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200601013856 (733607-W)

A n n u A l R e p o R t 2 0 2 0

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

PANTECH CORPORATION SDN. BHD. 198801008964 (176321-P)

Johor Bahru Head Office

PTD 204334 Jalan Platinum Utama Kawasan Perindustrian Pasir Gudang Zon 12B 81700 Pasir Gudang Johor Darul Takzim, Malaysia Tel : +607 259 7979 Fax : +607 256 7588/7589 Email : [email protected]

Shah Alam Office & Warehouse

No. 3, Jalan Trompet 33/8 Seksyen 33, 40400 Shah Alam Selangor Darul Ehsan, Malaysia Tel : +603 5192 7995 Fax : +603 5192 7992 Email : [email protected]

Port Klang Free Zone Warehouse

Persiaran Port Klang FZ 7, Jalan FZ 6-P1 Port Klang Free Zone / KS 12 42920 Pulau Indah Selangor Darul Ehsan, Malaysia Tel : +603 3101 3767 Fax : +603 3101 4767 Email : [email protected]

Pengerang Warehouse

Lot LO129, Kampung Bukit Gelugur 81600 Pengerang Johor Darul Takzim, Malaysia Tel : +6019 751 0988 Email : [email protected]

https://pantech-group.com/

PANTECH (KUANTAN) SDN. BHD. 199001000048 (191606-U)

Kuantan Sales Office & Warehouse Lot 5, Jalan Industri Semambu 2 Kawasan Perindustrian Semambu 25350 Kuantan Pahang Darul Makmur, Malaysia Tel : +609 568 7550 Fax : +609 568 7553 Email : [email protected]

PANAFLO CONTROLS PTE. LTD. (200413822 D)

No. 7, Soon Lee Street #04-42 ISpace Singapore 627608 Tel : +65 6562 3048 Fax : +65 6562 3148 Email : [email protected]

PANTECH INTERNATIONAL (KSA) SDN. BHD. 201001006051 (890670-K)

PTD 204334 Jalan Platinum Utama Kawasan Perindustrian Pasir Gudang Zon 12B 81700 Pasir Gudang Johor Darul Takzim, Malaysia Email : [email protected]

PANTECH STEEL INDUSTRIES SDN. BHD. 200001007126 (509731-A)

Manufacturer Lot 13258 & 13259 Jalan Haji Abdul Manan, Off Jalan Meru 42200 Kapar Selangor Darul Ehsan, Malaysia Tel : +603 3393 1633 Fax : +603 3392 8966 Email : [email protected]

PANTECH STAINLESS & ALLOY INDUSTRIES SDN. BHD. 200601013677 (733428-W)

Manufacturer PTD 204334 Jalan Platinum Utama Kawasan Perindustrian Pasir Gudang Zon 12B 81700 Pasir Gudang Johor Darul Takzim, Malaysia Tel : +607 251 8888 Fax : +607 251 9999 Email : [email protected]

NAUTIC STEELS LIMITED, UNITED KINGDOM (02302004)

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

PANTECH GALVANISING SDN. BHD. 201501036779 (1162100-W)

Hot-dip Galvanising Plant PLO 7, Jalan Rumbia 4 Kawasan Perindustrian Tanjung Langsat 81700 Pasir Gudang Johor Darul Takzim, Malaysia Tel : +607 257 5800 Fax : +607 257 5888 Email : [email protected]

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200601013856 (733607-W)

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Additional Compliance Statement 43Directors’ Responsibility Statement 44Financial Statements 45List of Properties 156Notice of Fourteenth Annual General Meeting 157Analysis of Shareholdings 161Analysis of Warrant Holdings 164Proxy Form

CONTENTSFinancial Highlights 2Corporate Information 3Group Structure 4Directors’ Profile 5Key Senior Management Profile 9Executive Chairman’s Statement 10Management Discussion and Analysis 12Sustainability Statement 15Corporate Events 28Audit Committee Report 29Statement on Risk Management and Internal Control 32Corporate Governance Overview Statement 35

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Pant e ch Group Holdings B erhadRegistration No. 200601013856 (733607-W)

FINANCIALHIGHLIGHTS

Ringgit Malaysia (RM'000)

FYE29 Feb 2016

FYE28 Feb 2017

FYE28 Feb 2018

FYE28 Feb 2019

FYE29 Feb 2020

Revenue 513,293 479,349 614,771 609,215 602,543

EBITDA 75,240 59,409 83,284 87,161 74,654

Profit Before Tax 53,076 39,096 58,133 60,792 46,023

Profit After Tax 37,945 28,409 45,680 47,458 36,002

Profit Attributable to Shareholders 37,973 29,718 47,127 47,458 36,002

Paid-Up Capital 123,294 203,929 207,544 208,298 209,920

Shareholders’ Equity 509,297 524,401 553,454 586,450 658,887

Total Assets 720,307 791,318 790,776 891,685 908,988

Total Net Tangible Assets 508,015 523,188 552,256 585,260 657,693

Total Borrowings 159,665 163,889 176,571 243,738 191,907

Basic Earnings Per Share (sen) 5.19 4.03 6.36 6.40 4.80

Diluted Earnings Per Share (sen) 5.19 3.79 6.08 6.32 4.78

Total Net Dividend Declared 16,528 12,069 18,574 14,970 14,087

Net Dividend Per Share (sen) 2.70 1.80 2.50 2.01 1.89

Net Tangible Assets Per Share (RM) 0.82 0.71 0.74 0.79 0.88

Total net dividend declared is

RM14.09 million,representing

39.1% of ourPAT

NTA stands atRM657.69 million,

translating to aNTA/share of

RM0.88

2016 2017 2018 2019 2020

513,293

479,349

614,771609,215

REVENUERM'000

2016 2017 2018 2019 2020

5.19

4.03

6.36

6.40

EARNING PER SHARESEN

2016 2017 2018 2019 2020

37,945

28,409

45,680

47,458

36,002

PROFIT AFTER TAXATIONRM'000

2016 2017 2018 2019 2020

509,297

524,401

553,454

586,

450

SHAREHOLDERS' EQUITYRM'000

586,450

658,887

602,543

4.80

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ANNUAL REPORT 2020

CORPORATEINFORMATION

BOARD OF DIRECTORS

Dato’ Chew Ting Leng Executive Chairman/ Group Managing Director

Dato’ Goh Teoh Kean Group Deputy Managing Director

Mr. Tan Ang Ang Executive Director

Mr. To Tai Wai Executive Director

Ms. Ng Lee Lee Executive Director

Mr. Lim Yoong Xao Independent Non-Executive Director

Dato’ Sri Yap Tian Leong Independent Non-Executive Director

Puan Nooraini Binti Mohd Yasin Independent Non-Executive Director

Puan Sakinah Binti Salleh Non-Independent Non-Executive Director

AUDIT COMMITTEE

Chairman

Mr. Lim Yoong Xao

Members

Dato’ Sri Yap Tian Leong

Puan Nooraini Binti Mohd Yasin

REMUNERATION COMMITTEE

Chairman


Members


Mr. Lim Yoong Xao

NOMINATING COMMITTEE

Chairman


Members

Mr. Lim Yoong Xao


COMPANY SECRETARIES

Ms. Siew Suet Wei (MAICSA 7011254)SSM Practicing Certificate No. 202008001690

Ms. Liang Siew Ching (MAICSA 7000168)SSM Practicing Certificate No. 202008000879

REGISTERED OFFICE

No. 5-9A The Boulevard Offices Mid Valley City, Lingkaran Syed Putra 59200 Kuala Lumpur

Tel No. : 03-2282 6331 Fax No. : 03-2201 9331

SHARE REGISTRAR

Tricor Investor & Issuing House Services Sdn Bhd Company No.: 197101000970 (11324-H)

Unit 32-01, Level 32, Tower AVertical Business Suite, Avenue 3 Bangsar South, No.8, Jalan Kerinchi 59200 Kuala Lumpur

Tel No. : 03-2783 9299 Fax No. : 03-2783 9222

PRINCIPAL BANKERS

Alliance Bank Malaysia Berhad

Alliance Islamic Bank Berhad

AmBank (M) Berhad

AmBank Islamic 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

SOLICITORS

Ng Kee Chong & Company

AUDITORS

Grant Thornton Malaysia PLT(Member Firm of Grant Thornton International Ltd)

Chartered Accountants Suite 28.01, 28th Floor, Menara Zurich15, Jalan Dato’ Abdullah Tahir80300 Johor Bahru, Johor Darul Takzim

STOCK EXCHANGE LISTING

Main Market Bursa Malaysia Securities Berhad

Stock Code: 5125

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GROUPSTRUCTURE

100% NAUTIC STEELS LIMITED

100%

100%

100% PANTECH (KUANTAN) SDN. BHD.

40% TUAH NUSA SDN. BHD.

100% PANTECH REALTY SDN. BHD.

Registration No. 200601013856 (733607-W)

100% PANTECH CORPORATION SDN. BHD.

100% PANTECH STEEL INDUSTRIES SDN. BHD.

100%PANTECH STAINLESS & ALLOY INDUSTRIES SDN. BHD.

100% PANAFLO CONTROLS PTE. LTD.

100% NAUTIC STEELS (HOLDINGS) LIMITED

100% PANTECH GALVANISING SDN. BHD.

100% NAUTIC STEELS SDN. BHD.

100% PANTECH INTERNATIONAL (KSA) SDN. BHD.

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ANNUAL REPORT 2020

DIRECTORS’PROFILE

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

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

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

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

He has more than 30 years of experience in the PVF solutions industry. He is one of the co-founders of the Group and was appointed as the Group Deputy Managing Director on 11 November 2006. He is responsible for the financial functions of the Group.



Mr. Adrian Tan was appointed as the Executive Director on 11 November 2006. He is responsible for M&A of the Group, 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.



DATO’ CHEW TING LENGExecutive Chairman/ Group Managing Director

Aged 65 | Male | Malaysian

DATO’ GOH TEOH KEANGroup Deputy Managing Director


TAN ANG ANGExecutive Director


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Directors’ Profile (cont’d)

Mr. David To was appointed as the Executive Director on 11 November 2006. He started his career in Pantech Corporation Sdn. Bhd. since 1989 and has more than 30 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.



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

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

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

Pn. Sakinah Binti Salleh was appointed as Non-Independent Non-Executive Director on 21 July 2016. She graduated from Mara University of Technology (UITM) with Bachelor (Hons) in Accountancy. She is a Chartered Accountant and a member of Malaysian Institute of Accountants (MIA) since 2002. She has a Master of Business Administration from International Teaching University of Georgia (University Institute for International and European Studies) since August 2017.

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

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



TO TAI WAIExecutive Director


NG LEE LEEExecutive Director

Aged 53 | Female | Malaysian

SAKINAH BINTI SALLEHNon-Independent Non-Executive Director


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ANNUAL REPORT 2020


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

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

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



Dato’ Sri Yap Tian Leong was appointed as an Independent Non-Executive Director on 26 July 2017. He is a member of the Malaysian Association of Company Secretaries (MACS), Malaysian Institute of Chartered Secretaries and Administrators (MAICSA), Malaysian Institute of Corporate Governance (MICG) and Institute of Corporate Directors Malaysia (ICDM). Apart from these, he is also a member of The Chinese Chamber Of Commerce & Industry of Kuala Lumpur & Selangor and Hong Kong-Malaysia Business Association.

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

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



LIM YOONG XAOIndependent Non-Executive Director


DATO’ SRI YAP TIAN LEONGIndependent Non-Executive Director


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

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

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

She is the Chairperson of the Remuneration Committee and a member of both the Audit and Nominating Committees.




NOORAINI BINTI MOHD YASINIndependent Non-Executive Director


OTHER INFORMATION:-

Directors’ ShareholdingsDetails of Directors’ Shareholdings in the Company are as disclosed on page 162 of the Annual Report 2020.

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

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

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

Attendance at Board MeetingsThe attendance of the Directors is disclosed in the Corporate Governance Overview Statement on page 39 of this Annual Report 2020.

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ANNUAL REPORT 2020

KEY SENIORMANAGEMENT PROFILE

Please refer to his Director’s Profile appearing in Page 5 of this Annual Report 2020.




Please refer to her Director’s Profile appearing in Page 6 of this Annual Report 2020.

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

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

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

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

DATO’ CHEW TING LENGExecutive Chairman/ Group Managing Director


DATO’ GOH TEOH KEANGroup Deputy Managing Director


TAN ANG ANGExecutive Director


TO TAI WAIExecutive Director


NG LEE LEEExecutive Director


WANG WOON CHINChief Financial Officer


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EXECUTIVE

CHAIRMAN’S STATEMENT

Dear Shareholders,

I am happy to be in the position to report another profitable financial year for Pantech Group.

Pantech Group earned a profit before tax (PBT) of RM46.02 million on the back

of RM602.54 million revenue in the financial year ended

29 February 2020 (FY2020). Against the previous fiscal year,

PBT contracted by 24.30% with a slight 1.10% slide in topline.

In a reversal of last year’s fortunes, the Manufacturing division turned a better

result upon resumption of shipments to the United States. Pantech Group was

vindicated in June 2019 when the United States Department of Commerce issued a final

affirmative anti-circumvention determination on carbon steel butt-weld pipe fittings from Malaysia

in our favour. It attests to our capability and approach to transparency in operations. I applaud the team’s

commitment for having the tenacity to persevere and emerge from this headwind for the better. The Manufacturing division saw

a 15.44% upturn in revenue while the Trading division performance contracted by 10.58%.

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ANNUAL REPORT 2020

Executive Chairman’s Statement (cont’d)

Pantech Group’s financial position remains healthy with gearing ratio strengthening to 0.29 from 0.42. Inventory management allowed for an improvement in greater liquidity and reduced working capital financing requirements. With over 30,000 types of products in store, Pantech Group’s value proposition as a One-Stop Centre for pipes, valves and fittings (PVF) is perpetuated. This is bolstered by the development of the new warehouse on the 7-acre land bank across from our head office in Zone 12B in Pasir Gudang and the acquisition of new machineries to increase product range.

Overall, the past fiscal year is one of mixed fortunes for the oil and gas industry. For the most part, Brent prices continued its stable trajectory, albeit slightly lower than the previous year, trading rangebound USD60. This stability was shattered when the coronavirus outbreak began at the turn of the new decade which took a toll across all sectors and the global economy, not least oil and gas which saw Brent prices sliding downwards toward zero.

OPEC and Russia’s continued compliance towards self-imposed production cuts have helped ease supply-side worries. However, the ongoing spat between the United States and China has led to some demand-side worry. Keeping tabs on the developments between these two superpowers is key as it could have implications that ripple worldwide.

We had managed to remain on course despite the challenges. Going forward, the coming fiscal year will reflect the turbulence of year 2020 – a year of acid bath for many industries and companies. It will be our prudence, stamina and resilience that have bore us through numerous upheavals that will see Pantech Group through once again.

Nevertheless, the performance of FY2020 allowed for shared prosperity even as Pantech Group conserves cash, resources and retained profits to fund investment to remain competitive and sustain business for the year ahead. Total dividend payout for FY2020, including share dividend, is approximately RM14.09 million, translating to 39.13% of Pantech Group’s profit after tax (PAT), in line with historical payout.

CORPORATE GOVERNANCE

Corporate governance best practices and ethical operations are deeply internalised values for Pantech Group. We temper our pursuit of maximising shareholder value with prudence and transparency, testament to our unwavering belief of championing integrity and core values in conducting ourselves appropriately in any scenario, regardless of external pressures, be it economic or societal. Pantech Group is resolute in safeguarding the goodwill and trust earned from our continued track record throughout as we understand the sanctity of its value.

Our corporate governance framework is premised on best practices in transparency and accountability, guided by Bursa Malaysia Securities Berhad’s Main Market Listing Requirements. Further reading on corporate governance matters and reports can be found on pages 35 to 42.

ACKNOWLEDGEMENT

Contribution of all stakeholders have been instrumental in enabling the accomplishment of the past year. On behalf Pantech Group, I extend my gratitude to the directors for their wise counsel, to the management and the team for their dedication and hard work, to the shareholders for their trust and most of all, to our customers who have shown us unwavering faith.

Pantech Group is built on cohesiveness and unity, and we appreciate the roles all our stakeholders play in ensuring we remain competitive in the industry by creating shared value for all stakeholders.

I would like to take this opportunity to also thank all Malaysians for their community spirit in the face of adversity. This unity, which was on full display during the Movement Control Order truly makes Malaysia unique and beautiful. We believe that Malaysians will be able to rebuild and regenerate the economy with our cohesiveness.

The months ahead will be akin to purification by fire and Pantech Group is ready at its core for the dross to be burned away and emerge stronger in the longer term. I am confident the board and management together with the team will be able to navigate through tumultuous periods and still deliver.

Dato’ Chew Ting Leng (Jimmy)Executive Chairman / Group Managing Director

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MANAGEMENT DISCUSSIONAND ANALYSIS

The past financial year 1 March 2019 to 29 February 2020 (FY2020) was an eventful one for Pantech Group as it marked the resumption of our carbon steel fittings exports to the United States (US) after a one-year exacting process since July 2018, which included scrutiny and validation by the United States Department of Commerce (US DOC).

The measures towards attaining the favourable final affirmative anti-circumvention determination on carbon steel butt-weld pipe fittings from Pantech Group proved our integrity and transparency. We have since taken the entire experience in our stride and come out the stronger for it. It has also given Pantech Group added vigour to remain steadfast on this path we have forged to continue returning positive results and shared value for all stakeholders.

BUSINESS AND OPERATIONS

As a One-Stop Centre for pipes, valves and fittings (PVF), Pantech Group has built an unrivalled reputation on the basis of this undisputed, unique value proposition. On top of PVF, we also manufacture and trade other components for the oil and gas industry, augmented by project management consultancy for fluid transmission solutions.

FY2020 was a period of stoking the embers to gradually ramp up production and export that were left to simmer throughout the episode with the US DOC. New customers, projects and relationships complemented existing ones fashioned over the years delivered orders that translated into revenue.

The Group’s performance draws parallels to the oil and gas industry as a whole. In lieu of traditional cyclical factors, our performance is linked to the sector and flows contingent on the robustness of ongoing oil and gas projects.

Two parallel but complementary core divisions make up Pantech Group’s business and operations:

Trading Division

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

Stocking inventory of exceeding 30,000 stock keeping units (SKU), Pantech Group also distributes for international reputable vendors. Items produced in our Manufacturing division are also traded through this sister division. A systematic warehouse management is employed to maintain optimum stock levels to service customer requirements with utmost efficiency and faster turnaround time.

Such a system is critical as our warehouses are strategically located in five locations, which are in a free trade zone or near ports or close to customer sites. We have also completed the RM15.3 million warehousing capacity expansion on the 7-acre land bank adjacent to our fully-developed 26-acre land which houses a consolidated trading, manufacturing and corporate administration office. This expansion has increased storage capacity, providing more space to hold the Group’s extensive product mix in a systematic arrangement which can expedite operations to further reduce turnaround time.

Manufacturing Division

Pantech Group’s Manufacturing division produces standard and customised ranges of pipes and fittings of various materials like carbon steel, stainless steel, nickel alloys, duplex and other alloys. In addition we also have a specialised facility to galvanise steel products. All items produced by the Manufacturing division, including elbows, tees, reducers, stub ends and end-caps, comply with all relevant international standards. Our factories are located in Pasir Gudang, Tanjung Langsat, and Klang, Malaysia, and Tamworth, United Kingdom (UK), with a total land area of approximately 153,000 square metres.

The management is very pleased with the outcome of the US DOC final affirmative anti-circumvention determination. The US DOC has verified Pantech Steel Industries Sdn. Bhd.’s (PSI) ability to trace country of origin of its shipments of its butt-weld pipe fittings and allows Pantech Group to continue exporting to the US without being subject to antidumping duty provided Pantech Group and its US importers provide the required certifications and documentation to the US Customs and Border Protection, and maintain certifications and supporting documentation to provide to US DOC upon request.

PSI immediately commenced shipments of its carbon steel butt-weld fittings to the US once again and this has had positive impact to the Group revenue in Q3 FY2020 as announced.

The activities at the PSI’s 21,000-metric tonne capacity manufacturing plant has normalised from the 30% level to 80% following the US DOC final determination. PSI has proven its credibility and capability to produce high quality products of international standards that bear the stamp of Made in Malaysia. PSI is ready to increase its output to reach its optimum capacity in the coming fiscal year, in tandem with increase in customer demand.

Pantech Stainless & Alloy Industries Sdn. Bhd. (PSA), which focuses on manufacturing stainless steel pipes and fittings, operated at 80% of its annual 18,000 metric tonne capacity in the financial year under review. The full positive impact of the new machines that were installed towards the end of the previous financial year was experienced in FY2020. Another RM3.8 million allocation in FY2020 for new machineries and other equipment has also been expended. Overall, production efficiency improved while the range of fittings and sizes being produced grew.

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ANNUAL REPORT 2020

Management Discussion And Analysis (cont’d)

Meanwhile Pantech Galvanising Sdn. Bhd. (PGSB) has maintained its 65% output of the 48,000-metric tonne capacity per annum. PGSB owns the largest hot-dip galvanising bath in Southern Peninsular Malaysia and the plant which became profitable last year continues to contribute to the bottom line of Pantech Group. During the year, it acquired a 2-acre land for RM3.8 million next to its existing factory as land bank for future expansion.

The fourth plant under Nautic Steels Limited (Nautic) is based in Tamworth, UK. It is a leading manufacturing of pipes, fittings, flanges and ancillary equipment for marine, offshore and hazardous environment. Its output remains stable at 65% of the 800-metric tonne annual capacity.

Taken together, both the Trading and Manufacturing divisions heighten our One-Stop Centre for PVF positioning.

Pantech Group continued to maintain presence in related international exhibitions to elevate the Pantech brand among industry players and customers. These events also generate new relationships. Among the select events we exhibited in were the Oil and Gas Exhibition (OGA) 2019 held in June 2019 at the Kuala Lumpur Convention Centre, the Stainless Steel World 2019 Conference & Expo in The Netherlands in November as well as the MPOB International Palm Oil Congress & Exhibition (PIPOC) 2019 held in the same month in Kuala Lumpur.

With an established track record built since 1987, Pantech products can today be found in 69 countries. Nevertheless, Malaysia remains the Group’s core market, contributing approximately 60% of the Group revenue.

FINANCIAL RESULTS & CONDITIONS

FY2020 was one of ramping up output at PSI and fulfilling orders following the challenging period at the carbon steel manufacturing front from July 2018 to June 2019.

A revenue of RM602.54 million was recorded by Pantech Group for FY2020, which is a marginal 1.10% decline from the preceding year. Profit before tax (PBT) was RM46.02 million, a RM14.77 million slide from the RM 60.79 million recorded in FY2019. The PBT margin of 7.64% is a reduction of 2.34% from the 9.98% posted in the previous financial year. This performance can be attributed to the drop in margins in both divisions. Diving into the segments, the Trading division turned in a respectable RM346.14 million in revenue with a segment profit of RM41.87 million despite the RAPID project concluding. This segment revenue and profit were 10.58% and 20.89% lower respectively. This performance translated to a segment profit margin of 12.10%, a slight dip of 1.57% compared to the 13.67% of FY2019. This can be attributed to lower sales volume while having the same operating cost base, and product mix optimisation due to trading with more non-oil and gas industries. The Trading division will continue to offer

project management services and partner customers for the maintenance needs. On the upside, Manufacturing division revenue recorded a considerable 15.44% increase, rising to RM256.41 million from RM222.11 million a year prior. This impressive performance contributed positively to the segment profit which was under pressure by the low 30% output during the US DOC preliminary affirmative anti-dumping determination. Lower utilisation of capacity does not give economies of scale that help margins. The segment profit margin came in at 6.82%, a decrease of 2.49% from the previous financial year’s.

The Group’s inventory continues to be extensive, supporting our One-Stop Centre positioning. Valued at RM305.25 million as at 29 February 2020, the inventory holding is lower by 14.32% compared to previous financial year but Pantech Group remains just as capable and able to meet customers’ demand for quick turnaround. This achievement is possible with close monitoring by the management team and courtesy of the inventory management system Pantech Group implemented.

Overall, Pantech Group managed to optimise our inventory level and strengthen our working capital management. A lower working capital borrowing gave rise to lower gearing. Together with a more efficient inventory and reduced receivables, we have greater liquidity. The improved working capital management including financing, is reflected in the cash at hand.

As at the end of FY2020, cash flow stood at RM88.70 million, which was 80.88% more than FY2019’s. This also enabled Pantech Group to reduce the gearing ratio down to 0.29 from 0.42, and maintain a healthy gearing consistently below 1.

With continued financial prudence and hard work to post profitability year after year, Pantech Group is able to share earned profits with loyal shareholders. For FY2020, Pantech Group has paid out the following dividends:

• Firstinterimsingletierdividendof0.50senperordinaryshare paid out on 24 October 2019 with total payout amounting approximately RM3.75 million

• Second interim single tier dividend of 0.50 sen perordinary share paid out on 17 January 2020 for a total payout amounting approximately RM3.75 million

• Thirdinterimsingletierdividendof0.50senperordinaryshare paid out on 10 April 2020 for a total payout amounting approximately RM3.72 million

In addition, a fourth interim dividend was announced via distribution of Treasury Shares on the basis of one (1) treasury share for every 100 existing ordinary shares held. Fractional entitlement will be rounded down or disregarded. Upon completion of transaction on 18 August 2020, total dividend payout for FY2020 approximates to RM14.09 million, or 39.13% of PAT. Last year total dividend declared was RM14.97 million. In comparison, the total payout for FY2019 was 31.50% of PAT.

14


Management Discussion And Analysis (cont’d)

CHALLENGES

Being an oil and gas industry supplier, our business correlates to oil prices. The crude oil prices in the year 2019 was stable albeit slightly lower, with the international benchmark averaging US$64 per barrel. Should the oil price continue fluctuating or drop significantly, it will affect the activities of the oil and gas industry and impact the demand of our products.

The recent pandemic has affected countries and businesses around the world. Activities at Pantech Group’s manufacturing plants ground to a halt for almost two months of the Movement Control Order (MCO) in Malaysia, where sales at both divisions trickled and logistics became a challenge. While a few orders came in, Pantech Group was unable to ship rapidly as workers were not allowed into the warehouse and plant. Customers affected by MCO also faced a tightening of purse strings in order to ensure going concern.

TRENDS AND OUTLOOK

The coronavirus pandemic has taken a high toll on the global economy. The International Monetary Fund (IMF) predicts a 3% contraction while the World Bank predicts a 5.2% contraction, the deepest slump since the Great Depression.

As nations around the world battled to contain pandemic, stay-at-home orders were issued. With varying degrees of lockdowns in place to curb the coronavirus’ spread, many commercial activities stopped and borders shut. This had a major impact on industries and every aspect of the economy. Commercial activities slowed and along with it, the demand for oil and gas.

The oil and gas industry took a beating at the height of the lockdowns. In April 2020, storage facilities could not cope with oil stockpiles, causing the US crude to drop to an unprecedented level, at negative value. Many day-to-day activities of producers were impacted; they had to pay to dispose of excess stock. Oil companies such as Shell and Exxon are making moves to counteract oversupply issues by delaying LNG project constructions.

Decisions such as these in turn affect equipment and service providers, contractors, storage and transportation companies, fleet operations, traders and marketers as the orders are delayed or cancelled.

Many oil and gas companies are implementing emergency measures to try and reduce the financial impact. In a report dated 1 May 2020, Offshore Technology noted that oil and gas producers have cut spending budgets by at least USD85 billion. Some companies are also taking this lull to conduct exercises to free up cash flow and increase liquidity access, such as right-sizing. Rystad analysts estimate such exercises to continue.

Counteracting this freefall in oil prices, the OPEC+ cartel struck a historic consensus to cut production in April. Production was meant to slowly taper from July onwards by more than 20% and since the agreement was sealed, Saudi Arabia took proactive measures with additional cuts and Gulf

allies the United Arab Emirates and Kuwait followed suit and pledged more cuts on top of what was promised.

On the whole, the sector is facing a historically difficult time in the wake of the coronavirus. As lockdown eased around the world, commercial activities restarted and demand for oil is recuperating. The demand for oil will recover as it is still the main source of energy powering industries.

This is evidenced by US crude climbing back to the USD40 a barrel range in mid-June with traders hopeful that global fuel demand will rebound more quickly than anticipated. This resurgence was aided by the historic OPEC+ deal struck in April as well as economies coming back online around the world.

Continued tensions between the US and China have implications for the world’s economy which gives rise to greater self-preservation policies. The posturing gave cause for concern and does not help a battered world economy, and can potentially affect our exports.

On local shores, private consumption is expected to weaken this year and Bank Negara Malaysia (BNM) has projected a slower economic growth at -2% to 0.5% in 2020, against 4.3% growth in 2019.

In other developments, Petronas revised its annual capex allocation downward by 21%. They attribute it to increasing risks of delay in some projects due to prolonged lockdowns globally and in Malaysia. Hence, the capex cut that comes together with a 12% operating expenditure cut bodes poorly for oil and gas suppliers focused on the local upstream space.

The road ahead is challenging for Pantech Group. Due to the impact of COVID-19 and the subsequent MCO implemented in Malaysia, the Group anticipates the first quarter of the new financial year to be severely impacted.

However, the Group has established itself over three decades, building a solid foundation and understanding of the industry and its needs. In the oil and gas industry, operations and maintenance are a necessity to ensure equipment compliance to safety standards, and enhance asset lifespan and efficiency which are integral to ensure continued cash flow generation from existing production assets. This is one aspect in which Pantech Group is poised to excel in, with warehouses in strategic locations to oil and gas projects to supply industry-certified PVF for maintenance works.

Complemented by a strong network of customers who trust in the Pantech brand, the Group is confident that it has the tenacity and stamina to ride out the storm. We are confident that new business opportunities will present itself in FY2021, and business will flow stronger in the second quarter of FY2021 onwards. We will continue investing into our core business to enhance our operational efficiency and productivity across our core businesses. As a whole, we will err on the side of caution before making any investment decision, and project another profitable year for the Group.

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ANNUAL REPORT 2020

Sustainability Statement

ABOUT THIS STATEMENT

Pantech Group continuously upholds its responsibility to conduct business in a sustainable and ethical manner. This is even more critical in view of its positioning as a One-Stop Centre for pipes, valves, fittings and other related components. This report is put together to reflect our sustainability efforts in a fair and balanced manner. This report marks our second Sustainability Statement in line with Bursa Malaysia’s listing requirements.

Pantech Group is committed to improving our reporting process every year as we believe that organizations play a pivotal role in creating value for its stakeholders. We prepared this Sustainability Statement by monitoring and managing our impact on economic, environmental, and social (“EES”) matters.

The Sustainability Statement comprises Pantech Group’s activities that were performed to maintain our relationship with the multiple stakeholders surrounding our operations. We recognise that an organization is part of the community and it is a fundamental responsibility to preserve the environment it operates in.

Pantech Group’s corporate structure can be found in pages 4.

Preparation of this Statement

The Statement was prepared in accordance with Bursa Malaysia Securities Berhad’s Main Market Listing Requirements (“Listing Requirements”) on Sustainability Reporting.

We have also referred to the framework and guidance provided by the Global Reporting Initiative (GRI) Standards to ensure the adequacy and transparency of our disclosures are in line with best practices.

The Statement is structured into four sections:

• ThefirstsectionintroducestheStatement;• Thesecondsectiondepictsthegovernancestructureresponsibleformonitoringandmanagingsustainabilitymatters;• Thethirdpresentsthemethodsthatweretakentoreview,updateandcategorisethematerialmatters;and• Thefinalsectionreportsonthepracticesandperformancerelatedtomanagementofmaterialsustainabilitymatters

SUSTAINABILITY GOVERNANCE

Board of Directors

SustainabilityManagement Commitee

Sustainability Taskforce

Coordinator

16


Sustainability Statement (cont’d)

Sustainability is engrained in the culture of Pantech Group and it cascades down from Executive Management. The Board of Directors has the overall accountability and responsibility for Sustainability within Pantech Group. They actively monitor sustainability strategies, policies, and management on economic, environmental, and social issues.

In FY2020, we established our own Sustainability Management Committee (SMC). The committee comprises representatives from the Board of Directors and is chaired by Group Managing Director, Dato’ Chew Ting Leng (Jimmy). The SMC meets bi-annually to review and evaluate the effectiveness and implementation of the Sustainability Strategy.

The Coordinator acts as an intermediary between the SMC and Sustainability Taskforce in communicating strategy and feedback. In addition, the Coordinator also actively participates in carrying out the Sustainability Strategy set by the committee.

The Sustainability Taskforce comprises senior management who are actively involved in the day-to-day operations of the business. They are the main driving force to execute the Sustainability Strategy, come up with action plans and guide the subsidiaries or departments involved in the implementation of the overall sustainability plan. The Sustainability Taskforce also assists in the overseeing of data collection on key indicators to be communicated to the SMC on a quarterly basis.

MATERIALITY ASSESSMENT

Materiality Assessment Process

Matters which are material to the organisation are decided upon by the Sustainability Management Committee during their regular meetings. We referred to Bursa Malaysia Securities Berhad’s Sustainability Reporting Guide and Toolkits, Global Reporting Initiative Sustainability Reporting Standards (“GRI Standards”), United Nations Sustainability Development Goals, and relevant industry-specific references and publications to update our material sustainability matters that are significant to Pantech Group’s business operations and can influence stakeholders’ decisions.

Based on the updates, the committee members come to a consensus on materiality assessment of the matters. Having monitored and reviewed material sustainability matters throughout the past year in its annual assessment, the committee agreed that there have been no substantial changes to the organisation’s business operations. The committee was guided by Bursa Malaysia’s Securities Berhad’s Listing Requirements which defined the matters as:

• Reflectingthebusiness’significantEESimpacts;and/or• Substantivelyinfluencingassessmentsanddecisionsofstakeholders

Scope of Reporting

The Sustainability Report represents Pantech Group’s disclosures of our sustainability performance for the financial period 1 March 2019 to 29 February 2020 and for subsidiaries of Pantech Group mentioned below, unless otherwise stated.

The basis of reporting covers subsidiaries which:

1. Have business operations within Malaysia.2. Have substantial magnitude revenue contribution or impact to Pantech Group.

The subsidiaries which fall under this scope are:

• PantechCorporationSdn.Bhd.• Pantech(Kuantan)Sdn.Bhd.• PantechStainless&AlloyIndustriesSdn.Bhd.• PantechSteelIndustriesSdn.Bhd.• PantechGalvanisingSdn.Bhd.

For this year’s report, the indicators disclosed included those in FY2018 and FY2019 for baseline comparison of data.

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ANNUAL REPORT 2020


Stakeholder Engagement

STAKEHOLDER GROUPS AREAS OF FOCUS ENGAGEMENT CHANNELS

EMPLOYEES • Careerdevelopmentandcareerprogression

• Performancemanagement

• Meetings

• Facetofacediscussions

• Learninganddevelopmenttrainings

• Workplaceconduciveness

• Occupationalsafetyandhealth

• Learninganddevelopmenttrainings

• Internalmemocirculation

• Employeewelfare

• Balancedlifestyle

• Festivalcelebrations

• Companyevents

• Employeesurveys

• Sportsactivities

INVESTORS AND SHAREHOLDERS

• Groupfinancialperformance

• Dividend

• Corporategovernanceandcompliance

• Businessstrategyandoutlook

• AGMandEGM

• AnnualReport

• Corporatewebsite

• Investorrelationsessions

• Companyannouncements

• Analystreportspublishedbyresearch houses

CUSTOMERS • Relationshipmanagement

• Qualityofproductsandservice

• Meetingandbusinesscommunication

• Customersatisfactionsurveys

• Exhibitions

• Customerfeedback

• Corporatewebsite

SUPPLIERS • Relationshipmanagement

• Qualityofproductsandservices

• Supplychainmanagement

• Corporategovernanceandcompliance

• Meetingandbusinesscommunication

• Supplierevaluationandregistration

GOVERNMENT AGENCIES AND REGULATORY BODIES

• Regulatorycompliance

• Wastemanagementandenvironmental compliance

• Labourpracticeandsafetycompliance

• Statutorysubmissions

• Inspectionsconductedbyauthorities

• Meetings/verbalcommunication

FINANCIERS • Financialperformances

• Debtmanagementandpaymentschedules

• Facilityreview

• Meetingsandbusinesscommunication

Pantech Group focuses on engaging its stakeholders in an inclusive and responsive manner to continuously build a relationship between Pantech Group and its stakeholders.

18


The SMC has identified stakeholders who are key to Pantech Group by utilising stakeholder mapping. The process identifies stakeholders according to their power and influence over Pantech Group.

The identified stakeholders are engaged over various frequencies spanning from weekly to annually. Stakeholder engagements are carried out at various locations of Pantech Group’s subsidiaries.

Materiality Matrix

The material sustainable matters surrounding Pantech Group are dynamic. We respond to this by conducting continuous reviews and evaluations. As a member of society, we must align our risk management and materiality assessment processes to achieve sustainable business growth and ultimately, our long-term objective.

It is imperative that the identification of materiality is performed as it helps businesses identify, refine, and prioritise EES risks and opportunities and map any emerging risks that may affect Pantech Group’s operations.

Guided by Bursa Malaysia Securities Berhad’s Sustainability Reporting Guide and Toolkits, Pantech Group has implemented a structured materiality assessment approach.

The following EES matters has been identified by the SMC with the participation of key internal stakeholders. These matters will receive close attention in the day-to-day operation of Pantech Group and will be closely monitored by the organisation.

ENVIRONMENTAL ECONOMIC SOCIAL

1. Energy 8. Procurement practices 11. Employment

2. Water 9. Economic performance 12. Labour practices/ Labour-Management Relations

3. Waste and effluents 10. Indirect economic impact 13. Occupational Safety and Health

4. Materials 14. Training and education

5. Emissions 15. Diversity and equal opportunity

6. Environmental compliance 16. Grievance mechanism

7. Transport 17. Anti-corruption/ bribery

18. Social compliance

19. Local communities

* The highlighted matters are prioritized based on the Materiality Assessment conducted


19

ANNUAL REPORT 2020


Based on engagements with Pantech Group’s stakeholders, the following prioritization of issues have been identified:

Materiality Matrix

Occupational Safety and Health

Energy

Waste and effluentsEmissions

Procument practicesTraining and Education

Labour practices

Importance to Pantech Group

Medium HighLow

Med

ium

Imp

ort

ance

to

Our

Sta

keho

lder

s

Hig

h

Diversity

Anti-corruptionGrievance mechanism

Social compliance

Transport

Economic performance

Employment

Indirect economic impact

Enviromental compliance

Materials

Local communities

Water

SUSTAINABLE BUSINESS GROWTH

Our Vision is to be an international leader in the provision of total solutions for fluid transmission systems. We have positioned ourselves as a One-Stop Centre whereby we actively trade and/ or manufacture pipes, fittings, flanges, valves and other components to service customers across the globe. We aim to drive long-term growth and profitability while considering EES impacts.

Quality Assurance and Professional Certification

As a supplier to a global customer base, compliance standards and regulations is of paramount importance. Each product complies to relevant global and industry standards and comes with its own certificate. These certificates are safely archived in a dedicated document library.

We emphasize maintaining an extensive and systematic archive of up-to-date documentation. This library of certificates and documentations can be called upon anytime to validate requirements by customers or authorities.

20



In terms of management, Pantech Group upholds proper business processes in adherence to best practices to satisfy efficient quality systems. We have been certified by various accredited certification bodies. These certifications provide quality assurance to our customers worldwide and are listed in the table below.

ENTITY CERTIFICATION CERTIFICATION BODY

PANTECH CORPORATION SDN. BHD.

ISO 14001:2015 SGS United Kingdom Ltd Systems & Services Certification

ISO 14001:2015 SGS (Malaysia) Sdn Bhd Systems & Services Certification

OHSAS 18001:2007, MS 1722:PART 1:2011

SGS (Malaysia) Sdn Bhd Systems & Services Certification

ISO 9001:2015 Lloyd's Register Quality Assurance Ltd

PANTECH STEEL INDUSTRIES SDN. BHD.


0038 / PED / MUM / 0810070 / 1 Lloyd's Register Quality Assurance Ltd

Approval of Manufacturer Certificate DNV GL Hamburg, Germany

PANAFLO CONTROLS PTE. LTD. ISO 9001:2015 Lloyd's Register Quality Assurance Ltd

PANTECH STAINLESS & ALLOY INDUSTRIES SDN. BHD.


ASTM A 312/A 312M & A 403/A403M

Sirim QAS International Sdn. Bhd.

SPAN Suruhanjaya Perkhidmatan Air Negara

0038 / PED / MUM / 1110006 / 1 Lloyd's Register Verification

Welded Pipes and Tubes in Austenitic Stainless Steel

Lloyd’s Register Verification

Approval for Water Supply Products Jabatan Air Negeri Sabah

Approval for Water Supply Products Pihak Berkuasa Air Negeri Sarawak

NAUTIC STEELS LIMITED ISO 9001:2015 Lloyd's Register Quality Assurance Ltd

PANTECH GALVANISING SDN. BHD.

ISO 9001:2015 Transpacific Certifications Limited

Good Procurement Practices

Our procurement process identifies suppliers that hold the relevant certifications that reflect our emphasis on compliance with regulations and standards. Pantech Group utilizes ISO certifications as basis of guidance to select our suppliers. When receiving goods, quality control (QC) checks are performed to ensure the quality of goods received matches that of the requirements.

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ANNUAL REPORT 2020


Responsible Materials Handling Process

Materials are sourced from vendors who are thoroughly vetted and reviewed prior to selection. The suppliers are selected based on quality of goods, instead of based on pricing alone. Pantech Group also ensures that these materials are obtained via responsible and ethical purchases.

Pantech Group ensures that each and every member of staff is committed to maintain the highest standards when handling materials. The production team will monitor the handling of materials during the production process. Any defect identified will be separated and disposed responsibly as scrap metal through a qualified provider.

ENVIRONMENTAL

Pantech Group is conscious of its responsibility in managing our environmental impact. In consideration to the nature of our business, in particular the Manufacturing Division, the environmental areas of key concerns are energy, water, effluents, and dust.

Energy

The nature of our manufacturing process requires high amount of energy. In addition to having an impact on the cost of production, this energy consumption contributes to our environmental footprint, especially in the event energy is wasted.

We have introduced several measures to reduce the consumption of energy in our core operations as well as non-core activities. During the past year, Pantech Group invested in new machinery to utilize energy more efficiently. The new machinery increased output while reducing energy consumption.

Additionally, we maintain our energy-efficient practices to reduce energy usage when operation areas are not in use. Translucent roofing in several warehouses help take advantage of Malaysia’s tropical climate and abundance of sunlight, lowering the need for extensive lighting.

Pantech Group’s reduction of 15.25% in energy consumption in FY2020 compared to FY2019 (kWh/Tonne production) was due to increased production efficiency. This is mainly attributable to Pantech Galvanising Sdn. Bhd. (PGSB) which recorded an increase in production of 27% and managed to reduce its energy consumption by 19%.

Electricity Usage kWh/Tonne Production*

Electricity Usage kWh/Tonne Production

FY2019 FY2020FY2018

500

450

400

350

300

250

200

150

100

50

0

* Measures only on manufacturing division

22



Water

Pantech Group subsidiaries Pantech Galvanising Sdn. Bhd. (PGSB) and Pantech Stainless & Alloy Industries Sdn. Bhd. (PSA) have rain harvesting systems complete with a collection, filtration, and storage system to reuse rainwater for operations and other activities. There are currently seven rainwater catchment tanks employed in both PGSB and PSA with each tank able to hold 10,000 gallons of water.

At the same time, we endeavour to reduce water usage for a double impact action – harvesting rainwater for use and reducing usage. In FY2020, our water usage decreased by 15% as FY2020 recorded a total usage of 47,437m3 compared to 55,779m3 in FY2019.

Water Usage M3/Tonne Production*

Water Usage M3/Tonne Production

FY2019 FY2020FY2018

1

0.8

0.6

0.4

0.2

0

1.2

1.4

1.6

Effluents, Waste and Emissions

Proper disposal of waste resultant of our manufacturing process is an emphasis. This waste may come in the form of solid or liquid, in which we have engaged licensed service providers to collect and manage in compliance with the required regulations.

PGSB and PSA have Industrial Effluent Treatment System with wastewater and sludge treatment facilities. The facilities can treat and neutralise up to 240 cubic metres of acid water from pickling tanks daily before it is discharged into general sewage. The treated sludge is then disposed to licensed vendors for proper handling and further processing.

During the financial year, PSA experienced a minor acid leakage. This was due to a crack in the concrete wall of the effluent pool. During the repair process, the acid was transferred to a temporary tank and the crack was filled. The effluent pool was then fitted with a stainless-steel tank to avoid any leaks and coated with fibre-reinforced-plastic (FRP) to avoid rust. Pantech Group also implements scrubber systems to neutralise and remove acid fumes emitted during the pickling process. The scrubber systems are complemented with dust collector systems which can filter the air and prevent dust particles generated by the manufacturing process being released, thereby minimizing emissions into the environment.

* Measures only on manufacturing division

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ANNUAL REPORT 2020


WORKPLACE MANAGEMENT

Pantech Group recognises that our employees represent a critical factor for the company to achieve our mission. As outlined in the Stakeholder Engagement section, we hold numerous activities throughout the year to actively support our employees and create a conducive workplace environment for them to perform efficiently. We are committed to fair employment practices, enhancing our employees’ skill sets and job enrichment.

Labour Practices

Pantech Group understands the value in investing in employees and is focused on attracting and retaining top talent. We develop employee skills and knowledge through training and workshops for their professional growth and provide adequate benefits to ensure they have room for personal development.

During the year under review, Pantech Group held numerous updates and trainings for our staff focusing on health, safety, and environment awareness (HSE) and personal protective equipment (PPE) trainings to increase proficiency in identifying and communicating potential hazards. These sessions also help employees refresh their know-how from previous trainings and provide an avenue for them to put learning to practice.

In addition to the training mentioned above, Pantech Group is committed to improve other aspects of our employees’ skills. We have organised training sessions to cover technical skills and soft/leadership skills. Technical skills training focused on areas such as forklift operation, crane operation, calibration techniques and inventory management whereas leadership skills training involved management courses, hiring solution workshops and legal and regulatory seminars.

The number of training hours provided to our staff is as follows:

Training Hours

Training hours per local employee

0

1

2

3

4

5

6

Total Number of hours ('000)

2018 2019 2020

24


Occupational Safety and Health

The wellbeing of Pantech Group staff is crucial, and we endeavour to provide a safe and conducive working environment to mitigate potential risk of unwanted incidences which can be detrimental to operations. Safety procedures are constantly being reviewed and updated where necessary to ensure the continued safety of staff.

Pantech Group adheres to the CARE policy:

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

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

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

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

Should any unforeseen incident occur, we provide a safe channel for employees to disclose them without fear of blame or repercussions.

It is on a dour note that the number of safety incidents has increased from 21 to 34 over the year and the Lost Time Injury Frequency Rate (LTIFR) subsequently followed suit. Pantech Group sees room for improvement in these two metrics and aims to further reduce the number of incidents and LTIFR in the coming years.

As mentioned in Labour Practices, Pantech Group mitigates the risk of accidents by instilling awareness through HSE and PPE training. Pantech Group’s Management is aware of the increase and is committed to improve occupational safety and health through various training and briefing sessions.

Safety Incidents

Lost Time Injury Frequency Rate (LTIFR)

0

5

10

15

20

25

30

Number of safety incidents

2018 2019 2020

35

40


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ANNUAL REPORT 2020


Diversity

Our business units cultivate an inclusive culture which values employees with different talents and experiences. Our hiring and appraisal process is based on merit without discrimination on the grounds of age, gender, national origin, ethnicity, or any other form.

We focus on succession planning with a larger proportion of a younger workforce in the mix, of which 77% of our employees are under 40 years old. We strive for inclusivity and our board of directors consists of 30% female directors, and will continue to align ourselves with relevant policies to encourage female employment on merit. As a proud Malaysian company, we take it upon ourselves to provide ample jobs for the local population; 63% of our management and skilled workforce are Malaysians.

The figures below give an overview of our employee demographics.

Local Employees by Gender

2019

■ Female■ Male

Local Employees by Gender

2020

■ Female■ Male

39% 40%

61% 60%

Breakdown of Staff

2019

■ Foreign■ Local

Breakdown of Staff

2020

■ Foreign■ Local

41% 37%

59% 63%

Local Employees by Age Group

2019

■ < 30■ 30 – 40■ 41 – 50■ > 50

Local Employees by Age Group

2020

32%

15%48%

5%

■ < 30■ 30 – 40■ 41 – 50■ > 50

33%

16%44%

7%

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Anti-Corruption and Bribery

Pantech Group maintains strict policies with its suppliers, contractors, and customers. Misconduct, if any, by any Pantech Group staff is dealt through an internal inquiry and the sternest action is meted out if and when the breach is validated.

We continue to abide to our Code of Ethics for all our staff and instil it through induction training and briefings.

There is a Whistle Blowing policy for staff to report any misconduct to senior management. No such incidents have been reported over the course of the year.

CORPORATE RESPONSIBILITY

Pantech Group is fully aware of our role in society and our operations have a far-reaching impact beyond just ourselves but to the community as a whole. In shouldering our responsibility beyond profitability in commerce and integrity in our operations throughout our 33 years in business, we have consistently taken actions that can contribute positively for the long-term sustainability of the nation’s socio-economy. In all our activities, we attempt to add value to environment, society, and the economy. Our activities are separated into Environmental related programmes and Society related programmes.

Environmental

Over the course of the past financial year, Pantech Group held two programmes which emphasise protection of the environment among our employees. The first programme, Eco-Awareness for the Environment, was undertaken to educate employees on the importance of and methods of reusing plastics. Among other things, this programme encouraged staff to adopt a plant-based diet, where possible, as a measure to mitigate climate change as industrial livestock is major producer of greenhouse gases.

Apart from the Eco-Awareness for the Environment, we also organised an Organic Waste Composting Project. We are delighted to report that the project was initiated and led by a group of our employees on a completely voluntary basis. They learned how to mix canteen food waste with garden soil, leaves, twigs, and newspapers for composting and to be used as fertiliser.

Demonstrating our concern for our neighbourhood, we lent a helping hand in preserving the riverbanks of Kampung Bakar Batu, Johor Bahru. Our employees collected and sorted the rubbish into different categories such as aluminium, glass, paper, and plastic. These items were then dropped off at various recycling bins in Pantech premises. In the process, the employees learned item classification and saw first-hand the damaging impact from improper waste disposal.


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ANNUAL REPORT 2020


Society

Pantech Group believes every effort and support matters when it comes to care for people. In collaboration with a group of about 30 volunteers, Pantech Group contributed 100 non-woven bags for a one-day medical outreach to the Orang Asli community in the remote area of Kg Gadak, Rompin, Pahang.

We also contributed to the National Stroke Association of Malaysia (NASAM), supporting the association’s message to the public that there is Life After Stroke Through Proper Rehabilitation. Pantech Group donated three wheelchairs to NASAM’s centre in Serene Park Johor Bahru. In similar vein of helping the efforts of non-governmental organisations, Pantech Group extended monetary contribution to the Johor Cerebral Palsy Association to help fund their operations.

We believe education changes lives. On this note, the Pantech Back to School Programme continues to encourage education for children. Focusing on our own confirmed employees who have children attending primary or secondary school, we provided subsidies to help parents prepare for the new school year for their children.

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CORPORATEEVENTS

Oil and Gas ExhibitiOn (OGa) 2019

KLCC, Malaysia

18 – 20 June 2019

stainlEss stEEl WOrld 2019 COnfErEnCE & ExpO

Maastricht, The Netherlands

26 – 28 November 2019

MpOb intErnatiOnal palM Oil COnGrEss & ExhibitiOn (pipOC) 2019

KLCC, Malaysia

19 – 21 November 2019

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ANNUAL REPORT 2020

AUDIT COMMITTEEREPORT

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

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

MEMBERSHIP

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

The members of the Audit Committee and details of their attendance at the Audit Committee Meetings during the financial year ended 29 February 2020 are as follows:

Name Designation Number of Meeting(s) Attended

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

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

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

^ Member of the Malaysian Institute of Accountants

MEETINGS

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

TERMS OF REFERENCE

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

30


Audit Committee Report (cont’d)

SUMMARY OF ACTIVITIES OF AUDIT COMMITTEE

In line with the Terms of Reference of the Audit Committee, the following is a summary of work undertaken by the Audit Committee during the financial year ended 29 February 2020 in discharging its functions and duties:

Date of Meeting Subject

24 April 2019 • ReviewofFourthQuarterResultsended28February2019• ExternalAuditStatusReportforFYE28February2019• ReviewofInternalAuditReport

12 June 2019 • ReviewofAuditedFinancialStatementsFYE28February2019• ReviewofAuditCommitteeReport• ReviewofStatementonRiskManagementandInternalControl• ReviewofRiskManagementReport• InternalAuditPlanFYE29February2020

25 July 2019 • ReviewofFirstQuarterResultsended31May2019

23 October 2019 • ReviewofSecondQuarterResultsended31August2019• ExternalAuditPlanforFYE29February2020• ReviewofInternalAuditReport

15 January 2020 • ReviewofThirdQuarterResultsended30November2019

1. Financial Reporting

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

b) The Audit Committee had on 12 June 2019 reviewed and made recommendation to the Board in respect of the annualAuditedFinancialStatementsoftheGroupandtheCompanyforthefinancialyearended28February2019to ensure that the financial statements of the Group and the Company give a true and fair view in accordance with MFRSs, International Financial Reporting Standards (“IFRS”) and the requirements of the Companies Act, 2016 in Malaysia.

2. Annual Reporting

The Audit Committee had on 12 June 2019 reviewed the Audit Committee Report and Statement on Risk Management & Internal Control in respect of the Annual Report 2019 to ensure compliance to the regulatory reporting requirements and recommended the same to the Board for approval.

3. External Audit

a) Deliberated on the external auditors’ report at its meeting on 12 June 2019 with regards to the relevant disclosures intheannualauditedfinancialstatementforthefinancialyearended28February2019.

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

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

d) Private sessions held with the external auditors, without the presence of the Executive Directors and management.e) Evaluated the external auditors’ independence and objectivity, as well as their ability to serve the Group in terms

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

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

g) On 23 October 2019, the Audit Committee discussed and reviewed the external auditors’ Audit Plan for the financial year ended 29 February 2020 outlining the auditors’ responsibilities, engagement team, significant risks and areas of audit focus, proposed scope of work, independence policies and procedures and audit fees.

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ANNUAL REPORT 2020

Audit Committee Report (cont’d)

SUMMARY OF ACTIVITIES OF AUDIT COMMITTEE (CONT’D)

4. Internal Audit

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

b) During the financial year ended 29 February 2020, the Audit Committee:

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

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

iii) Reviewed and approved the Risk Management Report.iv) Review and approved the Internal Audit Plan for the financial year ended 29 February 2020.

c) The cost incurred in respect of the internal audit function for the financial year ended 29 February 2020 was RM203,229.

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

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

and scope of audit work.

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

5. Related Party Transaction

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

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

Pursuanttoparagraph8.17(2)oftheListingRequirements,theAuditCommitteeverifiedthattheallocationofESOSasat 29 February 2020 is in compliance with the criteria for allocation of options pursuant to the ESOS Bye-Laws to ensure the quantum of ESOS offered is within the approved limit and to eligible employees only.

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

BOARD RESPONSIBILITY

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

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

ENTERPRISE RISK MANAGEMENT FRAMEWORK

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

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

INTERNAL AUDIT FUNCTION

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

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

Total cost incurred for the internal audit function in respect of the financial year ended 29 February 2020 was RM203,229.

STATEMENT ON RISK MANAGEMENTAND INTERNAL CONTROL

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ANNUAL REPORT 2020

KEY ELEMENTS OF THE GROUP’S INTERNAL CONTROL SYSTEM

• ResponsibilitiesoftheBoardandmanagementaredefinedtoensureeffectivedischargeofrolesandresponsibilities;

• TheBoardand theAuditCommitteemeeteveryquarter todiscussmatter(s) raisedbyManagementand/or InternalAuditoronbusinessandoperationalmattersincludingpotentialrisksandcontrolissues;

• TheBoard andAuditCommittee receive feedback from the External Auditor on the risk and control issues (if any)highlightedduringthecourseoftheirstatutoryaudit;

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

• ManagementreportstotheBoardonmaterialfindingsand/orvariances,ifany,andtheBoardwillreviewtheirimplicationstotheGroupandadviseaccordingly;

• Annualbudgetingprocessisinplaceandperformanceismonitoredonanongoingbasis;

• SeniorManagementattendsmanagementmeetingsonaregularbasistoaddressbudgets,operationalandfinancialperformance,businessplanning,controlenvironmentandotherkeyissues;

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

• Communicationchannelshavebeenestablishedbetweensubsidiaries,businessunits,divisionsandemployeesthroughinternalmemorandums,staffbriefingsandoperationalmeetingstoachievetheGroup’soverallbusinessobjectives;

• CloseandactiveinvolvementoftheExecutiveDirectorsontheday-to-daybusinessoperationsoftheGroup;

• Health, Safety and Environmental Committee has been established in order to review and ensure compliancewithoccupationalsafetyandhealthpoliciesandproceduresonacontinuousbasis;

• Systemaccess controls are established to ensure the information systemsareduly safeguardedand secured fromunauthorised access. Regular review on user access rights for the Enterprise Resource Planning Systems is also in place;and

• TheGroup has adopted awhistle blowing policy, providing an avenue for employees and external parties to raiseconcerns, in confidence, about actual or suspected misconduct, malpractice or irregularities in any matters related to the Group.

CONCLUSION

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

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

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

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

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REVIEW OF THE STATEMENT BY EXTERNAL AUDITORS

Pursuant to Paragraph 15.23 of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad, this Statement has been reviewed by the external auditors for inclusion in the Annual Report for the financial year ended 29 February 2020. The review was conducted in accordance with the Audit and Assurance Practice Guide 3 (“AAPG 3”): Guidance for Auditors on Engagements to Report on the Statement on Risk Management and Internal Control issued by the Malaysian Institute of Accountants. Based on their review, the external auditors have reported to the Board that nothing had come to their attention that causes them to believe that this Statement is inconsistent with their understanding of the risk management and internal control processes implemented by the Group.

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

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ANNUAL REPORT 2020

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

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

The overview statement is to be read together with the CG Report 2020 (“CG Report”) of the Company which is available on the Company’s website at www.pantech-group.com. The detailed explanation on the application of the corporate governance practices are reported under the CG Report.

PRINCIPLE A: BOARD LEADERSHIP AND EFFECTIVENESS

PART I - BOARD RESPONSIBILITIES

Strategic plans and directions

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

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

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

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

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

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

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

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

CORPORATE GOVERNANCEOVERVIEW STATEMENT

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

PART I - BOARD RESPONSIBILITIES (CONT'D)

Chairman and Group Managing Director

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

Qualified and Competent Company Secretaries

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

Access to information and advice

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

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

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

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

Board Charter

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

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

Corporate Governance Overview Statement (cont’d)

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ANNUAL REPORT 2020


PART I - BOARD RESPONSIBILITIES (CONT'D)

Code of Ethics

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

Whistle-Blowing Policy

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

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

TheBoard ismindful of theprovisions ofSection 17Aof theMalaysianAnti-CorruptionCommission (“MACC”)Act 2009(Amendment2018)whichcome intoeffecton1June2020.TheBoardwillbereviewing itsexistingpoliciesaswellas itsbusinessprocessestoensurethattheyarecompliantandinlinewiththenewSection17AandadoptionoftheAnti-Briberyand Anti-Corruption Policy.

PART II - BOARD COMPOSITION

Board Composition and Balance

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

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

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

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


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PART II - BOARD COMPOSITION (CONT'D)

Tenure of Independent Non-Executive Directors

OurIndependentNon-ExecutiveDirectorswereallappointedon26July2017.Thus,thetenureoftheIndependentDirectorsdoes not exceed a cumulative term limit of nine (9) years.

In accordance with the Company’s Constitution, one-third (1/3) of the Directors shall retire by rotation from office and be eligible for re-election at the annual general meeting and all new Directors appointed by the Board are subject to re-election by shareholders at the first opportunity after their appointment. Furthermore, each Director shall retire from office at least once in every three (3) years.

Diverse Board and Senior Management Team

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

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

The composition of the Board which comprises nine (9) members can be dissected as below:

AGE GROUP GENDER ETHNICITY

41 - 50 2 Male 6 Malay 2

51 -60 2Female 3 Chinese 7

61-70 5

Gender Diversity Policy

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

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

Directors’ Commitment

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

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


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ANNUAL REPORT 2020



Directors’ Commitment (Cont'd)

During the financial year ended 29 February 2020, the attendance of each Director at Board and Committees meetings were as follows:

Board of Directors

Audit Committee

Nominating Committee

Remuneration Committee

Dato’ Chew Ting Leng 5/5 – – –

Dato’GohTeohKean 5/5 – – –

Tan Ang Ang 5/5 – – –

To Tai Wai 5/5 – – –

Ng Lee Lee 5/5 – – –

Sakinah binti Salleh 5/5 – – –

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

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

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

Chairman

Member

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

Nominating Committee (“NC”)

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

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

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

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

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


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Nominating Committee (“NC”) (Cont'd)

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

Director Programme Date

Dato’ Chew Ting Leng Workshop on “Smartthink : Synapse Your Thinking” 24 July 2019

Dato’GohTeohKean Workshop on “Smartthink : Synapse Your Thinking” 24 July 2019

Tan Ang Ang Workshop on “Smartthink : Synapse Your Thinking” 24 July 2019

WorkshoponCorporateLiabilityProvision(Section17A)of the MACC Act 2009 by Bursa Malaysia

5 November 2019

To Tai Wai Workshop on “Smartthink : Synapse Your Thinking” 24 July 2019

Ng Lee Lee Workshop on “Smartthink : Synapse Your Thinking” 24 July 2019

Sakinah Binti Salleh Workshop on “Smartthink : Synapse Your Thinking” 24 July 2019

MIA International Accountants Conference 2019 23 & 24 October 2019

Lim Yoong Xao Workshop on “Smartthink : Synapse Your Thinking” 24 July 2019

Securities Commission Malaysia's Audit Oversight Board Conversation with Audit Committee

22 November 2019

Dato’ Sri Yap Tian Leong Independent Directors’ Programme: The Essence of Independence by Bursa Malaysia

27June2019

Workshop on “Smartthink : Synapse Your Thinking” 24 July 2019

Demystifying the Diversity Conundrum: The Road toBusiness Excellence” by Bursa Malaysia

14 August 2019

ICDM International Directors Summit 2019 14 & 15 October 2019

Securities Commission Malaysia's Audit Oversight Board Conversation with Audit Committees

22 November 2019

Nooraini Binti Mohd Yasin Creative Problem Solving & Decision Making by SIDC 20 April 2019

AMLA 2001 and Code of Conduct for CMSRL Holders 28April2019

Workshop on “Smartthink : Synapse Your Thinking” 24 July 2019

Bursa Malaysia Thought Leadership Series: Sustainability-Inspired Innovations: Enablers of the 21st Century

23 September 2019

Annual Assessment

The Board conducted an annual assessment to evaluate the effectiveness of the Board and the Board Committees as well as the performance of each individual Director through the NC for the financial year ended 29 February 2020.

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

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


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ANNUAL REPORT 2020


PART III - REMUNERATION

Remuneration Committee (“RC”)

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

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

Remuneration Policy

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

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

Details of the remuneration of the Directors for the financial year under review are provided in the CG Report. The Board has identified our 5 Executive Directors as well as the Chief Financial Officer as the key Senior Management of the Group.

The disclosure of any Senior Management’s remuneration (other than our Executive Directors) will not be in the best interest of the Group as such disclosure is premised on the confidentiality of the remuneration package of the Senior Management.

PRINCIPLE B: EFFECTIVE AUDIT AND RISK MANAGEMENT

PART I - AUDIT COMMITTEE

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

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

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


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

PART II - RISK MANAGEMENT AND INTERNAL CONTROL FRAMEWORK

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

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

Further information on the Group’s risk management and internal control framework is made available in the Statement of Risk Management and Internal Control of this Annual Report 2020.

PRINCIPLE C: INTEGRITY IN CORPORATE REPORTING MEANINGFUL RELATIONSHIP WITH STAKEHOLDERS

PART I - COMMUNICATION WITH STAKEHOLDERS

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

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

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

PART II - CONDUCT OF GENERAL MEETINGS

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

Shareholderswill receiveannual reportsandnoticesofAGM,whichwillbesentoutat least28calendardaysbefore thedate of the AGM. In addition, the Notice of AGM and/or Extraordinary General Meeting (“EGM”) will be advertised in the newspapers. The Board encourages shareholders to attend the forthcoming AGM and undertakes to answer all questions raised by shareholders.

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

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

COMPLIANCE STATEMENT

Saved as disclosed above, the Board is satisfied that throughout the financial year ended 29 February 2020, the Company has applied the principles and recommendations of the corporate governance set out in MCCG, where necessary and appropriate.

This Statement is made in accordance with the resolution of the Board of Directors dated 15 July 2020.


43

ANNUAL REPORT 2020

ADDITIONAL COMPLIANCESTATEMENT

1. UTILISATION OF PROCEEDS

During the financial year ended 29 February 2020, there were no proceeds raised from any corporate proposal.

2. OPTIONS, WARRANTS OF CONVERTIBLE SECURITIES EXERCISED Duringthefinancialyearended29February2020,atotalof60unitsofWarrantsAand38unitsofWarrantsBwas

exercised at the conversion price of RM0.50 per unit.

During the financial year ended 29 February 2020, a total of 3,111,950 ESOS (Batch 1) and 29,400 ESOS (Batch 2) was exercised under the Company’s ESOS at the exercise price of RM0.415 per unit (Batch 1) and RM0.49 per unit (Batch 2) respectively.

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

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

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

Description

Number of Options(Since commencement of ESOS to

29 February 2020)

All Eligible Employeesincluding Directorsand Chief Executive

Directors andChief Executive

(a) Total options granted 69,023,000 13,600,000

(b) Total options exercised 10,298,450 2,175,000

(c) Total options outstanding 51,792,100 10,660,000 A total of 19,154,000 ESOS was granted during the financial year ended 29 February 2020.

In accordance with the Company’s ESOS Bye-Laws, not more than forty per centum (40%) of the Company’s ordinary shares available under the Scheme shall be allocated, in aggregate, to Directors and senior management of the Group. Since the commencement of the Scheme up to the financial year ended 29 February 2020, the Company has granted 36.44% of options to the Directors and senior management.

A total of 900,000 ESOS was granted to the Non-Executive Directors during the financial year ended 29 February 2020. No options were exercised by the Non-Executive Directors during the financial year.

4. MATERIAL CONTRACTS AND CONTRACTS RELATING TO LOANS

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

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

There was no RRPT entered during the financial year.

44


The Directors are required by the Companies Act 2016 ("the Act") to prepare the financial statements for each financial year which have been made out in accordance with applicable Malaysian Financial Reporting Standards ("MFRSs"), International Financial Reporting Standards ("IFRSs"), the requirements of the Act in Malaysia and the Main Market Listing Requirements of Bursa Malaysia Securities Berhad.

The Directors are responsible to ensure that the financial statements give a true and fair view of the state of affairs of the Group and of the Company at the end of the financial year, and of the results and cash flows of the Group and of the Company for the financial year.

In preparing the financial statements, the Directors have:

(i) adoptedappropriateaccountingpoliciesandappliedthemconsistently;(ii) madejudgementsandestimatesthatarereasonableandprudent;and(iii) prepared the financial statements on a going concern basis.

The Directors are responsible to ensure that the Group and the Company keep accounting records which disclose the financial position of the Group and of the Company with reasonable accuracy, enabling them to ensure that the financial statements comply with the Act.

The Directors are responsible for taking such steps as are reasonably open to them to safeguard the assets of the Group and of the Company and to detect and prevent fraud and other irregularities.

DIRECTORS’ RESPONSIBILITYSTATEMENTIn Respect of the Audited Financial Statements

45

FINANCIALSTATEMENTS Directors’ Report 46

Statement by Directors 53

Statutory Declaration 53

Independent Auditors’ Report 54

Statements of Financial Position58

Statements of Profit or Loss and Other Comprehensive Income 60

Statements of Changes in Equity62

Statements of Cash Flows66

Notes to the Financial Statements70

46


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 29 February 2020.

PRINCIPAL ACTIVITIES

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

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

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

RESULTS

Group Company RM RM

Profitforthefinancialyear 36,001,590 14,860,287

Attributable to:- OwnersoftheCompany 36,001,590 14,860,287

RESERVES AND PROVISIONS

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

DIVIDENDS

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

RM

Final single tier dividend of 1.0 sen per ordinary share in respect of the financialyearended28February2019andpaidon23August2019. 7,499,002

First interim single tier dividend of 0.50 sen per ordinary share in respect of the financialyearended29February2020andpaidon24October2019. 3,749,486

Second interim single tier dividend of 0.50 sen per ordinary share in respect ofthefinancialyearended29February2020andpaidon17January2020. 3,749,486

Third interim single tier dividend of 0.50 sen per ordinary share in respect ofthefinancialyearended29February2020andpaidon10April2020. 3,717,443

Fourth interim share dividend via distribution of treasury shares on the basis of 1 treasury shares for every 100 existing ordinary sharesinrespectofthefinancialyearended29February2020andwillbedistributedon18August2020.

The Directors do not recommend a final dividend in the respect of the financial year ended 29 February 2020.

47

ANNUAL REPORT 2020

Directors’ Report (cont’d)

DIRECTORS

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

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

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

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

DIRECTORS’ INTERESTS

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

Number of ordinary shares As at Share Exercise As at 1.3.2019 Dividend of ESOS (Sold) 29.2.2020

Dato’ Chew Ting Leng-directinterest 7,808,540 78,085 300,000 – 8,186,625- deemed interest through CTL CapitalHoldingSdn.Bhd. 132,948,174 1,329,480 – – 134,277,654- deemed interest through his daughter, Chew Zhiyin 150,000 1,500 – – 151,500

Dato’GohTeohKean-directinterest 6,108,540 61,085 – – 6,169,625- deemed interest through GL ManagementAgencySdn.Bhd. 95,839,830 958,398 – – 96,798,228

48


DIRECTORS’ INTERESTS (CONT’D)

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

Number of ordinary shares As at Share Exercise As at 1.3.2019 Dividend of ESOS (Sold) 29.2.2020

Tan Ang Ang-directinterest 12,258,253 122,581 – – 12,380,834- deemed interest through his spouse,YongYuiKiew 1,998,987 19,989 – – 2,018,976- deemed interest through his son, Jairus Tan Vern Hsein 150,000 1,500 – – 151,500 To Tai Wai-directinterest 14,305,587 143,054 – – 14,448,641

Ng Lee Lee-directinterest 8,733,632 87,335 – – 8,820,967- deemed interest through her spouse,WongChongPeng 192,764 1,927 – – 194,691

Lim Yoong Xao - deemed interest through his spouse, Wong Hui Chin 2,000 20 – – 2,020

Sakinah Binti Salleh - direct interest 90,000 900 – – 90,900

Number of ordinary shares under Employee Share Option Scheme Unexercised Unexercised as at as at 1.3.2019 Granted (Exercised) (Expired) (Lapsed) 29.2.2020

Dato’ChewTingLeng 1,700,000 300,000 (300,000) – – 1,700,000

Dato’GohTeohKean 1,400,000 300,000 – – – 1,700,000

TanAngAng 1,550,000 300,000 – – – 1,850,000

ToTaiWai 1,700,000 300,000 – – – 2,000,000

Ng Lee Lee 2,000,000 300,000 – – – 2,300,000

Sakinah Binti Salleh 210,000 – – – – 210,000

Dato’ Sri Yap Tian Leong – 300,000 – – – 300,000

Lim Yoong Xao – 300,000 – – – 300,000

Nooraini Binti Mohd Yasin – 300,000 – – – 300,000


49

ANNUAL REPORT 2020

DIRECTORS’ INTERESTS (CONT’D)

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

Number of Warrants A (2010/2020) As at As at 1.3.2019 (Exercised) (Sold) 29.2.2020

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

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

Number of Warrants B (2016/2021) As at As at 1.3.2019 (Exercised) (Sold) 29.2.2020

Dato’ Chew Ting Leng- direct interest 459,045 – – 459,045- deemed interest through CTL Capital HoldingSdn.Bhd. 11,079,014 – – 11,079,014 Dato’GohTeohKean- direct interest 459,045 – – 459,045- deemed interest through GL Management AgencySdn.Bhd. 7,986,651 – – 7,986,651 Tan Ang Ang-directinterest 533,768 – – 533,768- deemed interest through his spouse, YongYuiKiew 166,582 – – 166,582 To Tai Wai-directinterest 884,406 – – 884,406 Ng Lee Lee-directinterest 727,802 – – 727,802- deemed interest through her spouse, Wong Chong Peng 16,063 – – 16,063

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


50


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 disclosedinNote38totheFinancialStatements)byreasonofacontractmadebytheCompanyorarelatedcorporationwiththe Director or with a firm of which he is a member, or with a company in which he has a substantial financial interest.

DIRECTORS’ REMUNERATION

The Directors’ remuneration is disclosed in Notes 33 and 36 to the Financial Statements.

TheCompanymaintainsDirectors’andOfficers’liabilityinsuranceforpurposesofSection289oftheCompaniesAct,2016,throughout the financial year, which provides appropriate insurance cover for the Directors and Officers of the Company. The amount of insurance premium paid during the financial year amounted to RM32,446.

ISSUE OF SHARES AND DEBENTURES

During the current financial year, the Company had increased its issued and fully paid-up ordinary share capital from RM208,298,243toRM209,919,921bywayof:-

(a) 3,111,950 new ordinary shares arising from the exercise of employee’s share option (Batch 1) at an exercise price of RM0.415perordinaryshare;

(b) 29,400 new ordinary shares arising from the exercise of employee’s share option (Batch 2) at an exercise price of RM0.490perordinaryshare;and

(c) 98newordinarysharesarisingfromtheexerciseofwarrantsataconversionpriceofRM0.50perordinaryshare.

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

There were no issuance of debentures during the financial year.

TREASURY SHARES

TheshareholdersoftheCompany,throughtheAnnualGeneralMeetingheldon21August2008,approvedtheCompany’splan 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 25 July 2019. 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.

Duringthefinancialyearended29February2020,theCompanyrepurchased1,037,100ordinarysharesofitsissuedsharecapitalfromtheopenmarket.TheaveragepricepaidfortherepurchasedshareswasRM0.48pershare.Therepurchasedtransactions were financed by internally generated funds. These repurchased shares were held as treasury shares and treated inaccordancewiththerequirementsofSection127oftheCompaniesAct,2016.

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

As at financial year end, the number of ordinary shares issued and fully paid-up after deducting treasury shares against equity is749,190,693ordinaryshares.


51

ANNUAL REPORT 2020

OPTIONS GRANTED OVER UNISSUED SHARES

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

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

ThesalientfeaturesandothertermsoftheESOSaredisclosedintheNote37totheFinancialStatements.

WARRANTS

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

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

OTHER STATUTORY INFORMATION

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

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

(b) to ensure that any current assets which were unlikely to realise their values in the ordinary course of business as shown in the accounting records had been written down to an amount which they might be expected so to realise.

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

(a) which would render the amounts written off for bad debts or the amount of provision for doubtful debts in the financial statementsoftheGroupandoftheCompanyinadequatetoanysubstantialextent;or

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

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

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

In the opinion of the Directors:-

(a) no contingent liability or other liability has become enforceable or is likely to become enforceable within the period of twelve months after the end of the financial year which, in the opinion of the Directors, will or may affect the ability of the GroupandoftheCompanytomeettheirobligationsasandwhentheyfalldue;

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


52


OTHER STATUTORY INFORMATION (CONT’D)

In the opinion of the Directors (cont’d):

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

AUDITORS’ REMUNERATION

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

To the extent permitted by law, the Company has agreed to indemnify its auditors, Grant Thornton Malaysia PLT, as part of the terms of its audit engagement against claims by third parties arising from the audit (for an unspecified amount). No payment has been made to indemnify Grant Thornton Malaysia PLT for the financial year ended 29 February 2020.

SIGNIFICANT EVENTS

Significant events are disclosed in Note 43 to the Financial Statements.

AUDITORS

The Auditors, Grant Thornton Malaysia PLT (a conventional partnership was converted to a limited liability partnership on 1 January 2020) have expressed their willingness to continue in office.

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

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

Johor Bahru26 June 2020


53

ANNUAL REPORT 2020

IntheopinionoftheDirectors,thefinancialstatementssetoutonpages58to155aredrawnupinaccordancewithMalaysianFinancial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act, 2016 in Malaysia so as to give a true and fair view of the financial position of the Group and of the Company as at 29 February 2020 and of their financial performance and cash flows for the financial year then ended.

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

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

Johor Bahru26 June 2020

STATUTORYDECLARATION

I, Wang Woon Chin, being the Officer primarily responsible for the financial management of Pantech Group Holdings Berhad, dosolemnlyandsincerelydeclarethattothebestofmyknowledgeandbelief,thefinancialstatementssetoutonpages58to155 are correct and I make this solemn declaration conscientiously believing the same to be true and by virtue of the Statutory Declarations Act 1960.

Subscribed and solemnly declared by )the abovenamed at Johor Bahru in the )State of Johor this day of )26 June 2020 ) …………….………………………… WANG WOON CHIN (MIA No. 19232)

Before me:

VASANTHI A/P VADIVELOONo.J258Commissioner for Oaths

STATEMENT BYDIRECTORS

54


REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS

Opinion

We have audited the financial statements of Pantech Group Holdings Berhad (“the Company”), which comprise the statements of financial position as at 29 February 2020, and the statements of profit or loss and other comprehensive income, statements of changes in equity and statements of cash flows for the financial year then ended, and notes to the financial statements, includingasummaryofsignificantaccountingpolicies,assetoutonpages58to155.

In our opinion, the accompanying financial statements give a true and fair view of the financial position of the Group and of the Company as at 29 February 2020, and of their financial performance and cash flows for the financial year then ended in accordance with Malaysian Financial Reporting Standards (“MFRSs”), International Financial Reporting Standards (“IFRSs”) and the requirements of the Companies Act, 2016 in Malaysia.

Basis for Opinion

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

Independence and Other Ethical Responsibilities

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

Key Audit Matters

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

Impairment on doubtful receivables

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

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

Thebasisofmanagement’sjudgementovertherecoverabilityofbilledtradereceivablesaredisclosedinNotes3.8and45(c)to the Financial Statements.

INDEPENDENTAUDITORS’ REPORTTo the members of Pantech Group Holdings Berhad(Incorporated in Malaysia)

55

ANNUAL REPORT 2020

Key Audit Matters (cont’d)

Inventory valuation

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

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

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

Information Other than the Financial Statements and Auditors’ Report Thereon

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

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

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

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

Responsibilities of Directors for the Financial Statements

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

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

Independent Auditors’ Report (cont’d)

56


Auditors’ Responsibilities for the Audit of the Financial Statements

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

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

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

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

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

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

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

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

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

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

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


57

ANNUAL REPORT 2020

Other Matters

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

GRANT THORNTON MALAYSIA PLT DATO’ N.K. JASANI (201906003682&LLP0022494-LCA) (NO:708/03/22(J/PH)) CHARTEREDACCOUNTANTS(AF0737) CHARTEREDACCOUNTANT

Johor Bahru 26 June 2020


58


STATEMENTS OFFINANCIAL POSITIONAs at 29 February 2020

Group Company Note 2020 2019 2020 2019 RM RM RM RM

ASSETSNon-current assets Property,plantandequipment 5 343,538,547 230,563,255 – – Prepaidlandleasepayments 6 – 32,551,772 – – Capitalwork-in-progress 7 561,325 13,690,978 – – Investmentproperties 8 6,300,000 6,300,000 – – Investmentinsubsidiarycompanies 9 – – 244,860,458 244,860,458 Investmentinanassociatecompany 10 2,819,276 2,782,458 – – Goodwill on acquisition 11 1,194,131 1,190,129 – – Derivativesfinancialinstruments 12 20,481 43,015 20,481 43,015 Deferred tax assets 13 3,900 2,016,401 – –

Totalnon–currentassets 354,437,660 289,138,008 244,880,939 244,903,473

Current assets Inventories 14 305,254,321 356,265,984 – – Tradereceivables 15 111,279,091 129,804,623 – – Otherreceivables 16 12,763,025 26,176,237 17,859 5,595 Amount due from subsidiary companies 9 – – 32,049 5,211,122 Amountduefromanassociatecompany 10 35,710,624 36,517,705 – – Derivativesfinancialinstruments 12 74,912 796,810 74,912 35,449 Taxrecoverable 767,294 1,832,051 – – Fixeddepositswithlicensedbanks 17 2,616,452 2,546,650 – – Cashandbankbalances 18 86,084,929 48,606,847 2,270,000 1,859,094

Totalcurrentassets 554,550,648 602,546,907 2,394,820 7,111,260

Total assets 908,988,308 891,684,915 247,275,759 252,014,733

EQUITY AND LIABILITIESEQUITYSharecapital 19 209,919,921 208,298,243 209,919,921 208,298,243Treasuryshares 20 (892,115) (4,171,344) (892,115) (4,171,344)Revaluationreserve 21 61,749,741 12,134,168 – –Employeesshareoptionreserve 22 4,297,911 2,960,508 4,297,911 2,960,508Cashflowhedgereserve 23 95,393 839,825 95,393 78,464Warrantsreserve 24 14,748,618 14,748,628 14,748,618 14,748,628Exchangetranslationreserve 8,102,236 8,309,009 – –Unappropriatedprofit 25 360,865,640 343,330,869 12,193,506 16,049,594

Total equity 658,887,345 586,449,906 240,363,234 237,964,093

59

ANNUAL REPORT 2020


LIABILITIESNon-current liabilities Finance lease liabilities 26 – 5,104,325 – – Leaseliabilities 27 10,815,126 – – – Borrowings 28 48,525,308 43,750,027 510,000 2,550,000 Other payables 29 – 264,649 – – Deferredtaxliabilities 30 14,469,460 4,521,074 – –

Totalnon-currentliabilities 73,809,894 53,640,075 510,000 2,550,000

Current liabilities Tradepayables 31 24,949,183 34,238,989 – – Otherpayables 29 13,313,629 14,792,810 367,709 315,581 Amount due to subsidiary companies 9 – – – 424 Amountduetoanassociatecompany 10 88,845 319,874 – – Finance lease liabilities 26 – 2,464,310 – – Leaseliabilities 27 2,807,558 – – – Borrowings 28 129,758,561 192,419,404 2,061,828 7,147,383 Dividendpayable 3,717,443 3,776,960 3,717,443 3,776,960 Taxpayable 1,655,850 3,582,587 255,545 260,292

Totalcurrentliabilities 176,291,069 251,594,934 6,402,525 11,500,640

Total liabilities 250,100,963 305,235,009 6,912,525 14,050,640

Total equity and liabilities 908,988,308 891,684,915 247,275,759 252,014,733

Statements of Financial Position (cont’d)

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

60


STATEMENTS OF PROFIT OR LOSSAND OTHER COMPREHENSIVE INCOMEFor the financial year ended 29 February 2020


Revenue 32 602,542,770 609,214,562 20,611,309 19,767,593

Costofsales (475,933,153) (469,515,809) – –

Grossprofit 126,609,617 139,698,753 20,611,309 19,767,593

Otherincome 6,404,425 6,939,710 8,849 530

Financeincome 1,124,674 919,112 311,957 100,203

Sellinganddistributionexpenses (19,369,795) (19,114,817) – –

Administrationexpenses (54,588,014) (54,170,636) (4,739,246) (3,987,674)

Otherexpenses (3,017,234) (3,690,133) – (6,753)

Financecosts (11,177,831) (10,509,124) (465,663) (382,484)

Profitfromoperations 45,985,842 60,072,865 15,727,206 15,491,415

Shareofprofitinassociatecompany 36,818 719,293 – –

Profitbeforetax 33 46,022,660 60,792,158 15,727,206 15,491,415

Taxexpense 34 (10,021,070) (13,333,968) (866,919) (896,229)

Profitforthefinancialyear 36,001,590 47,458,190 14,860,287 14,595,186

Other comprehensive income/(loss), net of taxItems that will not be reclassified subsequently to profit or loss Revaluationoflandandbuildings 62,342,167 – – – Tax effect on item that will not be reclassifiedtoprofitorloss (12,477,038) – – – Realisation of revaluation reserve upon depreciation of revalued assets 249,556 199,004 – – Transfer of revaluation reserve to unappropriated profit (249,556) (199,004) – –

49,865,129 – – –

61

ANNUAL REPORT 2020

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


Items that may be reclassified subsequently to profit or loss Fairvalue(loss)/gainoncashflowhedge (744,432) (304,442) 16,929 181,821 Foreign currency translation differences forforeignoperations,netoftax (206,773) (1,237,262) – –

(951,205) (1,541,704) 16,929 181,821

Other comprehensive income/(loss) for the financial year, net of tax 48,913,924 (1,541,704) 16,929 181,821

Total comprehensive income for the financial year 84,915,514 45,916,486 14,877,216 14,777,007

Profit attributable to:- OwnersoftheCompany 36,001,590 47,458,190 14,860,287 14,595,186 Non-controlling interest – – – –

Profitforthefinancialyear 36,001,590 47,458,190 14,860,287 14,595,186

Total comprehensive income attributable to:-OwnersoftheCompany 84,915,514 45,916,486 14,877,216 14,777,007Non-controlling interest – – – –

Total comprehensive income for the financial year 84,915,514 45,916,486 14,877,216 14,777,007

Earnings per share attributable to owners of the CompanyEarnings per ordinary share-Basic(sen) 35 4.80 6.40 – –

-Diluted(sen) 35 4.78 6.32 – –


62


STATEMENTS OFCHANGES IN EQUITYFor the financial year ended 29 February 2020

A

ttrib

utab

le to

ow

ners

of t

he C

ompa

ny

N

on-d

istrib

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Di

strib

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le

Em

ploy

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Exch

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Un

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n-

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e Tr

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Reva

luat

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shar

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e W

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n pr

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d

cont

rollin

g To

tal

ca

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l sh

ares

re

serv

e re

serv

e re

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e re

serv

e re

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e pr

ofit

Tota

l in

tere

st

equi

ty

RM

RM

RM

RM

RM

RM

RM

RM

RM

RM

RM

Grou

p

Balan

ceat1

March

201

8207

,543

,729

(8

11,264

)12,33

3,17

2

2,080

,383

1,144

,267

14,74

8,62

8

9,546

,271

30

6,86

8,74

95

53,453

,935

–5

53,453

,935

Tran

sact

ions

with

ow

ners

:-

Shareop

tiongran

tedun

derE

SOS

–

–

–

1,027

,702

–

–

–

–

1,027

,702

–

1,027

,702

Exercis

eofESO

S754

,514

–

–

(147

,577

)–

–

–

–

606

,937

–

606

,937

Acqu

isitio

noftrea

surysh

ares

–

(3,360

,080

)–

–

–

–

–

–

(3,360

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)–

(3,360

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)

Final

single

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nd o

f 0.5

0 se

n

per o

rdina

ry sh

are

for t

he fin

ancia

l

yearend

ed28Fe

brua

ry201

8–

–

–

–

–

–

–

(3,719

,205

)(3

,719

,205

)–

(3,719

,205

)

First

inte

rim si

ngle

tier d

ivide

nd o

f

0.50

sen

per o

rdina

ry sh

are

for

th

e fin

ancia

l yea

r end

ed

28Feb

ruary2

019

–

–

–

–

–

–

–

(3,698

,909

)(3

,698

,909

)–

(3,698

,909

)

Seco

nd in

terim

shar

e div

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via

dist

ribut

ion o

f tre

asur

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the

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of 1

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for e

very

100

exis

ting

ordin

ary

sh

ares

for t

he fin

ancia

l yea

r

ende

d28

Feb

ruary2

019

–

–

–

–

–

–

–

(3,776

,960

)(3

,776

,960

)–

(3,776

,960

)

Totaltr

ansa

ction

swith

own

ers

754

,514

(3

,360

,080

)–

880

,125

–

–

–

(11,19

5,07

4)

(12,92

0,51

5)

–

(12,92

0,51

5)

Profi

tforth

efinan

cialyea

r–

–

–

–

–

–

–

47,45

8,19

047,45

8,19

0

–

47,45

8,19

0Ot

her c

ompr

ehen

sive

incom

e

forthe

finan

cialyea

r–

–

(199

,004

)–

(304

,442

)–

(1,237

,262

)199

,004

(1

,541

,704

)–

(1,541

,704

)

Tota

l com

preh

ensiv

e inc

ome

forthe

finan

cialyea

r–

–

(199

,004

)–

(304

,442

)–

(1,237

,262

)47

,657

,194

45

,916

,486

–

45,916

,486

Balan

ceat2

8Fe

brua

ry201

9208

,298

,243

(4

,171

,344

)12,13

4,16

8

2,960

,508

839

,825

14,74

8,62

8

8,309

,009

34

3,33

0,86

95

86,449

,906

–5

86,449

,906

63

ANNUAL REPORT 2020

Statements of Changes in Equity (cont’d)

A

ttrib

utab

le to

ow

ners

of t

he C

ompa

ny

N

on-d

istrib

utab

le

Di

strib

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Em

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Cash

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Exch

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Un

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Reva

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n pr

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d

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tal

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re

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Tota

l in

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equi

ty

RM

RM

RM

RM

RM

RM

RM

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(con

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Balan

ceat1

March

201

9208

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,243

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4,16

8

2,960

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839

,825

14,74

8,62

8

8,309

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34

3,33

0,86

95

86,449

,906

–5

86,449

,906

Tran

sact

ions

with

ow

ners

:-Sh

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tiongran

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SOS

–

–

–

1,653

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–

–

–

–

1,653

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–

1,653

,157

Iss

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shar

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o

exer

cise

of w

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59

–

–

–

–

(1

0)

–

–

49

–

4

9 Ex

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,619

–

–

(315

,754

)–

–

–

–

1,305

,865

–

1,305

,865

Ac

quisitio

noftrea

surysh

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–

(498

,689

)–

–

–

–

–

–

(498

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)–

(498

,689

)Sh

are

divide

nd vi

a dis

tribu

tion

of

trea

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n th

e ba

sis

of 1

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r eve

ry

100

exist

ing o

rdina

ry sh

ares

fo

r the

finan

cial y

ear e

nded

28

Feb

ruary2

019

–

3,777

,918

–

–

–

–

–

(958

)3,776

,960

–

3,776

,960

Fin

al sin

gle tie

r divi

dend

of 1

.0 se

n

per o

rdina

ry sh

are

for t

he fin

ancia

l

yearend

ed28Fe

brua

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9

–

–

–

–

–

–

–

(7,499

,002

)(7

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)–

(7,499

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st in

terim

sing

le tie

r divi

dend

of

0.5

0 se

n pe

r ord

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shar

e

for t

he fin

ancia

l yea

r end

ed

29Feb

ruary2

020

–

–

–

–

–

–

–

(3,749

,486

)(3

,749

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(3,749

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ngle

tier d

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nd

of 0

.50

sen

per o

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are

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r the

finan

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ear e

nded

29

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020

–

–

–

–

–

–

–

(3,749

,486

)(3

,749

,486

) –

(3,749

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terim

sing

le tie

r divi

dend

of

0.5

0 se

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inary

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for t

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29 F

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020

–

–

–

–

–

–

–

(3,717

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(3,717

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actio

nsw

ithown

ers

1,621

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3,279

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–

1,337

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–

(10)

–(1

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6,37

5)(12,47

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5)

–(1

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t for

the

finan

cial y

ear

–

–

–

–

–

–

–

36,

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590

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ome

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finan

cialyea

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–

49,61

5,57

3

–

(744

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)–

(206

,773

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–

48,91

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l com

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forthe

finan

cialyea

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–

49,61

5,57

3

–

(744

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,146

84

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–84,91

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9Fe

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0209

,919

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9,74

1

4,297

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95,39

314,74

8,61

8

8,102

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36

0,86

5,64

06

58,887

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–65

8,88

7,34

5

64



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March

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8207

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12,649

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Tran

sact

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with

ow

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Sha

reoptiongran

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derE

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–

–

1,027

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–

–

–

1,027

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ExerciseofE

SOS

754

,514

–

(147

,577

)–

–

–

606

,937

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uisitio

noftrea

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l sin

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28Feb

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19

–

–

–

–

–

(3,698

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Sec

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ever

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28

Feb

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19

–

–

–

–

–

(3,776

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)(3

,776

,960

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Totaltrans

actio

nsw

ithowne

rs

754

,514

(3

,360

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,125

–

–

(11,19

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4)

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Profitfo

rthe

fina

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r–

–

–

–

–

14,59

5,18

6

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5,18

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ther

com

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r

thefinan

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r–

–

–

181

,821

–

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Tota

l com

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e fo

r

thefinan

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r–

–

–

181

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–

14,595

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14

,777

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Balan

ceat2

8Fe

brua

ry201

9208

,298

,243

(4

,171

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)2,960

,508

78,46

4

14,74

8,62

8

16,049

,594

23

7,96

4,09

3

65

ANNUAL REPORT 2020


N

on-d

istr

ibut

able

Dis

trib

utab

le

Em

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9208

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(4

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78,46

4

14,74

8,62

8

16,049

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23

7,96

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3

Tran

sact

ions

with

ow

ners

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Sha

reoptiongran

tedun

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SOS

–

–

1,653

,157

–

–

–

1,653

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ExerciseofE

SOS

1,621

,619

–

(315

,754

)–

–

–

1,305

,865

Issu

ance

of s

hare

s pu

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nt to

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e of

war

rant

s 5

9

–

–

–

(10)

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4

9

Acq

uisitio

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–

–

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Sha

re d

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s fo

r the

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cialyea

rend

ed28Fe

brua

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9

–

3,777

,918

–

–

–

(958

)3,776

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Fina

l sin

gle

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per o

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9–

–

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pe

r ord

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nanc

ial y

ear

en

ded29

Feb

ruary20

20

–

–

–

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66


STATEMENTS OFCASH FLOwSFor the financial year ended 29 February 2020


OPERATING ACTIVITIES Profitbeforetax 46,022,660 60,792,158 15,727,206 15,491,415

Adjustments for:- Allowanceforimpairmentofreceivables 1,912,692 3,237,495 – – Baddebtswrittenoff 19 17,706 – – Inventorieswrittendown 3,137,227 2,536,300 – – Amortisationofprepaidlandleasepayments – 582,044 – – Depreciationofproperty,plantandequipment 14,858,729 16,438,348 – – Depreciation of right-of-use assets 3,431,064 – – – Interestexpense 10,341,450 9,348,400 465,087 380,634 Property,plantandequipmentwrittenoff 279,701 14,774 – – Reversalofinventorieswrittendown (1,013,690) (84,069) – – EmployeesShareOptionSchemeexpenses 1,653,157 1,027,702 1,653,157 1,027,702 Interestincome (1,124,674) (919,112) (311,957) (100,203) Shareofprofitfromassociatecompany (36,818) (719,293) – – Dividendincome – – (16,548,355) (15,626,040) Gain on disposal of property, plant and equipment (325,825) (90,765) – – Revaluation loss on property, plant and equipment 169,944 – – – Fair value loss on derivatives financial instruments – 4,400 – – Fair value loss adjustment on investment properties – 300,000 – – Allowance for impairment of receivables no longer required (2,569,246) (4,402,242) – – Unrealised (gain)/loss on foreign exchange (923,499) 1,515 – –

Operatingprofitbeforeworkingcapitalchanges 75,812,891 88,085,361 985,138 1,173,508

Changes in working capital:- Inventories 48,888,126 (82,623,859) – – Receivables 33,369,920 11,687,525 (12,264) 45,714 Payables (11,182,678) 2,379,127 (192,828) (38,036) Associatecompany 906,629 (30,068,479) – –

Cashflowsfrom/(usedin)operations 147,794,888 (10,540,325) 780,046 1,181,186

Taxrefunded 1,899,369 – – – Taxpaid (13,423,492) (15,866,518) (871,666) (948,972)

Net cash flows from/(used in) operating activities 136,270,765 (26,406,843) (91,620) 232,214

67

ANNUAL REPORT 2020

Statements of Cash Flows (cont’d)


INVESTING ACTIVITIES Dividendreceived – – 16,548,355 15,626,040 Interestreceived 1,124,674 919,112 311,957 100,203 Purchaseofproperty,plantandequipment A (12,032,820) (20,293,262) – – Proceeds from disposal of property, plant andequipment 1,166,947 114,500 – – Capitalwork-in-progressincurred (3,314,810) (13,775,093) – –

Netcashflows(usedin)/frominvestingactivities (13,056,009) (33,034,743) 16,860,312 15,726,243

FINANCING ACTIVITIES Repayment from/(Advance to) subsidiary companies – – 5,182,383 (5,193,245) Dividendpaid (14,997,974) (11,141,184) (14,997,974) (11,141,184) Proceedsfromissuanceofsharecapital 1,305,914 606,937 1,305,914 606,937 Purchaseoftreasuryshares (498,689) (3,360,080) (498,689) (3,360,080) Interestpaid (10,341,450) (9,369,817) (223,865) (330,003) Repaymentoffinanceleasecreditors – (2,742,828) – – Repaymentofleaseliabilities (3,107,876) – – – Drawndownofshort-termborrowings 274,503,785 56,363,448 – 5,069,389 Repaymentofshort-termborrowings (336,213,455) – (5,069,389) – Repaymentoftermloans (14,979,626) (13,311,491) (2,056,166) (2,058,758) Drawndownoftermloans 20,814,972 22,367,709 – –

Netcashflows(usedin)/fromfinancingactivities (83,514,399) 39,412,694 (16,357,786) (16,406,944)

CASH AND CASH EQUIVALENTS Netchanges 39,700,357 (20,028,892) 410,906 (448,487) Effectofexchangeratechanges (37,926) (1,155,187) – – Atbeginningoffinancialyear 49,038,950 70,223,029 1,859,094 2,307,581

Atendoffinancialyear B 88,701,381 49,038,950 2,270,000 1,859,094

NOTES TO THE STATEMENTS OF CASH FLOWS

A. PURCHASE OF PROPERTY, PLANT AND EQUIPMENT

Group Company 2020 2019 2020 2019 RM RM RM RM

Acquiredbymeansoffinanceleasearrangements 1,654,800 1,565,958 – –Addition to right-of-use in exchange for increased lease liabilities 44,244 –Cashpayments 12,032,820 20,293,262 – –

13,731,864 21,859,220 – –

68


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

B. CASH AND CASH EQUIVALENTS

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


Cashandbankbalances 86,084,929 48,606,847 2,270,000 1,859,094Fixed deposits with licensed banks 2,616,452 2,546,650 – – Bankoverdraft – (2,114,547) – –

88,701,381 49,038,950 2,270,000 1,859,094

Reconciliation of liabilities arising from financing activities

Group

Finance lease Lease Short-term creditors liabilities Term loans borrowings RM RM RM RM

At 1 March 2018 8,744,154 – 49,595,614 118,231,158Addition 1,565,958 – 22,367,709 56,363,448Repayment (2,742,828) – (13,311,491) –Foreignexchangemovement 1,351 – (21,417) 829,863

At 28 February 2019/1 March 2019 7,568,635 – 58,630,415 175,424,469EffectofadoptingofMFRS16 (7,568,635) 15,030,691 – –Addition – 1,699,044 20,814,972 274,503,785Repayment – (3,107,876) (14,979,626) (336,213,455)Foreignexchangemovement – 825 – 103,309

At 29 February 2020 – 13,622,684 64,465,761 113,818,108

Company

Short-term Term loans borrowings

At 1 March 2018 6,686,752 –Addition – 5,069,389Repayment (2,058,758) –

At 28 February 2019/1 March 2019 4,627,994 5,069,389Addition – –Repayment (2,056,166) (5,069,389)Foreign exchange movement

At 29 February 2020 2,571,828 –


69

ANNUAL REPORT 2020

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

C. CASH OUTFLOWS FOR LEASES AS A LESSEE Group

2020 2019 RM RM

Included in net cash from operating activities -Paymentrelatingtoshort-termleasesandlow-valueassets 663,048 –

Included in net cash used in financing activities -Interestpaidinrelationtoleaseliabilities 760,058 – -Paymentofprincipalportionofleaseliabilities 3,107,876 –

4,530,982 –



70


1. GENERAL INFORMATION

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

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

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

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

The financial statements were authorised for issue by the Board of Directors in accordance with a resolution of the Directors on 26 June 2020.

2. BASIS OF PREPARATION OF THE FINANCIAL STATEMENTS

2.1 Statement of compliance

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

2.2 Basis of measurement

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

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

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

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

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

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

NOTES TO THEFINANCIAL STATEMENTS- 29 February 2020

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ANNUAL REPORT 2020

Notes to the Financial Statements (cont’d)Notes to the Financial Statements (cont’d)

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

2.2 Basis of measurement (cont’d)

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

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

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

is unobservable.

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

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

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

2.3 Functional and presentation currency

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

2.4 MFRSs

2.4.1 Adoption of new or revised MFRSs

The Group and the Company have applied the following standards, amendments to published standards and IC Interpretations approved by Malaysian Accounting Standards Board (“MASB”) for the first time for the financial year beginning on 1 March 2019:

• MFRS16–Leases• AmendmentstoMFRS9–Prepayment Features with Negative Compensation• AmendmentstoMFRS119–Plan Amendment, Curtailment or Settlement• AmendmentstoMFRS128–Long-term Interests in Associates and Joint Ventures• AnnualImprovementstoMFRSs2015-2017Cycle• ICInterpretation23–Uncertainty over Income Tax Treatments

The adoption of the above MFRSs, amendments to published standards and IC Interpretations did not have any material impact on the current and prior year financial statements of the Group and the Company except for those explanations as disclosed in Note 4 to the Financial Statements.

72

Notes to the Financial Statements (cont’d)



2.4 MFRSs (cont’d)

2.4.2 Standards Issued But Not Yet Effective

The following are MFRSs, Amendments to MFRSs and IC Interpretations with effective dates on or after 1 January 2020 issued by MASB and they have not been early adopted by the Group and the Company. The Group and the Company intends to adopt these new standards, amendments to the published standards and interpretations, if applicable, when they become effective.

(a) Amendments effective for financial period beginning on or after 1 January 2020

• AmendmentstoMFRS2–Share-based Payment• AmendmentstoMFRS3–Business Combinations• AmendmentstoMFRS6–Exploration for and Evaluation of Mineral Resources• AmendmentstoMFRS7–Financial Instruments: Disclosures• AmendmentstoMFRS9–Financial Instruments• AmendmentstoMFRS14–Regulatory Deferral Accounts• AmendmentstoMFRS101–Presentation of Financial Statements• AmendmentstoMFRS108–Accounting Policies, Changes in Accounting Estimates and Errors• AmendmentstoMFRS134–Interim Financial Reporting• AmendmentstoMFRS137–Provisions, Contingent Liabilities and Contingent Assets• AmendmentstoMFRS138–Intangible Assets• AmendmentstoMFRS139–Financial Instruments: Recognition and Measurement• AmendmentstoICInterpretation12–Service Concession Arrangements• AmendmentstoICInterpretation19–Extinguishing Financial Liabilities with Equity Instruments• AmendmentstoICInterpretation20–Stripping Costs in the Production Phase of a Surface

Mine• AmendmentstoICInterpretation22–Foreign Currency Transactions and Advance Consideration• AmendmentstoICInterpretation132–Intangible Assets – Web Site Costs

(b) Amendments effective for financial period beginning on or after 1 June 2020

• AmendmenttoMFRS16–Leases for Covid 19-Related Rent Concessions

(c) MFRS effective for financial period beginning on or after 1 January 2021

• MFRS17Insurance Contracts

(d) Amendments effective for a date yet to be confirmed

• AmendmentstoMFRS10andMFRS128–Sale or Contribution of Assets between an Investor and its Associate or Joint Venture

(e) Amendments effective for financial period beginning on or after 1 January 2022

• AmendmentstoMFRSscontainedinthedocumententitled–Annual improvements to MFRS Standards 2018 – 2020

• AmendmentstoMFRS3–Business Combinations• AmendmentstoMFRS101–Classification of Liabilities as Current or Non-current• AmendmentstoMFRS116–Property, Plant and Equipment Proceeds before Intended Use• Amendments to MFRS 137 – Provision, Contingent Liabilities and Contingent Assets for

Onerous Contracts – Cost of Fulfilling a Contract

The initial application of these new MFRSs, amendments to the published standards and interpretations is not expected to have any material impact on the financial statements of the Group and the Company.

73

ANNUAL REPORT 2020



2.5 Significant Accounting Estimates and Judgements

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

2.5.1 Estimation uncertainty

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

Useful lives of depreciable assets

Themanagement estimates theuseful livesof theproperty, plant andequipment tobewithin3 to88years and reviews the useful lives of depreciable assets at each reporting date. At 29 February 2020, the management assesses that the useful lives represent the expected utility of the assets to the Group. The carrying amounts are analysed in Note 5 to the Financial Statements. Actual results, however, may vary due to change in the expected level of usage and technological developments, which result in adjustment to the Group’s assets.

The management anticipate that the expected useful lives of the property, plant and equipment would not have material difference from their estimates and hence it would not result in material variance in the Group’s profit for the financial year.

Impairment of inventories

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

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

A 2% (2019: 2%) difference in the management’s estimation of net realisable values of the inventories would resultinapproximately0.17%(2019:0.11%)varianceintheGroup’sprofitforthefinancialyear.

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

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

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

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

74




2.5 Significant Accounting Estimates and Judgements (cont’d)

2.5.1 Estimation uncertainty (cont’d)

Impairment of property, plant and equipment

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

Impairment of non-financial assets

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

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

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

Income taxes/Deferred tax liabilities

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

Deferred tax assets Deferred tax assets are recognised for all deductible temporary differences, unutilised tax losses,

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

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

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ANNUAL REPORT 2020




2.5.1 Estimation uncertainty (cont’d)

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 analysisandthecarryingamountsaredisclosedinNote37totheFinancialStatements.

Fair value measurement and valuation processes

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

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

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

andliabilitiesaredisclosedintheNotes5and8totheFinancialStatements.

Leases – Estimating the incremental borrowing rate

The Group cannot readily determine the interest rate implicit in the lease, therefore, it uses its incremental borrowing rate (“IBR”) to measure lease liabilities. The IBR is the rate of interest that the Group would have to pay to borrow over a similar term, and with a similar security, the funds necessary to obtain an asset of a similar value to the right-of-use asset in a similar economic environment. The IBR therefore reflects what the Group ‘would have to pay’, which requires estimation when no observable rates are available (such as for Group that do not enter into financing transactions) or when they need to be adjusted to reflect the terms and conditions of the lease (for example, when leases are not in the Group’s functional currency). The Group estimate the IBR using observable inputs (such as market interest rates) when available and is required to make certain entity-specific estimates (such as the Group’s stand-alone credit rating).

2.5.2 Significant management judgements

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

76





2.5.2 Significant management judgements (cont’d)

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.

3.1 Consolidation

3.1.1 Subsidiary companies

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

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

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

77

ANNUAL REPORT 2020


3. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

3.1 Consolidation (cont’d)

3.1.2 Basis of consolidation

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

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

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

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

3.1.3 Business combinations and goodwill

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

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

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

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

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

78





3.1.3 Business combinations and goodwill (cont’d)

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

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

3.1.4 Loss of control

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

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

3.1.5 Associate company

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

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

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

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

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

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3.1.5 Associate company (cont’d)

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.

3.2 Property, plant and equipment

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

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

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

The principal annual depreciation rates used are as follows:-

Buildings 2.00% - 5.50%Renovation, warehouse extension and electrical installation 10.00% - 33.33%Computers and software 20.00% - 33.33%Crane,plantandmachinery 7.00%-20.00%Factory equipment 10.00% - 25.00%Office equipment, telecommunication system, furniture and fittings 10.00% - 20.00%Forklift and motor vehicles 20.00% - 25.00%Leaseholdland 59-88years

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3.2 Property, plant and equipment (cont’d)

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

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

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

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

3.3 Investment properties

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

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

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

3.4 Inventories

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

The costs of inventories are determined on weighted average method.

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

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

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

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3.5 Assets acquired under lease agreements

Accounting policies applied until 28 February 2019

The Group as lessee

Finance leases

Property, plant and equipment acquired under lease arrangements which transfer substantially all the risks and rewards of ownership to the Group are classified as finance leases. The leased asset is measured at fair value of the leased asset or, if lower, at the present value of the minimum lease payments at inception. Initial direct costs are added to the amount recognised above. Leased asset is accounted in accordance with accounting policy applicable to that asset.

Leased payments are apportioned between the finance charges and reduction of the lease liability to achieve a constant rate of interest on the remaining balance of the liability. Outstanding obligation due under finance lease arrangements after deducting finance expenses are included as liabilities in the financial statements. Finance charges on finance lease arrangements are allocated to profit or loss over the period of respective agreements.

The property, plant and equipment acquired under finance leases is depreciated over the shorter of the useful life of the asset and the lease term if there is no reasonable certainty that the Group will obtain ownership at the end of the lease term.

Operating leases

Leases in which the Group does not assume substantially all the risk and benefits of ownership are classified as operating lease, except for property interest held under operating lease, the leased assets are not recognised on the statement of financial position. Property interest held under an operating lease, which is held to earn rental income or capital appreciation or both, is classified as investment property and measured using fair value model.

Payments made under operating leases are recognised in profit or loss on straight-line basis over the lease period. Lease incentives received are recognised in profit or loss as an integral part of the total lease expense, over the term of the lease. Contingent rentals are charged to profit or loss in the reporting period in which they are incurred.

Leasehold land at cost

Leasehold land that normally has an indefinite economic life and title is not expected to pass to the Group by the end of the leases term is treated as operating lease. The payment made on entering into or acquiring a leasehold landisaccountedforasprepaidlandleasepaymentandisamortisedovertheleasetermbetween59to88years.

The Group as lessor

Where the Group acts as lessor in an operating lease arrangement, rental income from operating leases is accounted for on a straight-line basis over the period of the lease. Lease incentives provided are recognised over the lease term on a straight-line basis.

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3.5 Assets acquired under lease agreements (cont’d)

Accounting policies applied from 1 March 2019

The Group as lessee

For any new contracts entered into on or after 1 March 2019, the Group considers whether a contract is, or contains a lease. A lease is defined as ‘a contract, or part of a contract, that conveys the right to use an asset (the underlying asset) for a period of time in exchange for consideration.

To apply this definition, the Group assesses whether the contract meets three key evaluations which are whether:-

• The contract contains an identified asset, which is either explicitly identified in the contract or implicitlyspecified by being identified at the time the asset is made available to the Group.

• TheGrouphastherighttoobtainsubstantiallyalloftheeconomicbenefitsfromuseoftheidentifiedassetthroughout the period of use, considering its rights within the defined scope of the contract.

• TheGrouphastherighttodirecttheuseoftheidentifiedassetthroughouttheperiodofuse.TheGroupassesses whether it has the right to direct ‘how and for what purpose’ the asset is used throughout the period of use.

Measurement and recognition of leases as a lessee

At lease commencement date, the Group recognises a right-of-use asset and a lease liability on the statement of financial position. The right-of-use asset is measured at cost, which is made up of the initial measurement of the lease liability, any initial direct costs incurred by the Group, an estimate of any costs to dismantle and remove the asset at the end of the lease, and any lease payments made in advance of the lease commencement date (net of any incentives received).

The Group depreciates the right-of-use assets on a straight-line basis from the lease commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. The Group also assesses the right-of-use asset for impairment when such indicators exist.

At the commencement date, the Group measures the lease liability at the present value of the lease payments unpaid at that date, discounted using the interest rate implicit in the lease if that rate is readily available or the Group’s incremental borrowing rate.

Lease payments included in the measurement of the lease liability are made up of fixed payments (including in substance fixed), variable payments based on an index or rate, amounts expected to be payable under a residual value guarantee and payments arising from options reasonably certain to be exercised.

Subsequent to initial measurement, the liability will be reduced for payments made and increased for interest. It is remeasured to reflect any reassessment or modification, or if there are changes in in-substance fixed payments.

When the lease liability is remeasured, the corresponding adjustment is reflected in the right-of-use asset, or profit and loss if the right-of-use asset is already reduced to zero.

The Group has elected to account for short-term leases and leases of low-value assets using the practical expedients. Instead of recognising a right-of-use asset and lease liability, the payments in relation to these are recognised as an expense in profit or loss on a straight-line basis over the lease term.

On the statement of financial position, right-of-use assets have been included in property, plant and equipment.

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3.5 Assets acquired under lease agreements (cont’d)

Accounting policies applied from 1 March 2019 (cont’d)

The Group as lessor

TheaccountingpolicyunderMFRS16hasnotchangedfromthepreviousaccountingpolicyunderMFRS17forlessor accounting.

Where the Group acts as lessor in an operating lease arrangement, rental income from operating leases is accounted for on a straight-line basis over the period of the lease. Lease incentives provided are recognised over the lease term on a straight-line basis.

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 company, then the relevant proportionate share of the translation difference is allocated to the non-controlling interests. When a foreign operation is disposed of such that control, significant influence or joint control is lost, the cumulative amount in the foreign currency translation reserve related to that foreign operation is reclassified to profit or loss as part of the profit or loss on disposal.

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

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

3.7 Taxes

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

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

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

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

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

Indirect taxes

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

TheMalaysianGovernmenthaszeroratedtheGSTeffectivefrom1June2018.ThismeansthattheGSTrateonthe supplies of goods or services or on the importation of goods has been revised from 6% to 0%.

TheGSThasbeenreplacedwithSalesandServicesTax(“SST”)effectivefrom1September2018.Therateforsales tax is fixed at 5% or 10% while the rate for services tax is fixed at 6%.

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3.7 Taxes (cont’d)

Indirect taxes (cont’d)

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

(i) where the GST/SST incurred in a purchase of assets or services is not recoverable from the authority, in which case the GST/SST is recognised as part of the cost of acquisition of the assets or as part of the expenseitemasapplicable;and

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

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

3.8 Financial instruments

3.8.1 Financial assets

3.8.1.1 Classification

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

The Group and the Company classify their financial assets in the following measurement categories:-

• Those to be measured subsequently at fair value (either through other comprehensiveincome(“OCI”)orthroughprofitorloss);and

• Thosetobemeasuredatamortisedcost.

3.8.1.2 Recognition and derecognition

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

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

3.8.1.3 Initial measurement

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

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3.8 Financial instruments (cont’d)

3.8.1 Financial assets (cont’d)

3.8.1.4 Subsequent measurement

Financial assets are subsequently measured at the four categories:-

(i) Amortised cost

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

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

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

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

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

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

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

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

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

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3.8.1.4 Subsequent measurement (cont’d)

Financial assets are subsequently measured at the four categories:- (cont’d)

(iv) FVTPL Financial assets that do not meet the criteria for amortised cost or FVTOCI are measured

at FVTPL. The Group may also irrevocably designate financial assets at FVTPL if doing so significantly reduces or eliminates a mismatch created by assets and liabilities being measured on different bases. Net changes in fair value is recognised in profit or loss in the period which it arises.

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

3.8.1.5 Impairment of financial assets

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

The measurement of ECL reflects:

• Anunbiasedandprobability-weightedamountthatisdeterminedbyevaluatingarangeofpossibleoutcomes;

• Thetimevalueofmoney;and• Reasonableandsupportable information that is availablewithoutunduecostor effort at

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

ECLs are measured on either of the following basis:-

• 12-month ECLs: the portion of lifetime expected credit losses that result from possibledefaulteventsonafinancialinstrumentwithinthe12monthsafterthereportingdate;and

• LifetimeECLs:theexpectedcreditlossthatresultfromallpossibledefaulteventsovertheexpected life o a financial instrument.

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

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3.8.1.5 Impairment of financial assets (cont’d)

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

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

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

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

3.8.2 Financial liabilities

3.8.2.1 Classification

The Group and the Company classify their financial liabilities in the following measurement categories:-

• Thosetobemeasuredsubsequentlyatfairvaluethroughprofitorloss;and• Thosetobemeasuredatamortisedcost.

3.8.2.2 Recognition and derecognition

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

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

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

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3.8.2 Financial liabilities (cont’d)

3.8.2.3 Initial measurement

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

3.8.2.4 Subsequent measurement

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

(i) FVTPL

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

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

• If doing so eliminates or significantly reduces an accounting mismatch that wouldotherwisearise;

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

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

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

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

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3.8.2 Financial liabilities (cont’d)

3.8.2.4 Subsequent measurement (cont’d) The subsequent measurement of financial liabilities depends on their classification, as described

below (cont’d):-

(ii) Amortised cost

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

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

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

3.8.3 Offsetting of financial instruments

Financial assets and financial liabilities are offset and the net amount reported in the statements of financial position if, and only if, there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, or to realise the assets and settle the liabilities simultaneously.

3.9 Revenue recognition

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

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

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

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

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

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

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3.9 Revenue recognition (cont’d)

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

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

ii. Createorenhanceanassetthatthecustomercontrolsastheassetiscreatedorenhanced;or

iii. Provide benefits that the customer simultaneously receives and consumes as the Group and the Company perform.

For performance obligations where none of the above conditions are met, revenue is recognised at a point in time at which the performance obligation is satisfied.

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

3.9.1 Sales of goods

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

3.9.2 Interest income

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

3.9.3 Rental income

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

3.9.4 Dividend income

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

3.10 Employee benefits

(a) Short term employees benefits

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

92




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

3.11 Share-based payment transactions

Share-based payment transactions of the Company

Equity-settled share-based payments to employees and others providing similar services are measured at the fair value of the equity instruments at the grant date. Details regarding the determination of the fair value of equity-settledshare-basedtransactionsaresetoutinNote37totheFinancialStatements.

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

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

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

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

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

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

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

93

ANNUAL REPORT 2020



3.11 Share-based payment transactions (cont’d)

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

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

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

3.12 Dividends

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

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

3.13 Financial guarantee contracts

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

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

3.14 Provisions

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

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

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

94




3.15 Cash and cash equivalents

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

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

3.16 Equity instrument and reserves

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

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

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

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

Unappropriated profits include all current and prior period unappropriated profits.

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

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

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

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

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

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

3.18 Capital work-in-progress Capital work-in-progress consists of property, plant and equipment under construction/installation for intended use

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

3.19 Goodwill/Negative goodwill

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

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

95

ANNUAL REPORT 2020



3.20 Contingent liabilities

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

3.21 Warrants

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

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

3.22 Earnings per share

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

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

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

3.23 Related parties

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

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

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

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

(i) The entity and the Group are members of the same group.(ii) The entity is an associate or joint venture of the Group.(iii) The Group and the entity are joint ventures of the same third party.(iv) The Group is a joint venture of a third entity and the other entity is an associate of the same third entity.(v) The entity is a post-employment benefit plan for the benefits of employees of either the Group or an

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

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

services to the Group.

96




3.24 Operating segments

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

3.25 Derivative financial instruments and hedging activities

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

Derivative financial instruments

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

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

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

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

Cash flow hedge

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

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

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

97

ANNUAL REPORT 2020



3.26 Borrowing costs

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

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

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

3.27 Government grant

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

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

4. CHANGES IN ACCOUNTING POLICIES

4.1 MFRS 16 Leases

The Group has adopted MFRS 16 on 1 March 2019 using the modified retrospective method of which the comparative information was not restated.

Upon the adoption of MFRS 16, the Group recognised lease liabilities in relation to leases which had previously beenclassifiedas‘operatingleases’undertheprinciplesofMFRS117Leases.Theseliabilitiesweremeasuredatthe present value of the remaining lease payments, discounted using the lessee’s incremental borrowing rate as of 1 March 2019. The weighted average lessee’s incremental borrowing rate applied to the lease liabilities on 1 March 2019 was 5.31%.

For those leases previously classified as finance lease, the right-of-use assets and lease liabilities are measured atthedateof initialapplicationatthesameamountsasunderMFRS117immediatelybeforethedateof initialapplication.

In conclusion, the adoption of MFRS 16 has no significant impact on the substance of the principles applied by the Group to lease classification. No adjustment to the opening balance of unappropriated profit has been made as there are no changes in lease classification.

98



4. CHANGES IN ACCOUNTING POLICIES (CONT’D)

4.1 MFRS 16 Leases (cont’d)

4.1.1 Effect of initial application

In summary, the adoption impact of MFRS 16 to the opening balances are as follows:-

GroupStatement of financial position

Impact of change in accounting policy Note 28 February MFRS 16 1 March 2019 adjustments 2019 RM RM RMAssetsProperty,plantandequipment (1)(2) 230,563,255 40,013,828 270,577,083Prepaidlandleasepayments (1) 32,551,772 (32,551,772) –

Impactonassets 263,115,027 7,462,056 270,577,083

LiabilitiesFinance lease liabilities – current 2,464,310 (2,464,310) –Finance lease liabilities – non current 5,104,325 (5,104,325) –Leaseliabilities–current – 2,809,530 2,809,530Lease liabilities – non current – 12,221,161 12,221,161

Impactonliabilities (3) 7,568,635 7,462,056 15,030,691

Note:

(1) Prepaid land lease payments consist of leasehold lands which were reclassified to property, plant and equipment upon the adoption of MFRS 16. Prepaid land lease payments were previously carried at costandamortisedoverleasetermsunderMFRS117.Subsequenttoreclassification,theleaseholdland are remeasured at fair value to be in line with the Group’s accounting policy by applying revaluation model for the land and buildings under property, plant and equipment.

(2) Right-of-use assets have been included in property, plant and equipment. The right-of-use assets represent the right to use of the underlying asset during the lease term. The right-of-use assets are measured at cost less accumulated depreciation and impairment losses if any, and adjusted for any re-measurement of the lease liability. Leasehold land and building in right-of-use assets are subsequently measured at fair value, less subsequent depreciation and any impairment losses.

99

ANNUAL REPORT 2020


4. CHANGES IN ACCOUNTING POLICIES (CONT’D)

4.1 MFRS 16 Leases (cont’d)

4.1.1 Effect of initial application (cont’d)

Note: (cont’d)

(2) (cont’d)

The adjustment to property, plant and equipment related to right-of-use assets is as follows:-

RM

Finance type leases disclosed in Property, plant and equipment as at 28 February 2019 10,329,520Add: Operating type leases (MFRS 16 adjustment made in Property,PlantandEquipment) 40,013,828

Right-of-use assets recognised as at 1 March 2019 50,343,348

(3) The lease liabilities are measured at present value of the lease payments that are not paid at 1 March 2019 using its incremental borrowing rate. Subsequently, the lease liabilities are adjusted for interest and lease payments, as well as the impact of lease modifications if any.

RM

Operating lease commitments as at 28 February 2019 as disclosed in the Company’s financial statements 11,935,927(Less):Short-termleasesrecognisedonastraight-linebasisasexpense (171,329)

11,764,598

Weighted average incremental borrowing rate as at 1 March 2019 5.31%

LeaseliabilitiesforleasesclassifiedasoperatingtypeunderMFRS117 7,462,056Add:Financeleaseliabilitiesrecognisedasat28February2019 7,568,635

Lease liabilities recognised as at 1 March 2019 15,030,691

100



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101

ANNUAL REPORT 2020


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ncialyea

r–

1,00

6,30

13,58

0,54

14,58

6,84

217

3,42

412

,177

,968

1,35

1,55

918

,289

,793

Dispo

sals

––

––

–(1,332

,408

)(1,683

,184

)(3,015

,592

)Writtenoff

––

––

(630

,956

)(418

,294

)–

(1,049

,250

)Revalua

tion

–(4,130

,589

)(12,04

1,89

3)

(16,17

2,48

2)

––

–(16,17

2,48

2)Currenc

ytra

nslatio

ndiffe

renc

e

––

13,042

13

,042

1,37

746

,694

86

461

,977

At29Fe

brua

ry202

0–

397,17

432

5,77

972

2,95

34,19

8,15

191

,210

,010

10

,787

,895

10

6,91

9,00

9

Net

car

ryin

g am

ount

At28Fe

brua

ry201

924

,151

,839

–

114,32

6,75

713

8,47

8,59

61,02

1,50

087

,628

,323

3,43

4,83

623

0,56

3,25

5

At29Fe

brua

ry202

040

,853

,022

89

,384

,351

12

7,65

8,46

225

7,89

5,83

51,10

8,41

881

,026

,505

3,50

7,78

934

3,53

8,54

7

102



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

On28February2020,theDirectorsrevaluedalltheabovelandandbuildingsbasedonprofessionalrevaluationsmadeby Sr. Chong Shek Heong, M. Com. (Applied Finance), B. Bus. (Property), MRISM and Registered Valuer (V-0951) & Sr. Ungku Mohd Iskandar Ungku Ismail, BSc. (Hons) Property Management, MRISM, MPEPS, MMIPFM and Registered Valuer(V-855)ofCHWilliamsTalhar&WongSdn.Bhd.,onthemarketvaluebasis.Thevaluationswereincorporatedinthe financial statements for the financial year ended 29 February 2020.

The market value is defined as the estimated amount for which an asset or liability should exchange on the valuation date between a willing buyer and a willing seller in an arm’s length transaction after proper marketing and where the parties had each acted knowledgeably, prudently and without compulsion. The market value of the land and buildings was determined based on the comparison approach, cost approach and income approach.

Land and buildings at valuation are categorised at Level 2 fair value.

Level 2 Fair Value of Freehold and Leasehold Land

Level 2 fair value of freehold and leasehold land has been generally derived using the comparison approach or cost approach. The most significant input into these valuation approaches is price per square foot of comparable properties.

Level 2 Fair Value of Freehold Building and Leasehold Building

Level 2 fair value of freehold building and leasehold building has been generally derived using the comparison approach, cost approach or income approach. The most significant input into comparison approach and cost approach is construction cost of comparable properties while the most significant input into income approach is rental price per square foot of comparable properties.

5.1 Comparison approach

The comparison approach entails analysing recent transactions and asking prices of similar property in and around the locality for comparison purpose with adjustments made for differences in location, accessibility, terrain, size, and shape of land, tenure, visibility and exposure, planning status, title restriction if any and other relevant characteristics to arrive at the market value.

5.2 Cost approach

The cost approach entails separate valuations of the land and building to arrive at the market value.

The land is valued by reference to transactions of similar lands in the surrounding with adjustments made for differences in location, terrain, size and shape of land, tenure, title restrictions if any and other relevant characteristics.

The buildings are valued by reference to their depreciated replacement costs, i.e. the replacement cost of the buildings as new less an appropriate adjustment for profits and depreciation or obsolescence to reflect the existing condition of the buildings at the date of valuation.

The land and buildings values are then summated to arrive at the market value of the subject property.

5.3 Income approach

The building is valued by determining the net annual income by deducting the annual outgoings from the gross annual income and capitalising the net income by a suitable rate of return consistent with the type and quality of investment to arrive at the market value.

103

ANNUAL REPORT 2020


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

At the reporting date, had the revalued land and buildings of the Group been carried under the cost model, the net carrying amount would have been as follows:-

Freehold Leasehold land land Buildings Total RM RM RM RM

2020Cost 16,181,219 39,886,274 122,190,011 178,257,504Accumulateddepreciation – (4,140,663) (24,460,400) (28,601,063)

Netcarryingamount 16,181,219 35,745,611 97,729,611 149,656,441

2019Cost 16,181,219 – 104,250,745 120,431,964Accumulateddepreciation – – (23,158,396) (23,158,396)

Netcarryingamount 16,181,219 – 81,092,349 97,273,568

The net carrying amount of property, plant and equipment of the Group which are acquired under finance lease arrangementsamountedtoRM10,329,520asat28February2019.

Included in the property, plant and equipment is right-of-use assets as follows:-

Crane, machinery, Forklift equipments, Leasehold and motor furniture and land Buildings vehicles fittings Total RM RM RM RM RM

Net carrying amountAt28February2019 – – 2,513,275 7,816,245 10,329,520Adjustment on initial applicationofMFRS16 39,833,297 180,531 – – 40,013,828

At1March2019,restated 39,833,297 180,531 2,513,275 7,816,245 50,343,348Addition 3,813,040 44,244 1,236,368 582,000 5,675,652Depreciationcharges (1,006,301) (122,454) (984,921) (1,317,388) (3,431,064)Disposal – – (188,756) – (188,756)Revaluation 46,744,315 – – – 46,744,315Translationdifference – – 491 (16,707) (16,216)

At29February2020 89,384,351 102,321 2,576,457 7,064,150 99,127,279

104



6. PREPAID LAND LEASE PAYMENTS

Group 2020 2019 RM RM

Leasehold land:-

CostAtbeginningoffinancialyear 36,073,234 36,073,234AdjustmentoninitialapplicationofMFRS16 (36,073,234) –

Atbeginningoffinancialyear,restated/Atendoffinancialyear – 36,073,234

Accumulated amortisationAtbeginningoffinancialyear 3,521,462 2,939,418Adjustment on initial application of MFRS 16 (3,521,462) –

Atbeginningoffinancialyear,restated – 2,939,418Chargeforthefinancialyear – 582,044

At end of financial year – 3,521,462

Net carrying amount – 32,551,772

Amount to be amortised-Notlaterthanoneyear – 582,044-Laterthanoneyearbutnotlaterthanfiveyears – 2,328,176- Later than five years – 29,641,552

– 32,551,772

Theprepaidlandleasepaymentsareamortisedovertheleaseholdperiodof59to88yearsinfinancialyear2019.

7. CAPITAL WORK-IN-PROGRESS

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

At1March2018 3,491,058 323,689 3,814,747Addition 12,680,142 1,094,951 13,775,093Transferredtoproperty,plantandequipment (3,588,941) (309,921) (3,898,862)

At28February2019 12,582,259 1,108,719 13,690,978Addition 3,114,529 200,281 3,314,810Transferredtoproperty,plantandequipment (15,577,583) (866,880) (16,444,463)

At 29 February 2020 119,205 442,120 561,325

105

ANNUAL REPORT 2020


8. INVESTMENT PROPERTIES

Freehold Total land and Leasehold land and shophouse land Buildings buildings building TotalGroup RM RM RM RM RMAt fair value:-

At1March2018 2,600,000 3,400,000 6,000,000 600,000 6,600,000Fair value loss adjustment (100,000) (200,000) (300,000) – (300,000)

At28February2019, 1 March 2019 and 29February2020 2,500,000 3,200,000 5,700,000 600,000 6,300,000

The investment properties consist of land and buildings and are valued annually at fair value, comprising market value, by an external independent professionally qualified property 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 acted knowledgeably, prudently and without compulsion. The market value of the investment properties was determined based on the comparison approach and cost approach.

Investment properties at valuation are categorised at Level 2 fair value.

Level 2 Fair Value of Freehold Land and Shophouse Buildings

Level 2 fair value of freehold land and shophouse building has been generally derived using the comparison approach. The most significant input into this valuation approach is price per square foot of comparable properties.

Level 2 Fair Value of Leasehold Land and Buildings Level 2 fair value of leasehold land and buildings has been generally derived using the cost approach. The most significant

input into this valuation approach is price per square foot and cost of construction of comparable properties.

8.1 Comparison approach

The comparison approach analysing recent transactions and asking prices of similar property in and around the locality for comparison purpose with adjustments made for differences in location, size, age and condition of property, tenure, title restriction if any and other relevant characteristics to arrive at the market value.

8.2 Cost approach The cost approach entails separate valuations of the land and buildings to arrive at the market value. The land is valued by reference to transactions of similar lands in the surrounding with adjustments made

for differences in location, terrain, size and shape of the land, tenure, title restriction if any and other relevant characteristics.

The building is valued by reference to its depreciated replacement costs, i.e. the replacement cost of the building

as new less an appropriate adjustment for profits and depreciation or obsolescence to reflect the existing condition of the building at the date of valuation.

The land and buildings values are then summated to arrive at the market value of the subject property.

106



8. INVESTMENT PROPERTIES (CONT’D)

Included in the investment properties is right-of-use assets as follows:-

Leasehold land RM

At fair valueAt 1 March 2019/29 February 2020 2,500,000

9. SUBSIDIARY COMPANIES

(a) Investment in subsidiary companies

Company 2020 2019 RM RM

Unquoted shares - At cost:-

Atbeginningoffinancialyear/Atendoffinancialyear 244,860,458 244,860,458

The particulars of the subsidiary companies are as follows:-

Name of companyCountry of

incorporationEffective

equity interest Principal activities2020

%2019

%

1. Pantech Corporation Sdn. Bhd.

Malaysia 100 100 Trading, supply and stocking of high pressure seamless and specialised steel pipes, fittings, flanges, valves and other related products for use in the oil and gas, gas reticulation, marine, onshore and offshore heavy engineering, power generation, petrochemicals, palm oil refining and other related industries.

Subsidiary companies of Pantech Corporation Sdn. Bhd.

1.1 Pantech Realty Sdn. Bhd.

Malaysia 100 100 Investment holding and property investment.

1.2 Pantech(Kuantan) Sdn. Bhd.

Malaysia 100 100 Trading and supply of high pressure seamless and specialised steel pipes, fittings, flanges, valves and other related products for use in the oil and gas, gas reticulation, marine, onshore and offshore heavy engineering, power generation, petrochemicals, palm oil refining and other related industries.

107

ANNUAL REPORT 2020


9. SUBSIDIARY COMPANIES (CONT’D)

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

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




%2019

%

2. Pantech Steel Industries Sdn. Bhd.

Malaysia 100 100 Manufacturing and supply of butt-welded carbon steel fittings such as elbows, tees, reducers, end-caps and high frequency induction long bends for use in the oil and gas and other related industries.

3. Panaflo Controls Pte. Ltd.# Singapore 100 100 Supplier of flow control solutions such as valves, actuators and controls for the oil and gas, petrochemicals, water treatment and other related industries and trading of specialised steel pipes and related products.

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. PantechInternational(KSA)Sdn. Bhd.

Malaysia 100 100 Dormant.

6. Nautic Steels (Holdings) Limited#

United Kingdom

100 100 Investment holdings.

Subsidiary company of Nautic Steels (Holdings) Limited:-

6.1 Nautic Steels Limited# United Kingdom

100 100 Milling, machining and welding of tube and pipe fittings in special metals for the oil industry.

7.NauticSteelsSdn.Bhd. Malaysia 100 100 Dormant.

8. PantechGalvanising Sdn. Bhd.

Malaysia 100 100 Hot dip galvanising, treatment and coating of metals and its related activities, engineering fabrication works and its related activities and manufacturing of industrial consumable products.

# Not audited by Grant Thornton Malaysia PLT.

108



9. SUBSIDIARY COMPANIES (CONT’D)

(b) Amount due from/to subsidiary companies

The amount due from/to subsidiary companies is non-trade in-nature, bears no interest and repayable upon demand, except for a temporary loan to a subsidiary company amounted to RM Nil (2019: RM5,000,000) which bears interest at rates ranging from 5.19% to 5.59% (2019: 5.59%) per annum.

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

10. ASSOCIATE COMPANY

(a) Investment in an associate company


Unquotedshares-atcost 288,717 288,717

Share of post acquisition profit-Atbeginningoffinancialyear 2,939,241 2,219,948- Share of post acquisition profitduringthefinancialyear 36,818 719,293

-Atendoffinancialyear 2,976,059 2,939,241

Less: Dividend received (cumulative) (445,500) (445,500)

2,819,276 2,782,458

Represented by:-Shareofnetassets 2,819,276 2,782,458

Summarised financial information of associate company is as follows:-


Assets and liabilitiesCurrentassets 41,239,033 41,986,412Non-currentassets 2,007,173 2,319,543

Total assets 43,246,206 44,305,955

Currentliabilities 36,197,714 37,340,994Non-currentliabilities – 8,514

Totalliabilities 36,197,714 37,349,508

ResultsRevenue 70,756,777 68,958,834Profitforthefinancialyear 92,045 1,798,231

There is no share of commitments and contingent liabilities from the associate company to the Group.

109

ANNUAL REPORT 2020


10. ASSOCIATE COMPANY (CONT’D)

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

The particulars of the associate company are as follows:-




%2019

%

Tuah Nusa Sdn. Bhd. Malaysia 40 40 Manufacturing of butt-welded fittings and high frequency induction long bends as well as trading and supply of specialised industrial products, alloys and ferrous materials for the oil and gas and related industries.

(b) Amount due from/to an associate company

The amount due from/to an associate company is trade in-nature, unsecured, bears no interest and repayable upon demand.

The currency exposure profile of the amount due from an associate company is as follows (foreign currency balances are unhedged):-


RinggitMalaysia 30,075,110 21,660,600USDollar 5,635,514 14,857,105

35,710,624 36,517,705

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

11. GOODWILL ON ACQUISITION


At cost and at net carrying amount:-Atbeginningoffinancialyear 1,190,129 1,198,088Currencytranslationdifference 4,002 (7,959)

At end of financial year 1,194,131 1,190,129

Thegoodwillarisefromtheacquisitionofanewsubsidiarycompanyon7March2012.

110



11. GOODWILL ON ACQUISITION (CONT’D)

Impairment tests for goodwill

(a) Allocation of goodwill

For the purpose of impairment testing, goodwill is allocated to the Group’s cash generating units (“CGU”) identified as follows:-


Subsidiary companyNautic Steels (Holdings) Limited 1,194,131 1,190,129

1,194,131 1,190,129

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 yearsended28February2019and29February2020.

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

The recoverable amount of a CGU is determined based on value-in-use calculations using cash flow projections based on financial budgets approved by management covering a period of one year. Key assumptions andmanagement’s approach to determine the values assigned to each key assumption are as follows:-

(i) Budgeted gross profit margin

The basis used to determine the value assigned to the budgeted gross profit margin of 20% (2019: 20%) 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 9% (2019: 23%) per annum is based on management’s estimate of revenue growth rate based on the past and current trends of the industry.

(iii) Discount rate

A pre-tax discount rate of 3% (2019: 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.

111

ANNUAL REPORT 2020


12. DERIVATIVES FINANCIAL INSTRUMENTS

Hedging activities – Cash flow hedges

Cross currency swap

Contract/ Notional amount Assets Liabilities NetGroup RM RM RM RMAsset2020Hedging derivatives:- Cash flow hedges -Crosscurrencyswap 2,655,233 2,655,233 2,559,840 95,393

2,655,233 2,655,233 2,559,840 95,393

2019Hedging derivatives:- Cash flow hedges -Crosscurrencyswap 8,699,831 8,699,831 7,860,006 839,825

8,699,831 8,699,831 7,860,006 839,825

2020 2019 RM RM

Analysed as:--Within1year 74,912 796,810-Morethan1yearbutlessthan5years 20,481 43,015

95,393 839,825

112



12. DERIVATIVES FINANCIAL INSTRUMENTS (CONT’D)

Hedging activities – Cash flow hedges (Cont’d)

Cross currency swap (Cont’d)

Contract/ Notional amount Assets Liabilities NetCompany RM RM RM RMAsset2020Hedging derivatives:- Cash flow hedges -Crosscurrencyswap 2,655,233 2,655,233 2,559,840 95,393

2019Hedging derivatives:- Cash flow hedges -Crosscurrencyswap 4,669,638 4,669,638 4,591,174 78,464

2020 2019 RM RM

Analysed as:--Within1year 74,912 35,449-Morethan1yearbutlessthan5years 20,481 43,015

95,393 78,464

The full fair value of a derivative is classified as a non-current asset or liability if the remaining maturity of the hedged item is more than 12 months and, as a current asset or liability, if the maturity of the hedged item is less than 12 months.

The Group and the Company held cross currency swap contracts designated as hedges of cash flow currency risk for certain borrowings.

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

113

ANNUAL REPORT 2020


12. DERIVATIVES FINANCIAL INSTRUMENTS (CONT’D)

Hedging activities – Cash flow hedges (Cont’d)

Cross currency swap (Cont’d)

The following table indicates the periods in which the cash flows associated with the cross currency swap are expected to occur and affect profit or loss:-

Carrying Expected Less than Between More than amount cash flows 1 year 1 to 5 years 5 yearsGroup RM RM RM RM RM2020Crosscurrencyswap 2,550,000 2,648,404 2,131,838 516,566 –

2019Crosscurrencyswap 7,908,000 8,230,434 5,581,940 2,648,494 –

Company2020Crosscurrencyswap 2,550,000 2,648,404 2,131,838 516,566 –

2019Crosscurrencyswap 4,590,000 4,883,377 2,234,883 2,648,494 –

ThecashflowhedgesoftheborrowingswereassessedtobehighlyeffectiveandanetunrealisedlossofRM744,432andnetunrealisedgainofRM16,929(2019:netunrealisedlossofRM304,442andnetunrealisedgainofRM181,821)of the Group and of the Company respectively relating to the hedging instruments are included in other comprehensive income. None was reclassified from equity to profit or loss during the current and previous financial year.

Non-hedging activities

The Group uses forward currency contracts to manage some of the transaction exposure. Trading derivatives are classified as a current asset or liability. The full fair value of a derivative is classified as a non-current asset or liability if the remaining maturity of the hedged item is more than 12 months and, as a current asset or liability, if the maturity of the hedged item is less than 12 months.

These contracts are not designated as cash flow or fair value hedges and are entered into for periods consistent with currency transaction exposure and fair value changes exposure. Such derivatives do not qualify for hedge accounting.

114



13. DEFERRED TAX ASSETS


Atbeginningoffinancialyear 2,016,401 1,851,363Transferred(to)/fromprofitorloss(Note34) (472,862) 165,038Transferredfromothercomprehensiveincome (9,598,914) –Transferredtodeferredtaxliabilities(Note30) 8,059,275 –

At end of financial year 3,900 2,016,401

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


Carrying amount of qualifying property, plant and equipmentinexcessoftheirtaxbase (15,100) (733,623)Inventories written down 19,000 1,409,000Allowanceforimpairmentofreceivables – 1,168,000Revaluation of land and buildings – 13,363Provision of expenses – 159,661

3,900 2,016,401

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


Carrying amount of qualifying property, plant and equipmentinexcessoftheirtaxbase (54,149,118) (50,301,207)Inventorieswrittendown 320,640 833,243Unabsorbedbusinesslosses 15,578,425 14,088,084Unabsorbedvalueofincreasedexportsincentive 18,959,000 18,959,000Unutilisedleaveentitlement 567 3,130Unutilisedcapitalallowances 21,723,358 25,469,450Unutilised reinvestment allowances 11,430,000 –Allowanceforimpairmentofreceivables 78,983 –

13,941,855 9,051,700

FollowingthegazettingoftheFinanceAct2018on27December2018,theunutilisedcapitalallowancesareavailableindefinitely for offset against future taxable profits of the subsidiary companies in which the item arose. As for unabsorbed business losses, unabsorbed value of increased exports incentive and unutilised reinvestment allowances, they are restricted to be carried forward to a maximum period of seven consecutive years of assessment. 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 recent history of losses.

115

ANNUAL REPORT 2020


14. INVENTORIES


Rawmaterials 39,092,324 62,719,855Work-in-progress 20,887,390 22,743,355Finishedgoods 245,274,607 270,802,774

Totalinventories 305,254,321 356,265,984

Recognised in profit or loss:- Inventoriesrecognisedincostofsales 407,539,795 398,244,500 Inventorieswrittendown 3,137,227 2,536,300 Reversalofinventorieswrittendown (1,013,690) (84,069)

The reversal of inventories written down was made when the related inventories were subsequently sold above their carrying amounts and increased in net realisable value because of changed economic circumstances.

15. TRADE RECEIVABLES


Tradereceivables 117,623,360 137,035,974Less:Allowanceforimpairmentoftradereceivables (6,344,269) (7,231,351)

111,279,091 129,804,623

Movement in allowance for impairment of trade receivables:-


Atbeginningoffinancialyear (7,231,351) (8,447,469)Chargeforthefinancialyear (1,912,692) (3,237,495)Reversal of impairment- payment received 2,569,246 4,402,242-writeoffagainstallowanceforimpairment 272,867 6,381Currency translation difference (42,339) 44,990

Atendoffinancialyear (6,344,269) (7,231,351)

116



15. TRADE RECEIVABLES (CONT’D)

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


RinggitMalaysia 85,022,150 83,293,887USDollar 25,199,253 46,264,270SingaporeDollar 2,143,823 1,716,284GreatBritainPoundSterling 5,258,134 5,761,533

117,623,360 137,035,974

Trade receivables comprise amounts receivable from sales of goods. The credit terms granted on sales of goods ranged from7days to90days (2019:7days to90days).Allowancehasbeenmade for estimated irrecoverableof tradereceivables based on the default experience of the Group.

An impairment analysis is performed at each reporting date using a provision matrix to measure ECLs. Information regarding the Group’s and the Company’s exposure to the credit risk and ECLs for trade receivables is disclosed in Note 45 (c) to the Financial Statements.

16. OTHER RECEIVABLES


Non-tradereceivables 416,140 185,125 – –Advancepaymenttosuppliers 2,260,784 6,941,740 – –Deposit for purchase of property, plant andequipment 612,373 822,967 – –Deposits 6,094,713 14,048,865 – –Prepaymentofexpenses 2,280,855 2,610,220 17,441 5,177GSTreceivable 1,098,160 1,567,320 418 418

12,763,025 26,176,237 17,859 5,595

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


RinggitMalaysia 6,392,539 5,530,326 17,859 5,595USDollar 5,618,619 19,398,328 – –GreatBritainPoundSterling 616,970 489,221 – –EURO 13,772 632,194 – –SingaporeDollar 121,125 126,168 – –

12,763,025 26,176,237 17,859 5,595

117

ANNUAL REPORT 2020


17. FIXED DEPOSITS WITH LICENSED BANKS


Current 2,616,452 2,546,650

The fixed deposits with licensed banks of the Group are on fixed rate basis and will mature within 1 month to 6 months (2019: 1 month to 6 months) period.

The effective interest rates on fixed deposits with licensed banks ranged from 2.30% to 3.20% (2019: 2.60% to 2.90%) per annum.

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

18. CASH AND BANK BALANCES

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


RinggitMalaysia 53,110,470 35,388,540 2,011,274 1,783,075USDollar 20,690,928 3,689,593 – –EURO 1,884,839 118,756 – –SingaporeDollar 2,800,756 2,019,323 – –GreatBritainPoundSterling 7,597,936 7,390,635 258,726 76,019

86,084,929 48,606,847 2,270,000 1,859,094

19. SHARE CAPITAL

Share capital

2020 2020 2019 2019 Unit RM Unit RM

Group and CompanyIssued and fully paid-up:- Ordinary shares Atbeginningoffinancialyear 747,857,224 208,298,243 746,394,724 207,543,729 Exerciseofwarrants 98 59 – – PursuanttoexerciseofESOS 3,141,350 1,621,619 1,462,500 754,514

Atendoffinancialyear 750,998,672 209,919,921 747,857,224 208,298,243

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

118



20. TREASURY SHARES

Group and Company

TheshareholdersoftheCompany,throughtheAnnualGeneralMeetingheldon21August2008,approvedtheCompany’splan to repurchase up to 10% of the issued and paid-up share capital of the Company (“Share Buy Back”). The authority 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 25 July 2019. 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.

TheCompany repurchased 1,037,100 (2019: 6,781,400) ordinary shares of its issued share capital from the openmarket.TheaveragepricepaidfortherepurchasedshareswasRM0.48(2019:RM0.51)pershare.Therepurchasedtransactions were financed by internally generated funds. These repurchased shares were held as treasury shares and treatedinaccordancewiththerequirementsofSection127oftheCompaniesAct,2016.

The shares purchased were retained as treasury shares. The Company has the right to re-issue these shares at a later date. As treasury shares, the rights attached as to voting, dividends and participation in other distribution are suspended.

Asatthefinancialyearend,theCompanyheld1,807,979(2019:8,173,324)oftheCompany’ssharesandthenumberofoutstandingsharesinissueaftersettingtreasurysharesoffagainstequityare749,190,693(2019:739,683,900).

No treasury shares were sold during the current and previous financial year.

21. REVALUATION RESERVE

Group

The revaluation reserve arose from the revaluation of land and buildings and is not available for distribution as dividends.

22. EMPLOYEES SHARE OPTION RESERVE

Group and Company

Employees share option reserve represents the equity-settled share option granted to employees. The reserve is made up of the cumulative value of services received from employees recorded over the vesting period commencing from the grant date of equity-settled share option, and is reduced by the expiry or exercise of the share option.

The employees share option reserve is not available for distribution as dividends.

23. CASH FLOW HEDGE RESERVE

The cash flow hedge reserve contains the effective portion of the gain or loss on hedging instruments in cash flow hedges and is not available for distribution as dividends.

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ANNUAL REPORT 2020


24. WARRANTS RESERVE

Group and Company

Warrant A Warrant B 2010/2020 2016/2021 Total RM RM RM

At1March2018,28February2019and1March2019 7,454,130 7,294,498 14,748,628Exercise of warrant (5) (5) (10)

At29February2020 7,454,125 7,294,493 14,748,618

(a) Warrants 2010/2020 (“Warrant A”)

On22December 2010, theCompany issued748,410,400 IrredeemableConvertibleUnsecuredLoanStocks(“ICULS”)atthenominalvalueofRM0.10,togetherwith74,841,040freedetachablewarrantstotheholdersoftheICULS on the basis of one free detachable warrants for every ten ICULS subscribed.

The fair value of the warrants is estimated using the Black Scholes model, taking into account the terms and conditions upon which the warrants are acquired. The fair value of the warrants measured at issuance date and the assumptions are as follows:-

Style VanillaExercise type AmericanTenure 10 years5-dayvolumeweightedaveragepriceofPantechshareat23December2010 RM0.58Conversion price RM0.60Volatility rate 20%

Each warrant entitles the registered holder of warrant to subscribe for one new ordinary share in the Company at any time on or after 22 December 2010 up to the date of expiry on 21 December 2020, at an exercise price of RM0.60 per share or such adjusted price in accordance with the provisions in the Deed Poll. The warrants were listedontheBursaMalaysiaSecuritiesBerhadon27December2010.

On 22 December 2016, the Company completed a Bonus Issue of Shares. Pursuant to this Bonus Issue of Shares, the exercise price of Warrant A of RM0.60 is adjusted to RM0.50 and a total of 14,963,269 additional Warrant A is issued, listed and quoted on the Main Market of Bursa Malaysia Securities Berhad on 22 December 2016.

A total of 60 (2019:Nil) units of Warrants A were exercised and converted to ordinary shares.

Asatthereportingdate,89,449,491(2019:89,449,551)WarrantAremainedunexercised.

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24. WARRANTS RESERVE (CONT’D)

Group and Company (Cont’d)

(b) Warrants 2016/2021 (“Warrant B”)

On22December2016,theCompanyissued61,561,667freewarrantsonthebasisofone(1)WarrantBforeveryten (10) existing ordinary shares held on the same entitlement date as the Bonus Issue of Shares.

The fair value of the warrants is estimated using the Black Scholes model, taking into account the terms and conditions upon which the warrants are acquired. The fair value of the warrants measured at issuance date and the assumptions are as follows:-

Style VanillaExercise type AmericanTenure 5 years5-day volume weighted average price of Pantech share at 2 December 2016 RM0.534Conversion price RM0.50Volatilityrate 28.805%

Each warrant entitles the registered holder of warrant to subscribe for one new ordinary share in the Company at any time on or after 22 December 2016 up to the date of expiry on the 21 December 2021, at an exercise price of RM0.50 per share or such adjusted price in accordance with the provisions in the Deed Poll. The warrants were listed on the Bursa Malaysia Securities Berhad on 29 December 2016.

Atotalof38(2019:Nil)unitsofWarrantsBwereexercisedandconvertedtoordinaryshares.

Asatthereportingdate,60,787,449(2019:60,787,487)WarrantBremainedunexercised.

25. UNAPPROPRIATED PROFIT

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

26. FINANCE LEASE LIABILITIES


Minimum lease payment-within1year – 2,804,795-after1yearbutnotlaterthan5years – 5,449,979

– 8,254,774Less:Interestinsuspense – (686,139)

– 7,568,635

Total principal sum payable- within 1 year – 2,464,310- after 1 year but not later than 5 years – 5,104,325

– 7,568,635

The interest rates on the finance lease ranging from 2.26% to 5.50% per annum in financial year 2019.

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ANNUAL REPORT 2020


26. FINANCE LEASE LIABILITIES (CONT’D)

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


RinggitMalaysia – 7,276,928SingaporeDollar – 137,169GreatBritainPoundSterling – 154,538

– 7,568,635

27. LEASE LIABILITIES

27.1 Leaseliabilitiesarepresentedinthestatementoffinancialpositionasfollows:- Group 2020 RM

Current 2,807,558Non-current 10,815,126

13,622,684

27.2 Futureminimumleasepaymentsat29February2020wereasfollows:-

Group

Minimum lease payment due Within 1 year 1 to 5 years After 5 years Total RM RM RM RM 29 February 2020 Leasepayment 3,461,822 6,790,545 7,784,608 18,036,975Less:Financecharges (654,264) (1,580,609) (2,179,418) (4,414,291)

Netpresentvalues 2,807,558 5,209,936 5,605,190 13,622,684

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27. LEASE LIABILITIES (CONT’D)

27.3 Leasepaymentsnotrecognisedasaliability

The Group has elected not to recognise lease liability for short-term leases (leases with an expected term of 12 months or less) or for leases of low value assets. Payments made under such leases are expensed on a straight-line basis. In addition, certain variable lease payments are not permitted to be recognised as lease liabilities and are expensed as incurred. The expense relating to payments not included in the measurement of the lease liabilities is as follows:-

Group 2020 RM

Low-value assets - Administration expenses 101,290

Short-term leases -Administrationexpenses 296,548 - Cost of sales 265,210

561,758

The currency exposure profile of the lease liabilities is as follows (foreign currency balance is unhedged):-

Group 2020 RM

RinggitMalaysia 13,574,851SingaporeDollar 47,833

13,622,684

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ANNUAL REPORT 2020


28. BORROWINGS


CurrentUnsecured:- Termloans 4,463,028 8,270,573 2,061,828 2,077,994 Termloans-i 11,477,425 6,609,815 – – Trade loans:- -Acceptedbills-i 418,466 20,047,173 – – -Bankers’acceptance 92,742,534 133,139,120 – – -Bankoverdraft – 2,114,547 – – -Onshoreforeigncurrencyloans 14,615,733 3,688,056 – – -Cleanimportloans 1,041,375 980,731 – – -Revolvingcredit 5,000,000 17,569,389 – 5,069,389

Totalcurrent 129,758,561 192,419,404 2,061,828 7,147,383

Non-currentUnsecured:- Termloans 5,825,682 10,275,017 510,000 2,550,000 Termloans-i 42,699,626 33,475,010 – –

Totalnon-current 48,525,308 43,750,027 510,000 2,550,000

Totalborrowings 178,283,869 236,169,431 2,571,828 9,697,383

(i) The term loans, term loans-i, accepted bills-i, bankers’ acceptance, bank overdraft, clean import loans and revolving credit are obtained by way of corporate guarantee from the Company and negative pledge on subsidiary companies’ assets.

A term loan of a subsidiary company is obtained by way of facility agreement and corporate guarantee from the Company.

Thetermloansbearinterestatratesrangingfrom5.24%to5.88%(2019:5.15%to5.77%)perannum.

Thetermloans-ibearinterestatratesrangingfrom4.52%to5.34%(2019:4.98%to5.34%)perannum.

All term loans are repayable by monthly or quarterly installments.

Theacceptedbills-ibearsinterestatratesrangingfrom3.98%to4.70%(2019:4.14%to4.70%)perannum.

Thebankers’acceptancebearsinterestatratesrangingfrom2.91%to4.60%(2019:3.80%to4.91%)perannum. Thebankoverdraftbearsinterestatratesrangingfrom7.67%to8.39%(2019:7.95%to8.64%)perannum.

The clean import loans bear interest at the rate of 1.05% (2019: 1.05%) per annum.

The revolving credits bear interest at rates ranging from 4.69% to 5.60% (2019: 5.36% to 5.60%) per annum.

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28. BORROWINGS (CONT’D)

(ii) The onshore foreign currency loans are obtained by way of corporate guarantee from the Company. Certain onshore foreign currency loans are obtained by way of negative pledge on subsidiary companies’ assets.

It bears interest at rates ranging from 2.25% to 3.40% (2019: 2.15% to 3.40%) per annum.

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


RinggitMalaysia 162,626,761 231,500,644 2,571,828 9,697,383USDollar 14,615,733 3,688,056 – –GreatBritainPoundSterling 1,041,375 980,731 – –

178,283,869 236,169,431 2,571,828 9,697,383

29. OTHER PAYABLES


CurrentNon-tradepayables 4,312,501 6,581,940 115,953 70,080Depositsreceived 110,700 150,550 – –Accrualofexpenses 6,155,403 5,549,067 251,756 245,501Advancepaymentfromcustomers 2,730,538 2,496,134 – –SSTpayable 4,487 15,119 – –

Totalcurrent 13,313,629 14,792,810 367,709 315,581

Non-currentProvision for reinstatement cost – 264,649 – –

Total non-current – 264,649 – –

Totalotherpayables 13,313,629 15,057,459 367,709 315,581

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ANNUAL REPORT 2020


29. OTHER PAYABLES (CONT’D)

Provision for reinstatement cost refers to estimated costs made by a subsidiary company required to reinstate its office premise to its original state according to the terms and conditions of the respective tenancy agreements.

Movement in the provision for reinstatement cost:-


Atbeginningoffinancialyear 264,649 259,745Reversalofprovisionnolongerrequired (110,757) –Utilisedduringthefinancialyear (154,479) –Currencytranslationdifference 587 4,904

At end of financial year – 264,649

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


RinggitMalaysia 11,948,299 12,127,372 367,709 315,581USDollar 519,610 2,477,975 – –SingaporeDollar 74,004 452,112 – –GreatBritainPoundSterling 771,716 – – –

13,313,629 15,057,459 367,709 315,581

30. DEFERRED TAX LIABILITIES


Atbeginningoffinancialyear 4,521,074 5,156,759Transferredtoprofitorloss(Note34) (928,319) (571,656)Transferredfromothercomprehensiveincome 2,878,124 –Transferredfromdeferredtaxassets(Note13) 8,059,275 –Realisation of deferred tax liabilities upon depreciation of revalued assets (60,954) (60,954)Currencytranslationdifference 260 (3,075)

Atendoffinancialyear 14,469,460 4,521,074

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30. DEFERRED TAX LIABILITIES (CONT’D)

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


Carrying amount of qualifying property, plant and equipment inexcessoftheirtaxbase 3,765,236 3,082,689Revaluationoflandandbuildings 14,129,224 1,753,385Allowance for impairment of receivables (926,000) –Unabsorbedcapitalallowance (738,000) (315,000)Unutilisedtaxlosses (88,000)Inventorieswrittendown (1,673,000) –

14,469,460 4,521,074

31. TRADE PAYABLES

Group Trade payables comprise amounts outstanding for trade purchases. The credit terms granted to the Group ranged from

30 days to 90 days (2019: 30 days to 90 days).

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


RinggitMalaysia 13,098,333 22,940,126USDollar 7,667,361 6,063,451SingaporeDollar 3,480,414 3,460,627GreatBritainPoundSterling 573,000 809,330EURO 130,075 965,455

24,949,183 34,238,989

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ANNUAL REPORT 2020


32. REVENUE

Revenue for the Group comprise of revenue from contract with customers.

32.1 Disaggregation of revenue from contract with customers

Revenue from contracts with customers is disaggregated by major products, primary geographical markets and timing of revenue recognition as follows:-

2020 2019Group RM RM

Major productsManufacturing and trading of pipes, fittings, flanges,valvesandotherrelatedproducts 602,542,770 609,214,562

Primary geographical marketsMalaysia 363,173,078 404,787,580Othercountries 239,369,692 204,426,982

602,542,770 609,214,562

Timing of revenue recognitionProductstransferredatapointintime 602,542,770 609,214,562

2020 2019Company RM RM

Dividendincome 16,548,355 15,626,040Management fee 4,062,954 4,141,553

20,611,309 19,767,593

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33. PROFIT BEFORE TAX

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


Auditors’ remuneration-statutory 193,000 168,000 20,000 20,000-non-statutory 67,100 121,300 – 74,700- other auditors 134,593 132,296 – –Direct operating expenses:-- revenue generating investment propertiesduringthefinancialyear 157,573 113,003 – –Directors’fee 488,000 647,640 173,000 157,640Lease expense/Rental expense-premises 214,200 1,324,786 – –-factoryandwarehouse – 631,184 – –-forklift 176,040 240,643 – –-officeequipment – 183,948 – –Realisedloss/(gain)onforeignexchange 348,268 (567,824) (3,734) 6,753Rentalincome (774,800) (1,229,800) – –

The estimated monetary value of benefits provided to the Directors of the Company during the financial year by way of usageoftheGroup’sassetsandotherbenefitsamountedtoRM142,376(2019:RM127,946).

The remuneration paid (Company and Group basis) to the Directors of the Company is categorised as follows:-

Other Benefits- Fees emoluments in-kind Total RM RM RM RM

Group2020ExecutiveDirectors 235,000 5,939,783 142,376 6,317,159Non-ExecutiveDirectors 173,000 – – 173,000

Total 408,000 5,939,783 142,376 6,490,159

2019ExecutiveDirectors 380,000 5,923,015 127,946 6,430,961Non-ExecutiveDirectors 157,640 – – 157,640

Total 537,640 5,923,015 127,946 6,588,601

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ANNUAL REPORT 2020


33. PROFIT BEFORE TAX (CONT’D)

The remuneration paid (Company and Group basis) to the Directors of the Company is categorised as follows (cont’d):-

Other Benefits- Fees emoluments in-kind Total RM RM RM RM

Company2020Executive Directors – 1,630,153 – 1,630,153Non-ExecutiveDirectors 173,000 – – 173,000

Total 173,000 1,630,153 – 1,803,153

2019ExecutiveDirectors – 1,648,853 – 1,648,853Non-ExecutiveDirectors 157,640 – – 157,640

Total 157,640 1,648,853 – 1,806,493

The remuneration paid to the Directors of the Company analysed into bands are as follows:-

RM100,000 RM1,000,001 to toNumber of Directors <RM100,000 RM1,000,000 RM2,000,000

2020Executive Directors – 1 4Non-Executive Directors 4 – –

2019Executive Directors – 1 4Non-Executive Directors 4 – –

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34. TAX EXPENSE

Tax recognised in profit or loss


In Malaysia

Currentyear’staxexpense 10,957,287 14,629,903 866,919 896,229Over provision of tax expense in prior financialyear (456,257) (490,494) – –Over provision of deferred tax liabilities inpriorfinancialyear(Note30) (197,770) – – –Realisation of deferred tax liabilities upon depreciation of revalued assets (60,954) (60,954) – –Transferred from deferred tax liabilities (Note 30) (693,500) (534,161) – –Transferred from/(to) deferred tax assets (Note13) 472,862 (165,038) – –

10,021,668 13,379,256 866,919 896,229

Outside Malaysia

Current year’s tax expense 36,451 – – –Over provision of tax expense in prior financialyear – (7,793) – –Transferred from deferred tax liabilities (Note30) (37,049) (37,495) – –

(598) (45,288) – –

Total 10,021,070 13,333,968 866,919 896,229

Tax recognised in other comprehensive income

Malaysian income tax is calculated at the statutory tax rate of 24% (2019: 24%) of the estimated taxable profits for the financial year.

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ANNUAL REPORT 2020


34. 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:-


Profitbeforetax 46,022,660 60,792,158 15,727,206 15,491,415

Tax expense at Malaysian statutory taxrateof24%(2019:24%) 11,045,438 14,590,118 3,774,530 3,717,939

Tax effects in respect of:-Expensesnotdeductiblefortaxpurposes 2,982,910 2,555,036 1,063,995 928,666Incomenotsubjecttotax (265,692) (103,491) (3,971,606) (3,750,376)Deferred tax assets not recognised in currentfinancialyear (3,026,605) (3,235,774) – –(Over)/Under provision of deferred tax liabilitiesinpriorfinancialyear (197,770) 89,000 – –Under provision of deferred tax assetsinpriorfinancialyear – (1,680) – –Over provision of tax expense in prior financialyear (456,257) (498,287) – –Realisation of deferred tax liabilities upon depreciation of revalued assets (60,954) (60,954) – –

Totaltaxexpense 10,021,070 13,333,968 866,919 896,229

The Group has unutilised capital allowances, unabsorbed value of increased exports incentive, unabsorbed business losses and unutilised reinvestment allowances which can be carried forward to offset against future taxable profit amountedtoapproximatelyRM21,723,358,RM18,959,000,RM15,578,425andRM11,430,000(2019:RM25,469,450,RM18,959,000,RM14,088,084andNIL)respectively.

35. EARNINGS PER ORDINARY SHARE

Group

Basic earnings per ordinary share

The calculation of basic earnings per ordinary share was based on Group’s profit for the financial year attributable to owners of the Company and weighted average number of ordinary shares calculated as follows:-

Group 2020 2019

ProfitaftertaxforthefinancialyearattributabletoownersoftheCompany(RM) 36,001,590 47,458,190

Weightedaveragenumberofordinarysharesinissue 749,434,293 740,963,412 Basicearningsperordinaryshare(sen) 4.80 6.40

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35. EARNINGS PER ORDINARY SHARE (CONT’D)

Group (cont’d)

Diluted earnings per ordinary share

The calculation of diluted earnings per ordinary shares was based on Group’s profit attributable to ordinary shareholders and weighted average number of ordinary shares outstanding after adjustment for the effects of all dilutive potential ordinary shares.

Group 2020 2019

ProfitaftertaxforthefinancialyearattributabletoownersoftheCompany(RM) 36,001,590 47,458,190

Weightedaveragenumberofordinarysharesinissue(basic) 749,434,293 740,963,412AdjustmentfordilutiveeffectonexerciseofESOS 4,438,178 7,754,539Adjustmentfordilutiveeffectonwarrant – 2,091,467

Weightedaveragenumberofordinarysharesinissue(diluted) 753,872,471 750,809,418

Dilutedearningsperordinaryshare(sen) 4.78 6.32

36. EMPLOYEE BENEFITS EXPENSE


Staffcosts 48,438,862 48,876,677 2,198,215 2,187,640

Employee benefits expense of the Group and of the Company consists of, amongst others, the following items:-


Directors’ remuneration-Salaries,allowancesandbonuses 5,577,700 5,513,300 1,532,400 1,532,400-others 362,083 409,715 97,753 116,453

Definedcontributionplan–staffEPF 3,014,200 2,734,043 61,111 57,830

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ANNUAL REPORT 2020


37. EMPLOYEE SHARE OPTION SCHEME

At an extraordinary general meeting held on 2 December 2016, the Company’s shareholders approved the establishment of Employee Share Option Scheme (“ESOS” or “Scheme”) for the eligible Directors and employees of the Group.

The salient features of the Scheme are as follows:-

(a) The maximum number of new ordinary shares in the Company (“Shares”) which may be available under the Scheme shall not be more than ten per centum (10%) of the issued and fully paid-up share capital (excluding treasury shares) of the Company at any point in time during the Duration of the Scheme.

(b) The Company will for the Duration of the Scheme make available sufficient number of new Shares in the unissued share capital of the Company to satisfy all outstanding options, which may be exercisable from time to time.

(c) Any employee or Director of any company comprised in the Group (save for any subsidiaries which are dormant) shallbeeligibletoparticipateintheESOSif,asatthedateofoffer,theemployeeisatleasteighteen(18)yearsofageorabove;andisemployedonacontinuousfulltimebasis(eitherpermanentoroncontract)andonthepayroll of that corporation comprised in the Group and has been given notification in writing that the employee is a confirmed employee.

(d) The option price shall be determined by the Board of Directors of the Company upon recommendation of the Option Committee at a discount of not more than 10% from the volume weighted average market price of the Company’s shares as quoted on Bursa Malaysia Securities Berhad for the five (5) market days immediately preceding the date of the offer.

(e) The shares under options shall remain unissued until the options are exercised and shall, on allotment, rank pari passu in all respects with the existing issued and fully paid-up Shares at the time of allotment save that they will not entitle the holders thereof to receive any rights and bonus issues announced or to any dividend or other distribution declared to the shareholders of the Company as at a date which precedes the date of the exercise of the options.

(i) Employee Share Option Scheme (Batch 1)

The Scheme shall be in force for a duration of ten (10) years from the date of commencement from 23 January 2017(“Durationof theScheme”).Duringthepreviousfinancialyears, theCompanyhasgrantedoptionsunderthe Scheme and the options are exercisable within a period of five (5) years from the date commencing from 24 January2017.

Number of unexercised share option

Company 2020 2019

Atbeginningoffinancialyear 38,211,800 40,405,400Exercised during the financial year (3,111,950) (1,462,500)Forfeitedduringthefinancialyear (819,250) (731,100)

Atendoffinancialyear 34,280,600 38,211,800

Analysed as:-Exercisableinfinancialyear2019 – 15,783,300Exercisable in financial year 2020 23,365,100 11,214,250Exercisable in financial year 2021 10,915,500 11,214,250

34,280,600 38,211,800

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37. EMPLOYEE SHARE OPTION SCHEME (CONT’D)

(i) Employee Share Option Scheme (Batch 1) (cont’d)

Option price

Company RM

Option granted - on grant date 0.415

Share option exercised during the financial year

During the financial year, 3,111,950 (2019: 1,462,500) number of ordinary shares were issued under the Company’s ESOS.

Fair value of share option granted

The fair value of share option granted was estimated by an external valuer using the Binomial Model, taking into

consideration the terms and conditions upon which the option was granted.

The fair value of the share option measured at grant date and the assumptions are as follow:-

Fairvalueofshareoptiongrantedon24January2017basedonvestingdate(RM) -24January2017 0.102343 -24January2018 0.099692 - 24 January 2019 0.100360 - 24 January 2020 0.100640 - 24 January 2021 0.099612

Expected volatility of Company’s share price (%) 30.00 Option term (years) 5 Risk free rate of interest per annum (%) 3.60 Expected dividend yield per annum (%) 5.00

(ii) Employee Share Option Scheme (Batch 2)

TheSchemeshallbeinforceforadurationoften(10)yearsfromthedateofcommencementfrom23January2017.On 3 April 2019, the Company has granted batch 2 options under the Scheme and the options are exercisable within a period of five (5) years from the date commencing from 4 April 2019.

Number of unexercised share option

Company 2020 At beginning of financial year –Granted during the financial year 19,154,000Exercised during the financial year (29,400)Forfeited during the financial year (1,613,100)

Atendoffinancialyear 17,511,500

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ANNUAL REPORT 2020


37. EMPLOYEE SHARE OPTION SCHEME (CONT’D)

(ii) Employee Share Option Scheme (Batch 2) (cont’d)

Number of unexercised share option (cont’d)

Company 2020

Analysed as:-Exercisableinfinancialyear2020 2,607,600Exercisable in financial year 2021 2,630,100Exercisableinfinancialyear2022 3,506,800Exercisableinfinancialyear2023 4,383,500Exercisableinfinancialyear2024 4,383,500

17,511,500

Option price

Company RM

Option granted - on grant date 0.490

Share option exercised during the financial year

During the financial year, 29,400 (2019: Nil) number of ordinary shares were issued under the Company’s ESOS. Fair value of share option granted

The fair value of share option granted was estimated by an external valuer using the Binomial Model, taking into consideration the terms and conditions upon which the option was granted.

The fair value of the share option measured at grant date and the assumptions are as follow:-

Fair value of share option granted on 4 April 2019 based on vesting date (RM) -4April2019 0.125865- 4 April 2020 0.122563- 4 April 2021 0.123261-4April2022 0.123723-4April2023 0.122789 ExpectedvolatilityofCompany’sshareprice(%) 28.00Option term (years) 5Risk free rate of interest per annum (%) 3.50Expected dividend yield per annum (%) 4.50

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38. RELATED PARTY DISCLOSURES

(a) The transactions of the Group and of the Company with the related parties were as follows:-


Transactions with subsidiary companies:- - management fee received – – 4,062,954 4,141,553 -dividendreceived(net) – – 16,548,355 15,626,040 -loaninterestreceived – – 260,912 72,747 -loaninterestpaid – – 27,417 26,624Transactions with an associate company:- -sales 67,502,341 65,872,357 – – -purchases 521,659 89,255 – – -machineservicingcharged – 721,000 – – - rental received 264,000 225,000 – –

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

(c) The remuneration of key management personnel is same with the Directors’ remunerations as disclosed in Notes 33and36totheFinancialStatements.Keymanagementpersonnelisdefinedasthosepersonshavingauthorityand responsibility for planning, directing and controlling the activities of the Company either directly or indirectly and entity that provides key management personnel services to the Company. The Company has no other members of key management personnel apart from the Board of Directors.

39. CAPITAL COMMITMENTS


Authorised and contracted for:-Purchaseof -crane,machinery,equipmentsfurnitureandfittings 3,004,963 3,227,660 -buildings 782,855 3,089,742 -leaseholdland – 3,110,184

40. RENTAL COMMITMENTS

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


Withinthenexttwelvemonths 61,763 793,632Afterthenexttwelvemonths 65,582 11,142,295

127,345 11,935,927

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ANNUAL REPORT 2020


40. RENTAL COMMITMENTS (CONT’D)

The Group leases office and office equipment under operating lease for the current financial year. The leases run for a period of 12 to 60 months. Lease payments are negotiated on each renewal.

From 1 March 2019, the Company has recognised right-of-use assets (included in property, plant and equipment for these leases, except for short-term and low-value leases), as disclosed in Notes 4 and 5 to Financial Statements.

41. OPERATING LEASE ARRANGEMENTS

The Group has entered into operating lease agreements on its assets. These leases have remaining lease terms of between13to32months(2019:8to25months).

The future minimum lease payments receivable under non-cancellable operating leases contracted for as at the reporting date but not recognised as receivables are as follows:-


Withinthenexttwelvemonths 460,800 511,200Afterthenexttwelvemonths 84,000 468,000

544,800 979,200

42. CONTINGENT LIABILITIES

Company 2020 2019 RM RM

Unsecured:-Corporate guarantees given to licensed financial institutions forcreditfacilitiesgrantedtosubsidiarycompanies 720,845,288 754,005,208Corporate guarantees given to finance lease creditors for financeleasefacilitiesgrantedtosubsidiarycompanies 10,272,900 10,272,900Corporate guarantees given to third parties for supply of goodsandservicestosubsidiarycompanies 5,297,333 5,000,498

736,415,521 769,278,606

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.

138



43. SIGNIFICANT EVENTS

Significant events after the financial year end

Coronavirus Disease 2019 (“COVID-19”)

The recent outbreak of Coronavirus Disease ("COVID-19") since end of year 2019 has seen significant cases increased worldwide which prompted the World Health Organisation to declare it as pandemic on 11 March 2020. A series of precautionary and control measures have been and continued to be implemented across the world. The Malaysian GovernmentimposedtheMovementControlOrder("MCO")from18March2020to3May2020,ConditionalMovementControl Order ("CMCO") from 4 May 2020 to 9 June 2020 and Recovery Movement Control Order (“RMCO”) from 10 June 2020 to 31 August 2020. Consequently, these restrictions are expected to have material adverse effect on the Malaysia's economy for year 2020. The deterioration of world economy has also prompted additional uncertainties to the business of the Group in year 2020.

As at the date of this report, the management of the Group has assessed the overall impact of the situation on the Group's operations and financial position, and it is concluded that there are no material adverse effects on the financial statements for the financial year ended 29 February 2020 as the pandemic has yet to run its full course, hence the current situation is still fluid. The Directors shall continuously assess the impact of COVID-19 on its operations as well as thefinancialpositionforthefinancialyearending28February2021.

44. OPERATING SEGMENTS - GROUP

(a) Business segments

The Group is organised on three major operating segments. These operating segments are monitored separately for the purpose of making decisions about resource allocation and performance assessment. Segment performance is evaluated based on operating profit or loss which, in certain respects as explained in the table below, is measured differently from operating profit in the consolidated financial statements. The following summary describes the operations in each of the Group’s reportable segments:-

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

fittings, flanges, valves and other related products. Manufacturing Manufacturing and supply of butt-welded carbon steel fittings 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, hot dip galvanising, treatment and coating of metals, engineering fabrication works and manufacturing and trading of industrial consumable products.

Investment holding Investment holding, property investment and management service.

Transfer prices between operating segments are on negotiated basis.

The Group has aggregated certain operating segments to form a reportable segment due to the similar nature and operational characteristics of the services.

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ANNUAL REPORT 2020


44.

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140



44. OPERATING SEGMENTS – GROUP (CONT’D)

(a) Business segments (cont’d)

Investment Consolidation Trading Manufacturing holding adjustments Notes Consolidated2020 RM RM RM RM RM

Assets

Segmentassets 480,043,801 426,594,526 284,886,636 (286,127,125) D 905,397,838

Investment in an associate company 2,819,276 – – – 2,819,276

Additions to non-current assets other than financial instruments and deferred taxassets 5,446,545 12,594,689 – (994,560) E 17,046,674

Liabilities

Segmentliabilities 41,970,510 21,714,490 17,039,507 (38,655,407) F 42,069,100

2019

Assets

Segmentassets 454,952,803 458,902,620 286,713,318 (315,514,736) D 885,054,005

Investment in an associate company 2,782,458 – – – 2,782,458

Additions to non-current assets other than financial instruments and deferred taxassets 4,690,008 22,833,262 – 8,111,043 E 35,634,313

Liabilities

Segmentliabilities 50,430,587 53,749,889 18,217,373 (69,004,567) F 53,393,282

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ANNUAL REPORT 2020




Notes to the nature of adjustments and eliminations to arrive at amounts reported in the consolidated financial statements:-

A. Inter-segment revenues are eliminated on consolidation.

B. The following items are added to/(deducted from) segment profit to arrive at “profit before tax” presented in the consolidated profit or loss:-

2020 2019 RM RM Segmentprofit 56,038,999 69,662,877Interestincome 1,124,674 919,112Financecosts (11,177,831) (10,509,124)Shareofresultsofassociatecompany 36,818 719,293

Profitbeforetax 46,022,660 60,792,158

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

2020 2019 RM RM

Allowanceforimpairmentofreceivables (1,912,692) (3,237,495)Baddebtswrittenoff (19) (17,706)Property,plantandequipmentwrittenoff (279,701) (14,774)Inventorieswrittendown (3,137,227) (2,536,300)Reversalofinventorieswrittendown 1,013,690 84,069Allowance for impairment of receivables no longer required 2,569,246 4,402,242Fair value loss adjustment on investment properties – (300,000)Revaluation loss on property, plant and equipment (169,944) –Gainondisposalofproperty,plantandequipment 325,825 90,765Unrealised gain on foreign exchange 923,499 –EmployeesShareOptionSchemeexpenses (1,653,157) (1,027,702)

(2,320,480) (2,556,901)

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

2020 2019 RM RM

Segmentassets 905,397,838 885,054,005Investmentinanassociatecompany 2,819,276 2,782,458Deferred tax assets 3,900 2,016,401Taxrecoverable 767,294 1,832,051

Totalassets 908,988,308 891,684,915

142





Notes to the nature of adjustments and eliminations to arrive at amounts reported in the consolidated financial statements (cont’d):-

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

2020 2019 RM RM

Property,plantandequipment 13,731,864 21,859,220Capitalwork-in-progress 3,314,810 13,775,093

17,046,674 35,634,313

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

2020 2019 RM RM

Segmentliabilities 42,069,100 53,393,282Financeleaseliabilities – 7,568,635Leaseliabilities 13,622,684 –Borrowings 178,283,869 236,169,431Taxpayable 1,655,850 3,582,587Deferredtaxliabilities 14,469,460 4,521,074

Total liabilities 250,100,963 305,235,009

(b) Geographical information

The Group’s revenue and non-current assets information based on geographical location are as follows:-

Revenue Non-current assets 2020 2019 2020 2019 RM RM RM RM

Malaysia* 573,224,685 579,899,991 338,736,442 275,493,311RepublicofSingapore 10,494,062 10,814,041 1,826,805 520,780UnitedKingdom 18,824,023 18,500,530 13,874,413 13,123,917

602,542,770 609,214,562 354,437,660 289,138,008

* Company’s home country

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ANNUAL REPORT 2020



(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:-

2020 2019 RM RM

Property,plantandequipment 343,538,547 230,563,255Prepaidlandleasepayments – 32,551,772Capitalwork-in-progress 561,325 13,690,978Investmentinanassociatecompany 2,819,276 2,782,458Deferred tax assets 3,900 2,016,401Derivativesfinancialinstruments 20,481 43,015Goodwill on acquisition 1,194,131 1,190,129Investment properties 6,300,000 6,300,000

354,437,660 289,138,008

(c) Major customers

The Group does not have any revenue from a single external customer which represents 10% or more of the Group’s revenue.

45. FINANCIAL INSTRUMENTS

Categories of Financial Instruments

The table below provides an analysis of financial instruments categorised as follows:-- Amortisedcost(AC);and- Fair value through other comprehensive income (FVTOCI).

Group 2020 Carrying amount AC FVTOCI RM RM RM

Financial assetsDerivatives financial instruments 95,393 – 95,393Tradereceivables 111,279,091 111,279,091 –Otherreceivables 9,384,010 9,384,010 –Amountduefromanassociatecompany 35,710,624 35,710,624 –Fixed deposits with licensed banks 2,616,452 2,616,452 –Cashandbankbalances 86,084,929 86,084,929 –

245,170,499 245,075,106 95,393

Financial liabilities Leaseliabilities 13,622,684 13,622,684 –Borrowings 178,283,869 178,283,869 –Amountduetoanassociatecompany 88,845 88,845 –Tradepayables 24,949,183 24,949,183 –Other payables 13,309,142 13,309,142 –

230,253,723 230,253,723 –

144



45. FINANCIAL INSTRUMENTS (CONT’D)

Categories of Financial Instruments (cont’d)

Group (cont’d) 2019 Carrying amount AC FVTOCI RM RM RM

Financial assetsDerivativesfinancialinstruments 839,825 – 839,825Tradereceivables 129,804,623 129,804,623 –Otherreceivables 21,998,697 21,998,697 –Amountduefromanassociatecompany 36,517,705 36,517,705 –Fixed deposits with licensed banks 2,546,650 2,546,650 –Cashandbankbalances 48,606,847 48,606,847 –

240,314,347 239,474,522 839,825

Financial liabilitiesFinanceleaseliabilities 7,568,635 7,568,635 –Borrowings 236,169,431 236,169,431 –Amountduetoanassociatecompany 319,874 319,874 –Tradepayables 34,238,989 34,238,989 –Other payables 15,042,340 15,042,340 –

293,339,269 293,339,269 –

Company 2020 Carrying amount AC FVTOCI RM RM RM

Financial assetsDerivatives financial instruments 95,393 – 95,393Amount due from subsidiary companies 32,049 32,049 –Cashandbankbalances 2,270,000 2,270,000 –

2,397,442 2,302,049 95,393

Financial liabilitiesBorrowings 2,571,828 2,571,828 –Otherpayables 367,709 367,709 –

2,939,537 2,939,537 –

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Categories of Financial Instruments (cont’d)

Company (cont’d) 2019 Carrying amount AC FVTOCI RM RM RM

Financial assets Derivativesfinancialinstruments 78,464 – 78,464Amount due from subsidiary companies 5,211,122 5,211,122 –Cashandbankbalances 1,859,094 1,859,094 –

7,148,680 7,070,216 78,464

Financial liabilitiesBorrowings 9,697,383 9,697,383 –Amount due to subsidiary companies 424 424 –Otherpayables 315,581 315,581 –

10,013,388 10,013,388 –

Net gains and losses arising from financial instruments


Net gains/(losses) on:- -FinancialassetscategorisedasAC 2,886,427 2,066,153 311,957 100,203-FinancialliabilitiescategorisedasAC (10,523,169) (9,348,400) (465,087) (380,634)

(7,636,742) (7,282,247) (153,130) (280,431)

Included in gains/(losses) on financial instrument categorised as amortised cost are:-


Totalinterestincomeforfinancialassets 1,124,674 919,112 311,957 100,203Totalinterestexpensesforfinancialliability (10,341,450) (9,348,400) (465,087) (380,634)

146




Risk management objectives and policies

The Group is exposed to various risks in relation to financial instruments. The Group’s financial assets and financial liabilitiesbycategoryaresummarisedinNote3.8.1and3.8.2respectively.Themaintypesofrisksareforeigncurrencyrisk, interest rate risk, credit risk and liquidity risk.

Financial risk management policy is established to ensure that adequate resources are available for the development of the Group’s businesses whilst managing its foreign currency risk, interest rate risk, credit risk and liquidity risk. The Group operates within clearly defined policies and procedures that are approved by the Board of Directors to ensure the effectiveness of the risk management process.

(a) Foreign currency risk

Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates.

The Group is exposed to foreign currency risk mostly on its sales and purchases that are denominated in a currency other than the functional currency of the Group. The currencies giving rise to this risk are primarily US Dollar (“USD”), Singapore Dollar (“SGD”), Great Britain Pound Sterling (“GBP”) and EURO.

The Group uses forward exchange contracts to hedge its foreign currency risk and forward exchange contracts have maturities of less than one year from the reporting date. Where necessary, the forward exchange contracts are rolled over at maturity.

Based on carrying amounts as at the reporting date, foreign currency denominated financial assets and financial liabilities which expose the Group and the Company to currency risk are disclosed below:-

USD SGD GBP EURO RM RM RM RMGroup2020Financial assetsTradereceivables 25,199,253 2,143,823 5,258,134 –Otherreceivables 4,282,073 121,125 611,835 –Amount due from an associate company 5,635,514 – – –Cashandbankbalances 20,690,928 2,800,756 7,597,936 1,883,171

55,807,768 5,065,704 13,467,905 1,883,171

Financial liabilitiesBorrowings (14,615,733) – (1,041,375) –Leaseliabilities – (47,833) – –Tradepayables (7,667,361) (3,480,414) (573,000) (130,075)Otherpayables (13,625) (67,479) (771,716) –

(22,296,719) (3,595,726) (2,386,091) (130,075)

Netexposure 33,511,049 1,469,978 11,081,814 1,753,096

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Risk management objectives and policies (cont’d)

(a) Foreign currency risk (cont’d)

Based on carrying amounts as at the reporting date, foreign currency denominated financial assets and financial liabilities which expose the Group and the Company to currency risk are disclosed below (cont’d):-

USD SGD GBP EURO RM RM RM RMGroup (cont’d)2019Financial assetsTradereceivables 46,264,270 1,716,284 5,761,533 –Otherreceivables 19,398,328 126,168 489,221 632,194Amountduefromanassociatecompany 14,857,105 – – –Cashandbankbalances 3,689,593 2,019,323 7,390,635 118,756

84,209,296 3,861,775 13,641,389 750,950

Financial liabilitiesBorrowings (3,688,056) – (980,731) –Financeleaseliabilities – (137,169) (154,538) –Tradepayables (6,063,451) (3,460,627) (809,330) (965,455)Otherpayables (2,477,975) (452,112) – –

(12,229,482) (4,049,908) (1,944,599) (965,455)

Netexposure 71,979,814 (188,133) 11,696,790 (214,505)

USD SGD GBP EURO RM RM RM RMCompany2020Financial assetCashandbankbalances – – 258,726 –

Netexposure – – 258,726 –

2019Financial assetCashandbankbalances – – 76,019 –

Netexposure – – 76,019 –

148





(a) Foreign currency risk (cont’d)

Foreign currency sensitivity analysis

The following table illustrates the sensitivity of profit in regards to the Group’s and the Company’s financial assets and financial liabilities and the RM/USD exchange rate, RM/SGD exchange rate, RM/GBP exchange rate and RM/EURO exchange rate with ‘all other things are being equal’.

It assumes a +/- 3% (2019: 3%) change of the RM/USD, RM/SGD, RM/GBP and RM/EURO exchange rates respectively. The percentage has been determined based on the average market volatility in exchange rates in the previous 12 months. The sensitivity analysis is based on the Group's and the Company’s foreign currency denominated financial instruments held at each reporting date.

If the RM had strengthened against the USD, SGD, GBP and EURO by 3% (2019: 3%) respectively, this would have the following impact:-

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

2020 (1,005,331) (44,099) (332,454) (52,593) (1,434,477)

2019 (2,159,394) 5,644 (350,904) 6,435 (2,498,219)

Company USD SGD GBP EURO Total RM RM RM RM RM

2020 – – (7,762) – (7,762)

2019 – – (2,281) – (2,281)

If the RM had weakened against the USD, SGD, GBP and EURO by 3% (2019: 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.

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(b) Interest rate risk (cont’d)

The Group’s interest rate management objective is to manage interest expenses consistent with maintaining an acceptable level of exposure to interest rate fluctuation.

Interest rate sensitivity

The Group and the Company are exposed to changes in market interest rates through bank borrowings at variable interest rates. Other borrowings are at fixed interest rates. The exposure to interest rates for the Group’s short term placement is considered immaterial.

The interest rate profile of the Group’s and of the Company’s significant interest-bearing financial instruments, based on carrying amounts as at the end of the reporting period is as follows:-

Group Company2020 RM RMFixed rate instrumentsFinancial asset Fixed deposits with licensed banks 2,616,452 –

Financial liabilities Leaseliabilities (13,622,684) – Acceptedbills-i (418,466) – Bankers’acceptance (92,742,534) – Onshoreforeigncurrencyloans (14,615,733) – Cleanimportloans (1,041,375) – Revolving credit (5,000,000) – Termloans (2,571,828) (2,571,828)

(127,396,168) (2,571,828)

Floating rate instrumentsFinancial liabilities Termloans (7,716,882) – Termloans-i (54,177,051) –

Netfinancialliabilities (61,893,933) –

150





(b) Interest rate risk (cont’d)

Interest rate sensitivity (cont’d)

The interest rate profile of the Group’s and of the Company’s significant interest-bearing financial instruments, based on carrying amounts as at the end of the reporting period is as follows (cont’d):-

Group Company2019 RM RMFixed rate instrumentsFinancial asset Fixed deposits with licensed banks 2,546,650 – Financial liabilities Financeleaseliabilities (7,568,635) – Acceptedbills-i (20,047,173) – Bankers’ acceptance (133,139,120) – Onshoreforeigncurrencyloans (3,688,056) – Cleanimportloans (980,731) – Revolvingcredit (17,569,389) (5,069,389) Termloans (4,627,994) (4,627,994)

(185,074,448) (9,697,383)

Floating rate instrumentsFinancial liabilities Termloans (13,917,596) – Termloans-i (40,084,825) – Bankoverdraft (2,114,547) –

Netfinancialliabilities (56,116,968) –

The following table illustrates the sensitivity of profit to a reasonably possible change in interest rates of +/- 25 (2019: 25) basis points (“bp”). These changes are considered to be reasonably possible based on observation of current market conditions. The calculations are based on a change in the average market interest rates for each period, and the financial instruments held at each reporting date that are sensitive to changes in interest rates. All other variables are held constant.

(Decrease)/Increase on profit for the financial year + 25 bp - 25 bpGroup RM RM

29February2020 (154,735) 154,735

28February2019 (140,292) 140,292

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(c) Credit risk

Credit risk is the risk that counterparty fails to discharge an obligation to the Group and the Company. The Group’s and the Company’s maximum exposure to credit risk is limited to the carrying amount of financial assets summarised at the reporting date, as summarised below:-


Classes of financial assets – carrying amounts:-Cashandcashequivalents 88,701,381 51,153,497 2,270,000 1,859,094Tradereceivables 111,279,091 129,804,623 – –Otherreceivables 9,384,010 21,998,697 – –Amountduefromanassociatecompany 35,710,624 36,517,705 – –Amount due from subsidiary companies – – 32,049 5,211,122

245,075,106 239,474,522 2,302,049 7,070,216

The Group continuously monitors defaults of customers and other counterparties, identified either individually or by group, and incorporate this information into its credit risk controls. Where available at reasonable cost, external credit ratings and/or reports on customers and other counterparties are obtained and used. The Group’s policy is to deal only with creditworthy counterparties.

The Group’s management considers that all the above financial assets that are not impaired or past due for each of the reporting dates under review are of good credit quality.

The ageing analysis of trade receivables of the Group is as follows:-

Allowance for impairment loss Expected Expected credit loss credit loss (individually (collectively Gross impaired) impaired) Total Net RM RM RM RM RM

2020Withinterms 63,876,626 – – – 63,876,626Pastdue1to30days 17,582,085 – – – 17,582,085Pastdue31to60days 13,315,198 – – – 13,315,198Pastdue61to90days 8,780,210 – – – 8,780,210Pastdue91to120days 3,949,021 39,312 – 39,312 3,909,709Pastduemorethan120days 10,120,220 6,304,957 – 6,304,957 3,815,263

117,623,360 6,344,269 – 6,344,269 111,279,091

152





(c) Credit risk (cont’d)

The ageing analysis of trade receivables of the Group is as follows (cont’d):-

Allowance for impairment loss Expected Expected credit loss credit loss (individually (collectively Gross impaired) impaired) Total Net RM RM RM RM RM

2019Withinterms 46,973,787 – – – 46,973,787Pastdue1to30days 25,670,980 – – – 25,670,980Pastdue31to60days 16,284,569 – – – 16,284,569Pastdue61to90days 16,886,387 – – – 16,886,387Past due 91 to 120 days 6,056,146 – – – 6,056,146Pastduemorethan120days 25,164,105 7,231,351 – 7,231,351 17,932,754

137,035,974 7,231,351 – 7,231,351 129,804,623

None of the Group’s financial assets are secured by collateral or other credit enhancements and none of the carrying amount of financial assets whose terms have been renegotiated that would otherwise be past due or impaired.

In respect of trade and other receivables, the Group is not exposed to any significant credit risk exposure to any single counterparty or any group of counterparties having similar characteristics. Trade receivables consist of a large number of customers in various industries and geographical areas. Based on historical information about customer default rates, the management consider the credit quality of trade receivables that are not past due or impaired to be good.

The credit risk for cash and cash equivalents and short term placements is considered negligible, since the counterparties are reputable banks with high quality external credit ratings.

Financial guarantee The Company provides unsecured financial guarantees to financial institutions, finance lease creditors and third

parties in respect of credit facilities granted to certain subsidiary companies. The maximum exposure to credit risk is as disclosed in Note 42 to the Financial Statements as at the reporting date. The Company monitors on an ongoing basis the results of the subsidiary companies and repayments made by the subsidiary companies. As at the end of the reporting period, there was no indication that the subsidiary companies would default in payment.

(d) Liquidity risk

Liquidity risk is the risk arising from the Group and the Company not being able to meet their obligations due to shortage of funds.

In managing their exposures to liquidity risk, the Group and the Company maintain a level of cash and cash equivalents and bank credit facilities deemed adequate by the management to ensure that they will have sufficient liquidity to meet their liabilities as and when they fall due.

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(d) Liquidity risk (cont’d)

The following table shows the areas where the Group and the Company are exposed to liquidity risk:-

Group Company Current Non-current Current Non-current Less than Between More than Less than Between More than 1 year 1 to 5 years 5 years 1 year 1 to 5 years 5 years RM RM RM RM RM RM2020Non-derivative financial liabilitiesTermloans 4,917,497 6,252,917 – 2,114,477 512,231 –Termloans-i 13,906,002 43,625,001 4,684,527 – – –Bankers’ acceptance and accepted bills-i 93,161,000 – – – – –Cleanimportloans 1,041,375 – – – – –Onshoreforeigncurrencyloans 14,615,733 – – – – –Leaseliabilities 3,461,822 6,790,545 7,784,608 – – –Tradepayables 24,949,183 – – – – –Otherpayables 13,309,142 – – 367,709 – –Revolving credit 5,000,000 – – – – –Amount due to an associate company 88,845 – – – – –

Total undiscounted financial liabilities 174,450,599 56,668,463 12,469,135 2,482,186 512,231 –

Financialguarantees* 736,415,521 – – – – –

2019Non-derivative financial liabilitiesTermloans 9,500,422 11,707,996 – 2,220,041 2,626,708 –Termloans-i 8,251,879 33,346,611 4,777,522 – – –Bankers’ acceptance and acceptedbills-i 153,186,293 – – – – –Bankoverdraft 2,114,547 – – – – –Cleanimportloans 980,731 – – – – –Onshoreforeigncurrencyloans 3,688,056 – – – – –Financeleaseliabilities 2,804,795 5,449,979 – – – –Tradepayables 34,238,989 – – – – –Otherpayables 15,090,386 264,649 – 315,581 – –Revolvingcredit 17,569,389 – – 5,069,389 – –Amount due to subsidiary companies – – – 424 – –Amount due to an associate company 319,874 – – – – –

Total undiscounted financial liabilities 247,745,361 50,769,235 4,777,522 7,605,435 2,626,708 –

Financialguarantees* 769,278,606 – – – – –

* This exposure is included in liquidity risk for illustration only. No financial guarantee was called upon by the holders as at the end of the reporting period.

154





(d) Liquidity risk (cont’d)

The above amounts reflect the contractual undiscounted cash flows, which may differ from the carrying values of the financial liabilities at the reporting date.

46. CAPITAL MANAGEMENT OBJECTIVE The primary capital management objective of the Group is to maintain a strong capital base and safeguard the Group’s

ability to continue as a going concern, so as to sustain future development of the business. There is no change to the objectives in financial years ended 2020 and 2019.

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:-


Totalequity 658,887,345 586,449,906 240,363,234 237,964,093Borrowings 191,906,553 243,738,066 2,571,828 9,697,383

Debt-to-equity ratio 0.29 0.42 0.01 0.04

TheGrouphascompliedwithPracticeNoteNo.17(Revisionon3August2009,22September2011and25March2015) of Main Market Listing Requirements of Bursa Malaysia Securities Berhad which requires the Group to maintain a consolidated shareholders’ equity not less than 25% of the issued and paid-up capital of the Company and such shareholders’ equity is not less than RM40 million.

47. FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying amounts of financial assets and financial 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.

155

ANNUAL REPORT 2020


47. FAIR VALUE OF FINANCIAL INSTRUMENTS (CONT’D)

Fair value hierarchy

The following table provides an analysis of financial instruments that are measured subsequent to initial recognition at fair value, grouped into Levels 1 to 3 based on the degree to which the fair value is observable.

Quoted in Significant active markets other Significant for identical observable unobservable instruments inputs inputs Total Level 1 Level 2 Level 3 RM RM RM RMGROUP

2020Financial assetDerivatives - Cross currency swap – 95,393 – 95,393

– 95,393 – 95,393

2019Financial assetDerivatives -Crosscurrencyswap – 839,825 – 839,825

– 839,825 – 839,825

COMPANY

2020Financial assetDerivatives - Cross currency swap – 95,393 – 95,393

2019Financial assetDerivatives -Crosscurrencyswap – 78,464 – 78,464

There were no transfers between Level 1 and 2 during the reporting period.

156


No. Tittle deed Address

(Land area)Gross build-

up areaSq.ft. Tenure

Description/Existing use

Net BookValue @

29.2.2020RM’000

Approximateage of

buildingyears

Date oflast

revaluation

1 HS(D)484896,PTD204334,Mukim Plentong,District of Johor Bahru,Johor Darul Takzim

PTD 204334,Jalan Platinum Utama,Pasir Gudang Industrial Estate,Zone12B,81700PasirGudang,Johor Darul Takzim

(899,754)521,171

Leaseholdexpiring on18.08.2070

4 blocks single storeyfactory buildings with1 unit 3-storey officeand 1 unit 5-storeycorporate office and

ancillary buildings

81,000 7-10 28.02.2020

2 Geran95058,95059and 95060. Lot No. 23190,23191 and 23192MukimKapar,DistrictofKlang,Selangor Darul Ehsan

Lot13257,13258and13259,Jalan Haji Abdul Manan,OffJalanMeru,41050Klang,Selangor Darul Ehsan

(544,353)331,485

Freehold 6 units of single storeydetached factories

(Identified for referenceas Factory A, B, C, D,

E and F)

52,000 Factory A,B,C - 30FactoryD-28Factory E - 13FactoryF-8

28.02.2020

3 HS(D)564272,PTD222449,Mukim Plentong,District of Johor Bahru,Johor Darul Takzim.

PTD 222449, Jalan Platinum 3, Pasir Gudang Industrial Estate, Zone12B,81700PasirGudang,Johor Darul Takzim.

(317,966)191,276


A single storeywarehouse with1 unit of double

storey office

30,000 1 28.02.2020

4 HS(D) 501116, PTD 209335,Mukim Plentong,District of Johor Bahru,Johor Darul Takzim

PLO 641, Jalan Platinum 1,Pasir Gudang Industrial Estate, Zone12B,81700PasirGudang,Johor Darul Takzim

(253,920) 107,666


2 units of single storeydetached warehouse

with 1 unit doublestorey office

23,300 8 28.02.2020

5 HS(D) 563306, PTD 5020,Mukim Sungai Tiram,District of Johor Bahru,Johor Darul Takzim.

PLO7,JalanRumbia4,KawasanPerindustrianTanjung Langsat,81700PasirGudang,Johor Darul Takzim

(189,768)91,182


A single storeydetached factory

and 1 unit 3-storeyoffice building

19,500 3 28.02.2020

6 HS(M)29537,LotPT34277,MukimandDistrictofKlang,HS(D)114965,LotPT17296,Pekan Baru Hicom,District of Petaling,Selangor Darul Ehsan

No.3,JalanTrompet33/8,Seksyen 33,40400 Shah Alam,Selangor Darul Ehsan

(123,549) 32,445

Leasehold expiring on11.12.2096

&28.11.2096

A single storeydetached warehousewith 2-storey officebuilding annexed

15,600 22 28.02.2020

7 HS(M)135,PTD14174&PTD14175(Lot1433),Mukim Pantai Timor,District of Pengerang,Johor Darul Takzim

PTD14174,KampungBukitGelugur,81600Pengerang,Johor Darul Takzim

(128,404)51,183

Freehold A single storeywarehouse andan office block

9,000 2 28.02.2020

8 SF209083,SF318990,SF211845,SF318991,SF184517Claymore,Tame Valley Industrial Estate,Tamworth

Claymore Tame ValleyIndustrial Estate, Tamworth,Staffordshire,B775DQ,UnitedKingdom

(63,310) 33,570

Freehold 5 units of buildingcomprising of

factories, warehousesand offices

6,110 32-38 23.03.2020

9 HS(D)125023,PTD71061,Mukim Plentong,District of Johor Bahru,Johor Darul Takzim

PLO 234, Jalan Tembaga Satu,Pasir Gudang Industrial Estate,81700PasirGudang,Johor Darul Takzim

(87,123) 42,782


A single storeydetached warehousewith 3-storey officebuildings annexed

5,700 21 28.02.2020

10 SF211341, Brent, Tame ValleyIndustrial Estate,Wilnecote, Tamworth

Unit 2, Brent, Tame ValleyIndustrial Estate, Wilnecote,Tamworth, Staffordshire,B775DF, UnitedKingdom

(46,760) 22,323

Freehold A single storeydetached factoryand warehouse

5,160 30 23.03.2020

LIST OFPROPERTIESAs at 29 February 2020

157

ANNUAL REPORT 2020

NOTICE OF FOURTEENTH (14TH)ANNUAL GENERAL MEETING

NOTICE IS HEREBY GIVEN that the Fourteenth (14th) Annual General Meeting of Pantech Group Holdings Berhad (“Pantech” or the “Company”) will be held at Ballroom 1 and 2, Level 2, Renaissance Johor Bahru Hotel, 2, Jalan Permas 11, Bandar Baru PermasJaya,81750Masai,JohorDarulTakzimonWednesday,19August2020at11.00a.m.forthefollowingpurposes:

AGENDA

AS ORDINARY BUSINESS

1. To receive the Audited Financial Statements for the financial year ended 29 February 2020 together with the Directors' and Auditors' Reports thereon.

2. To approve the payment of Directors’ fees and benefits up to the amount of RM200,000 for thefinancialyearending28February2021.

3. To re-elect the following Directors retiring pursuant to the Article 26.1 of Company’s Constitution and being eligible, offered themselves for re-election:

3.1 Dato’GohTeohKean3.2 Mr. Tan Ang Ang3.3 Mr. Lim Yoong Xao

4. To re-appoint Grant Thornton Malaysia PLT as Auditors of the Company and to authorise the Directors to fix their remuneration.

(Please refer toExplanatory Notes)

Resolution 1

Resolution 2Resolution 3Resolution 4

Resolution 5

AS SPECIAL BUSINESS

To consider, and if thought fit, to pass the following Resolutions:

5. ORDINARY RESOLUTION

AUTHORITY TO ISSUE SHARES BY THE COMPANY PURSUANT TO SECTIONS 75 AND 76 OF THE COMPANIES ACT 2016

“THAT subject always to the Companies Act 2016 (“the Act”), and approvals from any other governmental/regulatory authorities, the Directors of the Company be and are hereby empowered,pursuanttoSections75and76oftheAct,toissuesharesintheCompanyatany time and upon such terms and conditions and for such purposes as the Directors of the Company may, in their absolute discretion, deem fit provided that the aggregate number of shares to be issued pursuant to this resolution does not exceed 10% of the total number of issued shares of the Company at the time of submission to the authority AND THAT the Directors of the Company be and are hereby empowered to obtain the approval for the listing of and quotation for the additional shares so issued on Bursa Malaysia Securities Berhad (“Bursa Securities”) AND FURTHER THAT such authority shall continue to be in force until the conclusion of the next Annual General Meeting of the Company.”

Resolution 6

6. ORDINARY RESOLUTION

PROPOSED RENEWAL OF SHARE BUY-BACK AUTHORITY

“THAT subject to compliance with all applicable rules, regulations and orders made pursuant to the Companies Act 2016 (“the Act”), provisions in the Company’s Constitution, the Listing Requirements of Bursa Securities and any other relevant authorities, the Company be and is hereby authorised to purchase such number of ordinary shares of the Company (“Proposed Renewal of Share Buy-Back”) as may be determined by the Directors of the Company from time to time through Bursa Securities upon such terms and conditions as the Directors may deem fit and expedient in the interest of the Company PROVIDED THAT:

Resolution 7

158


6. ORDINARY RESOLUTION (CONT'D)

PROPOSED RENEWAL OF SHARE BUY-BACK AUTHORITY (CONT'D)

(1) the aggregate number of shares purchased or held does not exceed ten per centum (10%) of the total number of issued shares of the Company as quoted on Bursa Securitiesasatthepointofpurchase;

(2) the maximum fund to be allocated by the Company for the purpose of purchasing such number of ordinary shares shall not exceed the retained profit account of the Company. As at the latest financial year ended 29 February 2020, the audited retained profitaccountoftheCompanystoodatRM12,193,506;

(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 authorityisrenewedeitherunconditionallyorsubjecttoconditions;or

(b) the expiration of the period within which the next AGM of the Company is requiredbylawtobeheld;or

(c) revoked or varied by ordinary resolution passed by the shareholders of the Company in a general meeting.

whicheveroccursfirst;

AND THAT upon completion of the purchase(s) of the ordinary shares of the Company, the Directors of the Company be and are hereby authorised to deal with the ordinary shares so purchased in the following manner:

(a) tocanceltheordinarysharessopurchased;or(b) to retain the ordinary shares so purchased as treasury shares for distribution as dividend

toshareholdersand/orresellonBursaSecuritiesorsubsequentlycancelled;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.”

7. Totransactanyotherbusinessforwhichduenoticeshallhavebeengiven.

By order of the Board,SIEW SUET WEI (MAICSA 7011254)SSMPracticingCertificateNo.202008001690LIANG SIEW CHING (MAICSA 7000168)SSMPracticingCertificateNo.202008000879Company Secretaries

KualaLumpurDated: 21 July 2020

Notice of Fourteenth (14th) Annual General Meeting (cont’d)

159

ANNUAL REPORT 2020

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 10 August 2020. Only a depositor whose name appears on the Record of Depositors as at 10 August 2020 shall be entitled to attend the said meeting or appoint proxies to attend, speak and vote on his/her behalf

2. A member entitled to attend and vote at this AGM is entitled to appoint a proxy or attorney or in the case of a corporation, to appoint a duly authorised representative to attend, speak and vote in his place. A proxy may but need not be a member of the Company

3. Where a member is an authorised nominee as defined under the Securities Industry (Central Depositories) Act, 1991, it may appoint at least one (1) proxy but not more than two (2) proxies in respect of each Securities account it holds with ordinary shares of the Company standing to the credit of the said securities account.

4. Where a member is an exempt authorised nominee, it may appoint multiple proxies for each omnibus account it holds5. The instrument appointing a proxy shall be in writing under the hand of the appointer or his/her attorney duly authorised

in writing or, if the appointer is a corporation, either under the Corporation’s Common Seal or under the hand of an officer or attorney so authorised

6. The Proxy Form must be deposited at the Share Registrar’s office, Tricor Investor & Issuing House Services Sdn Bhd atUnit 32-01, Level 32, TowerA, VerticalBusinessSuite,Avenue3,BangsarSouth,No. 8, JalanKerinchi, 59200KualaLumpur,oralternatively,TricorCustomerServiceCentreatUnitG-3,GroundFloor,VerticalPodium,Avenue3,BangsarSouth,No.8,JalanKerinchi,59200KualaLumpurormayalsosubmittheproxyformelectronicallyviaTIIHOnlinewebsiteathttps://tiih.onlinenotlessthanforty-eight(48)hoursbeforethetimesetforholdingthemeetingoranyadjournment thereof. Please refer to the Administrative Details for submission of electronic Proxy Form.

EXPLANATORY NOTES

7. Audited Financial Statements for the financial year ended 29 February 2020

This Agenda item is meant for discussion only as under the provisions of Section 340(1)(a) of the Companies Act 2016, the audited financial statements do not require the approval of the shareholders. As such, this matter will not be put forward for voting.

8. Ordinary Resolution No. 1: Payment of Directors’ Fees & Benefits

Pursuant to Section 230(1) of the Companies Act 2016, the shareholders’ approval is sought for the proposed payment ofDirectors’Feesforfinancialyearended28February2021andBenefitstotheNon-ExecutiveDirectors(“NEDs”).Thecalculation of the benefits which include meeting allowance is based on the estimated number of scheduled and/or special Board and Board Committees’ meetings and on the assumption that the number of NEDs in office until the next AGM remains the same.

9. Ordinary Resolution No. 2, 3 and 4: Re-election of Directors Article 26.1 of the Company’s Constitution provides that an election of Directors shall take place each year at the annual

general meeting of the Company where one third (1/3) of the Directors for the time being, or, if their number is not three (3) or a multiple of three (3), then the number nearest to one third (1/3) shall retire from office and be eligible for re-election. PROVIDED ALWAYS THAT all Directors shall retire from office once at least in each three (3) years but shall be eligible for re-election. Hence, three (3) out of nine (9) Directors are to retire in accordance with Article 26.1 of the Constitution.

The Board through its Nominating Committee had assessed each of the retiring Directors, and considered the following factors in determining their eligibility for re-election:

(a) therequiredmixofskillsandexperience;(b) thecharacter,knowledge,expertise,professionalism,integrityandtimeavailability;(c) theabilitytodischargesuchresponsibilitiesandfunctionsasexpectedasDirector;and(d) attendance at Board and Committee Meetings

The profiles of the Directors standing for re-election are set out in the Directors’ Profile of the Annual Report 2020.


160


EXPLANATORY NOTES (CONT’D)

10. Ordinary Resolution No. 5: Re-appointment of Auditors

The Board and Audit Committee had at their respective meetings on 11 June 2020 recommended the re-appointment ofGrantThorntonMalaysiaPLTforthefinancialyearending28February2021.GrantThorntonMalaysiaPLThavemetthe criteria prescribed under the Paragraph 15.21 of the MMLR and indicated their willingness to continue their services for the next financial year.

11. Ordinary Resolution No. 6: Authority under Sections 75 And 76 of the Companies Act 2016 for the Directors to allot and issue shares

The Company had during its 13th AGM held on 25 July 2019 obtained from its shareholders, a general mandate pursuanttoSections75and76oftheCompaniesAct2016toissueandallotsharesintheCompanyuptoanamountnot exceeding 10% of the issued share capital of the Company and this mandate had not being exercised by the Company.

The proposed Ordinary Resolution 6 is a renewal mandate of the general mandate for the issuance of shares by the CompanyunderSections75and76oftheCompaniesAct2016.Themandate,ifpassed,willgivetheDirectorsoftheCompany, the authority to issue and allot shares in the Company up to an amount not exceeding 10% of the issued share capital of the Company for the time being for such purposes as the Directors would consider to be in the best interest of the Company. This authority, unless revoked or varied by the Company in a general meeting will expire at the conclusion of the next AGM of the Company.

This mandate would provide the Company the flexibility to raise fund including but not limited to placing of shares to finance future projects, working capital and/or acquisitions without having to convene a general meeting.

12. Ordinary Resolution 7 – Proposed Renewal of Share Buy-Back Authority

This resolution will empower the Directors of the Company to purchase the Company’s shares up to ten per centum (10%) of the total number of issued shares of the Company by utilising the funds allocated which shall not exceed the total retained profits of the Company. This authority, unless revoked or varied at a general meeting, will expire at the conclusion of the next AGM of the Company.

Further information on the Proposed Renewal of Share Buy-Back Authority are set out in the Share Buy-Back Statement dated 21 July 2020 which has been despatched together with the Company’s Annual Report 2020.

STATEMENT ACCOMPANYING NOTICE OF 14TH ANNUAL GENERAL MEETING(PursuanttoParagraph8.27(2)oftheMainMarketListingRequirementsofBursaMalaysiaSecuritiesBerhad)

1. Details of individual who are standing for election as Directors (excluding Directors standing for re-election)

No individual is seeking election as a Director at the 14th AGM of the Company.

2. General mandate for issue of securities in accordance with Paragraph 6.03 of the Listing Requirements of Bursa Securities

The Company will seek shareholders’ approval on the general meeting for issue of securities in accordance with Paragraph 6.03(3) of the MMLR of Bursa Securities. Please refer to the Proposed Ordinary Resolution 6 as stated in the Notice of the 14th AGM of the Company for details.


161

ANNUAL REPORT 2020

ANALYSIS OFSHAREHOLDINGS

As at 30 June 2020

NumberofSharesIssued : 751,006,672Voting Rights : One Vote Per Ordinary ShareNo.ofShareholders : 9,583

DISTRIBUTION OF SHAREHOLDINGS AS AT 30 JUNE 2020

No. of % of No. of % ofCategory Shareholders Shareholders Shares* Shares*

Less than 100 1,363 14.22 52,135 0.01100–1,000 617 6.44 223,571 0.031,001–10,000 3,215 33.55 16,022,846 2.1610,001–100,000 3,787 39.52 108,871,532 14.66100,001–lessthan5%ofissuedshares 598 6.24 443,361,241 59.695%andaboveofissuedshares 3 0.03 174,203,268 23.45

Total 9,583 100.00 742,734,593 100.00

Note: * Excluding8,272,079treasurysharesretainedbytheCompany

LIST OF SUBSTANTIAL SHAREHOLDERS AS AT 30 JUNE 2020

Direct IndirectNo. Names No. of Shares %* No. of Shares %* 1. CTLCapitalHoldingSdnBhd 134,277,654 18.08 – –2. GLManagementAgencySdnBhd 96,798,228 13.03 – –3. Employees Provident Fund Board 45,633,156 6.14 – – 4. Dato’ChewTingLeng 8,186,625 1.10 134,429,154 18.10 (a)

5. DatinShumKahLin – – 142,615,779 19.20 (b)

6. Dato’GohTeohKean 6,169,625 0.83 96,798,228 13.03 (c)

7. DatinLeeSockKee – – 102,967,853 13.86 (d)

Note:* Excludingatotalof8,272,079sharesbought-backbytheCompanyandretainedastreasuryshares

162


Analysis of Shareholdings (cont’d)

DIRECTORS’ INTERESTS IN SHARES AS AT 30 JUNE 2020

Direct IndirectNo. Names No. of Shares %* No. of Shares %*

1. Dato’ChewTingLeng 8,186,625 1.10 134,429,154 18.10 (a)

2. Dato’GohTeohKean 6,169,625 0.83 96,798,228 13.03 (c)

3. TanAngAng 12,426,434 1.67 2,170,476 0.29 (e)

4. ToTaiWai 14,448,641 1.95 – – –5. NgLeeLee 8,820,967 1.19 194,691 0.03 (f)

6. Sakinah Binti Salleh 90,900 0.01 – – –7. LimYoongXao – – 2,020 0.00 (g)

8. NoorainiBintiMohdYasin – – – – –9. Dato’ Sri Yap Tian Leong – – – – –

Notes:(a) DeemedinterestedbyvirtueofhisandhisspouseDatinShumKahLin’sinterestinCTLCapitalHoldingSdnBhdpursuant

toSection8oftheCompaniesAct,2016(“Act”)andbyvirtueofhisdaughterMsChewZhiyin’sdirectshareholdingintheCompany pursuant to Section 59(11) of the Act.

(b) Deemed interested by virtue of her and her spouse Dato’ Chew Ting Leng’s interest in CTL Capital Holding Sdn Bhd pursuanttoSection8oftheAct,andbyvirtueofherspouseDato’ChewTingLeng’sanddaughter,MsChewZhiyin’sdirect shareholdings in the Company pursuant to Section 59(11) of the Act.

(c) DeemedinterestedbyvirtueofhisandhisspouseDatinLeeSockKee’sinterestsinGLManagementAgencySdnBhdpursuanttoSection8oftheAct.

(d) DeemedinterestedbyvirtueofherandherspouseDato’GohTeohKean’sinterestsinGLManagementAgencySdnBhdpursuanttoSection8oftheAct,andbyvirtueofherspouseDato’GohTeohKean’sdirectshareholdingintheCompanypursuant to Section 59(11) of the Act.

(e) Deemed interested by virtue of his spouse Madam Yong Yui Kiew’s and son, Mr Jairus Tan Vern Hsien’s directshareholdings in the Company pursuant to Section 59(11) of the Act.

(f) Deemed interested by virtue of her spouse Mr Wong Chong Peng’s direct shareholding in the Company pursuant to Section 59(11) of the Act.

(g) Deemed interested by virtue of his spouse Madam Wong Hui Chin’s direct shareholding in the Company pursuant to Section 59(11) of the Act.

*Excludingatotalof8,272,079sharesbought-backbytheCompanyandretainedastreasuryshares

163

ANNUAL REPORT 2020

Analysis of Shareholdings (cont’d)

30 LARGEST SHAREHOLDERS AS AT 30 JUNE 2020

No. Shareholders Shareholdings %*

1. CTLCAPITALHOLDINGSDNBHD 71,862,928 9.682. GLMANAGEMENTAGENCYSDNBHD 53,034,898 7.143. AMSECNOMINEES(TEMPATAN)SDNBHD 43,763,330 5.89 PLEDGEDSECURITIESACCOUNT-AMBANK(M)BERHADFOR GL MANAGEMENT AGENCY SDN BHD4. ALLIANCEGROUPNOMINEES(TEMPATAN)SDNBHD 36,349,019 4.89 PLEDGED SECURITIES ACCOUNT FOR CTL CAPITAL HOLDING SDN BHD 5. CITIGROUPNOMINEES(TEMPATAN)SDNBHD 27,503,274 3.70 EMPLOYEES PROVIDENT FUND BOARD 6. LEELIANGMONG 22,336,608 3.017. ALLIANCEGROUPNOMINEES(TEMPATAN)SDNBHD 20,523,595 2.76 PLEDGED SECURITIES ACCOUNT FOR CTL CAPITAL HOLDING SDN BHD 8. CITIGROUPNOMINEES(ASING)SDNBHD 17,381,292 2.34 EXEMPTANFORCITIBANKNEWYORK(NORGESBANK14) 9. CITIGROUPNOMINEES(TEMPATAN)SDNBHD 9,744,682 1.31 EMPLOYEES PROVIDENT FUND BOARD (RHBISLAMIC) 10. CITIGROUPNOMINEES(TEMPATAN)SDNBHD 8,385,200 1.13 EMPLOYEES PROVIDENT FUND BOARD (AMUNDI) 11. CHEWTINGLENG 8,186,625 1.1012. TOTAIWAI 7,689,002 1.0413. CIMBGROUPNOMINEES(ASING)SDNBHD 7,186,119 0.97 EXEMPTANFORDBSBANKLTD(SFS) 14. CIMSECNOMINEES(TEMPATAN)SDNBHD 7,134,385 0.96 CIMBFORLEEKENGHONG(PB)15. KONGCHIONGLEE 6,189,854 0.8316. GOHTEOHKEAN 6,169,625 0.8317. KOPERASIPERMODALANFELDAMALAYSIABERHAD 6,024,600 0.8118. CTLCAPITALHOLDINGSDNBHD 5,542,112 0.7519. TAN ANG ANG 5,146,412 0.6920. PUBLIC NOMINEES (TEMPATAN) SDN BHD 4,540,000 0.61 PLEDGEDSECURITIESACCOUNTFORCHONGKHONGSHOONG(E-IMO/JSI) 21. NG LEE LEE 4,520,433 0.6122. NGLEELEE 4,300,534 0.5823. MAYBANKNOMINEES(TEMPATAN)SDNBHD 4,250,000 0.57 PLEDGEDSECURITIESACCOUNTFORCHONGKHONGSHOONG 24. LEE LIANG MONG 4,196,332 0.5625. TO TAI WAI 3,943,399 0.5326. AFFINHWANGNOMINEES(TEMPATAN)SDNBHD 3,754,683 0.51 PLEDGED SECURITIES ACCOUNT FOR TAN ANG ANG 27. TANANGANG 3,525,339 0.4728. CITIGROUPNOMINEES(ASING)SDNBHD 3,482,272 0.47 CBNYFORDIMENSIONALEMERGINGMARKETSVALUEFUND 29. LIMKHUANENG 3,000,000 0.4030. HSBCNOMINEES(TEMPATAN)SDNBHD 2,847,600 0.38 HSBC (M) TRUSTEE BHD FOR RHB SMALL CAP OPPORTUNITY UNIT TRUST

TOTAL: 412,514,152 55.54

* Excludingatotalof8,272,079sharesbought-backbytheCompanyandretainedastreasuryshares

164


No.WarrantsIssued : 89,449,491Warrants2010/2020(“WarrantA”)Exercise Price of Warrants : RM0.50Expiry Date of Warrants : 21/12/2020No Of Warrant Holders : 1,105

DISTRIBUTION OF WARRANT A HOLDINGS

No. of % of No. of % of Warrant Warrant Warrant WarrantSize of Holdings Holders Holders Holdings Holdings

Lessthan100 193 17.47 7,672 0.01100-1,000 135 12.22 63,346 0.071,001–10,000 365 33.03 1,343,864 1.5010,001–100,000 310 28.05 10,566,744 11.82100,001 – less than 5% issued Warrants 100 9.05 41,246,432 46.115%andaboveofissuedWarrants 2 0.18 36,221,433 40.49

1,105 100.00 89,449,491 100.00

DIRECTORS’ INTERESTS IN WARRANT A AS AT 30 JUNE 2020

Direct Indirect No. of No. ofNo. Names Warrants % Warrants %

1. Dato’ChewTingLeng – – 20,815,677 23.27 (a)

2. Dato’GohTeohKean – – 15,405,756 17.22 (b)

3. Tan Ang Ang – – – – –4. To Tai Wai – – – – –5. Ng Lee Lee – – – – –6. Sakinah Binti Salleh – – – – –7. LimYoongXao – – – – –8. NoorainiBintiMohdYasin – – – – –9. Dato’ Sri Yap Tian Leong – – – – –

Notes:(a) DeemedinterestedbyvirtueofhisinterestinCTLCapitalHoldingSdnBhdpursuanttoSection8oftheAct.(b) DeemedinterestedbyvirtueofhisinterestinGLManagementAgencySdnBhdpursuanttoSection8oftheAct.

ANALYSIS OFwARRANT HOLDINGSAs at 30 June 2020

165

ANNUAL REPORT 2020

30 LARGEST WARRANT A HOLDERS AS AT 30 JUNE 2020

WarrantNo. Warrant Holders Holdings %

1. CTLCAPITALHOLDINGSDNBHD 20,815,677 23.272. AMSECNOMINEES(TEMPATAN)SDNBHD 15,405,756 17.22 PLEDGEDSECURITIESACCOUNT-AMBANK(M)BERHADFOR GL MANAGEMENT AGENCY SDN BHD3. MAYBANKNOMINEES(TEMPATAN)SDNBHD 4,020,000 4.49 PLEDGEDSECURITIESACCOUNTFORCHONGKHONGSHOONG4. KENANGANOMINEES(TEMPATAN)SDNBHD 2,028,060 2.27 PLEDGED SECURITIES ACCOUNT FOR TIMMY GAN VE LI 5. TONGAHMOI@TEONGSOOKENG 1,600,000 1.796. MAYBANKNOMINEES(TEMPATAN)SDNBHD 1,000,000 1.12 PLEDGED SECURITIES ACCOUNT FOR WONG LAI MOEY7. CGS-CIMBNOMINEES(TEMPATAN)SDNBHD 960,000 1.07 PLEDGEDSECURITIESACCOUNTFORWONGLAIMOEY(MY1706)8. RHBNOMINEES(TEMPATAN)SDNBHD 908,300 1.01 PLEDGED SECURITIES ACCOUNT FOR WONG TOONG YEW9. ONG SOO THIAH 906,000 1.0110. MAYBANKNOMINEES(TEMPATAN)SDNBHD 900,000 1.01 PLEDGEDSECURITIESACCOUNTFORLEEKOKHONG11. EELICHEN 867,840 0.9712. MAYBANKNOMINEES(TEMPATAN)SDNBHD 866,200 0.97 LIM PIANG NAM13. CGS-CIMBNOMINEES(TEMPATAN)SDNBHD 850,000 0.95 PLEDGEDSECURITIESACCOUNTFORCHONGKHONGSHOONG(MY1707)14. PANGSWEECHIEN 810,000 0.9115. ANGHINGTAY 801,480 0.9016. WILLIELAUCHIENG 778,920 0.8717. YEAPCHINYIN 751,100 0.8418. PANGCHIAWYING 713,200 0.8019. NENGAIKHONG 713,000 0.8020. BEHENGPAR 606,000 0.6821. RAFIEBINMOHAMADRAZAK 600,000 0.6722. LIMTENHOCK 585,000 0.6523. MAYBANKNOMINEES(TEMPATAN)SDNBHD 547,600 0.61 SUKHBIRSINGHA/LTARASINGH24. AFFIN HWANG NOMINEES (TEMPATAN) SDN. BHD. 540,000 0.60 PLEDGED SECURITIES ACCOUNT FOR LAI SOON MING25. CHANSIEWKUEN 519,600 0.5826. CHEONG YUEN LAI 500,000 0.5627. HMNNADHIRSDNBHD 500,000 0.5628. LOWSIEWNYOK 500,000 0.5629. NGAN LAY HOON 500,000 0.5630. YUSOFBINABDULRAHMAN 465,272 0.52

TOTAL: 61,559,005 68.82

Analysis of Warrant Holdings (cont’d)

166



No.WarrantsIssued : 60,787,449Warrants2016/2021(“WarrantB”)Exercise Price of Warrants : RM0.50Expiry Date of Warrants : 21/12/2021No Of Warrant Holders : 6,395

DISTRIBUTION OF WARRANT B HOLDINGS

No. of % of No. of % of Warrant Warrant Warrant WarrantSize of Holdings Holders Holders Holdings Holdings

Lessthan100 1,551 24.25 32,783 0.05100-1,000 2,240 35.03 929,534 1.531,001–10,000 2,128 33.27 5,303,807 8.7310,001 – 100,000 390 6.10 12,316,465 20.26100,001–lessthan5%issuedWarrants 83 1.30 27,831,655 45.795%andaboveofissuedWarrants 3 0.05 14,373,205 23.64

6,395 100.00 60,787,449 100.00

DIRECTORS’ INTERESTS IN WARRANT B AS AT 30 JUNE 2020

Direct Indirect No. of No. ofNo. Names Warrants % Warrants %

1. Dato’ChewTingLeng 459,045 0.76 11,079,014 18.23 (a)

2. Dato’GohTeohKean 459,045 0.76 7,986,651 13.14 (b)

3. TanAngAng 533,768 0.88 166,582 0.27 (c)

4. ToTaiWai 884,406 1.45 – – –5. NgLeeLee 727,802 1.20 16,063 0.03 (d)

6. Sakinah Binti Salleh – – – – –7. LimYoongXao – – – – –8. NoorainiBintiMohdYasin – – – – –9. Dato’ Sri Yap Tian Leong – – – – –

Notes:(a) DeemedinterestedbyvirtueofhisinterestinCTLCapitalHoldingSdnBhdpursuanttoSection8oftheAct.(b) DeemedinterestedbyvirtueofhisinterestinGLManagementAgencySdnBhdpursuanttoSection8oftheAct.(c) DeemedinterestedbyvirtueofhisspouseMadamYongYuiKiew’sdirectwarrantholdingintheCompanypursuantto

Section 59(11) of the Act.(d) Deemed interested by virtue of her spouse, Wong Chong Peng’s direct warrant holding in the Company pursuant to

Section 59(11) of the Act.

167

ANNUAL REPORT 2020


30 LARGEST WARRANT B HOLDERS AS AT 30 JUNE 2020

WarrantNo. Warrant Holders Holdings %

1. CTLCAPITALHOLDINGSDNBHD 5,929,284 9.752. GLMANAGEMENTAGENCYSDNBHD 4,375,816 7.203. AMSECNOMINEES(TEMPATAN)SDNBHD 3,610,835 5.94 PLEDGEDSECURITIESACCOUNT-AMBANK(M)BERHADFOR GL MANAGEMENT AGENCY SDN BHD 4. ALLIANCEGROUP NOMINEES (TEMPATAN) SDN BHD 2,999,094 4.93 PLEDGED SECURITIES ACCOUNT FOR CTL CAPITAL HOLDING SDN BHD5. ALLIANCEGROUPNOMINEES(TEMPATAN)SDNBHD 1,693,366 2.79 PLEDGEDSECURITIESACCOUNTFORCTLCAPITALHOLDINGSDNBHD(8089199)6. LOOIBOONFUI 1,656,000 2.727. CGS-CIMBNOMINEES(TEMPATAN)SDNBHD 1,475,305 2.43 PLEDGEDSECURITIESACCOUNTFORWONGYEEWAH@WONGMOKCHOON (SS2 PJ-CL) 8. TOTAIWAI 884,406 1.459. GANEECHORNG 820,600 1.3510. ANGHINGTAY 715,500 1.1811. LEEKEEHUAT 710,000 1.1712. MAYBANKNOMINEES(TEMPATAN)SDNBHD PLEDGED SECURITIES ACCOUNT FOR EDWIN SELVARAJAH A/L PETER SELVARAJAH 600,000 0.9913. CHUJINKANG 550,000 0.9014. KONGCHIONGLEE 473,214 0.7815. KENANGANOMINEES(TEMPATAN)SDNBHD 462,100 0.76 RAKUTENTRADESDNBHDFORLEEKOKHONG16. CHEWTINGLENG 459,045 0.7617. GOHTEOHKEAN 459,045 0.7618. CTLCAPITALHOLDINGSDNBHD 457,270 0.7519. LEEKEEHUAT 405,000 0.6720. LEEHIEWCHET 375,000 0.6221. NGLEELEE 372,973 0.6122. LAWKINGYONG 370,000 0.6123. NGLEELEE 354,829 0.5824. YONGSIEWMEE 350,000 0.5825. MAYBANKNOMINEES(TEMPATAN)SDNBHD 344,541 0.57 PLEDGED SECURITIES ACCOUNT FOR CHAN BEE HWA 26. HLIBNOMINEES(TEMPATAN)SDNBHD 327,200 0.54 PLEDGED SECURITIES ACCOUNT FOR LEE HIEW CHET 27. CITIGROUPNOMINEES(ASING)SDNBHD 312,968 0.51 EXEMPTANFORCITIBANKNEWYORK(NORGESBANK1)28. HLBNOMINEES(TEMPATAN)SDNBHD 310,000 0.51 PLEDGED SECURITIES ACCOUNT FOR SIM CHEE TEONG 29. LEW CHOON HONG 300,000 0.4930. PUBLIC NOMINEES (TEMPATAN) SDN BHD 300,000 0.49 PLEDGED SECURITIES ACCOUNT FOR MURUGESU A/L ATHIYAPPAN (E-TMM)

TOTAL: 32,453,391 53.39

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PROXY FORM(Before completing this form please refer to the notes below)

I/We .......................................................................................................... I/C No./Co. No./ ................................................... (Full name in Capital Letters)

of ............................................................................................................................................................................................ (Full address)

being a member/members of PANTECH GROUP HOLDINGS BERHAD, hereby appoint the following person(s):-

Name of proxy NRIC No.No. of shares or % of shares to be

represented by each proxy

1.

2.

or failing him/her, the Chairman of the Meeting as my/our proxy/proxies to attend and vote for me/us on my/our behalf at the Fourteenth (14th) Annual General Meeting (“AGM”) of the Company to be held at Ballroom 1 and 2, Level 2, Renaissance Johor BahruHotel,2,JalanPermas11,BandarBaruPermasJaya,81750Masai,JohorDarulTakzimonWednesday,19August2020 at 11.00 a.m. My/our proxy/proxies is to vote as indicated below:-

PROXY 1 PROXY 2

FOR AGAINST FOR AGAINST

ORDINARY RESOLUTION

1. To approve the payment of Directors’ fees and benefits up to the amountofRM200,000forthefinancialyearending28February2021.

2. Tore-electDato’GohTeohKeanwhoretirespursuanttoArticle26.1.

3. To re-elect Mr. Tan Ang Ang who retires pursuant to Article 26.1.

4. To re-elect Mr. Lim Yoong Xao who retires pursuant to Article 26.1.

5. To re-appoint Grant Thornton Malaysia PLT as Auditors of the Company and to authorise the Directors to fix their remuneration.

SPECIAL BUSINESS

6. AuthoritytoissuesharesbytheCompanypursuanttoSections75and76oftheCompaniesAct,2016.

7. Proposed Renewal of Share Buy-Back Authority.

Please indicate with a “√” or “X” in the space provided how you wish your vote to be cast. If no instruction as to voting is given, the proxy will vote or abstain from voting at his/her discretion.

______________________________________Signature of Shareholder(s)/Common Seal Signed this ................. day of .............................. 2020

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 10 August 2020. Only a depositor whose name appears on the Record of Depositors as at 10 August 2020 shall be entitled to attend the said meeting or appoint proxies to attend, speak and vote on his/her behalf

2. A member entitled to attend and vote at this AGM is entitled to appoint a proxy or attorney or in the case of a corporation, to appoint a duly authorised representative to attend, speak and vote in his place. A proxy may but need not be a member of the Company

3. Where a member is an authorised nominee as defined under the Securities Industry (Central Depositories) Act, 1991, it may appoint at least one (1) proxy but not more than two (2) proxies in respect of each Securities account it holds with ordinary shares of the Company standing to the credit of the said securities account.

4. Where a member is an exempt authorised nominee, it may appoint multiple proxies for each omnibus account it holds

5. The instrument appointing a proxy shall be in writing under the hand of the appointer or his/her attorney duly authorised in writing or, if the appointer is a corporation, either under the Corporation’s Common Seal or under the hand of an officer or attorney so authorized

6. The Proxy Form must be deposited at the Share Registrar’s office, Tricor Investor & Issuing House Services Sdn Bhd at Unit 32-01, Level 32, Tower A, Vertical Business Suite, Avenue 3, Bangsar South, No. 8, Jalan Kerinchi, 59200 Kuala Lumpur, or alternatively, Tricor Customer Service Centre at Unit G-3, Ground Floor, Vertical Podium, Avenue 3, Bangsar South, No. 8, Jalan Kerinchi, 59200 Kuala Lumpur or may also submit the proxy form electronically via TIIH Online website at https://tiih.online not less than forty-eight (48) hours before the time set for holding the meeting or any adjournment thereof. Please refer to the Administrative Details for submission of electronic Proxy Form.

✄

200601013856 (733607-W)

No. of ordinary shares held

CDS Account No.

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THE SHARE REGISTRAR ofPANTECH GROUP HOLDINGS BERHADTricor Investor & Issuing House Services Sdn BhdUnit 32-01, Level 32, Tower AVertical Business Suite, Avenue 3BangsarSouth,No.8,JalanKerinchi59200KualaLumpur

200601013856 (733607-W)

A n n u A l R e p o R t 2 0 2 0

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

PANTECH CORPORATION SDN. BHD. 198801008964 (176321-P)

Johor Bahru Head Office

PTD 204334 Jalan Platinum Utama Kawasan Perindustrian Pasir Gudang Zon 12B 81700 Pasir Gudang Johor Darul Takzim, Malaysia Tel : +607 259 7979 Fax : +607 256 7588/7589 Email : [email protected]

Shah Alam Office & Warehouse

No. 3, Jalan Trompet 33/8 Seksyen 33, 40400 Shah Alam Selangor Darul Ehsan, Malaysia Tel : +603 5192 7995 Fax : +603 5192 7992 Email : [email protected]

Port Klang Free Zone Warehouse

Persiaran Port Klang FZ 7, Jalan FZ 6-P1 Port Klang Free Zone / KS 12 42920 Pulau Indah Selangor Darul Ehsan, Malaysia Tel : +603 3101 3767 Fax : +603 3101 4767 Email : [email protected]

Pengerang Warehouse

Lot LO129, Kampung Bukit Gelugur 81600 Pengerang Johor Darul Takzim, Malaysia Tel : +6019 751 0988 Email : [email protected]

https://pantech-group.com/

PANTECH (KUANTAN) SDN. BHD. 199001000048 (191606-U)

Kuantan Sales Office & Warehouse Lot 5, Jalan Industri Semambu 2 Kawasan Perindustrian Semambu 25350 Kuantan Pahang Darul Makmur, Malaysia Tel : +609 568 7550 Fax : +609 568 7553 Email : [email protected]

PANAFLO CONTROLS PTE. LTD. (200413822 D)

No. 7, Soon Lee Street #04-42 ISpace Singapore 627608 Tel : +65 6562 3048 Fax : +65 6562 3148 Email : [email protected]

PANTECH INTERNATIONAL (KSA) SDN. BHD. 201001006051 (890670-K)

PTD 204334 Jalan Platinum Utama Kawasan Perindustrian Pasir Gudang Zon 12B 81700 Pasir Gudang Johor Darul Takzim, Malaysia Email : [email protected]

PANTECH STEEL INDUSTRIES SDN. BHD. 200001007126 (509731-A)

Manufacturer Lot 13258 & 13259 Jalan Haji Abdul Manan, Off Jalan Meru 42200 Kapar Selangor Darul Ehsan, Malaysia Tel : +603 3393 1633 Fax : +603 3392 8966 Email : [email protected]

PANTECH STAINLESS & ALLOY INDUSTRIES SDN. BHD. 200601013677 (733428-W)

Manufacturer PTD 204334 Jalan Platinum Utama Kawasan Perindustrian Pasir Gudang Zon 12B 81700 Pasir Gudang Johor Darul Takzim, Malaysia Tel : +607 251 8888 Fax : +607 251 9999 Email : [email protected]

NAUTIC STEELS LIMITED, UNITED KINGDOM (02302004)

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

PANTECH GALVANISING SDN. BHD. 201501036779 (1162100-W)

Hot-dip Galvanising Plant PLO 7, Jalan Rumbia 4 Kawasan Perindustrian Tanjung Langsat 81700 Pasir Gudang Johor Darul Takzim, Malaysia Tel : +607 257 5800 Fax : +607 257 5888 Email : [email protected]

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