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A n n u A l R e p o R t 2 0 1 8

New Beginn ing Greater Heights

Pasdec Holdings Berhad (“PASDEC”), based in Pahang, has been listed on the Main Board of Bursa Malaysia Securities Berhad (Stock Code: 6912) under the property counter since 27 October 1997. The State Government of Pahang (via Perbadanan Kemajuan Negeri Pahang) and Jasa Imani Sdn. Bhd. have major shareholdings in PASDEC.

As an investment holding company, PASDEC through its subsidiaries and associate companies is principally involved in property development, project management, civil and building construction, manufacturing of electrical wiring harness for the automotive industry in South Africa and renewable energy.

PASDEC welcomes new profitable business ventures and acquisitions to expand its investment portfolio.

ABOUT US

Towards an Excellent and Diversified Conglomerate

VISION

An Esteemed Organisation in the Property Sector and Diversification in Other Ventures Giving Best Return to Stakeholders

MISSION

23rdAnnual General Meeting of Pasdec Holdings Berhad

DATE:

Thursday, 4 July 2019

TIME:

10:30 am

VENUE:

Silk Ballroom, Level 3,The Zenith Hotel,

Jalan Putra Square 6, Putra Square, 25200 Kuantan,

Pahang Darul Makmur.

What’s Inside This ReportNEw fEATUrE IN THIS ANNUAl rEPorT

The digital version of Pasdec Holdings Berhad Annual Report 2018 is available at our website.

Go to www.pasdec.com.my or scan the QR code with your smartphone.

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CORPORATE02 Corporate Information

03 Corporate Structure

04 Group Financial Summary

05 Notice of Annual General Meeting

07 Statement Accompanying Notice of Annual General Meeting

08 Chairman’s Statement

12 Management Discussion and Analysis

16 Board of Directors

17 Directors’ Profile

22 Management Team

23 Key Senior Management Profile

25 Sustainability Statement

28 Corporate Governance Overview Statement

34 Nomination and Remuneration Committee Report

36 Audit Committee Report

39 Statement on Risk Management and Internal Control

42 Additional Disclosure Requirements

43 Directors’ Responsibility Statement

44 Analysis of Shareholdings

46 Analysis of Warrant Holdings

48 List of Properties

FINANCIAl STATEMENTS52 Directors’ Report

56 Statement by Directors

56 Statutory Declaration

57 Independent Auditors’ Report

61 Statements of Comprehensive Income

63 Statements of Financial Position

65 Statements of Changes in Equity

68 Statements of Cash Flows

70 Notes to the Financial Statements

ProXY forM

02

CORPORATE INFORMATION

YB DATo’ SrI DIrAjA HAjI ADNAN BIN HAjI YAAkoBChairman

YH DATo’ SrI TEw kIM THINGroup Managing Director

YH DATo’ SrI kAMArUDDIN BIN MoHAMMEDNon-Independent Non-Executive Director

YH DATo’ INDErA HAjI ABDUl rAHIM BIN MoHD AlINon-Independent Non-Executive Director

YH DATo’ Ir. Noor AzMI BIN jAAfArIndependent Non-Executive Director

YH DATo’ MAjID BIN MoHAMADIndependent Non-Executive Director

PUAN SHArINA BAHrINIndependent Non-Executive Director

MS. TEH SEw HoNgIndependent Non-Executive Director

Mr. TEw lIANg TzE(Alternate Director to YH Dato’ Sri Tew Kim Thin)

Note:1. YH Dato’ Majid bin Mohamad resigned as Director of the Company w.e.f. 30 April 2019 and ceased as member of Audit & Risk Management

Committee and Nomination & Remuneration Committee.2. Ms. Teh Sew Hong resigned as Director of the Company w.e.f. 30 April 2019 and ceased as member of Audit & Risk Management Committee.

wEBSITE

www.pasdec.com.my

SToCk EXCHANgE lISTINg

Main Market ofBursa Malaysia Securities BerhadStock name : PASDECStock code : 6912

rEgISTrAr

Securities Services (Holdings) Sdn. Bhd.Level 7, Menara MileniumJalan Damanlela,Pusat Bandar Damansara,Damansara Heights,50490 Kuala Lumpur.Telephone : 03-2084 9000 /

03-2094 9940Facsimile : 03-2095 0292Email : [email protected]

AUDITorS

Messrs. Hanafiah Raslan & MohamadPublic Accountants

PrINCIPAl BANkErS

CIMB Bank BerhadBank Islam Malaysia BerhadMBSB Bank BerhadRHB Bank Berhad

AUDIT & rISk MANAgEMENT CoMMITTEE

ChairmanPuan Sharina Bahrin

MembersYH Dato’ Ir. Noor Azmi bin jaafarYH Dato’ Majid bin MohamadMs. Teh Sew HongYH Dato’ Sri kamaruddin bin Mohammed

NoMINATIoN & rEMUNErATIoN CoMMITTEE

Chairman YH Dato’ Ir. Noor Azmi bin jaafar

MembersPuan Sharina BahrinYH Dato’ Majid bin MohamadYH Dato’ Sri kamaruddin bin Mohammed

CoMPANY SECrETArY

Miss Shakerah Enayetali

rEgISTErED offICE

Level 21, Menara Zenith, Jalan Putra Square 6,Putra Square, 25200 Kuantan,Pahang Darul Makmur.Telephone : 09-5133 888Facsimile : 09-5145 988

BOARD OFDIRECTORS

| Annual Report 2018

03

PASDEC HOLDINGS BERHAD

CORPORATE STRUCTURE

Pasdec Corporation Sdn. Bhd.

100%

Pasdec Resources SA Limited

100%

100%

100%

100%

97%

100%

100%

70%

51%

70%

40%

30%

20%

Pasdec Putra Sdn. Bhd.

Jasa Pasdec Sdn. Bhd.

Pasdec Trading Sdn. Bhd.

Pahang Aircraft Industries Sdn. Bhd.#

Pahang Off-Shore Sdn. Bhd.

Pasdec Cempaka Sdn. Bhd.

SBP Power Sdn. Bhd.#

Pahang Specialist Hospital Sdn. Bhd.

Prima Prai Sdn. Bhd.

100% Pasdec Land Sdn. Bhd.

100% Kuantan Tembeling Resort Sdn. Bhd.

100% Pasdec Mega Sdn. Bhd.

100%Sumbangan Sakti Sdn. Bhd.

100% Mutiara Pasdec Sdn. Bhd.

100% Pasdec Bina Sdn. Bhd.

70% Pasdec Pintas Sdn. Bhd.

100% GELNAS Sdn. Bhd.

51%Pasdec Engineering Sdn. Bhd.

50%Pasdec Technology Centre & Services Sdn. Bhd.

100% Deep Sea Thermal Solutions Sdn. Bhd.#

Femcotec Finance (Pty) Ltd.

Pasdec Automotive Technologies (Botswana) (Pty) Ltd.

Pasdec Automotive Technologies (Pty) Ltd.

Note:# In the process of striking-off.

04

Year Ended 31 December

2018 2017 2016 2015 2014

rM’000 rM’000 rM’000 rM’000 rM’000

Turnover 147,786 112,445 117,380 156,653 210,560

Profit/(Loss) After Taxation (21,736) 4,160 (27,324) (27,717) 6,171

Net Assets 343,147 326,081 275,984 305,547 334,896

Net Assets/Share (RM) 0.86 1.14 1.34 1.48 1.63

Earnings/(Losses) Per share (Sen) (5.63) 2.34 (12.64) (12.01) 2.41

GROUP FINANCIAL SUMMARY

20185

10

15

20

30

2017 2016 2015 2014

112,

44514

7,78

6

117,

380 15

6,65

3

210,

560

Turnover (RM’000)

2018

-30

-20

-10

0

10

2017 2016 2015 2014

6,17

1

4,16

0

(21,

736)

(27,

717)

(27,

324)

Profit/(loss)After Taxation (RM’000)

2018

-10

-15

-5

0

5

10

2017 2016 2015

2.34

(5.6

3) (12.

64)

(12.

01)

2.41

2014

Earnings/(losses) Per Share (RM)

2018200

220

240

260

280

300

320

340

360

380

2017 2016 2015

326,

081

343,

147

275,

984 30

5,54

7 334,

896

2014

Net Assets (RM’000)

2018

1.0

0

1.2

1.4

1.6

2017 2016 2015

1.14

0.86

1.34

1.48

1.63

2014

Net Assets/Share (RM)


05


NOTICE OF ANNUAL GENERAL MEETING

AgENDA

(resolution 1)

(resolution 2)

(resolution 3)

(resolution 4)

NoTICE IS HErEBY gIVEN THAT the Twenty-Third (23rd) Annual General Meeting (“AGM”) of PASDEC HOLDINGS BERHAD will be held at Silk Ballroom, level 3, The zenith Hotel, jalan Putra 6, Putra Square, 25200 kuantan, Pahang Darul Makmur on Thursday, 4 july 2019 at 10:30 a.m. for the following purposes:-

As ordinary Business

1. To receive the audited financial statements for the year ended 31 December 2018 together with the reports of the Directors and Auditors thereon.Refer to Explanatory Note 1

2. To re-elect Dato’ Sri DiRaja Haji Adnan bin Haji Yaakob, who retires by rotation pursuant to Clause 80 of

the Company’s Constitution and being eligible, offers himself for re-election.

Dato’ Indera Haji Abdul Rahim bin Mohd Ali who also retires by rotation in accordance with Clause 80 of the Company’s Constitution has expressed his intention of not seeking re-election. Hence, he will retain office until the conclusion of the 23rd AGM.Refer to Explanatory Note 2

3. To approve the payment of Directors’ fees for the financial year ended 31 December 2018.Refer to Explanatory Note 3

4. To approve the payment of benefits payable to the Directors (excluding Directors’ fees) of up to an amount of RM494,750 from 1 July 2019 until the next Annual General Meeting of the Company.Refer to Explanatory Note 4

5. To re-appoint Messrs. Hanafiah Raslan & Mohamad as Auditors and to authorise the Directors to fix their remuneration.

6. To consider any other business of which due notice shall have been given in accordance with the Companies Act 2016 and the Constitution of the Company.

By Order of the Board,

SHAkErAH ENAYETAlI Company SecretaryKuantan

12 June 2019

06

Notice of Annual General Meeting

EXPlANATorY NoTES:-

1. Explanatory Note 1

This audited financial statements are laid in accordance with Section 340(1) of the Companies Act 2016 for discussion only. The audited financial statements do not require shareholders’ approval and therefore will not be put forward for voting.


Clause 80 of the Company’s Constitution provides that one-third (1/3) of the Directors of the Company or if their number is not three (3) or a multiple of three (3), then the number nearest to one-third (1/3) shall retire from office by rotation at an AGM, and be eligible for re-election.

Out of the current board size, two (2) of the Directors of the Company are to retire in accordance with Clause 80 of the Company’s Constitution. Being eligible, Dato’ Sri DiRaja Haji Adnan bin Haji Yaakob has agreed to offer himself for re-election in the Company’s 23rd AGM. Dato’ Indera Haji Abdul Rahim bin Mohd Ali, who also retires pursuant to Clause 80 of the Company’s Constitution, will not seek for re-election and will retain office until the conclusion of the 23rd AGM.


The Directors’ fees are provided in Note 11 of the Notes to the Audited Financial Statements where fees amounting to RM165,000 are to be approved at the 23rd AGM for payment to the Directors that served the Company in the financial year 2018. However, notwithstanding that the Directors have discharged their duties to the Group and are deserving of the fees, the Board of Directors of the Company had agreed not to receive the Directors’ fees for the year 2018 from the Company in view of the Group’s financial position.


The benefits comprising of monthly allowance to Non-Executive Directors and meeting allowances as well as medical benefits to Directors for the period from 1 July 2019 until the next AGM in 2020 are estimated at RM494,750.

The allowances for attending meeting are calculated based on the number of scheduled meetings. In the event that the benefits proposed is insufficient, approval will be sought at the next AGM for the additional amount to meet the shortfall.


07


Notice of Annual General Meeting

STATEMENT ACCOMPANYING NOTICE OF ANNUAL GENERAL MEETING

pursuant to Paragraph 8.27(2) of the Main Market listing Requirements of Bursa Malaysia Securities Berhad

NoTES:

1. In respect of deposited securities, only members whose names appear on the Record of Depositors as at 28 June 2019 shall be entitled to attend, speak and vote at the 23rd AGM.

2. A member entitled to attend and vote at the 23rd AGM is entitled to attend and vote in person or by proxy or by duly authorised representative. A proxy or duly authorised representative may, but need not be a member of the Company.

3. The instrument appointing a proxy shall be signed by the appointor or his/her attorney duly authorised in writing. If the appointor is a corporation, it shall be given either under its common seal or under the hand of its officer or attorney duly authorised.

4. A member may appoint not more than two (2) proxies to attend and vote at the same meeting. An authorised nominee as defined under the Securities Industry (Central Depositories) Act, 1991 may appoint not more than two (2) proxies in respect of each securities account it holds.

5. Where a member is an exempt authorised nominee which holds ordinary shares in the Company for multiple beneficial owners in one (1) securities account (“Omnibus Account”), there is no limit to the number of proxies which the member may appoint in respect of each Omnibus Account it holds.

6. Where a member appoints more than one (1) proxy, the appointment shall be invalid unless the member specifies the proportion of shareholdings to be represented by each proxy. If the Form of Proxy is returned without any indication as to how the proxy shall vote, the proxy will vote or abstain as he/she thinks fit.

7. The instrument appointing a proxy shall be deposited at the Registered Office of the Company at Level 21, Menara Zenith, Jalan Putra Square 6, Putra Square, 25200 Kuantan, Pahang Darul Makmur, not less than forty-eight (48) hours before the time of holding the 23rd AGM or any adjournment thereof or not less than twenty-four (24) hours before the time appointed for the taking of the poll.

8. Pursuant to Paragraph 8.29A(1) of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad, the resolutions set out in the Notice of the 23rd AGM will be put to vote by poll.

DETAIlS of INDIVIDUAlS wHo ArE STANDINg for ElECTIoN AS DIrECTorS

No individual is seeking election as a Director at the Twenty-Third Annual General Meeting of the Company.

08

CHAIRMAN’S STATEMENT Dear Valued Shareholders,

It was a challenging year for Pasdec

Holdings Berhad (“PASDEC”), especially our

manufacturing division, that led the Group to

record losses for the financial year ended 31

December 2018.

ECoNoMIC lANDSCAPE

The Malaysian economy remained resilient with a gross domestic product (“GDP”) growth of 4.7% for the year 2018, despite global headwinds, mainly driven by expansion in domestic demand and private sector expenditure amidst a decline in net export growth. Even though it was lower that the growth of 5.9% the country recorded in 2017, it was still considered healthy as it was underpinned by stronger growth in private consumption, partly boosted by three months of tax holiday.

The property market remained soft in the year 2018, affected by economic uncertainties and unfavourable consumer sentiments.

08


09


Chairman’s Statement

Mandatory General Offer

Pursuant to the allotment of the Rights Issue with Warrants to the shareholders, the shareholding of Jasa Imani Sdn. Bhd. (“JISB”) in PASDEC increased to 38.6% thus triggering JISB to extend a mandatory take-over offer from 3 July 2018, pursuant to the Capital Markets and Services Act, 2007 and the Rules on Take-overs, Mergers and Compulsory Acquisitions, to purchase all the remaining shares and warrants not already owned by JISB (“Offeror”), Dato’ Sri Tew Kim Thin (“Ultimate Offeror”) and the persons acting in concert (“PACs”) with the Offeror at the offer price of RM0.525 per offer share and RM0.01 per offer warrant.

Up until the closing date on 14 August 2018, JISB, the Ultimate Offeror and the PACs did not receive the required acceptance which would result in them holding more than 50% of the voting shares in PASDEC, thus rendering the mandatory general offer unsuccessful.

Streamlining Operations

During the year under review, as part of our strategic plan to streamline the Group’s operations and focus on our core businesses in Malaysia, the Group disposed of its entire 30.87% equity interest in CRH Africa Automotive Proprietary Limited (“CRH”), an associate company operating in South Africa, to P Pather Capital Proprietary Limited for a total consideration of South African Rand (ZAR) 60.0 million (equivalent to approximately RM18.0 million).

We had also disposed of our interests in inactive companies, Kimdec Corporation Sdn. Bhd, and Genting View Resort Development Sdn. Bhd. to an individual and the 60% shareholder respectively, for nominal considerations during the year 2018.

rESPoNSIBlE PrACTICES

Your Board is committed to observe high standards of corporate governance and risk management practices throughout the organisation and will work towards abiding by the principles of the Malaysian Code of Corporate Governance 2017 and Corporate Governance Guide issued by Bursa Malaysia Securities Berhad.

Embracing sustainable practices across the organisation to support the long-term growth and value creation of the Group for our shareholders and stakeholders, whilst ensuring our business is conducted with integrity is crucial to us. The Group’s sustainability efforts for the year 2018 can be found in the Sustainability Statement of this Annual Report.

fINANCIAl PErforMANCE

PASDEC Group incurred loss for the year 2018 mainly due to the negative bottomline of our manufacturing division. Our construction division registered a slight loss while our property division registered moderate earnings as a result of trying economic conditions.

The Board does not recommend the payment of any dividend for this year.

Detail analysis of the Group’s financial and operational performance is set out in the Management Discussion and Analysis (MD&A) section of this Annual Report.

CorPorATE DEVEloPMENTS

Rights Issue with Warrants

During the financial year 2018, the Group undertook a fund raising exercise through the issuance of renounceable rights issue of 114,391,200 new ordinary shares on the basis of two (2) rights shares for every five (5) existing shares in PASDEC together with 114,391,200 free detachable warrants on the basis of one (1) warrant for every one (1) rights shares subscribed at an issue price of RM0.35 per rights shares (“Rights Issue with Warrants”). Proceeds of approximately RM40,036,920 million were raised from the Rights Issue completed on 11 July 2018.

10

oUTlook

The Malaysian economy is expected to expand at a steady pace in 2019, supported mainly by private sector demand and recovery from supply disruptions in commodity related sectors. The favourable labour market and a resilient banking system will further sustain the nation’s economy in 2019.

Nevertheless, 2019 is set to be another challenging year for the Malaysian property development industry, with the threat of global slowdown and financial market volatility affecting the economy.

As we look ahead to the new year, I am reminded of the way our Group has time and again faced adversities head-on and emerged strong. I can assure you that this financial year 2019 is no different. We will review our business model, tap into strategic opportunities and build our fundamentals in order to improve the Group’s organic as well as inorganic growth.

ACkNowlEDgEMENTS

On behalf of my fellow Directors, I wish to convey our heartfelt appreciation to the Management team and employees for your hard work, commitment and dedication to the Group.

To our shareholders, customers, business associates, financiers, and the regulatory authorities, we are grateful for your invaluable support and confidence. Our gratitude also goes to the State Government of Pahang for its continued support and trust in us.

On a personal note, my heartfelt gratitude goes to my colleagues on the Board for their contributions and wise counsel in leading the Group through this challenging year.

DATo’ SrI DIrAjA HAjI ADNAN BIN HAjI YAAkoBChairman

Date : 30 April 2019

Chairman’s Statement

ENHANCINg oPErATIoNS

In order to enhance the operations of the Group, some changes were made at the Management level in the year 2018.

On behalf of the Board, I would like to thank Dato’ Zuber bin Haji Shamsuri, our former Chief Executive Officer, who decided not to continue serving the Group upon expiry of his contract in July 2018.

During the year, the Board appointed Dato’ Sri Tew Kim Thin as Executive Director to helm and steer PASDEC Group to a stronger footing. The Board also promoted Mr. Goh Song Han from within the organisation to the position of Chief Operating Officer and appointed Mr. Tew Kim Kiat as the Senior Vice President of Projects. The Board trusts that with their experience and knowledge, they will be able to execute the set strategic plans and contribute positively to the growth of the Group.

New office at Zenith Tower

12

MANAGEMENT DISCUSSION AND ANALYSIS

TUrNoVEr

Year 2018 continued to be another challenging year for the Group amidst the economic uncertainty, both global and locally, and soft consumer demand. Revenue for the financial year increased to RM147.79 million from the preceding financial year’s revenue of RM112.44 million.

Property development contributed turnover of RM55.85 million, a slight increase from RM48.09 million recorded in 2017, and continued to contribute to the Group’s revenue.

The manufacturing division registered revenue of RM90.62 million compared to RM58.85 million in 2017, as a result of continued contract with Nissan, Renault and Volkswagen South Africa to manufacture and supply electrical wiring harness. The increase in revenue of 54% was mainly due to increase in production volumes.

During the year, the Group’s construction arm successfully completed the Mass Rapid Transit (“MRT”) feeder bus depot project at Kawasan Perindustrian Desa Tun Razak, Daerah Petaling, Kuala Lumpur and reported revenue of RM1.05 million for the year compared to RM1.45 million last year.

rESUlTS

The Group recorded loss before tax of RM15.14 million for the financial year ended 31 December 2018 compared to profit before tax of RM2.44 million last year. The loss was mainly due to eroded margin as a result of higher freight charges and overtime costs at the manufacturing division, causing its loss before tax to increase from RM7.63 million last year to RM13.2 million this year.

In order to boost sales of properties developed by the Group, the Group carried-out promotional activities and offered discounts to customers, as a result of which profit margin was impacted. On top of this, the liquidated and ascertained damages (LAD) and cost overrun of certain development projects totalling RM4.95 million had further pulled down the operating profit of the property division.

As a result, lower profit before tax of RM3.94 million was recorded for the year 2018 compared to profit before tax of RM15.26 million for the year 2017.

Our construction division registered net loss for the year of RM0.94 million compared to RM0.04 million last year.

The Group’s results net of tax for the year 2018 was loss of RM21.74 million compared to profit of RM4.16 million last year. Deferred tax assets amounting to RM5.83 million written-off during the year contributed further to the existing loss of the Group. The deferred tax assets that arose from manufacturing division in Botswana were written-off following foreseeable losses in the forthcoming year.

lIQUIDITY AND CAPTIAl rESoUrCES

The Group’s cash and cash equivalents increased from RM28.46 million net overdraft position as at end of last year to net cash bank balance of RM4.39 million as at reporting date in 2018.

The increase was mainly due to contribution from financing activities arising from the completion of Rights Issue on 11 July 2018 which raised RM40.04 million.

gEArINg rATIo

The Group aimed to minimise its exposure by reducing total borrowings. As at the end of financial year 2018, the Group’s gearing ratio decreased from 0.4 times to 0.3 times. This was mainly due to settlement of bank borrowings and reliance on internal funds rather than banking facilities.

ProPErTY DEVEloPMENT DIVISIoN

During the year under review, the Group continued to develop residential and commercial properties. The property sector is one of the sectors directly affected by the economic uncertainty and instability throughout the year 2018. These challenges have affected the sales performance that were further impacted by prudent ruling for loan approvals from financial institutions.

12

Management Discussion and Analysis

Our projects at Bandar Putra, Pasdec Damansara and Chendor Utama remained as major contributors to the Group which offered affordable properties, well planned infrastructures, pleasant surroundings and good investment to the buyers. The Group successfully completed four projects during the year comprising of 290 units of various types of properties.

During the financial year 2018, 126 units of residential and commercial products worth RM 41.6 million were sold. Low market absorption of properties of the Group during the year was mainly due to difficulties in obtaining end financing where many potential buyers had to pull out after their end financing applications were rejected by the financial institutions. Malaysia’s gloomy economy in the year of 2018 was also one of the reasons that caused the drop in transactions in all property sectors especially in the first half of the year. Higher cost of living also contributed to lower purchasing power in buying properties.

The Group is in the process of completing construction of its residential projects at Perumahan Balok Perdana, Vista Verde, Pasdec Damansara and commercial project at Pesona Commercial, all in Kuantan. For the year 2019, the Group plans to commence the development of some 404 units of residential and commercial properties with an estimated gross development value (GDV) of RM126 million at Bandar Putra, Pasdec Damansara and Balok Perdana, Kuantan as well as at Muadzam Shah, Pahang. However the actual launch of these planned developments will be subject to market demand.

During the year under review, the Group continued with its participation in the 1Malaysia Civil Servants Housing Programme (PPA1M) for residential units at Pasdec Idaman Temerloh (23 units) and Chendor Utama Chendor, Kuantan (60 units). As at the end of 2018, response from buyers have been encouraging with 31 units having sales value of approximately RM8.23 million sold.

Management continued to hold discussions with the two joint venture partners appointed to carry out the development of 154 acres of land at Bandar Putra, Kuantan and 113 acres land at Cameron Highlands belonging to the Group. Both the projects are in final stages of planning and are slated to commence first phase of development in 2019.

The Group is also undertaking the planning and design for the proposed mixed development on a parcel of land measuring 6.8 acres at Alam Mesra, Kota Kinabalu, Sabah.

CoNSTrUCTIoN

For the financial year 2018, our construction arm contributed a total turnover of RM9.17 million. The construction sector, vide Pasdec Bina Sdn. Bhd., carried out 8 internal projects of the Group and successfully handed over Bandar Putra 7A6 Phase 4, Bandar Putra 6A8 Phase 4, Bandar Putra 7A5 Phase 3 and Pasdec Damansara Package 4A Phase 1 to the client during the year.

The MRT feeder bus depot project at Kawasan Perindustrian Desa Tun Razak was successfully completed and handed over to Mass Rapid Transit Corporation Sdn. Bhd. during the year.

MANUfACTUrINg

Despite increase in revenue of the manufacturing arm, PASDEC Automotive Technologies (Pty) Ltd. (“PAT”) group, from ZAR 181.98 million (RM58.85 million) in 2017 to ZAR 296.3 million (RM90.1 million) in 2018, profit margins were affected mainly due to higher than budgeted cost components i.e manpower, transport, freight costs and forex loss incurred during the year arising from insufficient working capital to match increase in customer demand at Nissan, Renault and Volkswagen South Africa.

From an operational perspective, PAT’s focus in 2018 on skills development and training of the human resources, modernisation, continued improvement and enhanced quality standards have set the platform for greater productivity and profitability in 2019.

PAT’s approach to increasing efficiency and productivity as well as enhanced operator skills, improved methodologies and increased testing enabled the company to achieve zero PPM (parts per million) defects across the board by end of 2018.

The company received two significant accreditations under ISO 450001:2018 (occupational health and safety management system) and IATF 16949:2016 (quality management system) during the year.

In 2018, PAT was awarded a seven-year contract with total value of approximately Botswana Pula (BWP) 1 billion by Nissan South Africa to manufacture and supply harnesses for the new Nissan H60A project. The H60A represents the first new Light Commercial Vehicle platform at Nissan South Africa since the D22LCV and a total of 27,000 vehicles per annum will be produced. Production is slated to commence in the third quarter of 2020 and will require significant capital expenditure for new technology, machinery and infrastructure.

| Annual Report 2018 PASDEC HOLDINGS BERHAD

13

14

oTHEr BUSINESSES AND INVESTMENT

Renewable Energy

During the financial year 2018, the Group successfully obtained further extension on the feed-in-tariff (“FiT”) commencement dates for our small hydro power projects from the Sustainable Energy Development Authority Malaysia (“SEDA”) in view of the anticipated delay in completing the plants due to site possession issues.

SEDA has also approved concession period of 21 years with revised FiT rate at RM0.25 per kWH for the project at Sungai Benus, Bentong and 0.26 per kWh for the project at Sungai Sia, Raub.

Upon completion and commencement, the plants at Sungai Benus and Sungai Sia will generate and supply 5 Megawatt and 2 Megawatt power respectively to Tenaga Nasional Berhad (TNB) for a period of 21 years.

Rental

During the year under review, the Group derived rental collection of approximately RM5.27 million from properties belonging to the Group at various locations in Pahang, compared to RM5.27 million in 2017.

Others

On 31 December 2018, the Group completed the disposal of its entire 30.87% equity interest in CRH Africa Automotive Pty. Ltd (“CRH”) held through PAT to PPather Catpital Pty. Ltd. as part of the Group’s strategic direction to streamline its operations and realign its resources to focus on its core businesses in Malaysia.

Management Discussion and Analysis

lookINg AHEAD AND ProSPECTS

Although the overall property market remains soft, there are pockets of demand for reasonably priced products in good and well-connected locations, especially for landed properties.

Our Property division will continue to leverage on the demand for affordable residential properties as well as up-graders looking for medium to high-end landed properties by banking on the Group’s on-going projects and upcoming launches at various strategically located and much sought-after vicinities around Kuantan and Pahang.

As a listed entity, our efforts will be channelled towards balancing risk and return in all our development activities and towards achieving and maintaining a strong financial position. We will continue to leverage on our asset monetisation strategy to unlock the potential and value of current and future assets, in addition to building a strategic portfolio of investment properties to diversify as well as to build new streams of revenue or recurring income. In the long-term. All these steps will contribute additional value to our portfolio, with promising returns for our shareholders.

Budget 2019 measures to provide concessionary financing, mortgage guarantees, stamp duties waivers and extended financing term for civil servants together with other measures such as Sales and Services Tax exemptions for construction services and certain building materials for housing units below RM300,000 should benefit the housing industry in general and affordable housing in particular.

Although these are all positive to the Group’s property development business, the Group is conscious that it will experience margin compression with the rising costs of construction, going forward.

The Group aims to increase profitability from its core business of property development by reviewing the plans and designs of our new projects and controlling developments costs without compromising on the quality of our developments.

Vista Verde Phase 2

16

BOARD OF DIRECTORS

Dato’ Sri Diraja Haji Adnan bin Haji YaakobChairman

Dato’ Sri Tew kim ThinGroup Managing Director

Dato’ Sri kamaruddin bin MohammedNon-Independent Non-Executive Director

From left to right

From left to right

From left to right

Dato’ Indera Haji Abdul rahim bin Mohd AliNon-Independent Non-Executive Director

Dato’ Ir. Noor Azmi bin jaafarIndependent Non-Executive Director

Dato’ Majid bin MohamadIndependent Non-Executive Director

Sharina BahrinIndependent Non-Executive Director

Teh Sew HongIndependent Non-Executive Director

Tew liang Tze(Alternate Director to Dato’ Sri Tew Kim Thin)


17


DIRECTORS’ PROFILE

Dato’ Sri Diraja Haji Adnan bin Haji Yaakob was appointed to the Board as Chairman of Pasdec Holdings Berhad on 21 January 2003.

He holds a B.A (Hons) and Diploma in Education from University of Malaya. In October 2010, Dato’ Sri DiRaja Haji Adnan was conferred an Honorary Doctorate in Education Administration by Yarmouk University, Jordan; the first ever Malaysian to receive such honour from Jordon’s most prestigious and oldest university, as a recognition towards his contribution to education especially in providing opportunity to the financially less fortunate students of Pahang to pursue higher education. He also received an Honorary Doctorate in Technology Management from Universiti Malaysia Pahang the same year.

Dato’ Sri DiRaja Haji Adnan is the first recipient of the Darjah Sri DiRaja Sultan Ahmad Shah Pahang (SDSA) bestowed upon him by Sultan Haji Ahmad Shah Al Musta’in Billah on His Royal Highness’ 80th birthday and carries the title Dato’ Sri DiRaja.

Dato’ Sri DiRaja Haji Adnan is a well-known and respected politician. He served as the Chief Minister of Pahang for 19 years from 1999 to 2018 and holds the record as the longest serving Chief Minister of the State. He has been a member of the Pahang State Legislative Assembly representing the Pelangai Constituency since 1986.

He is currently pursuing his final year Law degree at the International Islamic University of Malaysia.

Dato’ Sri Tew kim Thin was appointed to the Board of Pasdec Holdings Berhad on 10 October 2017.

He assumed the position of Executive Director on 16 May 2018 before being appointed as the Group Managing Director on 1 March 2019.

He is a self- made entrepreneur with over 40 years of experience in the construction and property development industry. He started his involvement in the construction industry soon after completing his primary education. His dynamism and vision coupled with proactive experience is instrumental in the growth and success of the companies that he led.

He is presently leading the Zenith Aim group of companies that are involved in property development, property management, shopping mall operation and hospitality business. Among the successfully completed projects are 5-star hotels, an international convention centre, Class A office tower, shopping malls, golf and country club, as well as mixed residential and commercial projects.

Board Committee Membership

• None

other Directorship in Public Companies and listed Issuers

•MahkotaGolf&CountryClubBhd

DATo’ SrI TEw kIM THINGroup Managing DirectorNon-Independent Executive DirectorAged 61 | Male | Malaysian


• None


•MentigaCorporationBerhad(Chairman)

DATo’ SrI DIrAjA HAjI ADNAN BIN HAjI YAAkoBChairman Non-Independent Non-ExecutiveAged 69 | Male | Malaysian

18

Directors’ Profile

Dato’ Sri kamaruddin bin Mohammed was appointed to the Board of Pasdec Holdings Berhad on 10 October 2017.

He holds a Business Studies degree from MARA College (now Universiti Teknologi MARA) and a Professional degree in Investment Analysis from the Securities Institute of Australia, Sydney, Australia. He is also a Management graduate of the Asian Institute of Management, Philippines and a Senior Fellow of the Financial Services Institute of Australia (SF Fin).

Dato’ Sri Kamaruddin spent over 40 years at Amanah Saham MARA Berhad (now Pelaburan MARA Berhad - PMB) and was its Group Executive Director from 1991 to 1995 before being appointed the Group Chief Executive Officer and Group Managing Director until 2008 and thereafter serving as Deputy Chairman cum Adviser of PMB for another 2 years until 2010.

He is currently the Group Executive Chairman of Far East Holdings Berhad.

Dato’ Sri Kamaruddin’s extensive experience in the investment, financial management, corporate restructuring and management fields enables him to contribute significantly to the Board and the committees he sits on.


•MemberofAudit&RiskManagementCommittee•MemberofNomination&RemunerationCommittee


• FarEastHoldingsBerhad(GroupExecutiveChairman)• PascorpPaperIndustriesBerhad(Chairman)• AmanahSahamPahangBerhad

DATo’ SrI kAMArUDDINBIN MoHAMMED Non-Independent Non-Executive Director Aged 71 | Male | Malaysian

Dato’ Indera Haji Abdul rahim bin Mohd Ali was appointed to the Board of Pasdec Holdings Berhad on 25 April 2014.

He holds a B.A (Hons) in Economics (Public Administration) degree from University of Malaya.

Dato’ Indera Haji Abdul Rahim started his career with Perbadanan Kemajuan Negeri Pahang (PKNP) in 1980 as Assistant Manager of Industrial Promotion & Development, moving up to the post of Industrial Development Manager in 1988.

He went on to become the Deputy Chief Executive Officer of PKNP before being promoted to Chief Executive Officer on 1 April 2014. He served as the Chief Executive Officer of PKNP until the end of 2018.

He is presently operating his own business.


• None


• TiomanIslandResortBerhad• PascorpPaperIndustriesBerhad

DATo’ INDErA HAjI ABDUl rAHIM BIN MoHD AlI Non-Independent Non-Executive Director Aged 62 | Male | Malaysian


19



Dato’ Majid bin Mohamad was appointed to the Board of Pasdec Holdings Berhad on 2 January 2018. Dato’ Majid is currently Chairman of Etiqa Family Takaful Berhad and Etiqa General Takaful Berhad.

He has extensive experience in the setting up, regulatory planning and rehabilitation of a wide range of finance and insurance institutions in the industry. Starting out at the Bank Negara Malaysia in 1977, he has held various supervisory roles across key departments, from audit to economics, and bank and insurance regulation.

In the insurance industry, he was Chief Executive Officer of a number of life and general insurance companies in Malaysia including Pacific and Orient Insurance, Malaysia National Insurance Berhad, The People Insurance Berhad, Talasco Insurance Berhad. In 2001, he facilitated the successful merger between Talasco and People’s Insurance Berhad. He retired from Labuan Reinsurance (L) Ltd. at the end of 2010.

His current directorship includes Maybank Ageas Holdings Berhad, Universiti Malaysia Pahang and UMP Holdings Sdn. Bhd.

Formerly, he was the adviser to Lloyd’s of London, adviser to Labuan International Insurance Association (LIIA), independent board member of AIA Public Takaful Berhad, Alliance Investment Bank Berhad, Alliance Islamic Bank Berhad, UniAsia Insurance Berhad (now Liberty Insurance) and UniAsia Life Insurance Berhad (now Gibraltar Life Insurance). In academic field, he was a Visiting Professor of Islamic Finance at Universti Sains Islam Malaysia (USIM) and Universiti Sultan Zainal Abidin (UnISZA), Terengganu.

Dato’ Majid holds a Bachelor of Arts (Honours) from University of Malaya Kuala Lumpur and a Masters of Business Administration from Manchester Business School, England. He also attended senior management programmes at ICLIF, Malaysia, Harvard Business School, USA and INSEAD, Paris.


•MemberofAudit&RiskManagementCommittee•MemberofNominationandRemunerationCommittee


• EtiqaFamilyTakafulBerhad (formerly known as Etiqa Takaful Berhad) (Chairman)• EtiqaGeneralTakafulBerhad(Chairman)•MaybankAgeasHoldingsBerhad

DATo’ MAjID BIN MoHAMAD Independent Non-Executive Director Aged 65 | Male | Malaysian

Dato’ Ir. Noor Azmi bin jaafar was appointed to the Board of Pasdec Holdings Berhad on 9 November 2015.

He holds a Mechanical Engineering diploma and a Bachelor of Science degree in Mechanical Engineering from Universiti Teknologi MARA (UiTM). Subsequently, he obtained a Master of Science in Mechanical Engineering from University of Miami Florida, USA. He is a member of the Institution of Engineers, Malaysia and a registered Professional Engineer with the Board of Engineers Malaysia.

Dato’ Ir. Noor Azmi started his career in 1979 as a lecturer in the Faculty of Mechanical Engineering of UiTM, moving on to be the Head of Thermodynamics and Heat Transfer Division of the university before leaving to join PROTON (Perusahaan Otomobil Nasional Sdn. Bhd.) in 1984. He served in various managerial capacities during his seven and a half years with PROTON including Quality Control, Local Content, Localisation, Warranty & Technical Services as well as Procurement & Vendor Development.

Dato’ Ir. Noor Azmi went on to join Delloyd Industries (M) Sdn. Bhd. as Director and Advisor to the Managing Director. He was appointed as Executive Director of Delloyd Ventures Berhad (now Delloyd Ventures Sdn. Bhd.) (Delloyd) in 1996 and in August 2008, he was made the Chief Executive Officer Manufacturing of Delloyd Group’s automotive components division and later redesignated to Managing Director from 1 April 2013. He retired from his executive position in May 2016 and was Senior Advisor to Delloyd’s Automotive Group until 2018. He remains as a Director and Shareholder of Delloyd.

Dato’ Ir. Noor Azmi is also an academic advisor to the Faculty of Mechanical Engineering Universiti Malaysia Pahang and Faculty of Mechanical Engineering UiTM. He is a member of the Executive Committee of PROTON Vendors Association (PVA) and Kelab Vendor Perodua Malaysia (KVP).


• ChairmanofNominationandRemunerationCommittee•MemberofAudit&RiskManagementCommittee


• PascorpPaperIndustriesBerhad

DATo’ Ir. Noor AzMI BIN jAAfAr Independent Non-Executive Director Aged 64 | Male | Malaysian

20


A Chartered Accountant, Puan Sharina Bahrin was appointed to the Board of Pasdec Holdings Berhad on 10 October 2017.

She holds a Bachelor of Commerce (Honours) degree in Finance, a Bachelor of Commerce (Accounting & Finance) degree and a Master’s of Accounting degree, all from the University of Western Australia. She is a Fellow of the Institute of Chartered Accountant Australia and New Zealand, and a Member of the Malaysian Institute of Accountants.

Puan Sharina has nearly 30 years’ experience in corporate finance and business advisory fields in Malaysia and Australia.

From 2003 to 2008, she was an Executive Director of Aftaas Consultancy Sdn. Bhd. and prior to that she was Associate Director of PricewaterhouseCoopers’ Corporate Finance and Recovery from 1997 to 2003. She served many years at PETRONAS from 1991 to 1997 in various capacities as holding company accounts manager, finance manager of a joint venture project, senior executive of its group corporate finance and also a member of the PETRONAS corporate strategy team focusing on globalisation. In Australia, she provided business advisory services and preparation of account and tax returns to entities of various industries.

She was an Independent Director of Far East Holdings Berhad from 2005 to 2010.

Puan Sharina is currently the Executive Director of Sea2Sea Services Sdn. Bhd., a company providing business management consultancy services.


• ChairmanofAudit&RiskManagementCommittee•MemberofNomination&RemunerationCommittee


• None

SHArINA BAHrIN Independent Non-Executive Director Aged 54 | Female | Malaysian

A Chartered Accountant, Ms. Teh Sew Hong was appointed to the Board of Pasdec Holdings Berhad on 12 December 2017.

Ms. Teh is a Fellow of the Association of Chartered Certified Accountants (United Kingdom) and a Member of the Malaysian Institute of Certified Public Accountants, Malaysian Institute of Accountants and Certified Practicing Accountants Australia.

She started out as an auditor with one of the big four accounting firms and left for investment banks in 1995 after a 6-year stint in the audit field. She spent 8 years in the corporate finance departments of 2 investment banks. Thereafter, she assumed the role of General Manager Corporate Finance of an insurance group from 2002 to 2006, advising on corporate finance and advisory activities within the group of companies. From 2007 to 2009, she was appointed as Director, Corporate Finance of a boutique advisory firm licensed with the Securities Commission.

Presently, Ms. Teh is the Executive Director of Sierac Corporate Advisers Sdn. Bhd., a boutique advisory firm licensed by the Securities Commission. She is an approved Company Auditor and audit partner of a firm of Chartered Accountants since 2015.

Ms. Teh possesses nearly 30 years’ working experience in the fields of auditing, accounting, financial management accounting, corporate finance and advisory services, taxation as well as company secretarial and insolvency services.


•MemberofAudit&RiskManagementCommittee


• None

TEH SEw HoNg Independent Non-Executive Director Aged 52 | Female | Malaysian


21



Notes1. family relationship with Director and/or

Major ShareholderNo Director has a family relationship with other Directors and/or major shareholders of the Company except for:-Dato’ Sri Tew Kim Thin, who is a major shareholder in Jasa Imani Sdn. Bhd., is the father of Mr. Tew Liang Tze.

2. Conflict of InterestNone of the Directors has any conflict of interest with the Company.

3. Conviction of offences None of the Directors has been convicted for any offences (other than traffic offences) within the past five (5) years.

4. Public Sanction or Penalty ImposedNone of the Directors has been imposed with any public sanction or penalty by the relevant regulatory bodies during the financial year.


• None


•MahkotaGolf&CountryClubBhd.

TEw lIANg TzE Alternate Director to Dato’ Sri Tew Kim Thin Aged 33 | Male | Malaysian

Mr. Tew liang Tze was appointed to the Board of Pasdec Holdings Berhad as Alternate Director to Dato’ Sri Tew Kim Thin on 30 November 2017. Prior to that, he was a Non-Executive Non-Independent Director of the Company.

Mr. Tew holds a Diploma of Commerce in Accounting from Deakin University, Melbourne, Australia and a Professional Diploma (Honours) in Property Management from Ashworth University, USA.

Since 2008, he has been with the Zenith Aim group of companies which is involved in property development, property management, shopping mall operation and hospitality business. He assisted the Executive Chairman in financial, administration and management matters before being appointed as Executive Director of Zenith Aim group in charge of finance and administration while also being involved in project planning, land acquisitions and project management matters.

Among the projects that Zenith Aim group of companies has successfully developed and completed a 5-star hotels, an international convention centre, Class A office tower, shopping malls, golf and country club, as well as mixed residential and commercial projects.

22

MANAGEMENT TEAM

1. Dato’ Sri Tew kim Thin Group Managing Director

2. goh Song Han Chief Operating Officer

3. Tew kim kiat Senior Vice President Projects

4. Shakerah Enayetali Group Corporate Secretary & Governance

5. kamal Hakim bin Abd rahman Land Management Manager

6. ros Maliya binti Mamat Senior Manager Finance & Accounts

1 23 4 65


23


KEY SENIOR MANAGEMENT PROFILE

goH SoNg HANChief Operating OfficerAged 57 | Male | Malaysian

TEw kIM kIATSenior Vice President ProjectsAged 57 | Male | Malaysian

Mr. goh Song Han was appointed as Chief Operating Officer of Pasdec Holdings Berhad (“PASDEC”) on 1 August 2018. Prior to being appointed to his present position, he was the Chief Financial Officer of PASDEC. He has served PASDEC Group for about 24 years. He holds a Bachelor in Accountancy from University of Malaya. He is a member of the Malaysian Institute of Accountants (MIA), Malaysian Institute of Certified Public Accountants (MICPA) and Malaysian Institute of Taxation. Mr. Goh currently sits on the board of several companies within PASDEC Group.

Mr. Tew kim kiat was appointed as the Senior Vice President Projects of Pasdec Holdings Berhad (“PASDEC”) on 11 July 2018. After completing his education, he joined Zenith Aim Sdn. Bhd. and was the Managing Director of Zenith Aim group of companies for more than 20 years, gaining vast experience in the infrastructure industry. Mr. Tew is a Director of several companies involved in oil palm mill, plantation and investment.

DATo’ SrI TEw kIM THINGroup Managing DirectorAged 61 | Male | Malaysian

The profile of Dato’ Sri Tew kim Thin is set out in the Directors’ Profile on page 17.

He does not hold any directorship in any public companies and listed issuers. He does not have any family relationship with any Director and/or major shareholder, nor any conflict of interest with the Company. He has no convictions for any offences within the past 5 years (other than traffic offences, if any) nor any public sanction or penalty imposed by regulatory bodies during the financial year.

He does not hold any directorship in any public companies and listed issuers. He is the brother of Dato’ Sri Tew Kim Thin and the uncle of Mr. Tew Liang Tze, who are members of the Board of the Company and major shareholders of Jasa Imani Sdn. Bhd. He does not have any conflict of interest with the Company and has no convictions for any offences within the past 5 years (other than traffic offences, if any) nor any public sanction or penalty imposed by regulatory bodies during the financial year.

Balok Perdana 3A4 & 3A5


25


HUMAN CAPITAl

Staff and Talent Development

Our employees have always been our priced assets. We consistently provide and encourage skills development training to our staff to ensure their capabilities and competencies are at par with other companies in similar environment and industries. We believed in the importance of investment for the development of human capital to support the Group’s expansion and growth.

New staff intake has been slowed down to allow talent to be developed internally to recognize and promote within existing staff. New recruitment was made only for jobs or positions that cannot be filled internally.

Multitasking and job rotation continued to be practiced to prepare the staff to be able to work in multiple areas with new skills and work knowledge enhancement.

For the coming year, right sizing and job functions of the departments and staff will be analysed and reorganised to avoid overstaffing. Staff remuneration is well taken care of to upkeep staff motivation, commitment and loyalty to the Group.

SUSTAINABILITY STATEMENT

As a responsible property developer we employ sustainable practices in our effort to meet high aspirations that we and our stakeholders have set for Pasdec Holdings Berhad (“PASDEC” or “Company”).

PASDEC’s product development and properties portfolio are integrated with design and features that incorporate social, economic and environmental aspects. Our performance in sustainability in the financial year 2018 is reported throughout the three sections of this statement: Human Capital, Environment and Community.

26

Work Place

Beginning from the end of 2018, our Head Office has shifted from Menara Teruntum to a modern and integrated office at Level 21, Menara Zenith. The office is designed as an open office concept and locates all departments at the same level. This is to foster togetherness and promote ease of communication between the staff and the Management leading to healthier working culture and surrounding.

ENVIroNMENT PASDEC is committed to reduce the negative impact on the environment by making continued efforts to improve environmental sustainability practices in our project development operations.

We take efforts in preserving the natural surroundings by maintaining matured trees within our present township developments at Bandar Putra, Pasdec Damansara, Balok Perdana, Cenderawasih Pesona and Chendor Utama in line with the ‘Green Living’ concept adapted in our property design and layout.

Conservation of environment is also our main agenda at the small hydro project sites at Sungai Benus, Bentong and Sungai Sia, Raub where natural river flow will be utilised and the surrounding habitat maintained as much as possible.

Camaraderie

PASDEC encourages staff involvement in sport events and official gathering functions to promote spirit of togetherness.

During the year, 25 of our employees joined the 15th Gemaputera Games in Perlis as part of the contingent of Perbadanan Kemajuan Negeri Pahang (“PKNP”), one of our major shareholders. The Gemaputera Games, a biennial sport tournament, involves teams from various state economic development corporations participating in sporting events like futsal, netball, badminton, bowling, table tennis and golf, in order to enhance and strengthen the coorperation among the agencies.

Throughout the year 2018, members of our staff continued to participate in various sports events organised by the PKNP Group’s Family Club.

In July 2018, the Group organised a Dinner themed as ‘Majlis Ramah Mesra Warga dan Pesara Kumpulan Pasdec’ at The Zenith Hotel as an appreciation to existing and former employees. The Chief Minister of Pahang, our Chairman and Board of Directors enhanced the Dinner with their presence. The Dinner also served as a platform for the Board Members, Management and staff to socialise in a less formal environment.

Sustainbility Statement


27


Sustainbility Statement

CoMMUNITY Under the Corporate Social Responsibility (“CSR”) programme, we continued to carry-out projects which benefitted communities directly and indirectly. In the year 2018, efforts to engage the community were made by contributing to charity bodies, community sports, as well as arts and cultural activities. In an effort to support the activities of the aborigines in Pahang, PASDEC gifted the Koperasi Orang Asli Muslim Malaysia Berhad a shop lot at Medan Warisan, Kuantan to serve as its office and communication centre.

Public Amenities During the Year 2018, a ‘Surau’ at our project of Cenderawasih Pesona for the use of local community was completed and handed over to the residents there. As a responsible property developer, we have and are consistently delivering public amenities such as ‘Surau’, playground and community centre to the communities within our developments.

Sports In order to play a part in generating the interest of the young ones to be involved in sporting activities from a young age and promote healthy living, PASDEC contributed towards the development of the Pesona Football Club Under 12 and Under 10 football team during the year. Our contribution proved fruitful when these football teams won many tournaments in Pahang.

Arts and Culture During the year, we also supported efforts of small scale entrepreneurs to market their products through ‘Jelajah Usahawan Desa 2018’ and ‘Moh Fest 2018’ programmes in cooperation with government agencies and the events’ organiser.

28

CORPORATE GOVERNANCEOVERVIEW STATEMENT

The Board of Directors (“Board”) of Pasdec Holdings Berhad (“PASDEC” or “Company”) is committed to manage the Group in line with corporate governance practices recommended in the Malaysian Code on Corporate Governance 2016 (“Code”) and to ensure that good corporate governance standards are practiced throughout the Group. The Board believes that corporate accountability complements business practices that will facilitate the achievement of PASDEC Group’s goals and objectives with the ultimate aim of enhancing shareholders’ value whilst protecting the interests of other stakeholders.

The Board is pleased to present this statement to provide shareholders with an overview of the corporate governance practices of the Company under the Board leadership during the financial year 2018 guided by the three (3) principles set out in the Code.

This statement is prepared in compliance with the Main Market Listing Requirements (“MMLR”) of Bursa Malaysia Securities Berhad (“Bursa Securities”) and is to be read together with the Corporate Governance Report 2018 of the Company which is available on the Company website (www.pasdec.com.my). The Corporate Governance Report 2018 provides the details on how the Company has applied each practice and the extent of compliance with the best practices provision in the Code for the financial year 2018, including where applicable, reasons for not applying specific practices.

1. BOARD LEADERSHIP AND EFFECTIVENESS

A. Board Responsibilities

The Board is responsible for the overall governance of the Group and is committed to exercise its duties and responsibilities with diligence and proper care for the best interests of the Company and its stakeholders.

The Board’s functions are governed and regulated by the Constitution of the Company, the Companies Act 2016, the MMLR and other applicable legislations that are in force.

In discharging its responsibilities, the Board is guided by the Board Charter and Limits of Authority which define matters that are specifically reserved for the Board and day-to-day management of the Group delegated to the Group Managing Director (“GMD”)/Executive Director (“ED”)/Chief Executive Officer (“CEO”). This delegation of authority further cascades down to the Key Senior Management within the Group. Notwithstanding the delegation of authority, the GMD/ED/CEO and Key Senior Management remain accountable to the Board for their actions.

The roles of the Chairman and the GMD are separate and clearly defined to ensure a balance of power and authority. The Chairman is primarily responsible for the orderly conduct, smooth functioning and effectiveness of the Board and leads the Directors in the performance of the responsibilities and governance of the Board.

The GMD who is accountable to the Board, has the overall responsibility for the day-to-day running of the business, operational decision-making and implementation of Board policies and decisions in accordance with the powers and authority delegated to him by the Board. He is accountable for leading the Management team and building a dynamic corporate culture with the requisite skills and competency.

The Board has established functions which are reserved for the Board Committees and those which are delegated to the Management. The Board has delegated specific responsibilities to its respective Committees to ensure the effective discharge of its fiduciary duties. Nevertheless, the Board retains full responsibility for the direction and control of the Group.

The Board has established two (2) Board Committees namely Audit & Risk Management Committee and Nomination & Remuneration Committee. In addition to the Board Committees, the Company has established a Management Executive Committee (“MEXCO”) headed by the GMD/ED and made up of Senior Managers in charge of specific functions as members of the MEXCO. The MEXCO assists the Board by deliberating and deciding on operational matters within its purview under its terms of reference and making the appropriate recommendations to the Board via the GMD/ED on matters requiring Board’s deliberations and decision.


29

Corporate Governance Overview Statement

1. BOARD LEADERSHIP AND EFFECTIVENESS (CONT’D)

A. Board Responsibilities (cont’d)

Key matters reserved for the Board’s approval include overall strategic direction, business plans and goals, business expansion and restructuring plans, material acquisitions and disposals, expenditure over certain limits, issuance of new securities and capital plans.

The Board Charter, a source of reference to the Directors, documents the strategic intent, duties, functions and roles and responsibilities of the Board including the division of responsibilities and powers between the Board and Management, the different Committees established by the Board, and between the Chairman and the GMD as well as schedule of matters reserved for the Board and is available on the Company’s website at www.pasdec.com.my.

The Directors also observe and adhere to the Code of Ethics which is based on principles of integrity, sincerity, honesty, responsibility and accountability in order to enhance the standard of corporate governance. The Company’s Whistleblowing Policy provides an avenue for employees and stakeholders to make, disclose and report instances of improper, unethical or unlawful conduct within PASDEC without fear of reprisal. Both the Code of Ethics and Whistleblowing Policy can be found on the Company’s website www.pasdec.com.my.

All the Directors have full access to the advice and services of the Company Secretary who is qualified to act as Company Secretary under the Companies Act 2016. The Company Secretary ensures that the Board procedures are adhered to at all times during meetings and advises the Board and Management on matters including corporate governance developments and Directors’ responsibility in complying with relevant statutory and regulatory requirements.

The Company Secretary records the deliberations and conclusions in all Board and Committee meetings and ensures accurate and proper records of the proceedings of the meetings and resolutions passed are kept in the statutory books at the registered office.

The Board is satisfied with the level of commitment given by the Directors towards fulfilling their roles and responsibilities.

All Directors are required to notify the Chairman before accepting any new board appointment in other listed companies and commitment expected under the said appointment.

The Board meets on quarterly basis with additional meetings, including special meetings, convened whenever necessary. Eight (8) Board meetings were held during the financial year ended 31 December 2018. Details of attendance of the Directors to the Board meetings are as follows:-

Name of Director Number of Meetings Attended

Dato’ Sri DiRaja Haji Adnan bin Haji Yaakob 6/8

Dato’ Sri Tew Kim Thin 7/8

Dato’ Sri Kamaruddin bin Mohammed 7/8

Dato’ Indera Haji Abdul Rahim bin Mohd Ali 8/8

Dato’ Ir. Noor Azmi bin Jaafar 8/8

Dato’ Majid bin Mohamad 7/8

Puan Sharina Bahrin 8/8

Ms. Teh Sew Hong 8/8

The Directors are usually provided with a structured agenda and Board papers in advance and in the appropriate quality prior to Board meetings to enable the Directors to have sufficient time to peruse and assess the meeting papers and obtain further explanation from the Management and/or the Company Secretary.

30



B. Board Composition

The Board is currently made up of a Non-Independent Non-Executive Chairman, an Executive Director, four (4) Independent Non-Executive Directors and two (2) Non-Independent Non-Executive Directors.

50% of the Board consists of Independent Non-Executive Directors with expertise and skills from various fields and backgrounds. The Board is of the view that there is an optimum board balance and the Company is in compliance with Paragraph 15.02 of the MMLR in respect of the composition of the Board.

There are two (2) women Directors on Board which constitutes 25% of the Board composition. The Board deems the representation of women Directors as sufficient for the time being.

Overall, the Board is satisfied with the current number and composition of its members and is of the view that the members represent a diverse set of academic background, skills, knowledge and experience that are necessary to support the Group’s growth and success.

The Board composition in terms of each of the Directors’ industry and/or background experience, age and ethnic composition is as follows:-

Directors

Industry/Background Experience Age Composition Ethnic GenderPublic Service

Investment/Banking

Accounting/Finance

Engineering/Construction

Business / Entrepreneur

Legal/Regulatory

50 to 59 years

60 to 69 years

70 to 79 years

Bumiputera

Non-bumiputera

Male

Female

Dato’ Sri DiRaja Haji Adnan bin Haji Yaakob

√ √ √ √ √

Dato’ Sri Tew Kim Thin √ √ √ √ √

Dato’ Sri Kamaruddin bin Mohammed

√ √ √ √ √ √

Dato’ Indera Haji Abdul Rahim bin Mohd Ali

√ √ √ √ √

Dato’ Majid bin Mohamad √ √ √ √ √

Dato’ Ir. Noor Azmi bin Jaafar √ √ √ √ √

Puan Sharina Bahrin √ √ √ √ √

Ms. Teh Sew Hong √ √ √ √ √

In accordance with the Company’s Constitution, one-third of the Directors are required to retire from office at each Annual General Meeting (“AGM”) at least once in every three (3) years and may offer themselves for re-election. Directors who are appointed by the Board during the financial year are subject to re-election by shareholders at the next AGM held following their appointment.


31



B. Board Composition (cont’d)

The Board recognises the importance of boardroom diversity including gender, age, education background, ethnicity and socio-economic background in designing the composition of the Board while taking into account the pertinent skills, knowledge and experience necessary for the effective functioning of the Board. The Nomination & Remuneration Committee, considers candidates with the appropriate skills, expertise, experience and characteristics as well as level of commitment, resources and time that they can contribute for new appointments before submitting its recommendation to the Board for decision.

Further information on the activities of the Nomination & Remuneration Committee can be found in the Nomination & Remuneration Committee Report set out in this Annual Report.

C. Remuneration

The Board as a whole reviews the level of remuneration of the Directors to ensure that it is sufficient to attract and retain the Directors needed to lead the Company to growth and success. The level of remuneration of the Non-Executive Directors is structured to be aligned to the market and their duties and responsibilities. The individual Director does not participate in decision regarding his own remuneration package. The aggregate amount of Directors’ fees and benefits payable to the Directors are subject to approval by the shareholders at the Annual General Meeting.

The Directors’ fees for the year 2017 and benefits to the Directors for the period from 1 July 2018 up to first half of 2019 were approved by the shareholders at the 22nd AGM held on 25 June 2018.

Details of the remuneration of the Directors for the financial year 2018 are set-out below:-

Name of Directors Fees (RM)* Allowances (RM) Total (RM)

Dato’ Sri DiRaja Haji Adnan bin Haji Yaakob 25,000 95,750 120,750

Dato’ Sri Tew Kim Thin 20,000 88,581 108,581

Dato’ Sri Kamaruddin bin Mohammed 20,000 53,000 73,000

Dato’ Indera Haji Abdul Rahim bin Mohd Ali 20,000 53,0001 73,000

Dato’ Majid bin Mohamad 20,000 56,000 76,000

Dato’ Ir. Noor Azmi bin Jaafar 20,000 59,2501 79,250

Puan Sharina Bahrin 20,000 57,750 77,750

Ms. Teh Sew Hong 20,000 52,000 72,000

Notes:-* Subject to approval in the forthcoming AGM1 Inclusive of allowances received from subsidiaries

Directors’ fees for the year 2018 and benefits payable to the Directors from 1 July 2019 until the 24th AGM (June 2020) will be tabled for approval in the forthcoming 23rd AGM.

D. Directors’ Training and Development

All the Directors of the Company have attended the Mandatory Accreditation Programme prescribed by Bursa Securities.

The Directors are encouraged to attend seminars, briefings, courses and training programmes to keep abreast with the latest developments in the industry and business environment, regulatory updates or changes as well as to enhance their skills and knowledge. In order to ensure that the Board has sufficient knowledge to discharge its duties, the Company Secretary coordinates and notifies the Board members of training programmes from time to time.

32



D. Directors’ Training and Development (cont’d)

During the financial year, the Directors participated in seminars and training programmes in various capacities either as delegates and/or speakers as detailed below:-

Name of Director Programme

Dato’ Sri DiRaja Haji Adnan bin Haji Yaakob

• PresentedLawLecturesatInternationalIslamicUniversityMalaysia• JudiciarySeminar

Dato’ Sri Tew Kim Thin • MandatoryAccreditationProgramme

Dato’ Indera Haji Abdul Rahim bin Mohd Ali

• StateEconomicDevelopmentCorporationBoardTrainingProgramme• Anti-BriberyManagementSystemCertificationSchemeSeminar• ConferenceProgrammeForChartingNewHorizon-ManagingChange

Effectively • OrganisationRestructuringWorkshop

Dato’ Sri Kamaruddin bin Mohammed

• Seminaron‘WorkasASpiritualJourney’

Dato’ Ir. Noor Azmi bin Jaafar • Presented Seminar On ‘Taking The Next Steps After Graduation’ atUniversitiTeknologiMARA

Dato’ Majid bin Mohamad • BNM-FIDEForum-ManagingCyberRisks inFinancial InstitutionsandBoard Conversation

• InvestMalaysia2018-ConnectingStrengthAdvancingPerformance• WorldCapitalMarketSymposium-RenaissanceOfCapitalism• FIDEDistinguishedBoardLeadershipSeriesAndDinnerTalk• FocusGroupDiscussionForDialogueWithBNM• AnnualComplianceConference• IIFMSeminarOnIslamicFinancialMarkets• WinTheInnovationRace:UnlockingTheCreativityPowerOfAsians• CaptiveAsia• IBM-FIDELuncheonTalkOnIBMTHINKMalaysia• MalaysiaANewDawn• Malaysia-TakafulRendezvous• FintechDisruptionToBeEmbraced• 3rd Asean Takaful Summit

Puan Sharina Bahrin • MIAInternationalAccountantsConference• E-UsahawanWorkshop

Ms. Teh Sew Hong • MandatoryAccreditationProgramme• MalaysianCodeonCorporateGovernance&Bursa’sListingRequirements,

Application, Disclosure & Reporting Expectations For Principle B&C• CorporateStrategicAnalyticsI:EssentialsOfCorporateProposalAnalysis• AuditQualityProgramme• CreativeAccountingResultingInFraud


33


2. EFFECTIVE AUDIT AND RISK MANAGEMENT

A. Audit Committee

The Audit Committee of the Company comprises of four (4) Independent Non-Executive Directors and one (1) Non-Independent Non-Executive Director. The Audit Committee is chaired by an Independent Non-Executive Director, Puan Sharina Bahrin.

The Nomination and Remuneration Committee ensures that Directors who are financially literate, possess the appropriate level of expertise and experience and has a good understanding of the Company’s business are considered for membership of the Audit Committee.

The Audit Committee Report which provides an overview of the summary activities of the Audit Committee, is set out on pages 36 to 38 of this Annual Report.

B. Risk Management and Internal Control Framework

The Board acknowledges its responsibility to maintain a sound system of risk management and internal control to safeguard shareholders’ investment and the Group’s assets. The Board has approved a framework to formulate and review risk management policies and risk strategies. The Statement on Risk Management and Internal Control, which provides an overview of the management of risks and state of internal controls within the Group, is set out on pages 39 to 41 of this Annual Report.

3. COMMUNICATION WITH SHAREHOLDERS AND INVESTORS

A. Corporate Disclosures

The Board recognises the importance of timely dissemination of information to its shareholders and other stakeholders, and in line with its commitment to transparency and accountability, the Company observes the disclosure requirements under the MMLR and other applicable laws.

Shareholders are kept informed of any major and significant development of the Group through official announcements through Bursa Securities, press releases/press conferences on the Group’s significant corporate events and developments, publication of up-to-date information on the Group’s projects, financial information and general corporate information on the website amongst others. Due care is taken to ensure no market sensitive and material information is disseminated to any party without first announcing the information through the official website of Bursa Securities.

Information on the Group’s performance, operations and major developments are communicated to shareholders and investors through annual report, quarterly financial results, various announcements and disclosures made to Bursa Securities and the Company’s website at www.pasdec.com.my.

The Company has in place an internal Corporate Disclosure Policy to facilitate disclosure of information based on the requirements set out in the MMLR. It sets out the policies and procedures for disclosure of material information of the Group and communication with the media in a responsible, productive and positive manner whilst keeping the integrity of PASDEC Group in mind. The said policy is applicable to all Directors, those authorised to speak on the Group’s behalf as well as the employees of the Group.

B. Shareholders’ Communication via General Meetings

The Company’s general meetings serve as the primary channel for shareholders’ communication. It gives an opportunity to all shareholders to engage directly with the Company’s Directors and Senior Management as well as raise questions or seek clarification on the resolutions proposed at the general meetings, corporate developments and operations of PASDEC Group. Shareholders are encouraged to attend the general meetings and actively participate in the proceedings.

Where there is special business or where special resolutions are proposed, the explanation of the effects of such special business or special resolutions are provided in the notice of the general meeting. Notice for an AGM is sent to shareholders at least 21 days prior to the AGM in accordance with the MMLR, the Companies Act 2016 and the Company’s Constitution.

In line with MMLR, all resolutions are put to vote by poll. An independent scrutineer is appointed to observe the polling process and to tabulate the polling results.

This Statement on Corporate Governance has been authorised for release by the Board of Directors on 26 April 2019.

34

NOMINATION AND REMUNERATIONCOMMITTEE REPORT

COMPOSITION AND MEETINGS

The Nomination and Remuneration Committee comprises entirely of Non-Executive Directors, the majority of whom are Independent. The Committee is chaired by an Independent Director. Composition of the Committee members in the financial year 2018 and current (30 April 2019) is as follows:-

Dato’ Ir. Noor Azmi bin Jaafar Independent Non-Executive (Chairman)Dato’ Majid bin Mohamad Independent Non-ExecutivePuan Sharina Bahrin Independent Non-ExecutiveDato’ Sri Kamaruddin bin Mohammed Non-Independent Non-ExecutiveDato’ Sri Tew Kim Thin Ceased as member w.e.f. 16 May 2018

The Nomination and Remuneration Committee met three (3) times in 2018 and attendance of the Committee Members to the meetings:-

Name Attendance

1. Dato’ Ir. Noor Azmi bin Jaafar 3/3

2. Dato’ Majid bin Mohamad 3/3

3. Puan Sharina Bahrin 3/3

4. Dato’ Sri Kamaruddin bin Mohammed 3/3

5. Dato’ Sri Tew Kim Thin (ceased as member w.e.f. 16 May 2018) 2/2

After each meeting, Chairman of the Committee reported to the Board of Directors (“Board”) of Pasdec Holdings Berhad (“Company” or “PASDEC”) the activities of the Committee and the key recommendations for Board’s consideration. Minutes of each Nomination and Remuneration Committee meeting were recorded and tabled for confirmation at the following Committee meeting. Confirmed minutes of the Nomination and Remuneration Committee are tabled to the Board of PASDEC for notification.

DUTIES AND FUNCTIONS

The Nomination and Remuneration Committee is primarily responsible for the following:- 1. To assess and recommend to the Board candidates for directorship on the Board of the Company as well as membership of

the Board Committees and active subsidiaries of the Company.

2. To review and assess annually the overall composition of the Board in terms of appropriate size, required mix of skills, experience and core competencies, and the adequacy of balance between Executive Directors, Non-Executive Directors and Independent Directors.

3. To recommend to the Board on the appointment of Key Senior Management personnel.

4. To recommend to the Board compensation and remuneration packages of the Executive Director and Key Senior Management and their rewards based on the key performance indicators (“KPIs”).

5. To review the performance of the Group against the KPIs and recommend the rewards for the employees.

Detailed Terms of Reference of the Nomination and Remuneration Committee can be found on the Company’s website www.pasdec.com.my.


35

Nomination and Remuneration Committee Report

SUMMARY OF ACTIVITIES

Key matters considered by the Nomination and Remuneration Committee during the financial year 2018 included, among others, the following:

1. Reviewed its Terms of Reference and tabled to the Board for endorsement.

2. Recommended to the Board to consider the candidates who were seeking for re-election and re-appointment in the 22nd Annual General Meeting.

3. Made recommendations to the Board and/or endorsed the candidates proposed for appointment to the respective board of subsidiaries.

4. Discussed on the appointment of Executive Director of the Company and made the appropriate recommendation to the Board on the candidate, his remuneration package and terms of appointment.

5. Reviewed and recommended adjustments to the Organisation Structure of the Group for the consideration of the Board.

6. Assessed and recommended to the Board on the appointment of Chief Operating Officer, Senior Vice President Projects and other Key Senior Management personnel.

7. Discussed on the contract of service of the Internal Audit Manager and made its recommendation to the Audit Committee.

8. Discussed on the results of KPIs for 2017 and made its recommendation to the Board on salary increment and incentive for the senior managers and employees of PASDEC Group.

9. Discussed and decided on the proposed KPIs for the year 2018 of the Group for endorsement of the Board.

10. Requested Human Resources department to carry-out a holistic review of the Group’s existing Scheme of Service for tabling to the Committee.

The Committee agreed not to carry-out assessment of the Directors serving in 2017 during the year (2018) in view of the revamp of Board membership between October 2017 to early 2018.

30 April 2019

36

AUDIT COMMITTEE REPORT

Audit Committee (“Committee”) also acts as the Risk Management Committee for Pasdec Holdings Berhad (“PASDEC”) .

Composition of the Committee in the financial year 2018 and current (30 April 2019):-

Puan Sharina Bahrin Chairman Independent Non-Executive Director

Dato’ Sri Kamaruddin bin Mohammed Member Non-Independent Non-Executive Director

Dato’ Ir. Noor Azmi bin Jaafar Member Independent Non-Executive Director

Dato’ Majid bin Mohamad Member Independent Non-Executive Director

Ms Teh Sew Hong Member Independent Non-Executive Director

Attendance to Meeting for Financial Year 2018:-

Name of Director Total Meetings Attended

1. Puan Sharina Bahrin 7/7

2. Dato’ Sri Kamaruddin bin Mohammed 5/7

3. Dato’ Ir. Noor Azmi bin Jaafar 7/7

4. Dato’ Majid bin Mohamad 7/7

5. Ms Teh Sew Hong 6/7

TERMS OF REFERENCE

The scope of duties and responsibilities of the Committee stated in the Terms of Reference is available at our website www.pasdec.com.my.

COMPOSITION AND MEETINGS

The Committee consists of four (4) Independent Non-Executive Directors and one (1) Non-Independent Non-Executive Director. All members of the Committee are financially literate and have sufficient understanding of the Company’s business in order to effectively discharge their duties and responsibilities as members. Both Puan Sharina Bahrin and Ms Teh Sew Hong are Chartered Accountants and members of several professional accounting associations. The Company is in compliance with Paragraph 15.09 of the Main Market Listing Requirements (“MMLR”) of Bursa Malaysia Securities Berhad (“Bursa Securities”).

Aside from Committee members, attendance to the meetings includes the Head of Internal Audit and the Company Secretary, who is also the Secretary to the Committee. The Group Managing Director (“GMD”), Chief Operating Officer (“COO”), Senior Manager Finance & Accounts and other officers are invited to deliberate on matters related to their purview, as and when requested by the Committee.

At the onset of each meeting, action sheets are issued by Company Secretary on the decisions made and action required. These are then circulated to Management for their onward action. Minutes of each Committee meeting are recorded and tabled to the Board for notification. Chairman to the Committee reports activities at the Committee to the Board and the key recommendations for the Board’s consideration.


37

Audit Committee Report

KEY ISSUES CONSIDERED BY THE COMMITTEE IN 2018

INTERNAL AUDIT

• ReviewedGroupInternalAudit(“GIA”)’sstaffingrequirements,budget,longtermthree(3)yearsauditplanandannualauditplanto ensure sufficiency of resources, competencies and coverage of auditable entities with significant and high risks.

• Reviewed internalaudit reports forPASDECand itssubsidiaries (“PASDECGroup”) issuedbyGIAon theeffectivenessandadequacy of governance, risk management, internal control system, operational and compliance.

• Reviewedtheadequacyandeffectivenessofcorrectiveactions takenbyManagementonsignificant issuesraised includingstatus of completion achieved.

• Recommendedforadditionalimprovementopportunitiesintheareasofgovernance,riskmanagement,internalcontrolsystemsand efficiency.

• ReviewedPASDEC’sStatementofRiskManagementandInternalControlbasedonrisksandareascoveredbyGIA.• EscalatedtotheBoardonmattersthatrequiredBoardattentionanddeliberation.

EXTERNAL AUDIT

• EvaluatedtheperformanceofExternalAuditorsandrecommendedtheauditors'appointmentandremunerationtotheBoard.• ReviewedExternalAuditors’scopeofservicesandauditplan.• Deliberatedonexternalauditresults,auditreports,managementletterandreviewupdatesonactionstakenbyManagementfor

improvement.• DeliberatedandreportedtheresultofannualstatutoryaudittotheBoard.• Held discussions with the External Auditors and Internal Auditors once without the presence of Management on matters

concerning the audit.• ReviewedandevaluatedfactorsrelatingtotheindependenceoftheExternalAuditors.InensuringindependencetheCommittee:-

- took into consideration the criteria stipulated under Paragraph 15.21 of the MMLR when deciding on the External Auditors.- ensured audit partner responsible for external audit of PASDEC is subject to rotation at least every five (5) financial years

in accordance with the MIA By-Laws which requires that the engagement partner involved in the external audit should not remain in a key audit role beyond five (5) years. The last audit partner rotation was in 2014.

PASDEC generally engages the External Auditor solely for audit purposes. However, as and when their non-audit expertise is required, the Company may engage its firm for the provision of non-audit activities.

FINANCIAL RESULTS

• Reviewedthequarterlyfinancialresultsandannualfinancialstatements(“FinancialReports”)priortotheirrecommendationtothe Board for approval.

• AttheAuditCommitteemeetings,theFinancialReportswerepresentedbytheCOOandSeniorManager,Finance&Accountswherein the following matters were reviewed and confirmed, with clarification and/or additional information provided wherever required:- - Appropriate accounting policies had been adopted and applied consistently, and other statutory and regulatory requirements

have been complied with; - The Company has adequate resources to continue in operation for the foreseeable future; - Significant judgements made by Management in respect of matters such as impairment assessment, carrying value of

investment, and retirement benefits were prudent and the underlying assumptions and/or estimates used were reasonable in accordance with the requirements of the Malaysian Financial Reporting Standards (“MFRS”);

- The Financial Reports are fairly presented in conformity with the relevant accounting standards in all material aspects with special attention on new MFRS standards that will have impact on PASDEC Group’s Financial Reporting.

- Adequate processes and controls were in place for effective and efficient financial reporting and disclosure under MFRS and MMLR.

38

Audit Committee Report

RELATED PARTY TRANSACTION AND CONFLICT OF INTEREST

Reviewed any related party transaction and conflict of interest situation that may arise within the Group, including any transaction, procedures or course of conduct that raised questions of Management’s integrity.

The conflict of interest situation is explained in PASDEC’s Code of Conduct and Work Ethics. There is no conflict of interest situation escalated to the Audit Committee in the year under review.

RISK MANAGEMENT

The Committee also acts as Risk Management Committee for PASDEC Group. During the financial year 2018, the Committee:-

• Reviewedofriskmanagement’sresourcerequirements,scope,adequacyandactivities;• ReviewedoftheGroup’sstrategicrisksandprovidefeedbacktoManagementonrisksmitigationstrategiesandimprovementon

half yearly basis;• ReviewedoftheGroup’sdivisionalriskreportandprovisionoffeedbackonthemitigationstrategiesandimprovementonhalf

yearly basis; and• PresentedrisksthatrequiredBoard’sattentionattheBoardofDirectors’meetings.

GROUP INTERNAL AUDIT FUNCTION

The Committee is assisted by the GIA Department in the discharge of their duties and responsibilities. GIA is independent of operations and its primary responsibility is to provide assurance to the Audit Committee on the effectiveness of governance, risk management and internal control processes within the Company. GIA uses a risk-based approach to determine the priorities of the internal audit activities, consistent with the strategies of the Group.

Since PASDEC Group’s main business is Property Development, GIA’s main emphasis is on projects audit which covers all aspects of project development from planning to sales & marketing activities. In planning and execution of audit, GIA ensures that at least one (1) audit is conducted during the entire implementation cycle of a project.

Internal audit reports were issued to Management and they contain improvement opportunities, audit findings, Management responses and corrective actions in areas with significant risks and internal control deficiencies. Management provided the corrective and preventive actions as well as deadlines to complete the actions.

Reports that require significant improvement opportunities and/or show critical control deficiencies were tabled to the Audit Committee for deliberation on quarterly basis. Management were present at the Audit Committee meetings to respond and provide feedback on the progress of business process improvement opportunities identified by GIA.

Five (5) major audits were conducted in the financial year 2018 with main focus on project audits. Three (3) project audits and two (2) support service department audits were conducted in 2018. Besides that, five (5) minor assignments were conducted with emphasis on payment process to improve internal control. The total cost incurred for the GIA function in respect of the financial year ended 31 December 2018 amounted to RM311,924 (2017: RM187,923).

30 April 2019


39

STATEMENT ON RISK MANAGEMENTAND INTERNAL CONTROL

RISK MANAGEMENT

PASDEC’s Risk Management Policy

PASDEC is committed in managing risk in order to benefit the business and manage the costs of risk. To meet this commitment:

1. Risk is to be every employee’s business. All employees are required to be responsible and accountable for managing risk in so far as is reasonably practicable within their area of responsibilities;

2. Sound risk management principles and practices must become part of the normal management strategy for all business units, divisional and departments within PASDEC; and

3. The management of risk is to be integrated into PASDEC’s existing planning and operational processes and is to be fully recognised in the reporting processes.

Risk Management Framework

The Group has formalised the Risk Management Framework in early 2013. The Risk Management Framework involves all level of management and employees within the Group.

LEVEL ROLES

AUDIT COMMITTEE (“AC”) OVERSIGHT

MANAGEMENT EXECUTIVE COMMITTEE (“MEXCO”) STRATEGIC LEVEL

HEAD OF DEPARTMENTS (“HOD”) TACTICAL LEVEL

RISK CHAMPIONS WORKING LEVEL

RISK AWARENESS FOR ALL EMPLOYEES

RISK MANAGEMENT UNIT(RMU):

Monitor, Review, Communication,

Consultation

40

Statement on Risk Management and Internal Control

Management Executive Committee (“MEXCO”) which consist of Group Managing Director (“GMD”) and Senior Management are overall responsible for implementation of PASDEC’s risk management. On risk management matters, they report to AC (which also actsastheRiskManagementCommittee)onhalfyearlybasis.TheRiskManagementUnit(“RMU”)assistsSeniorManagementtomonitor, review, communicate and provide consultation and training for PASDEC’s risk management. The Group’s risk management process is depicted below:-

Risk Assessment

Risk Assessment is a process of risk identification, analysis and evaluation of risks before relevant treatments are implemented.

IneachBusinessUnitsandDepartments,RiskChampionswereidentifiedandappointedbyrespectiveHeads.TheRiskChampionswork hand in hand with respective Heads to conduct risks assessment on their areas of responsibilities. The Risk Champions have attendedan in-houseworkshopconductedbyRMUon riskassessmentandcontinuously inconsultationwithRMU to identify,analyse and evaluate those risks.

On 13 March 2018, a refresher workshop on Risk Management was conducted to improve on overall risk management function and reporting for PASDEC Group.

All therisksandtreatmentplansareregistered inriskregisters.TheGrouphigh level risksregister ismaintainedbyRMU.RMUwill review the risks registers and prepare a summary for presentation to MEXCO on half yearly basis. In the MEXCO meetings the risks are further deliberated before the risks report are presented to AC that acts as the Risk Management Committee in PASDEC. PASDEC’s key risks correlate with current economic condition, property industry climate and funding. The treatments of risks are continuous on-going process.

The high impact major risks treatments for PASDEC in 2018 are as follows:

1. Refocused on Property Development Sector.2. Disposal of non-profitable unrelated business activities.3. Continuously sell stock of completed projects with Certificate of Compliance and Completion (CCC).4. Focus on internal funding by improving cash flow management through sales of project; improvement on credit collection and

careful spending.

Communicate & Consultation

Monitor & Review

Establish the Context

Risk Assessment

Risk Identification

Risk Analysis

Risk Evaluation

Risk Treatment


41

Statement on Risk Management and Internal Control

INTERNAL CONTROL STATEMENT

Internal controls are embedded in the Group’s decision making and operations. The followings are in place and implemented:

1. Clear organization structure with defined reporting lines.2. Defined level of authorities and lines of responsibilities from operating units up to the Board of Directors level to ensure

accountabilities for risk management and control activities. The authority limit manual was revised in August 2018.3. A detailed budgeting process for each business which is approved by both operating level and the Board.4. Periodic reporting of actual results and review against the budget.5. Regular information provided by Management to the Board of Directors and its committees, covering financial performance

and key performance indicators including staff utilization and cash flow.6. Clearly documented procedure on award of contract. A minimum of three quotations is called for and tenders are awarded

based on criteria such as pricing, quality, track record and speed of delivery.7. Clearly documented standard operating procedures manuals which set out policies and procedures for day to day operations

to be carried out. Regular reviews are performed to ensure that documentation remains current and relevant. 8. Whistleblowing Policy, Code of Ethics & Business Conduct and Internal Control Manual. A briefing to employees was conducted

to provide in depth understanding on the documents.9. Periodic examination of business processes and the state of internal control by the internal audit function. Reports on the

reviews carried out by the internal audit function are submitted on a regular basis to the AC.10. Regular technical meeting to improve control over project supervision and resolve issues relates to project delivery and quality. 11. Inception of Inspectorate Department to improve internal controls over project execution.

In 2018, a MEXCO was introduced to improve on PASDEC’s overall operation efficiency and state of internal control.

The Board of Directors acknowledges its responsibility of ensuring the effectiveness of risk management system and adequacy of the internal control system, financial, operational and compliance controls within the Group.

The Board of Directors periodically review all internal control mechanism as to ensure its strengths are being maintained and weaknesses are being remedied.

THE REVIEW OF THE STATEMENT BY EXTERNAL AUDITORS

The External Auditors have reviewed this Statement on Risk Management and Internal Control for inclusion in the Annual Report of the Group for the financial year ended 31 December 2018 and reported to the Board that nothing has come to their attention that cause them to believe that the statement intended to be included in the annual report of the Group, in all material respects: (a) has not been prepared in accordance with the disclosures required by Paragraphs 41 and 42 of the Statement on Risk Management and Internal Control: Guidelines for Directors of Listed Issuers, or (b) is factually inaccurate.

30 April 2019

42

ADDITIONAL DISCLOSURE REQUIREMENTSPursuant to the Main Market Listing Requirements of Bursa Malaysia Securities Berhad

1. Utilisation of Proceeds

The utilisation of the proceeds of RM40,036,920 raised from the renounceable Rights Issue which was completed on 11 July 2018 is as follows:-

No PurposeProposed Utilisation

RM’000

Actual Utilisation

RM’000

Estimated Timeframe as per Abridged

Prospectus dated16 May 2018

1 Land premium 7,436 2,281 Within three months

2 Property development projects 18,000 6,477 Within two years

3 Working capital purpose 13,501 8,415 Within one year

4 Expenses for the Rights Issue with Warrants 1,100 1,100 Within one month

Total 40,037 18,273

The Group, on 31 January 2019, announced variation in the utilisation of the balance remaining from the proceeds raised from the renounceable Rights Issue as follows:-

No Particulars

Remaining to beutilised as at

31 December 2018 RM’000

Amount varied for utilisation as announced

on 31 January 2019 RM’000

1 Land premium 5,155 (967)

2 Property development projectsOn-going and new projects as per announcement

dated 31 January 2019

11,523-

(8,889)8,889

3 Working capital purpose 5,086 967

Total 21,764 -

2. Audit and Non-Audit Fees

The amount of audit fees and non-audit fees paid or payable to the external auditors (or a firm or corporation affiliated to the firm) for the financial year ended 31 December 2018 are as follows:-

Company RM’000

Group RM’000

Audit fees 40 372

Non-audit fees * - 108

* The non-Audit Fees are in relation to consultancy and advisory services provided by the external auditors.

3. Material Contracts

Save as disclosed in Note 33 of the Financial Statements in this Annual Report, there were no material contracts including contracts relating to loans (not being contracts entered into in the ordinary course of business) entered into by the Group involving the interests of Directors and major shareholders which were still subsisting as at the end of the financial year or which were entered into since the end of the previous financial year.


43

DIRECTORS’ RESPONSIBILITY STATEMENT

The Directors are responsible to ensure that the annual audited financial statements of the Group and the Company are properly drawn up in accordance with the applicable approved accounting standards in Malaysia, the provisions of the Companies Act 2016 and the Main Market Listing Requirements of Bursa Malaysia Securities Berhad so as to give a true and fair view of the state of affairs, the financial position and the cash flow of the Group and the Company for the financial year ended 31 December 2018.

In preparing these financial statements, the Directors have:-

• adoptedandappliedtheappropriateandrelevantaccountingpoliciesthatareappliedconsistently;• madereasonableandprudentjudgementsandestimates;and• preparedthefinancialstatementsonagoingconcernbasis.

The Directors are responsible for ensuring that the Company keeps proper accounting records which disclose with reasonable accuracy at any time the financial position of the group and the Company which enable them to ensure that the financial statements comply with the Companies Act 2016.

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

44

ANALYSIS OF SHAREHOLDINGSAs At 10 June 2019

Issued and Paid-up Shares : 400,369,200Class of Shares : Ordinary Shares Voting Rights : One vote per ordinary share

ANALYSIS OF SHAREHOLDINGS (Without aggregating securities from different securities accounts belonging to the same person)

No. of No. ofSize of Shareholdings Shareholders % Shares %

1 - 99 10 0.27 325 0.00100 - 1,000 1,390 37.79 1,338,082 0.331,001 - 10,000 1,581 42.99 7,217,530 1.8010,001 - 100,000 572 15.55 17,682,393 4.42100,001 - less than 5% of issued shares 123 3.34 107,254,820 26.7920,018,460 and above of issued shares 2 0.05 266,876,050 66.66

Total 3,678 100.00 400,369,200 100.00

DIRECTORS’ SHAREHOLDINGS As per register of directors’ shareholdings

Direct Indirect No. of No. of Name Shares % Shares %

Dato’ Sri DiRaja Haji Adnan bin Haji Yaakob - - - -Dato’ Sri Tew Kim Thin 523,320 0.13 175,372,1001 43.80Dato’ Sri Kamaruddin bin Mohammed - - - -Dato’ Indera Haji Abdul Rahim bin Mohd Ali 10,000 0.00# - -Dato’ Ir. Noor Azmi bin Jaafar - - - -Puan Sharina Bahrin - - - -Mr. Tew Liang Tze 100,000 0.02 161,695,4601 40.38(Alternate Director to Dato’ Sri Tew Kim Thin)

Notes:-1 Deemed interested pursuant to Section 8 of the Companies Act 2016.# negligible

THIRTY LARGEST SHAREHOLDERS (Without aggregating securities from different securities accounts belonging to the same person)

No. Name of Shareholder No. of Shares %

1. Jasa Imani Sdn. Bhd. 160,480,400 40.08

2. Perbadanan Kemajuan Negeri Pahang 106,395,650 26.57

3. Alliancegroup Nominees (Tempatan) Sdn. Bhd. 13,000,000 3.25 - Pledged Securities Account for Tew Kim Kiat

4. Cimsec Nominees (Tempatan) Sdn. Bhd. 8,692,000 2.17 - Pledged Securities Account for Lim Boon Ann

5. Mujur Sepakat Sdn. Bhd. 8,003,600 2.00

6. Buma Bina Sdn. Bhd. 7,529,940 1.88

7. Lai Hong Choo 6,592,000 1.65

8. Tan Chee Chuan 4,576,100 1.14


45

Analysis of ShareholdingsAs At 10 June 2019

THIRTY LARGEST SHAREHOLDERS (CONT’D.) (Without aggregating securities from different securities accounts belonging to the same person)

No. Name of Shareholder No. of Shares %

9. Maybank Nominees (Tempatan) Sdn. Bhd. 4,262,100 1.06 - Pledged Securities Account for Khoo Bee Lian

10. Tee Kian Heng 3,059,500 0.76

11. Maybank Nominees (Tempatan) Sdn. Bhd. 2,781,800 0.69 - Pledged Securities Account for Tan Kian Aik

12. Chin Kian Fong 2,575,420 0.64

13. Cimsec Nominees (Tempatan) Sdn. Bhd. 2,569,680 0.64 - CIMB Bank for Tan Sow Peng

14. Yeoh Phek Leng 2,511,000 0.63

15. Maybank Nominees (Tempatan) Sdn. Bhd. 2,428,000 0.61 - Yap Koon Teck

16. S’ng Hooi Seah 1,618,500 0.40

17. Alliancegroup Nominees (Tempatan) Sdn. Bhd. 1,384,040 0.35 - Pledged Securities Account for Lee Yoke Lin

18. Tan Ban Seng 1,336,800 0.33

19. Lim Kia Chet 1,238,300 0.31

20. Zenith Aim Sdn. Bhd. 1,215,060 0.30

21. Chin Kiam Hsung 1,106,360 0.28

22. Chin Khee Kong & Sons Sendirian Berhad 968,680 0.24

23. Ong Ah @ Wong Ah Li 785,800 0.20

24. Public Nominees (Tempatan) Sdn. Bhd. 778,300 0.19 - Pledged Securities Account for Su Suit Chai

25. Public Nominees (Tempatan) Sdn. Bhd. 752,400 0.19 - Pledged Securities Account for Tan Kah Joan

26. Tan Chee Chuan 730,040 0.18

27. West River Engineering Sdn. Bhd. 700,100 0.17

28. Kenanga Nominees (Tempatan) Sdn. Bhd. 676,620 0.17 - Pledged Securities Account for Chin Kiam Hsung

29. Tew Noon Hoe 671,440 0.17

30. Cimsec Nominees (Tempatan) Sdn. Bhd. 659,000 0.16 - Pledged Securities Account for Ang Kok Chia

350,078,630 87.44

SUBSTANTIAL SHAREHOLDERS

Direct Indirect No. of No. of Name Shares % Shares %

Jasa Imani Sdn. Bhd. 160,480,400 40.08 - -Perbadanan Kemajuan Negeri Pahang 106,395,650 26.57 - -Dato’ Sri Tew Kim Thin 523,320 0.13 175,372,100* 43.80

* Deemed interested pursuant to Section 8 of the Companies Act 2016.

46

ANALYSIS OF WARRANT HOLDINGSAs At 10 June 2019

No. of Warrants issued : 114,391,200Exercise Price of Warrants : RM1.00Expiry Date : 3 July 2023

ANALYSIS OF WARRANT HOLDINGS (Without aggregating securities from different securities accounts belonging to the same person)

No. of No. ofSize of Holdings Holders % Holdings %

1 - 99 4 0.82 239 0.00100 - 1,000 64 13.09 34,920 0.031,001 - 10,000 188 38.45 920,700 0.8010,001 - 100,000 181 37.01 7,348,301 6.42100,001 - 5,719,559 51 10.43 31,528,840 27.565,719,560 and above 1 0.20 74,558,200 65.18

Total 489 100.00 114,391,200 100.00

DIRECTORS' WARRANT HOLDINGS As per register of directors’ shareholdings

Direct Indirect No. of No. ofName Warrants % Warrants %

Dato’ Sri DiRaja Haji Adnan bin Haji Yaakob - - - -Dato’ Sri Tew Kim Thin 149,520 0.13 77,609,800 67.84Dato’ Sri Kamaruddin bin Mohammed - - - -Dato’ Indera Haji Abdul Rahim bin Mohd Ali - - - -Dato’ Ir. Noor Azmi bin Jaafar - - - -Puan Sharina Bahrin - - - -Mr. Tew Liang Tze - - - -(Alternate Director to Dato’ Sri Tew Kim Thin)

THIRTY LARGEST WARRANT HOLDERS (Without aggregating securities from different securities accounts belonging to the same person)

No. Name of Holders No. of Warrants %

1. Jasa Imani Sdn. Bhd. 74,558,200 65.18

2. Gan Ah Kow 4,036,000 3.53

3. Buma Bina Sdn. Bhd. 3,335,640 2.92

4. Cimsec Nominees (Tempatan) Sdn. Bhd. 3,192,000 2.79 - Pledged Securities Account for Lim Boon Ann

5. Tew Kim Kiat 2,704,440 2.36

6. Lim Kian Chong 2,000,000 1.75

7. Tan Chee Chuan 1,806,000 1.58

8. Tan Chee Chuan 1,359,440 1.19

9. Maybank Nominees (Tempatan) Sdn. Bhd. 1,015,200 0.89 - Pledged Securities Account for Kek Lian Lye


47

THIRTY LARGEST WARRANT HOLDERS (CONT’D.)(Without aggregating securities from different securities accounts belonging to the same person)

No. Name of Holders No. of Warrants %

10. Public Nominees (Tempatan) Sdn. Bhd. 1,000,000 0.87 - Pledged Securities Account for Tan Kah Joan

11. Lee Kok Hoong 661,000 0.58

12. Cimsec Nominees (Tempatan) Sdn. Bhd. 648,480 0.57 - CIMB Bank for Tan Sow Peng

13. Lim Keng Jin 630,000 0.55

14. Kenanga Nominees (Tempatan) Sdn. Bhd. 608,500 0.53 - Pledged Securities Account for Gan Boon Guat

15. Mujur Sepakat Sdn. Bhd. 461,100 0.40

16. Chong Keng Seng 440,000 0.38

17. Alliancegroup Nominees (Tempatan) Sdn. Bhd. 395,440 0.35 - Pledged Securities Account for Lee Yoke Lin

18. Zenith Aim Sdn. Bhd. 347,160 0.30

19. Kenanga Nominees (Tempatan) Sdn. Bhd. 334,500 0.29 - Pledged Securities Account for Kwong Ming Kwei

20. Mohamed Zaiman bin Mohd Noor 325,700 0.28

21. Ling Sing Tiong 315,000 0.28

22. PM Nominees (Tempatan) Sdn. Bhd. 300,000 0.26 - Pledged Securities Account for Tan Cheoh Leong (B)

23. Teh Swee Heng 300,000 0.26

24. Kenanga Nominees (Tempatan) Sdn. Bhd. 298,100 0.26 - Rakuten Trade Sdn. Bhd. for Chew Shean Meng

25. HLIB Nominees (Tempatan) Sdn. Bhd. - Hong Leong Bank Bhd for Ewe Hong Khoon 290,100 0.25

26. Chong Keng Seng 270,000 0.24

27. Tee Seng Hu 254,000 0.22

28. Goh Chooi Eam 250,000 0.22

29. Lim Kia Chet 247,800 0.22

30. Maybank Securities Nominees (Tempatan) Sdn. Bhd. 225,000 0.20 - Pledged Securities Account for Nur Azrina binti Abdul Aziz

102,608,800 89.70

Analysis of Warrant HoldingsAs At 10 June 2019

48

LIST OF PROPERTIES

No Location TenureDecription and Existing Use

Land Area / Floor Area (sqm)

Net Book Value @ 31.12.2018

(RM)

Year of Acquisition

KUANTAN

1 Mahkota Square Leasehold Expiring: Year 2081

OfficeUnits 4,331.00 4,982,598 1997

2 Kompleks Teruntum Leasehold Expiring: Year 2075

Shop/OfficeUnits 1,601.52 1,707,867 1991

3 Menara Zenith Leasehold Expiring: Year 2106

OfficeUnits 13,104.80 43,001,333 2011

4 Role Shop Leasehold Expiring: Year 2106

Shop/OfficeUnits 2,428.00 8,887,817 2011

5 Construction Town Leasehold Expiring: Year 2106

Shop/OfficeUnits - 4,776,590 2011

6 ICT Hub Leasehold Expiring: Year 2106

Shop/OfficeUnits 3,762.00 - 2011

7 Kuantan Tembeling Resort Leasehold Expiring: Year 2092

ResidentialUnits 570.24 718,647 1997

8 Pasdec Pesona Leasehold Expiring: Year 2105

Land under development

2,034.00 3,801,168 2013

9 Kuantan Piazza, Tanjung Lumpur

Leasehold Expiring: Year 2106

Land held for development

12,150.00 902,015 1996

10 Astana Villa Leasehold Expiring: Year 2092


69,122.50 5,535,361 1997

11 Pasdec Avenue Leasehold Expiring: Year 2096


60,049.00 14,884,139 2011

12 Mahkota Idaman Leasehold Expiring: Year 2097

Shop/OfficeUnits 880.00 1,257,477 1997

13 Kobat View Leasehold Expiring: Year 2097


6,605.00 - 1999

14 Mahkota Perdana 3 Leasehold Expiring: Year 2102


10,579.00 - 1997

15 Semambu Baru Leasehold Expiring: Year 2111


2,996.00 295,822

16 Semambu Block D Leasehold Expiring: Year 2095


1,561.00 -

17 Vista Verde Freehold Land under development

9,106.00 16,300,968 2011

18 Harbour Park Leasehold Expiring: Year 2113


659,504.00 10,959,280 1996

19 Bukit Tenggek LeaseholdExpiring: Year 2095


200,000.00 396,806 1997

20 Sungai Pohoi, Gambang



239,396.00 1,936,225 2015

21 Kampung Pandan Leasehold Expiring: Year 2114


117,360.10 8,200,000 2017


49




(RM)

Year of Acquisition

22 Bandar Putra (Lot 13807) Freehold Land held for development

41,445.00 -

23 Kondominium, Bandar Putra

Freehold Land held for development

17,536.00 2,311,167 2003

24 Bandar Putra (Lot 137673)


447,400.00 23,147,222 2003

25 Bandar Putra (Lot 137674)


99,690.00 5,271,989 2003

26 Bandar Putra Residential Freehold Land held for development

76,642.00 6,242,604 2003

27 Bandar Putra (Lot 149169) B.Betanez


80,180.00 4,079,446 2003

28 Bandar Putra Residential 6A9


17,313.00 1,600,033 2003

29 Putra Business Centre Freehold ShopUnit 1,009.00 1,920,150 2003

30 Bandar Damansara Pakej 4

Freehold Land under development

7,003.90 3,338,167 2005

31 Bandar Damansara (Pertanian)


1,153,500.00

50,099,583

2005

32 Bandar Damansara (L.Cost)


41,113.70 2005

33 Balok Perdana Residential 3AF4 & 3AF5



15,796.00 13,335,157 1997

34 Balok Perdana Commercial 2A2F2 & 2A2F3



14,593.00 3,091,458 1997

35 Balok PerdanaResidential 3AF7 & Zon 5



48,210.00 372,460 1997

36 ChendorUtamaBlock2C, 3B, F4, F5 & F6



494,779.00 4,093,028 1997

37 Chendor Perdana Leasehold Expiring: Year 2114


2,449,610.00 - 2015

38 Gambang, Mukim Kuala Kuantan

Leasehold Land held for development

2,280,832 2018

PEKAN

39 Komersil Peramu Leasehold Expiring: Year 2104


10,256.00 1,630,275 1997

ROMPIN

40 Kampung Sembayan Leasehold Expiring: Year 2094


3,481,500.00 144,545 1997

41 Bandar Muadzam Land under development

120,780 2011

List of Properties

50




(RM)

Year of Acquisition

MARAN

42 Tanah Maran, Mukim Chenor



121,406.00 1,054,353 2011

JERANTUT

43 Kuala Tembeling Leasehold Expiring: Year 2076


665,640.45 73,079 1997

BENTONG

44 Bukit Tinggi Freehold Land held for development

366,200.00 36,708,544 2002

RAUB

45 Raub Perdana F1 Leasehold Expiring: Year 2093


4,777.15 492,622 1997

46 Raub Perdana F2 (Block) Leasehold Expiring: Year 2100


295,100.00 - 1997

47 Kampung Besu Leasehold Expiring: Year 2023


80,800.00 93,964 1997

CAMERON HIGHLANDS

48 Lembah Ruil Leasehold Expiring: Year 2052


458,433.00 184,414 2011

SABAH

49 Alamesra Leasehold Expiring: Year 2098


27,478.18 25,610,217 2013

List of Properties

FINANCIAL StAteMeNtS

52 Directors’ Report

56 Statement by Directors

56 Statutory Declaration

57 Independent Auditors’ Report

61 Statements of Comprehensive Income

63 Statements of Financial Position

65 Statements of Changes in Equity

68 Statements of Cash Flows

70 Notes to the Financial Statements

What’s Inside This Report

52

DIRECTORS' REPORT

The directors of Pasdec Holdings Berhad hereby submit their report together with the audited financial statements of the Group and of the Company for the financial year ended 31 December 2018.

Principal activities

The principal activities of the Company are those of investment holding and provision of management services to the subsidiaries.

The principal activities of the subsidiaries are described in Note 18 to the financial statements.

There have been no significant changes in the nature of the principal activities during the financial year.

Results

Group Company RM RM

Loss net of tax 21,735,620 31,233,924

Loss attributable to:Owners of the parent 19,918,517 31,233,924 Non-controlling interests 1,817,103 -

21,735,620 31,233,924

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

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

Dividend

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

Directors

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

YB Dato’ Sri DiRaja Haji Adnan bin Haji YaakobYH Dato’ Sri Tew Kim ThinYH Dato’ Sri Kamaruddin bin Mohammed YH Dato’ Indera Haji Abdul Rahim bin Mohd Ali *YH Dato’ Ir. Noor Azmi bin Jaafar *Ms. Sharina binti Bahrin YH Dato’ Majid bin Mohamad (Resigned on 30 April 2019)Ms. Teh Sew Hong (Resigned on 30 April 2019)Mr. Tew Liang Tze (Alternate Director to YH Dato’ Tew Kim Thin)

* These directors are also directors of certain Company’s subsidiaries.


53

Directors’ Report

Directors (cont’d.)

The names of the directors of the Company’s subsidiaries in office since the beginning of the financial year to the date of this report (not including the directors listed above) are:

YH Dato’ Abdul Ghani bin L. SulaimanYH Dato’ Haji Mohamad Nor bin AliYH Dato’ Abdullah bin A. RasolMr. Goh Song HanYH Dato’ Tok Teng SaiMr. Ir. Dr. Zulhkiple bin A. BakarMr. Ahmad Rosdi bin IsmailYH Dato’ Zuber bin Haji ShamsuriYH Dato’ Poovendhran Kevin PatherMr. Piyush SharmaMr. Tew Kim Kiat (Appointed on 7 August 2018)Mr. Kamal Hakim bin Abd Rahman (Appointed on 20 August 2018)Mr. Zulkarnain bin Hashim (Resigned on 6 September 2018)Ms. Suzy Suzanna Machtub (Resigned on 6 September 2018)Ms. Shariff Sherry binti Sharif Arab (Appointed on 22 October 2018)Tuan Haji Anwar bin MatNor (Resigned on 26 October 2018)Mr. Arif bin Md Taib (Appointed on 15 January 2019)Mr. Gabriel Mokgoko (Resigned on 8 April 2019)YH Dato’ Ahmad Zahar bin Mohd Zaman (Resigned on 30 April 2019)

Directors’ benefits

Neither at the end of the financial year, nor at any time during that year, did there subsist any arrangement to which the Company was a party, whereby the directors might 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 benefits included in the aggregate amount of emoluments received or due and receivable by the directors or the fixed salary of a full-time employee of the Company as shown in Note 11 to the financial statement) by reason of a contract made by the Company or a related corporation with any 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.

At the date of this report, no indemnity was given to or insurance effected for any directors and officers of the Company.

Directors’ interest

According to the register of directors’ shareholdings, the interests of directors in office at the end of the financial year in shares in the Company and its related corporations during the financial year were as follows:

Number of ordinary shares 1 January 31 December 2018 Acquired Sold 2018

Direct interest:Ordinary shares of the Company:YH Dato’ Sri Tew Kim Thin 373,800 149,520 - 523,320 YH Dato’ Indera Haji Abdul Rahim bin Mohd Ali 10,000 - - 10,000 Mr. Tew Liang Tze - 100,000 - 100,000

Indirect interest: 2

Ordinary shares of the Company:YH Dato’ Sri Tew Kim Thin 86,014,200 88,796,9003 - 174,811,100 Mr. Tew Liang Tze 80,867,900 80,827,5604 - 161,695,460

54

Directors’ interest (cont’d.)

Number of warrants held 1 January 31 December 2018 Acquired Sold 2018

Direct interest:YH Dato’ Sri Tew Kim Thin - 149,520 - 149,520


YH Dato’ Sri Tew Kim Thin - 77,609,800 - 77,609,800

Holding company’s interest Number of ordinary shares 1 January 31 December 2018 Acquired Sold 2018


Ordinary shares of the Company:YH Dato’ Sri Tew Kim Thin 80,000,000 80,480,4001 - 160,480,400 Mr. Tew Liang Tze 80,000,000 80,480,4001 - 160,480,400

1 Pursuant to Rights Issue with Warrants 2 Deemed interest pursuant to Section 8 of the Companies Act 20163 Pursuant to Rights Issue with Warrants, Mandatory General Offer and purchase from open market4 Pursuant to Rights Issue with Warrants and Mandatory General Offer

Dato’ Sri Tew Kim Thin, by virtue of his interest in shares in the Company is also deemed interested in shares in all the Company’s subsidiaries to the extent that the Company has an interest.

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

Issue of shares

During the financial year, the Company increased its issued and paid-up ordinary share capital from RM250,368,000 to RM284,685,360 by way of issuance of 114,391,200 rights shares together with 114,391,200 free detachable warrants on the basis of one warrant for every one rights share subscribed, an issue price of RM0.35 per right share. The fair value of the rights shares is RM0.30 per rights share.

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

Holding company

The holding corporation of the Company is Jasa Imani Sdn. Bhd., a company incorporated in Malaysia under the Companies Act 2016.

Other statutory information

(a) Before the statements of comprehensive income and statements of financial position of the Group and of the Company were made out, the directors took reasonable steps:

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

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

Directors’ Report


55

Other statutory information (cont’d.)

(b) At the date of this report, the directors are not aware of any circumstances which would render:

(i) the amount written off for bad debts or the amount of the provision for doubtful debts in the financial statements of the Group and of the Company inadequate to any subtantial extent; and

(ii) the values attributed to the current assets in the financial statements of the Group and of the Company misleading.

(c) At the date of this report, the directors are not aware of any circumstances which have arisen which would render adherence to the existing method of valuation of assets or liabilities of the Group and of the Company misleading or inappropriate.

(d) 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 financial statements misleading, other than as disclosed in subsequent events below.

(e) At the date of this report, there does not exist:

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

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

(f) In the opinion of the directors:

(i) although there is a material uncertainty related to the events or conditions that may cast significant doubt on the Group’s and the Company’s ability to continue as a going concern, the directors believe that no contingent or other liability has become enforceable or is likely to become enforceable which will or may affect the ability of the Group or of the Company to meet their obligations when they fall due as disclosed in Note 2.1; and

(ii) no item, transaction or event of a material and unusual nature has arisen in the interval between the end of the financial year and the date of this report which is likely to affect substantially the results of the operations of the Group or of the Company for the financial year in which this report is made, other than as disclosed as subsequent events in Note 40.

Significant events and subsequent event

Details of the significant events and subsequent event are disclosed in Note 40 to the financial statements.

Auditors

The auditors, Hanafiah Raslan & Mohamad, have expressed their willingness to continue in office.

Auditors’ remuneration is as follows:

Group Company RM RM

Hanafiah Raslan & Mohamad 234,000 40,000 Other auditors 138,169 -

372,169 40,000

To the extent permitted by law, the Company has agreed to indemnify its auditors, Hanafiah Raslan & Mohamad, as part of the terms of their audit engagement against claims by third parties arising from the audit (for an unspecified amount). No payment has been made to indemnify Hanafiah Raslan & Mohamad during or since the financial year.

Signed on behalf of the Board in accordance with a resolution of the directors dated 10 June 2019.

Dato’ Sri DiRaja Haji Adnan bin Haji Yaakob Dato’ Sri Tew Kim Thin

Directors’ Report

56

STATEMENT BY DIRECTORSPursuant to Section 251 (2) of the companies Act 2016

STATUTORY DECLARATIONPursuant to Section 251(1)(b) of the Companies Act 2016

We, Dato’ Sri DiRaja Haji Adnan bin Haji Yaakob and Dato’ Sri Tew Kim Thin, being two of the directors of Pasdec Holdings Berhad, do hereby state that, in the opinion of the directors, the accompanying financial statements set out on pages 61 to 153 are drawn up in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act 2016 in Malaysia so as to give a true and fair view of the financial position of the Group and of the Company as at 31 December 2018 and of their financial performance and cash flows for the year then ended.

Signed on behalf of the Board in accordance with a resolution of the directors dated 10 June 2019.

Dato’ Sri DiRaja Haji Adnan bin Haji Yaakob Dato’ Sri Tew Kim Thin

I, Goh Song Han, being the officer primarily responsible for the financial management of Pasdec Holdings Berhad, do solemnly and sincerely declare that, the accompanying financial statements set out on pages 61 to 153 are in my opinion correct, and I make this solemn declaration conscientiously believing the same to be true and by virtue of the provisions of the Statutory Declarations Act 1960.

Subscribed and solemnly declared bythe abovenamed Goh Song Han atKuantan in the state of Pahang Darul Makmuron 10 June 2019 Goh Song Han (MIA No.: CA6372)

Before me,


57

INDEPENDENT AUDITORS' REPORTto the members of Pasdec Holdings Berhad (Incorporated in Malaysia)

Report on the audit of the financial statements

Opinion

We have audited the financial statements of Pasdec Holdings Berhad, which comprise the statements of financial position as at 31 December 2018 of the Group and of the Company, and statements of comprehensive income, statements of changes in equity and statements of cash flows of the Group and of the Company for the year then ended, and notes to the financial statements, including a summary of significant accounting policies, as set out on pages 61 to 153.

In our opinion, the accompanying financial statements of the Group and of the Company give a true and fair view of the financial position of the Group and of the Company as at 31 December 2018, and of their financial performance and their cash flows for the year then ended in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act 2016 in Malaysia.

Basis for opinion

We conducted our audit in accordance with approved standards on auditing in Malaysia and International Standards on Auditing. Our responsibilities under those standards are further described in the Auditors’ responsibilities for the audit of the financial statements section of our report.

Material uncertainty related to going concern

We draw attention to Note 2.1 of the financial statements, which indicates that the Group has reported a net loss of RM21,735,620 for the year ended 31 December 2018. Further, the Company has provided corporate guarantees totaling BWP167,100,000 and ZAR8,000,000 (approximately RM66,776,713) to the preference shareholders, lenders and creditors of Pasdec Automotive Technologies (Bostwana) (Pty) Ltd (“PAT BW”), a subsidiary of the Company. The said subsidiary has reported a net loss of RM14,346,247, net current liabilities of RM110,051,559 and negative cash and cash equivalents of RM17,324,163. As disclosed in Note 26 to the financial statements, the subsidiary has breached the financial covenants of the loans and borrowings resulted in the loans and borrowings of the Group amounting to RM35,206,019 being reclassified to current liabilities as at 31 December 2018.

These events or conditions, along with other matters as set forth in Note 2.1 indicate that a material uncertainty exists that may cast significant doubt on the Group’s and the Company’s ability to continue as a going concern. Our opinion is not modified in respect of this matter.

Independence and other ethical responsibilities

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

Key audit matters

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of the Group and of the Company for the current year. We have determined that there are no key audit matters to communicate in our report on the financial statements of the Company. The key audit matters for the audit of the financial statements of the Group are described below. 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. For each matter below, our description of how our audit addressed the matter is provided in that context.

We have fulfilled the responsibilities described in the Auditors’ responsibilities for the audit of the financial statements section of our report, including in relation to these matters. Accordingly, our audit included the performance of procedures designed to respond to our assessment of the risks of material misstatement of the financial statements. The results of our audit procedures, including the procedures performed to address the matters below, provide the basis of our audit opinion on the accompanying financial statements.

58

Independent Auditors’ Reportto the members of Pasdec Holdings Berhad (Incorporated in Malaysia)

Key audit matters (cont’d.)

Revenue and cost of sales in respect of property development and construction activities (Refer to Note 4 and Note 5 to the financial statements)

The principal activities of certain subsidiaries of the Company are property development and construction. For property development contracts and construction contracts where revenue is recognised over time, the Group uses the input method in accounting for the progress towards complete satisfaction of the Group’s performance obligation which is computed based on the actual costs incurred to date as compared to the total budgeted costs for these property development and construction contracts.

We identified that the revenue and cost of sales for property development and construction activities as key audit matter due to the degree of management’s judgement and estimates involved in deriving at the budgeted property development and construction costs. A change in key assumptions may lead to significant changes to the progress towards complete satisfaction of the Group’s performance obligation which will then affect the revenue recognised and the gross profit recognised in profit or loss for the year.

How our audit addressed the key audit matter

We performed the following audit procedures, amongst others:

(a) We obtained the budgeted revenue and costs for property development and construction activities which is approved by the Board of Directors;

(b) We evaluated the internal controls process over the preparation of the budget, including controls performed by management in estimating the total property development and construction costs, gross profit margin and progress towards complete satisfaction of the Group’s performance obligation of the property development and construction activities;

(c) We evaluated the assumptions used in determining the budgeted costs of the property development and construction activities by examining documentary evidence such as letters of award issued to contractors to support the total budgeted costs, sub-contractor correspondence or signed contract of construction costs;

(d) We read the sale and purchase agreements and construction contracts entered into with the customers to obtain an understanding of the specific terms and conditions; and

(e) We recomputed the project revenue and gross profit recognised in profit or loss based on the progress towards complete satisfaction of the Group’s performance obligation. We considered the expected handover date of ongoing development projects in evaluating the estimated liquidated ascertained damages which should be deducted from the revenue to be recognised, if any.

The Group’s accounting policies and disclosures on inventories, contract assets, contract liabilities and revenue are disclosed in Notes 2.12, 2.13, 2.21, 4, 16 and 22 respectively to the financial statements.

Information other than the financial statements and auditors’ report thereon

The directors of the Company are responsible for the other information. The other information comprises the Directors’ report, but does not include the financial statements of the Group and of the Company and our auditors’ report thereon, which we obtained prior to the date of this auditors’ report, and the other sections of annual report, which is expected to be made available to us after the date of this auditors’ report.

Our opinion on the financial statements of the Group and of the Company does not cover the other information and we do not and will 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 identified above 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 on the other information that we obtained prior to the date of this auditors’ report, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

When we read the other sections of annual report, if we conclude that there is a material misstatement therein, we are required to communicate the matter to the directors of the Company and take appropriate action.


59


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

Management of the Company is responsible for the preparation and fair presentation of the financial statements of the Group and of the Company in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act 2016 in Malaysia, and for such internal control as the management determines 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, management is responsible for assessing the Group’s and the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intend to liquidate the Group or the Company or to cease operations, or have no realistic alternative but to do so.

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

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.

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:

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

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

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

- Conclude on the appropriateness of the managements’ 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 auditors’ report to the related disclosures in the financial statements of the Group and of the Company or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors’ report. However, future events or conditions may cause the Group or the Company to cease to continue as a going concern.

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

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

60

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

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

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

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

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 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.

As stated in Note 2.1 to the financial statements, Pasdec Holdings Berhad adopted Malaysian Financial Reporting Standards and International Financial Reporting Standards on 1 January 2018 with a transition date of 1 January 2017. These standards were applied retrospectively by directors to the comparative information in these financial statements, including the statements of financial position of the Group and of the Company as at 31 December 2017 and 1 January 2017, and the statements of profit or loss and other comprehensive income, statements of changes in equity and statements of cash flows of the Group and of the Company for the year ended 31 December 2017 and related disclosures. We were not engaged to report on the restated comparative information and it is unaudited. Our responsibilities as part of our audit of the financial statements of the Group and of the Company for the year ended 31 December 2018, in these circumstances, included obtaining sufficient appropriate audit evidence that the opening balances as at 1 January 2018 do not contain misstatements that materially affect the financial position as at 31 December 2018 and financial performance and cash flows for the year then ended.

Hanafiah Raslan & Mohamad Sandra Segaran a/l Muniandy@KrishnanAF: 0002 02882/01/2021 JChartered Accountants Chartered Accountant

Kuantan, Pahang Darul Makmur, Malaysia10 June 2019



61

STATEMENTS OF COMPREHENSIVE INCOMEFor the financial year ended 31 December 2018

Group Company Note 2018 2017 2018 2017 RM RM RM RM

Revenue 4 147,786,386 112,444,639 3,203,969 2,671,290 Cost of sales 5 (113,082,973) (65,739,894) - -

Gross profit 34,703,413 46,704,745 3,203,969 2,671,290

Other items of income: Interest income 6 1,392,303 866,922 2,058,165 2,360,709 Other income 7 2,287,696 3,079,435 17,846 556,763

Other items of expense: Administrative expenses (18,075,271) (19,837,171) (4,861,490) (4,375,286) Other expenses (24,782,903) (14,994,917) (30,234,671) (4,740,368) Finance costs 8 (13,829,174) (13,289,154) (1,417,743) (1,946,268)

Share of profit/(loss) of associates 3,164,845 (87,444) - -

(Loss)/profit before tax from continuing operations 9 (15,139,091) 2,442,416 (31,233,924) (5,473,160)

Income tax (expense)/benefit 12 (6,596,529) 1,690,943 - -

(Loss)/profit from continuing operations, net of tax (21,735,620) 4,133,359 (31,233,924) (5,473,160)

Profit from discontinued operations, net of tax 13 - 26,945 - - (Loss)/profit net of tax (21,735,620) 4,160,304 (31,233,924) (5,473,160)

(Loss)/profit attributable to:Owners of the parent (19,918,517) 5,875,831 (31,233,924) (5,473,160)Non-controlling interests (1,817,103) (1,715,527) - -

(21,735,620) 4,160,304 (31,233,924) (5,473,160)

(Loss)/profit per share attributable to equity holders of the Company (sen):

Basic (loss)/profit per share 14 (5.63) 2.34

62

The accompanying accounting policies and explanatory information form an integral part of the financial statements.

Statements of Comprehensive IncomeFor the financial year ended 31 December 2018


Other comprehensive (loss)/incomeItems that will not be reclassified subsequently to profit or loss:

Remeasurement (loss)/gain on defined benefit plan 25 (832,846) 213,074 (136,250) (204,145)

Items that will be reclassified subsequently to profit or loss:

Net changes in fair value:Investments 30 (81,342) (6,947) - - Foreign currency translation 30 (486,667) 877,063 - -

Net other comprehensive income/ (loss) representing total comprehensive income/(loss) for the year, net of tax (1,400,855) 1,083,190 (136,250) (204,145)

Total comprehensive (loss)/income for the year (23,136,475) 5,243,494 (31,370,174) (5,677,305)

Total comprehensive (loss)/income attributable to:Owners of the parent (20,232,645) 3,406,867 (31,370,174) (5,677,305)Non-controlling interests (2,903,830) (1,836,627) - -

(23,136,475) 5,243,494 (31,370,174) (5,677,305)


63

STATEMENTS OF FINANCIAL POSITIONAs at 31 December 2018

Group Company Note 2018 2017 1.1.2017 2018 2017 1.1.2017 RM RM RM RM RM RM

AssetsNon-current assetsProperty, plant and equipment 15 39,671,959 43,374,087 21,927,105 9,129,046 8,027,394 986,303 Inventories 16 145,381,539 143,026,007 133,699,183 - - - Investment properties 17 58,234,141 58,914,585 22,747,159 35,929,701 36,671,501 - Investments in subsidiaries 18 - - - 142,220,267 149,214,930 149,214,930 Investments in associates 19 3,791,190 23,952,086 22,385,222 - - - Marketable securities 23 377,350 458,692 465,640 - - - Deferred tax assets 31 - 5,703,259 - - - -

247,456,179 275,428,716 201,224,309 187,279,014 193,913,825 150,201,233

Current assetsInventories 16 210,940,795 218,732,142 213,340,054 - - - Trade and other receivables 20 44,052,034 42,315,082 33,812,002 147,550,964 145,834,317 147,156,265 Other current assets 21 538,900 2,588,805 3,141,826 83,421 112,528 131,673 Contract assets 22 11,406,495 18,247,281 14,848,259 - - - Cash and bank balances 24 29,556,218 17,514,244 28,276,025 5,324,562 677,666 279,602 Tax recoverable 5,457,836 1,841,613 3,747,406 270,872 366,802 366,802

301,952,278 301,239,167 297,165,572 153,229,819 146,991,313 147,934,342 Assets of disposal group classified as held for sale 13 - 29,874 - - - -

301,952,278 301,269,041 297,165,572 153,229,819 146,991,313 147,934,342

Total assets 549,408,457 576,697,757 498,389,881 340,508,833 340,905,138 298,135,575

Equity and liabilities

Current liabilities Retirement benefit obligations 25 150,373 901,359 916,388 72,806 380,415 406,695 Contract liabilities 22 2,656,021 - - - - - Loans and borrowings 26 100,948,718 108,879,399 54,217,393 17,105,748 20,164,852 159,647 Trade and other payables 28 96,269,609 112,361,340 86,994,311 3,704,995 9,533,740 5,622,996 Tax payable 1,703,037 - 23,766 - - -

201,727,758 222,142,098 142,151,858 20,883,549 30,079,007 6,189,338 Liabilities of disposal group classified as sale 13 - 31,650 - - - -

201,727,758 222,173,748 142,151,858 20,883,549 30,079,007 6,189,338

Net current assets 100,224,520 79,095,293 155,013,714 132,346,270 116,912,306 141,745,004

Non-current liabilities Retirement benefit obligations 25 4,473,729 3,607,918 3,618,572 2,396,303 2,046,048 1,713,987 Loans and borrowings 26 60,297 17,917,449 67,320,260 33,052 250,900 20,415,762 Other payables 28 - 6,917,364 9,315,652 - - -

4,534,026 28,442,731 80,254,484 2,429,355 2,296,948 22,129,749

Total liabilities 206,261,784 250,616,479 222,406,342 23,312,904 32,375,955 28,319,087

Net assets 343,146,673 326,081,278 275,983,539 317,195,929 308,529,183 269,816,488

64

Group Company Note 2018 2017 1.1.2017 2018 2017 1.1.2017 RM RM RM RM RM RM

Equity attributable to owners of the parentShare capital 29 327,693,357 293,375,997 205,978,000 330,201,110 295,883,750 205,978,000 Share premium 29 - - 43,007,997 - - 45,515,750 Other reserves 30 (2,101,195) (8,504,423) (9,604,734) 5,719,560 - - Retained earnings 35 22,121,611 42,872,974 36,784,069 (18,724,741) 12,645,433 18,322,738

347,713,773 327,744,548 276,165,332 317,195,929 308,529,183 269,816,488 Non-controlling interests (4,567,100) (1,663,270) (181,793) - - -

Total equity 343,146,673 326,081,278 275,983,539 317,195,929 308,529,183 269,816,488

Total equity and liabilities 549,408,457 576,697,757 498,389,881 340,508,833 340,905,138 298,135,575


Statements of Financial PositionAs at 31 December 2018


65

At

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of t

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(N

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e 30

) re

serv

e an

ass

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rese

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re

serv

e tr

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n

inte

rest

s

inte

rest

s

RM

RM

R

M

RM

R

M

RM

RM

R

M

RM

RM

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M

RM

2018

Grou

p

Open

ing

bala

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at

1 Ja

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18As

pre

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stat

ed

322

,304

,021

324

,142

,593

293

,375

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5

6,29

9,38

7 (

25,5

32,7

91)

(2,5

41,2

73)

-

9,7

16

- (

13,1

02,9

63)

(9,8

98,2

71)

(1,8

38,5

72)

Prio

r yea

r adj

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(N

ote

39)

2,8

51,4

05

2,6

76,1

03

-

(250

,639

) 2

,926

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2

,139

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7

87,5

13

-

-

-

-

175

,302

Ef

fect

s on

ado

ptio

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of M

FRS

925

,852

9

25,8

52

- (

13,1

75,7

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14,

101,

626

-

-

-

-

14

,101

,626

-

-

At 1

Jan

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201

8

(res

tate

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326

,081

,278

327

,744

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293

,375

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4

2,87

2,97

4

(8,5

04,4

23)

(402

,044

) 7

87,5

13

9,7

16

-

998

,663

(9

,898

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) (1

,663

,270

)

Loss

for t

he y

ear

(21,

735,

620)

(19

,918

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) -

(19

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-

-

-

-

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-

(1

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her c

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sive

(loss

)/inc

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Othe

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r (1

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(832

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) 5

18,7

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-

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-

6

00,0

60

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27)

Shar

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164

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-

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Tran

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5,7

19,5

60

5,7

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-

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19,5

60

-

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60

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pita

l 3

4,31

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0

34,3

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60

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317,

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-

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at

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343

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347

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626)

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,719

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1

,598

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,898

,271

) (4

,567

,100

)

STATEMENTS OF CHANGES IN EQUITYFor the Financial Year ended 31 December 2018

66

At

trib

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RM

RM

R

M

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RM

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2017

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at

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pre

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stat

ed

273

,665

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273

,872

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205

,978

,000

4

3,00

7,99

7

51,4

10,5

55

(26,

524,

507)

(2

,541

,273

) -

1

6,66

3 (

14,1

01,6

26)

(9,8

98,2

71)

(206

,618

)Pr

ior y

ear a

djus

tmen

ts

(Not

e 39

) 3

,145

,811

2

,765

,836

-

-

(5

2,31

1)

2,8

18,1

47

2,0

30,6

34

787

,513

-

-

-

3

79,9

75

Effe

cts

on a

dopt

ion

of

MFR

S (4

72,5

49)

(472

,549

) -

-

(14

,574

,175

) 1

4,10

1,62

6

-

-

-

14,1

01,6

26

-

-

At 1

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201

7

(res

tate

d)

276

,338

,689

276

,165

,332

205

,978

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4

3,00

7,99

7

36,7

84,0

69

(9,6

04,7

34)

(510

,639

) 7

87,5

13

16,

663

-

(9

,898

,271

) 1

73,3

57

Tr

ansi

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to n

o pa

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va

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regi

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on

31 J

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017

-

-

43,0

07,9

97

(43,

007,

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-

-

-

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-

-

-

-

27

6,33

8,68

9 2

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65,3

32 2

48,9

85,9

97

-

36,7

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69

(9,6

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34)

(510

,639

) 7

87,5

13

16,

663

-

(9

,898

,271

) 1

73,3

57

Profi

t for

the

year

4

,160

,304

5

,875

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-

-

5

,875

,831

-

-

-

-

-

-

(1

,715

,527

)Ot

her c

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inco

me/

(loss

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for t

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ear

1,0

83,6

90

1,2

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90

-

-

213

,074

9

91,7

16

-

-

(6,9

47)

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-

(1

21,1

00)

Shar

e of

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ity c

ontri

butio

n

of a

n as

soci

ate

108

,595

1

08,5

95

-

-

-

108

,595

1

08,5

95

-

-

-

-

-

Tran

sact

ion

with

ow

ners

Ad

ditio

nal p

aid

up c

apita

l 4

4,39

0,00

0

44,3

90,0

00

44,

390,

000

-

-

-

-

-

-

-

-

-

Clos

ing

bala

nce

at

31 D

ecem

ber 2

017

(r

esta

ted)

3

26,0

81,2

78 3

27,7

44,5

48 2

93,3

75,9

97

-

42,8

72,9

74

(8,5

04,4

23)

(402

,044

) 7

87,5

13

9,7

16

998

,663

(9

,898

,271

) (1

,663

,270

)

Statements of Changes in equityFor the Financial Year ended 31 December 2018


67


Statements of Changes in equityFor the Financial Year ended 31 December 2018

Non-Distributable Distributable Share Share Warrant Retained capital premium reserve earnings (Note 29) (Note 29) (Note 30) (Note 35) Total RM RM RM RM RM

Company

At 1 January 2018As previously stated 295,883,750 - - 12,871,667 308,755,417 Effect on adoption of MFRS - - - (226,234) (226,234)

At 1 January 2018 (restated) 295,883,750 - - 12,645,433 308,529,183 Loss for the year - - - (31,233,924) (31,233,924)

Other comprehensive loss - - - (136,250) (136,250)

Total comprehensive loss - - - (31,370,174) (31,370,174)

Transaction with ownersIssuance of new ordinary shares 34,317,360 - - - 34,317,360

Warrant issue - - 5,719,560 - 5,719,560

Closing balance at 31 December 2018 330,201,110 - 5,719,560 (18,724,741) 317,195,929

At 1 January 2017 205,978,000 45,515,750 - 18,322,738 269,816,488 Loss for the year - - - (5,473,160) (5,473,160)Transfer to share capital 45,515,750 (45,515,750) - - -

Other comprehensive loss - - - (204,145) (204,145)

Total comprehensive income/(loss) 45,515,750 (45,515,750) - (5,677,305) (5,677,305)

Transaction with ownersIssuance of new ordinary shares 44,390,000 - - - 44,390,000

Closing balance at 31 December 2017 (restated) 295,883,750 - - 12,645,433 308,529,183

68

STATEMENTS OF CASH FLOWSFor the financial year ended 31 December 2018


Operating activities

(Loss)/profit before taxation from continuing operations (15,139,091) 2,442,416 (31,233,924) (5,473,160)Profit before taxation from discontinued operations 13 - 26,945 - - Adjustments for: Reversal of allowance for expected credit loss of trade and other receivables 9 (1,977,628) (13,505,662) (656,169) (19,904) Reversal of impairment losses in investment in an associate 9 (60,000) - - - Depreciation of property, plant and equipment 9 3,660,844 2,685,677 344,565 306,233 Depreciation of investment properties 9 1,245,570 922,574 741,800 418,499 Gain on disposal of investment properties 7 (244,369) - - - Property, plant and equipment written off 9 1,478,912 2,216 - - (Gain)/loss on disposal of property, plant and equipment 7,9 (287,096) (102,754) 91,882 (20,801) Loss/(gain) on disposal of a subsidiary 7,9 1,971 617,813 (1,000) (535,587) Provision for impairment losses in investment in a subsidiary 9 - - 8,481,179 - Reversal of impairment losses in investment in a subsidiary 9 - - (1,356,000) - Share of (gain)/loss of associates (3,164,845) 87,444 - - Provision for retirement benefits 10 476,757 471,059 266,785 219,662 Short-term compensated absence 10 166,709 - 134,090 - Overprovision of short-term accumulated compensated absences in prior years 10 - (41,434) - (6,231) Overprovision of defined benefit plan in prior year 10 - (296,773) - - Allowance for expected credit loss on trade and other receivables 9 945,384 3,582,006 19,603,459 987,761 Unrealisedlossonforeignexchange 9 357,893 - - - Loss on disposal of an associate 9 6,416,566 - - - Inventories written down 75,283 - - - Interest expense 8 13,829,174 13,289,154 1,417,743 1,946,268 Interest income 6 (1,392,303) (866,922) (2,058,165) (2,360,709) Dividend income 4 (16,838) (21,942) - -

Total adjustments 21,511,984 6,822,456 27,010,169 935,191

Operating cash flows before changes in working capital carried forward 6,372,893 9,291,817 (4,223,755) (4,537,969)


69

Statements of Cash FlowsFor the financial year ended 31 December 2018



Changes in working capital Decrease/(increase) in trade and other receivables 473,870 1,409,398 (18,157,691) 3,249,285 Decrease in other current assets 2,049,905 553,020 29,107 19,145 Decrease/(increase) in contract assets 6,840,786 (3,399,022) - - Decrease/(increase) in inventories 5,360,532 (12,086,676) - - (Decrease)/increase in trade and other payables (26,933,541) 14,058,060 (6,589,829) 3,916,974

Total changes in working capital (12,208,448) 534,780 (24,718,413) 7,185,404 Income taxes paid (2,325,636) (3,176,892) - - Income taxes refunded 1,263,711 1,100,676 95,930 - Retirement benefits paid 25 (1,194,778) (283,668) (360,389) (118,026)

Net cash flows (used in)/ generated from operating activities (8,092,258) 7,466,713 (29,206,627) 2,529,409

Investing activitiesPurchase of property, plant and equipment 15 (4,427,474) (6,192,069) (1,564,907) (47,325)Proceeds from disposal of property, plant and equipment 614,376 513,152 75,205 20,802 Proceeds from disposal of investment properties 397,888 - - - Proceeds from disposal of investment in associate 18,351,840 - - - Proceed from disposal of investment in subsidiary - - 1,000 - Interest received 1,392,303 866,922 - 1,103 Dividends received 16,838 21,942 - - Upliftmentofdepositswithlicensedbanks - 852,621 - -

Net cash flows generated from/(used in) investing activities 16,345,771 (3,937,432) (1,488,702) (25,420)

Financing activitiesProceed from issuance of new ordinary shares 40,036,920 - 40,036,920 - Repayments of term loans (11,032,782) (14,212,184) (3,006,365) - Repayment of revolving credits - (500,000) - - Addition/repayment of bankers’ acceptances 8,379,097 (153,000) - - Repayments of obligations under finance leases (290,011) (418,534) (270,587) (159,657)Interest paid (12,165,234) (13,289,154) (1,417,743) (1,946,268)Upliftmentofdepositsforloansand borrowings securities - 270,171 - -

Net cash flows generated from/(used in) financing activities 24,927,990 (28,302,701) 35,342,225 (2,105,925)

Net increase/(decrease) in cash and cash equivalents 33,181,503 (24,773,420) 4,646,896 398,064 Cash and cash equivalents at 1 January (28,455,046) (3,650,757) 677,666 279,602 Effect of exchange rate fluctuations on cash held (340,386) (30,869) - -

Cash and cash equivalents at 31 December 24 4,386,071 (28,455,046) 5,324,562 677,666

70

Notes to the FiNaNcial statemeNtsFor the Financial Year Ended 31 December 2018

1. Corporate information

The Company is a public limited liability company, incorporated and domiciled in Malaysia, and is listed on the Bursa Malaysia Securities Berhad. The registered office of the Company is located at Level 21, Menara Zenith, Jalan Putra Square 6, Putra Square, 25200 Kuantan, Pahang Darul Makmur.

The holding corporation of the Company is Jasa Imani Sdn. Bhd., a company incorporated in Malaysia under the Companies Act 2016 .

The principal activities of the Company are those of investment holding and provision of management services to the subsidiaries. The principal activities of the subsidiaries are described in Note 18. There have been no significant changes in the nature of the principal activities during the financial year.

2. Summary of significant accounting policies

2.1 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.

For all periods up to and including the year ended 31 December 2017, the Group and the Company prepared its financial statements in accordance with Financial Reporting Standards in Malaysia ("Previous FRS Framework") . The financial statements of the Group and of the Company for financial year ended 31 December 2018 are the first set of financial statements prepared in accordance with the MFRS Framework, hence MFRS 1 First-time Adoption of Malaysian Financial Standards has been applied. The MFRS Framework is effective for the Group from 1 January 2018 and the date of transition to the MFRS Framework for the purpose of preparation of the MFRS compliant financial report is 1 January 2017.

The financial statements have been prepared on the historical cost basis except as disclosed in the accounting policies below.

The financial statements are presented in Ringgit Malaysia ("RM"), which is also the Company's functional currency.

For the year ended 31 December 2018, the Group has reported a net loss of RM21,735,620.

The Company provided corporate guarantees totaling BWP167,100,000 and ZAR8,000,000 (approximately RM66,776,713) to the preference shareholders, lenders and creditors of Pasdec Automotive Technologies (Bostwana) (Pty) Ltd (“PAT BW”), a subsidiary of the Company. The said subsidiary has reported a net loss of RM14,346,247, net current liabilities of RM110,051,559 and negative cash and cash equivalents of RM17,324,163. As disclosed in Note 26 to the financial statements, the subsidiary has breached the financial covenants of the loans and borrowings resulted in the loans and borrowings amounting to RM11,002,516 being reclassified to current liabilities as at 31 December 2018. Despite the said breach of covenants, the lenders have not called upon an event of default.

These events or conditions indicate that a material uncertainty exists that may cast significant doubt on the Group’s and the Company’s ability to continue as a going concern and, therefore, they may be unable to realise their assets and discharge their liabilities in the normal course of business.

The Directors of the Company have a plan to dispose the Company's investment in PAT BW at a nominal sum in order to discharge the Company from its corporate guarantees provided to the preference shareholders, lenders and certain creditors of PAT BW.

The going concern assumption is dependent on the successful implementation of the plan to divest from PAT BW.

At the date of this report, the Company has entered into negotiations with the preference shareholder on the mode of settlement of the redeemable preference shares (either through redemption or conversion to ordinary shares) which will be due subject to finalisation of the negotiation between the parties as disclosed in Note 26 to the financial statements.

Notes To The Financial StatementsFor the Financial Year Ended 31 December 2018

71


2. Summary of significant accounting policies (cont’d.)

2.1 Basis of preparation (cont’d.)

The Company is also actively pursuing potential investors and the Company’s ability to discharge itself from the corporate guarantees is the main negotiation point with the potential investors.

The Company plans to dissolve Pasdec Resources SA Ltd (“PRSA”) and Pasdec Automotive Technologies (Pty) Ltd (“PAT SA”) upon the successful divestment of PAT BW.

The Directors of the Company believe that the plan will be implemented successfully and the Group will be able to continue as going concern.

2.2 First-time adoption of Malaysian Financial Reporting Standards

These financial statements for the year ended 31 December 2018 are the first the Group and the Company have prepared in accordance with MFRS and IFRS.

Accordingly, the Group and the Company have prepared financial statements that comply with MFRS applicable as at 31 December 2018, together with the comparative period data for the year ended 31 December 2017, as described in the summary of significant accounting policies. In preparing the financial statements, the Group’s and the Company’s opening statements of financial position was prepared as at 1 January 2017, the Group’s and the Company’s date of transition to MFRS. This note explains the principal adjustments made by the Group and the Company in restating its FRS financial statements, including the statements of financial position as at 1 January 2017 and the financial statements for the year ended 31 December 2017.

Exemptions applied

MFRS 1 allows first-time adopters certain exemptions from the retrospective application of certain requirements under MFRS.

The Group has applied the following exemptions:

(a) MFRS 3 Business Combinations

MFRS 3 Business Combinations has not been applied to either acquisitions of subsidiaries that are considered businesses under MFRS, or acquisitions of interests in associates and joint ventures that occurred before 1 January2017.UseofthisexemptionmeansthatthePreviousFRSFrameworkcarryingamountsofassetsandliabilities, that are required to be recognised under MFRS, is their deemed cost at the date of the acquisition. After the date of the acquisition, measurement is in accordance with MFRS. Assets and liabilities that do not qualify for recognition under MFRS are excluded from the opening MFRS statement of financial position. The Group did not recognise or exclude any previously recognised amounts as a result of MFRS recognition requirements. MFRS 1 also requires that the Previous FRS Framework carrying amount of goodwill must be used in the opening MFRS statement of financial position (apart from adjustments for goodwill impairment and recognition or derecognition of intangible assets). In accordance with MFRS 1, the Group has tested goodwill for impairment at the date of transition to MFRS. No goodwill impairment was deemed necessary at 1 January 2017.

(b) Cumulative translation difference

The cumulative translation differences for all foreign operations are deemed to be zero at the date of transition to MFRS, 1 January 2017. The entire balance of RM14,101,625 for the Group in the exchange translation reserve at the date of transition has been transferred to retained profits.


72


2.2 First-time adoption of Malaysian Financial Reporting Standards (cont’d.)

(c) MFRS 15 Revenue from Contracts with Customers

The key effects as a result of adopting this standard on the property development activities of the Group are as follows:

(i) in respect of sales of properties that do not come under the purview of the Financial Reporting Standards Implementation Committee (“FRSIC”) Consensus 23 Application of MFRS 15 “Revenue from Contracts with Customers” on Sale of Residential Properties issued by the Malaysian Institute of Accountants, the Group has to assess if the property has an alternative use to the Group and whether the sales and purchase arrangement provides the Group with an enforceable right to payment for work completed to date, in determining whether or not the sale of property units should be recognised at a point in time (completion method) or over time (percentage of completion method);

(ii) it requires the identification of separate performance obligations arising from the sale of property units from the various property development projects of the Group, such as the sale of property with complimentary giveaways, and may result in the acceleration or deferment of revenue recognition relating to these separate performance obligations depending on when the related goods and/or services are delivered or satisfied. This would affect the timing of revenue recognition for the property development activities;

(iii) it requires that expenses attributable to securing contracts with customers such as commission expense be capitalised and expensed by reference to the progress towards complete satisfaction of the performance obligation; and

(v) it views liquidated ascertained damages payable when the developer fails to deliver vacant possession within the stipulated period as variable consideration and is presented as a reduction of the transaction price which would then be accounted for in the profit or loss over the tenure of the respective property development project instead of being accounted for as a direct charge to the profit or loss when the obligation arises.

Apart from the above, pursuant to the adoption of MFRS 15 Revenue from Contracts with Customers, the FRSIC Consensus 17 Development of Affordable Housing, which requires the upfront recognition of provision for foreseeable losses on the development of affordable housing on an involuntary basis, is no longer effective and was effectively withdrawn on 7 March 2018. This has resulted in the retrospective reversal of the provision for affordable housing previously provided for in the financial statements of the Group.

(d) MFRS 9 Financial Instruments

(i) Classification and measurement of financial instruments

UnderMFRS9,theclassificationforallfinancialassets,exceptequityinstrumentsandderivatives,shallbeassessed based on a combination of the Group’s/ Company’s business model for managing the assets and the financial assets’ contractual cash flow characteristics.

The categories of financial assets under MFRS 9 are as follows:

• Amortisedcost• Fairvaluethroughothercomprehensiveincome(“FVOCI”),withgainsorlossesrecycledtoprofitor

loss on derecognition• FVOCI,withnorecyclingofgainsorlossestoprofitorlossonderecognition• Fairvaluethroughprofitorloss(“FVTPL”)

The Group/the Company reclassified financial assets previously recognised as available for sale and held to maturity to the appropriate MFRS categories noted above.

The accounting for financial liabilities remains largely the same as it was under MFRS 139, except for the treatment of gains or losses arising from an entity’s own credit risk relating to liabilities designated at FVTPL. Such movements are presented in other comprehensive income with no subsequent reclassification to the profit or loss.


73




(d) MFRS 9 Financial Instruments (cont’d.)

(ii) Impairment of financial assets

UpontransitiontoMFRS,theGroup’s/theCompany’saccountingforimpairmentoffinancialassets,hasbeen replaced from the incurred loss approach to the forward-looking expected credit losses (“ECL”) approach. ECL approach is based on the Group’s/the Company’s historical credit loss experience, adjusted for forward-looking factors specific to the debtors and the economic environment.

The MFRS’s simplified approach is applied for contract assets and trade and other receivables, and the Group/the Company has calculated ECL based on lifetime expected credit losses. The simplified approach excludes tracking of changes in credit risk.

(i) Reconciliation of statements of comprehensive income for the year ended 31 December 2017

Effect of transition to MFRS

As As restated previously Adjustment FRS as at Note 2.2 Note 2.2 MFRS as at Group stated (Note 39) 31.12.2017 (c) (d) 31.12.2017 RM RM RM RM RM RM

Revenue 115,446,886 - 115,446,886 (3,002,247) - 112,444,639 Cost of sales (67,563,328) (719,127) (68,282,455) 2,542,561 - (65,739,894)

Gross profit 47,883,558 47,164,431 46,704,745 Other items of income:Interest income 866,922 - 866,922 - - 866,922 Other income 5,557,575 - 5,557,575 (2,478,140) - 3,079,435 Other items of expense:Administrative expenses (19,837,171) - (19,837,171) - - (19,837,171)Other expenses (18,975,494) - (18,975,494) 3,673,032 307,545 (14,994,917)Finance costs (13,134,794) (154,360) (13,289,154) - - (13,289,154)Share of loss of associates (913,080) 825,636 (87,444) (87,444)

Profit before tax from continuing operations 1,447,516 1,399,665 2,442,416 Income tax benefit 1,690,943 - 1,690,943 - - 1,690,943

Profit from continuing operations, net of tax 3,138,459 3,090,608 4,133,359 Profit from discontinued operations, net of tax 26,945 - 26,945 - - 26,945

Profit net of tax 3,165,404 3,117,553 4,160,304

Profit attributable to:Owners of the parent 4,675,758 4,833,080 5,875,831 Non-controlling interests (1,510,354) (205,173) (1,715,527) (1,715,527)

3,165,404 3,117,553 4,160,304


74



(i) Reconciliation of statements of comprehensive income for the year ended 31 December 2017 (cont’d.)


As As restated previously Adjustment FRS as at Note 2.2 Note 2.2 MFRS as at Group (cont’d.) stated (Note 39) 31.12.2017 (c) (d) 31.12.2017 RM RM RM RM RM RM

Other comprehensive incomeItems that will not be reclassified subsequently to profit or loss:Remeasurement gain on defined benefit plan 213,074 - 213,074 - - 213,074

Items that will be reclassified subsequently to profit or loss:Net loss on available-for-sale financial assets:Loss on fair value changes (6,947) - (6,947) - - (6,947)- Transfer to profit or loss upon disposalForeign currency translation 877,063 - 877,063 - - 877,063

Net other comprehensive income representing total comprehensive income for the year, net of tax 1,083,190 1,083,190 1,083,190

Total comprehensive income for the year 4,248,594 4,200,743 5,243,494

Total comprehensive income attributable to:Owners of the parent 5,880,048 6,037,370 3,406,867 Non-controlling interests (1,631,454) (205,173) (1,836,627) (1,836,627)

4,248,594 4,200,743 5,243,494


75




(i) Reconciliation of statements of comprehensive income for the year ended 31 December 2017 (cont’d.)


As As restated previously Adjustment FRS as at Note 2.2 Note 2.2 MFRS as at Company stated (Note 39) 31.12.2017 (c) (d) 31.12.2017 RM RM RM RM RM RM

Revenue 2,671,290 - 2,671,290 - - 2,671,290 Cost of sales - - - - - -

Gross profit 2,671,290 2,671,290 2,671,290 Other items of income: Interest income 2,360,709 - 2,360,709 - - 2,360,709 Other income 556,763 - 556,763 - - 556,763 Other items of expense: Administrative expenses (4,375,286) - (4,375,286) - - (4,375,286) Other expenses (4,514,134) - (4,514,134) - (226,234) (4,740,368) Finance costs (1,946,268) - (1,946,268) - - (1,946,268)

Loss before tax from continuing operations (5,246,926) (5,246,926) (5,473,160)Income tax benefit/(expense) - - - - - -

Loss net of tax (5,246,926) (5,246,926) (5,473,160)

Other comprehensive lossItems that will not be reclassified subsequently to profit or loss:Remeasurement loss on defined benefit plan (204,145) - (204,145) - - (204,145)

Net other comprehensive loss representing total comprehensive loss for the year, net of tax (204,145) (204,145) (204,145)

Total comprehensive loss for the year (5,451,071) (5,451,071) (5,677,305)


76



(ii) Reconciliation of statements of financial position as at 1 January 2017


As As restated previously Adjustment FRS as at Note 2.2 Note 2.2 MFRS as at Group stated (Note 39) 1.1.2017 (c) (d) 1.1.2017 RM RM RM RM RM RM

AssetsNon-current assetsProperty, plant and equipment 21,927,105 - 21,927,105 - - 21,927,105 Land held for property development 133,611,510 - 133,611,510 87,673 - 133,699,183 Investment properties 22,747,159 - 22,747,159 - - 22,747,159 Investments in associates 19,518,692 2,866,530 22,385,222 - - 22,385,222 Marketable securities 465,640 - 465,640 - - 465,640

198,270,106 201,136,636 201,224,309

Current assetsInventories 212,660,941 - 212,660,941 679,113 - 213,340,054 Trade and other receivables 40,160,105 - 40,160,105 (5,727,012) (621,091) 33,812,002 Other current assets 13,756,513 - 13,756,513 (10,614,687) - 3,141,826 Contract assets - - - 14,848,259 - 14,848,259 Cash and bank balances 28,276,025 - 28,276,025 - - 28,276,025 Tax recoverable 3,747,406 - 3,747,406 - - 3,747,406

298,600,990 298,600,990 297,165,572

Total assets 496,871,096 499,737,626 498,389,881


Current liabilities Retirement benefit obligations 916,388 - 916,388 - - 916,388 Loans and borrowings 54,217,393 - 54,217,393 - - 54,217,393 Trade and other payables 87,793,638 75,869 87,869,507 (875,196) - 86,994,311 Tax payable 23,766 - 23,766 - - 23,766

142,951,185 - 143,027,054 142,151,858 Liabilities of disposal group - classified as sale - - - - - -

142,951,185 143,027,054 142,151,858

Net current assets 155,649,805 155,573,936 155,013,714


77




(ii) Reconciliation of statements of financial position as at 1 January 2017 (cont’d.)


As As restated previously Adjustment FRS as at Note 2.2 Note 2.2 Note 2.2 MFRS as at Group (cont’d.) stated (Note 39) 1.1.2017 (b) (c) (d) 1.1.2017 RM RM RM RM RM RM RM

Non-current liabilities Retirement benefit obligations 3,618,572 - 3,618,572 - - - 3,618,572 Loans and borrowings 67,320,260 - 67,320,260 - - - 67,320,260 Other payables 9,315,652 - 9,315,652 - - - 9,315,652

80,254,484 80,254,484 80,254,484

Total liabilities 223,205,669 223,281,538 222,406,342

Net assets 273,665,427 273,589,558 275,983,539

Equity attributable to owners of the parentShare capital 205,978,000 - 205,978,000 - - - 205,978,000 Share premium 43,007,997 - 43,007,997 - - - 43,007,997 Other reserves (26,524,507) 2,818,147 (23,706,360) 14,101,626 - - (9,604,734)Retained earnings 51,410,555 (52,311) 51,358,244 (14,101,626) 148,542 (621,091) 36,784,069

273,872,045 276,637,881 276,165,332 Non-controlling interests (206,618) 24,825 (181,793) - - - (181,793)

Total equity 273,665,427 276,456,088 275,983,539

Total equity and liabilities 496,871,096 499,737,626 498,389,881


78



(ii) Reconciliation of statements of financial position as at 1 January 2017 (cont’d.)



AssetsNon-current assetsProperty, plant and equipment 986,303 - 986,303 - - 986,303 Investments in subsidiaries 149,214,930 - 149,214,930 - - 149,214,930

150,201,233 150,201,233 150,201,233

Current assetsTrade and other receivables 147,156,265 - 147,156,265 - - 147,156,265 Other current assets 131,673 - 131,673 - - 131,673 Cash and bank balances 279,602 - 279,602 - - 279,602 Tax recoverable 366,802 - 366,802 - - 366,802

147,934,342 147,934,342 147,934,342

Total assets 298,135,575 298,135,575 298,135,575

Current liabilities Retirement benefit obligations 406,695 - 406,695 - - 406,695 Loans and borrowings 159,647 - 159,647 - - 159,647 Trade and other payables 5,622,996 - 5,622,996 - - 5,622,996

6,189,338 6,189,338 6,189,338


Non-current liabilities Retirement benefit obligations 1,713,987 - 1,713,987 - - 1,713,987 Loans and borrowings 20,415,762 - 20,415,762 - - 20,415,762

22,129,749 22,129,749 22,129,749


Net assets 269,816,488 269,816,488 269,816,488

Equity attributable to owners of the parentShare capital 205,978,000 - 205,978,000 - - 205,978,000 Share premium 45,515,750 - 45,515,750 - - 45,515,750 Retained earnings 18,322,738 - 18,322,738 - - 18,322,738

Total equity 269,816,488 269,816,488 269,816,488



79




(iii) Reconciliation of statements of financial position as at 31 December 2017


As As restated previously FRS as at Note 2.2 Note 2.2 MFRS as at Group stated (Note 39) 31.12.2017 (c) (d) 31.12.2017 RM RM RM RM RM RM

AssetsNon-current assetsProperty, plant and equipment 43,374,087 - 43,374,087 - - 43,374,087 Land held for property development 142,938,334 - 142,938,334 87,673 - 143,026,007 Investment properties 58,914,585 - 58,914,585 - - 58,914,585 Investments in associates 20,151,325 3,800,761 23,952,086 - - 23,952,086 Marketable securities 458,692 - 458,692 - - 458,692 Deferred tax assets 5,703,259 - 5,703,259 - - 5,703,259

271,540,282 275,341,043 275,428,716

Current assetsInventories 218,053,029 - 218,053,029 679,113 - 218,732,142 Trade and other receivables 48,884,610 717,099 49,601,709 (6,973,081) (313,546) 42,315,082 Other current assets 15,148,557 - 15,148,557 (12,559,752) - 2,588,805 Contract assets - - - 18,247,281 - 18,247,281 Cash and bank balances 17,514,244 - 17,514,244 - - 17,514,244 Tax recoverable 1,841,613 - 1,841,613 - - 1,841,613

301,442,053 302,159,152 301,239,167 Assets of disposal group classified as held for sale 29,874 - 29,874 - - 29,874

301,471,927 302,189,026 301,269,041

Total assets 573,012,209 577,530,069 576,697,757


Current liabilities Retirement benefit obligations 901,359 - 901,359 - - 901,359 Loans and borrowings 108,879,399 - 108,879,399 - - 108,879,399 Trade and other payables 112,453,049 1,666,455 114,119,504 (1,758,164) - 112,361,340

222,233,807 223,900,262 222,142,098 Liabilities of disposal group classified as sale 31,650 - 31,650 - - 31,650

222,265,457 223,931,912 222,173,748



80



(iii) Reconciliation of statements of financial position as at 31 December 2017 (cont’d.)


As As restated previously Adjustment FRS as at Note 2.2 Note 2.2 Note 2.2 MFRS as at Group (cont’d.) stated (Note 39) 1.1.2017 (b) (c) (d) 31.12.2017 RM RM RM RM RM RM RM

Non-current liabilities Retirement benefit obligations 3,607,918 - 3,607,918 - - - 3,607,918 Loans and borrowings 17,917,449 - 17,917,449 - - - 17,917,449 Other payables 6,917,364 - 6,917,364 - - - 6,917,364

28,442,731 28,442,731 28,442,731


Net assets 322,304,021 320,637,566 326,081,278

Equity attributable to owners of the parentShare capital 293,375,997 - 293,375,997 - - - 293,375,997 Share premium - - - - - - - Other reserves (25,532,791) 2,926,742 (22,606,049) 14,101,626 - - (8,504,423)Retained earnings 56,299,387 (250,639) 56,048,748 (14,101,626) 1,239,398 (313,546) 42,872,974

324,142,593 326,818,696 327,744,548 Non-controlling interests (1,838,572) 175,302 (1,663,270) - - - (1,663,270)

Total equity 322,304,021 325,155,426 326,081,278



81




(iii) Reconciliation of statements of financial position as at 31 December 2017 (cont’d.)



AssetsNon-current assetsProperty, plant and equipment 8,027,394 - 8,027,394 - - 8,027,394 Investment properties 36,671,501 - 36,671,501 - - 36,671,501 Investments in subsidiaries 149,214,930 - 149,214,930 - - 149,214,930

193,913,825 193,913,825 193,913,825

Current assetsTrade and other receivables 146,060,551 - 146,060,551 - (226,234) 145,834,317 Other current assets 112,528 - 112,528 - - 112,528 Cash and bank balances 677,666 - 677,666 - - 677,666 Tax recoverable 366,802 - 366,802 - - 366,802

147,217,547 147,217,547 146,991,313

Total assets 341,131,372 341,131,372 340,905,138


Current liabilities Retirement benefit obligations 380,415 - 380,415 - - 380,415 Loans and borrowings 20,164,852 - 20,164,852 - - 20,164,852 Trade and other payables 9,533,740 - 9,533,740 - - 9,533,740

30,079,007 30,079,007 30,079,007


Non-current liabilities Retirement benefit obligations 2,046,048 - 2,046,048 - - 2,046,048 Loans and borrowings 250,900 - 250,900 - - 250,900

2,296,948 2,296,948 2,296,948


Net assets 308,755,417 308,755,417 308,529,183

Equity attributable to owners of the parentShare capital 295,883,750 - 295,883,750 - - 295,883,750 Retained earnings 12,871,667 - 12,871,667 - (226,234) 12,645,433

Total equity 308,755,417 308,755,417 308,529,183



82



(iv) Reconciliation of cash flows for the year ended 31 December 2017


FRS as at Note 2.2 Note 2.2 MFRS as at Group 31.12.2017 (c) (d) 31.12.2017 RM RM RM RM

Operating activitiesProfit before taxation from continuing operations 1,399,665 735,206 307,545 2,442,416 Profit before taxation from discontinued operations 26,945 - - 26,945 Adjustments for: Reversal of allowance for impairment of trade and other receivables (13,198,117) - 307,545 (13,505,662) Depreciation of property, plant and equipment 2,685,677 - - 2,685,677 Depreciation of investment properties 922,574 - - 922,574 Property, plant and equipment written off 2,216 - - 2,216 Gain on disposal of property, plant and equipment (102,754) - - (102,754) Loss on disposal of a subsidiary 617,813 - - 617,813 Share of loss of associate 87,444 - - 87,444 Provision for retirement benefits 471,059 - - 471,059 Overprovision of short-term accumulated compensated absences in prior years (41,434) - - (41,434) Overprovision of defined benefit plan in prior year (296,773) - - (296,773) Impairment losses on trade and other receivables 3,582,006 - - 3,582,006 Interest expense 13,289,154 - - 13,289,154 Interest income (866,922) - - (866,922) Dividend income (21,942) - - (21,942)

Total adjustments 7,130,001 6,822,456

Operating cash flows before changes in working capital 8,556,611 9,291,817

Changes in working capitalDecrease in trade and other receivables 1,862,084 168,405 (621,091) 1,409,398 (Increase)/decrease in other current assets (1,392,045) 1,945,065 - 553,020 Increase in contract assets - (3,399,022) - (3,399,022)Increase in inventories (14,718,912) (766,786) - (12,086,676)Increase in trade and other payables 13,250,938 807,122 - 14,058,060

Total changes in working capital (997,935) 534,780 Interest paid Income taxes paid (3,176,892) - - (3,176,892) Income taxes refunded 1,100,676 - - 1,100,676 Retirement benefits paid (283,668) - - (283,668)

Net cash flows generate from operating activities 5,198,792 7,466,713


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(iv) Reconciliation of cash flows for the year ended 31 December 2017


FRS as at Note 2.2 Note 2.2 MFRS as at Group (cont’d.) 31.12.2017 (c) (d) 31.12.2017 RM RM RM RM

Investing activitiesPurchase of property, plant and equipment (6,192,069) - - (6,192,069)Proceeds from disposal of property, plant and equipment 513,152 - - 513,152 Interest received 866,922 - - 866,922 Dividends received 21,942 - - 21,942 Upliftedofdepositswithlicensedbanks 852,621 - - 852,621

Net cash flows used in investing activities (3,937,432) (3,937,432)

Financing activitiesRepayments of term loans (14,212,184) - - (14,212,184)Repayment of revolving credits (500,000) - - (500,000)Repayment of bankers’ acceptances (153,000) - - (153,000)Repayments of obligations under finance leases (418,534) - - (418,534)Interest paid (13,289,154) - - (13,289,154)Deposits upliftment for loans and borrowings securities 270,171 - - 270,171

Net cash flows used in financing activities (28,302,701) (28,302,701)

Net decrease in cash and cash equivalents (24,773,420) (24,773,420)Cash and cash equivalents at 1 January (3,650,757) - - (3,650,757)

Effect of exchange rate fluctuations on cash held (30,869) - - (30,869)

Cash and cash equivalents at 31 December (28,455,046) (28,455,046)


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(iv) Reconciliation of cash flows for the year ended 31 December 2017 (cont’d.)


FRS as at Note 2.2 Note 2.2 MFRS as at Company 31.12.2017 (c) (d) 31.12.2017 RM RM RM RM

Operating activitiesLoss before taxation from continuing operations (5,246,926) - (226,234) (5,473,160)Adjustments for: Reversal of allowance for impairment of trade and other receivables (19,904) - - (19,904) Depreciation of property, plant and equipment 306,233 - - 306,233 Depreciation of investment properties 418,499 - - 418,499 Gain on disposal of property, plant and equipment (20,801) - - (20,801) Gain on disposal of a subsidiary (535,587) - - (535,587) Provision for retirement benefits 219,662 - - 219,662 Overprovision of short-term accumulated compensated absences in prior years (6,231) - - (6,231) Impairment losses on trade and other receivables 761,527 - 226,234 987,761 Interest expense 1,946,268 - - 1,946,268 Interest income (2,360,709) - - (2,360,709)

Total adjustments 708,957 935,191

Operating cash flows before changes in working capital (4,537,969) - - (4,537,969)

Changes in working capital Decrease in trade and other receivables 3,249,285 - - 3,249,285 Decrease in other current assets 19,145 - - 19,145 Increase in trade and other payables 3,916,974 - - 3,916,974

Total changes in working capital 7,185,404 7,185,404 Retirement benefits paid (118,026) - - (118,026)

Net cash flows generate from operating activities 2,529,409 2,529,409

Investing activitiesPurchase of property, plant and equipment (47,325) - - (47,325)Proceeds from disposal of property, plant and equipment 20,802 - - 20,802 Interest received 1,103 - - 1,103

Net cash flows generated used in investing activities (25,420) (25,420)


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(iv) Reconciliation of cash flows for the year ended 31 December 2017 (cont’d.)


FRS as at Note 2.2 Note 2.2 MFRS as at Company (cont’d.) 31.12.2017 (c) (d) 31.12.2017 RM RM RM RM

Financing activitiesRepayments of obligations under finance leases (159,657) - - (159,657)Interest paid (1,946,268) - - (1,946,268)

Net cash flows used in financing activities (2,105,925) (2,105,925)

Net increase in cash and cash equivalents 398,064 - - 398,064 Cash and cash equivalents at 1 January 279,602 - - 279,602

Cash and cash equivalents at 31 December 677,666 677,666

(v) Reconciliation adjustments to the statements of changes in equity for the financial year ended 31 December 2017 and 1 January 2017

Group Company 31.12.2017 1.1.2017 31.12.2017 01.01.2017 RM RM RM RM

Increase in land held for development 87,673 87,673 - - Increase in property development costs 679,113 679,113 - -Decrease in trade and other receivables (7,286,627) (6,348,103) (226,234) - Decrease in other current assets (12,559,752) (10,614,687) - - Increase in contract assets 18,247,281 14,848,259 - - Decrease in trade and other payables 1,758,164 875,196 - -

Increase/(decrease) in retained earnings 925,852 (472,549) (226,234) -

2.3 Standards and interpretation issued but not yet effective

The standards and interpretation that are issued but not yet effective up to the date of issuance of the Group’s and the Company’s financial statements are disclosed below. The Group and the Company intend to adopt these standards, if applicable, when they become effective.

Effective for annual periodsDescriptions beginning on or after

MFRS 9: Prepayment Features with Negative Compensation (Amendments to MFRS 9) 1 January 2019MFRS 16: Leases 1 January 2019MFRS 128: Long-term Interests in Associates and Joint Ventures (Amendments to MFRS 128) 1 January 2019Annual Improvements to MFRS Standards 2015 - 2017 cycle 1 January 2019MFRS 119 Plan Amendment, Curtailment or Settlement (Amendments to MFRS 119) 1 January 2019IC Interpretation 22 Foreign Currency Transactions and Advance Consideration 1 January 2019MFRS 17 Insurance Contracts 1 January 2021Amendments to MFRS 10 and MFRS 128: Sale or Contribution of Assets between an Investor and its Associate or Joint Venture Deferred


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2.3 Standards and interpretation issued but not yet effective (cont’d.)

The directors expect that the adoption of the above standards and interpretation will have no material impact on the financial statements in the period of initial application other than for MFRS 16: Leases, as discussed below:

MFRS 16: Leases

MFRS 16: Leases (“MFRS 16”) will replace MFRS 117: Leases (“MFRS 117”), IC Interpretation 4: Determining whether an Arrangement contains a Lease (“IC 4”), IC Interpretation 115: Operating Lease-Incentives (“IC 115”) and IC Interpretation 127: Evaluating the Substance of Transactions Involving the Legal Form of a Lease (“IC 127”). MFRS 16 sets out the principles for the recognition, measurement, presentation and disclosure of leases and requires lessees to account for all leases under a single on-balance sheet model similar to the accounting for finance leases under MFRS 117.

At the commencement date of a lease, a lessee will recognise a liability to make lease payments and an asset representing the right to use the underlying asset during the lease term. The right-of-use asset is initially measured at cost and subsequently measured at cost (subject to certain exceptions), less accumulated depreciation and impairment losses, adjusted for any remeasurement of the lease liability. The lease liability is initially measured at present value of the lease payments that are not paid at that date. Subsequently, the lease liability is adjusted for interest and lease payments, as well as the impact of lease modifications.

Classification of cash flows will also be affected as operating lease payments under MFRS 117 are presented as operating cash flows, whereas under MFRS 16, the lease payments will be split into a principal (which will be presented as financing cash flows) and an interest portion (which will be presented as operating cash flows).

Lessor accounting under MFRS 16 is substantially the same as the accounting under MFRS 117. Lessors will continue to classify all leases using the same classification principle as in MFRS 117 and distinguish between two types of leases: operating and finance leases. MFRS 16 also requires lessees and lessors to make more extensive disclosures than under MFRS 117.

MFRS 16 is effective for annual periods beginning on or after 1 January 2019. Early application is permitted but not before an entity applies MFRS 15: Revenue from Contracts with Customers (“MFRS 15”). A lessee can choose to apply the standard using either a full retrospective or a modified retrospective approach. The Group and the Company are currently assessing the impact of MFRS 16 and plans to adopt the new standard on the required effective date.

2.4 Basis of consolidation

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

The Company controls an investee if and only if the Company has all the following:

(i) Power over the investee (i.e existing rights that give it the current ability to direct the relevant activities of the investee);

(ii) Exposure, or rights, to variable returns from its investment with the investee; and (iii) The ability to use its power over the investee to affect its returns.

When the Company has less than a majority of the voting rights of an investee, the Company considers the following in assessing whether or not the Company’s voting rights in an investee are sufficient to give it power over the investee:

(i) The size of the Company’s holding of voting rights relative to the size and dispersion of holdings of the other vote holders;

(ii) Potential voting rights held by the Company, other vote holders or other parties;(iii) Rights arising from other contractual arrangements; and (iv) Any additional facts and circumstances that indicate that the Company has, or does not have, the current ability

to direct the relevant activities at the time that decisions need to be made, including voting patterns at previous shareholders’ meetings.


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2.4 Basis of consolidation (cont’d.)

Subsidiaries are consolidated when the Company obtains control over the subsidiary and ceases when the Company loses control of the subsidiary. All intra-group balances, income and expenses and unrealised gains and losses resulting from intra-group transactions are eliminated in full.

Losses within a subsidiary are attributed to the non-controlling interests even if that results in a deficit balance.

Changes in the Group’s ownership interests in subsidiaries that do not result in the Group losing control over the subsidiaries are accounted for as equity transactions. The carrying amounts of the Group’s interests and the non-controlling interests are adjusted to reflect the changes in their relative interests in the subsidiaries. The resulting difference is recognised directly in equity and attributed to owners of the Company.

When the Group loses control of a subsidiary, a gain or loss calculated as the difference between (i) the aggregate of the fair value of the consideration received and the fair value of any retained interest and (ii) the previous carrying amount of the assets and liabilities of the subsidiary and any non-controlling interest, is recognised in profit or loss. The subsidiary’s cumulative gain or loss which has been recognised in other comprehensive income and accumulated in equity are reclassified to profit or loss or where applicable, transferred directly to retained earnings. The fair value of any investment retained in the former subsidiary at the date control is lost is regarded as the cost on initial recognition of the investment.

Business combinations

Acquisitions of subsidiaries are accounted for using the acquisition method. The cost of an acquisition is measured as the aggregate of the consideration transferred, measured at acquisition date fair value and the amount of any non-controlling interests in the acquiree. The Group elects on a transaction-by-transaction basis whether to measure the non-controlling interests in the acquiree either at fair value or at the proportionate share of the acquiree’s identifiable net assets. Transaction costs incurred are expensed and included in administrative expenses.

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

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

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

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

2.5 Transactions with non-controlling interests

Non-controlling interest represents the equity in subsidiaries not attributable, directly or indirectly, to owners of the Company, and is presented separately in the consolidated statement of comprehensive income and within equity in the consolidated statement of financial position, separately from equity attributable to owners of the Company.

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


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2.6 Foreign currency

(a) Functional and presentation currency

The individual financial statements of each entity in the Group are measured using the currency of the primary economic environment in which the entity operates (“the functional currency”). The consolidated financial statements are presented in Ringgit Malaysia (“RM”), which is also the Company’s functional currency.

(b) Foreign currency transactions

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

Exchange differences arising on the settlement of monetary items or on translating monetary items at the reporting date are recognised in profit or loss except for exchange differences arising on monetary items that form part of the Group’s net investment in foreign operations, which are recognised initially in other comprehensive income and accumulated under foreign currency translation reserve in equity. The foreign currency translation reserve is reclassified from equity to profit or loss of the Group on disposal of the foreign operation.

Exchange differences arising on the translation of non-monetary items carried at fair value are included in profit or loss for the period except for the differences arising on the translation of non-monetary items in respect of which gains and losses are recognised directly in equity. Exchange differences arising from such non-monetary items are also recognised directly in equity.

(c) Foreign operations

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

Goodwill and fair value adjustments arising on the acquisition of foreign operations are treated as assets and liabilities of the foreign operations and are recorded in the functional currency of the foreign operations and translated at the closing rate at the reporting date.

2.7 Property, plant and equipment

Property, plant and equipment is stated at cost, net of accumulated depreciation and accumulated impairment losses, if any. Such cost includes the cost of replacing part of the property, plant and equipment and borrowing costs for long-term construction projects if the recognition criteria are met. When significant parts of property, plant and equipment are required to be replaced at intervals, the Group recognises such parts as individual assets with specific useful lives and depreciates them accordingly. Likewise, when a major inspection is performed, its cost is recognised in the carrying amount of the plant and equipment as a replacement if the recognition criteria are satisfied. All other repair and maintenance costs are recognised in profit or loss as incurred. The present value of the expected cost for the decommissioning of an asset after its use is included in the cost of the respective asset if the recognition criteria for a provision are met.


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2.7 Property, plant and equipment (cont’d.)

Depreciation of property, plant and equipment is provided for on a straight-line basis to write off the cost of each asset to its residual value over the estimated useful lives as follows:

Leasehold improvement 10 years Buildings 20 years Plant and machinery 5 to 10 years Motor vehicles 5 to 10 years Office equipment 5 to 10 years Office renovation 10 to 12.5 years Furniture and fittings 5 to 10 years

Work-in-progress is not depreciated as this asset is not yet available for use.

The carrying values of property, plant and equipment are reviewed for impairment when events or changes in circumtances indicate that the carrying value may not be recoverable.

The residual value, useful life and depreciation method are reviewed at each financial year-end, and adjusted prospectively, if appropriate.

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

2.8 Investment properties

Investment properties are buildings which are held either to earn rental income or for capital appreciation, or for both. Such properties are measured initially at cost including transaction costs. Following initial recognition, investment properties are carried at cost less any accumulated depreciation and accumulated impairment losses. The buildings are depreciated at 2% per annum on a straight line method.

Investment properties are derecognised when either they have been disposed of or when the investment property is permanently withdrawn from use and no future economic benefit is expected from its disposal. Any gains or losses on the retirement or disposal of an investment property are recognised in profit or loss in the year in which they arise.

Transfers are made to or from investment property only when there is a change in use.

2.9 Impairment of non-financial assets

The Group assesses at each reporting date whether there is an indication that an asset may be impaired. If any such indication exists, or when an annual impairment assessment for an asset is required, the Group makes an estimate of the asset’s recoverable amount.

An asset’s recoverable amount is the higher of an asset’s fair value less costs to sell and its value in use. For the purpose of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generatingunits(“CGU”)).

In assessing value in use, the estimated future cash flows expected to be generated by the asset are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. Where the carrying amount of an asset exceeds its recoverable amount, the asset is written downtoitsrecoverableamount.ImpairmentlossesrecognisedinrespectofaCGUorgroupsofCGUsareallocatedfirst to reduce the carrying amount of any goodwill allocated to those units or groups of units and then, to reduce the carrying amount of the other assets in the unit or groups of units on a pro-rata basis.


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2.9 Impairment of non-financial assets (cont’d.)

Impairment losses are recognised in profit or loss.

An assessment is made at each reporting date as to whether there is any indication that previously recognised impairment losses may no longer exist or may have decreased. A previously recognised impairment loss is reversed only if there has been a change in the estimates used to determine the asset’s recoverable amount since the last impairment loss was recognised. If that is the case, the carrying amount of the asset is increased to its recoverable amount. That increase cannot exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised previously. Such reversal is recognised in profit or loss. Impairment loss on goodwill is not reversed in a subsequent period.

2.10 Subsidiaries

A subsidiary is an entity over which the Group has all the following:

(i) Power over the investee (i.e. existing rights that give it the current ability to direct the relevant activities of the investee);

(ii) Exposure, or rights, to variable returns from its investment with the investee; and (iii) The ability to use its power over the investee to affect its returns.

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

2.11 Investments in associates

An associate is an entity in which the Group has significant influence. Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control over those policies.

On acquisition of an investment in associate, any excess of the cost of investment over the Group’s share of the net fair value of the identifiable assets and liabilities of the investee is recognised as goodwill and included in the carrying amount of the investment. Any excess of the Group’s share of the net fair value of the identifiable assets and liabilities of the investee over the cost of investment is excluded from the carrying amount of the investment and is instead included as income in the determination of the Group’s share of the associate’s or joint venture’s profit or loss for the period in which the investment is acquired.

An associate is equity accounted for from the date on which the investee becomes an associate.

Undertheequitymethod,oninitialrecognitiontheinvestmentinanassociateisrecognisedatcost,andthecarryingamount is increased or decreased to recognise the Group’s share of the profit or loss and other comprehensive income of the associate after the date of acquisition. When the Group’s share of losses in an associate equal or exceeds its interest in the associate, the Group does not recognise further losses, unless it has incurred legal or constructive obligations or made payments on behalf of the associate.

Profits and losses resulting from upstream and downstream transactions between the Group and its associate are recognised in the Group’s financial statements only to the extent of unrelated investors’ interests in the associate. Unrealisedlossesareeliminatedunlessthetransactionprovidesevidenceofanimpairmentoftheassettransferred.

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

After application of the equity method, the Group applies MFRS 139 Financial Instruments: Recognition and Measurement to determine whether it is necessary to recognise any additional impairment loss with respect to its net investment in the associate. When necessary, the entire carrying amount of the investment is tested for impairment in accordance with MFRS 136 Impairment of Assets as a single asset, by comparing its recoverable amount (higher of value in use and fair value less costs to sell) with its carrying amount. Any impairment loss is recognised in profit or loss. Reversal of an impairment loss is recognised to the extent that the recoverable amount of the investment subsequently increases.


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2.12 Inventory

(a) Inventory properties

Property acquired or being constructed for sale in the ordinary course of business, rather than to be held for rental or capital appreciation, is held as inventory and is measured at the lower of cost and net realisable value.

Cost includes:- Freehold and leasehold rights for land;- Amounts paid to contractors for construction;- Borrowing costs, planning and design costs, costs of site preparation, professional fees for legal services,

property transfer taxes, construction overheads and other related costs; and

Net realisable value is the estimated selling price in the ordinary course of the business, based on market prices at the reporting date and discounted for the time value of money if material, less costs to completion and the estimated costs of sales.

Inventory properties under construction are referred to as property development costs and comprise the cost of land, direct building costs and a share of development costs common to the entire development project where applicable. Once sold, the cost of these inventories is recognised in profit or loss as and when control passes to the respective customers.

Unitsofdevelopmentpropertiescompletedandheldforsalearestatedatthelowerofcostandnetrealisablevalue. Costs comprise costs of acquisition of land including all related costs incurred subsequent to the acquisition necessary to prepare the land for its intended use, related development costs to projects and direct building costs.

Inventory properties where no development activities have been carried out or where development activities are not expected to be completed within the normal operating cycle are referred to as land held for development and classified within non-current assets. Generally no significant development work would have been undertaken on these lands other than infrastructure work, earth work and landscape work incurred to prepare the land for development and these inventory properties are stated at cost plus incidental expenditure incurred to put the land in a condition ready for development. These inventory properties are classified to current assets at the point when active development project activities have commenced and when it can be demonstrated that the development activities can be completed within the normal operating cycle.

(b) Raw materials, consumable goods and others

Inventories are stated at the lower of cost and net realisable value. Cost is determined on the weighted average basis. In the case of finished goods and work-in-progress, cost comprises materials, direct labour, other direct charges and an appropriate proportion of factory overheads.

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

2.13 Contract assets and contract liabilities

Contract assets

A contract asset is the right to consideration in exchange for goods or services transferred to the customer. If the Group performs by transferring goods or services to a customer before the customer pays consideration or before payment is due, a contract asset is recognised for the earned consideration that is conditional. In the case of property development and construction contracts, contract asset is the excess of cumulative revenue earned over the billings to date. A contract asset is stated at cost less impairment. Contract assets are subject to impairment in accordance of MFRS 9 Financial Instruments.


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2.13 Contract assets and contract liabilities (cont’d.)

Contract liabilities

A contract liability is the obligation to transfer goods and services to a customer for which the Group has received consideration (or an amount of consideration is due) from the customer. In the case of property development and construction contracts, contract liability is the excess of the billings to date over the cumulative revenue earned. Contract liabilities are recognised as revenue when the Group performs its obligation under the contracts.

Refund liabilities

A refund liability is the obligation to refund some of the consideration received (or receivable) from the customer due to the events of delay in the supply of goods or services (liquidated damages) and is measured at the amount the Group ultimately expects it will have to return to the customer. The Group updates its estimates of refund liabilities (and the corresponding change in the transaction price) at the end of each reporting period.

2.14 Financial instruments

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

(a) Financial assets

Recognition and initial measurement

Financial assets are recognised initially at fair value, normally being the transaction price plus, in the case of financial assets not at fair value through profit or loss, any directly attributable transaction costs.

Trade receivables that do not contain a significant financing component or for which the Group and the Company has applied the practical expedient, whereby no adjustment is required if the period between performance and payment is one (1) year or less, are measured at the transaction price determined under MFRS 15: Revenue from Contract with Customers (“MFRS 15”), upon adoption of MFRS 9: Financial instruments (“MFRS 9”).

UponadoptionofMFRS9,tradereceivablesthatdonotcontainasignificantfinancingcomponentoriftheperiodbetween performance and payment is one (1) year or less under practical expedient of MFRS 15, are measured at the transaction price determined under MFRS 15.

Purchases or sales under a contract whose terms require delivery of financial assets within a time frame established by regulation or convention in the marketplace concerned (“regular way purchases”) are recognised on the trade date i.e. the date that the Group and the Company commit to purchase or sell the financial asset.

Fair value adjustments on shareholder’s loans and advances at initial recognition, if any, are added to the carrying value of investments in the Group’s and the Company’s financial statements.

Classification and subsequent measurement

The Group and the Company determine the classification of financial assets at initial recognition.

In previous years, financial assets are classified as measured at: financial assets at fair value through profit or loss (“FVTPL”), loans and receivables, held-to-maturity investments or available-for-sale financial assets, as appropriate.

UponadoptionofMFRS9,financialassetsareclassifiedasmeasuredat:amortisedcost,fairvaluethroughothercomprehensive income (“FVOCI”) and FVTPL, as appropriate.


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2.14 Financial instruments (cont’d.)

(a) Financial assets (cont’d.)

Classification and subsequent measurement (cont’d.)

The classification of financial assets at initial recognition depends on the financial asset’s contractual cash flow characteristics evaluated using the Solely Payments of Principal and Interest (“SPPI”) assessment and the Group’s and the Company’s business model for managing them.

Solely Payments of Principal and Interest (“SPPI”) assessment

For the purpose of this assessment, principal is defined as the fair value of the financial asset on initial recognition. Interest is defined as consideration for the time value of money and for the credit risk associated with the principal amount outstanding during a particular period of time and for other basic lending risks and costs, as well as a profit margin.

In assessing whether the contractual cash flows are SPPI, the Group and the Company consider the contractual terms of the instrument. This includes assessing whether the financial asset contains a contractual term that could change the timing or amount of contract cash flows such that it would not meet this condition.

The Group and the Company also consider terms that limit the Group’s and the Company’s claim to cash flows from specified assets, contingent events that would change the amount or timing of cash flows, terms that may adjust the contractual coupon rate, including variable rate features, and prepayment and extension features.

Business model assessment

The Group and the Company make an assessment of the objective of the business model in which a financial asset is held at a portfolio level because this best reflects the way the business is managed and information is provided to management.

The information considered include the stated policies and objectives for the portfolio and the operation of those policies in practice. These include whether management’s strategy focuses on earning contractual interest income, maintaining a particular interest rate profile, matching the duration of the financial assets to the duration of any related liabilities or expected cash ouflows, or realising cash flows through the sale of assets.

Other information considered includes how the performance of the portfolio is evaluated and reported to the Group’s and the Company’s management, the risks that affect the performance of the business model (and the financial assets held within that business model) and how those risks are managed, and the frequency, volume and timing of sales of financial assets in prior periods, the reasons for such sales and expectations about future sales activity.

Financial assets that are held for trading or are managed and whose performance is evaluated on a fair value basis are measured at FVTPL.

Financial assets commencing in the current financial year are not reclassified subsequent to their initial recognition unless the Group and the Company change their business model for managing financial assets in which case all affected financial assets are reclassified on the first day of the first reporting period following the change in the business model.

Amortised cost

Amortised cost category comprises financial assets that are held within a business model whose objective is to hold assets to collect contractual cash flows and its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. The financial assets are not designated as FVTPL. Subsequent to initial recognition, these financial assets are measured at amortised cost using the effective interest method. Interest income and foreign exchange gains and losses are recognised in profit or loss.


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Classification and subsequent measurement (cont’d.)

Fair value through other comprehensive income (“FVOCI”)

This category comprises debt instruments where it is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets, and its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. The debt instruments are not designated as at FVTPL.

FVOCI category also comprises investment in equity that are not held for trading, and the Company irrevocably elect to present subsequent changes in the investment’s fair value in other comprehensive income. This election is made on an investment-by-investment basis.

Financial assets categorised as FVOCI are subsequently measured at fair value with unrealised gains and losses recognised directly in other comprehensive income and accumulated under FVOCI reserve in equity. For debt instruments, when the investment is derecognised or determined to be impaired, the cumulative gain or loss previously recorded in equity is reclassified to the profit or loss. For equity instruments, the gains or losses are never reclassified to profit or loss.

Financial assets at fair value through profit or loss (“FVTPL”)

All financial assets not classified as measured at amortised cost or FVOCI as described above are measured at FVTPL. On initial recognition, the Group and the Company may irrevocably designate a financial asset that otherwise meets the requirements to be measured at amortised cost or at FVOCI as at FVTPL if doing so eliminates or significantly reduces an accounting mismatch that would otherwise arise.

Financial assets categorised as FVTPL are subsequently measured at their fair value with gains or losses recognised in the profit or loss. The methods used to measure fair value are stated in Note 2.26.

All financial assets, except for those measured at FVTPL and equity investments measured at FVOCI, are subject to impairment.

In making the assessment, the Group and the Company consider terms that limit the Group’s and the Company’s claim to cash flows from specified assets, contingent events that would change the amount or timing of cash flows, terms that may adjust the contractual coupon rate, including variable rate features, and prepayment and extension features.

Impairment of financial assets

The Group recognises an allowance for expected credit losses (ECLs) for all debt instruments not held at fair value through profit or loss. ECLs are based on the difference between the contractual cash flows due in accordance with the contract and all the cash flows that the Group expects to receive, discounted at an approximation of the original effective interest rate. The expected cash flows will include cash flows from the sale of collateral held or other credit enhancements that are integral to the contractual terms.

ECLs are recognised in two stages. For credit exposures for which there has not been a significant increase in credit risk since initial recognition, ECLs are provided for credit losses that result from default events that are possible within the next 12-months (a 12-month ECL). For those credit exposures for which there has been a significant increase in credit risk since initial recognition, a loss allowance is required for credit losses expected over the remaining life of the exposure, irrespective of the timing of the default (a lifetime ECL).


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Impairment of financial assets (cont’d.)

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

The Group considers a financial asset in default when contractual payments are 90 days past due. However, in certain cases, the Group may also consider a financial asset to be in default when internal or external information indicates that the Group is unlikely to receive the outstanding contractual amounts in full before taking into account any credit enhancements held by the Group. A financial asset is written off when there is no reasonable expectation of recovering the contractual cash flows.

(b) Financial liabilities

In previous years, financial liabilities are classified as financial liabilities at fair value through profit or loss or at amortised cost, loans and borrowings (i.e. financial liabilities measured at amortised cost), as appropriate. Financial liabilities are recognised initially at fair value less, in the case of at amortised cost loans and borrowings, any directly attributable transaction costs.

UponadoptionofMFRS9inthecurrentfinancialyear,financialliabilitiesareclassifiedasmeasuredat:FVTPLor at amortised cost, as appropriate. Financial liabilities are recognised initially at fair value less, in the case of at amortised cost, any directly attributable transaction costs.

The Group and the Company determine the classification of financial liabilities at initial recognition.

Subsequent measurement

Financial liabilities at fair value through profit or loss (“FVTPL”)

FVTPL category comprises financial liabilities that are derivatives (except for a derivative that is a financial guarantee contract or a designated and effective hedging instrument), contingent consideration in a business combination and financial liabilities that are specifically designated into this category upon initial recognition.

Financial liabilities categorised as FVTPL are subsequently measured at their fair value with gains or losses recognised in the profit or loss.

Amortised cost

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

Gains and losses are recognised in the profit or loss when the liabilities are derecognised as well as through the amortisation process.

(c) Offsetting of financial instruments

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


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(d) Amortised cost of financial instruments (cont’d.)

Amortised cost is computed using the effective interest method. This method uses effective interest rate that exactly discounts estimated future cash receipts or payments through the expected life of the financial instrument to the net carrying amount of the financial instrument. Amortised cost takes into account any transaction costs and any discount or premium on settlement.

(e) Derecognition of financial instruments

A financial asset is derecognised when the rights to receive cash flows from the asset have expired or, the Group and the Company have transferred their rights to receive cash flows from the asset or have assumed an obligation to pay the received cash flows in full without material delay to a third party under a “pass-through” arrangement without retaining control of the asset or substantially all the risks and rewards of the asset. On derecognition of a financial asset, the difference between the carrying amount and the sum of the consideration received (including any new asset obtained less any new liability assumed) and any cumulative gain or loss that had been recognised in equity is recognised in the profit or loss, except for equity investments at FVOCI where the gain or loss are recognised in other comprehensive income.

A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expired. On derecognition of a financial liability, the difference between the carrying amount of the financial liabilities extinguished or transferred to another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in the profit or loss. In the case of waiver of debt from owners, the gain is recognised in equity as capital reserve.

2.15 Cash and cash equivalents

For the purposes of the statements of cash flows, cash and cash equivalents include cash in hand and at banks and deposits at call which have an insignificant risk of changes in value, net of outstanding bank overdrafts.

2.16 Provisions

Provisions are recognised when the Group and the Company have a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of economic resources will be required to settle the obligation and the amount of the obligation can be estimated reliably.

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

2.17 Borrowing costs

Borrowing costs are capitalised as part of the cost of a qualifying asset if they are directly attributable to the acquisition, construction or production of that asset. Capitalisation of borrowing costs commences when the activities to prepare the asset for its intended use or sale are in progress and the expenditures and borrowing costs are incurred. Borrowing costs are capitalised until the assets are substantially completed for their intended use or sale.

All other borrowing costs are recognised in profit or loss in the period they are incurred. Borrowing costs consist of interest and other costs that the Group and the Company incurred in connection with the borrowing of funds.


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2.18 Employee benefits

(a) Short term benefits

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

(b) Defined contribution plans

The Group and the Company participate in the national pension schemes as defined by the laws of the countries in which it has operations. The Malaysian companies in the Group make contributions to the Employees Provident Fund in Malaysia, a defined contribution pension scheme. Contributions to defined contribution pension schemes are recognised as an expense in the period in which the related service is performed.

(c) Defined benefit plans

The net defined benefit liability or asset is the aggregate of the present value of the defined benefit obligation (derived using a discount rate based on high quality corporate bonds) at the end of the reporting period reduced by the fair value of plan assets (if any), adjusted for any effect of limiting a net defined benefit asset to the asset ceiling. The asset ceiling is the present value of any economic benefits available in the form of refunds from the plan or reductions in future contributions to the plan.

The cost of providing benefits under the defined benefit plans is determined separately for each plan using the projected unit credit method.

Defined benefit costs comprise the following:- Service cost- Net interest on the net defined benefit liability or asset- Remeasurements of net defined benefit liability or asset

Service costs which include current service costs, past service costs and gains or losses on non-routine settlements are recognised as expense in profit or loss. Past service costs are recognised when plan amendment or curtailment occurs.

Net interest on the net defined benefit liability or asset is the change during the period in the net defined benefit liability or asset that arises from the passage of time which is determined by applying the discount rate based on high quality corporate bonds to the net defined benefit liability or asset. Net interest on the net defined benefit liability or asset is recognised as expense or income in profit or loss.

Remeasurements comprising actuarial gains and losses, return on plan assets and any change in the effect of the asset ceiling (excluding net interest on defined benefit liability) are recognised immediately in other comprehensive income in the period in which they arise. Remeasurements are recognised in retained earnings within equity and are not reclassified to profit or loss in subsequent periods. The actuarial valuation was carried out once every three years.

Plan assets are assets that are held by a long-term employee benefit fund or qualifying insurance policies. Plan assets are not available to the creditors of the Group, nor can they be paid directly to the Group. Fair value of plan assets is based on market price information. When no market price is available, the fair value of plan assets is estimated by discounting expected future cash flows using a discount rate that reflects both the risk associated with the plan assets and the maturity or expected disposal date of those assets (or, if they have no maturity, the expected period until the settlement of the related obligations).

The Group’s right to be reimbursed of some or all of the expenditure required to settle a defined benefit obligation is recognised as a separate asset at fair value when and only when reimbursement is virtually certain.


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2.19 Leases

Finance leases, which transfer to the Group substantially all the risks and rewards incidental to ownership of the leased item, are capitalised at the inception of the lease at the fair value of the leased asset or, if lower, at the present value of the minimum lease payments. Any initial direct costs are also added to the amount capitalised. Lease payments are apportioned between the finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are charged to profit or loss. Contingent rents, if any, are charged as expenses in the periods in which they are incurred.

Leased assets are depreciated over the estimated useful life of the asset. However, if there is no reasonable certainty that the Group will obtain ownership by the end of the lease term, the asset is depreciated over the shorter of the estimated useful life and the lease term.

Operating lease payments are recognised as an expense in profit or loss on a straight-line basis over the lease term. The aggregate benefit of incentives provided by the lessor is recognised as a reduction of rental expense over the lease term on a straight-line basis.

2.20 Discontinued operation

A component of the Group is classified as a “discontinued operation” when the criteria to be classified as held for sale have been met or it has been disposed of and such a component represents a separate major line of business or geographical area of operations or is part of a single coordinated major line of business or geographical area of operations. A component is deemed to be held for sale if its carrying amounts will be recovered principally through a sale transaction rather than through continuing use.

Uponclassificationasheldforsale,non-currentassetsanddisposalgroupsarenotdepreciatedandaremeasuredatthe lower of carrying amount and fair value less costs to sell. Any differences are recognised in profit or loss.

2.21 Revenue

Revenue from contracts with customers is recognised when control of the goods or services are transferred to the customer at an amount that reflects the consideration to which the Group expects to be entitled in exchange for those goods or services. The Group has generally concluded that it is the principal in its revenue arrangements (unless otherwise stated below) because it typically controls the goods or services before transferring them to the customer.

The Group considers whether there are other promises in the contract that are separate performance obligations to which a portion of the transaction price needs to be allocated (e.g., warranties, non-cash consideration and consideration payable to the customer, if any). Depending on the terms of the contract, revenue is recognised when the performance obligation is satisfied, which may be at the point in time or over time.

If the consideration in a contract includes a variable amount, the Group estimates the amount of consideration to which it will be entitled in exchange for transferring the goods to the customer. The variable consideration is estimated at contract inception and constrained until it is highly probable that a significant revenue reversal in the amount of cumulative revenue recognised will not occur when the associated uncertainty with the variable consideration is subsequently resolved. Some contracts relating to construction contract and property development allow for customers to deduct as liquidated damages from the revenue, in the event of delays in the supply of goods or services. Certain contracts relating to sale of building materials provide customers with a right of return. Liquidated damages and the right of return give rise to variable consideration.

The Group’s revenue from contracts with customers are further described below:

(a) Revenue from property development

Property development contracts with customers may include multiple promises to customers and are accounted for as separate performance obligations. Transaction price will be allocated to each performance obligation based on the stand-alone selling prices. When these are not directly observable, they are estimated based on expected cost-plus margin.


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2.21 Revenue (cont’d.)

(a) Revenue from property development (cont’d.)

Revenue from property development is recognised as and when the control of the asset is transferred to the customer. Depending on the terms of the contract and the laws that apply to the contract, control of the asset may transfer over time or at a point in time. Control of the asset is transferred over time if the Group’s performance does not create an asset with an alternative use to the Group and the Group has an enforceable right to payment for performance completed to-date.

If control of the asset transfers over time, revenue is recognised over the period of the contract by using an input method which is based on cost incurred to-date relative to the total expected cost to the satisfaction of that performance obligation. Otherwise, revenue is recognised at a point in time when the customer obtains control of the asset.

The Group recognises sales at a point in time for the sale of completed properties, when the control of the properties has been transferred to the purchasers, being when the properties have been completed and delivered to the customers.

(b) Construction contracts

Under such contracts, theGroup is engaged to construct buildings and related infrastructure and in certaininstances to supply equipments. These contracts may include multiple promises to the customers and therefore accounted for as separate performance obligations. The fair value of the revenue, which is based on fixed price under the agreement will be allocated based on relative stand-alone selling price of the considerations of each of the separate performance obligations.

The Group’s performance creates or enhances an asset that the customer controls as the asset is created or enhanced. The Group recognises revenue over time using the input method, which is based on the total actual construction cost incurred to date as compared to the total budgeted costs for the respective construction projects.

(c) Sale of goods

Revenue from the sale of goods and services is recognised at a point in time when control of the assets is transferred to the customer, generally on the delivery of the goods and the performance obligation is satisfied.

(d) Revenue from services

Revenue from services is recognised net of service taxes and discounts as and when the services are rendered and the performance obligation is satisfied.

(e) Dividend income

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

(f) Rental income

Rental income from investment property is recognised on a straight-line basis over the term of the lease.

(g) Interest income

Interest income is recognised using the effective interest method.

(h) Management fees

Management fees are recognised when services are rendered.


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2.22 Income taxes

(a) Current tax

Current tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted by the reporting date.

Current taxes are recognised in profit or loss except to the extent that the tax relates to items recognised outside profit or loss, either in other comprehensive income or directly in equity.

(b) Deferred tax

Deferred tax is provided using the liability method on temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.

Deferred tax liabilities are recognised for all taxable temporary differences, except:

- where the deferred tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and

- in respect of taxable temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.

Deferred tax assets are recognised for all deductible temporary differences, carry forward of unused tax credits and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilised except:

- where the deferred tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and

- in respect of deductible temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, deferred tax assets are recognised only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilised.

The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised.Unrecogniseddeferredtaxassetsarereassessedateachreportingdateandarerecognisedtotheextentthat it has become probable that future taxable profit will allow the deferred tax assets to be utilised.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled, based on tax rates and tax laws that have been enacted or substantively enacted at the reporting date.

Deferred tax relating to items recognised outside profit or loss is recognised outside profit or loss. Deferred tax items are recognised in correlation to the underlying transaction either in other comprehensive income or directly in equity and deferred tax arising from a business combination is adjusted against goodwill on acquisition.

Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.


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2.22 Income taxes (cont’d.)

(c) Goods and Services Tax (“GST”) and Sales and Service Tax (“SST”)

The net amount of GST, being the difference between output and input of GST, payable to or receivable from the respective authorities at the reporting date, is included in trade and other payables or trade and other receivables in the statements of financial position.

Legislation to implement Malaysia’s new SST and repeal the GST has received Royal Assent and was published in the official gazette on 28 August 2018 (the Sales Tax Act, the Service Tax Act and the GST Repeal Act). The GST ended on 31 August 2018, and the SST applies as from 1 September 2018.

2.23 Segment reporting

For management purposes, the Group is organised into operating segments based on its products and services which are independently managed by the respective segment managers responsible for the performance of the respective segments under their charge. The segment managers report directly to the management of the Company who regularly reviews the segment results in order to allocate resources to the segments and to assess the segment performance. Additional disclosures on each of these segments are shown in Note 38, including the factors used to identify the reportable segments and the measurement basis of segment information.

2.24 Share capital and share issuance expenses

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

Ordinary shares are recorded at the proceeds received, net of directly attributable incremental transaction costs. Ordinary shares are classified as equity. Dividends on ordinary shares are recognised in equity in the period in which they are declared.

2.25 Contingencies

A contingent liability or asset is a possible obligation or asset that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of uncertain future event(s) not wholly within the control of the Group.

Contingent liabilities and assets are not recognised in the statements of financial position of the Group and the Company.

2.26 Fair value measurements

Fair value of an asset or a liability, except for lease transactions, is determined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The measurement assumes that the transaction to sell the asset or transfer the liability takes place either in the principal market or in the absence of a principal market, in the most advantageous market.

(a) Financial instruments

The fair value of financial instruments that are actively traded in organised financial markets is determined by reference to quoted market bid prices at the close of business at the end of reporting date. For financial instruments where there is no active market, fair value is determined using valuation techniques. Such techniques may include using recent arm’s length market transactions; reference to the current fair value of another instrument that is substantially the same; discounted cash flow analysis or other valuation models

(b) Non-financial instruments

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


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2.26 Fair value measurements (cont’d.)

When measuring the fair value of an asset or a liability, the Group and the Company use observable market data as far as possible. Fair value are categorised into different levels in a fair value hierarchy based on the input used in the valuation technique as follows:

Level1- Quoted prices (unadjusted) in active markets for identical assets or liabilities.Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).Level 3 - Inputs for the asset or liability that are not based on observable market data (unobservable input).

The fair value of an asset to be transferred between levels is determined as of the date of the event or change in circumstances that caused the transfer.

2.27 Related parties

A related party is defined as follows:

(a) A person or a close member of that person’s family is related to the Company if that person:

(i) has control or joint control over the Company;(ii) has significant influence over the Company; or(iii) is a member of the key management personnel of the Company or of a parent of the Company.

(b) An entity is related to the Company if any of the following conditions applies:

(i) the entity and the Company are members of the same group (which means that each parent, subsidiary and fellow subsidiary is related to the others);

(ii) one entity is an associate or joint venture of the other entity (or an associate or joint venture of a member of a group of which the other entity is a member);

(iii) both entities are joint ventures of the same third party;(iv) one entity is a joint venture of a third entity and the other entity is an associate of the third entity;(v) the entity is a post-employment benefit plan for the benefit of employees of either the Company or an entity

related to the Company. If the Company is itself such a plan, the sponsoring employers are also related to the Company;

(vi) the entity is controlled or jointly controlled by a person identified in (a);(vii) a person identified in (a) (i) has significant influence over the entity or is a member of the key management

personnel of the entity (or of a parent of the entity).

2.28 Current and non-current classification

The Group and the Company present assets and liabilities in the statements of financial position based on current and non-current classification.

An asset is classified as current when it is:

- expected to be realised or intended to be sold or consumed in Normal operating- held primarily for the purpose of trading; - expected to be realised within 12 months after the reporting period; or- cash and cash equivalents unless restricted from being exchanged or used to settle a liability for at least 12 months

after the reporting period.

All other assets are classified as non-current.


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2.28 Current and non-current classification (cont’d.)

A liability is classified as current when:

- it is expected to be settled in normal operating cycle; - it is held primarily for the purpose of trading; - it is due to be settled within 12 months after the reporting period; or- there is no unconditional right to defer the settlement of the liability for at least 12 months after the reporting period.

All other liabilities are classified as non-current.

Deferred tax assets and liabilities are classified as non-current assets and liabilities, respectively.

3. Significant accounting judgements and estimates

The preparation of the Group’s financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the disclosure of contingent liabilities at the reporting date. However, uncertainty about these assumptions and estimates could result in outcomes that could require a material adjustment to the carrying amount of the asset or liability affected in the future.

3.1 Judgements made in applying accounting policies

In the process of applying the Group’s and the Company’s accounting policies, management has made the following judgements, apart from those involving estimations, which have the most significant effect on the amounts recognised in the financial statements:

(a) Revenue recognition of property development activities

Determination of performance obligations

With respect to the sale of property, the Group concludes that the goods and services transferred in each contract constitute a single performance obligation. In particular, the promised goods and services in contracts for the sale of property under development mainly include design work, procurement of materials and development of the property. Generally, the Group is responsible for all these goods and services and the overall management of the project. Although these goods and services are capable of being distinct, the Group accounts for them as a single performance obligation because they are not distinct in the context of the contract. The Group uses those goods and services as inputs and provides a significant service of integrating them into a combined output i.e., the completed property for which the customer has contracted.

Determining the timing of revenue recognition on the sale of property under development

For contracts relating to the sale of property under development, the Group has considered the factors contained in the contracts and concluded that the control of property is transferred to the customer over time because the Group’s performance does not create an asset with alternative use to the Group. Furthermore, the Group has an enforceable right to payment for performance completed to date. It has considered the factors that indicate that it is restricted (contractually or practically) from readily directing the property under development for another use during its development. In addition, the Group is at all times entitled to an amount that at least compensates it for performances for performance completed to date (usually costs incurred to date plus a reasonable profit margin). In making this determination, the Group has carefully considered the contractual terms as well as any legislation or legal precedent that could supplement or override those contractual terms.


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3. Significant accounting judgements and estimates (cont’d.)

3.2 Key sources of estimation uncertainty

The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.

(a) Property development and construction contracts

The Group recognises property development and construction contracts revenue over time by using the input method. The input method is determined by the proportion that contract or property development costs incurred for work performed to date to the estimated total construction or property development costs.

Significant judgement is involved in determining the progress towards satisfaction of performance obligation, the extent of the construction or property development costs incurred, the estimated total construction or property development costs, as well as the recoverability of the construction or property development projects. In making the estimation, the Group evaluates based on past experience and by relying on the work of specialists.

The carrying amounts of assets and liabilities of the Group arising from property development activities and construction activities are disclosed in Note 16 and Note 22 respectively.

(b) Provision for expected credit losses of trade and other receivables and contract assets

The Group uses a provision matrix to calculate ECLs for trade receivables and contract assets. The provision rates are based on days past due for groupings of various customer segments that have similar loss patterns (i.e., by geography, product type, customer type and rating, and coverage by letters of credit and other forms of credit insurance).

The provision matrix is initially based on the Group’s historical observed default rates. The Group will calibrate the matrix to adjust the historical credit loss experience with forward-looking information. For instance, if forecast economic conditions (i.e., gross domestic product) are expected to deteriorate over the next year which can lead to an increased number of defaults in the manufacturing sector, the historical default rates are adjusted. At every reporting date, the historical observed default rates are updated and changes in the forward-looking estimates are analysed.

The assessment of the correlation between historical observed default rates, forecast economic conditions and ECLs is a significant estimate. The amount of ECLs is sensitive to changes in circumstances and of forecast economic conditions. The Group’s historical credit loss experience and forecast of economic conditions may also not be representative of customer’s actual default in the future. The information about the ECLs on the Group’s trade receivables and contract assets is disclosed in Note 22.

(c) Deferred tax assets

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

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


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4. Revenue

Group Company 2018 2017 2018 2017 RM RM RM RM

Revenue from contracts with customers 142,498,467 107,292,458 1,037,424 1,406,078 Revenue from other sources- Rental income 5,271,081 5,130,239 2,166,545 1,265,212 - Dividend income 16,838 21,942 - -

147,786,386 112,444,639 3,203,969 2,671,290

Disaggregation of the revenue from contract with customers:

Property development 50,583,169 44,219,066 - - Construction 1,049,160 1,453,682 - - Manufacturing 90,622,118 58,851,878 - - Management fee charged to subsidiaries - - 1,037,424 1,406,078 Other services 244,020 2,767,832 - -

142,498,467 107,292,458 1,037,424 1,406,078

Geographical marketsMalaysia 51,876,349 48,440,580 1,037,424 1,406,078 South Africa 90,622,118 58,851,878 - -

142,498,467 107,292,458 1,037,424 1,406,078

Timing of revenueAt a point in time 126,139,925 68,785,988 1,037,424 1,406,078 Over time 16,358,542 38,506,470 - -

142,498,467 107,292,458 1,037,424 1,406,078

5. Cost of sales

Group 2018 2017 RM RM

Property development costs (Note 16(b)) 10,135,818 16,329,366 Additional costs for completed projects 476,202 1,077,506 Land surrended to government (Note 16(b)) 83,904 - Cost of inventories sold 100,939,107 46,537,646

Property development 23,568,547 5,951,004 Manufacturing 77,370,560 40,586,642

Cost of services rendered 1,447,942 1,554,561 Cost of construction contracts - 159,301 Value engineering and consultancy services - 81,514

113,082,973 65,739,894


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6. Interest income


Interest income from:Financial assets carried at amortised cost 1,302,883 533,160 2,058,165 2,360,709 Deposits with licensed banks 89,420 333,762 - -

1,392,303 866,922 2,058,165 2,360,709

7. Other income


Gain on disposal of property, plant and equipment 287,096 102,754 - 20,801 Gain on disposal of investment properties 244,369 - - - Non-operational claim from a customer - 531,808 - - Reversal of provision for liability no longer required 115,141 - - - Duty drawback 1,397,775 307,230 - - Gain on disposal of a subsidiary - - 1,000 535,587 Other payable written off 15,659 917,350 - - Compensation received for land surrendered compensation - 521,104 - - Miscellaneous 227,656 699,189 16,846 375

2,287,696 3,079,435 17,846 556,763

8. Finance costs


Interest expense on: Obligations under finance leases 17,011 27,952 13,874 23,690 Term loans 8,487,881 4,767,043 1,336,681 1,106,103 Bank overdrafts 1,289,864 5,540,166 - - Revolving credits 95,159 185,775 - - Other interests 4,329,340 3,064,646 67,188 816,475

14,219,255 13,585,582 1,417,743 1,946,268

Less: Interest expense capitalised in: Development property (Note 16(b)) (390,081) (296,428) - -

Total finance costs 13,829,174 13,289,154 1,417,743 1,946,268


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9. (Loss)/profit before tax

The following items have been included in arriving at (loss)/profit before tax:


Auditors’ remuneration - current 372,169 636,432 40,000 33,000 - prior year over provision - (10,700) - - Employee benefits expense (Note 10) 17,681,186 17,998,617 4,861,492 4,533,475 Non-executive directors’ remuneration 571,750 613,547 564,250 612,297 Depreciation of property, plant and equipment (Note 15) 3,660,844 2,685,677 344,565 306,233 Unrealisedlossonforeignexchange 357,893 - - -Depreciation of investment properties (Note 17) 1,245,570 922,574 741,800 418,499 Loss on disposal of property, plant and equipment - - 91,882 - Loss on disposal of a subsidiary (Note 18(c)) 1,971 617,813 - - Property, plant and equipment written off 1,478,912 2,216 - - Provision for impairment losses in investment in a subsidiary - - 8,481,179 - Reversal of impairment losses in investment in a subsidiary - - (1,356,000) - Inventories written down 75,283 - - - Loss of disposal of an associate 6,416,566 - - - Allowance for expected credit loss on financial assets 945,384 3,582,006 19,603,459 987,761 - Trade receivables (Note 20(a), Note 38(B)) 786,510 2,421,275 70,280 226,234 - Other receivables (Note 20(a), Note 38(B)) 158,874 1,160,731 19,533,179 761,527 Rental expenses: - 279,626 230,560 251,520 - Third parties - 279,626 - - - Related parties - - 230,560 251,520 Reversal of allowance for expected credit loss (1,977,628) (13,505,662) (656,169) (19,904)- Trade receivables (Note 20(a)) (1,108,841) (9,001,211) (208,278) - - Other receivables (Note 20(b)) (868,787) (4,504,451) (447,891) (19,904)Bad debts written off - - 30,695 - Reversal of impairment losses in investment in an associate (60,000) - - - Relocation costs for operations from South Africa to Botswana - 892,252 - -

10. Employee benefits expense


Wages and salaries 12,470,632 13,713,926 3,043,803 3,267,126 Social security contributions 104,502 103,409 45,970 44,971 Short-term accumulated compensated absences- current 166,709 - 134,090 - - prior year over provision - (41,434) - (6,231)Contributions to defined contribution plan 1,116,088 1,108,811 429,875 398,988 Pension costs - defined benefit plan (Note 25, Note 38(B)) 476,757 471,059 266,785 219,662 Under/(over)provisionofpensioncost- defined benefit plan in prior year - (296,773) - - Incentive 270,179 553,168 - 257,677 Bonus - current year 237,151 328,137 - - - (over)/under provision in prior year 478,090 (652,007) 365,973 (290,436)Other staff related expenses 2,361,078 2,710,321 574,996 641,718

17,681,186 17,998,617 4,861,492 4,533,475


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10. Employee benefits expense (cont’d.)

Included in employee benefits expense of the Group and the Company are executive directors’ remuneration amounting to RM108,581 (2017: RM1,763,864) and RM108,581 (2017: RM159,015) respectively.

11. Directors’ remuneration

The details of remuneration receivable by directors of the Company during the year are as follows:


Executive: Fees - current 20,000 6,667 20,000 6,667 - reversal of provision in prior years - - - Salaries and other emoluments, representing total executive directors’ remuneration (excluding benefits-in-kind) 88,580 551,568 88,581 152,348

Total executive director’s remuneration (excluding benefits-in-kind) 108,580 558,235 108,581 159,015 Estimated money value of benefits-in-kind - - - -

Total executive directors’ remuneration (including benefits-in-kind) 108,580 558,235 108,581 159,015

Non-executive: Fees - current year 145,000 149,137 145,000 149,137 - reversal of provision in prior years - - Other emoluments 426,750 464,410 419,250 463,160

Total non-executive directors’ remuneration 571,750 613,547 564,250 612,297

Total directors’ remuneration 680,330 1,171,782 672,831 771,312

12. Income tax expense/(benefit)

Major components of income tax expense/(benefit)

The major components of income tax expense/(benefit) for the years ended 31 December 2018 and 2017 are:


Statement of comprehensive income:Current income tax: Malaysian income tax 1,367,528 3,848,216 - - (Over)/under provision in prior years (603,728) 110,027 - -

763,800 3,958,243 - -

Deferred income tax (Note 31): Relating to originating and reversal of temporary differences 5,832,729 (5,649,186) - -

Income tax expenses/(benefit) for the year 6,596,529 (1,690,943) - -


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12. Income tax expense/(benefit) (cont’d.)

Reconciliation between tax expense and accounting (loss)/profit

The reconciliation between tax expense and the product of accounting (loss)/profit multiplied by the applicable corporate tax rate for the years ended 31 December 2018 and 2017 are as follows:

2018 2017 RM RM

Group

(Loss)/profit before taxation from continuing operations (15,139,091) 2,442,416 Profit before taxation from discontinued operations - 26,945

(15,139,091) 2,469,361

Tax at Malaysian statutory tax rate of 24% (2017: 24%) (3,633,382) 353,871 Different tax rate in another country (501,024) (177,958)UtilisationofGrouprelief (692,764) (723,349)Effect of income not subject to tax (63,327) (188,396)Effect of expenses not deductible for tax purposes 4,399,506 3,791,620 Effect of utilisation of previously unrecognised tax losses and unabsorbed capital allowances - (31,240)Deferred tax assets not recognised 8,375,667 604,529 Benefits from previously unrecognised tax losses and unabsorbed capitalised allowance - (5,649,186)(Over)/under provision of income tax in prior years (603,728) 110,027 Share of tax of associates (684,419) 219,139

Income tax expense/(benefit) for the year 6,596,529 (1,690,943)

2018 2017 RM RM

Company

Loss before taxation (31,233,924) (5,473,160)

Tax at Malaysian statutory tax rate of 24% (2017: 24%) (7,496,141) (1,313,558)UtilisationofGrouprelief 720,776 -Effect of income not subject to tax (172,949) (79,237)Effect of expenses not deductible for tax purposes 2,088,424 1,153,246 Deferred tax assets not recognised in respect of current year’s tax losses and other deductible temporary differences 4,859,890 239,549

Income tax expense for the year - -

The income tax is calculated at the statutory tax rate of 24% (2017: 24%) of the estimated assessable (loss)/profit for the year.

Taxation for other jurisdictions is calculated at the rates prevailing in the respective jurisdictions.

The above reconciliation is prepared by aggregating separate reconciliations for each national jurisdiction.


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13. Profit from discontinued operations, net of tax

In prior year, the Board of Directors decided to dispose of two of its wholly-owned subsidiaries, Kimdec Corporation Sdn. Bhd. andPasdecTradingSdn.Bhd.whichwerepreviouslyreportedinthe‘Others’segmentunderNote38.

As at 31 December 2017, the assets and liabilities related to Kimdec Corporation Sdn. Bhd., and Pasdec Trading Sdn. Bhd. have been presented in the statement of financial position as “Assets of disposal group classified as held for sale” and “Liabilities of disposal group classified as held for sale”, and its results are presented separately on the statement of comprehensive income as “Profit from discontinued operations, net of tax”.

Statement of financial position disclosures

The major classes of assets and liabilities of disposal group classified as held for sale as at 31 December 2017 are as follows:

2017 RM

Assets: Property, plant and equipment 1,144 Other receivables 5,030 Cash and bank balances 23,700

29,874

Liabilities: Trade and other payables 31,650

Net liabilities of disposal group classified as held for sale 1,776

Statement of comprehensive income disclosures

The results of disposal group classified as held for sale for the year ended 31 December 2017 are as follows:

2017 RM

Discontinued operations

Other income 72,795 Expenses (45,850)

Profit from discontinued operations, net of tax 26,945

Statement of cash flows disclosures

The cash flows attributable to disposal group classified as held for sale are as follows:

2017 RM

Operating activities representing net cash inflows 2,085


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14. (Loss)/profit per share

(a) Basic

Basic (loss)/profit per share amounts are calculated by dividing (loss)/profit for the year, net of tax, attributable to owners of the parent by the weighted average number of ordinary shares outstanding during the financial year.

Group 2018 2017

(Loss)/profit attributable to ordinary equity holders of the Company (RM) (19,918,517) 5,875,831

Weighted average number of ordinary shares in issue (units) 353,795,823 251,128,685

Basic (loss)/earnings per share (sen) (5.63) 2.34

(b) Diluted

No diluted earnings per share were presented as the warrants are anti-dilutive, hence no potential dilutive ordinary shares outstanding as at 31 December 2018 and 31 December 2017.

15. Property, plant and equipment

Leasehold Plant and Work-in Other improvement Buildings machinery -progress assets* Total RM RM RM RM RM RM

GroupCost:

At 1 January 2017 611,368 2,600,474 10,356,780 6,715,063 11,029,805 31,313,490 Additions - 7,300,000 15,680,290 2,251,465 889,177 26,120,932 Disposals (23,188) (321,011) - - (567,190) (911,389)Write-off - - (3,838) - - (3,838)Reclassification to asset held for sale - - - - (28,641) (28,641)Exchange differences (33,044) - (1,604,600) - (2,584) (1,640,228)

At 31 December 2017 and 1 January 2018 555,136 9,579,463 24,428,632 8,966,528 11,320,567 54,850,326 Additions 1,064 112,649 1,570,995 600,463 2,142,303 4,427,474 Disposals - - (505,558) - (783,241) (1,288,799)Reclassification from inventories - 1,235,060 - - - 1,235,060 Write-off - - - (1,478,912) - (1,478,912)Exchange differences (66,311) - (3,836,087) - (285,054) (4,187,452)

At 31 December 2018 489,889 10,927,172 21,657,982 8,088,079 12,394,575 53,557,697


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15. Property, plant and equipment (cont’d.)

Leasehold Plant and Work-in Other improvement Buildings machinery -progress assets* Total RM RM RM RM RM RM

Group (cont’d.)Accumulated depreciation:

At 1 January 2017 231,190 573,541 719,803 - 7,861,851 9,386,385 Charge for the year (Note 9) 56,272 160,162 1,729,068 - 740,175 2,685,677 Disposals (4,298) (76,649) - - (420,044) (500,991)Write-off - - (1,622) - - (1,622)Reclassification to asset held for sale - - - - (27,497) (27,497)Exchange differences 20,832 - 125,875 - (212,420) (65,713)

At 31 December 2017 and 1 January 2018 303,996 657,054 2,573,124 - 7,942,065 11,476,239 Charge for the year (Note 9) 54,390 179,382 2,519,928 - 907,144 3,660,844 Disposals - - (474,816) - (486,703) (961,519)Exchange differences (37,344) - (184,326) - (68,156) (289,826)

At 31 December 2018 321,042 836,436 4,433,910 - 8,294,350 13,885,738

Net carrying amount:At 31 December 2017 251,140 8,922,409 21,855,508 8,966,528 3,378,502 43,374,087

At 31 December 2018 168,847 10,090,736 17,224,072 8,088,079 4,100,225 39,671,959

* Other assets consist of office renovation, furniture and fittings, office equipment and motor vehicles.

Furniture Office Motor and Office equipment vehicles fittings renovation Building Total RM RM RM RM RM RM

CompanyCost:

At 1 January 2017 715,692 1,451,982 57,854 77,649 - 2,303,177 Additions 45,150 1 2,174 - 7,300,000 7,347,325 Disposal - (1) - - - (1)

At 31 December 2017 and 1 January 2018 760,842 1,451,982 60,028 77,649 7,300,000 9,650,501 Additions - - 48,397 1,564,907 - 1,613,304 Disposals (5,632) (370,780) (17,331) - - (393,743)

At 31 December 2018 755,210 1,081,202 91,094 1,642,556 7,300,000 10,870,062

Accumulated depreciation:

At 1 January 2017 573,664 679,507 20,136 43,567 - 1,316,874 Charge for the year (Note 9) 65,042 145,197 5,862 7,764 82,368 306,233

At 31 December 2017 and 1 January 2018 638,706 824,704 25,998 51,331 82,368 1,623,107 Charge for the year (Note 9) 54,841 115,444 7,502 20,778 146,000 344,565 Disposals (5,021) (211,734) (9,901) - - (226,656)

At 31 December 2018 688,526 728,414 23,599 72,109 228,368 1,741,016

Net carrying amount:At 31 December 2017 122,136 627,278 34,030 26,318 7,217,632 8,027,394

At 31 December 2018 66,684 352,788 67,495 1,570,447 7,071,632 9,129,046


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15. Property, plant and equipment (cont’d.)

During the financial year, the Group and the Company acquired property, plant and equipment as follows:


Debt settlement through property, plant and equipment - - 48,397 - Loans and borrowings - 12,628,863 - - Issuance of ordinary shares - 7,300,000 - 7,300,000 Cash outflow 4,427,474 6,192,069 1,564,907 47,325

4,427,474 26,120,932 1,613,304 7,347,325

Net carrying amounts of property, plant and equipment held under hire purchase arrangements are as follows:


Motor vehicles 771,645 1,046,136 342,128 616,619 Plant and machinery 11,963,495 11,963,495 - -

12,735,140 13,009,631 342,128 616,619

In addition to assets held under finance leases, the Group’s property, plant and equipment, with carrying amount of RM1,297,687 (2017: RM44,150,332) are pledged to secure the Group’s bank borrowings (Note 26).

16. Inventories


Non-currentCost:Land held for property development (Note 16(a)) 145,381,539 143,026,007 133,699,183

CurrentCost:- completed development units 88,413,873 81,354,543 60,101,288 - finished goods, raw materials and consumable stores 19,693,443 15,481,595 12,246,786 - property development costs (Note 16 (b)) 102,520,947 121,508,189 140,604,165

Net realisable value:- completed development units 312,532 387,815 387,815

210,940,795 218,732,142 213,340,054

Total inventories 356,322,334 361,758,149 347,039,237

During the financial year, the Group recognised inventories write down of RM75,283 (2017: RM87,468)


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16. Inventories (cont’d.)

(a) Land held for property development

Freehold Leasehold land land Total RM RM RM

Group

At 31 December 2018

CostAt 1 January 2018 47,105,187 95,920,820 143,026,007 Additions - 2,355,532 2,355,532

At 31 December 2018 47,105,187 98,276,352 145,381,539

At 31 December 2017

CostAt 1 January 2017 47,105,187 86,593,996 133,699,183 Additions - 8,379,357 8,379,357 Transferred to inventories - property development costs Note (16(b)) - (58,143) (58,143)Reclassification from inventories - property development costs Note (16(b)) - 1,005,610 1,005,610

At 31 December 2017 47,105,187 95,920,820 143,026,007

(b) Property development costs

Freehold Leasehold Development land land costs Total RM RM RM RM

Group

At 31 December 2018

Cumulative property development costsAt 1 January 2018 7,420,032 12,285,322 140,997,369 160,702,723 Costs incurred during the year - - 23,382,958 23,382,958 Land surrended to government (83,904) - - (83,904)Reversal of completed projects (1,361,581) - (36,408,864) (37,091,332)Development cost expensed off (15,842) (13,698) (258,000) (287,540)Unsoldunitstransferredtoinventories upon completion (1,103,460) - (30,080,365) (31,862,938)

At 31 December 2018 4,855,245 12,271,624 97,633,098 114,759,967

Cumulative costs recognised in profit or lossAt 1 January 2018 (5,376,246) (1,213,630) (32,604,658) (39,194,534)Recognised during the year (Note 5) (530,648) - (9,605,170) (10,135,818)Reversal of completed projects 1,361,581 - 35,729,751 37,091,332

At 31 December 2018 (4,545,313) (1,213,630) (6,480,077) (12,239,020)

Property development costs at 31 December 2018 309,932 11,057,994 91,153,021 102,520,947


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16. Inventories (cont’d.)

(b) Property development costs (cont’d.)

Freehold Leasehold Development land land costs Total RM RM RM RM

Group (cont’d.)

At 31 December 2017

Cumulative property development costsAt 1 January 2017 7,435,766 14,088,547 162,770,519 184,294,832 Costs incurred during the year - 13,696 25,947,041 25,960,737 Transferred from land held for property development (Note 16(a)) - 58,143 - 58,143 Reversal of completed projects - (236,370) (20,589,129) (20,825,499)Reclassification to land held for property development (Note 16(a)) - (1,005,610) - (1,005,610)Development cost expensed off (15,734) (395,872) (256,610) (668,216)Unsoldunitstransferredtoinventories - (237,212) (26,874,452) (27,111,664)

At 31 December 2017 7,420,032 12,285,322 140,997,369 160,702,723

Cumulative costs recognised in profit or lossAt 1 January 2017 (3,344,121) (1,563,924) (38,782,622) (43,690,667)Reclassification (156,195) 156,195 - - Recognised during the year (Note 5) (1,875,930) (42,271) (14,411,165) (16,329,366)Reversal of completed projects - 236,370 20,589,129 20,825,499

At 31 December 2017 (5,376,246) (1,213,630) (32,604,658) (39,194,534)

Property development costs at 31 December 2017 2,043,786 11,071,692 108,392,711 121,508,189

Included in property development costs incurred during the financial year are:


Interest expense capitalised (Note 8) 390,081 296,428

The freehold land and leasehold land of certain subsidiaries with a carrying value of RM76,873,991 (2017: RM81,036,836) have been charged as security for short term borrowings (Note 26).

The title of leasehold land held for development of a subsidiary with a carrying value of RM16,409,176 (2017: RM16,321,504) is still pending transfer to the subsidiary’s name from the ultimate holding corporation, Perbadanan Kemajuan Negeri Pahang.


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17. Investment properties


Buildings

CostAt 1 January 62,719,266 25,629,266 37,090,000 - Additions - 37,090,000 - 37,090,000 Transferred from inventories 718,645 - - - Disposals (182,446) - - -

At 31 December 63,255,465 62,719,266 37,090,000 37,090,000

Accumulated depreciationAt 1 January 3,804,681 2,882,107 418,499 - Charge for the year (Note 9) 1,245,570 922,574 741,800 418,499 Disposals (28,927) - - -

At 31 December 5,021,324 3,804,681 1,160,299 418,499

Net carrying amountAt 31 December 58,234,141 58,914,585 35,929,701 36,671,501

Fair value information

As at 31 December 2018 and 2017, the fair values of the properties are based on valuations performed by accredited independent valuers. A valuation model in accordance with that recommended by the International Valuation Standards Committee has been applied. Fair value of investment property is based on Level 2 of RM95,465,000 (2017: RM88,913,888).

Level 2 fair value

Level 2 fair value of buildings have been generally derived using the sales comparison approach. Sales price of comparable properties in close proximity are adjusted for differences in key attributes such as property size, location and accessibility, topographical factors, land use zoning, time factor, improvements and surrounding land uses. The most significant input into this valuation approach is price per square foot of comparable properties.

Certain investment properties with carrying amount of RM18,573,711 (2017: RM18,981,808) are pledged to a financial institution for credit facilities granted to a subsidiary (Note 26).

The following are recognised in profit or loss in respect of investment properties:


Rental income 5,271,081 5,124,069 Direct operating expenses (368,595) (285,469)


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18. Investments in subsidiaries

Company 2018 2017 RM RM

Unquotedshares at cost 293,651,080 295,651,082 Add: Deemed equity for debt waiver of a subsidiary 130,515 - Less: Disposal during the year (Note 18(c)) (32,318,812) (2,000,002)

261,462,783 293,651,080 Less: Accumulated impairment losses (119,242,516) (144,436,150)

142,220,267 149,214,930

(a) Details of the subsidiaries are as follows:

Country of % of ownership incorporation/ % of ownership interest held by Principal place interest held by non-controllingName of business Principal activities the Group interest 2018 2017 2018 2017

Held by the Company:

Pasdec Corporation Malaysia Property development and 100 100 - - Sdn. Bhd. project management

Kuantan Tembeling Malaysia Property management and 100 100 - - Resort Sdn. Bhd. maintenance

Pasdec Land Sdn. Bhd. Malaysia Property development 100 100 - -

Pasdec Bina Sdn. Bhd. # Malaysia Building and civil construction 100 100 - -

Kimdec Corporation Malaysia Property development - 100 - - Sdn. Bhd. *** (Ceased operations)

Sumbangan Sakti Malaysia Property development and 100 100 - - Sdn. Bhd. # renewable energy

Pasdec Mega Sdn. Bhd. # Malaysia Property development and 100 100 - - renewable energy

Pasdec Pintas Sdn. Bhd. Malaysia Property development 70 70 30 30

Mutiara Pasdec Malaysia Investment holding 100 100 - - Sdn. Bhd. #

Deep Sea Thermal Malaysia Thermal solutions 100 100 - - Solutions Sdn. Bhd. #

Pasdec Engineering Malaysia Engineering and 51 51 49 49 Sdn. Bhd. consultancy services

GELNAS Sdn. Bhd. # Malaysia Manufacturing of halal gelatin 100 100 - -


118

18. Investments in subsidiaries (cont’d.)

(a) Details of the subsidiaries are as follows (cont’d.):

Country of % of ownership incorporation/ % of ownership interest held by Principal place interest held by non-controllingName of business Principal activities the Group interest 2018 2017 2018 2017

Held through Pasdec Corporation Sdn. Bhd.:

Pasdec Putra Sdn. Bhd. Malaysia Property development 100 100 - -

SBP Power Sdn. Bhd. @ Malaysia Solar plant 51 51 49 49

Held through Mutiara Pasdec Sdn. Bhd.

Pahang Aircraft Industries Malaysia Manufacturing, selling and 100 100 - - Sdn. Bhd. # leasing of aircrafts and related equipments

Pasdec Trading Malaysia Trading of building materials 100 100 - - Sdn. Bhd. #

Pahang Off-Shore Malaysia Property development 100 100 - - Sdn. Bhd. **

Jasa Pasdec Sdn. Bhd.**** Malaysia Trading of building materials 70 - 30 -

Held through Pahang Off-Shore Sdn. Bhd.:

Pasdec Resources S.A. South Africa Investment holding 97 97 3 3 Limited *

Held through Pasdec Resources S.A. Limited:

Pasdec Automotive South Africa Manufacturing and supply of 70 70 30 30 Technologies (Pty) Ltd. * automotive wiring harnesses

Held through Pasdec Automotive Technologies (Pty) Ltd.:

Pasdec Automotive Botswana Manufacturing and supply of 100 100 - - Technologies (Botswana) automotive wiring harnesses (Pty) Ltd. *

* Audited by Moore Stephens, Johannesburg, South Africa.** Audited by Ernst & Young, Malaysia.*** Subsidiary disposed during the year**** Subsidiary newly incorporated during the year@ Audited by a firm of chartered accountants other than Hanafiah Raslan & Mohamad.# The auditors’ reports on the financial statements of these subsidiaries were not subject to any qualification. The

ability to continue as a going concern is dependent on the success of their future operations and the continued financial support from their holding company.


119



(b) Summarised financial information of Pasdec Pintas Sdn. Bhd. (“PPSB”), Pasdec Engineering Sdn. Bhd. (“PESB”), and Pahang Off-Shore Sdn. Bhd. and its subsidiaries (“POSB Group”), which have non-controlling interests that are material to the Group is set out below. The summarised financial information presented below is the amount before inter-company elimination.

(i) Summarised statements of financial position

As at 31 December 2018

PPSB PESB POSB Group Total RM RM RM RM

Current assets 955,873 27,465 32,296,588 33,279,926 Non-current assets - - 20,181,002 20,181,002

Total assets 955,873 27,465 52,477,590 53,460,928

Current liabilities 19,830 513,826 112,221,874 112,755,530 Non-current liabilities - - 336,169 336,169

Total liabilities 19,830 513,826 112,558,043 113,091,699

Foreign currency translation reserve - - (5,104,315) (5,104,315)

Net assets/(liabilities) 936,043 (486,361) (54,976,138) (54,526,456)

Equity attributable to owners of the Company 655,231 (248,045) (50,366,542) (49,959,356)Non-controlling interests 280,812 (238,316) (4,609,596) (4,567,100)

As at 31 December 2017


Current assets 968,232 1,631,811 28,439,943 31,039,986 Non-current assets - - 49,128,304 49,128,304

Total assets 968,232 1,631,811 77,568,247 80,168,290

Current liabilities 14,702 649,015 72,643,014 73,306,731 Non-current liabilities - - 45,073,292 45,073,292

Total liabilities 14,702 649,015 117,716,306 118,380,023

Foreign currency translation reserve - - (5,139,095) (5,139,095)

Net assets/(liabilities) 953,530 982,796 (35,008,964) (33,072,638)

Equity attributable to owners of the Company 667,471 501,226 (32,578,065) (31,409,368)Non-controlling interests 286,059 481,570 (2,430,899) (1,663,270)


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(b) (ii) Summarised statements of comprehensive income

For the financial year ended 31 December 2018


Revenue - - 90,622,118 90,622,118 Loss for the year (17,487) (1,487,332) (15,340,091) (16,844,910)

Loss attributable to owners of the Company (12,241) (758,539) (14,257,027) (15,027,807)

(Loss)/profit attributable to the non-controlling interests (5,246) (728,793) (1,083,064) (1,817,103)

Total comprehensive (loss)/profit (17,487) (1,487,332) (15,340,091) (16,844,910)

Total comprehensive loss attributable to owners of the Company (12,241) (758,539) (14,257,027) (15,027,807)

Total comprehensive loss/(profit) attributable to the non-controlling interests (5,246) (728,793) (2,169,791) (2,903,830)

(17,487) (1,487,332) (16,426,818) (17,931,637)



Revenue - - 58,851,878 58,851,878 (Loss)/profit for the year (19,312) (291,738) 1,200,173 889,123

(Loss)/profit attributable to owners of the Company (13,518) (148,786) 2,561,782 2,399,477

Loss attributable to the non-controlling interests (5,794) (142,952) (1,361,609) (1,510,354)

Total comprehensive (loss)/income (19,312) (291,738) 1,200,173 889,123

Total comprehensive (loss)/income attributable to owners of the Company (13,518) (148,786) 2,561,782 2,399,477

Total comprehensive loss attributable to the non-controlling interests (5,794) (142,952) (1,361,609) (1,510,354)

(19,312) (291,738) 1,200,173 889,123


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(b) (iii) Summarised statements of cash flows



Net cash used in operating activities (53) 864 1,581,113 1,581,924 Net cash used in investing activities - - 14,940,276 14,940,276 Net cash used in financing activities - - (4,413,919) (4,413,919)

Net decrease in cash and cash equivalents (53) 864 12,107,470 12,108,281

Cash and cash equivalents at beginning of the year 611,540 1,298 (21,154,643) (20,541,805)

Cash and cash equivalents at end of the year 611,487 2,162 (9,047,173) (8,433,524)



Net cash (used in)/from operating activities (53) (21,169) 6,698,685 6,677,463 Net cash used in investing activities - - (15,526,676) (15,526,676)Net cash generated from financing activities - - (1,077,445) (1,077,445)

Net decrease in cash and cash equivalents (53) (21,169) (9,905,436) (9,926,658)

Cash and cash equivalents at beginning of the year 611,593 22,467 (11,249,207) (10,615,147)

Cash and cash equivalents at end of the year 611,540 1,298 (21,154,643) (20,541,805)

(c) Disposal of a subsidiary

During the financial year, the Company disposed of its 100% equity interest in Kimdec Corporation Sdn. Bhd. in 4 June 2018 for a total consideration of RM1,000 of cash and debt settlement. The subsidiary was previously reported as part of the others segment under segment information (Note 38).

The disposal had the following effects on the financial position of the Group and of the Company as at the end of the year:

31.12.2018 RM

Cash and bank balances 4 Trade and other payables (12,692)Net assets disposed (12,688)Other payable written off 15,659 Total disposal proceed (1,000)

Loss on disposal 1,971

Disposal proceed settled by cash: 1,000

Cash inflow arising on disposal:Cash consideration 1,000 Cash and cash equivalents of subsidiary disposal (4)

Net cash inflow on disposal 996


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19. Investments in associates

Group 2018 2017 1.1.2017 RM RM RM

Unquotedshares,atcost 4,766,751 23,290,750 23,290,750Share of post-acquisition reserves (965,561) 3,238,401 3,417,250

3,801,190 26,529,151 26,708,000 Exchange differences transferred to retained earnings upon adoption of MFRS 1 - (4,252,778) (4,252,778)

Exchange differences - 1,745,713 -

3,801,190 24,022,086 22,455,222 Less: Accumulated impairment losses (10,000) (70,000) (70,000)

3,791,190 23,952,086 22,385,222

Represented by: Share of net assets 3,791,190 23,952,086 22,385,222

(a) Details of the associates are as follows:

Country of incorporation/ % of ownership Principal place interest held by Accounting

Name of business Principal activities the Group model applied 2018 2017

Held by the Company:

Pasdec Technology Malaysia Dormant 50 50 Equity method Centre and Services Sdn. Bhd. *

Held through subsidiaries:

Prima Prai Sdn. Bhd. * Malaysia Property development 20 20 Equity method

Genting View Resort Malaysia Ceased operations - 40 Equity method Development Sdn. Bhd. *

Pasdec Cempaka Malaysia Dormant 40 40 Equity method Sdn. Bhd. *

CRH Africa South Africa Manufacturing of automobile - 30.87 Equity method Automotive (Pty) Ltd. * seat components and catalytic converters

Pahang Specialist Malaysia Specialist medical services 30 30 Equity method Hospital Sdn. Bhd. *

* Audited by a firm of chartered accountants other than Hanafiah Raslan & Mohamad.


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19. Investments in associates (cont’d.)

(b) Disposal of associates

During the financial year, the Group disposed of its 40% equity interest in Genting View Resort Development Sdn. Bhd. and 30.87% equity interest CRH Africa Automotive (Pty) Ltd. on 26 March 2018 and 31 December 2018 with total consideration of RM1 and RM18 million of cash and debt settlement, respectively .

This transaction has resulted in the recognition of a gain or loss, calculated as follows:

(i) Genting View Resort Development Sdn. Bhd.

2018 RM

Proceed of disposal 1 Less: Carrying amount of investment on the date of loss of significant influence -

Gain recognised 1

(ii) CRH Africa Automotive (Pty) Ltd.

2018 RM

Proceed from disposal 18,351,840 Less: Carrying amount of investment on the date of loss of significant influence (23,395,274)Add: Reclassification of foreign translation reserve into profit or loss upon disposal of CRH (1,373,132)

Loss recognised (6,416,566)

(c) Summarised financial information of CRH Automotive (Pty) Ltd. which represent an associate that is material to the Group is set out below. The summarised financial information represents the amounts in the financial statements of the associate and not the Group’s share of those amounts. Other associates are not material to the Group.

(i) Summarised statement of financial position

CRH Automotive (Pty) Ltd. 2018 2017 RM RM

Non-current assets - 54,409,731 Current assets - 92,925,930

Total assets - 147,335,661

Non-current liabilities - 24,619,565 Current liabilities - 49,703,362

Total liabilities - 74,322,927

Net assets - 73,012,734

(ii) Summarised statement of comprehensive income

CRH Automotive (Pty) Ltd. 2018 2017 RM RM

Revenue - 342,704,357 Profit before tax - 40,866 Profit for the year - 246,741 Total comprehensive income - 246,789


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19. Investments in associates (cont’d.)

(c) Summarised financial information of CRH Automotive (Pty) Ltd. which represent an associate that is material to the Group is set out below. The summarised financial information represents the amounts in the financial statements of the associate and not the Group’s share of those amounts. Other associates are not material to the Group.

(iii) Reconciliation of the summarised financial information presented above to the carrying amount of the Group’s interest in the associate

2017 RM

Net assets at 1 January 59,848,202 Profit for the year 246,741 Foreign currency translation reserve 5,655,047 Disposal -

Net assets at date of disposal 65,749,990 Interest in the associate 30.87%

Carrying value of Group’s interest in the associate 20,297,022

(d) Aggregate information of associates that are not individually material

2018 2017 RM RM

The Group’s share of profit/(loss) before tax 13,920,687 (921,646)The Group’s share of profit/(loss) after tax 10,039,686 (1,097,622)The Group’s share of total comprehensive income/(loss) 10,039,686 (1,097,622)

20. Trade and other receivables

Group Company 2018 2017 1.1.2017 2018 2017 1.1.2017

RM RM RM RM RM RM

Current

Trade receivables 32,671,755 36,812,265 42,709,397 196,624 320,607 - Less: Allowance for expected credit loss (6,586,481) (7,245,085) (15,834,038) (88,236) (226,234) -

26,085,274 29,567,180 26,875,359 108,388 94,373 -

Other receivablesAmounts due from related parties: Related parties 15,846,162 15,779,468 15,776,801 15,776,164 15,776,164 15,776,801 Subsidiaries - - - 177,345,572 156,298,493 160,519,755

15,846,162 15,779,468 15,776,801 193,121,736 172,074,657 176,296,556 Deposits 4,346,549 5,800,383 5,725,531 46,950 15,900 - Sundry receivables 16,810,402 10,914,317 9,550,510 2,379,107 2,669,316 55,364

37,003,113 32,494,168 31,052,842 195,547,793 174,759,873 176,351,920

Less: Allowance for expected credit loss Third parties (3,260,189) (3,970,102) (8,340,035) - - - Subsidiaries - - - (32,329,053) (13,243,765) (13,419,491) Related party (15,776,164) (15,776,164) (15,776,164) (15,776,164) (15,776,164) (15,776,164)

(19,036,353) (19,746,266) (24,116,199) (48,105,217) (29,019,929) (29,195,655)

17,966,760 12,747,902 6,936,643 147,442,576 145,739,944 147,156,265


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20. Trade and other receivables (cont’d.)

Group Company 2018 2017 1.1.2017 2018 2017 1.1.2017 RM RM RM RM RM RM

Financial assets carried at amortised cost 44,052,034 42,315,082 33,812,002 147,550,964 145,834,317 147,156,265 Add: Cash and bank balances (Note 24) 29,556,218 17,514,244 28,276,025 5,324,562 677,666 279,602 Less: GST receivable (3,415,110) (3,202,321) (161,116) (2,281,775) (2,104,497) -

Financial assets carried at amortised cost 70,193,142 56,627,005 61,926,911 150,593,751 144,407,486 147,435,867

(a) Trade receivables

Trade receivables are non-interest bearing and are generally on 7 to 90 day (2017: 7 to 90 day) terms. They are recognised at their original invoice amounts which represent their fair values on initial recognition.

Ageing analysis of trade receivables

The ageing analysis of the Group’s trade receivables is as follows:

Group 2018 2017 1.1.2017 RM RM RM

Neither past due nor impaired 2,477,397 5,265,196 6,406,012

1 to 30 days past due not impaired 1,387,757 1,196,654 1,381,035 31 to 60 days past due not impaired 4,462,097 1,582,554 1,794,135 61 to 90 days past due not impaired 2,972,564 1,254,705 620,162 More than 91 days past due not impaired 14,785,459 20,268,071 16,674,015

23,607,877 24,301,984 20,469,347 Impaired 6,586,481 7,245,085 15,834,038

32,671,755 36,812,265 42,709,397

Receivables that are neither past due nor impaired

Trade receivables that are neither past due nor impaired are creditworthy debtors 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 year.

Receivables that are past due but not impaired

The Group has trade receivables amounting to RM23,607,877 (2017: RM23,482,053) that are past due at the reporting date but not impaired.

Trade receivables that were past due but not impaired relate to customers that have a good track record with the Group. Based on past experience and no adverse information to date, the directors of the Group are of the opinion that no provision for impairment is necessary in respect of these balances as there has not been a significant change in the credit quality and the balances are still considered fully recoverable.


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(a) Trade receivables (cont’d.)

Trade receivables that are impaired

The Group’s and the Company’s trade receivables that are impaired at the reporting date and the movement of the provision for expected credit losses used to record the expected credit losses are as follows:


Trade receivables - nominal amounts 6,586,481 7,245,085 15,834,038 196,624 320,607 - Less: Allowance for expected credit loss (6,586,481) (7,245,085) (15,834,038) (88,236) (226,234) -

- - - 108,388 94,373 -

Movement in allowance for expected credit loss:


At 1 January 7,245,085 15,834,038 14,403,880 - - - Effect of the adoption of MFRS 9 (Note 2.2 (d), 9) - (307,545) 621,091 226,234 - -

At 1 January, restated 7,245,085 15,526,493 15,024,971 226,234 - - Disposal of a subsidiary - (730,381) - - - - Charge for the year (Note 9) 786,510 2,421,275 3,145,197 70,280 226,234 - Reversal (Note 9) (1,108,841) (8,693,666) (744,026) (208,278) - - Written off (336,273) (1,278,636) (1,592,104) - - -

At 31 December 6,586,481 7,245,085 15,834,038 88,236 226,234 -

(b) Other receivables

The amounts due from subsidiaries bear interest at 3.0% (2017: 3.0%) per annum. These amounts are unsecured, repayable on demand and to be settled in cash.

The amount due from holding corporation is unsecured, non-interest bearing, repayable on demand and to be settled in cash.

Other receivables that are impaired

The Group’s and the Company’s other receivables that are impaired at the reporting date and the allowance used to record the expected credit loss are as follows:

Individually impaired Group Company

2018 2017 1.1.2017 2018 2017 1.1.2017 RM RM RM RM RM RM

GroupOther receivables - nominal amounts 19,036,353 19,746,266 24,116,199 48,105,217 35,060,103 35,039,897 Less: Allowance for expected credit loss (19,036,353) (19,746,266) (24,116,199) (48,105,217) (29,019,929) (29,195,655)

- - - - 6,040,174 5,844,242


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(b) Other receivables (cont’d.)

Movement in allowance for expected credit loss:


At 1 January 19,746,266 24,116,199 24,333,073 29,019,929 29,195,655 28,173,670 Charge for the year (Note 9) 158,874 1,160,731 257,924 19,533,179 761,527 2,318,168 Reversal (Note 9) (868,787) (4,504,451) - (447,891) (19,904) (1,296,183)Written off - (980,367) (474,798) - (917,349) - Reclassification to asset held for sale - (45,846) - - - -

At 31 December 19,036,353 19,746,266 24,116,199 48,105,217 29,019,929 29,195,655

21. Other current assets


Prepaid operating expenses 538,900 2,588,805 3,141,826 83,421 112,528 131,673

22. Contract assets/(liabilities)

Group 2018 2017 1.1.2017 RM RM RM

Contract assets

Amount due from customers 703,042 2,042,415 2,099,044 Accrued billings 4,544,576 10,517,337 8,515,643 Retention sum 6,158,877 5,687,529 4,233,572

11,406,495 18,247,281 14,848,259

Contract liabilities

Amount due from customers 95,783 - - Accrued billings 2,560,238 - -

2,656,021 - -

Contract assets are initially recognised for revenue earned from property under development and construction rendered but yet tobebilledtocustomers.Uponbillingof invoice, theamountsrecognisedascontractassetsarereclassifiedto tradereceivables.

As at 31 December 2018, a provision for impairment of RM550,867 (2017: RM550,867) was recognised in relation to contract assets. There has been no movement in this provision account for the financial year ended 31 December 2018.


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23. Marketable securities

2018 2017 RM RM

Fair Value through Other Comprehensive IncomeAt fair value:Shares quoted in Malaysia 8,811 8,627 UnittrustsquotedinMalaysia 368,539 450,065

377,350 458,692

24. Cash and cash equivalents


Cash in hand and at banks 24,487,535 11,975,287 5,324,562 677,666 Deposits with licensed banks 5,068,683 5,538,957 - -

Cash and bank balances 29,556,218 17,514,244 5,324,562 677,666

Cash at banks earns interest at floating rates based on daily bank deposit rates. Short-term deposits are made for varying periods of between 1 day and 365 day depending on the immediate cash requirements of the Group and earn interests at the respective short-term deposit rates. The weighted average effective interest rate as at 31 December 2018 for the Group was 3.12% (2017: 3.08%) per annum.

Included in cash at banks of the Group is an amount of RM6,135,296 (2017: RM5,357,518) held pursuant to Section 7A of the Housing Development (Control and Licensing) Act 1966 and therefore restricted from use in other operations.

The Group’s cash held under the Housing Development Accounts represent receipts from purchasers of residential properties less payments or withdrawals provided under Section 7A of the Housing Developers (Control Licensing) Amendments Act 2002. The utilisation of these balances is restricted before completion of the housing development projects and fulfillment of all relevant obligations to the purchasers, such that the cash could only be withdrawn from such accounts for the purpose of completing that particular projects.

Deposits with licensed banks of the Group amounting to RM4,320,989 (2017: RM4,648,822) are pledged to banks for credit facilities granted to certain subsidiaries (Note 26).

For the purpose of the statements of cash flows, cash and cash equivalents comprise the following at the reporting date:


Cash and bank balances- continuing operations 29,556,218 17,514,244 5,324,562 677,666 - discontinued operation (Note 13) - 23,700 - -

29,556,218 17,537,944 5,324,562 677,666 Less:Bank overdrafts (Note 26) (20,312,959) (41,344,168) - - Deposits pledged as securities for bank borrowing (4,779,206) (4,648,822) - - Deposits with licensed banks for a period of more than 90 days (77,982) - - -

Cash and cash equivalents 4,386,071 (28,455,046) 5,324,562 677,666


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25. Retirement benefit obligations

TheGroupoperatesanunfunded,definedbenefitRetirementBenefitScheme(“theScheme”)foritseligibleemployees.Underthe Scheme, eligible employees are entitled to retirement benefits with 7.5% of final salary multiplied with plan service with maximum of 360 months payable on attainment of the retirement age of 40 upon completion of 10 or more years of plan service or retirement age.

The following tables summarise the components of net benefit expense recognised in profit or loss and the unfunded status and amounts recognised in the statements of financial position for the plans:


Net benefit expense

Current service costs 270,705 259,556 153,285 120,919 Interest cost on benefit obligation 206,052 211,503 113,500 98,743

Net benefit expense, included in employee benefits expense (Note 10) 476,757 471,059 266,785 219,662

Benefit liability

Defined benefit obligation represents total benefit liability 4,624,102 4,509,277 2,469,109 2,426,463

Changes in present value of defined benefit obligations are as follows:


At 1 January 4,509,277 4,534,960 2,426,463 2,120,682 Current service costs 270,705 259,556 153,285 120,919 Interest cost 206,052 211,503 113,500 98,743 Actuarial (gain)/loss on obligation 832,846 (213,074) 136,250 204,145 Benefits paid (1,194,778) (283,668) (360,389) (118,026)

At 31 December 4,624,102 4,509,277 2,469,109 2,426,463

Analysed as:Current 150,373 901,359 72,806 380,415 Non-current 4,473,729 3,607,918 2,396,303 2,046,048

4,624,102 4,509,277 2,469,109 2,426,463

The principal assumptions used in determining defined benefit plans are shown below:

2018 2017 % %

Discount rate 5.15 5.15 Future salary increases 5.00 5.00

The Retirement Benefit Scheme was revalued on 28 January 2019. As at that date, the valuation showed that the Group’s provision for retirement benefits was sufficient to meet the actuarially determined value of vested benefits.


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25. Retirement benefit obligations (cont’d.)

The sensitivity analysis below has been determined based on reasonably possible changes of each significant assumption on the defined benefit obligation as of the end of the reporting, assuming if all other assumptions were held constant:

Loss net of tax Group Company

2018 2017 2018 2017 RM RM RM RM

Discount rate- increase by 1% (2017: 1%) (2,381) (2,322) (1,272) (1,250)- decrease by 1% (2017: 1%) 2,381 2,322 1,272 1,250

Future salary- increase by 1% (2017: 1%) (2,311) (2,255) (1,235) (1,213)- decrease by 1% (2017: 1%) 2,311 2,255 1,235 1,213

26. Loans and borrowings


CurrentSecured:Bank overdrafts 20,312,959 41,344,168 - - Revolving credits 9,879,097 1,500,000 - - Term loans- Tawarruq Flexi Term Financing-I Cost of Fund (“COF”) + 1.00% 16,993,635 - 16,993,635 -- Tawarruq Flexi Term Financing-I Cost of Fund (“COF”) + 1.50% - 20,000,000 - 20,000,000 - Loan at Base Funding Rate (“BFR”) + 1.00% per annum 1,365,523 1,006,960 - - - Loan at BFR + 1.35% per annum - 1,333,340 - - - Loan at BFR + 1.50% per annum 4,681,391 1,315,516 - - - Loan at BFR - 1.50% per annum 1,405,394 435,211 - - - Loan at BFR - 1.90% per annum 10,146,622 2,538,654 - - - Loan at Base Lending Rate (“BLR”) + 1.25% per annum 11,142,097 - - - - Loan at 2.5% above the base rate per annum - 12,519,006 - - Obligations under finance leases (Note 27(b)) 132,659 184,275 112,113 164,852 Redeemable preference shares 24,889,341 26,702,269 - -

100,948,718 108,879,399 17,105,748 20,164,852


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26. Loans and borrowings (cont’d.)


Non-currentSecured:Term loans - - - -- Tawarruq Flexi Term Financing-I (TFTF-i) COF + 1.00% per annum - - - -- Tawarruq Flexi Term Financing-I (TFTF-i) COF + 1.50% per annum - - - - - Loan at BFR + 1.00% per annum - 1,406,578 - - - Loan at BFR + 1.35% per annum - - - - - Loan at BFR + 1.50% per annum - 4,605,102 - - - Loan at BFR - 1.50% per annum - 1,399,355 - - - Loan at BFR - 1.90% per annum - 10,207,722 - - Obligations under finance leases (Note 27(b)) 60,297 298,692 33,052 250,900

60,297 17,917,449 33,052 250,900

101,009,015 126,796,848 17,138,800 20,415,752

The remaining maturities of the loans and borrowings as at 31 December 2018 are as follows:


Maturity of borrowings:

On demand or within one year 100,948,718 108,879,399 4,864,037 20,164,852 More than 1 year and less than 2 years - 5,550,880 - 250,900 More than 2 years and less than 5 years 60,297 11,587,334 12,274,763 - 5 years or more - 779,235 - -

101,009,015 126,796,848 17,138,800 20,415,752

Bank overdrafts

The bank overdrafts of the Group are secured against the land registered under the name of a related party, first legal charge over long term leasehold land (Note 15) of certain subsidiaries, fixed and floating charges over certain assets of subsidiaries and corporate guarantee by a subsidiary and the Company. The weighted average effective interest as at 31 December 2018 for the Group was 8.99% (2017: 8.31%) per annum.

Revolving credits

The secured revolving credits of the Group are for a period of six months and are secured against fixed legal charge over certain leasehold land (Note 15) of a subsidiary and corporate guarantee by the Company. The weighted average effective interest as at 31 December 2018 for the Group was 8.95% (2017: 9.03%) per annum.

Tawarruq Flexi Term Financing-I (TFTF- i) + 1.00% (2017: (TFTF- i) + 1.50%) per annum The secured term loan is charged over certain properties with an Open Market Value of not less than RM60,000,000. The weighted average effective interest as at 31 December 2018 for the Group was 8% (2017: 5.66%) per annum.


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Bankers’ acceptances

The secured bankers’ acceptances of the Group are secured by certain assets of a subsidiary and are guaranteed by the Company. The weighted average effective interest as at 31 December 2018 for the Company was 5.10% (2017: Nil) per annum.

Term loans- Loan at BFR + 1.00% per annum- Loan at BFR + 1.35% per annum- Loan at BFR + 1.50% per annum- Loan at BFR - 1.50% per annum- Loan at BFR - 1.90% per annum- Loan at BLR + 1.25% per annum

The term loans are secured by the following:

(a) First legal charge over the freehold land and leasehold land of certain subsidiaries;(b) Fixed and floating charges over certain assets (Note 15, Note 16 and Note 17) of subsidiaries;(c) Corporate guarantee by a subsidiary and the Company.

- Loan at 2.5% above the base rate per annum

The loan was secured by corporate guarantee from the Company and has been fully settled in current financial year.

The weighted average effective interest as at 31 December 2018 for the Group was 8.19% (2017: 6.28%) per annum. The repayment periods of the Group’s term loans are ranging from 1 year to 6 years.

Breaches of loan covenants

PAT BW, a subsidiary of the Group has entered into a term loan agreement with the certain bank. PAT BW did not fulfil the financial covenants as required in the loan agreement for a credit line of BWP43 million (RM12.4 million).

Due to the breach of the financial covenants, the bank is contractually entitled to request for immediate repayment of the outstanding loan amount of BWP28,511,314 million (RM11,002,516 million). Accordingly, the long term loan is reclassified as a current loan as at 31 December 2018.

The bank did not request for repayment of the loan as of the date when these financial statements were approved by the Board of Directors.

As a result of the above, other loans and borrowings of the Group amounting to RM24,203,503 are also reclassified to current as the Group no longer has an unconditional right to defer the settlement of these borrowings for at least 12 months after the reporting period.

Obligations under finance leases

These obligations are secured by a charge over the leased assets (Note 15). The weighted average effective interest as at 31 December 2018 for the Group and the Company were 2.08% (2017: 2.08%) per annum and 2.75% (2017: 2.75%) per annum respectively.


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Redeemable preference shares

On 26 June 2015, a redeemable preference share (“RPS”) subscription agreement between BDC and PAT BW has been signed to provide funding to PAT BW of BWP52,100,000.

Group Number of RPS Amount

2018 2017 2018 2017 RM RM

AuthorisedAt 1 January 52,100,000 52,100,000 26,702,269 21,348,356 Exchange differences - - (1,812,928) 5,353,913

At 31 December 52,100,000 52,100,000 24,889,341 26,702,269

The amounts recognised in the statement of financial position of the Group may be analysed as follows:

Group Number of RPS Amount

2018 2017 2018 2017 RM RM

Nominal value - issued and fully paidAt 1 January 52,100,000 52,100,000 26,702,269 21,348,356 Exchange differences - - (1,812,928) 5,353,913

At 31 December 52,100,000 52,100,000 24,889,341 26,702,269

The salient features of the RPS issued by PAT BW are as follows:

(i) The Company provides irrevocable corporate guarantee to PAT BW in favour of BDC.

(ii) The redemption amount is the subscribe price aggregate multiplied by 110% and cumulative dividend at 4.0% per annum at the earlier of an event of default or third anniversary of issuance of RPS.

(iii) Financial covenant which stated that the net assets value of the Company shall be at least 2 times redemption amount.

(iv) Plant leasing which is located at Lobatse Clay Works by PAT BW from Western Industrial Estates (Proprietary) Limited (“WIEPL”) (BDC’s wholly owned subsidiary), for a ten year lease. WIEPL will fund the refurbishment of the Lobatse Clay Works property and customise it to PAT BW’s requirements. In the event that PAT BW relocates or vacates the premises within 10 years of the date of occupation, it will be liable to pay all the rentals payable for the remaining lease period.

On 11 December 2015, PAT BW had entered into an Ordinary Share Subscription Agreement (“OSSA”) with BDC.The OSSA shall be read together with the RPS agreement mentioned above.

The salient features of the OSSA are BDC has undertaken, on the Subscription Date, to utilise the proceeds received on the redemption of the Preference Shares to subscribe for the Subscription Shares at the Subscription Price on the Subscription Date, subject to the terms and conditions set out in the OSSA and PAT BW has undertaken, on the Subscription Date, to allot and issue the Subscription Shares to BDC.


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On 15 November 2018, the RPS is due for redemption upon its third year anniversary as per the RPS agreement. However, as stipulated in OSSA, PAT BW had to deliver the 31 December 2018 Financial Statements, together with a calculation certificate issued by the auditors confirming the earnings before interest, taxation, depreciation and amortisation (“EBITDA”) of PAT BW to BDC, as soon as possible after 31 December 2018 but in any event with a period of ninety (90) days after such date, cause to be completed by the auditors, the audited financial statements of PAT BW for the financial year ended 31 December 2018, which the said financial statements shall be delivered to BDC, as soon as possible, within ten (10) days after the completion of the financial statements. The calculation cetificate will be given to BDC for the determination of the subscription price using formula set in OSSA and for its consideration on whether to subcribe to the ordinary shares.

BDC shall be entitled to review the calculation certificate and within 14 days, shall advise in writing whether it agrees or disagrees with the calculation.

Should any difference or dispute arise between BDC and PAT BW in relation to the calculation certificate or the calculation, the parties shall forthwith consult with the other to resolve the dispute or difference and failing which, the difference or dispute shall be submitted for determinaton to and be decided by an expert agreed by both parties.

At the date of this report, the Company has entered into negotiations with BDC on the mode of settlement of the redeemable preference shares (either through redemption or conversion to ordinary shares). The Company is currently in active negotiation with BDC on the resolution to the preference shares.

Changes in liabilities arising from financing activities

Exchange difference/ At Net addition/ interest At 1 January (repayment) expense 31 December 2018 2018 2018 2018 RM’000 RM’000 RM’000 RM’000

Group

Obligations under hire purchase and finance lease 482,967 (290,011) - 192,956

Term loans:- TFTF-I COF + 1.50% per annum - 16,993,635 - 16,993,635 - TFTF-I COF + 1.50% per annum 20,000,000 (20,000,000) - - - Loan at BFR + 1.00% per annum 2,413,538 (1,048,015) - 1,365,523 - Loan at BFR + 1.35% per annum 1,333,340 (1,333,340) - - - Loan at BFR + 1.50% per annum 5,920,618 (1,239,227) - 4,681,391 - Loan at BFR - 1.50% per annum 1,834,566 (429,172) - 1,405,394 - Loan at BFR - 1.90% per annum 12,746,376 (2,599,754) - 10,146,622 - Loan at BFR + 1.25% per annum - 11,142,097 - 11,142,097 - Loan at 2.5% above the base rate per annum 12,519,006 (12,519,006) - -

Bank overdraft 41,344,168 (21,031,209) - 20,312,959

Revolving credits 1,500,000 8,379,097 - 9,879,097

Bankers’ acceptances - - - -

Redeemable preference shares 26,702,269 - (1,812,928) 24,889,341

126,796,848 (23,974,905) (1,812,928) 101,009,015

Company

Obligations under hire purchase and finance lease 415,752 (270,587) - 145,165

Bank loans:- TFTF-I COF + 1.50% per annum 20,000,000 (20,000,000) - - - TFTF-I COF + 1.00% per annum - 16,993,635 - 16,993,635

20,415,752 (3,276,952) - 17,138,800


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27. Commitments

(a) Operating lease commitments - as lessee

The Group has entered into commercial lease on office properties. Leases are negotiated for an average term of seven years. Rentals are fixed for an average of three years.

Future minimum rentals payable under non-cancellable operating leases at the reporting date are as follows:


Not later than 1 year 59,556 59,556 Later than 1 year but not later than 5 years 238,226 238,226

297,782 297,782

(b) Finance lease commitments

The Group has finance leases for certain items of plant and equipment and furniture and fixtures (Note 15). These leases do not have terms of renewal, but have purchase options at nominal values at the end of the lease term.

Future minimum lease payments under finance leases together with the present value of the net minimum lease payments are as follows:


Minimum lease payments:Not later than 1 year 136,891 202,802 114,331 180,242 Later than 1 year and not later than 5 years 63,625 314,908 35,443 264,165 Later than 5 years - - - -

200,516 517,710 149,774 444,407 Less: Future finance charges (7,560) (34,743) (4,608) (28,655)

Present value of lease liabilities 192,956 482,967 145,166 415,752

Analysed as:SecuredCurrent (Note 26) 132,659 184,275 112,113 164,852 Non-current (Note 26) 60,297 298,692 33,052 250,900

192,956 482,967 145,165 415,752

(c) Capital commitments


Capital expenditure Approved and contracted for: Property plant and equipment 79,049,172 79,649,636


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28. Trade and other payables

Group Company 2018 2017 2016 2018 2017 2016 RM RM RM RM RM RM

Current

Trade payablesThird parties 52,191,915 70,350,337 52,045,411 - 12,890 -

Other payablesAmounts due to- subsidiaries - - - 1,578,820 3,334,178 2,376,134- related company 1,659,615 2,992,694 2,452,538 - 2,074 -Sundry payables 38,288,954 31,937,791 27,567,497 1,473,295 5,531,718 2,581,855GST payable 31,555 17,725 59,781 - - 5,897Accruals 4,097,570 7,062,793 4,869,084 652,880 652,880 659,110

44,077,694 42,011,003 34,948,900 3,704,995 9,520,850 5,622,996

96,269,609 112,361,340 86,994,311 3,704,995 9,533,740 5,622,996

Non-current

Other payables - 6,917,364 9,315,652 - - -

Total trade and other payables 96,269,609 119,278,704 96,309,963 3,704,995 9,533,740 5,622,996Add: Loans and borrowings (Note 26) 101,009,015 126,796,848 121,537,653 17,138,800 20,415,752 20,575,409Less: GST payable (31,555) (17,725) (59,781) - - -

Total financial liabilities carried at amortised cost 197,247,069 246,057,827 217,787,835 20,843,795 29,949,492 26,198,405

(a) Trade payables

Trade payables are non-interest bearing and the normal trade credit term granted to the Group ranges from 30 to 90 days (2017: 30 to 90 days).

(b) Amount due to holding company

The amount due to holding company is unsecured, non-interest bearing, repayable on demand and to be settled in cash.

(c) Other payables

Current

These amounts are unsecured, non-interest bearing, repayable on demand and are to be settled in cash.

Non-current

Other payables amounting to RM5,000,000 (2017: RM5,000,000) bear interest of 5.0% (2017: 5.0%) per annum and are secured by way of RM5,000,000 face value of shares in Pasdec Resources S.A. Limited (“PRSA”). The amount is repayable on the fifth year from 29 April 2013, the date of agreement. In current financial year, amount of RM6,581,195 has been settled.


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29. Share capital

Number of ordinary shares Group and Company

2018 2017

Issued and fully paid

1 January 285,978,000 205,978,000 Additions 114,391,200 80,000,000

31 December 400,369,200 285,978,000

Amount Group Company

2018 2017 2018 2017 RM RM RM RM

Issued and fully paid

1 January 293,375,997 205,978,000 295,883,750 205,978,000 Issued for acquisition of properties - 44,390,000 - 44,390,000 Rights issue 34,317,360 - 34,317,360 - Transitional to no-par value regime on 31 January 2017 - 43,007,997 - 45,515,750

31 December 327,693,357 293,375,997 330,201,110 295,883,750

Rights issue

During the financial year, the Company increased its issued and paid-up ordinary share capital from RM250,368,000 to RM284,685,360 by way of issuance of 114,391,200 rights shares together with 114,391,200 free detachable warrants on the basis of one warrant for every one rights share subscribed, an issue price of RM0.35 per right share. The fair value of the rights shares is RM0.30 per rights share.

Share premium

Group Company 2017 2017 RM RM

1 January 43,007,997 45,515,750 Transitional to no-par value regime on 31 January 2017 (43,007,997) (45,515,750)

31 December - -

The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at general meetings of the Company. All ordinary shares rank equally with regard to the Company’s residual assets.


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30. Other reserves

Premium paid on Share of Foreign acquisition revaluation Fair value currency of non- reserve adjustment translation controlling of an Warrant reserve reserve interest associate reserve Others Total RM RM RM RM RM RM RM

Group

At 1 January 2018 9,716 (13,102,963) (9,898,271) - - (2,541,273) (25,532,791)Prior year adjustments (Note 39) - - - 787,513 - 2,139,229 2,926,742 Effect on adoption of MFRS - 14,101,626 - - - - 14,101,626

At 1 January 2018, restated 9,716 998,663 (9,898,271) 787,513 - (402,044) (8,504,423)

Other comprehensive income:Fair value through other comprehensive income financial assets: Loss on fair value changes (81,342) - - - - - (81,342)Share of other comprehensive income of an associate - - - - - 164,950 164,950 Warrant reserve - - - - 5,719,560 - 5,719,560 Foreign currency translation - (486,667) - - - - (486,667)Add: Non-controlling interest - 1,086,727 - - - - 1,086,727

(81,342) 600,060 - - 5,719,560 164,950 6,403,228

At 31 December 2018 (71,626) 1,598,723 (9,898,271) 787,513 5,719,560 (237,094) (2,101,195)

At 1 January 2017 16,663 (14,101,626) (9,898,271) - - (2,541,273) (26,524,507)Prior year adjustments (Note 39) - - - 787,513 - 2,030,634 2,818,147 Effect on adoption of MFRS - 14,101,626 - - - - 14,101,626

At 1 January 2017, restated 16,663 - (9,898,271) 787,513 - (510,639) (9,604,734)

Other comprehensive income:Fair value through other comprehensive income financial assets:Loss on fair value changes (6,947) - - - - - (6,947)Share of other comprehensive loss of associate - - - - - 108,595 108,595 Foreign currency translation - 877,063 - - - - 877,063 Less: Non-controlling interest - 121,600 - - - - 121,600

(6,947) 998,663 - - - 108,595 1,100,311

At 31 December 2017 9,716 998,663 (9,898,271) 787,513 - (402,044) (8,504,423)

Company

At 1 January 2018 - - - - - - -

Other comprehensive income:Warrant reserve - - - - 5,719,560 - 5,719,560

At 31 December 2018 - - - - 5,719,560 - 5,719,560


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30 Other reserves (cont’d.)

Premium paid on Share of Foreign acquisition revaluation Fair value currency of non- reserve adjustment translation controlling of an Warrant reserve reserve interest associate reserve Others Total RM RM RM RM RM RM RM

At 1 January 2017 - - - - - - -

Other comprehensive income: - - - - - - -

At 31 December 2018 - - - - - - -

Fair value adjustment reserve

Fair value adjustment reserve represents the cumulative fair value changes of fair value through other comprehensive income financial assets until they are disposed or impaired.

Foreign currency translation reserve

The foreign currency translation reserve comprises all foreign exchange differences arising from the translation of the financial statements of foreign subsidiaries.

Warrant reserve

Arose from the issuance of 114,391,200 rights shares together with 114,391,200 free detachable warrants on the basis of one warrant for every one rights share subscribed. The fair value of the warrants is RM0.05 per warrant.

Others

The others represent share of capital redemption reserve, merger reserve and equity contribution of associates.

31. Deferred tax

Deferred income tax as at 31 December relates to the following:

Group Recognised Recognised As at 1 in profit As at 31 in profit As at 31 January or loss Exchange December or loss Exchange December 2017 (Note 12) differences 2017 (Note 12) differences 2018 RM RM RM RM RM RM RM

Deferred tax liabilities:

Property, plant and equipment 1,111,432 (1,111,432) - - 17,682 - 17,682

Deferred tax assets:

Provision and others (77,902) 77,902 - - (17,682) - (17,682)Retirement benefit obligations - - - - - - - Unutilisedtaxlosses and unabsorbed capital allowances (1,033,530) (4,615,656) (54,073) (5,703,259) 5,832,729 (129,470) -

(1,111,432) (4,537,754) (54,073) (5,703,259) 5,815,047 (129,470) (17,682)

- (5,649,186) (54,073) (5,703,259) 5,832,729 (129,470) -


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31. Deferred tax (cont’d.)

Deferred tax assets have not been recognised in respect of the following items:


Unrecognisedtaxlosses 78,563,602 48,095,454 2,549,396 1,489,554Unabsorbedcapitalallowances 9,264 14,396 - -Provisions and others 47,868,286 43,432,689 51,370,237 32,180,538

126,441,152 91,542,539 53,919,633 33,670,092

In accordance with the provision in Finance Act 2018, the unrecognised tax losses are available for the utilisation in the next seven years, for which, any excess at the end of the seventh year, will be disregarded.

Deferred tax assets have not been recognised in respect of these items as they have arisen in companies that have a recent history of losses or in companies where future taxable profits may be insufficient to trigger the utilisation of these items.

32. Financial guarantees

As at 31 December 2018, the Group’s total amount of bank guarantees to third parties was RM227,008,789 (2017: RM231,995,470) arising from both Malaysian and African operations.

33. Related party transactions

(a) Sale and purchase of goods and services

In addition to the related party information disclosed elsewhere in the financial statements, the following significant transactions between the Group and the Company and related parties took place at terms agreed between the parties during the financial year:


Related company- office rental and service charge 489,016 509,976 230,560 251,520 Subsidiaries- interest income - - (2,058,165) (2,360,709)- management fee income - - (1,037,424) (1,406,078)Rental paid to a shareholder of subsidiary 228,310 228,310 - - Rental paid to a related party 971,345 971,345 - -

(b) Compensation of key management personnel

The remuneration of directors and other members of key management of the Group and of the Company during the year was as follows:


Short-term employee benefits 2,953,784 2,009,527 1,264,252 1,279,792 Post-employment benefits - Defined contribution plan 84,972 86,496 65,700 58,656 - Defined benefit plan 26,177 6,383 26,177 6,383

3,064,933 2,102,406 1,356,129 1,344,831

Included in the total key management personnel are: Group Company

2018 2017 2018 2017 RM RM RM RM

Directors’ remuneration 2,198,156 1,171,782 672,831 771,312


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34. Fair value of financial instruments

A. Fair value of financial instruments by classes that are not carried at fair value and whose carrying amounts are not reasonable approximation of fair value

Group Company Carrying Fair Carrying Fair Note amount value amount value RM RM RM RM

2018Financial liabilities:Loans and borrowings (non-current)- Obligations under finance leases 26 60,297 58,900 33,052 20,690 Other payables (non-current) 28 - - - -

2017Financial liabilities: Loans and borrowings (non-current)- Obligations under finance leases 26 298,692 260,051 250,900 196,168 Other payables (non-current) 28 6,917,364 5,520,761 - -

B. Determination of fair value

Financial instruments that are not carried at fair value and whose carrying amounts are reasonable approximation of fair value

The following are classes of financial instruments that are not carried at fair value and whose carrying amounts are reasonable approximation of fair value:

Note

Trade and other receivables 20Trade and other payables 28Loans and borrowings (current and non-current) 26

The carrying amounts of these financial assets and liabilities are reasonable approximations of fair values due to their short term nature.

The carrying amounts of current and non-current loans and borrowings and other payables are reasonable approximations of fair values due to the insignificant impact of discounting.

The fair values of non-current loans and borrowings are estimated by discounting expected future cash flows at market incremental lending rate for similar types of lending, borrowing or leasing arrangements at the reporting date.

Amounts due from/to subsidiaries

The carrying amounts of amounts due from/to subsidiaries are reasonable approximations of fair values due to the insignificant impact of discounting and short term nature.

The fair values of these financial instruments are estimated by charging expected future cash flows at market incremental lending rate for similar types of lending or borrowing at the reporting date.


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34. Fair value of financial instruments (cont’d.)

B. Determination of fair value (cont’d.)

Quotedequityinstruments

Fair value is determined directly by reference to their published market bid price at the reporting date.

Level 1 Note RM

31 December 2018

Financial asset:

Equity instruments fair value through other comprehensive income (quoted) 23 377,350

31 December 2017

Financial asset:

Equity instruments fair value through other comprehensive income (quoted) 23 458,692

35. Retained earnings

As at 31 December 2018, the Company may distribute dividends out of its entire retained earnings under the single tier system.

36. Financial risk management objectives and policies

The Group and the Company are exposed to financial risks arising from their operations and the use of financial instruments. The key financial risks include credit risk, liquidity risk, interest rate risk, market price risk and foreign currency risk.

The Board of Directors reviews and agrees policies and procedures for the management of these risks, which are executed by the Group Managing Director and Senior Vice President. The Audit Committee provides independent oversight to the effectiveness of the risk management process.

It is, and has been throughout the current and previous financial year, the Group’s and the Company’s policy that no derivatives shall be undertaken except for the use of hedging instruments where appropriate and cost-efficient. The Group and the Company do not apply hedge accounting.

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

(a) Credit risk

Credit risk is the risk of loss that may arise on outstanding financial instruments should a counterparty default on its obligations. The Group’s and the Company’s exposure to credit risk arises primarily from trade and other receivables. For other financial assets (including investment securities, cash and bank balances and derivatives), the Group and the Company minimise credit risk by dealing exclusively with high credit rating counterparties.

The Group’s objective is to seek continual revenue growth while minimising losses incurred due to increased credit risk exposure. The Group trades only with recognised and creditworthy third parties. It is the Group’s policy that all customers who wish to trade on credit terms are subject to credit verification procedures. In addition, receivable balances are monitored on an ongoing basis with the result that the Group’s exposure to bad debts is not significant. For transactions that do not occur in the country of the relevant operating unit, the Group does not offer credit terms without the approval of the Senior Vice President Corporate Resources. Since the Group trades only with recognised and creditworthy third parties, there is no requirement for collateral.


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36. Financial risk management objectives and policies (cont’d.)

(a) Credit risk (cont’d.)

An impairment analysis is performed at each reporting date using a provision matrix to measure expected credit losses. The provision rates are based on days past due for groupings of various customer segments with similar loss patterns (i.e., by customer type and rating, and coverage by bank guarantee). The calculation reflects the probability-weighted outcome, the time value of money and reasonable and supportable information that is available at the reporting date about past events, current conditions and forecasts of future economic conditions. Any receivables having significant balances past due more than 90 days, which are deemed to have higher default risk, are monitored individually.

Set out below is the information about the credit risk exposure on the Company’s trade receivables using a provision matrix:

31 December 2018

Days past due

Current 1 to 30 days 31 to 60 days 61 to 90 days > 90 days

Expected credit loss rate 0.00% 0.00% 0.00% 0.00% 49.00%Estimated total gross carrying amount at default 2,477,397 1,387,757 4,462,097 2,972,564 14,785,459 Expected credit loss - - - - 7,245,085

31 December 2017

Days past due

Current 1 to 30 days 31 to 60 days 61 to 90 days > 90 days

Expected credit loss rate 0.00% 0.00% 0.00% 0.00% 32.50%Estimated total gross carrying amount at default 5,265,196 1,196,654 1,582,554 1,254,705 20,268,071 Expected credit loss - - - - 6,586,481

Exposure to credit risk

At the reporting date, the Group’s and the Company’s maximum exposure to credit risk is represented by the carrying amount of each class of financial assets recognised in the statements of financial position.

Credit risk concentration profile

The Group determines concentrations of credit risk by monitoring industry sector profile of its trade receivables on an ongoing basis. The credit risk concentration profile of the Group at the reporting date is as follows:

Group 2018 2017

RM % of total RM % of total

By industry sectors:

Property development 16,415,553 62.9% 16,453,234 55.6%Manufacturing 1,506,570 5.8% 3,484,658 11.8%Construction 7,682,752 29.5% 9,073,918 30.7%Others 480,399 1.8% 555,370 1.9%

26,085,274 100.0% 29,567,180 100.0%

By country:

Malaysia 24,578,704 94.2% 26,082,522 88.2%South Africa 1,506,570 5.8% 3,484,658 11.8%

26,085,274 100.0% 29,567,180 100.0%

At the reporting date, none of the Group’s trade and other receivables were due from related parties while almost all of the Company’s receivables were balances with related parties.


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(a) Credit risk (cont’d.)

Financial assets that are neither past due nor impaired

Information regarding trade receivables that are neither past due nor impaired is disclosed in Note 20. Deposits with banks and other financial institutions and investment securities that are neither past due nor impaired are placed with or entered into with reputable financial institutions or companies with high credit ratings and no history of default.

Financial assets that are either past due or impaired

Information regarding financial assets that are either past due or impaired is disclosed in Note 20.

(b) Liquidity risk

Liquidity risk is the risk that the Group or the Company will encounter difficulty in meeting financial obligations due to shortage of funds. The Group manages its debt maturity profile, operating cash flows and the availability of funding so as to ensure that refinancing, repayment and funding needs are met. As part of its overall liquidity management, the Group maintains sufficient levels of cash or cash convertible investments to meet its working capital requirements. In addition, the Group strives to maintain available banking facilities at a reasonable level to its overall debt position. As far as possible, the Group raises committed funding from both capital markets and financial institutions and balances its portfolio with some short term funding so as to achieve overall cost effectiveness.

At the reporting date, approximately 76% (2017: 86% of the Group’s loans and borrowings (Note 26) will mature in less than one year based on the carrying amount reflected in the financial statements. 28% (2017: 99%) of the Company’s loans and borrowings will mature in less than one year at the reporting date.

Analysis of financial instruments by remaining contractual maturities

The table below summarises the maturity profile of the Group’s and the Company’s liabilities at the reporting date based on contractual undiscounted repayment obligations.

2018 On demand or within One to Over five one year five years years Total RM RM RM RM

Group

Financial liabilities:

Trade and other payables 96,238,054 - - 96,238,054 Loans and borrowings 102,778,730 1,482,652 - 104,261,382

Total undiscounted financial liabilities 199,016,784 1,482,652 - 200,499,436


Group


Trade and other payables 112,435,324 6,917,364 - 119,352,688 Loans and borrowings 110,180,005 19,341,273 784,539 130,305,817

Total undiscounted financial liabilities 222,615,329 26,258,637 784,539 249,658,505


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(b) Liquidity risk (cont’d.) 2018

On demand or within One to Over five one year five years years Total RM RM RM RM

Company


Trade and other payables 3,704,995 - - 3,704,995 Loans and borrowings 17,107,966 35,443 - 17,143,409

Total undiscounted financial liabilities 20,812,961 35,443 - 20,848,404


Company


Other payables 9,533,740 - - 9,533,740 Loans and borrowings 20,180,242 264,165 - 20,444,407

Total undiscounted financial liabilities 29,713,982 264,165 - 29,978,147

(c) Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of the Group’s and the Company’s financial instruments will fluctuate because of changes in market interest rates.

The Group’s and the Company’s exposure to interest rate risk arises primarily from their loans and borrowings, loans at floating rates given to related parties and investments in equity securities classified as available-for-sale. The Company’s loans at floating rate given to subsidiaries form a natural hedge for its non-current floating rate bank loan.

The Group manages its interest rate exposure by maintaining a mix of fixed and floating rate borrowings to achieve the overall cost effectiveness.

Sensitivity analysis for interest rate risk

At the reporting date, if interest rates had been 50 (2017: 50) basis points lower/higher, with all other variables held constant, the Group’s loss net of tax would have been RM379,634 (2017: RM283,837) higher/lower, arising mainly as a result of lower/higher interest expense on floating rate loans.The assumed movement in basis points for interest rate sensitivity analysis is based on the currently observable market environment.


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(d) Market price risk

Market price risk is the risk that the fair value or future cash flows of the Group’s financial instruments will fluctuate because of changes in market prices (other than interest or exchange rates).

The Group is exposed to equity price risk arising from its investment in quoted equity instruments. The quoted equity instruments in Malaysia are listed on Bursa Malaysia. These instruments are classified as a fair value through other comprehensive income. The Group does not have exposure to commodity price risk.

(e) Foreign currency risk

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

The Group has transactional currency exposures arising from sales or purchases that are denominated in a currency other than the respective functional currencies of Group entities, primarily South African Rand (“ZAR”) and Bostwana Pula (“BWP”). The foreign currencies in which these transactions are denominated are mainly ZAR and BWP.

Approximately 62% (2017: 51%) of the Group’s sales are denominated in foreign currencies whilst all costs are denominated in the respective functional currencies of the Group entities. The Group’s trade receivable and trade payable balances at the reporting date have similar exposures.

The Group also holds cash and cash equivalents denominated in foreign currencies for working capital purposes. At the reporting date, such foreign currency net credit balances (mainly in ZAR and BWP) amounted to RM8,237,732 (2017: RM388,128) and RM294 (2017: RM807) respectively.

Sensitivity analysis for foreign currency risk

The following table demonstrates the sensitivity of the Group’s profit net of tax to a reasonably possible change in the ZAR and BWP exchange rates against the respective functional currencies of the Group entities, with all other variables held constant.

Loss net of tax 2018 2017 RM RM

ZAR/RM - strengthened 3% (2017: 3%) 282,580 9,689 - weakened 3% (2017: 3%) (282,580) (9,689) BWP/RM - strengthened 3% (2017: 3%) (430,400) (3,558) - weakened 3% (2017: 3%) 430,400 3,558

37. Capital management

The primary objective of the Group’s capital management is to ensure that it maintains a strong credit rating and healthy capital ratios in order to support its business and maximise shareholders’ value.

The Group manages its capital structure and makes adjustments to it, in light of changes in economic conditions. To maintain or adjust the capital structure, the Group may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares. No changes were made in the objectives, policies or processes during the years ended 31 December 2018 and 31 December 2017.


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37. Capital management (cont’d.)

The Group monitors capital using a gearing ratio, which is net debt divided by total capital plus net debt. The Group includes within net debt, loans and borrowings, trade and other payables, less cash and bank balances. Capital includes equity attributable to the owners of the parent less the fair value adjustment reserve.


Loans and borrowings 26 101,009,015 126,796,848 17,138,800 20,415,752 Trade and other payables 28 96,269,609 119,278,704 3,704,995 9,533,740 Less:Cash and bank balances 24 (29,556,218) (17,514,244) (5,324,562) (677,666)

Net debt 167,722,406 228,561,308 15,519,233 29,271,826

Equity attributable to the owners of the parent 347,713,773 327,744,548 317,195,929 308,529,183 Less: Fair value adjustment reserve 30 71,626 (9,716) - -

Total capital 347,785,399 327,734,832 317,195,929 308,529,183

Capital and net debt 515,507,805 556,296,140 332,715,162 337,801,009

Gearing ratio 33% 41% 5% 9%

38. Segment information

For management purposes, the Group is organised into business units based on its products and services, and has five reportable operating segments as follows:

I. Investment holding - provision of management services;II. Property development - the development of residential and commercial properties;III. Construction - construction of residential and commercial properties;IV. Manufacturing - manufacture of automotive related products;V. Others - value engineering.

Except as indicated above, no operating segments have been aggregated to form the above reportable operating segments.

Management monitors the operating results of its business units separately for the purpose of making decisions about resource allocation and performance assessment. Segment performance is evaluated based on operating profit or loss which, in certain respects as explained in the table below, is measured differently from operating profit or loss in the consolidated financial statements. Group financing (including finance costs) and income taxes are managed on a Group basis and are not allocated to operating segments.


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38. Segment information (cont’d.)

Investment Property Manufac- holding development Construction turing Others Total Elimination Note Consolidated RM RM RM RM RM RM RM RM

31 December 2018

Revenue - Sales to external customers - 55,844,688 1,049,160 90,622,118 270,420 147,786,386 - 147,786,386 - Inter-segment sales 1,037,424 1,384 8,124,627 - 2,091,551 11,254,986 (11,254,986) A -

Total revenue 1,037,424 55,846,072 9,173,787 90,622,118 2,361,971 159,041,372 (11,254,986) 147,786,386

Results Depreciation 1,086,366 616,671 86,749 3,114,553 49,116 4,953,455 (47,041) 4,906,414 Share of results of associates - - - 3,108,550 - 3,108,550 56,295 3,164,845 Other non-cash expenses 266,785 205,375 947,213 - 2,768 1,422,141 - B 1,422,141 (Loss)/profit before tax (32,589,926) 3,943,870 (937,350) (13,201,127) (9,982,267) (52,766,800) 37,627,709 C (15,139,091)

Assets Investments in associates - 7,904,738 - - 432,394 8,337,132 (4,545,942) 3,791,190 Addition to non-current assets 1,613,304 2,355,532 1,550,235 1,892,731 89,849 7,501,651 - D 7,501,651 Segment assets 338,487,354 476,478,569 13,563,725 58,099,702 18,461,802 905,091,152 (355,682,692) E 549,408,460

Liabilities Segment liabilities 23,046,447 227,598,677 24,941,224 125,786,526 15,513,590 416,886,464 (210,624,680) F 206,261,784


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Investment Property Manufac- holding development Construction turing Others Total Elimination Note Consolidated RM RM RM RM RM RM RM RM

31 December 2017

Revenue - Sales to external customers 1,265,212 48,077,923 1,453,682 58,851,878 2,795,944 112,444,639 - 112,444,639 - Inter-segment sales 1,406,078 8,304 3,515,858 - 566,466 5,496,706 (5,496,706) A -

Total revenue 2,671,290 48,086,227 4,969,540 58,851,878 3,362,410 117,941,345 (5,496,706) 112,444,639

Results Depreciation 724,732 610,801 131,393 1,996,067 145,258 3,608,251 - 3,608,251 Share of results of associates - - - 76,184 - 76,184 (163,628) (87,444)Other non-cash expenses 981,189 3,389,706 330,781 - 114,882 4,816,558 (763,493) B 4,053,065 (Loss)/profit before tax (5,473,160) 15,261,775 (42,982) (7,630,510) 296,853 2,411,976 30,440 C 2,442,416

Assets Investments in associates - 4,756,750 - 23,108,898 - 27,865,648 (3,913,562) 23,952,086 Addition to non-current assets 44,018,826 8,377,917 245 16,442,222 2,740,158 71,579,368 - D 71,579,368 Segment assets 340,905,138 490,056,651 22,799,278 82,086,111 21,534,582 957,381,760 (380,684,003) E 576,697,757

Liabilities Segment liabilities 31,883,140 243,679,097 33,177,114 124,646,744 16,261,968 449,648,063 (199,031,584) F 250,616,479

A Inter-segment revenues are eliminated on consolidation.

B Other material non-cash expenses consist of the following items as presented in the respective notes to the financial statements:

Note 2018 2017 RM RM

Impairment of financial assets 9 945,384 3,582,006 Increase in liability for defined benefit plan 10 476,757 471,059

1,422,141 4,053,065


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C The following items are (deducted from)/added to segment profit/(loss) to arrive at “Profit/(loss) before tax” presented in the consolidated statement of comprehensive income:

2018 2017 RM RM

Share of results of associates 56,295 (163,628)Inter-segment transactions 37,571,414 194,068 Finance income - (1,893,658)Finance costs - 1,893,658

37,627,709 30,440

D Additions to non-current assets consist of:

2018 2017 RM RM

Property, plant and equipment 4,427,474 26,120,932 Land held for property development 2,355,532 8,368,436 Investment properties 718,645 37,090,000

7,501,651 71,579,368

E The following items are added to/(deducted from) segment assets to arrive at total assets reported in the consolidated statement of financial position:

2018 2017 RM RM

Investments in associates (4,545,942) (3,913,562)Investments in subsidiaries - (202,485,726)Inter-segment assets (351,136,750) (174,284,715)

(355,682,692) (380,684,003)

F The following item is deducted from segment liabilities to arrive at total liabilities reported in the consolidated statement of financial position:

2018 2017 RM RM

Inter-segment liabilities (210,624,680) (199,031,584)

Geographical information

Revenue and non-current assets information based on the geographical location of customers and assets respectively are as follows:

Non-current assets information presented above consist of the following items as presented in the consolidated statement of financial position:

Revenues Non-current assets 2018 2017 2018 2017 RM RM RM RM

Malaysia 91,233,112 65,635,374 200,707,921 246,437,157 South Africa 56,553,274 46,809,265 46,748,258 28,991,559

147,786,386 112,444,639 247,456,179 275,428,716


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2018 2017 RM RM

Property, plant and equipment 39,671,959 43,374,087 Land held for property development 145,381,539 143,026,007 Investment properties 58,234,141 58,914,585 Investments in associates 3,791,190 23,952,086 Marketable securities 377,350 458,692 Deferred tax assets - 5,703,259

247,456,179 275,428,716

39. Prior year adjustments and comparatives

(i) Unwindingofdiscountonthesettlementliabilities(instalmentsover84months)arisingfromthearbitrationsettlementagreement between Genfemanco Management Company (Pty) Ltd (“Genfemanco”) and Pasdec Resources SA Limited (“PRSA”), a subsidiary of PHB were not properly accounted for since FY2016

On 24 August 2012, Genfemanco and PRSA had entered into an arbitration settlement agreement. Based on the arbitration settlement agreement, PRSA undertook to pay Genfemanco a sum of RM12,925,710 (ZAR35 million) as the purchase consideration for its entitlement to Pasdec Automotive Technologies (Pty) Ltd and the mode of settlement was as follows: -

1. PRSA was required to pay RM6,462,855 (ZAR17,500,000) on 3 September 2012; 2. PRSA was required to pay equal instalments of RM76,939 (ZAR208,333) over 84 months commencing 1 October

2012 and thereafter on the first business day of each succeeding month which totalled to a gross amount of RM6,462,855 (ZAR17,500,000), interest free.

As the instalment settlement is spread over 84 months and it is interest free, PRSA was required to present value the settlement liability on day 1 and record the unwinding of discount over time until the full settlement is made.

From financial year ended 31 December 2016 onwards, the unwinding of discount for the settlement liability was not properly accounted for, which resulted in the understatement of the liability and understatement of the finance cost.

(ii) Payment made to certain creditors of Pasdec Automotive Technologies (Pty) Ltd SA (“PAT SA”), a subsidiary of PHB were overstated as cost of sales and omission on certain expenses.

Certain payments or prepayment made to the creditors have been errorneously debited to cost of sales accounts instead of the respective creditors’ accounts. This has resulted in the overstatement of cost of sales and overstatement of trade creditors.

The omission of certain expenses had resulted in an understatement of creditors’ balances and understatement of cost of sales.

(iii) Understatement of share of associates’ equity reserves, namely the retained earnings, capital redemption reserve,merger reserve, equity contribution and revaluation reserve and overstatement of share of associates’ losses

In prior years, the Group has understated the share of associates’ equity which consist of equity contribution reserves, capital redemption reserve and merger reserve of and share of revaluation reserve of an associate. In addition, the Group has overstated the share of associates’ losses.


152

39. Prior year adjustment and comparative (cont’d.)

The effects of the above matters are disclosed in Note 39 (i) to (iv).

(i) Restatement adjustments to the statement of financial position as at 1 January 2017 and 31 December 2017

As previously As restated stated Note 39 (i) Note 39 (ii) Note 39 (iii) per FRS RM RM RM RM RM Group: (Note 2.2)

1 January 2017

Investment in associates 19,518,692 - - 2,866,530 22,385,222 Trade and other receivables 40,160,105 - - - 40,160,105 Trade and other payables 87,793,638 178,701 (102,832) - 87,869,507 Non controlling interest (206,618) (5,039) 29,864 - (181,793)Other reserve (26,524,507) - - 2,818,147 (23,706,360)Retained earnings 51,410,555 (173,662) 72,968 48,383 51,358,244

31 December 2017

Investment in associates 20,151,325 - - 3,800,761 23,952,086 Trade and other receivables 48,884,610 - 717,099 - 49,601,709 Trade and other payables 112,453,049 333,061 1,333,394 - 114,119,504 Non controlling interest (1,838,572) (14,936) 190,238 - (1,663,270)Other reserve (25,532,791) - - 2,926,742 (22,606,049)Retained earnings 56,299,387 (318,125) (806,533) 874,019 56,048,748

(ii) Restatement adjustments to the statement of comprehensive income for the year ended 31 December 2017

As previously As restated stated Note 39 (i) Note 39 (ii) Note 39 (iii) per FRS RM RM RM RM RM Group:

Cost of sales (67,563,328) - (719,127) - (68,282,455)Finance costs (13,134,794) (154,360) - - (13,289,154)Share of associates (913,080) - - 825,636 (87,444)Profit net of tax 3,165,404 (154,360) (719,127) 825,636 3,117,553

(iii) Restatement adjustments to the statement of cash flows for the financial year ended 31 December 2017

The prior year adjustments do not result in material differences to the Group’s statement of cash flows.

(iv) Restatement adjustments to the statement of changes in equity for the financial year ended 31 December 2017

Group 31 December 2017 RM

Decrease in other reserve 2,926,742 Increase in retained earnings (250,639)


153


40. Significant events and subsequent event

Significant events

(a) On 26 March 2018, a subsidiary, Pasdec Corporation Sdn. Bhd. disposed of 400,000 ordinary shares representing 40% equity interest in Genting View Resort Development Sdn. Bhd. to the 60% shareholder, Malaysia Land Development Company Berhad, for a total consideration of RM1.00.

(b) The Company had on 4 June 2018 entered into a Share Sale Agreement with Dato’ Mohamad Nor bin Ali (“Purchaser”) for the disposal of 24,500,000 ordinary shares representing 100% equity interest held by the Company in Kimdec Corporation Sdn. Bhd. (“Kimdec”) for a total cash consideration of RM1,000. The Purchaser has taken over the management and operations of Kimdec in June 2018 where from this point, the Group no longer controlled Kimdec and the parent-wholly owned subsidiary relationship ceased to exist. The disposal of Kimdec was completed during the year.

(c) On 12 December 2018, the Group disposed of its entire 30.87% equity interest in CRH Africa Automotive Proprietary Limited (“CRH”) which was held by Pasdec Automotive Technologies (Proprietary) Limited (“PAT”), a subsidiary of the Company to P Pather Capital Proprietary Limited (“PPC”) for a total consideration of ZAR60.0 million (equivalent to approximately RM18.0 million) (“Disposal”). PPC is a major shareholder of PAT and Dato’ Poovendhran Kevin Pather is the director and sole shareholder of PPC as well as a director of PAT. The Disposal was completed on 31 December 2018 upon completion of all conditions precedent. As such, CRH has ceased to be an associate of the Group.

Subsequent event

(a) On 5 April 2019 the Company entered into a Sale of Shares Agreement (“Agreement”) with Wofema Sdn. Bhd. (“Purchaser”) for the disposal of 3,000,000 ordinary shares representing 100% equity interest held by the Company in Sumbangan Sakti Sdn. Bhd. for a total cash consideration of RM875,774. The Purchaser has paid deposit of RM87,577.40 upon signing of the Agreement. Completion of the Agreement is subject to satisfaction of conditions precedent contained in the Agreement by the parties after which the balance purchase price shall be payable.

41. Authorisation of financial statements for issue

The financial statements for the year ended 31 December 2018 were authorised for issue in accordance with a resolution of the directors on 10 June 2019.

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PROXY FORM

I/We NRIC (New)/Company No.: (insert full name in block capital)

of (full address)

being a member/members of PASDEC HOLDINGS BERHAD hereby appoint (insert full name in block capital)

NRIC (New)/Company No.: of (full address)

(full address)

and/or NRIC (New) No.: (insert full name in block capital)

of (full address)

or failing him/her the Chairman of the meeting as my/our proxy/proxies to vote for me/us and on my/our behalf at the Twenty-Third (23rd) Annual General Meeting (“AGM”) of the Company to be held at Silk Ballroom, Level 3, The Zenith Hotel, Jalan Putra Square 6, Putra Square, 25200 Kuantan, Pahang Darul Makmur on Thursday, 4 July 2019 at 10:30 a.m. or any adjournment thereof, and to vote as indicated below:-

(Please indicate with an “X” in the appropriate spaces provided below as to how you wish your vote to be cast. If you do not do so, the proxy/proxies will vote or abstain from voting at his/their discretion.)

ORDINARY RESOLUTION FOR AGAINST

1 Re-election of Dato’ Sri DiRaja Haji Adnan bin Haji Yaakob

2 Approval of Directors’ Annual Fees for the financial year ended 31 December 2018

3 Approval of Directors’ Benefits (excluding Directors’ fees) from 1 July 2019 to 24th AGM

4 Re-appointment of Messrs. Hanafiah Raslan & Mohamad as Auditors

Dated this day of , 2019

Signature of Member/Common Seal

No. of ordinary shares held:

CDS Account No.:

Proportion of shareholdings First Proxy: %to be represented by proxies Second Proxy: %

Contact No.:

NOTES:a. In respect of deposited securities, only members whose names appear on the Record of Depositors as at 28 June 2019 shall be entitled to attend,

speak and vote at the 23rd AGM.b. A member entitled to attend and vote at the 23rd AGM is entitled to attend and vote in person or by proxy or by duly authorised representative. A

proxy or duly authorised representative may, but need not be a member of the Company.c. The instrument appointing a proxy shall be signed by the appointor or his/her attorney duly authorised in writing. If the appointor is a corporation,

it shall be given either under its common seal or under the hand of its officer or attorney duly authorised.d. A member may appoint not more than two (2) proxies to attend and vote at the same meeting. An authorised nominee as defined under the

Securities Industry (Central Depositories) Act, 1991 may appoint not more than two (2) proxies in respect of each securities account it holds. e. Where a member is an exempt authorised nominee which holds ordinary shares in the Company for multiple beneficial owners in one (1) securities

account (“Omnibus Account”), there is no limit to the number of proxies which the member may appoint in respect of each Omnibus Account it holds.f. Where a member appoints more than one (1) proxy, the appointment shall be invalid unless the member specifies the proportion of shareholdings

to be represented by each proxy. If the Form of Proxy is returned without any indication as to how the proxy shall vote, the proxy will vote or abstain as he/she thinks fit.

g. The instrument appointing a proxy shall be deposited at the Registered Office of the Company at Level 21, Menara Zenith, Jalan Putra Square 6, Putra Square, 25200 Kuantan, Pahang Darul Makmur, not less than forty-eight (48) hours before the time of holding the 23rd AGM or any adjournment thereof or not less than twenty-four (24) hours before the time appointed for the taking of the poll.

h. Pursuant to Paragraph 8.29A(1) of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad, the resolutions set out in the Notice of the 23rd AGM will be put to vote by poll.

STAMP

THE COMPANY SECRETARY

PASDEC HOLDINGS BERHADLevel 21, Menara Zenith

Jalan Putra Square 6, Putra Square

25200 Kuantan

Pahang Darul Makmur

Fold this flap for sealing

Then fold here

1st fold here

w w w . p a s d e c . c o m . m y

PASDEC HOLDINGS BERHAD (367122-D)

Level 21, Menara Zenith, Jalan Putra Square 6, Putra Square, 25200 Kuantan, Pahang Darul Makmur.

Telephone / Telefon : 09-513 3888 Facsimile / Faksimili : 09-514 5988

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