Annual Report 2015

Transcription

Annual Report 2015

CONTENTS
01
Financial Highlights
02
Corporate Information
03
Group Structure
04
Directors’ Profile
06
Executive
Chairman’s Statement
09
Management
Review of Operations
and Financial Results
12
Corporate Social
Responsibility
Activities
14
Corporate Events
16
Audit Committee Report
19
Statement on Risk
Management and
Internal Control
21
Corporate
Governance Statement
28
Additional
Compliance Statement
32
Financial Statements
134
List of Properties
135
Notice of Ninth
Annual General Meeting
140
Analysis
of Shareholdings
143
Analysis
of Warrant Holdings
Proxy Form
Annual Report 2015
FINANCIAL HIGHLIGHTS
GROUP FIVE-YEAR SUMMARY
FYE
28 Feb 2011
FYE
29 Feb 2012
FYE
28 Feb 2013
FYE
28 Feb 2014
FYE
28 Feb 2015
335,779
434,604
635,663
575,610
525,772
EBITDA
48,191
62,905
102,115
96,272
81,352
Profit Before Tax
37,369
47,198
80,255
75,227
58,702
Profit After Tax
28,980
34,223
56,063
54,637
43,152
Profit Attributable to Shareholders
28,994
34,232
56,066
54,638
43,152
Paid-Up Capital
90,387
90,530
102,201
113,909
120,597
Shareholders’ Equity
317,268
337,230
377,019
426,229
467,405
Total Assets
522,054
596,573
699,222
690,465
747,369
Total Net Tangible Assets
317,268
337,230
377,019
426,229
467,405
Total Borrowings
141,657
192,770
256,455
195,915
215,000
Basic Earnings Per RM0.20 Share (sen)
6.45
7.60
11.73
10.02
7.38
Diluted Earnings Per RM0.20 Share (sen)
6.15
5.91
9.19
8.53
6.85
13,722
15,728
23,795
24,916
22,429
Net Dividend Per RM0.20 Share (sen)
3.30
3.50
4.60
4.40
3.76
Net Tangible Assets Per Share (RM)
0.70
0.74
0.74
0.75
0.78
REVENUE
RM’000
52% of our PAT
11
12
13
14
15
EARNING PER SHARE
SEN
11
12
13
14
43,152
54,637
representing
56,063
RM22.43 million,
434,604
Total net dividend declared for
FYE2015 is
335,779
9.7% to
RM467.41 million
525,772
PROFIT AFTER TAXATION
RM’000
575,610
Shareholders’ Equity grew
34,223
Total Net Dividend Declared
28,980
Revenue
635,663
Ringgit Malaysia (RM’000)
15
SHAREHOLDERS’ EQUITY
RM’000
13
14
12
13
14
467,405
11
426,229
15
377,019
337,230
12
317,268
11
7.38
NTA/share of RM0.78
6.45
translating to a
7.60
RM467.41 million
10.02
11.73
NTA stands at
15
1
2
Pantech Group Holdings Berhad (733607-W)
CORPORATE INFORMATION
BOARD OF DIRECTORS
AUDIT COMMITTEE
PRINCIPAL BANKERS
Dato’ Chew Ting Leng
Chairman
Mr. Tan Sui Hin
AmBank (M) Berhad
AmIslamic Bank Berhad
CIMB Bank Berhad
CIMB Islamic Bank Berhad
Citibank Berhad
Hong Leong Bank Berhad
Hong Leong Islamic Bank Berhad
HSBC Amanah Malaysia Berhad
HSBC Bank Malaysia Berhad
HSBC Bank Plc
OCBC Bank (Malaysia) Berhad
The Bank of Nova Scotia Berhad
United Overseas Bank Limited
United Overseas Bank (Malaysia) Berhad
Executive Chairman/
Group Managing Director
Dato’ Goh Teoh Kean
Group Deputy Managing Director
Mr. Tan Ang Ang
Members
Mr. Loh Wei Tak
Tuan Haji Yusoff Bin Mohamed
Executive Director
REMUNERATION COMMITTEE
Mr. To Tai Wai
Chairman
Executive Director
Ms. Ng Lee Lee
Members
Mr. Tan Sui Hin
Executive Director
Mr. Tan Sui Hin
SOLICITORS
Senior Independent
Non-Executive Director
NOMINATION COMMITTEE
Mr. Loh Wei Tak
Chairman
Independent Non-Executive Director
Mr. Loh Wei Tak
Members
Mr. Tan Sui Hin
Datuk Faizoull Bin Ahmad
Non-Independent
Non-Executive Director
(Ceased w.e.f. 01/03/2015)
COMPANY SECRETARIES
Ms. Lim Seck Wah
(MAICSA NO.: 0799845)
Adi Radlan & Co.
Ng Kee Chong & Co.
AUDITORS
Messrs SJ Grant Thornton
(Member of Grant Thornton International Ltd)
Chartered Accountants
Unit 29-08, Level 29
Menara Landmark
12, Jalan Ngee Heng
80000 Johor Bahru
Ms. Liang Siew Ching
(MAICSA NO.: 7000168)
STOCK EXCHANGE LISTING
REGISTERED OFFICE
Level 15-2,
Bangunan Faber Imperial Court
Jalan Sultan Ismail
50250 Kuala Lumpur
Tel : 03-2692 4271
Fax : 03-2732 5388
SHARE REGISTRAR
Mega Corporate Services Sdn. Bhd.
(Company No.: 187984-H)
Level 15-2,
Bangunan Faber Imperial Court
Jalan Sultan Ismail
50250 Kuala Lumpur
Tel No. : 03-2692 4271
Fax No. : 03-2732 5388
Main Market
Bursa Malaysia Securities Berhad
STOCK CODE: 5125
Annual Report 2015
GROUP STRUCTURE
100%
PANTECH CORPORATION SDN. BHD.
100%
Pantech (Kuantan) Sdn. Bhd.
100%
Pantech Realty Sdn. Bhd.
40%
Tuah Nusa Sdn. Bhd.
100%
PANTECH STEEL INDUSTRIES SDN. BHD.
100%
PANTECH STAINLESS & ALLOY INDUSTRIES SDN. BHD.
100%
100%
PANAFLO CONTROLS PTE. LTD.
70%
100%
100%
JC Flow Controls Pte. Ltd.
NAUTIC STEELS (HOLDINGS) LIMITED
100%
Nautic Steels Limited
100%
NAUTIC STEELS SDN. BHD.
100%
PANTECH INTERNATIONAL (KSA) SDN. BHD.
3
4
DIRECTORS’ PROFILE
DATO’ CHEW TING LENG
TO TAI WAI
Executive Chairman/Group Managing Director
Executive Director
Dato’ Chew Ting Leng, Malaysian, aged 60, is one
of the co-founders of the Group. He has more
than 30 years of experience in the PVF solutions
industries. He was appointed as Group Managing
Director and Executive Chairman of Pantech
Group Holdings Berhad (PGHB) on 11 November
2006 and 13 November 2006 respectively.
He is a member in the Remuneration Committee.
Mr David To, Malaysian, aged 44, 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.
public companies.
DATO’ GOH TEOH KEAN
NG LEE LEE
Executive Director
Dato’ Goh Teoh Kean, Malaysian, aged 59,
graduated with Diploma in Commerce (Financial
Accounting) from Tunku Abdul Rahman College.
Ms Ng Lee Lee, Malaysian, aged 48, 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.
He has more than 20 years of experience in
the PVF solutions industry. He is one of the cofounders 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.
public companies.
She does not hold any directorships in any other
public companies.
TAN SUI HIN
Senior Independent Non-Executive Director
TAN ANG ANG
Executive Director
Mr Adrian Tan, Malaysian, aged 59, 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.
public companies.
Mr Tan Sui Hin, Malaysian, aged 65, 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 the Senior Independent
Director with effective from 19 June 2014.
He is the Chairman of the Audit Committee
and a member of both the Nomination and
Remuneration Committees.
public companies.
Annual Report 2015
DIRECTORS’ PROFILE
cont’d
LOH WEI TAK
Mr Loh Wei Tak, Malaysian, aged 42, 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 member of the Audit Committee.
public companies.
OTHER INFORMATION:Directors’ Shareholdings
TUAN HAJI YUSOFF BIN MOHAMED
Tuan Haji Yusoff Bin Mohamed, Malaysian,
aged 64, 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.
public companies.
Details of Directors’ Shareholdings in the Company
are as disclosed on page 35 of the Annual Report
2015.
Family relationship with Directors and/or Major
Shareholders
Dato’ Chew Ting Leng and his spouse, Datin Shum
Kah Lin are substantial shareholders of Pantech
Group Holdings Berhad (“PGHB”) by virtue of their
substantial shareholdings in CTL Capital Holding Sdn.
Bhd. pursuant to Section 6A of the Companies Act
1965.
Dato’ Goh Teoh Kean and his spouse, Datin Lee Sock
Kee are substantial shareholders of PGHB by virtue
of their substantial shareholdings in GL Management
Agency Sdn. Bhd. pursuant to Section 6A of the
Companies Act 1965.
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.
Conviction of Offences
All Directors have no convictions of offences within
the past 10 years, save for traffic offences, if any.
Attendance at Board Meetings
The attendance of the Directors is disclosed in the
Corporate Governance Statement on page 24 of the
Annual Report 2015.
5
6
EXECUTIVE CHAIRMAN’S
STATEMENT
Dear Shareholders,
I am grateful to once again have
the privilege to bring you the
Annual Report for Pantech
Group Holdings Berhad. The
financial year under review was
a most challenging year. It
tested
Pantech
Group's
resilience
and
ability
to
withstand onslaughts brought
about by industry uncertainties.
Annual Report 2015
EXECUTIVE CHAIRMAN’S STATEMENT
cont’d
For the financial year (FY) that ended 28 February 2015, Pantech Group turned in a Profit After Tax (PAT) of RM43.15 million
on the back of RM525.77 million revenue. This performance was lower by RM11.48 million and RM49.84 million in PAT and
revenue respectively as compared to the financial year that ended 28 February 2014.
The year 2014 was overall a bleak year for the oil and gas industry with falling oil prices and rising costs. Being in the
business where our fortunes are linked closely to that of the oil and gas industry, we too bore part of the brunt and it
translated to the lack of growth reflected in our performance.
Business at both the divisions of Trading and Manufacturing were sustained albeit with a drop of 4% and 14% respectively
as compared to FY2014. Trading:Manufacturing revenue contribution ratio came in at 57:43, and this did not meet our
targeted 50:50 by 2015 revenue contribution. This missing of target was due to the decrease in revenue experienced at the
Manufacturing division brought about by decrease in export sales of stainless steel pipes. The sales of our stainless steel
pipes were also dampened by the anti-dumping duty that Malaysia is subjected to by the International Trade Commission of
the Department of Commerce of the United States of America.
Pantech Group continued to export to some 67 countries worldwide, but Malaysia accounted for the bulk of our business,
a testament to the track record that Pantech Group has shored up over the last 27 years of being in business. Our ability to
supply pipes, valves and fittings solutions to our customers under pressured deadlines have served us well. Together with our
inventory holding that we have maintained at 30,000 items, Pantech Group continues to build on our One Stop Centre value
proposition. We believe this has contributed to our ability to turn in more than half a billion Ringgit in business despite market
sentiments.
With such large inventory, comes large challenges. Our main trading company, Pantech Corporation Sdn Bhd (PCSB) is in the
process of setting up another warehouse in Pengerang, which will put us logistically and physically even closer to serve the
RAPID project. This warehouse will be an extension to the three other warehousing sites that we already operate. In addition
to the warehousing system that is already in place, all items are also now fully classified under the Goods and Services Tax
(GST) appropriately. Pantech Group successfully migrated all data to the GST-compliant system and the GST-accounting went
live as scheduled, in accordance with government requirements.
With forward planning, our cash flow was also in a healthy position to withstand the pressure of GST payable.
On the same note, we were also able to continue to reward loyal shareholders with cash dividend payouts for FY2015 that
have amounted to RM15.50 million. Upon approval by shareholders at the ninth Annual General Meeting, the total payouts
will be approximately RM18.55 million or 43% of our PAT, together with share dividend reward from our 6.10 million treasury
shares.
CORPORATE GOVERNANCE
The most valuable asset prized at Pantech Group is integrity. This is the cornerstone on which Pantech Group has built our
business. We believe that when integrity is upheld, the values of mutual respect and trust will automatically flow down. The
reputation that we have earned coming to three decades now is the result of consistently persisting on a transparent and
ethical way of doing business.
Our corporate governance statement and reports are on page 21 to 27.
7
8
EXECUTIVE CHAIRMAN’S STATEMENT
cont’d
ACKNOWLEDGEMENT
Pantech Group has managed to weather a sluggish year for the oil and gas industry due to strong support and hard work of
the Board of Directors, management and staff. They are the pillars that have helped build Pantech Group up, and continue to
be the central pillars of our business. I would like to record my heartfelt thank you to them, and also to our customers and
business partners who have continued to place their trust in us.
In September 2014, Pantech Group had the pleasure of hosting a number of our customers and business partners who came
from far and wide to celebrate with us the official opening of our new corporate head office by Y.A.B. Dato’ Mohamed Khaled
bin Nordin, Chief Minister of Johor.
The Pasir Gudang location of our consolidated operations in Johor is in the Eastern Gate Development - the same development
region as that of the oil and gas focus site in the main southern development corridor. This strategic locale gives us an added
advantage to tap a portion of the US$10 billion contracts which have already been awarded in the Refinery and Petrochemical
Integrated Development (RAPID) in Pengerang.
With the global market continuing to look depressed and the lacklustre economy likely to cause delay in investment in oil and
gas pipelines and projects, Pantech Group is huddled in to weather any stormy journey ahead. Pantech Group is braced for the
long term and is buckled in to rise to meet the short term challenges ahead.
Dato’ Chew Ting Leng (Jimmy)
Executive Chairman
Annual Report 2015
MANAGEMENT REVIEW OF OPERATIONS
AND FINANCIAL RESULTS
Pantech Group operated business for the financial period of 1 March 2014 to 28 February 2015 under a haze of economic
uncertainties where the mood in the oil and gas industry was dismal. The price of crude oil fell sharply in latter half of 2014 with
prices falling from US$114 per barrel on 19 June 2014 to US$62 per barrel at the end of February 2015. With a sharp decline of
almost 50% in price, investment in oil and gas projects decelerated. This in turn, affected our business. We managed to maintain
profitability amidst challenging environments of cost scrutiny and delays in projects in the oil and gas industry as anticipated.
Under such flat environment, Pantech Group ended the 2015 financial year with a Profit Before Tax (PBT) of RM58.70 million and
a Profit After Tax (PAT) of RM43.15 million on the back of RM525.77 million revenue. Overall, the PAT and revenue decreased by
RM11.48 million and RM49.84 million respectively. Margin was squeezed lower one percent year-on-year by higher cost of doing
business where operating costs rose, higher cost of raw materials, and a more competitive business environment.
Contributions by Trading and Manufacturing divisions dropped by 4% and 14% as compared to FY2014. The Trading Division
accounted for RM298.04 million whilst contribution by the Manufacturing Division came in at RM227.73 million, translating to
57% and 43% of the total revenue respectively. In FY2015, slowing sales demand from the local oil and gas sector saw this
drop in the robust business of the Trading Division while lower export sales of stainless steel pipes contributed to the revenue
reduction in the Manufacturing Division.
Profit-wise, the Trading Division came under pressure with the influx of lower quality products priced cheaply. Pantech Group has
always upheld that quality cannot be compromised in our business, we will continue to offer standards-based products. However,
quality products come at a price and this ate into the profit margin of our Trading Division which saw a 2.5% depression from
12.9% to 10.4% in segment profit before finance cost and interest income.
The Manufacturing Division, while it didn’t fair well in its revenue contribution, the profit margin was quite well defended and
maintained at 17.5% to 17.6% year-on-year. The segment profit before finance cost and interest income contribution from
Manufacturing was also higher than Trading, accounting for approximately 59% of Pantech Group’s total segment profit.
The Malaysian manufacturing operations remained the main revenue contributor in the Manufacturing Division, at 80%. The
manufacturing activities in the United Kingdom held steady at 20%. This quantum was similar to the Malaysia:United Kingdom
80:20 revenue contribution recorded in FY2014.
Our home country of Malaysia remained our main market, accounting for 52% of our total revenue. And, in line with our
positioning which is aligned to the oil and gas sector, this industry accounted for 66% of our total revenue in FY2015.
Aside from generating revenue and watching the profit margins, Pantech Group pays particular emphasis on efficient working
capital and healthy cash flow. These are the cornerstones of financial management that will give us the ability to capitalise
on opportunities regardless of market sentiment. Through prudent financial management, we have managed to maintain our
gearing level at 0.46 as at 28 February 2015 - the same as our gearing level as at the end of the last financial year.
Watching our operational expenses closely under inflationary pressure is no easy feat. With a tighter fist, the operational expenses
were contained without drastic increase.
The financial side of Pantech Group also geared for the full impact of the Goods and Services Tax (GST), and with foresight, we
were able to weather this burden on our cash flow.
Notwithstanding the challenges, we were determined to continue our track record of rewarding loyal shareholders. Our wellbuffered financial position has allowed us to share wealth with shareholders to the tune of RM22.43 million in total, upon
approval at the ninth Annual General Meeting (AGM).
For FY2015, Pantech Group has to-date paid out cash dividends in 3 tiers:
-
The first interim dividend of 1.0 sen per ordinary share was announced on 23 July 2014 and paid out on 21 October 2014;
the cash pay-out totalled RM5.97 million.
-
The second interim dividend of 1.0 sen for every ordinary share was announced on 20 October 2014 and paid out on 15
January 2015 with the cash pay-out amounting to RM5.95 million.
-
The third interim dividend of 0.6 sen per ordinary share was announced on 22 January 2015 and the pay-out which
amounted to RM3.58 million was made on 16 April 2015.
9
10
cont’d
The fourth and final single tier cash dividend of 0.5 sen per ordinary share has been proposed and is subject to approval by
shareholders at the ninth AGM. In addition, Pantech Group also plans to distribute approximately 6.10 million treasury shares on
the basis of one (1) treasury share for every 100 existing ordinary shares of RM0.20 each. Based on the treasury shares book cost,
this share dividend is equivalent to 0.66 sen per share.
MANUFACTURING AND CAPACITIES
All three manufacturing plants of Pantech Steel Industries Sdn Bhd (PSI), Pantech Stainless & Alloy Industries Sdn Bhd (PSA) and
Nautic Steels (Holdings) Limited have maintained their capacity at 21,000, 14,400 and 800 metric tonnes with output optimised
at 88%, 80% and 75% respectively.
Having the capability to produce customised products to meet customer requirements is one of the strategies that drove our
manufacturing thrust. The strategy also outlined the need to be efficient and having the right product mix that market demands,
but which cannot be fulfilled easily by trade.
To this end, the plant in Klang under PSI which produces carbon steel fittings and specialised high frequency induction long
bends, has increased the product range up to producing 36-inch elbows and 24-inch reducers. In addition, PSI has also started
production of cross tees.
PSA which produces stainless steel pipes and fittings are equipped with new CNC machines to enlarge the production of fittings
range to stub ends.
Over in the United Kingdom, Nautic undertook the planned upgrading of fittings machines to improve efficiency. The upgraded
machines are faster and more precise, giving higher quality items with more efficient raw material usage.
In respect of warehousing, PSA has set aside RM10 million as capex to expand the warehouse on a six-acre site which is part of
the 26-acre plot that houses trading and manufacturing activities together with warehousing and corporate administration. The
seven-acre land adjacent to this fully developed 26-acre site remains a land bank holding for the Group for future development.
MARKET
With product acceptance in 67 countries, marketing activities are not limited to our home country alone although Malaysia is our
main focus.
We are pleased that closer home and even closer to Pantech Group’s consolidated location, the relationship investment over
the years is beginning to blossom. The first fruit being a USD5 million initial take-off order for a project in the Refinery and
Petrochemical Integrated Development (RAPID) in Pengerang. To support this project and future wins, Pantech Group acquired a
four-acre land near Sungai Rengit, which is located just next to RAPID, for RM3 million. This new site will enable Pantech Group
to capitalise on urgent orders and accommodate the demanding turnaround time.
With the insipid economic growth enveloping the global market currently, Pantech Group feels the heat of the negative
sentiment. Even though big-ticket oil and gas pipelines and projects might be delayed, we believe it is important to soldier on
with investment in marketing activities, and building our brand name.
As such, Pantech Group participated in select and niche oil and gas exhibitions and conferences which also provided us a platform
to keep abreast of the latest developments, while renewing and strengthening ties within the sector that we serve. The events
that we invested into were:
-
Offshore Technology Conference (OTC Asia) which was held in Malaysia on 25-28 March 2014.
-
Tube and Wire 2014, held in Dusseldorf, Germany on 7-11 April 2014.
-
Malaysia Oil & Gas Services Exhibition and Conference (MOGSEC) which took place in Kuala Lumpur on 23-25 September
2014.
Pantech Group will continue identify and participate in relevant and worthwhile trade exhibitions and conferences as part of our
marketing efforts.
Annual Report 2015
cont’d
OUTLOOK AND CHALLENGES
The strategies that were put in place five years ago have enabled Pantech Group to stave off major drop in our business despite
the weak market demands. We are confident that the oil and gas industry will stablise and the clouds looming over major
economies will clear in the coming years.
The current weak Ringgit can work in our favour as export becomes cheaper. And on the domestic front, customers will source
locally as a natural hedge to the weaker Ringgit or to manage cost in home currency. And, repatriated revenue from our operations
of Nautic will also be higher.
Pantech Group is working hard to secure further contracts within the RAPID project, and is upbeat on the opportunities available.
In our FY2014, we reported our trepidation of the developments in the oil and gas industry as well as the influx of cheaper
products into the local market. We have been and will remain watchful on these two particular areas of concern. We have a good
reputation, solid track record, and ability to the meet stringent requirements on our side and we fully intent to capitalise on them
to provide a steady flow of income to the Group. We are also increasing our value added services of project management and
consultancy in the Trading Division to augment the supply of quality and standards-based complete solutions.
Perseverance and hard work complementing the relationship and value proposition offered by Pantech Group will see us through
another year of tumultuous business environment. Our focus is unwavering on boosting our One Stop Pipes, Valves and Fittings
solutions provider status, towards the purpose of positive business and sustained profitability.
11
12
CORPORATE SOCIAL RESPONSIBILITY ACTIVITIES
We make a living
by what we get,
but we make a life
by what we give.
~ Winston Churchill
Pantech Group believes that the key to success
involves not only improving corporate value and
increasing profits in business, but also contributing
actively to communities as well as the welfare of
employees. Our Corporate Social Responsibility is
also reflected in the way we do business - in such
a manner that is ethical, legal, and meet if not
exceed the expectations that stakeholders have of
us.
The focus of our
activities in FY2015
safety as well as
were the notable
Pantech Group.
WORKPLACE SAFETY
Employee safety in the workplace is and has always been
the priority at Pantech Group. As the saying goes, “Safety
always begins with prevention”. A series of safety training
courses were held to keep all employees informed and
trained on best safety practice and to encourage them to
apply the learnings at work.
Among the numerous Workplace Safety training and
programmes conducted in FY2015 were:
í First Aid Training to equip employees with basic first
aid knowledge and to be prepared to be able to deal
with emergencies effectively. The aim of the training
was to produce competent first aiders in the event of an
emergency.
corporate social responsibility
was our employees. Workplace
care for staff and community
CSR activities undertaken by
í 6DIHW\LQ+DQGOLQJ)RUNOLIW7UXFN7UDLQLQJwhere both
theory and practical sessions were the syllabus to
produce trained forklift operators who are aware of the
importance of adhering to strict safety guidelines.
í )LUH'ULOO to familiarise employees with the emergency
response procedure and identify any weakness in the
evacuation strategy. Pantech Group believe that a
coordinated and effective emergency response can only
happen when there is preparation and practice.
Annual Report 2015
CORPORATE SOCIAL RESPONSIBILITY ACTIVITIES
cont’d
í 6DIHW\ +HDOWK $ZDUHQHVV DQG 33( 7UDLQLQJ to
educate employees on the purpose and correct usage of
personal protective equipment (PPE) such as safety
shoes, safety glasses, hard hats, respirators, chemical
resistant gloves and aprons which are designed to
create a barrier against workplace hazards. This training
also highlighted the need to be constantly alert and to
work defensively to improve workplace safely.
í +DQGOLQJRI+D]DUGRXV&KHPLFDO which provided staff
and operators critical knowledge on hazardous chemical
that they might come into contact with.
WORKPLACE RECOGNITION
We believe that appreciation and encouragement are two
key attributes that can develop a person to be the best at
what they do and become. Turning this belief beyond mere
words, Pantech have established programmes dedicated to
staff.
%DFNWRVFKRRO 3URJUDPPH which appreciates and
support staff with school-going children in a very tangible
manner has been running for 7th year and going strong.
We provided each child of a Pantech staff with voucher for
school uniforms and school bags with the hope of helping
to alleviate the financial burden of education.
$WWLWXGH RI *UDWLWXGH DQG +HDOWK\ 5HODWLRQVKLSV are
nurtured at Pantech Group. When good work and loyalty
lacks visible appreciation, the passion and spirit of
excellence can be strangled. Fostering healthy
relationships through appreciation and recognition of good
work is important and our annual dinners in Klang and in
Johor made particular highlight of staff who have worked
hard and contributed to the growth of the company. Staff
who have been loyal to company for 5, 10 and 15 years
were appreciated during these dinners.
&$5()257+(&20081,7<
We are defined by the community around us. Our success is
determined equally by how much we care for them. Pantech
Group cares for the community that we are in by being
aware of those in need near us. Continuing our care for
those who have fallen on tough times, and families with
children with medical conditions, Pantech Group through PSI
provided food and basic needs to three families. For one
particular family of a grandmother caring for her daughter
with ‘Down Syndrome’, PSI ‘adopted’ them for six months,
providing food, basic needs and housekeeping awareness.
As our footprint in business develops, Pantech Group wants
to be a company that upholds real value, built by people
with character and courage, and surrounded by community
that lives with dignity.
13
14
CORPORATE EVENTS
Corporate Head Office
Opening Ceremony
7 September 2014
Corporate Head Office
Malaysia Oil & Gas Services
Exhibition And Conference
(MOGSEC)
23 - 25 September 2014
Kuala Lumpur Convention Centre, Malaysia
Annual Report 2015
CORPORATE EVENTS
cont’d
OneBuild@JB 2015,
Southern Malaysia Building Materials
& Construction Technology Exhibition
23 - 26 April 2015
Expo@Danga City Mall, Johor Bahru, Malaysia
OGA 2015
2 - 4 June 2015
Kuala Lumpur Convention Centre, Malaysia
15
16
AUDIT COMMITTEE REPORT
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 system of internal control.
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
Mr. Loh Wei Tak
: Independent Non-Executive Director
: Independent Non-Executive Director
AUTHORITY
The Committee shall, in accordance with a procedure to be determined by the Board and at the cost of the Company:a)
b)
c)
d)
e)
have authority to investigate any matter within its terms of reference;
have adequate resources and unrestricted access to any information from both internal and external auditors and all
employees of the Group in performing its duties;
have direct communication channels with the external auditors and person(s) carrying out the internal audit function or
activity;
be able to obtain external legal or other independent professional advice and to invite outsiders with relevant experience
to attend, if necessary; and
be able to convene meetings with the external auditors, the internal auditors or both, excluding the attendance of other
directors and employees of the Company, whenever deemed necessary.
MEETINGS
The Chairman shall call a meeting of the Audit Committee if a request is made by any committee member, any Executive Director,
or the external auditors.
A minimum of two members present shall form a quorum provided both of whom present are independent directors. The
Committee shall meet with the external auditors and/or internal auditors without the presence of the executive board members
at least once a year. The Company Secretary shall act as Secretary of the Audit Committee or in her/his absence, another person
authorized by the Chairman of the Audit Committee.
There were five (5) Audit Committee meetings held during the financial year 2015. The details of attendance of Committee
members are as follows:Name of Committee Members
Designation
Attendance
Mr. Tan Sui Hin
Chairman
5/5
Member
5/5
Mr. Loh Wei Tak
Member
5/5
Annual Report 2015
cont’d
RESPONSIBILITIES AND DUTIES OF THE AUDIT COMMITTEE
The duties and responsibilities of the Committee shall include:a)
To review and recommend the appointment of external auditors, the audit fee and any questions of resignation or dismissal
including the nomination of person or persons as external auditors;
b)
To review with the external auditors, the audit plan and audit report;
c)
To review with the external auditors, their evaluation on the effectiveness of the system of internal controls;
d)
To review the assistance and cooperation given by the employees of the Company to the external auditors;
e)
To review the adequacy of the scope, functions, competency and adequacy of resources of the internal audit functions and
authority to carry out its work;
f)
To review the internal audit programme, processes and findings of the internal audit processes or investigation undertaken
and whether or not appropriate corrective actions are taken on the recommendations of the internal audit function;
g)
To review the quarterly results and annual financial statements, prior to their submission for consideration and approval by
the Board of Directors, focusing particularly on:(i)
changes in or implementation of major new or revised accounting policies;
(ii)
significant and unusual events; and
(iii)
compliance with accounting standards and other legal and regulatory requirements;
h)
To review any related party transaction and conflict of interests situation that may arise within the company or group
including any transaction, procedure or course of conduct that raises questions of management integrity;
i)
To review the competency, professionalism and independency of the external auditors; and
j)
To verify the allocation of options pursuant to a share scheme for employees at the end of each financial year.
SUMMARY OF ACTIVITIES OF THE AUDIT COMMITTEE
In line with the Terms of Reference of the Audit Committee, the following activities were carried out by the Audit Committee
during the financial year ended 28 February 2015 in discharging its functions and duties:a)
b)
c)
d)
e)
f)
Reviewed the External Auditors’ scope of work and audit plans for the financial year under review;
Reviewed the results of audit and the audit report;
Reviewed and approved the Internal Audit Plan and the Internal Audit Report;
Reviewed the quarterly and annual financial statements of the Group prior to submission to the Directors for their perusal
and approval. This was to ensure compliance of the financial statements with the provisions of the Companies Act, 1965,
Malaysian Financial Reporting Standards, International Financial Reporting Standards and applicable Listing Requirements
of Bursa Malaysia Securities Berhad;
Reviewed the unaudited quarterly financial results announcements and made recommendations to the Board of Directors
for approval;
Considered and recommended to the Board the re-appointment of External Auditors and their fees.
17
18
cont’d
INTERNAL AUDIT FUNCTION
The Group has set up an internal audit division and supported by external 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
2015 was RM271,763.00.
The detail of internal audit functions during the period under review is stated in the Statement on Risk Management and Internal
Control of this Annual Report.
During the period under review, the Internal Auditors carried out the following activities:a)
b)
c)
Presented and obtained approval from the Audit Committee the annual internal audit plan, its audit strategy and scope of
audit work;
Performed audits according to the annual internal audit plan, to review the adequacy and effectiveness of the internal
control system, compliance with policies and procedures and reported ineffective and inadequate controls and made
recommendations to improve their effectiveness; and
Performed follow-up reviews in assessing the progress of the agreed management’s action plans and report to the
management and Audit Committee.
EMPLOYEES’ SHARE OPTION SCHEME (“ESOS”)
The allocations of options were reviewed and verified by the Audit Committee to ensure compliance with the allocation criteria
determined by the Option Committee and in accordance with the By-Laws of the ESOS.
ESOS granted to Non-Executive Directors
A breakdown of the options offered to the Non-Executive Directors pursuant to the ESOS in respect of the financial year under
review are as follows:No. of options
Granted on
03.03.2010
Exercised
Expired/
Forfeited
Unexercised
as at
28.02.2015
No.
Names
1.
Tan Sui Hin
250,000
(250,000)
-
-
2.
250,000
(135,000)
-
115,000
3.
Loh Wei Tak
250,000
(250,000)
-
-
ESOS granted to Directors and Senior Management
Pursuant to the Company’s ESOS By-Laws, not more than 50% of the Company’s shares available under the scheme shall be
allocated to Directors and Senior Management. At the commencement of the scheme on 3 March 2010, the Company has granted
44.88% of ESOS to its Directors and senior management staffs.
There is no new option been granted during the financial year.
Annual Report 2015
STATEMENT ON RISK MANAGEMENT
AND INTERNAL CONTROL
The Malaysian Code on Corporate Governance stipulates that the Board of Directors of a listed company should maintain a sound
system of internal control to safeguard shareholders’ investment and the Company’s assets. The system of risk management
and internal control covers not only financial controls but operational and compliance controls as well. This Statement on Risk
Management and Internal Control is made pursuant to paragraph 15.26(b) of the Main Market Listing Requirements of Bursa
Malaysia Securities Berhad.
Pursuant to Paragraph 15.23 of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad, the Group has
requested that the external auditors to review this Statement on Risk Management and Internal Control in accordance with
Recommended Practice Guide (“RPG”) 5 issued by the Malaysian Institute of Accountants. The Board is pleased to note that
external auditors find this Statement to be consistent with their understanding of the risk management and internal control
processes implemented by the Group during their review.
BOARD RESPONSIBILITY
The Board acknowledges its overall responsibility for the Group’s system of risk management and internal control and has in place
an on-going process for identifying, evaluating and monitoring the significant risks affecting the achievement of its 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 system is designed to manage rather than eliminate the risk of failure to achieve business objectives and strategies,
and can only provide reasonable but not absolute assurance against material misstatement, loss and 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 period.
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 managing the risks
of their respective business units, operational units and departments. Significant issues and risks are discussed during Executive
Group Directors Meeting and management meetings 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 Company has setup an internal audit division and supported by an external 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 2015 was RM271,763.00.
19
20
STATEMENT ON RISK MANAGEMENT
AND INTERNAL CONTROL
cont’d
KEY ELEMENTS OF THE GROUP’S INTERNAL CONTROL SYSTEM
The key elements of the Group’s internal control system comprise the following:
í
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í
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business and operational matters including potential risks and control issues;
í
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reporting and operation of the Board at regular Board meeting. Major capital investment, acquisition, disposals or any other
transaction not in the ordinary course of business exceeding a certain threshold must be referred to the Board for approval;
í
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to the Group and advise accordingly;
í
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í
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performance, business planning, control environment and other key issues;
í
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í
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memorandums, staff briefings and operational meetings to achieve the Group’s overall business objectives;
í
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í
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occupational safety and health policies and procedures on a continuous basis.
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 findings on risk and internal audit 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 internal control 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 internal control system in place is adequate and effective at its current level of operations
and will continuously strive to enhance the Group’s system of risk management and internal control in safeguarding stakeholders’
interest, shareholders’ investment and Group’s assets.
Annual Report 2015
CORPORATE GOVERNANCE STATEMENT
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”)
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:
z
reviewing and adopting a strategic plan for the Company, addressing the sustainability of the Group’s business;
z
overseeing the conduct of the Group’s business and evaluating whether or not its businesses are being properly managed;
z
identify principal business risks faced by the Group and ensuring the implementation of appropriate internal controls and
mitigating measures to address such risks;
z
ensuring that all candidates appointed to senior management positions are of sufficient calibre, including the orderly
succession of senior management personnel;
z
overseeing the development and implementation of a shareholder communications policy, including an investor relations
programme for the Company; and
z
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.
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.
Code of Conduct and Whistle-Blower Policy
The Company does not adopt the Code of Conduct and Whistle-Blower policy. The Board has always conducted themselves in an
ethical manner while executing their duties and function. The Board believes in open management that any issues of concern
can be channeled to Senior Independent Director or Executive Directors for appropriate action.
Sustainability of Business
The Board is mindful of the importance of business sustainability and, in conducting the Group’s business, 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.
21
22
cont’d
PRINCIPLE 1 - ESTABLISH CLEAR ROLES AND RESPONSIBILITIES OF THE BOARD AND MANAGEMENT cont’d
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 and quality necessary to enable them to
discharge their duties and responsibilities.
Senior Management of the Group and external advisers are 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 eight (8) members, comprising of an Executive Chairman who is also the
Group Managing Director, one (1) Group Deputy Managing Director, three (3) Executive Directors and three (3) Independent
Non-Executive Directors. This composition fulfills the requirements as set out under the Listing Requirements of Bursa Malaysia
Securities Berhad (“Bursa”), 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; and 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
Members
Mr. Tan Sui Hin
The Nomination Committee is primarily responsible for recommending suitable appointments to the Board, taking into
consideration the Board structure, size, composition and the required mix of expertise and experience which the Director should
bring to the Board. It assesses the effectiveness of the Board as a whole, the Board Committees and the contribution of each
Director, including Non-Executive Directors.
Annual Report 2015
cont’d
PRINCIPLE 2 - STRENGTHEN COMPOSITION OF THE BOARD cont’d
Nomination Committee – Selection and Assessment of Directors cont’d
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.
Directors’ Remuneration
A Remuneration Committee has been established by the Board, comprising a majority of Non-Executive Directors as follows:
Chairman
Members
Mr. Tan Sui Hin
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.
Details of Directors’ remuneration for the financial year ended 28 February 2015 are as follows:
Remuneration
(RM)
Executive Directors
6,047,095
Non-Executive Directors
168,000
Total
6,215,095
The remuneration paid to the Directors, analysed in the following bands, is as below:Range of Remuneration (RM)
Executive
Non-Executive
50,000 and below
-
4
550,000 – 600,000
1
-
900,000 – 950,000
1
-
1,300,000 – 1,350,000
1
-
1,500,000 – 1,550,000
1
-
1,700,000 – 1,750,000
1
-
There is no service contract made between any Director and the Company or its subsidiary companies.
23
24
cont’d
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 ensuring 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 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.
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 the
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 and 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.
Board Meetings
There were Five (5) Board meetings held during the financial year ended 28 February 2015, with details of Directors’ attendance
set out below:
Meetings Attended
(out of 5 held)
5/5
5/5
Mr. Tan Ang Ang
Executive Director
4/5
Mr. To Tai Wai
Executive Director
5/5
Ms. Ng Lee Lee
Executive Director
4/5
Mr. Tan Sui Hin
5/5
Mr. Loh Wei Tak
5/5
5/5
(Ceased w.e.f. 01/03/2015)
Non-Independent Non-Executive Director
2/5
Annual Report 2015
cont’d
PRINCIPLE 4 – FOSTER COMMITMENT OF DIRECTORS cont’d
Board Meetings cont’d
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 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 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.
All the Directors of the Company have attended the Mandatory Accreditation Programme conducted by Bursatra Sdn Bhd within
the stipulated timeframe required in the Listing Requirements during the financial year ended 2015.
During the year, all Board Members have attended pertinent training as below:Name of Director
(a) Dato’ Chew Ting Leng
Date
27 August 2014
24 June 2014
Training attended
Enterprise Risk Management – Boards’ Responsibilities in
Malaysia
Board Chairman series : The Role of the Chairman.
(b) Dato’ Goh Teoh Kean
27 August 2014
Malaysia
(c) Mr. Tan Ang Ang
27 August 2014
Malaysia
15 – 22 June 2014
3 June 2014
6th Asean Senior Management Development Program
(6ASMDP).
Global Malaysia Series #7: We Are Family: We Are Global
(featuring Tan Sri Francis Yeoh of YTL Corporation and Jacob
Yeoh of YTL Communications).
(d) Mr. To Tai Wai
27 August 2014
Malaysia
(e) Ms. Ng Lee Lee
27 August 2014
Malaysia
(f) Mr. Tan Sui Hin
27 August 2014
Malaysia
(g) Mr. Loh Wei Tak
27 August 2014
Malaysia
(h) Tuan Haji Yusoff Bin Mohamed
27 August 2014
Malaysia
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.
25
26
cont’d
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, 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, 1965, 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 2015, 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, 1965.
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 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 formalizing 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.
In assessing the independence of external auditors, the Audit Committee will in future require written assurance by the external
auditors, confirming that they are, and have been, independent throughout the conduct of the audit engagement with the
Company in accordance with the independence criteria set out by the International Federation of Accountants and the Malaysian
Institute of Accountants.
PRINCIPLE 6 – RECOGNISE AND MANAGE RISKS OF THE GROUP
The Company has established a Risk Management Committee (“RMC”) and is headed by the Executive Director 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.
Annual Report 2015
cont’d
PRINCIPLE 6 – RECOGNISE AND MANAGE RISKS OF THE GROUP cont’d
The internal audit function of the Group is carried out by an internal audit division and supported by an external independent
professional firm, whose work are 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
Function 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, 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.
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 about the
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 show of hands and duly passed. The outcome of the
AGM was announced to Bursa on the same meeting day.
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, 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 24 April 2015.
27
28
ADDITIONAL COMPLIANCE STATEMENT
1.
SHARE BUY-BACKS
Details of the share buy-back by the Company during the financial year are set out below:Total
Consideration
Price per share (RM)
No. of Shares
purchased
Lowest
Highest
Average
(RM)
July - 2014
100,000
1.100
1.100
1.100
110,473.00
August – 2014
258,100
1.040
1.050
1.045
270,286.65
November - 2014
509,900
0.925
0.935
0.930
476,509.25
December - 2014
1,839,500
0.710
0.830
0.770
1,396,102.81
108,000
0.730
0.730
0.730
79,415.70
Month
January - 2015
At the end of the financial year, a total of 6,267,800 ordinary shares at RM0.20 each were retained as treasury shares. There
has been no sale or cancellation of treasury shares during the financial year.
The Board is proposing for the shareholders’ approval at the 9th AGM to be held on 18 August 2015, a final single tier cash
dividend of 0.50 sen per ordinary share of RM0.20 each and a share dividend via a distribution of treasury shares on the
basis of 1 treasury share for every 100 existing ordinary shares of RM0.20 each. Any fractions arising from the distribution
of the share dividend will be disregarded.
2.
OPTIONS, WARRANTS OR CONVERTIBLE SECURITIES ISSUED AND EXERCISED
Employees’ Shares Options Scheme (“ESOS”)
The Company did not offer any options to the eligible employees of the Company under ESOS during the financial year.
The ESOS expired on 2 March 2015.
Irredeemable Convertible Unsecured Loan Stocks 2010/2017 (“ICULS”)
During the financial year, a total of 64,713,382 units of ICULS were converted to 10,785,562 ordinary shares in the Company
at the conversion ratio of 6 ICULS for 1 fully paid-up ordinary shares of the Company.
Pursuant to Clause 6.1(c) of the Trust Deed dated 11 November 2010, the Company had on 6 April 2015 served a Notice
on the remaining ICULS Holders for compulsory conversion of the outstanding 72,103,818 ICULS of nominal value of 10
sen each, which represented approximately 9.63% of the total ICULS issued. Accordingly on 6 May 2015, all the remaining
71,953,818 ICULS of nominal value of 10 sen each were converted into 11,992,027 new ordinary shares of 20 sen each of
the Company. The ordinary shares rank pari passu in all respects with the existing issued shares of the Company.
The ICULS of the Company were removed from the Official List of Bursa Securities with effect from 9:00 a.m., Thursday, 7
May 2015.
Warrants 2010/2020 (“Warrants”)
During the financial year, a total of 2,660 units of Warrants were exercised at the exercise price of RM0.60.
As at 28 February 2015, a total of 24,670 units of Warrants were exercised. 74,816,370 units of Warrants still remain
outstanding.
Annual Report 2015
cont’d
3.
DEPOSITORY RECEIPT PROGRAMME
The Company did not sponsor any depository receipt programme during the financial year.
4.
IMPOSITION OF SANCTIONS/PENALTIES
There were no public impositions of sanctions or penalties imposed on the Company and its subsidiaries, directors or
management by the regulatory bodies during the financial year.
5.
NON-AUDIT FEES
The amount of non-audit fees incurred for services rendered to the Company and its subsidiaries during the financial year
ended 28 February 2015 by Messrs SJ Grant Thornton was RM62,600.00.
6.
PROFIT ESTIMATE, FORECAST AND PROJECTION
The Company did not release any profit estimate, forecast or projections during the financial year.
7.
VARIANCE IN RESULTS
There is no significant variance between the profit after tax for the financial statement ended 28 February 2015 and the
unaudited results previously announced.
8.
PROFIT GUARANTEE
The Company did not receive any form of profit guarantee from any parties during the financial year under review.
9.
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 Directors
and major shareholders interests during the financial year or since the end of the previous financial year.
10.
RECURRENT RELATED PARTY TRANSACTIONS OF A REVENUE AND TRADING NATURE (“RRPT”)
There was no RRPT entered during the financial year.
11.
EXEMPTION TO CTL CAPITAL HOLDING SDN BHD (“CTL CAPITAL”) AND THE PARTIES ACTING IN CONCERT WITH IT (“PACS”)
FROM THE OBLIGATION TO UNDERTAKE A MANDATORY TAKE-OVER OFFER FOR ALL THE REMAINING VOTING SHARES, ICULS
AND WARRANTS IN THE COMPANY NOT ALREADY OWNED BY THEM
The Company had received the approval from the Securities Commission vide its letter dated 3 November 2010 for the
exemption sought by CTL Capital and its PACs pursuant to Practice Note 2.9.1 of the Malaysian Code on Take-Overs and
Mergers, 1998 (replaced by Practice Note 9 of the Malaysian Code on Take-Overs and Mergers 2010 with effect from 15
December 2010).
29
30
cont’d
11.
AND WARRANTS IN THE COMPANY NOT ALREADY OWNED BY THEM cont’d
Amongst others, the approval requires the Company to disclose in its annual and interim accounts and any public document,
including annual reports, prospectuses and circulars for so long as the ESOS Options, ICULS and Warrants remain outstanding,
the following:i.
The time period for which the exemption has been granted
The exemption has been granted from 3 November 2010 up to the issuance and listing of the new Pantech Shares
pursuant to the mandatory conversion of ICULS at its maturity date or upon full conversion of ICULS, whichever date
is earlier. ICULS has been fully converted on 6 May 2015.
ii.
Number and percentage of voting shares in the Company, and the number of ESOS Options, ICULS and Warrants
held by CTL Capital and its PACs as at 30 June 2015:Ordinary Shares
Direct
Parties
CTL Capital
No. of
Voting Shares
No. of Warrants
Indirect
No. of
%(i) Voting Shares
Direct
Indirect
%(i)
108,607,143
17.81
-
-
17,346,398
-
GL Management
Agency Sdn Bhd
(“GL Management”)
78,292,843
12.84
-
-
12,838,130
-
(“CTL”)
4,500,000
0.74 108,607,143
(ii)
17.81
-
17,346,398
(ii)
(“GTK”)
4,500,000
0.74
78,292,843
(iii)
12.84
-
12,838,130
(iii)
Tan Ang Ang (“TAA”)
10,790,000
1.77
1,633,000
(iv)
0.27
1,347,240
213,000
(iv)
To Tai Wai (“TTW”)
13,490,380
2.21
-
-
2,111,880
-
Datin Shum Kah Lin
(“SKL”)
-
- 113,107,143
(v)
18.55
-
17,346,398
(viii)
Datin Lee Sock Kee
(“LSK”)
-
-
82,792,843
(vi)
13.58
-
12,838,130
(ix)
1,633,000
0.27
10,790,000
(vii)
1.77
213,000
1,347,240
(vii)
221,813,366
36.38
-
-
33,856,648
-
Mdm Yong Yui Kiew
(“YYK”)
TOTAL
Notes:(i)
(ii)
Excluding a total of 6,643,800 treasury shares.
Deemed interested by virtue of his and his spouse SKL’s interests in CTL Capital pursuant to Section 6A of the Companies Act,
1965 (“the Act”).
(iii) Deemed interested by virtue of his and his spouse LSK’s interests in GL Management pursuant to Section 6A of the Act.
(iv) Deemed interested by virtue of his spouse YYK’s direct shareholding in the Company pursuant to Section 134(12) of the Act.
(v)
Deemed interested by virtue of her and her spouse CTL’s interests in CTL Capital pursuant to Section 6A of the Act, and by
virtue of her spouse CTL’s direct shareholding in the Company pursuant to Section 134(12) of the Act.
(vi) Deemed interested by virtue of her and her spouse GTK’s interests in GL Management pursuant to Section 6A of the Act and
by virtue of her spouse GTK’s direct shareholding in the Company pursuant to Section 134(12) of the Act.
(vii) Deemed interested by virtue of her spouse TAA’s direct shareholding in the Company pursuant to Section 134(12) of the Act.
(viii) Deemed interested by virtue of her and her spouse CTL’s interests in CTL Capital pursuant to Section 6A of the Act.
(ix) Deemed interested by virtue of her and her spouse GTK’s interests in GL Management pursuant to Section 6A of the Act
(x)
ESOS has expired on 2 March 2015 and ICULS has been fully converted on 6 May 2015.
Annual Report 2015
cont’d
11.
AND WARRANTS IN THE COMPANY NOT ALREADY OWNED BY THEM cont’d
iii.
The maximum potential voting shares or voting rights of CTL Capital and its PACs in the Company, assuming
only CTL Capital and its PACs (but not other shareholders) exercise the ESOS Options, ICULS and Warrants in
full:Direct
Parties
CTL Capital
No. of
Voting
Shares
Indirect
No. of
% Voting Shares
%
125,953,541
19.57
-
-
91,130,973
14.16
-
-
CTL
4,500,000
0.70
125,953,541
(i)
19.57
GTK
4,500,000
0.70
91,130,973
(ii)
14.16
TAA
12,137,240
1.89
1,846,000
(iii)
0.29
TTW
15,602,260
2.42
-
SKL
-
-
LSK
-
YYK
GL Management
TOTAL
-
130,453,541
(iv)
20.27
-
95,630,973
(v)
14.86
1,846,000
0.29
12,137,240
(vi)
1.89
255,670,014
39.73
-
-
Notes:(i)
(ii)
(iii)
(iv)
(v)
(vi)
iv.
Deemed interested by virtue of his and his spouse SKLs interests in CTL Capital pursuant to Section 6A of the Companies Act,
1965 (“the Act”).
Deemed interested by virtue of his and his spouse LSK’s interests in GL Management pursuant to Section 6A of the Act.
Deemed interested by virtue of his spouse YYK’s direct shareholding in the Company pursuant to Section 134(12) of the Act.
Deemed interested by virtue of her and her spouse CTL’s interests in CTL Capital pursuant to Section 6A of the Act, and by
virtue of her spouse CTL’s direct shareholding in the Company pursuant to Section 134(12) of the Act.
Deemed interested by virtue of her and her spouse GTK’s interests in GL Management pursuant to Section 6A of the Act, and
by virtue of her spouse GTK’s direct shareholding in the Company pursuant to Section 134(12) of the Act.
Deemed interested by virtue of her spouse TAA’s direct shareholding in the Company pursuant to Section 134(12) of the Act.
No take-over offer would arise on full exercise of the Warrants by CTL Capital and the PACs
31
32
FINANCIAL
STATEMENTS
33
Directors’ Report
41
Statement by Directors
41
Statutory Declaration
42
Independent Auditors‘ Report
44
Statements of Financial Position
46
Statements of Profit or Loss and Other Comprehensive Income
48
Statements of Changes in Equity
52
Statements of Cash Flows
55
Notes to the Financial Statements
Annual Report 2015
DIRECTORS’ REPORT
The Directors of Pantech Group Holdings Berhad have pleasure in submitting their report together with the audited financial
statements of the Group and of the Company for the financial year ended 28 February 2015.
PRINCIPAL ACTIVITIES
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.
RESULTS
Net profit for the financial year
Group
Company
RM
RM
43,151,696
24,616,182
43,151,696
24,616,182
Attributable to:Owners of the Company
RESERVES AND PROVISIONS
There were no material transfers to or from reserves or provisions during the financial year other than those disclosed in the
financial statements.
DIVIDENDS
The amount of dividends paid and declared since the end of the last financial year were as follows:RM
Special third interim single tier dividend of 1.00 sen per ordinary share in respect of the financial year
ended 28 February 2014 and paid on 16 April 2014
5,670,674
Final single tier dividend of 1.00 sen per ordinary share in respect of the financial year ended 28 February
2014 and paid on 22 September 2014
5,962,710
33
34
DIRECTORS’ REPORT
cont’d
DIVIDENDS cont’d
The amount of dividends paid and declared since the end of the last financial year were as follows:- cont’d
RM
First interim single tier dividend of 1.00 sen per ordinary share in respect of the financial year ended
28 February 2015 and paid on 21 October 2014
5,973,010
Second interim single tier dividend of 1.00 sen per ordinary share in respect of the financial year ended
28 February 2015 and paid on 15 January 2015
5,951,444
Third interim single tier dividend of 0.60 sen per ordinary share in respect of the financial year ended
28 February 2015 and paid on 16 April 2015
3,580,292
For the final single tier dividend of 1.00 sen per ordinary share in respect of the financial year ended 28 February 2014, the
amount paid of RM5,962,710 is higher than RM5,694,376 dividend proposed in last year’s Directors’ report. The difference of
RM268,334 was in respect of net effect from additional shares issued arising from conversion of Irredeemable Convertible
Unsecured Loan Stocks and exercise of Employees Share Option Scheme (“ESOS”) together with shares repurchased and held
as treasury shares subsequent to the end of the previous financial year, but prior to the closing date of the entitlement to
dividend.
At the forthcoming Annual General Meeting, a final single tier dividend, in respect of the financial year ended 28 February
2015, of 0.50 sen per ordinary share and a share dividend distribution of approximately 6.10 million treasury shares on the
basis of 1 treasury share for every 100 existing ordinary shares 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 retained earnings in the financial year ending 28 February 2016.
DIRECTORS
The Directors in office since the date of the last report are:Dato’ Chew Ting Leng
Tan Ang Ang
To Tai Wai
Ng Lee Lee
Tan Sui Hin
Loh Wei Tak
Yusoff Bin Mohamed
(Executive Chairman/Group Managing Director)
(Group Deputy Managing Director)
(Executive Director)
(Independent Non-Executive Director)
(Non-Independent Non-Executive Director) (ceased office effective 1 March 2015)
Annual Report 2015
DIRECTORS’ REPORT
cont’d
DIRECTORS 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 the shares of the Company are as follows:Number of ordinary shares of RM0.20 each
As at
1.3.2014
Exercised
Converted
(Sold)
As at
28.2.2015
-
4,500,000
-
-
4,500,000
108,696,480
-
7,910,663
-
4,500,000
-
85,292,843
-
-
(7,000,000)
78,292,843
- direct interest
8,889,900
1,500,000
100
(600,000)
9,790,000
- deemed interest through his spouse,
Yong Yui Kiew
1,633,000
-
-
13,340,380
3,150,000
-
(3,000,000)
13,490,380
7,134,623
2,000,000
-
(2,000,000)
7,134,623
123,240
-
34,233
-
157,473
470,000
50,000
25,000
-
545,000
3,000
135,000
-
200,000
50,000
-
- direct interest
- deemed interest through
CTL Capital Holding Sdn. Bhd.
(8,000,000) 108,607,143
- direct interest
- deemed interest through
GL Management Agency Sdn. Bhd.
-
4,500,000
Tan Ang Ang
-
1,633,000
To Tai Wai
- direct interest
Ng Lee Lee
- direct interest
- deemed interest through her spouse,
Wong Chong Peng
Tan Sui Hin
- direct interest
Yusoff Bin Mohamed
- direct interest
(137,000)
1,000
Loh Wei Tak
- direct interest
-
250,000
35
36
DIRECTORS’ REPORT
cont’d
DIRECTORS cont’d
Interest in Pantech Group Holdings Berhad Employees Share Option Scheme of those who were Directors at the end of the
financial year are as follows:Number of ordinary shares of RM0.20 each under option
Unexercised
as at
1.3.2014
Exercised
Expired
Lapsed
Unexercised
as at
28.2.2015
4,500,000
(4,500,000)
-
-
-
4,500,000
(4,500,000)
-
-
-
Tan Ang Ang
2,500,000
(1,500,000)
-
-
1,000,000
To Tai Wai
3,150,000
(3,150,000)
-
-
-
Ng Lee Lee
2,000,000
(2,000,000)
-
-
-
Tan Sui Hin
50,000
(50,000)
-
-
-
250,000
(135,000)
-
-
115,000
50,000
(50,000)
-
-
-
Yusoff Bin Mohamed
Loh Wei Tak
The beneficial interests of those who were Directors at the end of the financial year in the 7-Year 7% Irredeemable
Convertible Unsecured Loan Stocks (“ICULS”) of the Company are as follows:Number of ICULS of RM0.10 each
As at
1.3.2014
Acquired
(Converted)
As at
28.2.2015
47,463,982
-
(47,463,982)
-
600
-
(600)
-
205,400
-
(205,400)
-
150,000
-
(150,000)
-
- deemed interest through CTL Capital Holding Sdn. Bhd.
Tan Ang Ang
- direct interest
Ng Lee Lee
- deemed interest through her spouse, Wong Chong Peng
Tan Sui Hin
- direct interest
Annual Report 2015
DIRECTORS’ REPORT
cont’d
DIRECTORS cont’d
The beneficial interests of those who were Directors at the end of the financial year in the Warrants of the Company are as
follows:Number of Warrants
As at
1.3.2014
Acquired
(Exercised)
As at
28.2.2015
17,346,398
-
-
17,346,398
12,838,130
-
-
12,838,130
1,347,240
-
-
1,347,240
213,000
-
-
213,000
2,111,880
-
-
2,111,880
1,111,190
-
-
1,111,190
20,540
-
-
20,540
15,000
-
-
15,000
- deemed interest through CTL Capital Holding Sdn. Bhd.
- deemed interest through GL Management Agency Sdn. Bhd.
Tan Ang Ang
- direct interest
- deemed interest through his spouse, Yong Yui Kiew
To Tai Wai
- direct interest
Ng Lee Lee
- direct interest
- deemed interest through her spouse, Wong Chong Peng
Tan Sui Hin
- direct interest
By virtue of Dato’ Chew Ting Leng and Dato’ Goh Teoh Kean’s indirect interest in the Company, they are also deemed to have
interest in the shares of all the subsidiary companies to the extent that the Company has an interest under Section 6A of the
Companies Act 1965.
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 Notes 34, 37 and 39 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.
37
38
DIRECTORS’ REPORT
cont’d
ISSUE OF SHARES AND DEBENTURES
During the current financial year, the Company had increased its issued and fully paid-up ordinary share capital from
RM113,908,546 to RM120,596,651 by:(a)
the issuance of 10,785,562 new ordinary shares of RM0.20 each resulting from the conversion of 64,713,382 units of
7-Year 7% Irredeemable Convertible Unsecured Loan Stocks (“ICULS”) at the rate of six RM0.10 nominal value of ICULS
into one fully paid-up ordinary shares of RM0.20 each in the Company.
(b)
the issuance of 22,652,300 new ordinary shares of RM0.20 each for cash arising from the exercise of employees’ share
options at an exercise price of RM0.67 per ordinary share.
(c)
the issuance of 2,660 new ordinary shares of RM0.20 each pursuant to the exercise of 2,660 units of warrants at
RM0.60 each.
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 debentures issued 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 28 August 2014. The Directors of the Company are committed to enhancing the value of the
Company to its shareholders and believe that the purchase plan can be applied in the best interest of the Company and its
shareholders.
During the financial year ended 28 February 2015, the Company repurchased 2,815,500 ordinary shares of RM0.20 each of
its issued share capital from the open market. The average price paid for the shares repurchased was RM0.83 per share. The
repurchased transactions were financed by internally generated funds. These shares repurchased were held as treasury shares
and treated in accordance with the requirements of Section 67A of the Companies Act 1965.
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 596,715,453 ordinary shares of RM0.20 each.
PANTECH GROUP HOLDINGS BERHAD EMPLOYEES SHARE OPTION SCHEME
At an Extraordinary General Meeting held on 10 February 2010, the shareholders approved the Employees Share Option
Scheme (“ESOS”) for the granting of non-transferable options that are settled by physical delivery of the ordinary shares of
the Company, to eligible Directors (including Non-Executive Directors) of the Company and authorised the Board of Directors
to allocate the share options to eligible employees of the Group. The tenure of the ESOS is for 5 years from 3 March 2010 and
expired on 2 March 2015.
The salient features, other terms of the ESOS and details of the share options granted are disclosed in Note 38 to the Financial
Statements.
No new options were granted to any person during the financial year ended 28 February 2015.
Details of options granted to Directors are disclosed in the section on Directors’ interest in this report.
Annual Report 2015
DIRECTORS’ REPORT
cont’d
7-YEAR 7% IRREDEEMABLE CONVERTIBLE UNSECURED LOAN STOCKS (“ICULS”)
The terms of the conversion of the ICULS are disclosed in Note 24 to the Financial Statements.
As at the end of the financial year, the number of ICULS in issue is 72,193,818.
On 6 March 2015, the Company announced that it will exercise compulsory conversion of outstanding ICULS and as further
announced on 6 May 2015, this will be completed on 7 May 2015.
OTHER STATUTORY INFORMATION
Before the statements of financial position and statements of profit or loss and other comprehensive income 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 their
values as shown in the accounting records of the Group and of the Company have been written down to an amount
which they might be expected so to realise.
At the date of this report, the Directors are not aware of any circumstances:(a)
which would render the amounts written off for bad debts or the amount of provision for doubtful debts in the financial
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 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.
39
40
DIRECTORS’ REPORT
cont’d
SIGNIFICANT EVENTS AFTER THE REPORTING DATE
The significant events after the reporting date are disclosed in Note 44 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.
Johor Bahru
15 June 2015
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
DIRECTORS
Annual Report 2015
STATEMENT BY DIRECTORS
In the opinion of the Directors, the financial statements set out on pages 44 to 132 are drawn up in accordance with
Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies
Act 1965 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 2015 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 133 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.
Johor Bahru
15 June 2015
STATUTORY DECLARATION
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
44 to 132 and the financial information set out on page 133 are correct and I make this solemn declaration conscientiously
believing the same to be true and by virtue of the provisions of the Statutory Declarations Act 1960.
Subscribed and solemnly declared by
the abovenamed at Johor Bahru in the
State of Johor this day of
15 June 2015
)
)
)
)
WANG WOON CHIN
Before me:
NOORZRIN MOHD NOOR
MEJAR (B)
No. J079
Commissioner for Oaths
41
42
INDEPENDENT AUDITORS’ REPORT
To the members of Pantech Group Holdings Berhad
(Incorporated in Malaysia)
Company No.: 733607 W
REPORT ON THE FINANCIAL STATEMENTS
We have audited the financial statements of Pantech Group Holdings Berhad, which comprise statements of financial position
as at 28 February 2015 of the Group and of the Company, and statements of profit or loss and other comprehensive income,
statements of changes in equity and statements of cash flows of the Group and of the Company for the financial year then
ended, and a summary of significant accounting policies and other explanatory information, as set out on pages 44 to 132.
Directors’ Responsibility for the Financial Statements
The Directors of the Company are responsible for the preparation of financial statements so as to give a true and fair view in
accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of
the Companies Act 1965 in Malaysia. The Directors are also responsible for such internal control as the Directors determine is
necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud
or error.
Auditors’ Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in
accordance with approved standards on auditing in Malaysia. Those standards require that we comply with ethical
requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free
from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial
statements. The procedures selected depend on our judgement, including the assessment of risks of material misstatement
of the financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control
relevant to the entity’s preparation of financial statements that give a true and fair view 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 entity’s
internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of
accounting estimates made by the Directors, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the financial statements give a true and fair view of the financial position of the Group and of the Company as
of 28 February 2015 and of their financial performance and cash flows for the financial year then ended in accordance with
Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies
Act 1965 in Malaysia.
REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS
In accordance with the requirements of the Companies Act 1965 in Malaysia, we also report the following:a)
In our opinion, the accounting and other records and the registers required by the Act to be kept by the Company and
its subsidiary companies of which we have acted as auditors have been properly kept in accordance with the provisions
of the Act.
b)
We have considered the accounts and the auditors’ reports of all the subsidiary companies of which we have not acted
as auditors, which are indicated in Note 8 to the Financial Statements.
c)
We are satisfied that the accounts of the subsidiary companies that have been consolidated with the Company’s
financial statements are in form and content appropriate and proper for the purposes of the preparation of the financial
statements of the Group and we have received satisfactory information and explanations required by us for those
purposes.
d)
The auditors’ reports on the accounts of the subsidiary companies did not contain any qualification or any adverse
comment made under Section 174 (3) of the Act.
Annual Report 2015
INDEPENDENT AUDITORS’ REPORT
To the members of Pantech Group Holdings Berhad
(incorporated in Malaysia)
Company No: 733607 W
cont’d
OTHER REPORTING RESPONSIBILITIES
The supplementary information set out on page 133 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 174 of the Companies Act
1965 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
(NO. AF: 0737)
CHARTERED ACCOUNTANTS
Johor Bahru
15 June 2015
MOHAMAD HEIZRIN BIN SUKIMAN
(NO: 3046/05/17( J))
CHARTERED ACCOUNTANT
43
44
STATEMENTS OF FINANCIAL POSITION
As at 28 February 2015
Group
Note
ASSETS
Non-current assets
Property, plant and equipment
Prepaid land lease payments
Capital work-in-progress
Investment properties
Investment in subsidiary companies
Investment in an associate company
Investment in a joint venture company
Goodwill on acquisition
Deferred tax assets
4
5
6
7
8
9
10
11
12
Total non-current assets
Current assets
Inventories
Trade receivables
Other receivables
Amount due from subsidiary companies
Amount due from an associate company
Derivative financial instruments
Tax recoverable
Fixed deposits with licensed banks
Cash and bank balances
13
14
15
8
9
16
17
18
Total current assets
Company
2015
2014
RM
RM
2015
RM
2014
RM
198,000,565
27,166,994
3,073,452
4,830,000
2,544,651
608,590
1,364,066
1,701,711
196,173,240
27,490,250
680,028
4,830,000
2,619,130
544,757
1,205,784
2,421,090
225,094,458
190,615
150,019,912
493,985
239,290,029
235,964,279
225,285,073
150,513,897
289,377,352
130,819,803
21,243,578
6,212,059
2,394,387
355,150
2,283,357
55,392,956
251,209,727
121,400,696
9,020,605
10,762,928
2,223,003
59,883,768
578,800
8,782,111
82,877
9,360,271
534,000
92,920,787
15,794,980
508,078,642
454,500,727
18,804,059
109,249,767
747,368,671
690,465,006
244,089,132
259,763,664
120,596,651
7,504
74,743,799
(4,139,385)
3,904,448
93,983
113,908,546 120,596,651
7,504
54,159,878
74,743,799
(1,806,598)
(4,139,385)
4,027,860
5,235,826
93,983
4,821,211
1,304,275
7,481,637
7,236,699
251,354,613
9,142,841
(1,441,518)
7,481,903
4,559,053
230,888,671
Equity attributable to owners of the Company
Non-controlling interest
467,405,435
-
426,156,462
72,643
220,002,077
-
202,354,278
-
Total equity
467,405,435
426,229,105
220,002,077
202,354,278
Total assets
EQUITY AND LIABILITIES
EQUITY
Share capital
Share application money
Share premium
Treasury shares
Revaluation reserve
Employees share option reserve
Irredeemable Convertible Unsecured Loan Stocks
- Equity component
Cash flow hedge reserve
Warrants reserve
Exchange translation reserve
Unappropriated profit
19
20
21
22
23
24
25
26
27
4,821,211
(1,085,642)
7,481,637
17,482,319
113,908,546
54,159,878
(1,806,598)
5,235,826
9,142,841
(1,441,518)
7,481,903
15,673,400
Annual Report 2015
STATEMENTS OF FINANCIAL POSITION
cont’d
Group
Note
Company
2015
2014
2015
2014
RM
RM
RM
RM
764,204
6,307,311
54,891,264
232,876
4,651,260
1,975,947
7,304,300
58,174,179
226,919
4,094,289
764,204
6,250,000
-
1,975,947
13,250,000
-
66,846,915
71,775,634
7,014,204
15,225,947
34,790,970
16,656,396
1,085,642
656,279
223,000
3,959,224
149,842,188
3,580,292
2,322,330
34,073,629
15,005,788
1,449,938
593,769
108,000
3,709,870
126,726,868
5,670,674
5,121,731
374,116
1,085,642
12,032,801
3,580,292
-
471,260
1,441,518
20,076,405
14,053,197
5,670,674
470,385
213,116,321
192,460,267
17,072,851
42,183,439
Total liabilities
279,963,236
264,235,901
24,087,055
57,409,386
Total equity and liabilities
747,368,671
690,465,006
244,089,132
259,763,664
LIABILITIES
Non-current liabilities
- Liability component
Finance lease creditors
Borrowings
Other payables
Deferred tax liabilities
24
28
29
30
31
Total non-current liabilities
Current liabilities
Trade payables
Other payables
Derivatives financial instruments
Amount due to a joint venture company
Amount due to an associate company
Amount due to a subsidiary company
Borrowings
Dividend payable
Tax payable
Total current liabilities
32
30
16
10
9
8
28
29
The accompanying notes form an integral part of the financial statements.
45
46
STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
For the financial year ended 28 February 2015
Group
Note
Revenue
33
Cost of sales
Company
2015
2014
2015
2014
RM
RM
RM
RM
525,771,598
575,609,939
28,644,408
33,039,361
-
-
(398,821,955) (426,407,607)
Gross profit
Other income
126,949,643
149,202,332
28,644,408
33,039,361
9,827,479
7,573,967
3,062,792
6,081,568
-
-
Selling and distribution expenses
(21,046,227)
(22,827,063)
Administration expenses
(44,842,718)
(40,766,647)
Other expenses
(2,463,213)
(7,444,883)
Finance costs
(9,696,844)
(9,990,301)
(1,655,625)
(2,687,662)
Profit from operations
58,728,120
75,747,405
25,432,907
33,174,952
Share of loss in associate company
Share of profit in joint venture company
(4,618,668)
-
(3,258,315)
-
(74,479)
(541,814)
-
-
48,415
21,894
-
-
25,432,907
33,174,952
Profit before tax
34
58,702,056
75,227,485
Tax expense
35
(15,550,360)
(20,590,621)
43,151,696
54,636,864
24,616,182
29,935,729
123,412
129,852
-
-
-
174,745
-
-
(304,597)
-
-
-
-
(816,725)
(3,239,223)
Other comprehensive income/(loss), net of tax
Items that will not be reclassified subsequently
to profit or loss
Realisation of revaluation reserve upon
depreciation of revalued assets
Realisation of revaluation reserve upon transfer
of revalued building to investment property
Transfer of revaluation reserve to unappropriated
profit
(123,412)
-
-
Items that may be reclassified subsequently to
profit or loss
Fair value gain/(loss) on cash flow hedge
2,745,793
(1,264,732)
Foreign currency translation differences for
foreign operations, net of tax
2,677,646
5,505,973
-
5,423,439
4,241,241
355,876
(1,264,732)
5,423,439
4,241,241
355,876
(1,264,732)
48,575,135
58,878,105
24,972,058
Other comprehensive income/(loss) for the
financial year, net of tax
Total comprehensive income for the
financial year
355,876
(1,264,732)
-
28,670,997
Annual Report 2015
STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
cont’d
Group
Note
Company
2015
2014
2015
2014
RM
RM
RM
RM
Owners of the Company
43,151,696
54,637,815
24,616,182
29,935,729
-
-
-
Profit/(Loss) attributable to:-
(951)
43,151,696
54,636,864
24,616,182
29,935,729
Owners of the Company
48,575,135
58,879,056
24,972,058
28,670,997
-
-
-
Total comprehensive income attributable to:-
Total comprehensive income for the financial year
(951)
48,575,135
58,878,105
24,972,058
28,670,997
Earnings per share attributable to owners of the
Company
Earnings per 20 sen share
- Basic (sen)
36
7.38
10.02
-
-
- Diluted (sen)
36
6.85
8.53
-
-
47
-
-
Special second interim single
tier dividend of 1.20 sen
per share
Special third interim single
per share
-
-
Total comprehensive income
for the financial year
Balance at 28 February 2014 113,908,546
-
Profit for the financial year
Other comprehensive
income for the financial
year
11,707,196
-
First interim single tier
dividend of 1.20 sen per
share
Total transactions with
owners
-
Final single tier dividend of
1.20 sen per share
3,547,300
Exercise of ESOS
-
8,159,896
Issuance of shares pursuant
to conversion of ICULS
Acquisition of treasury
shares
-
102,201,350
Share option granted under
ESOS
Transactions with owners:
Balance at 1 March 2013
Group
RM
RM
Share
premium
-
-
-
-
-
-
-
-
-
- 54,159,878
-
-
-
- 28,581,521
-
-
-
-
-
- 12,261,728
- 16,319,793
-
- 25,578,357
RM
Share
Share application
capital
money
(1,806,598)
-
-
-
(136,490)
-
-
-
-
(136,490)
-
-
-
(1,670,108)
RM
4,027,860
(304,597)
(304,597)
-
-
-
-
-
-
-
-
-
-
4,332,457
RM
5,235,826
-
-
-
(3,489,898)
-
-
-
-
-
(3,925,574)
-
435,676
8,725,724
RM
9,142,841
-
-
-
(16,347,854)
-
-
-
-
-
-
(16,347,854)
-
25,490,695
RM
Employees Irredeemable
share Convertible
Treasury Revaluation
option
Unsecured
shares
reserve
reserve Loan Stocks
RM
-
-
-
-
-
-
-
-
-
-
-
-
(1,441,518) 7,481,903
(1,264,732)
(1,264,732)
-
-
-
-
-
-
-
-
-
-
Distributable
4,559,053
5,505,973
5,505,973
-
-
-
-
-
-
-
-
-
-
(946,920)
RM
RM
58,879,056
4,241,241
54,637,815
(9,668,194)
(5,670,674)
(6,786,461)
(6,764,017)
(6,759,475)
(136,490)
11,883,454
4,129,793
435,676
230,888,671 426,156,462
54,942,412
304,597
54,637,815
(29,982,669)
(5,670,674)
(6,786,461)
(6,764,017)
(6,759,475)
-
-
(4,002,042)
-
RM
Total
equity
58,878,105
4,241,241
54,636,864
(9,668,194)
(5,670,674)
(6,786,461)
(6,764,017)
(6,759,475)
(136,490)
11,883,454
4,129,793
435,676
72,643 426,229,105
(951)
-
(951)
-
-
-
-
-
-
-
-
-
73,594 377,019,194
RM
Noncontrolling
Total
interest
205,928,928 376,945,600
RM
Exchange
Warrants translation Unappropriated
reserve
reserve
profit
(176,786) 7,481,903
RM
Cash flow
hedge
reserve
Attributable to owners of the Company
Non-distributable
48
STATEMENTS OF CHANGES IN EQUITY
2,157,113
532
Issuance of shares pursuant to
conversion of ICULS
exercise of Warrants
-
-
-
First interim single tier dividend
of 1.00 sen per share
Second interim single tier
share
Third interim single tier dividend
of 0.60 sen per share
-
Total comprehensive income for
the financial year
120,596,651
-
Balance at 28 February 2015
-
Other comprehensive income for
the financial year
6,688,105
-
Final single tier dividend of 1.00
sen per share
Total transactions with owners
-
Acquisition of treasury shares
4,530,460
-
Acquisition of remaining
non-controlling interest of a
subsidiary company
Exercise of ESOS
-
113,908,546
Share option granted under ESOS
Group (cont’d)
RM
RM
Share
premium
RM
-
-
1,330
-
-
-
-
-
-
-
-
- (2,332,787)
-
-
-
-
-
-
-
-
-
-
-
7,504 74,743,799 (4,139,385)
-
-
-
7,504 20,583,921 (2,332,787)
-
-
-
-
-
7,504 16,268,366
-
- 4,314,225
-
-
-
-
-
479,942
5,235,826
RM
-
-
-
-
-
3,904,448
(123,412)
(123,412)
-
93,983
-
-
-
- (5,141,843)
-
-
-
-
-
- (5,621,785)
-
-
-
-
4,027,860
RM
RM
Cash flow
hedge
reserve
4,821,211
-
-
-
(4,321,630)
-
-
-
-
-
-
-
(4,321,630)
-
-
RM
-
-
-
(266)
-
-
-
-
-
-
(266)
-
-
-
1,304,275 7,481,637
2,745,793
2,745,793
-
-
-
-
-
-
-
-
-
-
-
-
Distributable
7,236,699
2,677,646
2,677,646
-
-
-
-
-
-
-
-
-
-
-
-
4,559,053
RM
RM
48,575,135
5,423,439
43,151,696
(7,326,162)
(3,580,292)
(5,951,444)
(5,973,010)
(5,962,710)
(2,332,787)
15,184,545
1,596
809,901
(1,903)
479,942
251,354,613 467,405,435
43,275,108
123,412
43,151,696
(22,809,166)
(3,580,292)
(5,951,444)
(5,973,010)
(5,962,710)
-
-
-
(1,339,807)
(1,903)
-
RM
Total
equity
48,575,135
5,423,439
43,151,696
(7,398,805)
(3,580,292)
(5,951,444)
(5,973,010)
(5,962,710)
(2,332,787)
15,184,545
1,596
809,901
(74,546)
479,942
- 467,405,435
-
-
-
(72,643)
-
-
-
-
-
-
-
-
(72,643)
-
72,643 426,229,105
RM
Noncontrolling
Total
interest
230,888,671 426,156,462
RM
Exchange
Warrants translation Unappropriated
reserve
reserve
profit
9,142,841 (1,441,518) 7,481,903
RM
Employees Irredeemable
share Convertible
Treasury Revaluation
option
Unsecured
shares
reserve
reserve Loan Stocks
- 54,159,878 (1,806,598)
RM
Share
Share application
capital
money
Attributable to owners of the Company
Non-distributable
Annual Report 2015
cont’d
49
-
-
-
share
Special second interim single
per share
Special third interim single
per share
-
-
-
113,908,546
Other comprehensive income
11,707,196
-
1.20 sen per share
-
3,547,300
Exercise of ESOS
8,159,896
-
102,201,350
-
-
-
-
-
-
-
-
-
-
-
-
-
-
RM
RM
conversion of ICULS
ESOS
Company
Share
application
money
Share
capital
54,159,878
-
-
-
28,581,521
-
-
-
-
-
12,261,728
16,319,793
-
25,578,357
RM
Share
premium
(1,806,598)
-
-
-
(136,490)
-
-
-
-
(136,490)
-
-
-
(1,670,108)
RM
Treasury
shares
5,235,826
-
-
-
(3,489,898)
-
-
-
-
-
(3,925,574)
-
435,676
8,725,724
RM
Employees
share option
reserve
Non-distributable
9,142,841
-
-
-
(16,347,854)
-
-
-
-
-
-
(16,347,854)
-
25,490,695
RM
Irredeemable
Convertible
Unsecured
Loan Stocks
(1,441,518)
(1,264,732)
(1,264,732)
-
-
-
-
-
-
-
-
-
-
(176,786)
RM
Cash flow
hedge
reserve
7,481,903
-
-
-
-
-
-
-
-
-
-
-
-
7,481,903
RM
Warrants
reserve
15,673,400
29,935,729
-
29,935,729
(29,982,669)
(5,670,674)
(6,786,461)
(6,764,017)
(6,759,475)
-
-
(4,002,042)
-
15,720,340
RM
Unappropriated
profit
Distributable
202,354,278
28,670,997
(1,264,732)
29,935,729
(9,668,194)
(5,670,674)
(6,786,461)
(6,764,017)
(6,759,475)
(136,490)
11,883,454
4,129,793
435,676
183,351,475
RM
Total
equity
50
cont’d
-
-
-
share
Second interim single tier
share
Third interim single tier
share
-
-
-
120,596,651
Other comprehensive income
6,688,105
-
1.00 sen per share
-
4,530,460
532
exercise of Warrants
Exercise of ESOS
2,157,113
-
113,908,546
74,743,799
-
-
-
20,583,921
-
-
-
-
-
16,268,366
1,330
4,314,225
-
54,159,878
RM
Share
premium
(4,139,385)
-
-
-
(2,332,787)
-
-
-
-
(2,332,787)
-
-
-
-
(1,806,598)
RM
Treasury
shares
93,983
-
-
-
(5,141,843)
-
-
-
-
-
(5,621,785)
-
-
479,942
5,235,826
RM
Employees
share option
reserve
4,821,211
-
-
-
(4,321,630)
-
-
-
-
-
-
-
(4,321,630)
-
9,142,841
RM
Irredeemable
Convertible
Unsecured
Loan Stocks
(1,085,642)
355,876
355,876
-
-
-
-
-
-
-
-
-
-
-
(1,441,518)
RM
Cash flow
hedge
reserve
7,504
-
-
-
7,504
-
-
-
-
-
7,504
-
-
-
-
RM
RM
conversion of ICULS
ESOS
Company (cont’d)
Share
application
money
Share
capital
Non-distributable
7,481,637
-
-
-
(266)
-
-
-
-
-
-
(266)
-
-
7,481,903
RM
Warrants
reserve
17,482,319
24,616,182
-
24,616,182
(22,807,263)
(3,580,292)
(5,951,444)
(5,973,010)
(5,962,710)
-
-
-
(1,339,807)
-
15,673,400
RM
Unappropriated
profit
Distributable
220,002,077
24,972,058
355,876
24,616,182
(7,324,259)
(3,580,292)
(5,951,444)
(5,973,010)
(5,962,710)
(2,332,787)
15,184,545
1,596
809,901
479,942
202,354,278
RM
Total
equity
Annual Report 2015
cont’d
51
52
STATEMENTS OF CASH FLOWS
Group
Note
Company
2015
2014
2015
2014
RM
RM
RM
RM
58,702,056
75,227,485
25,432,907
33,174,952
Allowance for impairment of receivables
3,181,433
7,451,335
-
-
Inventories written down
1,737,747
463,328
-
-
OPERATING ACTIVITIES
Profit before tax
Adjustments for:-
Amortisation of prepaid land lease payments
Depreciation of property, plant and equipment
Interest expense
Property, plant and equipment written off
323,256
346,589
-
-
13,629,004
11,471,661
-
-
8,698,169
9,225,927
1,596,481
2,628,804
10,341
177,487
-
-
Reversal of inventories written down
(65,639)
Bad debts written off
109,073
Bad debts recovered
Employees Share Option Scheme expenses
Interest income
Share of profit from joint venture company
Share of loss from associate company
Dividend income
Gain on disposal of property, plant and equipment
Gain on disposal of available for sale investment
Loss/(Gain) from cross currency swap
Fair value (gain)/loss on derivatives financial
instruments
Fair value gain adjustment on investment
properties
Allowance for impairment of receivables no longer
required
Under/(Over) provision of leave entitlement
Unrealised loss/(gain) on foreign exchange
Operating profit before working capital changes
(9,809)
479,942
(446,306)
(1,213,084)
-
-
48,366
-
-
-
-
-
435,676
(1,037,290)
479,942
(1,585,694)
435,676
(5,048,000)
(48,415)
(21,894)
-
-
74,479
541,814
-
-
(220,805)
(480)
(194,012)
(26,118,320)
-
-
(5,965)
-
22,497
(12,582)
22,497
(12,890)
8,420
(4,613,327)
(668,815)
(29,883,145)
(12,582)
-
-
-
-
(2,540,663)
-
-
32,950
(20,170)
-
-
1,976,561
(743,435)
398,073
(694,383)
83,560,317
98,939,698
225,886
601,322
Inventories
(39,839,733)
8,717,665
-
-
Receivables
(19,563,025)
Changes in working capital:(19,774,213)
(44,800)
-
Payables
5,159,747
2,568,695
(475,517)
1,129,162
Associate company
4,557,535
27,712,605
-
-
62,510
242,635
-
-
33,937,351
118,407,085
3,613
357,906
Joint venture company
Cash flows from/(used in) operations
Tax refund
Tax paid
Net cash flows from/(used in) operating activities
(294,431)
-
(17,476,149)
(22,466,317)
(1,066,617)
16,464,815
96,298,674
(1,361,048)
1,730,484
(1,601,211)
129,273
Annual Report 2015
cont’d
Group
Note
Company
2015
2014
2015
2014
RM
RM
RM
RM
Dividend received
-
84,480
26,118,320
29,883,145
Repayment from/(Advances to) subsidiary
companies
-
-
8,909,265
(20,872,697)
1,037,290
1,585,694
5,048,000
-
-
INVESTING ACTIVITIES
Interest received
Purchase of property, plant and equipment
446,306
A
Proceeds from disposal of property, plant and
equipment
Proceeds from disposal of available for sale
investment
-
356,152
1,066,365
(3,186,166)
Payment of contingent consideration
-
Payment to non-controlling interest
(74,546)
B
Net cash flows (used in)/from investing activities
(14,185,218)
-
-
Capital work-in-progress incurred
Purchase of prepaid land lease payments
(11,025,438)
12,865
(12,977,370)
(345,463)
-
(74,546)
-
-
-
-
-
-
-
(345,463)
-
-
(2,390,608)
(2,390,608)
-
-
(15,874,300)
(27,697,659)
36,538,733
13,712,985
(20,306,071)
20,052,404
FINANCING ACTIVITIES
(Repayment to)/Advance from subsidiary
companies
-
Dividend paid
-
(23,557,838)
(26,402,407)
(23,557,838)
(26,402,407)
Proceeds from issuance of share capital
15,178,637
11,883,454
15,178,637
11,883,454
Purchase of treasury shares
(2,332,787)
Share application money received
7,504
(136,490)
-
(2,332,787)
7,504
-
Interest paid
(9,966,807)
(11,249,334)
Repayment of finance lease creditors
(3,718,465)
(3,418,935)
-
-
Proceeds from/(Repayment of) short-term
borrowings
21,259,115
(52,886,844)
-
5,000,000
Proceeds from finance lease creditors
-
2,149,410
(2,018,719)
(136,490)
(9,000,000)
(3,681,828)
-
Repayment of term loans
(18,477,843)
(17,100,737)
Drawndown of term loans
16,590,000
6,543,228
Net cash flows used in financing activities
(5,018,484)
(90,618,655)
(42,029,274)
(2,284,867)
(4,427,969)
(22,017,640)
(6,851,589)
11,557,391
-
(9,000,000)
-
CASH AND CASH EQUIVALENTS
Net change
Effect of exchange rate changes
At beginning of financial year
At end of financial year
C
11,139
4,957,737
416,880
(1,244,807)
62,093,143
79,153,046
15,794,980
5,482,396
57,676,313
62,093,143
9,360,271
15,794,980
53
54
For the Financial Year Ended 28 February 2015
cont’d
NOTES TO THE STATEMENTS OF CASH FLOWS
A.
PURCHASE OF PROPERTY, PLANT AND EQUIPMENT
Group
Acquired by means of finance lease
Provision for reinstatement costs (Note 30)
Cash payments
B.
Company
2015
2014
2015
2014
RM
RM
RM
RM
3,341,732
3,814,737
-
-
232,876
226,919
-
-
11,025,438
14,185,218
-
-
14,600,046
18,226,874
-
-
PURCHASE OF PREPAID LAND LEASE PAYMENTS
During the previous financial year, the Group acquired a leasehold land with an aggregate cost of RM7,968,692 of which
RM3,187,476 (2014: RM5,578,084) is still outstanding. Cash payment of RM2,390,608 (2014: RM2,390,608) has been
made during the current financial year.
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
Cash and bank balances
Bank overdrafts (Note 29)
Company
2015
2014
2015
2014
RM
RM
RM
RM
55,392,956
59,883,768
9,360,271
15,794,980
2,283,357
2,223,003
-
-
-
-
9,360,271
15,794,980
57,676,313
(13,628)
62,093,143
Annual Report 2015
NOTES TO THE FINANCIAL STATEMENTS
28 February 2015
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 limited liability company, incorporated and domiciled in Malaysia, and is listed on the Main Market
of 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 15 June 2015.
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 and the requirements of the
Companies Act 1965 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 freehold land and buildings that is measured at revalued amount 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 the Group and the Company.
The fair value of an asset or a liability is measured on the assumptions that market participants would act in their
economic best interest when pricing the asset or liability.
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.
55
56
28 February 2015
cont’d
2.
BASIS OF PREPARATION OF THE FINANCIAL STATEMENTS cont’d
2.2
Basis of measurement cont’d
All assets and liabilities for which fair value is measure 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
Level 2
–
–
Level 3
–
Quoted (unadjusted) market prices in active markets for identical assets or liabilities.
Valuation techniques for which the lowest level input that is significant to their fair value
measurement is directly or indirectly observable.
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 Group’s and the Company’s
functional currency and all values are rounded to the nearest RM except when otherwise stated.
2.4
Malaysian Financial Reporting Standards (MFRSs)
2.4.1 Adoption of new or revised Malaysian Financial Reporting Standards (MFRSs)
The accounting policies adopted by the Group and the Company are consistent with those of the prior
financial year except for the new and revised MFRSs and IC interpretations approved by Malaysian
Accounting Standards Board (“MASB”) and applicable for current financial year. Application of the new and
revised MFRSs and interpretations has no material impact on financial statements of the Group and of the
Company.
Several other amendments are effective for the first time in financial year ended 28 February 2015.
However, they do not impact the financial statements of the Group and the Company.
The nature and the impact of each new standards and amendments are described below:Investment entities (Amendments to MFRS 10, MFRS 12 and MFRS 127)
These amendments provided an exception to the consolidation requirement for entities meeting the
definition of an investment entity under MFRS 10 and the exception is applicable retrospectively, subject
to certain transitional relief. The exception to consolidation requires investment entities to account for
subsidiary companies at fair value through profit or loss.
The amendments have no impact on the Group because none of the entities in the Group qualifies as an
investment entity under MFRS 10.
Annual Report 2015
28 February 2015
cont’d
2.
2.4
Malaysian Financial Reporting Standards (MFRSs) cont’d
2.4.1 Adoption of new or revised Malaysian Financial Reporting Standards (MFRSs) cont’d
Amendments to MFRS 132 Offsetting financial assets and financial liabilities
The amendments clarified the meaning of ‘currently has a legally enforceable right of set-off’ and the
criteria for non-simultaneous settlement mechanisms of clearing houses to qualify for offsetting and the
amendments is applied retrospectively.
The amendments have no impact on the Group since none of the entities in the Group has any offsetting
arrangements.
Amendments to MFRS 136 Recoverable amount disclosures for non-financial assets
The amendments clarified that the disclosure requirements in MFRS 136 that are applicable to value in use
are also applicable to fair value less costs of disposal when there has been a material impairment loss or
impairment reversal in the period.
The amendments affect disclosures in the financial statements only and do not have material impact on
the financial statements of the Group and the Company.
Amendments to MFRS 139 Novation of derivatives and continuation of hedge accounting
The amendments provided relief from discontinuing hedge accounting when novation of a derivative
designated as a hedging instrument meets certain criteria and it is applicable retrospectively.
These amendments have no impact to the Group and the Company as the Group and the Company have
not novated its derivative during the current and prior periods.
2.4.2 Standards issued but not yet effective
At the date of authorisation of these financial statements, MASB has approved certain new standards,
amendments and interpretations to existing standard which are not yet effective, and have not been
adopted by the Group and the Company.
Management anticipates that all of the relevant pronouncements will be adopted in the Group’s and the
Company’s accounting policies for the first period beginning after the effective date of the pronouncement.
The initial application of the new standards, amendments and interpretations are not expected to have
any material impacts to the financial statements of the Group and the Company except as mentioned
below:Amendments to MFRS 9 Financial instruments
MFRS 9 Financial Instruments issued by MASB on 17 November 2014 is equivalent to IFRS 9 Financial
Instruments issued by the IASB in July 2014. This Standard replaces earlier versions of MFRS 9 and
introduces a number of improvements such as classification and measurement model, single forwardlooking ‘expected loss’ impairment model and a substantially-reformed approach to hedge accounting.
57
58
28 February 2015
cont’d
2.
2.4
Malaysian Financial Reporting Standards (MFRSs) cont’d
2.4.2 Standards issued but not yet effective cont’d
Amendments to MFRS 9 Financial instruments cont’d
Classification and measurement
Financial instruments is classified and measured according to the entity’s business model and cash flow
characteristics of the instrument held. If the instrument is held to collect its contractual cash flows, the
financial asset is measured at amortised cost. However, if the financial instrument is held in a business
model the objective of which is achieved by both collecting contractual cash flows and selling financial
assets, it is measured at fair value in the statement of financial position, and amortised cost information is
provided through profit or loss. If the business model of the entity is neither one of the above, fair value is
provided both in the profit or loss and in the statement of financial position.
New expected loss impairment model
The standard introduces a new expected loss impairment model requiring more timely recognition of
expected credit losses by an entity. This new forward looking model requires an entity to recognise
expected credit losses when financial instruments are first recognised and to recognise expected credit
losses at all times and to update the amount of expected credit losses recognised at each reporting date
to reflect changes in the credit risk of financial instruments. It replaces the approach of recognising credit
losses when an event triggers it has occurred.
Hedge accounting
The new MFRS 9 with mandatory effective on or after 1 January 2018 retained the hedge accounting first
published in November 2013 by the IASB which enhanced disclosures about risk management activity. The
new model aligns the accounting treatment with risk management activities, enabling entities to better
reflect these activities in their financial statements.
Pending the completion of the project on “macro hedging”, the IASB decided to allow an accounting policy
choice to apply either the hedge accounting model in IFRS 9 or IAS 39 in its entirety, with the additional
choice to use the IAS 39 accounting for macro hedges if applying IFRS 9 hedge accounting.
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 Group and the Company are
currently assessing the impact of the adoption of this standard in relation to the new requirements for
classification and measurement and impairment.
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. They 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.
Annual Report 2015
28 February 2015
cont’d
2.
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.
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 13
to the Financial Statements.
A 2% (2014: 2%) difference in the management’s estimation of net realisable values of the inventories
would result in approximately 0.07% (2014: 0.07%) variance in the Group’s profit for the financial year.
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 2015, 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 resulting adjustment
to the Group’s assets.
A 3% (2014: 3%) difference in the expected useful lives of the property, plant and equipment from the
management’s estimate would result in approximately 0.95% (2014: 0.64%) variance in the Group’s profit
for the financial year.
Impairment of loans and receivables
The Group assesses 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 cashgenerating 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.
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 recognised 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.
59
60
28 February 2015
cont’d
2.
2.5
2.5.1 Estimation uncertainty cont’d
Deferred tax assets
Deferred tax assets are recognised for all deductible temporary differences, unutilised tax losses,
unabsorbed capital allowances and unused tax credits to the extent that it is probable that taxable
profit will be available against which all the deductible temporary differences, unutilised tax losses
and unabsorbed capital allowances can be utilised. Significant management judgement is required to
determine the amount of deferred tax assets that can be recognised, based upon the likely timing and
level of future taxable profits together with future tax planning strategies.
Assumptions about generation of future taxable profits depend on management’s estimates of future
cash flows. These depend on estimates of future production and sales volume, operating costs, capital
expenditure, dividends and other capital management transactions. Judgement is also required about
application of income tax legislation. These judgements and assumptions are subject to risks and
uncertainty, hence there is a possibility that changes in circumstances will alter expectations, which may
impact the amount of deferred tax assets recognised in the statements of financial position and the
amount of unrecognised tax losses and unrecognised temporary differences.
Employees share option
The Group measures the cost of equity-settled transactions with employees by reference to the fair value
of the equity instruments at the date at which they are granted. Estimating fair value for share-based
payment transactions requires determining the most appropriate valuation model, which is dependent on
the terms and conditions of the grant. This estimate also require determining the most appropriate inputs
to the valuation model including the expected life of the share option, volatility and dividend yield and
making assumptions about them.
The assumptions and model used for estimating fair value for share-based payment transactions,
sensitivity analysis and the carrying amounts are disclosed in Note 38 to the Financial Statements.
Fair value of financial instruments
Management uses valuation techniques in measuring the fair value of financial instruments where active
market quotes are not available. Details of the assumptions used are given in the notes regarding financial
assets and liabilities. In applying the valuation techniques, 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 pricing the instrument. Where applicable data is not observable,
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 period.
Revaluation of property, plant and equipment
The Group measures its land and buildings at revalued amount with changes in fair value being recognised
in other comprehensive income. The Group engaged independent valuation specialists to determine fair
values.
The carrying amount of the land and buildings at the end of the reporting period, and the relevant
revaluation bases, are disclosed in Note 4 to the Financial Statements.
Annual Report 2015
28 February 2015
cont’d
2.
2.5
2.5.1 Estimation uncertainty cont’d
Fair value measurement of contingent consideration
Contingent consideration, resulting from business combination, is valued at fair value at the acquisition
date as part of the business combination. Where the contingent consideration meets the definition of a
derivative and, thus, a financial liability, it is subsequently remeasured to fair value at each reporting date.
The determination of the fair value is based on discounted cash flows. The key assumptions taken into
consideration include the probability of meeting each performance target and the discounted factor.
2.5.2 Significant management judgement
The following is significant management judgements in applying the accounting policies of the Group that
have the most significant effect on the financial statements.
Classification between investment properties and owner-occupied properties
The Group determines whether a property qualifies as an investment property, and has developed
criteria in making that judgement. Investment property is a property held to earn rentals or for capital
appreciation or both. Therefore, the Group considers whether a property generates cash flows largely
independently of the other assets held by the Group.
Some properties comprise a portion that is held to earn rentals or for capital appreciation and another
portion that is held for use in the production or supply of goods or services or for administrative purposes.
The Group accounts for the portions separately if the portions could be sold separately (or leased out
separately under a finance lease). If the portions could not be sold separately, the property is an
investment property only if an insignificant portion is held for use in the production or supply of goods or
services or for administrative purposes.
Judgement is made on an individual property basis to determine whether ancillary services are so
significant that a property does not qualify as an investment property.
Deferred tax assets
The assessment of the probability of future taxable income in which deferred tax assets can be utilised is
based on the Group’s latest approved budget forecast, which is adjusted for significant non-taxable income
and expenses and specific limits to the use of any unused tax loss or credit. The tax rules in the numerous
jurisdictions in which the Group operates are also carefully taken into consideration. If a positive forecast
of taxable income indicates the probable use of a deferred tax asset, especially when it can be utilised
without a time limit, that deferred tax asset is usually recognised in full. The recognition of deferred tax
assets that are subject to certain legal or economic limits or uncertainties is assessed individually by
management based on the specific facts and circumstances.
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.
61
62
28 February 2015
cont’d
3.
SIGNIFICANT ACCOUNTING POLICIES cont’d
3.1
Consolidation
3.1.1 Subsidiary companies
Subsidiaries are entities, including structured entities, controlled by the Company. Control exists when
the Company 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 Company 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.
Subsidiary companies are consolidated from the date on which control is transferred to the Group and are
no longer consolidated from the date that control ceases.
Changes in the Company owners’ ownership interest in a subsidiary that do not result in a loss of control
are accounted for as equity transactions. In such circumstances, the carrying amounts of the controlling
and non-controlling interests are adjusted to reflect the changes in their relative interests in the subsidiary
company. Any difference between the amount by which the non-controlling interest is adjusted and the
fair value of the consideration paid or received is recognised directly in equity and attributed to owners of
the Company.
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.
Annual Report 2015
28 February 2015
cont’d
3.
3.1
Consolidation cont’d
3.1.3 Business combinations and goodwill cont’d
If the business combination is achieved in stages, the acquisition date fair value of the acquirer’s
previously held equity interest in the acquiree is remeasured to fair value at the acquisition date through
profit or loss.
Any contingent consideration to be transferred by the acquirer will be recognised at fair value at the
acquisition date. Subsequent changes in the fair value of the contingent consideration which is deemed
to be an asset or liability will be recognised in accordance with MFRS 139 either in profit or loss or as
a change to other comprehensive income. If the contingent consideration is classified as equity, it
will not be remeasured. Subsequent settlement is accounted for within equity. In instances where the
contingent consideration does not fall within the scope of MFRS 139, it is measured in accordance with the
appropriate MFRS.
Goodwill is initially measured at cost, being the excess of the aggregate of the consideration transferred
and the amount recognised for non-controlling interest over the net identifiable assets acquired and
liabilities assumed. If this consideration is lower than the fair value of the net assets of the subsidiary
acquired, the difference is recognised in profit or loss.
After initial recognition, goodwill is measured at cost less any accumulated impairment losses. For the
purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date,
allocated to each of the Group’s cash-generating units that are expected to benefit from the combination,
irrespective of whether other assets or liabilities of the acquiree are assigned to those units.
Where goodwill forms part of a cash-generating unit and part of the operation within that unit is disposed
of, the goodwill associated with the operation disposed of is included in the carrying amount of the
operation when determining the gain or loss on disposal of the operation. Goodwill disposed of in this
circumstance is measured based on the relative values of the operation disposed of and the portion of the
cash-generating unit retained.
3.1.4 Loss of control
Upon the loss of control of a subsidiary company, the Group derecognises the assets and liabilities of
the subsidiary company, any non-controlling interests and the other components of 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 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 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.
63
64
28 February 2015
cont’d
3.
3.1
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.
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.
Annual Report 2015
28 February 2015
cont’d
3.
3.1
3.1.7 Joint venture cont’d
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 are initially stated at cost. Land and buildings are subsequently shown at market
value, based on valuations by external valuers, less subsequent depreciation and any impairment losses. All other
property, plant and equipment are stated at historical cost less accumulated depreciation and any impairment
losses.
Revaluation is made at least once in every five years based on valuation by an independent valuer on an open
market value basis. Any revaluation increase is credited to equity as a revaluation surplus, except to the extent
that it reverses a revaluation decrease for the same asset previously recognised as an expense, in which case, the
increase is recognised in profit or loss to the extent of the decrease previously recognised. A revaluation decrease
is first offset against an increase on unutilised valuation surplus in respect of the same asset and is thereafter
recognised as an expense. Upon the disposal of revalued assets, the attributable revaluation surplus remaining in
the revaluation reserve is transferred to unappropriated profit.
Depreciation is provided on the straight-line method in order to write off the cost of each asset over its estimated
useful life. No depreciation is provided on freehold land.
The principal annual depreciation rates used are as follows:Factory buildings
Renovation, warehouse extension and electrical installation
Computers and software
Crane, plant and machinery
Factory equipment
Office equipments, furniture and fittings
Telecommunication system, forklift, mobile crane and motor vehicles
2.00% - 5.50%
10.00% - 33.33%
20.00% - 33.33%
7.00% - 20.00%
10.00% - 25.00%
10.00% - 20.00%
15.00% - 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.
65
66
28 February 2015
cont’d
3.
3.3
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 or 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. Gain 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 comprises raw materials, work-in-progress and finished goods are stated at the lower of cost and net
realisable value.
The cost 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
Leases
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.
Annual Report 2015
28 February 2015
cont’d
3.
3.5
Leases cont’d
Accounting by lessees cont’d
Leasehold land
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
60 to 88 years (2014: 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.
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,
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.
67
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28 February 2015
cont’d
3.
3.6
Foreign currency translation cont’d
3.6.2 Foreign operations cont’d
When the Group disposes of only part of its interest in a subsidiary 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 or joint venture 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 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.
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 all of that 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
The Group’s sale of goods may subject to value-added tax (“VAT”) or goods services tax (“GST”) in accordance with
rules applicable in the jurisdication where the Group operates.
The net amount of such taxes recoverable from, or payable to the authority is included as part of “other
receivables” or “other payables” in the statements of financial position.
Revenues, expenses and assets are recognised net of the amount of taxes except:(i)
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
(ii)
receivables and payables stated is inclusive of the tax elements.
Annual Report 2015
28 February 2015
cont’d
3.
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.
The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets
with the exception of trade and other receivables, where the carrying amount is reduced through the use of
an allowance account. When a trade and other 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 cashgenerating 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.
69
70
28 February 2015
cont’d
3.
3.9
Impairment of non-financial assets cont’d
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 and the
Company become 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.
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)
b)
c)
d)
Loans and receivables
Financial assets at fair value through profit or loss
Held to maturity investments
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 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.
Annual Report 2015
28 February 2015
cont’d
3.
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 Irredeemable Convertible Unsecured Loan Stocks, borrowings, finance lease
creditors, amount due to an associate company and a joint venture company, trade and other payables.
3.12 Revenue recognition
Revenue from sale of goods is recognised when the goods are delivered, net of discount and return.
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.
71
72
28 February 2015
cont’d
3.
3.14 Employee benefits cont’d
(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 an expense in profit or loss as incurred. As required by law, companies
in Malaysia made such contributions to the Employees Provident Fund (“EPF”). Some of the Group’s foreign
subsidiaries also made 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 equitysettled share-based transactions are set out in Note 38 to the Financial Statements.
The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straightline 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.
Annual Report 2015
28 February 2015
cont’d
3.
3.15 Share-based payment transactions cont’d
Share-based payment transactions of the acquiree in a business combination cont’d
At the acquisition date, when the outstanding equity-settled share-based payment transactions held by the
employees of an acquiree are not exchanged by the Group for its share-based payment transactions, the acquiree
share-based payment transactions are measured at their market-based measure at the acquisition date. If the
share-based payment transactions have vested by the acquisition date, they are included as part of the noncontrolling interest in the acquiree. However, if the share-based payment transactions have not vested by the
acquisition date, the market-based measure of the unvested share-based payment transactions is allocated to
the non-controlling interest in the acquiree based on the ratio of the portion of the vesting period completed to
the greater of the total vesting period or the original vesting period of the share-based payment transaction. The
balance is recognised as remuneration cost for post-combination service.
3.16 Dividends
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 were recognised as a liability.
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.
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.
73
74
28 February 2015
cont’d
3.
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 Segment reporting
In identifying its operating segments, management generally follows the Group’s internal reports regularly
reviewed by the Group’s chief operating decision makers in order to allocate resources to the respective segments
and to assess their performance.
3.21 Inter-segment transfers
Segment revenues, expenses and result include transfers between segments. The prices charged on intersegment transactions are based on negotiation basis. These transfers are eliminated on consolidation.
3.22 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.
Share capital represents the nominal value of shares that have been issued.
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.
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.
Retained earnings include all current and prior period retained profits.
All transactions with owners of the Company are recorded separately within equity.
3.23 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 share premium 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.
3.24 Capital work-in-progress
Capital work-in-progress consists of building and plant and machinery 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.
Annual Report 2015
28 February 2015
cont’d
3.
3.25 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.
3.26 Contingent liabilities
A contingent liability is a possible obligation that arises from past events and whose existence will be confirmed
by the occurrences 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 measure
reliably.
3.27 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.
3.28 Warrants
The free detachable warrants were issued pursuant to the ICULS of the Company. 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 and share premium. The warrants reserve in
relation to the unexercised warrants at the expiry of the warrants will be transferred to share premium.
3.29 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 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.
3.30 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.
75
76
28 February 2015
cont’d
3.
3.30 Related parties cont’d
(a)
A person or a close member of that person’s family is related to the Group if that person:
(i)
(ii)
(iii)
(b)
Has control or joint control over the Group;
Has significant influence over the Group; or
Is a member of the key management personnel of the Company, or the Group.
An entity is related to the Group if any of the following conditions applies:
(i)
(ii)
(iii)
(iv)
(v)
The entity and the Group are members of the same group.
One entity is an associate or joint venture of the other entity.
Both entities are joint ventures of the same third party.
One entity is a joint venture of a third entity and the other entity is an associate of the third entity.
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.
3.31 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 settle 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.
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.
Annual Report 2015
28 February 2015
cont’d
3.
3.31 Derivative financial instruments and hedging activities cont’d
Cash flow hedge cont’d
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.
3.32 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.
77
78
28 February 2015
cont’d
4.
PROPERTY, PLANT AND EQUIPMENT
Group
Crane,
Renovation
machinery,
Total
and equipments,
land and
electrical furniture and
buildings installation
fittings
Freehold
land
Buildings
RM
RM
RM
RM
Forklift,
mobile
crane and
motor
vehicles
Total
RM
RM
91,948,702 12,669,011
200,762,777
RM
Cost/Valuation
At 1 March 2013
17,475,260
74,679,216
92,154,476
3,990,588
Additions
-
8,398,425
8,398,425
611,226
8,133,867
1,083,356
18,226,874
Disposals
-
-
-
-
(1,119,544)
(714,346)
(1,833,890)
Written off
-
-
-
(1,049,905)
(1,404,420)
-
(2,454,325)
Transferred from capital workin-progress
-
26,759,309
26,759,309
-
5,902,130
-
32,661,439
Transferred to investment
properties
-
(3,220,000)
(3,220,000)
-
-
-
(3,220,000)
Reclassification
-
-
-
-
546,000
(546,000)
-
51,207
1,627,780
1,678,987
19,577
1,120,588
71,381
2,890,533
17,526,467
108,244,730
125,771,197
3,571,486
105,127,323 12,563,402
247,033,408
356,467
90,314,730
90,671,197
3,571,486
105,127,323 12,563,402
211,933,408
At valuation: 2011
17,170,000
17,930,000
35,100,000
-
At 1 March 2014
17,526,467
108,244,730
125,771,197
3,571,486
Currency translation difference
At 28 February 2014
Representing:At cost
Additions
-
-
-
880,825
Disposals
-
-
-
-
Written off
-
-
-
-
-
-
35,100,000
105,127,323 12,563,402
247,033,408
12,541,460
1,177,761
14,600,046
(350) (1,014,367)
(1,014,717)
(255,183)
-
(255,183)
Transferred from capital workin-progress
-
41,340
41,340
-
751,402
-
792,742
4,010
214,874
218,884
14,169
126,457
21,023
380,533
17,530,477
108,500,944
126,031,421
4,466,480
118,291,109 12,747,819
261,536,829
360,477
90,570,944
90,931,421
4,466,480
118,291,109 12,747,819
226,436,829
17,170,000
17,930,000
35,100,000
-
17,530,477 108,500,944 126,031,421
4,466,480
At 28 February 2015
Representing:At cost
At valuation: 2011
At 28 February 2015
-
-
35,100,000
118,291,109 12,747,819 261,536,829
Annual Report 2015
28 February 2015
cont’d
4.
PROPERTY, PLANT AND EQUIPMENT cont’d
Group cont’d
Freehold
land
Buildings
RM
RM
Crane,
Renovation
machinery,
Total
and equipments,
land and
electrical furniture and
buildings installation
fittings
RM
RM
RM
Forklift,
mobile
crane and
motor
vehicles
Total
RM
RM
Accumulated depreciation
At 1 March 2013
-
6,541,923
6,541,923
2,954,910
25,000,317
7,104,759
41,601,909
Charge for the financial year
-
2,368,404
2,368,404
315,274
7,018,606
1,769,377
11,471,661
Disposals
-
-
-
-
(304,572)
(656,965)
(961,537)
Written off
(1,013,163)
(1,263,675)
-
(2,276,838)
-
-
-
Transferred to investment
properties
-
(413,815)
(413,815)
-
-
-
(413,815)
Reclassification
-
-
-
-
546,000
(546,000)
-
-
461,125
461,125
37,087
881,361
59,215
1,438,788
At 28 February 2014
-
8,957,637
8,957,637
2,294,108
31,878,037
7,730,386
50,860,168
-
2,880,508
2,880,508
484,734
8,447,139
1,816,623
13,629,004
Disposals
-
-
-
-
(119)
(879,251)
(879,370)
Written off
-
-
-
-
(244,842)
-
(244,842)
-
48,109
48,109
5,376
101,070
16,749
171,304
At 28 February 2015
-
11,886,254
11,886,254
2,784,218
40,181,285
8,684,507
63,536,264
2014
17,526,467
99,287,093
116,813,560
1,277,378
73,249,286
4,833,016
196,173,240
2015
17,530,477
96,614,690 114,145,167
1,682,262
78,109,824
Net carrying amount
4,063,312 198,000,565
On 15 January 2011, the Directors revalued the above freehold land and buildings based on professional revaluations
made by Sr. Thiruselvam Arumugam, a Registered Valuer in PPC International Sdn. Bhd., on the market value basis. The
freehold land and buildings were valued at RM17,170,000 and RM22,080,000 respectively at that point of time. The
valuations were incorporated in the financial statements during the financial year ended 28 February 2011.
The market value is defined as the estimated amount for which an asset or an interest in a property should exchange
on the date of valuation between a willing buyer and a willing seller in an arm’s length transaction after proper
marketing wherein the parties had 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.
79
80
28 February 2015
cont’d
4.
PROPERTY, PLANT AND EQUIPMENT cont’d
At the reporting date, had the revalued freehold land and buildings of the Group been carried under the cost model, the
net carrying amount would have been as follows:Freehold
land
Buildings
Total
RM
RM
RM
14,739,517
18,263,238
33,002,755
(7,078,134)
(7,078,134)
2015
Cost
Accumulated impairment
Net carrying amount
(569,517)
-
(569,517)
14,170,000
11,185,104
25,355,104
14,739,517
18,263,238
33,002,755
(6,088,451)
(6,088,451)
2014
Cost
Accumulated impairment
Net carrying amount
(569,517)
14,170,000
12,174,787
(569,517)
26,344,787
The net carrying amount of property, plant and equipment of the Group which are acquired under finance lease
arrangements amounted to RM12,529,510 (2014: RM12,960,209).
Included in the property, plant and equipment of the Group are fully depreciated property, plant and equipment with a
total cost of RM10,458,248 (2014: RM7,814,028) but still in use.
During the previous financial year, a subsidiary company refinanced its payment made for property, plant and
equipment in prior year amounted to RM1,666,000 by way of finance lease arrangements.
During the previous financial year, the addition cost of property, plant and equipment of the Group includes
RM1,053,940 of interest capitalised during the previous financial year.
Annual Report 2015
28 February 2015
cont’d
5.
PREPAID LAND LEASE PAYMENTS
Group
2015
2014
RM
RM
28,630,137
22,061,445
Leasehold land:Cost
Additions
-
7,968,692
Transferred to investment properties
-
(1,400,000)
28,630,137
28,630,137
1,139,887
1,038,298
323,256
346,589
Accumulated amortisation
Transferred to investment properties
-
(245,000)
1,463,143
1,139,887
Net carrying amount
27,166,994
27,490,250
323,256
346,589
1,293,024
1,386,356
25,550,714
25,757,305
27,166,994
27,490,250
Amount to be amortised
- Not later than one year
- Later than one year but not later than five years
- Later than five years
The prepaid land lease payments are amortised over the leasehold period of 60 to 88 (2014: 60 to 88) years.
On 26 June 2013, a subsidiary company acquired a leasehold land from Johor Corporation. The leasehold period of this
leasehold land is 60 years. No amortisation is charged during the financial year as the leasehold land is still in the
acquisition stage and full settlement has not been made as at the reporting date.
81
82
28 February 2015
cont’d
6.
CAPITAL WORK-IN-PROGRESS
Group
Crane,
machinery,
equipment,
furniture and
Buildings
fittings
RM
Balance as at 1 March 2013
Addition
Transferred to property, plant and equipment
Balance as at 28 February 2014
RM
19,295,777
229,978
19,525,755
7,463,532
6,352,180
13,815,712
(26,759,309)
(5,902,130)
(32,661,439)
3,114,792
Transferred to property, plant and equipment
(41,340)
Balance as at 28 February 2015
7.
RM
-
Addition
Total
680,028
680,028
71,374
3,186,166
(751,402)
(792,742)
3,073,452
-
3,073,452
Freehold
land and
shophouse
building
Total
INVESTMENT PROPERTIES
Leasehold
land
Buildings
Total
land and
buildings
RM
RM
RM
RM
RM
Balance as at 1 March 2013
-
-
-
200,000
200,000
Transferred from property, plant and
equipment
-
2,806,185
2,806,185
-
2,806,185
Transferred from prepaid land lease
payments
1,155,000
-
1,155,000
-
1,155,000
545,000
93,815
638,815
30,000
668,815
1,700,000
2,900,000
4,600,000
230,000
4,830,000
Group
At fair value: -
Fair value gain adjustment on
investment properties
Balance as at 28 February 2014/
1 March 2014 and 28 February 2015
The investment properties consist of land and building 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 an interest in a property should exchange
on the date of valuation between a willing buyer and a willing seller in an arm’s length transaction after proper
marketing wherein the parties had each acted knowledgeably, prudently and without compulsion. The market value
of the investment properties was determined based on the comparison approach and depreciated replacement cost
approach.
Annual Report 2015
28 February 2015
cont’d
8.
SUBSIDIARY COMPANIES
(a)
Company
2015
2014
RM
RM
150,019,912
149,674,449
Additional investments made
75,074,546
345,463
225,094,458
150,019,912
Unquoted shares - At cost:-
During the current financial year, the Company increased its equity interest in a subsidiary company, Pantech
International (KSA) Sdn. Bhd.. A cash payment of RM74,546 was made to the non-controlling interest.
The Company also made additional investment in another subsidiary company by way of offsetting temporary
loans due from that subsidiary company amounted to RM75,000,000 with additional shares issued to the
Company.
The particulars of the subsidiary companies are as follows:-
Name of company
1. Pantech Corporation Sdn. Bhd.
Place of
incorporation
Malaysia
Effective
equity interest
Principal activities
2015
2014
%
%
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 company 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.
83
84
28 February 2015
cont’d
8.
SUBSIDIARY COMPANIES cont’d
(a)
Investment in subsidiary companies cont’d
The particulars of the subsidiary companies are as follows:- cont’d
Name of company
Place of
incorporation
Effective
equity interest
2015
2014
%
%
2. Pantech Steel Industries Sdn. Bhd.
Malaysia
100
100
Manufacturing and supply of buttwelded carbon steel fittings such
as elbows, tees, reducers, endcaps 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.
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
90
Dormant.
6. Nautic Steels (Holdings) Limited*
United
Kingdom
100
100
Investment holdings.
Subsidiary company of Nautic Steels (Holdings) Limited:6.1 Nautic Steels Limited*
7. Nautic Steels Sdn. Bhd.
#
*
United
Kingdom
100
100
Milling, machining and welding of
tube and pipe fittings in special
metals for the oil industry.
Malaysia
100
100
Dormant.
Not audited by SJ Grant Thornton
Subsidiary company not audited by SJ Grant Thornton but by other member firm of Grant Thornton
International Ltd.
Annual Report 2015
28 February 2015
cont’d
8.
SUBSIDIARY COMPANIES cont’d
(b)
The amount due from subsidiary companies is non-trade in-nature, bears no interest and repayable upon demand
except for loans to certain subsidiary companies amounted to RM8,178,812 (2014: RM92,547,155) which bear
interest at rates ranging from 2.75% to 5.60% (2014: 5.11% to 7.20%) per annum.
The currency exposure profile of the amount due from subsidiary companies is as follows (foreign currency
balances are unhedged):Company
2015
2014
RM
RM
Ringgit Malaysia
7,635,340
88,373,632
Great Britain Pound Sterling
1,119,717
4,547,155
27,054
-
8,782,111
92,920,787
Singapore Dollar
(c)
The amount due to a subsidiary company is non-trade in-nature, unsecured and repayable upon demand. In prior
financial year, included in the amount due to a subsidiary company is an amount of RM20,000,000 which bears
interest at the rate of 4.95% per annum.
The entire amount due to a subsidiary company was denominated in Ringgit Malaysia.
9.
ASSOCIATE COMPANY
(a)
Group
Unquoted shares - at cost
2015
2014
RM
RM
288,717
288,717
2,775,913
3,317,727
Share of post acquisition profit
- At beginning of financial year
- Share of post acquisition loss during the financial year
- At end of financial year
Less: Dividend received
(74,479)
2,701,434
(445,500)
2,544,651
(541,814)
2,775,913
(445,500)
2,619,130
85
86
28 February 2015
cont’d
9.
ASSOCIATE COMPANY cont’d
(a)
Investment in an associate company cont’d
Group
2015
2014
RM
RM
2,544,651
2,619,130
Represented by:Share of net assets
Summarised financial information of associate company is as follows:Group
2015
2014
RM
RM
19,918,927
19,998,026
3,462,673
3,722,724
Total assets
23,381,600
23,720,750
Current liabilities
15,906,395
15,235,405
1,113,575
1,937,518
17,019,970
17,172,923
25,346,336
37,665,672
186,197
1,354,534
Assets and liabilities
Current assets
Non-current assets
Total liabilities
Results
Revenue
Loss for the financial year
There is no share of commitments and contingent liabilities from the associate company to the Group.
The particulars of the associate company are as follows:-
Name of company
Tuah Nusa Sdn. Bhd.
Place of
incorporation
Malaysia
Effective equity
interest
2015
2014
%
%
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.
Annual Report 2015
28 February 2015
cont’d
9.
ASSOCIATE COMPANY cont’d
(b)
Amount due from/(to) an associate company
The amount due from an associate company is trade in-nature, bears no interest and repayable upon demand.
The amount due (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
Ringgit Malaysia
US Dollar
Singapore Dollar
2015
2014
RM
RM
6,204,873
9,492,179
-
1,258,612
7,186
12,137
6,212,059
10,762,928
The amount due (to) an associate company is denominated in Ringgit Malaysia.
10.
JOINT VENTURE COMPANY
(a)
Group
2015
2014
RM
RM
160,440
160,440
384,317
344,926
- Share of post acquisition profit during the financial year
48,415
21,894
- Currency translation difference
15,418
17,497
448,150
384,317
608,590
544,757
608,590
544,757
Unquoted shares - at cost
Share of post acquisition profit
- At beginning of financial year
- At end of financial year
Represented by:Share of net assets
87
88
28 February 2015
cont’d
10.
JOINT VENTURE COMPANY cont’d
(a)
Investment in a joint venture company cont’d
Summarised financial information of joint venture company is as follows:Group
2015
2014
RM
RM
1,271,500
972,238
-
-
1,271,500
972,238
402,089
194,015
-
-
402,089
194,015
681,713
913,867
69,162
31,277
Assets and liabilities
Current assets
Non-current assets
Total assets
Current liabilities
Total liabilities
Results
Revenue
The joint venture company had no capital commitment and contingent liabilities as at 28 February 2015 and
28 February 2014.
The particulars of the joint venture company are as follows:-
Name of company
JC Flow Controls Pte. Ltd. *#
*
#
(b)
Place of
incorporation
Singapore
Effective equity
interest
2015
2014
%
%
70
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
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.
Annual Report 2015
28 February 2015
cont’d
11.
GOODWILL ON ACQUISITION
Group
2015
2014
RM
RM
At cost and at net carrying amount:
Contingent consideration
1,205,784
715,603
-
345,463
158,282
144,718
1,364,066
1,205,784
The goodwill arose from the acquisition of a new subsidiary company on 7 March 2012.
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
2015
2014
RM
RM
1,364,066
1,205,784
1,364,066
1,205,784
Subsidiary company
Nautic Steels (Holdings) Limited
The recoverable amount of the above is based on its value in use and the recoverable amount is higher than the
carrying amount of the above goodwill allocated. Thus, there is no impairment loss recognised for the financial
years ended 28 February 2014 and 2015.
(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 not more than two years. 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 21% 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 7% per annum is based on management’s estimate of revenue
growth rate based on the past and current trends of the industry.
89
90
28 February 2015
cont’d
11.
GOODWILL ON ACQUISITION cont’d
Impairment tests for goodwill cont’d
(b)
Key assumptions used in value-in-use calculations cont’d
(iii)
Discount rate
A pre-tax discount rate of 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.
DEFERRED TAX ASSETS
Group
Transferred to profit or loss
Company
2015
2014
2015
2014
RM
RM
RM
RM
(2,421,090)
719,379
(1,701,711)
(3,053,952)
632,862
(2,421,090)
(493,985)
(1,783,838)
303,370
1,289,853
(190,615)
(493,985)
The balance in the deferred tax assets is made up of temporary differences arising from:Group
Carrying amount of qualifying property, plant and
equipment in excess of their tax base
Issuance of ICULS
Provision of expenses
Company
2015
2014
2015
2014
RM
RM
RM
RM
666,374
622,308
-
-
(190,615)
(493,985)
(190,615)
(493,985)
(880,234)
(715,940)
-
-
(1,284,420)
(1,756,043)
-
-
(12,816)
(77,430)
-
-
(1,701,711)
(2,421,090)
(190,615)
(493,985)
Annual Report 2015
28 February 2015
cont’d
12.
DEFERRED TAX ASSETS cont’d
The following temporary differences have not been recognised in the financial statements:Group
Carrying amount of qualifying property, plant and equipment in excess of their tax
base
Unabsorbed business losses
Unabsorbed value of increased in exports exemption
Unutilised capital allowances
Provision for leave entitlement
2015
2014
RM
RM
38,564,726
39,007,477
(496,466)
(356,420)
(8,561,000)
(8,561,000)
(9,577,000)
(9,577,000)
(44,421,000)
(43,400,000)
(56,534)
(22,239)
(24,547,274)
(22,909,182)
The unabsorbed business losses, unabsorbed value of increased in exports exemption 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.
13.
INVENTORIES
Group
2015
2014
RM
RM
56,072,963
45,603,754
Goods in transit
1,242,905
1,590,449
Work-in-progress
24,603,147
24,607,434
Finished goods
207,458,337
179,408,090
Total inventories
289,377,352
251,209,727
348,844,040
383,686,243
1,737,747
463,328
At carrying amount:Raw materials
Recognised in profit or loss:Inventories recognised in cost of sales
(65,639)
(1,213,084)
The reversal of written down of inventories was made when the related inventories were sold above their carrying
amounts and increased in net realisable value because of changed economic circumstances.
91
92
28 February 2015
cont’d
14.
TRADE RECEIVABLES
Group
Trade receivables
Less: Allowance for impairment of trade receivables
2015
2014
RM
RM
137,625,475
129,609,394
(6,805,672)
130,819,803
(8,208,698)
121,400,696
Movement in allowance for impairment of trade receivables:Group
2015
2014
RM
RM
(8,208,698)
(3,275,467)
(3,181,433)
(7,451,335)
4,432,164
2,500,976
Reversal of impairment
- payment received
- write off against allowance for impairment
181,163
39,687
(28,868)
(22,559)
(6,805,672)
(8,208,698)
The currency exposure profile of the trade receivables is as follows (foreign currency balances are unhedged):Group
2015
2014
RM
RM
Ringgit Malaysia
86,769,214
74,707,035
US Dollar
31,546,536
39,691,155
Singapore Dollar
EURO
4,834,656
4,011,154
14,333,231
10,747,785
141,838
452,265
137,625,475
129,609,394
Trade receivables comprise amounts receivable from sales of goods. The credit terms granted on sales of goods ranged
from 7 days to 90 days (2014: 7 days to 90 days). Allowance has been made for estimated irrecoverable of trade
receivables based on the default experience of the Group.
Annual Report 2015
28 February 2015
cont’d
15.
OTHER RECEIVABLES
Group
Company
2015
2014
2015
2014
RM
RM
RM
RM
2,207,342
1,359,466
-
-
15,774,639
4,132,460
-
-
535,000
440,471
-
-
Deposits
1,122,702
1,073,442
578,800
534,000
Prepayment of expenses
1,603,895
2,014,766
-
-
21,243,578
9,020,605
578,800
534,000
Non-trade receivables
Advance payment to suppliers
Deposit for purchase of property, plant and
equipment
The currency exposure profile of the other receivables is as follows (foreign currency balances are unhedged):Group
Ringgit Malaysia
2015
2014
2015
2014
RM
RM
RM
RM
7,613,459
3,159,680
578,800
534,000
11,017,405
4,416,302
-
-
2,320,922
1,278,891
-
-
EURO
107,205
-
-
-
Singapore Dollar
184,587
165,732
-
-
21,243,578
9,020,605
578,800
534,000
Contract/
Notional
amount
Assets
Liabilities
Net
RM
RM
RM
RM
18,662,167
18,662,167
16,272,250
2,389,917
Forward currency contracts
2,170,110
2,170,110
2,165,640
4,470
Forward currency contracts
20,832,277
20,832,277
18,437,890
2,394,387
US Dollar
16.
Company
DERIVATIVES FINANCIAL INSTRUMENTS
Group
Current assets
2015
Hedging derivatives:Cash flow hedges
- Cross currency swap
Non-hedging derivatives:-
93
94
28 February 2015
cont’d
16.
DERIVATIVES FINANCIAL INSTRUMENTS cont’d
Group cont’d
Contract/
Notional
amount
Assets
Liabilities
Net
RM
RM
RM
RM
6,679,352
5,593,710
6,679,352
(1,085,642)
9,674,829
8,233,311
9,674,829
(1,441,518)
648,000
648,000
656,420
(8,420)
10,322,829
8,881,311
10,331,249
(1,449,938)
6,679,352
5,593,710
6,679,352
(1,085,642)
9,674,829
8,233,311
9,674,829
(1,441,518)
Current liabilities
2015
2014
Non-hedging derivatives:Forward currency contracts
Company
Current liabilities
2015
2014
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.
The cash flow hedges of the borrowings were assessed to be highly effective and a net unrealised gain of RM2,745,793
and net unrealised gain of RM355,876 (2014: loss of RM1,264,732 and loss of RM1,264,732) of the Group and of the
Company respectively relating to the hedging instruments is included in other comprehensive income.
Annual Report 2015
28 February 2015
cont’d
16.
DERIVATIVES FINANCIAL INSTRUMENTS cont’d
Hedging activities – Cash flow hedges cont’d
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.
17.
FIXED DEPOSITS WITH LICENSED BANKS
Group
Current
Company
2015
2014
2015
2014
RM
RM
RM
RM
2,283,357
2,223,003
-
-
The fixed deposits with licensed banks of the Group are on fixed rate basis and will mature within 1 month to 6 months
(2014: 1 month to 6 months) period.
The effective interest rates on fixed deposits with licensed banks ranged from 2.20% to 3.29% (2014: 2.20% to 3.08%)
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
2015
2014
2015
2014
RM
RM
RM
RM
Ringgit Malaysia
32,162,842
37,248,199
6,396,418
14,535,930
US Dollar
14,115,033
17,606,020
-
-
624,224
12,189
-
-
Singapore Dollar
3,957,165
1,090,743
-
-
4,533,692
3,926,617
2,963,853
1,259,050
55,392,956
59,883,768
9,360,271
15,794,980
EURO
95
96
28 February 2015
cont’d
19.
SHARE CAPITAL
2015
2015
2014
2014
Unit
RM
Unit
RM
2,500,000,000
500,000,000
2,500,000,000
500,000,000
569,542,731
113,908,546
511,006,749
102,201,350
- Pursuant to conversion of ICULS
10,785,562
2,157,113
40,799,482
8,159,896
- Pursuant to exercise of ESOS
22,652,300
4,530,460
17,736,500
3,547,300
2,660
532
-
-
602,983,253
120,596,651
569,542,731
113,908,546
Group and Company
Authorised:Ordinary shares of RM0.20 each
Issued and fully paid-up:Ordinary shares of RM0.20 each
Issued during the financial year
- Pursuant to exercise of Warrants
New ordinary shares issued during the financial year ranked pari passu in all respect with the existing ordinary shares of
the Company.
20.
SHARE PREMIUM
Group and Company
Pursuant to conversion of ICULS
Pursuant to exercise of ESOS
Pursuant to exercise of Warrants
2015
2014
RM
RM
54,159,878
25,578,357
4,314,225
16,319,793
16,268,366
12,261,728
1,330
-
74,743,799
54,159,878
Annual Report 2015
28 February 2015
cont’d
21.
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 28 August 2014. The Directors of the Company are committed to
enhancing the value of the Company to its shareholders and believe that the purchase plan can be applied in the best
interest of the Company and its shareholders.
The Company repurchased 2,815,500 (2014: 150,000) ordinary shares of RM0.20 each of its issued share capital
from the open market. The average price paid for the shares repurchased was RM0.83 (2014: RM0.90) per share. The
repurchased transactions were financed by internally generated funds. These shares repurchased were held as treasury
shares and treated in accordance with the requirements of Section 67A of the Companies Act 1965.
The shares purchased were retained as treasury shares. The Company has the right to re-issue these shares at a
later date. As treasury shares, the rights attached as to voting, dividends and participation in other distribution are
suspended.
As at the financial year end, the Group held 6,267,800 (2014: 3,452,300) of the Company’s shares and the number of
outstanding shares in issue after setting treasury shares off against equity are 596,715,453 (2014: 566,090,431).
No treasury shares were sold during the current and previous financial year.
22.
REVALUATION RESERVE
Group
The revaluation reserve arose from the revaluation of lands and buildings and is not available for distribution as
dividends.
23.
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.
97
98
28 February 2015
cont’d
24.
IRREDEEMABLE CONVERTIBLE UNSECURED LOAN STOCKS (“ICULS”)
Group and Company
2015
2014
RM
RM
Equity component
Converted to ordinary shares during the financial year
9,142,841
25,490,695
(4,321,630)
(16,347,854)
4,821,211
9,142,841
1,975,947
7,135,355
Liability component
Converted to ordinary shares during the financial year
(809,900)
(4,129,793)
Coupon interest paid/accrued
(666,185)
(1,506,471)
Interest expense
264,342
476,856
764,204
1,975,947
5,585,415
11,118,788
Total
On 22 December 2010, the Company issued and allotted the renounceable rights issue of RM74,841,040 nominal value
of 7-Year 7% ICULS at 100% of its nominal value on the basis of two RM0.10 nominal value of ICULS for every one
existing ordinary share of RM0.20 each held in the Company together with 74,841,040 free detachable warrants on the
basis of one warrant for every ten ICULS subscribed for.
The ICULS were listed on the Bursa Malaysia Securities Berhad on 27 December 2010.
The ICULS represent the unconverted portion of the original RM74,841,040 nominal value of 7-Year 7% ICULS issued and
allotted at 100% of the nominal value, net of deferred tax and the amount allocated to warrants reserve.
The salient features of the ICULS are as follows:(a)
The ICULS are convertible into fully paid-up ordinary shares of RM0.20 each at any time during the tenure of the
ICULS from the date of issue of the ICULS up to and including the maturity date on 21 December 2017, at the rate
of six RM0.10 nominal value of ICULS for one fully paid-up ordinary shares of RM0.20 each in the Company.
(b)
The ICULS have a tenure period of seven years from the date of issue and will not be redeemable in cash. All
outstanding ICULS will be mandatorily converted by the Company into new ordinary shares at the conversion price
of RM0.60 each on the maturity date.
(c)
The interest on the ICULS is at the rate of 7% per annum on the nominal value of the ICULS and is payable twice
per annum.
(d)
Upon conversion of the ICULS into new ordinary shares, such shares would rank pari passu in all respects with
the existing ordinary shares of the Company in issue at the date of allotment of the new ordinary shares except
that the newly converted ordinary shares shall not be entitled to any rights, allotments of dividends and/or other
distribution if the entitlement date is before the new shares allotment.
On issuance of the ICULS which contain both liability and equity component, the fair value of the liability portion is
determined using a market interest rate for an equivalent financial instrument and the Company is using 13% per
annum as the discounting factor. These amounts are carried as liability until extinguished on conversion or maturity of
the ICULS. The remaining proceeds are allocated to the ICULS which is recognised and included in shareholders’ equity.
On 6 March 2015, the Company announced that it will exercise compulsory conversion of outstanding ICULS and as
further announced on 6 May 2015, this had been completed on 7 May 2015.
Annual Report 2015
28 February 2015
cont’d
25.
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.
26.
WARRANTS RESERVE
Group and Company
Pursuant to exercise of Warrants
2015
2014
RM
RM
7,481,903
7,481,903
(266)
7,481,637
7,481,903
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 Vanilla American 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:Valuation model
Exercise type
Tenure
Vanilla
American
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.
During the financial year, 2,660 units of warrants were exercised and converted to ordinary shares.
As at the reporting date, 74,816,370 (2014: 74,819,030) warrants remained unexercised.
27.
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.
99
100
28 February 2015
cont’d
28.
FINANCE LEASE CREDITORS
Group
2015
2014
RM
RM
- within 1 year
4,430,959
4,267,763
- after 1 year but not later than 5 years
6,690,976
7,832,678
11,121,935
12,100,441
Minimum lease payment
Less: Interest in suspense
(855,400)
(1,086,271)
10,266,535
11,014,170
- within 1 year
3,959,224
3,709,870
- after 1 year but not later than 5 years
6,307,311
7,304,300
10,266,535
11,014,170
Total principal sum payable
The interest rates on the finance lease range from 2.26% to 4.78% (2014: 2.26% to 4.78%) per annum.
Included in the above total principal sum payable is an amount of RM142,441 (2014: RM161,675) denominated in
Singapore Dollar and RM2,473,921 (2014: RM1,416,565) denominated in Great Britain Pound Sterling.
29.
BORROWINGS
Group
Company
2015
2014
2015
2014
RM
RM
RM
RM
19,895,951
18,527,388
7,032,801
9,053,197
Current
Unsecured:Term loans
Trade loans:- Accepted bills-i
25,215,449
-
-
-
- Bank overdraft
-
13,628
-
-
48,060,000
67,321,000
-
-
-
404,689
-
-
- Bankers’ acceptance
- Trust receipts
- Foreign currency loan-i
10,866,406
-
-
-
- Onshore foreign currency loans
30,523,406
31,963,846
-
-
- Commodity Murabahah Revolving Credit-i
5,000,000
5,000,000
5,000,000
5,000,000
10,280,976
3,496,317
-
-
149,842,188
126,726,868
12,032,801
14,053,197
Term loans
54,891,264
58,174,179
6,250,000
13,250,000
Total non-current
54,891,264
58,174,179
6,250,000
13,250,000
Total borrowings
204,733,452
184,901,047
18,282,801
27,303,197
- Clean import loans
Total current
Non-current
Unsecured:-
Annual Report 2015
28 February 2015
cont’d
29.
BORROWINGS cont’d
(i)
The term loans, accepted bills-i, bankers’ acceptance, trust receipts, foreign currency loan-i, bank overdrafts and
clean import loans of the Group are obtained by way of corporate guarantee from the Company and negative
pledge on a subsidiary company’s 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, specific debenture and corporate
guarantee from the Company.
The term loans of the Group and of the Company bear interest at rates ranging from 4.53% to 6.80% (2014:
3.39% to 7.20%) per annum respectively.
All term loans of the Group and of the Company are repayable by monthly, quarterly or yearly installments.
The accepted bills-i bears interest at rates ranging from 3.62% to 4.82% (2014: Nil) per annum.
The bankers’ acceptance bears interest at rates ranging from 3.53% to 4.66% (2014: 3.27% to 4.25%) per annum.
In prior financial year, the trust receipts bear interest at rates ranging from 2.28% to 6.25% per annum.
The foreign currency loan-i bears interest at rates ranging from 1.16% to 1.87% (2014: Nil) per annum.
The bank overdraft bears interest at rates ranging from 6.85% to 8.51% (2014: 6.85% to 8.51%) per annum.
The revolving credits of the Group bear interest at rates ranging from 4.78% to 5.03% (2014: 4.73% to 4.78%) per
annum.
The Commodity Murabahah Revolving Credit-i of the Group and of the Company bears interest at rates ranging
from 4.55% to 4.79% (2014: 4.79%) per annum.
The clean import loans of the Group bear interest at the rate of 1.05% (2014: 1.05%) per annum.
(ii)
The onshore foreign currency loans of the Group are obtained by way of corporate guarantee from the Company.
Certain onshore foreign currency loans are obtained by way of negative pledge on a subsidiary company’s assets.
It bears interest at rates ranging from 1.25% to 2.00% (2014: 1.05% to 2.10%) per annum.
The currency exposure profile of the borrowings is as follows (foreign currency balances are unhedged):Group
Company
2015
2014
2015
2014
RM
RM
RM
RM
148,017,413
141,123,488
13,237,550
19,404,118
US Dollar
41,389,812
35,747,730
-
-
15,326,227
7,899,079
5,045,251
7,899,079
-
130,750
-
-
204,733,452
184,901,047
18,282,801
27,303,197
Ringgit Malaysia
EURO
101
102
28 February 2015
cont’d
30.
OTHER PAYABLES
Group
Company
2015
2014
2015
2014
RM
RM
RM
RM
10,957,370
9,153,873
24,368
68,376
149,750
95,618
-
-
Accrual of expenses
4,527,922
4,846,079
349,748
402,884
Advance payment from customers
1,021,354
910,218
-
-
16,656,396
15,005,788
374,116
471,260
Provision for reinstatement cost
232,876
226,919
-
-
Total non-current
232,876
226,919
-
-
16,889,272
15,232,707
374,116
471,260
Current
Non-trade payables
Deposits received
Total current
Non-current
Total other payables
Provision for reinstatement cost refers to estimated costs made by a subsidiary company required to reinstate its
office premise and retail outlets to its original state according to the terms and conditions of the respective tenancy
agreements.
Movement in the provision for reinstatement cost:Group
Provision made
2015
2014
RM
RM
226,919
-
-
226,919
5,957
-
232,876
226,919
The currency exposure profile of the other payables is as follows (foreign currency balances are unhedged):Group
Company
2015
2014
2015
2014
RM
RM
RM
RM
14,516,877
12,949,512
374,116
471,260
1,264,121
901,098
-
-
Singapore Dollar
517,447
402,538
-
-
590,827
979,559
-
-
16,889,272
15,232,707
374,116
471,260
Ringgit Malaysia
US Dollar
Annual Report 2015
28 February 2015
cont’d
31.
DEFERRED TAX LIABILITIES
Group
2015
2014
RM
RM
4,094,289
4,252,108
Transferred from/(to) profit or loss (Note 35)
581,670
(106,633)
Realisation of deferred tax liabilities upon depreciation of revalued assets
(41,147)
(43,294)
Realisation of deferred tax liabilities upon transfer of revalued building to investment
property
-
(58,248)
16,448
50,356
4,651,260
4,094,289
The balance in the deferred tax liabilities is made up of temporary differences arising from:Group
Carrying amount of qualifying property, plant and equipment in excess of their tax
base
Revaluation of land and building
32.
2015
2014
RM
RM
3,997,782
3,399,664
653,478
694,625
4,651,260
4,094,289
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 (2014: 30 days to 90 days).
The currency exposure profile of the trade payables is as follows (foreign currency balances are unhedged):Group
2015
2014
RM
RM
16,184,721
13,938,710
US Dollar
9,298,736
9,919,854
Singapore Dollar
6,447,207
6,007,128
2,697,974
1,188,374
162,332
3,019,563
34,790,970
34,073,629
Ringgit Malaysia
EURO
103
104
28 February 2015
cont’d
33.
REVENUE
Group
Sales of goods
34.
Company
2015
2014
2015
2014
RM
RM
RM
RM
525,771,598
575,609,939
-
-
Dividend income
-
-
26,118,320
29,883,145
Management fee
-
-
2,526,088
3,156,216
525,771,598
575,609,939
28,644,408
33,039,361
PROFIT BEFORE TAX
Profit before tax has been determined after charging/(crediting), amongst others, the following items:Group
Company
2015
2014
2015
2014
RM
RM
RM
RM
3,181,433
7,451,335
-
-
323,256
346,589
-
-
143,000
136,000
18,000
17,000
62,600
63,450
24,800
24,850
- other auditors
126,805
119,754
-
-
109,073
48,366
-
-
13,629,004
11,471,661
-
-
Amortisation of prepaid land lease payments
Auditors’ remuneration
- statutory
- non-statutory
Depreciation
Directors’ remuneration
- fees
- other emoluments
618,000
608,000
168,000
158,000
7,436,139
7,673,746
1,719,387
1,666,356
Direct operating expenses:- revenue generating investment properties during
the financial year
90,791
15,980
-
-
479,942
435,676
479,942
435,676
Fair value (gain)/loss on derivatives financial
instruments
(12,890)
8,420
-
-
800
-
-
Hire of machinery
\
2,350
Annual Report 2015
28 February 2015
cont’d
34.
PROFIT BEFORE TAX cont’d
Profit before tax has been determined after charging/(crediting), amongst others, the following items:- cont’d
Group
Company
2015
2014
2015
2014
RM
RM
RM
RM
543,640
592,440
-
-
3,778,590
3,524,786
933,466
1,424,277
Interest expense
- hire purchase/finance lease
- term loans
- bank overdrafts
- ICULS liability component interest
- onshore foreign currency loans, trust receipts and
bankers’ acceptance
- subsidiary companies
- revolving credit
- clean import loans
25,058
42,891
-
-
264,342
476,856
264,342
476,856
3,752,061
3,727,579
-
-
-
-
285,208
727,671
236,580
856,268
113,465
-
97,898
5,107
-
-
1,737,747
463,328
-
-
10,341
177,487
-
-
1,336,314
1,324,059
-
-
231,904
194,856
-
-
Rental expense
- premises
- factory and warehouse
- forklift
- office equipment
Under/(Over) provision of leave entitlement
95,530
158,687
-
-
100,174
86,789
-
-
32,950
(20,170)
-
-
(Gain)/Loss on foreign exchange
- realised
- unrealised
Allowance for impairment of receivables no longer
required
Bad debts recovered
(1,762,439)
1,976,561
(4,613,327)
(9,809)
(1,382,384)
(141,495)
(326,603)
(743,435)
398,073
(694,383)
(2,540,663)
-
-
-
-
-
Dividend income
- subsidiary companies
-
- others
-
(480)
-
-
Fair value gain adjustment on investment properties
-
(668,815)
-
-
Government grant received
Loss/(Gain) from cross currency swap
-
-
(26,118,320)
(29,883,145)
(5,965)
-
-
(220,805)
(194,012)
-
-
(88,861)
(54,544)
-
-
22,497
(12,582)
22,497
(12,582)
105
106
28 February 2015
cont’d
34.
PROFIT BEFORE TAX cont’d
Profit before tax has been determined after charging/(crediting), amongst others, the following items:- cont’d
Group
Company
2015
2014
2015
2014
RM
RM
RM
RM
Interest income from fixed deposits
(218,343)
(764,112)
Interest income from current bank accounts
(227,963)
(273,178)
Interest income from intercompany loans
-
-
(110,910)
(115,727)
(175,111)
-
(1,469,967)
(4,761,979)
-
(1,358,100)
Warranty claim
(1,358,100)
Rental income
(166,750)
(209,400)
-
-
(65,639)
(1,213,084)
-
-
Share of loss from associate company
74,479
541,814
-
-
(48,415)
(21,894)
-
-
Share of profit from joint venture
-
The estimated monetary value of benefits provided to the Directors of the Group during the financial year by way of
usage of the Group’s assets and other benefits amounted to RM115,886 (2014: RM332,405).
The remuneration paid to the Directors of the Company is categorised as follows:-
Fees
Other
emoluments
Benefitsin-kind
Total
RM
RM
RM
RM
Executive Directors
350,000
5,581,209
115,886
6,047,095
168,000
-
-
168,000
Total
518,000
5,581,209
115,886
6,215,095
Executive Directors
350,000
5,932,962
273,463
6,556,425
158,000
-
-
158,000
Total
508,000
5,932,962
273,463
6,714,425
2015
2014
The remuneration paid to the Directors of the Company analysed into bands are as follows:-
<RM100,000
RM100,000
to
RM1,000,000
RM1,000,001
to
RM2,000,000
Executive Directors
-
2
3
4
-
-
Executive Directors
-
2
3
4
-
-
Number of Directors
2015
2014
Annual Report 2015
28 February 2015
cont’d
35.
TAX EXPENSE
Group
Company
2015
2014
2015
2014
RM
RM
RM
RM
13,988,647
18,524,795
638,753
1,650,285
In Malaysia
Current year’s tax expense
(Over)/Under provision of tax expense in prior
financial year
(566,090)
411,841
(41,147)
(43,294)
-
-
-
(58,248)
-
-
Transferred to/(from) deferred tax liabilities (Note 31)
177,000
(315,000)
-
-
Transferred from deferred tax assets (Note 12)
719,379
632,862
303,370
1,289,853
14,277,789
19,152,956
816,725
3,239,223
907,802
1,250,065
-
-
Realisation of deferred tax liabilities upon
Realisation of deferred tax liabilities upon transfer of
revalued building to investment property
(125,398)
299,085
Outside Malaysia
Current year’s tax expense
Over provision of tax expense in prior financial year
(39,901)
(20,767)
-
-
Transferred to deferred tax liabilities (Note 31)
404,670
208,367
-
-
1,272,571
1,437,665
-
-
15,550,360
20,590,621
816,725
3,239,223
Total
Malaysian income tax is calculated at the statutory tax rate of 25% (2014: 25%) of the estimated taxable profits for the
financial year.
107
108
28 February 2015
cont’d
35.
TAX EXPENSE cont’d
The reconciliations of income tax expense applicable to profit before tax at the statutory tax rate to the income tax
expense at the effective tax rate of the Group and of the Company are as follows:Group
Company
2015
2014
2015
2014
RM
RM
RM
RM
Profit before tax
58,702,056
75,227,485
25,432,907
33,174,952
Tax expense at Malaysian statutory tax rate of 25%
(2014: 25%)
14,675,514
18,806,871
6,358,227
8,293,738
4,006,093
5,182,397
1,268,345
2,425,865
(1,658,970)
(3,041,413)
(6,684,449)
(7,779,465)
Tax effects in respect of:Expenses not deductible for tax purposes
Income not subject to tax
Expenses allowable for double deduction
-
(49,869)
-
-
(490,716)
-
-
-
-
Deferred tax assets not recognised in current
financial year
(460,985)
Over provision of deferred tax liabilities in prior
financial year
(167,000)
-
(Over)/Under provision of tax expense in prior
financial year
(605,991)
391,074
(41,147)
(43,294)
-
-
(58,248)
-
-
Realisation of deferred tax liabilities upon
Realisation of deferred tax liabilities upon transfer of
revalued building to investment property
-
(125,398)
299,085
Effect of change in tax rate on opening of deferred
tax
(129,886)
(93,920)
-
-
Utilisation of unabsorbed capital allowance brought
forward
(67,268)
(12,261)
-
-
816,725
3,239,223
Total tax expense
15,550,360
20,590,621
The Group has unutilised capital allowances, unabsorbed value of increased in exports exemption and unabsorbed
business losses which can be carried forward to offset against future taxable profit amounted to approximately
RM44,421,000, RM9,577,000 and RM8,561,000 (2014: RM43,400,000, RM9,577,000 and RM8,561,000) respectively.
The corporate tax will be reduced to 24% for the year of assessment 2016 as announced in the Malaysia 2014 Budget.
Consequently, deferred tax assets/liabilities of Malaysian companies is measured at 24%.
However, the above amounts are subject to the approval of the Inland Revenue Board of Malaysia.
Annual Report 2015
28 February 2015
cont’d
36.
EARNINGS PER SHARE
(a)
Basic earnings per share
The earnings per share have been calculated based on Group’s profit after tax for the financial year attributable to
owners of the Company of RM43,151,696 (2014: RM54,637,815) and the weighted average number of ordinary
shares in issue during the financial year of 585,064,015 (2014: 545,470,480).
(b)
Diluted earnings per share
For the purpose of calculating diluted earnings per share, profit after tax for the financial year attributable to
owners of the Company and weighted average number of ordinary shares in issue during the financial year have
been adjusted for dilutive effects of all potential ordinary shares (share options granted to employees, ICULS and
exercise of warrants).
Group
Profit after tax for the financial year attributable to owners of the Company
(RM)
Impact on income statement upon conversion of ICULS (RM)
2014
43,151,696
54,637,815
(39,028)
Adjusted profit after tax (RM)
Weighted average number of ordinary shares in issue (basic)
(812,997)
43,112,668
53,824,818
585,064,015
545,470,480
Adjustment for dilutive effect on conversion of ICULS
16,898,401
37,752,873
Adjustment for dilutive effect on exercise of warrant
16,754,333
25,427,494
Adjustment for dilutive effect on exercise of ESOS
10,518,340
22,174,885
629,235,089
630,825,732
6.85
8.53
Weighted average number of ordinary shares in issue (diluted)
Diluted earnings per share (sen)
37.
2015
EMPLOYEE BENEFITS EXPENSE
Group
Staff costs
Company
2015
2014
2015
2014
RM
RM
RM
RM
42,114,318
41,986,768
2,079,333
1,814,056
Employee benefits expense of the Group and of the Company consists of, amongst others, the following items:Group
Company
2015
2014
2015
2014
RM
RM
RM
RM
5,727,319
5,735,203
1,532,400
1,510,098
Directors’ remuneration
- Salary
- EPF
714,899
651,423
183,888
153,174
- Bonus
983,815
1,276,940
-
-
- SOCSO
10,106
10,180
3,099
3,084
2,057,833
1,826,993
37,380
16,274
Defined contribution plan – staff EPF
109
110
28 February 2015
cont’d
38.
EMPLOYEES SHARE OPTION SCHEME
(a)
The Pantech Group Holdings Berhad Employees Share Option Scheme (“ESOS”) is governed by the by-laws and
approved by the shareholders at an Extraordinary General Meeting held on 10 February 2010. The tenure of the
ESOS is for 5 years from 3 March 2010 and expired on 2 March 2015.
The salient features of the ESOS are as follows:-
(b)
(i)
The Option Committee appointed by the Board of Directors to administer the ESOS, may from time to time
grant options to eligible employees of the Group to subscribe for new ordinary shares of RM0.20 each in the
Company.
(ii)
Subject to the discretion of the Option Committee, any employee whose employment has been confirmed
shall be eligible to participate in the ESOS.
(iii)
The total number of ordinary shares to be issued under the ESOS shall not exceed in aggregate 15% of the
issued and paid-up share capital (excluding treasury shares) of the Company at any point of time during the
tenure of the ESOS.
(iv)
The exercise price for each share shall be the higher of weighted average market price of the shares as
quoted in the Daily Official List issued by the Bursa Malaysia Securities Berhad for the five market days
immediately preceding the grant date or the par value of the ordinary shares; and provided that the exercise
price is not provided at a discount of more than 10% from the five days weighted average market price of
the shares immediately preceding the grant date.
(v)
All of the new ordinary shares issued upon exercise of the options granted under the ESOS will rank pari
passu in all respects with the existing ordinary shares of the Company in issue at the date of allotment of
the new ordinary shares except that the newly allotted ordinary shares shall not be entitled to any rights,
allotments of dividends and/or other distribution if the entitlement date is before the shares allotment date.
Number of unexercised share option
Company
2015
2014
24,426,500
42,664,000
Granted during the financial year
-
Forfeited during the financial year
-
Exercised during the financial year
(22,652,300)
(501,000)
(17,736,500)
1,774,200
24,426,500
Exercisable in financial year 2014
-
16,149,500
Exercisable in financial year 2015
1,774,200
8,277,000
1,774,200
24,426,500
Analysed as:-
(c)
Option price
Company
RM
Option granted
- on grant date
0.86
- after Bonus Issue, ICULS and Warrants
0.67
Annual Report 2015
28 February 2015
cont’d
38.
EMPLOYEES SHARE OPTION SCHEME cont’d
(d)
Share option exercised during the financial year
Share option exercised during this financial year resulted in the issuance of 22,652,300 new ordinary shares at the
exercise price of RM0.67 each.
(e)
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 of 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 3 March 2010 based on vesting date (RM)
- 3 March 2011
0.226
- 3 March 2012
0.253
- 3 March 2013
0.267
- 3 March 2014
0.272
Expected volatility of Company share price (%)
40.00
Option term (years)
39.
5
Risk free rate of interest (%) per annum
3.68
Expected dividend yield (%) per annum
5.00
RELATED PARTY DISCLOSURES
(a)
The transactions of the Group and of the Company with the related parties were as follows:Group
Company
2015
2014
2015
2014
RM
RM
RM
RM
- management fee received
-
-
2,526,088
3,156,216
- dividend received (net)
-
-
26,118,320
29,883,145
- loan interest received
-
-
1,469,967
4,761,979
- loan interest paid
-
-
285,208
727,671
22,735,467
35,044,183
-
-
1,919,736
1,614,745
-
-
192,000
170,000
-
-
- dividend received (net)
-
84,000
-
-
- disposal of property, plant and equipment
-
814,972
-
-
686,505
894,989
-
-
Transactions with subsidiary companies:-
Transactions with an associate company:- sales
- purchases
- rental received
Transaction with joint venture company:- purchases
(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.
111
112
28 February 2015
cont’d
39.
RELATED PARTY DISCLOSURES cont’d
(c)
The remuneration of key management personnel is same with the Directors’ remunerations as disclosed in Notes
34 and 37 to the Financial Statements. 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
Addition due to an existing employee appointed as director
Exercised during the financial year
2015
2014
17,000,000
17,400,000
-
2,000,000
(15,885,000)
1,115,000
(2,400,000)
17,000,000
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 38 to the Financial Statements.
40.
CAPITAL COMMITMENTS
Group
2015
2014
RM
RM
Authorised and contracted for:Purchase of - freehold land
- forklift and motor vehicle
- crane, plant and machinery
- buildings
41.
2,465,000
-
-
279,600
626,000
2,028,872
6,182,575
693,825
RENTAL COMMITMENTS
The future rental expense commitments are as follows:Group
2015
2014
RM
RM
Year 2015
-
1,833,445
Year 2016
1,775,624
1,658,314
Year 2017 to 2020
1,353,509
1,090,217
3,129,133
4,581,976
Annual Report 2015
28 February 2015
cont’d
42.
OPERATING LEASE ARRANGEMENTS
The Group has entered into operating lease agreements on its assets. These leases have remaining lease terms of
between 12 to 20 months (2014: 8 to 12 months).
The future minimum lease payments receivable under operating leases contracted for as at the reporting date but not
recognised as receivables are as follows:Group
43.
2015
2014
RM
RM
Within the next twelve months
414,000
72,668
After the next twelve months
766,000
-
1,180,000
72,668
CONTINGENT LIABILITIES
Company
2015
2014
RM
RM
Corporate guarantees given to licensed financial institutions for credit facilities
granted to subsidiary companies
675,597,355
604,279,655
Corporate guarantees given to finance lease creditors for finance lease facilities
granted to subsidiary companies
10,130,099
11,386,882
4,957
971,281
685,732,411
616,637,818
Unsecured:-
Corporate guarantees given to third parties for supply of goods and services to
subsidiary companies
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.
44.
SIGNIFICANT EVENTS AFTER THE REPORTING DATE
(a)
At the forthcoming Annual General Meeting, a final single tier dividend, in respect of the financial year ended
28 February 2015, of 0.50 sen per ordinary share and a share dividend distribution of approximately 6.10 million
treasury shares on the basis of 1 treasury share for every 100 existing ordinary shares 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 retained
earnings in the financial year ending 28 February 2016.
113
114
28 February 2015
cont’d
44.
SIGNIFICANT EVENTS AFTER THE REPORTING DATE cont’d
(b)
45.
On 6 May 2015, the Company announced that it will proceed with the compulsory conversion of the outstanding
Irredeemable Convertible Unsecured Loan Stocks (“ICULS”) and it had been completed on 7 May 2015.
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.
Investment holding
Investment holding, property investment and management service.
Transfer prices between operating segments are on negotiated basis.
45.
(a)
RM
RM
RM
2015
RM
2014
Manufacturing
18,316,053
38,115,519
33,828,156 28,644,408
-
RM
2015
(6,402,074)
1,653,087
Other non-cash
income/(expenses)
48,415
Share of results of joint
venture company
Income tax expense
(74,479)
(3,553,090)
Depreciation and
amortisation
Share of results of
associate company
642,108
(4,255,254)
Interest income
31,026,114
136,905
40,083,557
-
-
620,617
(38,179)
(8,514,467) (8,304,980)
21,894
(541,814)
(2,402,342) (9,636,721)
(4,131,022) (5,566,693)
1,526,700
40,151,915
5,067,842
(102,398)
(8,747,718)
-
-
(8,526,674)
-
-
(28)
(479,942)
19,138
-
-
(762,419)
1,938,681
(1,939,169)
-
(505,676) (1,743,922)
(862,444) (3,407,969)
-
-
(30)
(8,687,190) (1,813,578) (2,855,165)
1,606,462
-
RM
(3,966,196)
79,533
-
-
(889,206)
5,683,076
(5,682,709)
-
33,039,361 (95,397,572) (85,183,570)
46,434,042 (3,131,013) (1,885,541)
125,457
-
RM
2014
Eliminations
2015
33,039,361 (95,397,572) (85,183,570)
-
RM
2014
Investment
holding
326,677,223 328,275,167 265,847,539 299,478,981 28,644,408
28,637,645
298,039,578 309,959,114 227,732,020 265,650,825
2014
2015
Trading
Finance costs
Segment profit/(loss)
Results
Total revenue
Inter-segment revenue
External revenue
Revenue
Business segments cont’d
OPERATING SEGMENTS - GROUP cont’d
C
B
A
Notes
RM
-
(9,990,301)
1,037,290
84,700,416
21,894
(541,814)
(608,956)
(3,953,653)
(15,550,360) (20,590,621)
48,415
(74,479)
(13,952,260) (11,818,250)
(9,696,844)
446,306
67,978,658
525,771,598 575,609,939
-
525,771,598 575,609,939
RM
2014
Consolidated
2015
Annual Report 2015
28 February 2015
cont’d
115
116
28 February 2015
cont’d
45.
(a)
2015
Trading
Manufacturing
Investment
holding
RM
RM
RM
Eliminations Notes
RM
Consolidated
RM
Assets
Segment assets
Investment in an
associate company
Investment in joint
venture company
Additions to noncurrent assets
other than financial
instruments and
deferred tax assets
366,142,633
389,216,182 257,355,871 (270,556,117)
D
742,158,569
2,544,651
-
-
-
2,544,651
608,590
-
-
-
608,590
2,062,108
20,095,318
-
(4,371,214)
E
17,786,212
47,946,913
37,996,540
14,947,980
(42,901,774)
F
57,989,659
338,699,107
339,499,660
272,987,167
(266,305,905)
D
684,880,029
2,619,130
-
-
-
2,619,130
544,757
-
-
-
544,757
14,870,205
17,174,783
7,968,692
(2,402)
E
40,011,278
39,323,950
115,718,594
38,801,902
(134,739,782)
F
59,104,664
Liabilities
Segment liabilities
2014
Assets
Segment assets
Investment in an
associate company
Investment in joint
venture company
Additions to noncurrent assets
other than financial
instruments and
deferred tax assets
Liabilities
Segment liabilities
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.
Annual Report 2015
28 February 2015
cont’d
45.
(a)
statements: cont’d
B.
The following items are added to/(deducted from) segment profit to arrive at “profit before tax” presented
in the consolidated income statement:2015
2014
RM
RM
Segment profit
67,978,658
84,700,416
Interest income
446,306
1,037,290
Finance costs
Share of results of associate company
Share of results of joint venture company
Profit before tax
C.
(9,990,301)
(74,479)
(541,814)
48,415
21,894
58,702,056
75,227,485
Other non-cash (expenses)/income consist of the following items as presented in the respective notes to
the financial statements:-
Bad debts recovered
2015
2014
RM
RM
(3,181,433)
(7,451,335)
(109,073)
(48,366)
9,809
-
(10,341)
(177,487)
(1,737,747)
(463,328)
65,639
1,213,084
4,613,327
2,540,663
Fair value gain adjustment on investment properties
-
668,815
-
5,965
Allowance for impairment of receivables no longer required
D.
(9,696,844)
220,805
194,012
(479,942)
(435,676)
(608,956)
(3,953,653)
The following items are added to segment assets to arrive at total assets reported in the consolidated
statement of financial position:-
Segment assets
Deferred tax assets
Tax recoverable
Total assets
2015
2014
RM
RM
742,158,569
684,880,029
2,544,651
2,619,130
608,590
544,757
1,701,711
2,421,090
355,150
-
747,368,671
690,465,006
117
118
28 February 2015
cont’d
45.
(a)
statements: cont’d
E.
Additions to non-current assets other than financial instruments and deferred tax assets consist of:-
F.
2014
RM
RM
14,600,046
18,226,874
-
7,968,692
3,186,166
13,815,712
17,786,212
40,011,278
The following items are added to segment liabilities to arrive at total liabilities reported in the consolidated
statement of financial position:2015
2014
RM
RM
Segment liabilities
57,989,659
59,104,664
10,266,535
11,014,170
Borrowings
204,733,452
184,901,047
Tax payable
2,322,330
5,121,731
Deferred tax liabilities
4,651,260
4,094,289
279,963,236
264,235,901
Total liabilities
(b)
2015
Geographical information
The Group’s revenue and non-current assets information based on geographical location are as follows:Revenue
2015
2014
2015
2014
RM
RM
RM
RM
445,562,553
499,050,279
215,917,902
214,619,350
Republic of Singapore
35,202,775
23,272,333
2,045,542
1,759,508
United Kingdom
45,006,270
53,287,327
21,326,585
19,585,421
525,771,598
575,609,939
239,290,029
235,964,279
Malaysia *
*
Non-current assets
Company’s home country
Annual Report 2015
28 February 2015
cont’d
45.
(b)
Geographical information cont’d
Non-current assets information presented above consist of the following items as presented in the consolidated
statement of financial position:2015
2014
RM
RM
198,000,565
196,173,240
27,166,994
27,490,250
3,073,452
680,028
2,544,651
2,619,130
(c)
608,590
544,757
Deferred tax assets
1,701,711
2,421,090
Goodwill on acquisition
1,364,066
1,205,784
4,830,000
4,830,000
239,290,029
235,964,279
Major customers
The Group does not have any revenue from a single external customer which represents 10% or more of the
Group’s revenue.
46.
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.
119
120
28 February 2015
cont’d
46.
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:-
Group
USD
SGD
GBP
EURO
RM
RM
RM
RM
56,678,974
8,498,249
19,809,720
873,267
(51,979,997)
(7,763,374)
(21,088,949)
(162,332)
2015
Financial assets
Financial liabilities
Net exposure
4,698,977
734,875
(1,279,229)
710,935
62,972,089
5,171,092
15,953,293
464,454
(46,568,682)
(7,165,110)
(11,483,577)
(3,150,313)
16,403,407
(1,994,018)
4,469,716
(2,685,859)
2014
Financial assets
Net exposure
USD
SGD
GBP
EURO
RM
RM
RM
RM
Financial assets
-
27,054
4,083,570
-
-
-
(5,045,521)
-
Net exposure
-
27,054
(961,951)
-
Financial assets
-
-
5,806,205
-
-
-
(7,899,079)
-
Net exposure
-
-
(2,092,874)
-
Company
2015
2014
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% (2014: 3%) change of the RM/USD, RM/SGD, RM/GBP and RM/EURO exchange rates
respectively. The percentage has been determined based on the average market volatility in exchange rates in the
previous 12 months. The sensitivity analysis is based on the Group’s and the Company’s foreign currency financial
instruments held at each reporting date and also takes into account forward exchange contracts that offset effects
from changes in currency exchange rates.
Annual Report 2015
28 February 2015
cont’d
46.
(a)
Foreign currency risk cont’d
Foreign currency sensitivity analysis cont’d
If the RM had strengthened against the USD, SGD, GBP and EURO by 4% (2014: 3%) 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
2015
(187,959)
(29,395)
51,169
(28,437)
(194,611)
2014
(492,102)
59,821
(134,091)
80,576
(485,796)
Company
USD
SGD
GBP
EURO
Total
RM
RM
RM
RM
RM
38,478
-
37,396
62,786
-
62,786
2015
-
2014
-
(1,082)
-
If the RM had weakened against the USD, SGD, GBP and EURO by 4% (2014: 3%) respectively, then the impact to
profit for the financial year would be the opposite effect.
Exposures to foreign exchange rates vary during the financial year depending on the volume of overseas
transactions. Nonetheless, the analysis above is considered to be representative of the Group’s and the Company’s
exposures to foreign currency risk.
(b)
Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of the Group’s and the Company’s financial
instruments will fluctuate because of changes in market interest rates.
The Group’s and the Company’s fixed rate borrowings are exposed to a risk of change in their fair value due to
changes in interest rates. The Group’s variable rate borrowings are exposed to the risk of change in cash flows
due to changes in interest rates. Investment in equity securities and short term receivables and payables are not
significantly exposed to interest rate risk.
The Group’s interest rate management objective is to manage interest expenses consistent with maintaining an
acceptable level of exposure to interest rate fluctuation.
121
122
28 February 2015
cont’d
46.
(b)
Interest rate risk cont’d
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:-
2015
Group
Company
RM
RM
Fixed rate instruments
Financial assets
2,283,357
-
-
8,178,812
(10,266,535)
-
Accepted bills-i
(25,215,449)
-
Bankers’ acceptance
(48,060,000)
-
Foreign currency loan-i
(10,866,406)
-
Onshore foreign currency loans
(30,523,406)
-
Commodity Murabahah Revolving Credit-i
(5,000,000)
(5,000,000)
Clean import loans
(10,280,976)
-
Term loans
(13,282,801)
(13,282,801)
(151,212,216)
(10,103,989)
Floating rate instruments
Term loans
(61,504,414)
-
Net financial liabilities
(61,504,414)
-
Annual Report 2015
28 February 2015
cont’d
46.
(b)
Interest rate risk cont’d
Interest rate sensitivity cont’d
The interest rate profile of the Group’s and of the Company’s significant interest-bearing financial instruments,
based on carrying amounts as at the end of the reporting period is as follows:- cont’d
2014
Group
Company
RM
RM
Fixed rate instruments
Financial assets
2,223,003
-
-
92,547,155
-
(20,000,000)
(11,014,170)
-
(67,321,000)
-
(31,963,846)
-
(5,000,000)
Clean import loans
(3,496,317)
Term loans
(5,000,000)
-
(22,303,197)
(22,303,197)
(138,875,527)
45,243,958
(54,398,370)
-
(404,689)
-
(13,628)
-
(54,816,687)
-
Floating rate instruments
Term loans
Trust receipts
Bank overdrafts
Net financial liabilities
The following table illustrates the sensitivity of profit to a reasonably possible change in interest rates of +/- 25
(2014: 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
Group
+ 25 bp
- 25 bp
RM
RM
28 February 2015
(153,761)
153,761
28 February 2014
(137,042)
137,042
123
124
28 February 2015
cont’d
46.
(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
2015
RM
2014
RM
2015
RM
2014
RM
57,676,313
62,106,771
9,360,271
15,794,980
Trade receivables
130,819,803
121,400,696
-
-
Other receivables
19,639,683
7,005,839
578,800
534,000
Amount due from an associate company
6,212,059
10,762,928
-
-
-
-
8,782,111
92,920,787
214,347,858
201,276,234
18,721,182
109,249,767
Classes of financial assets – carrying amounts:Cash and cash equivalents
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:-
Gross
RM
Allowance for impairment loss
Individually
Collectively
impaired
impaired
Total
RM
RM
RM
Net
RM
2015
Within terms
56,213,745
-
-
-
56,213,745
Past due 1 to 30 days
18,765,687
-
-
-
18,765,687
21,206,971
-
-
-
21,206,971
9,556,034
-
-
-
9,556,034
11,284,715
939,343
-
939,343
10,345,372
Past due more than 120 days
20,598,323
5,866,329
-
5,866,329
14,731,994
137,625,475
6,805,672
-
6,805,672
130,819,803
Within terms
62,245,726
-
-
-
62,245,726
18,812,549
-
-
-
18,812,549
13,540,757
-
-
-
13,540,757
11,959,702
-
-
-
11,959,702
2014
Past due more than 120 days
5,636,839
41,818
-
41,818
5,595,021
17,413,821
8,166,880
-
8,166,880
9,246,941
129,609,394
8,208,698
-
8,208,698
121,400,696
Annual Report 2015
28 February 2015
cont’d
46.
(c)
Credit risk cont’d
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.
(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 when they fall due.
125
126
28 February 2015
cont’d
46.
(d)
Liquidity risk cont’d
The following table shows the areas where the Group and the Company are exposed to liquidity risk:Group
Current
Company
Non-current
Current
Non-current
Less than 1
year
1 to
5 years
More than
5 years
Less than
1 year
1 to
5 years
More than
5 years
RM
RM
RM
RM
RM
RM
Term loans
22,386,456
51,125,332
11,137,893
7,487,109
6,446,267
-
Bankers’ acceptance and
accepted bills-i
73,275,449
-
-
-
-
-
Clean import loans
10,280,976
-
-
-
-
-
Onshore foreign currency
loans and foreign currency
loan-i
41,389,812
-
-
-
-
-
2015
Non-derivative financial
liabilities
Irredeemable Convertible
Unsecured Loan Stocks
97,613
666,591
-
97,613
666,591
-
4,430,959
6,690,976
-
-
-
-
Trade payables
34,790,970
-
-
-
-
-
Other payables
16,656,396
-
-
374,116
-
-
5,000,000
-
-
5,000,000
-
-
Amount due to an associate
company
223,000
-
-
-
-
-
Amount due to a joint
venture company
656,279
-
-
-
-
-
209,187,910
58,482,899
11,137,893
12,958,838
7,112,858
-
Commodity Murabahah
Revolving Credit-i
Derivative financial liabilities
Outflow
Inflow
Total undiscounted financial
liabilities
6,679,352
-
-
6,679,352
-
-
(5,593,710)
-
-
(5,593,710)
-
-
1,085,642
-
-
1,085,642
-
-
210,273,552
58,482,899
11,137,893
14,044,480
7,112,858
-
Annual Report 2015
28 February 2015
cont’d
46.
(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
Current
Company
Non-current
Current
Non-current
Less than 1
year
1 to
5 years
More than
5 years
Less than
1 year
1 to
5 years
More than
5 years
RM
RM
RM
RM
RM
RM
Term loans
20,916,603
52,141,931
15,185,336
9,942,373
13,933,376
-
67,321,000
-
-
-
-
-
404,689
-
-
-
-
-
13,628
-
-
-
-
-
3,496,317
-
-
-
-
-
Onshore foreign currency
loans
31,963,846
-
-
-
-
-
Irredeemable Convertible
Unsecured Loan Stocks
574,991
1,400,956
-
574,991
1,400,956
-
2014
Non-derivative financial
liabilities
Trust receipts
Bank overdrafts
Clean import loans
4,267,763
7,832,678
-
-
-
-
Trade payables
34,073,629
-
-
-
-
-
Other payables
15,005,788
-
-
471,260
-
-
5,000,000
-
-
5,000,000
-
-
Amount due to a subsidiary
company
-
-
-
20,076,405
-
-
Amount due to an associate
company
108,000
-
-
-
-
-
Amount due to a joint
venture company
593,769
-
-
-
-
-
183,740,023
61,375,565
15,185,336
36,065,029
15,334,332
-
Outflow
10,331,249
-
-
9,674,829
-
-
Inflow
(8,881,311)
-
-
(8,233,311)
-
-
1,449,938
-
-
1,441,518
-
-
185,189,961
61,375,565
15,185,336
37,506,547
15,334,332
-
Commodity Murabahah
Revolving Credit-i
Derivative financial liabilities
Total undiscounted financial
liabilities
The above amounts reflect the contractual undiscounted cash flows, which may differ from the carrying values of
the financial liabilities at the reporting date.
127
128
28 February 2015
cont’d
47.
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 2015 and 2014.
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
2015
2014
2015
2014
RM
RM
RM
RM
Total equity
467,405,435
426,229,105
220,002,077
202,354,278
Borrowings
214,999,987
195,915,217
18,282,801
27,303,197
0.46
0.46
0.08
0.13
Debt-to-equity ratio
The Group has complied with Practice Note No. 17 (Revision on 3 August 2009, 22 September 2011 and 25 March
2014) 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.
48.
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.
The following summarises the methods used in determining the fair value of financial instruments:(i)
Derivatives
The fair value of forward contract is calculated by reference to current forward exchange rates for contracts with
similar maturity profile.
(ii)
Non-derivatives financial liabilities
Fair value, which is determined for disclosure purposes, is calculated based on the present value of future principal
and interest cash flows, discounted at the market rate of interest at the end of the reporting period. In respect
of the liability component of convertible notes, the market rate of interest is determined by reference to similar
liabilities that do not have a conversion option. For finance leases, the market rate of interest is determined by
reference to similar lease agreements.
Annual Report 2015
28 February 2015
cont’d
48.
FAIR VALUE OF FINANCIAL INSTRUMENTS cont’d
The following summarises the methods used in determining the fair value of financial instruments:- cont’d
(ii)
Non-derivatives financial liabilities cont’d
The interest rates used to discount estimated cash flows, when applicable, are as follows:2015
2014
%
%
Bank overdrafts
6.85 – 8.51
6.85 – 8.51
Accepted bills-i
3.62 – 4.82
-
3.53 – 4.66
3.27 – 4.25
Foreign currency loan-i
1.16 – 1.87
-
1.25 – 2.00
1.05 – 2.10
Revolving credits
4.78 – 5.03
4.73 – 4.78
4.55 – 4.79
4.79
Term loans
4.53 – 6.80
3.39 – 7.20
-
2.28 – 6.25
2.26 – 4.78
2.26 – 4.78
Clean import loans
1.05
1.05
7.00
7.00
Trust receipts
129
130
28 February 2015
cont’d
48.
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
Level 1
Level 2
Level 3
RM
RM
RM
RM
-
2,389,917
-
2,389,917
- Forward currency contracts
-
4,470
-
4,470
-
2,394,387
-
2,394,387
-
(1,085,642)
-
(1,085,642)
-
(1,441,518)
-
(1,441,518)
- Forward currency contracts
-
(8,420)
-
(8,420)
-
(1,449,938)
-
(1,449,938)
-
(1,085,642)
-
(1,085,642)
-
(1,441,518)
-
(1,441,518)
Total
Group
2015
Financial assets:
Derivatives
Financial liability:
Derivatives
2014
Financial liabilities:
Derivatives
Company
2015
Derivatives
2014
Derivatives
There were no transfers between Level 1 and 2 in the reporting period.
Annual Report 2015
28 February 2015
cont’d
49.
FAIR VALUE MEASUREMENT OF NON-FINANCIAL ASSETS
The following table summarises the methods used in determining the fair value of non-financial assets on a recurring
basis at 28 February 2015:Fair value as at
Non-financial
assets
Investment
properties
Valuation
techniques
and
key inputs
Relationship of
unobservable
inputs to fair
value
28 February
2015
28 February
2014
RM
RM
Land
1,700,000
Land
1,700,000
Level 3
Land
Comparison
approach
entails
comparing the
property with
comparable
properties
which have
been sold
or are being
offered for
sale.
Land
Adjustment for
factors such as
location and
accessibility,
market
conditions,
size, shape and
terrain of land,
tenurial interest
and restriction if
any, occupancy
status, built-up
area, building
construction,
finishes and
services, age
and condition
of building and
other relevant
characteristics.
Land
The extent and
direction of
this adjustment
depends on the
number and
characteristics
of the
observable
market
transactions
in similar
properties that
are used as
starting point
for valuation.
Buildings
2,900,000
Buildings
2,900,000
Level 3
Buildings
Depreciated
Replacement
Cost approach
reflecting
the cost of
replacing the
building in
its existing
condition.
Buildings
Adjustment for
depreciation
for physical,
functional
and economic
obsolescence.
Buildings
Depreciation
is deducted
to reflect
the current
condition of the
buildings and
structures.
Fair value
hierarchy
Significant
unobservable
inputs
131
132
28 February 2015
cont’d
49.
FAIR VALUE MEASUREMENT OF NON-FINANCIAL ASSETS cont’d
The following table summarises the methods used in determining the fair value of non-financial assets on a recurring
basis at 28 February 2015:- cont’d
Fair value as at
Non-financial
assets
Investment
properties
(cont’d)
28 February
2015
28 February
2014
RM
RM
Shophouse
230,000
Shophouse
230,000
Valuation
techniques
and
key inputs
Fair value
hierarchy
Level 3
Shophouse
Comparison
approach
entails
comparing the
property with
comparable
properties
which have
been sold
or are being
offered for
sale.
Significant
unobservable
inputs
Shophouse
Adjustment for
factors such as
location and
accessibility,
market
conditions,
size, shape
and terrain of
land, tenurial
interest and
restriction
if any,
occupancy
status, built-up
area, building
construction,
finishes and
services, age
and condition
of building
and other
relevant
characteristics.
Relationship of
unobservable
inputs to fair
value
Shophouse
The extent and
direction of
this adjustment
depends on the
number and
characteristics
of the
observable
market
transactions
in similar
properties that
are used as
starting point
for valuation.
The reconciliation of the carrying amounts of non-financial assets classified within Level 3 is as follows:Investment properties
Land
Building
Shophouse
2015
2014
2015
2014
2015
2014
RM
RM
RM
RM
RM
RM
1,700,000
-
2,900,000
-
230,000
200,000
Transferred from property, plant and
equipment
-
-
-
2,806,185
-
-
Transferred from prepaid land lease
payments
-
1,155,000
-
-
-
-
-
545,000
-
93,815
-
30,000
1,700,000
1,700,000
2,900,000
2,900,000
230,000
230,000
Gains/(Expenses) recognised in profit
or loss:
- Increase/(Decrease) in fair value
Annual Report 2015
28 February 2015
cont’d
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
2015
2014
2015
2014
RM
RM
RM
RM
338,520,074
313,549,572
17,880,392
14,979,017
2,740,293
6,453,106
341,260,367
320,002,678
17,482,319
15,673,400
2,261,152
2,335,631
-
-
-
-
Total unappropriated profit of the Company and its
subsidiary companies:
- Realised
- Unrealised
(398,073)
694,383
Total unappropriated profit of the Associate Company:
- Realised
- Unrealised
(5,218)
(5,218)
2,255,934
2,330,413
-
-
452,827
404,422
-
-
(20,105)
-
-
448,150
384,317
-
-
Total
343,964,451
322,717,408
17,482,319
15,673,400
Consolidation adjustments
(92,609,838)
(91,828,737)
-
-
251,354,613
230,888,671
17,482,319
15,673,400
Total unappropriated profit of the Joint Venture Company:
- Realised
- Unrealised
(4,677)
The above disclosures were reviewed and approved by the Board of Directors in accordance with a resolution of the Board of
Directors on 15 June 2015.
133
134
LIST OF PROPERTIES
(Land area)
Gross buildup area
Sq.ft.
No. Tittle deed
Address
Tenure
1
HS(D) 484896, PTD 204334,
Mukim Plentong,
District of Johor Bahru,
Johor Darul Takzim
PTD 204334, Jalan Platinum
Utama, Kawasan Perindustrian
Pasir Gudang, Zon 12B, 81700
Pasir Gudang, Johor.
(899,775)
522,610
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
3
SF263520, SF207018,
SF209083, SF318990,
SF211845, SF318991,
SF184517, SF196161
Claymore, Tame Valley
Industrial Estate, Tamworth
Claymore Tame Valley
Industrial Estate, Tamworth,
Staffordshire, B77 5DQ,
United Kingdom
(59,000)
46,450
4
Pending for Title to be
issued by the Authority
PLO 749, Jalan Kampung Pasir
Gudang Baru, Pasir Gudang
Industrial Estate Zone 12B,
81700 Pasir Gudang,
Johor Darul Takzim.
5
SF211341, Brent, Tame
Valley Industrial Estate,
Wilnecote, Tamworth
6
Description/
Existing use
Leasehold 4 Blocks single
expiring on storey factory
18.08.2070 buildings with 1
unit 3-storeys
office and 1 unit
5-storeys corporate
office and ancillary
buildings
Net Book
Value @
Approximate
28.2.2015 age of building Date of last
RM’000
Years
revaluation
68,147
2-5
-
6 units of single
storey detached
factories (Identified
for reference as
Factory A, B, C, D, E
and F)
35,474
Factory A,B,C-25
Factory D - 23
Factory E - 8
Factory F - 3
3.3.2011
Freehold
8 units of building
comprising
of factories,
warehouses and
office.
8,259
27-33
-
(318,032)
Leasehold
A parcel of
industrial land
7,969
-
-
Unit 2, Brent, Tame Valley
Industrial Estate, Wilnecote,
Tamworth, Staffordshire B77
5DF United Kingdom
(55,700)
23,500
Freehold
A single storey
detached factory
and warehouse
6,302
25
-
HS(D) 501116, PTD 209335,
Mukim Plentong,
Johor Darul Takzim
PLO 641, Jalan Plantinum 1,
Pasir Gudang Industrial Estate,
Zone 12B, 81700
Pasir Gudang, Johor Darul
Takzim
(254,566)
43,560
Leasehold A single storey
expiring on detached
16.01.2072 warehouse
6,128
3
-
7
Lot PT NO 34277, HS(M)
29537 Mukim and District
of Klang, HS (D) 114965,
Lot PT 17296, Pekan Baru
Hicom, Daerah Petaling,
No. 3, Jalan Trompet 33/8,
Seksyen 33, 40400 Shah
Alam, Selangor Darul Ehsan.
(123,548)
25,968
Leasehold
expiring on
11.12.2096
&
8.11.2096
A single storey
detached
warehouse with
2-storey office
buildings annexed
5,225
17
15.1.2011
8
PTD 71061, HS(D) 125023,
Mukim Plentong,
Johor Darul Takzim
PLO 234, Jalan Tembaga Satu,
Pasir Gudang Industrial Estate,
81700 Pasir Gudang,
Johor Darul Takzim
(87,120)
42,300
expiring on detached
30.09.2045 warehouse with
3-storey office
buildings annexed
4,600
16
18.4.2014
9
Part of Plot 157, Plot 158,
Plot 159 and part of Plot
160, Precinct 1, Port Klang
Free Zone held under
Master Title Pajakan Negeri
7324, Lot 7894,
Mukim and District of
Klang,
Persiaran Port Klang FZ 7,
Jalan FZ 6-P1, Port Klang Free
Zone/ KS12, 42920 Pulau
Indah, Selangor Darul Ehsan.
(304,920)
48,383
expiring on warehouse and an
30.06.2017 office block
2,465
7
13.1.2011
10
SF439519, Fasson Close,
Tamworth, Staffordshire B77 1GJ 6 Fasson Close, Tamworth,
Staffordshire B11 1GJ United Kingdom
(3,000)
1,324
Freehold
A double storey
residential property
1,343
14
-
11
Geran 252790, Lot 75931,
Mukim Plentong,
Johor Darul Takzim.
No. 18 & 18A, Jalan Lampam
41, Tanjong Puteri Resort,
81700 Pasir Gudang,
Johor Darul Takzim.
(1,540)
3,080
Freehold
A double storey
intermediate
shophouse
230
18
15.4.2014
Annual Report 2015
NOTICE OF NINTH ANNUAL GENERAL MEETING
NOTICE IS HEREBY GIVEN that the Ninth Annual General Meeting of Pantech Group Holdings Berhad (“Pantech” or the
“Company”) will be held at Meeting Room 3, Level 3, Renaissance Johor Bahru Hotel, 2, Jalan Permas 11, Bandar Baru Permas
Jaya, 81750 Masai, Johor on Tuesday, 18 August 2015 at 10.30 a.m. for the following purposes:-
AGENDA
AS ORDINARY BUSINESS
1.
To receive the Audited Financial Statements for the financial year ended
28 February 2015 together with the Directors’ and Auditors’ Reports thereon.
2.
To approve the payment of the dividend comprising the following for the financial year
ended 28 February 2015:
(i)
final single tier cash dividend of 0.5 sen per ordinary share of RM0.20 each; and
(ii)
share dividend via a distribution of treasury shares on the basis of 1 treasury share
for every 100 existing ordinary shares of RM0.20 each. Any fractions arising from the
distribution of share dividend will be disregarded.
3.
To approve the increase and payment of Directors’ fees from RM168,000 up to RM180,000
for the financial year ending 29 February 2016.
4.
To re-elect the following Directors retiring pursuant to Article 122 of the Company’s Articles
of Association and being eligible, offered themselves for re-election:4.1
4.2
5.
Mr Tan Ang Ang
Ms Ng Lee Lee
To re-appoint Messrs SJ Grant Thornton as Auditors of the Company and to authorise the
Directors to fix their remuneration.
Ordinary Resolution 1
AS SPECIAL BUSINESS
To consider, and if thought fit, to pass the following Resolutions:
6.
RETENTION OF INDEPENDENT DIRECTORS
To retain the following Directors who have served for more than nine years as Independent
Non-Executive Director of the Company:6.1
6.2
Mr Tan Sui Hin
Mr Loh Wei Tak
135
136
cont’d
7.
PROPOSED RENEWAL OF SHARE BUY-BACK
“THAT subject to compliance with all applicable rules, regulations and orders made pursuant
to the Companies Act, 1965 (“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:(1)
the aggregate number of shares purchased or held does not exceed ten per centum
(10%) of the issued and paid-up share capital 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 and share
premium account of the Company. As at the latest financial year ended 28 February
2015, the audited retained profit and share premium account of the Company stood
at RM17,482,319 and RM74,743,799 respectively;
(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.”
Annual Report 2015
cont’d
8.
AUTHORITY TO ISSUE SHARES BY THE COMPANY PURSUANT TO SECTION 132D OF THE
COMPANIES ACT, 1965
“THAT pursuant to Section 132D of the Companies Act, 1965 and subject to the approvals
from the relevant governmental and/or regulatory authorities, the Directors be and are
hereby empowered to issue shares in the Company from time to time and upon such terms
and conditions and for such purposes as the Directors may in their absolute discretion
deem fit, provided that the aggregate number of shares issued pursuant to this resolution
does not exceed ten (10) per cent of the issued share capital of the Company at the time
of submission, upon such terms and conditions, for such purposes and to such person or
persons AND THAT the Directors be and are also hereby empowered to obtain the approval
from the Bursa Malaysia Securities Berhad for the listing and quotation of the additional
shares so issued AND THAT such authority shall continue in force until the conclusion of the
next Annual General Meeting of the Company.”
NOTICE OF DIVIDEND ENTITLEMENT AND PAYMENT
Subject to the approval of the shareholders, that the payment of the dividend comprising the following for the financial year
ended 28 February 2015 will be paid on 18 September 2015 to Depositors registered in the Record of Depositors at the closed
of business at 5.00 p.m. on 27 August 2015.
(i)
final single tier cash dividend of 0.5 sen per ordinary share of RM0.20 each; and
(ii)
share dividend via a distribution of treasury shares on the basis of 1 treasury share for every 100 existing ordinary
shares of RM0.20 each. Any fractions arising from the distribution of share dividend will be disregarded.
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 27 August 2015, 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.
Subject to the approval of the Bursa Malaysia Depository Sdn. Bhd. (“Bursa Depository”) for the transfer of treasury shares
under the Share Buy-back Account by bulk transfer method of debiting and crediting, the treasury shares to be distributed
under the share dividend will be credited into the entitled Depositors’ Securities Account maintained with Bursa Depository on
27 August 2015.
By order of the Board,
LIM SECK WAH (MAICSA 0799845)
LIANG SIEW CHING (MAICSA 7000168)
Company Secretaries
Kuala Lumpur
Dated this: 27 July 2015
137
138
cont’d
Notes:1.
For the purpose of determining a member who shall be entitled to attend, speak and vote at the AGM, the Company shall be
requesting the Record of Depositors as at 12 August 2015. Only a depositor whose name appears on the Record of Depositors
as at 12 August 2015 shall be entitled to attend the said meeting or appoint proxies to attend, speak and vote on his/her
behalf.
2.
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 and a member
may appoint any person to be his/her proxy without limitation and the provisions of Section 149(1)(a) & (b) of the Companies
Act, 1965 shall not apply.
3.
Where a member is an authorised nominee as defined under the Securities Industry (Central Depositories) Act, 1991, it may
appoint at least one (1) proxy but not more than two (2) proxies in respect of each Securities account it holds with ordinary
shares of the Company standing to the credit of the said securities account.
4.
Where a member is an exempt authorised nominee, it may appoint multiple proxies for each omnibus account it holds.
5.
The instrument appointing a proxy shall be in writing under the hand of the appointer or his/her attorney duly authorized in
writing or, if the appointer is a corporation, either under the Corporation’s Common Seal or under the hand of an officer or
attorney so authorized.
6.
The Proxy Form must be deposited at the 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.
7.
Explanatory Notes on Special Businesses:
Ordinary Resolutions 6 and 7 - Retention of Independent Directors
The Board of Directors has vide the Nomination Committee conducted an assessment of independence of the following
directors who have served as Independent Non-Executive Directors for a cumulative term of more than nine years and
recommended them to continue to act as Independent Non-Executive Directors based on the following justifications:
(i)
(ii)
Mr Tan Sui Hin
Mr Loh Wei Tak
Justifications:(a)
They have met the independence guidelines as set out in Chapter 1 of the Bursa Malaysia Securities Berhad Main Market
Listing Requirements and are therefore able to give independent opinion to the Board;
(b)
Being directors for more than nine years have enabled them to contribute positively during deliberations/discussions at
meetings as they are familiar with the operations of the Company and possess tremendous insight and knowledge of
the Company’s activities;
(c)
They have contributed sufficient time and exercised due care during their tenure as Independent Non-Executive Directors;
(d)
They have discharged their professional duties with reasonable skill and competence, bringing independent judgements
into the Board’s decisions;
(e)
They have vigilantly safeguarded the interests of the minority shareholders of the Company;
(f)
They have the calibre, qualifications, experiences and personal qualities to challenge management in an effective and
constructive manner; and
(g)
They have never compromised on their independent judgement.
Annual Report 2015
cont’d
7.
Explanatory Notes on Special Businesses: cont’d
Ordinary Resolution 8 - 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 issued and paid-up share capital of the Company by utilising the funds allocated which shall not exceed the total retained
profits and share premium 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 27 July
2015 which has been dispatched together with the Company’s Annual Report 2015.
Ordinary Resolution 9 - Authority to issue shares by the company pursuant to Section 132D of the Companies Act, 1965
The proposed Resolution 9 is a renewal of mandate given by the shareholders at the previous AGM held on 28 August 2014,
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 issue capital.
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 issued share capital of the Company. The renewed authority will provide flexibility to the Company for the
allotment 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 28 August 2014 except for new shares arising from the ICULS conversion and exercise of Warrants/ESOS.
139
140
ANALYSIS OF SHAREHOLDINGS
As at 30 June 2015
Authorized Share Capital
Issued and Fully Paid-Up Share Capital
Class of Shares
Voting Rights
No. of Shareholders
:
:
:
:
:
RM500,000,000.00
RM123,294,296.00
Ordinary Shares of RM0.20 Each
One Vote Per Ordinary Share
7,735
DISTRIBUTION OF SHAREHOLDINGS AS AT 30 JUNE 2015
No. of
Shareholders
% of
Shareholders
Less than 100
173
2.24
4,111
0.00
100 – 1,000
485
6.27
328,753
0.05
1,001 – 10,000
4,139
53.51
24,531,552
3.98
10,001 – 100,000
2,549
32.95
79,968,907
12.97
386
5.00
360,629,465
58.50
3
0.03
151,008,692
24.50
7,735
100.00
616,471,480
100.00
Category
100,001 – less than 5% of issued shares
5% and above of issued shares
Total
No. of
Shares*
% of
Shares*
Note:
*
Inclusive of 6,643,800 treasury shares retained by the Company.
LIST OF SUBSTANTIAL SHAREHOLDERS AS AT 30 JUNE 2015
Direct
No.
Names
1.
CTL Capital Holding Sdn Bhd
No. of Shares
Indirect
%* No. of Shares
108,607,143
17.81
-
%*
-
2.
GL Management Agency Sdn Bhd
78,292,843
12.84
-
-
3.
Koperasi Permodalan Felda Malaysia Berhad
58,587,266
9.61
-
-
4.
4,500,000
0.74
108,607,143
17.81
(a)
5.
Datin Shum Kah Lin
-
-
113,107,143
18.55
(b)
6.
4,500,000
0.74
78,292,843
12.84
(c)
7.
Datin Lee Sock Kee
-
-
82,792,843
13.58
(d)
Note:
*
Excluding a total of 6,643,800 shares bought-back by the Company and retained as treasury shares
Annual Report 2015
As at 30 June 2015
cont’d
DIRECTORS’ INTERESTS IN SHARES AS AT 30 JUNE 2015
Direct
No. of Shares
Indirect
No.
Names
%* No. of Shares
%*
1.
4,500,000
0.74
108,607,143
17.81
(a)
2.
4,500,000
0.74
78,292,843
12.84
(c)
3.
Tan Ang Ang
10,790,000
1.77
1,633,000
0.27
(e)
4.
To Tai Wai
13,490,380
2.21
-
-
5.
Ng Lee Lee
7,134,623
1.17
157,473
0.03
6.
Tan Sui Hin
545,000
0.09
-
-
7.
1,000
0.00
-
-
8.
Loh Wei Tak
250,000
0.04
-
-
(f)
Notes:
(a)
(b)
(c)
(d)
(e)
(f)
*
Deemed interested by virtue of his and his spouse Datin Shum Kah Lin’s interest in CTL Capital Holding Sdn Bhd pursuant to Section 6A
of the Act.
Deemed interested by virtue of her and her spouse, CTL’s interests in CTL Capital pursuant to Section 6A of the Act, and by virtue of her
spouse CTL’s direct shareholding in the Company pursuant to Section 134(12) of the Act.
Deemed interested by virtue of his and his spouse Datin Lee Sock Kee’s interest in GL Management Agency Sdn Bhd pursuant to
Section 6A of the Act.
Deemed interested by virtue of her and her spouse, GTK’s interests in GL Management pursuant to Section 6A of the Act, and by virtue
of her spouse GTK’s direct shareholding in the Company pursuant to Section 134(12) of the Act.
Deemed interested by virtue of his spouse Madam Yong Yui Kiew’s direct shareholding in the Company pursuant to Section 134(12) of
the Act.
Deemed interested by virtue of her spouse Mr Wong Chong Peng’s direct shareholding in the Company pursuant to Section 134(12) of
the Act.
30 LARGEST SHAREHOLDERS AS AT 30 JUNE 2015
No.
Shareholders
Shareholdings
%*
1.
CTL CAPITAL HOLDING SDN BHD
58,124,543
9.53
2.
KOPERASI PERMODALAN FELDA MALAYSIA BERHAD
57,487,266
9.43
3.
AMSEC NOMINEES (TEMPATAN) SDN BHD
PLEDGED SECURITIES ACCOUNT - AMBANK (M) BERHAD FOR GL MANAGEMENT
AGENCY SDN BHD
35,396,883
5.80
4.
ALLIANCEGROUP NOMINEES (TEMPATAN) SDN BHD
PLEDGED SECURITIES ACCOUNT FOR CTL CAPITAL HOLDING SDN BHD
29,400,000
4.82
5.
GL MANAGEMENT AGENCY SDN. BHD.
23,121,760
3.79
6.
GL MANAGEMENT AGENCY SDN. BHD.
19,774,200
3.24
7.
LEE LIANG MONG
17,423,500
2.86
8.
ALLIANCEGROUP NOMINEES (TEMPATAN) SDN BHD
PLEDGED SECURITIES ACCOUNT FOR CTL CAPITAL HOLDING SDN BHD
16,600,000
2.72
9.
CITIGROUP NOMINEES (ASING) SDN BHD
EXEMPT AN FOR CITIBANK NEW YORK
9,853,400
1.62
10.
CITIGROUP NOMINEES (ASING) SDN BHD EXEMPT AN FOR CITIBANK NEW YORK
8,799,040
1.44
141
142
As at 30 June 2015
cont’d
30 LARGEST SHAREHOLDERS AS AT 30 JUNE 2015 cont’d
No.
Shareholders
Shareholdings
%*
11.
12.
TO TAI WAI
8,669,800
1.42
CITIGROUP NOMINEES (TEMPATAN) SDN BHD
EMPLOYEES PROVIDENT FUND BOARD
8,162,900
1.34
13.
MALACCA EQUITY NOMINEES (TEMPATAN) SDN BHD
EXEMPT AN FOR PHILLIP CAPITAL MANAGEMENT SDN BHD
4,979,400
0.82
14.
KONG CHIONG LEE
4,638,900
0.76
15.
CITIGROUP NOMINEES (TEMPATAN) SDN BHD
EMPLOYEES PROVIDENT FUND BOARD
4,619,500
0.76
16.
CHEW TING LENG
4,500,000
0.74
17.
GOH TEOH KEAN
4,500,000
0.74
18.
4,482,600
0.74
19.
AMTRUSTEE BERHAD FOR PACIFIC PEARL FUND
4,399,900
0.72
20.
HSBC NOMINEES (TEMPATAN) SDN BHD
HSBC (M) TRUSTEE BHD FOR AFFIN HWANG SELECT BALANCED FUND
4,168,500
0.68
21.
TAN ANG ANG
4,117,600
0.68
22.
MAYBANK NOMINEES (TEMPATAN) SDN BHD
MAYBANK TRUSTEES BERHAD FOR SAHAM AMANAH SABAH
4,060,500
0.67
23.
FREDDIE CHEW SUN GHEE
3,765,940
0.61
24.
TAN ANG ANG
3,672,400
0.60
25.
NG LEE LEE
3,656,241
0.60
26.
LIM SOON BENG
3,622,360
0.59
27.
CITIGROUP NOMINEES (ASING) SDN BHD
CBNY FOR DIMENSIONAL EMERGING MARKETS VALUE FUND
3,565,100
0.58
28.
MALACCA EQUITY NOMINEES (TEMPATAN) SDN BHD
EXEMPT AN FOR PHILLIP CAPITAL MANAGEMENT SDN BHD
3,493,000
0.57
29.
NG LEE LEE
3,478,382
0.57
30.
LEE LIANG MONG
3,394,100
0.55
365,927,715
59.99
TOTAL:
*
Annual Report 2015
ANALYSIS OF WARRANT HOLDINGS
As at 30 June 2015
No. Warrants Issued
Exercise Price of Warrants
Expiry Date of Warrants
No of Warrant Holders
:
:
:
:
74,816,370 Warrants 2010/2020
RM0.60
21/12/2020
1,247
DISTRIBUTION OF WARRANT HOLDINGS
No. of
Warrant
Holders
% of
Warrant
Holders
No. of
Warrant
Holdings
% of
Warrant
Holdings
<100
152
12.19
5,121
0.01
100 - 1,000
237
19.00
152,371
0.20
1,001 – 10,000
499
40.02
2,443,080
3.26
10,001 – 100,000
310
24.86
10,428,210
13.94
45
3.61
20,063,060
26.82
4
0.32
41,724,528
55.77
1,247
100.00
74,816,370
100.00
Size of Holdings
100,001 – < 5% issued Warrants
5% and above of issued Warrants
DIRECTORS’ INTERESTS IN WARRANTS AS AT 30 JUNE 2015
Direct
No. of
Warrants
Indirect
%
No. of
Warrants
%
No.
Names
1.
-
-
17,346,398
23.19
(a)
2.
-
-
12,838,130
17.16
(b)
3.
Tan Ang Ang
1,347,240
1.80
213,000
0.28
(c)
4.
To Tai Wai
2,111,880
2.82
-
-
5.
Ng Lee Lee
1,111,190
1.49
20,540
0.03
6.
Tan Sui Hin
15,000
0.02
-
-
7.
-
-
-
-
8.
Loh Wei Tak
-
-
-
-
(d)
Notes:
(a)
(b)
(c)
(d)
Deemed interested by virtue of his interest in CTL Capital Holding Sdn Bhd pursuant to Section 6A of the Act.
Deemed interested by virtue of his interest in GL Management Agency Sdn Bhd pursuant to Section 6A of the Act.
Deemed interested by virtue of his spouse Madam Yong Yui Kiew’s direct warrant holding in the Company pursuant to Section 134(12)
of the Act.
Deemed interested by virtue of her spouse, Wong Chong Peng’s direct warrant holding in the Company pursuant to Section 134(12) of
the Act.
143
144
ANALYSIS OF WARRANT HOLDINGS
As at 30 June 2015
cont’d
30 LARGEST WARRANT HOLDERS AS AT 30 JUNE 2015
Warrant
Holdings
%
17,346,398
23.19
PLEDGED SECURITIES ACCOUNT - AMBANK (M) BERHAD FOR GL MANAGEMENT AGENCY
SDN BHD
12,838,130
17.16
DB (MALAYSIA) NOMINEE (TEMPATAN) SENDIRIAN BERHAD
EXEMPT AN FOR KUMPULAN SENTIASA CEMERLANG SDN BHD
7,126,000
9.52
4.
DEUTSCHE BANK AG SINGAPORE FOR KSC (S) PTE LTD
4,414,000
5.90
5.
PLEDGED SECURITIES ACCOUNT-AMBANK (M) BERHAD FOR LEE LIANG MONG
3,652,750
4.88
6.
PLEDGED SECURITIES ACCOUNT-AMBANK (M) BERHAD FOR TO TAI WAI
2,111,880
2.82
7.
PLEDGED SECURITIES ACCOUNT - AMBANK (M) BERHAD FOR NG LEE LEE
1,111,190
1.49
8.
ANG HING TAY
1,045,300
1.40
9.
TAN ANG ANG
836,240
1.12
10.
ONG SOO THIAH
755,000
1.01
11.
EE LI CHEN
723,200
0.97
12.
CIMB GROUP NOMINEES (ASING) SDN. BHD.
CIMB COMMERCE TRUSTEE BERHAD FOR GLOBAL STRATEGIC GROWTH FUND
670,000
0.90
13.
WILLIE LAU CHIENG
649,100
0.87
14.
DEUTSCHE BANK AG SINGAPORE FOR KSC (S) PTE LTD
640,000
0.85
15.
BEH ENG PAR
530,000
0.71
16.
TAN ANG ANG
511,000
0.68
17.
AFFIN HWANG NOMINEES (TEMPATAN) SDN. BHD.
PLEDGED SECURITIES ACCOUNT FOR CHEAH YAW TONG
500,000
0.67
18.
GEORGE LEE SANG KIAN
460,160
0.61
19.
CHAN SIEW KUEN
433,000
0.58
20.
PLEDGED SECURITIES ACCOUNT FOR CHAN THIAN KIAT
399,900
0.53
21.
MERCSEC NOMINEES (TEMPATAN) SDN BHD
PLEDGED SECURITIES ACCOUNT FOR TNTT REALTY SDN BHD
350,000
0.47
22.
RHB CAPITAL NOMINEES (TEMPATAN) SDN BHD
PLEDGED SECURITIES ACCOUNT FOR FONG JONG HAN
300,000
0.40
23.
KONG CHIONG LEE
300,000
0.40
24.
LEE CHEE KEONG
233,500
0.31
25.
MAYBANK SECURITIES NOMINEES (TEMPATAN) SDN BHD
PLEDGED SECURITIES ACCOUNT FOR CHAN PEI LIN
215,000
0.29
26.
YONG YUI KIEW
213,000
0.28
27.
SUKHBIR SINGH A/L TARA SINGH
205,500
0.27
28.
QUAH CHOON HOOI
202,000
0.27
29.
TEO YONG FONG
200,050
0.27
30.
NG SENG NAM
200,000
0.27
59,172,298
79.09
No.
Warrant Holders
1.
2.
3.
TOTAL:
No. of ordinary shares held
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 Ninth
Annual General Meeting (“AGM”) of the Company to be held at Meeting Room 3, Level 3, Renaissance Johor Bahru Hotel, 2, Jalan
Permas 11, Bandar Baru Permas Jaya, 81750 Masai, Johor on Tuesday, 18 August 2015 at 10.30 a.m. My/our proxy/proxies is to
vote as indicated below:FIRST PROXY
FOR
AGAINST
SECOND PROXY
FOR
AGAINST
ORDINARY RESOLUTION
1.
To approve dividend for the financial year ended 28 February 2015.
2.
To approve the increase and payment of Directors’ fees from
RM168,000 up to RM180,000 for the financial year ending 29
February 2016.
3.
To re-elect Mr Tan Ang Ang who retires pursuant to Article 122.
4.
To re-elect Ms Ng Lee Lee who retires pursuant to Article 122.
5.
To re-appoint Messrs SJ Grant Thornton as Auditors and to authorise
the Directors to fix their remuneration.
SPECIAL BUSINESS
6.
To retain Mr Tan Sui Hin as Independent Non-Executive Director.
7.
To retain Mr Loh Wei Tak as Independent Non-Executive Director.
8.
Proposed Renewal of Share Buy-Back.
9.
Authority to issue shares by the Company pursuant to Section 132D of
the Companies Act, 1965.
(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). The first named proxy shall be entitled to vote on a show of
hands on my/our behalf.
Signature of Shareholder(s)/Common Seal
Signed this
day of
2015
Notes:
1.
For the purpose of determining a member who shall be entitled to attend, speak and vote at the AGM, the Company shall be requesting the
Record of Depositors as at 12 August 2015. Only a depositor whose name appears on the Record of Depositors as at 12 August 2015 shall be
entitled to attend the said meeting or appoint proxies to attend, speak and vote on his/her behalf.
2.
A member entitle to attend and vote at the Meeting is entitled to appoint up to two (2) proxies attend and vote in his/her stead 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. The provisions of Section 149(1)(a) & (b) of the Companies Act, 1965 shall not apply.
3.
Where a member is an authorised nominee as defined under the Securities Industry (Central Depositories) Act, 1991, it may appoint at least
one (1) proxy but not more than two (2) proxies in respect of each Securities account it holds with ordinary shares of the Company standing to
the credit of the said securities account.
4.
Where a member is an exempt authorised nominee, it may appoint multiple proxies for each omnibus account it holds.
5.
The instrument appointing a proxy shall be in writing under the hand of the appointer or his/her attorney duly authorised in writing or, if the
appointer is a corporation, either under the Corporation’s Common Seal or under the hand of an officer or attorney so authorised.
6.
The Proxy Form must be deposited at the Registered Office of the Company at 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.
Fold This Flap For Sealing
Then Fold Here
AFFIX
STAMP
THE SECRETARY
PANTECH GROUP HOLDINGS BERHAD (733607-W)
Level 15-2, Bangunan Faber Imperial Court
Jalan Sultan Ismail
50250 Kuala Lumpur
1st Fold Here

Annual Report 2015

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