Pantech Group – Pantech Group - ANNUAL REPORT 2017...2010 and Deputy Chief Executive Officer, KPF...

A N N U A L R E P O R T 2 0 1 7

CONTENTSFinancial Highlights

Corporate Information

Group Structure

Directors’ Profile

Key Senior Management Profile

ExecutiveChairman’s Statement

Management Discussion and Analysis

Corporate Social Responsibility

Corporate Events

Audit Committee Report

Statement on Risk Management and Internal Control

01

02

03

04

06

07

09

12

14

15

18

CorporateGovernance Statement

AdditionalCompliance Statement

Financial Statements

List of Properties

Notice of EleventhAnnual General Meeting

Appendix I

Analysisof Shareholdings

Analysisof Warrant Holdings

Proxy Form

21

33

34

141

142

146

150

153

Annual Report 2017 1

FINANCIAL HIGHLIGHTS

377,0

19

426,

229

467,4

05

509,

297

524,

401

56,0

63

54,6

37

43,15

2

575,

610

525,

772

513,

293

479,

349

9.33

8.17

6.09

5.19

4.03

Ringgit Malaysia (RM'000)

Revenue

EBITDA

Profit Before Tax

Profit After Tax

Profit Attributable to Shareholders

Paid-Up Capital

Shareholders' Equity

Total Assets

Total Net Tangible Assets

Total Borrowings

Basic Earnings Per Share (sen)

Diluted Earnings Per Share (sen)

Total Net Dividend Declared

Net Dividend Per Share (sen)

Net Tangible Assets Per Share (RM)

GROUP FIVE-YEAR SUMMARY

13 14 15 16 17

REVENUERM’000

EARNING PER SHARESEN

PROFIT AFTER TAXATIONRM’000

SHAREHOLDERS’ EQUITYRM’000

Total net dividend declared for FY2017 is

RM12.07 million,representing

42.5% of our PAT

NTA stands at

RM523.19 milliontranslating to a

NTA/share of RM0.71

FYE

28 Feb 2013

635,663

102,115

80,255

56,063

56,066

102,201

377,019

699,222

375,813

256,455

9.33

7.60

23,795

4.60

0.74

FYE

28 Feb 2014

575,610

96,272

75,227

54,637

54,638

113,909

426,229

690,465

425,023

195,915

8.17

7.14

24,916

4.40

0.75

FYE

28 Feb 2015

525,772

81,352

58,702

43,152

43,152

120,597

467,405

747,369

466,041

215,000

6.09

5.73

22,546

3.76

0.77

FYE

29 Feb 2016

513,293

75,240

53,076

37,945

37,973

123,294

509,297

720,307

508,015

159,665

5.19

5.19

16,528

2.70

0.82

FYE

28 Feb 2017

479,349

59,409

39,096

28,409

29,718

203,929

524,401

791,318

523,188

163,889

4.03

3.79

12,069

1.80

0.71

13 14 15 16 17

13 14 15 16 17

13 14 15 16 17

37,9

45

28,4

09

635,

663

2 Pantech Group Holdings Berhad (733607-W)

AUDIT COMMITTEE

ChairmanMr. Tan Sui Hin

MembersMr. Loh Wei TakTuan Haji Yusoff Bin Mohamed

REMUNERATION COMMITTEE

ChairmanTuan Haji Yusoff Bin Mohamed

MembersDato’ Chew Ting LengMr. Tan Sui Hin

NOMINATION COMMITTEE

ChairmanMr. Loh Wei Tak

Members Mr. Tan Sui HinTuan Haji Yusoff Bin Mohamed

COMPANY SECRETARIES

Ms. Lim Seck Wah(MAICSA No.: 0799845)Ms. Liang Siew Ching(MAICSA No.: 7000168)

REGISTERED OFFICE

Level 15-2,Bangunan Faber Imperial CourtJalan Sultan Ismail 50250 Kuala LumpurTel : 03-2692 4271Fax : 03-2732 5388

SHARE REGISTRAR

Mega Corporate Services Sdn. Bhd. (Company No.: 187984-H)Level 15-2,Bangunan Faber Imperial CourtJalan Sultan Ismail 50250 Kuala LumpurTel No. : 03-2692 4271Fax No. : 03-2732 5388

Dato’ Chew Ting LengExecutive Chairman / Group Managing Director

Dato’ Goh Teoh KeanGroup Deputy Managing Director

Mr. Tan Ang AngExecutive Director

Mr. To Tai WaiExecutive Director

Ms. Ng Lee LeeExecutive Director

Mr. Tan Sui HinSenior Independent Non-Executive Director

Mr. Loh Wei TakIndependent Non-Executive Director

Tuan Haji Yusoff Bin MohamedIndependent Non-Executive Director

Puan Sakinah Binti SallehNon-Independent Non-Executive Director(Appointed on 21/07/2016)

PRINCIPAL BANKERS

Alliance Bank Malaysia BerhadAlliance Islamic Bank BerhadAmBank (M) BerhadAmIslamic Bank BerhadCIMB Bank BerhadCIMB Islamic Bank BerhadCitibank BerhadHong Leong Bank BerhadHong Leong Islamic Bank BerhadHSBC Amanah Malaysia BerhadHSBC Bank Malaysia BerhadHSBC Bank PlcOCBC Bank (Malaysia) BerhadThe Bank of Nova Scotia BerhadUnited Overseas Bank LimitedUnited Overseas Bank (Malaysia) Berhad

SOLICITORS

Ng Kee Chong & Co.

AUDITORS

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

STOCK EXCHANGE LISTING

Main Market Bursa Malaysia Securities Berhad

STOCK CODE: 5125

BOARD OF DIRECTORS

CORPORATE INFORMATION

Annual Report 2017AnnAnnualua ReReport 2017

PANTECH STEEL INDUSTRIES SDN. BHD.

PANTECH STAINLESS & ALLOY INDUSTRIES SDN. BHD.

PANAFLO CONTROLS PTE. LTD.

NAUTIC STEELS SDN. BHD.

PANTECH INTERNATIONAL (KSA) SDN. BHD.

NAUTIC STEELS (HOLDINGS) LIMITED

Nautic Steels Limited

PANTECH CORPORATION SDN. BHD.100%

Pantech (Kuantan) Sdn. Bhd.

Tuah Nusa Sdn. Bhd.

100%

100%

100%

100%

100%

100%

PANTECH GALVANISING SDN. BHD.51%

100%

40%

Pantech Realty Sdn. Bhd.

100%

100%

3

GROUP STRUCTURE


DATO’ CHEW TING LENGExecutive Chairman/Group Managing Director (Aged 62, Male, Malaysian)

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

He is a member in the Remuneration Committee.

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

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

DATO’ GOH TEOH KEANGroup Deputy Managing Director (Aged 61, Male, Malaysian)

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

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

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


TAN ANG ANGExecutive Director (Aged 61, Male, Malaysian)

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



TO TAI WAIExecutive Director (Aged 46, Male, Malaysian)

Mr. David To was appointed as the Executive Director on 11 November 2006. He started his career in Pantech Corporation Sdn. Bhd. since 1989 and has more than 20 years of experience in the PVF solution industries. He is primarily responsible for the domestic, international and project sales activities of the Group’s trading division and trading operation in Malaysia.

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


NG LEE LEEExecutive Director (Aged 50, Female, Malaysian)

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

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

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

TAN SUI HINSenior Independent Non-Executive Director (Aged 67, Male, Malaysian)

Mr. Tan Sui Hin was appointed as an Independent Non-Executive Director on 30 November 2006. He graduated with a Diploma in Mechanical Engineering from Ungku Omar Polytechnic in 1971. He has more than 35 years of experience in the manufacturing and building engineering field.

He was appointed as the Senior Independent Director effective from 19 June 2014.

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



DIRECTORS’ PROFILE

5Annual Report 2017

LOH WEI TAKIndependent Non-Executive Director (Aged 44, Male, Malaysian)

Mr. Loh Wei Tak was appointed as an Independent Non-Executive Director on 30 November 2006. He is a qualified accountant and a member of the Malaysian Institute of Accountants. He completed his Bachelor of Business Degree (Majoring in Accounting) from Monash University, Melbourne, Australia in 1994 and was admitted to Certified Practicing Accountant from Australia in 1998. In 2000, he was admitted as a Chartered Accountant to the Malaysian Institute of Accountants.

He is the Chairman of the Nomination Committee and a member of the Audit Committee.



TUAN HAJI YUSOFF BIN MOHAMEDIndependent Non-Executive Director (Aged 66, Male, Malaysian)

Tuan Haji Yusoff Bin Mohamed was appointed as an Independent Non-Executive Director on 10 August 2007. He graduated from University Kebangsaan Malaysia with a Bachelor Degree in Economics (Hons).

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



DIRECTORS’ PROFILEcont’d

SAKINAH BINTI SALLEHNon-Independent Non-Executive Director (Aged 48, Female, Malaysian)

Pn. Sakinah Binti Salleh was appointed as Non-Independent Non-Executive Director on 21 July 2016. She graduated from Mara University of Technology (UITM) with Bachelor (Hons) in Accountancy. She is a Chartered Accountant and a member of Malaysian Institute of Accountants (MIA) since 2002.

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

She was Acting Chief Executive Officer in January 2014. She was promoted to Chief Executive Officer & Group Senior Executive Director since November 2014 until to-date. She does not hold any directorships in any other public listed companies.

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

OTHER INFORMATION:-Directors’ Shareholdings

Details of Directors’ Shareholdings in the Company are as disclosed on page 37 of the Annual Report 2017.

Family relationship with Directors and/or Major Shareholders

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

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

Conflict of Interest

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

Attendance at Board Meetings

The attendance of the Directors is disclosed in the Corporate Governance Statement on page 28 of the Annual Report 2017.


1. DATO’ CHEW TING LENG Male, Executive Chairman / Group Managing Director (Aged 62, Malaysian)

Please refer to his Director’s Profile appearing in Page 4 of the Annual Report 2017.

2. DATO’ GOH TEOH KEAN Male, Group Deputy Managing Director (Aged 61, Malaysian)


3. TAN ANG ANG Male, Executive Director (Aged 61, Malaysian)


4. TO TAI WAI Male, Executive Director (Aged 46, Malaysian)


5. NG LEE LEE Female, Executive Director (Aged 50, Malaysian)

Please refer to her Director’s Profile appearing in Page 4 of the Annual Report 2017.

6. WANG WOON CHIN Male, Chief Financial Officer (Aged 42, Malaysian)

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

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


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

KEY SENIOR MANAGEMENT PROFILE

EXECUTIVE

Dear Shareholders,

2017 marks an important milestone in Pantech Group Holdings Berhad’s history. It is the 30th year that we have been in operations, of which 10 years are as a public listed company. We have experienced growth and shared the fortunes of the oil and gas industry, in particular in the last decade.

Dear ShaDea

2017 maGroup Ho

Annual Report 2017

listed company. We have years are as a public listared the fortunes of the experienced growth and shared

cular in the last oil and gas industry, in particuladededecade.

7


The oil and gas industry witnessed persistent uncertainty in the past year. This condition has been an overcast from the prior year and the market sentiments were generally subdued with weak demand and suppressed prices.

The situation tested the resilience of companies, including Pantech Group, and our management at all levels in our ability rose to the challenge of navigating through the trying times. Sound strategy was required to formulate plans for the best possible course of action and put to the test. The sector has begun to recover, albeit slowly, towards the tail end of 2016 heading into 2017.

With the continued transformative period in the oil and gas sector, I am proud to be able to announce yet another profitable performance for Pantech, for the financial year ended 28 February 2017.

Pantech Group managed to accrue a revenue of RM479.35 million and profit before tax (PBT) of RM39.10 million for the financial year ended 28 February 2017. This is a respectable performance in light of such a transitional period.

This profitable result was achieved through the diligence of the team in pursuing leads and tenacity in following up closely on sales in various projects, including the RAPID project in Pengerang. The years of fostering good business relationships with parties involved in RAPID projects, along with Pantech’s reputable track record was the cornerstone for the achievement.

Year-on-year, FYE 2017 group performance was comparatively lower by 6.61% and 26.34% respectively for revenue and PBT, with margins being corroded by suppressed pricing and increased competitiveness.

Businesses in both Trading and Manufacturing divisions saw a slowdown with a decrease in revenue of 2.44% in Trading and 13.40% in Manufacturing.

Regardless of fluctuating sentiments, Pantech Group managed to maintain product presence in 67 countries with Malaysia continuing to be the focus market for the period under review. Our established foothold and understanding of the Malaysian market coupled with our positive track record built over the years as a reliable supplier of pipes, valves and fittings (PVF) has enabled Pantech Group to have a continued presence in tenders.

The group’s cash flow and balance sheet improved due to stringent financial management. The Group has a greater cash reserve of RM91.59 million as compared to the previous financial year standing of RM76.95 million, along with increased inventory with over 30,000 stock keeping units (SKU) valued at RM262.43 million in line with our One Stop Centre value proposition.

Our acumen has enabled Pantech Group to proceed as planned to establish a new hot-dip galvanising facility. It commenced operations in December 2016 and is the largest of such facilities in the Southern part of Peninsular Malaysia. The process of hot-dip galvanising creates a new product line which passes on cost savings advantages in corrosion

protection. The Group holds 51% in the subsidiary company, Pantech Galvanising Sdn. Bhd., with the remainder being held by minority shareholders with established commercial presence in Johor.

Our approach to evaluating and proceeding with any venture is to err on the side of caution and will remain to be so in the face of an uncertain market and currency fluctuations.

We continue to maintain a firm grasp on the financials of the group and seek to extract optimum returns from all our assets. Even as we brace ourselves for the upcoming year, our financial prudence has put us in the position to reward loyal shareholders once more. Upon approval by shareholders at the 11th Annual General Meeting, the total dividend payout will amount to approximately RM12.07 million, or 42.5% of our profit after tax.

CORPORATE GOVERNANCE

Competing in the current global economic climate is increasingly challenging, compounded by sluggish market conditions and fragile developments in the oil and gas sector. Under such strenuous environment, it is critical that we guard against practices that can damage the reputation and goodwill of the group. Pantech Group remains vigilant in conducting business ethically with integrity while balancing the interests of its shareholders. The trustworthiness earned throughout the years is an invaluable asset which we protect and guard fiercely.

Our corporate governance statement and reports are on pages 21 to 32.

ACKNOWLEDGEMENT

The belief of shareholders, foresight of the directors and management, the hard work of the team and most of all, the confidence in us by customers have been vital throughout our last 30 years in operations and will remain so in the next 30 years and more.

Allow me to express my sincere gratitude on behalf of everyone at Pantech Group to all stakeholders who have placed their continued faith in us.

I would also like to record a special note of heartfelt appreciation to our retiring independent non-executive directors, Mr. Tan Sui Hin, Tuan Haji Yusof bin Mohamed and Mr. Loh Wei Tak who have served on the Board of Pantech Group for the last 10 years. Their perusal, guidance and advice on best practices have been paramount to keeping Pantech Group on course.

The last financial year was a period of working harder and smarter, a route which we will continue to walk as we prepare for an exciting year ahead.

Dato’ Chew Ting Leng (Jimmy)Executive Chairman

EXECUTIVE CHAIRMAN'S STATEMENTcont’d

9Annual Report 2017

Throughout the financial year (FY) under review of 1 March 2016 to 28 February 2017, oil prices fluctuated under a pessimistic environment. The challenging market outlook saw a slight recovery, albeit sluggish, towards the tail-end of the financial period. This in turn translated into challenges for Pantech Group Holdings Berhad and the group rose to the challenge to close the year on a profitable note.

BUSINESS AND OPERATIONS

Over the last 30 years, Pantech Group has refined its focus to be a specialist in the business of manufacturing and trading of pipes, valves and fittings (PVF) and other components for the oil and gas industry, complemented by consultancy for fluid transmission solutions.

Our operations are not acutely subjected to seasonal or cyclical factors but are dependent on the availability of oil and gas projects. Pantech Group also benefits from supplying for the maintenance of existing projects which provides reliable recurring revenues.

The business of Pantech Group is conducted via two core divisions:

Trading Division

Trading division focuses on trading, supply, and stocking of high pressure seamless and specialised steel PVF and other fluid transmission related products for use in the oil and gas, gas reticulation, marine, onshore and offshore heavy engineering, power generation, petrochemicals, palm oil refining, and other related industries, predominantly in Malaysia. Trading is conducted with international parties, particularly in Southeast Asia.

The 30,000 plus stock keeping units (SKU) in our inventory are warehoused in five facilities in two countries, Malaysia and Singapore. We are increasing the range of product offerings prudently to be even more equipped to serve customers better and with shorter turnaround time, especially so for RAPID customers. With such an extensive inventory range, management continues to vigilantly monitor the stock level to keep it at an optimum level to meet projects in the pipeline. In terms of trade promotions, the trading division participated in relevant oil and gas related exhibitions to maintain brand presence and contacts while gaining new leads.

Manufacturing Division

This division produces and supplies pipes and fittings of various sizes and specifications such as elbows, tees, reducers, flanges and end-caps that comply with different international standards. The products are made of materials such as carbon steel, stainless steel, copper nickel, nickel alloys, duplex and other alloys. Pantech Group’s manufacturing division also produces stainless steel and alloy pipes, and customised high frequency induction long bends. Products manufactured by Pantech Group are mainly sold internationally.

Annual manufacturing capacities at the manufacturing plants of Pantech Steel Industries Sdn. Bhd. (PSI), Pantech Stainless & Alloy Industries Sdn. Bhd. (PSA), and Nautic Steels Limited (Nautic) remained unchanged at 21,000, 14,400, and 800 metric tonnes respectively. In light of the slowdown in global demand, manufacturing output for PSI and Nautic was maintained at 70% and 60% of capacity. PSA on the other hand saw an increase in manufacturing output from 80% to 90%.

Improvements to operational efficiencies helped mitigate rising material costs and expansion of our product lines are always ongoing to widen our product range and potential revenue streams. In the current financial year, we invested into new machines for PSA which will enable us to manufacture new sizes ranging from 4” to 12” of stub end products, this is in addition to our current 4” production. Capital has been set aside to procure additional machines which would increase the plant’s capacity by approximately 20% per annum from next financial year onwards.

Hot-dip Galvanising subsidiary

In the preceding reporting period, Pantech Group entered into a 51:49 joint venture agreement with Euromech Machinery Sdn Bhd to establish Pantech Galvanising Sdn Bhd (PGSB).

PGSB commenced operations as planned in December 2016 and have the largest hot-dip galvanising facility in the Southern part of Peninsular Malaysia with a planned capacity of 48,000 metric tonnes per annum. Output is picking up pace and is anticipated to achieve 50% capacity at the end of FY2018. This venture has begun contributing positively to Pantech Group's revenue.

MANAGEMENT DISCUSSION AND ANALYSIS


BUSINESS AND OPERATIONS cont’d

Hot-dip Galvanising subsidiary cont’d

Hot-dip galvanising is a process that allows for cost-savings in corrosion protection and is a value-added service, further enhancing Pantech’s value proposition as a One Stop Centre.

Post-land acquisition by the Johor State Government, there has been further development regarding our balance portion of land in Sungai Rengit, near Pengerang, as it is being reconfigured to a new warehouse to service RAPID projects.

Plans are afoot to extend our existing warehouse for the purpose of improving warehouse management, while the 7-acre plot of land adjacent to the fully developed 26-acre lot remains as land bank.

The wide range of Pantech products have presence in 67 countries with Malaysia being the primary market.

FINANCIAL RESULTS & CONDITION

Pantech Group reaped the benefits of diligently pursuing projects in the Refinery and Petrochemical Integrated Development (RAPID) in Pengerang. The focus on RAPID was an insightful move towards servicing downstream industries whereas previously upstream oil and gas industries contributed predominantly to sales.

In general, RAPID projects contributed substantially to Pantech Group’s domestic sales in FY2017, generating about RM100 million. Overall, the Group posted RM479.35 million in revenues, with RM 39.10 million profit before tax (PBT). Profit after tax (PAT) was RM28.41 million.

To take the performance into perspective as compared to the previous financial year ended 29 February 2016, group revenue decreased by RM33.94 million, or 6.61% and PBT declined by RM13.98 million, or 26.34%. Likewise, PAT fell by RM9.54 million, or 25.13%. PAT margin dropped from 7.39% to 5.93% year-on-year. These diminished returns were mainly attributable to the reduced contribution from Manufacturing division due to weaker demand and competitive pricing in the industry.

For FY2017, the Manufacturing division recorded sales of RM169.29 million, which was RM26.20 million or 13.40% lower compared to the preceding year. The reduced revenue contribution arose from the decrease in output in light of the flat demand from the industry. In addition, increased competitive pricing from the international market and startup losses from the new galvanising plant also compounded the situation and depressed profit margins.

The depressed revenue translated to a corresponding lower segmental profit before finance cost and interest income for Manufacturing of RM17.31 million, a year-on-year decrease in margin from 15.57% to 10.22%.

The Trading division posted a revenue of RM310.05 million, which was RM7.74 million or 2.44% lower than FY2016. The RAPID projects which picked up momentum towards to end of our FY helped offset the initial sluggish demand in the local oil and gas sector to result in this negligible decrease in Trading revenue.

Despite this reduced revenue causing a smaller segmental profit before finance cost and interest income for Trading of RM32.13 million, a fractional increase in margin to 10.36% from 10.25% year-on-year was achieved.

Overall the closing trade receivables was higher at RM133.39 million as compared to RM109.15 million in the preceding financial year, or 22.21% increase, as these were mainly from the sales closed in the last financial quarter of FY2017.

Borrowings stood at RM163.89 million, comparable to FY2016 amount of RM159.67 million as the lower working capital borrowings was offset by the drawdown for the investment into PGSB as well as the capital expenditure (CAPEX) incurred by PGSB.

In terms of inventory management, the introduction of several new product lines saw an increase in inventory holding to RM262.43 million from RM253.37 million.

MANAGEMENT DISCUSSION AND ANALYSIScont’d

11Annual Report 2017

FINANCIAL RESULTS & CONDITION cont’d

Pantech Group’s main CAPEX incurred during the financial year was for PGSB’s initial set-up of the factory, office, plant and machinery, which was primarily financed by bank borrowings.

On the dividend front, stringent financial management has placed Pantech Group in good stead to be able to continue sharing profits with shareholders, despite the soft market. In FY2017, Pantech Group paid out dividends as follows:

First interim single tier dividend of 0.5 sen per share was paid on 19 October 2016 with total payout amounting to approximately RM3.08 million;

Second interim single tier dividend of 0.5 sen per share was paid on 27 December 2016; total payout was approximately RM3.08 million; and

Third interim single tier dividend of 0.3 sen per share was paid on 12 April 2017; total payout was RM2.22 million.

A fourth and final single tier dividend of 0.5 sen per share has been proposed by the Board and will be tabled to shareholders during the AGM. If it passes shareholders’ approval at the forthcoming 11th Annual General Meeting, this will bring the total dividend payout for FY2017 to approximately RM12.07 million or 42.5% of PAT.

CHALLENGES

There are several challenges that are associated with the business we are engaged in. The shale oil evolution in the United States threatens any oil price equilibrium. This unpredictability gives poor visibility on oil and gas development projects. While this is an external risk factor beyond the Group’s control, Pantech Group has managed to minimise the impact by diversifying into different countries, markets and industries.

There is also the threat of other players introducing cheaper products and employing price undercutting marketing tactics, which may appear as attractive alternatives for project owners. However, these products tend not to be able to meet the stringent quality specifications that we adhere to, thus we are confident it should pose minimal threat, especially after having established close rapport and having built the brand recognition among our customers.

Pantech Group is exposed to the fluctuating prices of raw materials in particular steel. Pantech Group mitigates this by increasing the supplier base for approved suppliers. There are also continuous efforts to improve production efficiency, delivery turnaround time, and reduce wastage which are achieved through management’s many years of experience in this industry.

TREND AND OUTLOOK

We remain cautiously optimistic with respect to the developments in oil and gas industry and the challenges it poses.

Oil prices have seen a slow but somewhat steady recovery. At the beginning of 2016, oil prices were below USD30 per barrel but has since risen to average above USD50 per barrel.

OPEC’s decision to further cut crude oil production will help prices strengthen further. With 10 of the 21 nations having agreed to produce less in March 2017, compared to only five in February. OPEC and its allies intend to stabilise the market with the output cap agreement. However, while the price slide has halted, meaningful gains are sparse due to the United States shale players capitalising by increasing output.

Domestically, the official investment agreement announcement by Saudi Arabian Oil Co (Aramco) into RAPID provides fresh impetus for the project. The agreement is a culmination of several months of hard work and sees Aramco holding at least a 50% stake in the project. RAPID is approaching 60% completion and is due to operate in the first quarter of 2019.

Furthermore, Petronas Gas Berhad has allocated RM500 million for capex for ongoing projects in Pengerang. This presents opportunities for Pantech Group to pursue further sales with Petronas for their maintenance and upgrading works of their facilities.

Pantech Group will continue to expand on existing business and seek growth opportunities by improving and expanding capacity. We are optimistic on the long term outlook of the industry, especially with the RAPID projects progressing.

MANAGEMENT DISCUSSION AND ANALYSIScont’d


Transparency, honesty, kindness, good stewardship, even humour, work in businesses at all times.“ “

John Gerzema

Pantech Group recognises the need to be a corporate citizen, and not just an organisation in search for the bottomline. We take an inclusive view of business and its role in society and engaging with stakeholders. Corporate Responsibility (CR) programmes are taken seriously by the Group, prioritising the wellbeing of our employees and in order to sustain and develop the business in the long-term, in harmony with society.

Workforce Safety

Safe working environments are essential elements to the performance of a company. Pantech Group continued to equip employees with the knowledge and skills to increase workplace safety and improve productivity in the last financial year.

Health, Safety and Environment (HSE) activities that promote safety at workplace and encourage the analysis of potential hazards related to a task before execution, were the regular exercise.

In addition to these, several internal programmes were undertaken to elevate health and safety awareness and increase protection and general wellbeing of employees. These programmes include Personal Protective Equipment (PPE) and Hazard at Workplace trainings, Basic Occupational First Aid, Cardiopulmonary Resuscitation (CPR) and Automated External Defibrillator (AED) Know-how as well as Forklift Operation and Safety Training.

Employee Recognition

Pantech Group also helped alleviate the rising cost of living through its Back to School initiative which provides aid to employees to purchase essential school material for their children such as uniforms and bags, for the ninth consecutive year.

CORPORATE SOCIAL RESPONSIBILITY


CORPORATE SOCIAL RESPONSIBILITYcont’d

To recognise employees’ contribution and stoke their morale, Pantech Group held its Annual Dinner where long service staff of 5, 10 and 15 years were appreciated with Special Awards. It was a night that also provided a chance for staff from various departments and subsidiaries to bond, strengthening camaraderie.

Outreach Programme

Besides employee welfare, Pantech Group reached out to a household comprising a paralysed elderly woman, her daughter, and four grandchildren. The breadwinner is the daughter, a widow who supports the family on a meagre RM1,200 monthly income. Pantech Group aided with housekeeping, sponsored groceries and basic household items that were necessities.

As the business scene grows increasingly challenging and competitive, it is critical that we hold on tight to values and continue to prioritise people, in particular our employees. We believe this is an important piece of the jigsaw that makes an organization resilient as we create value for the community and industry.

Pantech Group Holdings Berhad (733607-W)

7-10 November 2016, The Abu Dhabi International Petroleum Exhibition and Conference (ADIPEC) 2016, Abu Dhabi National Exhibition Centre (ADNEC), UAE

23-25 August 2016, INAPALM ASIA 2016 - The 4th Indonesia International Palm Oil Machinery Processing & Technology Exhibition 2016, Jakarta International Expo, Indonesia

15 February 2017, 10th year Listing Anniversary of Pantech Group Holdings Berhad, Head Quarter of Pantech Group Holdings Berhad, Pasir Gudang


15 February 2017, 10th year Listing Anniversary of Pantech Group Holdings Berhad, Head Quarter of Pantech Group Holdings Berhad, Pasir Gudang

CORPORATE EVENTS


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

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

MEMBERSHIP

The Audit Committee is appointed by the Board and comprises exclusively of Independent Non-Executive Directors:-

Chairman

Mr. Tan Sui Hin : Senior Independent Non-Executive Director

Members

Tuan Haji Yusoff Bin Mohamed : Independent Non-Executive Director

Mr. Loh Wei Tak : Independent Non-Executive Director

MEETINGS

There were five (5) Audit Committee meetings held during the financial year 2017. The details of attendance of Committee members are as follows:-

Name of Committee Members Designation Attendance

Mr. Tan Sui Hin Chairman 4/5

Tuan Haji Yusoff Bin Mohamed Member 5/5

Mr. Loh Wei Tak Member 4/5

SUMMARY OF THE WORK OF THE AUDIT COMMITTEE

In line with the Terms of Reference of the Audit Committee, the following is a summary of work undertaken by the Audit Committee during the financial year ended 28 February 2017 in discharging its functions and duties:-

Financial Performance & Reporting

Reviewed the unaudited quarterly financial announcements and annual financial statements of the Group prior to submission to the Board of Directors for their perusal and approval. This was to ensure compliance of the financial statements with the provisions of the Companies Act, Malaysian Financial Reporting Standards, International Financial Reporting Standards and applicable Listing Requirements of Bursa Malaysia Securities Berhad.

Reported to the Board on significant audit issues and concerns discussed during the Audit Committee meetings for consideration and deliberation by the Board.

Reviewed the Audit Committee Report and the Statement on Risk Management and Internal Control prior to submission of the same to the Board for consideration and inclusion in the Annual Report of the Company.

AUDIT COMMITTEE REPORT


SUMMARY OF THE WORK OF THE AUDIT COMMITTEE cont’d

External Auditors

Discussed and reviewed the external auditors’ audit planning memorandum for the financial year ended 28 February 2017 outlining their auditors’ responsibilities, engagement team, significant risks and areas of audit focus, proposed scope of work, independence policies and procedures and audit fees.

Deliberated on the external auditors’ report at its meeting with regard to the relevant disclosures in the annual audited financial statement for the financial year ended 28 February 2017.

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

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

Dialogue session with the external auditors, without the presence of the Executive Director and management. Evaluate the external auditors’ independence and objectivity, as well as their ability to serve the Group in terms of

technical competencies and manpower resource sufficiency and reviewed the reasonableness of the proposed audit fees against the size and complexity of the Group.

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

Internal Audit

Reviewed the Internal Audit Report for the financial year ended 28 February 2017 from Internal Auditors and assessed the internal audits’ findings, recommendations together with the Management’s comments.

Reviewed and assessed Internal Auditors based on staff strength, resources, professional integrity, independence, capability as well as reputation and recommended to the Board the re-appointment of Internal Auditors.

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

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

The professional fee and other cost incurred in respect of the internal audit function for the financial year ended 28 February 2017 was RM184,636.

The main role of the internal audit function is stated in the Statement on Risk Management and Internal Control of this Annual Report. During the period under review, the summary of works undertaken by the Internal Auditors comprised the following:-

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

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

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

AUDIT COMMITTEE REPORTcont’d


SUMMARY OF THE WORK OF THE AUDIT COMMITTEE cont’d

Related Party Transaction

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

Review of Employees’ Share Option Scheme (ESOS) Allocation

The Company has granted 49,869,000 ESOS to the eligible employees on 24 January 2017. The Audit Committee reviewed the basis of allocation based on the ESOS By-laws to ensure the quantum of ESOS offered is within the approved limit and only to the eligible employees.

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

The Audit Committee members have undergone relevant training during the financial year to stay abreast with the regulatory changes and contemporary issues that may affect the Group. Details of the Audit Committee members’ training are shown in the Company’s Corporate Governance Statement included in this Annual Report.

AUDIT COMMITTEE REPORTcont’d


The Board of Directors (“the Board”) is pleased to present this Statement on Risk Management and Internal Control (“Statement”) which has been prepared pursuant to paragraph 15.26(b) of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad. The Malaysian Code on Corporate Governance stipulates that the Board should establish a sound risk management framework and internal control system. The system of risk management and internal control covers not only financial controls but also operational and compliance controls in order to safeguard shareholders’ investment and the Company’s assets.

BOARD RESPONSIBILITY

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

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

ENTERPRISE RISK MANAGEMENT FRAMEWORK

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

The Board has set up a Risk Management Committee (“RMC”) which comprises of Executive Directors and Senior Management of the Group. Executive Directors, senior management personnel and Departmental Heads are responsible for assessing and managing the risks of their respective business units, operational units and departments. Significant issues and risks are discussed during Executive Group Directors Meeting and Monthly Management Meeting which are attended by Executive Directors and senior management personnel. This process has been in place during the year under review and up to the date of approval of this statement for inclusion in the Annual Report.

INTERNAL AUDIT FUNCTION

The Group has an in-house internal audit function and supported by an independent professional firm, both report directly to the Audit Committee on its findings and recommendations for improvements. An internal audit charter and internal audit plan has been submitted and approved by the Audit Committee.

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

Total cost incurred for the internal audit function in respect of the financial year ended 28 February 2017 was RM184,636.

STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL


KEY ELEMENTS OF THE GROUP’S INTERNAL CONTROL SYSTEM

The key elements of the Group’s internal control system comprise the following:-

Responsibilities of the Board and management are defined to ensure effective discharge of roles and responsibilities;

The Board and the Audit Committee meet every quarter to discuss matter(s) raised by Management and/or Internal Audit on business and operational matters including potential risks and control issues;

The Board has established and documented a Schedule of Matters Reserved for the Board to facilitate the effective reporting and operation of the Board at regular Board meeting. Major capital investment, acquisition, disposals or any other transaction that are not in the ordinary course of business exceeding a certain threshold must be referred to the Board for approval;

Management reports to the Board on material findings and/or variances, if any, and the Board will review their implications to the Group and advise accordingly;

Annual budgeting process is in place and performance is monitored on an ongoing basis;

Senior Management attends management meetings on a regular basis to address budgets, operational and financial performance, business planning, control environment and other key issues;

Key personnel from respective subsidiaries provide monthly reports to the corporate office on the subsidiaries’ performance;

Communication channels have been established between subsidiaries, business units, divisions and employees through internal memorandums, staff briefings and operational meetings to achieve the Group’s overall business objectives;

Close and active involvement of the Executive Directors on the day-to-day business operations of the Group;

Health, Safety and Environmental Committee has been established in order to review and ensure compliance with occupational safety and health policies and procedures on a continuous basis;

System access controls are established to ensure the information systems are duly safeguarded and secured from unauthorised access. Regular review on user access rights for the Enterprise Resource Planning Systems is also in place; and

The Group has adopted a whistle blowing policy, providing an avenue for employees and external parties to raise concerns, in confidence, about actual or suspected misconduct, malpractice or irregularities in any matters related to the Group.

CONCLUSION

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

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

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

STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROLcont’d


REVIEW OF THE STATEMENT BY EXTERNAL AUDITORS

Pursuant to Paragraph 15.23 of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad, this Statement has been reviewed by the external auditors for inclusion in the Annual Report for the financial year ended 28 February 2017. The review was conducted in accordance with the Recommended Practice Guide (“RPG”) 5 (Revised): Guidance for Auditors on Engagements to Report on the Statement on Risk Management and Internal Control issued by the Malaysian Institute of Accountants. Based on their review, the external auditors have reported to the Board that nothing had come to their attention that causes them to believe that this Statement is inconsistent with their understanding of the risk management and internal control processes implemented by the Group.

STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROLcont’d


The Board of Directors (“the Board”) of Pantech Group Holdings Berhad (“Pantech” or “the Company”) recognises and subscribes to the importance of the principles and recommendations set out in the Malaysian Code on Corporate Governance 2012 (“the Code” or “MCCG 2012”) as a key factor towards achieving an optimal governance framework and process in managing the business and operational activities of the Company and its subsidiaries (“the Group”).

The Board believes that good corporate governance practices are pivotal towards enhancing business prosperity and corporate accountability with the ultimate objective of realizing long-term shareholder value, whilst taking into account the interests of other stakeholders. Hence, the Board is fully dedicated to continuously appraise the Group’s corporate governance practices and procedures to ensure that the principles and recommendations in corporate governance are applied and adhered to in the best interests of the stakeholders.

The Statement below sets out the manner in which the Group has applied the principles of the Code and the extent of compliance with recommendations advocated therein.

PRINCIPLE 1 - ESTABLISH CLEAR ROLES AND RESPONSIBILITIES OF THE BOARD AND MANAGEMENT

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

reviewing and adopting a strategic plan for the Company, addressing the sustainability of the Group’s business; overseeing the conduct of the Group’s business and evaluating if its businesses are being properly managed; identify principal business risks faced by the Group and ensuring the implementation of appropriate internal controls

and mitigating measures to address such risks; ensuring that all candidates appointed to senior management positions are of sufficient calibre, including the orderly

succession of senior management personnel; overseeing the development and implementation of a shareholder communications policy, including an investor

relations programme for the Company; and reviewing the adequacy and integrity of the Group’s internal control and management information systems.

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

SCHEDULE OF MATTERS RESERVED FOR THE BOARD

The following matters (including changes to any such matters) require approval from the Board of Directors, except where they are expressly delegated to a Committee of the Board:-

(A) Strategy and Management

1. Responsibility for the overall strategic direction and strategic plans for, and the overall management of, Pantech and its subsidiaries (the “Group”).

2. Approval of the Group’s long-term objectives and sustainability strategy.

3. Approval of the annual operating and capital expenditure budgets and any material changes thereto.

4. Review of performance in the light of the Group’s strategy, objectives, business plans, borrowings from financial institution, budgets and ensuring that any necessary corrective action is taken.

CORPORATE GOVERNANCE STATEMENT


PRINCIPLE 1 - ESTABLISH CLEAR ROLES AND RESPONSIBILITIES OF THE BOARD AND MANAGEMENT cont’d

SCHEDULE OF MATTERS RESERVED FOR THE BOARD cont’d

(A) Strategy and Management cont’d

5. Oversight of the Group’s operations ensuring:

(a) competent and prudent management (b) sound planning (c) adequate system of internal control (d) adequate accounting and other records (e) compliance with statutory and regulatory obligations

6. Expansion of the Group’s activities into new business or geographical areas.

7. Decision to cease to operate all or any material part of the Group’s business or to cease to operate in any country that would result in the Group no longer having a presence in that country.

8. Any matters materially affecting the Group’s overall reputation, including its brand and values.

(B) Structure and Capital

1. Changes relating to Group’s capital structure including:

(a) share split, capital reduction, issuance of unsecured securities (b) new share issues (except pursuant to approved option scheme) (c) share buy-back (including the disposal/use of treasury shares) (d) establishment of employees’ share and/or performance option scheme(s)

2. Changes to the Group’s corporate structure or creation or liquidation of subsidiary/joint venture.

3. Any changes to Pantech’s listing status or matters affecting Pantech’s listing status.

(C) Financial Reporting and Controls

1. Approval of the announcements of the interim and final results.

2. Approval of Pantech’s audited financial statements and annual report.

3. Approval of any significant changes in accounting policies or practices.

4. Approval of significant treasury policies, including policies on foreign currency exposure and use of financial derivatives.

5. Approval of dividend policy, declaration of interim dividend and recommendation of final dividend.

(D) Investment

1. Approval of major investment proposal, such as expansion of the Group’s activities into new business, acquisitions, disposals and other contractual commitments entered into by Group (not in the ordinary course of business).

(E) Financial

1. Approval of Group capital expenditure and commitment that is anticipated to exceed or has exceeded the threshold of RM5 million.

2 Approval of bank borrowings and pledging of any asset in excess of the thresholds, and corporate guarantees of any amount granted by Pantech in favour of financial institutions or third parties.

CORPORATE GOVERNANCE STATEMENTcont’d



SCHEDULE OF MATTERS RESERVED FOR THE BOARD cont’d

(F) Communication

1. Approval of resolutions and corresponding documentation to be put forward to shareholders at a general meeting.

2. Approval of all circulars, prospectuses, and all the announcements to Bursa Malaysia Securities Berhad.

(G) Board Membership and Other Appointments

1. Consider recommendations from the Nomination Committee on changes to the structure, size and composition of the Board (including appointment, re-designation, resignation and removal).

2. Establishment of Board committees, membership and terms of reference. 3. Review the continuation in office of directors at the end of their term of office, when they are due for retirement by

rotation and consider recommendation of Nomination Committee on the continuation of office of directors. 4. Appointment or removal of Company Secretary. 5. Appointment, reappointment or removal of external auditors and determination of their remuneration, upon

recommendation from the Audit Committee.

(H) Remuneration

1. Review and approve the remuneration package for the Chairman/Group Managing Director and Executive Directors upon recommendation from Remuneration Committee.

2. Recommend Directors’ fees for the Non-Executive Directors, subject to the Articles of Association and shareholders’ approval as appropriate.

(I) Internal Controls and Governance

1. Review of the Group’s internal controls and risk management, including the effectiveness of the system of internal controls, and consider significant risk issues referred to it.

2. Review of the Group’s compliance with the Code on Corporate Governance. 3. Approve prosecution, defence and settlement of major litigation involving more than 10% of the Group’s latest audited

net profit or otherwise material to the interests of the Group. 4. Review of the performance of the Board, its Committees and individual Directors. 5. Development of sustainability terms and succession plan.

Board Charter

The Board had formalized and approved the Board Charter. The Board Charter will be reviewed as and when to ensure that it remains consistent with the Board’s objectives and best practices. The Board Charter can be accessed at the Company’s website at www.pantech-group.com. The last review and update of Board Charter was on 25 April 2017.

Code of Ethics and Whistleblowing Policy

The Board has finalized and approved the Code of Ethics and Whistleblowing policy. They can be accessed at the Company’s website at www.pantech-group.com. The last review was on 25 April 2017.

Sustainability of Business

The Board is mindful of the importance of business sustainability in conducting the Group’s business and the impact on the environmental, social, health and safety, staff welfare and governance aspects are taken into consideration. The Board takes heed of go green and energy saving by implement several measures on sustainability. The Board actively reviews the Group business plan for diversification.




Supply of, and Access to, Information

The Board is supplied with relevant information and reports on financial, operational, corporate, regulatory, business development and audit matters, by way of Board reports or upon specific requests, for decisions to be made on an informed basis and effective discharge of Board’s responsibilities.

Good practices have been observed for timely dissemination of meeting agenda, including the relevant Board and Board Committee papers to all Directors prior to the Board and Board Committee meetings, to give effect to Board decisions and to deal with matters arising from such meetings. The Executive Directors and/or other relevant Board members furnish comprehensive explanation on pertinent issues and recommendations by Management. The issues are then deliberated and discussed thoroughly by the Board prior to decision making.

In addition, the Board members are updated on the Company’s activities and its operations on a regular basis. All Directors have access to all information of the Company on a timely basis in an appropriate manner to enable them to discharge their duties and responsibilities.

Senior Management of the Group and external advisers may be invited to attend Board meetings to provide additional insights and professional views, advice and explanations on specific items on the meeting agenda. Besides direct access to Management, Directors may obtain independent professional advice at the Company’s expense, if considered necessary, in furtherance of their duties.

Directors have unrestricted access to the advice and services of the Company Secretary to enable them to discharge their duties effectively. The Board is regularly updated and advised by the Company Secretary who is qualified, experienced and competent on statutory and regulatory requirements, and the resultant implications of any changes therein to the Company and Directors in relation to their duties and responsibilities. The Company Secretary, who oversees adherence with board policies and procedures, briefs the Board on the proposed contents and timing of material announcements to be made to regulators. The Company Secretary attends all Board and Board Committees meetings and ensures that meetings are properly convened, and that accurate and proper records of the proceedings and resolutions passed are taken and maintained accordingly. The removal of Company Secretary, if any, is a matter for the Board, as a whole, to decide.

PRINCIPLE 2 - STRENGTHEN COMPOSITION OF THE BOARD

As at the date of this report, the Board consists of nine (9) members, comprising of an Executive Chairman who is also the Group Managing Director, one (1) Group Deputy Managing Director, three (3) Executive Directors, three (3) Independent Non-Executive Directors and one (1) Non-Independent Non-Executive Director. This composition fulfills the requirements as set out under the Listing Requirements of Bursa Malaysia Securities Berhad (“Bursa Malaysia”), which stipulate that at least two (2) Directors or one-third of the Board, whichever is higher, must be Independent. The profile of each Director is set out in this Annual Report. The Directors, with their differing backgrounds and specializations, collectively bring with them a wide range of experience and expertise in areas such as finance; accounting and audit; corporate affairs; marketing and operations.

Nomination Committee – Selection and Assessment of Directors

A Nomination Committee has been established, with specific terms of reference, by the Board, comprising exclusively Independent Non-Executive Directors as follows:

Chairman Mr. Loh Wei Tak Independent Non-Executive Director

Members Mr. Tan Sui Hin

Tuan Haji Yusoff Bin Mohamed

Senior Independent Non-Executive Director

Independent Non-Executive Director



PRINCIPLE 2 - STRENGTHEN COMPOSITION OF THE BOARD cont’d

Assessment of Performance

The process of assessing Directors is an ongoing responsibility of the entire Board. During the financial year, the Nomination Committee had assessed the performance of all the Board members based on established criteria, which include:-

(a) the compliance with attendance and qualification requirements of the position; (b) the ability to provide input relating to business, market outlook and management strategies; (c) the ability to keep the Board abreast with operational, business, regulatory, economic and environmental issues

confronting the Group; and(d) whether sufficient level of importance has been accorded to governance issues to safeguard the integrity of the

Company’s activities, operations and improvement in the financial position of the Group.

The Nomination Committee will recommend to the Board on the balance mix skills and composition of Board members and the need for any relevant training to the respective Director.

The Company has also developed assessment criteria for the following:

i. Board

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

ii. Board Committees

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

iii. Individual Directors

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

Assessment forms have been developed to facilitate the assessment process. Assessment of the Board and Board Committees are performed on a Board review basis whilst assessment of individual Directors is performed on a peer review basis. Each director is provided with the same set of assessment forms for their completion. Upon completion of assessment, the Company Secretary would compile the results for the Nomination Committee’s evaluation prior to reporting to the Board for deliberation and approval.

The final decision on the appointment of a candidate recommended by Nomination Committee rests with the whole Board. The Board is entitled to the services of the Company Secretary who would ensure that all appointments are properly made upon obtaining all necessary information from the Directors.

During the financial year, the Nomination Committee met once, attended by all members, to assess the balance composition of Board members based on merits, Directors’ contribution and Board effectiveness. The Company has no policy on gender diversity or target set but believes in merits and commitment of its Board members. The Nomination Committee assesses the Board members on an objective basis for both genders.



PRINCIPLE 2 - STRENGTHEN COMPOSITION OF THE BOARD cont’d

Directors’ Remuneration

A Remuneration Committee has been established by the Board, comprising a majority of Non-Executive Directors as follows:

Chairman Tuan Haji Yusoff Bin Mohamed Independent Non-Executive Director

Members Dato’ Chew Ting Leng

Mr. Tan Sui Hin

Executive Chairman/Group Managing Director

Senior Independent Non-Executive Director

The Remuneration Committee has been entrusted by the Board to determine that the levels of remuneration are sufficient to attract and retain Directors of quality required to manage the business of the Group. The Remuneration Committee is entrusted under its terms of reference to assist the Board, amongst others, to recommend to the Board the remuneration of the Executive Directors. In the case of Non-Executive Directors, the level of remuneration shall reflect the experience and level of responsibilities undertaken by the Non-Executive Directors concerned. In all instances, the deliberations are conducted, with the Directors concerned abstaining from discussions on their individual remuneration. During the financial year under review, the Committee met once attended by all members.

Aggregate of remuneration (Company and Group basis) of the Directors of the Company for the financial year ended 28 February 2017 can be categorised into the following components:

Category

Directors’ Fee (RM’000)Salaries and other

emoluments (RM’000) Total (RM’000)

Company Group Company Group Company Group

Executive Directors - 312,500 1,680,234 5,660,147 1,680,234 5,972,647

Non-Executive Directors 163,206 163,206 - - 163,206 163,206

There is no service contract made between any Director and the Company or its subsidiary companies.

Directors’ remuneration for the financial year ended 28 February 2017 are broadly categorized into the following bands:

Range of remuneration (RM)

Number of Directors

Executive Directors Non-Executive Directors

Company Group Company Group

50,000 and below 3 3

50,000 to 100,000 1 1

100,000 to 150,000 1

300,000 to 350,000 2

350,000 to 400,000 1

450,000 to 500,000 1

600,000 to 650,000 1

900,000 to 950,000 1

1,250,000 to 1,300,000 1

1,400,000 to 1,450,000 1

1,650,000 to 1,700,000 1

The remuneration of the individual director is not disclosed due to security and sensitivity reasons. The directors’ fees are subject to the approval by shareholders at the forthcoming Annual General Meeting of the Company.



PRINCIPLE 3 – REINFORCE INDEPENDENCE OF THE BOARD

The roles of the Chairman and Group Managing Director are held by the same Director. This departs from the Recommendation 3.4 of the Code which stipulates that the positions of Chairman and Chief Executive Officer should be held by different individuals and that the Chairman must be a Non-Executive member of the Board. However, the Board believes that for its current size, it is more expedient for the two roles to be held by the same person as long as there are pertinent checks and balance to ensure no one person in the Board has unfettered powers to make major decisions for the Company unilaterally. As such, the Board is of the view that the significant composition of Non-Executive Directors, which is close to the current Board’s size, provides for the relevant check and balance.

The Executive Chairman is responsible for the Group’s strategies to achieve the mission and vision. He has to ensure the adequacy and effectiveness of the Board’s governance process and acts as a facilitator at Board meetings to ensure all Directors participate and deliberated at all Board meetings and that no Board member dominates discussion. As the Group Managing Director, supported by fellow Executive Directors, he implements the Group’s strategies, policies and decision adopted by the Board and oversees the operations and business development of the Group.

The Independent Non-Executive Directors bring objective and independent views, advice and judgment on interests, not only of the Group, but also of shareholders and stakeholders. Independent Non-Executive Directors are essential for protecting the interests of shareholders and can make significant contributions to the Company’s decision by giving rationale and fair view and to decide impartially.

The Board recognizes the importance of establishing criteria on independence to be used in the annual assessment of its Independent Non-Executive Directors. Although the definition on independence according to the Listing Requirements of Bursa Malaysia is used, the Board review and assess the independence of its Independent Directors annually based on their conduct, argue on the matters objectively and make decision rationally and other independence criteria.

The Board has adopted the 9-year tenure for independent Directors. The three independent Directors who have served the Board for more than 9 years will not seek for re-election and shall retire at the conclusion of the 11th AGM.

The Nomination Committee have sourced for the right caliber and have recommended to the Board for succession.

PRINCIPLE 4 – FOSTER COMMITMENT OF DIRECTORS

The Board ordinarily meets at least five (5) times a year, scheduled well in advance before the end of the preceding financial year to facilitate the Directors in planning their meeting schedule for the year. Additional meetings are convened when urgent and important decisions need to be made between scheduled meetings. Board and Board Committee papers which are prepared by Management, provide the relevant facts and analysis for the convenience of Directors. The meeting agenda, the relevant reports and Board papers are furnished to Directors and Board Committee members well before the meeting to allow the Directors sufficient time to peruse for effective discussion and decision making during meetings. At the quarterly Board meetings, the Board reviews the business performance of the Group and discusses major operational and financial issues. The Chairman of the Audit Committee informs the Directors at each Board meetings of any salient matters noted by the Audit Committee which require the Board’s attention or direction. All pertinent issues discussed at Board meetings in arriving at the decisions and conclusions are properly recorded by the Company Secretary by way of minutes of meetings.



PRINCIPLE 4 – FOSTER COMMITMENT OF DIRECTORS cont’d

Board Meetings

There were Five (5) Board meetings held during the financial year ended 28 February 2017, with details of Directors’ attendance set out below:

Directors DesignationMeetings Attended

(out of 5 held)

Dato’ Chew Ting Leng Executive Chairman/Group Managing Director 5/5

Dato’ Goh Teoh Kean Group Deputy Managing Director 5/5

Mr. Tan Ang Ang Executive Director 5/5

Mr. To Tai Wai Executive Director 5/5

Ms. Ng Lee Lee Executive Director 5/5

Mr. Tan Sui Hin Senior Independent Non-Executive Director 4/5

Mr. Loh Wei Tak Independent Non-Executive Director 5/5

Tuan Haji Yusoff Bin Mohamed Independent Non-Executive Director 5/5

Puan Sakinah Binti Salleh(Appointed on 21 July 2016)

Non-Independent Non-Executive Director 3/3

It is the practice of the Company for Directors to devote sufficient time and efforts to carry out their responsibilities. All Board members are required to notify the Chairman before accepting any new directorships notwithstanding that the Listing Requirements of Bursa Malaysia allow a Director to sit on the boards of 5 listed issuers. Such notification is expected to include an indication of time that will be spent on the new appointment.

Directors’ Training – Continuing Education Programmes

The newly appointed Non-Independent Non-Executive Director, Puan Sakinah Binti Salleh had completed the Mandatory Accreditation Programme conducted by Bursatra Sdn. Bhd. on 3 and 4 August 2016.

The Board is mindful of the importance for its members to undergo continuous training to keep abreast with changes to regulatory requirements and the impact such regulatory requirements have on the Group.

During the financial year under review, the Directors continued to participate in training programmes, seminars and conferences to gain insight into the state of the economy as well as the latest regulatory and developments relevant to the Company’s business.

The Directors are also updated by the Company Secretary on relevant legal/regulatory updates applicable to the Company at each Board meeting.

In additional to that, the following Directors have attended the following trainings or seminars:-

Name of Director Date Training attended

(a) Dato’ Chew Ting Leng 20 July 2016 Igniting Workplace Enthusiasm

(b) Dato’ Goh Teoh Kean 20 July 2016 Igniting Workplace Enthusiasm

(c) Mr. Tan Ang Ang 20 July 2016 Igniting Workplace Enthusiasm

(d) Mr. To Tai Wai 20 July 2016 Igniting Workplace Enthusiasm

(e) Ms. Ng Lee Lee 20 July 2016 Igniting Workplace Enthusiasm

(f) Mr. Tan Sui Hin 20 July 2016 Igniting Workplace Enthusiasm



PRINCIPLE 4 – FOSTER COMMITMENT OF DIRECTORS cont’d

Directors’ Training – Continuing Education Programmes cont’d

Name of Director Date Training attended

(g) Mr. Loh Wei Tak 20 July 2016 Igniting Workplace Enthusiasm

(h) Tuan Haji Yusoff Bin Mohamed 20 July 2016 Igniting Workplace Enthusiasm

(i) Puan Sakinah Binti Salleh 4 May 2016 Invest Taiwan 2016

19 May 2016 Investors Conference

3 & 4 August 2016 Mandatory Accreditation Programme

23 to 27 January 2017 Strategic Enterprise & Leadership Successful Management in the 21 Century 5-days MBA Programme

Throughout the year, the Directors also received updates and briefings, particularly on regulatory, industry and legal developments, including information on significant changes in business and procedures instituted to mitigate such risks.

The External Auditors also briefed the Board members on any changes to the Malaysian Financial Reporting Standards that would affect the Group’s financial statements during the financial year under review. The Directors continue to undergo relevant training programmes to further enhance their skills and knowledge in the discharge of their stewardship role.

The Company Secretaries also update the Board Members on the relevant guidelines on statutory and regulatory requirements from time to time.

PRINCIPLE 5 – UPHOLD INTEGRITY IN FINANCIAL REPORTING BY COMPANY

It is the Board’s commitment to present a balanced and meaningful assessment of the Group’s financial performance and prospects at the end of each reporting period and financial year, primarily through the quarterly announcement of Group’s results to Bursa Malaysia, the annual financial statements of the Group and Company as well as the Chairman’s statement and review of the Group’s operations in the Annual Report, where relevant. A statement by the Directors of their responsibilities in the preparation of financial statements is set out in the ensuing paragraph.

Statement of Directors’ Responsibility for Preparing Financial Statements

The Board is responsible to ensure that the financial statements are properly drawn up in accordance with the provisions of the Companies Act, 2016, Malaysian Financial Reporting Standards and International Financial Reporting Standards so as to give a true and fair view of the financial position of the Group as at the end of the financial year and of the financial performance and cash flows of the Group for the financial year then ended.

The Directors are satisfied that in preparing the financial statements of the Group for the year ended 28 February 2017, the Group has adopted suitable accounting policies and applied them consistently, prudently and reasonably. The Directors also consider that all applicable approved accounting standards have been followed in the preparation of the financial statements, subject to any material departures being disclosed and explained in the notes to the financial statements. The financial statements have been prepared on the going concern basis.

The Directors are responsible for ensuring that the Group keeps sufficient accounting records to disclose with reasonable accuracy, the financial position of the Group and which enable them to ensure that the financial statements comply with the Companies Act, 2016.



PRINCIPLE 5 – UPHOLD INTEGRITY IN FINANCIAL REPORTING BY COMPANY cont’d

Audit Committee

In assisting the Board to discharge its duties on financial reporting, the Board has established an Audit Committee, comprising wholly Independent Non-Executive Directors, with Mr. Tan Sui Hin as the Committee Chairman. The composition of the Audit Committee, including its roles and responsibilities, are set out in the Audit Committee Report of this Annual Report. One of the key responsibilities of the Audit Committee in its specific terms of reference is to ensure that the financial statements of the Group and Company comply with applicable financial reporting standards in Malaysia. Such financial statements comprise the quarterly financial report announced to Bursa Malaysia and the annual statutory financial statements.

As the Board understands its role in upholding the integrity of financial reporting by the Company, it will take steps to revise the Audit Committee’s terms of reference by formalising a policy on the types of non-audit services permitted to be provided by the External Auditors of the Company so as not to compromise their independence and objectivity, including the need for the Audit Committee’s approval in writing before such services can be provided by the External Auditors.

External Auditors

The Company maintains an appropriate and transparent relationship with the External Auditors in seeking their professional advice and towards ensuring compliance with the accounting standards. The Company’s External Auditors play an essential role by enhancing the reliability of the Company’s financial statements and giving assurance of that reliability to users of these financial statements.

The Audit Committee has explicit authority to communicate directly with the External Auditors. The Group’s External Auditors are invited to attend the Audit Committee meeting as and when necessary. The Audit Committee meets the External Auditors without the presence of the Executive Directors at least once a year and Management to discuss any concerns including management’s cooperation in the audit process, quality and competency in the financial reporting function, sharing of information and audit issues in relation to appropriate accounting treatment.

The effectiveness, independence and performance of the External Auditors are reviewed annually by the Audit Committee.

The External Auditors are required to declare their independence annually to the Audit Committee in accordance with the By-Laws (on Professional Ethics, Conduct and Practice) of the Malaysian Institute of Accountants (“By-Laws”) and the International Ethics Standards Board for Accountants’ Code of Ethics for Professional Accountants (“IESBA Code”). The External Auditors had made the declaration in their annual audit plan presented to the Audit Committee that they were independent throughout the conduct of the audit engagement in accordance with the terms of the relevant professional and regulatory requirements.

The Audit Committee has assessed and is satisfied with the competence and independence of the External Auditors and had recommended the re-appointment of the External Auditors to the Board which the Board had accepted the Audit Committee’s recommendation and thereafter to be tabled for the shareholders’ approval at the upcoming Annual General Meeting.

The amount of audit fees and non-audit fees paid or payable to the Company’s External Auditors for the services rendered to the Group and the Company for the financial year ended 28 February 2017 were as follows:

Fee incurred by Audit Fee (RM) Non-Audit Fee (RM)

The Company 19,000 84,200

The Group 157,000 123,600

The non-audit services rendered include review of the statement on risk management and internal control, statutory tax compliance service, review of adjustment to exercise price and number of outstanding Warrants 2010/2020 (Warrant A) and professional fee rendered on the corporate exercise on the Bonus Issue of Ordinary shares and Warrants 2016/2021 (Warrant B) during the financial year.



PRINCIPLE 6 – RECOGNISE AND MANAGE RISKS OF THE GROUP

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

The RMC will report to the Board on the risk management at least once yearly.

Continuous efforts will be made to monitor and re-assess the existing ERM framework in regards to maintaining a proper system of managing risks as well as the related control activities.

The Group has an in-house internal audit function and supported by an independent professional firm, whose work is performed with impartiality, proficiency and due professional care, and in accordance with the International Professional Practices Framework of the Institute of Internal Auditors, which sets out professional standards on internal audit. It undertakes regular reviews of the adequacy and effectiveness of the Group’s system of internal controls and risk management process, as well as appropriateness and effectiveness of the corporate governance practices. The Internal Audit reports directly to the Audit Committee. Further details on the internal audit function can be seen in the Audit Committee Report and the Statement on Risk Management and Internal Control in this Annual Report.

PRINCIPLE 7 – ENSURE TIMELY AND HIGH QUALITY DISCLOSURE

The Board is aware of the need to establish corporate disclosure policies and procedures to enable comprehensive, accurate and timely disclosures relating to the Company and its subsidiaries to be made to the regulators, shareholders and stakeholders. On this basis, the Board has formalized pertinent policies and procedures not only to comply with the disclosure requirements as stipulated in the Listing Requirements of Bursa Malaysia, but also setting out the persons authorised and responsible to approve and disclose material information to regulators, shareholders and stakeholders.

To augment the process of disclosure, the Board has earmarked a dedicated section for corporate governance on the Company’s website where information on the Company’s announcements to the regulators, the Board Charter, rights of shareholders and the Company’s Annual Report may be accessed.

7.1 Supply of Information

The Board has complete and unimpeded access to information relating to the Group in discharging their duties. All Directors regularly receive comprehensive management reports or periodic updates on the Group operations and

financial reports, for their perusal and monitoring of the Group business and operation. The Chairman of the respective Board Committees would report to the Board at Board meetings, of any pertinent matters for information or decision making and reports would be appended to the agenda of the Board meetings for Directors’ notation.

For the purpose of informed decision made by the Board, Board papers on proposal together with supporting documents are attached to facilitate decision making.

All Directors have unrestricted access to the management staff, to seek explanation or clarification on any operational issues in relation to the Group. The Directors and the Board Committees members have the right to seek independent professional advice from external experts and/or advisors in discharging their duties, at the expense of the Company.

All Directors and the Board Committees members also have unrestricted access to the advice and services of the

Company Secretaries in the discharge of their duties. The Directors are regularly updated by the Company Secretaries of new statutory and regulatory requirements.



PRINCIPLE 7 – ENSURE TIMELY AND HIGH QUALITY DISCLOSURE cont’d

7.2 Company Secretary

The Company Secretary is a qualified chartered secretary from the prescribed body.

The Board is assisted by Company Secretaries whose appointment or removal is determined by the Board.

The Company Secretaries carry out the instructions of the Board and Board Committees, advise the Board, Board Committees, individual Director and officers of the Group on relevant statutory and regulatory compliance obligation. The Company Secretaries recommend to the Company on institution of policies and procedures, to comply with relevant regulatory requirements, MCCG 2012 and legislations to promote a high standard of corporate governance.

The key roles of Company Secretaries include advising the Board as compliance officer and issuing notice and agenda of meeting together with relevant papers to the Board and Board Committees ahead of each meeting. In addition, the Company Secretaries also ensure that deliberations and discussion at meetings are accurately minuted and kept in the minutes books.

PRINCIPLE 8 – STRENGTHEN RELATIONSHIP BETWEEN THE COMPANY AND ITS SHAREHOLDERS

Shareholder participation at general meeting

The Annual General Meeting (“AGM”), which is the principal forum for shareholder dialogue, allows shareholders to review the Group’s performance via the Company’s Annual Report and pose questions to the Board for clarification. At the AGM, shareholders participate in deliberating resolutions being proposed or on the Group’s operations in general. At the last AGM, a question & answer session was held where the Chairman invited shareholders to raise questions with responses from the Board.

The Notice of AGM is circulated at least twenty one (21) days before the date of the meeting to enable shareholders to go through the Annual Report and papers supporting the resolutions proposed. Shareholders are invited to ask questions both on the rationale of resolutions being proposed before putting a resolution to vote as well as matters relating to the Group’s operations in general. All the resolutions set out in the Notice of the last AGM were put to vote by way of poll voting where each share has 1 vote. The poll was scrutinised and the poll results were verified by the appointed independent Scrutineer as per Bursa Malaysia Securities Berhad Main Market Listing Requirements.

Moving forward, all resolutions in members meeting will be voted by poll and an independent Scrutineer will be appointed for the entire polling process.

Communication and engagement with shareholders

The Board recognises the importance of being transparent and accountable to the Company’s investors and, as such, has various channels to maintain communication with them. The various channels of communications are through the quarterly announcements on financial results to Bursa Malaysia, relevant announcements and circulars, when necessary, the Annual and Extraordinary General Meetings and through the Group’s website at where shareholders can access pertinent information concerning the Group.

This Statement is issued in accordance with a resolution of the Board dated 25 April 2017.



1. UTILISATION OF PROCEEDS RAISED FROM CORPORATE EXERCISE The Company has completed bonus issue of 123,124,376 ordinary shares of the Company on 22 December 2016 and

bonus issue of 61,561,667 free warrants (“Warrants 2016/2021” or “Warrants B”) on 29 December 2016. There was no proceeds raised from the aforesaid exercise.

The Warrants B were listed and quoted on Bursa Securities on 29 December 2016.

There was no exercise of Warrants B since its issuance.

There was also no exercise of Warrants 2010/2020 (“Warrants A”) during the financial year.

2. EMPLOYEES SHARE OPTION SCHEME The Employees’ Share Option Scheme of the Company (“ESOS” or “Scheme”) was implemented on 23 January 2017 and

shall be in force for a duration of ten (10) years.

The total number of options granted, exercised and outstanding under the ESOS are set out in the table below:-

Description

Number of Options as at 28 February 2017

All Eligible Employees including Directors and Chief Executive Directors and Chief Executive

(a) Options granted 49,869,000 11,200,000

(b) Options exercised - -

(c) Options outstanding 49,869,000 11,200,000

In accordance with the Company’s ESOS By-Laws, not more than forty per centum (40%) of the Company’s ordinary shares available under the Scheme shall be allocated, in aggregate, to Directors and senior management of the Group. Since the commencement of the Scheme up to the financial year ended 28 February 2017, the Company has granted 27.50% of options to the Directors and senior management.

A breakdown of the options offered to the Non-Executive Directors pursuant to the ESOS in respect of the current financial year are disclosed in the Directors’ Report on page 38.

3. MATERIAL CONTRACTS AND CONTRACTS RELATING TO LOANS

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

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

There was no RRPT entered during the financial year.

ADDITIONAL COMPLIANCE STATEMENT

FINANCIAL STATEMENTSDirectors’ Report

Statement by Directors

Statutory Declaration

Independent Auditors‘ Report

Statements of Financial Position

Statements of Profit or Loss and Other Comprehensive Income

Statements of Changes in Equity

Statements of Cash Flows

Notes to the Financial Statements

35

44

44

45

49

51

53

57

60


The Directors of Pantech Group Holdings Berhad have pleasure in submitting their report together with the audited financial statements of the Group and of the Company for the financial year ended 28 February 2017.

PRINCIPAL ACTIVITIES

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

The principal activities and details of the subsidiary companies, associate company and joint venture are disclosed in Notes 8, 9 and 10 to the Financial Statements respectively.

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

RESULTS

Group Company

RM RM

Profit for the financial year 28,408,657 18,481,015

Attributable to:-

Owners of the Company 29,718,280 18,481,015

Non-controlling interest (1,309,623) -

28,408,657 18,481,015

RESERVES AND PROVISIONS

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

DIVIDENDS

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

RM

Final single tier dividend of 0.5 sen per ordinary share in respect of the financial year ended 29 February 2016 and paid on 18 August 2016 3,047,932

Final share dividend via distribution of treasury shares on the basis of 1 treasury share for every 100 existing ordinary shares in respect of the financial year ended 29 February 2016 and distributed on 18 August 2016 3,668,030

First interim single tier dividend of 0.5 sen per ordinary share in respect of the financial year ended 28 February 2017 and paid on 19 October 2016 3,078,162

Second interim single tier dividend of 0.5 sen per ordinary share in respect of the financial year ended 28 February 2017 and paid on 27 December 2016 3,078,162

Third interim single tier dividend of 0.3 sen per ordinary share in respect of the financial year ended 28 February 2017 and paid on 12 April 2017 2,215,962

DIRECTORS’ REPORT

Pantech Group Holdings Berhad (733607-W)36

DIVIDENDS cont’d

At the forthcoming Annual General Meeting, a final single tier dividend, in respect of the financial year ended 28 February 2017, of 0.50 sen per ordinary share will be proposed for shareholders’ approval. The financial statements for current financial year do not reflect this proposed dividend. Such dividend, if approved by the shareholders, will be accounted for in equity as an appropriation of unappropriated profit in the financial year ending 28 February 2018.

DIRECTORS

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

Dato’ Chew Ting Leng (Executive Chairman/Group Managing Director)*Dato’ Goh Teoh Kean (Group Deputy Managing Director)*Tan Ang Ang (Executive Director)*To Tai Wai (Executive Director)*Ng Lee Lee (Executive Director)*Tan Sui Hin (Senior Independent Non-Executive Director)Loh Wei Tak (Independent Non-Executive Director)Yusoff Bin Mohamed (Independent Non-Executive Director)Sakinah Binti Salleh (Non-Independent Non-Executive Director) (appointed on 21.7.2016)

* Directors of the Company and its subsidiary company(ies).

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

Chew Soon JiatFreddie Chew Sun GheeGan Teck YeowHoon Tai WoeiJairus Tan Vern HsienKong Chiong LeeLim Soon BengLing ChingLing Ju Loong (alternate Director for Ling Ching)Teo Tiong TeckWang Woon Chin

DIRECTORS’ REPORTcont’d


DIRECTORS’ INTERESTS

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

Number of ordinary shares

As at1.3.2016 Acquired

BonusIssue

SharesDividend (Sold)

As at28.2.2017

Dato’ Chew Ting Leng

- direct interest 4,545,000 2,000,000 918,090 45,450 - 7,508,540

- deemed interest through CTL Capital Holding Sdn. Bhd. 109,693,214 - 22,158,029 1,096,931 - 132,948,174

Dato’ Goh Teoh Kean

- direct interest 4,545,000 - 918,090 45,450 - 5,508,540

- deemed interest through GLManagement Agency Sdn. Bhd. 79,075,770 - 15,973,304 790,756 - 95,839,830

Tan Ang Ang

- direct interest 10,897,900 - 2,201,375 108,978 (2,000,000) 11,208,253

- deemed interest through his spouse, Yong Yui Kiew 1,649,330 - 333,164 16,493 - 1,998,987

To Tai Wai

- direct interest 13,625,283 - 2,752,306 136,251 (3,000,000) 13,513,840

Ng Lee Lee

- direct interest 7,205,968 - 1,455,605 72,059 - 8,733,632

- deemed interest through her spouse,Wong Chong Peng 159,047 - 32,127 1,590 - 192,764

Tan Sui Hin

- direct interest 550,450 - 111,190 5,504 - 667,144

Loh Wei Tak

- direct interest 252,500 - 51,005 2,525 - 306,030

Yusoff Bin Mohamed

- direct interest 1,010 - 204 10 - 1,224



DIRECTORS’ INTERESTS cont’d

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

Number of ordinary shares under Employee Share Option Scheme

Granted on24.1.2017 Exercised Expired Lapsed

Unexercisedas at

28.2.2017

Dato’ Chew Ting Leng 2,000,000 - - - 2,000,000

Dato’ Goh Teoh Kean 2,000,000 - - - 2,000,000

Tan Ang Ang 2,000,000 - - - 2,000,000

To Tai Wai 2,000,000 - - - 2,000,000

Ng Lee Lee 2,000,000 - - - 2,000,000

Tan Sui Hin 300,000 - - - 300,000

Loh Wei Tak 300,000 - - - 300,000

Yusoff Bin Mohamed 300,000 - - - 300,000

Sakinah Binti Salleh 300,000 - - - 300,000

Number of Warrants A (2010/2020)

As at1.3.2016 Adjusted* (Exercised)

As at28.2.2017


- deemed interest through CTL Capital Holding Sdn. Bhd. 17,346,398 3,469,279 - 20,815,677


- deemed interest through GL Management Agency Sdn. Bhd. 12,838,130 2,567,626 - 15,405,756

Tan Ang Ang

- direct interest 1,347,240 269,448 - 1,616,688

- deemed interest through his spouse, Yong Yui Kiew 213,000 42,600 - 255,600





Number of Warrants A (2010/2020)

As at1.3.2016 Adjusted* (Exercised)

As at28.2.2017

To Tai Wai

- direct interest 2,111,880 422,376 - 2,534,256

Ng Lee Lee

- direct interest 1,111,190 222,238 - 1,333,428

- deemed interest through her spouse, Wong Chong Peng 20,540 4,108 - 24,648

Tan Sui Hin

- direct interest 15,000 3,000 - 18,000

Number of Warrants B (2016/2021)

As at1.3.2016 Bonus issue (Exercised)

As at28.2.2017


- direct interest - 459,045 - 459,045

- deemed interest through CTL Capital Holding Sdn. Bhd. - 11,079,014 - 11,079,014


- direct interest - 459,045 - 459,045

- deemed interest through GL Management Agency Sdn. Bhd. - 7,986,651 - 7,986,651

Tan Ang Ang

- direct interest - 1,100,687 - 1,100,687

- deemed interest through his spouse, Yong Yui Kiew - 166,582 - 166,582

To Tai Wai

- direct interest - 1,376,153 - 1,376,153

Ng Lee Lee

- direct interest - 727,802 - 727,802

- deemed interest through her spouse, Wong Chong Peng - 16,063 - 16,063

Tan Sui Hin

- direct interest - 55,595 - 55,595





Number of Warrants B (2016/2021)

As at1.3.2016 Bonus issue (Exercised)

As at28.2.2017

Loh Wei Tak

- direct interest - 25,502 - 25,502

Yusoff Bin Mohamed

- direct interest - 102 - 102

* Adjustments to the exercise price and number of outstanding Warrant A 2010/2020 pursuant to the issuance of bonus issue of 123,124,376 new ordinary shares by the Company as constituted by the Deed Poll.

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

DIRECTORS’ BENEFITS

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

Since the end of the previous financial year, no Director has received or become entitled to receive any benefit (other than as disclosed in Note 38 to the Financial Statements) by reason of a contract made by the Company or a related corporation with the Director or with a firm of which he is a member, or with a company in which he has a substantial financial interest.

DIRECTORS’ REMUNERATION

The Directors’ remuneration is disclosed in Notes 33 and 36 to the financial statements.

The Company maintains Directors’ and Officers’ liability insurance for purposes of Section 289 of the Companies Act, 2016, throughout the financial year, which provides appropriate insurance cover for the Directors and Officers of the Company. The amount of insurance premium paid during the financial year amounted to RM9,217.

ISSUE OF SHARES AND DEBENTURES

During the current financial year, the Company had increased its issued and fully paid-up ordinary share capital from RM123,294,296 to RM203,928,587 by:-

(a) 123,124,376 new ordinary shares arising from issuance of bonus shares on the basis of one bonus share for every five existing ordinary shares held; and

(b) the transfer of share premium pursuant to Section 618 (2) of the Companies Act, 2016 amounting to RM56,009,416 and

became part of the Company’s share capital.

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

There were no issuance of debentures during the financial year.



TREASURY SHARES

The shareholders of the Company, through the Annual General Meeting held on 21 August 2008, approved the Company’s plan to repurchase up to 10% of the issued and paid-up share capital of the Company (“Share Buy Back”). The authority granted by the shareholders was subsequently renewed in every Annual General Meeting held and it was last renewed in the Annual General Meeting held on 21 July 2016. The Directors of the Company are committed to enhancing the value of the Company to its shareholders and believe that the purchase plan can be applied in the best interest of the Company and its shareholders.

The Company has distributed a share dividend via distribution of treasury shares on the basis of 1 treasury share for every 100 existing ordinary shares in respect of the financial year ended 29 February 2016 and distributed on 18 August 2016.

During the financial year ended 28 February 2017, the Company repurchased 2,269,300 ordinary shares of its issued share capital from the open market. The average price paid for the repurchased shares was RM0.59 per share. The repurchased transactions were financed by internally generated funds. These repurchased shares were held as treasury shares and treated in accordance with the requirements of Section 127 of the Companies Act, 2016.

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

As at financial year end, the number of ordinary shares issued and fully paid-up after deducting treasury shares against equity is 738,653,932 ordinary shares.

OPTIONS GRANTED OVER UNISSUED SHARES

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

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

The salient features and other terms of the ESOS are disclosed in the Note 37 to the Financial Statements.

7-YEAR 7% IRREDEEMABLE CONVERTIBLE UNSECURED LOAN STOCKS (“ICULS”)

During the previous financial year, all outstanding ICULS have been fully converted into ordinary shares of the Company through compulsory conversion exercise which was completed on 7 May 2015.

WARRANTS

The salient features of the Warrants are disclosed in Note 25 to the Financial Statements.

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



OTHER STATUTORY INFORMATION

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

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

(b) to ensure that any current assets which were unlikely to be realised in the ordinary course of business including the value of current assets as shown in the accounting records of the Group and of the Company have been written down to an amount which the current assets might be expected so to realise.

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

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

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

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

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

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

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

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

In the opinion of the Directors:-

(a) no contingent liability or other liability has become enforceable or is likely to become enforceable within the period of twelve months after the end of the financial year which, in the opinion of the Directors, will or may affect the ability of the Group and of the Company to meet their obligations as and when they fall due;

(b) the results of operations of the Group and of the Company during the financial year were not substantially affected by any item, transaction or event of a material and unusual nature; and

(c) there has not arisen in the interval between the end of the financial year and the date of this report any item, transaction or event of a material and unusual nature likely to affect substantially the results of operations of the Group and of the Company for the current financial year in which this report is made.

SIGNIFICANT EVENTS

The significant events are disclosed in Note 43 to the Financial Statements.

AUDITORS’ REMUNERATION

The Auditors’ Remuneration is disclosed in Note 33 to the Financial Statements.



AUDITORS

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

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

)DATO’ CHEW TING LENG ) ) ) ) ) ) ) DIRECTORS ) ) ) ) )

)DATO’ GOH TEOH KEAN )

Johor Bahru13 June 2017



In the opinion of the Directors, the financial statements set out on pages 49 to 139 are drawn up in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act, 2016 in Malaysia so as to give a true and fair view of the financial position of the Group and of the Company as at 28 February 2017 and of their financial performance and cash flows for the financial year then ended.

In the opinion of the Directors, the information set out on page 140 has been compiled in accordance with the Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosures pursuant to Bursa Malaysia Securities Berhad Listing Requirements, issued by the Malaysian Institute of Accountants, and presented based on the format prescribed by Bursa Malaysia Securities Berhad.

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

DATO’ CHEW TING LENG DATO’ GOH TEOH KEAN


I, Wang Woon Chin, being the Officer primarily responsible for the financial management of Pantech Group Holdings Berhad, do solemnly and sincerely declare that to the best of my knowledge and belief, the financial statements set out on pages 49 to 139 and the supplementary information set out on page 140 are correct and I make this solemn declaration conscientiously believing the same to be true and by virtue of the Statutory Declarations Act 1960.

Subscribed and solemnly declared by )the abovenamed at Johor Bahru in the )State of Johor this day of ) 13 June 2017 ) WANG WOON CHIN

Before me:

LIM JIT NGOH NO. J265Commissioner for Oaths

STATEMENT BY DIRECTORS

STATUTORY DECLARATION


REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS

Opinion

We have audited the financial statements of Pantech Group Holdings Berhad (“the Company”), which comprise the statements of financial position as at 28 February 2017, and the statements of profit or loss and other comprehensive income, statements of changes in equity and statements of cash flows for the financial year then ended, and notes to the financial statements, including a summary of significant accounting policies, as set out on pages 49 to 139.

In our opinion, the accompanying financial statements give a true and fair view of the financial position of the Group and of the Company as at 28 February 2017, and of their financial performance and cash flows for the financial year then ended in accordance with Malaysian Financial Reporting Standards (“MFRSs”), International Financial Reporting Standards (“IFRSs”) and the requirements of the Companies Act, 2016 in Malaysia.

Basis for Opinion

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

Independence and Other Ethical Responsibilities

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

KEY AUDIT MATTERS

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

Allowance for impairment of trade receivables

The risk

Refer to Note 45(c) to the Financial Statements. We focused on this area because the Group has material amount of trade receivables that are past due but not impaired. The key associate risk was the recoverability of billed trade receivables as management judgement is required in determining the completeness of the trade receivables provision and in assessing its adequacy through considering the expected recoverability of the year-end trade receivables.

Our response

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

The basis of management’s judgement over the recoverability of billed trade receivables are disclosed in Note 3.8 and 45(c) to the Financial Statements.

INDEPENDENT AUDITORS’ REPORTTo the Members of Pantech Group Holdings Berhad

(Incorporated in Malaysia) Company No: 733607 W


KEY AUDIT MATTERS cont’d

Inventory valuation

The risk

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

Our response

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

Capitalisation of property, plant and equipment and capital work-in-progress

The risk

The Group holds a significant amount of property, plant and equipment and capital work-in-progress as at 28 February 2017 as detailed in Note 4 and Note 6 to the Financial Statements respectively.

The significant level of capital expenditure requires consideration of the nature of costs incurred to ensure that capitalisation of property, plant and equipment and capital work-in-progress meets the specific recognition criteria as set out in MFRS 116 – property, plant and equipment, specifically in relation to assets constructed by the Group and the application and management judgement in assigning appropriate useful economic lives.

Our response

We have assessed the nature of capital work-in-progress capitalised by the Group in order to test the validity of amounts capitalised and evaluating whether assets capitalised meet the recognition criteria as set out in MFRS 116.

We also considered whether capitalisation of assets ceased when the asset is in the location and condition necessary for it to be capable of operating in the manner intended by the Group and that a consistent approach was applied by the Group across all operations.

Furthermore, we challenged the useful economic lives assigned with reference to the Group’s historical experience, our understanding of the future utilisation of assets by the Group and by reference to the depreciation policies applied by third parties operating similar assets.

INFORMATION OTHER THAN THE FINANCIAL STATEMENTS AND AUDITORS’ REPORT THEREON

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

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

INDEPENDENT AUDITORS’ REPORTTo the Members of Pantech Group Holdings Berhad(Incorporated in Malaysia) Company No: 733607 Wcont’d


INFORMATION OTHER THAN THE FINANCIAL STATEMENTS AND AUDITORS’ REPORT THEREON cont’d

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

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

RESPONSIBILITIES OF DIRECTORS FOR THE FINANCIAL STATEMENTS

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

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

AUDITORS’ RESPONSIBILITIES FOR THE AUDIT OF THE FINANCIAL STATEMENTS

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

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

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

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

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

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

INDEPENDENT AUDITORS’ REPORTTo the Members of Pantech Group Holdings Berhad

(Incorporated in Malaysia) Company No: 733607 W

cont’d


AUDITORS’ RESPONSIBILITIES FOR THE AUDIT OF THE FINANCIAL STATEMENTS cont’d

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

- Evaluate the overall presentation, structure and content of the financial statements of the Group and of the Company, including the disclosures, and whether the financial statements of the Group and of the Company represent the underlying transactions and events in a manner 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 financial statements of the Group. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

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

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

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

REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS

In accordance with the requirements of the Companies Act, 2016 in Malaysia, we report that the subsidiaries of which we have not acted as auditors, are disclosed in Note 8 to the Financial Statements.

OTHER REPORTING RESPONSIBILITIES

The supplementary information set out on page 140 is disclosed to meet the requirement of Bursa Malaysia Securities Berhad and is not part of the financial statements. The Directors are responsible for the preparation of the supplementary information in accordance with Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants (“MIA Guidance”) and the directive of Bursa Malaysia Securities Berhad. In our opinion, the supplementary information is prepared, in all material respects, in accordance with the MIA Guidance and the directive of Bursa Malaysia Securities Berhad.

OTHER MATTERS

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

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


INDEPENDENT AUDITORS’ REPORTTo the Members of Pantech Group Holdings Berhad(Incorporated in Malaysia) Company No: 733607 Wcont’d


STATEMENTS OF FINANCIAL POSITIONAs at 28 February 2017

Group CompanyNote 2017 2016 2017 2016

RM RM RM RM

ASSETSNon-current assets

Property, plant and equipment 4 199,913,489 199,755,305 - - Prepaid land lease payments 5 33,715,859 26,843,738 - - Capital work-in-progress 6 28,565,616 10,260,534 - - Investment properties 7 6,600,000 6,500,000 - - Investment in subsidiary companies 8 - - 235,294,458 225,094,509 Investment in an associate company 9 2,275,137 2,233,712 - - Investment in a joint venture company 10 - 796,904 - - Goodwill on acquisition 11 1,213,677 1,282,166 - - Derivative financial instruments 12 3,275,874 3,122,987 831,429 - Deferred tax assets 13 927,225 1,413,087 - -

Total non-current assets 276,486,877 252,208,433 236,125,887 225,094,509

Current assets Inventories 14 262,426,291 253,367,474 - - Trade receivables 15 133,392,544 109,148,304 - - Other receivables 16 14,637,214 10,313,298 51,652 44,304 Amount due from subsidiary companies 8 - - 13,491 5,323,288 Amount due from an associate company 9 11,043,435 17,323,281 - - Derivative financial instruments 12 1,343,786 874,743 177,098 - Tax recoverable 395,089 120,031 - - Fixed deposits with licensed banks 17 2,436,327 2,352,101 - - Cash and bank balances 18 89,156,176 74,599,063 2,993,275 3,314,200

Total current assets 514,830,862 468,098,295 3,235,516 8,681,792

Total assets 791,317,739 720,306,728 239,361,403 233,776,301

EQUITY AND LIABILITIESEQUITYShare capital 19 203,928,587 123,294,296 203,928,587 123,294,296 Share premium 19 - 80,634,291 - 80,634,291 Treasury shares 20 (553,111) (2,948,525) (553,111) (2,948,525)Revaluation reserve 21 12,634,149 12,754,630 - - Employees share option reserve 22 960,348 - 960,348 - Irredeemable Convertible Unsecured Loan Stocks

- Equity component 23 - - - - Cash flow hedge reserve 24 4,520,394 3,262,018 909,261 (727,452)Warrants reserve 25 14,869,037 7,481,637 14,869,037 7,481,637 Exchange translation reserve 10,038,149 14,178,208 - - Unappropriated profit 26 278,003,771 270,640,658 6,535,546 10,530,179

Equity attributable to owners of the Company 524,401,324 509,297,213 226,649,668 218,264,426 Non-controlling interest 8,462,977 (27,351) - -

Total equity 532,864,301 509,269,862 226,649,668 218,264,426



RM RM RM RM

LIABILITIES

Non-current liabilities

Irredeemable Convertible Unsecured Loan Stocks

- Liability component 23 - - - -

Finance lease creditors 27 2,391,038 3,607,094 - -

Borrowings 28 44,546,710 36,710,294 6,630,000 1,250,000

Other payables 29 277,745 262,569 - -

Deferred tax liabilities 30 5,608,891 5,891,999 - -

Total non-current liabilities 52,824,384 46,471,956 6,630,000 1,250,000

Current liabilities

Trade payables 31 64,166,675 21,126,097 - -

Other payables 29 19,436,288 16,974,741 267,220 333,783

Derivatives financial instruments 12 99,266 727,452 99,266 727,452

Amount due to a joint venture company 10 - 802,034 - -

Amount due to an associate company 9 258,462 253,256 - -

Finance lease creditors 27 2,166,244 3,505,898 - -

Borrowings 28 114,785,150 115,841,787 3,368,169 10,022,600

Dividend payable 2,215,962 3,058,525 2,215,962 3,058,525

Tax payable 2,501,007 2,275,120 131,118 119,515

Total current liabilities 205,629,054 164,564,910 6,081,735 14,261,875

Total liabilities 258,453,438 211,036,866 12,711,735 15,511,875

Total equity and liabilities 791,317,739 720,306,728 239,361,403 233,776,301

STATEMENTS OF FINANCIAL POSITIONAs at 28 February 2017cont’d

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


STATEMENTS OF PROFIT OR LOSSAND OTHER COMPREHENSIVE INCOME

For the Financial Year ended 28 February 2017


RM RM RM RM

Revenue 32 479,348,907 513,293,392 24,391,992 16,584,201

Cost of sales (378,512,005) (395,506,552) - -

Gross profit 100,836,902 117,786,840 24,391,992 16,584,201

Other income 9,133,146 9,386,876 85,570 368,144

Selling and distribution expenses (14,659,312) (17,176,453) - -

Administration expenses (44,013,038) (44,456,523) (4,341,924) (3,243,141)

Other expenses (5,254,937) (3,899,361) (358,218) (260,747)

Finance costs (6,977,505) (8,361,594) (771,740) (682,247)

Profit from operations 39,065,256 53,279,785 19,005,680 12,766,210

Share of profit/(loss) in associate company 41,425 (310,939) - -

Share of (loss)/profit in joint venture company (11,049) 107,281 - -

Profit before tax 33 39,095,632 53,076,127 19,005,680 12,766,210

Tax expense 34 (10,686,975) (15,130,972) (524,665) (908,429)

Profit for the financial year 28,408,657 37,945,155 18,481,015 11,857,781

Other comprehensive income/(loss), net of tax

Items that will not be reclassified subsequently to profit or loss

Revaluation of property, plant and equipment - 10,284,149 - -

Realisation of revaluation reserve upon depreciation of revalued assets 120,481 123,411 - -

Transfer of revaluation reserve to unappropriated profit (120,481) (123,411) - -

Tax effect on items that will not be reclassified to profit or loss 34 - (1,310,556) - -

- 8,973,593 - -

Items that may be reclassified subsequently to profit or loss

Fair value gain on cash flow hedge 1,258,376 1,957,743 1,636,713 358,190

Foreign currency translation differences for foreign operations, net of tax (4,140,059) 6,941,509 - -

(2,881,683) 8,899,252 1,636,713 358,190

Other comprehensive (loss)/income for the financial year, net of tax (2,881,683) 17,872,845 1,636,713 358,190

Total comprehensive income for the financial year 25,526,974 55,818,000 20,117,728 12,215,971



RM RM RM RM

Profit/(Loss) attributable to:-

Owners of the Company 29,718,280 37,972,555 18,481,015 11,857,781

Non-controlling interest (1,309,623) (27,400) - -

Profit for the financial year 28,408,657 37,945,155 18,481,015 11,857,781

Total comprehensive income attributable to:-

Owners of the Company 26,836,597 55,845,400 20,117,728 12,215,971

Non-controlling interest (1,309,623) (27,400) - -

Total comprehensive income for the financial year 25,526,974 55,818,000 20,117,728 12,215,971

Earnings per share attributable to owners of the Company

Earnings per ordinary share

- Basic (sen) 35 4.03 5.19 - -

- Diluted (sen) 35 3.79 5.19 - -

STATEMENTS OF PROFIT OR LOSSAND OTHER COMPREHENSIVE INCOMEFor the Financial Year ended 28 February 2017cont’d



STATEMENTS OF CHANGES IN EQUITYFor the Financial Year ended 28 February 2017

Attr

ibuta

ble to

owne

rs of

the C

ompa

ny

Non

-dist

ribut

able

Distr

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ble

Sh

are

capit

al

Shar

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plica

tion

mon

eySh

are

prem

iumTre

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ares

Reva

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e

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shar

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ionre

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e

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eem

able

Conv

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secu

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Loan

Stoc

ks

Cash

flow

hedg

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sre

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e

Exch

ange

trans

lation

rese

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Unap

prop

riate

dpr

ofit

Tota

l

Non-

cont

rollin

gint

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tTo

tal

equit

yRM

RMRM

RMRM

RMRM

RMRM

RMRM

RMRM

RM

Grou

p

Balan

ce at

1 Ma

rch 20

15 12

0,596

,651

7,50

4 74

,743,7

99

(4,13

9,385

) 3,

904,4

48

93,98

3 4,

821,2

11

1,304

,275

7,481

,637

7,23

6,699

25

1,354

,613

467,4

05,43

5 -

467,4

05,43

5

Trans

actio

ns w

ith ow

ners:

-

Acqu

isitio

n of a

subs

idiary

comp

any

- -

- -

- -

- -

- -

- -

49

49

Issua

nce o

f sha

res pu

rsuan

t to c

onve

rsion

of

ICULS

2,40

6,405

-

4,81

2,811

-

- -

(4,82

1,211

) -

- -

(1,65

6,846

) 74

1,159

-

741,1

59

Exerc

ise of

ESOS

291,2

40

(7,50

4) 1,

077,6

81

- -

(93,9

83)

- -

- -

(299

,284)

968,1

50

- 96

8,150

Ac

quisi

tion o

f trea

sury

share

s -

- -

(2,79

3,164

) -

- -

- -

- -

(2,79

3,164

) -

(2,79

3,164

)Fin

al sin

gle ti

er div

idend

of 0.

50 se

n pe

r sha

re -

- -

- -

- -

- -

- (3

,057,3

67)

(3,05

7,367

) -

(3,05

7,367

)Fin

al sh

are di

viden

d via

distri

butio

n of

treas

ury sh

ares o

n the

basis

of 1

treas

ury sh

are fo

r eve

ry 10

0 exis

ting

ordina

ry sh

ares

- -

- 3,

984,0

24

- -

- -

- -

(3,98

4,024

) -

- -

First

interi

m sin

gle ti

er div

idend

of 0.

50

sen p

er sh

are -

- -

- -

- -

- -

- (3

,074,5

46)

(3,07

4,546

) -

(3,07

4,546

)Se

cond

inter

im si

ngle

tier d

ivide

nd of

0.6

0 sen

per s

hare

- -

- -

- -

- -

- -

(3,67

9,329

) (3

,679,3

29)

- (3

,679,3

29)

Third

inter

im si

ngle

tier d

ivide

nd of

0.50

se

n per

share

- -

- -

- -

- -

- -

(3,05

8,525

) (3

,058,5

25)

- (3

,058,5

25)

Total

tran

sacti

ons w

ith ow

ners

2,69

7,645

(7

,504)

5,89

0,492

1,

190,8

60

- (9

3,983

) (4

,821,2

11)

- -

- (1

8,809

,921)

(13,9

53,62

2) 49

(1

3,953

,573)

Profit

for t

he fin

ancia

l yea

r -

- -

- -

- -

- -

- 37

,972,5

55

37,97

2,555

(2

7,400

) 37

,945,1

55

Othe

r com

prehe

nsive

inco

me fo

r the

fin

ancia

l yea

r -

- -

- 8,

850,1

82

- -

1,957

,743

- 6,

941,5

09

123,4

11

17,87

2,845

-

17,87

2,845

To

tal co

mpreh

ensiv

e inc

ome f

or the

fin

ancia

l yea

r -

- -

- 8,

850,1

82

- -

1,957

,743

- 6,

941,5

09

38,09

5,966

55

,845,4

00

(27,4

00)

55,81

8,000

Balan

ce at

29 Fe

bruary

2016

123,2

94,29

6 -

80,63

4,291

(2

,948,5

25)

12,75

4,630

-

- 3,2

62,01

8 7,4

81,63

7 14

,178,2

08

270,6

40,65

8 50

9,297

,213

(27,3

51)

509,2

69,86

2


STATEMENTS OF CHANGES IN EQUITYFor the Financial Year ended 28 February 2017cont’d

Attr

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rs of

the C

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ny

Non

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Distr

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RMRM

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RMRM

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RM

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Balan

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1 Ma

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16 12

3,294

,296

- 80

,634,2

91

(2,94

8,525

) 12

,754,6

30

- -

3,26

2,018

7,

481,6

37

14,17

8,208

27

0,640

,658

509,2

97,21

3 (2

7,351

) 50

9,269

,862

Trans

actio

ns w

ith ow

ners:

-

Increa

se in

inve

stmen

t in a

subs

idiary

co

mpan

y -

- -

- -

- -

- -

- -

- 9,

799,9

51

9,79

9,951

Sh

are op

tion g

ranted

unde

r ESO

S -

- -

- -

960,3

48

- -

- -

- 96

0,348

-

960,3

48

Issua

nce o

f Warr

ants

- -

- -

- -

- -

7,38

7,400

-

(7,38

7,400

) -

- -

Issua

nce o

f sha

res fr

om bo

nus i

ssue

24,62

4,875

-

(24,6

24,87

5) -

- -

- -

- -

- -

- -

Acqu

isitio

n of t

reasu

ry sh

ares

- -

- (1

,272,6

16)

- -

- -

- -

- (1

,272,6

16)

- (1

,272,6

16)

Final

single

tier

divide

nd of

0.50

sen

per s

hare

- -

- -

- -

- -

- -

(3,04

7,932

) (3

,047,9

32)

- (3

,047,9

32)

Final

share

divid

end v

ia dis

tribu

tion

of tre

asury

share

s on t

he ba

sis of

1 tre

asury

share

for e

very

100 e

xistin

g ord

inary

share

s -

- -

3,66

8,030

-

- -

- -

- (3

,668,0

30)

- -

- Fir

st int

erim

single

tier

divide

nd of

0.50

se

n per

share

- -

- -

- -

- -

- -

(3,07

8,162

) (3

,078,1

62)

- (3

,078,1

62)

Seco

nd in

terim

sing

le tie

r divi

dend

of 0.

50

sen p

er sh

are -

- -

- -

- -

- -

- (3

,078,1

62)

(3,07

8,162

) -

(3,07

8,162

)Th

ird in

terim

sing

le tie

r divi

dend

of 0.

30

sen p

er sh

are -

- -

- -

- -

- -

- (2

,215,9

62)

(2,21

5,962

) -

(2,21

5,962

)

Total

tran

sacti

ons w

ith ow

ners

24,62

4,875

-

(24,6

24,87

5) 2,

395,4

14

- 96

0,348

-

- 7,

387,4

00

- (2

2,475

,648)

(11,7

32,48

6) 9,

799,9

51

(1,93

2,535

)

Profit

for t

he fin

ancia

l yea

r -

- -

- -

- -

- -

- 29

,718,2

80

29,71

8,280

(1

,309,6

23)

28,40

8,657

Ot

her c

ompre

hens

ive in

come

for t

he

finan

cial y

ear

- -

- -

(120

,481)

- -

1,25

8,376

-

(4,14

0,059

) 12

0,481

(2

,881,6

83)

- (2

,881,6

83)

Total

comp

rehen

sive i

ncom

e for

the

finan

cial y

ear

- -

- -

(120

,481)

- -

1,25

8,376

-

(4,14

0,059

) 29

,838,7

61

26,83

6,597

(1

,309,6

23)

25,52

6,974

Trans

fer pu

rsuan

t to S

ectio

n 618

(2) o

f the

Co

mpan

ies A

ct, 20

16 (N

ote 19

) 56

,009,4

16

- (5

6,009

,416)

- -

- -

- -

- -

- -

-

Balan

ce at

28 Fe

bruary

2017

203,9

28,58

7 -

- (5

53,11

1) 12

,634,1

49

960,3

48

- 4,

520,3

94

14,86

9,037

10

,038,1

49

278,0

03,77

1 52

4,401

,324

8,46

2,977

53

2,864

,301


STATEMENTS OF CHANGES IN EQUITYFor the Financial Year ended 28 February 2017

cont’d

Non

-dist

ribut

able

Di

strib

utab

le

Sh

are

capi

tal

Shar

eap

plica

tion

mon

eySh

are

prem

ium

Treas

ury

shar

es

Empl

oyee

ssh

are

optio

nre

serv

e

Irred

eem

able

Co

nver

tible

Un

secu

red

Loan

Stoc

ks

Cash

flow

hedg

ere

serv

eWa

rrant

sre

serv

eUn

appr

opria

ted

prof

itTo

tal e

quity

RMRM

RMRM

RMRM

RMRM

RMRM

Com

pany

Balan

ce at

1 M

arch

201

5 1

20,59

6,651

7

,504

74,7

43,79

9 (4

,139,3

85)

93,9

83

4,82

1,211

(1

,085,6

42)

7,48

1,637

1

7,482

,319

220

,002,0

77

Trans

actio

ns w

ith o

wner

s:-

Issua

nce

of sh

ares

pur

suan

t to

conv

ersio

n of

ICUL

S 2

,406,4

05

- 4

,812,8

11

- -

(4,82

1,211

) -

- (1

,656,8

46)

741

,159

Exer

cise

of ES

OS 2

91,24

0 (7

,504)

1,07

7,681

-

(93,9

83)

- -

- (2

99,28

4) 9

68,15

0

Acqu

isitio

n of

trea

sury

shar

es -

- -

(2,79

3,164

) -

- -

- -

(2,79

3,164

)

Final

single

tier

divi

dend

of 0

.50 s

en p

er o

rdina

ry sh

are

- -

- -

- -

- -

(3,05

7,367

) (3

,057,3

67)

Final

shar

e div

idend

via

distri

butio

n of

tre

asur

y sh

ares

on

the

basis

of 1

trea

sury

shar

e fo

r eve

ry 10

0 ex

isting

ord

inary

shar

es -

- -

3,98

4,024

-

- -

- (3

,984,0

24)

-

First

inter

im s

ingle

tier d

ivide

nd o

f 0.50

sen

per

sh

are

- -

- -

- -

- -

(3,07

4,546

) (3

,074,5

46)

Seco

nd in

terim

sing

le tie

r divi

dend

of 0

.60 se

n pe

r sh

are

- -

- -

- -

- -

(3,67

9,329

) (3

,679,3

29)

Third

inte

rim s

ingle

tier d

ivide

nd o

f 0.50

sen

per

sh

are

- -

- -

- -

- -

(3,05

8,525

) (3

,058,5

25)

Tota

l tra

nsac

tions

with

own

ers

2,69

7,645

(7

,504)

5,89

0,492

1

,190,8

60

(93,9

83)

(4,82

1,211

) -

- (1

8,809

,921)

(13,9

53,62

2)

Prof

it fo

r the

fina

ncial

year

- -

- -

- -

- -

11,8

57,78

1 1

1,857

,781

Othe

r com

preh

ensiv

e inc

ome

for t

he fi

nanc

ial ye

ar -

- -

- -

- 3

58,19

0 -

- 3

58,19

0

Tota

l com

preh

ensiv

e inc

ome

for t

he fi

nanc

ial ye

ar -

- -

- -

- 3

58,19

0 -

11,8

57,78

1 1

2,215

,971

Balan

ce at

29

Febr

uary

2016

123

,294,2

96

- 8

0,634

,291

(2,94

8,525

) -

- (7

27,45

2) 7

,481,6

37

10,5

30,17

9 2

18,26

4,426

Pantech Group Holdings Berhad (733607-W)56 N

on-d

istrib

utab

le

Distr

ibut

able

Sh

are

capi

tal

Shar

eap

plica

tion

mon

eySh

are

prem

ium

Treas

ury

shar

es

Empl

oyee

ssh

are

optio

nre

serv

e

Irred

eem

able

Co

nver

tible

Un

secu

red

Loan

Stoc

ks

Cash

flow

hedg

ere

serv

eWa

rrant

sre

serv

eUn

appr

opria

ted

prof

itTo

tal e

quity

RMRM

RMRM

RMRM

RMRM

RMRM

Com

pany

con

t’d

Balan

ce at

1 M

arch

201

6 1

23,29

4,296

-

80,6

34,29

1 (2

,948,5

25)

- -

(727

,452)

7,48

1,637

1

0,530

,179

218

,264,4

26

Trans

actio

ns w

ith o

wner

s:-

Shar

e op

tion

gran

ted

unde

r ESO

S -

- -

- 9

60,34

8 -

- -

- 9

60,34

8

Issua

nce

of W

arra

nts

- -

- -

- -

- 7

,387,4

00

(7,38

7,400

) -

Issua

nce

of sh

ares

from

bon

us is

sue

24,6

24,87

5 -

(24,6

24,87

5) -

- -

- -

- -

Acqu

isitio

n of

trea

sury

shar

es -

- -

(1,27

2,616

) -

- -

- -

(1,27

2,616

)

Final

single

tier

divi

dend

of 0

.50 se

n pe

r sha

re -

- -

- -

- -

- (3

,047,9

32)

(3,04

7,932

)

Final

shar

e div

idend

via d

istrib

ution

of t

reas

ury

shar

es o

n th

e ba

sis o

f 1 tr

easu

ry sh

are

for e

very

100

exist

ing o

rdina

ry sh

ares

- -

- 3

,668,0

30

- -

- -

(3,66

8,030

) -

First

inter

im si

ngle

tier d

ivide

nd o

f 0.50

sen

per

shar

e -

- -

- -

- -

- (3

,078,1

62)

(3,07

8,162

)

Seco

nd in

terim

sing

le tie

r divi

dend

of 0

.50 se

n pe

r sha

re -

- -

- -

- -

- (3

,078,1

62)

(3,07

8,162

)

Third

inte

rim si

ngle

tier d

ivide

nd o

f 0.30

sen

per

shar

e -

- -

- -

- -

- (2

,215,9

62)

(2,21

5,962

)

Tota

l tra

nsac

tions

with

own

ers

24,6

24,87

5 -

(24,6

24,87

5) 2

,395,4

14

960

,348

- -

7,38

7,400

(2

2,475

,648)

(11,7

32,48

6)

Prof

it fo

r the

fina

ncial

year

- -

- -

- -

- -

18,4

81,01

5 1

8,481

,015

Othe

r com

preh

ensiv

e inc

ome

for t

he fi

nanc

ial ye

ar -

- -

- -

- 1

,636,7

13

- -

1,63

6,713

Tota

l com

preh

ensiv

e inc

ome

for t

he fi

nanc

ial ye

ar -

- -

- -

- 1

,636,7

13

- 1

8,481

,015

20,1

17,72

8

Trans

fer p

ursu

ant t

o Se

ction

618

(2) o

f the

Co

mpa

nies A

ct, 2

016

(Not

e 19

) 5

6,009

,416

- (5

6,009

,416)

- -

- -

- -

-

Balan

ce at

28

Febr

uary

2017

203

,928,5

87

- -

(553

,111)

960

,348

- 9

09,26

1 1

4,869

,037

6,53

5,546

2

26,64

9,668

STATEMENTS OF CHANGES IN EQUITYFor the Financial Year ended 28 February 2017cont’d

The

acco

mpa

nyin

g no

tes

form

an

inte

gral

par

t of t

he fi

nanc

ial s

tate

men

ts.


STATEMENTS OF CASH FLOWSFor the Financial Year ended 28 February 2017


RM RM RM RM

OPERATING ACTIVITIESProfit before tax 39,095,632 53,076,127 19,005,680 12,766,210

Adjustments for:-

Allowance for impairment of receivables 4,011,565 3,150,044 - - Inventories written down 622,503 1,036,671 - - Amortisation of prepaid land lease payments 570,976 323,256 - - Depreciation of property, plant and

equipment 13,850,139 14,524,732 - - Interest expense 5,892,479 7,316,358 703,092 614,287 Property, plant and equipment written off 6,361 22,328 - - Reversal of inventories written down (110,259) (2,356,972) - - Bad debts written off 40,601 13,305 - - Employees Share Option Scheme expenses 960,348 - 960,348 - Revaluation loss on property, plant and

equipment - 100,722 - - Interest income (1,011,073) (229,010) (80,550) (368,144)Share of loss/(profit) from joint venture

company 11,049 (107,281) - - Share of (profit)/loss from associate company (41,425) 310,939 - - Dividend income - - (21,841,052) (14,018,613)Government grant income (23,000) - - - (Gain)/Loss on disposal of property, plant and

equipment (960,717) 434,603 - - Gain on disposal of joint venture company (55,750) - - - Loss from cross currency swap 10,144 40,998 10,144 40,998 Fair value loss/(gain) on derivatives financial

instruments 8,260 (3,790) - - Fair value gain adjustment on investment

properties (100,000) (1,670,000) - - Allowance for impairment of receivables no

longer required (3,922,073) (3,122,960) - - Unrealised (gain)/loss on foreign exchange (237,880) (798,782) (1,393) 17,207

Operating profit/(loss) before working capital changes 58,617,880 72,061,288 (1,243,731) (948,055)

Changes in working capital:-Inventories (9,571,061) 37,330,179 - - Receivables (28,487,038) 30,997,439 (7,348) 534,496 Payables 45,130,079 (13,235,392) (66,563) (439,521)Associate company 6,260,101 (11,056,089) - - Joint venture company (802,034) 145,755 - -

Cash flows from/(used in) operations 71,147,927 116,243,180 (1,317,642) (853,080)

Tax refund 142,287 98,309 - 14,493

Tax paid (10,652,456) (14,950,843) (513,062) (529,915)

Net cash flows from/(used in) operating activities 60,637,758 101,390,646 (1,830,704) (1,368,502)



RM RM RM RM

INVESTING ACTIVITIES

Dividend received - - 21,841,052 14,018,613

Repayment from subsidiary companies - - 5,000,000 3,177,164

Interest received 1,011,073 229,010 80,550 368,144

Purchase of property, plant and equipment A (4,299,271) (7,540,786) - -

Investment in subsidiary companies - - (10,199,949) (51)

Proceeds from disposal of joint venture 850,892 - - -

Proceeds from disposal of property, plant and equipment 2,596,027 8,137,604 - -

Capital work-in-progress incurred (28,650,306) (12,135,941) - -

Net cash flows (used in)/from investing activities (28,491,585) (11,310,113) 16,721,653 17,563,870

FINANCING ACTIVITIES

Repayment from subsidiary companies - - 311,190 280,010

Dividend paid (12,262,781) (13,391,534) (12,262,781) (13,391,534)

Proceeds from non-controlling interest B 2,587,896 49 - -

Proceeds from issuance of share capital - 968,151 - 968,151

Purchase of treasury shares (1,272,616) (2,793,164) (1,272,616) (2,793,164)

Government grant received 23,000 - - -

Interest paid (5,845,571) (7,354,712) (647,523) (647,534)

Repayment of finance lease creditors (3,771,520) (4,130,868) - -

Repayment of short-term borrowings (2,227,236) (28,856,364) (5,000,000) -

Repayment of term loans (20,823,787) (19,880,856) (6,530,000) (7,000,000)

Drawndown of term loans 28,732,039 - 10,200,000 -

Net cash flows used in financing activities (14,860,576) (75,439,298) (15,201,730) (22,584,071)

CASH AND CASH EQUIVALENTS

Net changes 17,285,597 14,641,235 (310,781) (6,388,703)

Effect of exchange rate changes (2,644,258) 4,633,616 (10,144) 342,632

At beginning of financial year 76,951,164 57,676,313 3,314,200 9,360,271

At end of financial year C 91,592,503 76,951,164 2,993,275 3,314,200

STATEMENTS OF CASH FLOWSFor the Financial Year ended 28 February 2017cont’d


STATEMENTS OF CASH FLOWSFor the Financial Year ended 28 February 2017

cont’d

NOTES TO THE STATEMENTS OF CASH FLOWS A. PURCHASE OF PROPERTY, PLANT AND EQUIPMENT

Group Company

2017 2016 2017 2016

RM RM RM RM

Acquired by means of finance lease 1,316,000 831,710 - -

Cash payments 4,299,271 7,540,786 - -

5,615,271 8,372,496 - - B. PROCEEDS FROM NON-CONTROLLING INTEREST During the financial year, the Group increased the issued and paid-up share capital of a subsidiary company from RM49

to RM9,800,000 by way of issuance of 9,799,951 units of new ordinary shares for a cash consideration of RM2,587,896 and non-cash consideration of RM7,212,055 to its non-controlling interest.

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

C. CASH AND CASH EQUIVALENTS Cash and cash equivalents included in the statements of cash flows comprise the following statements of financial

position amounts:-

Group Company

2017 2016 2017 2016

RM RM RM RM

Cash and bank balances 89,156,176 74,599,063 2,993,275 3,314,200

Fixed deposits with licensed banks 2,436,327 2,352,101 - -

91,592,503 76,951,164 2,993,275 3,314,200


Pantech Group Holdings Berhad (733607-W)Pantech Group Holdings Berhad (733607-W)60

1. GENERAL INFORMATION

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

The principal activities of the subsidiary companies, associate company and joint venture are disclosed in Notes 8, 9 and 10 to the Financial Statements respectively.

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

The Company is a public limited liability company, incorporated and domiciled in Malaysia and listed on the Main Market of the Bursa Malaysia Securities Berhad. The registered office of the Company is located at Level 15-2, Bangunan Faber Imperial Court, Jalan Sultan Ismail, 50250 Kuala Lumpur. The principal place of business of the Company is located at PTD 204334, Jalan Platinum Utama, Kawasan Perindustrian Pasir Gudang, Zon 12B, 81700 Pasir Gudang, Johor Darul Takzim.

The financial statements were authorised for issue by the Board of Directors in accordance with a resolution of the Directors on 13 June 2017.

2. BASIS OF PREPARATION OF THE FINANCIAL STATEMENTS

2.1 Statement of compliance

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

2.2 Basis of measurement

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

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

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

The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.

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

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

NOTES TO THE FINANCIAL STATEMENTS28 February 2017



cont’d

Annual Report 2017

2. BASIS OF PREPARATION OF THE FINANCIAL STATEMENTS cont’d

2.2 Basis of measurement cont’d

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

Level 1 – Quoted (unadjusted) market prices in active markets for identical assets or liabilities. Level 2 – Valuation techniques for which the lowest level input that is significant to their fair value measurement

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

is unobservable.

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

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

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

2.3 Functional and presentation currency

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

2.4 MFRSs

2.4.1 Adoption of new or revised MFRSs

The Group and the Company have consistently applied the accounting policies set out in Note 3 to the Financial Statements to all periods presented in these financial statements.

At the beginning of the current financial year, the Group and the Company adopted amendments to MFRSs and IC Interpretations which are mandatory for the financial periods beginning on or after 1 January 2016.

Initial application of all the relevant new and revised MFRSs and amendments/improvements to MFRSs and IC Interpretations that are effective did not have material impact to the financial statements of the Group and of the Company.

2.4.2 Standards Issued But Not Yet Effective

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


NOTES TO THE FINANCIAL STATEMENTS28 February 2017cont’d


2.4 MFRSs cont’d

2.4.2 Standards Issued But Not Yet Effective cont’d

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

Amendment to MFRS 107 Disclosure initiative

The amendment to MFRS 107 requires entity to provide disclosures on changes in liabilities arising from financing activities, including changes from cash flows and non-cash changes. The adoption of these amendments is not expected to have any financial impact on the Group and on the Company.

These amendments are effective for annual periods beginning on or after 1 January 2017, with early application permitted. Application of amendments will result in additional disclosure to be provided by the Group and the Company.

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

The amendment to MFRS 112 clarified the accounting treatment of deferred tax assets for unrealised losses on fixed-rate debt instruments measured at fair value. The adoption of the amendment is not expected to have any financial impact on the Group and the Company.

These amendments are effective for annual periods beginning on or after 1 January 2017, with early application permitted. If an entity applies these amendments for an earlier period, it must disclose that fact. These amendments are not expected to have any impact on the Group and on the Company.

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

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

On adoption, entities are required to apply the amendments without restating prior periods, but retrospective application is permitted if elected for all three amendments and other criteria are met. The amendments are effective for annual periods beginning on or after 1 January 2018, with early application permitted. The Group is assessing the potential effect of the amendments on its financial statements.

MFRS 9 Financial Instruments

MFRS 9 replaces MFRS 139 Financial Instruments: Recognition and Measurement and all previous version of MFRS 9. The new standard introduces extensive requirements and guidance for classification and measurement of financial assets and financial liabilities which fall under the scope of MFRS 9, new “expected credit loss model” under the impairment of financial assets and greater flexibility has been allowed in hedge accounting transactions. Upon adoption of MFRS 9, financial assets will be measured at either fair value or amortised cost. It is also expected that the investment in unquoted shares will be measured at fair value through other comprehensive income.

This standard will come into effect on or after 1 January 2018 with early adoption permitted. Retrospective application is required, but comparative information is not compulsory. The adoption of MFRS 9 will result in a change in accounting policy. The Group and the Company are currently assessing the financial impact of adopting MFRS 9.



cont’d


2.4 MFRSs cont’d

2.4.2 Standards Issued But Not Yet Effective cont’d

MFRS 15 Revenue from contracts with customers

MFRS 15 replaces the guidance in MFRS 111, Construction Contracts, MFRS 118, Revenue, IC Interpretation 13, Customer Loyalty Programmes, IC Interpretation 15, Agreements for Construction of Real Estate, IC Interpretation 18, Transfers of Assets from Customers and IC Interpretation 131, Revenue – Barter Transactions Involving Advertising Services. Upon adoption of MFRS 15, it is expected that the timing of revenue recognition might be different as compared with current practices.

This standard will come into effect on or after 1 January 2018 with early adoption permitted. The adoption of MFRS 15 will result in a change in accounting policy. The Group and the Company are currently assessing the financial impact of adopting MFRS 15.

MFRS 16 Leases

MFRS 16 introduces a single accounting model for a lessee and eliminates the distinction between finance lease and operating lease. Lessee is now required to recognise assets and liabilities for all leases with a term of more than 12 months, unless the underlying asset is of low value.

Upon adoption of MFRS 16, the Group and the Company are required to account for major part of its operating leases in the statements of financial position by recognising the “right-of-use” assets and these lease liabilities, thus increasing the assets and liabilities of the Group and the Company. The financial effect arising of this standard is still being assessed by the Group and the Company.

MRFS 16 is effective for annual periods beginning on or after 1 January 2019. Early application is permitted but not before an entity applies MFRS 15. A lessee can choose to apply the standard using either a full retrospective or a modified retrospective approach. The Group plans to assess the potential effect of MFRS 16 on its financial statements in financial year 2019.

IC Interpretation 22 Foreign currency transactions and advance consideration

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

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

This standard will come into effect on or after 1 January 2018 with early adoption permitted. The adoption of these amendments is not expected to have any financial impact on the Group.

2.5 Significant Accounting Estimates and Judgements

Estimates, assumptions concerning the future and judgements are made in the preparation of the financial statements. They affect the application of the Group’s accounting policies and reported amounts of assets, liabilities, income and expenses, and disclosures made. Estimates and underlying assumptions are assessed on an on-going basis and are based on experience and relevant factors, including expectations of future events that are believed to be reasonable under the circumstances. The actual results may differ from the judgements, estimates, and assumptions made by management, and will seldom equal the estimated results.




2.5 Significant Accounting Estimates and Judgements cont’d

2.5.1 Estimation uncertainty

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

Useful lives of depreciable assets

The management estimates the useful lives of the property, plant and equipment to be within 3 to 50 years and reviews the useful lives of depreciable assets at each reporting date. At 28 February 2017, the management assesses that the useful lives represent the expected utility of the assets to the Group. The carrying amounts are analysed in Note 4 to the Financial Statements. Actual results, however, may vary due to change in the expected level of usage and technological developments, which result in adjustment to the Group’s assets.

A 3% (2016: 3%) difference in the expected useful lives of the property, plant and equipment from the management’s estimate would result in approximately 1.40% (2016: 1.15%) variance in the Group’s profit for the financial year.

Impairment of inventories

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

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

A 2% (2016: 2%) difference in the management’s estimation of net realisable values of the inventories would result in approximately 0.04% (2016: 0.05%) variance in the Group’s profit for the financial year.

Impairment of loans and receivables

The Group and the Company assess at end of each reporting date whether there is any objective evidence that a financial asset is impaired. Factors such as probability of insolvency or significant financial difficulties of the receivables and default or significant delay in payments are considered in determining whether there is objective evidence of impairment.

Where there is objective evidence of impairment, the amount and timing of future cash flows are estimated based on historical loss experience for assets with similar credit risk characteristics.

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

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



cont’d



2.5.1 Estimation uncertainty cont’d

Impairment of non-financial assets

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

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

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

Income taxes/Deferred tax liabilities

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

Deferred tax assets

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

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

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

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





2.5.1 Estimation uncertainty cont’d

Employees share option cont’d

The assumptions and model used for estimating fair value for share-based payment transactions, sensitivity analysis and the carrying amounts are disclosed in Note 37 to the Financial Statements.

Fair value measurement and valuation processes

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

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

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

and liabilities are disclosed in the Notes 4 and 7 to the financial statements.

2.5.2 Significant management judgements

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

Classification between investment properties and owner-occupied properties

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

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

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



cont’d



2.5.2 Significant management judgements cont’d

Deferred tax assets

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

3. SIGNIFICANT ACCOUNTING POLICIES

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

3.1 Consolidation

3.1.1 Subsidiary companies

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

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

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

3.1.2 Basis of consolidation

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

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

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



3. SIGNIFICANT ACCOUNTING POLICIES cont’d

3.1 Consolidation cont’d

3.1.2 Basis of consolidation cont’d

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

3.1.3 Business combinations and goodwill

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

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

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

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

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

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

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



cont’d



3.1.4 Loss of control

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

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

3.1.5 Non-controlling interests

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

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

interests even if that results in a deficit balance.

3.1.6 Associate company

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

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

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

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

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

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





3.1.6 Associate company cont’d

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

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

3.1.7 Joint venture

A joint venture is a type of joint arrangement whereby the parties who have joint control of the arrangement have rights to the net assets of the joint venture. Joint control is contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require unanimous consent of the parties sharing control.

The Group’s interests in jointly-controlled entities are accounted for in the Group’s financial statements using the equity method from the date the Group obtains joint control until the date the Group ceases to have joint control over the joint venture.

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

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

3.2 Property, plant and equipment

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

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

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



cont’d


3.2 Property, plant and equipment cont’d

The principal annual depreciation rates used are as follows:-

Factory buildings 2.00% - 5.50%

Renovation, warehouse extension and electrical installation 10.00% - 33.33%

Computers and software 20.00% - 33.33%

Crane, plant and machinery 7.00% - 20.00%

Factory equipment 10.00% - 25.00%

Office equipment, telecommunication system, furniture and fittings 10.00% - 20.00%

Forklift, mobile crane and motor vehicles 20.00% - 25.00%

Restoration cost relating to an item of property, plant and equipment is capitalised only if such expenditure is expected to increase the future benefits from the existing property, plant and equipment beyond its previously assessed standard of performance.

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

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

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

3.3 Investment properties

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

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

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




3.4 Inventories

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

The costs of inventories are determined on weighted average method.

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

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

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

3.5 Assets acquired under lease agreements

Accounting by lessees

Finance leases

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

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

Operating leases

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

Leased assets

Leasehold land that normally has an indefinite economic life and title is not expected to pass to the Group by the end of the lease term is treated as operating lease. The payment made on entering into or acquiring a leasehold land is accounted for as prepaid land lease payment and is amortised over the respective lease term ranging from 59 to 88 years (2016: 60 to 88 years).

3.6 Foreign currency translation

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

3.6.1 Foreign currency transactions and balances

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

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



cont’d


3.6 Foreign currency translation cont’d

3.6.1 Foreign currency transactions and balances cont’d

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

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

3.6.2 Foreign operations

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

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

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

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

3.7 Income tax

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

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




3.7 Income tax cont’d

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

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

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

Value-added tax and goods services tax Value-added tax (“VAT”) or Goods and Services Tax (“GST”) are consumption tax based on value-added concept.

VAT and GST are imposed on goods and services at every production and distribution stage in the supply chain including importation of goods and services, at the rates applicable in the jurisdictions where the Group operates. Input tax on purchases can be deducted from output VAT/GST.

Revenues, expenses and assets are recognised net of the amount of VAT/GST except:-

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

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

The net amount of VAT/GST recoverable from, or payable to the authority is included as part of “other receivables” or “other payables” in the statements of financial position.

3.8 Impairment of financial assets

The Group assesses at each reporting date whether there is any objective evidence indicating that a financial asset is impaired.

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

The Group considers factors such as the probability of insolvency or significant financial difficulties of the debtor and default or significant delay in payments to determine whether there is objective evidence that an impairment loss has occurred. For certain categories of financial assets, such as trade receivables, assets that are assessed not to be impaired individually are subsequently assessed for impairment on a collective basis based on similar risk characteristics. Objective evidence of impairment for a portfolio of receivables could include the Group’s past experience with industry group, increase in cases of delayed payments and observable changes in economic conditions.

If such evidence exists, the amount of impairment loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at the financial asset’s original effective interest rate and the loss is recognised in profit or loss.



cont’d


3.8 Impairment of financial assets cont’d

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

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

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

3.9 Impairment of non-financial assets

At each reporting date, the Group reviews the carrying amounts of non-financial assets to determine whether there is any indication of impairment.

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

In assessing value in use, estimated future cash flows are discounted to 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. Impairment losses of continuing operations are recognised in profit or loss in those expense categories consistent with the function of the impaired asset.

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

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

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

3.10 Financial assets Financial assets are recognised in the statements of financial position when, and only when, the Group becomes

a party to the contractual provisions of the financial instrument and they are derecognised when the contractual rights to the cash flows from the financial asset expire, or when the financial asset and all substantial risks and rewards are transferred.

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




3.10 Financial assets cont’d

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

a) Loans and receivables b) Financial assets at fair value through profit or loss c) Held to maturity investments d) Available-for-sale financial assets

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

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

Other than loans and receivables, the Group does not have financial assets at fair value through profit or loss, held to maturity investments and available-for-sale financial assets.

Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted

in an active market and they are measured at amortised cost using effective interest method, less provision for impairment subsequently. Discounting is omitted where the effect of discounting is immaterial in subsequent measurement. Cash and cash equivalents, amount due from an associate company, trade and most other receivables of the Group and of the Company are fall into this category of financial instruments.

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

3.11 Financial liabilities Financial liabilities are recognised when the Group becomes a party to the contractual provisions of the financial

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

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

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

The Group’s financial liabilities include borrowings, finance lease creditors, amount due to an associate company, trade and other payables.

3.12 Revenue recognition

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured. Revenue is measured at the fair value of consideration received or receivable.



cont’d


3.12 Revenue recognition cont’d

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

Rental income is recognised when the rent is due.

Interest income is accounted for on accrual basis.

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

Insurance commission received is recognised on receivable basis.

Sales and inter-company transactions between companies of the Group are excluded from revenue of the Group.

3.13 Interest-bearing borrowings

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

3.14 Employee benefits

(a) Short term benefits

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

(b) Defined contribution plans

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

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

3.15 Share-based payment transactions

Share-based payment transactions of the Company

Equity-settled share-based payments to employees and others providing similar services are measured at the fair value of the equity instruments at the grant date. Details regarding the determination of the fair value of equity-settled share-based transactions are set out in Note 37 to the Financial Statements.




3.15 Share-based payment transactions cont’d

Share-based payment transactions of the Company cont’d

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

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

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

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

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

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

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

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



cont’d


3.16 Dividends

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

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

3.17 Financial guarantee contracts

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

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

3.18 Provisions

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

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

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

3.19 Cash and cash equivalents

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

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

3.20 Equity and reserves

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




3.20 Equity and reserves cont’d

Prior to Companies Act, 2016 which came into operation on 31 January 2017, share premium includes any premiums received on issue of share capital. Any transaction costs associated with the issuing of shares are deducted from share premium, net of any related income tax benefits. Effective on 31 January 2017 and subsequent period, transaction costs associated with the issuing of shares are deducted against equity.

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

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

Gains and losses on certain financial instruments are included in reserves for available-for-sale financial assets and cash-flow hedges respectively.

Unappropriated profits include all current and prior period unappropriated profits.

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

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

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

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

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

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

3.22 Capital work-in-progress Capital work-in-progress consists of property, plant and equipment under construction/installation for intended use

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

3.23 Goodwill/Negative goodwill

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

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

3.24 Contingent liabilities

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



cont’d


3.25 Irredeemable Convertible Unsecured Loan Stocks (“ICULS”)

The ICULS are regarded as compound financial instruments, consisting of a liability component and an equity component. At the date of issue, the fair value of the liability component is estimated by discounting the future contractual cash flows at the prevailing market interest rate available to the Company. The difference between the proceeds of issue of the ICULS and the fair value assigned to the liability component, representing the conversion option is accounted in the shareholders’ equity.

The liability component is subsequently stated at amortised cost using the effective interest rate method until extinguished on conversion whilst the value of the equity component is not adjusted in subsequent periods except on exercise and conversion to ordinary shares.

Under the effective interest rate method, the interest expense on the liability component is calculated by applying the prevailing market interest rate. The difference between this amount and the interest paid is added to the carrying value of the ICULS.

3.26 Warrants

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

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

3.27 Earnings per Share

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

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

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

3.28 Related parties

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

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

(i) Has control or joint control over the Group; (ii) Has significant influence over the Group; or (iii) Is a member of the key management personnel of the Group.




3.28 Related parties cont’d

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

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

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

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

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

services to the Group.

3.29 Operating segments

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

3.30 Derivative financial instruments and hedging activities

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

Derivative financial instruments

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

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

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

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

Cash flow hedge

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



cont’d


3.30 Derivative financial instruments and hedging activities cont’d

Cash flow hedge cont’d

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

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

3.31 Borrowing costs

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

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

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

3.32 Government grant

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

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



4. PROPERTY, PLANT AND EQUIPMENT

Group

Freehold land Buildings

Total land and buildings

Renovation and electrical

installation

Crane, machinery,

equipments, furniture and

fittings

Forklift, mobile crane

and motor vehicles Total

RM RM RM RM RM RM RM

Cost/Valuation

At 1 March 2015 17,530,477 108,500,944 126,031,421 4,466,480 118,291,109 12,747,819 261,536,829

Additions 3,340,623 - 3,340,623 25,512 3,913,766 1,092,595 8,372,496

Disposals (2,257,721) (6,517,549) (8,775,270) - (48,259) (623,894) (9,447,423)

Revaluation 5,547,098 (10,086,354) (4,539,256) - - - (4,539,256)

Written off - - - - (77,143) - (77,143)

Transferred from capital work-in-progress - 4,948,859 4,948,859 - - - 4,948,859

Currency translation difference 18,571 1,054,795 1,073,366 70,637 805,116 103,409 2,052,528

At 29 February 2016 24,179,048 97,900,695 122,079,743 4,562,629 122,884,589 13,319,929 262,846,890

Representing:-

At cost - 47,000 47,000 4,562,629 122,884,589 13,319,929 140,814,147

At valuation: 2016 24,179,048 97,853,695 122,032,743 - - - 122,032,743

At 1 March 2016 24,179,048 97,900,695 122,079,743 4,562,629 122,884,589 13,319,929 262,846,890

Additions - - - - 4,909,389 705,882 5,615,271

Disposals - (1,375,798) (1,375,798) - (280,561) (760,830) (2,417,189)

Written off - - - - (10,277) - (10,277)

Transferred from capital work-in-progress - 10,894,397 10,894,397 - 161,450 - 11,055,847

Currency translation difference (20,248) (792,297) (812,545) 36,102 (620,920) 10,661 (1,386,702)

At 28 February 2017 24,158,800 106,626,997 130,785,797 4,598,731 127,043,670 13,275,642 275,703,840

Representing:-

At cost - 10,941,397 10,941,397 4,598,731 127,043,670 13,275,642 155,859,440

At valuation: 2016 24,158,800 95,685,600 119,844,400 - - - 119,844,400

At 28 February 2017 24,158,800 106,626,997 130,785,797 4,598,731 127,043,670 13,275,642 275,703,840



cont’d

4. PROPERTY, PLANT AND EQUIPMENT cont’d

Group cont’d

Freehold land Buildings

Total land and buildings

Renovation and electrical

installation

Crane, machinery,

equipments, furniture and

fittings

Forklift, mobile crane

and motor vehicles Total

RM RM RM RM RM RM RM

Accumulated depreciation

At 1 March 2015 - 11,886,254 11,886,254 2,784,218 40,181,285 8,684,507 63,536,264

Charge for the financial year - 2,921,687 2,921,687 520,727 9,237,872 1,844,446 14,524,732

Disposals - (271,592) (271,592) - (47,107) (556,517) (875,216)

Revaluation - (14,722,683) (14,722,683) - - - (14,722,683)

Written off - - - - (54,815) - (54,815)

Currency translation difference - 188,684 188,684 33,862 380,320 80,437 683,303

At 29 February 2016 - 2,350 2,350 3,338,807 49,697,555 10,052,873 63,091,585

Charge for the financial year - 2,707,587 2,707,587 468,963 9,239,035 1,434,554 13,850,139

Disposals - - - - (70,550) (711,329) (781,879)

Written off - - - - (3,916) - (3,916)

Currency translation difference - 1,230 1,230 28,537 (404,374) 9,029 (365,578)

At 28 February 2017 - 2,711,167 2,711,167 3,836,307 58,457,750 10,785,127 75,790,351

Net carrying amount

At 29 February 2016 24,179,048 97,898,345 122,077,393 1,223,822 73,187,034 3,267,056 199,755,305

At 28 February 2017 24,158,800 103,915,830 128,074,630 762,424 68,585,920 2,490,515 199,913,489



4. PROPERTY, PLANT AND EQUIPMENT cont’d

On 31 December 2015 and on 29 February 2016, the Directors revalued all the above freehold land and buildings based on professional revaluations made by Sr. Lo Kin Weng, BSc. (Hons) Estate Mgt. MRICS, MRISM and Registered Valuer (V917) of CH Williams Talhar & Wong Sdn. Bhd. and Steve Smith B.Sc. (Hons) MRICS MNAVA and RICS Registered Valuer of Ernest Hawk Chartered Surveyors respectively. Both are independent professional valuers having recent experience in the location and category of properties being valued. All the above freehold land and buildings were revalued based on the market value basis. The valuations were incorporated in the financial statements for the financial year ended 29 February 2016.

The market value is defined as the estimated amount for which an asset or liability should exchange on the valuation date between a willing buyer and a willing seller in an arm’s length transaction after proper marketing and where the parties had each acted knowledgeably, prudently and without compulsion. The market value of the freehold land and buildings were determined based on the comparison approach and depreciated replacement cost approach respectively.

At the reporting date, had the revalued freehold land and buildings of the Group been carried under the cost model, the net carrying amount would have been as follows:-

Freehold land Buildings Total

RM RM RM

2017

Cost 16,181,219 106,030,735 122,211,954

Accumulated depreciation - (19,447,350) (19,447,350)

Net carrying amount 16,181,219 86,583,385 102,764,604

2016

Cost 16,201,467 108,602,631 124,804,098

Accumulated depreciation - (17,043,903) (17,043,903)

Net carrying amount 16,201,467 91,558,728 107,760,195

The net carrying amount of property, plant and equipment of the Group which are acquired under finance lease arrangements amounted to RM6,893,592 (2016: RM11,077,018).



cont’d

5. PREPAID LAND LEASE PAYMENTS

Group2017 2016

RM RM

Leasehold land:-CostAt 1 March 28,630,137 28,630,137Addition 7,212,055 -Transferred from other receivables 231,042 -

At 28 February/29 February 36,073,234 28,630,137

Accumulated amortisationAt 1 March 1,786,399 1,463,143Charge for the financial year 570,976 323,256

At 28 February/29 February 2,357,375 1,786,399

Net carrying amount 33,715,859 26,843,738

Amount to be amortised- Not later than one year 570,976 323,256- Later than one year but not later than five years 2,283,904 1,293,024- Later than five years 30,860,979 25,227,458

33,715,859 26,843,738

The prepaid land lease payments are amortised over the leasehold period of 59 to 88 (2016: 60 to 88) years.

6. CAPITAL WORK-IN-PROGRESS

Group

Buildings

Crane, machinery,

equipment, furniture and

fittings TotalRM RM RM

Balance as at 1 March 2015 3,073,452 - 3,073,452Addition 11,986,391 149,550 12,135,941Transferred to property, plant and equipment (4,948,859) - (4,948,859)

Balance as at 29 February 2016 10,110,984 149,550 10,260,534Addition 12,687,650 15,962,656 28,650,306Transferred from other receivables - 710,623 710,623Transferred to property, plant and equipment (10,894,397) (161,450) (11,055,847)

Balance as at 28 February 2017 11,904,237 16,661,379 28,565,616

The carrying amount of capital work-in-progress of the Group includes RM211,914 (2016: RM789,695) of term loan interest capitalised during the financial year.



7. INVESTMENT PROPERTIES

Leasehold land BuildingsTotal land and

buildings

Freehold land and

shophouse building Total

RM RM RM RM RM

Group

At fair value:-

At 1 March 2015 1,700,000 2,900,000 4,600,000 230,000 4,830,000

Fair value gain adjustment on investment properties 900,000 500,000 1,400,000 270,000 1,670,000

At 29 February 2016 2,600,000 3,400,000 6,000,000 500,000 6,500,000

Fair value gain adjustment on investment properties - - - 100,000 100,000

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

The investment properties consist of land and buildings and are valued annually at fair value, comprising market value, by an external independent professionally qualified valuer having appropriate recognised professional qualifications and recent experience in the location and category of properties being valued.

The market value is defined as the estimated amount for which an asset or liability should exchange on the valuation date between a willing buyer and a willing seller in an arm’s length transaction after proper marketing and where the parties had each acted knowledgeably, prudently and without compulsion. The market value of the land and buildings were determined based on the comparison approach and depreciated replacement cost approach respectively.

8. SUBSIDIARY COMPANIES

(a) Investment in subsidiary companies

Company

2017 2016

RM RM

Unquoted shares - At cost:-

At beginning of financial year 225,094,509 225,094,458

Additional investments made 10,199,949 51

At end of financial year 235,294,458 225,094,509



cont’d

8. SUBSIDIARY COMPANIES cont’d

(a) Investment in subsidiary companies cont’d

The particulars of the subsidiary companies are as follows:-

Name of companyPlace of

incorporationEffective

equity interest Principal activities

2017 2016

% %

1. Pantech Corporation Sdn. Bhd. Malaysia 100 100 Trading, supply and stocking of high pressure seamless and specialised steel pipes, fittings, flanges, valves and other related products for use in the oil and gas, gas reticulation, marine, onshore and offshore heavy engineering, power generation, petrochemicals, palm oil refining and other related industries.

Subsidiary companies of Pantech Corporation Sdn. Bhd.

1.1 Pantech Realty Sdn. Bhd. Malaysia 100 100 Investment holding, property investment and insurance agency.

1.2 Pantech (Kuantan) Sdn. Bhd.

Malaysia 100 100 Trading and supply of high pressure seamless and specialised steel pipes, fittings, flanges, valves and other related products for use in the oil and gas, gas reticulation, marine, onshore and offshore heavy engineering, power generation, petrochemicals, palm oil refining and other related industries.

2. Pantech Steel Industries Sdn. Bhd.

Malaysia 100 100 Manufacturing and supply of butt-welded carbon steel fittings such as elbows, tees, reducers, end-caps and high frequency induction long bends for use in the oil and gas and other related industries.

3. Panaflo Controls Pte. Ltd.# Singapore 100 100 Supplier of flow control solutions such as valves, actuators and controls for the oil and gas, petrochemicals, water treatment and other related industries and trading of specialised steel pipes and related products.



8. SUBSIDIARY COMPANIES cont’d

(a) Investment in subsidiary companies cont’d

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


incorporationEffective

equity interest Principal activities2017 2016

% %

4. Pantech Stainless & Alloy Industries Sdn. Bhd.

Malaysia 100 100 Manufacturing and supply of stainless steel and alloy pipes, fittings and related products for use in the oil and gas, marine, onshore and offshore, heavy engineering, petrochemical and chemical, palm oil refinery and oleochemical, power generation, pharmaceutical, water and other related industries.

5. Pantech International (KSA) Sdn. Bhd.

Malaysia 100 100 Dormant.

6. Nautic Steels (Holdings) Limited#

United Kingdom

100 100 Investment holdings.

Subsidiary company of Nautic Steels (Holdings) Limited:-

6.1 Nautic Steels Limited# United Kingdom

100 100 Milling, machining and welding of tube and pipe fittings in special metals for the oil industry.

7. Nautic Steels Sdn. Bhd. Malaysia 100 100 Dormant.

8. Pantech Galvanising Sdn. Bhd. Malaysia 51 51 Hot dip galvanising, treatment and coating of metals and its related activities, engineering fabrication works and its related activities and manufacturing of industrial consumable products.

# Not audited by SJ Grant Thornton.

(b) Amount due from subsidiary companies

The amount due from subsidiary companies is non-trade in-nature, bears no interest and repayable upon demand except for a temporary loan to a subsidiary company during the previous financial year amounted to RM5,000,000 which bears interest at rates ranging from 2.75% to 5.60% per annum.

The currency exposure profile of the amount due from subsidiary companies is as follows (foreign currency balance is unhedged):-

Company2017 2016

RM RM

Ringgit Malaysia 13,491 5,338,876Great Britain Pound Sterling - (15,588)

13,491 5,323,288



cont’d

9. ASSOCIATE COMPANY

(a) Investment in an associate company

Group

2017 2016

RM RM

Unquoted shares - at cost 288,717 288,717

Share of post acquisition profit

- At beginning of financial year 2,390,495 2,701,434

- Share of post acquisition profit/(loss) during the financial year 41,425 (310,939)

- At end of financial year 2,431,920 2,390,495

Less: Dividend received (cumulative) (445,500) (445,500)

2,275,137 2,233,712

Represented by:-

Share of net assets 2,275,137 2,233,712

Summarised financial information of associate company is as follows:-

Group

2017 2016

RM RM

Assets and liabilities

Current assets 14,341,284 21,264,112

Non-current assets 2,962,002 3,286,983

Total assets 17,303,286 24,551,095

Current liabilities 11,574,582 18,535,487

Non-current liabilities 40,859 431,326

Total liabilities 11,615,441 18,966,813

Results

Revenue 29,129,560 39,574,351

Profit/(Loss) for the financial year 103,563 (777,348)

There is no share of commitments and contingent liabilities from the associate company to the Group.



9. ASSOCIATE COMPANY cont’d

(a) Investment in an associate company cont’d

The particulars of the associate company are as follows:-


incorporationEffective equity

interest Principal activities

2017 2016

% %

Tuah Nusa Sdn. Bhd. Malaysia 40 40 Manufacturing of butt-welded fittings and high frequency induction long bends as well as trading and supply of specialised industrial products, alloys and ferrous materials for the oil and gas and related industries.

(b) Amount due from/(to) an associate company

The amount due from/(to) an associate company is trade in-nature, unsecured, bears no interest and repayable upon demand.

The currency exposure profile of the amount due from an associate company is as follows (foreign currency balances are unhedged):-

Group

2017 2016

RM RM

Ringgit Malaysia 11,037,949 10,842,599

US Dollar 5,486 6,480,682

11,043,435 17,323,281

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



cont’d

10. JOINT VENTURE COMPANY

(a) Investment in a joint venture company

Group

2017 2016

RM RM

Unquoted shares - at cost

At beginning of financial year 160,440 160,440

Disposal (211,966) -

Currency translation difference 51,526 -

At end of financial year - 160,440

Share of post acquisition profit

- At beginning of financial year 636,464 448,150

- Share of post acquisition (loss)/profit during the financial year (11,049) 107,281

- Disposal (583,176) -

- Currency translation difference (42,239) 81,033

- At end of financial year - 636,464

- 796,904

Represented by:-

Share of net assets - 796,904

On 31 January 2017, the Group has disposed its entire 70% equity interest in the joint venture company to another shareholder for the sale consideration of RM850,892.

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

Group

2017 2016

RM RM

Assets and liabilities

Current assets - 1,324,386

Non-current assets - -

Total assets - 1,324,386

Current liabilities - 185,953

Non-current liabilities - -

Total liabilities - 185,953

Results

Revenue 118,705 1,639,547

(Loss)/Profit for the financial year (15,784) 153,260



10. JOINT VENTURE COMPANY cont’d

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

The joint venture company had no capital commitment and contingent liabilities as at 29 February 2016. The particulars of the joint venture company are as follows:-


incorporationEffective equity

interest Principal activities

2017 2016

% %

JC Flow Controls Pte. Ltd. *# Singapore - 70 Sales and distribution of JC products such as Ball, Gate, Globe and Check valves for South East Asian markets.

* Held through Panaflo Controls Pte. Ltd. # Not audited by SJ Grant Thornton.

(b) Amount due to a joint venture company

The amount due to a joint venture company is trade in-nature, unsecured, bears no interest and repayable upon demand.

The entire amount due to a joint venture company of the Group is denominated in Singapore Dollar.

11. GOODWILL ON ACQUISITION

Group

2017 2016

RM RM

At cost and at net carrying amount:-


Currency translation difference (68,489) (81,900)


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



cont’d

11. GOODWILL ON ACQUISITION cont’d

Impairment tests for goodwill

(a) Allocation of goodwill

For the purpose of impairment testing, goodwill is allocated to the Group’s cash generating units (“CGU”) identified as follows:-

Group

2017 2016

RM RM

Subsidiary company

Nautic Steels (Holdings) Limited 1,213,677 1,282,166

1,213,677 1,282,166

The recoverable amount of the above is based on its value-in-use and the recoverable amount is higher than the carrying amount of the above goodwill allocated. Thus, there is no impairment loss recognised for the financial years ended 29 February 2016 and 28 February 2017.

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

The recoverable amount of a CGU is determined based on value-in-use calculations using cash flow projections based on financial budgets approved by management covering a period of one year. Key assumptions and management’s approach to determine the values assigned to each key assumption are as follows:-

(i) Budgeted gross profit margin The basis used to determine the value assigned to the budgeted gross profit margin of 16% (2016: 30%)

is the average gross margins achieved in the year immediately before the budgeted year and revised for expected demand of their products.

(ii) Revenue growth rate

The revenue growth rate of approximately 15% (2016: 10%) per annum is based on management’s estimate of revenue growth rate based on the past and current trends of the industry.

(iii) Discount rate

A pre-tax discount rate of 3% (2016: 3%) is applied. The discount rate reflects specific risks relating to the relevant business operations.

The Directors believe that any reasonably possible changes in the above key assumptions applied are not likely to materially cause the recoverable amount to be lower than its carrying amount except for the changes in prevailing operating environment which is not ascertainable.



12. DERIVATIVES FINANCIAL INSTRUMENTS

Contract/Notional amount Assets Liabilities Net

RM RM RM RM

Group

Asset

2017

Hedging derivatives:-

Cash flow hedges

- Cross currency swap 23,295,538 23,295,538 18,675,878 4,619,660

2016


Cash flow hedges


Non-hedging derivatives:-

Forward currency contracts 2,110,690 2,110,690 2,102,430 8,260

19,175,352 19,175,352 15,177,622 3,997,730

2017 2016

RM RM

Analysed as:-

- Within 1 year 1,343,786 874,743

- More than 1 year but less than 5 years 3,275,874 3,122,987

4,619,660 3,997,730

Liability

2017


Cash flow hedges

- Cross currency swap 704,918 605,652 704,918 (99,266)

2016


Cash flow hedges

- Cross currency swap 3,807,944 3,080,492 3,807,944 (727,452)

The entire liability portion of cash flow hedge is due within 1 year.



cont’d

12. DERIVATIVES FINANCIAL INSTRUMENTS cont’d

Contract/Notional amount Assets Liabilities Net

RM RM RM RM

Company

Asset

2017


Cash flow hedges


2017 2016

RM RM

Analysed as:-

- Within 1 year 177,098 -

- More than 1 year but less than 5 years 831,429 -

1,008,527 -

Liability


Cash flow hedges

- Cross currency swap 704,918 605,652 704,918 (99,266)

2016


Cash flow hedges

- Cross currency swap 3,807,944 3,080,492 3,807,944 (727,452)

The entire liability portion of cash flow hedge is due within 1 year.

Hedging activities – Cash flow hedges

Cross currency swap

The Group and the Company held cross currency swap contracts designated as hedges of cash flow currency risk for certain borrowings.

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



12. DERIVATIVES FINANCIAL INSTRUMENTS cont’d

Hedging activities – Cash flow hedges cont’d

Cross currency swap cont’d

The following table indicates the periods in which the cash flows associated with the cross currency swap are expected to occur and affect profit or loss:-

Carrying amount

Expected cash flows

Less than 1 year

Between1 to 5 years

More than 5 years

RM RM RM RM RM

Group

2017

Cross currency swap 19,874,000 20,610,033 7,096,097 13,513,936 -

2016


Company

2017


2016


The cash flow hedges of the borrowings were assessed to be highly effective and a net unrealised gain of RM1,258,376 and net unrealised gain of RM1,636,713 (2016: gain of RM1,957,743 and gain of RM358,190) of the Group and of the Company respectively relating to the hedging instruments are included in other comprehensive income. None was reclassified from equity to profit or loss during the current and previous financial year.

Non-hedging activities

The Group uses forward currency contracts to manage some of the transaction exposure. Trading derivatives are classified as a current asset or liability. The full fair value of a derivative is classified as a non-current asset or liability if the remaining maturity of the hedged item is more than 12 months and, as a current asset or liability, if the maturity of the hedged item is less than 12 months.

These contacts are not designated as cash flow or fair value hedges and are entered into for periods consistent with currency transaction exposure and fair value changes exposure. Such derivatives do not qualify for hedge accounting.



cont’d

13. DEFERRED TAX ASSETS

Group Company

2017 2016 2017 2016

RM RM RM RM

At beginning of financial year 1,413,087 1,701,711 - 190,615

Transferred to profit or loss (Note 34) (485,862) (301,987) - (190,615)

Transferred from other comprehensive income - 13,363 - -

At end of financial year 927,225 1,413,087 - -

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

Group Company

2017 2016 2017 2016

RM RM RM RM

Carrying amount of qualifying property, plant and equipment in excess of their tax base (787,138) (855,744) - -

Inventories written down 1,016,000 977,393 - -

Allowance for impairment of receivables 685,000 1,278,075 - -

Revaluation of buildings 13,363 13,363 - -

927,225 1,413,087 - -

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

Group

2017 2016

RM RM

Carrying amount of qualifying property, plant and equipment in excess of their tax base (44,739,681) (40,729,708)

Inventories written down 366,205 725,822

Unabsorbed business losses 13,079,022 8,561,000

Unabsorbed value of increased exports incentive 9,577,000 9,577,000

Unutilised capital allowances 45,798,483 49,527,082

Provision for leave entitlement - 63,743

24,081,029 27,724,939

The unabsorbed business losses, unabsorbed value of increased exports incentive and unutilised capital allowances are available indefinitely for offset against future taxable profits of the subsidiary companies in which those items arose. Deferred tax assets have not been recognised in respect of these items as they may not be used to offset taxable profits of other subsidiary companies in the Group and they have arisen in subsidiary companies that have a recent history of losses.



14. INVENTORIES

Group

2017 2016

RM RM

Raw materials 41,776,450 30,570,162

Work-in-progress 19,416,286 16,204,764

Finished goods 201,233,555 206,592,548

Total inventories 262,426,291 253,367,474

Recognised in profit or loss:-

Inventories recognised in cost of sales 332,663,103 349,913,833

Inventories written down 622,503 1,036,671

Reversal of inventories written down (110,259) (2,356,972)

The reversal of inventories written down was made when the related inventories were subsequently sold above their carrying amounts and increased in net realisable value because of changed economic circumstances.

15. TRADE RECEIVABLES

Group

2017 2016

RM RM

Trade receivables 140,107,735 115,764,167

Less: Allowance for impairment of trade receivables (6,715,191) (6,615,863)

133,392,544 109,148,304

Movement in allowance for impairment of trade receivables:-

Group

2017 2016

RM RM

At 1 March (6,615,863) (6,805,672)

Charge for the financial year (4,011,565) (3,150,044)

Reversal of impairment

- payment received 3,922,073 3,122,960

- write off against allowance for impairment - 307,730

Currency translation difference (9,836) (90,837)

At 28 February/29 February (6,715,191) (6,615,863)



cont’d

15. TRADE RECEIVABLES cont’d

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

Group

2017 2016

RM RM


US Dollar 47,468,514 41,018,414

Singapore Dollar 5,518,470 4,346,473

Great Britain Pound Sterling 8,890,794 9,807,737

EURO 55,520 -

140,107,735 115,764,167

Trade receivables comprise amounts receivable from sales of goods. The credit terms granted on sales of goods ranged from 7 days to 90 days (2016: 7 days to 90 days). Allowance has been made for estimated irrecoverable of trade receivables based on the default experience of the Group.

16. OTHER RECEIVABLES

Group Company

2017 2016 2017 2016

RM RM RM RM

Non-trade receivables 92,317 181,232 - -

Advance payment to suppliers 6,093,292 5,614,977 - -

Deposit for purchase of property, plant and equipment 1,370,613 1,757,676 - -

Deposits 644,421 647,386 46,655 44,304

Prepayment of expenses 1,969,606 1,539,065 4,997 -

GST receivable 4,466,965 572,962 - -

14,637,214 10,313,298 51,652 44,304

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

Group Company

2017 2016 2017 2016

RM RM RM RM

Ringgit Malaysia 6,629,010 3,685,123 51,652 44,304

US Dollar 7,154,926 5,192,769 - -

Great Britain Pound Sterling 445,348 527,389 - -

EURO - 332,259 - -

Singapore Dollar 407,930 575,758 - -

14,637,214 10,313,298 51,652 44,304



17. FIXED DEPOSITS WITH LICENSED BANKS

Group Company

2017 2016 2017 2016

RM RM RM RM

Current 2,436,327 2,352,101 - -

The fixed deposits with licensed banks of the Group are on fixed rate basis and will mature within 1 month to 12 months (2016: 1 month to 6 months) period.

The effective interest rates on fixed deposits with licensed banks ranged from 2.35% to 3.30% (2016: 2.20% to 3.20%) per annum.

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

18. CASH AND BANK BALANCES

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

Group Company

2017 2016 2017 2016

RM RM RM RM

Ringgit Malaysia 46,986,453 27,292,182 2,266,138 1,877,726

US Dollar 31,931,702 38,552,148 - -

EURO 105,378 24,553 - -

Singapore Dollar 2,243,653 1,405,383 - -

Great Britain Pound Sterling 7,888,990 7,324,797 727,137 1,436,474

89,156,176 74,599,063 2,993,275 3,314,200

19. SHARE CAPITAL AND SHARE PREMIUM

Share capital

2017 2017 2016 2016

Unit RM Unit RM

Group and Company

Issued and fully paid-up:-

Ordinary shares

At beginning of financial year 616,471,480 123,294,296 602,983,253 120,596,651

Issued during the financial year

- Pursuant to conversion of ICULS - - 12,032,027 2,406,405

- Pursuant to exercise of ESOS - - 1,456,200 291,240

- Pursuant to issuance of bonus shares 123,124,376 24,624,875 - -

Transfer pursuant to Section 618 (2) of the Companies Act, 2016 - 56,009,416 - -

At end of financial year 739,595,856 203,928,587 616,471,480 123,294,296



cont’d

19. SHARE CAPITAL AND SHARE PREMIUM cont’d

Share capital cont’d

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

The new Companies Act, 2016 (“the Act”), which came into operation on 31 January 2017, abolished the concept of authorised share capital and par value of share capital.

Share premium

Group and Company

2017 2016

RM RM

At 1 March 80,634,291 74,743,799

Pursuant to conversion of ICULS - 4,812,811

Pursuant to exercise of ESOS - 1,077,681

Pursuant to issuance of bonus shares (24,624,875) -

Transfer pursuant to Section 618 (2) of the Companies Act, 2016 (56,009,416) -

At 28 February/29 February - 80,634,291

In line with the abolishment of the concept of authorised share capital and par value of share capital, the amount standing to the credit of the share premium account of RM56,009,416 became part of the Group’s and the Company’s share capital pursuant to the transitional provisions set out in Section 618 (2) of the Act. Notwithstanding this provision, the Company may within 24 months from the commencement of the Act, use the amount standing to the credit of its share premium account of RM56,009,416 for purposes as set out in Section 618 (3) of the Act. There is no impact in the numbers of ordinary shares in issue or the relative entitlement of any of the members as a result of this transition.

20. TREASURY SHARES

Group and Company

The shareholders of the Company, through the Annual General Meeting held on 21 August 2008, approved the Company’s plan to repurchase up to 10% of the issued and paid-up share capital of the Company (“Share Buy Back”). The authority granted by the shareholders was subsequently renewed in every Annual General Meeting held and it was last renewed in the Annual General Meeting held on 21 July 2016. The Directors of the Company are committed to enhancing the value of the Company to its shareholders and believe that the purchase plan can be applied in the best interest of the Company and its shareholders.

The Company has distributed a share dividend via distribution of treasury shares on the basis of 1 treasury share for every 100 existing ordinary shares in respect of the financial year ended 29 February 2016 and paid on 18 August 2016.

The Company repurchased 2,269,300 (2016: 4,595,100) ordinary shares of its issued share capital from the open market. The average price paid for the repurchased shares was RM0.59 per share. The repurchased transactions were financed by internally generated funds. These repurchased shares were held as treasury shares and treated in accordance with the requirements of Section 127 of the Companies Act, 2016.

The shares purchased were retained as treasury shares. The Company has the right to re-issue these shares at a later date. As treasury shares, the rights attached as to voting, dividends and participation in other distribution are suspended.



20. TREASURY SHARES cont’d

Group and Company cont’d

As at the financial year end, the Company held 941,924 (2016: 4,766,460) of the Company’s shares and the number of outstanding shares in issue after setting treasury shares off against equity are 738,653,932 (2016: 611,705,020).

No treasury shares were sold during the current and previous financial year.

21. REVALUATION RESERVE

Group

The revaluation reserve arose from the revaluation of land and buildings and is not available for distribution as dividends.

22. EMPLOYEES SHARE OPTION RESERVE

Group and Company

Employees share option reserve represents the equity-settled share option granted to employees. The reserve is made up of the cumulative value of services received from employees recorded over the vesting period commencing from the grant date of equity-settled share option, and is reduced by the expiry or exercise of the share option.

The employees share option reserve is not available for distribution as dividends.

23. IRREDEEMABLE CONVERTIBLE UNSECURED LOAN STOCKS (“ICULS”)

Group and Company

2017 2016

RM RM

Equity component

At beginning of financial year - 4,821,211

Converted to ordinary shares during the financial year - (4,821,211)

At end of financial year - -

Liability component

At beginning of financial year - 764,204

Converted to ordinary shares during the financial year - (741,158)

Coupon interest paid/accrued - (23,046)

At end of financial year - -

Total - -

During the previous financial year, all outstanding ICULS have been fully converted into ordinary shares of the Company through compulsory conversion exercise which was completed on 7 May 2015.



cont’d

24. CASH FLOW HEDGE RESERVE

The cash flow hedge reserve contains the effective portion of the gain or loss on hedging instruments in cash flow hedges and is not available for distribution as dividends.

25. WARRANTS RESERVE

Group and Company

Warrant A2010/2020

Warrant B2016/2021 Total

RM RM RM

At 1 March 2015, 29 February 2016 and 1 March 2016 7,481,637 - 7,481,637

Issued - 7,387,400 7,387,400

At 28 February 2017 7,481,637 7,387,400 14,869,037

(a) Warrants 2010/2020 (“Warrant A”)

On 22 December 2010, the Company issued 748,410,400 ICULS at the nominal value of RM0.10, together with 74,841,040 free detachable warrants to the holders of the ICULS on the basis of one free detachable warrants for every ten ICULS subscribed.

The fair value of the warrants is estimated using the Black Scholes model, taking into account the terms and conditions upon which the warrants are acquired. The fair value of the warrants measured at issuance date and the assumptions are as follows:-

Style Vanilla

Exercise type American

Tenure 10 years

5-day volume weighted average price of Pantech share at 23 December 2010 RM0.58

Conversion price RM0.60

Volatility rate 20 %

Each warrant entitles the registered holder of warrant to subscribe for one new ordinary share in the Company at any time on or after 22 December 2010 up to the date of expiry on 21 December 2020, at an exercise price of RM0.60 per share or such adjusted price in accordance with the provisions in the Deed Poll. The warrants were listed on the Bursa Malaysia Securities Berhad on 27 December 2010.

On 22 December 2016, the Company completed a Bonus Issue of Shares. Pursuant to this Bonus Issue of Shares, the exercise price of Warrant A of RM0.60 is adjusted to RM0.50 and a total of 14,963,269 additional Warrant A is issued, listed and quoted on the Main Market of Bursa Malaysia Securities Berhad on 22 December 2016.

During the financial year, no warrants were exercised and converted to ordinary shares.

As at the reporting date, 89,779,639 (2016: 74,816,370) Warrant A remained unexercised.



25. WARRANTS RESERVE cont’d

Group and Company cont’d

(b) Warrants 2016/2021 (“Warrant B”)

On 22 December 2016, the Company issued 61,561,667 free warrants on the basis of one (1) Warrant B for every ten (10) existing ordinary shares held on the same entitlement date as the Bonus Issue of Shares.

The fair value of the warrants is estimated using the Black Scholes model, taking into account the terms and conditions upon which the warrants are acquired. The fair value of the warrants measured at issuance date and the assumptions are as follows:-

Style VanillaExercise type AmericanTenure 5 years5-day volume weighted average price of Pantech share at 2 December 2016 RM0.534Conversion price RM0.50Volatility rate 28.805 %

Each warrant entitles the registered holder of warrant to subscribe for one new ordinary share in the Company at any time on or after 22 December 2016 up to the date of expiry on the 21 December 2021, at an exercise price of RM0.50 per share or such adjusted price in accordance with the provisions in the Deed Poll. The warrants were listed on the Bursa Malaysia Securities Berhad on 29 December 2016.

During the financial year, no warrants were exercised and converted to ordinary shares.

As at the reporting date, 61,561,667 Warrant B remained unexercised.

26. UNAPPROPRIATED PROFIT

Effective from 1 January 2014, the Company is required by the Income Tax Act 1967 to pay dividend under single tier income tax system. As such, the Company may frank the payment of dividends out of its entire unappropriated profit.

27. FINANCE LEASE CREDITORS

Group2017 2016

RM RM

Minimum lease payment - within 1 year 2,379,208 3,821,923 - after 1 year but not later than 5 years 2,475,795 3,767,512

4,855,003 7,589,435Less: Interest in suspense (297,721) (476,443)

4,557,282 7,112,992

Total principal sum payable - within 1 year 2,166,244 3,505,898 - after 1 year but not later than 5 years 2,391,038 3,607,094

4,557,282 7,112,992



cont’d

27. FINANCE LEASE CREDITORS cont’d

The interest rates on the finance lease ranged from 2.26% to 4.78% (2016: 2.26% to 4.78%) per annum.

Included in the above total principal sum payable is an amount of RM109,129 (2016: RM132,635) denominated in Singapore Dollar and RM1,334,311 (2016: RM2,019,122) denominated in Great Britain Pound Sterling.

28. BORROWINGS

Group Company

2017 2016 2017 2016

RM RM RM RM

Current

Unsecured:-

Term loans 15,229,563 18,180,757 3,368,169 5,022,600

Term loans-i 3,069,938 - - -

Trade loans:-

- Accepted bills-i 28,561,407 24,343,129 - -

- Bankers’ acceptance 57,870,000 33,977,000 - -

- Trust receipts - 132,590 - -

- Foreign currency loan-i - 5,010,538 - -

- Onshore foreign currency loans 8,516,988 27,470,716 - -

- Commodity Murabahah Revolving Credit-i - 5,000,000 - 5,000,000

- Clean import loans 1,537,254 1,727,057 - -

Total current 114,785,150 115,841,787 3,368,169 10,022,600

Non-current

Unsecured:-

Term loans 29,084,609 36,710,294 6,630,000 1,250,000

Term loans-i 15,462,101 - - -

Total non-current 44,546,710 36,710,294 6,630,000 1,250,000

Total borrowings 159,331,860 152,552,081 9,998,169 11,272,600

(i) The term loans, term loans-i, accepted bills-i, bankers’ acceptance, trust receipts, foreign currency loan-i, bank overdrafts and clean import loans are obtained by way of corporate guarantee from the Company and negative pledge on subsidiary companies’ assets. There is no security held to obtain Commodity Murabahah Revolving Credit-i facility.

A term loan of a subsidiary company is obtained by way of facility agreement and corporate guarantee from the Company.

The term loans bear interest at rates ranging from 4.40% to 6.10% (2016: 4.73% to 6.10%) per annum.

The term loans-i bear interest at rates ranging from 5.09% to 5.17% (2016: Nil) per annum.

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



28. BORROWINGS cont’d

(i) cont’d

The accepted bills-i bears interest at rates ranging from 3.63% to 4.82% (2016: 3.63% to 4.61%) per annum.

The bankers’ acceptance bears interest at rates ranging from 3.38% to 4.93% (2016: 3.27% to 4.66%) per annum.

During the previous financial year, the trust receipts bear interest at the rate of 2.72% per annum.

The foreign currency loan-i bears interest at rates ranging from 1.14% to 2.14% (2016: 1.16% to 2.14%) per annum. It is unutilised as at the reporting date.

The bank overdraft bears interest at rates ranging from 7.85% to 8.10% (2016: 7.85% to 8.10%) per annum. It is unutilised as at the reporting date.

The revolving credits bear interest at the rate of 4.76% (2016: 4.80% to 5.04%) per annum. It is unutilised as at the reporting date.

During the previous financial year, the Commodity Murabahah Revolving Credit-i bears interest at rates ranging from 4.63% to 4.81% per annum.

The clean import loans bear interest at the rate of 1.05% (2016: 1.05%) per annum.

(ii) The onshore foreign currency loans are obtained by way of corporate guarantee from the Company. Certain onshore foreign currency loans are obtained by way of negative pledge on subsidiary companies’ assets.

It bears interest at rates ranging from 1.00% to 1.83% (2016: 1.00% to 1.77%) per annum. The currency exposure profile of the borrowings is as follows (foreign currency balances are unhedged):-

Group Company

2017 2016 2017 2016

RM RM RM RM

Ringgit Malaysia 148,652,618 115,074,880 9,373,169 8,136,300

US Dollar 8,516,988 32,613,844 - -

Great Britain Pound Sterling 2,162,254 4,863,357 625,000 3,136,300

159,331,860 152,552,081 9,998,169 11,272,600



cont’d

29. OTHER PAYABLES

Group Company

2017 2016 2017 2016

RM RM RM RM

Current

Non-trade payables 8,072,284 4,343,719 59,239 73,977

Deposits received 153,950 119,750 - -

Accrual of expenses 5,539,071 5,012,944 194,349 238,588

Advance payment from customers 5,048,112 7,236,636 - -

GST payable 622,871 261,692 13,632 21,218

Total current 19,436,288 16,974,741 267,220 333,783

Non-current

Provision for reinstatement cost 277,745 262,569 - -

Total non-current 277,745 262,569 - -

Total other payables 19,714,033 17,237,310 267,220 333,783

Provision for reinstatement cost refers to estimated costs made by a subsidiary company required to reinstate its office premise to its original state according to the terms and conditions of the respective tenancy agreements.

Movement in the provision for reinstatement cost:-

Group

2017 2016

RM RM

At beginning of financial year 262,569 232,876

Currency translation difference 15,176 29,693

At end of financial year 277,745 262,569

Included in the non-trade payables of the Group is an amount of RM364,188 (2016: RM753,260) due to a company in which a Director of a subsidiary company has equity interest in it of which the amount due is unsecured, bears no interest and repayable upon demand.

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

Group Company

2017 2016 2017 2016

RM RM RM RM

Ringgit Malaysia 15,989,153 10,245,517 267,220 333,783

US Dollar 1,144,342 2,278,984 - -

Singapore Dollar 1,513,053 3,744,599 - -

Great Britain Pound Sterling 1,067,485 968,210 - -

19,714,033 17,237,310 267,220 333,783



30. DEFERRED TAX LIABILITIES

Group

2017 2016

RM RM


Transferred to profit or loss (Note 34) (194,674) (103,873)

Transferred from other comprehensive income - 1,323,919

Realisation of deferred tax liabilities upon depreciation of revalued assets (60,955) (41,147)

Currency translation difference (27,479) 61,840


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

Group

2017 2016

RM RM

Carrying amount of qualifying property, plant and equipment in excess of their tax base 3,733,597 3,955,750

Revaluation of land and building 1,875,294 1,936,249

5,608,891 5,891,999

31. TRADE PAYABLES Group Trade payables comprise amounts outstanding for trade purchases. The credit terms granted to the Group ranged from

30 days to 90 days (2016: 30 days to 90 days).

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

Group

2017 2016

RM RM


US Dollar 24,145,669 4,941,718

Singapore Dollar 3,414,618 2,649,170

Great Britain Pound Sterling 555,264 1,846,066

EURO 483,436 449,627

64,166,675 21,126,097



cont’d

32. REVENUE

Group Company

2017 2016 2017 2016

RM RM RM RM

Sales of goods 479,348,907 513,293,392 - -

Dividend income - - 21,841,052 14,018,613

Management fee - - 2,550,940 2,565,588

479,348,907 513,293,392 24,391,992 16,584,201

33. PROFIT BEFORE TAX

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

Group Company

2017 2016 2017 2016

RM RM RM RM

Auditors’ remuneration

- statutory 157,000 150,500 19,000 19,000

- non-statutory 123,600 67,600 84,200 27,200

- other auditors 130,802 156,617 - -

Direct operating expenses:-

- revenue generating investment propertiesduring the financial year 31,729 41,699 - -

Directors’ fee 513,206 850,171 163,206 160,128

Hire of machinery 2,250 470 - -

Rental expense

- premises 1,302,077 1,485,118 - -

- factory and warehouse 598,253 599,753 - -

- crane 2,500 - - -

- forklift 200,350 196,860 - -

- office equipment 104,814 102,254 - -

Realised (gain)/loss on foreign exchange (530,351) (3,182,793) 347,970 202,542

Rental income (790,240) (546,000) - -

The estimated monetary value of benefits provided to the Directors of the Company during the financial year by way of usage of the Group’s assets and other benefits amounted to RM208,178 (2016: RM292,484).



33. PROFIT BEFORE TAX cont’d

The remuneration paid (Company and Group basis) to the Directors of the Company is categorised as follows:-

FeesOther

emolumentsBenefits-

in-kind Total

RM RM RM RM

Group

2017

Executive Directors 312,500 5,451,969 208,178 5,972,647

Non-Executive Directors 163,206 - - 163,206

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

2016

Executive Directors 640,040 5,915,333 292,484 6,847,857


Total 800,168 5,915,333 292,484 7,007,985

Company

2017

Executive Directors - 1,680,234 - 1,680,234


Total 163,206 1,680,234 - 1,843,440

2016

Executive Directors - 1,691,844 - 1,691,844


Total 160,128 1,691,844 - 1,851,972

The remuneration paid to the Directors of the Company analysed into bands are as follows:-

Number of Directors <RM100,000

RM100,000to

RM1,000,000

RM1,000,001to

RM2,000,000

2017

Executive Directors - 2 3

Non-Executive Directors 4 - -

2016

Executive Directors - 2 3

Non-Executive Directors 4 - -



cont’d

34. TAX EXPENSE

Tax recognised in profit or loss

Group Company

2017 2016 2017 2016

RM RM RM RM

In Malaysia

Current year’s tax expense 10,579,647 15,345,623 559,988 594,175

(Over)/Under provision of tax expense in prior financial year (95,036) (280,913) (35,323) 123,639

Realisation of deferred tax liabilities upon depreciation of revalued assets (60,955) (41,147) - -

Transferred (from)/to deferred tax liabilities (Note 30) (173,999) 326,508 - -

Transferred from deferred tax assets (Note 13) 485,862 301,987 - 190,615

10,735,519 15,652,058 524,665 908,429

Outside Malaysia

Over provision of tax expense in prior financial year (27,869) (90,705) - -

Transferred from deferred tax liabilities (Note 30) (20,675) (430,381) - -

(48,544) (521,086) - -

Total 10,686,975 15,130,972 524,665 908,429

Malaysian income tax is calculated at the statutory tax rate of 24% (2016: 24%) of the estimated taxable profits for the financial year.



34. TAX EXPENSE cont’d

Tax recognised in profit or loss cont’d

The reconciliations of income tax expense applicable to profit before tax at the statutory tax rate to the income tax expense at the effective tax rate of the Group and of the Company are as follows:-

Group Company

2017 2016 2017 2016

RM RM RM RM

Profit before tax 39,095,632 53,076,127 19,005,680 12,766,210

Tax expense at Malaysian statutory tax rate of 24% (2016: 24%) 9,382,952 12,738,270 4,561,363 3,063,890

Tax effects in respect of:-

Expenses not deductible for tax purposes 2,701,407 4,240,403 1,240,812 1,158,749

Income not subject to tax (768,512) (2,118,921) (5,242,187) (3,437,849)

Deferred tax assets not recognised in current financial year (538,292) 203,629 - -

Under provision of deferred tax liabilities in prior financial year 117,237 562,000 - -

Under provision of deferred tax assets in prior financial year (6,000) - - -

(Over)/Under provision of tax expense in prior financial year (122,905) (371,618) (35,323) 123,639

Realisation of deferred tax liabilities upon depreciation of revalued assets (60,955) (41,147) - -

Effect of change in tax rate on opening of deferred tax (17,957) (57,541) - -

Utilisation of unabsorbed capital allowance brought forward - (24,103) - -

Total tax expense 10,686,975 15,130,972 524,665 908,429

Tax recognised in other comprehensive income

Group

2017 2016

RM RM

Revaluation of land and buildings - 1,310,556

The Group has unutilised capital allowances, unabsorbed value of increased exports incentive and unabsorbed business losses which can be carried forward to offset against future taxable profit amounted to approximately RM45,798,483, RM9,577,000 and RM13,079,022 (2016: RM49,527,082, RM9,577,000 and RM8,561,000) respectively.



cont’d

35. EARNINGS PER ORDINARY SHARE

Group

Basic earnings per ordinary share

The calculation of basic earnings per ordinary share was based on Group’s profit for the financial year attributable to owners of the Company and weighted average number of ordinary shares calculated as follows:-

Group

2017 2016

Profit after tax for the financial year attributable to owners of the Company (RM) 29,718,280 37,972,555

Weighted average number of ordinary shares in issue 736,598,503 732,186,982

Basic earnings per ordinary share (sen) 4.03 5.19 Diluted earnings per ordinary share

The calculation of diluted earnings per ordinary shares was based on Group’s profit attributable to ordinary shareholders and a weighted average number of ordinary shares outstanding after adjustment for the effects of all dilutive potential ordinary shares.

Group

2017 2016

Profit after tax for the financial year attributable to owners of the Company (RM) 29,718,280 37,972,555

Weighted average number of ordinary shares in issue (basic) 736,598,503 732,186,982

Adjustment for dilutive effect on exercise of ESOS 46,869,000 -

Weighted average number of ordinary shares in issue (diluted) 783,467,503 732,186,982

Diluted earnings per ordinary share (sen) 3.79 5.19

The comparative basic and diluted earnings per share have been restated for the increase in weighted average number of ordinary shares in issue as a result of bonus issue of one (1) bonus share for every five (5) existing ordinary shares in the Company.



36. EMPLOYEE BENEFITS EXPENSE

Group Company

2017 2016 2017 2016

RM RM RM RM

Staff costs 40,416,342 41,953,093 2,002,876 2,036,617

Employee benefits expense of the Group and of the Company consists of, amongst others, the following items:-

Group Company

2017 2016 2017 2016

RM RM RM RM

Directors’ remuneration

- Salaries, allowances and bonuses 5,003,844 5,354,507 1,532,400 1,532,400

- others 448,125 560,826 147,834 159,444

Defined contribution plan – staff EPF 2,419,320 2,168,217 34,680 36,865

37. EMPLOYEE SHARE OPTION SCHEME

At an extraordinary general meeting held on 2 December 2016, the Company’s shareholders approved the establishment of Employee Share Option Scheme (“ESOS” or “Scheme”) for the eligible Directors and employees of the Group. The Scheme shall be in force for a duration of ten (10) years from the date of commencement from 23 January 2017 (“Duration of the Scheme”). During the financial year, the Company has granted an option under the Scheme and the option is exercisable within a period of five (5) years from the date commencing from 24 January 2017.

The salient features of the Scheme are as follows:-

(a) The maximum number of new ordinary shares in the Company (“Shares”) which may be available under the Scheme shall not be more than ten per centum (10%) of the issued and fully paid-up share capital (excluding treasury shares) of the Company at any point in time during the Duration of the Scheme.

(b) The Company will for the Duration of the Scheme make available sufficient number of new Shares in the unissued share capital of the Company to satisfy all outstanding options, which may be exercisable from time to time.

(c) Any employee or Director of any company comprised in the Group (save for any subsidiaries which are dormant) shall be eligible to participate in the ESOS if, as at the date of offer, the employee is at least eighteen (18) years of age or above; and is employed on a continuous full time basis (either permanent or on contract) and on the payroll of that corporation comprised in the Group and has been given notification in writing that the employee is a confirmed employee.

(d) The option price shall be determined by the Board of Directors of the Company upon recommendation of the Option Committee at a discount of not more than 10% from the volume weighted average market price of the Company’s shares as quoted on Bursa Malaysia Securities Berhad for the five (5) market days immediately preceding the date of the offer.

(e) The shares under options shall remain unissued until the options are exercised and shall, on allotment, rank pari passu in all respects with the existing issued and fully paid-up Shares at the time of allotment save that they will not entitle the holders thereof to receive any rights and bonus issues announced or to any dividend or other distribution declared to the shareholders of the Company as at a date which precedes the date of the exercise of the options.



cont’d

37. EMPLOYEE SHARE OPTION SCHEME cont’d

Number of unexercised share option

Company2017 2016

At beginning of financial year - 1,774,200Granted during the financial year 49,869,000 -Exercised during the financial year - (1,456,200)Expired during the financial year - (318,000)

At end of financial year 49,869,000 -

Analysed as:-Exercisable in financial year 2017 7,480,350 -Exercisable in financial year 2018 7,480,350 -Exercisable in financial year 2019 9,973,800 -Exercisable in financial year 2020 12,467,250 -Exercisable in financial year 2021 12,467,250 -

49,869,000 -

Option price

CompanyRM

Option granted - on grant date 0.415

Share option exercised during the financial year

During the financial year, there were no share option exercised.

Fair value of share option granted The fair value of share option granted was estimated by an external valuer using the Binomial Tree Method, taking into

consideration the terms and conditions upon which the option was granted.

The fair value of the share option measured at grant date and the assumptions are as follow:-

Fair value of share option granted on 24 January 2017 based on vesting date (RM) - 24 January 2017 0.102343- 24 January 2018 0.099692- 24 January 2019 0.100360- 24 January 2020 0.100640- 24 January 2021 0.099612

Expected volatility of Company’s share price (%) 30.00

Option term (years) 5Risk free rate of interest per annum (%) 3.60Expected dividend yield per annum (%) 5.00



38. RELATED PARTY DISCLOSURES

(a) The transactions of the Group and of the Company with the related parties were as follows:-

Group Company

2017 2016 2017 2016

RM RM RM RM

Transactions with subsidiary companies:-

- management fee received - - 2,550,940 2,565,588

- dividend received (net) - - 21,841,052 14,018,613

- loan interest received - - 41,530 335,593

- loan interest paid - - 22,159 16,110

Transactions with an associate company:-

- sales 25,933,070 35,752,998 - -

- purchases 169,098 1,673,494 - -

- machine servicing charged 1,020,000 1,020,000 - -

- rental received 192,000 192,000 - -

Transaction with a joint venture company:-

- purchases 118,098 1,081,345 - -

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

(c) The remuneration of key management personnel is same with the Directors’ remunerations as disclosed in Notes 33 and 36 to the Financial Statements. Key management personnel is defined as those persons having authority and responsibility for planning, directing and controlling the activities of the Company either directly or indirectly and entity that provides key management personnel services to the Company. The Company has no other members of key management personnel apart from the Board of Directors.

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

Group

2017 2016 At beginning of financial year - 1,115,000

Granted during the financial year 11,200,000 -

Exercised during the financial year - (1,000,000)

Expired during the financial year - (115,000)

At end of financial year 11,200,000 -

The share option was granted to key management personnel on terms and conditions similar to those offered to employees of the Group as disclosed in Note 37 to the Financial Statements.



cont’d

39. CAPITAL COMMITMENTS

Group

2017 2016

RM RM Authorised and contracted for:-

Purchase of - leasehold land - 7,212,055

Purchase of - crane, machinery, equipments, furniture and fittings 3,908,248 3,261,649

Purchase of - buildings 300,058 -

40. RENTAL COMMITMENTS

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

Group

2017 2016

RM RM Year 2017 - 1,088,660

Year 2018 1,379,636 245,213

Year 2019 to 2022 1,523,669 15,660

2,903,305 1,349,533

41. OPERATING LEASE ARRANGEMENTS

The Group has entered into operating lease agreements on its assets. These leases have remaining lease terms of between 2 to 32 months (2016: 8 to 25 months).

The future minimum lease payments receivable under non-cancellable operating leases contracted for as at the reporting date but not recognised as receivables are as follows:-

Group

2017 2016

RM RM Within the next twelve months 454,080 436,000

After the next twelve months 78,000 390,000

532,080 826,000



42. CONTINGENT LIABILITIES

Company

2017 2016

RM RM

Unsecured:-

Corporate guarantees given to licensed financial institutions for credit facilities granted to subsidiary companies 770,046,198 712,755,292

Corporate guarantees given to finance lease creditors for finance lease facilities granted to subsidiary companies 7,674,848 9,321,622

Corporate guarantees given to third parties for supply of goods and services to subsidiary companies 5,407,940 158,484

783,128,986 722,235,398

The corporate guarantees do not have determinable effect on the terms of the credit facilities due to the banks requiring guarantee as a pre-condition for approving the credit facilities granted to the subsidiary companies. The actual terms of the credit facilities are likely to be the best indicator of “at market” terms and hence the fair value of the credit facilities are equal to the credit facilities and contract bond amount received by the subsidiary companies. As such, there is no value on the corporate guarantee to be recognised in the financial statements.

43. SIGNIFICANT EVENTS

Significant events during the financial year

(a) On 22 December 2016, the Company increased its issued and fully paid-up ordinary share capital by the issuance of 123,124,376 new ordinary shares through bonus issue on the basis of one bonus share for every five existing ordinary shares held.

(b) On 22 December 2016, the Company issued 61,561,667 free warrants on the basis of one Warrant B for every ten existing ordinary shares held on the same entitlement date as the Bonus Issue of Shares.

(c) On 23 January 2017, the Company launched the Employee Share Option Scheme (“ESOS” or “Scheme”) by granting the ESOS option to eligible employees and Directors of the Group. The Scheme shall be in force for a duration of 10 years from 23 January 2017. During the financial year, the Company has granted an option under the Scheme and the option is exercisable within a period of 5 years from the date commencing from 24 January 2017.

(d) The Companies Act, 2016 (“New Act”) was enacted to replace the Companies Act, 1965 and was passed by Parliament on 4 April 2016. The New Act was subsequently gazetted on 15 September 2016. On 26 January 2017, the Minister of Domestic Trade, Co-operatives and Consumerism announced that the effective date of the New Act, except for section 241 and Division 8 or Part III of the New Act, to be 31 January 2017.

Significant event after the financial year

At the forthcoming Annual General Meeting, a final single tier dividend, in respect of the financial year ended 28 February 2017, of 0.50 sen per ordinary share will be proposed for shareholders’ approval. The financial statements for current financial year do not reflect this proposed dividend. Such dividend, if approved by the shareholders, will be accounted for in equity as an appropriation of unappropriated profit in the financial year ending 28 February 2018.



cont’d

44. OPERATING SEGMENTS - GROUP (a) Business segments

The Group is organised on three major operating segments. These operating segments are monitored separately for the purpose of making decisions about resource allocation and performance assessment. Segment performance is evaluated based on operating profit or loss which, in certain respects as explained in the table below, is measured differently from operating profit in the consolidated financial statements. The following summary describes the operations in each of the Group’s reportable segments:-

Operating segments Business activities

Trading Trading, supply and stocking of high pressure seamless and specialised steel pipes, fittings, flanges, valves and other related products for use in the oil and gas, gas reticulation, marine, onshore and offshore heavy engineering, power generation, petrochemicals, palm oil refining and other related industries.

Manufacturing Manufacturing and supply of butt-welded carbon steel fittings such as elbows, tees, reducers, end-caps and high frequency induction long bends, manufacturing and supply of stainless steel and alloy pipes, fittings and related products, as well as milling, machining and welding of tube and pipe fitting in special metals for use in the oil and gas, marine, onshore and offshore heavy engineering, petrochemical and chemical, palm oil refinery and oleochemical, power generation, pharmaceutical, water and other related industries, hot dip galvanizing, treatment and coating of metals, engineering fabrication works and manufacturing and trading of industrial consumable products.

Investment holding Investment holding, property investment and management service.

Transfer prices between operating segments are on negotiated basis.

The Group has aggregated certain operating segments to form a reportable segment due to the similar nature and operational characteristics of the services.



44.

OPER

ATIN

G SE

GMEN

TS -

GROU

P c

ont’d

(a

) Bu

sine

ss s

egm

ents

con

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g

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Inve

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Cons

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Note

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Cons

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2017

2016

2017

2016

2017

2016

2017

2016

2017

2016

RMRM

RMRM

RMRM

RMRM

RMRM

Reve

nue

Exte

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reve

nue

310,

054,

386

317,

794,

145

169,

294,

521

195,

499,

247

--

--

479,

348,

907

513,

293,

392

Inte

r-seg

men

t rev

enue

27,9

04,9

0133

,475

,812

34,4

69,6

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,189

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24,3

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,201

(86,

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560)

(79,

249,

103)

A-

-

Tota

l rev

enue

337,

959,

287

351,

269,

957

203,

764,

188

224,

688,

337

24,3

91,9

9216

,584

,201

(86,

766,

560)

(79,

249,

103)

479,

348,

907

513,

293,

392

Resu

ltsSe

gmen

t pro

fit/(

loss

)32

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32,5

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30,4

42,7

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)-

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45,0

31,6

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Inte

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1,16

9,20

852

7,87

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2,70

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9,24

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1,07

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9,01

0Fin

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costs

(2,8

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(4,3

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cont’d

44. OPERATING SEGMENTS - GROUP cont’d

(a) Business segments cont’d

Trading ManufacturingInvestment

holdingConsolidation adjustments Notes Consolidated

RM RM RM RM RM

2017

Assets

Segment assets 393,497,129 421,830,774 254,405,142 (282,012,757) D 787,720,288

Investment in an associate company 2,275,137 - - - 2,275,137

Additions to non-current assets other than financial instruments and deferred tax assets 789,378 34,186,822 - - E 34,976,200

Liabilities

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

2016

Assets

Segment assets 387,281,732 362,960,523 248,862,344 (283,361,605) D 715,742,994

Investment in an associate company 2,233,712 - - - 2,233,712

Investment in joint venture company 796,904 - - - 796,904

Additions to non-current assets other than financial instruments and deferred tax assets 10,532,976 9,975,461 - - E 20,508,437

Liabilities

Segment liabilities 52,266,256 33,401,947 13,105,327 (55,568,856) F 43,204,674





Notes to the nature of adjustments and eliminations to arrive at amounts reported in the consolidated financial statements:

A. Inter-segment revenues are eliminated on consolidation.

B. The following items are added to/(deducted from) segment profit to arrive at “profit before tax” presented in the consolidated income statement:-

2017 2016

RM RM

Segment profit 45,031,688 61,412,369

Interest income 1,011,073 229,010

Finance costs (6,977,505) (8,361,594)

Share of results of associate company 41,425 (310,939)

Share of results of joint venture company (11,049) 107,281

Profit before tax 39,095,632 53,076,127

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

2017 2016

RM RM

Allowance for impairment of receivables (4,011,565) (3,150,044)

Bad debts written off (40,601) (13,305)

Property, plant and equipment written off (6,361) (22,328)

Inventories written down (622,503) (1,036,671)

Reversal of inventories written down 110,259 2,356,972

Allowance for impairment of receivables no longer required 3,922,073 3,122,960

Fair value gain adjustment on investment properties 100,000 1,670,000

Gain on disposal of joint venture company 55,750 -

Gain/(Loss) on disposal of property, plant and equipment 960,717 (434,603)

Employees Share Option Scheme expenses (960,348) -

(492,579) 2,492,981



cont’d



Notes to the nature of adjustments and eliminations to arrive at amounts reported in the consolidated financial statements: cont’d

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

2017 2016

RM RM

Segment assets 787,720,288 715,742,994

Investment in an associate company 2,275,137 2,233,712

Investment in a joint venture company - 796,904

Deferred tax assets 927,225 1,413,087

Tax recoverable 395,089 120,031

Total assets 791,317,739 720,306,728

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

2017 2016

RM RM

Property, plant and equipment 5,615,271 8,372,496

Capital work-in-progress 29,360,929 12,135,941

34,976,200 20,508,437 F. The following items are added to segment liabilities to arrive at total liabilities reported in the consolidated

statement of financial position:-

2017 2016

RM RM

Segment liabilities 86,454,398 43,204,674

Finance lease creditors 4,557,282 7,112,992

Borrowings 159,331,860 152,552,081

Tax payable 2,501,007 2,275,120

Deferred tax liabilities 5,608,891 5,891,999

Total liabilities 258,453,438 211,036,866




(b) Geographical information

The Group’s revenue and non-current assets information based on geographical location are as follows:-

Revenue Non-current assets

2017 2016 2017 2016

RM RM RM RM

Malaysia * 435,802,140 461,107,299 259,103,663 230,246,820

Republic of Singapore 24,797,329 21,940,926 980,186 2,003,379

United Kingdom 18,749,438 30,245,167 16,403,028 19,958,234

479,348,907 513,293,392 276,486,877 252,208,433

* Company’s home country

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

2017 2016

RM RM

Property, plant and equipment 199,913,489 199,755,305

Prepaid land lease payments 33,715,859 26,843,738

Capital work-in-progress 28,565,616 10,260,534

Investment in an associate company 2,275,137 2,233,712

Investment in a joint venture company - 796,904

Deferred tax assets 927,225 1,413,087

Derivative financial instruments 3,275,874 3,122,987

Goodwill on acquisition 1,213,677 1,282,166

Investment properties 6,600,000 6,500,000

276,486,877 252,208,433

(c) Major customers

The Group does not have any revenue from a single external customer which represents 10% or more of the Group’s revenue.



cont’d

45. FINANCIAL INSTRUMENTS

Risk management objectives and policies

The Group is exposed to various risks in relation to financial instruments. The Group’s financial assets and liabilities by category are summarised in Note 3.10 and 3.11 respectively. The main types of risks are foreign currency risk, interest rate risk, credit risk and liquidity risk.

Financial risk management policy is established to ensure that adequate resources are available for the development of the Group’s businesses whilst managing its foreign currency risk, interest rate risk, credit risk and liquidity risk. The Group operates within clearly defined policies and procedures that are approved by the Board of Directors to ensure the effectiveness of the risk management process.

(a) Foreign currency risk

Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates.

The Group is exposed to foreign currency risk mostly on its sales and purchases that are denominated in a currency other than the functional currency of the Group. The currencies giving rise to this risk are primarily US Dollar (“USD”), Singapore Dollar (“SGD”), Great Britain Pound Sterling (“GBP”) and EURO.

The Group uses forward exchange contracts to hedge its foreign currency risk and forward exchange contracts have maturities of less than one year from the reporting date. Where necessary, the forward exchange contracts are rolled over at maturity.

Based on carrying amounts as at the reporting date, foreign currency denominated financial assets and financial liabilities which expose the Group and the Company to currency risk are disclosed below:-

USD SGD GBP EURO

RM RM RM RM

Group

2017

Financial assets

Trade receivables 47,468,514 5,518,470 8,890,794 55,520

Amount due from an associate company 5,486 - - -

Other receivables 7,154,926 407,930 445,348 -

Cash and bank balances 31,931,702 2,243,653 7,888,990 105,378

86,560,628 8,170,053 17,225,132 160,898

Financial liabilities

Borrowings (8,516,988) - (2,162,254) -

Finance lease creditors - (109,129) (1,334,311) -

Trade payables (24,145,669) (3,414,618) (555,264) (483,436)

Other payables (1,144,342) (1,513,053) (1,067,485) -

(33,806,999) (5,036,800) (5,119,314) (483,436)

Net exposure 52,753,629 3,133,253 12,105,818 (322,538)



45. FINANCIAL INSTRUMENTS cont’d

Risk management objectives and policies cont’d

(a) Foreign currency risk cont’d

Based on carrying amounts as at the reporting date, foreign currency denominated financial assets and financial liabilities which expose the Group and the Company to currency risk are disclosed below:- cont’d

USD SGD GBP EURO

RM RM RM RM

Group cont’d

2016

Financial assets

Trade receivables 41,018,414 4,346,473 9,807,737 -

Amount due from an associate company 6,480,682 - - -

Other receivables 5,192,769 575,758 527,389 332,259

Cash and bank balances 38,552,148 1,405,383 7,324,797 24,553

91,244,013 6,327,614 17,659,923 356,812


Borrowings (32,613,844) - (4,863,357) -

Finance lease creditors - (132,635) (2,019,122) -

Amount due to a joint venture company - (802,034) - -

Trade payables (4,941,718) (2,649,170) (1,846,066) (449,627)

Other payables (2,278,984) (3,744,599) (968,210) -

(39,834,546) (7,328,438) (9,696,755) (449,627)

Net exposure 51,409,467 (1,000,824) 7,963,168 (92,815)



cont’d




Based on carrying amounts as at the reporting date, foreign currency denominated financial assets and financial liabilities which expose the Group and the Company to currency risk are disclosed below:- cont’d

USD SGD GBP EURO

RM RM RM RM

Company

2017

Financial asset

Cash and bank balances - - 727,137 -

Financial liability

Borrowings - - (625,000) -

Net exposure - - 102,137 -

2016

Financial assets

Amount due from subsidiary companies - - (15,588) -

Cash and bank balances - - 1,436,474 -

- - 1,420,886 -

Financial liability

Borrowings - - (3,136,300) -

Net exposure - - (1,715,414) -

Foreign currency sensitivity analysis

The following table illustrates the sensitivity of profit in regards to the Group’s and the Company’s financial assets and financial liabilities and the RM/USD exchange rate, RM/SGD exchange rate, RM/GBP exchange rate and RM/EURO exchange rate with ‘all other things are being equal’.

It assumes a +/- 4% (2016: 6%) change of the RM/USD, RM/SGD, RM/GBP and RM/EURO exchange rates respectively. The percentage has been determined based on the average market volatility in exchange rates in the previous 12 months. The sensitivity analysis is based on the Group’s and the Company’s foreign currency denominated financial instruments held at each reporting date and also takes into account forward exchange contracts that offset effects from changes in currency exchange rates.






Foreign currency sensitivity analysis cont’d

If the RM had strengthened against the USD, SGD, GBP and EURO by 4% (2016: 6%) respectively, this would have the following impact:-

Increase/(Decrease) on profit for the financial year

Group USD SGD GBP EURO Total

RM RM RM RM RM

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

2016 (3,084,568) 60,049 (477,790) 5,569 (3,496,740)

Company USD SGD GBP EURO Total

RM RM RM RM RM

2017 - - (4,085) - (4,085)

2016 - - 102,925 - 102,925

If the RM had weakened against the USD, SGD, GBP and EURO by 4% (2016: 6%) respectively, then the impact to profit for the financial year would be the opposite effect.

Exposures to foreign exchange rates vary during the financial year depending on the volume of overseas transactions. Nonetheless, the analysis above is considered to be representative of the Group’s and the Company’s exposures to foreign currency risk.

(b) Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of the Group’s and the Company’s financial instruments will fluctuate because of changes in market interest rates.

The Group’s and the Company’s fixed rate borrowings are exposed to a risk of change in their fair value due to changes in interest rates. The Group’s variable rate borrowings are exposed to the risk of change in cash flows due to changes in interest rates. Investment in equity securities and short term receivables and payables are not significantly exposed to interest rate risk.



cont’d



(b) Interest rate risk cont’d

The Group’s interest rate management objective is to manage interest expenses consistent with maintaining an acceptable level of exposure to interest rate fluctuation.

Interest rate sensitivity

The Group and the Company are exposed to changes in market interest rates through bank borrowings at variable interest rates. Other borrowings are at fixed interest rates. The exposure to interest rates for the Group’s short term placement is considered immaterial.

The interest rate profile of the Group’s and of the Company’s significant interest-bearing financial instruments, based on carrying amounts as at the end of the reporting period is as follows:-

Group Company

2017 RM RM

Fixed rate instruments

Financial asset

Fixed deposits with licensed banks 2,436,327 -


Finance lease creditors (4,557,282) -

Accepted bills-i (28,561,407) -

Bankers’ acceptance (57,870,000) -

Onshore foreign currency loans (8,516,988) -

Clean import loans (1,537,254) -

Term loans (9,998,169) (9,998,169)

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

Floating rate instruments


Term loans (34,316,003) -

Term loans-i (18,532,039)

Net financial liabilities (52,848,042) -






Interest rate sensitivity cont’d

The interest rate profile of the Group’s and of the Company’s significant interest-bearing financial instruments, based on carrying amounts as at the end of the reporting period is as follows:- cont’d

Group Company

2016 RM RM

Fixed rate instruments

Financial assets

Fixed deposits with licensed banks 2,352,101 -

Amount due from subsidiary companies - 5,000,000


Finance lease creditors (7,112,992) -

Accepted bills-i (24,343,129) -

Bankers’ acceptance (33,977,000) -

Foreign currency loan-i (5,010,538) -

Onshore foreign currency loans (27,470,716) -

Commodity Murabahah Revolving Credit-i (5,000,000) (5,000,000)

Clean import loans (1,727,057) -

Term loans (6,272,600) (6,272,600)

(108,561,931) (6,272,600)

Floating rate instruments


Term loans (48,618,451) -

Trust receipts (132,590) -

Net financial liabilities (48,751,041) -



cont’d




Interest rate sensitivity cont’d

The following table illustrates the sensitivity of profit to a reasonably possible change in interest rates of +/- 25 (2016: 25) basis points (“bp”). These changes are considered to be reasonably possible based on observation of current market conditions. The calculations are based on a change in the average market interest rates for each period, and the financial instruments held at each reporting date that are sensitive to changes in interest rates. All other variables are held constant.

(Decrease)/Increase on profit for the financial year

+ 25 bp - 25 bp

Group RM RM

28 February 2017 (132,120) 132,120

29 February 2016 (121,878) 121,878

(c) Credit risk

Credit risk is the risk that counterparty fails to discharge an obligation to the Group and the Company. The Group’s and the Company’s maximum exposure to credit risk is limited to the carrying amount of financial assets summarised at the reporting date, as summarised below:-

Group Company

2017 2016 2017 2016

RM RM RM RM

Classes of financial assets – carrying amounts:-

Cash and cash equivalents 91,592,503 76,951,164 2,993,275 3,314,200

Trade receivables 133,392,544 109,148,304 - -

Other receivables 8,200,643 8,201,271 46,655 44,304

Amount due from an associate company 11,043,435 17,323,281 - -

Amount due from subsidiary companies - - 13,491 5,323,288

244,229,125 211,624,020 3,053,421 8,681,792





(c) Credit risk cont’d

The Group continuously monitors defaults of customers and other counterparties, identified either individually or by group, and incorporate this information into its credit risk controls. Where available at reasonable cost, external credit ratings and/or reports on customers and other counterparties are obtained and used. The Group’s policy is to deal only with creditworthy counterparties.

The Group’s management considers that all the above financial assets that are not impaired or past due for each of the reporting dates under review are of good credit quality.

The ageing analysis of trade receivables of the Group is as follows:-

Allowance for impairment loss

GrossIndividually

impairedCollectively

impaired Total Net

RM RM RM RM RM

2017

Within terms 76,003,419 - - - 76,003,419

Past due 1 to 30 days 31,529,816 - - - 31,529,816

Past due 31 to 60 days 12,935,418 - - - 12,935,418

Past due 61 to 90 days 5,252,472 - - - 5,252,472

Past due 91 to 120 days 2,456,880 - - - 2,456,880

Past due more than 120 days 11,929,730 6,715,191 - 6,715,191 5,214,539

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

2016

Within terms 41,867,753 - - - 41,867,753

Past due 1 to 30 days 22,380,178 - - - 22,380,178

Past due 31 to 60 days 15,652,319 - - - 15,652,319

Past due 61 to 90 days 7,790,114 - - - 7,790,114

Past due 91 to 120 days 13,523,715 - - - 13,523,715

Past due more than 120 days 14,550,088 6,615,863 - 6,615,863 7,934,225

115,764,167 6,615,863 - 6,615,863 109,148,304

None of the Group’s financial assets are secured by collateral or other credit enhancements and none of the carrying amount of financial assets whose terms have been renegotiated that would otherwise be past due or impaired.

In respect of trade and other receivables, the Group is not exposed to any significant credit risk exposure to any single counterparty or any group of counterparties having similar characteristics. Trade receivables consist of a large number of customers in various industries and geographical areas. Based on historical information about customer default rates, the management consider the credit quality of trade receivables that are not past due or impaired to be good.

The credit risk for cash and cash equivalents and short term placements is considered negligible, since the counterparties are reputable banks with high quality external credit ratings.



cont’d



(d) Liquidity risk

Liquidity risk is the risk arising from the Group and the Company not being able to meet their obligations due to shortage of funds.

In managing their exposures to liquidity risk, the Group and the Company maintain a level of cash and cash equivalents and bank credit facilities deemed adequate by the management to ensure that they will have sufficient liquidity to meet their liabilities as and when they fall due.

The following table shows the areas where the Group and the Company are exposed to liquidity risk:-

Group CompanyCurrent Non-current Current Non-current

Less than 1 year

Between1 to 5 years

More than 5 years

Less than 1 year

Between1 to 5 years

More than 5 years

RM RM RM RM RM RM

2017

Non-derivative financial liabilities

Term loans 16,482,832 27,546,049 5,741,508 3,684,555 7,171,275 -

Term loans-i 4,189,573 16,352,700 1,701,435 - - -

Bankers’ acceptance and accepted bills-i 86,431,407 - - - - -

Clean import loans 1,537,254 - - - - -

Onshore foreign currency loans 8,516,988 - - - - -

Finance lease creditors 2,379,208 2,475,795 - - - -

Trade payables 64,166,675 - - - - -

Other payables 18,813,417 277,745 - 253,588 - -

Amount due to an associate company 258,462 - - - - -

202,775,816 46,652,289 7,442,943 3,938,143 7,171,275 -

Derivative financial liabilities

Outflow 704,918 - - 704,918 - -

Inflow (605,652) - - (605,652) - -

99,266 - - 99,266 - -

Total undiscounted financial liabilities 202,875,082 46,652,289 7,442,943 4,037,409 7,171,275 -

Financial guarantees* 783,128,986 - - - - -





(d) Liquidity risk cont’d

The following table shows the areas where the Group and the Company are exposed to liquidity risk:- cont’d

Group CompanyCurrent Non-current Current Non-current

Less than 1 year

Between1 to 5 years

More than 5 years

Less than 1 year

Between1 to 5 years

More than 5 years

RM RM RM RM RM RM

2016

Non-derivative financial liabilities

Term loans 19,852,899 33,380,482 9,180,539 5,191,370 1,254,897 -

Bankers’ acceptance and accepted bills-i 58,320,129 - - - - -

Clean import loans 1,727,057 - - - - -

Onshore foreign currency loans and foreign currency loan-i 32,481,254 - - - - -

Trust receipts 132,590 - - - - -

Finance lease creditors 3,821,923 3,767,512 - - - -

Trade payables 21,126,097 - - - - -

Other payables 16,713,049 262,569 - 312,565 - -

Commodity Murabahah Revolving Credit-i 5,000,000 - - 5,000,000 - -

Amount due to an associate company 253,256 - - - - -

Amount due to a joint venture company 802,034 - - - - -

160,230,288 37,410,563 9,180,539 10,503,935 1,254,897 -

Derivative financial liabilities

Outflow 3,807,944 - - 3,807,944 - -

Inflow (3,080,492) - - (3,080,492) - -

727,452 - - 727,452 - -

Total undiscounted financial liabilities 160,957,740 37,410,563 9,180,539 11,231,387 1,254,897 -

Financial guarantees* 722,235,398 - - - - -

* This exposure is included in liquidity risk for illustration only. No financial guarantee was called upon by the holders as at the end of the reporting period.



cont’d



(d) Liquidity risk cont’d

The above amounts reflect the contractual undiscounted cash flows, which may differ from the carrying values of the financial liabilities at the reporting date.

46. CAPITAL MANAGEMENT OBJECTIVE

The primary capital management objective of the Group is to maintain a strong capital base and safeguard the Group’s ability to continue as a going concern, so as to sustain future development of the business. There is no change to the objectives in financial years ended 2017 and 2016.

The Group manages its capital by regularly monitoring its current and expected liquidity requirement and modify the combination of equity and borrowings from time to time to meet the needs. Shareholders’ equity and gearing ratio of the Group and of the Company are as follows:-

Group Company

2017 2016 2017 2016

RM RM RM RM

Total equity 532,864,301 509,269,862 226,649,668 218,264,426

Borrowings 163,889,142 159,665,073 9,998,169 11,272,600

Debt-to-equity ratio 0.31 0.31 0.04 0.05

The Group has complied with Practice Note No. 17 (Revision on 3 August 2009, 22 September 2011 and 25 March 2015) of Main Market Listing Requirements of Bursa Malaysia Securities Berhad which requires the Group to maintain a consolidated shareholders’ equity not less than 25% of the issued and paid-up capital of the Company and such shareholders’ equity is not less than RM40 million.

47. FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying amounts of financial assets and liabilities of the Group and of the Company as at the reporting date are approximately at their fair values due to their short term nature or they are floating rate instruments that are re-priced to market interest rates on or near the reporting date.



47. FAIR VALUE OF FINANCIAL INSTRUMENTS cont’d

Fair value hierarchy

The following table provides an analysis of financial instruments that are measured subsequent to initial recognition at fair value, grouped into Levels 1 to 3 based on the degree to which the fair value is observable.

Quoted in active markets

for identical instruments

Significant other

observable inputs

Significant unobservable

inputs Total

Level 1 Level 2 Level 3

RM RM RM RM

GROUP

2017

Financial assets

Freehold land - 24,158,800 - 24,158,800

Buildings - 93,085,769 - 93,085,769

Investment properties - 6,600,000 - 6,600,000

Derivatives

- Cross currency swap - 4,619,660 - 4,619,660

- 128,464,229 - 128,464,229

Financial liability

Derivatives

- Cross currency swap - (99,266) - (99,266)

2016

Financial assets

Freehold land - 24,179,048 - 24,179,048

Buildings - 97,853,695 - 97,853,695

Investment properties - 6,500,000 - 6,500,000

Derivatives


- Forward currency contracts - 8,260 - 8,260

- 132,530,473 - 132,530,473

Financial liability

Derivatives




cont’d

47. FAIR VALUE OF FINANCIAL INSTRUMENTS cont’d

Fair value hierarchy cont’d

Quoted in active markets

for identical instruments

Significant other

observable inputs

Significant unobservable

inputs Total

Level 1 Level 2 Level 3

RM RM RM RM

COMPANY

2017

Financial asset

Derivatives


Financial liability

Derivatives


2016

Financial liability

Derivatives


There were no transfers between Level 1 and 2 in the reporting period.

Pantech Group Holdings Berhad (733607-W)Pantech Group Holdings Berhad (733607-W)140


DISCLOSURE OF REALISED AND UNREALISED PROFITS/(LOSSES)

Bursa Malaysia Securities Berhad has, on 25 March 2010 and 20 December 2010, issued directives requiring all listed corporations to disclose the breakdown of unappropriated profits or accumulated losses into realised and unrealised on group and company basis, as the case may be, in quarterly reports and annual audited financial statements.

The breakdown of unappropriated profit as at the reporting date that has been prepared by the Directors in accordance with the directives from Bursa Malaysia Securities Berhad stated above and Guidance on Special Matter No. 1 issued on 20 December 2010 by the Malaysian Institute of Accountants are as follows:-

Group Company

2017 2016 2017 2016

RM RM RM RM

Total unappropriated profit of the Company and its subsidiary companies

- Realised 359,843,948 350,963,655 6,534,153 10,547,386

- Unrealised 4,525,882 6,928,704 1,393 (17,207)

364,369,830 357,892,359 6,535,546 10,530,179

Total unappropriated profit of the Associate Company

- Realised 1,976,514 1,946,456 - -

- Unrealised 9,906 (1,461) - -

1,986,420 1,944,995 - -

Total unappropriated profit of the Joint Venture Company

- Realised - 661,435 - -

- Unrealised - (24,971) - -

- 636,464 - -

Total 366,356,250 360,473,818 6,535,546 10,530,179

Consolidation adjustments (88,352,479) (89,833,160) - -

278,003,771 270,640,658 6,535,546 10,530,179

The above disclosures were reviewed and approved by the Board of Directors in accordance with a resolution of the Board of Directors on 13 June 2017.

Annual Report 2017 141Annual Report 2017

LIST OF PROPERTIESAs at 28 February 2017

No. Tittle deed Address

( Land area ) Gross build-

up area Sq.ft. Tenure

Description /Existing use

Net Book Value @

28.02.2017 RM’000

Approximate age of

buildingyears

Date oflast

revaluation

1 HS(D) 484896, PTD 204334, Mukim Plentong, District of Johor Bahru, Johor Darul Takzim

PTD 204334, Jalan Platinum Utama, Pasir Gudang Industrial Estate, Zone 12B, 81700 Pasir Gudang, Johor Darul Takzim

(899,775)522,610

Leasehold expiring on 18.08.2070

4 Blocks single storey factory buildings with 1 unit 3-storeys office and 1 unit 5-storeys corporate office and ancillary buildings

66,245 4-7 31.12.2015

2 Geran 95058, 95059 and 95060. Lot No. 23190, 23191 and 23192 Mukim Kapar, District of Klang, Selangor Darul Ehsan

Lot 13257, 13258 and 13259, Jalan Haji Abdul Manan, Off Jalan Meru, 41050 Klang, Selangor Darul Ehsan

(544,353)346,523

Freehold 6 units of single storey detached factories (Identified for reference as Factory A, B, C, D, E and F)

42,362 Factory A,B,C - 27 Factory D - 25 Factory E - 10 Factory F - 5

31.12.2015


PLO 641, Jalan Plantinum 1, Pasir Gudang Industrial Estate, Zone 12B, 81700 Pasir Gudang, Johor Darul Takzim

(254,566)104,370


2 units of single storey detached warehouse with 1 unit double storey office

16,345 5 31.12.2015

4 HS(D) 564272, PTD222449, Mukim Plentong, District of Johor Bahru, Johor Darul Takzim.

PLO 749, Jalan Kampung Pasir Gudang Baru, Pasir Gudang Industrial Estate, Zone 12B, 81700 Pasir Gudang, Johor Darul Takzim.

(318,032) Leasehold expiring on 27.03.2076

A parcel of industrial land

7,847 - 31.12.2015

5 HS(D)563306, PTD5020, Mukim Sungai Tiram, District of Johor Bahru, Johor Darul Takzim.

PLO 7, Jalan Rumbia 4, Kawasan Perindustrian Tanjung Langsat, 81700 Pasir Gudang, Johor Darul Takzim

(189,790) Leasehold expiring on 05.04.2075

A parcel of industrial land

7,317 - -


PLO 234, Jalan Tembaga Satu, Pasir Gudang Industrial Estate, 81700 Pasir Gudang, Johor Darul Takzim

(87,123)42,300


A single storey detached warehouse with 3-storey office buildings annexed

6,000 18 31.12.2015

7 SF209083, SF318990, SF211845, SF318991, SF184517 Claymore, Tame Valley Industrial Estate, Tamworth

Claymore Tame Valley Industrial Estate, Tamworth, Staffordshire, B77 5DQ, United Kingdom

(63,310)33,570

Freehold 5 units of building comprising of factories, warehouses and office.

5,946 29-35 29.2.2016

8 HS(M) 29537, Lot PT 34277, Mukim and District of Klang, HS(D) 114965, Lot PT 17296, Pekan Baru Hicom, District of Petaling, Selangor Darul Ehsan

No. 3, Jalan Trompet 33/8, Seksyen 33, 40400 Shah Alam, Selangor Darul Ehsan

(123,548)25,968


& 28.11.2096

A single storey detached warehouse with 2-storey office buildings annexed

5,728 19 31.12.2015

9 SF211341, Brent, Tame Valley Industrial Estate, Wilnecote, Tamworth

Unit 2, Brent, Tame Valley Industrial Estate, Wilnecote, Tamworth, Staffordshire, B77 5DF, United Kingdom

(46,760)22,323

Freehold A single storey detached factory and warehouse

5,135 27 29.2.2016

10 HS(M) 135, Lot LO129 (1433), Mukim Pantai Timor, District of Pengerang, Johor Darul Takzim

Lot LO129, Kampung Bukit Gelugur, 81600 Pengerang, Johor Darul Takzim

(127,617)

Freehold A parcel of agriculture land

1,800 - 31.12.2015


Notice is hereby given that the Eleventh Annual General Meeting of Pantech Group Holdings Berhad (“Pantech” or the “Company”) will be held at Meeting Room 2, Level 2, Renaissance Johor Bahru Hotel, 2, Jalan Permas 11, Bandar Baru Permas Jaya, 81750 Masai, Johor on Wednesday, 26 July 2017 at 11.00 a.m. for the following purposes:-

AGENDA

AS ORDINARY BUSINESS

1. To receive the Audited Financial Statements for the financial year ended 28 February 2017 together with the Directors’ and Auditors’ Reports thereon.

2. To approve the payment of a Final Single Tier Dividend of 0.50 sen per ordinary share for the financial year ended 28 February 2017.

Ordinary Resolution 1

3. To approve the payment of Directors’ fees and benefits up to the amount of RM180,000 for the financial year ending 28 February 2018.


4. To re-elect the following Directors retiring pursuant to the Company’s Articles of Association and being eligible, offered themselves for re-election:-

4.1 Dato’ Goh Teoh Kean (Article 122) Ordinary Resolution 34.2 Pn Sakinah Binti Salleh (Article 127) Ordinary Resolution 4

5. To re-appoint Messrs SJ Grant Thornton as Auditors of the Company and to authorise the Directors to fix their remuneration.


AS SPECIAL BUSINESS

To consider, and if thought fit, to pass the following Resolutions:

6. AUTHORITY TO ISSUE SHARES BY THE COMPANY PURSUANT TO SECTIONS 75 AND 76 OF THE COMPANIES ACT, 2016 “THAT subject always to the Companies Act, 2016 (“the Act”), and approvals from any other governmental/regulatory authorities, the Directors of the Company be and are hereby empowered, pursuant to Sections 75 and 76 of the Act, to issue shares in the Company at any time and upon such terms and conditions and for such purposes as the Directors of the Company may, in their absolute discretion, deem fit provided that the aggregate number of shares to be issued pursuant to this resolution does not exceed 10% of the total number of issued shares of the Company at the time of submission to the authority AND THAT the Directors of the Company be and are hereby empowered to obtain the approval for the listing of and quotation for the additional shares so issued on Bursa Securities Malaysia Berhad (“Bursa Securities”) AND FURTHER THAT such authority shall continue to be in force until the conclusion of the next Annual General Meeting of the Company.”


7. PROPOSED RENEWAL OF SHARE BUY-BACK

“THAT subject to compliance with all applicable rules, regulations and orders made pursuant to the Companies Act, 2016 (“the Act”), provisions in the Company’s Memorandum and Articles of Association, the Listing Requirements of Bursa Malaysia Securities Berhad (“Bursa Securities”) and any other relevant authorities, the Company be and is hereby authorised to purchase such number of ordinary shares of the Company (“Proposed Renewal of Share Buy-Back”) as may be determined by the Directors of the Company from time to time through Bursa Securities upon such terms and conditions as the Directors may deem fit and expedient in the interest of the Company PROVIDED THAT:-


NOTICE OF ELEVENTH ANNUAL GENERAL MEETING


(1) the aggregate number of shares purchased or held does not exceed ten per centum (10%) of the total number of issued shares of the Company as quoted on Bursa Securities as at the point of purchase;

(2) the maximum fund to be allocated by the Company for the purpose of purchasing such number of ordinary shares shall not exceed the retained profit account of the Company. As at the latest financial year ended 28 February 2017, the audited retained profit account of the Company stood at RM6,535,546;

(3) the authority conferred by this resolution will commence immediately upon passing of this resolution and will continue to be in force until:-

(a) at the conclusion of the next Annual General Meeting (“AGM”) of the Company following the general meeting in which the authorisation is obtained, at which time it shall lapse unless by ordinary resolution passed at that meeting, the authority is renewed either unconditionally or subject to conditions; or

(b) the expiration of the period within which the next AGM of the Company is required by law to be held; or

(c) revoked or varied by ordinary resolution passed by the shareholders of the Company in a general meeting.

whichever occurs first;

AND THAT upon completion of the purchase(s) of the ordinary shares of the Company, the Directors of the Company be and are hereby authorised to deal with the ordinary shares so purchased in the following manners:-

(a) to cancel the ordinary shares so purchased; or

(b) to retain the ordinary shares so purchased as treasury shares for distribution as dividend to shareholders and/or resell on Bursa Securities or subsequently cancelled; or

(c) to retain part of the ordinary shares so purchased as treasury shares and cancel the remainder; or

(d) in any other manner prescribed by the Act, rules, regulations and orders made to the Act, the Listing Requirements of Bursa Securities and any other relevant authorities for the time being in force.

AND THAT the Board of the Company be and are hereby authorised to take all such steps as are necessary or expedient to implement, finalise or to effect the aforesaid share buy-back with full powers to assent to any conditions, modifications, variations, and/or amendments as may be required or imposed by the relevant authorities and to do all such acts and things (including executing all documents) as the Board may deem fit and expedient in the best interest of the Company.”

NOTICE OF ELEVENTH ANNUAL GENERAL MEETINGcont’d


8. PROPOSED AMENDMENTS TO THE MEMORANDUM AND ARTICLES OF ASSOCIATION OF THE COMPANY

“THAT the Memorandum and Articles of Association of the Company be and are hereby amended in the manner as set out in Appendix I on page 146 to 149 of the Company’s Annual Report 2017 to be in line with the Companies Act, 2016.

AND THAT the Directors be and are hereby authorised to assent to any modifications, variations and/or amendments as may be required by the relevant authorities and to do all acts and things and take all such steps as may be considered necessary to give full effect to the Proposed Amendments to the Memorandum and Articles of Association of the Company.”

Special Resolution 1

NOTICE OF DIVIDEND ENTITLEMENT AND PAYMENT

Subject to the approval of the shareholders, a Final Single Tier Dividend of 0.50 sen per ordinary share for the financial year ended 28 February 2017 will be paid on 24 August 2017 to Depositors registered in the Record of Depositors at the closed of business at 5.00 p.m. on 4 August 2017.

A Depositor shall qualify for entitlement only in respect of:

(a) Shares transferred into the Depositor’s Securities Account before 4.00 p.m. on 4 August 2017, in respect of ordinary shares; and

(b) Shares bought on Bursa Securities on a cum entitlement basis according to the Rules of the Bursa Securities.

By order of the Board,

LIM SECK WAH (MAICSA 0799845)LIANG SIEW CHING (MAICSA 7000168)Company Secretaries Kuala LumpurDated this: 29 June 2017

Notes:-

1. The three (3) Independent Directors, Mr. Tan Sui Hin, Mr. Loh Wei Tak and Tuan Haji Yusoff Bin Mohamed who are due for retirement in accordance with Article 122 of the Company’s Articles of Association at this 11th Annual General Meeting and being eligible for re-election, do not wish to seek for re-election as Directors of the Company. This is in line with the Company’s policy and recommendations of the Malaysian Code on Corporate Governance, the tenure of an independent director should not exceed a cumulative term of over 9 years.

2. For the purpose of determining a member who shall be entitled to attend, speak and vote at the AGM, the Company shall be requesting the Record of Depositors as at 19 July 2017. Only a depositor whose name appears on the Record of Depositors as at 19 July 2017 shall be entitled to attend the said meeting or appoint proxies to attend, speak and vote on his/her behalf.

3. A member entitle to attend and vote at the Meeting is entitled to appoint a proxy to attend and vote in his/her stead. A member may appoint up to two (2) proxies to attend the same meeting provided that he/she specifies the proportion of his/her shareholding to be represented by each proxy. A proxy may but need not be a member of the Company.

4. Where a member is an authorised nominee as defined under the Securities Industry (Central Depositories) Act, 1991, it may appoint

at least one (1) proxy but not more than two (2) proxies in respect of each Securities account it holds with ordinary shares of the Company standing to the credit of the said securities account.



5. Where a member is an exempt authorised nominee, it may appoint multiple proxies for each omnibus account it holds.

6. The instrument appointing a proxy shall be in writing under the hand of the appointer or his/her attorney duly authorized in writing or, if the appointer is a corporation, either under the Corporation’s Common Seal or under the hand of an officer or attorney so authorized.

7. The Proxy Form must be deposited at the Registered Office of the Company at Level 15-2, Bangunan Faber Imperial Court, Jalan Sultan Ismail, 50250 Kuala Lumpur not less than 48 hours before the time set for holding the meeting or any adjournment thereof.

8. Explanatory Notes on Special Businesses: Ordinary Resolution 6 - Authority to issue shares by the Company pursuant to Sections 75 and 76 of the Companies Act, 2016

The proposed Resolution 6 is a renewal of mandate given by the shareholders at the previous AGM held on 21 July 2016, primarily to give flexibility to the Board of Directors to issue and allot shares at any time in their absolute discretion and for such purposes as they consider would be in the interest of the Company without convening a general meeting. This authority, unless revoked or varied at a general meeting, will expire at the next annual general meeting of the Company.

The Company continues to consider opportunities to broaden its earnings potential. If any of the expansion/diversification proposals involves the issue of new shares, the Directors, under certain circumstance when the opportunity arises, would have to convene a general meeting to approve the issue of new shares even though the number involved may be less than 10% of the total number of issued shares.

In order to avoid any delay and costs involved in convening a general meeting to approve such issue of shares, it is thus considered appropriate that the Directors be empowered to issue shares in the Company, up to any amount not exceeding in total 10% of the total number of issued shares of the Company. The renewed authority will provide flexibility to the Company for the issuance of shares for the purpose of the possible fund raising activities for the purpose of funding future project/investment, working capital and/or acquisitions. This authority, unless revoked or varied at a general meeting will expire at the conclusion of the next AGM of the Company.

No shares have been issued and allotted by the Company since obtaining the said authority from its shareholders at the last AGM held on 21 July 2016.

Ordinary Resolution 7 – Proposed Renewal of Share Buy-Back

This resolution will empower the Directors of the Company to purchase the Company’s shares up to ten per centum (10%) of the total number of issued shares of the Company by utilising the funds allocated which shall not exceed the total retained profits of the Company. This authority, unless revoked or varied at a general meeting, will expire at the conclusion of the next AGM of the Company.

Further information on the Proposed Renewal of Share Buy-Back are set out in the Share Buy-Back Statement dated 29 June 2017 which has been dispatched together with the Company’s Annual Report 2017.

Special Resolution 1 - Proposed Amendments to the Memorandum and Articles of Association of the Company

The proposed Special Resolution 1 above on the Proposed Amendments to the Memorandum and Articles of Association of the Company is to align the Memorandum and Articles of Association with the Companies Act, 2016, which is effective from 31 January 2017.



DETAILS OF THE PROPOSED AMENDMENTS TO THE MEMORANDUM AND ARTICLES OF ASSOCIATION OF THE COMPANY

The following Memorandum and Articles of Association of the Company be amended to be in line with the new Companies Act, 2016:-

Memorandum of Association

Clause No. Existing Provision Proposed Amendment

Clause 7 The capital of the Company is RM 500,000,000.00 divided into 2,500,000,000 ordinary shares of RM 0.20 each. The Company shall have the power to increase or reduce its capital, to consolidate or sub-divide the shares into shares of larger or smaller amounts, and to divide the shares in the original, increased or reduces capital into several classes and there may be attached thereto respectively any preferential, deferred or other special rights, privileges, conditions or restrictions as to dividends, capital, voting or otherwise and to issue all or any part of the original or any additional capital as fully paid or partly paid shares, and with any special or preferential rights or privileges, or subject to any special terms or conditions and either with or without any special designation, also from time to time alter, modify, commute, abrogate or deal with any such rights, privileges, terms, conditions or designations in accordance with the regulations for the time being of the Company.

The share capital of the Company comprises of ordinary shares. The Company shall have the power to increase or reduce its capital. The shares in the original or any increased capital may be divided into several classes, and there may be attached hereto respectively any preferential, deferred or special rights, privileges, conditions or restrictions or dividends, capital, voting or otherwise.

Articles of Association

Article No. Existing Provision Proposed Amendment

Article 1 The Regulations contained in Table “A” in the Fourth Schedule to the Companies Act 1965 shall not apply to the Company except in so far as the same are repeated or contained in these presents.

Delete in its entirely.

Article 2 (Interpretation)

Act - The Companies Act, 1965, and every statutory modification or re-enactment thereof for time being in force.

The Act- the Companies Act 2016 or any statutory modification, amendment or re-enactment thereof for the time being in force.

APPENDIX I


Articles of Association cont’d


Article 2 (Interpretation)

Major Shareholder- A person who has an interest or interests in one (1) or more voting shares in the Company and the nominal amount of that share, or the aggregate of the nominal amount of those shares, is not less than five per cent (5%) of the aggregate of the nominal amount of all the voting shares in the Company. For the purpose of this definition, “interest in shares” shall have the meaning given in Section 6A of the Act.

A person who has an interest or interests in one (1) or more voting shares in the Company and the nominal amount of that share, or the aggregate of the nominal amount of those shares, is not less than five per cent (5%) of the aggregate of the nominal amount of all the voting shares in the Company. For the purpose of this definition, “interest in shares” shall have the meaning given in Section 8 of the Act.

Article 5 Except as authorised by Section 67A of the Act and Article 4 of these presents, no part of the funds of the Company shall be employed in the purchase of or in loans upon the security of shares in the Company or its holding company, if any, and the Company shall not, except as authorised by Section 67(2)(a)-(c) of the Act, given any financial assistance for the purpose of or in connection with any purchase of, or subscription made or to be made by any person of or for any shares in the Company or in its holding company nor, except as authorised by Section 133(1)(a)-(c) of the Act make, guarantee or provide any security in connection with a loan to any Director of the Company or its holding company.

Except as authorised by Section 127 of the Act and Article 4 of these presents, no part of the funds of the Company shall be employed in the purchase of or in loans upon the security of shares in the Company or its holding company, if any, and the Company shall not, except as authorised by Section 125(a) to 125(d) of the Act, given any financial assistance for the purpose of or in connection with any purchase of, or subscription made or to be made by any person of or for any shares in the Company or in its holding company nor, except as authorised by Section 123 of the Act make, guarantee or provide any security in connection with a loan to any Director of the Company or its holding company.

Article 8(A) No shares shall be issued at a discount except in compliance with the provisions of Section 59 of the Act;

Delete in its entirely.

APPENDIX Icont’d

148



Article 8(F) Subject to the provisions of the Act, the Central Depositories Act and the Rules of Depository, the Company shall issue, allot Securities and dispatch notices of allotment to the allottee and make an application for the quotations of such Securities within such other period as may be prescribed under the Listing Requirements or by the Exchange from time to time.

Subject to the Listing Requirements and notwithstanding the existence of a resolution pursuant to Section 132D of the Act, the Company shall not issue any shares or convertible Securities if the nominal value of those shares or convertible Securities when aggregated with the nominal value of any such shares or convertible Securities issued during the preceding twelve (12) months, exceed ten per cent (10%) of the nominal value of the issued and paid-up capital of the Company, except where the shares or convertible Securities are issued with the prior approval of the Company in general meeting of the precise terms and conditions of the issue. Provided that in working out the number of shares or convertible Securities that may be issued by the Company, if the Security is a convertible Security, each such Security is counted as the maximum number of shares into which it can be converted or exercised. Provided further that except in the case of an issue of Securities on a pro rata basis to Members, no shares or convertible Securities shall be issued to a Director, Major Shareholder or person connected with any Director or Major Shareholder unless the Company in general meeting has approved of the specific allotment to be made to such aforesaid person, such approval to be obtained in accordance with the Listing Requirements.

Subject to the provisions of the Act, the Central Depositories Act and the Rules of Depository, the Company shall issue, allot Securities and dispatch notices of allotment to the allottee and make an application for the quotations of such Securities within such other period as may be prescribed under the Listing Requirements or by the Exchange from time to time.

Subject to the Listing Requirements and notwithstanding the existence of a resolution pursuant to Sections 75 and 76 of the Act, the Company shall not issue any shares or convertible Securities if the nominal value of those shares or convertible Securities when aggregated with the nominal value of any such shares or convertible Securities issued during the preceding twelve (12) months, exceed ten per cent (10%) of the nominal value of the issued and paid-up capital of the Company, except where the shares or convertible Securities are issued with the prior approval of the Company in general meeting of the precise terms and conditions of the issue. Provided that in working out the number of shares or convertible Securities that may be issued by the Company, if the Security is a convertible Security, each such Security is counted as the maximum number of shares into which it can be converted or exercised. Provided further that except in the case of an issue of Securities on a pro rata basis to Members, no shares or convertible Securities shall be issued to a Director, Major Shareholder or person connected with any Director or Major Shareholder unless the Company in general meeting has approved of the specific allotment to be made to such aforesaid person, such approval to be obtained in accordance with the Listing Requirements.

Article 9 The Company (or the Directors on behalf of the Company) may exercise the powers of paying commissions conferred by Section 58 of the Act, provided that the commission paid or agreed to be paid shall not exceed ten per cent (10%) of the price at which the shares in respect of which the commission is paid are issued and shall be disclosed in the manner required by that Section. The Company (or the Directors on behalf of the Company) may on any issue of shares pay such brokerage as may be lawful.

The Company (or the Directors on behalf of the Company) may exercise the powers of paying commissions conferred by Section 80 of the Act, provided that the commission paid or agreed to be paid shall not exceed ten per cent (10%) of the price at which the shares in respect of which the commission is paid are issued and shall be disclosed in the manner required by that Section. The Company (or the Directors on behalf of the Company) may on any issue of shares pay such brokerage as may be lawful.

APPENDIX Icont’d

149



Article 10 If any share of the Company are issued for the purpose of raising money to defray the expenses of the construction of any works or buildings or the provision of any plant which cannot be made profitable for a lengthened period, the Company (or the Directors on behalf of the Company) may, subject to the conditions and restrictions prescribed by Section 69 of the Act, pay interest on so much of that share capital as is for the time being paid up, and may charge the same to capital as part of the cost of construction of the works, buildings or plant.

If any share of the Company are issued for the purpose of raising money to defray the expenses of the construction of any works or buildings or the provision of any plant which cannot be made profitable for a lengthened period, the Company (or the Directors on behalf of the Company) may, subject to the conditions and restrictions prescribed by Section 84 of the Act, pay interest on so much of that share capital as is for the time being paid up, and may charge the same to capital as part of the cost of construction of the works, buildings or plant.

Article 12 A Depositor who is deemed a Member of the Company pursuant to Section 107B(1) of the Act shall, subject to the provisions of the Central Depositories Act and any regulations made thereunder, be entitled to the number of shares stated in the Record of Depositors and all rights, benefits, powers and privileges and be subject to all liabilities, duties and obligations in respect of, or arising from, such shares (whether conferred or imposed by the Act or the Memorandum of Association or these Articles). The Company shall not be obliged to enter in the Register the names and particulars of Depositors who are deemed to be Members pursuant to Section 107B(2) of the Act.

A Depositor who is deemed a Member of the Company pursuant to Section 146 of the Act shall, subject to the provisions of the Central Depositories Act and any regulations made thereunder, be entitled to the number of shares stated in the Record of Depositors and all rights, benefits, powers and privileges and be subject to all liabilities, duties and obligations in respect of, or arising from, such shares (whether conferred or imposed by the Act or the Memorandum of Association or these Articles). The Company shall not be obliged to enter in the Register the names and particulars of Depositors who are deemed to be Members pursuant to Section 147 of the Act.

Article 16 Certificates, in relation to any securities (including shares) which are prescribed securities pursuant to Section 14 of the Central Depositories Act, shall only be issued, replaced or cancelled (in such manner as may be determined by the Directors in accordance with applicable laws and requirements) by the Company for purposes of compliance with the Act, the Central Depositories Act, the Rules of Depository and other applicable laws and regulations. Subject to the Act, the certificates in relation to all other shares not so prescribed shall be issued, replaced or cancelled in the manner provided in the Act (including the applicable sections of Table “A” in the Fourth Schedule to the Act) to the extent that the same is not inconsistent with these Articles.

Certificates, in relation to any securities (including shares) which are prescribed securities pursuant to Section 14 of the Central Depositories Act, shall only be issued, replaced or cancelled (in such manner as may be determined by the Directors in accordance with applicable laws and requirements) by the Company for purposes of compliance with the Act, the Central Depositories Act, the Rules of Depository and other applicable laws and regulations.

Article 31 (i) The transfers of any Listed Securities or class of Listed Securities in the Company shall be by way of book entry by the Depository in accordance with the Rules of Depository and, notwithstanding Sections 103 and 104 of the Act, but the subject to sub-Section 107C(2) of the Act and any exemptions that may be made from compliance with sub-Section 107C(1) of the Act, the Company shall be precluded from registering and effecting any transfer of the Listed Securities.

The transfers of any Listed Securities or class of Listed Securities in the Company shall be by way of book entry by the Depository in accordance with the Rules of Depository and, notwithstanding Section 105 and 109 of the Act, but the subject to Section 148(2) of the Act and any exemptions that may be made from compliance with Section 148(1) of the Act, the Company shall be precluded from registering and effecting any transfer of the Listed Securities.

APPENDIX Icont’d


Number of Shares Issued : 740,375,756

Voting Rights : One Vote Per Ordinary Share

No. of Shareholders : 8,460

DISTRIBUTION OF SHAREHOLDINGS AS AT 31 MAY 2017

CategoryNo. of

Shareholders% of

Shareholders No. of Shares* % of Shares*

Less than 100 779 9.21 27,941 0.00

100 – 1,000 397 4.69 144,951 0.02

1,001 – 10,000 3,082 36.43 15,455,064 2.09

10,001 – 100,000 3,659 43.25 103,909,690 14.03

100,001 – less than 5% of issued shares 540 6.38 431,773,356 58.32

5% and above of issued shares 3 0.04 189,064,754 25.54

Total 8,460 100.00 740,375,756 100.00

Note: * Inclusive of 941,924 treasury shares retained by the Company.

LIST OF SUBSTANTIAL SHAREHOLDERS AS AT 31 MAY 2017

Direct Indirect

No. Names No. of Shares %* No. of Shares %*

1. CTL Capital Holding Sdn Bhd 132,948,174 17.98 - -

2. GL Management Agency Sdn Bhd 95,839,830 12.96 - -

3. Koperasi Permodalan Felda Malaysia Berhad 75,929,842 10.27 - -

4. Dato’ Chew Ting Leng 7,508,540 1.02 132,948,174 17.98 (a)

5. Datin Shum Kah Lin - - 140,456,714 19.00 (b)

6. Dato’ Goh Teoh Kean 5,508,540 0.75 95,839,830 12.96 (c)

7. Datin Lee Sock Kee - - 101,348,370 13.71 (d)

Note:* Excluding a total of 941,924 shares bought-back by the Company and retained as treasury shares

ANALYSIS OF SHAREHOLDINGSAs at 31 May 2017


DIRECTORS’ INTERESTS IN SHARES AS AT 31 MAY 2017

Direct Indirect

No. Names No. of Shares %* No. of Shares %*

1. Dato’ Chew Ting Leng 7,508,540 1.02 132,948,174 17.98 (a)

2. Dato’ Goh Teoh Kean 5,508,540 0.75 95,839,830 12.96 (c)

3. Tan Ang Ang 11,208,253 1.52 1,998,987 0.27 (e)

4. To Tai Wai 13,513,840 1.83 - -

5. Ng Lee Lee 8,733,632 1.18 192,764 0.03 (f)

6. Tan Sui Hin 667,144 0.09 - -

7. Loh Wei Tak 306,030 0.04 - -

8. Tuan Haji Yusoff Bin Mohamed 1,224 0.00 - -

Notes:(a) Deemed interested by virtue of his and his spouse Datin Shum Kah Lin’s interest in CTL Capital Holding Sdn Bhd pursuant to Section 8 of

the Companies Act, 2016 (“Act”). (b) Deemed interested by virtue of her and her spouse Dato’ Chew Ting Leng’s interest in CTL Capital Holding Sdn Bhd pursuant to Section

8 of the Act, and by virtue of her spouse Dato’ Chew Ting Leng’s direct shareholding in the Company pursuant to Section 59(11) of the Act.

(c) Deemed interested by virtue of his and his spouse Datin Lee Sock Kee’s interest in GL Management Agency Sdn Bhd pursuant to Section 8 of the Act.

(d) Deemed interested by virtue of her and her spouse Dato’ Goh Teoh Kean’s interest in GL Management Agency Sdn Bhd pursuant to Section 8 of the Act, and by virtue of her spouse Dato’ Goh Teoh Kean’s direct shareholding in the Company pursuant to Section 59(11) of the Act.

(e) Deemed interested by virtue of his spouse Madam Yong Yui Kiew’s direct shareholding in the Company pursuant to Section 59(11) of the Act.

(f) Deemed interested by virtue of her spouse Mr Wong Chong Peng’s direct shareholding in the Company pursuant to Section 59(11) of the Act.

* Excluding a total of 941,924 shares bought-back by the Company and retained as treasury shares

30 LARGEST SHAREHOLDERS AS AT 31 MAY 2017

No. Shareholders Shareholdings %*

1. KOPERASI PERMODALAN FELDA MALAYSIA BERHAD 74,583,310 10.09

2. CTL CAPITAL HOLDING SDN BHD 71,151,414 9.62

3. AMSEC NOMINEES (TEMPATAN) SDN BHDPLEDGED SECURITIES ACCOUNT - AMBANK (M) BERHAD FOR GL MANAGEMENT AGENCY SDN BHD

43,330,030 5.86

4. ALLIANCEGROUP NOMINEES (TEMPATAN) SDN BHDPLEDGED SECURITIES ACCOUNT FOR CTL CAPITAL HOLDING SDN BHD

35,989,128 4.87

5. GL MANAGEMENT AGENCY SDN. BHD. 28,303,807 3.83

6. GL MANAGEMENT AGENCY SDN. BHD. 24,205,993 3.27

7. LEE LIANG MONG 22,115,454 2.99


20,320,392 2.75

9. CITIGROUP NOMINEES (TEMPATAN) SDN BHDEMPLOYEES PROVIDENT FUND BOARD

13,543,500 1.83

ANALYSIS OF SHAREHOLDINGSAs at 31 May 2017

cont’d


30 LARGEST SHAREHOLDERS AS AT 31 MAY 2017 cont’d

No. Shareholders Shareholdings %*

10. CITIGROUP NOMINEES (ASING) SDN BHDEXEMPT AN FOR CITIBANK NEW YORK

8,589,346 1.16

11. TO TAI WAI 7,612,874 1.03

12. CHEW TING LENG 7,508,540 1.02

13. HSBC NOMINEES (TEMPATAN) SDN BHDHSBC (M) TRUSTEE BHD FOR RHB SMALL CAP OPPORTUNITY UNIT TRUST

7,300,000 0.99

14. KONG CHIONG LEE 5,678,569 0.77

15. GOH TEOH KEAN 5,508,540 0.75


17. LEMBAGA TABUNG HAJI 5,364,000 0.72

18. FREDDIE CHEW SUN GHEE 4,609,960 0.62

19. TAN ANG ANG 4,495,458 0.61

20. NG LEE LEE 4,475,677 0.60

21. CITIGROUP NOMINEES (ASING) SDN BHDCBNY FOR DIMENSIONAL EMERGING MARKETS VALUE FUND

4,364,109 0.59

22. LIM SOON BENG 4,271,201 0.58

23. NG LEE LEE 4,257,955 0.58

24. LEE LIANG MONG 4,154,785 0.56

25. MAYBANK NOMINEES (TEMPATAN) SDN BHDETIQA INSURANCE BERHAD

3,700,000 0.50

26. MAYBANK SECURITIES NOMINEES (TEMPATAN) SDN BHDPLEDGED SECURITIES ACCOUNT FOR TAN ANG ANG

3,672,360 0.50

27. TO TAI WAI 3,604,021 0.49

28. LIM KHUAN ENG 3,600,000 0.48

29. TAN ANG ANG 3,040,435 0.41

30. CIMSEC NOMINEES (TEMPATAN) SDN BHDCIMB FOR LEE KENG HONG

2,700,000 0.36

TOTAL : 437,538,098 59.17 * Excluding a total of 941,924 shares bought-back by the Company and retained as treasury shares

ANALYSIS OF SHAREHOLDINGSAs at 31 May 2017 cont’d


No. Warrants Issued : 89,779,639 Warrants 2010/2020 (“Warrant A”)

Exercise Price of Warrants : RM0.50

Expiry Date of Warrants : 21/12/2020

No Of Warrant Holders : 1,300

DISTRIBUTION OF WARRANT A HOLDINGS

Size of Holdings

No. of Warrant Holders

% of Warrant Holders

No. of Warrant

Holdings

% of Warrant

Holdings

Less than 100 174 13.38 6,883 0.01

100-1,000 141 10.85 69,069 0.08

1,001 – 10,000 450 34.62 1,635,982 1.82

10,001 – 100,000 452 34.77 15,067,560 16.78

100,001 – less than 5% issued Warrants 80 6.15 32,259,012 35.93

5% and above of issued Warrants 3 0.23 40,741,133 45.38

1,300 100.00 89,779,639 100.00

DIRECTORS’ INTERESTS IN WARRANT A AS AT 31 MAY 2017

No. Names

Direct Indirect

No. of Warrants % No. of Warrants %

1. Dato’ Chew Ting Leng - - 20,815,677 23.19 (a)

2. Dato’ Goh Teoh Kean - - 15,405,756 17.16 (b)

3. Tan Ang Ang 1,616,688 1.80 255,600 0.28 (c)

4. To Tai Wai 2,534,256 2.82 - -

5. Ng Lee Lee 1,333,428 1.49 24,648 0.03 (d)

6. Tan Sui Hin 18,000 0.02 - -

7. Loh Wei Tak - - - -

8. Tuan Haji Yusoff Bin Mohamed - - - -

Notes:(a) Deemed interested by virtue of his interest in CTL Capital Holding Sdn Bhd pursuant to Section 8 of the Act. (b) Deemed interested by virtue of his interest in GL Management Agency Sdn Bhd pursuant to Section 8 of the Act.(c) Deemed interested by virtue of his spouse Madam Yong Yui Kiew’s direct warrant holding in the Company pursuant to Section 59(11)

of the Act.(d) Deemed interested by virtue of her spouse, Wong Chong Peng’s direct warrant holding in the Company pursuant to Section 59(11) of

the Act.

ANALYSIS OF WARRANT HOLDINGSAs at 31 May 2017


30 LARGEST WARRANT A HOLDERS AS AT 31 MAY 2017

No. Warrant HoldersWarrant

Holdings %

1. CTL CAPITAL HOLDING SDN BHD 20,815,677 23.19 2. AMSEC NOMINEES (TEMPATAN) SDN BHD

PLEDGED SECURITIES ACCOUNT - AMBANK (M) BERHAD FOR GL MANAGEMENT AGENCY SDN BHD

15,405,756 17.16

3. DB (MALAYSIA) NOMINEE (TEMPATAN) SENDIRIAN BERHAD EXEMPT AN FOR KUMPULAN SENTIASA CEMERLANG SDN BHD

4,519,700 5.03

4. AMSEC NOMINEES (TEMPATAN) SDN BHD PLEDGED SECURITIES ACCOUNT - AMBANK (M) BERHAD FOR LEE LIANG MONG

4,199,900 4.68

5. DB (MALAYSIA) NOMINEE (TEMPATAN) SENDIRIAN BERHAD DEUTSCHE BANK AG SINGAPORE FOR KSC (S) PTE LTD

2,751,800 3.06

6. AMSEC NOMINEES (TEMPATAN) SDN BHDPLEDGED SECURITIES ACCOUNT – AMBANK (M) BERHAD FOR TO TAI WAI

2,534,256 2.82

7. ANG HING TAY 1,455,980 1.628. AMSEC NOMINEES (TEMPATAN) SDN BHD

PLEDGED SECURITIES ACCOUNT - AMBANK (M) BERHAD FOR NG LEE LEE1,333,428 1.49

9. TAN ANG ANG 1,003,488 1.1210. ONG SOO THIAH 906,000 1.0111. EE LI CHEN 867,840 0.9712. WILLIE LAU CHIENG 778,920 0.8713. KENANGA NOMINEES (TEMPATAN) SDN BHD

PLEDGED SECURITIES ACCOUNT FOR TIMMY GAN VE LI768,660 0.86

14. TAN ANG ANG 613,200 0.6815. BEH ENG PAR 606,000 0.6716. MAYBANK NOMINEES (TEMPATAN) SDN BHD

PLEDGED SECURITIES ACCOUNT FOR LEE KOK HONG600,000 0.67

17. CHAN SIEW KUEN 519,600 0.5818. LEE CHEE KEONG 458,000 0.5119. MAYBANK NOMINEES (TEMPATAN) SDN BHD

SUKHBIR SINGH A/L TARA SINGH451,300 0.50

20. MAYBANK NOMINEES (TEMPATAN) SDN BHD PLEDGED SECURITIES ACCOUNT FOR TAN CHIN HOOI

438,500 0.49

21. CIMSEC NOMINEES (TEMPATAN) SDN BHDCIMB BANK FOR LONG LAI CHOW

400,100 0.45

22. KONG CHIONG LEE 360,000 0.4023. CHUNG KEAT ANN 356,500 0.4024. MERCSEC NOMINEES (TEMPATAN) SDN BHD

PLEDGED SECURITIES ACCOUNT FOR TNTT REALTY SDN BHD342,000 0.38

25. LEE PHAIK KOOI 309,900 0.3526. CIMSEC NOMINEES (TEMPATAN) SDN BHD

PLEDGED SECURITIES ACCOUNT FOR WONG YOOK CHONG300,000 0.33

27. MONALISSA @ SELAMAH BINTI KUTHAR BHAKS 300,000 0.3328. CIMB GROUP NOMINEES (ASING) SDN BHD

CIMB COMMERCE TRUSTEE BERHAD FOR GLOBAL STRATEGIC GROWTH FUND289,000 0.32

29. JF APEX NOMINEES (TEMPATAN) SDN BHDPLEDGED SECURITIES ACCOUNT FOR LEE CHEE KEONG

280,000 0.31

30. PUBLIC NOMINEES (TEMPATAN) SDN BHDPLEDGED SECURITIES ACCOUNT FOR TANG KIAN KHIM

277,500 0.31

TOTAL : 64,243,005 71.56

ANALYSIS OF WARRANT HOLDINGSAs at 31 May 2017 cont’d


ANALYSIS OF WARRANT HOLDINGSAs at 31 May 2017

cont’d

No. Warrants Issued : 61,561,667 Warrants 2016/2021 (“Warrant B”)

Exercise Price of Warrants : RM0.50

Expiry Date of Warrants : 21/12/2021

No Of Warrant Holders : 7,403

DISTRIBUTION OF WARRANT B HOLDINGS

Size of Holdings

No. of Warrant Holders

% of Warrant Holders

No. of Warrant

Holdings

% of Warrant

Holdings

Less than 100 1,169 15.79 23,065 0.04

100-1,000 2,716 36.69 1,155,892 1.88

1,001 – 10,000 2,945 39.78 7,618,014 12.37

10,001 – 100,000 505 6.82 14,883,359 24.17

100,001 – less than 5% issued Warrants 66 0.89 28,341,218 46.04

5% and above of issued Warrants 2 0.03 9,540,119 15.50

7,403 100.00 61,561,667 100.00

DIRECTORS’ INTERESTS IN WARRANT B AS AT 31 MAY 2017

No. Names

Direct Indirect

No. of Warrants % No. of Warrants %

1. Dato’ Chew Ting Leng 459,045 0.75 11,079,014 18.00 (a)

2. Dato’ Goh Teoh Kean 459,045 0.75 7,986,651 12.97 (b)

3. Tan Ang Ang 1,100,687 1.79 166,582 0.27 (c)

4. To Tai Wai 1,376,153 2.24 - -

5. Ng Lee Lee 727,802 1.18 16,063 0.03 (d)

6. Tan Sui Hin 55,595 0.09 - -

7. Loh Wei Tak 25,502 0.04 - -

8. Tuan Haji Yusoff Bin Mohamed 102 0.00 - -

Notes:(a) Deemed interested by virtue of his interest in CTL Capital Holding Sdn Bhd pursuant to Section 8 of the Act. (b) Deemed interested by virtue of his interest in GL Management Agency Sdn Bhd pursuant to Section 8 of the Act.(c) Deemed interested by virtue of his spouse Madam Yong Yui Kiew’s direct warrant holding in the Company pursuant to Section 59(11)

of the Act.(d) Deemed interested by virtue of her spouse, Wong Chong Peng’s direct warrant holding in the Company pursuant to Section 59(11) of

the Act.


30 LARGEST WARRANT B HOLDERS AS AT 31 MAY 2017

No. Warrant HoldersWarrant

Holdings %


2. AMSEC NOMINEES (TEMPATAN) SDN BHD PLEDGED SECURITIES ACCOUNT - AMBANK (M) BERHAD FOR GL MANAGEMENT AGENCY SDN BHD

3,610,835 5.86


2,999,094 4.87

4. GL MANAGEMENT AGENCY SDN BHD 2,358,650 3.83

5. GL MANAGEMENT AGENCY SDN BHD 2,017,166 3.28


1,693,366 2.75

7. THAM KAH FOOK 1,552,000 2.52

8. MAYBANK SECURITIES NOMINEES (TEMPATAN) SDN BHDPLEDGED SECURITIES ACCOUNT FOR ISKANDAR BIN MOHD ZAFFA

1,397,400 2.27

9. TO TAI WAI 884,406 1.44

10. KENANGA NOMINEES (TEMPATAN) SDN BHDPLEDGED SECURITIES ACCOUNT FOR LIM AI CHOO

490,000 0.79

11. KONG CHIONG LEE 473,214 0.77

12. CHEW TING LENG 459,045 0.75

13. GOH TEOH KEAN 459,045 0.75

14. CTL CAPITAL HOLDING SDN BHD 457,270 0.75

15. TAN ANG ANG 420,036 0.68

16. YONG SIEW KAT 419,000 0.68

17. MAYBANK NOMINEES (TEMPATAN) SDN BHDPLEDGED SECURITIES ACCOUNT FOR CHIA MUI SENG

415,001 0.67

18. HARBANS SINGH A/L BUDH SINGH 400,000 0.65

19. GAN EE CHORNG 397,000 0.65

20. MOHD AZLAN BIN ONN 390,000 0.63

21. LEE HIEW CHET 375,000 0.61

22. TAN ANG ANG 374,621 0.61

23. NG LEE LEE 372,973 0.61

24. LIM SOON BENG 369,516 0.60

25. NG LEE LEE 354,829 0.57

26. MAYBANK NOMINEES (TEMPATAN) SDN BHDPLEDGED SECURITIES ACCOUNT FOR CHAN BEE HWA

344,541 0.56

27. LOW EWE HUM 330,010 0.54

28. KHAW CHIN HONG 330,000 0.54

29. HLB NOMINEES (TEMPATAN) SDN BHDPLEDGED SECURITIES ACCOUNT LEE HIEW CHET

327,200 0.53

30. PUBLIC NOMINEES (TEMPATAN) SDN BHDPLEDGED SECURITIES ACCOUNT FOR CHIA MUI SENG

318,000 0.51

TOTAL : 30,718,502 49.90

ANALYSIS OF WARRANT HOLDINGSAs at 31 May 2017 cont’d

PROXY FORM(Before completing this form please refer to the notes below)

I/We I/C No./Co. No./CDS A/C No. (Full name in Capital Letters)

of (Full address)

being a member/members of PANTECH GROUP HOLDINGS BERHAD, hereby appoint the following person(s):-

Name of proxy, NRIC No. & Address No. of shares or % of shares to be represented

1.

2.

or failing him/her, the Chairman of the Meeting as my/our proxy to attend and vote for me/us on my/our behalf at the Eleventh Annual General Meeting (“AGM”) of the Company to be held at Meeting Room 2, Level 2, Renaissance Johor Bahru Hotel, 2, Jalan Permas 11, Bandar Baru Permas Jaya, 81750 Masai, Johor on Wednesday, 26 July 2017 at 11.00 a.m. My/our proxy/proxies is to vote as indicated below:-

FIRST PROXY SECOND PROXY

FOR AGAINST FOR AGAINST

ORDINARY RESOLUTION

1. To approve dividend for the financial year ended 28 February 2017.

2. To approve the payment of Directors’ fees and benefits up to the amount of RM180,000 for the financial year ending 28 February 2018.

3. To re-elect Dato’ Goh Teoh Kean who retires pursuant to Article 122.

4. To re-elect Pn Sakinah Binti Salleh who retires pursuant to Article 127.

5. To re-appoint Messrs SJ Grant Thornton as Auditors and to authorise the Directors to fix their remuneration.

SPECIAL BUSINESS

6. Authority to issue shares pursuant to Sections 75 and 76 of the Companies Act, 2016.

7. Proposed Renewal of Share Buy-Back.

SPECIAL RESOLUTION

1. Proposed Amendments to the Memorandum and Articles of Association.

Please indicate with a “√” or “X” in the space provided how you wish your vote to be cast. If no instruction as to voting is given, the proxy will vote or abstain from voting at his/her discretion.

Signature of Shareholder(s)/Common Seal Signed this day of 2017

Notes:1. The three (3) Independent Directors, Mr. Tan Sui Hin, Mr. Loh Wei Tak and Tuan Haji Yusoff Bin Mohamed who are due for retirement in accordance

with Article 122 of the Company’s Articles of Association at this 11th Annual General Meeting and being eligible for re-election, do not wish to seek for re-election as Directors of the Company. This is in line with the Company’s policy and recommendations of the Malaysian Code on Corporate Governance, the tenure of an independent director should not exceed a cumulative term of over 9 years.

2. For the purpose of determining a member who shall be entitled to attend, speak and vote at the AGM, the Company shall be requesting the Record of Depositors as at 19 July 2017. Only a depositor whose name appears on the Record of Depositors as at 19 July 2017 shall be entitled to attend the said meeting or appoint proxies to attend, speak and vote on his/her behalf.

3. A member entitle to attend and vote at the Meeting is entitled to appoint a proxy to attend and vote in his/her stead. A member may appoint up to two (2) proxies to attend the same meeting provided that he/she specifies the proportion of his/her shareholding to be represented by each proxy. A proxy may but need not be a member of the Company.

4. Where a member is an authorised nominee as defined under the Securities Industry (Central Depositories) Act, 1991, it may appoint at least one (1) proxy but not more than two (2) proxies in respect of each Securities account it holds with ordinary shares of the Company standing to the credit of the said securities account.

5. Where a member is an exempt authorised nominee, it may appoint multiple proxies for each omnibus account it holds.6. The instrument appointing a proxy shall be in writing under the hand of the appointer or his/her attorney duly authorised in writing or, if the

appointer is a corporation, either under the Corporation’s Common Seal or under the hand of an officer or attorney so authorised.7. The Proxy Form must be deposited at the Registered Office of the Company at Level 15-2, Bangunan Faber Imperial Court, Jalan Sultan Ismail,

50250 Kuala Lumpur not less than forty-eight (48) hours before the time set for holding the meeting or any adjournment thereof.

No. of ordinary shares held

AFFIX

STAMP

1st Fold Here

Fold This Flap For Sealing

Then Fold Here

THE SECRETARYPANTECH GROUP HOLDINGS BERHAD (733607-W)

Level 15-2, Bangunan Faber Imperial CourtJalan Sultan Ismail50250 Kuala Lumpur

PANAFLO CONTROLS PTE. LTD.(200413822 D)

Singapore OfficeNo. 22

Pioneer Crescent

#02-06 West Park Biz Central

Singapore 628556

Tel: +65 6562 3048

Fax: +65 6562 3148

Email: [email protected]

PANTECH INTERNATIONAL (KSA)

SDN. BHD.(890670-K)

PTD 204334

Jalan Platinum Utama

Kawasan Perindustrian Pasir Gudang

Zon 12B

81700 Pasir Gudang

Johor Darul Takzim, Malaysia


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

ManufacturerLot 13258 & 13259

Jalan Haji Abdul Manan

Off Jalan Meru

42200 Kapar

Selangor Darul Ehsan, Malaysia

Tel: +603 3393 1633

Fax: +603 3392 8966


PANTECH CORPORATION SDN. BHD.(176321-P)

Johor Bahru Head OfficePTD 204334



Zon 12B

81700 Pasir Gudang


Tel: +607 259 7979

Fax: + 607 256 7588/7589


Shah Alam OfficeNo. 3, Jalan Trompet 33/8

Seksyen 33, 40400 Shah Alam


Tel: +603 5192 7995

Fax: +603 5192 7992


Pulau Indah (Warehouse Office)Persiaran Port Klang FZ 7, Jalan FZ 6-P1

Port Klang Free Zone / KS 12

42920 Pulau Indah


Tel: +603 3101 3767

Fax: +603 3101 4767

Pengerang (Warehouse office)Lot LO129, Kampung Bukit Gelugur

81600 Pengerang


Tel: +607 826 5235

Fax: +607 826 6237


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

Lot 5, Jalan Industri Semambu 2

Kawasan Perindustrian Semambu

25350 Kuantan

Pahang Darul Makmur, Malaysia

Tel: +609 568 7550

Fax: +609 568 7553


Cert. No. KLR0404021

MS ISO/IEC 17021:2011

OSH 18072007 CB 02

Cert. No. MY12/00913.01

MS ISO/IEC 17021:2011

EMS 12072004 CB 03

SG12/03893.01 MY12/00912.01

PANTECH STAINLESS & ALLOY

INDUSTRIES SDN. BHD.(733428-W)

ManufacturerPTD 204334



Zon 12B

81700 Pasir Gudang


Tel: +607 251 8888

Fax:+607 251 9999


NAUTIC STEELS LIMITED,

UNITED KINGDOM(02302004)

ManufacturerNautic House, Claymore,

Tame Valley Industrial Estate,

Tamworth, Staffordshire,

England, B77 5DQ

Tel: +44 (0)1827 281111

Fax:+44 (0)1827 281444


PANTECH GALVANISING SDN. BHD.(1162100-W)

PLO 7, Jalan Rumbia 4

Kawasan Perindustrian Tanjung Langsat

81700 Pasir Gudang


Tel: +607 257 5800

Fax: +607 256 7599



Cert. No. LRQ 0921634

Cert. No.: E02742

Cert. No.: SNG 6003354 • SNG 6019422

SNG 6019422


Pantech Group – Pantech Group - ANNUAL REPORT 2017...2010 and Deputy Chief Executive Officer, KPF...

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