2 17 edaran precision industries sdn. bhd. golden city plastic sdn. bhd. edaran precision india...

ANNUAL REPORT

Everyone creates value

2 17

02 Corporate Information

03 Corporate Structure

04 Profile of Directors

07 Profile of Key Senior Management

08 Financial Highlights

10 Chairman’s Statement

12 Management Discussion and Analysis

14 Statement on Corporate Governance

32 Additional Disclosure Requirements

33 Audit Committee Report

37 Statement on Directors’ Responsibilities

38 Corporate Social Responsibility Statement

40 Statement on Risk Management and Internal Control

44 Directors’ Report

49 Statement by Directors

50 Statutory Declaration

51 Independent Auditors’ Report

57 Statements of Comprehensive Income

59 Statements of Financial Position

61 Statements of Changes in Equity

64 Statements of Cash Flows

67 Notes to the Financial Statements

144 Share Buy-back Statement

151 List of Properties

153 Analysis of Shareholdings

155 Notice of Annual General Meeting

159 Statement Accompanying Notice of Annual General Meeting

Proxy Form

CONTENTS

LNG Resources Berhad (582043-K) | Annual Report 20172

Corporate Information

AUDIT COMMITTEE

ChairmanLow Hee Chung

MembersGor Siew Yeng Chuah Poay Ngee

NOMINATING COMMITTEE

ChairmanYBhg Dato’ (Dr) Pahamin Ab Rajab

MembersLow Hee Chung Gor Siew Yeng Chuah Poay Ngee

REMUNERATION COMMITTEE

ChairmanGor Siew Yeng

MembersLow Hee ChungChuah Poay NgeeYong Chan Cheah

RISK MANAGEMENT COMMITTEE

ChairmanYong Chan Cheah

MembersRepresentative(s) from each major business units/divisions to be identified by the Management from time to time.

ESOS COMMITTEE

ChairmanYong Chan Cheah

MembersYong Swee Chuan Gan Joe Yee Poa Mei Ling

COMPANY SECRETARIES

How Wee Ling (MAICSA 7033850) Ooi Ean Hoon (MAICSA 7057078)

AUDITORS

PricewaterhouseCoopers (AF1146)Chartered Accountants16th Floor Bangunan KWSPJalan Sultan Ahmad ShahP O BOX 85610810 Pulau Pinang

REGISTRAR

Mega Corporate Services Sdn. Bhd.Level 15-2 Bangunan Faber Imperial CourtJalan Sultan Ismail50250 Kuala LumpurPhone: 03-2692 4271Fax: 03-2732 5388

REGISTERED OFFICE

57-G Persiaran Bayan IndahBayan Bay, Sungai Nibong11900 PenangPhone: 04-640 8933Fax: 04-643 8911

HEAD OFFICE

Suntech @ Penang Cybercity1-12B-20, Lintang Mayang Pasir 3,11950 Bayan Baru, Penang, Malaysia.Phone: 04-645 8623Fax: 04-645 6623

WEB-SITE ADDRESS

www.lng-res.com

PRINCIPAL BANKERS

OCBC Bank (Malaysia) BerhadPublic Bank BerhadHSBC Bank Malaysia BerhadUnited Overseas Bank (M) BhdBank of America Malayan Banking Berhad

DATE OF LISTING

29 July 2003

STOCK EXCHANGE LISTING

ACE Market of Bursa Malaysia Securities BerhadStock Name: LNGRESStock Code: 0025

BOARD OF DIRECTORS

YBhg Dato’ (Dr) Pahamin Ab Rajab (Chairman/Non-Independent Non-Executive Director)Yong Chan Cheah (Managing Director)Yong Swee Chuan (Executive Director)

Low Hee Chung (Independent Non-Executive Director)Gor Siew Yeng (Independent Non-Executive Director)

Chuah Poay Ngee (Independent Non-Executive Director)

Annual Report 2017 | LNG Resources Berhad (582043-K) 3

Corporate StructureAs at 14 July 2017

100%

100%

70%

100%

100%

100%

100%

51%

100%

100%

EDARAN PRECISION INDUSTRIES SDN. BHD.

GOLDEN CITY PLASTIC SDN. BHD.

EDARAN PRECISION INDIA PRIVATE LIMITED

ORIENTAL FASTECH MANUFACTURING SDN. BHD.

ORIENTAL FASTECH MANUFACTURING (VIETNAM) CO., LTD. (A wholly-owned subsidiary of Oriental Fastech Manufacturing Sdn. Bhd.)

EDARAN RESOURCES PTE. LTD.

ORIFAST CONNECTOR SOLUTIONS LLC (A wholly-owned subsidiary of Edaran Resources Pte. Ltd.)

ORIFAST CONNECTOR SDN. BHD.

EDARAN INTERCONNECT SDN. BHD.

BUMBLEBEE ECO SOLUTIONS SDN. BHD.


YBhg Dato’ (Dr) Pahamin Ab Rajab, Aged 71, Malaysian/Male, is the Non-Independent Non-Executive Chairman of LNG Resources Berhad and was appointed to the Board on 20 April 2006. He is also the Chairman of the Nominating Committee. He is currently an Advocate and Solicitor of the High Court of Malaya. He has worked in several ministries and government agencies in Malaysia over a thirty (30) years period, where he held various key positions, including Director General of Road Transport Department at the Ministry of Transport from 1974 to 1998, Secretary-General of the Ministry of Domestic Trade and Consumer Affairs from 1998 to 2001 and Chairman of the Patent Board and the Controller of Copyright from 1998 to 2001. He is recognised internationally as an expert in intellectual property laws by the World Intellectual Property Organisation and in 2000, was awarded the prestigious Cyber Champion International Award by Business Software Alliance in Washington.

He obtained a Bachelor of Arts (Hons) in History majoring in International Relations from the University Malaya in 1970 and a Master of Arts in Public Policy and Administration, majoring in Economic Development from the University of Wisconsin, Madison, United States of America in 1978. He later received a law degree (LLB) from the University of London in 1990 and a Diploma in Syariah Law and Practice from the International Islamic University, Malaysia in 1991. He was conferred the Honorary Doctor of Laws (honoris causa) by The University of Newcastle, Australia in 2006. In 2011, he was conferred the Award of Honorary Doctor of Laws (HonLLD) from the University of Greenwich, United Kingdom.

YBhg Dato’ (Dr) Pahamin is currently the Independent Non-Executive Chairman of H-Displays (MSC) Berhad.

YBhg Dato’ (Dr) Pahamin has no family relationship with any director and/or major shareholder of the Company nor does he have any conflict of interest with the Company. He has not been convicted of any offences, other than traffic offences (if applicable) within the past five (5) years and no public sanction or penalty imposed by the relevant regulatory bodies to him during the financial period.

Yong Chan Cheah, Aged 43, Malaysian/Male, is the Managing Director of LNG Resources Berhad. Mr Yong was appointed as an Executive Director of the Company on 7 June 2013 and was promoted as the Group Managing Director on 27 February 2014. He is also the Chairman of Risk Management Committee and ESOS Committee as well as a member of the Remuneration Committee of the Company. Mr Yong obtained his Bachelor of Business Administration from Northern University of Malaysia (UUM) in 1998. He has over sixteen (16) years of experience in the marketing of metal and plastics components. He began his career in 1998 in Pentagon Engineering Sdn Bhd as a Contract Administrator. He subsequently joined AE Technology Sdn Bhd as Sales Executive in 1999 and was promoted to Sales Manager in 2002. In 2006, he co-founded Oriental Fastech Manufacturing Sdn Bhd ("OFM") with Mr Yong Swee Chuan and is directly involved in the growth and development of OFM Group.

Mr Yong is the brother of Mr Yong Swee Chuan, a director and major shareholder of the Company. He does not have any conflict of interest with the Company. He has not been convicted of any offences, other than traffic offences (if applicable) within the past five (5) years and no public sanction or penalty imposed by the relevant regulatory bodies to him during the financial period.

Profile of Directors

YBhg Dato’ (Dr) Pahamin Ab RajabAged 71, Malaysian/Male

Yong Chan CheahAged 43, Malaysian/Male


Yong Swee Chuan, Aged 45, Malaysian/Male, is an Executive Director and was appointed to the Board on 7 June 2013. He is also a member of Risk Management Committee and ESOS Committee of the Company. He obtained his Diploma from Institute Technology Education of Ang Mo Kio in Singapore in 1995. He has over eighteen (18) years of experience specialising in metal work and welding as well as fabrication, tool and automation modifying and making in Malaysia and Singapore. He started his career at Tuck Hwa Fabrication Pte Ltd in Singapore in 1990. His subsequent employment included Senic Sanyo (Singapore) Pte Ltd in 1995 and TKR Manufacturing (Singapore) Pte Ltd in 1996, before co-founding Oriental Fastech Manufacturing Sdn Bhd with Mr Yong Chan Cheah in 2006. He specialises in the engineering of Computer-Aided Manufacturing Turning, Computer Numerical Control Turning and Stamping machineries.

Mr Yong is the brother of Mr Yong Chan Cheah, the Managing Director and major shareholder of the Company. He does not have any conflict of interest with the Company. He has not been convicted of any offences, other than traffic offences (if applicable) within the past five (5) years and no public sanction or penalty imposed by the relevant regulatory bodies to him during the financial period.

Low Hee Chung, Aged 44, Malaysian/Male, is an Independent Non-Executive Director of LNG Resources Berhad and was appointed to the Board on 31 July 2013. He was appointed as the Chairman of the Audit Committee on 23 September 2013. He is also a member of the Nominating Committee and Remuneration Committee of the Company.

Mr Low is a Chartered Accountant and obtained his Bachelor Degree with Honours in Accounting from Northern University of Malaysia (UUM) in 1997. He is a Chartered Accountant of the Malaysian Institute of Accountants.

Mr Low has worked for a multinational professional service firm PricewaterhouseCoopers and local auditing firm Peter Chong & Co., together over a span of seven (7) years. He is well experienced in corporate tax, personal tax and auditing companies in a wide range of industries in both public and private sectors. He is appointed as Group Financial Controller of Alma Group of companies in 2003.

Mr Low has no family relationship with any director and/or major shareholder of the Company nor does he have any conflict of interest with the Company. He has not been convicted of any offences, other than traffic offences (if applicable) within the past five (5) years and no public sanction or penalty imposed by the relevant regulatory bodies to him during the financial period.

Profile of Directors (cont’d)

Yong Swee ChuanAged 45, Malaysian/Male

Low Hee ChungAged 44, Malaysian/Male


Gor Siew Yeng, Aged 51, Malaysian/Female, is an lndependent Non-Executive Director of LNG Resources Berhad and was appointed to the Board on 1 July 2014. She is the Chairman of Remuneration Committee and member of the Audit Committee and Nominating Committee of the Company.

Ms Gor graduated with a LL.B (Bachelor of Laws) with Honours from the University of London (International Programme). After obtaining her Certificate in Legal Practice (CLP), Ms Gor was called to the Malaysian Bar in 1996. She began her legal career as a conveyancing lawyer and subsequently worked as a litigation lawyer representing mostly financial institutions.

In 1999, Ms Gor ceased practice as an Advocate and Solicitor to assume the position of in-house corporate legal counsel. Over the years, Ms Gor has worked as senior legal counsel for Japanese and German multinational companies. She is now an Associate Director in a Japanese multinational company. In April 2016, Ms. Gor was appointed as a Council Member of Federation of Malaysian Manufacturers, a public company limited by guarantee.

Ms Gor has no family relationship with any director and/or major shareholder of the Company nor does she have any conflict of interest with the Company. She has not been convicted of any offences, other than traffic offences (if applicable) within the past five (5) years and no public sanction or penalty imposed by the relevant regulatory bodies to her during the financial period.

Chuah Poay Ngee, Aged 47, Malaysian/Female, is an lndependent Non-Executive Director of LNG Resources Berhad and was appointed to the Board on 2 December 2016. She is a member of the Audit Committee, Nominating Committee and Remuneration Committee of the Company.

Ms Chuah graduated with Bachelor of Business (Accountancy), Deakin University, Australia, she is Certified Practicing Accountant of the Australian Society of Certified Practicing Accountants, Chartered Accountant of Malaysian Institute of Accountants and Certified Corporate Secretary with the University Malaya Centre of Continuing Education.

Upon graduation, Ms. Chuah joined Matthew & Partners (formerly known as Russ Ooi & Associates) as Tax and Audit Assistant. She then joined Grand Circuits Industry Sdn Bhd, a subsidiary of Grand United Holdings Berhad as Accounts Executive in 1995 and was subsequently promoted to Group Accountant. In 2001, she worked for Golden Fresh Sdn Bhd as Finance & Administration Manager and was later promoted to Senior Finance & Administration Manager. She left the company in 2006 and join Mini-Circuits Technologies (M) Sdn Bhd as Financial Controller until 2010. She was appointed as Finance Manager for Dynacraft Industries (M) Sdn Bhd from 2011 to 2016.

Ms Chuah is currently an Independent Non-Executive Director for ViTrox Corporation Berhad.

Ms Chuah has no family relationship with any director and/or major shareholder of the Company nor does she have any conflict of interest with the Company. She has not been convicted of any offences, other than traffic offences (if applicable) within the past five (5) years and no public sanction or penalty imposed by the relevant regulatory bodies to her during the financial period.

Profile of Directors (cont’d)

Gor Siew YengAged 51, Malaysian/Female

Chuah Poay NgeeAged 47, Malaysian/Female


Profile of Key Senior Management

Gan Joe Yee, General Manager, aged 45, Malaysian/Male, he joined Oriental Fastech Manufacturing (Vietnam) Co., Ltd. on 12 May 2011 as a General Manager and was promoted to General Manager of Precision Machining and Stamping divisions of LNGRES. He obtained his Bachelor Degree with Honours in Commerce from Lincoln University, New Zealand. He is a Chartered Accountant of the Malaysian Institute of Accountants. He started his career as Auditor and Tax Consultant involved in advisory work on auditing and taxation on various industries for both locally and overseas. Prior to joining LNGRES, he was a General Manager of a listed Company overseeing its manufacturing plant in Vietnam.

Poa Mei Ling, Assistant General Manager, aged 43, Malaysian/Female, she joined LNGRES on 22 December 2003 as Group Finance Manager and was promoted to Corporate Financial Controller in year 2013. Presently, she is the Assistant General Manager in charge of the Precision Engineering, Precision Plastic Injection Moulding and Electronic Manufacturing Services divisions of LNGRES. She obtained her Bachelor Degree with Honours in Accounting from Northern University of Malaysia (UUM) in 1997. She is a Chartered Accountant of Malaysian Institute of Accountants and Fellow Member of the Association of Chartered Certified Accountants. Prior to joining LNGRES, she was the Audit Manager of Deloitte KassimChan.

ADDITIONAL INFORMATION ON THE KEY SENIOR MANAGEMENT

Family relationship with any director and/or major shareholderNone of the Key Senior Management have family relationship with any other Directors and/or major shareholders of LNGRES.

Other than traffic offences (if Applicable), the list of convictions for offences within the past 5 years and particulars financial year of any public sanction or penalty imposed by the relevant regulatory bodies during the financial period from 1 January 2016 to 31 March 2017 (“FPE 2017”)

• None of the Key Senior Management have any convictions for offences other than traffic offences within the past 5 years. • None of the Key Senior Management were penalized or sanctioned by any regulatory bodies during the FPE 2017.

Conflict of InterestThe Key Senior Management do not have any conflict of interest with the Company.


Financial Highlights

GROUP 2012

RM’000 2013

RM’000 2014

RM’000 2015

RM’000 2017

RM’000

12 months 12 months 12 months 12 months 15 months

Revenue 24,913 55,476 57,760 56,861 89,959

Profit before tax 889 9,536 611 (5,126) 2,980

Profit for the year 478 7,492 449 (5,331) 2,165

Profit attributable to owners of the Company 504 7,577 431 (5,326) 2,300

Total equity attributable to owners of the Company 39,902 56,974 58,311 53,524 55,162

Total assets 45,182 94,609 92,838 86,776 87,994

SHARE INFORMATION 2012 2013 2014 2015 2017

Basic earnings per share (sen) 0.27 3.23 0.18 (2.20) 0.95

Gross dividends per share (sen) - 0.30 - - 0.25

Net assets per share (RM) 0.21 0.24 0.24 0.22 0.23

FINANCIAL RATIOS 2012 2013 2014 2015 2017

Profit before tax margin 4% 17% 1% -9% 3%

Net profit margin 2% 14% 1% -9% 2%

Return on equity attributable to owners of the Company 1% 13% 1% -10% 4%

Return on total assets 1% 8% 0% -6% 2%

Revenue growth rate -26% 123% 4% -2% 27%*

* Monthly average growth rate due to fifteen months financial period


Financial Highlights (cont’d)

12 12

12

13 13

13

14 14

14

15 15

15

17 17

17

REVENUE(RM'000)

PROFIT ATTRIBUTABLE TOOWNERS OF THE COMPANY(RM'000)

TOTAL ASSETS(RM'000)

BASIC EARNINGS PER SHARE(SEN)

PROFIT BEFORE TAX(RM'000)

NET ASSETS PER SHARE(RM)

89,9

59

87,9

94

56,8

61

57,7

60

55,4

76

24,9

13

86,7

7692,8

38

94,6

09

45,1

82

12 13 14 15 17

9,53

6

889

611

(5,1

26)

2,98

0

12 13 14 15 17

7,57

7

504

431

(5,3

26)

2,30

0

12 13 14 15 17

3.23

0.27

0.18

(2.2

0)

0.95

0.2

4

0.21

0.22

0.2

4

0.23


Chairman’s Statement

Dear Shareholders,

On behalf of the Board of Directors, it is my pleasure to present to you the annual report of LNG Resources Berhad (“LNGRES”) for the financial period from 1 January 2016 to 31 March 2017 (“FPE 2017”).


Chairman’s Statement (cont’d)

INDUSTRY OVERVIEW

The FPE 2017 was a memorable year and recorded a very significant milestone for LNGRES. In its history, LNGRES achieved a high revenue of RM89.959 million in FPE 2017, compared with RM56.861 million for twelve month period in previous financial year. Correspondingly, profit after tax, increased impressively from a loss making of (RM5.331 million) to profit of RM2.165 million.

The significant increase was a result of a surge in demand from plastic injection moulding and precision machining and stamping segments during the financial period. The basic earnings per share saw an increase to 0.95 sen in 2017 compared to basis losses per share (2.20) sen in 2015.

During the financial period under review, the Group managed an impressive turnaround from loss-making to profit-making, which signified the management's clear direction and a solid recovery strategy as well as its tenacity and strength in rebuilding the organisation to overcome challenges and forge growth.

LNGRES continued to strengthen its position in the high precision engineering, plastic injection moulding and precision machining and stamping segments. The group also kept up its ongoing approach of delving into market expansion activities, which helped the company establish positive customer rapport and build strong relationships with its customers.

During the year, LNGRES further diversified its business activities to include a new paper product business segment through its 51% owned subsidiary namely Bumblebee Eco Solutions Sdn. Bhd. A response to market demands, its key solution Honeycomb Paper Board is an innovative product that display characteristics of being lightweight, durable, cost-effective and environmentally friendly.

DIVIDENDS

LNGRES has declared a single tier interim dividend of 0.25 sen per ordinary share for the FPE 2017.

OUR APPRECIATION AND ACKNOWLEDGEMENT

On Behalf of the Board of Directors, I would like to express my sincere and heartfelt thanks to our shareholders, customers, business associates, suppliers, financiers, government agencies and regulatory authorities for their continued and unwavering support and confidence in LNGRES.

I would like to take this opportunity to welcome our new Independent Director, Ms Chuah Poay Ngee. A Chartered Accountant by profession, I believe that she shall be a source of invaluable support and expertise to the Group in the time ahead.

I have witnessed the impressive teamwork, continued commitment and tenacity of our employees, which were no doubt invaluable in taking the Group to its commendable and leading position today. For that, I thank you from the bottom of my heart.

YBhg Dato’ (Dr) Pahamin Ab RajabChairman/Non-Independent Non-Executive Director


Management Discussion and Analysis

INTRODUCTION

Throughout the years, LNGRES has diversified its manufacturing plants from one (1) plant to five (5) plants. Its pioneer plant was acquired in year 2006 to support high precision engineering and precision plastic injection moulding segment. Located at Kawasan Perindustrian Tanjung Agas, Muar, Johor, Malaysia, this plant is jointly owned and operated by two wholly-owned subsidiaries namely Edaran Precision Industries Sdn. Bhd. and Golden City Plastic Sdn. Bhd. During FPE 2017 LNGRES invested in new machineries which focus on electronic manufacturing services to enhance the plant’s prospects for future expansion. In year 2013, LNGRES, acquired two manufacturing plants for precision machining and stamping through its acquisition of Oriental Fastech Manufacturing Sdn. Bhd. and its subsidiary, Oriental Fastech Manufacturing (Vietnam) Co. Ltd. One of plants, located at Bukit Minyak Industrial Park, Penang is owned and operated by its wholly owned subsidiary Oriental Fastech Manufacturing Sdn Bhd while the other located at VSIP Industrial Park, Ho Chi Minh City, Vietnam, is operated by Oriental Fastech Manufacturing (Vietnam) Co., Ltd.

In year 2014, LNGRES expanded its business in precision engineering segment by setting up a manufacturing plant at Kerala, India. This plant is operated by its 70% owned subsidiary namely Edaran Precision India Private Limited.

During FPE 2017, LNGRES set up another new manufacturing plant to manufacture honey combs paper product at Sungai Bakap, Penang. This plant is operated by its 51% owned subsidiary namely Bumblebee Eco Solutions Sdn. Bhd.

MARKET

For a more effective marketing network, LNGRES has set up the following marketing offices to explore and penetrate into new markets. The Group’s strategy is to diversify its product mix, produce value added products for higher returns and continuously explore new market segments both domestically and internationally.

Subsidiaries Target Customers and market segments

Orifast Connector Solutions LLC

United States region

Edaran Resources Pte. Ltd.

Singapore and Vietnam region

Edaran Precision India Private Limited

India region

Orifast Connector Sdn. Bhd.

Malaysia region

LNGRES’s ultimate goals are to increase productivity, produce higher quality products and improve the safety and efficiency of every plant.

GROUP FINANCIAL PERFORMANCE

LNGRES recorded a substantial improvement in revenue of RM89.959 million (fifteen month period) for FPE 2017 as compared to the previous financial year of RM56.861 million (twelve-month period). The strong revenue in the FPE 2017 was mainly attributed to the following segments as indicated in the diagram:-

2017Revenue

52%

20%

Precision engineering segment

Precision plastic injection moulding segment

Precision machining and stamping segment

Other

1%

27%


Management Discussion and Analysis (cont’d)

Precision engineering, plastic injection moulding and precision machining and stamping segments

Bishop & Associates, a market research firm that specialises in the connector industry, reported that the connector industry sales grew by 4.1% for year 2016 to USD54,164 million compared to sales in the previous year which totaled USD52,050 million.

For the semiconductor industry, the Semiconductor Industry Association announced on 2 February 2017 that the worldwide semiconductor industry posted sales totaling USD338.9 billion in 2016, the industry’s highest-ever annual sales recorded and a modest increase of 1.1% from the 2015 total of USD335.2 billion.

Sales from our precision engineering, plastic injection moulding and precision machining and stamping segments have increased in tandem with the growth in the connector and semiconductor industries.

The precision engineering, precision plastic injection moulding and precision machining and stamping segments recorded an average growth rate of 17%, 24% and 30% respectively.

Revenue from the precision machining and stamping segment for FPE 2017 contributed 52% of the Group’s revenue. The increase in revenue was mainly due to a rise in demand from customers in Vietnam.

Gross profit

The Group’s gross margin ratio for FPE 2017 increased from 9% to 17%, an increase of 8% compared to last financial year. The significant increase in gross profit was mainly due to the effective cost control of materials and improvement in production efficiencies arising from the above segments.

Statement of Financial Position as of 31 March 2017

Both inventories and trade receivables increased in tandem with the rise in the revenue.

The financial position showed that the Group’s gearing ratio on loan and borrowing has seen a decrease to 0.26 times from 0.37 times or RM14.805 million as of 31 March 2017, compared to RM19.932 million as of 31 December 2015. The decrease was mainly due to the Group has generating stable profit and served the repayment of loan and borrowing on time.

Earnings per share (EPS) rose to 0.95 sen from losses per share (2.20) sen a year ago.

Group Cash Flows

The Group continued to generate healthy cash flow from its operations with net cash from operating activities amounting to RM6.611 million in FPE 2017.

The Group continues to invest in capital expenditures of RM6.304 million for FPE 2017 to retain its competitive edge and embrace technological advancements to improve facilities and production capabilities.

OUTLOOK AND FUTURE PROSPECTS

Precision engineering, plastic injection moulding and precision machining and stamping segments

According to Xmultiple, a leader in the connector marketplace, the worldwide connector market is believed to reach an estimated value of USD72.7 billion by 2020, driven by growing demand for advanced product features, high-speed and connectivity.

For the semiconductor industry, the global semiconductor sales are forecasted to be USD377.8 billion in 2017, an 11.5% increase from the 2016 sales total based on the World Semiconductor Trade Statistics [“WSTS”]. WSTS projects that the growth in semiconductor across all regional markets will year-to-year increase: Asia Pacific (12.4%), the Americas (12.2%), Europe (8.7%) and Japan (6.6%).

Electronics manufacturing services segment

We are anticipating strong outlook for electronic manufacturing services segment from growth. According to Technavio, the worldwide electronic manufacturing services market is projected to grow at a Compound Annual Growth Rate [CAGR] of 6.4% over the next five years due to rising industrial automation driving productivity as well as efficiency in electronics manufacturing.

Looking Ahead

The Group remains cautiously optimistic about the prospects of future growth. While the overall economic climate remains a challenging one, the Group is confident that its core strategic objective of outreach, coupled with an unrelenting focus on innovation and principles of sustainability, shall enable it to optimise product value to meet consumer demands and market expectations. This, along with the support and unity of management and staff, will be integral to the Group’s strong momentum of growth ahead.


Statement on Corporate Governance

The Board of Directors (“the Board”) recognises the importance of good corporate governance and is committed to ensure that good corporate governance is being practised by the Group in order to safeguard stakeholders’ interests as well as enhancing shareholders’ value.

This Statement sets out the manner in which the Group has applied and the extent of compliance with the principles and recommendations as set out in the Malaysian Code on Corporate Governance 2012 (“MCCG 2012” or “the Code”).

1. CLEAR ROLES AND RESPONSIBILITIES

1.1 Clear functions of the Board and Management

To ensure the effective discharge of its function and responsibilities, the Board established an internal governance model for delegating of specific powers of the Board to the relevant Board Committees, the Managing Director (“MD”) and the Senior Management of the Company and respective subsidiaries.

Key matters reserved for the Board’s approval including but not limited to the Group’s annual budget, dividend payout proposal, business continuity plan, issuance of new securities, business restructuring, expenditure above certain limit and disposal of significant property, plant and equipment and acquisition or disposal of companies within the Group. All Board’s decisions are recorded in the minutes, including the deliberation for each decision, along with actions to be taken and the individuals responsible for implementation. Relevant Board decisions are communicated to the Senior Management for implementation within a reasonable timeframe.

The Board has direct access to Senior Management and has unrestricted and immediate access to information relating to the Group’s business and affairs in the discharge of their duties. The Board will consider inviting the Senior Management to attend meetings for reporting on major issues relating to their respective responsibility.

The Group’s annual budget will be tabled for the Audit Committee (“AC”) and Board’s approval. The Management

will also report on the Group’s capital expenditure to the AC and Board on quarterly basis.

Periodic briefings on the Group’s prospects and performance are also conducted for the Directors to ensure that the Board is well informed on the Group’s operational, financial and corporate issues.

The Board Committees are entrusted with specific responsibilities to oversee the Group’s affairs, with authority to act on behalf of the Board in accordance with their respective Terms of Reference (“ToR”). At each Board meeting, minutes of Board Committee meetings will be circulated to the Board to keep the Board informed. The Chairman of the relevant Board Committees also report to the Board on key issues deliberated by the Board Committees at their respective meetings.

The Board has set up the clear task and responsibilities to the Senior Management. Management Meetings were held periodically between the Executive Directors and the Senior Management to discuss the major business affairs of the Group. Besides, the Board has also delegated the authority to Senior Management in respective subsidiaries to run the daily errand in pursuant to the authority matrix set.


Statement on Corporate Governance (cont’d)

1. CLEAR ROLES AND RESPONSIBILITIES (cont'd)

1.2 Clear roles and responsibilities of the Board

In discharging its stewardship, the Board is constantly mindful of safeguarding the interests of the Group’s stakeholders and is ultimately responsible for the performance of the Group. The Board assumes the following core responsibilities:-

• Reviewing and adopting strategic plans for the Group; The Group has adopted top-down strategic planning process whereby the Executive Directors will periodically

formulate Group’s strategy and communicate it down to the organisation for implementation. During the strategic planning process, the Executive Directors will set the Group’s mission and objective. The Executive Directors will carry out situation analysis, inclusive of allocation of time, human capital and budget with the Senior Management before formulating the strategy in achieving the Group’s objectives. During the implementation of the strategic plans, relevant policies will be set and communicate to the respective team for implementation and necessary organisational changes will be putting in place. During the implementation stage, the Senior Management will continuously monitor and to ensure the effectiveness of the plan.

• Overseeing the conduct of the Group’s business to evaluate whether the business is being properly managed; The Board will continuously observe the external and internal business environment to ensure proper actions has

been taken to address the environmental changes that might affect the Group’s business. Besides, periodical management meetings will be held for reporting by respective division heads and/or Senior Management to ensure the business is being properly managed.

• Identifying principal risks and ensuring the implementation of appropriate systems to manage these risks; The Board oversees the Enterprise Risk Management (“ERM”) framework of the Group and monitors the

Group’s risk profile with the assistance from its Risk Management Committee (“RMC”). The RMC comprising the Executive Directors and Senior Management vide its periodically meeting will continue to assess to Group’s risk exposure and implementation of appropriate actions to manage the risks. The RMC advises the AC and the Board on areas of high risk and the adequacy of compliance and control procedures throughout the organisation. To enhance the effectiveness of risk management and internal control systems, the Company has outsourced its internal audit function to an independent internal audit service provider. The professional internal auditors will be able to provide additional independent review on the state of risk management and internal control of the Group and has an independent reporting channel to Audit Committee (“AC”). The AC reviews, deliberates and decides on the next course of action and evaluates the effectiveness and efficiency of the risk management and internal control systems in the organisation. The risk management and internal control systems are designed to manage and mitigate rather than eliminate the risk of failure in achieving the Company’s corporate objective and safeguarding the Company’s assets as well as investors interests.

• Succession planning is critical element in preventing business disruptions and promoting operational sustainability for which the Nominating committee is entrusted by the Board to review and recommend candidates for executive management. Succession Planning is established for Nominating Committee to effectively discharge responsibilities in identifying and assessing potential candidates with assistance of the Managing Director, to ascertain that potential successors have sufficient experience and are the right fit for the Company.

The Board is fully aware of the importance of succession planning to the Group and is endeavour in identifying, appointing and training of internal people with potential to fill the key position in the Group.




1.2 Clear roles and responsibilities of the Board (cont'd)

The shareholders of the Company had vide its Extraordinary General Meeting held on 25 February 2016, approved the establishment of an Employees’ Share Option Scheme (“ESOS”). An ESOS Committee was established by the Board on 25 February 2016 to oversee the administration as well as to ensure proper implementation of the ESOS in accordance with the By-Laws of the ESOS. The rationale of the Scheme is to, inter alia,

(i) motivate and encourage the employees of the Group by rewarding them for their contribution and achieving a greater level of commitment and dedication, resulting in enhanced productivity;

(ii) reward and retain the employees whose services are vital to the businesses, continued growth and future expansion of the Group;

(iii) establish a more competitive remuneration package to attract more skilled and experienced individuals to join the Group and contribute to its continued growth and profitability; and

(iv) create a greater sense of ownership and belonging among the employees upon exercising of their ESOS Options as they will be able to participate directly in the future growth of the Group.

The members of the ESOS Committee are as follows:-

Chairman Yong Chan Cheah

Members Yong Swee Chuan Gan Joe Yee Poa Mei Ling

• Developing and implementing an investor relation programme or shareholder communication policy for the Company;

As part of the implementation of investor relation programme, the Board has identify the relevant personnel in handling investor relation related matter in the Group and their contacts are as published in the Group’s website. Besides, shareholders or investors may conveyed any concern / grievances to the Independent Directors of the Company accordingly. During the financial period, the Company communicated material news on the Company to its shareholders vide release of public announcement.

• Reviewing the adequacy and the integrity of the Group’s internal control systems and management information systems, including systems for compliance with applicable laws, regulations, rules, directives and guidelines with the assistance from the Internal Auditors, External Auditors and Company Secretary.




1.3 Ethical standards through Code of Ethics

The principle of the Company’s Codes of Ethics for Directors is based on principles in relation to sincerity, integrity, responsibility and corporate social responsibility. The Code of Ethics is formulated to enhance the standard of corporate governance and corporate behaviour with the intention of achieving the following aims:- • To establish a standard of ethical behaviour for directors based on trustworthiness and values that can be

accepted, are held or upheld by any one person. • To uphold the spirit of responsibility and social responsibility in line with the legislation, regulations and

guidelines for administrating the Group.

The Code of Ethics for Directors of the Group is available at the Company’s website.

As a measure to govern the conduct of its employees, the Company has in place its Whistleblower Policy and Procedures (“WPP”) and Employees Hand Book.

The Code of Ethics for employees promotes integrity and ethical conduct in all aspects of the Group’s operations,

including but not limited to privacy and confidentiality of information. It also sets out prohibited activities or misconduct such as accepting gifts, bribes and dishonest behavior.

The WPP seek to foster an environment where integrity and ethical behaviour are maintained and any illegal or improper action and/or wrongdoing in the Group may be exposed. The Board has overall responsibility to oversee the implementation of the WPP and all whistle-blowing reports are to be addressed to the respective personnel as assigned pursuant to the Group’s WPP. This mechanism will allow the stakeholders of LNGRES to report concerns about alleged unethical behaviour, actual or suspected fraud within the Group, or improper business conduct affecting the Group and about business improvement opportunities.

Further to the Group’s WPP, any internal concern should be raised with immediate superior. If for any reason, it is believed that this is not possible or appropriate, then the concern should be reported to ‘Group Managing Director’ (‘Group MD’). Channel of reporting to Group MD are:

Name : Mr. Yong Chan Cheah

Email : [email protected]

Telephone : (604) 6458623

Fax : (604) 6456623

Address : Suntech @ Penang Cybercity, 1-12B-20, Lintang Mayang Pasir 3, 11950 Bayan Baru, Pulau Pinang, Malaysia.

In the case where reporting to management is a concern, then the report should be made to the Chairman of Audit Committee. Channel of reporting to the Chairman of Audit Committee are:

Name : Mr. Low Hee Chung

Email : [email protected]

Address : 57-G Persiaran Bayan Indah, Bayan Bay, Sungai Nibong, 11900 Penang.

The detailed WPP of LNGRES is available at its corporate website.




1.4 Strategies promoting sustainability

The Board promotes good corporate governance in the application of sustainability practices throughout the Group, the benefits of which are believed to translate into better corporate performance. A report on sustainability activities, demonstrating LNGRES’s commitment to the global environmental, social, governance and sustainability agenda, is detailed in the Corporate Social Responsibility Statement of this Annual Report.

1.5 Access to information and advice

The Directors have individual and independent access to the advice and dedicated support services of the Company Secretaries in ensuring the effective functioning of the Board. Generally, the meeting papers for the Board of Directors’ Meeting and/or respective Committee Meeting are circulated at least 7 days prior to the Meetings. In promoting productive discussion during the respective Meetings, the Directors may seek advice from the Management on issues under their respective purview. The Directors may also interact directly with the Management, or request further explanation, information or updates on any aspect of the Company’s operations or business concerns from them.

In addition, the Board may seek independent professional advice at the Company’s expense on specific issues to enable it to discharge its duties in relation to matters being deliberated. Individual Directors may also obtain independent professional or other advice in furtherance of their duties, subject to the approval of the Chairman or the Board, depending on the quantum of the fees involved.

1.6 Qualified and competent Company Secretaries

Both Company Secretaries of the Company have legal credentials, and are qualified to act as company secretary under Section 235(2) of the Companies Act 2016. The Company Secretaries play an advisory role to the Board in relation to the Company’s constitution, Board’s policies and procedures and compliance with the relevant regulatory requirements, codes or guidance and legislations. The Company Secretaries support the Board by ensuring that all Board meetings are properly conducted and deliberations at the Board and Board Committee meetings are well captured and recorded. The Company Secretaries also keep the Board updated on changes in the Listing Requirements and directives issued by the regulatory authorities, and the resultant implications to the Company and the Directors in relation to their duties and responsibilities. The Company Secretaries keep abreast of the evolving capital market environment, regulatory changes and developments in Corporate Governance through continuous training.

1.7 Board Charter

The Board has made available its Board Charter on its corporate website. The document clearly sets out the roles and responsibilities of the Board and Board Committees and the processes and procedures for convening their meetings. It serves as a reference and primary induction literature providing prospective and existing Board members and Management insights into the fiduciary and leadership functions of the Directors of LNGRES.

The Board last reviewed its charter on 6 July 2017 The Board will continue the practice to review its charter regularly, at least once a year to keep it up to date with changes in regulations and best practices and ensure its effectiveness and relevance to the Board’s objectives.



2. STRENGTHEN COMPOSITION

2.1 Nominating Committee (“NC”)

The NC of LNGRES was established on 12 February 2007 to assist the Board in recommending appointment of new Directors and assessing the effectiveness of the Board.

The membership of the NC is as follows:

Chairman: YBhg Dato’ (Dr) Pahamin Ab Rajab (Non-Independent Non-Executive Director) Members: Low Hee Chung (Independent Non-Executive Director) Gor Siew Yeng (Independent Non-Executive Director) Chuah Poay Ngee (Independent Non-Executive Director)

The NC of LNGRES assumes the following core responsibilities:-

• formulating the nomination, selection and succession policies for members of the Board;• review the structure, size and diversity (including without limitation, gender, age, cultural and educational

background, ethnicity, professional experience, skills, knowledge and length of service) of the Board;• consider the election criteria and develop procedures for the sourcing and election of candidates to stand for

election by LNGRES’s shareholders (“Shareholders”) or to fill casual vacancies of Directors;• identify and nominate candidates to the Board for it to recommend to Shareholders for election as Directors;• undertake an assessment of its Independent Directors annually;• review the training needs for the Directors regularly; and• establishing a set of quantitative and qualitative performance criteria to evaluate the performance of each

member of the Board, each Board Committee and reviewing the performance of the Board as a whole.

Details of the ToR for NC of LNGRES are available at its corporate website.

In line with the ToR of NC, there is one (1) meeting held by the NC during the financial period ended 31 March 2017. The activities carried out by the NC during the financial period from 1 January 2016 to 31 March 2017 (“FPE 2017”) in discharging its functions are as follows, amongst others:

• reviewed the structure, size and diversity (including without limitation, gender, age, cultural and educational background, ethnicity, professional experience, skills, knowledge and length of service) of the Board;

• undertaken an assessment of independency of its Independent Directors; and• reviewed the training needs for the Directors.

2.2 Develop, maintain and review criteria for recruitment and annual assessment of Directors

Appointment process

The Company has in place its procedures and criteria for appointment of new directors It has been a practice to the Company that NC will carry out an interview with the candidates prior to his/her appointment as a director of the Company. All candidates for appointment are first considered by the NC, taking into account the mix of skills, competencies, experience, professionalism and other relevant qualities required to well manage the business, with the aim to meet the current and future needs of the Board composition. The NC also evaluates the candidates’ character and ability to commit sufficient time to the Group. Other factors considered for appointment of Independent Director will include the level of independence of the candidate.



2. STRENGTHEN COMPOSITION (cont'd)

2.2 Develop, maintain and review criteria for recruitment and annual assessment of Directors (cont'd)

The NC leads the process for identifying and making recommendations for the Board’s approval on suitable candidates for directorship to the Board and members to the Board Committees. The Board will then based on the recommendation of the NC, evaluates and decides on the appointment of the proposed candidates(s). The Company Secretaries will ensure that all appointments are properly conducted and that legal and regulatory obligations are met.

The NC will assess the potential candidate’s suitability and the candidates are required to declare and confirm in writing their independence based on the criteria on independence as set out in the ACE Market Listing Requirements of Bursa Malaysia Securities Berhad ("ACE LR").

The NC had reviewed and recommended the appointment of Ms Chuah Poay Ngee as an Independent Non-Executive Director of the Company during the FPE 2017. In evaluating the suitability of Ms Chuah Poay Ngee, the NC had reviewed and considered her education background, professionalism, skills, knowledge, expertise and experience. In addition, the NC also discussed and considered boardroom diversity including gender, age and ethnicity diversity with a view to achieving a sustainable and balance Board. Upon due consideration, the NC agreed to recommend the appointment of Ms Chuah Poay Ngee as an Independent Non-Executive Director of the Company to the Board for approval.

The NC will also be reviewing the composition of respective board committee of the Company to ensure its effectiveness in functioning.

Re-election of Director

In accordance with the Company’s Articles of Association (“AA”), all Directors are subject to re-election by shareholders at the Annual General Meeting (“AGM”) following their appointment. At least one-third (1/3) of the remaining Directors shall retire from office at each AGM at least once in every three (3) years, but shall be eligible for re-election. The Articles further provide that a managing director can be appointed for a fixed term which shall not exceed three (3) years. Any person appointed by the Board either to fill a casual vacancy or as an addition to the existing Board, shall hold office only until the next AGM and shall then be eligible for re-election.

The performance of those Directors who are subject to re-appointment and re-election of Directors at the AGM will be assessed by the NC whereupon recommendations are submitted to the Board for decision on the tabling of the proposed re-appointment or re-election of the Director concerned for shareholders’ approval at the next AGM.

Board Evaluation

The NC has also established a set of quantitative and qualitative performance criteria to evaluate the performance of each member of the Board, each Board Committee and reviewing the performance of the Board as a whole. The criteria for assessment of Directors shall include attendance record, intensity of participation at meetings, quality of interventions and special contributions.

On 25 May 2017, an assessment of the effectiveness of the Board, respective Board Committee and Independence (“the Assessment”) were carried out in respect of the FPE 2017. Appraisal form which comprising quantitative and qualitative performance criteria to evaluate the performance of each member of the Board as well as each Board Committee, were being circulated at the Meeting for assessment. The NC reviewed the required mix of skills, experience and other qualities of the Board and Board Committee and agreed that it has the necessary mix of skill, experience and other necessary qualities to serve effectively. Also, during the Assessment, the NC:-




2.2 Develop, maintain and review criteria for recruitment and annual assessment of Directors (cont'd)

Board Evaluation (cont'd)

• recommended to the Board on those Directors who retire pursuant to Article 81 of the Articles, being eligible, to seek re-election during the forthcoming AGM.

• reminded the Directors should continue to attend training programmes to enhance their skills and knowledge where relevant, as well as to keep abreast with the changing regulatory and corporate governance developments.

Notwithstanding the recommendation of the MCCG 2012, the Board is presently of the view that there is no necessity to fix a specific gender diversity policy. However, the Board noted the recommendation of the MCCG 2012 on gender diversity in the Board and has appointed Ms. Chuah Poay Ngee as Independent Non-Executive Director of the Company on 2 December 2016. The numbers of female directors in its Board is made up to one-third (1/3) of the board.

The skillsets and diversity of the existing Board are summarized as follows:-

Directors Nationality Designation

Industry / Background Experience

By Composition

Age Ethic Gender

Tech

nolo

gy

Mar

ketin

g

Indu

stria

l

Cor

pora

te

Acc

ount

ing

/ Fi

nanc

e

Inte

rnal

Aud

it

Law

/ le

gal

30 –

39

year

s

40 –

49

year

s

50 –

59

year

s

60 –

70

year

s

70 y

ears

and

ab

ove

Bum

iput

ra

Chi

nese

Mal

e

Fem

ale

YBhg Dato’ (Dr) Pahamin Ab Rajab

Malaysian Chairman/Non-Independent Non-Executive Director

√ √ √ √ √ √ √ √

Yong Chan Cheah

Malaysian Managing Director

√ √ √ √ √ √ √ √ √

Yong Swee Chuan

Malaysian Executive Director

√ √ √ √ √ √ √

Low Hee Chung Malaysian Independent Non-Executive Director

√ √ √ √ √ √

Gor Siew Yeng Malaysian Independent Non-Executive Director

√ √ √ √ √ √

Chuah Poay Ngee Malaysian Independent Non-Executive Director

√ √ √ √ √ √ √ √ √




2.3 Remuneration policies

The Remuneration Committee (“RC”) was established on 12 February 2007 and is responsible for recommending to the Board on the remuneration framework as well as the remuneration package of Executive Directors to ensure that rewards commensurate with their contributions to the Group’s growth and profitability in order to align the interest of the Directors with those of the shareholders. The Committee also ensures the level of remuneration for Non-Executive Directors and Executive Directors are linked to their level of responsibilities undertaken and contributions to the effective functioning of the Board.

The membership of the RC is as follows:

Chairman: Gor Siew Yeng (Independent Non-Executive Director) Members: Low Hee Chung (Independent Non-Executive Director) Yong Chan Cheah (Managing Director) Chuah Poay Ngee (Independent Non-Executive Director)

The Company’s remuneration policy for Directors is formulated to attract and retain individuals of the necessary calibre needed to run the business of the Group successfully. The remuneration is structured to link experience, expertise and level of responsibility undertaken by the Directors. The Directors play no part in deciding their own remuneration and shall abstain from discussing or voting on their own remuneration.

The current remuneration policy of the Group is summarised as follows:-

a) The Directors’ salary for Executive Directors are set at a competitive level for similar roles within comparable markets, reflect the performance of the director, skills and experience as well as responsibility undertaken.

b) Directors’ fees are based on a standard fixed fee and are subject to approval by its shareholders at the AGM. c) Meeting Allowance – All the Directors are entitled to a fixed amount of allowance paid in accordance with the

number of meeting attended during the year and subject to approval by its shareholders at the AGM.d) Benefits-in-kind – only Executive Directors of the Group are entitled to benefits-in-kind except ESOS provided

by the Group.e) The RC may obtain independent professional advice in formulating the remuneration package of its

Directors.

The details of the Company Directors’ remuneration comprising remuneration received/receivable from the Company and its subsidiary companies during the FPE 2017 are as follows:

Executive Directors

(RM)

Non-Executive Directors

(RM)Total(RM)

Fees - 194,718* 194,718

Salaries and other emoluments 1,667,519 12,500* 1,680,019

Benefits-in-kind 14,982 - 14,982

Total 1,682,501 207,218 1,889,719




2.3 Remuneration policies (cont'd)

The Directors’ remuneration of the Company’s Directors are categorised into the following bands:

Number of Directors

Range of Remuneration Executive Directors Non-Executive Directors

Below RM50,000 - 4*

RM50,001 to RM100,000 - 1

RM800,001 to RM850,000 2 -

* Inclusive of Directors' remuneration paid to an Independent Non-Executive Director resigned during the FPE 2017.

Details of the remuneration of each Director are not disclosed as the Board is of the view that the transparency and accountability aspects of corporate governance on disclosure of Directors’ remuneration are appropriately served by the above disclosures.

3. REINFORCE INDEPENDENCE

3.1 Annual Assessment of Independence

The NC played an important role to assist the Board in assessing the independence of Non-Executive Directors of the Company on annual basis. Based on the assessment conducted by the NC, the Board is generally satisfied with the level of independence demonstrated by all the Independent Directors of the Company and their ability to act in the best interest of the Company.

The NC develops the criteria to assess independence of Independent Director, include but not limited to directors’ background, family relationships, interest of shareholdings in the Company and related party transactions with the Group (if any).

With respect to the re-election of Ms Gor Siew Yeng, the Independent Directors of the Company seeking for re-election at the forthcoming 15th AGM of the Company, the Board is of the opinion that she has demonstrated

that she is independent from the Management and free from business relationship that might interfere with the exercise of independent judgement, objectivity or the ability to act in the best interest of the Company. Therefore, the Board unanimously recommends and supports the proposed re-election of Ms. Gor.

3.2 Tenure of Independent Directors

The Board has adopted a nine (9) year policy for Independent Directors. The Board will justify and seek shareholders’ approval in the event it retains an Independent Director who has served in that capacity for more than nine (9) years.

3.3 Shareholders’ approval to retain an Independent Director who has served for more than nine (9) years Currently, all the Independent Directors of the Company served less than a tenure of nine (9) years in the Company.

The Board will justify and seek shareholders’ approval in the event it retains as an independent director, a person who has served in that capacity for more than nine (9) years.



3. REINFORCE INDEPENDENCE (cont'd)

3.4 Separation of roles of Chairman and Managing Director The Company practises a division of responsibilities between the Non-Independent Non-Executive Chairman and

the Managing Director. Their roles are separated and clearly defined to ensure a balance of power and authority, increased accountability and greater capacity of the Board for independent decision-making. The Chairman is not related to the Managing Director. The Chairman is responsible for the Board’s effectiveness and conduct. He also promotes an open environment for debate and ensures effective contributions from Non-Executive Directors. The Chairman also exercises control over the quality, quantity and timeliness of information flow between the Board and Management. At a general meeting, the Chairman plays a role in fostering constructive dialogue between shareholders, Board and Management.

The Managing Director is in charge of the day-to-day operations of the business, making strategic business decision and implementing Board policies.

3.5 Composition of the Board

The Board currently has six (6) members comprising a Non-Independent Non-Executive Chairman, two (2) Executive Directors and three (3) Independent Non-Executive Directors. This composition complies with Rule 15.02 of the ACE LR whereby the Company must have at least two (2) Directors or one-third (1/3) of the Board, whichever is higher, who are Independent Directors.

In the event of any vacancy in the Board resulting in the non-compliance with the above, the Company must fill the vacancy within three (3) months. The Board is of the opinion that the interests of shareholders of the Company are fairly represented by the current Board composition and its size constitutes an effective Board of the Company.

The presence of the three (3) Independent Non-Executive Directors is essential in providing guidance, unbiased, fully balanced and independent views, advice and judgement to many aspects of the Group’s strategy so as to safeguard the interests of minority shareholders and to ensure that high standards of conduct and integrity are maintained by the Group.

The Board is mindful to the recommendation that the board must comprise a majority of independent directors where the Chairman of the Company is not an independent director. The Board is of the opinion that other than his shareholdings in the Company, YBhg Dato’ (Dr) Pahamin Ab Rajab has demonstrated that he is independent from the Management and free from business relationship that might interfere with the exercise of independent judgement.

The Board has not nominated a Senior Independent Non-Executive Director to whom concerns may be conveyed as the Board is of the opinion that given the strong independent element of the Board, any concern regarding the Group may be conveyed by shareholders or investors to any of the Independent Directors at the following address and such concerns will be reviewed and addressed by the Board accordingly:-

Mr. Low Hee Chung/ Ms. Gor Siew Yeng/ Ms Chuah Poay Ngee LNG Resources Berhad 57-G Persiaran Bayan Indah, Bayan Bay, Sungai Nibong, 11900 Penang.



4. FOSTER COMMITMENT

4.1 Time Commitment

The Board does not specifically set out the expected time commitments from each Directors. However, the Board is satisfied with the level of time commitment given by the Directors towards fulfilling their roles and responsibilities as Directors of LNGRES. This is evidenced by the attendance record of the Directors at Board meetings.

The Board meets on a quarterly basis with additional meetings held whenever necessary. The Board met six (6) times during the period under review. The meeting attendance record of the Directors is as follows:

Meeting Attendance

YBhg Dato’ (Dr) Pahamin Ab Rajab 4/6

Yong Chan Cheah 6/6

Yong Swee Chuan 6/6

Low Hee Chung 6/6

Gor Siew Yeng 5/6

Chuah Poay Ngee (Appointed w.e.f. 2 December 2016) 1/1

Lee Huei (Resigned on 24 October 2016) 4/4

Though the Company does not set a policy for Directors to notify the Chairman and/or Management prior to accepting new appointments, to ensure that the Directors have the time to focus and fulfill their roles and responsibilities effectively and in line with the ACE LR, a Director of LNGRES must not hold directorships of more than five (5) Public Listed Companies and must be able to commit sufficient time to LNGRES.

The Directors are required to submit an update on their other directorships from time to time for monitoring of the number of directorships held by the Directors of LNGRES and for notification to Companies Commission of Malaysia accordingly.

To facilitate the Directors’ time planning, an annual meeting calendar is prepared and circulated to all Directors before the beginning of every year.



4. FOSTER COMMITMENT (cont'd)

4.2 Continuing Training Programme

The Directors are mindful that they should continue to attend training programmes to enhance their skills and knowledge where relevant, as well as to keep abreast with the changing regulatory and corporate governance developments.

The details of trainings attended by the Directors during the FPE 2017 are as follows:-

Director Date Description

YBhg Dato’ (Dr) Pahamin Ab Rajab

23 August 20161 day

Practical Impact of the New Companies Act 2016.

Yong Chan Cheah 9 January 2016½ day

“Trans-Pacific Partnership Agreement (TPPA)” organised by Kementerian Perdagangan Antarabangsa dan Industri (MITI).

15 January 2016½ day

“Business Opportunities in South Australia” organised by Penang Chinese Chamber of Commerce.

28 March 20161 day

“Penang State Industrial Conference 2016” organised by Penang State Government under Deputy Chief Minister 1 office.

27 April 2016 ½ day

“The CEO speak on Automation in Smart Manufacturing” organised by InvestPenang.

19 May 20161 day

“Beyond Scada & Mobility” organised by Federation of Malaysian Manufacturers (FMM).

11-15 July 20165 days

“Malaysia Aerospace Industry Export Acceleration Mission” event organised by MATRADE.

11 October 2016½ day

Going or Gone Regional ? Structuring your Business Expansion via Labuan IBFC, organised by MICCI.

Yong Swee Chuan 12-13 August 2016 2 days

Creative Problem Solving & Decision Making.

28-29 September 2016 2 days

ISO 14001:2015 Awareness, Risk Assessment and Auditor Training.

21-22 October 20162 days

ISO 9001:2015 Awareness, Risk Assessment and Auditor Training.

Low Hee Chung 18 May 20161 day

MPERS Executive Briefing.

8 November 20161 day

National Tax Seminar 2017, organised by Inland Revenue Board of Malaysia.

19 January 20171 day

Budget 2017, GST Audit and New Tax Code Seminar.



4. FOSTER COMMITMENT (cont'd)

4.2 Continuing Training Programme (cont'd)

Director Date Description

Gor Siew Yeng 19 January 2016 1 day

An Overview of the Proposed New Companies Act, 2016.

11 November 2016 1 day

Seminar on Budget 2017 & GST.

18 November 2016 1 day

Common Violations / Offences under the New Companies Act 2016 – Defences against Penalties.

Chuah Poay Ngee 7 April 20161 day

Risk Management & Internal Control Workshop Is our Line of Defence adequate & Effective organised by Bursa Malaysia.

13-14 Apr 20162 days

Financial Analysis & Modelling in Excel organised by MIA.

5. UPHOLD INTEGRITY IN FINANCIAL REPORTING

5.1 Compliance with applicable financial reporting standards

The Board aims to provide and present a balanced and meaningful assessment of the Group’s financial performance and prospects at the end of each financial year, primarily through annual financial statements, announcement of results to shareholders as well as the Chairman’s Statement and Management Discussion and Analysis in the annual report.

Details of the Directors’ Responsibility in the preparation of the Group’s financial statements are disclosed in page 37 of this Annual Report 2017.

The Board is assisted by the AC in overseeing the Group’s financial reporting processes and the quality of its financial reporting. The AC reviews the Group’s annual financial statements and the quarterly condensed financial statements focusing particularly on changes in accounting policies, management’s judgement in applying these accounting policies as well as assumptions and estimates applied in accounting for certain material transactions.

5.2 Assessment of suitability and independence of external auditors

During the FPE 2017, the AC has reviewed and assessed the proposals from a few Audit Firms for engagement as Auditors of the Group for the ensuing year in place of the retiring Auditors, Messrs. Crowe Horwath. After considering the following factors, the Committee had shortlisted and recommended to the Board the proposed appointment of Messrs. PricewaterhouseCoopers, in place of the retiring Auditors of the Group:-

(a) Firm’s reputation and qualifications of its professionals, including the breadth and depth of resources, expertise and experience of the team members;

(b) Networking ability and competency to address audit of overseas subsidiaries; (c) Independence of the firm; and(d) Proposed Audit Fee.


5. UPHOLD INTEGRITY IN FINANCIAL REPORTING (cont'd)

5.2 Assessment of suitability and independence of external auditors (cont'd)

The appointment of Messrs. PricewaterhouseCoopers was approved by the shareholders on its 14th Annual General Meeting held on 26 May 2016.

The AC had obtained written assurance from its external auditors, Messrs. PricewaterhouseCoopers , confirmed that they are, and have been independent throughout the conduct of the audit engagement in accordance with the terms of all relevant professional and regulatory requirements.

The AC undertakes an assessment of the suitability and independence of the external auditors considering the factors which include adequacy of experience and resources of the firm and the professional staff assigned to the audit, independence and the level of non-audit services to be rendered by the external auditors to the Company, etc. The Board maintains a transparent relationship with external auditors. Members of the AC meet the external auditors at least twice a year without the presence of the executive Board members to discuss the results and concerns arising from their audit. During the FPE 2017, two discussion sessions between the AC and the former external auditors were held on 25 February 2016 and 7 April 2016 whilst another two discussion session were held on 24 November 2016 and 23 February 2017 respectively with the its current Auditors, Messrs. PricewaterhouseCoopers.

The AC recommended the re-appointment of Messrs. PricewaterhouseCoopers as the External Auditors of the Group for the ensuing year ending 31 March 2018 after having satisfied with its audit independence and the performance of Messrs. PricewaterhouseCoopers throughout its course of audit for the FPE 2017, amongst others:-• satisfied that the quality processes/ performance of External Auditors;• able to give adequate technical support when audit issue arise; and• adequate experience and resources of Messrs. PricewaterhouseCoopers and audit engagements.

The AC recommended the re-appointment of Messrs. PricewaterhouseCoopers to the Board for approval by its

shareholders at the forthcoming 15th AGM.

6. RECOGNISE AND MANAGE RISK

6.1 Sound framework to manage risk

With the assistance of its outsourced Internal Auditors (“IA”), the AC oversees the Enterprise Wide-Risk Management framework of the Group and reviews the risk management framework formulated by the Management.

The Company had also formed its Risk Management Committee (“RMC”) on 11 April 2013 to closely monitor the Group’s risk profile. The RMC will review and recommend to the Board the type and level of business risks of LNGRES Group and the appropriate framework and policies for managing such risks.

The Group employed the “Top-down” methodology for the risk assessment process. The approach to conducting the risk assessment shall include the following steps:

a) Review of Information - The Group shall perform Risk Management mapping process entails reliance on available data;



6. RECOGNISE AND MANAGE RISK (cont'd)

6.1 Sound framework to manage risk (cont'd)

b) The RMC identify and review the Group’s processes and issues that present the most significant risks to the Group, based on the assessment and forecast of the business and operating environment. The Executive Directors and Heads of Departments will discuss risks related to their specific areas as well as comment on their perceptions of risks to the overall organisation. During the meetings, the strategies, objectives, current and planned changes in operations, and related risks shall be discussed; and

c) In assessing risk, the summarised results should be compared to the risk universe. The four major categories of risks are business strategy, compliance, financial and operational. The identification of primary business processes would enable the prioritisation of risk throughout the organisation.

Overall, the risk assessment is based on collective inputs from the Executive Directors and Heads of Departments, review of various data and management reports and application of cumulative knowledge of the industry. The identified risk exposures can be used in developing a risk-based internal audit plan with Internal Auditors.

The risk response strategy adopted in respond to the various identified risk in the aforementioned audit risk universe are Transfer, Reduce, Accept and Avoid.

The RMC reviewed and assessed the Group’s Risk Register on quarterly basis and tabled the details RMC report to the AC and the Board on half yearly basis.

6.2 Internal Audit Function

The Group has engaged the services of an independent professional accounting and consulting firm to provide much of the assurance it requires regarding the effectiveness as well as the adequacy and integrity of the Group’s systems of internal control. In order to further enhance the Group’s internal control, the Committee has in June 2016 recommended the engagement of BDO Governance Advisory Sdn. Bhd., a reputable firm with vast exposure and having adequate resources and expertise in internal audit, for its appointment as the new Internal Auditors of the Group. Internal Auditors reports directly to the Committee on its activities based on the approved annual Internal Audit Plans. Its principal role is to provide independent assurance on the adequacy and effectiveness of governance, risk management and internal control processes.

The Statement on Risk Management and Internal Control set out on pages 40 to 43 of this Annual Report provides an overview of the state of risk management and internal controls within the Group.

7. ENSURE TIMELY AND HIGH QUALITY DISCLOSURE

7.1 Corporate Disclosure Policy

The Board is mindful on the importance of maintaining a proper corporate disclosure procedures with the aim to provide shareholders and investors with comprehensive, accurate and quality information on a timely basis. Personnel and working team for preparing the disclosure will conduct due diligence and proper verification, as well as coordinate the efficient disclosure of material information to the investing public.

The Company has put in place an internal control policy on confidentiality to ensure that confidential information is handled properly by Directors, employees and relevant parties to avoid leakage and improper use of such information.



7. ENSURE TIMELY AND HIGH QUALITY DISCLOSURE (cont'd)

7.1 Corporate Disclosure Policy (cont'd)

The Company has also conduct internal training and briefing to the employees (those with access to the confidential information) from time to time to enhance the awareness of employees on corporate disclosure requirements and to keep them abreast on the updates of the same.

7.2 Leverage on information technology for effective dissemination of information

LNGRES’s website incorporates an Investor Relations (“IR”) section which provides all relevant information on the Group and is accessible by the public. This section enhances the IR function by including share price information, all announcements made by LNGRES, annual reports, board charter and the corporate and governance structure of LNGRES.

The Company will enhance the disclosures on its website for broader and effective dissemination of information to its stakeholders from time to time.

8. STRENGTHEN RELATIONSHIP BETWEEN COMPANY AND SHAREHOLDERS

8.1 Encourage shareholder participation at general meetings

LNGRES dispatches its notice of AGM to shareholders more than twenty-one (21) days before the AGM, in advance of the notice period as required under the Companies Act 2016 and ACE LR. The additional time given to shareholders allows them to make necessary arrangements to attend and participate either in person, by corporate representative, by proxy or by attorney.

The Company allows a member to appoint a proxy who may not be a member of the Company. If the proxy is not a member of the Company, he/she need not be an advocate, an approved company auditor or a person approved by the Companies Commission of Malaysia. LNGRES has also removed the limit on the number of proxies to be appointed by an exempt authorised nominee with shares in the Company for Omnibus account to allow greater participation of beneficial owners of shares at general meetings of the Company. The AA of the Company further accord proxies the same rights as members to speak at the general meeting. Essentially, a corporate representative, proxy or attorney is entitled to attend, speak and vote both on a show of hands and on a poll as if they were a member of the Company.

The Board will consider adopting electronic voting to facilitate greater shareholder participation at general meetings, and to ensure accurate and efficient outcomes of the voting process.

8.2 Encourage poll voting

At the 14th AGM of the Company held on 26 May 2016, no substantive resolutions were put forth for approval, thus, the resolutions were voted on by a show of hands.

In compliance with Rule 8.31A of the ACE LR, all resolutions set out in the notice of forthcoming 15th AGM of the Company will be voted by poll.



8. STRENGTHEN RELATIONSHIP BETWEEN COMPANY AND SHAREHOLDERS (cont'd)

8.3 Effective Communication and proactive engagement

The proceedings of the 14th AGM included the presentation of the Company’s operating and financial performance for the financial year ended 31 December 2015. YBhg Dato’ Chairman also invited shareholders to raise questions pertaining to the Company’s financial statements and other items for adoption at the meeting, before putting a resolution to vote. The Directors, Management and external auditors were in attendance to respond to the shareholders’ queries.

In addition to the above, the Company will look into allocation of time during AGM for dialogue with shareholders to address the issues concerning the Group and to make arrangement for Officers of the Company to present and handle other face-to-face enquiries from shareholders.

This statement was made in accordance with a resolution of the Board dated 14 July 2017.



Additional Disclosure Requirements Pursuant to the ACE Market Listing Requirements

of Bursa Malaysia Securities Berhad

1. Utilisation of Proceeds Raised from Corporate Proposals

There were no proceeds raised from any corporate proposals during the financial period from 1 January 2016 to 31 March 2017 (“FPE 2017”).

2. Material Contracts

There were no material contracts entered into by the Group involving Directors’ or major shareholders’ interests, either still subsisting at the end of the FPE 2017, or entered into since the end of the previous financial year:-

Oriental Fastech Manufacturing Sdn Bhd (“OFM”), a wholly-owned subsidiary of LNGRES has on 22 January 2016 entered into a Sales and Purchase Agreement (“SPA”) with Triangle Asset Management Sdn Bhd (“TAM”) to dispose its property as detailed below to TAM at a consideration of Ringgit Malaysia One Million and Two Hundred Thousand (RM1,200,000/) only (GST exclusive) to be satisfied fully in cash [“the Disposal”].

Description of the Property: All that piece of land and hereditaments known as:- GRN 152456, No. Lot 3426, Mukim 13, Daerah Seberang Perai Tengah, Negeri Pulau Pinang together with a unit of One

and Half (1½) Storey Semi-Detached Factory erected thereon bearing address No. 26, Lorong Industri Ringan 1, Kawasan Industri Ringan Juru, 14100 Simpang Ampat, Pulau Pinang.

Mr Yong Chan Cheah and Mr Yong Swee Chuan are deem interested in the Disposal by virtue of their common directorship in LNGRES Group and TAM. Both Mr Yong are also Major Shareholder of LNGRES and TAM. Mr Gan Joe Yee is deem interested in the Disposal by virtue of his common directorship in OFM and TAM. Mr Gan is also a Major Shareholder of TAM.

The Disposal was completed on 26 May 2016.

3. Audit and Non-Audit Fees

The amount of audit and non-audit fees incurred for services rendered to the Company and its subsidiaries for the FPE 2017 by the Company’s Auditors, or a firm or company affiliated to the Auditors’ firm are as follows: -

Category Audit Fees

(RM) Non-Audit Fees

(RM)

Company 91,000 3,000

Subsidiaries 238,796 -

Total 329,796 3,000


Audit Committee Report

The Audit Committee (“AC”) was established on 20 May 2003 by the Board of Directors with the primary objective of assisting the Board of Directors in fulfilling its fiduciary responsibilities relating to accounting and reporting practices, and systems of internal control of the Group.

MEMBERSHIP

The AC presently comprises the following members:

Chairman : Low Hee Chung (Independent Non-Executive Director)Members : Gor Siew Yeng (Independent Non-Executive Director) Chuah Poay Ngee (Independent Non-Executive Director)

Mr. Low Hee Chung, the Chairperson of the AC is a Chartered Accountant of the Malaysian Institute of Accountants, which is in compliance with paragraph 15.09(1) of the ACE LR of the Bursa Malaysia Securities Berhad. (“Bursa Securities”) All members of the AC are financially literate and believed to be able to analyze and interpret financial statements to effectively discharge their duties and responsibilities as members of the AC. The Nominating Committee had on 25 May 2017 assessed the performance of the AC and its members through an annual board committee effectiveness evaluation. The Nominating Committee is satisfied that the AC and its members have discharged their functions, duties and responsibilities in accordance with the AC’s Terms of Reference and supported the Board in ensuring the Group upholds appropriate corporate governance standards.

The duties and responsibilities of the AC are spelt out in the Terms of Reference of the AC, a copy of which is available in the Company’s website at www.lng-res.com

MEETINGS

During the financial period, a total of seven (7) AC meetings were held and the details of the attendance are as follows:

Meeting Attendance

Low Hee Chung 7/7

Gor Siew Yeng 6/7

Chuah Poay Ngee (Appointed w.e.f 2 December 2016) 1/1

Lee Huei (Resigned on 24 October 2016) 5/5

The AC conducted its meetings in an open and constructive manner and encouraged focused discussion, questioning and expressions of differing opinions. The External Auditors and Internal Auditors attended meetings of the AC to present their reports. As and when necessary, the AC would request the attendance of relevant personnel at its meetings to brief the AC on specific issues. The Financial Controller and/or representative from the Finance Division also attended the AC meetings to present the unaudited quarterly financial statements, as well as other financial reporting related matters for the AC’s deliberation and recommendation to the Board for approval, where appropriate.

At each meeting, the Chairman of the AC reported the AC’s deliberations and recommendations to the Board. Minutes of each AC meeting were recorded and tabled for confirmation at the next following AC meeting and subsequently presented to the Board for notation.


Audit Committee Report (cont’d)

ACTIVITIES OF THE AUDIT COMMITTEE

In line with the terms of reference of the Committee, the following activities were carried out by the Committee during the financial period ended 31 March 2017 from 1 January 2016 to 31 March 2017 (“FPE 2017”) in discharging its functions:

Financial Reporting

The Group has changed its financial year end from December 31, 2016 to March 31, 2017. The current financial statements shall be for a period of 15 months from January 1, 2016 to March 31, 2017 and thereafter, the financial year end shall be on March 31 for each subsequent year. The Committee reviewed the fifth quarterly financial statements of the Group for FPE 2017 on 25 May 2017 and also reviewed the first, second, third and fourth quarterly financial statements of the Group for the FPE 2017 and recommended the same to the Board for approval during its Audit Committee meeting held on 26 May 2016, 25 August 2016, 24 November 2016 and 23 February 2017 respectively. The Committee reviewed and was satisfied that the said quarterly financial statements are prepared in compliance with the Malaysian Financial Reporting Standards (“MFRSs”) 134 - Interim Financial Reporting, IAS 34: Interim Financial Reporting issued by International Accounting Standards Board and Appendix 9B of the ACE LR.

External Auditors

During the FPE 2017, two discussion sessions between the AC and the former external auditors were held on 25 February 2016 and 7 April 2016 whilst another two discussion session were held on 24 November 2016 and 23 February 2017 respectively with the its current Auditors, Messrs. PricewaterhouseCoopers.

On 25 February 2016, the AC reviewed and discussed with the External Auditors Messrs. Crowe Horwath on the results of their audit for the financial year ended 31 December 2015 ("FYE 2015") and the outstanding audit areas as summarised in the Audit Review Memorandum. The AC also deliberated on audit issues raised by the External Auditors and the action plans required to address those issues. During the Meeting, the AC enquired the External Auditors whether they have encountered any matter/concern/ issue during the course of audit including the co-operation rendered by the staff. The External Auditors informed that the Management had granted full co-operation to the External Auditors during their course of audit. On 7 April 2016, the External Auditors updated the AC on the Status of Audit of the Financial Statements FYE 2015 and the update of audit areas as summarised in the Audit Review Memorandum.

During the FPE 2017, an invitation was send out to various audit firms inviting proposal from the interested firms for the engagement as Auditors of the Company for the ensuing year. On 7 April 2016, the AC after considering the following factors, recommended to the Board the proposed appointment of Messrs. PricewaterhouseCoopers in place of the retiring Auditors of the Group:-

a) Firm’s reputation and qualifications of its professionals, including the breadth and depth of resources, expertise and experience of the team members;

b) Networking ability and competency to address overseas subsidiaries not audited by the firm, i.e. its liaison capability with the secondary auditors; and

c) Independence of the firm.

On 24 November 2016, the External Auditors, Messrs. PricewaterhouseCoopers tabled the Audit Planning Memorandum prior to the commencement of the audit of the financial statements for FPE 2017, more particularly as below:-

a) Audit Approach, Roles and Responsibilities;b) Areas of Audit Emphasis;c) Developments in laws and regulations;



External Auditors (cont'd)

d) Malaysian Accounting Standards Board Proannouncements;e) Engagement Team;f) Proposed Fee;g) Audit Timetable;h) Terms of Engagement for review of the Directors’ Statement on Risk Management and Internal Control.

Besides, further to the briefing by the External Auditors, the Committee took note on the key amendments of the Listing Requirements and key changes in the financial reporting standards and updates which are applicable to the Group.

The AC has also obtained confirmation from the External Auditors that Messrs. PricewaterhouseCoopers have maintained its independence in accordance with Messrs. PricewaterhouseCoopers’s requirements and with the provision of the By-Laws on Professional Independence of the Malaysian Institute of Accountants (MIA), they are not aware of any cause that in their professional judgement, may be thought to impair their independence.

On 6 July 2017, the AC concluded that based on the Assessment, amongst others as set out below, the External Auditors Performance for FPE 2017 was found adequate and thereby recommended the re-appointment of Messrs. PricewaterhouseCoopers as the External Auditors of the Group to the Board for approval by its shareholders:-

o after having satisfied with its audit independence and the performance of Messrs. PricewaterhouseCoopers throughout its course of audit FPE 2017;

o satisfied that the quality processes/ performance of External Auditors;o able to give adequate technical support when audit issue arise; ando adequate experience and resources of Messrs. PricewaterhouseCoopers and audit engagements.

INTERNAL AUDIT FUNCTION

The Group has engaged the services of an independent professional accounting and consulting firm to provide much of the assurance it requires regarding the effectiveness as well as the adequacy and integrity of the Group’s systems of internal control. In order to further enhance the Group’s internal control, the Committee had on 23 June 2016 recommended the engagement of BDO Governance Advisory Sdn. Bhd., a reputable firm with vast exposure and having adequate resources and expertise in internal audit, for its appointment as the new Internal Auditors of the Group. Internal Auditors reports directly to the Committee on its activities based on the approved annual Internal Audit Plans. Its principal role is to provide independent assurance on the adequacy and effectiveness of governance, risk management and internal control processes.

On 25 February 2016, the Internal Audit Plan for year 2016 was tabled for Committee’s review and approval. Following the Engagement of new Internal Auditors, the AC had on 25 August 2016 reviewed the revised Internal Audit Plan which was developed based on the methodology practiced by BDO Governance Advisory Sdn. Bhd., prioritized on the core business processes of the Group. The Committee approved the said Plan upon incorporation of the comments from the Committee and advises from the Internal Auditors;

The Internal Auditors presented its findings together with recommendation and management action plan to the Committee at the Meetings on 25 February 2016, 24 November 2016 and 23 February 2017 respectively;



INTERNAL AUDIT FUNCTION (cont'd)

During the FPE 2017, the Internal Auditors have conducted review on internal control of the selected Subsidiaries focusing on the following areas:-

• Conversion and Production; • Property, Plant and Equipment (PPE) Management; • Credit Control and Cash Management;• Procure to Pay; and• Sales to Receipt.

RISK MANAGEMENT AND INTERNAL CONTROL

On 26 May 2016 and 24 November 2016, the AC reviewed and discussed the Risk Assessment Report tabled by the Risk Management Committee, the discussion includes risk assessment, summary of action plans and action taken by the management and update of risks register. The Audit Committee reviewed the Statement on Risk Management and Internal Control in respect of FPE 2017 on 6 July 2017 for publication in the Annual Report 2017. Information pertaining to the Company’s internal controls is shown in the Statement on Internal Control and Risk Management set out on page 40 to 43 of this Annual Report.

OTHERS

AC reviewed and discussed with senior management on the Annual Budget 2017 half yearly and reviewed the Group Aging Report on quarterly basis;


Statement on Directors’ Responsibilities

The Directors are required under the Companies Act 2016 to prepare the financial statements for each financial year. These financial statements are to be drawn up in accordance with applicable approved accounting standards other than private entities as issued by Malaysian Accounting Standards Board so as to give a true and fair view of the state of affairs of the Group and of the Company as at the end of the financial year and of their financial performance and cash flows for the year then ended.

In preparing these financial statements, the Directors have considered the following:

• that the Group and the Company have used appropriate accounting policies of which are consistently applied;• that reasonable and prudent judgements and estimates were made;• that the applicable approved accounting standards in Malaysia have been applied; and• that the preparation of the financial statements were on a going concern basis.

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

The Directors have general responsibility for taking such steps that are reasonably available to them to safeguard the assets of the Group and the Company, and to prevent and detect fraud and other irregularities.

This statement was made in accordance with a resolution of the Board dated 14 July 2017.


Corporate Social Responsibility Statement

At LNGRES, we are committed to undertaking responsible practices that impact our society and environment in a positive manner in all aspects of our business.

We aim to manage our impact on the environment, safeguard the health and safety of our employees and contribute to the community in which we operate. We also ensure that the products we develop are of international safety standards. We develop ethical and responsible business policies and practices that are applied without exception across our business operations.

During the financial period 1 January 2016 to 31 March 2017 (“FPE 2017”), the corporate social responsibility initiatives undertaken by our Group are as follows:

THE ENVIRONMENT

Our Group is committed to achieving excellence in manufacturing and managing our operations in an environmentally sustainable way. Certain of our manufacturing plants are accredited with ISO 14001 Environmental Management System.

During the financial period, environmental audits focusing on significant aspects, risks and objectives as required by the Environmental Management System standards were conducted. We have systems in place to monitor and measure noise exposure, environmental air, scheduled waste disposal and sewage discharge to meeting legal requirements. We also promote environmental conscious work practices such as recycling and energy saving in order to reduce the impact to the environment.

THE WORKPLACE

We aim to provide a safe and healthy environment for all our employees, customers, suppliers and business partners entering our premises and ensure safe practices in all aspects.

Safety inspections and audits and regular training form part of our comprehensive measures to ensure health and safety at the workplace. During the FPE 2017, we initiated health and safety programmes such as fire drills, safety system checks on equipments and first aid training. We also have an Emergency Response Team to handle emergency situations pending the arrival of assistance from the respective authorities during emergency situations.

Apart from safety at workplace, at LNGRES, we recognised that promoting health is an essential part of our responsibility to our employees. In this regard, various initiatives such as sport activities were carried out aimed at developing healthy lifestyle among our employees. Additional benefits such as personal accident and group health insurance coverage are also provided for our employees.

Recognising our employees are our greatest asset and strength, we continue to focus on people development to develop our people to their fullest potential. We encourage our employees to continually upgrade their technical competence to keep pace with the evolving environment as well as technological advancements and to compete effectively in global markets. On-the-job training is conducted for all new employees. In addition, specific process training and skills enhancement training are provided to our employees to ensure that our employees are well equipped with the necessary skills and knowledge for their jobs.

THE COMMUNITY

We are committed to responsibly serve our community. Our Group recognises that we can make a positive impact in the community by giving financial and other resources towards meaningful causes.

In order to fulfil our responsibilities to the community in a consistent manner, we also provide industrial training for students. During the FPE 2017, our Group has continued to take students from local institutions, colleges, polytechnics and universities as trainees.


Corporate Social Responsibility Statement (cont’d)

THE MARKETPLACE

Our Group is committed to ensure that the interests of all our important stakeholders – our shareholders, suppliers and customers are being taken care. We emphasise on good corporate governance practices to meet shareholders’ expectations. For our suppliers, we practise transparent and fair procurement policies. As to our customers, the major facilities within our Group are accredited with ISO 9001 Quality Management System. We are committed to supply quality products and meeting customers’ satisfactions through continual improvement in technology, process and services.


Statement on Risk Managementand Internal Control

INTRODUCTION

Pursuant to Paragraph 15.26(b) of the ACE Market Listing Requirements of Bursa Malaysia Securities Berhad (“ACE LR”) and Statement on Risk Management and Internal Control: Guidelines for Directors of Listed Issuers, the Board of Directors (“Board”) is pleased to present the Statement on Risk Management and Internal Control (the “Statement”) which outlines the governance policies, key elements, nature and scope of risk management and internal control of the Group during the financial period and up to date of approval of this statement.

BOARD’S RESPONSIBILITY

The Board is committed to the continuous improvement of internal control and risk management practices within the Group to meet its business objectives. The Board affirms its overall responsibility to establish a sound risk management framework and internal control system, and for reviewing the adequacy, integrity and effectiveness of these systems to safeguard shareholders’ investment and the Group’s assets. It covers not only financial controls but operational and compliance controls, and risk management.

However, such systems, by their nature, can only provide reasonable, but not absolute, assurance against hindering the Group achieving its business objectives, material misstatement, loss and fraud. These systems are designed to manage, rather than eliminate, the risk of failure to achieve business objectives of the Group.

ASSURANCE FROM THE MANAGEMENT

The Board has received assurance in writing from the Group’s Managing Director and the Finance Managers of the Group that the Group’s risk management and internal control system are operating adequately and effectively, in all material aspects, to ensure achievement of corporate objectives.

RISK MANAGEMENT

The Board recognises the importance for identifying, evaluating and managing the significant risks that could potentially impact the Group. The Group had carried out a review on Enterprise-Wide Risk Assessment in 2014, which includes identifying and prioritising the Group’s business risks. The Board is aware that risk management practices need to be embedded into the organisation’s business process. Hence, risk registers and risk profiles are used as one of the business tools to highlight the risks exposures and their risks mitigation to Management and Board. The risk register and risk profiles for all business units of the Group are updated as and when there are changes to the business environment or regulatory guidelines. This process is regularly reviewed by the Audit Committee. The Group formed its Risk Management Committee in April 2013 to provide risk management support for the management of the Group as a whole.

The key elements of the Group’s Risk Management Framework are described below:

1. The Group maintains a sound system of risk management by ensuring that the risk management and control framework are embedded into the culture, processes and structure of the Group and to the achievement of its business objectives.

2. The Group has established an organisation structure with clearly defined limits of authority, lines of responsibility and accountability that aligned to the Group’s business objectives.

3. The respective Head of Department and Senior Management staff are responsible for identifying, assessing and managing the risks faced by their departments. The results of risk assessment activities are shared across the business unit for appropriate actions to be taken.


Statement on Risk Managementand Internal Control (cont’d)

RISK MANAGEMENT (cont'd)

4. Periodic operational/management meetings are held to ensure that the risks identified are monitored and appropriately addressed to the Executive Directors and the Executive Directors shall highlight those significant risks identified to the Audit Committee and the Board.

5. The Board is assisted by the Audit Committee in overseeing the effectiveness of the Group’s policies and guidelines to ensure proper management of risks to which the Group is exposed and to take appropriate and timely action to manage the risks.

6. The Board through the Audit Committee maintains risks oversight for the Group by carrying out the following:

i. Ongoing reviews with the key management within the Group on the development and maintenance of risk management and the internal control framework.

ii. Review the results of the internal audit programme, processes or investigation undertaken on a quarterly basis, and whether or not appropriate action is taken on the recommendations made by the internal auditors.

iii. Review with external auditors on the results of their audit, the audit report and internal control recommendations in respect of internal control weaknesses noted in the course of their audit on a yearly basis.

INTERNAL CONTROL

The Board has established an appropriate control structure to manage risks identified by taking into consideration the nature and extent of the risks, the extent and sources of risk which it regards as acceptable for the Group, the likelihood of the significant risks materialising, the Group’s ability to reduce the incidence of risks that do materialise and manage their impact on the business and the costs of operating particular controls relative to the benefit derived from managing the related risks.

The key elements of the Group’s Internal Control System are described below:

1. The Board has established a hierarchical organisation structure with proper segregation of duties for key functions of the operations of the Group.

2. Delegation of authority including authorisation limits at various levels of management and those requiring the Board’s approval are clearly defined to ensure accountability and responsibility.

3. Clear, formalised and documented internal policies, standards and procedures are in place to ensure compliance with internal controls and relevant laws and regulations. LNGRES has a stand-alone Whistle Blowing Policy to provide an avenue for staff or any external party to report any breach or suspected breach of any law or regulation, including business principles and the Group’s policies and guidelines.

4. The significant operations of each business unit of the Group are accredited with ISO 9001 Quality Management System and ISO 14001 Environmental Management System, and are subject to yearly audit reviews. This ensures that the quality and environmental management system comply with international standards and are continuously improved upon.

5. An annual budget where key performance indicators for each business unit are set, are submitted to the Board for

approval. Actual performance is reviewed against budget on half yearly basis allowing timely response and corrective actions to be taken to mitigate significant risks.

6. The Group’s performance is monitored through management and operational meetings attended by senior management. The Executive Directors are also actively involved in the day-to-day operations of the Group.



INTERNAL CONTROL (cont'd)

7. There are guidelines within the Group for hiring and termination of staff. Appointment of staff is based on the required level of qualification, experience and competency to fulfil their responsibilities. An induction programme is conducted for all new employees to ensure that they are aware of the existing code of ethical conduct and culture. Training and development programmes are identified and scheduled for employees to ensure that employees are equipped with the necessary knowledge and competencies to carry out their responsibilities. In addition, a formal employee appraisal to evaluate and measure the employees’ performance and their competency is performed at least once a year.

8. Quarterly and yearly financial and management reports are submitted to the Audit Committee and the Board for review and approval.

9. There exists sufficient insurance coverage and physical safeguards on major assets to ensure the Group’s assets are adequately covered against any mishap that could result in material loss. A yearly policy renewal exercise is undertaken in which Management reviews the coverage based on the current fixed asset and inventory balances and the respective net carrying amounts and “replacement value”, i.e. the prevailing market price for the same or similar item, where applicable.

10. Through internal audits, the Audit Committee assesses compliance with policies and procedures and relevant laws and regulations. In addition, it examines and evaluates the effectiveness and efficiency of the Group’s internal control system.

INTERNAL AUDIT FUNCTION

The Group has outsourced its internal audit function to an independent professional service provider (the “Internal Auditors”) which carries out its functions independently using the risk-based approach and provides the Audit Committee and the Board with the assurance on the adequacy and effectiveness of the system of internal control.

The key elements of the Group’s Internal Audit Function are described below:

1. Prepare a detailed Annual Audit Plan in consultation with the senior management on the scope and frequency of the internal audit activities for the Audit Committee’s approval.

2. Carry out all activities to conduct the audits in an effective, professional and timely manner.

3. Inform the Management upon completion of each audit for any significant control lapses and/or deficiencies noted from the reviews for their verification and corrective action plan.

4. Report to the Audit Committee on a quarterly basis on any non-compliance, internal control weaknesses and agreed actions taken by Management to resolve the audit issues identified.

The cost incurred for the internal audit function for the financial period ended 31 March 2017 was RM32,000.00.

REVIEW OF THE STATEMENT BY EXTERNAL AUDITORS

As required by paragraph 15.23 of the ACE LR, the External Auditors have reviewed this Statement on Risk Management and Internal Control for inclusion in the annual report of the Group for the period ended 31 March 2017 and reported to the Board that nothing has come to their attention that causes them to believe that this Statement is inconsistent with their understanding of the process adopted by the Board in reviewing the adequacy and effectiveness of the risk management and internal control system.



CONCLUSION

The Board is of the view that the risk management and internal control systems are satisfactory and have not resulted in any material losses, contingencies or uncertainties that would require disclosure in the Group’s annual report. The Board continues to take pertinent measures to sustain and, where required, to improve the Group’s risk management and internal control systems in meeting the Group’s strategic objectives.

This statement is made in accordance with a resolution of the Board dated 14 July 2017.


Directors’ ReportFor The Fifteen Months Financial Period Ended 31 March 2017

The directors hereby submit their report and the audited financial statements of the Group and of the Company for the fifteen months financial period ended 31 March 2017.

DIRECTORS

The directors in office during the financial period and during the period from the end of the financial period to the date of the report are:

YBhg Dato’ (Dr) Pahamin Ab Rajab Yong Chan Cheah Yong Swee Chuan Low Hee Chung Gor Siew Yeng Chuah Poay Ngee (Appointed on 2 December 2016)Lee Huei (Resigned on 24 October 2016)

PRINCIPAL ACTIVITIES

The principal activities of the Company are investment holding and provision of management services. The principal activities of its subsidiaries are disclosed in Note 18 to the financial statements. There have been no significant changes in the nature of these principal activities during the financial period except for the business of an existing subsidiary and that of a newly acquired subsidiary as disclosed in Note 18 to the financial statements.

CHANGE OF FINANCIAL YEAR END

During the financial period, the Company changed its financial year end from 31 December to 31 March. Accordingly, the Company has prepared its financial statements for the fifteen months financial period from 1 January 2016 to 31 March 2017. The comparative financial statements were prepared for the financial year ended 31 December 2015.

FINANCIAL RESULTS

Group

RM

CompanyRM

Net profit for the financial period attributable to:

- Owners of the Company- Non-controlling interests

2,299,839(135,257)

6,763,7060

Net profit for the financial period 2,164,582 6,763,706

RESERVES AND PROVISIONS

All material transfers to or from reserves or provisions during the financial period are shown in the financial statements.


Directors’ Report (cont’d)For The Fifteen Months Financial Period Ended 31 March 2017

DIRECTORS’ BENEFITS

During and at the end of the financial period, no arrangements subsisted to which the Company or any of its subsidiaries is a party, being arrangements with the object of enabling the directors of the Company to acquire benefits by means of the acquisition of shares in, or debentures of, the Company or any other body corporate.

Since the end of the previous financial year, no director has received or become entitled to receive a benefit (other than those benefits shown under Directors’ Remuneration) by reason of a contract made by the Company or a related corporation with the director or with a firm of which the director is a member, or with a company in which the director has a substantial financial interest except that certain directors received remuneration from related companies as directors or executives of those related companies.

DIRECTORS’ INTERESTS

According to the Register of Directors’ Shareholdings required to be kept under Section 59 of the Companies Act, 2016, none of the directors who held office at the end of the financial period held any interest in shares in, or debentures of, the Company and every other body corporate, being the Company’s subsidiaries during the financial period except as follows:

Number of ordinary shares

As at 1.1.2016 Acquired Disposed

As at 31.3.2017

The Company

YBhg Dato’ (Dr) Pahamin Ab Rajab- Direct interest 12,000,000 0 0 12,000,000

Yong Chan Cheah- Direct interest- Indirect interest*

12,924,97945,600,000

00

00

12,924,97945,600,000

Yong Swee Chuan- Direct interest- Indirect interest*

12,924,97845,600,000

00

00

12,924,97845,600,000

* Deemed interest held through substantial shareholdings held in a corporation which held shares in the Company.

DIVIDENDS

The dividends declared and paid since the end of the Company’s previous financial year are as follows:

RM

In respect of the fifteen months financial period ended 31 March 2017:

- First interim single-tier dividend of 0.25 sen per share on 241,994,985 ordinary shares, declared on 24 November 2016 and paid on 28 December 2016 604,988

The directors do not recommend the payment of any final dividends in respect of the fifteen months financial period ended 31 March 2017.


EMPLOYEES SHARE OPTION SCHEME (“ESOS”)

The Company implemented an ESOS on 1 March 2016. The ESOS was approved by the shareholders of the Company at its Extraordinary General Meeting on 25 February 2016.

The ESOS would provide an opportunity for eligible person who has contributed to the growth and development of the Group to participate in the equity of the Company.

The main features of the ESOS are, inter alia, as follows:

(a) Eligible person is those who has been confirmed in service on the date of offer, who is at least 18 years of age and is not an undischarged bankrupt nor subject to any bankruptcy proceedings. If the eligible person is an employee, the eligible person has to be employed full time by and on the payroll of any entity in the Group and fulfills any other criteria and/or falls within such category as may be determined by the ESOS Committee from time to time. In respect of a director, the director must be at least 18 years of age and is not an undischarged bankrupt nor subject to any bankruptcy proceedings. The director has to be appointed as a director of the Company or any entity in the Group for such period as may be determined by the ESOS Committee prior to and up to the date of offer and fulfills any other criteria and/or falls within such category as may be determined by the ESOS Committee from time to time.

(b) The maximum allowable allotments for the directors was approved by the shareholders of the Company at the Extraordinary General Meeting. The ESOS Committee may, in its absolute discretion, waives any of the conditions of the eligibility as set out above. The eligibility and number of ESOS options to be offered to an eligible person shall be at the sole and absolute discretion of the ESOS Committee and the decision of the ESOS Committee shall be final and binding.

(c) The aggregate number of ordinary shares to be issued under the ESOS shall not exceed 30% of the issued and paid-up ordinary share capital of the Company at any given time.

(d) The ESOS shall be in force for a period of 5 years from 1 March 2016. The Company may, if the Board of Directors deems fit and upon the recommendation of the ESOS Committee, extend the ESOS for another period of up to a maximum of 5 years commencing from the day after the date of expiration of the original 5 years period.

(e) The option price is to be determined by the Board of Directors upon recommendation from the ESOS Committee based the volume weighted average market price (“VWAMP”) of the Company’s ordinary shares for the 5 market days immediately preceding the date of offer with a discount of not more than 10% or such other percentage of discount as may be permitted by Bursa Malaysia Securities Berhad or any other relevant authorities from time to time over the duration of the ESOS.

(f) The option granted to an option holder under the ESOS is exercisable by the option holder only during the employment with the Group or tenor as director of any entity of the Group and within the option exercise period to be determined by the ESOS Committee subject to any maximum limit as may be determined by the Board of Directors under the By-Laws of the ESOS and any other terms and conditions as may be contained in the option certificate.

(g) The new ordinary shares arising from the exercise of the ESOS options will, upon allotment and issuance, rank pari passu in all respects with the existing ordinary shares of the Company, save and except that the new ordinary shares will not be entitled to any dividends, rights, allotments and/or other form of distribution which may be declared, made or paid to the shareholders, the entitlement date of which precedes the date of allotment and issuance of such new ordinary shares.

There were no options granted during the current financial period.




DIRECTORS’ REMUNERATION

Details of directors’ remuneration are set out in Note 11 to the financial statements.

OTHER STATUTORY INFORMATION

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

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

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

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

(a) which would render the amounts written off for bad debts or the amount of allowance for doubtful debts inadequate to any substantial extent; or

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

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

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 period which secures the liabilities of any other person; or

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

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

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

In the opinion of the directors:

(a) except as disclosed in the financial statements, the results of the operations of the Group and of the Company during the financial period were not substantially affected by any item, transaction or event of a material and unusual nature; and

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


SUBSIDIARIES

Details of subsidiaries are set out in Note 18 to the financial statements.

AUDITORS’ REMUNERATION

Details of auditors’ remuneration are set out in Note 9 to the financial statements.

AUDITORS

The auditors, PricewaterhouseCoopers, have expressed their willingness to accept re-appointment as auditors.

This report was approved by the Board of Directors on 14 July 2017. Signed on behalf of the Board of Directors:

YONG CHAN CHEAH YONG SWEE CHUANDIRECTOR DIRECTOR



Statement by DirectorsPursuant to Section 251(2) of the Companies Act, 2016

We, Yong Chan Cheah and Yong Swee Chuan, being two of the directors of LNG Resources Berhad, do hereby state that, in the opinion of the directors, the accompanying financial statements set out on pages 57 to 143 are drawn up so as to give a true and fair view of the financial position of the Group and of the Company as at 31 March 2017 and financial performance of the Group and of the Company for the fifteen months financial period ended 31 March 2017 in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act, 2016 in Malaysia.

Signed on behalf of the Board of directors in accordance with a resolution of the directors dated 14 July 2017.

YONG CHAN CHEAH YONG SWEE CHUANDIRECTOR DIRECTOR


Statutory DeclarationPursuant to Section 251(1) of the Companies Act, 2016

I, Yong Chan Cheah, being the director primarily responsible for the financial management of LNG Resources Berhad, do solemnly and sincerely declare that, the financial statements set out on pages 57 to 143 are, to the best of my knowledge and belief, correct and I make this solemn declaration conscientiously believing the same to be true, and by virtue of the provisions of the California Civil Code section 1189.

YONG CHAN CHEAH DIRECTOR

Subscribed and solemnly declared by the abovenamed, Yong Chan Cheah (Passport No.: A32174348) before me in the County of Santa Clara, State of California, United States of America on 14 July 2017.

CAROL LUDLOWCommission # 2061564Notary Public - CaliforniaSanta Clara CountyMy Comm. Exp: APRIL 16, 2018

NOTARY PUBLIC


Independent Auditors’ ReportTo the members of LNG RESOURCES BERHAD

REPORT ON THE AUDIT OF FINANCIAL STATEMENTS

Our opinion

In our opinion, the financial statements of LNG Resources Berhad (“the Company”) and its subsidiaries (“the Group”) give a true and fair view of the financial position of the Group and of the Company as at 31 March 2017, and of their financial performance and their cash flows for the fifteen months financial period from 1 January 2016 to 31 March 2017 in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act, 2016 in Malaysia.

What we have audited

We have audited the financial statements of the Group and of the Company, which comprise the statements of financial position of the Group and of the Company as at 31 March 2017, and the statements of comprehensive income, statements of changes in equity and statements of cash flows of the Group and of the Company for the fifteen months financial period from 1 January 2016 to 31 March 2017, and notes to the financial statements, including a summary of significant accounting policies, as set out on Notes 1 to 38.

Basis for opinion

We conducted our audit in accordance with approved standards on auditing in Malaysia and International Standards on Auditing. 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.

Our audit approach

As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the financial statements of the Group and the Company. In particular, we considered where the directors made subjective judgements; for example, in respect of significant accounting estimates that involved making assumptions and considering future events that are inherently uncertain. As in all of our audits, we also addressed the risk of management override of internal controls, including among other matters, consideration of whether there was evidence of bias that represented a risk of material misstatement due to fraud.

We tailored the scope of our audit in order to perform sufficient work to enable us to provide an opinion on the financial statements as a whole, taking into account the structure of the Group and of the Company, the accounting processes and controls, and the industry in which the Group and the Company operate.


Independent Auditors’ Report (cont’d)To the members of LNG RESOURCES BERHAD

Key audit matters

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

Key audit matters How our audit addressed the key audit matters

Impairment assessment of property, plant and equipment of the Group

The Group has property, plant and equipment with aggregate carrying amount of approximately RM38,119,000 as at 31 March 2017.

Management performed an impairment assessment on the Group’s property, plant and equipment as a result of the existence of an impairment indicator as the Group’s market capitalisation value is below the total value of its net assets. MFRS 136 requires impairment assessment to be carried out at the level of lowest identifiable cash generating units (CGUs).

We focused on this area as the value in use computation for impairment assessment performed by management involved significant judgements and assumptions on revenue cash flow forecasts and operating profit margins in the 3-year detailed forecast period, long term growth rates used for forecast periods matching the remaining useful life of principal assets in the CGUs and discount rates used.

We focused on the impairment calculations for CGUs with material property, plant and equipment balance, namely the property, plant and equipment held by the subsidiaries of the Company except for property, plant and equipment held by Edaran Resources Pte. Ltd., Orifast Connector Sdn. Bhd. and Orifast Connector Solutions LLC.

Based on the impairment assessment performed by management, no impairment was considered necessary.

The related disclosures are included in Notes 5 to the financial statements.

Our procedures performed in relation to management’s impairment assessment comprised the following:

• Checked the appropriateness of management’s identification of CGUs;

• Assessed the reliability of management’s forecast by comparing past trends of actual financial performances against previous forecasted results;

• Compared the value in use cash flow projections to approved business plans;

• Compared the key assumptions used by management in the value in use calculations, in particular, revenue cash flow forecasts and operating profit margins in the 3-year detailed forecast period to historical results;

• Performed testing of expected sales volume and pricing from new customers to customers’ purchase orders received after the end of the financial period and/or correspondences with customers on a sample basis;

• Compared the expected operating profit margins for the incremental revenue from new customers against management’s internal production data and check that overall operating profit margins are consistent with historical margins;

• Compared the long term growth rates to industry data and check that the long term growth rates are within the range of historical annual growth rates;

• Compared the discount rates used to comparable industry rates in which the CGUs operate;

• Performed sensitivity analysis on revenue growth rates, operating profit margins and discount rates to evaluate impact on the impairment assessment; and

• Assessed the adequacy of the disclosures in the financial statements.

Based on the procedures performed, we noted the results of management’s impairment assessment to be consistent with the outcome of our procedures.



Key audit matters (continued)

Key audit matters How our audit addressed the key audit matters

Impairment assessment of goodwill

The carrying amount of the Group’s goodwill amounted to approximately RM10,656,000 as at 31 March 2017 was allocated to precision machining and stamping operating segment, which comprises two cash generating units (“CGUs”), namely Oriental Fastech Manufacturing Sdn. Bhd. and Oriental Fastech Manufacturing (Vietnam) Co., Ltd.

Goodwill is subject to annual impairment testing. We focused on this area as the impairment assessment performed by management involved significant degree of judgement and assumptions on revenue cash flow forecasts and operating profit margins in the 3-year detailed forecast period, terminal growth rates used to project the cash flows into perpetuity and the discount rates used.

Based on the impairment assessment performed by management, no impairment was considered necessary.

The related disclosures are included in Notes 5 and 17 to the financial statements.


• Leveraged on testing performed on impairment assessment of property, plant and equipment in respect of the two applicable CGUs’ key assumptions on revenue cash flow forecasts and operating profit margins in the 3-year detailed forecast period and discount rates used. Also leveraged on the sensitivity analysis performed on these key assumptions.

• Assessed terminal growth rates used to industry data and checked that the terminal growth rates are within the range of historical annual growth rates;

• Checked the accuracy of amalgamation of the two applicable CGUs’ values in use to derive at the value in use of the operating segment; and



Impairment assessment of investment in subsidiaries of the Company

The Company has investment in subsidiaries with aggregate carrying amount of approximately RM42,778,000 as at 31 March 2017.

Management performed an impairment assessment on the Company’s investment in subsidiaries with impairment indicator in which the subsidiaries’ net asset value is below their respective cost of investment of the Company, namely Edaran Resources Pte. Ltd., Oriental Fastech Manufacturing Sdn. Bhd., Edaran Precision India Private Limited and Orifast Connector Sdn. Bhd..

We focused on this area as the impairment assessment performed by management involved significant judgements and assumptions on revenue cash flow forecasts and operating profit margins in the 3-year detailed forecast period, terminal growth rates used to project the cash flows into perpetuity and the discount rates used.

The related disclosures are included in Notes 5 and Notes 18 to the financial statements.


• Leveraged on testing performed on impairment assessment of property, plant and equipment in respect of the applicable CGUs’ (i.e. Edaran Resources Pte. Ltd., Oriental Fastech Manufacturing Sdn. Bhd., Edaran Precision India Private Limited and Orifast Connector Sdn. Bhd.) key assumptions on revenue cash flow forecasts and operating profit margins in the 3-year detailed forecast period. Also leveraged on the sensitivity analysis performed on these key assumptions.

• Checked that cash flows which are attributable to equity holders had been appropriately included within the value in use calculations.

• Checked the discount rates used reflects industry cost of equity by comparing the rates used to comparable industry rates in which the applicable CGUs operate; and




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 Corporate Information, Corporate Structure, Profile of Directors, Profile of Key Senior Management, Financial Highlights, Chairman’s Statement, Management Discussion and Analysis, Statement on Corporate Governance, Additional Disclosure Requirements, Audit Committee Report, Statement on Directors’ Responsibilities, Corporate Social Responsibility Statement, Statement on Risk Management and Internal Control, Share Buy-back Statement, List of Properties, Analysis of Shareholdings, Notice of Annual General Meeting and Statement Accompanying Notice of Annual General Meeting within the 2017 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 the other information, we are required to report that fact. We have nothing to report in this regard.

Responsibilities of the directors for the financial statements

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

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

Auditors’ responsibilities for the audit of the financial statements

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



Auditors’ responsibilities for the audit of the financial statements (continued)

As part of an audit in accordance with approved standards on auditing in Malaysia and International Standards on Auditing, we exercise professional judgement and maintain professional scepticism throughout the audit. We also:

(a) 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.

(b) 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 the Company’s internal control.

(c) Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors.

(d) Conclude on the appropriateness of the 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 or the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s 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 and the Company to cease to continue as a going concern.

(e) 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.

(f) 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 communicate with the directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide 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 the directors, we determine 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 period and are therefore the key audit matters. We describe these matters in our auditors’ report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.



REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS

In accordance with the requirements of the Companies Act, 2016 in Malaysia, we report that the subsidiaries of which we have not acted as auditors, are disclosed in Note 18 to the financial statements.

OTHER REPORTING RESPONSIBILITIES

The supplementary information set out in Note 39 is disclosed to meet the requirement of Bursa Malaysia Securities Berhad and is not part of the financial statements. The directors are responsible for the preparation of the supplementary information in accordance with Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants (“MIA Guidance”) and the directive of Bursa Malaysia Securities Berhad. In our opinion, the supplementary information is prepared, in all material respects, in accordance with the MIA Guidance and the directive of Bursa Malaysia Securities Berhad.

OTHER MATTERS

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

PRICEWATERHOUSECOOPERS LIM HUCK KHIAM[No. AF: 1146] [03192/06/2019 J]Chartered Accountants Chartered Accountant

Penang

14 July 2017



Statements of Comprehensive IncomeFor The Fifteen Months Financial Period Ended 31 March 2017

GROUP COMPANY

Note

Fifteen months

ended to 31.3.2017

RM

Financial year ended

31.12.2015RM

Fifteen months

ended to 31.3.2017

RM

Financialyear ended

31.12.2015 RM

REVENUE 6 89,958,501 56,861,202 5,680,565 3,594,040

COST OF SALES (74,454,708) (51,946,694) 0 0

GROSS PROFIT 15,503,793 4,914,508 5,680,565 3,594,040

Other operating income 1,699,874 2,706,940 99,071 399,511

Selling and distribution expenses (747,633) (393,830) 0 0

Administrative expenses (11,761,948) (8,216,865) (2,973,726) (2,205,302)

Other operating expenses (579,947) (2,918,015) 4,461,180 (4,609,018)

OPERATING PROFIT/(LOSS) 4,114,139 (3,907,262) 7,267,090 (2,820,769)

Finance income 7 66,507 75,503 96,307 117,934

Finance costs 8 (1,200,149) (1,294,576) (416,856) (453,981)

PROFIT/(LOSS) BEFORE TAX 9 2,980,497 (5,126,335) 6,946,541 (3,156,816)

Tax expense 12 (815,915) (204,259) (182,835) (148,639)

NET PROFIT/(LOSS) FOR THE FINANCIAL PERIOD/YEAR 2,164,582 (5,330,594) 6,763,706 (3,305,455)

OTHER COMPREHENSIVE INCOME, NET OF TAX:

Item that may be reclassified subsequently to profit or loss:

- Foreign currency exchange differences on translation of foreign operations (53,496) 551,735 0 0

TOTAL COMPREHENSIVE INCOME/(LOSS) FOR THE FINANCIAL PERIOD/YEAR 2,111,086 (4,778,859) 6,763,706 (3,305,455)


Statements of Comprehensive Income (cont’d)For The Fifteen Months Financial Period Ended 31 March 2017

GROUP COMPANY

Note

Fifteen months

ended to 31.3.2017

RM


31.12.2015RM

Fifteen months

ended to 31.3.2017

RM

Financialyear ended

31.12.2015 RM

NET PROFIT/(LOSS) FOR THE FINANCIAL PERIOD/YEAR ATTRIBUTABLE TO:


2,299,839(135,257)

(5,326,073)(4,521)

6,763,7060

(3,305,455)0

2,164,582 (5,330,594) 6,763,706 (3,305,455)

TOTAL COMPREHENSIVE INCOME/(LOSS) FOR THE FINANCIAL PERIOD/YEAR ATTRIBUTABLE TO:


2,243,769(132,683)

(4,787,811)8,952

6,763,7060

(3,305,455)0

2,111,086 (4,778,859) 6,763,706 (3,305,455)

EARNINGS/(LOSS) PER SHARE

- Basic/diluted (sen) 13 0.95 (2.20)

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


Statements of Financial PositionAs At 31 March 2017

GROUP COMPANY

NoteAs at

31.3.2017RM

As at 31.12.2015

RM

As at 31.3.2017

RM

As at 31.12.2015

RM

ASSETS

NON-CURRENT ASSETS

Property, plant and equipment 14 38,118,616 39,876,786 11,037 17,745

Investment properties 15 667,448 0 0 0

Prepaid lease rentals 16 1,909,633 2,041,030 0 0

Goodwill 17 10,655,631 10,655,631 0 0

Investments in subsidiaries 18 0 0 42,778,243 36,602,745

Deferred tax assets 19 347,167 0 0 0

Amounts due from related parties 20 0 0 707,360 1,418,823

Receivables, deposits and prepayments 21 46,175 0 0 0

51,744,670 52,573,447 43,496,640 38,039,313

CURRENT ASSETS

Inventories 22 11,512,982 11,345,471 0 0

Receivables, deposits and prepayments 21 19,405,148 13,731,330 19,870 20,235

Amounts due from related parties 20 0 0 2,674,297 3,464,617

Current tax recoverable 329,250 621,638 0 0

Fixed deposits with licensed banks 23 516,768 1,182,137 0 0

Cash and bank balances 23 4,485,282 6,555,072 200,353 352,155

36,249,430 33,435,648 2,894,520 3,837,007

Asset classified as held for sale 24 0 767,258 0 0

36,249,430 34,202,906 2,894,520 3,837,007

TOTAL ASSETS 87,994,100 86,776,353 46,391,160 41,876,320

EQUITY AND LIABILITIES

EQUITY ATTRIBUTABLE TO OWNERS OF THE COMPANY

Share capital 25 35,116,236 24,199,499 35,116,236 24,199,499

Reserves 26 20,046,183 29,324,139 4,717,096 9,475,115

Non-controlling interests 1,179,087 86,770 0 0

TOTAL EQUITY 56,341,506 53,610,408 39,833,332 33,674,614

NON-CURRENT LIABILITIES

Borrowings - Others 27 5,068,549 9,793,196 2,815,633 5,461,418

Deferred tax liabilities 19 1,298,829 1,567,284 0 0

Deferred income on government grant 28 263,333 313,333 0 0

6,630,711 11,673,813 2,815,633 5,461,418


Statements of Financial Position (cont’d)As At 31 March 2017

GROUP COMPANY

NoteAs at

31.3.2017RM

As at 31.12.2015

RM

As at 31.3.2017

RM

As at 31.12.2015

RM

CURRENT LIABILITIES

Payables and accrued liabilities 29 14,805,922 11,316,930 644,783 566,576

Amount owing to related parties 20 0 5,650 939,005 158,803

Current tax payable 479,983 31,172 29,979 25,080

Borrowings

- Bank overdrafts 27 2,239,551 2,481,706 0 0

- Others 27 7,496,427 7,656,674 2,128,428 1,989,829

25,021,883 21,492,132 3,742,195 2,740,288

TOTAL LIABILITIES 31,652,594 33,165,945 6,557,828 8,201,706

TOTAL EQUITY AND LIABILITIES 87,994,100 86,776,353 46,391,160 41,876,320



Statements of Changes In EquityFor The Fifteen Months Financial Period Ended 31 March 2017

Att

ribut

able

to

owne

rs o

f th

e C

ompa

ny

Non

-dis

trib

utab

leD

istr

ibut

able

GRO

UP

Shar

eca

pita

lRM

Shar

epr

emiu

mRM

Oth

erre

serv

eRM

Exch

ange

fluct

uatio

nre

serv

eRM

Reta

ined

prof

its RMTo

tal

RM

Non

-co

ntro

lling

inte

rest

sRM

Tota

leq

uity

RM

At

1 Ja

nuar

y 20

1624

,199

,499

10,9

16,7

370

777,

471

17,6

29,9

3153

,523

,638

86,7

7053

,610

,408

Tran

sitio

n to

no-

par

valu

e re

gim

e on

31

Janu

ary

2017

(N

ote

25)

10,9

16,7

37(1

0,91

6,73

7)0

00

00

0

Tota

l com

preh

ensi

ve in

com

e fo

r th

e fin

anci

al p

erio

d

Net

pro

fit f

or t

he f

inan

cial

per

iod

00

00

2,29

9,83

92,

299,

839

(135

,257

)2,

164,

582

Oth

er c

ompr

ehen

sive

inco

me:

- For

eign

cur

renc

y ex

chan

ge

diff

eren

ces

on t

rans

latio

n of

fo

reig

n op

erat

ions

00

0(5

6,07

0)0

(56,

070)

2,57

4(5

3,49

6)

00

0(5

6,07

0)2,

299,

839

2,24

3,76

9(1

32,6

83)

2,11

1,08

6

Tran

sact

ions

with

ow

ners

Div

iden

d pa

id (

Not

e 31

)0

00

0(6

04,9

88)

(604

,988

)0

(604

,988

)

Subs

crip

tion

of a

dditi

onal

sh

ares

in a

sub

sidi

ary

by n

on-

cont

rolli

ng in

tere

st0

00

00

01,

225,

000

1,22

5,00

0

At

31 M

arch

201

735

,116

,236

00

721,

401

19,3

24,7

8255

,162

,419

1,17

9,08

756

,341

,506


Att

ribut

able

to

owne

rs o

f th

e C

ompa

ny

Non

-dis

trib

utab

leD

istr

ibut

able

GRO

UP

Shar

eca

pita

lRM

Shar

epr

emiu

mRM

Oth

erre

serv

eRM

Exch

ange

fluct

uatio

nre

serv

eRM

Reta

ined

prof

its RMTo

tal

RM

Non

-co

ntro

lling

inte

rest

sRM

Tota

leq

uity

RM

At

1 Ja

nuar

y 20

1524

,199

,499

12,7

42,8

24(1

,826

,087

)23

9,20

922

,956

,004

58,3

11,4

4977

,818

58,

389,

267

Recl

assi

ficat

ion

(Not

e 26

)0

(1,8

26,0

87)

1,82

6,08

70

00

0.

Tota

l com

preh

ensi

ve lo

ss f

or t

he

finan

cial

yea

r

Net

loss

for

the

fin

anci

al y

ear

00

00

(5,3

26,0

73)

(5,3

26,0

73)

(4,5

21)

(5,3

30,5

94)

Oth

er c

ompr

ehen

sive

inco

me:

- For

eign

cur

renc

y ex

chan

ge

diff

eren

ces

on t

rans

latio

n of

fo

reig

n op

erat

ions

00

053

8,26

20

538,

262

13,4

7355

1,73

5

00

053

8,26

2(5

,326

,073

)(4

,787

,811

)8,

952

(4,7

78,8

59)

At

31 D

ecem

ber

2015

24,1

99,4

9910

,916

,737

077

7,47

117

,629

,931

53,5

23,6

3886

,770

53,6

10,4

08

Statements of Changes In Equity (cont’d)For The Fifteen Months Financial Period Ended 31 March 2017


Statements of Changes In Equity (cont’d)For The Fifteen Months Financial Period Ended 31 March 2017

Non-distributable Distributable

COMPANY

Sharecapital

RM

Sharepremium

RM

Otherreserve

RM

(Accumulatedloss)/

Retainedprofits

RM

Totalequity

RM

At 1 January 2016 24,199,499 10,916,737 0 (1,441,622) 33,674,614

Transition to no-par value regime on 31 January 2017 (Note 25) 10,916,737 (10,916,737) 0 0 0

Total comprehensive income for the financial period

Net profit for the financial period 0 0 0 6,763,706 6,763,706

Transaction with owners

Dividend paid (Note 31) 0 0 0 (604,988) (604,988)

At 31 March 2017 35,116,236 0 0 4,717,096 39,833,332

At 1 January 2015 24,199,499 12,742,824 (1,826,087) 1,863,833 36,980,069

Reclassification (Note 26) 0 (1,826,087) 1,826,087 0 0

Total comprehensive loss for the financial year

Net loss for the financial year 0 0 0 (3,305,455) (3,305,455)

At 31 December 2015 24,199,499 10,916,737 0 (1,441,622) 33,674,614



Statements of Cash FlowsFor The Fifteen Months Financial Period Ended 31 March 2017

GROUP COMPANY

Fifteen months

ended to 31.3.2017

RM


31.12.2015RM

Fifteenmonths

ended to 31.3.2017

RM

Financialyear ended

31.12.2015RM

OPERATING CASH FLOWS

Profit/(loss) before tax 2,980,497 (5,126,335) 6,946,541 (3,156,816)

Adjustments for:

Property, plant and equipment- depreciation- gain on disposal - written off

7,538,140(84)30

5,669,289(2,564)

319

6,70800

5,12700

Amortisation of prepaid lease rentals 131,397 105,118 0 0

Depreciation of investment properties 5,543 19,737 0 0

Gain on disposal of asset classified as held for sale (432,742) 0 0 0

Impairment loss on goodwill 0 2,912,000 0 0

Impairment loss on investment in subsidiaries 0 0 100,000 4,609,018

Reversal of impairment loss on investment in a subsidiary 0 0 (4,609,018) 0

Allowance for write-down of inventories to net realisable value 39,672 196,463 0 0

Impairment loss on trade receivables 112,887 5,696 0 0

Amortisation of deferred income on government grant (50,000) (40,000) 0 0

Dividend income (Note 20.3) 0 0 (2,130,000) (1,000,000)

Interest expense 1,200,149 1,294,576 416,856 453,981

Interest income (66,507) (75,503) (96,307) (117,934)

Unrealised foreign currency exchange losses/(gains) 325,496 (1,133,641) 47,838 (399,408)

11,784,478 3,825,155 682,618 393,968

CHANGES IN WORKING CAPITAL

Inventories (209,696) 306,799 0 0

Receivables (5,912,515) 788,697 365 15,635

Payables 2,841,582 2,932,455 78,207 101,021

Intercompany balances (5,650) 0 60,616 (72,850)

CASH GENERATED FROM OPERATIONS 8,498,199 7,853,106 821,806 437,774

Interest paid (1,200,146) (1,294,576) (416,856) (453,981)

Tax paid (1,231,880) (715,784) (190,181) (128,741)

Tax refunded 544,749 241,610 12,245 74,600

NET OPERATING CASH FLOW 6,610,922 6,084,356 227,014 (70,348)


Statements of Cash Flows (cont’d)For The Fifteen Months Financial Period Ended 31 March 2017

GROUP COMPANY

Fifteen months

ended to 31.3.2017

RM


31.12.2015RM

Fifteenmonths

ended to 31.3.2017

RM

Financialyear ended

31.12.2015RM

INVESTING CASH FLOWS

Purchases of property, plant and equipment (5,660,749) (2,943,198) 0 (14,330)

Proceeds from disposal of property, plant and equipment 85 31,287 0 0

Proceeds from disposal of asset classified as held for sale 1,200,000 0 0 0

Purchase of an investment property 0 (17,400) 0 0

Subscription for shares in new subsidiaries 0 0 (1,275,000) 0

Subscription for additional shares in subsidiaries 0 0 (391,480) (99,998)

Loans granted to subsidiaries 0 0 0 (1,000,000)

Advances granted to subsidiaries 0 0 (1,067,152) (335,371)

Loan repayments received from subsidiaries 0 0 1,320,180 961,822

Repayments of advances from subsidiaries 0 0 1,151,978 1,185,195

Dividend received 0 0 2,130,000 1,000,000

Interest received 66,507 75,503 96,307 122,597

NET INVESTING CASH FLOW (4,394,157) (2,853,808) 1,964,833 1,819,915

FINANCING CASH FLOWS

Subscription of additional shares in a subsidiary by non-controlling interests 1,225,000 0 0 0

Drawdown of additional term loans 3,690,240 2,654,531 0 0

(Decrease)/increase in bankers’ acceptances 262,000 (416,668) 0 0

Repayment of finance lease liabilities (1,834,147) (1,457,520) 0 0

Repayments of term loans (7,196,301) (4,266,500) (2,507,186) (1,886,395)

Withdrawal of fixed deposits pledged as securities 225,975 478,703 0 0

Repayments of onshore foreign currency loans 0 (851,914) 0 0

Repayments of revolving loans 0 (1,026,152) 0 0

Advances received from subsidiaries 0 0 1,038,525 150,000

Repayments of advances made to subsidiaries 0 0 (270,000) 0

Dividend paid (Note 31) (604,988) 0 (604,988) 0

NET FINANCING CASH FLOW (4,232,221) (4,885,520) (2,343,649) (1,736,395)


GROUP COMPANY

Fifteen months

ended to 31.3.2017

RM


31.12.2015RM

Fifteenmonths

ended to 31.3.2017

RM

Financialyear ended

31.12.2015RM

NET (DECREASE)/ INCREASE IN CASH AND CASH EQUIVALENTS (2,015,456) (1,654,972) (151,802) 13,172

CASH AND CASH EQUIVALENTS AT BEGINNING OF THE FINANCIAL PERIOD/YEAR 4,922,585 6,304,774 352,155 338,983

EFFECTS OF CHANGES IN EXCHANGE RATE (251,573) 272,783 0 0

CASH AND CASH EQUIVALENTS AT END OF THE FINANCIAL PERIOD/YEAR (Note 23) 2,655,556 4,922,585 200,353 352,155

Statements of Cash Flows (cont’d)For The Fifteen Months Financial Period Ended 31 March 2017



Notes to the Financial StatementsFor The Fifteen Months Financial Period Ended 31 March 2017

1 GENERAL INFORMATION

The principal activities of the Company are investment holding and provision of management services to subsidiaries. The principal activities of its subsidiaries are disclosed in Note 18 to the financial statements. There have been no significant changes in the nature of these principal activities during the financial period except for the business of an existing subsidiary and that of a newly acquired subsidiary as disclosed in Note 18 to the financial statements.

The Company is a public limited liability company, incorporated and domiciled in Malaysia, and is listed on the ACE Market of Bursa Malaysia Securities Berhad.

The Company’s registered office is located at:

57-G, Persiaran Bayan Indah Bayan Bay, Sungai Nibong 11900 Penang

The Company’s principal place of business is located at:

Suntech @ Penang Cybercity 1-12B-20, Lintang Mayang Pasir 3 11950 Bayan Baru Pulau Pinang Malaysia

During the financial period, the Company changed its financial year end from 31 December to 31 March. Accordingly, the Company has prepared its financial statements for the fifteen months financial period from 1 January 2016 to 31 March 2017. The comparative financial statements were prepared for the financial year ended 31 December 2015. Given the change in financial year end, the comparative amounts for the statements of comprehensive income, statements of changes in equity, statements of cash flows, and related notes to the financial statements are not entirely comparable with those of the current financial period.

2 BASIS OF PREPARATION

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

The financial statements of the Group and of the Company have been prepared under the historical cost convention unless otherwise indicated in the individual policy statement as set out in Note 3 to the financial statements and are presented in Ringgit Malaysia.

The preparation of financial statements in conformity with MFRS requires the use of certain critical accounting estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the reporting date, and the reported amounts of revenues and expenses during the reported period. It also requires directors to exercise their judgement in the process of applying the Group and the Company’s accounting policies. Although these estimates and judgement are based on the directors’ best knowledge of current events and actions, actual results may differ. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed in Note 5 to the financial statements.


2 BASIS OF PREPARATION (CONTINUED)

(a) New standards, amendments to published standards and Issues Committee (“IC”) interpretations to existing standards that are applicable to the Group and the Company and are effective

The Group and the Company have applied the following amendments for the first time for the financial period beginning on 1 January 2016:

• Amendments to MFRS 101 ‘Presentation of Financial Statements’ - Disclosure Initiative• Amendments to MFRS 127 ‘Equity Method in Separate Financial Statements’• Annual Improvements to MFRSs 2012 – 2014 Cycle

The adoption of these amendments did not have any impact on the current financial period or any prior financial period and is not likely to affect future financial periods.

(b) New standards, amendments to published standards and IC interpretations to existing standards early adopted by the Group and the Company

There are no new standards, amendments to published standards and IC interpretations to existing standards early adopted by the Group and the Company.

(c) New standards, amendments to published standards and IC interpretations to existing standards that are applicable to the Group and the Company but not yet effective and not early adopted

A number of new standards and amendments to standards and IC interpretations to existing standards are effective for financial year beginning after 1 January 2016. None of these is expected to have a significant effect on the financial statements of the Group and of the Company, except the following:

• Amendments to MFRS 107 ‘Statement of Cash Flows’ – Disclosure Initiative (effective from 1 January 2017) introduce an additional disclosure on changes in liabilities arising from financing activities.

• Amendments to MFRS 112 ‘Income Taxes – Recognition of Deferred Tax Assets for Unrealised Losses’ (effective from 1 January 2017) clarify the requirements for recognising deferred tax assets on unrealised losses arising from deductible temporary difference on asset carried at fair value.

In addition, in evaluating whether an entity will have sufficient taxable profits in future periods against which

deductible temporary differences can be utilised, the amendments require an entity to compare the deductible temporary differences with future taxable profits that excludes tax deductions resulting from the reversal of those temporary differences.

The amendments shall be applied retrospectively.

• Amendments to MFRS 140 ‘Classification on ‘Change in Use’ – Assets transferred to, or from, Investment Properties’ (effective from 1 January 2018) clarify that to transfer to, or from investment properties there must be a change in use. A change in use would involve an assessment of whether a property meet, or has ceased to meet, the definition of investment property. The change must be supported by evidence that the change in use has occurred and a change in management’s intention in isolation is not sufficient to support a transfer of property.

The amendments also clarify the same principle applies to assets under construction.

Notes to the Financial Statements (cont’d)For The Fifteen Months Financial Period Ended 31 March 2017


2 BASIS OF PREPARATION (CONTINUED)

(c) New standards, amendments to published standards and IC interpretations to existing standards that are applicable to the Group and the Company but not yet effective and not early adopted (continued)

• IC Interpretation 22 ‘Foreign Currency Transactions and Advance Consideration’ (effective from 1 January 2018) applies when an entity recognises a non-monetary asset or non-monetary liability arising from the payment or receipt of advance consideration. MFRS 121 requires an entity to use the foreign currency exchange rate at the ‘date of the transaction’ to record foreign currency transactions.

IC Interpretation 22 provides guidance on how to determine ‘the date of transaction’ when a single payment/receipt is made, as well as for situations where multiple payments/receipts are made.

The date of transaction is the date when the payment or receipt of advance consideration gives rise to the non-monetary asset or non-monetary liability when the entity is no longer exposed to foreign currency exchange risk.

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

An entity has the option to apply IC Interpretation 22 retrospectively or prospectively.

• MFRS 9 ‘Financial Instruments’ (effective from 1 January 2018) will replace MFRS 139 ‘Financial Instruments: Recognition and Measurement’.

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

For liabilities, the standard retains most of the MFRS 139 requirements. These include amortised cost accounting for most financial liabilities, with bifurcation of embedded derivatives. The main change is that, in cases where the fair value option is taken for financial liabilities, the part of a fair value change due to an entity’s own credit risk is recorded in OCI rather than in the profit or loss, unless this creates an accounting mismatch.

MFRS 9 introduces an expected credit loss model on impairment that replaces the incurred loss impairment model used in MFRS 139. The expected credit loss model is forward-looking and eliminates the need for a trigger event to have occurred before credit losses are recognised.



2 BASIS OF PREPARATION (CONTINUED) (c) New standards, amendments to published standards and IC interpretations to existing standards that are applicable

to the Group and the Company but not yet effective and not early adopted (continued)

• MFRS 15 ‘Revenue from Contracts with Customers’ (effective from 1 January 2018) replaces MFRS 118 ‘Revenue’ and MFRS 111 ‘Construction Contracts’ and related interpretations. The core principle in MFRS 15 is that an entity recognises revenue to depict the transfer of promised goods or services to the customer in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.

Revenue is recognised when a customer obtains control of goods or services, i.e. when the customer has the ability to direct the use of and obtain the benefits from the goods or services.

A new five-step process is applied before revenue can be recognised:(i) Identify contracts with customers; (ii) Identify the separate performance obligations;(iii) Determine the transaction price of the contract;(iv) Allocate the transaction price to each of the separate performance obligations; and(v) Recognise the revenue as each performance obligation is satisfied.

Key provisions of the new standard are as follows:(i) Any bundled goods or services that are distinct must be separately recognised, and any discounts or

rebates on the contract price must generally be allocated to the separate elements.(ii) If the consideration varies (such as for incentives, rebates, performance fees, royalties, success of an

outcome etc), minimum amounts of revenue must be recognised if they are not at significant risk of reversal.

(iii) The point at which revenue is able to be recognised may shift: some revenue which is currently recognised at a point in time at the end of a contract may have to be recognised over the contract term and vice versa.

(iv) There are new specific rules on licenses, warranties, non-refundable upfront fees, and consignment arrangements, to name a few.

(v) As with any new standard, there are also increased disclosures.

• MFRS 16 ‘Leases’ (effective from 1 January 2019) supersedes MFRS 117 ‘Leases’ and the related interpretations.

Under MFRS 16, a lease is a contract (or part of a contract) that conveys the right to control the use of an identified asset for a period of time in exchange for consideration.

MFRS 16 eliminates the classification of leases by the lessee as either finance leases (on balance sheet) or operating leases (off balance sheet). MFRS 16 requires a lessee to recognise a “right-of-use” of the underlying asset and a lease liability reflecting future lease payments for most leases.

The right-of-use asset is depreciated in accordance with the principle in MFRS 116 ‘Property, Plant and Equipment’ and the lease liability is accreted over time with interest expense recognised in the profit or loss.

For lessors, MFRS 16 retains most of the requirements in MFRS 117. Lessors continue to classify all leases as either operating leases or finance leases and account for them differently.

The Group and the Company is in the process of assessing the full impact of the new standards, amendments to published standards and IC interpretations to existing standards on the financial statements of the Group and of the Company in the financial year of initial application.



3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The principal accounting policies applied in the preparation of the financial statements are set out below. Unless otherwise stated, the following accounting policies have been applied consistently in dealing with items that are considered material in relation to the financial statements.

3.1 Basis of consolidation

(a) Subsidiaries

Subsidiaries are all entities (including structured entities) over which the Group has control. The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power to direct the relevant activities of the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date that control ceases.

The Group applies the acquisition method to account for business combinations. The consideration transferred for the acquisition of a subsidiary is the fair values of the assets transferred, the liabilities incurred to the former owners of the acquiree and the equity interests issued by the Group. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement and fair value of any pre-existing equity interest in the subsidiary. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are, with limited exceptions, measured initially at their fair values at the acquisition date. The Group recognises any non-controlling interest in the acquiree on an acquisition-by-acquisition basis, either at fair value or at the non-controlling interest’s proportionate share of the recognised amounts of acquiree’s identifiable net assets.

The excess of the consideration transferred, the amount of any non-controlling interest in the acquiree and the acquisition-date fair value of any previous equity interest in the acquiree over the fair value of the identifiable net assets acquired is recognised as goodwill. If the total of consideration transferred, non-controlling interest recognised and previously held interest measured is less than the fair value of the net assets of the subsidiary acquired in the case of a bargain purchase, the difference is recognised directly in the profit or loss (refer to Note 3.5 to the financial statements).

Acquisition-related costs are expensed as incurred.

If the business combination is achieved in stages, the carrying value of the acquirer’s previously held equity interest in the acquiree is remeasured to fair value at the acquisition date, any gains or losses arising from such remeasurement are recognised in profit or loss.

Any contingent consideration to be transferred by the Group is recognised at fair value at the acquisition date. Subsequent changes to the fair value of the contingent consideration that is deemed to be an asset or liability is recognised in accordance with MFRS 139 in profit or loss. Contingent consideration that is classified as equity is not remeasured, and its subsequent settlement is accounted for within equity.

Inter-company transactions, balances and unrealised gains on transactions between Group companies are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the transferred asset.

Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group.

Non-controlling interests in the results and equity of subsidiaries are shown separately in the consolidated statement of comprehensive income, consolidated statement of changes in equity and consolidated statement of financial position respectively.



3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

3.1 Basis of consolidation (continued)

(b) Changes in ownership interests in subsidiaries without change of control

Transactions with non-controlling interests that do not result in loss of control are accounted for as transactions with equity owners of the Group. A change in ownership interest results in an adjustment between the carrying amounts of the controlling and non-controlling interests to reflect their relative interests in the subsidiary. Any difference between the amount of the adjustment to non-controlling interests and any consideration paid or received is recognised in equity attributable to owners of the Company.

(c) Disposal of subsidiaries

When the Group ceases to consolidate because of a loss of control, any retained interest in the entity is remeasured to its fair value with the change in carrying amount recognised in profit or loss. This fair value becomes the initial carrying amount for the purposes of subsequently accounting for the retained interest as an associate, joint venture or financial asset. In addition, any amounts previously recognised in other comprehensive income in respect of that entity are accounted for as if the Group had directly disposed of the related assets or liabilities. This may mean that amounts previously recognised in other comprehensive income are reclassified to profit or loss.

Gains or losses on the disposal of subsidiaries include the carrying amount of goodwill relating to the subsidiaries sold.

3.2 Investments in subsidiaries

In the Company’s separate financial statements, investments in subsidiaries are carried at cost less accumulated impairment losses. On disposal of investments in subsidiaries, the difference between net disposal proceeds and the carrying amounts of the investments are recognised in profit or loss.

The amounts due from subsidiaries of which the Company does not expect repayment in the foreseeable future are considered as part of the Company’s investments in the subsidiaries.

3.3 Property, plant and equipment

Property, plant and equipment are initially stated at cost. The cost of an item of property, plant and equipment initially recognised includes its purchase price and any cost that is directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management. The purchase price is excluding the amount of goods and services tax (“GST”), except where the amount of GST incurred is not recoverable from the government. When the amount of GST incurred is not recoverable from the government, the GST is recognised as part of the costs of acquisition of the property, plant and equipment. Cost also includes borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset (refer to Note 3.17 to the financial statements for the accounting policy on borrowings and borrowing costs).

After initial recognition, property, plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses, if applicable.




3.3 Property, plant and equipment (continued)

Subsequent costs are included in an asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the Company, and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognised. The subsequent costs that are included in an asset’s carrying amount are depreciated over the revised useful life of the related asset. All other repairs and maintenance are recognised as expenses in profit or loss during the financial period in which they are incurred.

Gains and losses on disposals are determined by comparing net proceeds with the carrying amount of the asset and are included in ‘other operating income’ or ‘other operating expenses’ in profit or loss.

Leasehold land qualified as finance lease (refer to accounting policy Note 3.12 to the financial statements on finance leases) is amortised in equal instalments over the period of the lease of 60 years, which expires on year 2068.

Other property, plant and equipment are depreciated on the straight-line method to allocate the costs to their residual values over their estimated useful lives. The annual depreciation rates are as follows:

% Leasehold buildings and improvements 1.7 - 20.0 Plant and machinery 5.0 - 33.3 Furniture, fittings and office equipment 10.0 - 40.0 Motor vehicles 11.9 - 20.0 Assets under construction are carried as ‘capital work in progress’ and depreciation only commences when the assets

are ready for their intended use.

Depreciation continues through idle periods and ceases at earlier of when asset is disposed or classified as held-for-sale as disclosed in Note 3.7 to the financial statements.

Residual values and useful life of assets are reviewed and adjusted if appropriate, at the end of each reporting period.

At the end of each reporting period, the Group and the Company assess whether there is any indication of impairment. If such indications exist, an analysis is performed to assess whether the carrying amount of the asset is fully recoverable. A write-down is made if the carrying amount exceeds the recoverable amount. See Note 3.6 to the financial statements on accounting policy for impairment of non-financial assets.




3.4 Investment properties

Investment properties, comprising principally land and office buildings, are held for long term rental yields or for capital appreciation or both, and are not occupied by the Group.

Investment property is measured initially at its cost, including related transaction costs. Costs of the investment property are net of the amount of GST, except where the amount of GST incurred is not recoverable from the government. When the amount of GST incurred is not recoverable from the government, the GST is recognised as part of the cost of acquisition of the investment property.

After initial recognition, investment property is stated at cost less any accumulated depreciation and impairment losses. Investment property is depreciated on the straight-line basis to allocate the cost to their residual values over their estimated useful lives of 50 years.

Subsequent expenditure is capitalised to the asset’s carrying amount only when it is probable that future economic benefits associated with the expenditure will flow to the Group and the cost of the item can be measured reliably. All other repairs and maintenance costs are expensed when incurred. When part of an investment property is replaced, the carrying amount of the replaced part is derecognised.

If an item of owner-occupied property becomes an investment property because its use has changed, the carrying amount of the property does not change.

Investment property is derecognised either when it has been disposed of or when the investment property is permanently withdrawn from use and no future economic benefit is expected from its disposal.

Gains or losses on disposals are determined by comparing net disposal proceeds with the carrying amount and are included in ‘other operating income’ or ‘other operating expenses’ in profit or loss.

3.5 Intangible asset - Goodwill

Goodwill arises from a business combination and represents the excess of the aggregate of fair value of consideration transferred, the amount of any non-controlling interest in the acquiree and the fair value of any previous equity interest in the acquiree over the fair value of the net identifiable assets acquired and liabilities assumed on the acquisition date. If the fair value of consideration transferred, the amount of non-controlling interest and the fair value of previously held interest in the acquiree are less than the fair value of the net identifiable assets of the acquiree, the resulting gain is recognised in profit or loss.

Goodwill is not amortised but it is tested for impairment annually or more frequently if events or changes in circumstances indicate that it might be impaired, and carried at cost less accumulated impairment losses. For the purpose of impairment testing, goodwill acquired in a business combination is allocated to each of the cash generating units (“CGUs”), or groups of CGUs that is expected to benefit from the synergies of the combination. Each unit or group of units to which the goodwill is allocated represents the lowest level within the entity at which the goodwill is monitored for internal management purposes. Goodwill is monitored at operating segment level. The carrying value of goodwill is compared to the recoverable amount, which is the higher of value in use and the fair value less costs of disposal. Any impairment is recognised immediately as an expense and is not subsequently reversed.




3.6 Impairment of non-financial assets

Non-current and non-financial assets that have an indefinite useful life, for example goodwill, are not subject to amortisation and are tested annually for impairment. Non-current and non-financial assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the carrying amount of the asset exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs of disposal and value in use. For the purpose of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows which are largely independent of the cash inflows from other assets or groups of assets (cash-generating units). Non-current and non-financial assets other than goodwill that suffered an impairment are reviewed for possible reversal of impairment at each reporting date.

The impairment loss is charged to profit or loss. Impairment losses on goodwill are not reversed. In respect of other non-current and non-financial assets, any subsequent increase in recoverable amount is recognised in profit or loss. The reversal is recognised to the extent of the carrying amount of the asset that would have been determined (net of amortisation and depreciation) had no impairment loss been recognised.

3.7 Non-current assets held for sale

Non-current assets (or disposal groups) are classified as assets held for sale if their carrying amount will be recovered principally through a sale transaction rather than through continuing use and a sale is considered highly probable. They are stated at the lower of carrying amount and fair value less costs to sell, except for assets such as deferred tax assets, assets arising from employee benefits, financial assets and investment property that are carried at fair value and contractual rights under insurance contracts, which are specifically exempt from this requirement.

An impairment loss is recognised for any initial or subsequent write-down of the asset (or disposal group) to fair value less costs to sell. A gain is recognised for any subsequent increases in fair value less costs to sell of an asset (or disposal group), but not in excess of any cumulative impairment loss previously recognised. A gain or loss not previously recognised by the date of the sale of the non-current asset (or disposal group) is recognised at the date of derecognition.

Non-current assets (including those that are part of a disposal group) are not depreciated or amortised while they

are classified as held for sale. Interest and other expenses attributable to the liabilities of a disposal group classified as held for sale continue to be recognised.

Non-current assets classified as held for sale and the assets of a disposal group classified as held for sale are presented separately from the other assets in the statement of financial position. The liabilities of a disposal group classified as held for sale are presented separately from other liabilities in the statement of financial position.

A discontinued operation is a component of the entity that has been disposed of or is classified as held for sale and that represents a separate major line of business or geographical area of operations, is part of a single co-ordinated plan to dispose of such a line of business or area of operations, or is a subsidiary acquired exclusively with a view to resale. The results of discontinued operations are presented separately in profit or loss.




3.8 Financial assets

(a) Classification

The Group and the Company classify the financial assets in the ‘loans and receivables’ category. The classification depends on the purpose for which the financial assets were acquired. Management determines the classification of its financial assets at initial recognition.

Loans and receivables

‘Loans and receivables’ are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. If collection of the amounts is expected in one year or less they are classified as current assets. If not, they are presented as non-current assets. The Group’s and the Company’s ‘loans and receivables’ comprise ‘receivables and deposits’, ‘amounts due from related parties’, ‘fixed deposits with licensed banks’ and ‘cash and bank balances’ in the statements of financial position.

(b) Recognition and initial measurement

Regular purchases and sales of financial assets are recognised on the trade-date, the date on which the Group and the Company commit to purchase or sell the asset.

‘Loans and receivables’ are initially recognised at fair value plus transaction costs that are directly attributable to the acquisition of the financial asset.

(c) Subsequent measurement – gains and losses

‘Loans and receivables’ are subsequently carried at amortised cost using the effective interest method.

(d) Subsequent measurement – impairment of financial assets

Assets carried at amortised cost

The Group and the Company assess at the end of the reporting period whether there is objective evidence that a financial asset or a group of financial assets is impaired. A financial asset or a group of financial assets is impaired and impairment losses are incurred only if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset (a ‘loss event’) and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated.

Evidence of impairment may include indications that the debtor or a group of debtors is experiencing significant financial difficulty, default or delinquency in interest or principal payments, the probability that they will enter bankruptcy or other financial reorganistion and where observable data indicate that there is a measurable decrease in the estimated future cash flows, such as charges in arrears or economic conditions that correlate with defaults.




3.8 Financial assets (continued)

(d) Subsequent measurement – impairment of financial assets (continued)

The amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset’s original effective interest rate. The carrying amount of the financial asset is reduced and the amount of the loss is recognised in profit or loss. If ‘loans and receivables’ have a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate determined under the contract. As a practical expedient, the Group and the Company may measure impairment on the basis of an instrument’s fair value using an observable market price.

If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised (such as an improvement in the debtor’s financial position), the reversal of the previously recognised impairment loss is recognised in profit or loss.

When an asset is uncollectible, it is written off against the related allowance account. Such assets are written off after all the necessary procedures have been completed and the amount of the loss has been determined.

(e) De-recognition

Financial assets are de-recognised when the rights to receive cash flows from the investments have expired or have been transferred and the Group and the Company have transferred substantially all risks and rewards of ownership.

Receivables that are factored out to banks and other financial institutions with recourse to the Group and the Company are not derecognised until the recourse period has expired and the risks and rewards of the receivables have been fully transferred. The corresponding cash received from the financial institutions is recorded as borrowings.

3.9 Financial liabilities

(a) Classification

The Group and the Company classify the financial liabilities measured at amortised cost in ‘other financial liabilities’ category. Management determines the classification of its financial liabilities at initial recognition.

‘Other financial liabilities’ are non-derivative financial liabilities with fixed or determinable payments that are not quoted in an active market. Other financial liabilities are recognised as current liabilities unless the Group and the Company have an unconditional right to defer repayment of the liabilities for at least 12 months after the reporting date. The Group’s and the Company’s other financial liabilities comprise ‘borrowings’, ‘payables and accrued liabilities’ and ‘amounts owing to related parties’ in the statements of financial position.




3.9 Financial liabilities (continued)

(b) Recognition and initial measurement

Financial liabilities within the scope of MFRS 139 are recognised in the statements of financial position when, and only when, the Group and the Company become a party to the contractual provisions of the financial instrument.

‘Other financial liabilities’ are initially recognised at fair value plus directly attributable transactions costs.

(c) Subsequent measurement

Subsequent to initial recognition, ‘other financial liabilities’ are measured at amortised cost using the effective interest method.

3.10 Offsetting financial instruments

Financial assets and liabilities are offset and the net amount presented in the statement of financial position when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis, or realise the asset and settle the liability simultaneously. The legally enforceable right must not be contingent on future events and must be enforceable in the normal course of business and in the event of default, insolvency or bankruptcy.

3.11 Financial guarantee contracts

Financial guarantee contracts are contracts that require the Group or the Company to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payments when due, in accordance with the terms of a debt instrument.

The Company has issued corporate guarantee to banks for borrowings of its subsidiaries. These guarantees are financial guarantees as they require the Group to reimburse the banks if the subsidiaries fail to make the required repayments when due in accordance with the respective terms of their borrowings.

Financial guarantee contracts are recognised as a financial liability at the time the guarantee is issued. The liability is initially measured at fair value and subsequently at the higher of the amount determined in accordance with MFRS 137 ‘Provisions, Contingent Liabilities and Contingent Assets’ and the amount initially recognised less cumulative amortisation, where appropriate.

The fair value of financial guarantees is determined as the present value of the difference in net cash flows between the contractual payments under the debt instrument and the payments that would be required without the guarantee, or the estimated amount that would be payable to a third party for assuming the obligations.

Where financial guarantees in relation to loans or payables of subsidiaries are provided by the Company for no compensation, the fair values are accounted for as contributions and recognised as part of the cost of investment in subsidiaries.




3.12 Leases – Accounting by lessee

A lease is an agreement whereby the lessor conveys to the lessee in return for a payment, or series of payments, the right to use an asset for an agreed period of time.

(a) Finance leases

Leases of property, plant and equipment where the Group and the Company has substantially all the risks and rewards of ownership are classified as finance leases. Finance leases are capitalised at the lease’s commencement at the lower of the fair value of the leased assets and the present value of the minimum lease payments. The corresponding rental obligations, net of finance charges, are included in ‘borrowings’ in the statement of financial position.

Each lease payment is allocated between the liability and finance charges so as to achieve a constant rate of interest on the remaining balance of the liability. The finance cost is charged to profit or loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each financial period. 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 and the Company will obtain ownership at the end of the lease term.

Initial direct costs incurred by the Group and the Company in negotiating and arranging finance leases are added to the carrying amount of the leased assets and recognised as an expense in profit or loss over the lease term on the same basis as the lease expense.

(b) Operating leases

Leases of assets where a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to profit or loss on a straight line basis over the lease period.

Initial direct costs incurred by the Group and the Company in negotiating and arranging operating leases are recognised in profit or loss when incurred.

Leasehold land which meets the requirements of an operating lease, is classified as prepaid lease rentals and is stated at cost less accumulated amortisation and accumulated impairment losses, if any. The prepaid lease rentals of leasehold land are amortised on a straight line basis over lease period of 29 years, which expires in year 2035.

3.13 Inventories

Inventories are stated at the lower of cost and net realisable value after adequate allowance has been made for all deteriorated, damaged, obsolete and slow-moving inventories. Cost is determined using the first-in-first-out basis. Cost of raw material and consumables includes purchase price and any cost that is directly attributable to bringing the inventories to their present location and condition. Costs of purchased inventory are determined after deducting rebates, discounts and the amount of GST, except where the amount of GST incurred is not recoverable from the government. When the amount of GST incurred is not recoverable from the government, the GST is recognised as part of the cost of purchased inventory. The cost of work in progress and finished goods comprises raw materials, direct labour, other direct costs and an appropriate proportion of variable and fixed overhead expenditure, the latter being allocated on the basis of normal operating capacity. It excludes borrowing costs.

Net realisable value is the estimated selling price in the ordinary course of business, less the costs of completion and the estimated costs necessary to make the sale.




3.14 Trade and other receivables

Trade receivables are amounts due from customers for merchandise sold or services performed in the ordinary course of business. Other receivables generally arise from transactions outside the usual operating activities of the Group and of the Company. If collection is expected in one year or less (or in the normal operating cycle of the business if longer), they are classified as current assets. If not, they are classified as non-current assets.

Trade and other receivables are recognised initially at fair value, with the amount of GST included. The net amount of GST recoverable from the government is included in ‘receivables, deposits and prepayments’ in the statement of financial position.

Cash flows are included in the statement of cash flows on a gross basis. The GST components of cash flows which are recoverable from, or payable to, the government are classified as operating cash flows.

After recognition, trade and other receivables are subsequently measured at amortised cost using the effective interest method, less allowance for impairment. Refer to Note 3.8 to the financial statements on the accounting policy for impairment of financial assets.

3.15 Cash and cash equivalents

For the purpose of the statements of cash flows, cash equivalents are held for the purpose of meeting short-term cash commitments rather than for investment or other purposes. Cash and cash equivalents comprise cash on hand, deposits held at call with financial institutions, other short term, highly liquid investments with original maturities of 3 months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.

Bank overdrafts which are repayable on demand and form an integral part of the Group’s and the Company’s cash management are included as a component of cash and cash equivalents in the statements of cash flows. In the statement of financial position, banks overdrafts are shown within ‘borrowings’ in current liabilities.

3.16 Trade and other payables

Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Other payables generally arise from transactions outside the usual operating activities of the Group and of the Company. Payables are classified as current liabilities unless payment is not due within 12 months after the reporting period. If not, they are presented as non-current liabilities.

Trade and other payables are recognised initially at fair value, with the amount of GST included. The net amount of GST payable to the government is presented as part of ‘payables and accrued liabilities’ in the statements of financial position.

Cash flows are included in the statement of cash flows on a gross basis. The GST components of cash flows which are recoverable from, or payable to, the government are classified as operating cash flows.

Trade and other payables are subsequently measured at amortised cost using the effective interest method.




3.17 Borrowings and borrowing costs

(a) Borrowings

Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently carried at amortised cost; any difference between initial recognised amount and the redemption value is recognised in profit or loss over the period of the borrowings using the effective interest method.

Fees paid on the establishment of loan facilities are recognised as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the draw-down occurs. To the extent there is no evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalised as a pre-payment for liquidity services and amortised over the period of the facility to which it relates.

Borrowings are removed from the statement of financial position when the obligation specified in the contract is discharged, cancelled or expired. The difference between the carrying amount of a financial liability that has been 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 within ‘other operating income’ or ‘finance costs’.

Where the terms of a financial liability are renegotiated and the Company issues equity instruments to a creditor to extinguish all or part of the liability (debt for equity swap), a gain or loss is recognised in profit or loss, which is measured as the difference between the carrying amount of the financial liability and the fair value of the equity instruments issued.

Borrowings are classified as current liabilities unless the Group or the Company has an unconditional right to

defer settlement of the liability for at least 12 months after the end of the reporting period.

(b) Borrowing costs

General and specific borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale.

Investment income earned on temporary investment of specific borrowings pending their expenditure on qualifying asset is deducted from the borrowings costs eligible for capitalisation.

All other borrowing costs are recognised in profit or loss in the financial period in which they are incurred.




3.18 Current and deferred tax

Tax expense for the financial period comprises current and deferred income tax. The income tax expense or credit for the financial period is the tax payable on the current financial period’s taxable income based on the applicable income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to temporary differences and unused tax losses. Tax is recognised in profit or loss, except to the extent that it relates to items recognised in ‘other comprehensive income’ or directly in equity. In this case the tax is also recognised in ‘other comprehensive income’ or directly in equity, respectively.

The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the end of the reporting period in the countries where the Group’s subsidiaries and the Company operate and generate taxable income.

Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities. This liability is measured using the single best estimate of the most likely outcome.

Deferred tax is provided in full, using the liability method, on temporary differences arising between the amounts attributed to assets and liabilities for tax purposes (i.e. tax bases) and their carrying amounts in the financial statements. However, deferred tax liabilities are not recognised if they arise from the initial recognition of goodwill. Deferred tax is also not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred tax is determined using tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period and are expected to apply when the related deferred tax asset is realised or the deferred tax liability is settled.

Deferred tax assets (including tax benefit from reinvestment allowance) are recognised to the extent that it is probable that future taxable profit will be available against which the deductible temporary differences, unused tax losses or unused tax credits can be utilised.

Deferred tax liability is recognised for all taxable temporary differences associated with investments in subsidiaries, except where the timing of the reversal of the temporary difference is controlled by the parent or investor and it is probable that the temporary difference will not reverse in the foreseeable future.

Deferred tax assets are recognised on deductible temporary differences arising from investments in subsidiaries only to the extent that it is probable the temporary difference will reverse in the future and there is sufficient taxable profit available against which the deductible temporary difference can be utilised.

Current and deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred tax assets and liabilities relate to taxes levied by the same tax authority on either the taxable entity or different taxable entities where there is an intention to settle the balances on a net basis.




3.19 Government grants

Grants from the government are recognised at their fair value where there is a reasonable assurance that the grant will be received and the Group and the Company will comply with all attached conditions.

Government grants relating to costs are recognised in profit or loss over the periods to match the related costs for which the grants are intended to compensate.

Government grants relating to the purchase of assets are presented as deferred income within non-current liabilities and credited to the profit or loss on a straight-line basis over the useful life of the related assets.

3.20 Provisions

Provisions are recognised when the Group or the Company has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation and a reliable estimate of the amount can be made.

Where the Group or the Company expects a provision to be reimbursed by another party (for example, under an insurance contract), the reimbursement is recognised as a separate asset but only when the reimbursement is virtually certain. Provisions are not recognised for future operating losses.

Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. A provision is recognised even if the likelihood of an outflow with respect to any one item included in the same class of obligations may be small.

Provisions are measured at the present value of management’s best estimate of the expenditure expected to be required to settle the obligation using a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the obligation. The increase in the provision due to passage of time is recognised as ‘finance costs’ in profit or loss.

3.21 Contingent assets and liabilities

The Group and the Company do not recognise contingent assets and liabilities other than those arising from business combinations, but discloses its existence in the financial statements. A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the Group and the Company, or a present obligation that is not recognised because it is not probable that an outflow of resources will be required to settle the obligation. A contingent liability also arises in the extremely rare case where there is a liability that cannot be recognised because it cannot be measured reliably. However, contingent liabilities do not include financial guarantee contracts. A contingent asset is a possible asset that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the Group and the Company. The Group and the Company do not recognise contingent assets but disclose its existence where inflows of economic benefits are probable, but not virtually certain.

The Group recognises separately the contingent liabilities of the acquirees as part of allocating the cost of a business combination where their fair values can be measured reliably. Where the fair values cannot be measured reliably, the resulting effect will be reflected in the goodwill arising from the acquisitions.

Subsequent to the initial recognition, the Group measures the contingent liabilities that are recognised separately at the date of acquisition at the higher of the amount that would be recognised in accordance with the provisions of MFRS 137 ‘Provisions, Contingent Liabilities and Contingent Assets’ and the amount initially recognised less, when appropriate, cumulative amortisation recognised in accordance with MFRS 118 ‘Revenue’.




3.22 Share capital

(a) Classification

Ordinary shares are classified as equity.

(b) Share issue costs

Incremental costs directly attributable to the issue of new shares or options are deducted against equity.

(c) Dividend distribution

Liability is recognised for the amount of any dividend declared, being appropriately authorised and no longer at the discretion of the Group or the Company, on or before the end of the reporting period but not distributed at the end of the reporting period.

Distributions to holders of an equity instrument is recognised directly in equity.

(d) Purchase of own shares

Where any company within the Group purchases the Company’s equity instruments as a result of a share buy-back or a share-based payment plan, the consideration paid, including any directly attributable incremental costs, net of tax, is deducted from equity attributable to the owners of the Company as treasury shares until the shares are cancelled or reissued. Where such ordinary shares are subsequently reissued, any consideration received, net of any directly attributable incremental transaction costs and the related tax effects, is included in equity attributable to the owners of the Company.

(e) Earnings per share Basic earnings per share

Basic earnings per share is calculated by dividing:• the profit attributable to owners of the Company, excluding any costs of servicing equity other than

ordinary shares,• by the weighted average number of ordinary shares outstanding during the financial period, adjusted for

bonus elements in ordinary shares issued during the financial period and excluding treasury shares.

Diluted earnings per share

Diluted earnings per share adjusts the figures in the determination of basic earnings per share to take into account:• the after income tax effect of interest and other financing costs associated with dilutive potential ordinary

shares, and• the weighted average number of additional ordinary shares that would have been outstanding assuming

the conversion of all dilutive potential ordinary shares.




3.23 Revenue recognition

Revenue is measured at the fair value of the consideration received or receivable for the sale of goods and services in the ordinary course of the Group’s and the Company’s activities. Revenue is shown net of GST, returns and discounts and amounts collected on behalf of third parties and after eliminating sales within the Group.

The Group and the Company recognise revenue when the amount of revenue can be reliably measured, it is probable that future economic benefits will flow to the Group and the Company and specific criteria have been met for each of the Group’s and the Company’s activities as described below. The Group and the Company base their estimates on historical results, taking into consideration the type of customer, the type of transaction and the specifics of each arrangement.

(a) Sale of goods

Revenue from the sales of goods is recognised upon full delivery of goods, when significant risks and rewards of ownership of the goods are transferred to the buyer.

(b) Management fee income

Management fee income from subsidiaries is recognised on an accrual basis upon rendering of services.

(c) Dividend income

Dividend income is recognised when the Group’s and the Company’s rights to receive payment are established. This applies even if they are paid out of pre-acquisition profits. However, the investment may need to be tested for impairment as a consequence.

3.24 Other operating income

(a) Interest income

Interest income is recognised using the effective interest method. When an item of ‘loans and receivables’ is impaired, the Group and the Company reduce the carrying amount to its recoverable amount, being the estimated future cash flows discounted at the original effective interest rate of the instrument, and continues unwinding the discount as interest income. Interest income on impaired ‘loans and receivables’ is recognised using the original effective interest rate. Interest income is included in ‘finance income’ in the profit or loss.

(b) Rental income

Rental income is recognised on an accrual basis in accordance with the substance of the relevant agreement. Rental income is included in ‘other operating income’ in the profit or loss.

(c) Other income

Other income is recognised on an accrued basis unless collectability is uncertain. Other income is included in ‘other operating income’ in the profit or loss.




3.25 Employee benefits

(a) Short term employee benefits

The Group and the Company recognise a liability and an expense for bonuses based on a formula that takes into consideration the profit attributable to the shareholder of the entities within the Group after certain adjustments. The Group and the Company recognise a provision where contractually obliged or where there is a past practice that has created a constructive obligation.

Wages, salaries, social security contributions, paid annual leave and sick leave, bonuses and non-monetary benefits that are expected to be settled wholly within 12 months after the end of the reporting period in which the employees render the related service are recognised in respect of employees’ services up to the end of the reporting period and are measured at the amounts expected to be paid when the liabilities are settled. The liabilities are presented as ‘payables and accrued liabilities’ in the statement of financial position.

(b) Post-employment pension benefits – Defined contribution plans

A defined contribution pension plan is a pension plan under which the Group pays fixed contributions into a separate entity. The Group has no legal or constructive obligations to pay further contributions if the fund does not hold sufficient assets to pay all employees the benefits relating to employee service in the current and prior periods.

The Group contributes to various mandatory defined contribution pension plans in accordance with local conditions, practices and laws and regulations in the countries in which it operates. The Group’s contributions to defined contribution pension plans are charged to profit or loss in the financial year in which they relate.

3.26 Share-based payments

The Group operates an Employees Share Option Scheme (“ESOS”) as an equity-settled, share-based compensation plan under which the entities within the Group receives services from eligible persons (i.e. employees and directors) as consideration for equity instruments (options) of the Company. The fair value of the options granted in exchange for the services of the employees are recognised as employee benefit expense with a corresponding increase to share option reserve within equity. The total amount to be expensed is determined by reference to the fair value of the options granted based on the conditions to be determined by the ESOS Committee which may include the following conditions:

- including any market performance conditions (for example, an entity’s share price); - excluding the impact of any service and non-market performance vesting conditions (for example, profitability,

sales growth targets and remaining an employee of the entity over a specified time period); and - including the impact of any non-vesting conditions (for example, the requirement for employees to save or

holding of shares for a specific period of time).

Non-market vesting conditions and service conditions are included in assumptions about the number of options that are expected to vest.

The total expense is recognised over the vesting period, which is the period over which all of the specified vesting conditions are to be satisfied. At the end of the reporting period, the Group revises its estimates of the number of options that are expected to vest based on the non-market vesting conditions and service conditions. It recognises the impact of the revision to original estimates, if any, in profit or loss, with a corresponding adjustment to share option reserve in equity.




3.26 Share-based payments (continued)

In circumstances where eligible persons provide services in advance of the grant date, the grant date fair value is estimated for the purposes of recognising the expense during the period between service commencement period and grant date.

When the options are exercised, the Company issues new shares. The proceeds received net of any directly attributable transaction costs are credited to share capital when the options are exercised. When options are not exercised and lapsed, the share option reserve is transferred to retained profits.

In its separate financial statements of the Company, the grant by the Company of options over its equity instruments to the eligible persons of any subsidiaries in the Group is treated as a capital contribution to the affected subsidiary. The fair value of options granted to eligible persons of the subsidiary in exchange for the services of the eligible persons to the subsidiary are recognised as investment in subsidiary, with a corresponding credit to equity of the Company.

There were no options granted during the current financial period.

3.27 Foreign currencies

(a) Functional and presentation currency

Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic environment in which the entity operates (the “functional currency”). The financial statements are presented in Ringgit Malaysia, which is the Company’s functional and presentation currency.

(b) Foreign currency transactions and balances

Foreign currency transactions are translated into the functional currency using the foreign currency exchange rates approximating those prevailing at the dates of the transactions or valuation where items are re-measured. Foreign currency exchange gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies at the end of the financial period using the foreign currency exchange rates approximating those prevailing at the reporting date, are recognised in profit or loss. Foreign currency exchange gains and losses are presented in the profit or loss within ‘other operating income’ or ‘other operating expenses’. However, foreign currency exchange differences are deferred in ‘other comprehensive income’ when they are attributable to items that form part of the net investment in a foreign operation.

(c) Group entities

The results and financial position of all the Group entities (none of which has the currency of a hyperinflationary economy) that have a functional currency different from the presentation currency of the Company are translated into the presentation currency as follows:

• assets and liabilities for each statement of financial position presented are translated at the closing foreign currency exchange rates approximating those prevailing at the reporting date;

• income and expenses for each statement of comprehensive income are translated at average foreign currency exchange rates (unless this average is not a reasonable approximation of the cumulative effect of the foreign currency exchange rates prevailing on the transaction dates, in which case income and expenses are translated at the foreign currency exchange rates on the dates of the transactions); and

• all resulting foreign currency exchange differences are recognised as a separate component of ‘other comprehensive income’.




3.27 Foreign currencies (continued)

(c) Group entities (continued)

Goodwill and fair value adjustments arising on the acquisitions of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing foreign currency exchange rate. Foreign currency exchange differences arising are recognised in ‘other comprehensive income’.

On consolidation, foreign currency exchange differences arising from the translation of any net investment in foreign entities are recognised in ‘other comprehensive income’.

On the disposal of a foreign operation (that is, a disposal of the Group’s entire interest in a foreign operation, or a disposal involving loss of control over a subsidiary that includes a foreign operation), all of the foreign currency exchange differences relating to that foreign operation recognised in ‘other comprehensive income’ and accumulated in the separate component of equity are reclassified to profit or loss, as part of the gain or loss on disposal. In the case of a partial disposal that does not result in the Group losing control over a subsidiary that includes a foreign operation, the proportionate share of accumulated foreign currency exchange differences are re-attributed to non-controlling interests and are not recognised in profit or loss.

(d) Principal closing rates

The principal closing rates used in the translation of foreign currency monetary assets and liabilities as at the reporting date are as follows:

As at 31.3.2017

As at 31.12.2015

RM RM

1 United States Dollar (“USD”)1 Singapore Dollar (“SGD”)100 Vietnamese Dong (“VND”)100 Indian Rupee (“INR”)

4.423 3.164 0.019 6.820

4.295 3.040 0.019 6.490

3.28 Segment reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker for the allocation of resources and assessment of its performance. The Group’s operating businesses are organised and managed separately according to the nature of the product and services provided, with each segment representing a strategic business unit that offers different products and serves different markets.

Segment revenue, expense, assets and liabilities are those amounts resulting from operating activities of a segment that are directly attributable to the segment and the relevant portion that can be allocated on a reasonable basis to the segment. Segment revenue, expense assets and liabilities are determined before intragroup balances and intragroup transaction are eliminated as part of the consolidation process, except to the extent such intragroup balances and transactions are between Group entities within a single segment. Intragroup transactions which in substance represent reallocation of non-current assets from a segment to another segment are also eliminated. Inter-segment pricing is based on similar terms as those available to external parties.



4 FINANCIAL RISK MANAGEMENT

The Group’s and the Company’s activities expose them to a variety of financial risks: market risk (including foreign currency exchange risk and interest rate risk), credit risk and liquidity risk. The Group’s and the Company’s overall financial risk management policy focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Group’s and the Company’s financial performance. Management continuously monitors the Group’s risk management process to ensure that an appropriate balance between risk and control is achieved. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Group’s activities.

The Board of Directors of the Company is responsible for setting the objectives, the underlying principles of financial risk management for the Group and the Company and establishing the policies such as authority levels, oversight responsibilities, risk identification and measurement and exposure limits, in accordance with the objectives and underlying principles approved.

The following sections provide details on the Group’s and the Company’s exposure to the abovementioned financial risks and the objectives, policies and processes for the management of these risks.

4.1 Market risk

Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and other prices will affect the fair value or future cash flows of financial instruments of the Group and of the Company. The Group and the Company are not subject to significant exposure to other price risk.

(a) Foreign currency exchange risk

Foreign currency exchange risk is the risk that the future cash flows of a financial instrument will fluctuate because of changes in foreign currency exchange rates.

The Group and the Company are exposed to foreign currency exchange risk on transactions arising from sales and purchases and balances that are denominated in currencies other than the respective functional currencies of the Group entities, primarily Ringgit Malaysia (“RM”), Vietnamese Dong (“VND”), United States Dollar (“USD”) and Indian Rupee (“INR”). The currencies giving rise to this risk are primarily with respect to the USD and Singapore Dollar (“SGD”).



4 FINANCIAL RISK MANAGEMENT (CONTINUED)

4.1 Market risk (continued)

(a) Foreign currency exchange risk (continued)

Exposure to foreign currency exchange risk

The Group’s and the Company’s exposure to foreign currency risk, based on the carrying amounts at the reporting date, expressed in RM, are as follows:

Denominated in other than functional currencies

UnitedStatesDollar

SingaporeDollar Others

Denominatedin functionalcurrencies of

group entities Total

GROUP RM RM RM RM RM

31.3.2017

Receivables and deposits 10,006,967 2,181 969 8,584,358 18,594,475

Fixed deposits with licensed banks 0 0 0 516,768 516,768

Cash and bank balances 814,238 39,693 7,298 3,624,053 4,485,282

Payables and accrued liabilities (2,127,345)

(117,112) 0 (11,519,005) (13,763,462)

Borrowings (477,659) 0 0 (14,326,868) (14,804,527)

8,216,201 (75,238) 8,267 (13,120,694) (4,971,464)


UnitedStatesDollar

SingaporeDollar



GROUP RM RM RM RM

31.12.2015

Receivables and deposits 8,236,116 11,945 4,756,732 13,004,793

Fixed deposits with licensed banks 0 0 1,182,137 1,182,137

Cash and bank balances 3,894,804 43,880 2,616,388 6,555,072

Payables and accrued liabilities (4,571,891) 0 (5,228,856) (9,800,747)

Amounts owing to related parties 0 0 (5,650) (5,650)

Borrowings (1,270,299) 0 (18,661,277) (19,931,576)

6,288,730 55,825 (15,340,526) (8,995,971)






Exposure to foreign currency exchange risk

The Group’s and the Company’s exposure to foreign currency risk, based on the carrying amounts at the reporting date, expressed in RM, are as follows (continued):


UnitedStatesDollar

SingaporeDollar



COMPANY RM RM RM RM

31.3.2017

Amounts due from related parties 1,752,765 147,927 1,480,965 3,381,657

Cash and bank balances 229 0 200,124 200,353

Payables and accrued liabilities 0 0 (273,583) (273,583)

Amounts owing to related parties (420,239) 0 (518,766) (939,005)

Borrowings 0 0 (4,944,061) (4,944,061)

1,332,755 147,927 (4,055,321) (2,574,639)


UnitedStatesDollar

SingaporeDollar


group Total

COMPANY RM RM RM RM

31.12.2015

Amounts due from related parties 1,607,557 225,199 3,050,684 4,883,440

Cash and bank balances 0 0 352,155 352,155

Payables and accrued liabilities 0 0 (246,194) (246,194)

Amounts owing to related parties (1,714) 0 (157,089) (158,803)

Borrowings 0 0 (7,451,247) (7,451,247)

1,605,843 225,199 (4,451,691) (2,620,649)






Foreign currency exchange risk sensitivity analysis

The following table details the sensitivity analysis of the Group’s and of the Company’s profit for the financial period/year and equity to a reasonably possible change in the foreign currencies against the functional currencies of the Group entities and of the Company, with all other variables held constant. At the reporting date, if the foreign currencies below have strengthened by 5% (2015: 5%) against the functional currencies of the Group entities and of the Company, profit before tax for the financial period/year and equity of the Group and of the Company would have been higher/(lower) by the following amounts:

Group Company

Foreign currencies

As at 31.3.2017

RM

As at 31.12.2015 RM

As at 31.3.2017 RM

As at 31.12.2015

RM

USDSGD

410,810(3,762)

314,4372,791

66,6387,396

80,29211,260

A weakening of the foreign currencies above against the functional currencies of the Group entities and of the Company at the reporting date would have had the equal but opposite effect on the profit before tax for the financial period/year and equity of the Group and of the Company with all other variables held constant.





(b) Interest rate risk

Interest rate risk is the risk that the future cash flows of the Group’s and of the Company’s financial instruments will fluctuate because of changes in market interest rates.

The Group’s and the Company’s exposure to interest rate risk arise primarily from their interest-bearing financial assets and financial liabilities.

The Group and the Company do not hedge interest rate risk but ensure that they obtain competitive interest rates under the most favourable terms and conditions.

Exposure to interest rate risk

The interest-bearing financial instruments of the Group and of the Company, based on carrying amounts at the reporting date are as follows:

Group Company

As at 31.3.2017

RM

As at 31.12.2015 RM

As at 31.3.2017 RM

As at 31.12.2015

RM

Fixed rate instruments

Financial assets:

- Fixed deposits with licensed banks - Cash and bank balances- Amounts due from related parties

516,7682,662,071

0

1,182,1372,001,681

0

00

170,461

0149,938

1,072,192

3,178,839 3,183,818 170,461 1,222,130

Financial liabilities:- Borrowings

Term loansFinance lease liabilitiesBank overdraftBanker’s acceptance

(1,868,750)(1,512,251)

0(2,419,000)

(1,557,356)(3,344,793)

(114,252)(2,157,000)

0000

0000

(5,800,001) (7,173,401) 0 0

(2,621,162) (3,989,583) 170,461 1,222,130





(b) Interest rate risk (continued)

Exposure to interest rate risk (continued)

The interest-bearing financial instruments of the Group and of the Company, based on carrying amounts at the reporting date are as follows (continued):

Group Company

As at 31.3.2017

RM

As at 31.12.2015 RM

As at 31.3.2017 RM

As at 31.12.2015

RM

Variable rate instruments

Financial assets:

- Amounts due from related parties 0 0 1,066,241 1,463,337

0 0 1,066,241 1,463,337

Financial liabilities:- Borrowings

Term loansFinance lease liabilitiesBank overdraftBanker’s acceptance

6,764,975)0

(2,239,551)0

(10,390,721)0

(2,367,454)0

(4,944,061)000

(7,451,247)000

(9,004,526) (12,758,175) (4,944,061) (7,451,247)

(9,004,526) (12,758,175) (3,877,820) (5,987,910)

Interest rate risk sensitivity analysis

Fair value sensitivity analysis for fixed rate financial instruments

As the Group’s and the Company’s fixed rate financial assets and financial liabilities are carried at amortised cost, the fair value interest rate risk has no financial impact on the profit or loss and equity of the Group and of the Company.

Cash flow sensitivity analysis for variable rate financial instruments

At the reporting date, if interest rates in variable rate financial instruments had been 50 basis points higher/lower with all other variables held constant, profit after tax for the financial period/year and equity of the Group and of the Company would have been RM45,023 (31.12.2015: RM63,791) and RM19,389 (31.12.2015: RM29,940) lower/higher, mainly as a results of higher/lower interest expense on variable rate financial instruments. The magnitude represents management’s assessment of the likely movement in interest rates under normal economic conditions.




4.2 Credit risk

Credit risk is the risk of loss that may arise on outstanding financial assets should a counterparty default on its obligations.

The Group’s exposure to credit risk arises primarily from trade and other receivables and deposits placed with licensed banks. The Group manages its exposure to credit risk arising from trade and other receivables by the application of credit approvals, credit limits and monitoring procedures on an ongoing basis.

The Company’s exposure to credit risk arises from amount due from related parties, unsecured financial guarantee contracts provided to banks in respect of banking facilities granted to the subsidiaries and deposits placed with licensed banks. The Company monitors on an ongoing basis the results of the subsidiaries and repayments made by the subsidiaries. The maximum exposure for financial guarantee contracts are as disclosed in Note 4.3 to the financial statements.

For bank deposits, the Group and the Company minimise their credit risk by placing the deposits with established financial institutions.

Exposure to credit risk

At the reporting date, the Group’s and the Company’s maximum exposure to credit risk are the carrying amount of each class of financial assets recognised in the statement of financial position as disclosed in Note 35 to the financial statements.

Credit risk concentration profile

Concentration of credit risk arises when a number of customers are engaged in similar business activities or activities within the same geographic region, or when they have similar risk characteristics that would cause their ability to meet contractual obligations to be similarly affected by changes in economic or other conditions. The Group continuously monitors its portfolios to identify and assess significant concentration of credit risk.

The credit risk concentration profile of the Group’s trade receivables by country at the reporting date is as follows:

Group

As at 31.3.2017 As at 31.12.2015

RM % RM %

By country:

Malaysia 7,512,273 42.6 4,371,448 35.9

United States of America 4,307,988 24.4 2,996,183 24.7

Vietnam 4,164,965 23.6 3,127,163 25.8

Other countries 1,660,552 9.4 1,654,269 13.6

17,645,778 100.0 12,149,063 100.0

The Company has no significant concentration of credit risk arising from exposure to a single counter-party or a group of counterparties having similar risk characteristics.




4.3 Liquidity risk

Liquidity risk is the risk that the Group or the Company will encounter difficulty in meeting their obligations associated with financial liabilities that are settled by delivering cash or another financial asset.

The Group’s and the Company’s exposure to liquidity risk primarily arising from their various payables and borrowings.

The Group and the Company maintain a level of cash and cash equivalents and bank facilities deemed adequate by management to ensure that they will have sufficient liquidity to meet their liabilities when they fall due.

Maturity profile

The following table sets out the maturity profile of the financial liabilities at the reporting date based on contractual undiscounted cash flows:

Within 1 year

1-5 years

5 years and above

Total contractual cash flow

Carrying amount

RM RM RM RM RM

GROUP

As at 31 March 2017

Non-derivative financial liabilities

Borrowings (excluding finance leases)Finance lease liabilitiesPayables and accrued liabilities

9,181,007917,211

13,763,462

3,719,191685,322

0

1,140,25400

14,040,4521,602,533

13,763,462

13,292,2761,512,251

13,763,462

23,861,680 4,404,513 1,140,254 29,406,447 28,567,989

As at 31 December 2015


Borrowings (excluding finance leases)Finance lease liabilitiesPayables and accrued liabilities Amounts owing to related parties

9,364,9241,683,5489,800,747

5,650

7,205,8141,945,069

00

1,628,595000

18,199,3333,628,6179,800,747

5,650

16,586,7833,344,7939,800,747

5,650

20,854,869 9,150,883 1,628,595 31,634,347 29,737,973




4.3 Liquidity risk (continued)

Maturity profile (continued)

The following table sets out the maturity profile of the financial liabilities at the reporting date based on contractual undiscounted cash flows (continued):

On demand* or within 1 year

1-5 years

5 yearsand above

Total contractual cash flow

Carrying amount

RM RM RM RM RM

COMPANY

As at 31 March 2017


Borrowings (excluding finance leases)Payables and accrued liabilities Amount owing to related partiesFinancial guarantee liabilities*

2,331,280273,583939,005

7,385,552

2,912,258000

0000

5,243,538273,583939,005

7,385,552

4,944,061273,583939,005

0

10,929,420 2,912,258 0 13,841,678 6,156,649

As at 31 December 2015


Borrowings (excluding finance leases)Payables and accrued liabilities Amount owing to related partiesFinancial guarantee liabilities*

2,340,148246,194158,803

9,460,227

5,846,706000

0000

8,186,854246,194158,803

9,460,227

7,451,247246,194158,803

0

12,205,372 5,846,706 0 18,052,078 7,856,244 Financial guarantees

The Company provides unsecured financial guarantees to a licensed bank in respect of banking facilities granted to a wholly-owned subsidiary and monitors on an ongoing basis the performance of the subsidiary. As at 31 March 2017, there was no indication that the subsidiary would default on repayment.

Financial guarantees have not been recognised since the fair value on initial recognition was deemed not material and the probability of the subsidiary defaulting on its banking facilities is remote.



5 CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS

Estimates and judgements are continually evaluated by the directors and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. The Group and the Company make estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, rarely equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are outlined below.

(a) Impairment of non-financial assets, including goodwill

The Group assesses whether there is any indication that non-financial assets are impaired at the end of each reporting period, and tests non-financial assets for impairment if such indication exists. The Group tests goodwill annually to assess whether goodwill has suffered any impairment.

Impairment is measured by comparing the carrying amount of a cash generating unit with its recoverable amount. The recoverable amount is measured at the higher of the fair value less costs to sell for that asset and its value in use. The value in use is the net present value of the projected future cash flows derived from that asset discounted at an appropriate discount rate. Projected future cash flows are calculated based on historical and industry trends, general market and economic conditions and other available information. Changes to any of these assumptions would affect the computed value in use and may result in recognition of impairment loss.

Impairment assessment on goodwill

The key assumptions used by management in their impairment assessment on goodwill are disclosed in Note 17 to the financial statements.

Impairment assessment on property, plant and equipment

The Group has property, plant and equipment with aggregate carrying amount of RM38,119,616 as at 31 March 2017. Management performed an impairment assessment on the Group’s property, plant and equipment as a result of the existence of an impairment indicator as the Group’s market capitalisation value is below the value of its net assets.

Management has assessed the recoverable amount of the applicable CGUs based on discounted cash flow analysis to determine their value in use. Cash flows were projected based on past experience and management’s expectations of market development and future business performance. Beyond the three-year forecast period, a growth rate is used to extrapolate the cash flow projections. The following are key assumptions used by management:

(a) The anticipated annual revenue growth included in the cash flow projections for the financial years 2018 to 2020 was based on average growth levels experienced over the last three years and committed and estimated additional orders from both new and existing customers for the applicable CGUs.

(b) Operating profit margin for the financial years 2018 to 2020 was projected based on average operating profit margin levels experienced over the last three years by the applicable CGUs.

(c) A pre-tax discount rate was applied in determining the recoverable amount of the respective CGU. The discount rate was estimated based on industry weighted average cost of capital, and taken into consideration risk-free rate and market risk of the countries in which the CGUs operate.

Based on management’s assessment, no impairment loss was identified for the Group’s property, plant and equipment.



5 CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS (CONTINUED)

(a) Impairment of non-financial assets, including goodwill (continued)

Impairment assessment on investment in subsidiaries

The Company has investment in subsidiaries with aggregate carrying amount of RM42,778,243 as at 31 March 2017. Management performed impairment assessment on the Company’s investment in Oriental Fastech Manufacturing Sdn. Bhd., Edaran Resources Pte. Ltd., Edaran Precision India Private Limited and Orifast Connector Sdn. Bhd. as there is an impairment indicator in which the net assets value of these subsidiaries is below their respective cost of investment.

Management has assessed the recoverable amount of the investment in subsidiaries based on discounted cash flow analysis to determine their value in use. Cash flows were projected based on past experience and management’s expectations of market development and future business performance. Beyond the three-year forecast period, a growth rate is used to extrapolate the cash flow projections. The following are key assumptions used by management:

(a) The anticipated annual revenue growth included in the cash flow projections for the financial years 2018 to 2020 was based on average growth levels experienced over the last three years and committed and estimated additional orders from both new and existing customers for the applicable CGUs.

(b) Operating profit margin for the financial years 2018 to 2020 was projected based on average operating profit margin levels experienced over the last three years.

(c) A discount rate was applied in determining the recoverable amount of the respective CGU. The discount rates were estimated based on comparable industry’s weighted average cost of equity for the applicable CGUs.

Based on management’s assessment, except for its investment in Orifast Connector Sdn. Bhd., no impairment loss was identified for the cost of investment in subsidiaries. Investment in Orifast Connector Sdn. Bhd. was fully impaired in the current financial period ended 31 March 2017. Refer to Note 18 to the financial statements for details of the movement in impairment losses on the Company’s investment in subsidiaries.

(b) Current and deferred taxes

The Group is subject to income taxes in various jurisdictions. Significant judgement is required in determining the provision for income taxes in respect of each jurisdiction. There are many transactions and calculations for which the ultimate tax determination is uncertain during the ordinary course of business. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the current and/or deferred tax in the financial period in which such determination is made.

(c) Depreciation of property, plant and equipment

Property, plant and equipment are depreciated on a straight line basis to write off their cost to their residual values over their estimated useful lives. The directors estimate the useful life of the assets excluding buildings to be within 2.5 to 28 years. Changes in the expected level of usage, physical wear and tear and technological development could impact the economic useful lives and the residual values of these assets. Therefore, future depreciation charges could be revised.



5 CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS (CONTINUED)

(d) Allowance for write down of inventory

The estimate of allowance for write down of inventory value is based on the estimated net realisable value (i.e. the estimated selling price, less the estimated cost of completion and the estimated costs necessary to make the sale). Actual sales and actual costs incurred may differ from these estimates.

(e) Impairment of receivables

An impairment loss is recognised when there is objective evidence that a financial asset is impaired. Management specifically reviews its ‘loans and receivables’ financial assets and analyses historical bad debts, customer creditworthiness, current economic trends and changes in the customer payment trends when making a judgement to evaluate the adequacy of the allowance for impairment losses. Where there is objective evidence of impairment, the amount and timing of future cash flows are estimated based on historical loss experience for assets with similar credit risk characteristics. If the actual circumstances are different from the original estimate, such difference will impact the carrying amount of receivables.

6 REVENUE

Breakdown of the revenue of the Group and of the Company is as follows:

Group Company

Fifteen months ended 31.3.2017 RM

Financial year ended 31.12.2015 RM



Invoiced sales value net of GST, discounts and returns:

- Precision machining and stamping- Plastic components- High precision moulds, tools and dies- Others

47,087,53124,654,20417,665,009

551,757

28,917,14115,842,17912,101,882

0

0000

0000

Dividend incomeManagement fee income

00

00

2,130,0003,550,565

1,000,0002,594,040

89,958,501 56,861,202 5,680,565 3,594,040



7 FINANCE INCOME

Group Company





Interest income:

- Fixed deposits with licensed banks 44,524 46,557 0 0

- Bank balances 21,983 28,946 2,902 2,323

- Loans to subsidiaries 0 0 93,405 115,611

66,507 75,503 96,307 117,934

8 FINANCE COSTS

Group Company





Interest expense:

- Bank borrowings 1,053,428 1,168,478 416,856 453,981

- Finance lease liabilities 146,721 126,098 0 0

1,200,149 1,294,576 416,856 453,981



9 PROFIT/(LOSS) BEFORE TAX

Profit/(loss) before tax is stated after charging/(crediting) the following items:

Group Company





Auditors’ remuneration :

- statutory audit- other services

347,3983,000

118,5070

91,0003,000

25,0000

Employee benefit costs (Note 10) 27,475,476 17,938,917 2,298,564 1,615,842

Property, plant and equipment:- depreciation- gain on disposal- write off

7,538,140(84)30

5,669,289(2,564)

319

6,70800

5,12700

Amortisation of prepaid lease rentals 131,397 105,118 0 0

Gain on disposal of asset classified as held for sale (432,742) 0 0 0

Dividend income from subsidiaries 0 0 (2,130,000) (1,000,000)

Depreciation of investment properties 5,543 19,737 0 0

Impairment loss on:- goodwill* 0 2,912,000 0 0

- investment in subsidiaries* 0 0 100,000 4,609,018

- trade receivables 112,887 5,696 0 0

Reversal of impairment loss on investment in a subsidiary* 0 0 (4,609,018) 0

Allowance for write-down of inventories to net realisable value 39,672 196,463 0 0

Rental income from investment properties (11,700) 0 0 0

Rental expenses 1,111,672 668,216 0 0

Amortisation of deferred income on government grant (50,000) (40,000) 0 0

Unrealised losses/(gains) on foreign currency exchange 325,496 (1,133,641) 47,838 (399,408)

Realised (gains)/losses on foreign currency exchange (697,433) (1,207,103) (99,071) 28,897

Realised losses on forward foreign currency contracts 0 6,400 0 0

* Included in ‘other operating expenses’.



10 EMPLOYEE BENEFIT COSTS

Group Company





Wages, salaries and bonus 24,307,158 15,740,303 2,067,138 1,453,086

Defined contribution retirement plans 1,757,059 1,215,335 202,442 142,819

Other employee benefits 1,411,259 983,279 28,984 19,937

27,475,476 17,938,917 2,298,564 1,615,842

The number of employees of the Group and of the Company at the end of the financial period is 678 (2015: 553) and 14 (2015: 12) respectively.

Included in employee benefit costs of the Group and of the Company are Executive Directors’ remuneration as set out in Note 11 to the financial statements.

11 DIRECTORS’ REMUNERATION

Group Company





Directors of the Company

Executive directors:

Salaries, allowances and bonus 1,493,362 1,184,419 828,623 795,620

Defined contribution retirement plans 174,157 139,837 106,860 102,752

1,667,519 1,324,256 935,483 898,372

Estimated monetary value of benefits-in-kind 14,982 8,246 14,982 8,246

1,682,501 1,332,502 950,465 906,618

Non-executive directors:

Fee 194,718 141,000 194,718 141,000

Other emoluments 12,500 12,500 12,500 12,500

207,218 153,500 207,218 153,500



11 DIRECTORS’ REMUNERATION (CONTINUED)

Group Company





Directors of subsidiaries companies

Executive directors:

Salaries, allowances and bonus 791,635 356,840 576,200 0

Defined contribution retirement plans 78,947 34,345 74,147 0

870,582 391,185 650,347 0

Total directors’ remuneration 2,760,300 1,877,187 1,808,030 1,060,118

12 TAX EXPENSE

Group Company





Current tax:

Malaysia income tax:

- current financial period/year 1,196,901 693,000 190,000 149,000

- over accrual in previous financial year (17,465) (1,831) (7,165) (361)

Real property gains tax (“RPGT”) 103,500 0 0 0

Overseas tax 142,616 42,045 0 0

1,425,552 733,214 182,835 148,639

Deferred tax (Note 19):

- origination and reversal of temporary differences (609,637) (528,955) 0 0

Tax expense 815,915 204,259 182,835 148,639



12 TAX EXPENSE (CONTINUED)

The numerical reconciliation between tax expense and the product of accounting profit multiplied by the Malaysian income tax rate is as follows:

Group Company





Profit/(loss) before tax 2,980,497 (5,126,335) 6,946,541 (3,156,816)

Tax calculated at the Malaysian income tax rate of 24% (31.12.2015: 25%) 715,319 (1,281,584) 1,667,170 (789,204)

Tax effects of:

- change in tax rate 0 (47,407) 0 0

- income tax exemption* (24,610) 0 0 0

- different tax rates in other countries (15,431) (73,762) 0 0

- income not subject to tax (103,404) (527,211) (1,636,598) (358,796)

- different tax rate for RPGT (358) 0 0 0

- expenses not deductible for tax purposes 663,165 1,477,961 159,428 1,297,000

- tax benefit from recognition of current year reinvestment allowance (221,516) (113,000) 0 0

- current year tax losses not recognised as deferred tax assets 46,992 771,093 0 0

- recognition of previously unrecognised unused tax losses (226,777) 0 0 0

- over accrual of current tax in previous financial year (17,465) (1,831) (7,165) (361)

Tax expense for the financial period/year 815,915 204,259 182,835 148,639

* As gazetted in the Income Tax (Exemption) (No. 2) Order 2017 issued on 10 April 2017 under the Income Tax Act 1967, a qualified resident company is eligible for exemption of income tax in respect of incremental amount of chargeable income (without regard to any unabsorbed loss or capital allowance) derived from business source for Years of Assessment 2017 and 2018, which shall be ascertained in the prescribed formulas as stated in the Order 2017. The income tax to be exempted is determined based on the percentage of increase in chargeable income in the current year of assessment from the preceding year of assessment which ranges from 0% to 4% on the incremental chargeable income. The Group and the Company have assessed the potential income tax exemption for the Year of Assessment 2018 based on the forecasted chargeable income and has recognised the related deferred tax impact in the current financial period ended 31 March 2017, if applicable.



13 EARNINGS/(LOSS) PER SHARE

(a) Basic earnings/(loss) per share

Basic earnings/(loss) per share of the Group is calculated by dividing the net profit/(loss) attributable to owners of the Company for the financial period/year by the weighted average number of ordinary shares in issue during the financial period/year.

Group



Net profit/(loss) for the financial period/year attributable to the owners of the Company (RM) 2,299,839 (5,326,073)

Weighted average number of ordinary shares in issue (units) 241,994,985 241,994,985

Basic earnings/(loss) per share (sen) 0.95 (2.20)

(b) Diluted earnings/(loss) per share Diluted earnings/(loss) per share of the Group is the same as the basic earnings/(loss) per share of the Group as

there is no potential ordinary shares being issued during the financial period/year that have a dilutive effect on the earnings/(loss) per share of the Group.



14

PRO

PERT

Y, P

LAN

T A

ND

EQ

UIP

MEN

T

G

ROU

P

Fina

ncia

l per

iod

from

1 J

anua

ry 2

016

to

31 M

arch

201

7Le

aseh

old

land RM

Leas

ehol

dbu

ildin

gs

and

impr

ovem

ents

RM

Plan

t an

dm

achi

nery

RM

Furn

iture

,fit

tings

and

off

ice

equi

pmen

tRM

Mot

orve

hicl

es RM

Cap

ital

wor

kin

pro

gres

sRM

Tota

lRM

CO

ST

At

1 Ja

nuar

y 20

1685

8,47

817

,579

,388

65,9

69,8

873,

483,

359

1,48

4,13

10

89,3

75,2

43

Add

ition

sD

ispo

sals

Writ

ten

off

Tran

sfer

to

inve

stm

ent

prop

ertie

s (N

ote

15)

Cur

renc

y tr

ansl

atio

n di

ffer

ence

s

0 0 0 0 0

175,

618 0 0

(738

,392

)27

,758

5,13

5,74

9(1

,440

)(2

,670

) 021

1,46

6

273,

443 0

(44,

120) 0

16,3

33

376,

032 0 0 0

25,7

89

342,

860 0 0 0 0

6,30

3,70

2(1

,440

)(4

6,79

0)(7

38,3

92)

281,

346

At

31 M

arch

201

785

8,47

817

,044

,372

71,3

12,9

923,

729,

015

1,88

5,95

234

2,86

095

,173

,669

AC

CU

MU

LATE

D D

EPRE

CIA

TIO

N

At

1 Ja

nuar

y 20

16C

harg

e fo

r th

e fin

anci

al p

erio

dD

ispo

sals

Writ

ten

off

Tran

sfer

to

inve

stm

ent

prop

ertie

s (N

ote

15)

Cur

renc

y tr

ansl

atio

n di

ffer

ence

s

44,3

0818

,989 0 0 0 0

4,59

0,33

888

2,39

8 0 0(6

5,40

1)11

,512

41,3

53,7

055,

984,

875

(1,4

39)

(2,6

69) 0

96,5

82

2,59

3,20

742

1,05

8 0(4

4,09

1) 011

,574

916,

899

230,

820 0 0 0

12,3

88

0 0 0 0 0 0

49,4

98,4

577,

538,

140

(1,4

39)

(46,

760)

(65,

401)

132,

056

At

31 M

arch

201

763

,297

5,41

8,84

747

,431

,054

2,98

1,74

81,

160,

107

057

,055

,053

CA

RRY

ING

AM

OU

NT

At

31 M

arch

201

779

5,18

111

,625

,525

23,8

81,9

3874

7,26

772

5,84

534

2,86

038

,118

,616



14

PRO

PERT

Y, P

LAN

T A

ND

EQ

UIP

MEN

T (C

ON

TIN

UED

)

G

ROU

P

Fina

ncia

l yea

r en

ded

31 D

ecem

ber

2015

Leas

ehol

dla

nd RM

Leas

ehol

dbu

ildin

gs a

ndim

prov

emen

tsRM

Plan

t an

dm

achi

nery

RM

Furn

iture

,fit

tings

and

off

ice

equi

pmen

tRM

Mot

orve

hicl

es RMTo

tal

RM

CO

ST

At

1 Ja

nuar

y 20

1585

8,47

817

,249

,910

61,3

38,6

233,

077,

947

1,43

4,45

883

,959

,416

Add

ition

s D

ispo

sals

Writ

ten

off

Cur

renc

y tr

ansl

atio

n di

ffer

ence

s

0 0 0 0

262,

855 0 0

66,6

23

3,87

2,66

7(1

1,20

0)(2

4,86

7)79

4,66

4

459,

609 0

(87,

190)

32,9

93

115,

330

(75,

505) 0

9,84

8

4,71

0,46

1(8

6,70

5)(1

12,0

57)

904,

128

At

31 D

ecem

ber

2015

858,

478

17,5

79,3

8865

,969

,887

3,48

3,35

91,

484,

131

89,3

75,2

43

AC

CU

MU

LATE

D D

EPRE

CIA

TIO

N

At

1 Ja

nuar

y 20

15C

harg

e fo

r th

e fin

anci

al y

ear

Dis

posa

lsW

ritte

n of

fC

urre

ncy

tran

slat

ion

diff

eren

ces

29,1

1715

,191 0 0 0

3,93

0,23

964

5,86

1 0 014

,238

36,6

47,4

664,

592,

151

(11,

199)

(24,

862)

150,

149

2,33

6,57

932

5,04

0 0(8

6,87

6)18

,464

870,

156

91,0

46(4

6,78

3) 02,

480

43,8

13,5

575,

669,

289

(57,

982)

(111

,738

)18

5,33

1

At

31 D

ecem

ber

2015

44,3

084,

590,

338

41,3

53,7

052,

593,

207

916,

899

49,4

98,4

57

CA

RRY

ING

AM

OU

NT

At

31 D

ecem

ber

2015

814,

170

12,9

89,0

5024

,616

,182

890,

152

567,

232

39,8

76,7

86



14 PROPERTY, PLANT AND EQUIPMENT (CONTINUED)

Company



Office equipment and signboard

COST

At beginning of financial period/yearAdditions

39,3300

25,00014,330

At end of financial period/year 39,330 39,330

ACCUMULATED DEPRECIATION

At beginning of financial period/yearCharge for the financial period/year

21,5856,708

16,4585,127


CARRYING AMOUNT


All additions are paid in cash during the financial year ended 31 December 2015.

The carrying amount of property, plant and equipment of the Group pledged as security for borrowings (Note 27) are as follows:

Group

As at 31.3.2017 RM

As at 31.12.2015 RM

Leasehold landLeasehold buildings and improvementsPlant and machinery

795,1819,920,5953,624,958

814,17010,782,4834,545,969

14,340,734 16,142,622

The carrying amount of property, plant and equipment held under finance leases at the reporting date are as follows:

Group

As at 31.3.2017 RM

As at 31.12.2015 RM

Plant and machineryMotor vehicles

2,805,556 50,234

5,131,156 277,595

2,855,790 5,408,751



14 PROPERTY, PLANT AND EQUIPMENT (CONTINUED)

Reconciliation of the additions to the cash flow for purchase of property, plant and equipment is as follows:

Group



Additions for the financial period/yearUnpaid balance included in other payables (Note 29)Additions financed through finance leaseCash paid in respect of previous year acquisitions

6,303,702(767,079)

0124,126

4,710,461(124,126)

(2,053,162)410,025

5,660,749 2,943,198

15 INVESTMENT PROPERTIES

Group



COST

At beginning of financial period/yearAdditionsTransfer from property, plant and equipment (Note 14)Transfer to asset classified as held for sale (Note 24)

00

738,3920

830,47217,400

0(847,872)

At end of financial period/year 738,392 0

ACCUMULATED DEPRECIATION

At beginning of financial period/yearCharge for the financial period/yearTransfer from property, plant and equipment (Note 14)Transfer to asset classified as held for sale (Note 24)

05,543

65,4010

60,877 19,737

0(80,614)


CARRYING AMOUNT


The fair value of the investment properties which made up of two shoplot units as at 31 March 2017 was approximately RM960,000 based on valuation performed by an independent professionally qualified valuer. The fair value is categorised as Level 3 in the fair value hierarchy. The valuation was performed based on recent sale transactions of comparable properties with appropriate adjustments made to reflect location, building differences, improvements and amenities, time element and other relevant factors.



15 INVESTMENT PROPERTIES (CONTINUED)

The direct operating expenses incurred on the investment properties held by the Group which are rented to third parties during the financial period/year amounted to RM16,060 (2015: RM Nil). The expenses incurred by the Group on other investment properties amounted to RM16,074 (2015: RM44,782) for the financial period/year.

The investment properties are pledged as security for term loan granted to a subsidiary of the Company, Oriental Fastech Manufacturing Sdn. Bhd. (Note 27).

16 PREPAID LEASE RENTALS

The prepaid lease rentals were payment for rights to use the following:

Group



Leasehold land

COST

At beginning/end of financial period/year 2,987,087 2,987,087

ACCUMULATED AMORTISATION

At beginning of financial period/yearCharge for the financial period/year

946,057131,397

840,939105,118

At end of financial period/year 1,077,454 946,057

CARRYING AMOUNT

At end of financial period/year 1,909,633 2,041,030

The leasehold land is pledged as security for term loan granted to the Company (Note 27).



17 GOODWILL

Group



COST

At beginning/end of financial period/year 13,567,631 13,567,631

ACCUMULATED IMPAIRMENT LOSSES

At beginning of financial period/yearImpairment loss recognised during the financial period/year

2,912,0000

02,912,000


CARRYING AMOUNT


The goodwill arose from the Group’s acquisition of subsidiaries in the precision machining and stamping operating segment.

The Group performs annual impairment test on goodwill by assessing the recoverable amount of the underlying cash generating units (“CGUs”).

For the purpose of impairment testing, the goodwill was allocated to the CGUs within the Group which will benefit from the synergies arising from the goodwill. The goodwill was allocated to precision machining and stamping operating segment, which comprises two CGUs, namely Oriental Fastech Manufacturing Sdn. Bhd. and Oriental Fastech Manufacturing (Vietnam) Co., Ltd..

The recoverable amount of the CGUs is determined based on value in use calculations. These calculations use pre-tax cash flows projections based on internally approved financial budgets covering a three-year (31.12.2015: five-year) financial period. Cash flows were projected based on past experience and management’s expectations of market development and future business performance. Beyond the three-year (31.12.2015: five-year) forecast period, a growth rate of 3% (31.12.2015: 0%) is used to extrapolate the cash flow projections.

Value in use was determined by discounting future cash flows expected to be generated from the continuing use of the CGUs and was based on the following key assumptions:

(a) Revenue was projected at about RM39,767,000 (31.12.2015: RM31,559,000) in the first year of the business plan. The anticipated annual revenue growth included in the cash flow projections was between 3% and 17% (31.12.2015: 9% and 10%) for the financial years 2018 to 2020 (31.12.2015: 2016 to 2020) based on average growth levels experienced over the last three years and committed and estimated additional orders from both new and existing customers.

(b) Operating profit margins were projected at a range of 8.4% to 17.8% (31.12.2015: 3.8% to 6.0%) for the financial years 2018 to 2020 (31.12.2015: 2016 to 2020) based on average operating profit margin levels experienced over the last three years.



17 GOODWILL (CONTINUED)

(c) Pre-tax discount rates of 10.3% and 15.7% (31.12.2015: 9.1% and 9.1%) per annum was applied in determining the recoverable amount of the CGUs. The discount rates were estimated based on industry weighted average cost of capital, and taken into consideration risk-free rate and market risk of the countries in which the CGUs operate.

The values assigned to the key assumptions represents management’s assessment of future trends in the precision machining and stamping industry and are based on both external sources and internal sources (historical data).

Based on management’s assessment, no impairment loss was identified on the goodwill as at 31 March 2017. As at 31 December 2015, the aggregate carrying amount of the CGUs amounting to approximately RM29,460,000 was higher than its recoverable amount of approximately RM26,548,000 and an impairment loss of RM2,912,000 was recognised. The impairment loss was due to lower than expected business performance of the CGUs as a result of operational inefficiency and challenging business outlook. The impairment was fully allocated to goodwill, and is included in ‘other operating expenses’ in the profit or loss.

Sensitivity analysis has been performed around the base case assumptions with the conclusion that no reasonably possible changes in key assumptions would cause the recoverable amount to be less than the carrying amount.

18 INVESTMENT IN SUBSIDIARIES

Company



Unquoted shares

COST

At beginning of the financial period/yearAdditional subscription of shares

41,211,7631,666,480

41,111,76599,998

At end of the financial period/year 42,878,243 41,211,763

ACCUMULATED IMPAIRMENT LOSSES

At beginning of the financial period/yearImpairment loss recognised during the financial period/yearReversal of impairment loss recognised during the financial period/year

(4,609,018)(100,000)

4,609,018

0(4,609,018)

0

(100,000) (4,609,018)

CARRYING AMOUNT

At end of the financial period/year 42,778,243 36,602,745



18 INVESTMENT IN SUBSIDIARIES (CONTINUED)

During the financial year ended 31 December 2015, the Company recognised an impairment loss of RM4,609,018 (included in ‘other operating expenses’ in the profit or loss) in respect of its investment in Oriental Fastech Manufacturing Sdn. Bhd. (“OFMSB”), a wholly-owned subsidiary of the Company as the recoverable amount of the investment in OFMSB is below its carrying amount due to lower than expected business performance of OFMSB as a result of technical challenges in configuring the machines that resulted in significant production yield loss. During the financial period ended 31 March 2017, the Company has reassessed the recoverable amount of the investment in OFMSB as there was an improvement in the operational results due to OFMSB successfully overcame the technical challenges experienced in the previous financial year ended 31 December 2015. The recoverable amount was determined using value in use based on discount rate of 15.0% determined using industry cost of equity. Arising from the reassessment, the Company has reversed the amount of impairment previously recognised in full. The amount of the reversal was recognised in ‘other operating expenses’ in profit or loss.

During the financial period ended 31 March 2017, the Company recognised a full impairment loss of RM100,000 (included in ‘other operating expenses’ in the profit or loss) in respect of cost of investment in a wholly owned subsidiary, Orifast Connector Sdn. Bhd. as management determined that its recoverable amount is negligible as it had incurred losses in the previous financial period and there is significant uncertainty over the amount and timing of the future expected cash flows.

Acquisition of Bumbeblee Eco Solutions Sdn. Bhd. (“BESSB”) On 30 September 2016, the Company acquired 51% of the issued and paid up capital of BESSB (a dormant company at

the point of acquisition) comprising 1,275,000 units of ordinary shares of RM1.00 each for cash payment of RM1,275,000. BESSB was incorporated in Malaysia as a private limited company under the Companies Act, 1965 on 28 June 2016 with an issued and paid-up capital of RM100 comprising 100 ordinary shares of RM1 each. With the acquisition, BESSB became a subsidiary to the Company. This acquisition did not have any material impact to the financial statements of the Group and the Company.

Subscription for additional shares in subsidiaries Financial period ended 31 March 2017:

(i) Edaran Resources Pte. Ltd. (“ERPL”)

During the financial period, the Company subscribed for additional 99,998 shares in ERPL for a purchase consideration amounted to SGD99,998 (approximately RM291,482) which was fully satisfied by cash.

(ii) Edaran Interconnect Sdn. Bhd. (“EISB”)

During the financial period, the Company subscribed 99,998 shares of RM1.00 each in EISB for a purchase consideration amounted to RM99,998 which was fully satisfied by cash.




Acquisition of additional shares in subsidiaries (continued) Financial year ended 31 December 2015:

(i) Orifast Connector Sdn. Bhd. (“OCSB”)

During the financial year, the Company subscribed 99,998 shares of RM1.00 each in OCSB for a purchase consideration amounted to RM99,998 which was fully satisfied by cash.

The Company’s subsidiaries as at the reporting date are set out below. Unless otherwise stated, they have share capital consisting solely of ordinary shares that are held directly by the Company, and the proportion of ownership interests held equals to the voting rights held by the Company. The country of incorporation is also their principal place of business.

Proportion of ownershipinterests held by the

Group

Proportion of ownershipinterests held by non-controlling interests

Name of entities

Place of business/country of

incorporationAs at

31.3.2017%

As at31.12.2015

%

As at31.3.2017

%

As at31.12.2015

%Principal activities

Edaran Precision Industries Sdn. Bhd.

Malaysia 100 100 0 0 Design and manufacture of high precision moulds, tools and dies.

Golden City Plastic Sdn. Bhd.

Malaysia 100 100 0 0 Precision engineering plastic injection moulding and sub-assembly.

Edaran Precision India Private Limited #

India 70 70 30 30 Design and manufacture of precision moulds, tools and dies and jigs and fixtures.

Oriental Fastech Manufacturing Sdn. Bhd.

Malaysia 100 100 0 0 Manufacture and sale of precision machining and stamping components for telecommunication,industrial sensors, switches, electronic equipment and other industries and the provision of related specialised engineering services.




Proportion of ownership interests held by the

Group

Proportion of ownership interests held by non-

controlling interests

Name of entities

Place of business/country of

incorporationAs at

31.3.2017%

As at31.12.2015

%

As at31.3.2017

%

As at31.12.2015

%Principal activities

Edaran Resources Pte. Ltd.#

Singapore 100 100 0 0 Carry out research and experimental development and trading on engineering parts including procurement and distribution.

Edaran Interconnect Sdn. Bhd. **

Malaysia 100 100 0 0 Manufacture and assembly of electroniccomponents.

Orifast Connector Sdn. Bhd.

Malaysia 100 100 0 0 Manufacture and distribution of connectors and contacts.

Bumblebee Eco Solutions Sdn. Bhd.**

Malaysia 51 0 49 0 Manufacture and sale of paper honeycomb products.

Indirect subsidiary held through Oriental Fastech Manufacturing Sdn. Bhd.

Oriental Fastech Manufacturing (Vietnam) Co., Ltd.^

Vietnam 100 100 0 0 Manufacture of precise mechanical components, labels, metal and paper stamping components for electricity, electric, information and other industries.

Indirect subsidiary held through Edaran Resources Pte. Ltd.

Orifast Connector Solutions LLC*

United States of

America

100 100 0 0 Design, development and supply of interconnect solutions.

^ Audited by a member firm of PricewaterhouseCoopers International Limited, which is a separate and independent legal entity from PricewaterhouseCoopers Malaysia

#

Not audited by PricewaterhouseCoopers Malaysia* No requirement for statutory audit in its country of incorporation** Commenced business operations during the current financial period ended 31 March 2017




Non-controlling interests in subsidiary

Set out below is summarised financial information for each subsidiary that has non-controlling interests (“NCI”). The amounts disclosed for each subsidiary are before inter-company eliminations.


BumblebeeEco Solutions

Sdn. Bhd.

As at 31.3.2017 RM

As at 31.12.2015 RM

As at 31.3.2017 RM

Summarised statement of financial position

Current assetsCurrent liabilities

496,266(2,464,320)

624,558(2,868,314)

615,428(101,752)

NET CURRENT (LIABILITIES)/ASSETS (1,968,054) (2,243,756) 513,676

Non-current assetsNon-current liabilities

2,276,910(78,452)

2,553,962 (20,969)

1,751,5630

NET NON-CURRENT ASSETS 2,198,458 2,532,993 1,751,563

NET ASSETS 230,404 289,237 2,265,239

Accumulated NCI 69,121 86,770 1,109,967

Fifteenmonthsended

31.3.2017 RM


Financialperiod from

30.9.2016 (date of

acquisition) to 31.3.2017

RM

Summarised statement of comprehensive income

Revenue 2,044,686 1,758,915 28,343

Loss for the financial period/yearOther comprehensive income for the financial period/year

(69,988)2,574

(15,071)44,908

(234,762)0

Total comprehensive (loss)/income for the financial period/year (67,414) 29,837 (234,762)

Loss allocated to NCI (20,224) (4,521) (115,033)

Dividends paid to NCI 0 0 0




Non-controlling interests in subsidiary (continued)


BumblebeeEco Solutions

Sdn. Bhd.

Fifteenmonthsended

31.3.2017 RM


Financialperiod from

30.9.2016 (date of

acquisition) to 31.3.2017

RM

Summarised cash flows

Net operating cash flowNet investing cash flowNet financing cash flow

511,257(5,444)

(413,058)

866,113(1,262,804)

(5,738)

(575,308)(1,692,176)2,499,900

Net increase/(decrease) in cash and cash equivalents 92,755 (402,429) 232,416

19 DEFERRED TAX ASSETS/(LIABILITIES)

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when the deferred taxes relate to the same tax authority. The following amounts, determined after appropriate offsetting, are shown in the statements of financial position:

Group

As at 31.3.2017 RM

As at 31.12.2015 RM

Subject to income tax:

Deferred tax assets 347,167 0

Deferred tax liabilities (1,298,829) (1,567,284)

(951,662) (1,567,284)



19 DEFERRED TAX ASSETS/(LIABILITIES) (CONTINUED)

The analysis of deferred tax assets and liabilities is as follows:

Group

As at 31.3.2017 RM

As at 31.12.2015 RM


Deferred tax assets:

- to be recovered after more than 12 months 158,882 0

- to be recovered within 12 months 188,285 0

347,167 0

Deferred tax liabilities:

- to be recovered after more than 12 months (2,160,381) (1,509,578)

- to be recovered within 12 months 861,552 (57,706)

(1,298,829) (1,567,284)

Deferred tax liabilities (net) (951,662) (1,567,284)

The movements in deferred tax assets/(liabilities) during the financial period/year are as follows:

Group



At beginning of financial period/year (1,567,284) (2,101,333)

(Charged)/credited to profit or loss (Note 12)

- Property, plant and equipment (240,951) 878,820

- Asset held for sale 0 (196,000)

- Allowances for write-down of inventories to net realisable value 0 (124,000)

- Accrued liabilities 234,234 (18,000)

- Net unrealised foreign currency exchange differences 200,577 (39,160)

- Unused tax losses 415,777 27,295

609,637 528,955

Currency translation differences 5,985 5,094

At end of financial period/year (951,662) (1,567,284)



19 DEFERRED TAX ASSETS/(LIABILITIES) (CONTINUED)

The deferred tax assets and liabilities as at the end of the reporting period/year are as follows:

Group

As at 31.3.2017 RM

As at 31.12.2015 RM


Deferred tax assets (before offsetting):

- Accrued liabilities 234,234 0

- Unused tax losses 570,750 150,580

- Property, plant and equipment 1,513,404 1,288,280

- Unrealised foreign currency exchange losses 77,460 8,000

2,395,848 1,446,860

Offsetting (2,048,681) (1,446,860)

Deferred tax assets (after offsetting) 347,167 0

Deferred tax liabilities (before offsetting):

- Property, plant and equipment (3,347,510) (2,883,027)

- Unrealised foreign currency exchange gains 0 (131,117)

(3,347,510) (3,014,144)

Offsetting 2,048,681 1,446,860

Deferred tax liabilities (after offsetting) (1,298,829) (1,567,284)

The Group has, subject to confirmation by the Inland Revenue Board of Malaysia, the following unused tax losses carried forward (which have no expiry date), for which no deferred tax assets are recognised in the statement of financial position as at 31 March 2017 and 31 December 2015 as management are of the view that it is not probable that future taxable profits will be available against which the unused tax losses can be realised, as these tax benefits were attributable to a loss making subsidiary.

Group

As at 31.3.2017 RM

As at 31.12.2015 RM

Unused tax losses 314,097 1,063,200

Deferred tax is not recognised on the unremitted earnings of one of the foreign subsidiaries as the remittance of earnings from the country in which the subsidiary operates does not attract any direct or indirect tax. The remaining foreign subsidiaries are in accumulated losses position.



20 RELATED PARTY DISCLOSURES

20.1 Related parties and relationships

For the purpose of these financial statements, parties are considered to be related to the Group or the Company if the Group or the Company has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial or operational decisions, or vice versa, or where the Group or the Company and the party are subject to common control or common significant influence. Related parties may be individuals or other entities. The related parties of the Group and of the Company are:

(a) Subsidiaries

The subsidiaries of the Company are listed in Note 18 to the financial statements.

(b) Other related parties

Other related parties, with whom the Group and the Company transacts with, include the following:

Other related parties Relationship Triangle Assets Management Sdn. Bhd. A company in which certain directors of the Company have substantial financial interests.

Other related parties also include close members of the family of certain directors. (c) Key management personnel

Key management personnel includes the Group’s and the Company’s directors and are defined as those persons having authority and responsibility for planning, directing and controlling the activities of the Group or the Company either directly or indirectly.



20 RELATED PARTY DISCLOSURES (CONTINUED)

20.2 Related party balances

Group Company

As at 31.3.2017 RM

As at 31.12.2015 RM

As at 31.3.2017 RM

As at 31.12.2015 RM

AMOUNTS DUE FROM RELATED PARTIES:

NON-CURRENT:

- Subsidiaries:

Non-trade – Loans granted

- Edaran Precision India Private Limited- Oriental Fastech Manufacturing Sdn. Bhd.

00

00

707,3600

1,115,401303,422

0 0 707,360 1,418,823

CURRENT:

- Subsidiaries:

Trade

- Edaran Precision India Private Limited- Oriental Fastech Manufacturing Sdn.Bhd.

00

00

239,795290,050

137,966452,400

0 0 529,845 590,366

Non-trade – Advances granted

- Edaran Resources Pte. Ltd.- Oriental Fastech Manufacturing Sdn. Bhd.- Edaran Interconnect Sdn. Bhd.- Orifast Connector Sdn. Bhd.- Golden City Plastic Sdn. Bhd.

00000

00000

594,448320,000595,00250,000

0

229,907320,000

00

1,151,978

0 0 1,559,450 1,701,885

Non-trade – Payment on behalf

- Edaran Precision India Private Limited - Oriental Fastech Manufacturing Sdn. Bhd.- Orifast Connector Solutions LLC

000

000

48,1015,5941,965

48,1015,5941,965

0 0 55,660 55,660

Non-trade – Loans granted

- Edaran Precision India Private Limited - Oriental Fastech Manufacturing Sdn. Bhd.

00

00

357,124172,218

347,934768,772

0 0 529,342 1,116,706

0 0 2,674,297 3,464,617

0 0 3,381,657 4,883,440




20.2 Related party balances (continued)

Group Company

As at 31.3.2017 RM

As at 31.12.2015 RM

As at 31.3.2017 RM

As at 31.12.2015 RM

AMOUNTS OWING TO RELATED PARTIES:

CURRENT:

- Subsidiaries:

Non-trade – Advances granted

- Edaran Precision Industries Sdn. Bhd. 0 0 918,525 150,000

Non-trade – Payment on behalf

- Edaran Precision Industries Sdn. Bhd.- Oriental Fastech Manufacturing Sdn. Bhd.- Oriental Fastech Manufacturing (Vietnam) Co. Ltd.

00

0

00

0

3,3679,341

1,713

02,400

1,713

0 0 14,421 4,113

Non-trade – Interest income from financial

institution received on behalf

- Edaran Precision Industries Sdn. Bhd. - Golden City Plastic Sdn. Bhd.

00

00

6,0590

3,6551,035

0 0 6,059 4,690

Non-trade – Amount owing to a director of

a subsidiary 0 5,650 0 0

0 5,650 939,005 158,803

The trade amounts and non-trade advances due from subsidiaries are unsecured, interest free and have no fixed terms of repayment.




20.2 Related party balances (continued)

Loans granted to subsidiaries are unsecured and bearing interest ranging from 3.8% to 5.0% per annum (31.12.2015: 3.8% to 5.0%). The amounts are repayable by:(i) 8 quarterly instalments effective July 2014 (fully settled during the current financial period ended 31 March

2017) ;(ii) 20 quarterly instalments effective May 2015 ; and (iii) 24 monthly instalments effective August 2015 respectively.

The non-trade amounts owing to subsidiaries and director of a subsidiary are unsecured, interest free and have no fixed term of repayment.

Past due not impaired

As at 31 March 2017, none of the amounts due from related parties of the Group and of the Company were past due but not impaired.

20.3 Significant related party transactions

Group Company

Fifteenmonthsended

31.3.2017 RM


Fifteenmonthsended

31.3.2017 RM


Subsidiaries:

Dividend income 0 0 2,130,000 1,000,000

Management fee income 0 0 3,550,565 2,594,040

Interest income 0 0 93,405 115,612

Loans granted to 0 0 0 1,000,000

Loan repayments received 0 0 1,320,180 961,822

Advances granted to 0 0 1,067,152 335,371

Advances repayments received 0 0 1,151,978 1,185,195

Advances received from 0 0 1,038,525 150,000

Repayment of advances 0 0 270,000 0

Interest income from financial institution received on behalf 0 0 16,412 14,845

Payment made on behalf 0 0 0 4,561




20.3 Significant related party transactions (continued)

Group Company

Fifteenmonthsended

31.3.2017 RM


Fifteenmonthsended

31.3.2017 RM


Other related parties:

Sale of property, plant and equipment to a close family member of certain directors 0 25,000 0 0

Purchase of property, plant and equipment from a close family member of certain directors 0 25,000 0 0

Sale of asset held for sale to Triangle Assets Management Sdn. Bhd. (Note 24) 1,200,000 0 0 0

Payment of accounting fee to a close family member of a director 0 17,130 0 0

The above transactions were established based on terms agreed between its related parties.

20.4 Key management compensation

Key management compensation which comprises the remuneration of the Group’s and the Company’s directors, are disclosed in Note 11 to the financial statements.



21 RECEIVABLES, DEPOSITS AND PREPAYMENTS

Group Company As at 31.3.2017 RM

As at 31.12.2015 RM

As at 31.3.2017 RM

As at 31.12.2015 RM

Non- current:Prepayments 30,706 0 0 0Deposits 15,469 0 0 0

46,175 0 0 0Current:Trade receivables 17,762,939 12,153,167 0 0Less: Allowance for impairment losses (117,161) (4,104) 0 0

17,645,778 12,149,063 0 0

Prepayments 826,142 726,537 19,870 20,235Deposits 600,111 473,991 0 0Other receivables 333,117 381,739 0 0

1,759,370 1,582,267 19,870 20,235 19,405,148 13,731,330 19,870 20,235

The Group’s trade receivables are unsecured, interest free and have credit terms range from 30 to 90 days (31.12.2015: 30 to 90 days) from the date of invoice.

The aging analysis of the Group’s trade receivables at the reporting date is as follows:

Group Fifteen months ended 31.3.2017 RM


Neither past due nor impaired 13,048,926 7,959,551Past due but not impaired:- up to 30 days 3,438,263 3,336,922- 31 to 90 days 1,017,012 686,996- more than 90 days 141,577 165,594

17,645,778 12,149,063Impaired 117,161 4,104

17,762,939 12,153,167

Trade receivables that are neither past due nor impaired

Trade receivables that are neither past due nor impaired are amounts due from creditworthy customers with good payment records with the Group. None of the Group’s trade receivables that are neither past due nor impaired have been renegotiated during the financial period/year.



21 RECEIVABLES, DEPOSITS AND PREPAYMENTS (CONTINUED)

Trade receivables that are past due but not impaired

Based on past experience, the Group is satisfied that no allowance for impairment is necessary in respect of these trade receivables. They are substantially companies with good collection track record and no recent history of default.

Trade receivables that are impaired

The movement in the allowance for impairment losses on trade receivables during the financial period/year are as follows:

Group Fifteen months ended 31.3.2017 RM


At beginning of the financial period/year 4,104 4,104Impairment loss charged to profit or loss (Note 9) 112,887 5,696Write off of allowance for impairment loss as no longer collectible (4,104) (5,696)Currency translation differences 4,274 0At end of the financial period/year 117,161 4,104

The allowance for impairment losses is made mainly on those trade receivables in significant financial difficulties and have defaulted on payments. The other classes of trade receivables do not contain impaired assets.

22 INVENTORIES

Group As at 31.3.2017 RM

As at 31.12.2015 RM

At costRaw materials 3,927,294 3,819,860Work in progress 3,060,069 2,772,702Finished goods 3,059,776 3,950,011Consumables 884,794 802,898

10,931,933 11,345,471

At net realisable valueFinished goods (at cost) 687,619 64,384Allowance for write-down of inventories to net realisable value (106,570) (64,384)

581,049 0

Carrying amount at end of financial period/year 11,512,982 11,345,471

Carrying amount of inventories pledged as security for borrowings granted to a subsidiary (Note 27) 3,630,713 3,350,168

The cost of inventories recognised as an expense and included in ‘cost of sales’ amounted to RM74,415,036 (31.12.2015: RM51,750,231).



23 CASH AND CASH EQUIVALENTS

Group Company As at 31.3.2017 RM

As at 31.12.2015 RM

As at 31.3.2017 RM

As at 31.12.2015 RM

Fixed deposits with licensed bank 516,768 1,182,137 0 0Less: Fixed deposits with licensed banks pledged as

securities (106,943) (332,918) 0 0409,825 849,219 0 0

Cash and bank balances 4,485,282 6,555,072 200,353 352,155Bank overdraft (Note 27) (2,239,551) (2,481,706) 0 0

2,655,556 4,922,585 200,353 352,155

The effective interest rates of fixed deposits with licensed banks as at 31 March 2017 ranged from 2.90% to 9.00% (31.12.2015: 2.90% to 9.00%) per annum and had maturity periods which ranged from 30 to 61 days (31.12.2015: 31 to 288 days).

Cash and bank balances of the Group and of the Company amounted RM2,662,071 (2015: RM2,001,681) and RM Nil (2015: RM149,938) respectively earn interest at an effective interest rate ranging from 0.3% to 2.0% (2015: 0.3% to 2.0%) per annum.

Included in fixed deposits placed with licensed banks of the Group is an amount of RM106,943 (31.12.2015: RM332,918) pledged as securities for credit facilities granted to certain subsidiaries (Note 27).

24 ASSET CLASSIFIED AS HELD FOR SALE

Group



At beginning of financial period/year 767,258 0

Transfer from investment property (Note 15) 0 767,258

Disposal (767,258) 0

At end of financial period/year 0 767,258

The investment property was classified as asset held for sale as at 31 December 2015 following the Group’s management commitment to a plan to sell the property. The property was sold to Triangle Assets Management Sdn. Bhd., a related party, for a cash consideration of RM1,200,000 in January 2016. The consideration was determined by a professionally qualified valuer using the comparison method by referencing to the current market value of the property.

As at 31 December 2015, the investment property was pledged as collateral for a term loan granted to Oriental Fastech Manufacturing Sdn. Bhd. (Note 27). The term loan was fully settled during the financial period ended 31 March 2017.



25 SHARE CAPITAL

Group and Company

As at 31.3.2017 As at 31.12.2015

Number of Number of

shares RM shares RM

AUTHORISED:

Ordinary shares of RM0.10 each

At beginning/end of financial period/year N/A N/A 500,000,000 50,000,000

ISSUED AND FULLY PAID:

At beginning of financial period/year - ordinary shares of RM0.10 each 241,994,985 24,199,499 241,994,985 24,199,499

Transition to no-par value regime on 31 January 2017 under the Companies Act, 2016 0 10,916,737 0 0

At end of financial period/year - ordinary shares with no par value (31.12.2015 only:

par value of RM0.10 each) 241,994,985 35,116,236 241,994,985 24,199,499

(a) The new Companies Act, 2016 (the “Act”) which came into operation on 31 January 2017, abolished the concept of authorised share capital and par value of share capital. Consequently, the amounts standing to the credit of the share premium account of RM10,916,737 becomes part of the Company’s share capital pursuant to the transitional provision set out in Section 618(2) of the Act. There is no impact on the number of ordinary shares in issue or the relative entitlement of any of the members as a result of this transition.

(b) The holders of ordinary shares are entitled to receive dividends as declared by the Company and are entitled to one (1) vote per share at meetings of the Company. All ordinary shares rank equally with regard to the Company’s residual assets. In respect of the Company’s treasury shares, all rights are suspended until those shares are reissued.



26 RESERVES

Group Company

As at 31.3.2017 RM

As at 31.12.2015 RM

As at 31.3.2017 RM

As at 31.12.2015 RM

NON-DISTRIBUTABLE

Share premium 0 10,916,737 0 10,916,737

Exchange fluctuation reserve 721,401 777,471 0 0

DISTRIBUTABLE

Retained profits/(accumulated losses) 19,324,782 17,629,931 4,717,096 (1,441,622)

20,046,183 29,324,139 4,717,096 9,475,115

Share premium

Share premium represents the resultant premium arising from the issuance of new shares. The other reserve amounted to RM1,826,087 as disclosed in the Group’s and the Company’s prior financial statements for the financial year ended 31 December 2015 has been reclassified to share premium as the nature of the balance was an adjustment to true up the share premium amount based on actual share issued price as the initial share premium amount was determined based on the estimated share issued price.

Prior to 31 January 2017, the application of the share premium account was governed by Section 60 and 61 of the Companies Act, 1965. In accordance with the transitional provisions set out in Section 618(2) of the new Companies Act, 2016 (the “Act”), on 31 January 2017 any amount standing to the credit of the Company’s share premium account has become part of the Company’s share capital (Note 25). Notwithstanding this provision, the Company may within 24 months from the commencement of the Act, use the amount standing to the credit of its share premium account of RM10,916,737 for purposes as set out in Section 618(3) of the Act.

Exchange fluctuation reserve

Exchange fluctuation reserve comprises foreign currency differences arising on retranslation of the net investments in foreign operations.

Retained profits

Retained profits include past earnings of consolidated companies where these were not distributed, and the consolidated annual net profit, net of the share attributable to non-controlling interests.

Dividends paid out of retained profits of the Group and of the Company are single-tier dividends which are tax exempt in the hands of shareholders.



27 BORROWINGS

Group Company

As at 31.3.2017 RM

As at 31.12.2015 RM

As at 31.3.2017 RM

As at 31.12.2015 RM

NON-CURRENT

Secured:

- Term loans 4,408,666 7,975,093 2,815,633 5,461,418

- Finance lease liabilities 659,883 1,818,103 0 0

5,068,549 9,793,196 2,815,633 5,461,418

CURRENT

Secured:

Bank overdrafts (Note 23) 2,239,551 2,481,706 0 0

Other borrowings:

- Bankers’ acceptances 2,419,000 2,157,000 0 0

- Finance lease liabilities 852,368 1,526,690 0 0

- Term loans 4,225,059 3,972,984 2,128,428 1,989,829

7,496,427 7,656,674 2,128,428 1,989,829

9,735,978 10,138,380 2,128,428 1,989,829

Total borrowings 14,804,527 19,931,576 4,944,061 7,451,247

The range of effective interest rates at the reporting date for borrowings are as follows:

Group Company

As at 31.3.2017 %

As at 31.12.2015 %

As at 31.3.2017 %

As at 31.12.2015 %

Term loans 4.6 - 15.8 4.8 - 8.4 5.1 5.4

Bank overdrafts 6.7 - 7.2 7.4 -7.6 0 0

Bankers’ acceptances 3.8 - 3.9 3.9 - 4.0 0 0

Finance lease liabilities 3.2 - 10.3 2.9 - 10.3 0 0

The borrowings are secured by the following:

(a) legal charges over certain subsidiaries’ property, plant and equipment, investment properties, prepaid lease rentals and assets classified as held for sale as disclosed in Notes 14, 15, 16 and 24 respectively;

(b) inventories of a subsidiary as disclosed in Note 22; and (c) fixed deposits placed with licensed banks of one of the subsidiary of the Company, Oriental Fastech Manufacturing

(Vietnam) Co. Ltd., as disclosed in Note 23 to the financial statements.



27 BORROWINGS (CONTINUED)

Finance lease liabilities

Group

As at 31.3.2017 RM

As at 31.12.2015 RM

Gross finance lease liabilities are as follows:

- Not later than one year 917,211 1,683,548

- Later than one year and not later than two years 559,560 1,056,516

- Later than two year and not later than five years 125,762 888,553

Minimum finance lease payments 1,602,533 3,628,617

Less : Future finance charges (90,282) (283,824)

Present value of minimum lease payments 1,512,251 3,344,793

Net finance lease liabilities are as follows:

Current - Not later than one year 852,368 1,526,690

Non-current - later than one year and not later than two years 535,600 976,968

Non-current - later than two year and not later than five years 124,283 841,135

1,512,251 3,344,793

Finance lease liabilities are effectively secured as the rights to the leased asset revert to the lessor on the event of default.

28 DEFFERED INCOME ON GOVERNMENT GRANT

Group



At beginning of financial period/year 313,333 353,333

Amortisation during the financial period/year (Note 9) (50,000) (40,000)


One of the subsidiaries within the Group received a government grant of RM400,000 in financial year ended 31 December 2013 for qualifying research and development projects. The grant covered the cost of property, plant and equipment invested for the qualifying research and development projects. The grant is being amortised over the useful life of the related property, plant and equipment. The amortisation during the financial period/year was included in ‘other operating income’ in the profit or loss.



29 PAYABLES AND ACCRUED LIABILITIES

Group Company

As at 31.3.2017 RM

As at 31.12.2015 RM

As at 31.3.2017 RM

As at 31.12.2015 RM

Trade payables 8,831,588 6,962,277 0 0

Accrued liabilities 3,330,111 3,117,168 552,065 520,416

Other payables 2,644,223 1,237,485 92,718 46,160

5,974,334 4,354,653 644,783 566,576

14,805,922 11,316,930 644,783 566,576

Trade payables are unsecured, interest free and have the credit terms granted to the Group range from 30 days to 90 days (31.12.2015: 30 to 90 days) from the date of invoice.

Other payables are unsecured, interest free and have credit term of 30 days to 90 days (2015: 30 to 90 days) from the date of invoice. Included in other payables of the Group is an amount of RM767,079 (31.12.2015: RM124,126) payable for the purchase of property, plant and equipment.

Included in accrued liabilities is the provision for bonus of the Group and of the Company amounted to RM1,042,461 (31.12.2015: RM1,516,183) and RM371,200 (31.12.2015: RM320,382) respectively.

30 OTHER COMPREHENSIVE INCOME

The income tax relating to foreign currency exchange differences on translation of foreign operations, which may be subsequently reclassified to profit or loss, is RM Nil (31.12.2015: RM Nil) for the Group for the financial period/year.

31 DIVIDENDS

Since the end of the previous financial year, the Company has declared and paid the following:

RM

- First interim single-tier dividend of 0.25 sen per share on 241,994,985 ordinary shares, declared on 24 November 2016 and paid on 28 December 2016 604,988

The directors do not recommend the payment of any final dividends in respect of the fifteen months financial period

ended 31 March 2017.



32 OPERATING LEASE COMMITMENTS

The Group leases factory premises under non-cancellable operating lease arrangement for a period of 15 years (31.12.2015: 15 years) for the operations of its manufacturing unit in India, Vietnam and Malaysia. The Group does not have any right to sub lease the factory premises. The term of the lease agreement restricts the Group from engaging in any other business in the premises other than that permitted by the lessor.

Rentals due under non-cancellable operating leases entered in respect of property, plant and equipment from the reporting date to the expiry of the leases are as follows:

Group

As at 31.3.2017 RM

As at 31.12.2015 RM

Not later than one year 868,532 695,663

Later than one year but not later than five years 661,484 1,036,574

Later than five years 448,459 522,167

1,978,475 2,254,404

33 CAPITAL COMMITMENTS

Capital commitments in respect of property, plant and equipment not provided for in the financial statements are as follows:

Group

As at 31.3.2017 RM

As at 31.12.2015 RM

Capital expenditure commitments:

Contacted but not provided for 730,806 222,000



34 SEGMENT INFORMATION

The Group is organised and managed into business units based on their products and services, and has three key reportable operating segments as follows:

(i) The precision engineering segment is involved in the design and manufacture of high precision moulds, tools and dies and jigs and fixtures.

(ii) The precision plastic injection moulding segment is principally engaged in the precision engineering plastic injection moulding and sub-assembly.

(iii) The precision machining and stamping segment is involved in the manufacture and sale of precision machining and stamping components for the telecommunication, industrial sensors, switches, electronic equipment and other industries and the provision of related specialised engineering services.

The other segment is involved in the manufacture and assembly of electronic components and manufacture of paper products.

The Group’s Executive Board (chief operating decision maker) monitors the operating results of each reportable segment for the purpose of resource allocation and performance assessment. Segment performance is measured based on segment profit or loss before tax, interest, depreciation and amortisation.

Transactions between segments are carried out on agreed terms between both parties. The effects of such inter-segment transactions are eliminated on consolidation.

Segment assets

The amounts provided to the Group’s Executive Board with respect to total assets are based on all assets allocated to each reportable segment other than deferred income tax assets and tax recoverable.

Segment liabilities

The amounts provided to the Group’s Executive Board with respect to total liabilities are based on all liabilities allocated to each reportable segment other than deferred income tax liability and tax payables.

Capital expenditure

Capital expenditure comprises mainly additions to property, plant and equipment directly attributable to the segment.



34

SEG

MEN

T IN

FORM

ATI

ON

(C

ON

TIN

UED

)

(a)

Ope

ratin

g se

gmen

ts

Prec

isio

nen

gine

erin

gRM

Prec

isio

npl

astic

inje

ctio

nm

ould

ing

RM

Prec

isio

nm

achi

ning and

stam

ping RM

Oth

ers

RMC

orpo

rate

RMTo

tal

RM

Fina

ncia

l per

iod

from

1 J

anua

ry 2

016

to

31

Mar

ch 2

017

Reve

nue

- Tot

al s

egm

ent

- Int

er-s

egm

ent

20,8

97,0

51(3

,232

,042

)25

,710

,368

(1,0

56,1

64)

47,5

91,0

54(5

03,5

23)

552,

602

(845

)5,

680,

565

(5,6

80,5

65)

100,

431,

640

(10,

473,

139)

Reve

nue

from

ext

erna

l cus

tom

ers

17,6

65,0

0924

,654

,204

47,0

87,5

3155

1,75

70

89,9

58,5

01

Segm

ent

prof

its29

3,34

34,

871,

282

7,77

0,68

1(4

63,4

32)

(682

,655

)11

,789

,219

Segm

ent

asse

ts21

,090

,176

14,3

07,8

6038

,237

,710

2,79

5,46

110

,886

,476

87,3

17,6

83

Segm

ent

liabi

litie

s4,

574,

538

2,42

7,02

817

,142

,502

140,

870

5,58

8,84

429

,873

,782

Oth

er in

form

atio

n:

- Cap

ital e

xpen

ditu

re- D

epre

ciat

ion

and

amor

tisat

ion

- Non

-cas

h ex

pens

es (

othe

r th

an d

epre

ciat

ion

a

nd a

mor

tisat

ion)

1,69

4,28

22,

285,

290 0

1,03

3,41

31,

031,

644 0

1,46

8,45

14,

232,

368 0

2,10

7,55

611

9,07

0 0

06,

708 0

6,30

3,70

27,

675,

080 0



34

SEG

MEN

T IN

FORM

ATI

ON

(C

ON

TIN

UED

)

(a)

Ope

ratin

g se

gmen

ts (

cont

inue

d)

Prec

isio

nen

gine

erin

gRM

Prec

isio

npl

astic

inje

ctio

nm

ould

ing

RM

Prec

isio

nm

achi

ning and

stam

ping RM

Oth

ers

RMC

orpo

rate

RMTo

tal

RM

Fina

ncia

l yea

r en

ded

31 D

ecem

ber

2015

Reve

nue

- Tot

al s

egm

ent

- Int

er-s

egm

ent

13,4

97,3

34(1

,395

,453

)15

,870

,258

(28,

079)

28,9

62,2

57(4

5,11

5)0 0

3,59

4,04

0(3

,594

,040

)61

,923

,889

(5,0

62,6

87)

Reve

nue

from

ext

erna

l cus

tom

ers

12,1

01,8

8115

,842

,179

28,9

17,1

420

056

,861

,202

Segm

ent

prof

its2,

950,

296

1,48

9,41

6(1

2,71

4)(6

,348

)37

8,23

24,

798,

882

Segm

ent

asse

ts25

,056

,020

12,7

64,3

4537

,144

,285

982

11,1

89,0

8386

,154

,715

Segm

ent

liabi

litie

s3,

389,

015

2,80

1,68

517

,357

,214

1,75

28,

017,

823

31,5

67,4

89

Oth

er in

form

atio

n:

- Cap

ital e

xpen

ditu

re- D

epre

ciat

ion

and

amor

tisat

ion

- Non

-cas

h ex

pens

es (

othe

r th

an d

epre

ciat

ion

a

nd a

mor

tisat

ion)

1,05

2,11

11,

770,

076

306

274,

991

799,

960 13

3,36

9,02

93,

218,

981 0

0 0 0

14,3

305,

127 0

4,71

0,46

15,

794,

144

319



34 SEGMENT INFORMATION (CONTINUED)

(a) Operating segments (continued)

Reconciliations of reportable segment profit, assets, liabilities and depreciation and amortisation are set out below:



Profit or loss

Total profit for reportable segments 11,789,219 4,798,882

Finance costs (1,200,149) (1,294,576)

Interest income 66,507 75,503

Depreciation and amortisation (7,675,080) (5,794,144)

Impairment loss on goodwill 0 (2,912,000)

Profit/(loss) before tax 2,980,497 (5,126,335)

Segmentassets

RM

Segmentliabilities

RM

31 March 2017

Total reportable segments 87,317,683 29,873,782

Unallocated amounts:

-Tax recoverable 329,250 0

-Tax payable 0 479,983

-Deferred tax assets 347,167 0

-Deferred tax liabilities 0 1,298,829

Consolidated total 87,994,100 31,652,594

31 December 2015

Total reportable segments 86,154,715 31,567,489

Unallocated amounts:

-Tax recoverable 621,638 0

-Tax payable 0 31,172

-Deferred tax assets 0 0

-Deferred tax liabilities 0 1,567,284

Consolidated total 86,776,353 33,165,945



34 SEGMENT INFORMATION (CONTINUED)

(b) Geographical information

In presenting information on the basis of geographical segments, segment revenue is based on geographical location of customers. Segment assets are based on the geographical location of the assets. The amounts of non-current assets do not include financial instruments and goodwill.

Group Group

31.3.2017 31.12.2015

RevenueRM

Non-currentassets

RMRevenue

RM

Non-currentassets

RM

Europe 2,642,055 0 1,669,997 0

Malaysia 40,578,585 46,994,922 25,080,405 47,668,935

Vietnam 22,681,258 3,523,726 14,905,040 3,523,042

United States of America 15,712,575 103,556 9,363,033 90,520

Other countries 8,344,028 1,122,466 5,842,727 1,290,950

89,958,501 51,744,670 56,861,202 52,573,447

(c) Major customers

Revenue from one (2015: two) major customers with revenue equal to or more than 10% of the Group’s revenue, amounts to RM16,677,169 (2015: RM11,763,393) and RM8,602,172 (2015: RM5,983,606) respectively, arising from sales by the precision engineering segment, precision plastic injection moulding segment and precision machining and stamping segment.

(d) Impairment (2015 only)

During financial year ended 31 December 2015, an impairment loss amounting to RM2,912,000 was recognised to the goodwill balance of precision machining and stamping segment as set out in Note 17 to the financial statements.



35 FINANCIAL INSTRUMENTS

(a) Classification of financial instruments

Group Company

As at 31.3.2017 RM

As at 31.12.2015 RM

As at 31.3.2017 RM

As at 31.12.2015 RM

FINANCIAL ASSETS

Loans and receivables

Fixed deposits with licensed banks 516,768 1,182,137 0 0

Cash and bank balances 4,485,282 6,555,072 200,353 352,155

Receivables and deposits 18,594,475 13,004,793 0 0

Amounts due from related parties 0 0 3,381,657 4,883,440

23,596,525 20,742,002 3,582,010 5,235,595

FINANCIAL LIABILITIES

Other financial liabilities

Borrowings 14,804,527 19,931,576 4,944,061 7,451,247

Payables and accrued liabilities 13,763,462 9,800,747 273,583 246,194

Amounts owing to related parties 0 5,650 939,005 158,803

28,567,989 29,737,973 6,156,649 7,856,244

(b) Fair value information

The disclosure of fair value measurements by level of the following fair value measurement hierarchy:

- Level 1: The fair value of financial instruments traded in active markets (such as publicly traded derivatives, and trading and available-for-sale securities) is based on quoted market prices at the end of the reporting period. The quoted market price used for financial assets held by the Group is the current bid price. These instruments are included in level 1.

- Level 2: The fair value of financial instruments that are not traded in an active market (for example, over-the-counter derivatives) is determined using valuation techniques which maximise the use of observable market data and rely as little as possible on entity-specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2.

- Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3. This is the case for unlisted equity securities.



35 FINANCIAL INSTRUMENTS (CONTINUED)

(b) Fair value information (continued)

The carrying amounts of receivables and deposits, amounts due from related parties, fixed deposits with licensed banks, cash and bank balances, payables and accrued liabilities and amount owing to related parties approximate their fair values due to the relatively short term maturity of these financial instruments.

The fair values of borrowings (including finance lease liabilities) are measured using discounted cash flows analysis, using observable current market interest rates for similar types of instruments (i.e. Level 2). The fair values measured are considered to be reasonably close to the carrying amounts reported as the observable current market interest rates approximate the effective interest rates of these financial instruments.

36 CAPITAL MANAGEMENT

The Group’s and the Company’s objectives when managing capital are to safeguard the Group and Company’s ability to continue as a going concern in order to provide returns to shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital. No changes were made in the objectives, policies or processes during the financial period ended 31 March 2017.

The Group and the Company will balance their overall capital structure through the payment of dividends, new share issue as well as the issue of new debt or the payment of existing borrowings.

The capital structure of the Group and the Company consists of total borrowings and total equity, comprising issued share capital, reserves and non-controlling interests, as follows:

Group Company

As at 31.3.2017 RM

As at 31.12.2015 RM

As at 31.3.2017 RM

As at 31.12.2015 RM

Total borrowings 14,804,527 19,931,576 4,944,061 7,451,247

Total equity 56,341,506 53,610,408 39,833,322 33,674,614

Total capital 71,146,033 73,541,984 44,777,393 41,125,861

The Group and the Company are required to maintain certain gearing ratio of total borrowings to total equity, as defined in the facilities agreements. During the financial year, the Group and the Company have complied with these requirements.



37 RECLASSIFICATION OF COMPARATIVE FIGURES

The following comparative figures have been reclassified to reflect the nature of the transaction:

Group

As previouslyreported on

31.12.2015 RM

Reclassification RM

As restated on 31.12.2015 RM

Statement of comprehensive income:

Administrative expenses (11,128,865) 2,912,000 (8,216,865)

Other operating expenses (6,015) (2,912,000) (2,918,015)

Statement of financial position:

Receivables, deposits and prepayments 13,888,784 (157,454) 13,731,330

Current tax recoverable 464,184 157,454 621,638

Payables and accrued liabilities 11,328,672 (11,742) 11,316,930

Amount owing to related parties 0 5,650 5,650

Current tax payable 25,080 6,092 31,172

Company

As previouslyreported on

31.12.2015 RM

Reclassification RM

As restated on 31.12.2015 RM

Statement of comprehensive income:

Administrative expenses (6,814,320) 4,609,018 (2,205,302)

Other operating expenses 0 (4,609,018) (4,609,018)

38 APPROVAL OF FINANCIAL STATEMENTS

The financial statements have been approved for issue in accordance with a resolution of the Board of Directors on 14 July 2017.



39 SUPPLEMENTARY INFORMATION – DISCLOSURE OF REALISED AND UNREALISED PROFITS/LOSSES

The following analysis of realised and unrealised retained profits/(accumulated losses) at the legal entity level is prepared in accordance with Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants whilst the disclosure at the group level is based on the prescribed format by Bursa Malaysia Securities Berhad.

The retained profits/ (accumulated losses) as at the reporting date are analysed as follows:

Group Company

As at 31.3.2017 RM

As at 31.12.2015 RM

As at 31.3.2017 RM

As at 31.12.2015 RM

Total retained profits/(accumulated losses):

- realised 38,908,608 31,895,216 4,764,934 (1,841,030)

- unrealised (1,888,868) (532,570) (47,838) 399,408

37,019,740 31,362,646 4,717,096 (1,441,622)

Less: Consolidation adjustments (17,694,958) (13,732,715) 0 0

Total retained profits as per statements of financial position 19,324,782 17,629,931 4,717,096 (1,441,622)

The disclosure of realised and unrealised retained profits/ (accumulated losses) above is solely for compliance with the directive issued by Bursa Malaysia Securities Berhad and should not be used for any other purpose.



Share Buy-back Statement

1. DISCLAIMER STATEMENT

Bursa Malaysia Securities Berhad (“Bursa Securities”) has not perused this Share Buy-back Statement (“Statement”) prior to its issuance, takes no responsibility for the contents of the Statement, makes no representation as to its accuracy or completeness and expressly disclaims any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of the Statement.

2. RATIONALE FOR THE PROPOSED RENEWAL OF AUTHORITY TO LNG RESOURCES BERHAD (“LNGRES” OR “THE COMPANY”) TO PURCHASE UP TO TEN PERCENT (10%) OF THE TOTAL NUMBER OF ISSUED SHARES OF LNGRES (“PROPOSED RENEWAL OF SHARE BUY-BACK MANDATE”)

The Proposed Renewal of Share Buy-back Mandate, if exercised, will enable the Company to utilise its financial resources not immediately required for use, to purchase its own Shares. The Proposed Renewal of Share Buy-back Mandate may enhance the Earnings per Share (“EPS”) which may have a positive impact on the market price of LNGRES Shares. Other potential advantages of the Proposed Renewal of Share Buy-back Mandate to the Company and its shareholders are as follows:-

(a) To allow the Company to take preventive measures against speculation particularly when LNGRES Shares are undervalued which would in turn stabilise the market price of LNGRES Shares and hence, enhance investors’ confidence;

(b) To allow the Company flexibility in achieving the desired capital structure, in terms of the debt and equity composition, and the size of equity; and

(c) The Shares purchased pursuant to the Proposed Renewal of Share Buy-back Mandate (“Purchased Shares”) may be held as treasury shares and distributed to shareholders as dividends and/or resold in the open market with the intention of realising a potential capital gain if the Purchased Shares are resold at price(s) higher than their purchase price(s).

3. RETAINED PROFITS

Based on the audited financial statements of LNGRES as at 31 March 2017, the retained profits of the Company stood at RM4,717,096.

4. SOURCE OF FUNDING

The Proposed Renewal of Share Buy-back Mandate will be funded by internally generated funds and/or external borrowings. The amount of internally generated funds and/or external borrowings to be utilised will only be determined later depending on the availability of internally generated funds and bank borrowings at the time of the purchase(s), actual number of LNGRES Shares to be purchased and other cost factors.

In the event external borrowings are used for the purchase of LNGRES Shares, the Board will ensure that the Company has the capability to repay the borrowings and that such repayment will not have a material effect on the Company’s cash flow. Any funds utilised by LNGRES for the Proposed Renewal of Share Buy-back Mandate will consequentially reduce the resources available to LNGRES for its operations by a corresponding amount for shares bought back.

5. INTERESTS OF DIRECTORS AND SUBSTANTIAL SHAREHOLDERS AND PERSONS CONNECTED TO THEM

Save for the inadvertent increase in the percentage shareholdings and/or voting rights of the shareholders in the Company as a consequence of the Proposed Renewal of Share Buy-back Mandate, none of the Directors and Substantial Shareholders of LNGRES nor persons connected to them has any interest, direct or indirect, in the Proposed Renewal of Share Buy-back Mandate and, if any, the resale of the treasury shares.


5. INTERESTS OF DIRECTORS AND SUBSTANTIAL SHAREHOLDERS AND PERSONS CONNECTED TO THEM (cont'd)

Based on the Register of Directors’ Shareholdings and the Register of Substantial Shareholders of LNGRES as at 30 June 2017, the effects of the Proposed Renewal of Share Buy-back Mandate on the shareholdings of the Directors and Substantial Shareholders of LNGRES are as follows:-

Minimum Scenario: Assuming none of the ESOS Options are exercised and LNGRES implements the Proposed Renewal

of Share Buy-back Mandate in full.

Directors’ Shareholdings

Directors

Before the Proposed Renewal of Share Buy-back Mandate

After the Proposed Renewal of Share Buy-back Mandate

Direct Indirect Direct Indirect

No. of shares

% of share

capital (a)

No. of shares

% of share

capital (a)

No. of shares

% of share

capital(b)

No. of shares

% of share

capital(b)

YBhg Dato’ (Dr) Pahamin Ab Rajab 12,000,000 4.96 - - 12,000,000 5.51 - -

Yong Chan Cheah 12,924,979 5.34 45,600,000^ 18.84 12,924,979 5.93 45,600,000^ 20.94

Yong Swee Chuan 12,924,978 5.34 45,600,000^ 18.84 12,924,978 5.93 45,600,000^ 20.94

Low Hee Chung - - - - - - - -

Gor Siew Yeng - - - - - - - -

Chuah Poay Ngee - - - - - - - -

Substantial Shareholders’ Shareholdings

Substantial Shareholders




No. of shares

% of share

capital (a)

No. of shares

% of share

capital (a)

No. of shares

% of share

capital(b)

No. of shares

% of share

capital(b)

Indowang Sdn Bhd 45,600,000 18.84 - - 45,600,000 20.94 - -

Musharaka Tech Venture Sdn Bhd 25,323,956 10.46 - - 25,323,956 11.63 - -

Yong Chan Cheah 12,924,979 5.34 45,600,000^ 18.84 12,924,979 5.93 45,600,000^ 20.94

Yong Swee Chuan 12,924,978 5.34 45,600,000^ 18.84 12,924,978 5.93 45,600,000^ 20.94

Share Buy-back Statement (cont’d)


5. INTERESTS OF DIRECTORS AND SUBSTANTIAL SHAREHOLDERS AND PERSONS CONNECTED TO THEM (cont'd)

Maximum Scenario: Assuming full exercise of the 72,598,400 ESOS Options (being 30% of the total number of issued shares of LNGRES) and LNGRES implements the Proposed Renewal of Share Buy-back Mandate in full.

Directors’ Shareholdings

Directors




No. of shares

% of share

capital (c)

No. of shares

% of share

capital (c)

No. of shares

% of share

capital(d)

No. of shares

% of share

capital(d)

YBhg Dato’ (Dr) Pahamin Ab Rajab 17,000,000 5.40 - - 17,000,000 6.00 - -

Yong Chan Cheah 20,184,779 6.42 45,600,000^ 14.49 20,184,779 7.13 45,600,000^ 16.11

Yong Swee Chuan 20,184,778 6.42 45,600,000^ 14.49 20,184,778 7.13 45,600,000^ 16.11

Low Hee Chung 2,000,000 0.64 - - 2,000,000 0.71 - -

Gor Siew Yeng 1,500,000 0.48 - - 1,500,000 0.53 - -

Chuah Poay Ngee - - - - - - - -

Substantial Shareholders’ Shareholdings

Substantial Shareholders




No. of shares

% of share

capital (c)

No. of shares

% of share

capital (c)

No. of shares

% of share

capital(d)

No. of shares

% of share

capital(d)

Indowang Sdn Bhd 45,600,000 14.49 - - 45,600,000 16.11 - -

Musharaka Tech Venture Sdn Bhd 25,323,956 8.05 - - 25,323,956 8.94 - -

Yong Chan Cheah 20,184,779 6.42 45,600,000^ 14.49 20,184,779 7.13 45,600,000^ 16.11

Yong Swee Chuan 20,184,778 6.42 45,600,000^ 14.49 20,184,778 7.13 45,600,000^ 16.11

Notes:(a) Based on existing total number of issued shares of 241,994,985 Ordinary Shares. (b) Based on the total number of issued shares of 217,795,487 Ordinary Shares without exercising of ESOS Options

and Proposed Share Buy-Back is carried out in full and all the shares purchased are held as treasury shares. (c) Based on the total number of issued shares of 314,593,385 Ordinary Shares, with the assumption that the Directors

fully exercised their ESOS Options:- • YBhg Dato’ (Dr) Pahamin Ab Rajab - 5,000,000 ESOS Options • Yong Chan Cheah - 7,259,800 ESOS Options • Yong Swee Chuan - 7,259,800 ESOS Options • Low Hee Chung - 2,000,000 ESOS Options • Gor Siew Yeng - 1,500,000 ESOS Options

(d) Based on total number of issued shares of 283,134,047 Ordinary Shares, after the full exercised of ESOS Options and the Proposed Share Buy-Back is carried out in full and all the shares purchased are held as treasury shares.

^ Deemed Interested by virtue of his substantial shareholdings in Indowang Sdn. Bhd.



6. POTENTIAL ADVANTAGES AND DISADVANTAGES OF THE PROPOSED RENEWAL OF SHARE BUY-BACK MANDATE

6.1 Potential Advantages of the Proposed Renewal of Share Buy-back Mandate

The potential advantages of the Proposed Renewal of Share Buy-back Mandate are as set out in Section 2 of the Statement.

6.2 Potential disadvantages of the Proposed Renewal of Share Buy-back Mandate

The potential disadvantages of the Proposed Renewal of Share Buy-back Mandate to the Company and its shareholders are as follows:-

(a) The Proposed Renewal of Share Buy-back Mandate will reduce the financial resources of the Group and may result in the Group foregoing interest income and/or better investment opportunities that may emerge in the future; and

(b) It would also result in the reduction of financial resources available for distribution to shareholders in the immediate future.

Nevertheless, the Board is of the view that the Proposed Renewal of Share Buy-back Mandate is not expected to have any potential material disadvantages to the shareholders of the Company as well as the Group as it will be implemented only after careful consideration of the financial resources of the Group and the resultant impact on the shareholders of the Company.

7. MATERIAL FINANCIAL EFFECTS OF THE PROPOSED RENEWAL OF SHARE BUY-BACK MANDATE

The material financial effects of the Proposed Renewal of Share Buy-back Mandate on the share capital, consolidated Net Tangible Assets (“NTA”), working capital, earnings, dividends and the substantial shareholders’ shareholdings in LNGRES (assuming that the Company purchases up to a maximum of 31,459,338 LNGRES Shares representing approximately ten percent (10%) of the enlarged total number of issued shares with the full exercised of ESOS) are set out below:

7.1 Share Capital

The effects of the Proposed Renewal of Share Buy-back Mandate on the total number of issued shares of LNGRES are as follows:

Minimum Scenario: Assuming none of the ESOS are exercised and LNGRES implements the Proposed Renewal of Share Buy-back Mandate in full.

No of shares

As at 30 June 2017 241,994,985

Proposed Renewal of Share Buy-back Mandate (assuming all LNGRES Shares purchased are fully cancelled) (24,199,498)

Total number of issued shares after the Proposed Renewal of Share Buy-back Mandate 217,795,487



7. MATERIAL FINANCIAL EFFECTS OF THE PROPOSED RENEWAL OF SHARE BUY-BACK MANDATE (cont'd)

7.1 Share Capital (cont'd)

Maximum Scenario: Assuming full exercise of the 72,598,400 ESOS Options (being 30% of the total number of issued shares of LNGRES) and LNGRES implements the Proposed Renewal of Share Buy-back Mandate in full.

No of shares

As at 30 June 2017 241,994,985

Shares to be issued pursuant to the ESOS (assuming full exercise of the ESOS Option (being 30% of the total number of issued shares of LNGRES) 72,598,400

Enlarged total number of issued shares 314,593,385

Proposed Renewal of Share Buy-back Mandate (assuming all LNGRES Shares purchased are fully cancelled) (31,459,338)

Resultant total number of issued shares 283,134,047

The Proposed Renewal of Share Buy-back Mandate will not have any effect on the total number of issued shares of the Company as Shares purchased are to be retained as treasury shares. However, while the Purchased Shares are held as treasury shares, Companies Act 2016 states that the rights attached to them as to voting, dividends and participation in other distributions or otherwise are suspended and the treasury shares shall not be taken into account in calculating the number or percentage of shares or of a class of shares for any purposes including without limiting the generality of this provision, the provisions of any law or requirements of the articles of association of the Company or the listing rules of a stock exchange on substantial shareholding, takeovers, notices, the requisitioning of meetings, the quorum for a meeting and the result of a vote on a resolution at a meeting.

7.2 NTA

The effects of the Proposed Renewal of Share Buy-back Mandate on the consolidated NTA of the Group would depend on the purchase price and number of Purchased Shares, the effective funding cost to LNGRES to finance the Purchased Shares or any loss in interest income to LNGRES.

The Proposed Renewal of Share Buy-back Mandate will reduce the consolidated NTA per Share at the time of purchase if the purchase price exceeds the consolidated NTA per Share and conversely will increase the consolidated NTA per Share at the time of purchase if the purchase price is less than the consolidated NTA per Share.

Should the Purchased Shares be resold, the consolidated NTA will increase if the Company realises a capital gain from the resale, and vice-versa. However, the quantum of the increase in NTA will depend on the selling prices of the Purchased Shares and the number of Purchased Shares resold.

7.3 Working Capital

The Proposed Renewal of Share Buy-back Mandate is likely to reduce the working capital of the Group, the quantum of which would depend on the purchase price of the Purchased Shares, the number of Purchased Shares and any associated costs incurred in making the purchase. The working capital of the Group will increase when the Company sell the Purchased Shares. The quantum of the increase in working capital will depend on the selling price of the Purchased Shares and the number of Purchased Shares resold.



7. MATERIAL FINANCIAL EFFECTS OF THE PROPOSED RENEWAL OF SHARE BUY-BACK MANDATE (cont'd)

7.4 Earnings

The effects of the Proposed Renewal of Share Buy-back Mandate on the earnings of the Group will depend on, inter alia, the purchase prices of the Shares, the number of Shares purchased, the effective funding cost to LNGRES to finance the purchase of Shares or any loss in interest income to the Group and the proposed treatment of the Purchased Shares.

If the Purchased Shares are to be retained as treasury shares or cancelled subsequently, the number of Shares applied in the computation of the EPS will be reduced, and accordingly, all other things being equal, the Proposed Renewal of Share Buy-back Mandate will have a positive impact on the EPS of the Group.

In the event the Purchased Shares are resold subsequently, depending on the price at which the said Shares are resold, the Proposed Renewal of Share Buy-back Mandate may have a positive effect on the EPS of the Group if there is a gain on the disposal and vice-versa.

7.5 Dividends

Assuming the Proposed Renewal of Share Buy-back Mandate is implemented in full, dividends would be paid on the remaining total number of issued shares of LNGRES (excluding the Shares already purchased). The Proposed Renewal of Share Buy-back Mandate may have an impact on the Company’s dividend policy for the financial year ending 31 March 2018 as it would reduce the cash available which may otherwise be used for dividend payments. Nonetheless, the treasury shares purchased may be distributed as dividends to shareholders of the Company, if the Company so decides.

Any dividends to be declared by LNGRES in the future would depend on, inter-alia, the profitability and cash flow position of the Group.

7.6 Substantial Shareholders

Shares bought back by the Company under the Proposed Renewal of Share Buy-back Mandate that are retained as treasury shares will result in a proportionate increase in the percentage shareholdings of the Substantial Shareholders in the Company. Please refer to Section 5 of this Statement for further details.

8. IMPLICATIONS OF THE PROPOSED SHARE BUY-BACK RELATING TO THE MALAYSIAN CODE ON TAKE-OVERS AND MERGERS, 2016 (THE “CODE”)

Based on the Company’s total number of issued Shares and the current shareholdings of the substantial shareholders and/or parties acting in concert as at 30 June 2017, none of the substantial shareholders and/or parties acting in concert with them will be required to make a mandatory general offer in the event of the implementation of Proposed Share Buy-Back in full.

LNGRES has no intention for the Proposed Share Buy-Back to trigger the obligation to undertake a mandatory general offer under the Code by any of its substantial shareholders and/or parties acting in concert with them, the Board will ensure that only such number of LNGRES Shares are purchased, retained as Treasury Shares or cancelled in the manner that the Code will not be triggered.

The Board is aware of the requirements of the Code and will be mindful of the requirements when making any purchase of LNGRES Shares pursuant to the Proposed Share Buy-Back.



9. PURCHASES MADE BY THE COMPANY OF ITS OWN SHARES IN THE LAST FINANCIAL YEAR

There was no share buy-back by the Company during the financial period ended 31 March 2017.

10. PUBLIC SHAREHOLDING SPREAD

As at 30 June 2017, the public shareholding spread of the Company was approximately 54.39%. In this regard, the Board undertakes to purchase Shares only to the extent that the public shareholding spread of LNGRES shall not fall below 25% of the total number of issued shares of the Company (excluding treasury shares) at all times pursuant to the Proposed Renewal of Share Buy-back Mandate, in accordance with Para 8.02(1) and 12.14 of the ACE Market Listing Requirements of Bursa Malaysia Securities Berhad.

11. DIRECTORS’ STATEMENT

After taking into consideration all relevant factors, the Board is of the opinion that the Proposed Renewal of Share Buy-back Mandate described above is in the best interest of the Company.

12. DIRECTORS’ RECOMMENDATION

The Board recommends that you vote in favour of the ordinary resolution to be tabled at the forthcoming Fifteen Annual General Meeting to give effect to the Proposed Renewal of Share Buy-back Mandate.

13. FURTHER INFORMATION

There is no other information concerning the Proposed Renewal of Share Buy-back Mandate as shareholders and other professional advisers would reasonably require and expect to find in the Statement for the purpose of making informed assessment as to the merits of approving the Proposed Renewal of Share Buy-back Mandate and the extent of the risks involved in doing so.



Location DescriptionArea

(sq.m.)Existing

Use

Tenure / Age of

Building

Carrying Amount

as at 31.03.2017

RM’000

Date of Acquisition/Revaluation

Lot Lain-lain PTK No. 4, HSD No. 1103 Mukim of Kesang, District of Ledang, State of Johor.

Bearing postal address:K27, Jalan Perindustrian, Kawasan Perindustrian Tanjung Agas, 84000 Muar, Johor Darul Takzim

Industrial land erected with factory cum office buildings and ancillary structures

24,281 Factory / Office

Leasehold for 60 years expiring on

31.05.2035 / 23 years

7,930 11.10.2006

H.S.(D) 55914, P.T. 907, Mukim 13, Daerah Seberang Perai Tengah

Bearing postal address:Plot 171, Mukim 13, Jalan Perindustrian Bukit Minyak, Kawasan Perindustrian Bukit Minyak, 14000 Bukit Mertajam, Seberang Perai Tengah, Pulau Pinang

Industrial land erected with factory cum office building and ancillary structures

4,063 Factory / Office

Leasehold for 60 years expiring on

23.04.2068 / 8 years

4,119 18.07.2011

Lot No. 4787 held under H.S.(D) 49069, Mukim 13, Seberang Perai Tengah

Bearing postal address:17, Lorong Seri Juru 1, Taman Seri Juru, 14100, Simpang Ampat

Double storey semi-detached house

232 Employee hostel

Freehold / 13 years 285 16.06.2010

Lot No. 5491, Mukim 13, Seberang Perai Tengah, Pulau Pinang

Bearing postal address:35, Lorong Seri Juru 3, Taman Seri Juru, 14100, Simpang Ampat

Double storey semi-detached house

232 Employee hostel

Freehold / 13 years 292 30.11.2011

List of Propertiesas at 31 March 2017


List of Properties (cont’d)as at 31 March 2017

Location DescriptionArea

(sq.m.)Existing

Use

Tenure / Age of

Building

Carrying Amount

as at 31.03.2017

RM’000

Date of Acquisition/Revaluation

H.S.(D) 35594, Lot 7132, Mukim 14, Seberang Perai Tengah, Pulau Pinang

Bearing postal address:2026, Jalan Bukit Minyak, Kawasan Industri Ringan Asas Jaya, 14000, Bukit Mertajam, Pulau Pinang

Three storey light industry building

130 Factory Freehold / 5 years 334 24.05.2011

H.S.(D) 35593, Lot 7131, Mukim 14, Seberang Perai Tengah, Pulau Pinang

Bearing postal address:2027, Jalan Bukit Minyak, Kawasan Industri Ringan Asas Jaya, 14000, Bukit Mertajam, Pulau Pinang

Three storey light industry building

130 Factory Freehold / 5 years 334 27.05.2011


Analysis of Shareholdingsas at 30 June 2017

Total Number of Issued Sharesl 241,994,985Class of Shares Ordinary shares Voting Right One vote per ordinary shareNumber of Shareholders 2,155

DISTRIBUTION OF SHAREHOLDINGS

No. of Shareholders

% of Shareholders

No. of Shares Held

% of Issued Share Capital

Less than 100 shares 26 1.21 1,302 0.00

100 to 1,000 shares 95 4.41 45,940 0.02

1,001 to 10,000 shares 787 36.52 4,950,230 2.05

10,001 to 100,000 shares 1,033 47.94 40,499,160 16.74

100,001 to 12,099,748 shares 210 9.74 99,724,440 41.21

12,099,749 shares and above 4 0.19 96,773,913 39.99

TOTAL 2,155 100.00 241,994,985 100.00

LIST OF TOP THIRTY (30) LARGEST SECURITIES ACCOUNT HOLDERS AS AT 30 JUNE 2017

No. Name of Shareholders No. of Shares Held %

1. Indowang Sdn. Bhd. 45,600,000 18.84

2. Musharaka Tech Venture Sdn. Bhd. 25,323,956 10.46

3. Yong Chan Cheah 12,924,979 5.34

4. Yong Swee Chuan 12,924,978 5.34

5. YBhg Dato’ (Dr) Pahamin Ab Rajab 12,000,000 4.96

6. Tan Ching Ling 8,770,000 3.62

7. Eastbay Capital Sdn. Bhd. 8,420,100 3.48

8. Law Kok Wah 2,900,000 1.20

9. Maybank Nominees (Tempatan) Sdn. Bhd.Qualifier: Pledged securities account for Gan Tee Jin 2,300,900 0.95

10. Yayasan Kelantan Darulnaim 1,635,000 0.68

11. Gan Joe Yee 1,600,000 0.66

12. Goh Huey Jiuan 1,222,100 0.51

13. Chong Siew Pin 1,127,200 0.47

14. Public Nominees (Tempatan) Sdn. Bhd. Qualifier: Pledged securities account for Chuah Swee Huat (E-KLC) 1,100,000 0.45

15. Chew Chen Hin 1,088,000 0.45

16. Tan Ka Lian 1,038,700 0.43

17. RHB Capital Nominees (Tempatan) Sdn. Bhd.Qualifier: Pledged securities account for Cheong Weng Teong (CEB) 1,020,000 0.42

18. Hii Yu Guan 1,000,000 0.41

19. Lim Ngak Ee 1,000,000 0.41

20. Amsec Nominees (Tempatan) Sdn. Bhd.Qualifier: Pledged securities account for Shia Chee Fong 970,000 0.40


Analysis of Shareholdings (cont’d)as at 30 June 2017

LIST OF TOP THIRTY (30) LARGEST SECURITIES ACCOUNT HOLDERS AS AT 30 JUNE 2017 (cont'd)

No. Name of Shareholders No. of Shares Held %

21. Ang Bon Beng 953,500 0.39

22. Chan Chee Hong 900,000 0.37

23. Public Nominees (Tempatan) Sdn. Bhd.Qualifier: Pledged securities account for Yong Shu Kong (E-KKU) 900,000 0.37

24. Maybank Securities Nominees (Tempatan) Sdn. Bhd.Qualifier: Pledged securities account for Cheong Weng Teong (MARGIN) 850,000 0.35

25. Sia Lai Seng 837,100 0.35

26. Tay Pau Huat 800,000 0.33

27. Yong Tan Heang 789,900 0.33

28. Chang Meng Chien 752,000 0.31

29. Maybank Securities Nominees (Tempatan) Sdn. Bhd.Qualifier: Pledged securities account for Tan Lih Pyng (Margin ROH3) 750,000 0.31

30. Teoh Chea Yin 672,000 0.28

LIST OF SUBSTANTIAL SHAREHOLDERS AS AT 30 JUNE 2017

No. Name Direct No. of Shares

Held

% IndirectNo. of Shares

Held

%

1. Indowang Sdn. Bhd. 45,600,000 18.84 - -

2. Musharaka Tech Venture Sdn. Bhd. 25,323,956 10.46 - -

3. Yong Chan Cheah 12,924,979 5.34 45,600,000^ 18.84

4. Yong Swee Chuan 12,924,978 5.34 45,600,000^ 18.84

^ Deemed interested by virtue of his substantial shareholdings in Indowang Sdn. Bhd.

DIRECTORS’ SHAREHOLDINGS AS AT 30 JUNE 2017

No. Name Direct No. of Shares

Held

% IndirectNo. of Shares

Held

%

1. YBhg Dato’ (Dr) Pahamin Ab Rajab 12,000,000 4.96 - -

2. Yong Chan Cheah 12,924,979 5.34 45,600,000^ 18.84

3. Yong Swee Chuan 12,924,978 5.34 45,600,000^ 18.84

4. Low Hee Chung - - - -

5. Gor Siew Yeng - - - -

6. Chuah Poay Ngee - - - -

^ Deemed interested by virtue of his substantial shareholdings in Indowang Sdn. Bhd.


Notice of Annual General Meeting

NOTICE IS HEREBY GIVEN that the Fifteenth Annual General Meeting of the Company will be held at Iconic 5, Level 7, The Iconic Hotel, 71, Jalan Icon City, Icon City, Bukit Mertajam, 14000 Penang on Thursday, 24 August 2017 at 11.00 a.m.

AGENDA

1. To receive the Audited Financial Statements for the financial period from 1 January 2016 to 31 March 2017 together with the Reports of the Directors and Auditors thereon. (Please refer to Note A)

2. To approve the payment of Directors’ Fees of up to RM291,500/- for the period from 1 January 2017 until the next Annual General Meeting of the Company. (Ordinary Resolution 1)

3. To approve the Directors’ benefits (excluding Directors’ Fee) payable of up to RM31,500/- for the period from 1 January 2017 until the next Annual General Meeting of the Company. (Ordinary Resolution 2)

4. To re-elect the following Directors retiring under the respective provisions of the Articles of Association of the Company, and who being eligible, offered themselves for re-election:-

a) Mr. Yong Swee Chuan (Article 81) (Ordinary Resolution 3)b) Ms. Gor Siew Yeng (Article 81) (Ordinary Resolution 4)c) Ms. Chuah Poay Ngee (Article 84) (Ordinary Resolution 5)

5. To re-appoint Messrs. PricewaterhouseCoopers as Auditors of the Company for the ensuing year and to authorize the Directors to fix their remuneration. (Ordinary Resolution 6)

AS SPECIAL BUSINESS

6. To consider and, if thought fit, to pass the following resolutions as ordinary resolutions:-

Ordinary Resolutions

a) Re-appointment of Director “That YBhg Dato’ (Dr) Pahamin Ab Rajab be re-appointed as Director of the Company to continue in office as

Director of the Company.” (Ordinary Resolution 7)

b) Authority to Issue Shares “That pursuant to Companies Act 2016 and approvals from the Bursa Malaysia Securities Berhad (“Bursa Securities”)

and other relevant governmental/regulatory authorities where such authority shall be necessary, the Board of Directors be authorised to issue and allot shares in the Company from time to time until the conclusion of the next Annual General Meeting and upon such terms and conditions and for such purposes as the Board of Directors may, in its absolute discretion, deem fit provided that the aggregate number of shares to be issued shall not exceed ten per centum (10%) of the total number of issued shares (excluding treasury shares) of the Company for the time being, and that the Board of Directors be empowered to obtain the approval for the listing of and quotation for the additional shares so issued on the Bursa Securities.” (Ordinary Resolution 8)


Notice of Annual General Meeting (cont’d)

c) Renewal of Authority to purchase its Own Shares

“THAT subject always to Companies Act 2016 (“the Act”), the Memorandum and Articles of Association of the Company, the ACE Market Listing Requirements of Bursa Securities and all other applicable laws, regulations and guidelines for the time in force, the Directors of the Company be and are hereby given full authority, to seek shareholders’ approval for the renewal of authority for the Company to allocate an amount not exceeding the total available retained profits of the Company for the purpose of and to purchase such amount of ordinary shares in the Company as may be determined by the Directors of the Company from time to time through Bursa Securities as the Directors may deem fit and in the best interest of the Company provided that the aggregate number of shares to be purchased and/or held pursuant to this resolution does not exceed ten percent (10%) of the total issued shares of the Company at any point in time;

AND THAT upon the purchase by the Company of its own shares, the Directors are authorized to retain such shares so purchased as treasury shares or cancel the shares so purchased or retain part of the shares so purchased as treasury shares and cancel the remainder. The Directors are further authorized to distribute the treasury shares as dividends to the shareholders of the Company and/or resell the shares on Bursa Securities in accordance with the relevant rules of Bursa Securities or subsequently cancel the treasury shares or any combination thereof;

AND THAT such approval and authorisation shall only continue to be in force until:-(i) the conclusion of the first Annual General Meeting of the Company following the general meeting at which

such resolution was passed at which time it shall lapse unless by ordinary resolution passed at that meeting, the authority is renewed, either unconditionally or subject to conditions; or

(ii) the expiration of the period within which the next Annual General Meeting after that date is required by law to be held; or

(iii) revoked or varied by ordinary resolution passed by the shareholders of the Company in a general meeting;

whichever occurs first;

AND FURTHER THAT the Directors of the Company be authorised to do all such acts and things (including, without limitation executing all such documents as may be required) as they may consider expedient or necessary to give full effect to this mandate.” (Ordinary Resolution 9)

7. To transact any other business of which due notice shall have been given in accordance with the Companies Act 2016.

BY ORDER OF THE BOARDHow Wee Ling (MAICSA 7033850)Ooi Ean Hoon (MAICSA 7057078)Secretaries

PenangDate : 31 July 2017



Notes:-

A. This Agenda item is meant for discussion only as the provision of Section 340(1)(a) of the Companies Act 2016 does not require a formal approval of the shareholders and hence, is not put forward for voting.

B. For the purpose of determining a member who shall be entitled to attend and vote at this Fifteenth Annual General Meeting, the Company shall be requesting the Record of Depositors as at 17 August 2017. Only a depositor whose name appears on the Record of Depositors as at 17 August 2017 shall be entitled to attend, speak and vote at the said meeting or appoint proxy(ies) to attend, speak and vote on his/her behalf.

Proxy1. A member entitled to attend and vote at the Meeting (except an Exempt Authorised Nominee) is entitled to appoint

up to two (2) proxies to attend and vote on a show of hands or on a poll in his stead. A proxy may but need not be a member of the Company. Where a member appoints more than one (1) proxy, the appointments shall be invalid unless he specifies the proportion of his holdings to be represented by each proxy.

2. Where a member of the Company is an Exempt Authorised Nominee which holds ordinary shares in the Company for multiple beneficial owners in one securities account (“omnibus account”), there is no limit to the number of proxies which the Exempt Authorised Nominee may appoint in respect of each omnibus account it holds.

3. The instrument appointing a proxy shall be in writing under the hand of the appointor or his attorney duly authorised in writing or, if the appointor is a corporation, either under its common seal or under the hand of an officer or attorney duly authorised.

4. The instrument appointing a proxy must be deposited at the Registered Office of the Company at 57-G Persiaran Bayan Indah, Bayan Bay, Sungai Nibong, 11900 Penang not less than twenty-four (24) hours before the time set for holding of the Meeting or at any adjournment thereof.

Explanation Notes on Special Business:-

5. Re-appointment of Director

At the Fourteenth Annual General Meeting of the Company held on 26 May 2016, YBhg Dato’ (Dr) Pahamin Ab Rajab who is over seventy years of age was re-appointed pursuant to Section 129(6) of the Companies Act, 1965* to hold office until the conclusion of the Fifteenth Annual General Meeting of the Company.

The proposed Resolution No. 7 (Item 6(a)), if passed, will enable the above Directors to continue in office and he shall subject to retirement by rotation in accordance with the Company’s Articles of Association.

The Nominating Committee has assessed the above Director and recommended for his re-appointment which has been duly endorsed by the Board of Directors of the Company.

* Companies Act, 1965 was repealed on 31 January 2017 following the coming into operation the Companies Act 2016. Pursuant to the Companies Act 2016, there is no maximum age limit for directors.



6. Authority to Issue Shares The proposed Ordinary Resolution No. 8 [Item 6(b)], if passed, will grant a renewed general mandate (Mandate 2017)

and empower the Directors of the Company to issue and allot shares up to an amount not exceeding in total ten percent (10%) of the issued share capital of the Company from time to time and for such purposes as the Directors consider would be in the interest of the Company. In order to avoid any delay and costs involved in convening a general meeting, it is thus appropriate to seek shareholders’ approval. This authority will, unless revoked or varied by the Company in general meeting, expire at the next Annual General Meeting of the Company.

The Mandate 2017 will provide flexibility to the Company for allotment of shares for any possible fund raising activities, including but not limited for further placing of shares, for the purpose of funding future investment(s), acquisition(s) and/or working capital.

As at the date of this Notice, the Company did not issue any shares pursuant to the mandate granted to the Directors at the Fourteenth Annual General Meeting. The Company did not issue any share pursuant to the mandate granted because there was no investment, acquisition or working capital that required fund raising activity.

7. Renewal of Authority to purchase its Own Shares

The proposed Ordinary Resolution No. 9 [Item 6(c)], if passed, will give the Company the authority to purchase its own ordinary shares of up to ten percent (10%) of the total number of issued shares of the Company for the time being. This authority, unless renewed or revoked or varied by the Company at a general meeting, will expire at the conclusion of the next Annual General Meeting of the Company or the expiration of the period within which the next Annual General Meeting after that date is required by law to be held, whichever occurs first. For further information on the Renewal of Authority to purchase its Own Shares, please refer to the Share Buy-back Statement set out in this Annual Report 2017.


Statement Accompanying Notice of Annual General Meeting

Pursuant to Rule 8.29(2) of the ACE Market Listing Requirements of Bursa Malaysia Securities Berhad

Details of individuals who are standing for election as directors (excluding directors standing for a re-election)No individual is seeking election as a director at the Fifteenth Annual General Meeting of the Company.


This page is intentionally left blank.

Annual Report 2017 | LNG Resources Berhad (582043-K)

Proxy Form

I/We, of (Company No./NRIC No. )

being a Member of the above Company hereby appoint (Proxy 1) of (NRIC No. ) and*/or failing him* (Proxy 2), of (NRIC No. )and*/or failing him*, the Chairman of the Meeting, as my/our proxy(ies), to vote for me/us on my/our behalf at the FIFTEENTH ANNUAL GENERAL MEETING of the Company to be held at Iconic 5, Level 7, The Iconic Hotel, 71, Jalan Icon City, Icon City, Bukit Mertajam, 14000 Penang on Thursday, 24 August 2017 at 11.00 a.m. and at any adjournment thereof.

The proportions of my/our holdings to be represented by my/our proxy(ies) are as follows:-

Proxy 1 - %

Proxy 2 - %

100%

* Strike out whichever is inapplicable

I/We hereby indicate with an “X” in the spaces provided how I/we wish my/our votes to be cast. (Unless otherwise instructed, the proxy may vote, as he thinks fit)

Ordinary Resolutions For Against

1. To approve the payment of Directors’ Fees of up to RM291,500/- for the period from 1 January 2017 until the next Annual General Meeting of the Company.

2. To approve the Directors’ benefits (excluding Directors’ Fee) payable of up to RM31,500/- for the period from 1 January 2017 until the next Annual General Meeting of the Company.

To re-elect the following Directors retiring under the respective provisions of the Articles of Association of the Company, and who being eligible, offered themselves for re-election:-

3. Mr. Yong Swee Chuan (Article 81)

4. Ms. Gor Siew Yeng (Article 81)

5. Ms. Chuah Poay Ngee (Article 84)

6. To re-appoint Messrs. PricewaterhouseCoopers as Auditors of the Company for the ensuing year and to authorize the Di-rectors to fix their remuneration.

Special BusinessOrdinary Resolutions

7. To re-appoint YBhg Dato’ (Dr) Pahamin Ab Rajab to continue in office as Director of the Company.

8. Authority to issue shares pursuant to the Companies Act 2016.

9. To approve the proposed renewal of authority to purchase up to ten percent (10%) of its own shares in the total number of issued shares of the Company.

Signature of Member: …………………………………..

Signed this on the …………… day of …..............………………..…, 2017

Notes:-

A. For the purpose of determining a member who shall be entitled to attend and vote at this Fifteenth Annual General Meeting, the Company shall be requesting the Record of Depositors as at 17 August 2017. Only a depositor whose name appears on the Record of Depositors as at 17 August 2017 shall be entitled to attend, speak and vote at the said meeting or appoint proxy(ies) to attend, speak and vote on his/her behalf.

Proxy

1. A member entitled to attend and vote at the Meeting (except an Exempt Authorised Nominee) is entitled to appoint up to two (2) proxies to attend and vote on a show of hands or on a poll in his stead. A proxy may but need not be a member of the Company. Where a member appoints more than one (1) proxy, the appointments shall be invalid unless he specifies the proportion of his holdings to be represented by each proxy.

2. Where a member of the Company is an Exempt Authorised Nominee which holds ordinary shares in the Company for multiple beneficial owners in one securities account (“omnibus account”), there is no limit to the number of proxies which the Exempt Authorised Nominee may appoint in respect of each omnibus account it holds.

3. The instrument appointing a proxy shall be in writing under the hand of the appointor or his attorney duly authorised in writing or, if the appointor is a corporation, either under its common seal or under the hand of an officer or attorney duly authorised.

4. The instrument appointing a proxy must be deposited at the Registered Office of the Company at 57-G Persiaran Bayan Indah, Bayan Bay, Sungai Nibong, 11900 Penang not less than twenty-four (24) hours before the time set for holding of the Meeting or at any adjournment thereof.

No. of ordinary shares held

Fold this flap for sealing

Then fold here

THE COMPANY SECRETARIES

LNG RESOURCES BERHAD (582043-K)

57-G Persiaran Bayan IndahBayan Bay, Sungai Nibong

11900 Penang

1st fold here

Affixstamp

LNG Resources Berhad (582043-K)

Suntech @ Penang Cybercity1-12B-20, Lintang Mayang Pasir 3,11950 Bayan Baru, Penang, Malaysia.

Tel : +604-645 8623Fax : +604-645 6623

http://www.lng-res.com

2 17 edaran precision industries sdn. bhd. golden city plastic sdn. bhd. edaran precision india...

Documents