresidentAged 67, Male, Malaysian

Mr. Wilson Song Kok Seng was appointed as General Manager cum Vice President of PT Ho Wah Genting on 14 May 2002.

He holds a Diploma in Electrical and Electronic Engineering. He obtained “Certified Quality Engineer” from Underwriters Laboratories Inc., USA in 1991. As the Vice President of PT Ho Wah Genting, he supervises, manages, and monitors the day to day operation, production, sourcing, shipping and quality assurance of the factory. He also entrusted with developing sales network in Indonesia. He has no directorship in other public companies.

He began his career as quality engineer with SGS (M) Sdn Bhd in 1988, tasked with conducting inspection of consumer products in Malaysia, Singapore and other Asian countries. He left to join Underwriters Laboratories Inc. Malaysia in 1990 as regional manager and product quality engineer, tasked with supervision of inspection works, analyzed and evaluated test results for compliance with

International Safety Standards of Underwriters Laboratories Inc. and as consultant for numerous organizations’ ISO 9000/14000 quality and environment system designing and implementation. He left to join Fuji Advance Sdn Bhd in 1999 as factory manager, wherein he runs the factory operations including sales prior to joining PT Ho Wah Genting in 2002.

Mr. Wilson Song holds 242,500 ESOS in the Company, save and except for the ESOS, he has no shareholding whether direct or indirect in the Company. He does not have any family relationship with any other Directors and/or major shareholders of the Company and neither has he had any conflict of interest nor loan arrangement or material contract with the Company.


Wilson Song Kok SengVice President, PT Ho Wah Genting, IndonesiaMember of Employees’ Share Option Scheme CommitteeAged 51, Male, Malaysian

Profile of Key senior Management


Mr. Law Shu Pin was appointed as Vice President of PT. Ho Wah Genting on February 2005. On 28 March 2016, he was appointed as a Director of PT. Ho Wah Genting.

He holds a Diploma in Banking Part I from the Institute of Bankers, London. As the Vice President/Director of PT. Ho Wah Genting, he is in charge of supervising, managing and monitoring day to day operations in purchasing, finance, accounts and costing. He has no directorship in other public companies.

He began his career as a clerk with UMBC Bank (now known as RHB Bank) in 1974. After obtaining his Diploma in Banking, he was promoted to junior executive officer and served in the following branches: Jalan Tun Perak Branch, Kuala Lumpur, Klang and Tanjung Karang Branch, Selangor Yong Peng Branch, Johor. In 1981, he left UMBC Bank to join Public Bank.

He joined Public Bank in 1981 as a junior executive officer and rose to the rank of a branch manager. He served as a junior and senior executive officer of the Kuala Lumpur Main Branch. In 1989, he was posted to Port Dickson Branch, Negeri Sembilan as the assistant manager of the

Branch. In 1990 he was posted to Tampoi Branch, Johor as the assistant manager. In 1991, he was posted to Taman Johor Jaya Branch as the branch manager. In 1994, he was posted back to Kuala Lumpur Main Office as the banking services manager.

In 1995, he left Public Bank to join Ho Wah Genting Wire and Cable Sdn Bhd as general manager. He managed the day to day operations, production, purchasing, finance and accounts. In February 2005, he was transferred to PT. Ho Wah Genting.

Mr. Law Shu Pin holds 242,500 ESOS in the Company, save and except for the ESOS, he has no shareholding whether direct or indirect in the Company. He does not have any family relationship with any other Directors and/or major shareholders of the Company and neither has he had any conflict of interest nor loan arrangement or material contract with the Company.


Law Shu PinVice President/Director, PT. Ho Wah Genting, IndonesiaAged 63, Male, Malaysian

Profile of senior Key Management (cont’d)


On behalf of the Board of Directors, I have great pleasure in presenting the Annual Report and the Audited Financial Statements of the Company and its subsidiaries (“the Group”) for the financial year ended 31 December 2017.


Group executive chairman’s statement


Financial Performance

In the financial year ended 31 December 2017, the Group recorded revenue of RM156.56 million and loss before taxation of RM22.86 million as compared to its preceding year’s revenue of RM148.10 million and loss before taxation of RM19.54 million.

The higher revenue recorded in the current financial year was mainly due to favourable currency conversion effect from USD to RM and the higher sales of USD1.53 million or 4.5% recorded in USD for the Moulded Power Supply Cord Sets Division in Indonesia. The average exchange rate used in the financial year ended 31 December 2017 was RM4.3175/USD as compared to the preceding year’s corresponding financial year of RM4.1300/USD.

Included in the loss before taxation in the current financial year was impairment loss provided on plant and equipment for the Tin Mining Division of RM16.69 million as compared to its preceding year’s impairment loss of RM9.53 million. However, the higher loss before taxation was mitigated by the Moulded Power Supply Cord Sets Division’s results which achieved a profit before taxation of RM5.30 million for the financial year ended 31 December 2017 as compared to a loss before taxation of RM0.81 million in the previous financial year.

At Company level, the Company recorded a loss before taxation of RM39.08 million for the current financial year ended 31 December 2017 as compared to a loss of RM33.20 million in the preceding financial year. The higher loss before taxation in the financial year ended 31 December 2017 were mainly due to the allowance for doubtful debts arising from amount due from a subsidiary of RM30.09 million (2016: RM24.24 million) and impairment loss on investment in subsidiaries of RM2.16 million (2016: RM1.83 million).

Further analysis of the Group’s financial performance, prospect and outlook for each Division are set out in “Management Discussion and Analysis” of this Annual Report.

Corporate Development

On 25 September 2017, the Company announced to Bursa Malaysia Securities Berhad (“BMSB”) that it had entered into a Shareholders Agreement with Dufry International AG (“Dufry”), a member of Dufry Group, to incorporate a company (“JV Co”) for the operation of a duty free and tax free shop in SkyAvenue mall located at the popular tourist spot in Genting Highlands Resort, Pahang, Malaysia. The said JV Co was incorporated on 27 September 2017 under the name of Dufry HWG Shopping Sdn Bhd with Dufry and HWGB holding 51% and 49% equity respectively. Therefore, Dufry HWG Shopping Sdn Bhd is an associate company of HWGB.

On 14 November 2017, the Company announced to BMSB to undertake the following:

• Proposed Share Consolidation The Proposed Share Consolidation entailed the

consolidation of every 4 HWGB Shares into 1 Consolidated Share.

• Proposed Diversification The Proposed Diversification of HWGB into travel

retail business in view of the operation of a duty free and tax free shop in SkyAvenue, Genting Highlands Resort, Pahang; and

• Proposed Private Placement The Proposed Private Placement of up to 77,597,200

new Consolidated Shares representing up to 30% of the issued shares in HWGB after the Proposed Share Consolidation (“Placement Shares”).

Collectively referred to as the “Proposals”.

Group executive chairman’s statement (cont’d)


Corporate Development (cont’d)

On 14 February 2018, the Company announced to BMSB that the above Proposals including the proposed issuance of at least 37,434,200 and up to 38,798,600 Placement Shares, representing up to 50% of the total available Placement Shares to Ho Wah Genting Holding Sdn Bhd in one or several tranches were duly approved by the shareholders at the Company’s Extraordinary General Meeting held on the same date.

On 16 March 2018, the Company announced to BMSB that the issue price for the Placement Shares pursuant to the Proposed Private Placement had been fixed at RM0.18 per Placement Shares.

On 29 March 2018, the Company announced to BMSB that the Proposed Share Consolidation and Proposed Private Placement exercise was completed with the listing and quotation of 74,910,400 Placement Shares on the Main Market of BMSB.

Dividend

The Board of Directors is not recommending any dividend payment for the financial year ended 31 December 2017.

Acknowledgement

On behalf of the Board, I wish to extend my sincere thanks to all our valued customers, financiers, business associates, Government authorities and shareholders for their continuous support, co-operation and confidence in the Group.

Last but not least, I also like to convey my sincere appreciation and gratitude to my fellow Directors, the Management and Staff for their dedication and commitment.

Thank you.


Kuala LumpurDate: 30 March 2018

Group executive chairman’s statement (cont’d)


The Group, whilst pursuing its commitment to the stakeholders, is also consciously emphasizing the importance of its social responsibility in carrying out its operations.

Production Process

The Group’s manufacturing division continues to promote environment friendly productions by implementing REACH compliance (a regulation of the European Union, adopted to improve the protection of human health and the environment from the risks exposed to chemicals, while enhancing the competitiveness of the European Union chemicals industry) which is the most stringent standards as required by Japanese and European base Original Equipment Manufacturer (“OEM”) for Electrical Appliances in the world. The restriction of Hazardous Substances used in manufacturing products was introduced by researching, awareness training to all level of employees including management.

This directive is closely linked with Waste Electrical and Electronic Equipment Directive (WEEE) 2002/96/EC which has set collection, recycling and recovery targets for electrical goods and it is part of legislative initiative to address the worldwide problem of huge amounts of toxic waste.

In compliance with RoHS 2 (Restriction of Hazardous Substances Directive in electrical and electronic equipment), the manufacturing division together with its customers and suppliers ensure all materials used in the finishing products do not contain the restricted substances namely, Lead (Pb), Mercury (Hg), Cadmium (Cd), Hexavalent Chromium (Cr6+), Polybrominated Biphenyls (PBBs) and Polybrominated Diphenyl Ethers (PBDEs). This is a legal requirement by European Union states and is listed in European Union’s legislation on Electrical and Electronic Equipment including cable. To ensure effectiveness of compliance with this directive, the manufacturing division has randomly sent raw materials for laboratory testing and also monitoring the production process in line with technical documents.

The Group’s objective is to further increase corporate social responsibility with minimal impact on people and environment while generating maximum value for our stakeholders.

The tin mining division has carried out the following to care for the environment on site:

a. Replanted grass at slopes to prevent soil erosion.b. Installed sludge and silt traps to prevent contamination of river flow.c. Frequent testing of water quality in the river flowing across the mining site to ensure water quality within standard.d. Provided a wider and sufficient buffer zone at overburden dumping areas to prevent clogging of river.e. Installed sufficient water sprinklers along access road to reduce formation of dust during mining operation and

also when heavy machineries passed through.

In addition, the tin mining division also adopted the following health and safety measures:

i. Provision of Occupational Health & Safety equipment and facilities.ii. Emergency rules.iii. Safety rules.iv. Workplace inspection and evaluations.v. Workplace design and standard of work methodology.vi. Review and recording incident reported.vii. Briefing and updates to workers on processes adopted.viii. Briefing and updates on technological or machineries operations.

Workplace Diversity

The Group recognizes that diversity of employees (in terms of age, gender, race, religion, nationality and education) is vital to the organization’s smooth operations and business sustainability. Thus, the Group is dedicated in providing and nurturing a positive culture and environment for all employees to have equal opportunity to strive and work together in harmony to achieve corporate objectives and sustainable growth.

Corporate Social responsibility statement


Corporate Social responsibility statement (cont’d)

Human Capital in the Group

(The above data consist of information on the Company and its local subsidiaries only).

The Group encourages employees’ participation in various games and sports to foster communication, understanding, team spirit, motivation and enlightenment for a healthy living style. In this respect, during the year the Group had sponsored weekly sport activities for the staff. Such events were designed to create greater unity, rapport and friendship amongst employees.

MALE FEMALE

BY GENDER

22(50%)

22(50%)

29 YEARS & BELOW

30-39 YEARS

40-49 YEARS

50-59 YEARS

60 YEARS & ABOVE

BY AGE GROUP

14(32%)

6(14%)

13(29%)

7(16%)

4(9%)

BUMIPUTRA

CHINESE

INDIAN

BY ETHNICITY

29(66%)

11(25%)

4(9%)

TERTIARY

DIPLOMA

SECONDARY & BELOW

BY EDUCATION

16(36%)

15(34%)

13(30%)



Supply Chain Management Training - For Related Department

Training Programme

The Group’s manufacturing division has long practiced and been committed to advancing our policies and systems in every facet of our business on daily basis. These include good ethical behavior; protection of natural environment, concern for employee health and safety and local community involvement. The Division recognizes that our social, environmental and ethical conduct has an impact to our Group’s reputation. Therefore, the Division is committed to continuing improvement in its performance, efficient use of natural resources, aspiring for ZERO HARM to human and environment.

During the year 2017, the Group emphasized training and learning programme for both technical and non-technical staffs. Employees are provided with internal recognition courses to fulfill their potential. We take our responsibility to protect, support and prepare our workers seriously; all employees are expected to be engaged in maintaining safe workplace through involvement in health and safety management plan and reduce environmental impact. Keeping workplace with environment clean and unpolluted is a benefit to all.

The Group praises the personal actions of each and every one of our employees in relation to its corporate responsibility to strengthen the Group’s beliefs and attitude. Together in partnership, we will improve the quality of life for all our employees.

As part of the Group’s human capital development and succession planning initiatives, the Group provides quality training programme to the employees on a regular basis with the aim to improve employees’ skill and competency, which will positively enhance their efficiency in discharging their duties, resulting in better performance. During the year, in-house and external training programme/seminar were provided to relevant staff.



Charity Donations from Management of PT Ho Wah Genting and Majelis Taklim of PT Ho Wah Genting.

Community

During the financial year, the Group donated to various charitable organizations to help the needy and unfortunate and also to partly fund their operations.

The Group is dedicated to build a stronger and healthier local communities through education, charitable donations and direct support to non-profit agencies in the communities in which we operate. Through the development of natural resources, the manufacturing division especially contributed pledges to enhance standard of living of poor villager and orphanage home near the factory.

Ho Wah Genting Berhad (272923-H) annual report 2017 21

Management Discussion and Analysis

INTRODUCTION

Ho Wah Genting Berhad (“HWGB” or “the Company”) is principally engaged in investment holdings and the provision of management services to its subsidiaries.

BUSINESS SEGMENTS

For the financial year under review, the Company and its subsidiaries (“HWGB Group” or “the Group”) are engaged in the businesses of:

• Manufacturing of wire and cable and moulded power supply cord sets and cable assemblies for electrical and electronic devices and equipment;

• Trading of wire and cable;

• Mining, processing and sales of tin concentrate; and

• Travel agent and tour related services.

Summary of the Group’s revenue by divisions

2017 2016RM’000 % RM’000 %

DivisionsInvestment 147 0.1 132 0.1Moulded Power Supply Cord Sets 151,691 96.9 137,342 92.7Wire and cable 145 0.1 2,052 1.4

Tin Mining 400 0.2 1,137 0.8

Travelling Services 4,180 2.7 7,438 5.0

156,563 100.0 148,101 100.0

LOCATION OF THE BUSINESS OPERATIONS

The Group’s businesses basically operate in Malaysia and Indonesia.

The Group operations in Malaysia consists of trading of wire and cable, mining, processing and sales of tin concentrate and travel agent and tour related services.

Manufacturing of wire and cable and moulded power supply cord sets and cable assemblies for electrical and electronic devices and equipment is located in the Republic of Indonesia.

PRINCIPAL MARKETS OR GEOGRAPHICAL PRESENCE

Summary of the Group’s revenue by geographical presence

2017 2016RM’000 % RM’000 %

Geographical presenceNorth America 143,102 91.4 125,021 84.4The rest of Asia 8,589 5.5 12,321 8.3Malaysia 4,872 3.1 10,759 7.3

156,563 100.0 148,101 100.0

The Group’s revenue is mainly derived from the manufacturing of wire and cable and moulded power supply cord sets and cable assemblies for electrical and electronics devices and equipment, constituting approximately 96.9% of the Group’s total revenue for the financial year ended 31 December 2017 (2016: 92.7%), with the US, being the biggest market contributing approximately 91.4% (2016: 84.4%) of the Group’s total revenue.

Ho Wah Genting Berhad (272923-H) annual report 201722

FINANCIAL INFORMATION

Summary of Group’s financial results

2017 2016 ChangesRM’000 RM’000 RM’000 %

Revenue 156,563 148,101 8,462 5.7Loss from operations before fair value of

ESOS granted (20,677) (14,701) (5,976) -40.7Fair value of ESOS granted - (2,097) 2,097 100.0

Loss from operations (20,677) (16,798) (3,879) -23.1

Finance costs (2,067) (2,741) 674 24.6

Share of losses from associate (116) - (116) N/A

Loss before taxation (22,860) (19,539) (3,321) -17.0

Income tax credit 3,128 111 3,017 >1,000.0

Net loss for the year (19,732) (19,428) (304) -1.6Other comprehensive (loss)/income for the year,

net of tax (1,505) 5,311 (6,816) -128.3

Total comprehensive loss for the year (21,237) (14,117) (7,120) -50.4

Loss Before Tax (“LBT”)

2017 2016 ChangesRM’000 RM’000 RM’000 %

Significant changes on LBT attributed by the following:

Fair value of ESOS granted - (2,097) 2,097 100.0Impairment loss on plant and equipment (16,691) (9,534) (7,157) -75.1Finance costs (2,067) (2,741) 674 24.6Unrealised foreign exchange loss (1,989) (121) (1,868) >1,000.0Unrealised foreign exchange gain 413 2,523 (2,110) -83.6

Other comprehensive gain/(loss) for the year

2017 2016 ChangesRM’000 RM’000 RM’000 %

Remeasurement of net retirement benefit obligations (212) (232) 20 8.6

Gain on revaluation of buildings - 3,442 (3,442) -100.0Foreign currency translation differences (1,293) 2,101 (3,394) -161.5

(1,505) 5,311 (6,816) -128.3

Commentary on financial results

The higher revenue of RM156.56 million recorded in the financial year ended 31 December 2017 (2016: RM148.10 million) were mainly due to favourable currency conversion from USD to RM and the higher sales of USD1.53 million or 4.5% recorded for the Moulded Power Supply Cord Sets Division in Indonesia as compared to the preceding financial year. The average exchange rate used in the financial year ended 31 December 2017 was RM4.3175/USD (2016: RM4.1300/USD).

The higher losses before taxation of RM22.86 million recorded in the financial year ended 31 December 2017 (2016: RM19.54 million) was mainly due to impairment losses provided on mine properties, plant and machinery and fixtures and equipment of RM16.69 million (2016: RM9.53 million) for the Tin Mining Division. However, the higher losses before taxation was mitigated by the Moulded Power Supply Cord Sets Division’s results which recorded a profit before taxation of RM5.30 million for the financial year ended 31 December 2017 (2016: loss before taxation of RM0.81 million).

Management Discussion and Analysis (cont’d)


FINANCIAL INFORMATION (CONT’D)

Fair value of ESOS granted

There were no ESOS granted to the employees of the Company and of the Group during the financial year as compared to the previous financial year.

Impairment loss on plant and equipment

During the financial year, an impairment loss on plant and equipment of RM16.69 million was recognised on mines properties, plant and machinery and furniture, fittings and equipment due to uncertainty of the application submitted to the Perak State Government in November 2013 for the extension of mining rights lease period which will expire in November 2020. The tin mining operations had temporary halted due to low grade of tin ore recovered and the additional investment to fund this business is no longer economically viable. In arriving at the impairment amount, the carrying value of these assets is compared with their recoverable amount. The recoverable amount is determined using fair value less cost of disposal of the relevant assets.

In the previous financial year, an impairment loss of RM9.53 million was recognised on mines properties and plant and machinery. The impairment was recognised due to the effect of significantly low tin concentrate output which resulted in gross losses being incurred by the Tin Mining Division. In arriving at the impairment amount, the carrying value of these assets is compared with their recoverable amount. The recoverable amount is determined using the value in use of these assets and the projected future cash flows of which are discounted using a pre-tax discount rate of 8.5%.

Finance costs

The lower finance costs were mainly due to reduce outstanding amount after the repayment of monthly installments on timely basis.

Unrealised foreign exchange loss and gain

The higher unrealised foreign exchange loss and lower unrealised foreign exchange gain were mainly due to lower exchange rate used at financial year end on the coversion of non financial assets and liabilities as a result of appreciation of RM against USD. The closing rates used as at 31 December 2016 and 31 December 2017 were RM4.4860/USD and RM4.0475/USD respectively.

Gain on revaluation of buildings

No revaluation of properties for the Group was performed in the current financial year under review. Revaluation of properties is done once in every three (3) to five (5) years. The gain on revaluation of RM3.44 million arising from the previous reporting period was arrived at after deducting deferred tax expense of RM1.01 million.

Foreign currencies translation differences

The loss in foreign currencies translation differences shown in other comprehensive loss arose from the translation of foreign assets and liabilities held by foreign subsidiary due to the appreciation of RM against USD.

Summary of Group’s financial position

2017 2016 ChangesRM’000 RM’000 RM’000 %

Total non current assets 41,436 59,247 (17,811) -30.1Total current assets 41,740 45,706 (3,966) -8.7Total non current liabilities 18,037 24,667 (6,630) -26.9

Total current liabilities 43,468 37,389 6,079 16.3

Equity attributable to owners of the company 48,451 60,762 (12,311) -20.3

Total equity 21,671 42,897 (21,226) -49.5




Summary of Group’s financial position (cont’d)

2017 2016 ChangesRM’000 RM’000 RM’000 %

Total borrowings 19,150 26,664 (7,514) -28.2Debt/Equity (%) 39.5% 43.9%Debt-to-adjusted capital ratio (%) 70.0% 43.9%

Loss per share (sen) (1.08) (1.47)

Net assets per share (sen) 0.02 0.04Market price of share

as at financial year end (RM) 0.065 0.055

No. of shares in issue (‘000) 998,246 998,046

Market capitalisation (RM’000) 64,886 54,893

Commentary on financial position

“Non-current assets” decreased by RM17.81 million or 30.1% mainly due to depreciation and impairment of property, plant and equipment as disclosed in Note 10: Property, Plant and Equipment in the notes to the financial statements.

“Current assets” decreased by RM3.97 million or 8.7% mainly due to utilisation of cash and bank balances to finance the Group’s operations.

“Non-current liabilities” decreased by RM6.63 million or 26.9% mainly due to reclassifications of long term borrowings into short term borrowings after repayment to financial institutions of RM7.42 million and proceeds from new term loan of RM1.60 million.

“Current liabilities” increased by RM6.08 million or 16.3% mainly due to increase in trade payable for materials purchased of RM2.73 million to cater for the higher production in fourth quarter under review and the increase in advance payment of RM1.64 million from customers for the sales order in the Moulded Power Supply Cord Sets Division. Also contributed to the increase in “current liabilities” was the advances received by the Company of RM1.70 million.

“Equity attributable to owners of the Company” decreased by RM12.31 million or 20.3% and “Total equity” decreased by RM21.23 million or 49.5% mainly due to the losses incurred for the financial year ended 31 December 2017.

Summary of Group’s cash flows

2017 2016 ChangesRM’000 RM’000 RM’000 %

Net cash generated from/(used in) operating activities

3,252 (20,037) 23,289 116.2

Net cash (used in)/from investing activities (3,000) 851 (3,851) -452.5Net cash (used in)/from financing activities (5,806) 21,674 (27,480) -126.8Net (decrease)/increase in cash and cash

equivalent (3,815) 3,697 (7,512) -203.2

Commentary on cash flows

The “net cash generated from operating activities” of RM3.25 million for the financial year ended 31 December 2017 was mainly due to the cash generated from operation in the Moulded Power Supply Cords Sets Division which recorded a profit from operations. In the preceding financial year, the “net cash used in operating activities” of RM20.04 million was mainly due to agreed schedule payments to a major supplier of the Moulded Power Supply Cord Sets Division which was long outstanding.




Commentary on cash flows (cont’d)

The “net cash used in investing activities” of RM3.00 million for the financial year ended 31 December 2017 was mainly due to purchase of plant and equipment by the Moulded Power Supply Cord Sets Division of RM2.14 million and the subscription of 49% ordinary shares for RM0.98 million in an associate. In the preceding financial year, the “net cash from investing activities” of RM0.85 million was due to proceeds from disposal of plant and equipment and dilution of shares in a subsidiary.

The “net cash used in financing activities” of RM5.81 million for the financial year ended 31 December 2017 was mainly due to repayment of bank borrowings of RM7.42 million but mitigated by drawdown of new term loan of RM1.60 million. In the preceding financial year, the “net cash from financing activities” of RM21.67 million was due to proceeds from issuance of new ordinary shares under the Rights Issue with Warrants and subsequent Private Placement exercise.

Capital Requirement, Structure and Resources

Issuance of share capital

During the financial year, a total of 200,000 employee share options (“ESOS”) were converted into 200,000 new ordinary shares at an issue price of RM0.055 each and the total proceeds of RM11,000 was raised. These new ordinary shares were listed on Bursa Malaysia Securities Berhad (“BMSB”) on 15 June 2017.

Corporate proposals for fund raising and diversification

On 14 November 2017, the Company through its adviser, M&A Securities Sdn Bhd (“Adviser”) announced that the Company intends to undertake the following:

(a) Proposed share consolidation involving the consolidation of every four (4) existing ordinary shares in HWGB into one (1) ordinary share (“Consolidated Share”) (“Proposed Share Consolidation”);

(b) Proposed diversification of HWGB into travel retail business in view of the shareholders’ agreement dated 25 September 2017 entered into between the Company and Dufry International AG, a member of the Dufry Group to establish a joint-venture company, for the operation of a duty free and tax free shop in Genting Highlands resort, Pahang (“Proposed Diversification”); and

(c) Proposed private placement of up to 77,597,200 new Consolidated Shares representing up to 30% of the issued shares in HWGB after the Proposed Share Consolidation. (“Placement Shares”) (“Proposed Private Placement”)

Collectively referred to as the “Proposals”.

On 21 November 2017, the Company through its Adviser announced that the listing application to BMSB in relation to the Proposed Share Consolidation and the Proposed Private Placement has been submitted on 21 November 2017.

On 26 December 2017 the Company’s Adviser announced that BMSB vide its letter dated 22 December 2017 approved the following applications:

(a) The Proposed Share Consolidation; and

(b) The listing and quotation of up to 77,597,200 Placement Shares pursuant to the Proposed Private Placement.

The approval by BMSB is subject to the following conditions:

(i) HWGB and its Adviser must fully comply with the relevant provisions under the Main Market Listing Requirements (“LR”) pertaining to the implementation of the Proposed Share Consolidation and Proposed Private Placement;

(ii) HWGB and its Adviser are to inform BMSB upon the completion of the Proposed Share Consolidation and Proposed Private Placement;




Capital Requirement, Structure and Resources (cont’d)

Corporate proposals for fund raising and diversification (cont’d)

The approval by BMSB is subject to the following conditions: (cont’d)

(iii) HWGB’s Adviser is to furnish BMSB with a written confirmation of its compliance with the terms and conditions of BMSB’s approval once the Proposed Share Consolidation and Proposed Private Placement are completed;

(iv) HWGB is required to make the relevant announcements pursuant to Paragraph 13.20 (2) of the LR pertaining to the Proposed Share Consolidation;

(v) HWGB or its Adviser is to furnish BMSB with a certified true copy of the resolutions passed by the shareholders in general meeting approving the Proposals prior to listing and quotation of the ordinary shares pursuant to the Proposed Share Consolidation and Proposed Private Placement; and

(vi) HWGB and its Adviser are to incorporate BMSB comments in the draft circular to shareholders.

On 22 January 2018, HWGB announced that the Extraordinary General Meeting for the Proposals will be held at 9.30 am on the 14 February 2018.

On 14 February 2018, the Board of Directors of HWGB announced that the Proposals including the proposed issuance of up to 50% Placement Shares to Ho Wah Genting Holding Sdn Bhd as detailed in the Circular to shareholders dated 23 January 2018 were duly approved by the shareholders at the Extraordinary General Meeting held on the same date.

On 16 March 2018, the Company through its Adviser announced that the Company has fixed the issue price of the Placement Shares at RM0.18 per Placement Share to be issued pursuant to the Private Placement.

The aforementioned issue price of RM0.18 per Placement Share represents a premium of approximately RM0.0099 or 5.82% from the five (5) day weighted average price of HWGB from 9 March 2018 to 15 March 2018 of approximately RM0.1701. On 29 March 2018, the Company through its Adviser announced that the Private Placement is completed following the listing and quotation of 74,910,400 Placement Shares on the Main Market of BMSB.

DISCUSSION AND ANALYSIS BY DIVISIONS

(a) Investment Division

The Investment Division consists of the Company and the subsidiaries which are engaged in investment holding and those inactive subsidiaries.

Summary results for the Investment Division

2017 2016 ChangesRM’000 RM’000 RM’000 %

Revenue 299 284 15 5.3

Loss from operations before fair value of ESOS granted (39,902) (32,147) (7,755) -24.1

Fair value of ESOS granted - (743) 743 100.0


Finance costs (247) (14) (233) >1,000.0

Share of loss from associate (116) - (116) N/A




DISCUSSION AND ANALYSIS BY DIVISIONS (CONT’D)

(a) Investment Division (cont’d)

Diversification into “Travel Retail Business”

On 25 September 2017, the Company diversified into “Travel Retail Business” via the execution of Shareholder’s Agreement (“SA”) with Dufry International AG (“Dufry”), a company incorporated in Switzerland and listed in Switzerland and Brazil. Dufry with its headquarters in Basel, Switzerland is a leading global travel retailer owning more than 20% of the market share in airport retail and has operations in approximately 62 countries, operating over 2,200 shops located at airports, railways, cruise liners, seaports and other touristic locations. Dufry has more than 60 years of travel retail experience.

Under the SA, Dufry and the Company are required to hold and maintain a 51% and 49% shareholding respectively in a newly incorporated company, Dufry HWG Shopping Sdn Bhd (“Dufry HWG Shopping”) at any time. The Company had on 30 November 2017, subscribed 980,000 ordinary shares representing 49% shareholding in Dufry HWG Shopping for a cash consideration of RM980,000.

Dufry HWG Shopping will operate the travel retail business under the name of “Plaza A Dufry Store” at SkyAvenue Mall, Genting Highlands, Pahang, a popular tourist destination.

With the Company’s 49% owned travel retail business, Dufry HWG Shopping had since commenced business in February 2018. The Company is hopeful that this new venture will provide additional income stream from the share of operating results after tax of the associate in future.

Summary results for the Company level

2017 2016 ChangesRM’000 RM’000 RM’000 %

Revenue 299 284 15 5.3

Loss from operations before fair value of ESOS granted (38,832) (32,442) (6,390) -19.7Fair value of ESOS granted - (743) 743 100.0


Finance costs (247) (13) (234) >1,000.0


At Company level, the Company recorded a loss before taxation of RM39.08 million for the financial year ended 31 December 2017 as compared to a loss before taxation of RM33.20 million in the preceding financial year.

The higher loss before taxation in the financial year ended 31 December 2017 were mainly due to the allowance for doubtful debts arising from amount due from a subsidiary of RM30.09 million (2016: RM24.24 million) and impairment on investment in subsidiaries of RM2.16 million (2016: RM1.83 million).

b) Moulded Power Supply Cord Sets Division

Manufacturing of wire and cable, moulded power supply cord sets and cable assemblies for electrical and electronic devices and equipment is undertaken by PT Ho Wah Genting (“PT HWG”), a wholly owned subsidiary of HWGB located at Kawasan Bintang Industri II, Batam, Kepulauan Riau, Republic of Indonesia.

The products manufactured by PT HWG can be categorised into power supply cords, cord sets, low emission diode (“LED”) and lighting sets, cord reels, electronic and building wires.

These products are mainly exported to North America, Malaysia and the rest of Asia.





b) Moulded Power Supply Cord Sets Division (cont’d)

Summary of sales by geographical presence

2017 2016RM’000 USD’000 % RM’000 USD’000 %

Sales to external partiesNorth America 143,102 33,145 94.3 125,021 30,272 90.0The rest of Asia 8,589 1,989 5.6 12,321 2,983 8.9

151,591 35,134 99.9 137,342 33,255 98.9Sales within HWGB Group

Malaysia - Wire and Cable Division 120 28 0.1 1,568 380 1.1

151,811 35,162 100.0 138,910 33,635 100.0

Note: “The rest of Asia” refers to Indonesia, Singapore, Thailand, Vietnam and Taiwan.

Sales to North America increased by USD2.87 million or 9.5% in the financial year ended 31 December 2017 mainly due to higher average copper rod price of USD6,300 per metric tonne (2016: USD5,100 per metric tonne) although the total consumption decreased from 2,625 metric tonne in 2016 to 2,423 metric tonne in 2017. For the financial year ended 31 December 2017, sales to the rest of Asia countries particularly to Singapore and Thailand dropped by approximately USD0.73 million and USD0.27 million respectively due to price competition, longer credit terms and competitors also allowing smaller quantity supply instead of bulk purchase.

The lower sales to the Wire and Cable Division for the financial year ended 31 December 2017 were mainly due to the following:

• Local manufacturers had shorter lead time and they accept small quantity order compared to bulk purchase.

• Volatility of RM against USD discourages customers of the Wire and Cable Division to import and instead placed order to local manufacturers to minimize their foreign currency exposures.

Summary of results

2017 2016RM’000 USD’000 RM’000 USD’000

Revenue 151,811 35,162 138,910 33,635

Profit from operations before fair value of ESOS granted 6,912 1,626 2,949 714

Fair value of ESOS granted - - (1,220) (295)Profit from operations 6,912 1,626 1,729 419

Finance costs (1,613) (373) (2,537) (529)

Profit/(Loss) before taxation 5,299 1,253 (808) (110)

The higher profit from operations before fair value of ESOS granted of USD1.63 million (2016: USD0.71 million) were due to improved production efficiencies and lower machinery repairing costs after the implementation of semi-automated production cycles and replacement of old machineries in stages.



b) Moulded Power Supply Cord Sets Division (cont’d)

Summary of London Metal Exchange (“LME”) copper price per metric tonne for both financial years 2017 and 2016 are as follow:

2017 2016Average USD6,163 USD4,863High USD6,826 (November) USD5,666 (December 2016)Low USD5,588 (May) USD4,463 (January 2016)

Risk factors affecting the Moulded Power Supply Cords Sets Division

(a) Volatility of copper price may have an impact on the operating results and cash flows of the division as the division may not be able to pass the increase in the copper price to the buyers. High copper price will generate high revenue but requires more working capital to finance the purchase of copper. On the contrary, low copper price will result in low revenue.

(b) The compulsory annual increment of wages and salaries in Indonesia may adversely affect the results and cash flows of the division. In order to maintain its competitiveness, the division needs to continue improving its production efficiencies.

(c) New products development is not cheap and takes long period to get the relevant authorities approval. The sales volume may not be able to recover the cost incurred.

Commentary on Prospect

The recovery in the US economy pushes the demand for housing market higher, improves the employment rate and leads to higher consumer spending. All these factors may have a favourable effect to the sale of moulded power supply cord sets as the sales to US accounts for majority of the Group’s revenue.

However, the Management is of the opinion that business operations in moulded power supply cord sets and wire and cable remain challenging in view of the intense competition in the US market, rising inflationary cost in Indonesia, especially the compulsory annual increment of wages and salaries, high volatility of copper price and working capital requirement.

To counter these unfavourable conditions, the Moulded Power Supply Cord Sets Division will continue tofocus on lean manufacturing process for better operational productivity, to improve efficiencies, and product quality in order to be more competitive and attract more customers.

c) Wire and Cable Trading Division

Trading in wire and cable is primarily engaged by Ho Wah Genting Trading Sdn Bhd (“HWGT”), a wholly owned subsidiary of the Company. The operation of HWGT is located at its registered office in the heart of Kuala Lumpur.

High quality wire and cable produced by fellow subsidiary company, PT HWG are imported by HWGT and sold to OEM manufacturers for various electrical and electronic industries, wholesalers and distributors for building and housing wire throughout Malaysia.





c) Wire and Cable Trading Division (cont’d)

Summary of results

2017 2016 ChangesRM’000 RM’000 RM’000 %

Revenue 145 2,052 (1,907) -93.0

Profit from operations before fair value of ESOS granted (1,463) 288 (1,751) -608.0


(Loss)/Profit from operations (1,463) 184 (1,647) -895.1

Finance costs (205) (187) (18) -9.6

Loss before taxation (1,668) (3) (1,665) <1,000.0

The lower sales for the financial year ended 31 December 2017 of RM0.15 million (2016: RM2.05 million) were mainly due to the following tough competition from local manufacturers which offer:

• Shorter lead time for supply of goods.

• Allow smaller quantity order compared to bulk purchase with longer credit term given.

The higher loss before taxation of RM1.67 million (2016: RM3,000) for the financial year ended 31 December 2017 were mainly due to lower revenue generated and foreign currency exchange loss of RM0.89 million arising from conversion of USD to RM at the end of the financial year. In the preceding financial year, the net loss before taxation of RM3,000 included a foreign exchange gain of RM0.81 million. The exchange rate as at 31 December 2017 was RM4.0475/USD as compared to RM4.4860/USD on 31 December 2016.

Risk factors affecting the Wire and Cable Trading Division

(a) Fluctuation of RM against USD is the risk faced by this division as supply of wires and cables is imported from fellow subsidiary in Indonesia quoted in USD whereas sales to local market is in RM.

(b) Competitive price, smaller quantity, shorter lead time of delivery and longer credit term offered by local manufacturers may cause customers from the division to change supplier.

Commentary on Prospect

The property market has been slow after the financial institutions imposed stricter guidelines on housing loan as they are more cautious. In this context, the Group’s revenue from trading of wire and cable may be affected by fewer new property projects launched.

d) Tin Mining Division

HWG Tin Mining Sdn Bhd (“HWGTM”) a 51% owned subsidiary of the Company is engaged in tin mining. HWGTM secured a tin mining concession covering an area of 500 acres of land in Pengkalan Hulu, Perak Darul Ridzuan, to undertake tin mining activities for a period of 10 years from 2010 to 2020.

Prior to commencement of operations, HWGTM had engaged UKM Pakarunding Sdn Bhd to do a resource estimation report which indicates tin deposits of 50,000 metric tonnes.

The Tin Mining Division’s processing plant at the mining site has a daily operational running capacity of 900 metric tonnes of tin ore input per day on 24 hours running.

All the tin concentrates output with estimated tin purity of between 60% to 70% are delivered and sold to Malaysia Smelting Corporation Berhad.



d) Tin Mining Division (cont’d)

The Tin Mining Division has temporarily halted its mining activities during the financial year due to low grades of tin ore recovered pending the drilling works on identified locations to verify the tin ore content. Though the tin mining activities has been temporarily halted and the impairment loss on mines properties, plant and machinery and fixtures, fitting and equipment has also been recognised in the reporting period, the Tin Mining Division continues to monitor and maintain these mining assets and equipment at running condition. This is crucial to ensure that these mining assets and equipment are ready to be back in service as and when required.

In 2013, HWGTM engaged an external exploration consultancy company, to carry out resource estimation works entailing among others, evaluation of historical data, geological evaluation, geological mapping, geophysical survey, reviewing of all existing drill data, design drill and exploration plan, field and surface sampling as well as laboratory chemical analysis, which culminated in a resource estimation report. The said report had indicated estimation tin deposits of 44,000 metric tonnes and had recommended that a drilling contractor be engaged to carry out exploration drilling works for conclusive determination of tin deposits reserve.

The estimated cost to carry out the exploration drilling works is estimated at USD1.5 million. HWGTM has yet to engage the drilling contractor.

On 15 March 2016, IPS International Process Solutions (Pty) Ltd was engaged to conduct a geophysical survey using the “ELFIS” system, an electromagnetic gradiomatry device to detect minerals below the ground level. The geophysical survey was carried out at certain targeted areas at the tin mining site and 6 anomaly areas of tin ores were detected. In order to verify the tin deposits, the division needs to engage a drilling contractor to conduct the drilling and obtain samples for analysis. The estimated costs for the proposed drilling works is approximately RM300,000.

The Tin Mining Division had via an offer letter dated 28 March 2017 and extension letter dated 1 July 2017 secured an offer from Rahman Hydraulic Tin Sdn Bhd (“RHTSB”) to supply 20,000 to 50,000 metric tonnes of tailings per month. The division had on 27 March 2017 and 17 July 2017, submitted the necessary applications to the Office of the Director of Lands and Mines Perak and the Mineral and Geoscience Department Perak to seek approvals to process the tailings from RHTSB and hopefully to obtain the approvals by 30 June 2018. In order to protect the environment and to prevent pollutions and erosions, the Tin Mining Division constantly monitors the tin mining site and has taken the following pro-active steps such as:

i) Replanting of grass at slopes to prevent soil erosion as part of the continuous rehabilitation process.

ii) Frequent testing of water quality in the river flowing through the mining site to ensure the water quality is in compliance with law and regulations.

iii) Installed sludge and mud traps to prevent mud from contaminating river flow.

iv) Provide a wider buffer zone at overburden dumping site to prevent clogging of rivers.

Summary of 5-years statistics of tin mining activities

2017 2016 2015 2014 2013

Tin ore input (metric tonnes) 6,030 34,802 242,816 70,642 64,105Tin concentrates output (metric tonnes) 2 26 261 51 56

Due to low grades of tin ore recovered, the Tin Mining Division has temporary halted its mining activities which resulted in low output of tin concentrates.

The Tin Mining Division produced 2 metric tons of tin concentrates from process of tailing sands during the financial year ended 31 December 2017 as compared to 26 metric tons from mining works in the preceding financial year.




d) Tin Mining Division (cont’d)

Summary of “The Kuala Lumpur Tin Market” (“KLTM”) tin price per metric tonne for both financial years 2017 and 2016 are as follow:

2017 2016Average USD20,036 USD17,867High USD20,801 (January) USD21,011 (December)Low USD19,353 (December) USD13,745 (January)

Summary results for HWGTM

2017 2016 ChangesRM’000 RM’000 RM’000 %

Revenue 400 1,137 (737) -64.8

Loss from operations before fair value of ESOS granted (18,174) (11,779) (6,395) -54.3



Finance costs (2) (3) 1 33.3


The lower revenue was due to low output of tin concentrates in the current financial year.

The higher loss before taxation of RM18.18 million (2016: RM11.83 million) in the financial year ended 31 December 2017 was mainly due to the impairment on “mines properties” of RM9.01 million (2016: RM5.05 million), “plant and machineries” of RM7.37 million (2016: RM4.49 million) and “furniture, fittings and equipment” of RM0.31 million (2016: RM nil). The division also wrote off its obsolete consumable inventories of RM0.21 million (2016:RM nil) in the financial year ended 31 December 2017.

Risks factors affecting the Tin Mining Division

(a) Volatility of tin price due to excess or shortfall of supply of tin in the global market may have an impact on the operating results and cash flows of the division.

(b) Volatility of exchange rate between RM against USD also may have an impact on the operating results and cash flows of the division as tin price is traded in USD globally.

(c) The low grade of tin ore and tailings recovered may have a negative impact on the operating results and cash flows of the division.

(d) More stringent rules imposed by relevant authorities to protect the environment may affect the division’s results as additional costs are needed to comply with the rules and regulations.

Commentary on prospect

The widespread applications of the tin metal and the miniaturization trend in consumer electronic products supported the demand of tin. However, the growth in the tin mining industry in Malaysia is likely to remain muted mainly due to challenges faced by the industry such as lack of lands for mining, short period of mining leases as well as small area of mining tenement granted by state authorities.

On the Tin Mining Division’s prospect, the division is likely to continue to underperform until new area of high tin ore grade is identified after carrying out the exploration and drilling works. The division is hopeful that the tailings to be supplied by RHTSB will contribute positively to the division.




e) Travel Services Division

Ho Wah Genting Holiday Sdn. Bhd. (“HWGH”) is HWGB Group’s Travel Services Division wing.

HWGH offers a wide range of outbound tour packages across the globe. By just clicking onto www.hwgholidays.com, travelers are able to choose and buy their holiday packages at competitive prices. HWGH is also an authorized International Air Transport Association (“IATA”) airline ticketing agent. HWGH is also offering incentive tours for both corporate and private group, cruise holiday, entertainment packages and others.

Summary results for HWGH

2017 2016 ChangesRM’000 RM’000 RM’000 %

Revenue 4,240 7,487 (3,247) -43.4

Loss from operations before fair value of ESOS granted (330) (220) (110) -50.0


Loss from operations (330) (281) (49) -17.4

Finance costs - - - -

Loss before taxation (330) (281) (49 ) -17.4

The lower revenue of RM4.24 million (2016: RM7.49 million) in the financial year ended 31 December 2017 was mainly due to the one-off cruise charter which contributed RM3.00 million or 40.1% revenue in the preceding financial year. The lower revenue had resulted in higher loss before taxation of RM0.33 million (2016: RM0.28 million).

The high cost of living and current economic climate had also affected the consumers’ spending in leisure and holiday which resulted in lower sales.

Risks factors affecting the Travel Services Division

(a) Weakening of RM against major currencies may affect the locals travelling abroad.

(b) Easy and friendly online booking and payment for air tickets, tour packages, hotel and other tour related products will affect the revenue of the division as tourists are able to pick and choose their own tour packages with more competitive price.

Commentary on prospect

HWGH is an outbound and domestic tour operator. The outlook for the local tourism and travel related services industry is positive. The local tourism and travel related services industry had an encouraging support from the Malaysian Government. The popularity of the MATTA Fair, a consumers’ travel fair organized by Malaysian Association of Tour & Travel Agents, has also played a key role in spurring the growth in the local tourism and travel related services industry. Besides that, the low fares air tickets promotions from various airlines, accommodation promotions by the hotel operators also helped to drive more activities in tourism industry. All these factors made travelling become easy and competitive thus affecting the revenue and profit margin of HWGH. To address these impacts, HWGH will look into in-house unique tour packages to improve the profit margin. The strengthening of RM against USD provided a good prospect on outbound tour and may contribute positively to the results of this division.



Corporate Governance Overview Statement

The Board of Directors of Ho Wah Genting Berhad believes that the presence of good corporate governance is fundamental to the continued growth of the Group and in achieving its objective in protecting and enhancing shareholders’ long-term value whilst taking into account the interest of other stakeholders.

In line with the above objective, the Board fully supports the disclosure requirements of the Malaysian Code on Corporate Governance 2017 (“the Code”) and Bursa Malaysia Securities Berhad’s Main Market Listing Requirements (“LR”) and is committed to ensure that the Principles and Recommendations contained in the Code are being practiced.

The Board is pleased to present an overview of the corporate governance (“CG”) practices of the Group, the manner in which the Group had applied the Principles and Recommendations contained in the Code and the state of compliance with the Code for the financial year ended 31 December 2017. The details on the application of CG practices are contained in the “Corporate Governance Report 2017” published in the Company’s website @ www.hwgenting.com.my.

PRINCIPLE A – BOARD LEADERSHIP AND EFFECTIVENESS

I BOARD RESPONSIBILITIES

1. Board’s Leadership, Objectives and Goals

1.1 The Board and Management, Duties and Responsibilities

The Company is managed and led by an experienced and effective Board which consists of professionals who specialize in the fields of manufacturing, finance, legal, regulatory and operations, accounting, information technology and business development. Together with the Management, they collectively bring a diverse range of skills and expertise required to effectively discharge their fiduciary duties and responsibilities towards achieving the Group’s business strategies and corporate goals.

The roles and responsibilities of the Board, Management, and the Managing Director/Chief Executive Officer are defined in the Board Charter. The responsibilities and limit of authority of the Managing Director/Chief Executive Officer to carry out the mandate of the Board to oversee and monitor the day-to-day running and management of the Group’s business and matters reserved for Board are also detailed in the Board Charter. The Board Charter is subject to review as and when needed. (A copy of the Board Charter is available in corporate governance section in the Company’s website.)

Management will prepare and submit significant matters to the Board for deliberation and approval, for example: annual budget, new business proposal(s), and corporate proposal(s) involving changes in issued capital, fund raising, substantial acquisition and disposal.

APPLICATION: APPLIED

1.2 Key Responsibilities of the Executive Chairman

The Executive Chairman is principally responsible for ensuring the effectiveness of the Board and the Group’s strategic business direction. The Executive Chairman is tasked with convening effective Board and Committee meetings, decides on agenda, ensures Management submit meeting papers to the Board timely, encourages interaction and discussion at meetings which leads to conclusion or decision of the agenda tabled. The Executive Chairman also chaired meetings in-line with good CG practice, promote and encourage compliance with CG especially in corporate management and reporting requirements.


1.3 Separation of Executive Chairman and MD/CEO

The roles of the Executive Chairman and MD/CEO of the Company are separate with clear division of responsibilities between them to ensure balance of power and authority. The MD/CEO is responsible for implementing the policies and decisions of the Board, overseeing the operations, coordinating the development and implementation of business and corporate strategies, internal controls as well as monitoring performance.


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

I BOARD RESPONSIBILITIES (CONT’D)

1. Board’s Leadership, Objectives and Goals (cont’d)

1.3 Separation of Executive Chairman and MD/CEO (cont’d)

The roles and duties of the Executive Chairman, MD/CEO, and the Board, are defined in the Board Charter which is available in the Company’s website.


1.4 Responsibility of Company Secretary

The Board of Directors is supported by a competent and professionally qualified Company Secretary, an associate member of The Malaysian Institute of Chartered Secretaries and Administrators.

The Company Secretary advises and assists the Board, Board Committee or Director individually on matters including but not limited to board procedures, rules and Articles of the Company, legislations, regulations, Code, guidelines and operational matter within the Group. All Board members are entitled and have direct and unrestricted access to the advice and services of the Company Secretary.

The Company Secretary has kept herself abreast with the development and new changes in relation to any legislation and regulations concerning the corporate administration and has highlighted the same to the Board of Directors and Senior Management of the Company accordingly.


1.5 Effective Board/Committee Meeting

In order for the Board to discharge its responsibilities efficiently, all quantitative and qualitative information on the Group’s performance is provided for the Board’s review on a regular basis. Updates on operational, financial, corporate issues and strategic matters as well as current development of the Group which require the Board members’ attention are disseminated promptly.

At least seven (7) days prior to a Board meeting, agenda and comprehensive board papers containing relevant reports and material information will be distributed to Directors for their perusal to enable them to participate effectively in the meeting for an effective Board discussion and decision process. The Directors may seek further explanation or clarification on issues before or during the proceedings of the meeting.

During Board meeting, the Chairman would invite members of the Board for comments and opinions and encourage active participation from the Board.

Minutes of meetings reflecting the matters transpired are properly recorded and circulated to the Board members for comments. In addition, the Company Secretary will email to the relevant Head of Department for follow up action, if required.


Corporate Governance Overview Statement (cont’d)



I BOARD RESPONSIBILITIES (CONT’D)

1. Board’s Leadership, Objectives and Goals (cont’d)

1.5 Effective Board/Committee Meeting (cont’d)

Board Meeting Attendance:

The details of attendance of each Director during the financial year under review are as follows:

Directors Attendance

Datuk William Teo Tiew 5/5Dato’ Lim Ooi Hong 5/5Mr. Lim Wee Kiat 4/5Dato’ Mohd Shahar Bin Abdul Hamid 5/5Mr. Tee Lay Peng 5/5Mr. Wong Tuck Jeong 5/5Ms. Elaine Tan Ai Lin 5/5

2. Demarcation of Responsibilities

2.1 Board Charter

The Board Charter sets out the roles and responsibilities of the Board and Committees, and the rights, process and procedures of the Board.

The Board Charter is to guide the Directors in discharging their duties and responsibilities as Directors and is drafted in accordance with the fundamental requirements of provisions in the Companies Act, 2016, LR, Capital Markets and Services Act 2007, Articles of Association of the Company and other applicable rules or regulations governing the Group’s business activities.


The Board had formally adopted the revised Board Charter on 26 March 2013 and it is subject to review periodically (a copy of the Charter is available on the Company’s website).

3. Business Conduct and Corporate Culture

3.1 Code of Ethics for Directors

The Board recognizes the importance of establishing a standard of competence for corporate accountability which includes standard of professionalism and trustworthiness in order to uphold good corporate integrity. The Board adopted a Code of Ethics for Directors which is embedded in the Board Charter of the Company (a copy of which is available on the Company’s website).


3.2 Policies on Whistleblowing

There is no formalized policy on whistleblowing.

APPLICATION: DEPARTURE

MEASURES: The Board had named the Senior Independent Director, Dato’ Mohd Shahar Bin Abdul Hamid to whom any concerns may be conveyed via email to [email protected].

All stakeholder who has dealing with the Group may contact the relevant Head of Department/Division or the Senior Independent Director.




II BOARD COMPOSITION

4. Board Decision and Objectivity

4.1 Board Balance

The Board currently has seven members comprising:

i. Executive Chairman;ii. Managing Director/Chief Executive Officer (“MD/CEO”);iii. One Executive Director; andiv. Four Independent Non-Executive Directors.

Out of four Audit Committee members, one is a member of the Malaysian Institute of Accountants.

With majority of Board comprises Independent Directors, it allows objective, independent deliberations, review and decision-making which lead to more effective oversight management.


4.2 Tenure of Independent Director

The Code recommended that the tenure of an Independent Director does not exceed a cumulative term of nine years. Upon completion of the nine years, an independent director may continue to serve on the Board as non-independent director.

Shareholders’ approval is required if an Independent Director is retained after nine years tenure. If the Board continues to retain an Independent Director who exceeded 12 years tenure, shareholders’ approval via two-tier voting process is required.

The Nomination and Remuneration Committee (“NRC”) is tasked by the Board to review and assess the independence of each Independent Director annually, term of office and to submit the relevant recommendation(s) to the Board for ultimate decision and endorsement.

Among the criteria considered for independency includes: ability to exercise independent comments, judgment, and contribution constructively at all times for an effective Board. The relationship between the Independent Directors with substantial shareholders, Executive Directors, persons related to the Executive Director/Major Shareholder, business transactions with the Group and their tenure of office will also be reviewed.


4.3 Policy on Tenure of Independent Directors – Step Up

The Board in its Charter had provided that an Independent Director whose terms of office exceeds nine (9) years (whether on a consecutive or cumulative basis), on the 9th anniversary year, shall subject to review by the Board of his or her independency before recommendation on re-appointment as independent director is proposed to shareholders.


4.4 Diversity of Board and Senior Management

Appointment of Board and Senior Management are based on objective criteria, merit with due regard for diversity in skills, experience, age, cultural background and gender.

The Board considers its current composition, with the mix of skills, expertise and age group provide much diversity of perspective to lead and guide the Group and are adequate to discharge the Directors’ duties and responsibilities effectively. The Board through the Nomination and Remuneration Committee regularly reviews the composition of the Board and Board Committees.





II BOARD COMPOSITION (CONT’D)

4. Board Decision and Objectivity (cont’d)

4.4 Diversity of Board and Senior Management (cont’d)

The brief profile of the Directors and Senior Management is set out in the Profile of the Board of Directors and Senior Key Management in the Annual Report.


4.5 Gender Diversity

The Code recommended disclosure in annual reports on policies for gender diversity. The Group has not adopted a formal policy on gender diversity.


MEASURES: In recognition of the call for gender diversity to consider female participation in Board membership, the NRC had recommended and the Board had appointed the first lady Director, Ms. Elaine Tan Ai Lin as Independent Non-Executive Director on 2 January 2013. Ms. Elaine Tan was also appointed as member of Audit Committee and NRC on 19 March 2013. The Board of Directors consists of six gentlemen and a lady.

The Board through NRC will consider the gender diversity as part of its future selection and will consider increasing female participation in Board as well as Senior Management.

4.6 New Candidate for Board Appointment

The Code recommended the Board to utilize independent sources to identify suitably qualify candidates instead of solely relying on the recommendations from existing Board Members, Management or Major Shareholder.

Besides recommendation from internal sources, the Board will also source externally via recruitment consultants, industry acquaintance and recommendations.

All recommended candidate(s) will be submitted to the NRC who is task to and responsible for assessing the curricular vitae of new nominees and recommending the appointment to the Board and/or Board Committee(s).

There is no new appointment to the Board and/or Board Committee since 2013.


4.7 Nomination Committee

The Board had established the Nomination and Remuneration Committee (“NRC”) on 25 November 2002. The Committee is made up entirely of Independent Directors and chaired by the Senior Independent Director.

A copy of the Board Charter which contains more information on the NRC and Board’s policy on its composition, process of appointment, Board and Board Committees procedures and conducts, terms of reference of various Board Committees are available on the Company’s website.





II BOARD COMPOSITION (CONT’D)

5. Overall Effectiveness of Board and Members

5.1 Annual Evaluation and Assessment

The Code recommended the Board to carry out annual evaluation and assessment of Board and its member.

The Board through the NRC evaluates and assesses the performance of the Executive Directors and their remuneration package; assessing and evaluating the Non-Executive Directors, the Board, the Audit Committee, and members of the Audit Committee annually.

During the financial year, the NRC met once with full attendance to review and assess the following:

i. Board performance: Board structure, training needs, Board operations, roles and responsibilities;

ii. Board Committee performance: composition of Board Committees and Board Committees operations and reporting;

iii. Non-Executive Directors and Executive Director performance review based on their contributions and conducts;

iv. Audit Committee performance: its composition, understanding of its charter, discharge of duties in accordance with its terms of reference, operations, reporting and conduct of meetings of the Audit Committee;

v. Audit Committee members’ performance based on their contributions and conduct; and assessment on “independence” of independent directors;

The minutes of the NRC and summary of the above mentioned assessments results are tabled to the Board at the subsequent Board meeting.


III REMUNERATION

6. Level and Composition of Remuneration

6.1 Remuneration Policy

The Code recommended the level and composition of remuneration of Directors and Senior Management to 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 Group has not adopted a formal policy on remuneration for Directors and Senior Management.


MEASURES: The Board through the NRC evaluates and assesses the performance of the Executive Directors and their remuneration packages. Senior Management remuneration will be reviewed by Executive Director in charge of the Division.

6.2 Remuneration Committee

The Board had established the NRC on 25 November 2002. The Committee is made up entirely of Independent Directors and chaired by the Senior Independent Director.

The NRC is responsible for assessing and evaluating the performance of the Executive Directors and their remuneration package; assessing and evaluating the Non-Executive Directors and recommends their fees payable to the Board for consideration.




III REMUNERATION (CONT’D)

6. Level and Composition of Remuneration (cont’d)

6.2 Remuneration Committee (cont’d)

A copy of the Board Charter which contains more information on the NRC and Board’s policy on its composition, process of appointment, Board and Board Committees procedures and conducts, terms of reference of various Board Committees are available on the Company’s website.


7. Remuneration of Directors and Senior Management

7.1 Details of Remuneration of Directors

The aggregate remuneration of the Directors for the financial year ended 31 December 2017 received or receivable from the Company is categorized into appropriate components as follows:

Company

Category

Executive Directors RM’000

Non-Executive Directors RM’000

Fees - 120Salaries 1,068 -Benefits-in-kind and other allowances 28 10TOTAL 1,096 130

The remuneration paid to the Directors analyzed into bands of RM50,000 is as follows:

Range of Remuneration (RM)Number of Directors

TotalExecutives Non-Executives

Less than 50,000 - 4 4200,001 – 250,000 2 - 2600,001 – 650,000 1 - 1TOTAL 3 4 7

Note: No Director received any remunerations from subsidiaries.

The Code requires detailed disclosure on remuneration of director individually.


MEASURES: The Board, after due consideration, is of the view that the detailed disclosure of individual director’s remuneration will not add significantly to the transparency in corporate governance on director’s remuneration disclosure. Accordingly, the Board chooses to disclose director’s remuneration in successive bands and categorized into components.




III REMUNERATION (CONT’D)

7. Remuneration of Directors and Senior Management (cont’d)

7.2 Details of Remuneration of Top Four Senior Management

Range of Remuneration (RM) Top 4 Senior Management

150,001 - 200,000 2200,001 - 250,000 1450,001 - 500,000 1TOTAL 4

Note: The Group has only four top senior management.


PRINCIPLE B – EFFECTIVE AUDIT AND RISK MANAGEMENT

I AUDIT COMMITTEE

8. Effective and Independent Audit Committee

The Code required:

8.1 Chairman of the Audit Committee

The Chairman of the Audit Committee is not Chairman of the Board.


8.2 Any former key audit-partner to observe a cooling-off period of at least two years before appointed as a member of the Audit Committee

The Group recognizes the importance of independence of its Audit Committee members to avoid conflict of interest. None of the members of the Board and Audit Committee were a former audit partner of the Group.


8.3 Policies and procedures in place to assess the suitability, objectivity and independence of the external auditor

The Audit Committee practices obtaining written confirmation from the external auditors each year before commencement of audit for the financial year ending, that the firm is able to carry out the audit with objectivity and independence. The said written confirmation is tabled at the said Audit Committee meeting for review and discussion with the auditor.


8.4 Audit Committee comprise solely of Independent Directors -Step Up

The Audit Committee comprises entirely of Independent Directors.




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

I AUDIT COMMITTEE (CONT’D)

8. Effective and Independent Audit Committee (cont’d)

The Code required: (cont’d)

8.5 The Audit Committee members are expected to be financially literate and have sufficient understanding of the Group’s business

The Chairman of the Audit Committee is a member of the Malaysian Institute of Accountant, the other members consist of legal and engineering background. All members of the Audit Committee undertake and continue to undertake professional development. The non-financial background Committee members would also attend financial related programme to keep themselves abreast of development in accounting matters.


II RISK MANAGEMENT AND INTERNAL CONTROL FRAME WORK

9.1 Effective Risk Management and Internal Control

In order to achieve a sound system of risk management and internal control framework, the Board and Management is committed to adopt a risk management and control framework that is embedded into the culture, processes and structures of the Group.

The Board has the overall responsibility for overseeing the Group’s system of internal control and the effectiveness in managing risks.


9.2 Risk Management and Internal Control Framework

The role of Management is to implement the Board’s policies on risk and control recognizing the importance of effective and sound system of internal control to enhance good corporate governance, achieve Group’s business objectives and safeguard shareholders’ investment whilst the Board has the overall responsibility for overseeing the Group’s system of internal control and the effectiveness in managing risks.

The internal audit function provides assessments as to whether risks, which may hinder the Company from achieving its objectives, are being adequately evaluated, managed and controlled. It further evaluates the effectiveness of the governance, risk management and internal control framework and facilitates enhancement, where appropriate.

Further details on the risk management and internal control activities are set out in the Statement on Risk Management and Internal Control of this Annual Report.




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

II RISK MANAGEMENT AND INTERNAL CONTROL FRAME WORK (CONT’D)

10. Effective Governance, Risk Management and Internal Control

10.1 Internal Audit Function

Internal auditing is an independent, objective assurance and consulting activity designed to add value and improve a company’s operations. It helps a company accomplish its objectives by bringing a systematic and disciplined approach to evaluate and improve the effectiveness of risk management, control and governance processes.

The internal audit function provides assessments as to whether risks, which may hinder the Company from achieving its objectives, are being adequately evaluated, managed and controlled. It further evaluates the effectiveness of the governance, risk management and internal control framework and facilitates enhancement, where appropriate.

The Board had set up an internal audit function that operates effectively, independently and reports directly to the Audit Committee.


10.2 Internal Audit Resources

The internal auditors are free from any relationship or conflict of interest or undue influence that could impair their objectivity and independence.

The Company has outsourced its internal audit function to a professional firm which reports directly to the Audit Committee.

Details of the Company’s internal control system and framework are set out in Statement on Risk Management and Internal Control and the Audit Committee Report of this Annual Report respectively.


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

I COMMUNICATION WITH STAKEHOLDERS

11. Continuous Communication between Company and Stakeholders

The Board recognizes the importance of transparency and accountability to its shareholders and the need for clear, effective communications with the Company’s institutional investors, shareholders and other stakeholders. The shareholders, investors and other stakeholders are kept informed of the Group’s performance, business activities, financial performance, material information and corporate events through the Annual Report, formal announcements, quarterly reports, circulars and press release which are released through Bursa’s and the Company’s website.

The Group maintains various websites at: www.hwgenting.com.my, www.hw-genting.com, www.hwgwirecable.com.my, www.hwgholidays.com and www.hwgenting-mm2h.com to provide information on the Company, the Group’s various businesses which shareholders, investors and public may surf.



PRINCIPLE C – INTEGRITY IN CORPORATE REPORTING AND MEANINGFUL RELATIONSHIP WITH STAKEHOLDERS (CONT’D)

II CONDUCT OF GENERAL MEETINGS

12. Encourage Shareholder Participation at General Meeting

The Annual General Meeting (“AGM”) is the principal forum for dialogue between the Company and its shareholders and investors. At the AGM, the Board briefs the shareholders on the status of the Group’s businesses and operations. The shareholders are given the opportunity to raise questions on the Group’s activities and prospects as well as to communicate their expectations and concerns to the Company. Extraordinary General Meeting is held as and when shareholders’ approvals are required on specific matters.

The Chairman at the commencement of each general meeting briefs shareholders of their right to speak and vote.

The Chairman will brief shareholders on the financial and operations performance of the Group prior to tabling the motion on the audited financial statements and shareholders will be invited to raise questions concerning the financial statements. Briefing will also be given on other motions not in the ordinary course of business of the agenda as and when needed before voting. The Directors, Auditors and Senior Managements Officers are also present to answer any questions which may be raised.


12.1 Notice of General Meeting

The Board encourages the participation of shareholders at the general meeting and has been sending AGM notice earlier (at least 28 days) than the minimum notice period stated in the LR and will try to continue sending AGM notice earlier as and when possible.

The Board will ensure sufficient and relevant information are given for each agenda items in the notice of meeting and / or annual report or circular accompanying the notice of meeting.


12.2 Directors’ Attendance

All Directors normally present at each general meeting. In the past 5 years general meeting attendance records, all Directors were present with no absenteeism.

Senior Management and adviser will also be present at general meeting to answer any questions shareholders may raise.


12.3 Facilitate shareholders’ participation

The Company uses electronic voting to facilitate the voting process and to obtain quicker and more accurate results, thus encourages shareholders participation in voting.

The Company has been holding general meeting in the Klang Valley area, thus the issue of remote location for meeting does not arise.


STATEMENT OF COMPLIANCE

The Board shall continue to adhere for high standards of corporate governance for the Group’s operations. The Board opined and is satisfied that the Group has materially complied with the principles and practices detailed in the Code save for those departures mentioned in this Statement.

The Corporate Governance Overview Statement was approved by the Board on 5 April 2018.



ADDITIONAL COMPLIANCE INFORMATION

13. Directors’ Training

The Board acknowledges the importance of continuous education for Directors. The Company on an on-going basis facilitates appropriate training and education programme for Directors’ participation from time to time to further enhance their skills and knowledge to fully equip them to discharge their duties effectively. An annual budget is allocated for Directors’ training.

The Board through the NRC reviews the training needs of the Directors annually and Directors are invited to state their training needs preference in the Board Assessment and Evaluation Form. Each Director is required to attend at least one training per year. Directors are also encouraged to attend various seminars and conferences to keep themselves abreast of the current developments and business environment affecting their roles and responsibilities.

In addition, the Company Secretary and other Senior Management Officers brief the Directors on any changes and updates on legislation, rules and guidelines issued by relevant regulatory bodies from time to time.

During the financial year under review, the Directors had attended the following seminar / training / conference / workshop:

Directors Training Date

Datuk Teo Tiew Capital Markets Conference 2017 - Global Capital Markets: Entering a New Era - By MIA 18.07.2017CG & Sustainability Microsite - Focus Group With Listed Issuers And Investors - By Bursa 20.07.2017Corporate Disclosure Framework & Directors Disclosure Obligations Under The Listing Requirements - By Bursa 30.08.2017MFRS Conference 2017 – The Future of Financial Reporting - By MIA 19.10.2017Enhance Quality of Management Discussion and Analysis for CEO and CFO of Listed Issuers- By Bursa 23.10.2017

Dato’ Lim Ooi Hong

ITRI Asia Tin Summit 2017, Kunming, China - By Yunnan Tin, China 12-14.09.2017Cloud Expo Asia Singapore 11-12.10.2017

Lim Wee Kiat SME CEO Forum 2017 - By Business Media International 09.08.2017Corporate Disclosure Framework & Directors Disclosure Obligations Under The Listing - By Bursa 30.08.2017CXSC Digital Finance 2017 Conference - By SC 6-7.11.2017Basic Blockchain and Bitcoin Course - By Tertiary Infotech Sdn Bhd 13.11.2017

Dato’ Mohd Shahar Bin Abdul Hamid

“The Velocity of Global Change & Sustainability – The New Business Model” and ACCA Malaysia Sustainability Reporting Awards (MaSRA) 2016 – By ACCA, Talent Corp and Bursa 10.01.2017Qualified Risk Director Programme – Series 4: Strategic ERM: A Primer For Directors By Institute of Enterprise Risk Practitioners 28.04.2017Corporate Disclosure Framework & Directors Disclosure Obligations Under The Listing - By Bursa 27.09.2017

Tee Lay Peng CG Breakfast Series with Directors – “Board Excellence”: How to Engage and Enthuse Beyond Compliance with Sustainability - By Bursa 17.07.2017CG Breakfast Series For Director - Leading in a Volatile, Uncertain, Complex, Ambiguous (VUCA) World - By Bursa 13.10.2017MIA Conference Delegate, Malaysia: Your Preferred Investment Destination in Asia – By MIA 06.11.2017MIA International Conference 2017 - By MIA 7-8.11.2017Conversation with Audit Committees - By SC 14.11.2017MIA-SC Workshop on Malaysian Code on Corporate Governance – By MIA & SC 17.11.2017CG Breakfast Series: “Leading Change @ The Brain” - By The Iclif Leadership and Governance Centre 05.12.2017




ADDITIONAL COMPLIANCE INFORMATION (CONT’D)

13. Directors’ Training (cont’d)

During the financial year under review, the Directors had attended the following seminar / training / conference / workshop: (cont’d)

Directors Training Date

Wong Tuck Jeong

“The Velocity of Global Change & Sustainability – The New Business Model” and ACCA Malaysia Sustainability Reporting Awards (MaSRA) 2016 - By ACCA, Talent Corp and Bursa 10.01.2017

Elaine Tan Ai Lin Corporate Disclosure Framework & Directors Disclosure Obligations Under The Listing Requirements- By Bursa 30.08.2017SSM National Conference 2017 – By Suruhanjaya Syarikat Malaysia 22-23.08.2017

Note: MIA - Malaysian Institute of Accountants Bursa - Bursa Malaysia Berhad SC- Securities Commission Malaysia

Newly appointed Director(s) will be given induction programme to the Group’s business operations, understanding of the cultures, the corporate and organizational structures which include meeting with Senior Management Officers and if necessary, visits to operation units.

Newly appointed Director(s) will also attend Mandatory Accreditation Programme (“MAP”) required under the LR. No new Director was appointed during the financial year under review.

14. Utilization of Proceeds

During the financial year under review, the Company did not raise funds through any corporate proposal.

15. Fees Paid to Auditors

During the financial year under review, the amount of audit fees and non-audit fees incurred for services rendered to the Group by the External Auditors of the Company were as follows:

CategoryGroup

RMCompany

RM

Audit Fees 142,175 42,000Non-Audit Fees 6,000 6,000

TOTAL 148,175 48,000

16. Material Contracts

There were no material contracts entered into by the Company or any of its subsidiaries involving Directors’ and Major Shareholders’ interests subsisting as at 31 December 2017 or entered into since the end of the previous financial year ended 31 December 2016.

There were no material contracts relating to loans between the Company and its subsidiaries involving Directors’ and Major Shareholders’ interests during the financial year under review.

17. Information on Employee Share Option Scheme

On 22 February 2016, the Company terminated the Employees’ Share Option Scheme (“ESOS”) 2010/2020 and on 13 April 2016 implemented a New ESOS 2016/2026.

A copy of the Bylaws of the ESOS 2016/2026 was posted on the notice board of the Company and each subsidiary for employee’s information.



ADDITIONAL COMPLIANCE INFORMATION (CONT’D)

17. Information on Employee Share Option Scheme (cont’d)

In the financial year ended 31 December 2016, a total of 40,825,200 ESOS were offered to eligible employees in the Group of which 40,104,100 ESOS were accepted by the employees. Disclosure of ESOS information pursuant to Appendix 9C (27) of the LR are as follows:

a. Brief details of ESOS:

No. ESOS movement during the financial year Balance

Total number of options granted on 12.05.2016 40,104,100i. Option granted/Additional adjustment -ii. Total number of options exercised (200,000)

Total number of options lapsed due to staff resignation (3,529,700)

iii. Total options outstanding as at 31.12.2017 36,374,400

b. ESOS granted to Directors and Chief Executive:

No. ESOS movement during the financial year Balance

Total number of options granted on 12.05.2016 10,500,000i. Aggregate option granted/Additional adjustment -ii. Aggregate options exercised -

iii. Aggregate options outstanding as at 31.12.2017 10,500,000

c. ESOS granted to Directors and Senior Management:

Since commencement of the ESOS on13 April 2016

Allocated during the year

As at31 December 2017

Aggregate maximum allocation in percentage 50% - 50%

Actual percentage granted 41.57% - 40.57%

The Company’s ESOS Bylaws do not provide for allocation of options to Non-Executive Directors.


The Audit Committee is pleased to present its report which provides for activities carried out during the financial year ended 31 December 2017.

COMPOSITION OF THE AUDIT COMMITTEE

CHAIRMANMr. Tee Lay Peng Independent Non-Executive Director

MEMBERSDato’ Mohd Shahar Bin Abdul Hamid Senior Independent Non-Executive Director



A. TERMS OF REFERENCE

The Audit Committee was established on 4 October 1994. It has clear written terms of reference providing its functions, qualifications for membership, authority, scope of duties, responsibilities, and rules and procedures of the Committee. The aforesaid terms of reference is available on the Company’s website.

B. SUMMARY OF AUDIT COMMITTEE ACTIVITIES

The Committee held four (4) meetings during the financial year ended 31 December 2017 with due notices of issues to be discussed circulated to the Committee Members.

Details of the attendance of the Audit Committee Members are as follows:

Audit Committee Members Attendance

Mr. Tee Lay Peng 4/4Dato’ Mohd Shahar Bin Abdul Hamid 4/4Mr. Wong Tuck Jeong 4/4Ms. Elaine Tan Ai Lin 4/4

During the financial year under review, the Audit Committee met twice with the external auditors without the presence of any Executive Directors and/or Management.

The proceedings of each audit committee meeting were minuted and distributed to members of the Audit Committee accordingly.

The activities undertaken by the Audit Committee during the financial year under review were as follows:

1. Reviewed the Group’s unaudited quarterly financial statements and made recommendations thereon to the Board for approval prior to release to Bursa Malaysia Securities Berhad.

2. Reviewed the Group’s audited financial statements and made recommendation to the Board for approval.

3. Monitored and ensured that the internal auditors carried out its functions in accordance with the Audit Committee instructions, and affirmed that adequate scope and coverage of the Group’s activities are constantly being considered.

4. Reviewed and discussed the quarterly internal audit reports on audit issues highlighted, recommendations and Management’s responses and the effectiveness of the Group’s system of internal controls.

5. Followed up on previous internal audit reports issued.

Audit Committee Report


B. SUMMARY OF AUDIT COMMITTEE ACTIVITIES (CONT’D)

The activities undertaken by the Audit Committee during the financial year under review were as follows: (cont’d)

6. Reviewed the Audit Summary Memorandum for the financial year ended 31 December 2016 prepared by the external auditors which comprised the significant audit findings.

7. Reviewed the Audit Committee Report and Statement on Risk Management and Internal Controls.

8. Reviewed the Audit Planning Memorandum for audit of financial statements for financial year ended 31 December 2017 prepared by the external auditors which set out the auditors’ responsibilities in respect of financial reporting, audit approach, scope of work, current developments, areas of concern, and audit procedures.

9. Considered and recommended to the Board for approval the audit fees payable to the internal and external auditors.

10. Reviewed existing accounting standards for additional disclosures requirement approved by the Malaysian Accounting Standards Board and Malaysian Financial Reporting Standards applicable in the preparation of the Group’s financial statements.

11. Reviewed related party transactions and conflict of interest situation that may arise within the Company and the Group.

12. Reviewed the “Independence” of the external auditors for the audit of the financial statements for financial year ended 31 December 2017.

C. INTERNAL AUDIT FUNCTION

The Board has established an internal audit function which reports directly to the Audit Committee. The function has been outsourced to a professional service firm and the audits are managed by a Certified Internal Auditor to provide assurance to the Board whether internal control is operating effectively.

The professional fees in relation to internal audit activities amounted to RM72,000 for the financial year ended 31 December 2017.

Details of the Company’s internal control system and framework are set out in Statement on Risk Management and Internal Control of this Annual Report.

D. SUMMARY OF INTERNAL AUDIT ACTIVITIES

During the financial year under review, the internal auditors carried out the following activities:

1. Performed internal audit based on priorities set by the Board and Management.

2. Reported to the Audit Committee on the execution of internal audit approaches, scope of work, findings and recommendations.

3. Reviewed and followed up on actions taken by management on previously issued internal audit reviews and recommendations in manufacturing division.

4. Reviewed the redevelopment of standard costing procedures in manufacturing division for consumption optimization and accountability.

5. Reviewed and recommended procedures for sustainable manufacturing and mining.

6. Reviewed the monthly management/manufacturing/production report whether it contains adequate information for management to identify, control and correct operational issues and to streamline costs in manufacturing division.

7. Provided continuous assistance and advisory to the Board and the Management on matters pertaining to governance, risk, compliance and sustainability.

The internal audit function will conduct special reviews or audit requested by the Audit Committee and / or Management on ad-hoc basis.

Audit Committee Report (cont’d)


Sustainability Statement

SUSTAINABLE MANUFACTURING

Sustainable manufacturing is increasingly critical in today’s businesses. Companies across the world face increasing costs in materials, energy and compliance as well as with higher expectations from customers, investors and local community.

PT HWG is an integrated manufacturer of wire and cable, moulded power supply cord sets and cable assemblies for electrical and electronic devices and equipment. The plant is located in Batam, Indonesia. The products are mainly exported to the US market. We employ a 700 workers operating on a 33,228m2 factory/office built on a 54,865m2 land. This make us one of the main foreign employers contributing to the local economy.

HWGB’s manufacturing division adopted certain sections of sustainable manufacturing model as our first step to green innovation. Our green efforts have improved efficiency of our production processes and contributed to sustainable growth. We manufacture wire and cable that minimize negative environmental impacts, conserve energy and natural resources, safe for employees, communities and are economically sound. Steps we have taken include the introduction of environmental risk management into our formal risk assessment function. Selected areas that are involved under green risk assessments include procurement, design, material consumption, waste management, customer selection, safety and community engagement.

The global market place in which we operate is constantly evolving with the introduction of new policies, social economic and environmental improvements. Challenges for our customers, partners and societies as a whole are becoming more diverse and complex.

Our venture into LED Lighting and Work Light cable is the testimony of our acknowledgement to the significance of responsible entrepreneurship in energy saving. We have set innovation as our strategic priority, allowing us to respond to the growing demands of energy efficient products.

As a responsible organization in environmental aspects, we have upgraded our Quality & Environment Management System to the latest 2015 versions, both on ISO 9001/2015 and ISO 14000/2015. Additionally, our production process is working towards meeting the requirements of Proposition 65, known as the Safe Drinking Water and Toxic Enforcement Act of 1986 in California State of USA. Proposition 65 requires businesses to provide warnings to Californians of significant exposures to chemicals that are harmful to health. These chemicals can reside in the products that Californians purchased, and left in their homes, workplaces or released into the environment. By making it a regulatory requirement to report on these issues, Proposition 65 enables Californians to make informed decisions about their potential exposures to harmful chemicals.

Through our engineering and quality team, we have announced to customers that the compositions of our products do not contain prohibited materials. We adopt Health Product Declarations (HPD) practices to provide transparent, scientifically based information by disclosing and comparing product ingredients against a list of hazardous materials published by governments and scientific institutions.

With a view to strengthening our position in global market, we have developed collaborative development exercises with vendors to acquire substitute materials to lower the impact on environment. Enhancing the composition of PVC compound as a priority, eliminating hazardous substances will effectively reduce pollution.

On employment and outsourcing, we have developed and communicated our green guidelines that will be formally adopted in 2018. All employees and subcontractors must undergo a green orientation. We will hold dialogues with local community leaders and authorities on our green practices.

We had organized charitable events to engage directly with local communities and non-profit organizations both in financial and physical aspects. During these events, we took the opportunity to introduce PT HWG’s philosophy and our sustainable development policies.


Sustainability Statement (cont’d)

SUSTAINABLE MINING

HWG Tin Mining Sdn. Bhd. (“HWGTM”) is undertaking tin mining activities covering an area of 500 acres of land in Pengkalan Hulu, Perak, for a period of 10 years from 2010 to 2020. All the tin concentrate outputs are sold to Malaysia Smelting Corporation Berhad. As our business activities are closely associated with natural resources, we recognise the importance of practising responsible stewardship of the environment.

HWGTM’s effort in environment management includes reducing mining input such as water and energy consumption as well as reducing mining waste. Tin mining can be very energy-intensive processes. For instance, diesel fuel is used by trucks and excavators during mining operations while electricity is used to operate heavy-duty equipment such as rock crushers, rod mill and ball mill to grind the ore to finest size prior to flow out onto the vibratory table to extract out the tin concentrate. HWGTM has made efforts to reduce greenhouse gas emissions by implementing scheduled maintenance program for all its earth moving equipment fleets.

To reduce water usage, HWGTM employs the strategy of minimising and recycling of water usage. Surplus waste water is treated to an acceptable quality before its eventual release back into the environment. A series of new initiatives were put in place to improve onsite water management and implement more effective conservation procedures. Actions taken include the development of site water management plans, systematic mine dewatering program, water flow control and quality monitoring and participating in regional and local water planning such as erosion and sedimentation measures.

Tin mining produces tailings, which are mixtures of crushed rock, sand and processing fluids from mills, which remain after the extraction of tin concentrate. HWGTM recognises that the storage and handling of tailings is an environmental risk. We have initiated tailings management, monitoring on possible acid drainage, discharge management and solid waste management on site. Monitoring of tailings storage facilities includes the installation of piezometers to monitor groundwater mounding beneath the surrounding facility, surface and groundwater quality sampling both upstream and downstream to ensure the water quality complies with law and regulations. We also provide a wider buffer zone at dumping site to prevent water pollution to rivers.

Additionally, regular inspections are performed on tailings storage facilities and associated pumping and pipeline systems. Any observations or maintenance requirements will be documented together with the actions taken. The performance of the tailings storage facilities will also be reviewed periodically by a geotechnical engineer experienced in tailings management.

HWGTM will continue to explore the possibility of tailing recycling and reuse. Research was done at Batu Gajah located in Perak, which indicates that high silica content in tailing sand can be reused as moulding sand for copper-based casting in marine application. It shows that there are many possibilities for tailing usage that can significantly reduce tailings waste.

HWGTM takes into consideration possible pollution to the air. Sufficient water sprinklers are installed along haulage road to reduce formation of dust during mining operation and also when heavy machineries pass through. Air quality at the mine is monitored periodically and reported to the mining authority monthly.

To protect the mine’s impact on the environment, HWGTM has taken actions to repair mine sites and mine environments. We are replanting grass at slopes to prevent soil erosion and also more trees and plants on a scheduled timeline. Through replanting activities, we hope to rejuvenate a long-term ecosystem, repair and sustain the environment. The entire replenishment and reclamation process include removal of hazardous materials, reshaping land, restoring topsoil and planting native grass, trees or ground cover that is natural to the site.


1. INTRODUCTION

The Board affirms that the Statement on Risk Management and Internal Control has been prepared in accordance to Paragraph 15.26(b) of the Listing Requirements of Bursa Malaysia Securities Berhad.

The Board is committed to continuously improve the risk management framework and to maintain a sound system of internal control. Each business unit or functional group has implemented its own control processes under the leadership of the Executive Chairman, who is responsible for business and regulatory governance. The following statement outlines the nature and scope of the Group’s risk management and internal control in 2017.

2. BOARD OF DIRECTORS’ RESPONSIBILITIES

The Board affirms its responsibility to oversee that a working systems of risk management and internal control are in place to assist the Group in meeting its objectives.

The Board meets on quarterly basis to review the Group’s risk management and internal control activities based on the scope collectively agreed by the Board and Senior Management. The Board through the Audit Committee (“AC”) supported by an internal audit function that is independent from the activities it audits, conducts quarterly assessments according to areas identified by the Board. Issues as well as actions agreed by Management to address them are tabled and deliberated during the AC meetings. Minutes of the AC meetings are recorded and presented to the Board.

The Board recognizes the need to embed risk management in all aspects of the Company’s activities and setting levels of acceptable risk appetite to aid decision making and governance processes. The Board reaffirms the need for a more formal risk management framework and processes that are capable to provide reasonable assurance that risks are managed within tolerable ranges.

The Board has received assurance from the Group Executive Chairman and the Managing Director/Chief Executive Officer that the Group will continue to develop and improve a sound and effective system of risk management and internal control. In pursuing objectives, the role of Management is to implement the Board’s policies, decisions and guidelines on risks and controls that include the identification, evaluation and treatment of risks with appropriate counter measures.

The Board however, recognizes that these systems are designed to manage, rather than eliminate risks. Therefore, the systems provide reasonable, but not absolute assurance against the occurrence of any material misstatement, loss or fraud.

2.1 Control Environment

The Board affirms its tone at the top regarding the importance of internal control and expected standards of conduct that will provide discipline, process and structure throughout the Group. The Board promotes transparency by providing communication channels for all levels within the organization to facilitate and ensure integrity and ethics are upheld at all times.

The Board reviews Management performances on a quarterly basis and exercises oversight for the development and performance of internal control. Management has attested its commitment to establish, with Board oversight, structures, reporting lines, and appropriate authorities and responsibilities in the pursuit of the objectives.

The Board and Management are committed to attract, develop and retain competent individuals in alignment with the objectives. Individuals are held accountable for their internal control responsibilities in the pursuit of the objectives.

Statement On Risk Management And Internal Control


2. BOARD OF DIRECTORS’ RESPONSIBILITIES (CONT’D)

2.2 Risk Assessment

The Board through the internal audit function has identified all key functional components within the Group and conducted basic risk assessment exercises with the purpose of prioritizing key areas for governance and control processes development. In this regard, risks were assessed using quantitative and qualitative measures based on the significance of their impact to the Group and the likelihood of occurrence. The product of impact and likelihood were evaluated on a scale, indicating the level of attention required. Occasionally, areas are selected based on management request, agreed by the Executive Chairman and then the Board.

Reviews are then carried out based on resources allocated, focusing on areas that required immediate mitigation and rectification. Agreed Management action plans are then tabled to the Board via Audit Committee.

The Board is committed to develop risk management framework based on globally acceptable standards such as the COSO and ISO models.

2.3 Control Activities

The Board oversees the establishment of policies and procedures to ensure that Management’s directives to mitigate risks for the achievement of the objectives are carried out. Control activities are performed at all levels within the Group and at various stages within business processes, and over the technology environment.

Control activities are continuously evolving and improved to ensure that they can better anticipate and mitigate risks to increase the Group’s chances in meeting objectives. Resources and capabilities are continuously being evaluated to ensure that they are able to match the Group’s strategic goals.

2.4 Information and Communication

Information is necessary for the Board to carry out internal control responsibilities in support of achievement of the Group objectives. The Board is committed to ensure that relevant and quality information is generated and communicated to support the internal audit and proper functioning of all the internal control components. Communication procedures are being developed to enable all personnel to understand internal control responsibilities and their importance to the achievement of objectives.

The Board affirms its commitment to ensure that all stakeholders are identified and critical stakeholders are included in its communication plan on matters affecting the functioning of internal control.

2.5 Monitoring Activities

The Board adopts the policy of ongoing and separate evaluations to ascertain whether key internal controls exist and that they are operating effectively. For ongoing evaluations, the Board ensures that Management at all levels is competent and has sufficient knowledge to understand evaluation purpose and procedures, giving thoughtful consideration on information they receive. By focusing on relationships, inconsistencies or other relevant implications, issues are raised immediately and corrective actions followed up consistently.

For separate and periodical evaluations, the Board engages a professional service firm that is independent of the activities it audits to perform internal audit for the Group. The internal auditor reviews the audit areas based on scope and resources set by the Board. Quarterly audits are performed based on the audit plan or areas that require the Board’s immediate attention. All internal audit reports are communicated to Management and tabled at the quarterly AC meetings. Internal audit reports indicates the effectiveness of the internal control system of the areas under review. Management action plans are monitored periodically to ensure agreed counter measures and improvements are being addressed.

Statement On Risk Management And Internal Control (cont’d)


The Directors are required under the Companies Act, 2016 and the Malaysian Financial Reporting Standard for entities other than private entities to prepare financial statements for each financial year which give a true and fair view of the state of affairs of the Group and of the Company for the financial year then ended.

The Directors are of the opinion that, in preparing these financial statements, the Group and the Company have:

1. used appropriate accounting policies and applies them consistently;2. made judgments and estimates that are reasonable and prudent; 3. followed applicable accounting standards; and4. prepared the financial statements on a going concern basis.

The Directors are responsible for ensuring that the Company keeps proper accounting records, to disclose with reasonable accuracy, the financial positions and results of the Group and Company. The Directors are also responsible for taking necessary and reasonable steps to safeguard the assets of the Company and the Group and to prevent and detect fraud and other irregularities.

Directors’ Responsibility Statement

3. REVIEW OF THIS STATEMENT

Pursuant to Paragraph 15.23 of the Main Market Listing Requirements, the External Auditors have reviewed this Statement for inclusion in the Annual Report 2017 and reported to the Board that nothing has come to their attention that causes them to believe that the Statement is inconsistent with their understanding of the process adopted by the Board in reviewing the adequacy and effectiveness of the risk management and internal control system. This Statement has been approved by the Board.

Additionally, the Internal Auditor has reviewed this Statement and reported to the AC that, the Statement reflected the general circumstances of risk management and internal control activities during the engagement year.

4. CONCLUSION

The Board is of the view that the risk management and internal control system is operational for the year under review and capable to provide basic information related to the status of the Group’s assets, shareholders’ investment, the interests of customers, regulators, employees and other stakeholders.

The Board has appraised the adequacy and effectiveness of the risk management and internal control system in operation during the financial year through the monitoring process set out above. However, it must be made clear that any system of internal control, no matter how well designed, implemented and monitored, does not eliminate the possibility of human error, collusion or the deliberate circumvention of control procedures. The Board remains committed towards building a sound system of internal controls within an effective risk management framework. The Board acknowledges that internal controls must continuously improve to support the Group in achieving its key objectives.

Statement On Risk Management And Internal Control (cont’d)


56 Directors’ Report

61 Statement By Directors

61 Statutory Declaration

62 Independent Auditors’ Report

66 Statements of Comprehensive Income

67 Statements of Financial Position

68 Statements of Changes In Equity

71 Statements of Cash Flows

73 Notes to the Financial Statements


The directors hereby submit their report and the audited financial statements of the Group and the Company for the financial year ended 31 December 2017.

PRINCIPAL ACTIVITIES

The principal activities of the Company are that of an investment holding company and the provision of management services. The details of the subsidiaries, including their principal activities, are disclosed in Note 12 to the financial statements.

FINANCIAL RESULTS

GroupRM’000

CompanyRM’000

Net loss for the year attributable to:Owners of the Company (10,816) (38,969)Non controlling interests (8,916) -

(19,732) (38,969)

In the opinion of the directors, the results of the operations of the Group and the Company during the financial year have not been substantially affected by any item, transaction or event of a material and unusual nature.

DIVIDENDS

No dividend has been paid or declared by the Company since the end of the previous financial year. The directors do not recommend any dividend payment in respect of the current financial year.

RESERVES AND PROVISIONS

There were no material transfers to and from reserves or provisions during the financial year other than those disclosed in the financial statements.

ISSUE OF SHARES AND DEBENTURES

During the financial year, the Company increased its issued and paid up capital from RM49,902,293 to RM49,923,753 via the following:

(i) issuance of 200,000 new ordinary shares pursuant to the exercise of 200,000 ESOS options at the exercise price of RM0.055 per ordinary share; and

(ii) transfer of RM10,460 from the employee share option reserve account pursuant to the exercise of 200,000 ESOS options.

The new ordinary shares issued rank pari passu with the then existing ordinary shares of the Company.

The movements in the Company’s share capital account are disclosed in Note 19 to the financial statements.

The Company has not issued any debentures during the financial year.

WARRANTS 2016/2021

The Company had on 16 March 2016 issued 244,935,533 Warrants 2016/2021 in conjunction with its renounceable rights issue. The Warrants 2016/2021 are constituted by a Deed Poll dated 28 January 2016.

The salient features of the Warrants 2016/2021 are as follows:

(a) The issue date of the Warrants is on 16 March 2016 and the expiry date is on 15 March 2021. Any warrants not exercised at the expiry date will lapse and cease to be valid for any purpose;

(b) Each Warrant entitles the registered holder the right to subscribe for one (1) new ordinary share in the Company at an exercise price of RM0.08 per ordinary share until the expiry of the exercise period;

Directors’ Report


Directors’ Report (cont’d)

WARRANTS 2016/2021 (CONT’D)

The salient features of the Warrants 2011/2016 are as follows: (cont’d)

(c) The exercise price and the number of Warrants are subject to adjustment in the event of alteration to the share capital of the Company in accordance with the provisions in the Deed Poll. However, no adjustment shall be made in any event whereby the exercise price would be reduced to below the par value of ordinary shares in the Company;

(d) The Warrant holders are not entitled to participate in any distribution and/or offer of further securities in the Company (except for the issue of new warrants pursuant to adjustment as mentioned in item (c) above), unless and until such Warrant holders exercise their rights to subscribe for new ordinary shares; and

(e) The new ordinary shares to be issued upon exercise of the Warrants, shall upon issuance and allotment, rank pari passu with the then existing ordinary shares, except that they will not be entitled to dividends, rights, allotments and/or other distributions, declared by the Company which entitlement thereof precedes the allotment date of the new ordinary shares allotted pursuant to the exercise of the Warrants.

The movements in the Company’s Warrants 2016/2021 during the financial year are as follows:

Entitlement for ordinary sharesBalance at

1.1.2017‘000

Issued ‘000

Exercised‘000

Expired‘000

Balance at 31.12.2017

‘000

Number of unexercised warrants 244,936 - - - 244,936

EMPLOYEES’ SHARE OPTION SCHEME (“ESOS”)

The Company implemented an Employees’ Share Option Scheme (“ESOS”) which is governed by the ESOS By-Laws and was approved by its shareholders at the Extraordinary General Meeting held on 12 November 2015.

The salient features of the ESOS are as follows:

(a) The ESOS was implemented on 25 March 2016 and is in force for a period of 10 years until 24 March 2026 in accordance with the terms of the ESOS By-Laws;

(b) The total number of new shares to be offered pursuant to the ESOS shall be subject to a maximum of 10% of the Company’s issued and paid up share capital (excluding treasury shares) at any one time;

(c) Employees (including Executive Directors) of the Company or its subsidiaries shall be eligible to participate in the ESOS, if as at the date of offer, the employee:

(i) has attained the age of eighteen (18) years;(ii) is employed by and on the payroll of the Company or its subsidiaries; and(iii) has been in the employment of the Company or the subsidiaries for a period of at least twelve full months

of continuous services, including services during the probation period and whose employment has been confirmed.

The allocation criteria of new ordinary shares comprised in the options to eligible employees shall be determined at the discretion of the Option Committee. The participation of an Executive Director of the Company in the ESOS shall be approved by the shareholders of the Company in the general meeting;

(d) The price payable upon exercise of ESOS shall be based on the weighted average market price of the Company’s shares as shown in the Daily Official List of Bursa Malaysia Securities Berhad for the five (5) market days immediately preceding the date of offer with an allowance of a discount of not more than 10%, or at the par value of the Company’s shares, whichever is higher;

(e) In the event that share buy-back exercise of the Company resulting in the number of options that have been offered under the ESOS exceeding 10% of the issued and paid up share capital of the Company, there shall be no granting of additional options at any point in time after the share buy-back, unless the number of options that have been granted under the ESOS falls below 10% of the issued and paid up share capital of the Company;



EMPLOYEES’ SHARE OPTION SCHEME (CONT’D)

The salient features of the ESOS are as follows: (cont’d)

(f) The new ordinary shares to be issued upon exercise of the ESOS, shall upon issuance and allotment, rank pari passu with the then existing ordinary shares, except that they will not be entitled to dividends, rights, allotments and/or other distributions, declared by the Company which entitlement thereof precedes the allotment date of the new ordinary shares allotted pursuant to the exercise of the ESOS; and

(g) The exercise price and the number of new ordinary shares comprised in the ESOS are subject to adjustment in the event of alteration to the share capital of the Company in accordance with the provisions in the ESOS By-Laws. However, no adjustment shall be made in any event whereby the exercise price would be reduced to below the par value of ordinary shares in the Company.

The movements in the Company’s ESOS are as follows:

Number of options over ordinary shares

Offer Date

Exercise price per ordinary

shareBalance at

1.1.2017‘000

Granted‘000

Lapsed‘000

Exercised‘000

Balance at 31.12.2017

‘000

13 April 2016 RM0.055 39,504 - (2,930) (200) 36,374

DIRECTORS

The directors of the Company in office since the end of the previous financial year to the date of this report are:

Datuk Teo TiewDato’ Lim Ooi HongLim Wee KiatDato’ Mohd Shahar Bin Abdul HamidTee Lay PengWong Tuck JeongElaine Tan Ai Lin

DIRECTORS’ INTERESTS

The shareholdings in the Company and its related companies of those who were directors at the end of the financial year, as recorded in the Register of Directors’ Shareholdings kept under Section 59 of the Companies Act 2016, are as follows:

Number of ordinary sharesBalance as at 1.1.2017 Bought Sold

Balance as at 31.12.2017

In the CompanyShareholdings registered in the name of directors:Datuk Teo Tiew 225,300 - - 225,300Other shareholdings which directors are deemed to

have an interest:Lim Wee Kiat* 101,686,000 - - 101,686,000Dato’ Lim Ooi Hong* 101,686,000 - - 101,686,000



DIRECTORS’ INTERESTS (CONT’D)

Number of options over ordinary sharesBalance as at 1.1.2017 Granted

Exercised/Lapsed


Employee share options registered in the name of directors:

Datuk Teo Tiew 3,000,000 - - 3,000,000Dato’ Lim Ooi Hong 2,500,000 - - 2,500,000Lim Wee Kiat 2,000,000 - - 2,000,000

Number of Warrants 2016/2021 over ordinary sharesBalance as at 1.1.2017 Bought Sold


Warrants registered in the name of director:Datuk Teo Tiew 100,000 - - 100,000Other holdings in which directors are deemed to

have an interest:Dato’ Lim Ooi Hong* 10,000,000 - - 10,000,000Lim Wee Kiat* 10,000,000 - - 10,000,000

* Deemed interested by virtue of his substantial shareholding in Ho Wah Genting Holding Sdn Bhd pursuant to Section 8(4) of the Companies Act 2016

None of the other directors in office at the end of the financial year had any interest in the shares of the Company and its related companies during the financial year.

DIRECTORS’ BENEFITS

Since the end of the previous financial year, no director has received or become entitled to receive any benefit (other than a benefit included in the aggregate amount of emoluments received or due and receivable by the directors as shown in the financial statements or the fixed salary of a full time employee of the Company) by reason of a contract made by the Company or a related corporation with the director or with a firm of which the director is a member, or with a company in which the director has a substantial financial interest except for any benefit which may be deemed to have arisen by virtue of the transactions between the Company and certain companies in which certain directors of the Company have interest as disclosed in Note 30.1 to the financial statements.

The amount of remuneration paid to or receivable by the directors for their services to the Group and the Company during the financial year is as follows:

GroupRM’000

CompanyRM’000

Fees 120 120Remuneration other than fees 1,206 1,206Estimated money value of benefits other than in cash 28 28Amount of indemnity insurance effected for directors

(any one claim and in annual aggregate) 5,000 5,000

There were no arrangements during or at the end of the financial year, which had the object of enabling directors to acquire benefits by means of the acquisition of shares in, or debentures of, the Company or any other body corporate.



OTHER STATUTORY INFORMATION

Before the financial statements of the Group and the Company were prepared, the directors took reasonable steps:

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

(b) to ensure that any current assets which were unlikely to realise their book values in the ordinary course of business had been written down to their expected realisable values.

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

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

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

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

In the interval between the end of the financial year and the date of this report:

(a) no item, transaction or event of a material and unusual nature has arisen which, in the opinion of the directors, would substantially affect the results of the operations of the Group and the Company for the financial year in which this report is made; and

(b) no charge has arisen on the assets of the Group and the Company which secures the liability of any other person nor have any contingent liabilities arisen in the Group and the Company.

No contingent or other liability of the Group and the Company has become enforceable or is likely to become enforceable within the period of twelve months after the end of the financial year which, in the opinion of the directors, will or may affect the ability of the Group and the Company to meet its obligations as and when they fall due.

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

AUDITORS

The auditors, Messrs Russell Bedford LC & Company, have indicated their willingness to continue in office.

The total remuneration paid to or receivable by the auditors for the financial year were RM141,175 for the Group and RM42,000 for the Company.

Signed on behalf of the Boardin accordance with a resolution of the directors,

DATUK TEO TIEW

DATO’ LIM OOI HONG



Statement By Directors

STATEMENT BY DIRECTORS

The directors of HO WAH GENTING BERHAD state that, in the opinion of the directors, the accompanying financial statements are drawn up in accordance with the provisions of the Companies Act 2016 and the Malaysian Financial Reporting Standards, so as to give a true and fair view of the financial position of the Group and of the Company as at 31 December 2017, and of their financial performance and their cash flows for the year ended on that date.

Signed on behalf of the Boardin accordance with a resolution of the directors,

DATUK TEO TIEW

DATO’ LIM OOI HONG


Statutory DeclarationI, DATUK TEO TIEW, being the director primarily responsible for the financial management of HO WAH GENTING BERHAD, do solemnly and sincerely declare that to the best of my knowledge and belief, the accompanying financial statements are correct, and I make this solemn declaration conscientiously believing the same to be true and by virtue of the provisions of the Statutory Declarations Act 1960.

Subscribed and solemnly declared by the )above named DATUK TEO TIEW at Kuala Lumpur )in Wilayah Persekutuan on 30 March 2018 )

DATUK TEO TIEW

Before me,

COMMISSIONER FOR OATHS Mohan A.S. Maniam No. W 710


Independent Auditors’ ReportTo The Members Of Ho Wah Genting Berhad

1. REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS

1.1 Opinion

We have audited the accompanying financial statements which comprise the statements of financial position of the Group and of the Company as at 31 December 2017, and the related statements of comprehensive income, changes in equity and cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies.

In our opinion, the financial statements give a true and fair view of the financial position of the Group and of the Company as at 31 December 2017, and of their financial performance and their cash flows for the year then ended in accordance with the Companies Act 2016 (the “Act”) and the Malaysian Financial Reporting Standards.

1.2 Basis for opinion

We conducted our audit in accordance with the Approved Standards on Auditing in Malaysia and the International Standards on Auditing. Our responsibilities under those standards are further described in the paragraph 1.6.

We are independent of the Group in accordance with the By-Laws (On Professional Ethics, Conduct and Practice) of the Malaysian Institute of Accountants (“MIA 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 MIA By-Laws and the IESBA Code.

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

1.3 Key audit matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current year. These matters were addressed in our context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

1.3.1 Going concern

We believe this risk has increased from last year as the Group and the Company have continued to incur losses. The total equity of the Group and the Company has decreased respectively from RM42.9 million and RM66.0 million as at 31 December 2016 to RM21.7 million and RM27.1 million as at 31 December 2017.

At 31 December 2017, the Group also has contractual debt payment obligations to its financial institution lenders and promissory notes holder of RM6.9 million and RM4.0 million respectively that are due within next 12 months.

We have, therefore, focused on assessing whether there are sufficient cash resources in place to allow the Group and consequently, the Company, to respectively continue as a going concern.

How the matter was addressed in the audit

In assessing the appropriateness of the going concern assumption used in the preparation of the financial statements, we:

- reviewed the cash flow requirements of the Group over the next 12 months based on approved business plans and budgets;

- understood what budget expenditure is committed and what could be considered discretionary;

- considered the liquidity of existing assets on the statement of financial position;- reviewed the terms associated with the debt agreements and the amount of the facility

available for drawdown, including that offered after year end;- considered the proceeds of RM13.5 million raised subsequent to 31 December 2017 from

the private placement of shares in the Company.


Independent Auditors’ Report (cont’d)To The Members Of Ho Wah Genting Berhad

1. REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS (CONT’D)

1.3 Key audit matters (cont’d)

1.3.1 Going concern (cont’d)

We have concluded that the directors’ use of the going concern basis is appropriate.

The management assessment of the Group’s and the Company’s ability to continue as a going concern is disclosed in Note 36 to the financial statements.

1.3.2 Risk of impairment of mining property, plant and equipment

The tin mining activities undertaken by a subsidiary, HWG Tin Mining Sdn Bhd (“HWG Tin Mining”), has continued to incur operating losses. The tin production output has not reached the cash flows and profitability breakeven levels since mining operations started in 2010. Also, the relevant authority approvals to extend the mining rights lease period which expire in 2020 are still pending. During the year, the mining activities has temporarily ceased as management viewed that additional investment to fund this business is no longer viable economically given the short unexpired lease period. This is an evidence that an impairment has occurred on the carrying amount of the property, plant and equipment of HWG Tin Mining at 31 December 2017.

When an impairment is performed on the tin mining assets, the recoverable amount is determined using fair value less costs of disposal as without additional investment, this business is not expected to generate any operating cash flows for the calculation of value in use.

We focus on this area due to the significance of the value involved.


We tested management’s impairment review by performing the following work:

- discussed with management to understand the key assumptions used to derive at the fair value less cost of disposal;

- reviewed management’s calculation together with relevant supporting documents.

Based on the impairment review calculation tested by us, we are satisfied with the impairment loss of RM16.7 million that has been recognised to reduce the carrying amount of the mining property, plant and equipment to its recoverable amount.

Additional information on the impairment review is disclosed in Note 10 to the financial statements.

1.3.3 Risk of impairment of the amount due by HWG Tin Mining to the Company

The tin mining business of HWG Tin Mining is primarily funded through cash advances from the Company. As at 31 December 2017, the balance due by HWG Tin Mining to the Company amounted to RM30.1 million (net of impairment recognised in previous year of RM24.1 million). Given the significant financial difficulties being faced by HWG Tin Mining as explained in paragraph 1.3.2, the future repayment cash flows from HWG Tin Mining are estimated by management using HWG Tin Mining’s impairment review model to determine whether an impairment loss has been incurred by the Company. Based on the impairment review model, an additional allowance for doubtful debts of RM30.1 million has been recognised by the Company.

We have also focused on this area due to the significance of the value involved.


The work that we have performed and our conclusion on HWG Tin Mining’s impairment review model are discussed in paragraph 1.3.2. Based on the impairment review model tested in 1.3.2 in arriving at the recoverable amount, the estimated future repayment cash flows from HWG Tin Mining is expected to be zero.




1.4 Other information

Management is responsible for the other information. The other information comprises the information included in the Company’s directors’ report and annual report, but does not include the financial statements and our auditors’ report thereon. The annual report is expected to be made available to us after the date of this auditor’s report.

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

In connection with our audit of the financial statements, our responsibility is to read the other information identified above when it becomes available and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on the work performed, we conclude that there is a material misstatement of this other information, we are required to report the fact. We have nothing to report in regard to the directors’ report.

1.5 Responsibilities of management and those charged with governance for the financial statements

The directors are responsible for the preparation of financial statements that give a true and fair view in accordance with the Act and the Malaysian Financial Reporting Standards, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, management is responsible for assessing the Group’s and the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company and/or its subsidiaries or to cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Group’s financial reporting process.

1.6 Auditors’ responsibilities for the audit of the financial statements

It is our responsibility to form an independent opinion, based on our audit, on these financial statements and to report our opinion solely to you, as a body, in accordance with Section 266 of the Act, and for no other purpose. We do not assume responsibility towards or accept liability to any other person for the content of this report.

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

As part of an audit in accordance with the Approved Standards on Auditing in Malaysia and the International Standards on Auditing, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the financial statements, 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.




1.6 Auditors’ responsibilities for the audit of the financial statements (cont’d)

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

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

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

• Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

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

We communicate with those charged with governance 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 identify during our audit.

We also provide those charged with governance 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 those charged with governance, we determine those matters that were of most significance in the audit of the financial statements of the current year and are therefore the key audit matters. We describe 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.

2. REPORT ON OTHER LEGAL AND REGULATORY REqUIREMENTS

In accordance with the requirements of the Act, we also report that the subsidiaries in which we have not acted as auditors, are as disclosed in Note 12 to the financial statements.

3. ENGAGEMENT PARTNER

The engagement partner on the audit resulting in this independent auditors’ report is Loh Kok Leong.

RUSSELL BEDFORD LC & COMPANY LOH KOK LEONGAF 1237 01965/06/2019(J) CHARTERED ACCOUNTANTS CHARTERED ACCOUNTANT



Statements Of Comprehensive IncomeFor The Year Ended 31 December 2017

Group Company

Note2017

RM’0002016

RM’0002017

RM’0002016

RM’000

Revenue 4 156,563 148,101 299 284Cost of sales 5 (146,199) (143,732) - -

Gross profit 10,364 4,369 299 284Other operating income 3,119 5,433 390 107Distribution costs (2,898) (2,155) - -Administrative expenses (10,966) (13,342) (7,268) (7,511)Other operating expenses (20,296) (11,103) (32,253) (26,065)

Loss from operations (20,677) (16,798) (38,832) (33,185)Finance costs (2,067) (2,741) (247) (13)Share in loss of an associate (116) - - -

Loss before tax 7 (22,860) (19,539) (39,079) (33,198)Income tax credit 8 3,128 111 110 62

Net loss for the year (19,732) (19,428) (38,969) (33,136)Other comprehensive (loss)/income:Items that will not be reclassified subsequently

to profit or loss: 8Remeasurement of net retirement

benefit obligations (212) (232) - -Gain on revaluation of buildings - 3,442 - 2,714Items that may be reclassified subsequently

to profit or loss: 8Foreign currency translation differences (1,293) 2,101 - -

Other comprehensive (loss)/income for the year, net of tax (1,505) 5,311 - 2,714

Total comprehensive loss for the year (21,237) (14,117) (38,969) (30,422)

Loss attributable to:Owners of the Company (10,816) (13,617) (38,969) (33,136)Non controlling interests (8,916) (5,811) - -

(19,732) (19,428) (38,969) (33,136)

Total comprehensive loss attributable to:Owners of the Company (12,321) (8,306) (38,969) (30,422)Non controlling interests (8,916) (5,811) - -

(21,237) (14,117) (38,969) (30,422)

Loss per share (sen)

Basic 9 (1.08) (1.47)

Diluted 9 - -

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



Statements Of Financial PositionAs At 31 December 2017

Group Company

Note2017

RM’0002016

RM’0002017

RM’0002016

RM’000

Non current assetsProperty, plant and equipment 10 37,792 59,228 11,787 12,574Intangible assets 11 11 19 - -Investment in subsidiaries 12 - - 68,384 70,542Investment in associates 13 864 - 980 -Goodwill on consolidation 14 - - - -Deferred tax assets 28 2,769 - - -

41,436 59,247 81,151 83,116Current assetsInventories 15 20,784 20,757 - -Trade receivables 16 15,802 13,266 - -Other receivables, deposits

and prepayments 17 1,110 3,798 333 29,633Tax recoverable 56 62 - -Fixed deposits with licensed banks 18 150 170 - -Cash and bank balances 3,838 7,653 770 5,344

41,740 45,706 1,103 34,977Total assets 83,176 104,953 82,254 118,093

EquityShare capital 19 49,924 49,902 49,924 49,902Reserves 21 (1,473) 10,860 (22,861) 16,119Equity attributable to owners of the

Company 48,451 60,762 27,063 66,021Non controlling interests (26,780) (17,865) - -Total equity 21,671 42,897 27,063 66,021

Current liabilitiesTrade payables 22 11,459 8,933 - -Other payables and accruals 23 25,027 20,747 50,629 48,892Hire purchase and finance lease liabilities 24 50 55 43 40Short term borrowings 25 6,932 7,654 - -

43,468 37,389 50,672 48,932Non current liabilitesOther payables and accurals 23 - - 849 917Hire purchase and finance lease liabilities 24 205 255 205 248Term loan 26 11,963 18,700 1,600 -Retirement benefit obligations 27 3,089 2,759 - -Deferred tax liabilities 28 2,780 2,953 1,865 1,975

18,037 24,667 4,519 3,140Total liabilites 61,505 62,056 55,191 52,072Total equity and liabilites 83,176 104,953 82,254 118,093


Statements of Changes In Equity For The Year Ended 31 December 2017

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ts.


Statements Of Changes In Equity (cont’d) For The Year Ended 31 December 2017

Non

-dist

ribut

able

rese

rve

Dist

ribut

able

rese

rve

Gro

upSh

are

capi

tal

RM’0

00

Shar

e pr

emiu

mRM

’000

Reva

luat

ion

rese

rve

RM’0

00

Empl

oyee

shar

eop

tion

rese

rve

RM’0

00

War

rant

rese

rve

RM’0

00

Fore

ign

curre

ncy

trans

latio

nre

serv

eRM

’000

Oth

erre

serv

eRM

’000

Accu

mul

ated

loss

esRM

’000

Equi

tyat

tribu

tabl

eto

ow

ners

of

the

Com

pany

RM’0

00

Non

cont

rollin

gin

tere

sts

RM’0

00

Tota

leq

uity

RM’0

00A

t 1 J

anua

ry 2

016

120,

229

21,6

066,

577

279

2,95

6(2

,357

)(2

,956

)(1

07,8

70)

38,4

64(1

2,69

2)25

,772

Trans

actio

ns w

ith o

wne

rs:

Cap

ital r

educ

tion

(90,

172)

--

--

--

90,1

72-

--

Righ

ts is

sue

of sh

ares

with

free

w

arra

nts

15,3

081,

038

--

7,34

8-

--

23,6

94-

23,6

94Sh

ares

issu

ed p

ursu

ant t

o pr

ivat

e pl

acem

ent

4,53

745

4-

--

--

-4,

991

-4,

991

Acq

uisit

ion

of n

on-c

ontro

lling

inte

rest

--

--

--

-(1

84)

(184

)15

4(3

0)D

ilutio

n of

inve

stm

ent i

n a

subs

idia

ry-

--

--

--

66

484

490

War

rant

201

1/20

16 e

xpire

d-

--

-(2

,956

)-

2,95

6-

--

-G

rant

of e

quity

settl

ed sh

are

optio

ns to

em

ploy

ees

--

-2,

097

--

--

2,09

7-

2,09

7Em

ploy

ee sh

are

optio

ns la

psed

/te

rmin

ated

--

-(3

10)

--

-31

0-

--

Tota

l tra

nsac

tions

with

ow

ners

(70,

327)

1,49

2-

1,78

74,

392

-2,

956

90,3

0430

,604

638

31,2

42

Rem

easu

rem

ent o

f net

retir

emen

t be

nefit

obl

igat

ions

--

--

--

-(2

32)

(232

)-

(232

)G

ain

on re

valu

atio

n

of b

uild

ings

--

3,44

2-

--

--

3,44

2-

3,44

2Fo

reig

n cu

rrenc

y tra

nsla

tion

diff

eren

ces

--

--

-2,

101

--

2,10

1-

2,10

1O

ther

com

preh

ensiv

e ga

in/(

loss

) fo

r the

yea

r -

-3,

442

--

2,10

1-

(232

)5,

311

-5,

311

Net

loss

for t

he y

ear

--

--

--

-(1

3,61

7)(1

3,61

7)(5

,811

)(1

9,42

8)To

tal c

ompr

ehen

sive

gain

/(lo

ss)

for t

he y

ear

--

3,44

2-

-2,

101

-(1

3,84

9)(8

,306

)(5

,811

)(1

4,11

7)

At 3

1 D

ecem

ber 2

016

49,9

0223

,098

10,0

192,

066

7,34

8(2

56)

-(3

1,41

5)60

,762

(17,

865)

42,8

97

The

acco

mpa

nyin

g no

tes f

orm

an

inte

gral

par

t of t

he fi

nanc

ial s

tate

men

ts.


Statements Of Changes In Equity (cont’d) For The Year Ended 31 December 2017

The

acco

mpa

nyin

g no

tes f

orm

an

inte

gral

par

t of t

he fi

nanc

ial s

tate

men

ts.

Non

-dist

ribut

able

rese

rve

Dist

ribut

able

rese

rve

Com

pany

Shar

eca

pita

lRM

’000

Shar

e pr

emiu

mRM

’000

Reva

luat

ion

rese

rve

RM’0

00

Empl

oyee

shar

eop

tion

rese

rve

RM’0

00

War

rant

rese

rve

RM’0

00

Oth

erre

serv

eRM

’000

Acc

umul

ated

loss

esRM

’000

Tota

leq

uity

RM’0

00

At J

anua

ry 2

016

120,

229

21,6

063,

910

279

2,95

6(2

,956

)(8

0,36

3)65

,661

Tran

sact

ions

with

ow

ners

:C

apita

l red

uctio

n(9

0,17

2)-

--

--

90,1

72-

Righ

ts is

sue

of sh

ares

with

free

war

rant

s15

,308

1,03

8-

-7,

348

--

23,6

94G

rant

of e

quity

settl

ed sh

are

optio

n to

em

ploy

ees

--

-2,

097

--

-2,

097

Shar

es is

sued

pur

suan

t to

priv

ate

plac

emen

t4,

537

454

--

--

-4,

991

Empl

oyee

shar

e op

tions

laps

ed/t

erm

inat

ed-

--

(310

)-

-31

0-

War

rant

s 201

1/20

16 -

expi

red

--

--

(2,9

56)

2,95

6-

-

Tota

l tra

nsac

tions

with

ow

ners

(70,

327)

1,49

2-

1,78

74,

392

2,95

690

,482

30,7

82

Gai

n on

reva

luat

ion

of b

uild

ings

--

2,71

4-

--

-2,

714

Oth

er c

ompr

ehen

sive

inco

me

for t

he y

ear

--

2,71

4-

--

-2,

714

Net

loss

for t

he y

ear

--

--

--

(33,

136)

(33,

136)

Tota

l com

preh

ensiv

e lo

ss fo

r the

yea

r-

-2,

714

--

-(3

3,13

6)(3

0,42

2)

At 3

1 D

ecem

ber 2

016

49,9

0223

,098

6,62

42,

066

7,34

8-

(23,

017)

66,0

21

Tran

sact

ions

with

ow

ners

:Em

ploy

ee sh

are

optio

ns e

xerc

ised

11

--

--

--

11Tr

ansf

er fr

om E

SOS

rese

rve

upon

ex

erci

se o

f ESO

S11

--

(11)

--

--

Empl

oyee

shar

e op

tions

laps

ed-

--

(153

)-

-15

3-

Tota

l tra

nsac

tions

with

ow

ners

22-

-(1

64)

--

153

11N

et lo

ss/T

otal

com

preh

ensiv

e lo

ss fo

r the

yea

r-

--

--

-(3

8,96

9)(3

8,96

9)

At 3

1 D

ecem

ber 2

017

49,9

2423

,098

6,62

41,

902

7,34

8-

(61,

833)

27,0

63


Statements Of Cash FlowsFor The Year Ended 31 December 2017

Group Company2017

RM’0002016

RM’0002017

RM’0002016

RM’000

Cash flows from/(used in) operating activitiesLoss before tax (22,860) (19,539) (39,079) (33,198)Adjustment for:Allowance for doubtful debts 31 5 30,095 24,235Allowance for doubtful debts

no longer required - (238) - -Amortisation of financial guarantee liabilities - - (73) (79)Amortisation of intangible assets 8 8 - -Bad debts written off 194 - - -Depreciation of property, plant and equipment 3,927 3,850 831 594Grant of equity settled share options

pursuant to ESOS - 2,097 - 743Gain on disposal of plant and equipment (146) (428) - (11)Impairment loss on plant and equipment 16,691 9,534 - -Impairment loss on investment in subsidiaries - - 2,158 1,830Interest expense 2,067 2,741 247 13Interest income (16) (29) (4) (16)Inventories written off 208 - - -Plant and equipment written off 220 - - -Retirement benefit obligations 681 1,165 - -Share in loss of an associate 116 - - -Unrealised gain on foreign exchange (413) (2,523) (312) -Unrealised loss on foreign exchange 1,989 121 - 74

Operating profit/(loss) before working capital changes 2,697 (3,236) (6,137) (5,815)

(Increase)/Decrease in inventories (2,385) 2,442 - -(Increase)/Decrease in trade and other

receivables (4,422) 2,783 118 416Increase/(Decrease) in trade

and other payables 9,464 (18,709) 2,044 4,947

Cash generated from/(used in) operations 5,354 (16,720) (3,975) (452)Interest paid (1,883) (2,389) (63) (13)Retirement benefits paid (235) (957) - -Interest received 16 29 4 16

Net cash generated from/(used in) operating activities 3,252 (20,037) (4,034) (449)



Statements Of Cash Flows (cont’d)For The Year Ended 31 December 2017

Group Company2017

RM’0002016

RM’0002017

RM’0002016

RM’000

Cash flows from/(used in) investing activitiesDecrease in fixed deposits pledged 20 108 - -Acquisition of non-controlling interest - (30) - -Dilution of share in investment in subsidiary - 490 - -Proceeds from disposal of plant and equipment 146 486 - 67Purchase of plant and equipment (2,186) (203) (44) (77)Subscription of shares in an associate (980) - (980) -Advances to subsidiaries - - (913) -Acquisition of shares in subsidiaries - - - (18,094)

Net cash (used in)/from investing activities (3,000) 851 (1,937) (18,104)

Cash flows from/(used in) financing activitiesProceeds from issue of shares 11 28,685 11 28,685Proceeds from term loan 1,600 - 1,600 -Proceeds from trade finance - 6,629 - -Repayments of trade finance - (6,710) - -Repayments of term loans (7,362) (6,883) - -Repayments of hire purchase and

finance lease liabilities (55) (47) (40) (32)Repayments to subsidiaries - - (174) (7,992)

Net cash (used in)/from financing activities (5,806) 21,674 1,397 20,661Exchange differences 1,739 1,209 - -

Net (decrease)/increase in cash and cash equivalents (3,815) 3,697 (4,574) 2,108

Cash and cash equivalents at beginning of year 7,653 3,956 5,344 3,236

Cash and cash equivalents at end of year 3,838 7,653 770 5,344

Cash and cash equivalents comprise:Cash and bank balances 3,838 7,653 770 5,344Fixed deposits with licensed banks 150 170 - -

3,988 7,823 770 5,344Less: Fixed deposits pledged (150) (170) - -

3,838 7,653 770 5,344



Notes To The Financial Statements 31 December 2017

1. General information

The principal activities of the Company are that of an investment holding company and the provision of management services. The Company is a public limited liability company, incorporated and domiciled in Malaysia, and is listed on the Main Market of Bursa Malaysia Securities Berhad.

The Company’s registered office and principal place of business are located at Wisma Ho Wah Genting, 1st Floor, No. 35, Jalan Maharajalela, 50150 Kuala Lumpur.

The financial statements of the Group and the Company were approved and authorised for issue by the Board of Directors on 30 March 2018.

2. Principal accounting policies

2.1 Statement of compliance

The financial statements of the Group and the Company have been prepared and presented in accordance with the provisions of the Companies Act 2016 and the Malaysian Financial Reporting Standards.

The financial statements also comply with the International Financial Reporting Standards as issued by the International Accounting Standards Board.

2.2 Basis of preparation of the financial statements

2.2.1 Basis of accounting

The financial statements have been prepared under the historical cost convention and any other bases described in the significant accounting policies as summarised below.

The Group has adopted the new and revised Malaysian Financial Reporting Standards (“MFRSs”) and their related interpretations that become mandatory for the current reporting period. The adoption of these new and revised MFRSs and IC interpretations does not result in significant changes in accounting policies of the Group.

The Group has not adopted the new standards, amendments to published standards and IC interpretations that have been issued but not yet effective. These new standards, amendments to published standards and IC interpretations do not result in significant changes in accounting policies of the Group upon their initial application other than the following:

(i) MFRS 9 Financial Instruments (effective for financial periods beginning on or after 1 January 2018)

MFRS 9 retains but simplifies the mixed measurement model in MFRS 139 and establishes three primary measurement categories for financial assets: amortised cost, fair value through profit or loss and fair value through other comprehensive income (“OCI”). The basis of classification depends on the entity’s business model and the contractual cash flow characteristics of the financial assets. Investments in equity instruments are always measured at fair value through profit or loss with an irrevocable option at the inception to present changes in fair value in OCI (provided the instrument is not held for trading). A debt instrument is measured at amortised cost only if the entity is holding it to collect contractual cash flows and the cash flows represent principal and interest.

For financial liabilities, there were no changes to classification and measurement except for the recognition of changes in own credit risk in other comprehensive income, for liabilities designated at fair value through profit or loss, unless this creates an accounting mismatch.

There is now a new expected credit losses model on impairment for all financial assets that replaces the incurred loss impairment model used in MFRS 139. The expected credit losses model is forward looking and eliminates the need for a trigger event to have occurred before credit losses are recognised.


Notes To The Financial Statements (cont’d) 31 December 2017

2. Principal accounting policies (cont’d)

2.2 Basis of preparation of the financial statements (cont’d)

2.2.1 Basis of accounting (cont’d)

(ii) MFRS 16 Leases (effective for financial periods beginning on or after 1 January 2019)

The scope of MFRS 16 includes leases of all assets, with certain exceptions. A lease is defined as a contract, or part of a contract, that conveys the right to use an asset (the underlying asset) for a period of time in exchange for consideration.

MFRS 16 requires lessees to account for all leases under a single on-balance sheet model in a similar way to finance lease under MFRS 117. The standard includes two recognition exemptions for lessees – leases of low value assets 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 required to remeasure the lease liability upon the occurrence of certain events (e.g. a change of 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.

Lessor accounting is substantially unchanged. Lessors will continue to classify all leases using the same classification principle as in MFRS 117 and distinguish between two types of leases which is operating and finance leases.

Either a full or modified retrospective application is required for annual periods beginning on or after 1 January 2019 with early adoption permitted but not before the entity applies MFRS 15 Revenue from Contracts with Customers.

The Group is in the process of making an assessment of where the impact of these new standards is expected to be in the period of initial application.

2.2.2 Significant accounting policies

Functional and presentation currency

The individual financial statements of each entity in the Group are measured using the currency of the primary economic environment in which the entity operates (“functional currency”). The consolidated financial statements are presented in Ringgit Malaysia (“RM”), which is also the Company’s functional currency and all values are rounded to the nearest thousand (“RM’000”) except when otherwise indicated.

Basis of consolidation

The consolidated financial statements comprise the financial statements of the Company and its subsidiaries as at the reporting date. The financial statements of the subsidiaries used in the preparation of the consolidated financial statements are prepared for the same reporting date as the Company. Consistent accounting policies are applied to like transactions and events in similar circumstances.

All intra-group balances, income and expenses and unrealised gains and losses resulting from intra-group transactions are eliminated in full.





2.2.2 Significant accounting policies (cont’d)

Basis of consolidation (cont’d)

Acquisitions of subsidiaries are accounted for by applying the acquisition method. Identifiable assets acquired and liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. Acquisition related costs are recognised as expenses in the periods in which the costs are incurred and the services are received.

In business combinations achieved in stages, previously held equity interests in the acquiree are remeasured to fair value at the acquisition date and any corresponding gain or loss is recognised in profit or loss.

For each business combination, non-controlling interests that are present ownership interests and entitle their holders to a proportionate share of the entity’s net assets in the event of liquidation are measured either at fair value or at the present ownership instruments’ proportionate share of the recognised amounts of the acquiree’s identifiable net assets. All other components of non-controlling interests shall be measured at their acquisition-date fair values, unless another measurement basis is required by MFRSs.

Any excess of the sum of the fair value of the consideration transferred in the business combination, the amount of non-controlling interest in the acquiree (if any), and the fair value of the Group’s previously held equity interest in the acquiree (if any), over the net fair value of the acquiree’s net identifiable assets and liabilities is recorded as goodwill in the statement of financial position. In instances where the latter amount exceeds the former, the excess is recognised as a gain on bargain purchase in profit or loss on the acquisition date.

Subsidiaries are consolidated from the date of acquisition, being the date on which the Group obtains control, and continue to be consolidated until the date that such control ceases.

Non-controlling interest represents the equity in subsidiaries not attributable, directly or indirectly, to owners of the Company, and is presented within equity in the consolidated statement of financial position, separately from equity attributable to owners of the Company. Non-controlling interests in the results of the Group is presented in the statement of comprehensive income as an allocation of the profit or loss and the comprehensive income for the reporting period 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 doing so causes the non-controlling interests to have a deficit balance.

Changes in the Company owners’ ownership interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions. In such circumstances, the carrying amounts of the controlling and non-controlling interests are adjusted to reflect the changes in their relative interests in the subsidiary. 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 attributable to owners of the parent.






Revenue and income recognition

Revenue from sale of goods is measured at the fair value of the consideration receivable and is recognised upon delivery of goods and the risk and rewards of ownership have passed to the customers.

Revenue from services rendered is recognised when the services are rendered.

Interest income is recognised as it accrues (using the effective interest rate method) unless collectibility is in doubt.

Rental income is recognised as it accrues unless collectibility is in doubt.

Foreign currencies

(i) Foreign currencies transactions

Transactions in foreign currencies are measured in the respective functional currencies of the Company and its subsidiaries and are recorded on initial recognition in the functional currencies at exchange rates approximating those ruling at the transaction dates. Monetary assets and liabilities denominated in foreign currencies are translated at the rates of exchange ruling at the reporting date. Non-monetary items denominated in foreign currencies that are measured at historical cost are translated using the exchange rates as at the dates of the initial transactions. Non-monetary items denominated in foreign currencies measured at fair value are translated using the exchange rates at the date when the fair value was determined.

Exchange differences arising on the settlement of monetary items or on translating monetary items at the reporting date are recognised in profit or loss.

(ii) Foreign operations

The assets and liabilities of foreign operations are translated into Ringgit Malaysia at the rates of exchange ruling at the reporting date and income and expenses are translated at exchange rates at the dates of the transactions. The exchange differences arising on the translation are taken directly to other comprehensive income. On disposal of a foreign operation, the cumulative amount recognised in other comprehensive income and accumulated in equity under foreign currency translation reserve relating to that particular foreign operation is recognised in profit or loss.

(iii) Exchange rates

The principal exchange rates for every unit of foreign currency used are as follows:

2017RM

2016RM

100 Indonesian Rupiah 0.03 0.031 United States Dollar 4.05 4.491 Singapore Dollar 3.03 3.10






Employee benefits

(i) Short term benefits

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

(ii) Defined contribution plans

Obligations for contribution to defined contribution plans such as Employees Provident Fund are recognised as an expense in profit or loss as incurred.

(iii) Defined benefit plans

Defined benefit plans are post employment benefit plans other than defined contribution plans and under which the pension benefits payable to employees are usually determined by reference to employee’s earning and/or length of service.

The Group operates an unfunded defined benefit plan for eligible employees of a subsidiary.

The defined benefit liability recognised is the net total of the present value of the defined benefit obligation at the reporting date together with adjustments for unrecognised past service cost.

The present value of the defined benefit obligation is determined on an annual basis by independent qualified actuaries using the Projected Unit Credit Method, by discounting estimated future cash outflows using interest rates of high quality corporate bonds or market rates on government bonds that are denominated in the currency in which the benefits will be paid, and that have terms to maturity approximating to the terms of the defined benefit obligation.

Remeasurements comprising actuarial gains or losses arising from experience adjustments or changes in actuarial assumptions are charged or credited to equity through other comprehensive income in the reporting period in which they arise. Remeasurements are recognised in retained earnings within equity and are not reclassified to profit or loss in subsequent periods.

Past service cost is recognised on a straight line basis over the average period until the benefits become vested or to the extent that the benefits are already vested following the introduction of, or changes to, the defined benefit plan, the past service cost is recognised immediately in profit or loss.






Employee benefits (cont’d)

(iv) Employee share option plans

Employees of the Group receive remuneration in the form of share options as consideration for services rendered. The cost of these equity-settled transactions with the employees is measured by reference to the fair value of the options at the date on which the options are granted. This cost is recognised in profit or loss, with a corresponding increase in the employee share option reserve over the vesting period. The cumulative expense recognised at each reporting date until the vesting date reflects the extent to which the vesting period has expired and the Group’s best estimates of the number of options that will ultimately vest. The charge or credit to profit or loss for a period represents the movement in the cumulative expense recognised at the beginning and end of the reporting period.

No expense is recognised for options that do not ultimately vest, except for options where vesting is conditional upon a market or non-vesting condition, which are treated as vested irrespective of whether or not the market or non-vesting condition is satisfied, provided that all other performance and/or service conditions are satisfied. The employee share option reserve is transferred to retained earnings upon expiry of the share options. When the options are exercised, the employee share option reserve is transferred to share capital when new shares are issued.

In the Company’s separate financial statements, the grant of the share options to the subsidiaries’ employees is not recognised as an expense. Instead, the fair value of the share options measured at the grant date is accounted for as an increase to the investment in subsidiary undertakings, with a corresponding credit to the employee share option reserve.

Income tax

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

Deferred tax is provided for, using the ‘liability’ method, on temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts in the financial statements. In principle, deferred tax liabilities are recognised for all taxable temporary differences and deferred tax assets are recognised for all deductible temporary differences, unused tax losses and unused tax credits to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, unused tax losses and unused tax credits can be utilised.

Deferred tax is measured at the tax rates that are expected to apply in the reporting period when the asset is realised or the liability settled, based on tax rates that have been enacted or substantively enacted at the reporting date. Deferred tax is recognised in profit or loss, except to the extent that it relates to items recognised directly in equity or other comprehensive income, in which case it is recognised in equity or other comprehensive income respectively. Deferred tax assets and liabilities are offset if there is legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity.






Impairment of non financial assets

The carrying amount of assets (other than financial assets) subject to accounting for impairment is reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, the asset’s recoverable amount is estimated. An impairment loss is recognised whenever the carrying amount of an asset or the cash-generating unit to which it belongs exceeds its recoverable amount. Impairment loss is recognised in profit or loss in the reporting period in which it arises, unless, the asset is carried at a revalued amount, in which case the impairment loss is accounted for as a revaluation decrease to the extent that the impairment loss does not exceed the amount held in asset revaluation reserve for the same asset.

The recoverable amount is the greater of the asset’s net selling price and its value in use. In assessing value in use, estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For an asset that does not generate largely independent cash inflows, the recoverable amount is determined for the cash-generating unit to which the asset belongs.

An impairment loss in respect of goodwill is not reversed. In respect of other assets, an impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised. The reversal is recognised in profit or loss, unless the asset is carried at revalued amount, in which case, such reversal is recognised as income to the extent that it reverses a revaluation decrease of the same property previously charged as an expense.

Property, plant and equipment and depreciation

Property, plant and equipment are stated at cost or valuation less accumulated depreciation and impairment losses, if any.

Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognised. All other repairs and maintenance are charged to profit or loss during the reporting period in which they are incurred.

Gain or loss arising from the disposal of an asset is determined as the difference between the net disposal proceeds and the carrying amount of the asset and is recognised in profit or loss.

The Group adopted the revaluation method to measure its entire class of buildings. Buildings are stated at revalued amount, which is the fair value at the date of the revaluation less any accumulated depreciation and impairment losses, if any. Fair value is determined from market-based evidence by appraisal that is undertaken by professionally qualified valuers. Buildings are revalued at a regular interval of every five (5) years with additional valuations in the interval years where market conditions indicate that the carrying values of the revalued buildings materially differ from the market value.

An increase arising from revaluation is recognised in other comprehensive income and accumulated in equity under the revaluation reserve. Any decrease arising is first offset against the revaluation surplus on an earlier valuation in respect of the same property and thereafter charged to profit or loss.

A revaluation increase is recognised as income to the extent that it reverses a revaluation decrease of the same property previously charged as an expense. Upon the disposal of revalued assets, the amounts in revaluation reserve relating to those assets are transferred directly to retained profits.






Property, plant and equipment and depreciation (cont’d)

Any accumulated depreciation as at the revaluation date is eliminated against the gross carrying amount of the asset and the net amount is restated to the revalued amount of the asset.

No depreciation is provided on freehold land.

Depreciation on other property, plant and equipment is calculated to write off the cost of the assets to its residual values on a straight line basis at the following annual rates based on their estimated useful lives except for mine properties and plant and equipment used in mining. Mine properties and plant and equipment used in mining are depreciated using the unit-of-production method based on economically recoverable ore reserves over the estimated useful lives of the assets and the tenure of the mining lease, whichever is shorter.

The principal depreciation rates are as follows:

Buildings 2% - 3%Plant and machinery Unit-of-production,10% - 20%Furniture, fittings and equipment 10% - 25%Motor vehicles 10% - 20%Renovations 3.33% - 10%Mines properties Unit-of-production

The residual values, useful life and depreciation method are reviewed at each reporting date 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.

Intangible assets

Intangible assets comprising mining right is measured on initial recognition at cost. Following initial recognition, intangible assets are carried at cost less accumulated amortisation and impairment losses, if any. Intangible assets are amortised on a straight line basis over the estimated economic useful lives and assessed for impairment whenever there is an indication that the intangible assets may be impaired. The amortisation period and the amortisation method for intangible assets are reviewed at each reporting date.

Gain or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in profit or loss when the asset is derecognised.

Mining right is amortised using the straight line method based on economically recoverable ore reserves over the lease term of 10 years.

Investment in subsidiaries

Subsidiaries are those companies controlled by the Company. Control exists when these three elements are met: (a) power by investor over an investee, (b) exposure, or rights to variable returns from investor’s involvement with the investee, and (c) investor’s ability to affect those returns through its power over the investee.

The Company’s investment in subsidiaries is stated at cost less impairment losses, if any.






Investment in associates

An associate is a company in which the Group has significant influence and which is neither a subsidiary nor a joint venture.

The Company’s investment in associates is stated at cost less impairment losses, if any.

The Group’s investment in associates is accounted for under the equity method of accounting based on the audited or management financial statements of the associates made up to the reporting date. Under this method of accounting, the investment in an associate is measured in the consolidated statement of financial position at cost plus the Group’s post acquisition share of the associate’s profit or loss and other comprehensive income while dividend received is reflected as a reduction of the investment.

Unrealised gains on transactions between the Group and its associates are eliminated to the extent of the Group’s interest in the associates; unrealised losses are also eliminated unless the transaction provides evidence on impairment of the asset transferred. Where necessary, in applying the equity method, adjustments have been made to the financial statements of the associates to ensure consistency of accounting policies with the Group.

Goodwill

Goodwill acquired in a business combination is initially measured at cost being the excess of the cost of the business combination over the Group’s interest in the net fair value of the net identifiable assets, liabilities and contingent liabilities. Goodwill is measured at cost less any accumulated impairment losses and is tested for impairment annually, or more frequently if events or changes in circumstances indicate that it might be impaired.

Inventories

Inventories comprising raw materials and consumable stores, work in progress and manufactured goods are stated at the lower of cost and net realisable value with weighted average cost being the main basis for cost. Cost of tin concentrates and consumable stores for tin mining activities are determined on a first in first out basis. Cost of raw materials and consumable stores includes expenditure incurred in acquiring them and other cost incurred in bringing them to their present location and condition. For work in progress and manufactured goods, cost consists of materials, direct labour and an appropriate proportion of fixed and variable production overheads.

Tin concentrates are measured at net realisable value when an active market exists and there is a negligible risk of failure to sell. Changes in the net realisable value are recognised in profit or loss in the reporting period of the change.

Net realisable value represents the estimated selling prices less the estimated costs of completion and all estimated costs to be incurred in marketing, selling and distribution.






Leases

Assets acquired under leases or hire purchase which transfers substantially all the risks and rewards incidental to ownership of the assets are capitalised under property, plant and equipment. The assets and the corresponding lease obligations are recorded at their fair values or, if lower, at the present value of the minimum lease payments of the leased assets at the inception of the respective leases.

Finance costs, which represent the difference between the total lease commitments and the fair values of the assets acquired, are charged to profit or loss over the terms of the relevant lease periods so as to give a constant periodic rate of charge on the remaining balance of the obligations for each reporting period.

All other leases which do not meet such criteria are classified as operating leases. Lease payments under operating leases are recognised as an expense on a straight line basis over the terms of the relevant lease.

Segment information

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

Borrowing costs

Borrowing costs are capitalised as part of the cost of a qualifying asset if they are directly attributable to the acquisition, construction or production of the asset. Capitalisation of borrowing costs commences when the activities to prepare the asset for its intended use or sale are in progress and the expenditures and borrowing costs are incurred. Borrowing costs are capitalised until the assets are substantially completed for their intended use or sale.

All other borrowing costs are recognised in profit or loss in the reporting period they are incurred. Borrowing costs consist of interest and other costs that the Group incurred in connection with the borrowing of funds.

Financial instruments

Financial instruments are recognised in the statement of financial position when the Group has become a party to the contractual provisions of the instrument.

A financial instrument is recognised initially at its fair value plus, in the case of a financial instrument not at fair value through profit or loss, transaction costs that are directly attributable to the acquisition or issue of the financial instrument.

Financial instruments are classified as liabilities or equity in accordance with the substance of the contractual arrangement. Interest, dividends and gains and losses relating to a financial instrument classified as a liability, are reported as expense or income.

Distributions to holders of financial instruments classified as equity are charged directly to equity. Financial instruments are offset when the Company has legal enforceable right to offset and intends to settle either on a net basis or realise the asset and settle the liability simultaneously.

Financial assets are classified as either at fair value through profit or loss, loans and receivables, held to maturity investments, or available for sale, as appropriate. Financial liabilities are classified as either at fair value through profit or loss (derivative financial liabilities) or at amortised cost (borrowings and trade and other payables), as appropriate.






Financial instruments (cont’d)

(i) Loans and receivables

Financial assets with fixed or determinable payments that are not quoted in an active market are classified as loans and receivables.

Subsequent to initial recognition, loans and receivables are measured at amortised cost using the effective interest method. Loans and receivables are classified as current assets, except for those having maturity dates later than 12 months after the reporting date which are classified as non-current.

(ii) Payables

Payables are recognised initially at fair value plus directly attributable transaction costs and subsequently measured at amortised cost using the effective interest method. Payables are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the reporting date.

(iii) Interest bearing borrowings

Borrowings are recognised initially at fair value, net of transaction costs incurred, and subsequently measured at amortised cost using the effective interest method. Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the reporting date.

(iv) Financial guarantee contracts

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

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

(v) Equity instruments

Equity instruments issued by the Company are recorded at the fair value of the proceeds received net of direct issue costs. Ordinary shares are classified as equity. Dividends on ordinary shares are recognised in equity in the reporting period in which they are approved.

A financial asset or part of it is derecognised when, and only when the contractual rights to the cash flows from the financial asset expire or the financial asset is transferred to another party without retaining control or substantially all risks and rewards of the asset. On derecognition of a financial asset, the difference between the carrying amount and the sum of the consideration received (including any new asset obtained less any new liability assumed) is recognised in profit or loss.

A financial liability or a part of it is derecognised when, and only when, the obligation specified in the contract is discharged or cancelled or expires. On derecognition of a financial liability, the difference between carrying amount of the financial liability extinguished or transferred to another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in profit or loss.






Financial instruments (cont’d)

The Group assesses at each reporting date whether there is any objective evidence that a financial asset is impaired.

(i) Trade and other receivables and other financial assets carried at amortised cost

To determine whether there is objective evidence that an impairment loss on financial assets has been incurred, the Group considers factors such as the probability of insolvency or significant financial difficulties of the debtor and default or significant delay in payments. 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 on similar risk characteristics. Objective evidence of impairment for a portfolio of receivables could include the Group’s past experience of collecting payments, an increased in the number of delayed payments in the portfolio past the average credit period and observable changes in national or local economic conditions that correlate with default on receivables.

If any such evidence exists, the amount of impairment loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at the financial asset’s original effective interest rate. The impairment loss is recognised in profit or loss.

The carrying amount of the financial asset is reduced by the impairment loss through the use of an allowance account. When a debtor becomes uncollectible, it is written off against the allowance account.

If in a subsequent reporting period, the amount of impairment loss decreases and the decrease can be related objectively to an event occurring after 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.

Statements of cash flows

Statements of cash flows are prepared using the indirect method.

Cash equivalents are short term, highly liquid investments that are readily convertible to known amount of cash and which are subject to insignificant risk of changes in value. For the purpose of the statements of cash flows, cash and cash equivalents are presented net of fixed deposits pledged.

3. Critical accounting estimates and judgements

In the preparation of the financial statements, the directors are required to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Estimates and judgments are continually evaluated by the directors and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

In the process of applying the Group’s accounting policies, management is of the opinion that there are no instances of application of judgment which are expected to have a significant effect on the amounts recognised in the financial statements.



3. Critical accounting estimates and judgements (cont’d)

Management believes that there are no key assumptions made concerning the future, and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next reporting period other than as follows:

(a) Impairment of non financial assets

The Group assesses impairment of property, plant and equipment, investment in subsidiaries and intangible assets when events or changes in circumstances indicate that the carrying amounts of these assets may not be recoverable. In assessing such impairment, the recoverable amount of the assets is estimated using the latest available fair value (after taking into account the costs to sell) or the value in use of the relevant assets.

Significant variations to the assumptions and estimates used to determine future cash flows could result in changes to the assessment of the recoverability of these non financial assets.

The future cash flows for mining operation ‘cash generating unit’ are based on:

• estimates of the quantities of recoverable ore reserves for which there is a high degree of confidence of economic extraction;

• estimates of future production levels; • estimates of future commodity prices; • estimates of future foreign exchange rates; and• estimates of future inflation.

(b) Impairment of loans and receivables

The Group assesses at each reporting date whether there is any objective evidence that a financial asset is impaired. To determine whether there is objective evidence of impairment, the Group considers factors such as the probability of insolvency or significant financial difficulties of the trade and other receivables and default or significant delay in payments.

Where there is objective evidence of impairment, the impairment loss is determined based on the estimated future cash flows discounted at the financial asset’s original effective interest rate.

(c) Deferred tax assets

The Group’s deferred tax assets are recognised for the unabsorbed capital allowances and unutilised tax losses to the extent that it is probable that taxable profit will be available against which the deferred tax assets can be utilised. Significant management judgement is required to determine the amount of these deferred tax assets that can be recognised based upon the likely timing and level of future taxable profits together with future tax planning strategies.

4. Revenue

Group Company2017

RM’0002016

RM’0002017

RM’0002016

RM’000Sales of goods 151,836 139,394 - -Sale of tin concentrates 400 1,137 - -Rendering of services 4,180 7,438 128 128Rental income 147 132 171 156

156,563 148,101 299 284



5. Cost of sales

Group Company2017

RM’0002016

RM’0002017

RM’0002016

RM’000Sales of goods 140,929 133,629 - -Sale of tin concentrates 1,368 3,211 - -Rendering of services 3,902 6,892 - -

146,199 143,732 - -

6. Staff costs

Group Company2017

RM’0002016

RM’0002017

RM’0002016

RM’000Salaries, wages, bonus and allowances 16,182 16,022 3,266 3,133Share option expenses - 2,176 - 743Defined benefit obligations 681 1,165 - -Defined contribution plan 1,430 1,258 330 297Other employee related expenses 969 1,228 107 104

19,262 21,849 3,703 4,277

The number of directors of the Company where total remuneration during the reporting period falls within the following bands is analysed as follows:

2017 2016Executive directors:RM250,001 – RM300,000 2 2RM650,001 – RM700,000 1 1

Non executive directors:Below RM50,000 4 4

The key management personnel of the Group and Company whose remuneration is analysed as follows:

Group Company2017

RM’0002016

RM’0002017

RM’0002016

RM’000Executive directors:Salaries and allowances 1,068 1,068 1,068 1,068Equity settled share-based payments - 392 - 392Defined contribution plan 128 128 128 128Benefits-in-kind and others 28 30 28 30

1,224 1,618 1,224 1,618

Non executive directors:Fees 120 120 120 120Others 10 8 10 8

130 128 130 128

Total 1,354 1,746 1,354 1,746



7. Loss before tax

Group Company2017

RM’0002016

RM’0002017

RM’0002016

RM’000Loss before tax is arrived at after charging:Auditors’ remuneration

- auditors’ of the Company- audit services 141 116 42 38- other services 6 23 - 23

- other auditors- audit services 70 24 - -

Bad debts written off 194 - - -Directors’ remuneration

- directors of the Company- fees 120 120 120 120- others 1,234 1,234 1,234 1,234

- directors of subsidiaries- others 126 316 - -

Plant and equipment written off 220 - - -Interest expense

- hire purchase 17 16 14 13- term loans 1,866 2,373 49 -- trade payable - 352 - -- promissory notes 184 - 184 -

Inventories written off 208 - - -Loss on foreign exchange

- realised 4 1,943 4 566- unrealised 1,989 121 - 74

Rental of- plant and equipment 29 381 22 40- premises 24 24 24 24

And crediting:Gain on foreign exchange

- realised 212 - - -- unrealised 413 2,523 312 -

Gain on disposal of plant and equipment 146 428 - 11Interest income from fixed deposits 6 29 4 16Interest income from bank accounts 10 - - -Rental income of buildings 420 132 171 156



8. Income tax credit

Group Company2017

RM’0002016

RM’0002017

RM’0002016

RM’000Deferred tax (Note 28)

- current year 3,128 111 110 62

A reconciliation of income tax expense applicable to loss before tax at the statutory income tax rate to income tax expense at the effective income tax rate is as follows:

Group Company2017

RM’0002016

RM’0002017

RM’0002016

RM’000Loss before tax (22,860) (19,539) (39,079) (33,198)

Taxation at statutory tax rate of 24% (2016: 24%) 5,486 4,689 9,379 7,970

Different tax rate in foreign jurisdiction (54) - - -Expenses not deductible for tax purposes (2,322) (2,346) (9,286) (7,927)Income not subject to tax 30 285 17 19Deferred tax assets not recognised (4,450) (2,517) - -Utilisation of previous year unrecognised

deferred tax assets 1,485 - - -Recognition of prior year unrecognised

deferred tax assets 2,953 - - -

Income tax credit 3,128 111 110 62

The income tax expense relating to components of other comprehensive income is as follows:

2017 2016

Group Before taxRM’000

Tax expense

RM’000Net of tax

RM’000Before tax

RM’000

Tax expense

RM’000Net of tax

RM’000Items that will not

be reclassified subsequently to profit or loss:

Remeasurement of retirement benefit obligations (212) - (212) (232) - (232)

Gain on revaluation of buildings - - - 4,541 (1,099) 3,442

(212) - (212) 4,309 (1,099) 3,210

Items that may be reclassified subsequently to profit or loss:

Foreign currency translation differences (1,293) - (1,293) 2,101 - 2,101



8. Income tax credit (cont’d)

2017 2016

Company Before taxRM’000

Tax expense

RM’000Net of tax

RM’000Before tax

RM’000

Tax expense

RM’000Net of tax

RM’000Item that will not be

reclassified subsequently to profit or loss:

Gain on revaluation of buildings - - - 3,570 (856) 2,714

9. Loss per share

Basic loss per ordinary share is based on net loss attributable to ordinary shareholders and weighted average number of ordinary shares in issue as follows:

Group2017

RM’0002016

RM’000Net loss attributable to owners of the Company (10,816) (13,617)

Weighted average number of ordinary shares in issue (‘000) 998,171 928,862

Loss per share (sen) (1.08) (1.47)

As at 31 December 2017 and 2016, diluted loss per share is not presented in the financial statements as there is an anti dilutive effect on loss per share.


10.

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10. Property, plant and equipment (cont’d)

At the reporting date:

(i) Property, plant and equipment of the Group and the Company with carrying amount of RM36,289,000 (2016: RM40,816,000) and RM11,106,000 (2016: RM11,800,000) respectively, have been charged as collaterals to secure the banking facilities referred to in Note 25; and

(ii) Equipment and motor vehicles of the Group and the Company with carrying amount of RM304,000 (2016: RM341,000) are acquired under finance lease and hire purchase arrangements.

During the reporting period, cash payments made to purchase property, plant and equipment are as follows:

Group Company2017

RM’0002016

RM’0002017

RM’0002016

RM’000Total additions 2,186 523 44 397Additions through hire purchase arrangements - (320) - (320)

Cash payments 2,186 203 44 77

Impairment

During the reporting period, an impairment loss of RM16,691,000 was recognised on property, plant and equipment used in mining. The impairment loss was due to significantly longer than expected time required to obtain the relevant authority approvals to extend the mining rights lease period which will expire in 2020. With the uncertainty on the mining rights lease period extension, mining activity has temporarily ceased as additional investment to fund this business is no longer viable economically. In arriving at the impairment amount, the carrying value of these assets is compared with their recoverable amount. The recoverable amount is determined using fair value less cost of disposal of the relevant assets.

In the last reporting period, an impairment loss of RM9,534,000 was recognised on property, plant and equipment used in mining. The impairment loss was due to the effect of significantly lower production volumes of tin which resulted in gross losses being incurred by the Company. In arriving at the impairment amount, the carrying value of these assets is compared with their recoverable amount. The recoverable amount is determined using the value in use of these assets, the projected future cash flows of which are discounted using a pre-tax discount rate of 8.5%.

The impairment loss is included in “other operating expenses” line item of the Group’s profit or loss.

Revaluation

The buildings of the Group were revalued on 22 December 2016 and 28 December 2016 by the directors based upon valuations carried out by independent professional valuers using the fair value method which is determined by reference to open market values on an existing use basis. Details of valuation techniques and inputs are disclosed in Note 32.

Had the buildings been carried at historical cost, the net book value of the buildings that would have been included in the financial statements of the Group and the Company as at 31 December 2017 would have been RM9,935,000 (2016: RM11,517,000) and RM1,841,000 (2016: RM1,999,000) respectively.



11. Intangible assets

Group Mining rightRM’000

CostAt 1 January 2016/31 December 2016/31 December 2017 82

Accumulated amortisationAt 1 January 2016 55Amortisation for the year 8

At 31 December 2016 63Amortisation for the year 8

At 31 December 2017 71

Carrying amountAt 31 December 2017 11

At 31 December 2016 19

The amount of amortisation recognised in profit or loss has been included under “Cost of sales” line item.

12. Investment in subsidiaries

Company2017

RM’0002016

RM’000Unquoted shares at costAt beginning of year 149,855 131,761Acquisition of additional shares in a subsidiary - 18,094

At the end of year 149,855 149,855Provision of financial guarantees

At the beginning/end of year 8,438 8,438

Share options granted to the employees of the subsidiaries pursuant to Company’s ESOS 1,355 1,355

Accumulated impairment lossesAt beginning of year (89,106) (87,276)Impairment loss for the year (2,158) (1,830)

At end of year (91,264) (89,106)

Carrying amount 68,384 70,542

The details of the subsidiaries are as follows:

Country of incorporation

Group’s effective interest2017

%2016

% Principal activitiesSubsidiaries of the CompanyHo Wah Genting Trading Sdn Bhd Malaysia 100 100 Trading of wires and cablesHo Wah Genting Kintron Sdn Bhd Malaysia 100 100 DormantPT. Ho Wah Genting# Indonesia 100 100 Manufacturing of wires and

cables, moulded power supply cord sets and cable assemblies for electrical and electronic devices and equipment



12. Investment in subsidiaries (cont’d)

The details of the subsidiaries are as follows: (cont’d)



%2016

% Principal activitiesSubsidiaries of the Company (cont’d) Ho Wah Genting Holiday Sdn Bhd Malaysia 99 99 Travel agent and tour related

servicesHo Wah Genting (Labuan) Ltd* Malaysia 100 100 Dormant

HWG Minerals Sdn Bhd Malaysia 100 100 Investment holding company

HWG Tin Mining Sdn Bhd Malaysia 51 51 Tin mining and its related activities

HWG Consortium Sdn Bhd Malaysia 100 100 DormantHWG Duty Free Sdn Bhd Malaysia 51 51 DormantRex Oriental Sdn Bhd Malaysia 100 100 Investment holding company

Subsidiary of Ho Wah Genting Holiday Sdn Bhd

HWG Travel (MM2H) Sdn Bhd Malaysia 99 70 Rendering personalised services such as immigration matters, under the “Malaysia My Second Home” Programme and other related services to any person setting up their second home in Malaysia

# The financial statements of the subsidiary are not audited by Russell Bedford LC & Company.

* The financial statements of the subsidiary are not required to be audited statutorily.

During the reporting period, Ho Wah Genting Holiday Sdn Bhd (“HWGH”) entered into an agreement with Adanan Bin Baharum to acquire his entire shareholdings of 15,000 ordinary shares representing 30% equity interest in HWG Travel (MM2H) Sdn Bhd (“MM2H”) for a cash consideration of RM1. Upon completion of the acquisition, MM2H became a wholly-owned subsidiary of HWGH.

The following summarises the effect of changes in the equity interest in MM2H that is attributable to owners of the Company:

Group2017

RM’000Equity interest:At beginning of year (91)Effect of increase in Company’s ownership interest (1)Share of comprehensive loss (4)At end of year (96)




In the previous reporting period:

(a) On 9 September 2016, the Company entered into an agreement with Datuk Che Wan Chik Bin Din and Ahmad Bin Abdul Jamil to acquire their entire shareholdings of 30,000 ordinary shares of RM1.00 each (representing 30% shareholdings) in HWG Consortium Sdn Bhd (“HWGC”) for a cash consideration of RM30,000. Upon completion of the acquisition, HWGC became a wholly-owned subsidiary of the Company.

The following summarises the effect of changes in the equity interest in HWGC that is attributable to owners of the Company:

Group2016

RM’000Equity interest:At beginning of year (430)Effect of increase in Company’s ownership interest (184)Share of comprehensive loss (106)

At end of year (720)

(b) On 27 June 2016, a wholly-owned subsidiary, HWG Duty Free Sdn Bhd [formerly known as HWG Resources Sdn Bhd] (“HWGDF”), issued a total of 999,998 ordinary shares of RM1.00 each of which only 509,998 of these number of shares were allotted to the Company. Consequently, the Company’s shareholding in HWGDF was diluted from 100% to 51%.

The following summarises the effect of changes in the equity interest in HWGDF that is attributable to owners of the Company:

Group2016

RM’000Equity interest:At beginning of year (7)Effect of dilution in Company’s ownership interest 6Share of comprehensive loss (18)

At end of year (19)

Impairment of investment in subsidiaries

During the reporting period, the directors performed an impairment test on the following subsidiaries and impairment losses have been recognised to write down the investments to their recoverable amounts:

Group2017

RM’0002016

RM’000Impairment loss recognisedHo Wah Genting Trading Sdn Bhd 1,380 -Ho Wah Genting Kintron Sdn Bhd 416 -Ho Wah Genting Holiday Sdn Bhd 362 780HWG Tin Mining Sdn Bhd - 1,020HWG Consortium Sdn Bhd - 30

The recoverable amount is determined based on the respective fair value less costs of disposal (arrived at based on the audited net assets) of these subsidiaries and the amount of impairment losses have been recognised in profit or loss under “Other operating expenses” line item.




Interest in a subsidiary with material non controlling interest (“NCI”)

The Group has the following subsidiary with NCI that is material to the Group.

Name of subsidiaryPrincipal place

of business

Proportion of ownership

interest held by NCI%

Loss allocated to NCI during the reporting

periodRM’000

Accumulated NCI deficit balance at the end of reporting

periodRM’000

2017HWG Tin Mining Sdn Bhd Malaysia 49 8,907 27,2272016HWG Tin Mining Sdn Bhd Malaysia 49 5,773 18,320

Summarised financial information about subsidiary with material NCI

(i) Summarised statement of financial position

2017RM’000

2016RM’000

CurrentAssets 203 670Liabilities (56,418) (55,536)

Net current liabilities (56,215) (54,866)

Non currentAssets 650 17,484Liabilities - (6)

Net non current assets 650 17,478

Net liabilities (55,565) (37,388)

(ii) Summarised statement of comprehensive income

2017RM’000

2016RM’000

Revenue 400 1,137

Loss before tax (18,177) (11,830)

Net loss/Total comprehensive loss (18,177) (11,830)

(iii) Other summarised information

2017RM’000

2016RM’000

Cash flows used in operating activities (942) (3,375)Cash flows from investing activities - 117Cash flows from financing activities 920 3,336Net (decrease)/increase in cash and cash equivalents (22) 78



13. Investment in an associate

Group Company2017

RM’0002016

RM’0002017

RM’0002016

RM’000Unquoted shares at cost 980 - 980 -Share in post-acquisition loss (116) - - -

864 - 980 -

The details of the associate are as follows:



%2016

% Principal activities Associate of the Company Dufry HWG Shopping Sdn Bhd * Malaysia 49 - Travel retail outlet

* The financial statements of the associate are not audited by Russell Bedford LC & Company.

During the reporting period, the Company subscribed for 980,000 new ordinary shares representing 49% equity interest in Dufry HWG Shopping Sdn Bhd for a cash consideration of RM980,000.

The summarised financial information of the Company’s associate is as follows:

(i) Summarised statement of financial position

2017 RM’000 Assets Non current assets 1,131 Current assets 828 Total assets 1,959 Liabilities Current liabilities 195 Total liabilities 195 Net assets 1,764

(ii) Summarised statement of comprehensive income

2017 RM’000 Revenue - Loss before tax (236) Net loss/Total comprehensive loss (236)

Reconciliation of the summarised financial information presented above to the carrying amount of the Group’s interest in the associates.

2017 RM’000Group’s share of net assets 864



14. Goodwill on consolidation

Group2017

RM’0002016

RM’000At beginning/end of year 14,429 14,429

Accumulated impairment lossesAt beginning/end of year 14,429 14,429

Carrying amount - -

15. Inventories

Group2017

RM’0002016

RM’000At cost:Raw materials and consumable stores:

- on hand 7,844 9,789 - in transit 1,160 -

Work in progress 7,552 4,289Manufactured goods 4,228 6,445

20,784 20,523At net realisable value:Tin concentrates - 234

20,784 20,757

Cost of inventories recognised in profit or loss 142,504 134,697

Inventories with a carrying amount of RM20,784,000 (2016: RM20,345,000) are pledged as collaterals for the banking facilities referred to in Note 25.

16. Trade receivables

Group2017

RM’0002016

RM’000Trade receivables 15,833 13,266Less: Allowance for doubtful debts (31) -

15,802 13,266

Trade receivables with a carrying amount of RM15,685,000 (2016: RM13,017,000) are pledged as collaterals for the banking facilities as disclosed in Note 25.

The Group’s normal trade credit terms range from 14 days to 90 days (2016: 14 days to 90 days). Other credit terms are assessed and approved on a case by case basis.

The movements in the allowance for doubtful debt accounts for trade receivables that are individually impaired at the reporting date are as follows:

Group2017

RM’002016

RM’000At beginning of year - 238Allowance for doubtful debt 31 -Allowance for doubtful debt no longer required - (238)

At end of year 31 -



16. Trade receivables (cont’d)

The following table provides information on the trade receivables’ credit risk exposure.

Group2017

RM’0002016

RM’000Not impaired or past due 13,197 10,2541 – 30 days past due not impaired 1,404 79331 – 60 days past due not impaired 864 82861 – 90 days past due not impaired 337 90691 – 120 days past due not impaired - 485

15,802 13,266Impaired 31 -

15,833 13,266

Trade receivables that are neither past due nor impaired are creditworthy debtors with good payment records with the Group.

Trade receivables that are individually determined to be impaired at the reporting date relate to debtors that are in significant financial difficulties and have defaulted on payments. These receivables are not secured by any collateral or credit enhancements.

17. Other receivables, deposits and prepayments

Group Company2017

RM’0002016

RM’0002017

RM’0002016

RM’000Deposits for purchase of raw materials 159 1,700 - -Other receivables and deposits 1,159 1,521 898 1,011Prepayments 599 1,384 243 248

1,917 4,605 1,141 1,259

Less: Allowance for doubtful debtsAt beginning of year 807 802 808 808Allowance for the year - 5 - -

At end of year (807) (807) (808) (808)

1,110 3,798 333 451

Amount due from subsidiaries - - 54,843 53,930Less: Allowance for doubtful debtsAt beginning of year - - 24,748 513Allowance for the year - - 30,095 24,235

At end of year - - (54,843) (24,748)

- - - 29,182

1,110 3,798 333 29,633

Amount due from subsidiaries represents unsecured interest free advances receivable on demand.

Amounts due from receivables that are individually determined to be impaired at the reporting date relate to receivables that are in significant financial difficulties. These receivables are not secured by any collateral or credit enhancements.

18. Fixed deposits with licensed banks

Fixed deposits of the Group amounting to RM150,000 (2016: RM170,000) have been pledged with a licensed bank to secure bank guarantee facilities.



19. Share capital

Group and Company2017

No. of ordinary

shares’000

2017RM’000

2016No. of

ordinary shares

’0002016

RM’000Issued and fully paid:At beginning of year 998,046 49,902 601,145 120,229Issue of shares for exercised of

employee share options 200 11 - -Transfer from ESOS reserve upon

exercised of ESOS - 11 - - Capital reduction - - - (90,172) Rights issue of shares - - 306,169 15,308 Issue of shares pursuant

to private placement - - 90,732 4,537

At end of year 998,246 49,924 998,046 49,902

During the financial year, the Company increased its issued and paid up capital from RM49,902,293 to RM49,923,753 via the following:

(i) issuance of 200,000 new ordinary shares pursuant to the exercise of 200,000 ESOS options at the exercise price of RM0.055 per ordinary share; and

(ii) transfer of RM10,460 from the employee share option reserve account pursuant to the exercise of 200,000 ESOS options.

In the previous reporting period, the following corporate exercises of the Company were completed:

(i) Capital reduction by the cancellation of RM0.15 of the par value of every existing ordinary share of RM0.20 each in the Company to offset against the accumulated losses of the Company; and

(ii) Rights issue of 306,169,423 new ordinary shares of RM0.05 each in the Company (“Rights Shares”) at an issue price of RM0.08 per Rights Share together with 244,935,533, free detachable warrants (“Warrants”) on the basis of four (4) Warrants for every five (5) Rights Shares subscribed in the Company after the capital reduction.

As part of the exercises, the number of authorised ordinary shares in the Company was increased from 2,500,000,000 ordinary shares of RM0.20 each to 10,000,000,000 ordinary shares of RM0.05 each in the Company. The value of the authorised share capital remained unchanged at RM500,000,000.

The Company’s issued and paid up share capital was also further increased by way of the issuance of 90,731,400 new ordinary shares of RM0.05 each for cash through a private placement at an issue price of RM0.055 per share. The shares were issued for working capital purposes.

The new ordinary shares issued rank pari passu with the then existing ordinary shares of the Company.

19.1 Warrants 2016/2021

The Company had on 16 March 2016 issued 244,935,533 Warrants 2016/2021 in conjunction with its renounceable rights issue. The Warrants 2016/2021 are constituted by a Deed Poll dated 28 January 2016.

The salient features of the Warrants 2016/2021 are as follows:

(a) The issue date of the Warrants is on 16 March 2016 and the expiry date is on 15 March 2021. Any warrants not exercised at the expiry date will lapse and cease to be valid for any purpose;

(b) Each Warrant entitles the registered holder the right to subscribe for one (1) new ordinary in the Company at an exercise price of RM0.08 per ordinary share until the expiry of the exercise period;



19. Share capital (cont’d)

19.1 Warrants 2016/2021 (cont’d)

The salient features of the Warrants 2016/2021 are as follows: (cont’d)

(c) The exercise price and the number of Warrants are subject to adjustment in the event of alteration to the share capital of the Company in accordance with the provisions in the Deed Poll. However, no adjustment shall be made in any event whereby the exercise price would be reduced to below the par value of ordinary shares in the Company;

(d) The Warrant holders are not entitled to participate in any distribution and/or offer of further securities in the Company (except for the issue of new warrants pursuant to adjustment as mentioned in item (c) above), unless and until such Warrant holders exercise their rights to subscribe for new ordinary shares; and

(e) The new ordinary shares to be issued upon exercise of the Warrants, shall upon issuance and allotment, rank pari passu with the then existing ordinary shares, except that they will not be entitled to dividends, rights, allotments and/or other distributions, declared by the Company which entitlement thereof precedes the allotment date of the new ordinary shares allotted pursuant to the exercise of the Warrants.

The movements in the Company’s Warrants 2016/2021 during the reporting period are as follows:

Entitlement for ordinary sharesBalance at

1.1.2017‘000

Issued‘000

Exercised‘000

Expired‘000

Balance at31.12.2017

‘000Number of unexercised warrants 244,936 - - - 244,936

20. New Employees’ Share Option Scheme (“New ESOS”)

The Company implemented a New Employees’ Share Option Scheme (“New ESOS”) which is governed by the ESOS By-Laws and was approved by its shareholders at the Extraordinary General Meeting held on 12 November 2015.

The salient features of the New ESOS are as follows:

(a) The New ESOS was implemented on 25 March 2016 and is in force for a period of 10 years until 24 March 2026 in accordance with the terms of the ESOS By-Laws;

(b) The total number of new shares to be offered pursuant to the New ESOS shall be subject to a maximum

of 10% of the Company’s issued and paid up share capital (excluding treasury shares) at any one time;

(c) Employees (including Executive Directors) of the Company or its subsidiaries shall be eligible to participate in the New ESOS, if as at the date of offer, the employee:

(i) has attained the age of eighteen (18) years;(ii) is employed by and on the payroll of the Company or its subsidiaries; and(iii) has been in the employment of the Company or the subsidiaries for a period of at least twelve

full months of continuous services, including services during the probation period and whose employment has been confirmed.

The allocation criteria of new ordinary shares comprised in the options to eligible employees shall be determined at the discretion of the Option Committee. The participation of an Executive Director of the Company in the New ESOS shall be approved by the shareholders of the Company in the general meeting;

(d) The price payable upon exercise of New ESOS shall be based on the weighted average market price of the Company’s shares as shown in the Daily Official List of Bursa Malaysia Securities Berhad for the five (5) market days immediately preceding the date of offer with an allowance of a discount of not more than 10%, or at the par value of the Company’s shares, whichever is higher;



20. New Employees’ Share Option Scheme (“New ESOS”) (cont’d)

The salient features of the New ESOS are as follows: (cont’d)

(e) In the event that share buy-back exercise of the Company resulting in the number of options that have been offered under the New ESOS exceeding 10% of the issued and paid up share capital of the Company, there shall be no granting of additional options at any point in time after the share buy-back, unless the number of options that have been granted under the New ESOS falls below 10% of the issued and paid up share capital of the Company;

(f) The new ordinary shares to be issued upon exercise of the New ESOS, shall upon issuance and allotment, rank pari passu with the then existing ordinary shares, except that they will not be entitled to dividends, rights, allotments and/or other distributions, declared by the Company which entitlement thereof precedes the allotment date of the new ordinary shares allotted pursuant to the exercise of the New ESOS; and

(g) The exercise price and the number of new ordinary shares comprised in the New ESOS are subject to adjustment in the event of alteration to the share capital of the Company in accordance with the provisions in the ESOS By-Laws. However, no adjustment shall be made in any event whereby the exercise price would be reduced to below the par value of ordinary shares in the Company.

The movements in the Company’s New ESOS are as follows:

Number of options over ordinary shares

Offer Date

Exercise price per ordinary

shareBalance at

1.1.2017’000

Granted’000

Lapsed’000

Exercised‘000

Balance at31.12.2017

‘00013 April 2016 RM0.055 39,504 - (2,930) (200) 36,374

The fair value of RM0.0523 under New ESOS options granted is estimated at the grant date using the Black-Scholes option pricing model, taking into account the terms and conditions upon which the instruments were granted.

Prior to the implementation of the New ESOS, the then existing ESOS 2010/2020 was terminated on 22 February 2016.

21. Reserves

Group Company2017

RM’0002016

RM’0002017

RM’0002016

RM’000Accumulated losses (42,291) (31,415) (61,833) (23,017)Non distributable:Share premium 23,098 23,098 23,098 23,098Revaluation reserve 10,019 10,019 6,624 6,624Employee share option reserve 1,902 2,066 1,902 2,066Warrant reserve 7,348 7,348 7,348 7,348Foreign currency translation reserve (1,549) (256) - -

40,818 42,275 38,972 39,136

(1,473) 10,860 (22,861) 16,119

Share premium represents the excess of the consideration received over the nominal value of the shares issued by the Company. Section 618(2) of the Companies Act 2016 states that upon the commencement of Section 74, the share premium account shall become part of the share capital. The share premium account is currently maintained pursuant to the transitional provisions set out in Section 618(3) and shall become part of the share capital within twenty-four months upon commencement of Section 74.



21. Reserves (cont’d)

The revaluation reserve represents revaluation surplus arising from buildings. The revaluation reserve is used to record increases in the fair value of buildings and decreases to the extent that such decrease relates to an increase on the same asset previously recognised in equity.

The warrant reserve represents the reserve arising from the rights issue with free detachable warrants which is determined based on the estimated fair value of the warrants immediately upon the listing and quotation thereof.

Employee share option reserve represents the equity settled share options 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 options, and is reduced by the expiry or exercise of the share options.

The foreign currency translation reserve represents exchange differences arising from the translation of the financial statements of foreign operations whose functional currencies are different from that of the Group’s presentation currency.

22. Trade payables

The normal trade credits granted to the Group range from 30 days to 90 days (2016: 30 days to 90 days).

23. Other payables and accruals

Group Company2017

RM’0002016

RM’0002017

RM’0002016

RM’000Financial guarantee liabilities:At beginning of year - - 990 1,069Amortisation for the year - - (73) (79)

At end of year - - 917 990Less: Non current portion - - (849) (917)

Current portion - - 68 73Amount due to subsidiaries - - 38,686 38,860Amount due to directors 1,008 - 1,008 -Assumption of liabilities of a former subsidiary 1,109 1,229 1,109 1,229Advances received from customers 5,858 3,993 - -Interest payable 1,110 1,025 184 -Secured promissory notes bearing effective

interest rate at 10% (2016: Nil) per annum 4,047 - 4,047 -Other payables and accruals 11,895 14,500 5,527 8,730

25,027 20,747 50,629 48,892

Company2017

RM’0002016

RM’000The non current portion of the present value

of financial guarantee liabilities is to be amortised as follows:Later than 1 year and not later than 2 years 62 68Later than 2 years and not later than 5 years 162 175Later than 5 years 625 674

849 917

The amount due to subsidiaries represents unsecured interest free advances repayable on demand.

The financial guarantee liabilities relate to a corporate guarantee provided by the Company to a bank for banking facilities amounting to RM4,990,000 (2016: RM4,990,000) taken by a subsidiary.

The promissory notes are secured by way of joint and several guarantee by certain directors of the Company.



24. Hire purchase and finance lease liabilities

Group Company2017

RM’0002016

RM’0002017

RM’0002016

RM’000Outstanding obligations 290 361 282 336Less: Future finance charges (35) (51) (34) (48)Present value of liabilities 255 310 248 288Less: Portion due within one year (50) (55) (43) (40)

Non current portion 205 255 205 248

The non current portion of the present value of liabilities is payable as follows:

Later than 1 year and not later than 2 years 45 49 45 42Later than 2 year and not later than 5 years 151 144 151 144Later than 5 years 9 62 9 62

205 255 205 248

The effective interest rates for these liabilities of the Group and the Company are 5.11% (2016: 5.08%) and 5.13% (2016: 5.13%) per annum respectively.

25. Short term borrowings

Group Company2017

RM’0002016

RM’0002017

RM’0002016

RM’000Secured:

Long term loans - current portion (Note 26) 6,932 7,654 - -

The effective interest rates are as follows:

Group Company2017

%2016

%2017

%2016

%Term loans 8.33 8.29 12.00 -

The above banking facilities are secured by way of:

GroupCarrying amount

CompanyCarrying amount

Group 2017RM’000

2016RM’000

2017RM’000

2016RM’000

Property, plant and equipment (Note 10) 36,289 40,816 11,106 11,800Inventories (Note 15) 20,784 20,345 - -Trade receivables (Note 16) 15,685 13,017 - -

The above banking facilities are also secured by way of:

(i) corporate guarantees by the Company for facilities of the subsidiaries; and(ii) personal guarantee by a director of the Company on the Company’s term loan.



26. Long term loans

Group Company2017

RM’0002016

RM’0002017

RM’0002016

RM’000Amount outstanding 18,895 26,354 1,600 -Less: Portion due within one year (Note 25) (6,932) (7,654) - -

Non current portion 11,963 18,700 1,600 -

The non-current portion of long term loans is payables as follows:

Later than 1 year and not later than 2 years 6,539 7,655 31 -Later than 2 years and not later than 5 years 1,081 7,528 441 -Later than 5 years 4,343 3,517 1,128 -

11,963 18,700 1,600 -

The long term loans are secured as disclosed in Note 25.

27. Retirement benefit obligations

Group2017

RM’0002016

RM’000Present value of retirement benefit obligations 3,089 2,759

The movements in the retirement benefit obligations in the reporting period are as follows:

Group2017

RM’0002016

RM’000At beginning of year 2,759 2,117Recognised in profit or loss under ‘administrative expenses’ line item 681 1,165Recognised in other comprehensive income 212 232Benefits paid (235) (957)Exchange differences (328) 202

At end of year 3,089 2,759

Amounts recognised as an expense in profit or loss can be analysed as follows:

Group2017

RM’0002016

RM’000Current service cost 477 970Interest on obligation 204 195

681 1,165

The amount recognised in other comprehensive income during the reporting period is as follows:

Group2017

RM’0002016

RM’000Remeasurement of net retirement benefit obligations

- actuarial loss 212 232



27. Retirement benefit obligations (cont’d)

The Group provides for retirement benefit obligations in respect of its overseas subsidiary, PT Ho Wah Genting, in accordance with the provisions of Labour Law 13/2003 established in Indonesia. Under the benefits plan, the benefits are payable upon attaining the normal retirement age or upon resignation of employees.

The provision for employee retirement benefits is determined by independent actuarial valuations using the Projected Unit Credit Method and is made to cover estimated obligations for payment of retirement benefits to employees. The latest actuarial valuation was performed on 31 December 2017.

The principal actuarial assumptions used are as follows:

Group2017 2016

Discount rate 7.25% 8.00%Future salary increase 6.00% 6.00%Disable rate 10% of

mortality rate10% of

mortality rate

Voluntary resignation rate 2.5% 2.5%

Assumptions regarding future mortality are set based on actuarial advice in accordance with published statistics and experiences in Indonesia.

The sensitivity analysis below has been determined based on reasonably possible changes of each significant assumption on the retirement benefit obligations as of the end of the reporting period, assuming if all other assumptions were held constant:

2017 2016Change in assumption Impact on retirement benefit obligations

IncreaseRM’000

DecreaseRM’000

IncreaseRM’000

DecreaseRM’000

Discount rate 1% (34) 40 (32) 58Future salary increase 1% 40 (34) 39 (33)Disable rate 10% 1 (1) 1 (1)Mortality rate 10% - - - -Voluntary resignation rate 10% (5) 5 (4) 4

28. Deferred tax (liabilities)/assets

Group Company2017

RM’0002016

RM’0002017

RM’0002016

RM’000At beginning of year (2,953) (1,965) (1,975) (1,180)Recognised in profit or loss (Note 8)

- current year 3,128 111 110 62Recognised in other comprehensive income

(Note 8)- current year - (1,099) - (857)

Exchange differences (186) - - -

At end of year (11) (2,953) (1,865) (1,975)



28. Deferred tax (liabilities)/assets (cont’d)

Group Company2017

RM’0002016

RM’0002017

RM’0002016

RM’000Deferred tax assets 4,093 2,393 - -Deferred tax liabilities (4,104) (5,346) (1,865) (1,975)

(11) (2,953) (1,865) (1,975)

Presented after appropriate offsetting as follows:

Deferred tax assets (2,769) - - -

(2,780) (2,953) (1,865) (1,975)

Deferred tax liabilities are in respect of the following:

Group Company2017

RM’0002016

RM’0002017

RM’0002016

RM’000Excess of tax capital allowances over related

depreciation of property, plant and equipment (1,303) (2,069) - -

Revaluation reserve (2,801) (2,953) (1,865) (1,975)Other temporary differences - (324) - -

(4,104) (5,346) (1,865) (1,975)

Deferred tax assets of the Group are in respect of the following temporary differences:

Gross Tax effectGroup 2017

RM’0002016

RM’0002017

RM’0002016

RM’000Deductible temporary differences 3,303 3,083 825 740Excess of depreciation of plant and

equipment over related tax capital allowances 10,360 - 2,486 -

Unutilised tax losses and unabsorbed capital allowances- no expiry date 100,206 96,567 24,049 23,176- tax losses allowed to be utilised up to the financial year ending 31 December

- 2017 - 852 - 213- 2018 - 2,980 - 745- 2019 4,290 7,284 1,072 1,821- 2020 to 2025 8,079 8,972 2,020 2,243

12,369 20,088 3,092 5,022

Unutilised reinvestment allowances 15,654 15,654 3,757 3,757141,892 135,392 34,209 32,695

Less: Deferred tax assets recognised (16,399) (9,970) (4,093) (2,393)

Deferred tax assets not recognised 125,493 125,422 30,116 30,302

Unrecognised deferred tax assets of the Company are in respect of the following temporary differences:

Gross Tax effect2017

RM’0002016

RM’0002017

RM’0002016

RM’000Unutilised tax losses and unabsorbed capital

allowances 29,137 29,137 6,993 6,993



28. Deferred tax (liabilities)/assets (cont’d)

Portion of these deferred tax assets of the Group and of the Company has not been recognised as it is not probable that taxable profit will be available in the foreseeable future to utilise these tax benefits.

29. Commitments

Group Company2017

RM’0002016

RM’0002017

RM’0002016

RM’000Rental commitmentsThe future minimum lease payments under

non cancellable operating leases are as follows:

Not later than 1 year 9 35 9 35Later than 1 year and not later than 2 years - 9 - 9

9 44 9 44

30. Significant related party disclosures

30.1 Related party transactions

Significant transactions with related parties are as follows:

Group CompanyType of

transactions2017

RM’0002016

RM’0002017

RM’0002016

RM’000With subsidiaries:Ho Wah Genting Trading Sdn Bhd Management

fee income - - 128 128Ho Wah Genting Holiday Sdn Bhd Rental

income - - 24 24

With an associate:Dufry HWG Shopping Sdn Bhd Rental

income 5 - 5 -With companies in which certain directors

have interestVitaxel Sdn Bhd Rental

income 84 84 84 84Sales 980 849 - -

Ho Wah Genting Property Sdn Bhd Rental income 10 - 10 -

30.2 Related party balances

Individually significant outstanding balances arising from transactions other than normal trade transactions are as follows:


transactions2017

RM’0002016

RM’0002017

RM’0002016

RM’000Financial assetsWith subsidiaries:HWG Tin Mining Sdn Bhd Advances - - 54,200 53,265

Allowance for doubtful

debts - - (54,200) (24,105)

- - - 29,160PT. Ho Wah Genting Advances - - - 22



30. Significant related party disclosures

30.2 Related party balances (cont’d)


transactions2017

RM’0002016

RM’0002017

RM’0002016

RM’000Financial assetsWith subsidiaries:HWG Consortium Sdn Bhd Advances - - 643 643

Allowance for doubtful

debts - - (643) (643)- - - -

Financial liabilitiesWith subsidiaries:Ho Wah Genting Holiday Sdn Bhd Advances - - 1,351 1,501

Rental deposit - - 4 4Ho Wah Genting Kintron Sdn Bhd Advances - - 9,045 8,945Ho Wah Genting (Labuan) Ltd Advances - - 442 500Ho Wah Genting Trading Sdn Bhd Advances - - 8,455 8,516HWG Duty Free Sdn Bhd Advances - - 936 936HWG Minerals Sdn Bhd Advances - - 17,858 17,858Rex Oriental Sdn Bhd Advances - - 595 600With an associate:Dufry HWG Shopping Sdn Bhd Rental

deposits 6 - 6 -With companies in which certain directors

have interestVitaxel Sdn Bhd Rental deposit 21 21 21 21Ho Wah Genting Property Sdn Bhd Rental deposit 10 - 10 -With directors of the CompanyDatuk Teo Tiew Advances 765 - 765 -Dato Lim Ooi Hong Advances 243 - 243 -

30.3 Compensation of key management personnel

The key management personnel comprises mainly executive directors of the Company whose remuneration is disclosed in Note 6.

31. Segment information of the Group

For management purposes, the Group is organised into business units based on their products and services, and has five reportable operating segments as follows:

Investment - Investment in properties and investment by the holding companyMoulded power supply cord sets - Manufacturing and trading of wires and cables, moulded power

supply cord sets and cable assemblies for electrical and electronic devices and equipment

Wires and cables - Trading of wires and cablesMining - Tin mining and its related activitiesTravelling services - Travel agent and tour related services


31.

Segm

ent i

nfor

mat

ion

of th

e G

roup

(con

t’d)

Man

agem

ent

mon

itors

the

ope

ratin

g re

sults

of

its b

usin

ess

units

and

rel

ies

on t

he s

egm

ent

info

rmat

ion

as d

isclo

sed

bel

ow f

or t

he p

urpo

se o

f m

akin

g d

ecisi

ons a

bout

reso

urce

allo

catio

n an

d p

erfo

rman

ce a

sses

smen

t.

The

dire

ctor

s tog

ethe

r with

the

man

agem

ent a

re o

f the

opi

nion

that

all i

nter

segm

ent t

rans

actio

ns h

ave

been

ent

ered

into

in th

e no

rmal

cou

rse

of b

usin

ess

and

hav

e be

en e

stab

lishe

d o

n te

rms a

nd c

ond

ition

s tha

t are

not

mat

eria

lly d

iffer

ent f

rom

thos

e ob

tain

able

in tr

ansa

ctio

ns w

ith u

nrel

ated

par

ties.

2017

Inve

stm

ent

RM’0

00

Mou

lded

po

wer

su

pply

cor

d se

tsRM

’000

Wire

s an

d ca

bles

RM’0

00M

inin

gRM

’000

Trav

ellin

g se

rvic

esRM

’000

Tota

lRM

’000

Elim

inat

ion

RM’0

00G

roup

RM’0

00

Reve

nue

Exte

rnal

reve

nue

147

151,

691

145

400

4,18

015

6,56

3-

156,

563

Inte

r-seg

men

t rev

enue

152

120

--

6033

2(3

32)

-To

tal r

even

ue29

915

1,81

114

540

04,

240

156,

895

(332

)15

6,56

3Re

sults

(Los

s)/P

rofit

from

ope

ratio

ns b

efor

e in

tere

st in

com

e(3

9,90

6)6,

906

(1,4

63)

(18,

174)

(336

)(5

2,97

3)32

,280

(20,

693)

Inte

rest

inco

me

46

--

616

-16

(Los

s)/P

rofit

from

ope

ratio

ns(3

9,90

2)6,

912

(1,4

63)

(18,

174)

(330

)(5

2,95

7)32

,280

(20,

677)

Fina

nce

cost

s(2

47)

(1,6

13)

(205

)(2

)-

(2,0

67)

-(2

,067

)Sh

are

in lo

ss o

f an

asso

ciat

e(1

16)

--

--

(116

)-

(116

)(L

oss)

/Pro

fit b

efor

e ta

x(4

0,26

5)5,

299

(1,6

68)

(18,

176)

(330

)(5

5,14

0)32

,280

(22,

860)

Inco

me

tax

cred

it11

03,

018

--

-3,

128

-3,

128

Net

(los

s)/p

rofit

for t

he y

ear

(40,

155)

8,31

7(1

,668

)(1

8,17

6)(3

30)

(52,

012)

32,2

80(1

9,73

2)N

on c

ontro

lling

inte

rest

s8

--

8,90

62

8,91

6-

8,91

6(L

oss)

/Pro

fit a

ttrib

utab

le to

ow

ners

of t

he C

ompa

ny(4

0,14

7)8,

317

(1,6

68)

(9,2

70)

(328

)(4

3,09

6)32

,280

(10,

816)

Ass

ets

and

liabi

litie

sSe

gmen

t ass

ets

91,7

3172

,288

23,7

6885

41,

963

190,

604

(107

,428

)83

,176

Con

solid

ated

tota

l ass

ets

91,7

3172

,288

23,7

6885

41,

963

190,

604

(107

,428

)83

,176

Segm

ent l

iabi

litie

s56

,063

60,4

0312

,462

56,4

1851

118

5,85

7(1

24,3

52)

61,5

05C

onso

lidat

ed to

tal l

iabi

litie

s56

,063

60,4

0312

,462

56,4

1851

118

5,85

7(1

24,3

52)

61,5

05



31.

Segm

ent i

nfor

mat

ion

of th

e G

roup

(con

t’d)

2017

Inve

stm

ent

RM’0

00

Mou

lded

po

wer

su

pply

cor

d se

tsRM

’000

Wire

s an

d ca

bles

RM’0

00M

inin

gRM

’000

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ellin

g se

rvic

esRM

’000

Tota

lRM

’000

Elim

inat

ion

RM’0

00G

roup

RM’0

00

Oth

er in

form

atio

nC

apita

l exp

end

iture

432,

135

41

32,

186

-2,

186

Am

ortis

atio

n of

inta

ngib

le a

sset

s-

--

8-

8-

8D

epre

ciat

ion

of p

rope

rty, p

lant

and

eq

uipm

ent

831

2,98

4-

104

83,

927

-3,

927

Mat

eria

l non

cas

h ite

ms o

ther

than

d

epre

ciat

ion

and

am

ortis

atio

n- A

llow

ance

for d

oubt

ful d

ebts

30,0

95-

31-

-30

,126

(30,

095)

31- B

ad d

ebts

writ

ten

off

-19

4-

--

194

-19

4- I

nven

torie

s writ

ten

off

--

-20

8-

208

-20

8- I

mpa

irmen

t los

s of i

nves

tmen

t in

subs

idia

ries

2,15

8-

--

-2,

158

(2,1

58)

-- I

mpa

irmen

t los

s on

plan

t and

eq

uipm

ent

--

-16

,691

-16

,691

-16

,691

- Unr

ealis

ed lo

ss o

n fo

reig

n ex

chan

ge1,

030

695

3-

-1,

989

-1,

989

- Pla

nt a

nd e

quip

men

t writ

ten

off

-19

0-

30-

220

-22

0- R

etire

men

t ben

efit o

blig

atio

ns-

681

--

-68

1-

681

- Am

ortis

ing

of fi

nanc

ial g

uara

ntee

lia

bilit

ies

(73)

--

--

(73)

73-

- Unr

ealis

ed g

ain

on fo

reig

n ex

chan

ge(3

12)

(101

)-

--

(413

)-

(413

)




31.

Segm

ent i

nfor

mat

ion

of th

e G

roup

(con

t’d)

2016

Inve

stm

ent

RM’0

00

Mou

lded

po

wer

su

pply

cor

d se

tsRM

’000

Wire

s an

d ca

bles

RM’0

00M

inin

gRM

’000

Trav

ellin

g se

rvic

esRM

’000

Tota

lRM

’000

Elim

inat

ion

RM’0

00G

roup

RM’0

00

Reve

nue

Exte

rnal

reve

nue

132

137,

342

2,05

21,

137

7,43

814

8,10

1-

148,

101

Inte

r-seg

men

t rev

enue

152

1,56

8-

-49

1,76

9(1

,769

)-

Tota

l rev

enue

284

138,

910

2,05

21,

137

7,48

714

9,87

0(1

,769

)14

8,10

1

Resu

lts(L

oss)

/Pro

fit fr

om o

pera

tions

bef

ore

shar

e op

tion

expe

nses

and

inte

rest

in

com

e(3

2,16

3)2,

945

288

(11,

782)

(226

)(4

0,93

8)26

,287

(14,

651)

Shar

e op

tion

expe

nses

(743

)(1

,220

)(1

04)

(48)

(61)

(2,1

76)

-(2

,176

)In

tere

st in

com

e16

4-

36

29-

29

(Los

s)/P

rofit

from

ope

ratio

ns(3

2,89

0)1,

729

184

(11,

827)

(281

)(4

3,08

5)26

,287

(16,

798)

Fina

nce

cost

s(1

4)(2

,537

)(1

87)

(3)

-(2

,741

)-

(2,7

41)

Loss

bef

ore

tax

(32,

904)

(808

)(3

)(1

1,83

0)(2

81)

(45,

826)

26,2

87(1

9,53

9)In

com

e ta

x ex

pens

e62

49-

--

111

-11

1

Net

loss

for t

he y

ear

(32,

842)

(759

)(3

)(1

1,83

0)(2

81)

(45,

715)

26,2

87(1

9,42

8)N

on c

ontro

lling

inte

rest

s12

--

5,79

72

5,81

1-

5,81

1

Loss

attr

ibut

able

to o

wne

rs

of th

e C

ompa

ny(3

2,83

0)(7

59)

(3)

(6,0

33)

(279

)(3

9,90

4)26

,287

(13,

617)

Ass

ets

and

liabi

litie

sSe

gmen

t ass

ets

157,

677

72,3

0325

,664

18,1

551,

961

275,

760

(170

,807

)10

4,95

3C

onso

lidat

ed to

tal a

sset

s15

7,67

772

,303

25,6

6418

,155

1,96

127

5,76

0(1

70,8

07)

104,

953

Segm

ent l

iabi

litie

s53

,653

66,8

0012

,690

55,5

4431

818

9,00

5(1

26,9

49)

62,0

56C

onso

lidat

ed to

tal l

iabi

litie

s53

,653

66,8

0012

,690

55,5

4431

818

9,00

5(1

26,9

49)

62,0

56



31.

Segm

ent i

nfor

mat

ion

of th

e G

roup

(con

t’d)

2016

Inve

stm

ent

RM’0

00

Mou

lded

po

wer

su

pply

cor

d se

tsRM

’000

Wire

s an

d ca

bles

RM’0

00M

inin

gRM

’000

Trav

ellin

g se

rvic

esRM

’000

Tota

lRM

’000

Elim

inat

ion

RM’0

00G

roup

RM’0

00

Oth

er in

form

atio

nC

apita

l exp

end

iture

398

120

--

552

3-

523

Am

ortis

atio

n of

inta

ngib

le a

sset

s-

--

8-

8-

8A

mor

tisat

ion

of fi

nanc

ial g

uara

ntee

lia

bilit

ies

(79)

--

--

(79)

79-

Dep

reci

atio

n of

pro

perty

, pla

nt a

nd

equi

pmen

t59

53,

003

124

29

3,85

0-

3,85

0M

ater

ial n

on c

ash

item

s oth

er th

an

dep

reci

atio

n an

d a

mor

tisat

ion

- Allo

wan

ce fo

r dou

btfu

l deb

ts24

,240

--

--

24,2

40(2

4,23

5)5

- Im

pairm

ent l

oss o

f inv

estm

ent i

n su

bsid

iarie

s1,

830

--

--

1,83

0(1

,830

)-

- Im

pairm

ent l

oss o

n pl

ant a

nd

equi

pmen

t -

--

9,53

4-

9,53

4-

9,53

4- U

nrea

lised

loss

on

fore

ign

exch

ange

7546

--

-12

1-

121

- Ret

irem

ent b

enefi

t obl

igat

ions

-1,

165

--

-1,

165

-1,

165

- Unr

ealis

ed g

ain

on fo

reig

n ex

chan

ge(4

52)

-(2

,071

)-

-(2

,523

)-

(2,5

23)



31. Segment information of the Group (cont’d)

Customers segment information

Revenue from transactions with major customers arising from sales by the moulded power supply cord sets segment that individually accounted for 10 percent or more of the Group’s revenue are summarised below:

2017RM’000

2016RM’000

Customer A 33,913 21,634Customer B 28,069 24,746Customer C 22,443 24,700Customer D 18,924 -

103,349 71,080

Geographical segments

In presenting information on the basis of geographical segments, segment revenue is based on geographical location of customers. Segment assets are based on the geographical location of the assets.

Revenue Non current assets2017

RM’0002016

RM’0002017

RM’0002016

RM’000Malaysia 4,872 10,759 12,497 30,119The rest of Asia 8,589 12,321 25,306 29,128North America 143,102 125,021 - -

156,563 148,101 37,803 59,247

Non current assets information presented above consist of property, plant and equipment, intangible assets and goodwill on consolidation as presented in the statements of financial position.

32. Fair value of assets and liabilities

32.1 Fair value hierarchy

The Group categorises fair value measurements using a fair value hierarchy that is dependent on the valuation inputs used as follows:

• Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets or liabilities;

• Level 2 fair value measurements are those derived from inputs other than quoted prices included within Level 1 that are observable for the assets or liabilities, either directly (i.e. prices) or indirectly (i.e. derived from prices); and

• Level 3 fair value measurements are those derived from valuation techniques that include inputs for the assets or liabilities that are not based on observable market data (unobservable inputs).



32. Fair value of assets and liabilities (cont’d)

32.2 Assets measured at fair value

The following table provides an analysis of each class of assets measured at fair value at the end of the reporting period:

Group2017

Fair value measurements at the end of the reporting period using

Level 1RM’000

Level 2RM’000

Level 3RM’000

TotalRM’000

Non recurring fair value measurementsNon financial assets:Property, plant and equipmentBuildings - 20,932 - 20,932Impaired property, plant and

equipment used in mining activities carried at fair value less cost of disposal - - 640 640

Group2016


Level 1RM’000

Level 2RM’000

Level 3RM’000

TotalRM’000

Non recurring fair value measurementsNon financial assets:Property, plant and equipmentBuildings - 23,345 - 23,345

There were no transfers between these levels of fair values in the current and previous reporting period.

Company2017


Level 1RM’000

Level 2RM’000

Level 3RM’000

TotalRM’000

Non recurring fair value measurementsNon financial assets:Property, plant and equipmentBuildings - 11,130 - 11,130Investment in subsidiariesImpaired subsidiaries carried at fair

value less cost of disposal - - 67,874 67,874



32. Fair value of assets and liabilities (cont’d)

32.2 Assets measured at fair value (cont’d)

Company2016


Level 1RM’000

Level 2RM’000

Level 3RM’000

TotalRM’000

Non recurring fair value measurementsNon financial assets:Property, plant and equipmentBuildings - 11,825 - 11,825

Investment in subsidiariesImpaired subsidiaries carried at fair

value less cost of disposal - - 57,329 57,329

There were no transfers between these levels of fair values in the current and previous reporting periods.

Valuation techniques used to derive Level 2 fair values

The fair values of buildings have been derived using the sales comparison approach. Sales prices of comparable buildings in close proximity are adjusted for differences in key attributes such as property size. The most significant input into this valuation approach is price per square foot.

Valuation techniques used to derive Level 3 fair values

The valuation of property, plant and equipment in mining activities was derived based on quotation from a second hand dealer less estimated costs that are directly attributable to the disposal of the assets.

The valuation of investment in subsidiaries was derived based on the audited net assets as at reporting date, as the subsidiaries are not generating substantial operating cash flows for discounting purposes.

32.3 Financial assets and financial liabilities not carried at fair value and whose carrying amounts are reasonable approximation of fair value

The carrying amounts of cash and cash equivalents, receivables and payables, and other liabilities approximate their respective fair values due to the relatively short-term maturity of these financial instruments.

The fair values of the Group’s and the Company’s hire purchase and finance lease liabilities approximate their carrying amount. The floating rate term loans are re-priced to market interest rate on or near the reporting date. Hire purchase and finance lease liabilities and the fixed rate term loan are contracted with interest rates which are reasonable approximation of the market interest rates on or near reporting date.



33. Financial instruments and financial risks management

33.1 Categories of financial instruments

The following table sets out the financial instruments as at the reporting date:

Group Company2017

RM’0002016

RM’0002017

RM’0002016

RM’000Financial assetsLoan and receivables:

- trade and other receivables 16,154 13,980 90 29,385- cash and bank balances 3,988 7,823 770 5,344

20,142 21,803 860 34,729

Financial liabilitiesAmortised cost:

- borrowings- floating rate 5,835 4,402 1,600 -- fixed rate 13,060 21,952 - -

- hire purchase and finance lease liabilities (fixed rate) 255 310 248 288- trade and other payables

- non interest bearing 26,581 25,687 47,431 49,809- interest bearing 4,047 - 4,047 -

49,778 52,351 53,326 50,097

33.2 Financial risk management objectives and policies

The Group’s overall financial risk management programme seeks to minimise potential adverse effects on financial performance of the Group.

The Group does not hold or issue derivative financial instruments for speculative purposes.

There has been no change in the Group’s exposure to these financial risks or the manner in which it manages and measures the risks.

Foreign exchange risk management

The Group operates internationally and is exposed to foreign exchange risk. Foreign currency denominated assets and liabilities together with expected cash flows from highly probable purchases and sales give rise to foreign exchange exposures.

The net unhedged financial assets and financial liabilities of the Group companies that are not denominated in their functional currencies are as follows:

Net Financial Assets/(Liabilities) Held in Non-Functional CurrenciesFunctional currency of the Group components

Indonesian RupiahRM’000

United States Dollar

RM’000

Singapore Dollar

RM’000Total

RM’0002017Ringgit Malaysia - (4,002) - (4,002)United States Dollar (6,944) - (89) (7,033)

(6,944) (4,002) (89) (11,035)2016Ringgit Malaysia - 185 - 185United States Dollar (187) - (2,254) (2,441)

(187) 185 (2,254) (2,256)



33. Financial instruments and financial risks management (cont’d)

33.2 Financial risk management objectives and policies (cont’d)

Foreign exchange risk management (cont’d)

Net Financial Assets/(Liabilities) Held in Non-Functional Currencies

Functional currency of the Company

United States Dollar

RM’000Total

RM’0002017Ringgit Malaysia (4,016) (4,016)2016Ringgit Malaysia 80 80

The following table details the sensitivity to a 10% increase and decrease in the relevant foreign currencies against the functional currencies of the respective Group entities. 10% is the sensitivity rate used when reporting foreign currency risk internally to key management personnel and represents management’s assessment of the possible change in foreign exchange rates. The sensitivity analysis includes only outstanding foreign currency denominated monetary items adjusted at the reporting period end for a 10% change in foreign currency rates. If the relevant foreign currencies strengthen by 10% against these respective functional currencies, loss before tax will decrease/(increase) by:

Group Company2017

RM’0002016

RM’0002017

RM’0002016

RM’000Functional currency in Ringgit MalaysiaUnited States Dollar (400) 19 (402) 8

Group2017

RM’0002016

RM’000Functional currency in United States DollarIndonesian Rupiah (694) (19)Singapore Dollar (9) (225)

The opposite applies if the relevant foreign currencies weaken by 10% against the functional currency of the Group.

Interest rate risk management

The Group’s primary interest rate risk relates to interest bearing debts. The Group manages its interest rate exposure by maintaining a prudent mix of fixed and floating rate borrowings. The Group actively reviews its debt portfolio, taking into account the investment holding period and nature of its assets. The information on maturity dates and effective interest rates of financial liabilities are disclosed in their respective notes.

The sensitivity analysis below have been determined based on the exposure to interest rates for the banking facilities at the reporting date. A 50 basis point increase or decrease is used when reporting interest rate risk internally to key management personnel and represents management’s assessment of the possible change in interest rates.

If interest rates had been 50 basis points higher/lower and all other variables were held constant, the Group and the Company loss before tax would increase/decrease by RM116,000 (2016: RM133,000) and RM29,000 (2016: Nil) respectively.





Credit risk management

The Group’s credit risk is primarily attributable to its trade and other receivables and cash and bank balances. Credit risks are managed by the application of credit approvals limits and monitoring procedures. Credit risks are minimised and monitored via strictly limiting the Group’s associations to business partners with high creditworthiness. Trade receivables are monitored on an ongoing basis via the Group’s management reporting procedures. For other financial assets including cash and bank balances, the Group minimises credit risk by dealing exclusively with high credit rating counterparties. The Group performs ongoing credit evaluation of its customers and generally does not require collateral on account receivables. At reporting date, there were no significant concentrations of credit risk other than as follows:

Group Company2017

RM’0002016

RM’0002017

RM’0002016

RM’000Amount due from a customer 5,183 - - -Amount due from a subsidiary - - - 29,160Bank balance with a financial institution - 5,197 - 5,197

Management believes that the sound financial standing of the customer and the financial institution substantially mitigates the Group’s exposure to credit risk. An impairment of RM54,200,000 (2016: RM24,105,000) has been made on the amount due from the subsidiary.

The amount receivable from customers in United States of America represented approximately 92% (2016: 84%) of the total trade receivables of the Group.

The Company provides unsecured financial guarantees to licensed banks in respect of banking facilities granted to subsidiaries and to a supplier for the granting of trade credit to a subsidiary. The Company monitors on an ongoing basis the results of the subsidiaries and repayments made by the subsidiaries. The maximum exposure to credit risk amounts to RM4,990,000 (2016: RM5,426,000) representing the total outstanding trade payable and banking facilities of the subsidiaries as at reporting date.

Liquidity risk management

The Group maintains sufficient cash and bank balances, and internally generated cash flows to finance their activities. The Group finances its operations by a combination of equity and bank borrowings.

The following tables detail the remaining contractual maturity for non-derivative financial liabilities. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Group and the Company can be required to pay.

Contractual cash flows (including interest payments)

GroupCarrying amountRM’000

TotalRM’000

On demand or within 1 year

RM’000

Within 1 to 2 yearsRM’000


More than 5 yearsRM’000

2017Non interest bearing

debts 26,581 26,581 26,581 - - -Interest bearing debts 4,047 4,452 4,452 - - -Hire purchase and

finance lease liabilities (fixed rate) 255 290 63 55 163 9

Loans and borrowings- floating rate 5,835 8,913 578 598 1,974 5,763- fixed rate 13,060 14,287 7,673 6,614 - -

49,778 54,523 39,347 7,267 2,137 5,772





Liquidity risk management (cont’d)


GroupCarrying amountRM’000

TotalRM’000


RM’000





debts 25,687 25,687 25,687 - - -Hire purchase and


Loans and borrowings- floating rate 4,402 6,384 383 382 1,146 4,473- fixed rate 21,952 25,034 9,199 8,504 7,331 -

52,351 57,466 35,340 8,949 8,641 4,536


CompanyCarrying amountRM’000

TotalRM’000


RM’000





debts 46,514 46,514 46,514 - - -Interest bearing debts 4,047 4,452 4,452 - - -Hire purchase and


Loans (floating rate) 1,600 2,529 195 216 828 1,29052,409 53,777 51,216 271 991 1,299


debts 48,819 48,819 48,819 - - -Hire purchase and


49,107 49,155 48,874 54 164 63

34. Capital structure and equity and capital risk management

The Group manages its capital to ensure that entities in the Group will be able to continue as going concerns while providing an adequate return to stakeholders through the optimisation of these debt and equity balance.

The Group sets the amount of capital in proportion to risk. The Group manages the capital structure and makes adjustments to it in the light of changes in economic conditions and the risk characteristics of the underlying assets. In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares, or sell assets to reduce debt.

The Group monitors capital on the basis of the debt-to-adjusted capital ratio. This ratio is calculated as net debt divided by adjusted capital. Net debt is calculated as total debt (as shown in the statements of financial position) less cash and cash equivalents. Adjusted capital comprises all components of equity and reserves that are managed as capital.



34. Capital structure and equity and capital risk management (cont’d)

During the reporting period ended 31 December 2017, the Group’s and the Company’s strategy were unchanged from 31 December 2016 which is to maintain the debt-to-adjusted capital ratio at a level deemed appropriate considering business, economic and investment conditions in order to secure access to finance at a reasonable cost. The debt-to-adjusted capital ratios at 31 December 2017 and 31 December 2016 were as follows:

Group Company2017

RM’0002016

RM’0002017

RM’0002016

RM’000Total debts 19,150 26,664 1,848 288Less: cash and cash equivalents (3,988) (7,823) (770) (5,344)

Net debts 15,162 18,841 1,078 (5,056)

Total equity 21,671 42,897 27,063 66,021

Debt-to-adjusted capital ratio 70.0% 43.9% 4.0% -

35. Reconciliation of liabilities arising from financing activities

1.1.2017RM’000

Cash flowsRM’000

Non-cash changes in foreign

exchange movement

RM’00031.12.2017

RM’000GroupHire purchase and finance lease liabilities

- current 55 (5) - 50- non current 255 (50) - 205

Term loans- current 7,654 9 (731) 6,932- non current 18,700 (5,771) (966) 11,963

26,664 (5,817) (1,697) 19,150CompanyAmount due to subsidiaries

- current 38,860 (174) - 38,686Hire purchase and finance lease liabilities

- current 40 3 - 43- non current 248 (43) - 205

Term loans- non current - 1,600 - 1,600

39,148 1,386 - 40,534



36. Management assessment on going concern

The Group and the Company incurred a total comprehensive loss of RM21.2 million and RM39.0 million respectively during the year ended 31 December 2017. The total equity of the Group and the Company has decreased respectively from RM42.9 million and RM66.0 million as at 31 December 2016 to RM21.7 million and RM27.1 million as at 31 December 2017.

At 31 December 2017, the Group also has contractual debt payment obligations to its financial institution lenders and promissory notes holder of RM6.9 million and RM4.0 million respectively that are due within next 12 months.

The financial statements have been prepared on a going concern basis. In making the assessment that the Group and the Company is a going concern, the directors have considered the Group’s cash flow requirements and the available resources to support the assertion that the Group will have sufficient funds to continue for a period of at least 12 months from the reporting date.

The available resources considered include, amongst others, the following:

(i) The cash flows from the business of a core subsidiary, PT Ho Wah Genting, that has been generating positive operating cash flows for the past 2 reporting periods;

(ii) a new debt facility amounting to USD6 million that has been offered by a foreign licensed financial institution to the Group subsequent to the reporting date; and

(iii) the proceeds of RM13.5 million raised from the private placement of shares in the Company as disclosed in Note 37.

37. Events subsequent to the reporting date

On 14 November 2017, the Company announced the following multi proposals:

(i) Share consolidation involving the consolidation of every 4 existing ordinary shares into 1 ordinary share; (ii) Diversification into travel retail business pursuant to the shareholder agreement of Dufry HWG Shopping

Sdn Bhd dated 25 September 2017 entered into between the Company and Dufry International AG (a company incorporated in Switzerland and listed in Switzerland and Brazil); and

(iii) Private placement of up to 77,597,200 new consolidated shares representing up to 30% of the issued shares in the Company after the proposed share consolidation.

On 14 February 2018, the Company announced that the above multi proposals were duly approved by the shareholders at the Extraordinary General Meeting.

On 27 March 2018, the Company announced that the share consolidation had been completed following the listing and quotation of the Consolidated Share and Consolidated Warrants on the Main Market of Bursa Malaysia Securities Berhad.

On 29 March 2018, the Company announced that the private placement is completed following the listing and quotation for 74,910,400 placement shares on the Main Market of Bursa Malaysia Securities Berhad.


Issued and fully Paid-up Capital : RM63,427,959.50Number of Shares Issued : 324,611,840Number of Shareholders : 12,764Class of Shares : Ordinary sharesVoting Rights : One vote per ordinary share

A. DISTRIBUTION OF SHAREHOLDINGS

Range of Holdings No. of Holders % of Holders No. of Shares % of SharesLess than 100 641 5.02 31,886 0.01100 to 1,000 3,370 26.40 1,560,238 0.481,001 to 10,000 5,451 42.71 22,000,405 6.7810,001 to 100,000 2,943 23.06 93,636,759 28.85100,001 to less than 5% of issued shares 357 2.80 144,505,852 44.525% and above of issued shares 2 0.02 62,876,700 19.37

TOTAL 12,764 100 324,611,840 100

B. DIRECTORS’ INTERESTS AS PER REGISTER OF DIRECTORS’ SHAREHOLDINGS

Direct IndirectName No. of Shares % No. of Shares %Datuk Teo Tiew 56,325 0.02 - -Dato’ Lim Ooi Hong - - 62,876,700A 19.37Mr. Lim Wee Kiat - - 62,876,700A 19.37Dato’ Mohd Shahar Bin Abdul Hamid - - - -Mr. Tee Lay Peng - - - -Mr. Wong Tuck Jeong - - - -Ms. Elaine Tan Ai Lin - - - -

Note:

A Deemed interested through Ho Wah Genting Holding Sdn Bhd by virtue of Section 8(4) of the Act.

C. SUBSTANTIAL SHAREHOLDERS AS PER REGISTER OF SUBSTANTIAL SHAREHOLDERS

Shares Warrant DB

Direct Indirect Direct Indirect

Name No. of Shares % No. of Shares %No. of

Warrant %No. of

Warrant %Ho Wah Genting

Holding Sdn Bhd62,876,700 19.37 - - 2,500,000 4.08 - -

Dato’ Lim Ooi Hong - - 62,876,700A 19.37 - - 2,500,000A 4.08Mr. Lim Wee Kiat - - 62,876,700A 19.37 - - 2,500,000A 4.08

Note:


B The percentage ratio is computed based on total Warrant D in issued of 61,233,883.

Analysis of ShareholdingsAs At 30 March 2018


D. TOP THIRTY SECURITIES ACCOUNT HOLDERS

No. Shareholders No. of Shares %1. Kenanga Capital Sdn Bhd

Pledged Securities Account For Ho Wah Genting Holding Sdn Bhd 37,455,200 11.54

2. M & A Nominee (Tempatan) Sdn BhdPledged Securities Account For Ho Wah Genting Holding Sdn Bhd (M&A)

25,421,500 7.83

3. Tan Siew Ching 12,200,000 3.764. Chin Sin Oon 11,200,000 3.455. Diana Teo May Ling 5,500,000 1.696. Ong Say Kiat 5,500,000 1.69

7. RHB Capital Nominees (Tempatan) Sdn BhdPledged Securities Account For Tan Chee Chuan

3,339,225 1.03

8. Kenanga Nominees (Tempatan) Sdn BhdPledged Securities Account For Ng Meow Giak

3,055,200 0.94

9. Public Nominees (Tempatan) Sdn BhdPledged Securities Account For Yong Hoon Lim (E-KPG)

2,500,000 0.77

10. Seng Siaw Wei 2,000,000 0.6211. Choo Kwang Wah 1,830,000 0.5612. AMSEC Nominees (Tempatan) Sdn Bhd

Pledged Securities Account For Jega Devan a/l M Nadchatiram1,775,000 0.55

13. RHB Capital Nominees (Tempatan) Sdn BhdPledged Securities Account For Kho Eng Hue @ Koh Eng Hooi (CEB)

1,750,000 0.54

14. Ong Yew Beng 1,626,300 0.5015. Yong Kar Keong 1,516,225 0.4716. AllianceGroup Nominees (Tempatan) Sdn Bhd

Pledged Securities Account For Siew Boon Yeong1,502,350 0.46

17. HLIB Nominees (Tempatan) Sdn BhdPledged Securities Account For Siew Boon Yeong

1,429,600 0.44

18. Lai Choy Long 1,250,000 0.3919. Maybank Nominees (Tempatan) Sdn Bhd

Pledged Securities Account For Koay Boon Hooi1,250,000 0.39

20. Ong Chiew Kee 1,250,000 0.3921. Richard Mah Foo Kheong 1,250,000 0.3922. Tan Kher Ann 1,225,000 0.3823. CIMSEC Nominees (Asing) Sdn Bhd

Exempt An For CIMB Securities (Singapore) Pte Ltd (Retail Clients)1,110,161 0.34

24. Gan Lay Har 1,000,000 0.3125. Lau Siau Min 1,000,000 0.3126. Paruvathy a/p Pariesamy 1,000,000 0.3127. DB (Malaysia) Nominee (Asing) Sdn Bhd

Exempt An For Bank of Singapore Limited 937,500 0.29

28. RHB Nominees (Tempatan) Sdn BhdPledged Securities Account For Mohd Shafei Bin Abdullah

912,500 0.28

29. Tai Woon Chin 912,500 0.2830. CIMSEC Nominees (Tempatan) Sdn Bhd

CIMB Bank For Ng Chai Hock (MY0972)800,025 0.25

TOTAL 133,498,286 41.13

Analysis of Shareholdings (cont’d)As At 30 March 2018


WARRANT D

Number of Warrants Issued : 61,233,883Expiry Date : 15 March 2021

A. DISTRIBUTION OF WARRANT D HOLDINGS

Range of Holdings No. of Holders % of HoldersNo. of

Warrants % of WarrantsLess than 100 36 2.12 1,422 0.00100 to 1,000 220 12.96 144,554 0.241,001 to 10,000 739 43.52 3,332,732 5.4410,001 to 100,000 587 34.57 20,657,260 33.74100,001 to less than 5% of issued warrants 115 6.77 31,710,415 51.795% and above of issued warrants 1 0.06 5,387,500 8.80

TOTAL 1,698 100 61,233,883 100

B. DIRECTORS’ INTERESTS AS PER REGISTER OF DIRECTORS’ SHAREHOLDINGS

Direct Indirect

NameNo. of

Warrants %No. of

Warrants %Datuk Teo Tiew 25,000 0.04 - -Dato’ Lim Ooi Hong - - 2,500,000A 4.08Mr. Lim Wee Kiat - - 2,500,000A 4.08

Note:


C. TOP THIRTY WARRANT D HOLDERS

No. Warrant Holders No. of Warrants %1. Choo Kwang Wah 5,387,500 8.802. M&A Nominee (Tempatan) Sdn Bhd

Pledged Securities Account For Ho Wah Genting Holding Sdn Bhd (M&A)

2,500,000 4.08

3. RHB Capital Nominees (Tempatan) Sdn BhdPledged Securities Account For Tan Chee Chuan

2,067,800 3.38

4. Maybank Nominees (Tempatan) Sdn BhdHamradhi Bin AB Karim

1,250,000 2.04

5. Chan Teik Leong 1,050,000 1.716. Wong Weng Onn 800,000 1.317. RHB Capital Nominees (Tempatan) Sdn Bhd

Pledged Securities Account For Kho Eng Hue @ Koh Eng Hooi (CEB)700,000 1.14

8. AllianceGroup Nominees (Tempatan) Sdn BhdPledged Securities Account For Siew Boon Yeong

650,940 1.06

9. Yap Chee Kuan 575,900 0.9410. HLIB Nominees (Tempatan) Sdn Bhd

Pledged Securities Account For Siew Boon Yeong571,840 0.93

11. Chan Seang Guan 521,600 0.8512. Ang Eik Yeong 500,000 0.82

Analysis of WarrantholdingsAs At 30 March 2018


C. TOP THIRTY WARRANT D HOLDERS (CONT’D)

No. Warrant Holders No. of Warrants %13. Four Sisters Sdn Bhd 500,000 0.8214. Saw Chew Yuen 500,000 0.8215. Fong Kong Meng 492,500 0.8216. Ong Chin Kim 477,550 0.7817. Ang Soh Mui 425,050 0.6918. Khaw Tatt Siew 425,000 0.6919. Lye Ming ZH 425,000 0.6920. JF Apex Nominees (Tempatan) Sdn Bhd

Pledged Securities Account For Su Chuang Tze (STA 2)395,000 0.65

21. Chia Siew Kiow 375,000 0.6122. Lee Ai Lin 375,000 0.6123. Ho Chew Moy 325,000 0.5324. Tan Sin Yen 300,000 0.4925. Teo Chuo Peng 300,000 0.4926. Lye Ming ZH 275,000 0.4527. Aw Wee Pick 262,500 0.4328. Tan Leok Kwee 256,000 0.4229. Choo Poh Tit 250,000 0.4130. Chu Eng Lai 250,000 0.41

TOTAL 23,184,180 37.86

Analysis of Warrantholdings (cont’d)As At 30 March 2018


List Of PropertiesAs At 31 December 2017

Location/Description Existing use

Approximateage of

building(year)

Land area(sq. ft.) Tenure

Date of Acquisition (“A”)/Revaluation (“R”)

Net BookValue

(RM’000)

HO WAH GENTING BERHAD

Lot 1066, Seksyen 69Kuala LumpurWilayah Persekutuan[No. 35, Jalan Maharajalela50150 Kuala Lumpur]

4 ½ storey shop cum office

Commercial premises

33 1,324 Freehold 22.12.2016(R)

3,294

Lot 1067 and 1068,Seksyen 69Kuala LumpurWilayah Persekutuan[No. 37 & 39,Jalan Maharajalela50150 Kuala Lumpur]

Two adjoining 4 ½ storeyintermediate and cornershop cum office

Commercialpremises

33 3,045 Freehold 22.12.2016(R)

7,812

Lot 2.72, 2nd FloorWisma Punca EmasJalan Yam Tuan, SerembanNegeri SembilanDarul Khusus

A shoplot in shoppingcomplex

Commercialpremises

35 140 Freehold 23.03.1994(A)

25

PT. HO WAH GENTING, INDONESIAKawasan Bintang Industri IINo. 29, 29A & 30Jalan Brigadir JenderalKatamsoTanjung Uncang/SagulungSekupang BatamRiau, Indonesia

Comprising Plant I withannexed double storeyoffice

Industrialcum officepremises

19 159,564 Leaseholdexpiring in

2034

28.12.2016(R)

2,071


List Of Properties (cont’d)As At 31 December 2017

Location/Description Existing use

Approximateage of

building(year)

Land area(sq. ft.) Tenure

Date of Acquisition (“A”)/Revaluation (“R”)

Net BookValue

(RM’000)

PT. HO WAH GENTING, INDONESIA (cont’d) Kawasan Bintang Industri IILot No. 27 & 28Jalan Brigadir JenderalKatamsoTanjung Uncang/SagulungSekupang BatamRiau, Indonesia

Comprising the followingbuildings:• Plant II• Plant III• Staff quarters and a

canteen

Industrialpremises

1614

16

273,715 Leaseholdexpiring in

2031

28.12.2016(R)

2,595

Kawasan Bintang Industri IILot C No. 27 & 28Jalan Brigadir JenderalKatamsoTanjung Uncang/SagulungSekupang BatamRiau, Indonesia

Comprising Plant IV and awarehouse

Industrialpremises

14 157,326 Leaseholdexpiring in

2035

28.12.2016(R)

5,135

Blok A2, No. 11, KomplekPerumahan PlutoTanjung Uncang, SekupangBatam, Riau, Indonesia

Residentialpremises

14 775 Leaseholdexpiring in

2031

04.03.2014(R)

6

*I/We ………………………………….….… (name of shareholder), *NRIC No./Company No. …..……..............…....…..……..........of ..…………………………………………….………………………..................................................................................... (full address), being a *member/members of HO WAH GENTING BERHAD, do hereby appoint …….………………….……......... (name of proxy), NRIC No. ..……..............…....…..……............... of .................................................……………………………..........……………….…….…………………...........................................(full address), or failing him/her …………………......………………...… (name of proxy), NRIC No. ……….................……………………………..... of .................................................……………………………..........……………….………………………...........................................................(full address), or failing *him/her, the *Chairman of the meeting as *my/our proxy to vote and act for *me/us on *my/our behalf, at the Twenty Fifth Annual General Meeting of the Company to be held at Mandarin A, Level 6, Mandarin Court Hotel Kuala Lumpur, No. 55, Jalan Maharajalela, 50150 Kuala Lumpur on Wednesday, 30 May 2018 at 9:30 a.m. and at any adjournment thereof.

The proportion of *my/our holding to be represented by *my / our proxies are as follows:[The next paragraph must be completed if two proxies are appointed]

First Proxy : %Second Proxy : %Total 100%

* My/Our proxy is to vote as indicated below:

Resolution No. Ordinary Business For (#) Against (#)1. Payment of Directors’ fees and benefits payable for financial year ended 31

December 2017.2. Payment of Non-Executive Directors’ fees and meeting allowance for

financial year ending 31 December 2018.3. Re-election of Mr. Wong Tuck Jeong.4. Re-election of Mr. Tee Lay Peng.5. Re-election of Mr. Lim Wee Kiat.6. Re-appointment of Messrs Russell Bedford LC & Company as Auditors and to

authorize the Board of Directors to fix their remuneration.Special Business

7. Authority to issue shares pursuant to Section 76 of the Companies Act, 2016.8. Retention of Mr. Wong Tuck Jeong as Independent Non-Executive Director.9. Retention of Mr. Tee Lay Peng as Independent Non-Executive Director.10. Retention of Dato’ Mohd Shahar Bin Abdul Hamid as Independent Non-

Executive Director.11. Proposed Renewal of and New Shareholders’ Mandate for The Recurrent

Related Party Transactions of a Revenue or Trading Nature.

(#) Please indicate with an “X” in the appropriate space above how you wish your vote to be cast. Unless otherwise instructed, the proxy will vote or abstain from voting as he thinks fit.

Dated this day of , 2018

Signature / Common Seal of Shareholder* Please delete where not applicableNOTES:1. Members Entitled To Attend:

Only members whose names appear in the Record of Depositors as at 23 May 2018 shall be entitled to attend the meeting.2. Voting By Poll:

Pursuant to Paragraph 8.29A(1) of the Main Market Listing Requirements of Bursa Malaysia Securities Bhd, all the resolutions set out in this Notice shall be put to vote by poll.

3. A member entitled to attend and vote at the meeting is entitled to appoint not more than two (2) proxies to attend and vote in his stead. A proxy appointed to attend and vote shall have the same rights as the member to speak at the meeting.

4. Where a member of the Company is an authorized nominee as defined under the Securities Industry (Central Depositories) Act 1991, it may appoint not more than two (2) proxies in respect of each securities account it holds.

5. Where a member of the Company is an exempt authorized nominee which holds ordinary shares in the Company for multiple beneficial owners in one securities account (“Omnibus Account”), there is no limit to the number of proxies which the exempt authorized nominee may appoint in respect of each Omnibus Accounts it holds.

6. Where a member or the authorized nominee appoints two (2) proxies, or where an exempt authorized nominee appoints two (2) or more proxies, the appointment shall be invalid unless the member / authorized nominee / exempt authorized nominee specifies the proportions of shareholdings to be represented by each proxy.

7. The instrument appointing a proxy must be deposited at the registered office of the Company not less than twenty four (24) hours before the time appointed for the meeting.

8. In the case of a corporate member, the instrument appointing a proxy must be executed under its Common Seal or under the hand of its attorney.

9. If the Proxy Form is returned without any indication as to how the proxy shall vote, the proxy will vote or abstain as he thinks fit.

Proxy Form

HO WAH GENTING BERHAD(Company No. 272923-H)Incorporated in Malaysia

No. of Shares Held CDS Account Number- -

Then fold here

First fold here

The Company SecretaryHO WAH GENTING BERHAD (272923-H)

Wisma Ho Wah GentingNo. 35, Jalan Maharajalela

50150 Kuala Lumpur

STAMP

Fold this flap for sealing

HO

WA

H G

EN

TIN

G B

ER

HA

D 272923-H

AN

NU

AL R

EP

OR

T 2017

Wisma Ho Wah Genting, No. 35, Jalan Maharajalela, 50150 Kuala Lumpur

T 603 2143 8811 F 603 2141 7477

HO WAH GENTING BERHAD · Ho Wah Genting Berhad (272923-H) annual report 2017 1 NOTICE IS HEREBY...

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Transcript of HO WAH GENTING BERHAD · Ho Wah Genting Berhad (272923-H) annual report 2017 1 NOTICE IS HEREBY...