wz1 ar17 .qxp layout 1 - wz satu · * wz satu berhad had entered into a conditional share sale...

MISSION

To continuouslyenforce strictrequirements ofproducing qualityproducts andservices

To create andenhanceshareholders value,whilst maintainingharmony withsociety to enhance oursustainability

To instil superior andpositive cognitions throughoverall excellence and dedication amongst theemployees

We aim to be outstanding inall our business activities aswe grow to become a major

corporate entity

VISION

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Corporate Structure 002Corporate Information 004Directors’ Profile 006Group Key Senior Management 012Management Discussion And Analysis 014Five-Year Performance Highlights 018Corporate Social Responsibility 020Award & Recognition 021

Corporate Governance Statement 022Additional Compliance Information 035Audit Committee Report 036Statement on Risk Management 040and Internal Control

Financial Statements 043Analysis of Shareholdings 143Analysis of Warrant Holdings 146List of Properties 148Notice of Annual General Meeting 149

Form of Proxy

table ofcontents

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CORPORATE STRUCTUREW

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WZS BINARAYA SDN BHD

(FORMERLY KNOWN ASWZS KENKEONG SDN BHD)

100%WZS MISI SETIA

SDN BHD(FORMERLY KNOWN AS

MISI SETIA OIL & GASSDN BHD)

100%SE SATU SDN BHD

49%

SE SATU PELANGISDN BHD

30%

WZS INDUSTRIES SDN BHD

WZS TECHNOLOGIESSDN BHD

100%

20%

Civil EngineeringAND ConstructionOil and Gas Mining

Manufacturing Others

WZS POWERGEN SDN BHD

WENG ZHENG TRADINGSDN BHD*

60%

100%

* WZ Satu Berhad had entered into a conditional share sale agreement dated 22 August 2017 for the disposal of 100% equity stake in Weng Zheng Trading Sdn Bhd.

Our track record is proof of our abilityto handle major infrastructural andarchitectural projects. Our expertiseand extensive experience enable usto turn every project into anachievement.

solidfoundation

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CORPORATE INFORMATION

BOARD OF DIRECTORS

EXECUTIVE DIRECTORS

YM Tengku Dato' Sri Uzir Bin Tengku Dato' UbaidillahExecutive Chairman

Dato' Ir. William Tan Chee KeongSenior Executive Director/Chief Operating Officer

Tan Teng HengExecutive Director/Chief Financial Officer

Tan Chong BoonExecutive Director

Dato' Ir. Mohd Ghazali Bin KamaruzamanExecutive Director

ALTERNATE DIRECTORS

Ng Chong TinAlternate Director to Tan Chong Boon

Choi Chee KenAlternate Director to Dato' Ir. Mohd Ghazali BinKamaruzaman

INDEPENDENT NON-EXECUTIVE DIRECTORS

Dato' Amin Rafie Bin OthmanDeputy Chairman/Senior Independent Non-Executive Director

Datuk Idris Bin Haji HashimIndependent Non-Executive Director

Dato’ Syed Kamarulzaman Bin Dato’Syed Zainol Khodki ShahabudinIndependent Non-Executive Director

Dato' Yeong Kok HeeIndependent Non-Executive Director

Rosli Bin ShafieiIndependent Non-Executive Director

Datuk Ahmad Nizam Bin SallehIndependent Non-Executive Director

GROUP KEY SENIOR MANAGEMENT

YM Tengku Dato’ Sri Uzir Bin Tengku Dato’ UbaidillahExecutive ChairmanYM Tengku Dato’ Indera Zubir BinTengku Dato’ UbaidillahDato’ Ir. William Tan Chee KeongTan Teng Heng

REMUNERATION COMMITTEE

Dato’ Amin Rafie Bin OthmanChairmanDato' Ir. William Tan Chee KeongDato' Yeong Kok HeeRosli Bin Shafiei

INVESTMENT COMMITTEE

YM Tengku Dato' Sri Uzir BinTengku Dato' UbaidillahChairmanDato' Ir. William Tan Chee KeongTan Teng Heng

PRINCIPAL BANKERS

United Overseas Bank (Malaysia)Berhad (271809-K)OCBC Al-Amin Bank Berhad(818444-T)AmBank Islamic Berhad(295576-U)

SHARE REGISTRAR

Securities Services (Holdings)Sdn Bhd (36869-T)Level 7, Menara MileniumJalan DamanlelaPusat Bandar DamansaraDamansara Heights50490 Kuala LumpurTel : 03-2084 9000Fax : 03-2094 9940

NOMINATION COMMITTEE

Dato' Amin Rafie Bin OthmanChairmanDatuk Idris Bin Haji HashimDato' Yeong Kok Hee

SHARIAH ADVISORY COMMITTEE

Dato’ Syed Kamarulzaman Bin Dato’Syed Zainol Khodki ShahabudinChairmanTan Teng HengMarizan Nor Bin BasirunTuan Haji Sabar @ Sabal Bin HajiAbdul Rahaman (Advisor)Mahamahpoyi Hj Walah (Advisor)

COMPANY SECRETARIES

Chua Siew Chuan(MAICSA 0777689)Yau Jye Yee(MAICSA 7059233)

PRINCIPAL PLACE OF BUSINESS

Lot 1890, Jalan KPB 9Kawasan Perindustrian Balakong43300 Seri KembanganSelangor Darul EhsanTel : 03-8962 2228Fax : 03-8962 2226E-mail : [email protected] : www.wzs.my

STOCK EXCHANGE

Main MarketBursa Malaysia Securities BerhadStock Name : WZSATUStock Code : 7245Warrant Name : WZSATU-WAWarrant Code : 7245WA

AUDIT COMMITTEE

Rosli Bin ShafieiChairmanDato’ Amin Rafie Bin OthmanDato' Yeong Kok HeeDato’ Syed Kamarulzaman Bin Dato’ Syed Zainol KhodkiShahabudinDatuk Ahmad Nizam Bin Salleh

LONG TERM INCENTIVEPLAN COMMITTEE

YM Tengku Dato' Sri Uzir BinTengku Dato' UbaidillahChairmanTan Teng HengRosli Bin Shafiei

AUDITORS

Baker Tilly Monteiro Heng (AF 0117)Baker Tilly MH TowerLevel 10, Tower 1, Avenue 5Bangsar South City59200 Kuala LumpurTel : 03-2297 1000Fax : 03-2282 9980

REGISTERED OFFICE

Level 7, Menara MileniumJalan DamanlelaPusat Bandar DamansaraDamansara Heights50490 Kuala LumpurTel : 03-2084 9000Fax : 03-2094 9940

CORPORATE INFORMATION(Continued)

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DIRECTORS’ PROFILEW

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YM TENGKU DATO’ SRI UZIR BIN TENGKU DATO’ UBAIDILLAHExecutive Chairman

DATO’ Ir. WILLIAM TAN CHEE KEONGSenior Executive Director/ Chief Operating Officer

YM Tengku Dato’ Sri Uzir Bin Tengku Dato’Ubaidillah, aged 58, graduated from City University,United Kingdom, with a Bachelor of Science (Honours)Degree in Civil Engineering in 1983. He started hiscareer with Jabatan Kerja Raya as an engineer beforejoining the private sectors.

He was the Managing Director cum Chief ExecutiveOfficer of Malaysian General Investment CorporationBerhad (now known as Sumatec Resources Berhad)from 1990 to 1993. He has also served on the Board ofRoad Builder (M) Holdings Berhad, Kurnia Setia Berhadand Project Penyelenggaran Lebuhraya Berhad, all ofwhich were public listed companies. He was appointedas an Executive Director of Tanah Makmur Berhad in2011 until he was re-designated as the Alternate Directorin 2013 pursuant to his appointment as ExecutiveChairman and Chief Executive Officer of WZ SatuBerhad Group (“the Group”) on 24 October 2013. On 1 November 2017, he was re-designated asExecutive Chairman of the Group. He is also theChairman of the Long Term Incentive Plan Committeeand Investment Committee.

He has vast business experience in various industries,especially in civil engineering, construction, plantationand property development.

Dato’ Ir. William Tan Chee Keong, aged 62, is amember of The Institution of Engineers Malaysia andregistered Professional Engineer. He graduated from TheUniversity of Nottingham with an honours degree ofBachelor of Science in Civil Engineering. He wasappointed to the Board on 12 May 2014. He was re-designated to Senior Executive Director cum ChiefOperating Officer of the Company on 2 July 2015. He isalso a member of the Remuneration Committee andInvestment Committee.

He started his career in Jabatan Kerja Raya and workedthere from 1980 to 1984. He was involved in numerousroad construction projects and bridge designingassignments. Later, he joined Ken Holdings Sdn Bhd andDayapi Berhad as a project manager tasked withoverseeing various road and bridge constructionprojects.

He joined the Road Builder group of companies in 1992as a Senior Project Manager (later Project Director) andhe was involved in leading a team to complete severallarge-scale construction contracts and infrastructuredevelopments. He was subsequently appointed as anExecutive Director in Road Builder (M) Sdn Bhd and asa Director in several subsidiaries within the group. Duringthat period, he was directly responsible for theengineering, procurement and implementation aspectsof construction projects and the management of highwayconcessions.

He founded KenKeong Sdn Bhd in 2007 after he left theRoad Builder group of companies. Under his leadership,the company secured several middle and large scaleprojects. KenKeong Sdn Bhd was acquired by WZ SatuBerhad in May 2014 and now renamed as WZSBinaRaya Sdn Bhd (formerly known as WZS KenKeongSdn Bhd).

DIRECTORS’ PROFILE(Continued)

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Mr. Tan Teng Heng, aged 53, is a member of the TheMalaysian Institute of Certified Public Accountants. Hewas appointed as the Group’s Executive Director cumChief Financial Officer on 24 October 2013. He is also amember of the Long Term Incentive Plan Committee,Investment Committee and Shariah Advisory Committee.

He was trained in the big four audit and consultancy firmsduring his time. He was working under an articleship witha view to complete his professional accountancy studiesto qualify as a Certified Public Accountant. His studieswere under the auspices of The Malaysian Associationof Certified Public Accountants (now known as MICPA).As a student, he had not only excelled and passed allexaminations in single sittings but most notably, he wasa prize winner in two professional subjects i.e. FinancialAccounting and Management Accounting.

He is well exposed to the capital markets through variouscapacities in senior management positions, principally inMalaysia with a stint in Hong Kong. He was the ChiefExecutive Officer of an options and futures companywhich was then a member of Kuala Lumpur Options andFinancial Futures Exchange (KLOFFE).

Prior to joining WZ Satu Berhad, he was with HwangDBSInvestment Bank Berhad as Senior Vice President.

TAN TENG HENGExecutive Director/ Chief Financial Officer

TAN CHONG BOONExecutive Director

Mr. Tan Chong Boon, aged 52, graduated fromUniversiti Putra Malaysia (UPM) with an honours degreein Civil Engineering and was appointed to the Board on26 October 2007.

He has experience in the areas of designing and buildingcivil and structural works. Upon graduating in 1991, hejoined a civil and structural consulting company as aDesign Engineer before joining the Group in 1994. Hesuccessfully established the Group’s cold drawn brightsteel production plant in 1995 and later, he managed theGroup’s venture into the production of high-end freecutting polished shafts for office automation.

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DATO’ Ir. MOHD GHAZALI BINKAMARUZAMAN Executive Director

DATO’ AMIN RAFIE BIN OTHMANDeputy Chairman/ Senior Independent Non-Executive Director

Dato’ Ir. Mohd Ghazali Bin Kamaruzaman, aged 52, isa member of The Institution of Engineers, Malaysia andBoard of Engineers, Malaysia. He holds a Bachelor’sDegree in Civil Engineering from Victoria University ofTechnology, Melbourne, Australia and a Master’s Degreein Project Management from Universiti Teknologi Mara(UiTM). He has over 27 years of experience in civilengineering works. He was involved in the planning,designing and building of drainage, buildings and roads.He was appointed as an Executive Director on 24 October 2013.

He started his career in 1988 with the Shire of Melton,Victoria, Australia as a design engineer in Water andSewerage Division responsible for design, tendering andconstruction of Water and Sewerage within the Shire.Upon returning to Malaysia, he joined PATI Sdn Bhd asan engineer responsible for tendering, execution andimplementation of Continuously Reinforced ConcretePavement (CRCP) from Bukit Raja, Klang to Tapah,Perak. He was later attached to PATI Pave Sdn Bhd,responsible for the tendering, execution andimplementation of pavement works. Among notableprojects that he was involved include North SouthExpressway, Second Link, Central Link, Manila CaviteExpressway, Jalan Pahang, Lebuhraya Pantai Timur(LPT), PUTRA LRT, KL - Salak Expressway, BangiSeremban Third Lane Widening and Simpang Pulai -Blue Valley.

In 2005, he founded Prisma Simfoni Sdn Bhd, whichspecialised in road construction, earthworks, buildingconstruction and waterworks. Some of the notableprojects delivered were Third Lane Widening Tg. Malimto Slim River, Missing Link Awan Besar to KESASHighway, UPSI infrastructure works, Batu Embun WaterIntake and Treatment Plant, Herbal Centre Phase 2 forTechnology Park Malaysia, Commercial and OfficeBuilding for UDA (North) in Seberang Prai and NonRevenue Water (NRW) for PAIP.

Dato’ Amin Rafie Bin Othman, aged 58, was appointedto the Board on 26 October 2007. He is the DeputyChairman and Senior Independent Non-ExecutiveDirector of the Board. He is also the Chairman of theNomination Committee, Remuneration Committee and amember of the Audit Committee. He graduated from theUniversity College of Wales, Aberystwyth, with a jointhonours degree in Economics and International Politicsin 1982. He also holds a Master of BusinessAdministration degree from the City University of London,United Kingdom.

Dato’ Amin is currently the Chairman of Asia SolarGeneration Ventures Sdn Bhd, and the ManagingDirector of Plynlymon Capital Sdn Bhd and RampaiUlltima Sdn Bhd. He is also a Director of PDAC FormisSdn Bhd (Brunei).

In a career spanning over 30 years, Dato’ Amin has alsoserved as the Managing Director of Dubai Group SdnBhd, CEO of Mayban Investment Sdn Bhd, ManagingDirector of PJB Capital Sdn Bhd, Executive Director ofSmith Zain Securities, Senior General Manager and aDirector of Rashid Hussain Asset Management Sdn Bhd.He is also a past President of the Malaysian Associationof Asset Managers and was a member of the ListingCommittee of Bursa Malaysia Securities Berhad.


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DATUK IDRIS BIN HAJI HASHIMIndependent Non-Executive Director

DATO’ SYED KAMARULZAMAN BIN DATO’SYED ZAINOL KHODKI SHAHABUDINIndependent Non-Executive Director

Datuk Idris Bin Haji Hashim, aged 65, was appointedas an Independent Non-Executive Director on 20November 2014. He is a member of the NominationCommittee. He graduated from Universiti Teknologi Mara(UiTM) with a Diploma in Town and Regional Planning in1975. Later, he furthered his studies in United States ofAmerica and graduated with a postgraduate degree ofMaster of Science, City and Regional Planning fromIllinois Institute of Technology, Chicago in 1978.

He started his career as an assistant town planner withArkitek Bersekutu Malaysia in 1975, where heparticipated in projects such as Pusat Bandar BukitRaden, Kompleks Perdagangan Kuantan in Pahang andBangunan Sri Mara in Kuala Lumpur. Upon completinghis postgraduate studies, he was attached to North-Eastern Illinois Planning Commission, Chicago as aPlanner where he was involved in various large projectsin the State of Illinois as well as the New JeddahInternational Airport, King Abdul Aziz University andAutomotive Centre for Sears Roebuck & Co. He wasappointed as a lecturer in the School of Architecture,Planning and Surveying of UiTM in 1980.

Dato’ Syed Kamarulzaman Bin Dato’ Syed ZainolKhodki Shahabudin, aged 52, was appointed as anIndependent Non-Executive Director on 23 April 2015.He is the Chairman of the Shariah Advisory Committeeand a member of the Audit Committee. He is also theManaging Director of Perbadanan Nasional Berhad(“PNS”) since 1 December 2007 and is also a memberof PNS’s Directors Investment Committee.

He is a holder of Master in Science and CorporateCommunication from School of Modern Languages &Communication, Universiti Putra Malaysia (UPM),Bachelor in Business Administration from School ofBusiness, Royal Melbourne Institute of Technology(RMIT) and Diploma in Business Studies from MaraInstitute of Technology.

He was previously the Managing Director of YayasanTekun Nasional and prior to that, he had accumulatedover 21 years of experience in banking operations,corporate management, property and informationtechnology with his last attachment at Bank MuamalatMalaysia Berhad as a Branch Manager. He had alsoserved as a lecturer at Universiti Tenaga Nasional(UNITEN).

Currently, he is a Director of Focus Point HoldingsBerhad and Magni-Tech Industries Berhad.


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DATO’ YEONG KOK HEEIndependent Non-Executive Director

ROSLI BIN SHAFIEIIndependent Non-Executive Director

Dato’ Yeong Kok Hee, aged 57, was appointed to theBoard on 26 October 2007 as an Independent Non-Executive Director. He is a member of the AuditCommittee, Remuneration Committee and NominationCommittee. Dato’ Yeong is known not only in theinformation technology arena, but also in the financialservices and corporate sector.

Dato’ Yeong was formerly a consultant of CSC MalaysiaSdn Bhd, a position that he has held since 1999. As thecompany’s consultant, he is focused in the areas ofManaged Services, Technology Consulting and ComplexSystem Integration.

He has established and developed a significant numberof strategic relationships and alliances with the seniormanagement of the financial and governmental sectors.

Encik Rosli Bin Shafiei, aged 65, was appointed as anIndependent Non-Executive Director on 28 October2014. He is the Chairman of the Audit Committee and amember of Remuneration Committee and Long TermIncentive Plan Committee. He holds an AdvancedDiploma in Accountancy from Universiti Teknologi Maraand is a member of the Malaysian Institute ofAccountants.

He has extensive experience in finance, insurance andbanking, infrastructure and building construction,offshore construction, installation and oil and gas relatedservices industries having held senior positions in privateand public listed companies.

Following the acquisition by UEM Group, he wasappointed as the Chief Operating Officer/Director of PATISdn Bhd, responsible for the operations of the groupwhich was primarily involved in construction, quarryingand supplying construction materials. Subsequently in2003, upon completion of acquisition of Intria Berhad andrestructuring of the UEM Group, he assumed the positionof Chief Financial Officer for UEM Builders Berhad. Heleft UEM Builders Berhad upon attaining the mandatoryretirement age in 2007.

Thereafter, he was also appointed as Chief FinancialOfficer for Willis (Malaysia) Sdn Bhd, a registeredinsurance brokers and consultants from January 2011 toFebruary 2013.


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DATUK AHMAD NIZAM BIN SALLEHIndependent Non-Executive Director

NG CHONG TINAlternate Director to Mr. Tan Chong Boon

Datuk Ahmad Nizam Bin Salleh, aged 62, wasappointed to the Board on 11 April 2016 as anIndependent Non-Executive Director and is a member ofthe Audit Committee.

Datuk Ahmad is the holder of a Bachelor Degree inBusiness Administration from Ohio University, UnitedStates of America and attended the AdvancedManagement Program (AMP) at Wharton SchoolUniversity of Pennsylvania (1999), United States ofAmerica.

He held various positions such as analyst, planner andproject coordinator in corporate planning and financesectors in Petronas Corporate Head Office from theyears 1981 to 1987. Subsequently, he held varioussenior positions in Petronas Holding Company fromyears 1988 to 2002, including Head of Crude Oil Groupand subsequently, Group Treasury. In 2004, he assumedthe position of Managing Director/Chief Executive Officerof Malaysia LNG Group of Companies and waspromoted to Vice President, Corporate Services Divisionof Petroliam Nasional Berhad in year 2007. From July2010 to August 2015, he was the ManagingDirector/Chief Executive Officer of Engen Ltd, SouthAfrica, operating in 20 countries in Southern Africa andIndian Ocean Islands.

Mr. Ng Chong Tin, aged 52, was appointed to the Boardon 26 October 2007. On 12 May 2014, he was re-designated as an Alternate Director to Mr. Tan ChongBoon. He embarked on his career in the steel industry in1985 and joined the Group in its early days as a co-founder and Director.

To date, Mr. Ng has 34 years of experience in thedevelopment of sales and marketing strategies based oncustomer feedback as well as analysing changingconsumer trends. Mr. Ng is primarily in charge of thesales and marketing functions of the Group’s steeltrading business.

CHOI CHEE KENAlternate Director to Dato’ Ir. Mohd Ghazali BinKamaruzaman

Mr. Choi Chee Ken, aged 54, was appointed as anAlternate Director to Dato’ Ir. Mohd Ghazali BinKamaruzaman on 28 October 2014. He holds aBachelor’s Degree in Civil Engineering from OhioUniversity, United States of America.

He has over 27 years of working experience in theconstruction and building materials industries. He beganhis career as an Engineer in Associated ConcreteProduct Sdn Bhd in 1989. Later, he joined Sepakat SetiaPerunding Sdn Bhd as a Consultant Engineer. From1996 until 2005, he was a Senior Project Manager inRoad Builder (M) Sdn Bhd.

He teamed up with Dato’ Ir. William Tan Chee Keong toform KenKeong Sdn Bhd in 2007 which wassubsequently acquired by WZ Satu Berhad in May 2014and now renamed as WZS BinaRaya Sdn Bhd (formerlyknown as WZS KenKeong Sdn Bhd). Currently, he is anExecutive Director of WZS BinaRaya Sdn Bhd.


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Group key senior management

YM TENGKU DATO’ SRI UZIR BIN TENGKU DATO’ UBAIDILLAHExecutive ChairmanAged 58

He was appointed as an Executive Chairman cum Chief Executive Officerof the Group on 24 October 2013 and was subsequently re-designated asExecutive Chairman on 1 November 2017.

He is the brother of YM Tengku Dato’ Indera Zubir Bin Tengku Dato’Ubaidillah, Chief Executive Officer of the Company.

His profile is listed in the Profile of Directors on page 6 of this AnnualReport.

TAN TENG HENGExecutive Director/ Chief Financial OfficerAged 53

He was appointed as an Executive Director cum Chief Financial Officer ofthe Company on 24 October 2013.


DATO’ Ir. WILLIAM TAN CHEE KEONGSenior Executive Director/ Chief Operating OfficerAged 62

He was appointed to the Board on 12 May 2014 and was subsequentlyre-designated to Senior Executive Director cum Chief Operating Officerof the Company on 2 July 2015.


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Group key senior management(Continued)

• All the Directors and members of the Key Senior Management are Malaysian and of male gender.

• Save as disclosed above, none of the Directors and members of the Key Senior Management has:-

1. any other directorship in public company and listed issuer;

2. any family relationship with any Director and/or major shareholder of the Company;

3. any conflict of interest with the Company; and

4. any conviction for offences within the past 5 years other than traffic offences, if any; and any publicsanction or penalty imposed by the relevant regulatory bodies during the financial year.

YM TENGKU Dato’ Indera Zubir BINTENGKU DATO’ UBAIDILLAHChief Executive OfficerAged 55

He was appointed as the Chief Executive Officer of WZ Satu BerhadGroup on 1 November 2017. He graduated with a Bachelor of Science(Computer Science) from California State University, Chico, United Statesof America in 1986. He started his career in 1986 with Petroliam NasionalBerhad as an Information System Executive and subsequently promotedto the position of Head of Computer Operation. In 1988, he joined theRoad Builder (M) Holdings Berhad’s (“Road Builder”) group of companiesas the Corporate Affairs Manager and was promoted to Group GeneralManager in 1994. He left Road Builder in 1998 to start his own privatebusinesses in construction and trading activities until 2004. He joinedKurnia Setia Berhad on 1 July 2005 as the General Manager of CorporateDevelopment and subsequently promoted to the position of ChiefOperating Officer. On 8 November 2008, he assumed the position ofManaging Director of Kurnia Setia Berhad. Subsequent to the privatisationof Kurnia Setia Berhad in 2010, he was transferred to Tanah MakmurBerhad as the Managing Director until his recent resignation in 2017. He is currently a Director in Tanah Makmur Berhad and holds directorshipin several private limited companies.

He is the brother of YM Tengku Dato’ Sri Uzir Bin Tengku Dato’ Ubaidillah,the Executive Chairman and a major shareholder of the Company.

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MANAGEMENT DISCUSSION AND ANALYSIS

Civil engineering and construction segment is principally engaged in securing and carrying out infrastructure constructioncontracts. Oil and gas segment is engaged in onshore oil and gas downstream activities. Manufacturing segment is engagedin manufacturing of cold drawn bright steel products. Mining segment is engaged in bauxite mining operations through miningassociate companies of the Group.

FINANCIAL REVIEW

The Group recorded a revenue of RM560.4 million and profit before tax of RM32.7 million in the financial year (“FY”) 2017compared to revenue of RM465.9 million and profit before tax of RM28.0 million in FY 2016.

The Group’s total comprehensive income attributable to shareholders has increased to RM39.9 million in FY 2017 fromRM22.8 million in FY 2016. The increase was principally due to revaluation gain on properties of RM14.4 million.

The increase in revenue was mainly contributed by better performances in the oil and gas and civil engineering andconstruction segments. The increase in profit before tax was mainly contributed by better performances in the oil and gasand manufacturing segments. However, the civil engineering and construction and mining segments recorded a reduction inprofit before tax in the current financial year.

The abovementioned financial results are further expanded in the section on “Review of Operating Activities and Risks” below.

REVIEW OF OPERATING ACTIVITIES AND RISKS

CIVIL ENGINEERING AND CONSTRUCTION ("CEC")

Review

CEC revenue increased by 9% or RM23.2 million to RM280.8 million. However, profit before tax reduced by RM2.2 million toRM10.1 million. The lower pretax profit was due to pressure on some project margins due to higher direct expenses incurred.Uncontrollable external factor like adverse weather conditions also affected the progress of some projects.

OVERVIEW OF WZ SATU BERHAD

WZ Satu Berhad is principally involved in civil engineering and construction, oil and gas, mining and manufacturing.

Challenges

Management is continuously mitigating the above risks by monitoring the sourcing,purchase and inventory levels of critical raw materials; assessing the performance ofcontractors to ensure they meet all contract specifications whilst under the managementof our professional team of engineers.

Given the challenging environment of the CEC industry, Management is vigilant andselective in prospecting for new contracts to maintain and grow the order book at aviable margin.

Prospect

The Group has accumulated an order book of RM1.0 billion to last for the next two tothree years and is confident its order book will grow beyond run-off rate.Notwithstanding current order book size, the Group is actively seeking opportunities innation-building undertakings such as the Central Spine Road and the East Coast RailLink. In addition, the Group has ventured into PR1MA housing project, a step towardsa good product mix of infrastructure and non-infrastructure projects, in order to mitigatecyclical sector risks whilst strengthening our track record.

The outlook for this segment is promising with the Group benefiting from Governmentexpenditure in infrastructure and housing. The Group is optimistic of this segment'scontribution in the next financial year.

OIL AND GAS ("OG")

Review

OG segment revenue increased significantly by 58% or RM65.9 million to RM179.8million. Profit before tax increased by 216% or RM8.2 million to RM12.0 million. Thecommendable performance in the OG segment was due to successful investmentstrategy in our Automated Pipe Spooling fabrication plant in Kuantan which has led tocontracts secured under The Refinery and Petrochemical Integrated Developmentproject. The above investment has come on stream and translated into meaningfulresults in this financial year.

Challenges

Given current challenging and competitive state in the oil and gas sector, the Groupanticipates tough competition as a service provider for oil and gas industry.Management will continue to improve its operational efficiency to maintaincompetitiveness; at the same time, be vigilant and selective in prospecting new projectsto sustain and increase our order book at a competitive margin.

In products division, the Group foresees a drop in sales in most product categories dueto the state of the oil and gas industry. Hence, actions are directed by Management toenhance focus into aftermarket sales and services and increase product portfolios.

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MANAGEMENT DISCUSSION AND ANALYSIS(Continued)

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Prospect

There may be fewer projects and limited development in upstream OG sector, the Groupforesees increased downstream activities in the next few years; which now are economicallyviable with lower feedstock price. As OG project division is focused on onshore projects,Management expects this division to be preoccupied with projects in the next financial year.

Management is also looking into possible ventures on onshore and downstream long termservice contracts; such as maintenance, plant turnaround and plant/facility improvementprograms to generate sustainable jobs, maximise available faclities and resources within theGroup. Barring unforeseen circumstances, the Group expects the OG segment to continuegenerating stable income for the Group.

MANUFACTURING

Review

Manufacturing segment revenue increased marginally to RM57.3 million from RM54.5 millionin FY 2016. However, profit before tax surged RM5.6 million to RM6.7 million. Thecommendable performance in the manufacturing segment was due to higher steel prices whichtranslated into higher revenue and pretax profits.

Challenges

This segment has to navigate through cycles of high and low steel prices which is a commonchallenge in this industry. FY 2017 has generally seen an upsurge in steel price which hasresulted in profits arising from inventory holdings bought during the low cycle.

Prospect

Steel manufacturing segment performance is affected by steel price fluctuations. TheManagement has been successful in ensuring cost discipline and efficiency combined withlean management. This will translate into higher earnings during periods of high steel price toride out the impact during periods of low steel price. The Group is confident of a decentcontribution from this segment in the next financial year.

MINING

Review

Share of results of associated companies from the mining segment reduced by 41% or RM3.9million to RM5.7 million in FY 2017.


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Challenges

Arising from negative environmental impact of illegal miningactivities, the Malaysian Government has imposed amoratorium on bauxite mining since January 2016. Further, theFederal Government introduced a complete ban on bauxiteexports in the fourth quarter of FY 2017.

Prospect

The State of Pahang through Perbadanan Kemajuan NegeriPahang is spearheading the reform on Approved Permit (“AP”)for exporting of bauxite. The Group is optimistic the export banon bauxite and moratorium on mining will be lifted in duecourse. When the moratorium and ban are lifted, the resultsfrom mining segment would further improve the Group results.

STRATEGIES

The Group adopted a multi-pronged strategies by embarkingon carefully crafted acquisitions and diversifications; whilstexpanding its capacities and resources strategically, to positionitself for bigger ticket items and next phase of challenginggrowth.

Over the last 3 years, the Group invested in capacity expansionand beefed up its human capital in major business segments.In WZS BinaRaya Sdn Bhd (BinaRaya), the Group expandedits business into the construction of PR1MA houses. As for WZSMisi Setia Sdn Bhd (Misi), the Group invested in Pipe SpoolingFabrication Facility. Both initiatives have contributedmeaningfully to the order book and/or the bottom line of theGroup.

The Group continuously evaluates proposals for suitablevertical and horizontal acquisitions and/or purchase of strategicassets, with an overriding theme that any such investmentswould enhance the value of the Group for the benefit ofshareholders. Simultaneously, the Group resized existingbusinesses by strategic disposals of subsidiaries in steelindustry, exiting at a profit each time.

DIVIDENDS

The current dividend policy of the Company is to distribute 20%to 35% of profit after tax.

The Company's dividend record in the recent financial yearsare as follows:-

2015 2016 2017

Dividends (sen per share) 2.0 3.0* 2.0Payout ratio 27% 46%* 27%**

NB

* Including special dividend of 1 sen** Estimated

The Company is committed to delivering satisfactory results inFY 2018 and maintaining its dividend policy.

BONUS ISSUE

As a reward to its shareholders, the Board has proposed abonus issue of up to 157,321,584 new ordinary shares on thebasis of one (1) bonus share for every three (3) existing sharesheld, subject to the approval of the shareholders at theforthcoming Extraordinary General Meeting to be convened.

ACKNOWLEDGEMENT

The late Mr Tan Ching Kee, founded and listed this Group underthe name of Weng Zheng Resources Berhad in 2008. TheBoard would like to put on record their appreciation to the lateMr Tan for his many past contributions and sacrification madetowards the continued success of the Group. His last positionwith the Group was as Senior Executive Director.

The Board would also like to thank the stakeholders, whomcomprise shareholders, bankers, customers and suppliers, fortheir support and confidence in the Group. Lastly, the Boardwishes to express its sincere gratitude to the Directors,management and staffs for their contributions, which are crucialto the Group's continued success.


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12 months 16 months 12 months 12 months 12 months 2013 2014 2015 2016 2017 RM’000 RM’000 RM’000 RM’000 RM’000

Revenue 86,932 160,388 351,422 465,933 560,448

Gross profit 8,907 29,294 62,486 81,459 92,035

EBITDA 7,594 22,959 42,130 46,308 55,809

Depreciation and amortisation (2,825) (3,382) (5,072) (7,300) (11,553)

Finance costs (1,963) (2,144) (3,437) (6,026) (7,743)

Share of results of associates, net of tax - 4,476 18,537 9,392 4,701

Profit before tax 2,806 15,373 26,734 27,996 32,682

Taxation (93) (1,774) (4,101) (4,976) (7,176)

Loss for the financial period/year fromdiscontinued operation, net of tax - (1,918) (2,207) - -

Profit after tax 2,713 11,681 20,426 23,020 25,506

Weighted average number ofWZ Satu shares (’000) 98,858 124,662 298,176 329,648 347,502

Gross margin 10.2% 18.3% 17.8% 17.5% 16.4%

PAT margin 3.1% 7.3% 5.8% 4.9% 4.6%

Basic EPS (sen) 2.7 9.4 7.0 7.0 7.3

FIVE-YEAR PERFORMANCE HIGHLIGHTS

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FIVE-YEAR PERFORMANCE HIGHLIGHTS(Continued)

‘13

86,9

32

‘14

160,

388

‘15

351,

422

‘16

465,

933

‘17

560,

448

Revenue (RM’000)

‘13

8,90

7

‘1429

,294

‘15

62,4

86

‘16

81,4

59

‘17

92,0

35

Gross Profit (RM’000)

‘13

7,59

4

‘14

22,9

59

‘15

42,1

30

‘16

46,3

08

‘17

55,8

09

EBITDA (RM’000)

‘13

2,71

3

‘14

11,6

81

‘15

20,4

26

‘16

23,0

20

‘17

25,5

06Profit After Tax (RM’000)

+20% +13%

+21% +11%

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CORPORATE SOCIAL RESPONSIBILITY

10,000,000 Manhours WorkedWithout Lost Time Injury (LTI)Appreciation Day7 October 2017

On 7 October 2017, WZS Misi Setia witnessed a major milestone, achievement of10 million manhours worked without LTI. This event was livestreamed with our teamfrom Kuantan yard and project sites, i.e. Pengerang, Bintulu and Bagan Luar. Theculture of safety starts with leadership. The Group Executive Chairman, TengkuDato’ Sri Uzir conveyed a unified message on the importance and sustainability ofsafety culture.

AWARD & RECOGNITION

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From left: WZ Satu Bhd’s seniorexecutive director and COODato’ Ir. William Tan and groupCEO Tengku Dato’ Indera Zubirposing with WZS Misi Setia SdnBhd CEO Ir. Teoh Chee Yoong.

The Board of Directors of WZ Satu Berhad (the Board) continues to uphold its commitments to the highest standard of corporategovernance and best practices that are set out in the Malaysian Code on Corporate Governance (the Code) issued by the SecuritiesCommission Malaysia and provisions in the Main Market Listing Requirements of Bursa Malaysia Securities Berhad (MMLR)throughout the Group.

The Board will continue to review and enhance the Group’s corporate governance framework to ensure its relevance and abilityin meeting future challenges in its course to enhance shareholders value and establish long term sustainable value for otherstakeholders. The Board is pleased to report below on the extent to which the principles and best practices of the Code wereapplied throughout the financial year ended 31 August 2017.

PRINCIPLE 1: ESTABLISHING CLEAR ROLES AND RESPONSIBILITIES OF THE BOARD OF DIRECTORS

It is the overall governance responsibilities of the Board to lead and control the Group. Amongst others, these responsibilitiesinclude charting the strategic direction of the Group and supervising its affairs to ensure its success; implementation of suitableand effective system of internal control and risk management; and ensuring compliance with the relevant laws, regulations,guidelines and directives.

Clear Roles and Responsibilities of the Board

The Board has established clear functions reserved for its members and those delegated to management. This allocation ofresponsibilities reflects the dynamic nature of the relationship necessary for the Group to adapt to changing circumstances.

Key matters such as approval of interim and annual financial results, acquisitions and disposals, investments, as well as materialagreements are reserved for the Board, while a capable and experienced management team is put in charge to oversee the day-to-day operations of the Group.

In line with the practice of good corporate governance, the Board has established and implemented various processes to assistmembers of the Board in the discharge of their roles and responsibilities. The Board’s roles and responsibilities include thefollowing:-

(a) reviewing and adopting strategic plans for the Group that enhances long term value;(b) overseeing the conduct of the Group’s businesses to evaluate whether the businesses are being properly managed;(c) reviewing principal risks and ensuring the implementation of appropriate systems of internal control to manage risks and

adoption of relevant mitigation measures;(d) reviewing the adequacy and integrity of the Group’s internal control systems and management information systems, including

systems for compliance with applicable laws, regulations, rules, directives and guidelines;(e) reviewing and approving succession planning, including appointing, training, compensating and where appropriate replacing

key principal officers; and(f) developing and implementing investor’s relations programme and shareholder’s communication policy for the Group.

Board Committees

To ensure effectiveness in discharging its responsibilities, the Board delegates specific powers to other Board Committees asfollows:-

(a) Nomination Committee;(b) Remuneration Committee; (c) Audit Committee;(d) Shariah Advisory Committee;(e) Long Term Incentive Plan Committee; and(f) Investment Committee.

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Corporate Governance Statement(Continued)

Board Diversity

The Board recognises that board diversity is an essential element contributing to the sustainable development of the Group anddoes not discriminate on the basis of ethnicity, age, gender, nationality, political affiliation, religious affiliation, marital status,education background or physical ability. There is no specific target in the composition in terms of gender, age or ethnic of itsBoard members or members of Senior Management.

The Board acknowledges the recommendation of the Code on gender diversity but believes that the overriding factors in selectionof a Director must be based on skill, experience, competency and wealth of knowledge, while taking into consideration diversity ofthe Board. The Group had established a Board Diversity Policy to formalise its diversity approach as above.

The Board is satisfied with the composition of its members and is of the view that with the current mix of skills, knowledge,experience and strength, the Board is able to discharge its duties effectively and in a competent manner.

The Board is committed to provide fair and equal opportunities within the Group and acknowledges the importance of Boardroomand workplace diversity. The Group is committed to workplace diversity and that the workplace is fair, accessible, inclusive andfree from discrimination.

The current diversity in the race/ethnicity of the existing Board (inclusive of Alternate Directors) is as follows:-

Race/Ethnicity

Malay Chinese Indian Others

Number of Directors and Alternate Directors 7 6 0 0

The existing Directors and Alternate Directors’ age distribution falling within the respective age group is as follows:

Age Group (Years) 51 - 60 61 - 70

Number of Directors and Alternate Directors 9 4

Workforce Diversity

The Group is committed to a diverse and inclusive culture which is essential to the Group’s future growth. The Group’s gender andrace/ethnicity diversity are made up of the following:-

Race/Ethnicity

Gender Malay Chinese Indian Others

Male 404 109 43 55Female 109 54 10 0

The Group’s workforce diversity in terms of age is made up of the following:-

Age Group (Years)

Gender Below 21 21 - 30 31 - 40 41 - 50 Above 50

Male 12 249 174 99 77Female 3 83 55 30 2

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Board Charter

The Board Charter which broadly sets out the Board’s governance process and Board-Management relationship, has beenreviewed and updated by the Board.

The Board Charter sets out, among others, the following:-

(a) the principal role of the Board;(b) the functions, roles, responsibilities and powers of the Board;(c) the functions, roles, responsibilities and powers of its various committees; (d) processes and procedures for convening Board Meetings;(e) Board’s access to information and professional advice; (f) continuing development and training;(g) succession plan;(h) the role of Secretary; and(i) division of authority between the Board and the Management.

The Board Charter was last reviewed and updated on 7 December 2017 in accordance with the needs of the Group and any newregulations to ensure its relevance.

Code of Conduct

The Group established appropriate standards of business conduct and ethical behaviour to govern the exercise of the Directors’duties and responsibilities as Directors of the Company in order to uphold good corporate integrity.

The Code of Conduct sets out the general principles and standards of business conduct and ethical behaviour for the Directors inthe performance and exercise of their responsibilities as Directors of the Company or when representing the Group and includesthe expectation of professionalism and trustworthiness from the Directors.

Whistle-Blowing Policy

The policy provides an avenue for any Director, officer, employee and members of the public to report instances of unethical,unlawful or undesirable conduct on a confidential basis without fear of intimidation or reprisal. Nothing in this policy shall interferewith other established operational policies and processes. All disclosures pursuant to this policy are to be made to an IndependentNon-Executive Director. The Board shall be apprised of disclosure matters which are serious in nature or of grave repercussions.

Confidential reports can be channeled online via this email address: [email protected].

Sustainability Policy

The Board has formalised the Group’s strategies on promoting sustainability. The Board and the Management are committed tocontinually improving the integration of sustainability into working environment and business processes, together with theaccountability and transparency in the sustainability performance.

In order to operate with sustainability, the key impact areas are to ensure operations and services are safe for the employees,customers and that environmental quality considerations are incorporated into the Group’s daily business activities which areundertaken and accountable by every employee; create an inspiring workplace that helps to build a diverse work force whichcontributes to highest potential and commits to a harassment free working environment, where every employee is treated fairlyand with respect; and to adhere to the requirements of all laws and regulatory requirements, standards and best practices to whichthe Group subscribes and establish and adopt high ethical values and ensure these practices are upheld across the business.

The Board Diversity Policy, Board Charter, Code of Conduct, Whistle Blowing Policy and Sustainability Policy are published onthe Company’s corporate website at www.wzs.my.


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Supply and Access to Information

The Board members, in order to enable them to discharge their duties effectively, has full and unrestricted access to theManagement and Company Secretaries for all information pertaining to the businesses and corporate affairs of the Group. If needarises, the Board may also seek appropriate external independent professional advice at the Group’s expense.

Prior to Board or Board Committee meetings, the agenda, minutes of previous meeting and board papers are circulated to theDirectors to allow sufficient time to ensure that they receive the necessary information in advance so that they can review, considerand deliberate on the matters, and where necessary, obtain further information to facilitate informed decision making.

Qualified and Competent Company Secretary

The Board is supported by experienced and competent Company Secretaries in discharging its duties and responsibilities. TheBoard receives regular advices, updates and notices from the Company Secretaries to ensure compliance with applicable laws,regulations and corporate governance matters. The Company Secretaries attend and ensure that all Board and Board Committeemeetings are properly convened and all deliberations and decisions are properly minuted and kept. They are also responsible inensuring that Board’s policies and procedures are followed, and the applicable statutory and regulatory requirements are observed.

PRINCIPLE 2: STRENGTHENING THE BOARD’S COMPOSITION

Composition and Balance of the Board

The Board has thirteen (13) members comprising five (5) Executive Directors, six (6) Independent Non-Executive Directors andtwo (2) Alternate Directors. The present composition of the Board has the requisite number of Independent Non-Executive Directorsas prescribed by the MMLR to facilitate effective and independent decision making and balance of power.

The Board Members have diverse backgrounds and experience in various fields. Collectively, these Board members bring theirstrength to bear on issues of oversight, strategy, performance, control, resource allocation and integrity. The Board is also wellbalanced as both the major and minority shareholders are also represented.

The Chairman of the Board is presently held by an Executive Director. The Code recommends that at least half of the Board mustcomprise Independent Directors. Despite the Chairman being an Executive member of the Board, the Board takes comfort in thepresence of majority Independent Non-Executive Directors with distinguished records and credentials to ensure that there areindependent views and judgments. The Independent Non-Executive Directors vocalise their concerns whenever necessary toensure proper checks and balances are in place in Board decisions and implementation of policies.

The Board is satisfied that notwithstanding Tengku Dato’ Sri’s Executive Chairmanship, he has shown deep commitment, impartialleadership, and abilities in discharging his duties effectively. In order to ensure effective conduct of the Board, the Board conductsits proceedings in accordance with the statutory requirements and best practices. The Board also comprises a Deputy Chairmanof the Board, who is a Senior Independent Non-Executive Director.

In addition, the Board has identified Dato’ Amin Rafie Bin Othman, the Deputy Chairman cum Senior Independent Non-ExecutiveDirector to whom concerns may be conveyed by shareholders and the general public. Dato’ Amin Rafie Bin Othman is also theChairman of the Nomination Committee and Remuneration Committee and a member of the Audit Committee.

The profiles of the members of the Board, are set out on pages 6 to 11 of this Annual Report.


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Criteria for Recruitment

The Nomination Committee has the responsibility of evaluating, proposing and recommending new candidates for appointment tothe Board and Committees to the Board. In reviewing and recommending to the Board any new appointment of a Director, theNomination Committee considers:-

(a) age, expertise, experience, professionalism, integrity, capability and such other factors which would contribute to the Board’scollective skills;

(b) composition requirements for the Board and Committees; and(c) the number of directorships held by the candidate in other public listed issuers i.e., not more than five (5). This ensures that

their commitments, resources and time are focused on the affairs of the Group to enable them to discharge their dutieseffectively and to comply with the MMLR.

The process flow for the appointment of a new director is as follows:-

At the time of appointment, the Board shall obtain the Directors’ commitment to devote sufficient time to carry out theirresponsibilities. Directors’ are required to notify the Chairman before accepting any new directorship and they are aware of thisrequirement. In addition, they are required to indicate the time expected to be spent on the new appointment

Board Performance Evaluation and Review

The Board carried out an annual assessment on the overall effectiveness of the Board as a whole, its Board committees andindividual Directors’. The objective is to improve the Board’s effectiveness by identifying gaps, addressing weaknesses andmaximising strengths. Using a combination of self and peer assessments, Directors’ obtain feedback on their level of effectivenesson various performance aspects via a series of questions and answers. Responses from the Directors’ were analysed andpresented to the Board, and areas requiring improvements are addressed by the Board.

Re-election and Re-appointment of Directors’

All newly appointed Directors’ are subject to re-election by the shareholders at the next Annual General Meeting (AGM) inaccordance with the Company’s Articles of Association (the Articles).

The Articles also provide that at least one-third (1/3), or the number nearest one-third (1/3) of the remaining Directors’ shall retirefrom office and be eligible for re-election at each AGM provided that all Directors shall retire from office at least once in every three(3) years but shall be eligible for re-election.

Accordingly, Dato’ Ir. William Tan Chee Keong, Encik Rosli Bin Shafiei, Datuk Idris Bin Haji Hashim and Mr. Tan Chong Boon willbe retiring in accordance with Article 84 of the Articles. Mr. Tan Chong Boon has also expressed his intention not to seek for re-election. Hence, he will retain office until the close of the 13th AGM.

Board Committees

To ensure the effective discharge of its fiduciary duties and responsibilities more effectively, the Board delegates specificresponsibilities to Board Committees, namely the Audit Committee, Nomination Committee, Remuneration Committee, ShariahAdvisory Committee, Long Term Incentive Plan Committee and Investment Committee.

All Committees function within and in accordance with clearly defined terms of reference that were approved by the Board. TheseCommittees have unrestricted authority to examine issues and submit reports of their findings to the Board. As the Committeeshave no authority to make decisions on matters reserved for the Board, the recommendations would be deliberated by the Boardfor decisions.


Identification ofCandidates

Evaluation ofSuitability

Deliberation byNomination Committee

Recommendation to the Board

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The responsibilities, compositions and activities of the abovementioned Committees are described below:-

(a) Nomination Committee

The Nomination Committee is empowered by the Board among others to recommend to the Board the right candidates withthe necessary skills, experiences and competencies to be filled in the Board and Board Committees, re-election and re-appointment of Directors.

The Nomination Committee also assesses the effectiveness of the Board as a whole, the Board Committees and thecontribution of each individual Director, including Independent Non-Executive Directors on an annual basis. The Directorsare provided with questionnaires to carry out the assessments with absolute anonymity and are based on their competence,capability, time commitment, integrity, participation and contribution in Board and Committees. The results are then tabulatedand presented to the Nomination Committee for its review and recommendation to the Board for notation. A summarisedversion of the results is circulated to each Director for their information. The criteria that are used in the assessments of theBoard/Committees include the required mix of skills and experience and the effectiveness of the Board/Committees.

During the financial year under review, the Nomination Committee held two (2) meetings to deliberate and report to the Boardon the following:-

• review the profile and nomination of the Chief Executive Officer of the Group;• assessment of the independence of independent directors;• review of the Directors who were due for re-election by rotation;• review of the retention of independent directors whose tenure have exceeded nine (9) years;• review of the Board’s representation and the required mix of skills and experience and assessing the effectiveness of

the Board as a whole;• review of the current size and composition of the Board; • review and deliberation on the findings and outcomes of the assessments of the Board, Board Committees and Directors; and• review of the term of office, appointment and performance of the Audit Committee and each of its members.

The terms of reference of the Nomination Committee is available for reference on the Company’s website at www.wzs.my

All members of the Nomination Committee are Independent Non-Executive Directors. The details of the members and theirattendance during the financial year are as follows:-

Name Attendance

Dato’ Amin Rafie Bin Othman (Chairman) 2/2 Datuk Idris Bin Haji Hashim 2/2 Dato’ Yeong Kok Hee 1/2

(b) Remuneration Committee

This Committee is primarily responsible for reviewing and recommending the appropriate level of remuneration for theExecutive Directors and the Non-Executive Directors.

The Committee’s responsibilities include the following:-

• set, review, recommend and advise the policy framework on all elements of the remuneration such as reward structure,fringe benefits and other terms of employment of Executive Directors having regard to the overall Group policyguidelines/framework;

• advise the Board on the performance of the Chief Executive Officer and Executive Directors, and an assessment of theirentitlements to performance related pay; and

• review the history of and proposals for the remuneration package of the Board’s committees.


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Remuneration Policy

The Board believes that appropriate and competitive remuneration is important to attract, retain and motivate Directors of thenecessary calibre, expertise and experience to lead the Group. In line with this philosophy, remuneration for the ExecutiveDirectors is aligned to individual and corporate performance. For Non-Executive Directors, the fees are set based on theresponsibilities shouldered by the respective Directors. Individual Directors do not participate in determining their ownremuneration package.

The Remuneration Committee recommends policy for assessing compensation package for Executive Directors. It alsoreviews and recommends to the Board for approvals, the remuneration packages and other employment conditions for theExecutive Directors.

The remuneration of Executive Directors is made up of basic salaries, monetary incentives and fringe benefits; and is linkedto the achievement of corporate performance targets. Salaries for Executive Directors consist of both fixed (i.e. base salary)and variable (performance-based incentive) remuneration components. The remuneration levels of Executive Directors arestructured to enable the Company to attract and retain the most qualified Executive Board members. The Company mayprovide competitive benefits to Executive Directors, such as a fully expensed car or cash alternative in lieu of car, companydriver, fuel expenses, private medical insurance and life insurance. Allowances relating to business expenses (i.e.entertainment and travel) incurred are reimbursed such that no additional compensation is given to the Executive Directors.

The remuneration of Non-Executive Directors is made up of Directors’ fees, meeting allowances and other benefits. The levelof remuneration for Non-Executive Directors shall reflect the experience and level of responsibilities undertaken by the Non-Executive Director concerned. The remuneration of a Non-Executive Director shall and is not based on commission,percentage of profits, or turnover. Non-Executive Directors are not entitled to receive performance-based bonuses norparticipate in short-term and/or long-term incentive plans. The emoluments of Non-Executive Directors are reviewed by theRemuneration Committee and Board annually.

Details of the Directors’ remuneration for the financial year ended 31 August 2017 are as follows:-

Company Amount (RM’000) Executive Non-Executive

Fee - 408Salaries and other emoluments 1,129 34Estimated value of benefits-in-kind 7 12

Group Amount (RM’000) Executive Non-Executive

Fee - 432Salaries and other emoluments 4,220 34Estimated value of benefits-in-kind 32 12


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The aggregate remuneration paid to Directors by the Company during the year, is analysed into the followings bands:-

Company Amount (RM’000) Range of Remuneration Executive Non-Executive

RM50,001 to RM100,000 - 4RM100,001 to RM150,000 - 2RM500,001 to RM550,000 1 -RM550,001 to RM600,000 1 -

Group Amount (RM’000) Range of Remuneration Executive Non-Executive

RM50,0011 to RM100,000 - 4RM100,001 to RM150,000 - 2RM400,001 to RM450,000 2 -RM500,001 to RM550,000 2 -RM550,001 to RM600,000 1 -RM850,001 to RM900,000 1 -RM900,001 to RM950,000 1 -

During the financial year, the Committee conducted two (2) meetings to review the remuneration of all Executive Directors,their performance, their terms of service agreement, bonuses and to perform a self-assessment of its performance. Thedetails of the members and their attendance during the financial year are as follows:-

Name Attendance

Dato’ Amin Rafie Bin Othman (Chairman) 2/2 Dato’ Ir. William Tan Chee Keong 2/2 Dato’ Yeong Kok Hee 1/2 Rosli Bin Shafiei 2/2

(c) Audit Committee

Composition of the Audit Committee, its function and a summary of its activities are set out on pages 36 to 39 of this Annual Report.

(d) Shariah Advisory Committee

The Shariah Advisory Committee has an oversight role on Shariah matters related to the Group’s business operations andactivities. The Shariah Advisory Committee shall be responsible and accountable for all its decisions, views and opinionsrelated to Shariah matters. The Shariah Advisory Committee shall ensure that decisions are made after undergoing rigorousand robust research and deliberation exercises.


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The details of the members during the financial year are as follows:-

Name

Dato’ Syed Kamarulzaman Bin Dato’ Syed Zainol Khodki Shahabudin (Chairman) Tan Teng Heng Marizan Nor Bin Basirun Tuan Haji Sabar @ Sabal Bin Haji Abdul Rahaman (Advisor) Mahamahpoyi Hj Walah (Advisor)

Main duties of the Shariah Advisory Committee shall include:-

• Provide Advice to the Board

The Shariah Advisory Committee shall advise the Board and provide input to the Group on Shariah matters in order forthe Group to comply with Shariah principles at all times.

• Endorse Shariah Policies and Procedures

The Shariah Advisory Committee shall endorse Shariah policies and procedures prepared by the Company and ensurethat the contents do not contain any elements which are not in line with Shariah principles.

• Assist Related Parties on Shariah Matters upon Request for Advice

The related parties of the Company such as its legal counsel, auditors or consultant may seek advice on Shariah mattersfrom the Shariah Advisory Committee. The Shariah Advisory Committee is expected to provide the necessary assistanceto the requesting party to ensure compliance and subscription with Shariah principles.

• Provide Written Shariah Opinion

The Shariah Advisory Committee is required to record any opinion given. In particular, the Shariah Advisory Committeeshall prepare written Shariah opinions as and when the Company makes reference to the Shariah Advisory Committeefor further deliberation.

(e) Long Term Incentive Plan Committee

This Committee was established to implement and administer the Executive Share Option Scheme and Executive ShareGrant Scheme.

The details of the members and their attendance during the financial year are as follows:-

Name Attendance

YM Tengku Dato’ Sri Uzir Bin Tengku Dato’ Ubaidillah (Chairman) 1/1 Tan Teng Heng 1/1 Rosli Bin Shafiei 1/1


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The Committee’s terms of reference includes the following:-

• set the criteria and determine the eligibility of any employee or any Executive Director to participate in the Long TermIncentive Plan Scheme;

• determine the number of shares to be comprised in an offer to be made to any employee or Executive Director;• impose condition(s), if any, on option granted; and ensuring such condition(s) has been complied with;• determine the manner in which any employee or Executive Director may accept such an offer;• suspend, reinstate, vary or cancel the rights of a Grantee;• determine the subscription price of the option; and• hear any dispute raised by any employee and decide accordingly.

(f) Investment Committee

The Investment Committee was established with the objective to make day-to-day investment decisions up to the pre-approvedlimit determined by the Board of Directors.

The details of the members and their attendance are as follows:-

Name Attendance

YM Tengku Dato’ Sri Uzir Bin Tengku Dato’ Ubaidillah (Chairman) 1/1 Dato’ Ir. William Tan Chee Keong 1/1 Tan Teng Heng 1/1

The Investment Committee’s terms of reference includes the following:-

• invest up to the prescribed amount as determined by the Board from time to time;• evaluate and recommend to the Board, proposals on new investments and divestments of significant value for the Board’s

approval;• conduct annual evaluations of the Group’s investment activities;• act in line with the directions of the Board of Directors; and• consider and examine such other matters as the Investment Committee considers appropriate.

PRINCIPLE 3: REINFORCING INDEPENDENCE

Board Independence

Independence is important for ensuring objectivity and fairness in the Board’s decision making. In order to uphold the independenceof Independent Directors, the Board has adopted the following recommendations of the Code as the Board’s policies:-

(a) subject to the Board’s justification and shareholders’ approval, tenure of Independent Directors should not exceed a cumulativeyear of nine (9) years; and

(b) undertake annual assessment of independence of its Independent Directors based on a set of criteria established by theNomination Committee focusing on events that would affect the ability of Independent Directors to continue bringingindependent and objective judgment for board deliberation and the regulatory definition of Independent Directors and applythese criteria upon admission, annually and when any new interest or relationship develops.

Dato’ Amin Rafie Bin Othman and Dato’ Yeong Kok Hee, who have served the Board for more than nine (9) years to-date, will notseek for re-election in line with the recommendation in the Code. Hence, they will retain office until the close of the 13th AGM.


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PRINCIPLE 4: FOSTERING COMMITMENT

Board Meetings

The Board meets at least once every quarter and on other occasions, as and when necessary, inter-alia, to approve quarterlyfinancial results, annual report, business plans and budgets as well as to review the performance of the Group, its operatingsubsidiaries and other business development activities. Management and external advisors (when needed) are invited to attendthe Board and Board Committee meetings and to provide their inputs and advices on relevant matters.

The attendance record of individual Directors at the Board meetings for the financial year ended 31 August 2017 is detailed below:-

Name Attendance

1. YM Tengku Dato’ Sri Uzir Bin Tengku Dato’ Ubaidillah 6/62. Dato’ Ir. William Tan Chee Keong 5/63. Tan Teng Heng 6/64. Tan Chong Boon 6/65. Dato’ Ir. Mohd Ghazali Bin Kamaruzaman 5/66. Dato’ Amin Rafie Bin Othman 5/67. Datuk Idris Bin Haji Hashim 6/68. Dato’ Syed Kamarulzaman Bin Dato’ Syed Zainol Khodki Shahabudin 5/69. Dato’ Yeong Kok Hee 4/610. Rosli Bin Shafiei 6/611. Datuk Ahmad Nizam Bin Salleh 5/6

The Board is satisfied with the level of commitment given by the Directors towards fulfilling their roles and responsibilities asDirectors. This, amongst others, is evidenced by the attendance record of the Directors at Board meetings.

The minimum 50% attendance requirement as stipulated in the MMLR has been complied with.

Directors’ Training

The Board recognises the need to attend training to enable the Directors to discharge their duties effectively. Under the Code, thetraining needs of each Director would be identified and proposed by the individual Director and the Nomination Committee annuallyupon the completion of Directors’ performance appraisals. The Nomination Committee continues to evaluate and assess the trainingneeds of the Directors to ensure professionalism in discharging their duties and recommends to the Board accordingly.

The Board encourages its members to enhance their skills and knowledge on relevant new laws, regulations and changingcommercial risks and to keep abreast with the developments in the economy, industry and technology. During the financial yearunder review, the Directors attended the following seminars, conferences and programmes:-

(a) Budget 2017 Tax Seminar(b) Leadership Energy Summit Asia(c) A Charlton Martin Evening Seminar Series-An Evening with Construction Industry Payment and Adjudication Act (CIPAA)(d) International Directors Summit 2017 – Enhancing Resilience Through Governance for Sustainability(e) 1st Members Breakfast Talk 2017 – Chief Governance Officer(f) MKD Directors Talk: Directors’ Liability and Effectiveness(g) Audit Committee Conference 2017(h) IATF 16949: 2016 Risk Based Thinking for Automotive Supply Chain(i) International Construction Week(j) Talk on Strategic Leadership - IEM


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PRINCIPLE 5: UPHOLDING INTEGRITY IN FINANCIAL REPORTING

Financial Reporting

The Board is responsible for ensuring that the quarterly financial reporting and annual audited financial statements present a trueand fair view of the Group’s financial position, performance and prospects. The Board ensures that the Group’s financial statementsare drawn up in accordance with the provisions of the Companies Act, 2016, MMLR and applicable financial reporting standards.

The Board is assisted by the Audit Committee in reviewing and scrutinising the information in terms of the appropriateness, accuracyand completeness of disclosure and in ensuring that the Group’s financial statements comply with applicable financial reportingstandards. The Audit Committee reviews and monitors the accuracy and integrity of the Group’s quarterly and annual financialstatements and submits these statements to the Board for approval and release within the stipulated time frame.

Independence of External Auditors

The Board has maintained a transparent and professional relationship with the Group’s External Auditors through the AuditCommittee. The Group’s External Auditors are invited to attend the Audit Committee meetings when deemed necessary. Duringthe year, the Audit Committee has met with the External Auditors on 20 October 2016 and 20 July 2017 without the presence ofthe management to review the scope and adequacy of the audit process, the financial statements and their audit findings that mayrequire the attention of the Audit Committee and Board.

The Audit Committee, as part of its review, has obtained assurance from the External Auditors confirming that they have in placepolicies on rotation (every 5 years) for partners of an audit engagement to ensure objectivity, independence and integrity of theaudit and declared their independence throughout the conduct of the audit engagement in accordance with the terms of all relevantprofessional and regulatory requirements. Annually, the Audit Committee also reviews the appointment, performance andremuneration of the External Auditors including audit and non-audit services, to ensure that the independence and objectivity ofthe External Auditors are not compromised, before recommending them to the shareholders for re-appointment in the AnnualGeneral Meeting. The Group has adopted a Policy on the Provision of Non-Audit Services by External Auditors which governs thecircumstances under which contracts for the provision of non-audit services can be entered into and procedures that must befollowed by the External Auditors. The Audit Committee has ensured that the External Auditors are a suitable service provider ofthe non-audit services based on their skills and experience. The Audit Committee also considered the nature of the non-auditservices and the related fee levels (both individually and in aggregate) relative to the audit fee to ensure independence of theExternal Auditors.

The Audit Committee, after due deliberations has recommended the re-appointment of Messrs. Baker Tilly Monteiro Heng asExternal Auditors for the financial year ending 31 August 2018. The Board at its meeting held on 7 December 2017 approved theAudit Committee’s recommendation. The appointment of Messrs. Baker Tilly Monteiro Heng will be presented for shareholders’approval at the forthcoming 13th AGM.

PRINCIPLE 6: RECOGNISING AND MANAGING RISK

The Board acknowledges that risk management is an integral part of good management practices. Risk is inherent in all businessactivities. It is not the Group’s objective to eliminate risk totally, but to review, prioritise and manage risks involved in all the Group’sactivities and to balance between the cost of managing and treating risks, and the anticipated benefits that will be derived. Furtherdetails of the Group’s state of risk management and internal control systems are reported in the Statement on Risk Managementand Internal Control on pages 40 to 42.

The Board has established an internal audit function which is currently outsourced to a professional firm. Functionally, the InternalAuditors report to the Audit Committee directly and they are responsible for conducting reviews and appraisals of the effectivenessof the governance, internal controls and processes within the Group.


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PRINCIPLE 7: ENSURING TIMELY AND HIGH QUALITY DISCLOSURE

The Group has in place the Corporate Disclosure Policy, which aims to assist the Board in furnishing information which iscomprehensive and accurate and is made on a timely basis and to ensure that communications to the investing public are, timely,factual, informative, balanced, broadly disseminated and in compliance with applicable legal and regulatory requirements. Thepolicy applies to all Directors, employees and authorised spokespersons on the handling and disclosing of material informationirrespective of their seniority or designation.

The Board is advised by the Management, the Company Secretaries and the External and Internal Auditors on the contents andtiming of disclosure requirements of the MMLR on the financial results and various announcements. The Board maintains strictconfidentiality and employs best efforts to ensure that no disclosure of material information is made selectively to any third parties.

The Board leverages on its corporate website (www.wzs.my) to communicate, disseminate and add depth to its governancereporting. The Board Charter was formalised and published in the section dedicated for corporate governance in its website.

Other principal governance information such as the Committees’ terms of reference are published in the website to avoid thedilution of issues in the Annual Report or other various announcements.

PRINCIPLE 8: STRENGTHENING RELATIONSHIP BETWEEN THE COMPANY AND ITS SHAREHOLDERS

The Board recognises the need for transparency and accountability to shareholders and for regular communications withshareholders, stakeholders and investors on the performance and major developments in the Group. This is achieved throughtimely releases of quarterly financial results, circulars, annual reports, corporate announcements and press releases. TheManagement attends meetings with institutional shareholders, analysts and members of the press to clarify information announcedregarding the Group’s performance and strategic direction as and when needed and/or requested.

General meetings are an important avenue through which shareholders can exercise their rights. The Board will ensure suitabilityof venue and timing of meeting and undertake other measures to encourage shareholder’s participation in the meetings. At generalmeetings, shareholders are given the opportunity to seek clarification on any matter pertaining to the business activities andfinancial performance of the Group.

COMPLIANCE WITH THE CODE

The Board has reviewed, deliberated and approved the statement on Corporate Governance. The Board is satisfied that theCorporate Governance Statement provides the information necessary to enable shareholders to evaluate how the Code has beenapplied and obligation fulfilled under the Code, MMLR and all applicable laws and regulations throughout the financial year, savefor the relevant exceptions as highlighted.

DIRECTORS’ RESPONSIBILITY STATEMENT

The Directors are responsible for ensuring that:-

(a) annual audited financial statements of the Group and the Company are drawn up in accordance with applicable approvedMalaysian Financial Reporting Standards, provisions of the Companies Act 2016 and MMLR so as to give a true and fair viewof the state of affairs of the Group and Company for the financial year, and

(b) accounting and other records are kept in a proper manner which enable the preparation of the financial statements withreasonable accuracy and by taking reasonable steps to ensure that appropriate systems are in place to safeguard the assetsof the Group and to prevent and detect fraud and other irregularities.

In the preparation of the financial statements for the financial year ended 31 August 2017, the Directors have adopted appropriateaccounting policies and have applied them consistently in the financial statements with reasonable and prudent judgments andestimates. The Directors are satisfied that all relevant approved Malaysian Financial Reporting Standards have been followed inthe preparation of the financial statements.


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Additional Compliance Information

In conformance with the Main Market Listing Requirements of Bursa Malaysia Securities Berhad (MMLR), the following informationis provided:-

Audit and Non-Audit Fees

Group Company RM’000 RM’000

Audit fees 209 40Non-audit fees - -

Total Fees 209 40

Revaluation Policy on Landed Properties

The Group has adopted a policy to revalue its land and buildings in every five (5) years. However, for land and buildings disposedoff during the financial year, no revaluation surplus/deficit is recognised in the year of disposal.

Material Contracts

There was no material contract involving the Directors’, chief executives’ (who is not a director) and major shareholders’ interestseither still subsisting at the end of the financial year ended 31 August 2017 or entered into since the end of the previous financial year.

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AUDIT COMMITTEE REPORT

The Board of Directors of WZ Satu Berhad is pleased to present the Audit Committee (“the Committee”) Report for the financialyear ended 31 August 2017.

ROLE OF AUDIT COMMITTEE

The Committee is to assist the Board of Directors in discharging its statutory duties and responsibilities relating to accounting andreporting practices of the holding company and each of its subsidiaries. In addition, the Committee shall:-

(a) assess the risk and control environment;

(b) oversee financial reporting;

(c) evaluate the internal and external audit process; and (d) review conflict of interest situations and related party transactions.

COMPOSITION AND MEETINGS

Members of the Committee shall be appointed by the Board from amongst the Directors and the Committee shall fulfill the followingrequirements:-

(a) membership shall consist of no fewer than three (3) members;

(b) all the members shall be Independent Non-Executive Directors (“INED”); and

(c) shall not comprise any Alternate Director of the Company.

The Committee meets at least four (4) times in each financial year and at least two (2) members must be present to constitute aquorum. The Company Secretary shall be the Secretary of the Committee. Other Board members and designated members ofSenior Management may also attend these meetings at the invitation of the Committee.

During the financial year ended 31 August 2017, the Committee conducted five (5) meetings. The composition of the Committeeand the attendance of the respective members at the meetings during the financial year ended 31 August 2017 are disclosed asfollows:-

Name Designation Directorship Attendance

Rosli Bin Shafiei Chairman INED 5/5Dato’ Amin Rafie Bin Othman Member INED 5/5Dato’ Yeong Kok Hee Member INED 3/5Dato’ Syed Kamarulzaman Bin Member INED 1/1Dato’ Syed Zainol Khodki Shahabudin (Appointed on 20 April 2017)

Datuk Ahmad Nizam Bin Salleh Member INED 0/1(Appointed on 20 April 2017)

The Terms of Reference of the Committee is available for reference on the Company’s website at www.wzs.my.

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AUDIT COMMITTEE REPORT(Continued)

SUMMARY OF WORK OF THE AUDIT COMMITTEE

A summary of the main activities carried out by the Committee during the financial year under review is as described below:-

Financial Reporting

(a) reviewed and discussed the quarterly and year end financial statements, prior to recommendations to the Board. The keyareas of focus are as follows:-

• change in accounting policies and practices;

• significant adjustments arising from the audit;

• going concern assumption;

• compliance with accounting standards and other legal requirements;

• significant matters highlighted in the financial statements;

• significant judgements made by the Management; and

• significant and unusual events or transaction, if any.

(b) reviewed and recommended the Corporate Governance Statement, Audit Committee Report and Statement on RiskManagement and Internal Control to the Board for consideration and approval for inclusion in the Annual Report; and

(c) reviewed and recommended to the Board for approval on any material related party transactions and recurrent related partytransactions arising during the financial year.

Following are the dates which the Committee met during the financial year to deliberate on financial reporting matters:-

Date of meetings Financial Reporting Statements Reviewed

20 October 2016 Fourth quarter financial results as well as the unaudited financial results of the Group for the financial year ended 31 August 2016

8 December 2016 Corporate Governance Statement, Audit Committee Report and Statement on Risk Management and Internal Control for the Board’s approval and disclosure in the Company’s Annual Report 2016

24 January 2017 First quarter financial results for the financial year ended 31 August 2017

20 April 2017 Second quarter financial results for the financial year ended 31 August 2017

20 July 2017 Third quarter financial results for the financial year ended 31 August 2017

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SUMMARY OF WORK OF THE AUDIT COMMITTEE (CONTINUED)

External Audit

(a) reviewed, discussed and approved the External Auditors’ audit planning memorandum;

(b) reviewed, discussed and approved the External Auditors’ scope of works, key areas of audit emphasis, audit approach andtimetable;

(c) reviewed, discussed and assessed the problems and reservations arising from the interim and final audits together withcorresponding action plans and recommendations made by the External Auditors;

(d) reviewed, discussed and assessed the External Auditor’s management letter and the adequacy and effectiveness ofManagement’s response; and

(e) reviewed the performance, independence and effectiveness of the External Auditors and made recommendations to the Boardon the re-appointment and remuneration of the External Auditors.

During the financial year, the Audit Committee had two private meetings with the External Auditors on 20 October 2016 and 20 July 2017 respectively without the presence of the Executive Directors and Management of the Group.

Internal Audit

The internal audit function is essential for assisting the Audit Committee in reviewing the state of the systems of internal controlmaintained by Management. During the financial year, the Audit Committee engaged RSM Corporate Consulting (Malaysia) SdnBhd, an external professional firm to provide independent internal audit services to the Group. The internal audit team adopted arisk-based approach towards the planning and conduct of their audits and it reports directly to the Committee.

The Committee reviews and approves the annual internal audit plan before the internal audit team carries out its audit functions.All audit findings are reported to the Committee and areas of improvements and audit recommendations identified arecommunicated to Management for further action. The internal audit scope of work also covers the follow-up review on the statusof actions implemented by Management.

The main internal audit activities performed during the financial year are as follows:-

(a) understand and evaluate business processes and related business controls from a risk perspective along the completelifecycle;

(b) ascertain the extent of compliance with established policies and procedures;

(c) identify control inadequacies within the Group and recommend viable solutions; and

(d) provide assurance in regards to process effectiveness and efficiency in terms of integrity and process improvementopportunities.

During the financial year ended 31 August 2017, the key process controls audited were as follows:-

(a) Civil Engineering and Construction Segment

• Procurement Management• Tender Management• Debtors


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SUMMARY OF WORK OF THE AUDIT COMMITTEE (CONTINUED)

Internal Audit (Continued)

(b) Oil and Gas Segment

• Project Management• Sales to Receivables

(c) Manufacturing Segment

• Procurement Management

The Committee had met the Internal Auditors on 20 October 2016, 24 January 2017, 20 April 2017 and 20 July 2017 without thepresence of the Management to review the internal audit reports of the Group.

The Committee has reviewed, discussed and assessed all significant matters highlighted by the Internal Auditors on financialreporting and operating issues. The Committee noted that there were no material misstatements, frauds and deficiencies in thesystems of internal control not addressed by the Management. The Committee has also reviewed all significant judgements madeby the Management as follows:-

(a) impairment of assets and long term contracts involving significant estimates of revenue and expenses;

(b) impairment loss on receivables;

(c) write-down of inventories; and

(d) depreciation method/estimation of useful lives of property, plant and equipment.

The Committee is satisfied that the systems of internal controls are adequate and operating effectively.

The fee incurred during the current financial year for the internal audit function of the Group was RM52,000 (2016: RM36,000).

BOARD’S CONCLUSION

The Board is satisfied that the Committee and its members have carried out their functions, duties and responsibilities in accordancewith the Terms of Reference of the Committee.


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INTRODUCTION

The Board of Directors (“the Board”) is pleased to present its Statement on Risk Management and Internal Control for the financialyear ended 31 August 2017 (“Statement”). This Statement is prepared pursuant to Paragraph 15.26(b) of the Bursa MalaysiaSecurities Berhad (“Bursa Securities”)’s Main Market Listing Requirements (“MMLR”).

The Board is also guided by the latest “Statement on Risk Management and Internal Control - Guidelines for Directors of ListedIssuers” issued by the Task Force on Internal Control with the support and endorsement of the Bursa Securities and Principle B ofthe Malaysian Code on Corporate Governance (“the Code”) - Risk Management and Internal Control Framework.

BOARD’S RESPONSIBILITIES

The Board affirms its responsibility to maintain a sound system of internal control and risk management to safeguard its investmentsand assets. The system will provide reasonable assurance in ensuring the effectiveness and efficiency of operations, reliability offinancial reporting and compliance with applicable laws and regulations.

However, due to inherent limitations of any system of internal control and risk management, it should be noted that the system isdesigned to manage rather than to eliminate the risk of failure to achieve the objectives. Therefore, any system of internal controlfor that matter could only provide a reasonable and not complete assurance against any material misstatement or omission.

The Board is assisted by the Internal Auditors and Management to identify, approve, and implement policies and procedures onrisk management and internal control. Management identifies and evaluates the risks faced, designs, implements and monitorsan appropriate system of internal control in line with the policies approved by the Board.

The Board with the assistance of the Audit Committee and Internal Auditors, RSM Corporate Consulting (Malaysia) Sdn Bhd(“RSM”), continuously review existing risks and identify new risks that the Group faces. In addition, the Management’s action plansthat manage such risks are also being reviewed by the Audit Committee to ensure its adequacy.

RISK MANAGEMENT FRAMEWORK

Risk management is regarded by the Board as part of the business operation activities of the Group. It is the Board’s priority toensure that uncertainties and investment risks in new business ventures are managed in order to safeguard the interest of theshareholders. Collectively, the Board oversees and reviews the conduct of the Group’s businesses while the Executive Directorsand Management execute measures and controls to ensure that the risks are effectively managed.

The other key elements of the systems of internal control and the Board’s review mechanisms are as follows:-

(a) establishment of the Nomination, Remuneration, Long Term Incentive Plan, Shariah Advisory and Investment Committees,apart from the Audit Committee;

(b) documentation of written policies and procedures for certain key operational areas;

(c) establishment of the limits of Management’s approvals and authorities;

(d) periodic review of Group’s management accounts and performance analysis by the Executive Directors and Management;and

(e) organisation structure with well-defined delegation of responsibilities and accountabilities for the Group’s operating units.

Besides reviewing the systems of internal control, the Audit Committee also reviews the financial information and reports producedby the Management. With the Management’s consultation, the Board and the Audit Committee deliberate the integrity of the financialresults, Annual Report and audited financial statements before presenting these financial information to the shareholders, investorsand public.

Statement on Risk Management and Internal Control

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Statement on Risk Management and Internal Control(Continued)

In accordance with the Statement on Risk Management and Internal Control - Guidelines for Directors of Listed Issuers issued byBursa Securities, the Management is responsible to the Board for:-

(a) continuously reviewing the risk profile and action plan to be undertaken to manage the principle risks relevant to the businessesof the Group;

(b) designing, implementing and monitoring the risk management framework in accordance with the Group’s strategic vision andoverall risk appetite; and

(c) identifying changes to risks or emerging risks, taking actions as appropriate and promptly bringing these to the attention ofthe Board.

The Board has received assurances from the Executive Chairman, Chief Executive Officer, Chief Operating Officer and ChiefFinancial Officer that, to the best of their knowledge, the Group’s risk management and system of internal control, in all materialaspects, are operating effectively.

INTERNAL AUDIT FUNCTION

The Audit Committee engaged RSM, an external professional firm to provide independent internal audit services to the Group.RSM provides the Audit Committee with quarterly reports of their audit findings and observations, together with recommendationsand Management’s action plans to enhance the systems of internal control. The Audit Committee reviews the internal audit reportsand reports to the Board on significant control issues noted. A follow-up audit is carried out to ascertain if Management’s actionsare effectively implemented.

The principal roles of the Internal Auditors are to assist the Audit Committee in discharging its duties and responsibilities in respectof reviewing the adequacy and effectiveness of the internal control system, risk management framework, governance and controlprocesses.

OTHER RISK MITIGATION PROCESSES

The Board has also adopted various other processes to complement the system of internal control which include:-

(a) the establishment of Board Charter and Code of Conduct which assist the Directors and employees of the Group in definingthe minimal ethical standards and conducts in discharging their responsibilities; and

(b) the implementation of a Whistle-Blowing Policy and procedures to provide a channel for legitimate concerns to be raised byemployees or other stakeholders to the Senior Independent Non-Executive Director and the Audit Committee.

The Board Charter, Code of Conduct and Whistle-Blowing Policy of the Company are available for reference on the Company’swebsite at www.wzs.my.

BOARD ASSURANCE AND LIMITATION

The Board confirms that there is an ongoing process for identifying, evaluating and managing significant risks faced by the Group.While the Board reiterates that the risk management and systems of internal control are continuously improved in line with evolvingbusiness developments, it should also be noted that all the risk management systems and systems of internal control can onlymanage rather than eliminate the risks of failure to achieve business objectives. Therefore, these systems of internal control andrisk management in the Group can only provide reasonable but not absolute assurance against all material misstatements, fraudsand losses.

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The Group has invested in associated companies, SE Satu Sdn Bhd, SE Satu Pelangi Sdn Bhd and WZS Technologies Sdn Bhd.While the Group has board representatives in the associated companies, the Group does not have management control in theiroperations. Accordingly, the associated companies have not been dealt with and considered for the purposes of this Statement.

REVIEW OF STATEMENT BY THE EXTERNAL AUDITORS

Pursuant to Paragraph 15.23 of the Bursa Securities’s MMLR, the External Auditors have conducted an assurance engagementon this Statement for inclusion in the Annual Report for the financial year ended 31 August 2017. Their assurance engagementwas performed pursuant to the scope set out in Recommended Practice Guide (“RPG”) 5 (Revised): Guidance for Auditors onEngagements to Report on the Statement on Risk Management and Internal Control issued by Malaysian Institute of Accountants.

Based on their procedures performed, the External Auditors have reported to the Board that nothing has come to their attentionthat causes them to believe that this Statement is not prepared, in all material respect, in accordance with disclosure required byparagraphs 41 and 42 of the Statement on Risk Management and Internal Control: Guidance for Directors of Listed Issuers as setout, nor it is factually inaccurate. RPG 5 does not require the External Auditors to consider whether this Statement covers all risksand controls, or to form an opinion on the adequacy and effectiveness of the Group’s risk and control system.

BOARD’S CONCLUSION

For the financial year under review, there were no significant control failures, weaknesses that result in material losses and requiredisclosure were identified. The Board is of the view that the systems of internal control and risk management, procedures andprocesses in place are reasonable, adequate and effective in safeguarding the assets of the Group, interests of shareholders andother stakeholders.

This Statement has been approved by the Board on 7 December 2017.

Statement on Risk Management and Internal Control(Continued)

Directors’ Report 44Statements of Financial Position 51Statements of Profit or Loss andOther Comprehensive Income 53Statements of Changes in Equity 55Statements of Cash Flows 58Notes to the Financial Statements 61Supplementary Information on the Disclosuresof Realised and Unrealised Profits or Losses 136Statement by Directors 137Statutory Declaration 138Independent Auditors’ Report 139

FINANCIALSTATEMENTS

The directors hereby submit their report together with the audited financial statements of WZ Satu Berhad (“the Company”) andits subsidiaries (“the Group”) for the financial year ended 31 August 2017.

PRINCIPAL ACTIVITIES

The principal activities of the Company are investment holding and the provision of management services to its subsidiaries. The principal activities of the subsidiaries are set out in Note 8 to the financial statements.

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

RESULTS

Group Company RM'000 RM'000

Profit for the financial year 25,506 26,727

Attributable to:-

Owners of the Company 25,408 26,727Non-controlling interests 98 -

25,506 26,727

DIVIDENDS

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

RM'000

Final and special dividends of 2 sen and 1 sen per ordinary share respectively in respect of the financial year ended 31 August2016 as reported on that year, paid on 1 March 2017 10,466

At the forthcoming Annual General Meeting, a first and final dividend of 2 sen per ordinary share in respect of the current financialyear will be proposed for shareholders approval. The financial statements for the current financial year do not reflect this proposeddividend. Such dividend, if approved by the shareholders, will be accounted for in equity as an appropriation of retained earningsin the financial year ending 31 August 2018.

RESERVES AND PROVISIONS

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

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DIRECTORS' REPORT

BAD AND DOUBTFUL DEBTS

Before the financial statements of the Group and of the Company were prepared, the directors took reasonable steps to ascertainthat action had been taken in relation to the writing off of bad debts and the making of allowance for doubtful debts, and satisfiedthemselves that all known bad debts had been written off and that adequate allowance had been made for doubtful debts.

At the date of this report, the directors are not aware of any circumstances which would render the amount written off for bad debtsor the amount of allowance for doubtful debts in the financial statements of the Group and of the Company inadequate to anysubstantial extent.

CURRENT ASSETS

Before the financial statements of the Group and of the Company were prepared, the directors took reasonable steps to ensurethat any current assets which were unlikely to be realised in the ordinary course of business including their values as shown in theaccounting records of the Group and of the Company had been written down to an amount which they might be expected to berealised.

At the date of this report, the directors are not aware of any circumstances that would render the values attributed to the currentassets in the financial statements of the Group and of the Company misleading.

VALUATION METHODS

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

CONTINGENT AND OTHER LIABILITIES

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 securesthe liabilities of any other person; or

(ii) any contingent liabilities in respect of the Group and of the Company that has arisen since the end of the financial year.

In the opinion of the directors, no contingent or other liability of the Group and of the Company has become enforceable, or islikely to become enforceable, within the period of twelve months after the end of the financial year which will or may affect theability of the Group and of the Company to meet their obligations as and when they fall due.

CHANGE OF CIRCUMSTANCES

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

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DIRECTORS' REPORT(Continued)

ITEMS OF MATERIAL AND UNUSUAL NATURE

In the opinions of the directors,

(i) the results of the operations of the Group and of the Company for the financial year were not substantially affected by anyitem, transaction or event of a material and unusual nature; and

(ii) no items, transactions or event of a material and unusual nature has arisen in the interval between the end of the financialyear and the date of this report which is likely to affect substantially the results of the operations of the Group and of theCompany for the financial year in which this report is made.

ISSUE OF SHARES AND DEBENTURES

During the financial year, the total number of issued shares of the Company increased from 335,867,395 units to 348,874,195units by way of the issuance of 13,006,800 new ordinary shares arising from the exercise of warrants at an exercise price ofRM0.50 each.

The new ordinary shares issued during the financial year rank pari-passu in all respects with the existing ordinary shares of theCompany.

The Company did not issue any debentures during the financial year.

OPTIONS GRANTED OVER UNISSUED SHARES

Other than warrants, no options were granted to any person to take up the unissued shares of the Company during the financial year.

WARRANTS

The Warrants issued on 29 October 2014 are constituted under a Deed Poll dated 9 October 2014 executed by the Company. The Warrants are listed on the Bursa Malaysia Securities Berhad.

The movement of Warrants during the financial year ended 31 August 2017 are stated as below:-

Number of Warrants ('000) At At 1.9.2016 Exercised 31.8.2017 Warrants 111,588 (13,007) 98,581

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WARRANTS (CONTINUED)

The salient features of the Warrants are as follows:-

(i) Each Warrants entitles the registered holder/(s) at any time prior to 28 October 2024 to subscribe for one (1) new ordinaryshare at RM0.50 each. The Warrants entitlement is subject to adjustments under the terms and conditions set out in the DeedPoll dated 9 October 2014;

(ii) The exercise period is ten (10) years from the date of issuance until the maturity date. Upon the expiry of the exercise period,any unexercised rights will lapse and cease to be valid for any purposes; and

(iii) The holders of the Warrants are not entitled to vote in any general meetings or to participate in any dividends, rights, allotmentand/or other forms of distribution other than on winding-up, compromise or arrangement of the Company unless and until theholders of the Warrants becomes a shareholder of the Company by exercising his Warrants into new shares or unlessotherwise resolved by the Company in general meeting.

As at the reporting date, 98,580,754 Warrants remained unexercised.

DIRECTORS

The directors/alternate directors in office during the financial year and during the period from the end of the financial year to thedate of this report are:-

YM Tengku Dato’ Sri Uzir Bin Tengku Dato’ Ubaidillah Dato’ Ir. William Tan Chee KeongTan Teng Heng Tan Chong BoonDato’ Ir. Mohd Ghazali Bin Kamaruzaman Dato’ Amin Rafie Bin OthmanDatuk Idris Bin Haji HashimDato’ Syed Kamarulzaman Bin Dato’ Syed Zainol Khodki Shahabudin Dato’ Yeong Kok HeeRosli Bin ShafieiDatuk Ahmad Nizam Bin SallehNg Chong Tin (Alternate Director to Tan Chong Boon)Choi Chee Ken (Alternate Director to Dato’ Ir. Mohd Ghazali Bin Kamaruzaman) Tan Ching Kee (Deceased on 27 February 2017)

Directors of Subsidiaries

Other than as stated above, the names of the directors of the subsidiaries of the Company in office during the financial year andduring the period from the end of the financial year to the date of the report are:-

Chong Kim Tham Chua Han WenDato' Ahmad Sharifuddin Bin Abdul Kadir Dominic James How Eng LiHo Kek YeeMarizan Nor Bin Basirun Mohd Aris Bin Mohd Arif Teoh Chee Yoong

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DIRECTORS’ INTERESTS

According to the Register of Directors’ shareholdings kept by the Company under Section 59 of the Companies Act 2016 inMalaysia, the interests of those directors/alternate directors in office at the end of the financial year in shares and warrants in theCompany and its related corporations during the financial year ended 31 August 2017 were as follows:-

Number of ordinary shares At At 1.9.2016 Bought Sold 31.8.2017

Direct Interest YM Tengku Dato' Sri Uzir Bin Tengku Dato' Ubaidillah 88,688,936 7,732,700 (16,000,000) 80,421,636Dato' Ir. William Tan Chee Keong 13,950,000 - - 13,950,000Tan Teng Heng 6,600,000 - - 6,600,000Tan Chong Boon 6,148,520 - (2,500,000) 3,648,520Dato' Amin Rafie Bin Othman 2,400 - - 2,400Dato' Yeong Kok Hee 85,200 - - 85,200Ng Chong Tin 2,961,040 - - 2,961,040Choi Chee Ken 13,950,000 - - 13,950,000

Indirect Interest* Dato' Ir. William Tan Chee Keong 265,800 - - 265,800Tan Chong Boon 124,200 - - 124,200

Number of Warrants At At 1.9.2016 Bought Sold 31.8.2017

Direct Interest YM Tengku Dato' Sri Uzir Bin Tengku Dato' Ubaidillah 36,460,467 1,701,000 - 38,161,467Dato' Ir. William Tan Chee Keong 6,975,000 - - 6,975,000Tan Teng Heng 2,700,000 - - 2,700,000Tan Chong Boon 3,412,320 - (1,000,000) 2,412,320Dato' Amin Rafie Bin Othman 1,200 - - 1,200Dato' Yeong Kok Hee 303,000 - - 303,000Ng Chong Tin 1,660,520 - - 1,660,520Choi Chee Ken 6,975,000 - - 6,975,000

Indirect Interest* Dato' Ir. William Tan Chee Keong 60,900 - - 60,900Tan Chong Boon 62,100 - - 62,100

* Deemed interests pursuant to Section 59(11)(c) of the Companies Act 2016 by virtue of their spouse direct interests in theCompany


DIRECTORS’ INTERESTS (CONTINUED)

By virtue of his interests in the ordinary shares of the Company, YM Tengku Dato’ Sri Uzir Bin Tengku Dato’ Ubaidillah is deemedto have an interest in the ordinary shares of all subsidiaries to the extent that the Company has an interest.

Other than as stated above, none of the other directors in office at the end of the financial year had any interests in shares of theCompany and its related corporations during the financial year.

DIRECTORS’ BENEFITS

Since the end of the previous financial year, no director of the Company has received or become entitled to receive a benefit (otherthan benefits included in the aggregate amount of emoluments received or due and receivable by the directors shown in Note 26to the financial statements) by reason of a contract made by the Company or a related corporation with the director or with a firmof which the director is a member, or with a company in which the director has a substantial financial interest.

Neither during, nor at the end of the financial year, was the Company a party to any arrangement where the object is to enable thedirectors to acquire benefits by means of the acquisition of shares in, or debentures of the Company or any other body corporate.

INDEMNITY TO DIRECTORS AND OFFICERS

During the financial year, the total amount of indemnity coverage and insurance premium paid for the directors and certain officersof the Company were RM4,000,000 and RM12,500 respectively.

SUBSIDIARIES

The details of the Company’s subsidiaries are disclosed in Note 8 to the financial statements.

SIGNIFICANT EVENTS

Significant events during the financial year are disclosed in Note 35 to the financial statements.

AUDITORS’ REMUNERATION

The details of auditors’ remuneration are disclosed in Note 25 to the financial statements.

INDEMNITY TO AUDITORS

The Company has agreed to indemnify the auditors of the Company as permitted under Section 289 of the Companies Act 2016in Malaysia.

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AUDITORS

The auditors, Messrs Baker Tilly Monteiro Heng, have expressed their willingness to continue in office.

This report was approved and signed on behalf of the Board of Directors in accordance with a resolution of the directors:-

YM TENGKU DATO’ SRI UZIR BIN TENGKU DATO’ UBAIDILLAHExecutive Chairman

DATO’ Ir. WILLIAM TAN CHEE KEONGSenior Executive Director/Chief Operating Officer

Kuala LumpurDate: 15 November 2017

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STATEMENTS OF FINANCIAL POSITION As At 31 August 2017

Group Company 2017 2016 2017 2016 Note RM'000 RM'000 RM'000 RM'000

ASSETS Non-current assetsProperty, plant and equipment 5 95,802 81,813 777 771Goodwill on consolidation 6 41,024 41,024 - -Investment in associates 7 28,587 28,076 2,077 2,360Investment in subsidiaries 8 - - 121,061 128,692Club memberships 9 205 205 - -Trade and other receivables 10 - 4,416 - 6,116Deferred tax assets 11 - 211 - -

Total non-current assets 165,618 155,745 123,915 137,939

Current assetsInventories 12 28,676 30,186 - -Trade and other receivables 10 170,792 133,714 54,604 17,755Prepayments 3,175 2,762 126 5Amount due from contract customers 13 108,682 51,057 - -Tax recoverable 1,815 1,498 74 305Derivative financial assets 14 9 95 - -Short term deposits, cash and bank balances 15 90,637 128,324 73,202 82,996

403,786 347,636 128,006 101,061Assets of disposal group classified as held for sale 16 26,278 - 8,726 -

Total current assets 430,064 347,636 136,732 101,061

TOTAL ASSETS 595,682 503,381 260,647 239,000


EQUITY AND LIABILITIESEquity attributable to owners of the Company Share capital 17 231,660 167,934 231,660 167,934Reserves 18 100,014 127,716 20,297 61,258

331,674 295,650 251,957 229,192Non-controlling interests 1,487 1,443 - -

TOTAL EQUITY 333,161 297,093 251,957 229,192

Non-current liabilitiesDeferred tax liabilities 11 5,966 2,485 17 -Borrowings 19 17,579 15,899 44 229

Total non-current liabilities 23,545 18,384 61 229

Current liabilitiesAmount due to contract customers 13 10,024 12,793 - -Trade and other payables 20 108,218 94,143 8,525 9,322Borrowings 19 104,748 80,314 104 257Derivative financial liabilities 14 27 73 - -Provision for liabilities 21 24 24 - -Tax payables - 557 - -

223,041 187,904 8,629 9,579Liabilities of disposal group classified as held for sale 16 15,935 - - -

Total current liabilities 238,976 187,904 8,629 9,579

TOTAL LIABILITIES 262,521 206,288 8,690 9,808

TOTAL EQUITY AND LIABILITIES 595,682 503,381 260,647 239,000

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

STATEMENTS OF FINANCIAL POSITION As At 31 August 2017 (Continued)


Revenue 22 560,448 465,933 34,745 6,577Cost of sales 23 (468,413) (384,474) - -

Gross profit 92,035 81,459 34,745 6,577

Other income 11,035 9,937 3,539 4,600Distribution costs (1,078) (1,191) - -Administrative expenses (44,904) (44,237) (4,278) (4,370)Other expenses (21,364) (21,338) (6,292) (1,514)

Results from operating activities 35,724 24,630 27,714 5,293

Finance costs 24 (7,743) (6,026) (185) (110)

Share of results of associates, net of tax 4,701 9,392 - -

Profit before taxation 25 32,682 27,996 27,529 5,183

Taxation 27 (7,176) (4,976) (802) 4

Profit for the financial year 25,506 23,020 26,727 5,187

Other comprehensive income, net of taxItems that will not be reclassified subsequently to profit or lossNet surplus on revaluation of properties 14,415 - - -

Items that may be reclassified subsequently to profit or lossReclassification of foreign currencytranslation reserve to profit or loss upon disposal of a subsidiary - (213) - -

Total comprehensive income for the year 39,921 22,807 26,727 5,187

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STATEMENTS OF PROFIT OR LOSSAND OTHER COMPREHENSIVE INCOME

For The Financial Year Ended 31 August 2017


Profit attributable to:- Owners of the Company 25,408 23,072 26,727 5,187Non-controlling interests 98 (52) - -

Profit for the year 25,506 23,020 26,727 5,187

Total comprehensive income attributable to:- Owners of the Company 39,823 22,859 26,727 5,187Non-controlling interests 98 (52) - -

Total comprehensive income for the year 39,921 22,807 26,727 5,187

Earnings per share attributable to owners of the CompanyBasic earnings per share (sen) 28 7.31 7.00Diluted earnings per share (sen) 28 6.30 5.85

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STATEMENTS OF PROFIT OR LOSSAND OTHER COMPREHENSIVE INCOME For The Financial Year Ended 31 August 2017 (Continued)

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STATEMENTS OF CHANGES IN EQUITYFor The Financial Year Ended 31 August 2017

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STATEMENTS OF CHANGES IN EQUITYFor The Financial Year Ended 31 August 2017 (Continued)

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Attributable to owners of the Company Share Share Retained Capital Premium Earnings TotalCompany RM'000 RM'000 RM'000 RM'000 At 1 September 2016 167,934 57,222 4,036 229,192

Total comprehensive income for the financial year - - 26,727 26,727

Issuance of shares pursuant to the exercise of warrants 6,504 - - 6,504Dividends paid on shares - - (10,466) (10,466)Transition to no-par value regime 57,222 (57,222) - -

Total transactions with owners of the Company 63,726 (57,222) (10,466) (3,962)

At 31 August 2017 231,660 - 20,297 251,957

Attributable to owners of the Company Share Share Retained Capital Premium Earnings TotalCompany RM'000 RM'000 RM'000 RM'000

At 1 September 2015 126,455 67,555 4,414 198,424

Total comprehensive income for the financial year - - 5,187 5,187

Issuance of shares pursuant to:-- Bonus issue 27,824 (27,824) - -- Exercise of warrants 1,010 4 - 1,014- Private placement 12,645 17,957 - 30,602Dividend paid on shares - - (5,565) (5,565)Transaction costs of share issue - (470) - (470)

Total transactions with owners of the Company 41,479 (10,333) (5,565) 25,581

At 31 August 2016 167,934 57,222 4,036 229,192


STATEMENTS OF CHANGES IN EQUITYFor The Financial Year Ended 31 August 2017 (Continued)

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STATEMENTS OF CASH FLOWSFor The Financial Year Ended 31 August 2017


CASH FLOWS FROM OPERATING ACTIVITIES

Profit before taxation 32,682 27,996 27,529 5,183 Adjustments for:-Bad debts written off 11 - - -Depreciation of property, plantand equipment 11,553 7,300 211 170Impairment loss on investment inassociate - - 1,283 -Impairment loss on investment insubsidiaries - - 3,905 -Impairment loss on receivables 68 391 - - Interest expenses 7,743 6,026 185 110Net fair value loss/(gain) on derivatives 40 (22) - - Plant and equipment written off 130 51 - -Corporate expenses for disposal ofa subsidiary company - (127) - (127)Dividend income - - (34,690) (6,500)Fair value (gain)/loss onfinancial assets and liabilities (2,464) 772 (419) - Gain on disposal of property,plant and equipment (3,553) (648) - - Gain on disposal of subsidiaries - (3,013) - (39) Interest income (2,663) (2,817) (3,106) (2,434)Realised gain on translation reserves - (162) - -Reversal of impairment losson receivables (332) (259) - -Reversal of provision of liabilities - (279) - - Share of results of associates (4,701) (9,392) - -Unrealised gain on foreign exchange (465) (160) - -

Operating cash flows before changes in working capital 38,049 25,657 (5,102) (3,637)

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STATEMENTS OF CASH FLOWSFor The Financial Year Ended 31 August 2017 (Continued)


CASH FLOWS FROM OPERATING ACTIVITIES (CONTINUED)

Changes in working capital:-Contract customers (60,394) 21,995 - -Inventories (3,233) (1,562) - -Payables 24,184 (13,609) 6,093 24Receivables (31,245) (12,859) (10,461) 3,220

Net cash flows (used in)/ generate from operations (32,639) 19,622 (9,470) (393)Dividend received 5,190 6,430 5,190 6,430Interest paid (8,100) (6,026) (185) (110)Interest received 2,663 2,817 3,106 2,434Net taxes paid (6,730) (5,638) (554) (158)

Net cash (used in)/generated fromoperating activities (39,616) 17,205 (1,913) 8,203

CASH FLOWS FROM INVESTING ACTIVITIES

Additional investment in an associate (1,000) - (1,000) -Advance to an associate company (1,482) (432) (1,482) (1,280)Decrease of deposits pledged to licensed banks 12,751 3,535 - -Proceeds from disposal of plant and equipment 202 2,886 - -Proceeds from disposal of a subsidiary, net of cash disposed - 4,586 - 4,493Purchase of property, plant and equipment (a) (12,716) (15,060) (217) (61)Repayment from subsidiaries - - 4,118 14,020Subsciption of shares in subsidiaries - - (5,000) (4,506)

Net cash (used in)/generated frominvesting activities (2,245) (4,485) (3,581) 12,666

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CASH FLOWS FROM FINANCING ACTIVITIES

Dividend paid (10,466) (5,565) (10,466) (5,565)Drawdown of bank borrowings 225,656 115,769 - -Drawdown of finance lease 1,838 - - -Drawdown of term loan - 1,061 - -Net proceeds from exercise of warrants 6,504 1,014 6,504 1,014Net proceeds from issuance of shares to non-controlling interest - 400 - -Payment of bank borrowings (202,227) (97,026) - -Payment of finance lease liabilities (7,163) (6,925) (338) (207)Proceeds from private placement - 30,602 - 30,602Shares issuance expenses - (470) - (470)

Net cash generated from/(used in)financing activities 14,142 38,860 (4,300) 25,374

NET CHANGE IN CASH ANDCASH EQUIVALENTS (27,719) 51,580 (9,794) 46,243CASH AND CASH EQUIVALENTSAT BEGINNING OF THE FINANCIAL YEAR 103,604 52,569 82,996 36,753Effect of the exchange rate fluctuations 487 (545) - -

CASH AND CASH EQUIVALENTS ATEND OF THE FINANCIAL YEAR 15 76,372 103,604 73,202 82,996

(a) During the financial year, the Group and the Company made the following cash payments for the purchase of property, plantand equipment:-

Group Company 2017 2016 2017 2016 RM'000 RM'000 RM'000 RM'000

Purchase of property, plant and equipment 25,179 33,684 217 366 Acquired by means of finance lease arrangement (12,463) (18,624) - (305)

Cash payments on purchase of property, plant and equipment 12,716 15,060 217 61


STATEMENTS OF CASH FLOWSFor The Financial Year Ended 31 August 2017 (Continued)

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1. CORPORATE INFORMATION

The Company is a public limited liability company, incorporated and domiciled in Malaysia and is listed on the Main Marketof Bursa Malaysia Securities Berhad. The Company’s registered office is at Level 7, Menara Milenium, Jalan Damanlela,Pusat Bandar Damansara, Damansara Heights, 50490 Kuala Lumpur. The Company’s principal place of business is at Lot1890, Jalan KPB 9, Kawasan Perindustrian Balakong, 43300 Seri Kembangan, Selangor Darul Ehsan.

The principal activities of the Company are investment holding and provision of management services to its subsidiaries. The principal activities of the subsidiaries are set out in Note 8 to the financial statements.

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

The financial statements were authorised for issue by the Board of Directors in accordance with a resolution of the directorson 15 November 2017.

2. BASIS OF PREPARATION

2.1 Statement of compliance

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

2.2 Basis of measurement

The financial statements of the Group and of the Company have been prepared under the historical cost basis, otherthan as disclosed in the significant accounting policies in Note 3 to the financial statements.

2.3 Use of estimates and judgement

The preparation of financial statements in conformity with MFRSs requires the use of certain critical accounting estimatesand assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets andliabilities at the date of the financial statements, and the reported amounts of the revenue and expenses during thereported period. It also requires Directors to exercise their judgement in the process of applying the Group’s and theCompany’s accounting policies. Although these estimates and judgement are based on the Directors’ best knowledgeof current events and actions, actual results may differ.

The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates aresignificant to the financial statements are disclosed in Note 4 to the financial statements.

2.4 Functional and presentation currency

The individual financial statements of each entity in the Group are measured using the currency of the primary economicenvironment in which they operate (“the functional currency”). The consolidated financial statements are presented inRinggit Malaysia (“RM”), which is also the Company’s functional currency, and has been rounded to the nearest thousand,unless otherwise stated.

NOTES TO THE FINANCIAL STATEMENTS

2. BASIS OF PREPARATION (CONTINUED)

2.5 Adoption of amendments/improvements to MFRSs

The Group and the Company have adopted the following amendments/improvements to MFRSs that are mandatory forthe current financial year:-

Amendments/Improvements to MFRSsMFRS 5 Non-current Assets Held for Sale and Discontinued OperationsMFRS 7 Financial Instruments: DisclosuresMFRS 10 Consolidated Financial StatementsMFRS 11 Joint ArrangementsMFRS 12 Disclosure of Interests in Other EntitiesMFRS 101 Presentation of Financial StatementsMFRS 116 Property, Plant and EquipmentMFRS 119 Employee BenefitsMFRS 127 Separate Financial StatementsMFRS 128 Investments in Associates and Joint VenturesMFRS 138 Intangible Assets

The adoption of the above amendments/improvements to MFRSs did not have any significant effect on the financialstatements of the Group and of the Company, and did not result in significant changes to the Group’s and the Company’sexisting accounting policies.

2.6 New MFRSs, amendments/improvements to MFRSs and new IC Interpretation (“IC Int”) that have been issued,but yet to be effective

The Group and the Company have not adopted the following new MFRSs, amendments/improvements to MFRSs andnew IC Int that have been issued, but yet to be effective:-

Effective for financial periods beginning on or afterNew MFRSs MFRS 9 Financial Instruments 1 January 2018MFRS 15 Revenue from Contracts with Customers 1 January 2018MFRS 16 Leases 1 January 2019MFRS 17 Insurance Contract 1 January 2021

Amendments/Improvements to MFRSsMFRS 1 First-time Adoption of MFRSs 1 January 2018MFRS 2 Share-based Payment 1 January 2018MFRS 4 Insurance Contracts 1 January 2018MFRS 10 Consolidated Financial Statements DeferredMFRS 12 Disclosure of Interests in Other Entities 1 January 2017MFRS 107 Statement of Cash Flows 1 January 2017MFRS 112 Income Taxes 1 January 2017MFRS 128 Investments in Associates and Joint Ventures 1 January 2018/ DeferredMFRS 140 Investment Property 1 January 2018

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NOTES TO THE FINANCIAL STATEMENTS(Continued)


2.6 New MFRSs, amendments/improvements to MFRSs and new IC Interpretation (“IC Int”) that have been issued,but yet to be effective (Continued)

Effective for financial periods beginning on or afterNew IC Int IC Int 22 Foreign Currency Transactions and Advance Consideration 1 January 2018IC Int 23 Uncertainty over Income Tax Treatment 1 January 2019

A brief discussion on the above significant new MFRSs and amendments/improvements to MFRSs and new IC Int aresummarised below. Due to the complexity of these new MFRSs and amendments/improvements to MFRSs and new ICInt, the financial effects of their adoption are currently still being assessed by the Group and the Company.

MFRS 9 Financial Instruments

Key requirements of MFRS 9:-

• MFRS 9 introduces an approach for classification of financial assets which is driven by cash flow characteristicsand the business model in which an asset is held. The new model also results in a single impairment model beingapplied to all financial instruments.

In essence, if a financial asset is a simple debt instrument and the objective of the entity’s business model withinwhich it is held is to collect its contractual cash flows, the financial asset is measured at amortised cost. In contrast,if that asset is held in a business model the objective of which is achieved by both collecting contractual cash flowsand selling financial assets, then the financial asset is measured at fair value in the statements of financial position,and amortised cost information is provided through profit or loss. If the business model is neither of these, then fairvalue information is increasingly important, so it is provided both in the profit or loss and in the statements of financialposition.

• MFRS 9 introduces a new, expected-loss impairment model that will require more timely recognition of expectedcredit losses. Specifically, this Standard requires entities to account for expected credit losses from when financialinstruments are first recognised and to recognise full lifetime expected losses on a more timely basis. The modelrequires an entity to recognise expected credit losses at all times and to update the amount of expected creditlosses recognised at each reporting date to reflect changes in the credit risk of financial instruments. This modeleliminates the threshold for the recognition of expected credit losses, so that it is no longer necessary for a triggerevent to have occurred before credit losses are recognised.

• MFRS 9 introduces a substantially-reformed model for hedge accounting, with enhanced disclosures about riskmanagement activity. The new model represents a significant overhaul of hedge accounting that aligns theaccounting treatment with risk management activities, enabling entities to better reflect these activities in theirfinancial statements. In addition, as a result of these changes, users of the financial statements will be providedwith better information about risk management and the effect of hedge accounting on the financial statements.

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MFRS 15 Revenue from Contracts with Customers

The core principle of MFRS 15 is that an entity recognises revenue to depict the transfer of promised goods or servicesto customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for thosegoods or services. An entity recognises revenue in accordance with the core principle by applying the following steps:-

(i) identify the contracts with a customer;

(ii) identify the performance obligation in the contract;

(iii) determine the transaction price;

(iv) allocate the transaction price to the performance obligations in the contract; and

(v) recognise revenue when (or as) the entity satisfies a performance obligation.

MFRS 15 also includes new disclosures that would result in an entity providing users of financial statements about thenature, amount, timing and uncertainty of revenue and cash flows from contracts with customers.

The following MFRSs and IC Interpretations will be withdrawn on the application of MFRS15:-

MFRS 111 Construction ContractsMFRS 118 RevenueIC Interpretation 13 Customer Loyalty ProgrammesIC Interpretation 15 Agreements for the Construction of Real EstateIC Interpretation 18 Transfers of Assets from CustomersIC Interpretation 131 Revenue - Barter Transactions Involving Advertising Services

MFRS 16 Leases

Currently under MFRS 117 Leases, leases are classified either as finance leases or operating leases. A lessee recogniseson its statement of financial position assets and liabilities arising from the finance leases.

MFRS 16 eliminates the distinction between finance and operating leases for lessees. All leases will be brought onto itsstatement of financial position except for short-term and low value asset leases.

Amendments to MFRS 12 Disclosure of Interests in Other Entities

Amendments to MFRS 12 clarify that entities classified as held for sale are required to apply all the disclosurerequirements of MFRS 12 except for the disclosure requirements set out in paragraphs B10-B16.

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Amendments to MFRS 107 Statement of Cash Flows

Amendments to MFRS 107 require entities to provide disclosures that enable users of financial statements to evaluatechanges in liabilities arising from financing activities, including changes from cash flows and non-cash changes. Thedisclosure requirement could be satisfied in various ways, and one method is by providing reconciliation between theopening and closing balances in the statements of financial position for liabilities arising from financing activities.

Amendments to MFRS 112 Income Taxes

Amendments to MFRS 112 clarify that decreases in value of debt instrument measured at fair value for which the taxbase remains at its original cost give rise to a deductible temporary difference. The estimate of probable future taxableprofits may include recovery of some of an entity’s assets for more than their carrying amounts if sufficient evidenceexists that it is probable the entity will achieve this.

The amendments also clarify that deductible temporary differences should be compared with the entity’s future taxableprofits excluding tax deductions resulting from the reversal of those deductible temporary differences when an entityevaluates whether it has sufficient future taxable profits. In addition, when an entity assesses whether taxable profits willbe available, it should consider tax law restrictions with regards to the utilisation of the deduction.

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Unless otherwise stated, the following accounting policies have been applied consistently to all the financial years presentedin the financial statements of the Group and of the Company.

3.1 Basis of consolidation

The consolidated financial statements comprise the financial statements of the Company and its subsidiaries. Thefinancial statements of the subsidiaries, associates, and joint operators used in the preparation of the consolidatedfinancial statements are prepared for the same reporting date as the Company. Consistent accounting policies are appliedto like transactions and events in similar circumstances.

(i) Subsidiaries and business combination

Subsidiaries are entities over which the Group is exposed, or has rights, to variable returns from its involvementwith the acquirees and has the ability to affect those returns through its power over the acquirees.

The financial statements of subsidiaries are included in the consolidated financial statements from the date theGroup obtains control of the acquirees until the date the Group loses control of the acquirees.

The Group applies the acquisition method to account for business combinations from the acquisition date.

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3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

3.1 Basis of consolidation (Continued)

(i) Subsidiaries and business combination (Continued)

For a new acquisition, goodwill is initially measured at cost, being the excess of the following:-

• the fair value of the consideration transferred, calculated as the sum of the acquisition-date fair value of assetstransferred (including contingent consideration), the liabilities incurred to former owners of the acquiree andthe equity instruments issued by the Group. Any amounts that relate to pre-existing relationships or otherarrangements before or during the negotiations for the business combination, that are not part of the exchangefor the acquiree, will be excluded from the business combination accounting and be accounted for separately;plus

• the recognised amount of any non-controlling interests in the acquiree either at fair value or at the proportionateshare of the acquiree’s identifiable net assets at the acquisition date (the choice of measurement basis is madeon an acquisition-by-acquisition basis); plus

• the recognised amount of any non-controlling interests in the acquiree either at fair value or at the proportionateshare of the acquiree’s identifiable net assets at the acquisition date (the choice of measurement basis is madeon an acquisition-by-acquisition basis); plus

• if the business combination is achieved in stages, the acquisition-date fair value of the previously held equityinterest in the acquiree; less

• the net fair value of the identifiable assets acquired and the liabilities assumed at the acquisition date.

The accounting policy for goodwill is set out in Note 3.7(i).

When the excess is negative, a bargain purchase gain is recognised immediately in profit or loss at the acquisitiondate.

Transaction costs, other than those associated with the issue of debt or equity securities, that the Group incurs inconnection with a business combination are expensed as incurred.

If the business combination is achieved in stages, the Group remeasures the previously held equity interest in theacquiree to its acquisition-date fair value, and recognises the resulting gain or loss, if any, in profit or loss. Amountsarising from interests in the acquiree prior to the acquisition date that have been previously been recognised inother comprehensive income are reclassified to profit or loss or transferred directly to retained earnings, on thesame basis as could be required if the acquirer had disposed directly of the previously held equity interest.

If the initial accounting for a business combination is incomplete by the end of the reporting period in which thebusiness combination occurs, the Group uses provisional fair value amounts for the items for which the accountingis incomplete. The provisional amounts are adjusted to reflect new information obtained about facts andcircumstances that existed as of the acquisition date, including additional assets or liabilities identified in themeasurement period. The measurement period for completion of the initial accounting ends as soon as the Groupreceives the information it was seeking about facts and circumstances or learns that more information is notobtainable, subject to the measurement period not exceeding one year from the acquisition date.

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(i) Subsidiaries and business combination (Continued)

Upon the loss of control of subsidiary, the Group derecognises the assets and liabilities of the former subsidiary,any non-controlling interests and the other components of equity related to the former subsidiary from theconsolidated statement of financial position. Any surplus or deficit arising on the loss of control is recognised inprofit or loss. If the Group retains any interest in the former subsidiary, then such interest is measured at fair valueat the date that control is lost. Subsequently, it is accounted for as an associate, joint venture, an available-for-salefinancial asset or a held for trading financial asset.

Changes in the Group’s ownership interest in a subsidiary that do not result in a loss of control are accounted foras equity transactions. The difference between the Group’s share of net assets before and after the change, andthe fair value of the consideration received or paid, is recognised directly in equity.

(ii) Non-controlling interests

Non-controlling interests represent the equity in subsidiaries not attributable, directly or indirectly, to owners of theCompany and are presented separately in the consolidated statement of financial position within equity.

Losses attributable to the non-controlling interests are allocated to the non-controlling interests even if the lossesexceed the non-controlling interests.

(iii) Associates

Associates are entities over which the Group has significant influence, but not control, to the financial and operatingpolicies.

Investments in associates are accounted for in the consolidated financial statements using the equity method.

Under the equity method, the investments in associates are initially recognised at cost. The cost of investmentincludes transaction costs. Subsequently, the carrying amount is adjusted to recognise changes in the Group’sshare of net assets of the associate.

When the Group’s share of losses exceeds its interest in an associate, the carrying amount of that interest includingany long-term investments is reduced to zero, and the recognition of further losses is discontinued except to theextent that the Group has an obligation or has made payments on behalf of the associate.

When the Group ceases to have significant influence over an associate, any retained interest in the former associateat the date when significant influence is lost is measured at fair value and this amount is regarded as the initialcarrying amount of a financial asset. Any difference between the carrying amount of the associate upon loss ofsignificant influence and the fair value of the retained investment and proceeds from disposal is recognised in profitor loss.

When the Group’s interest in an associate decreases but does not result in a loss of significant influence, anyretained interest is not remeasured. Any gain or loss arising from the decrease in interest is recognised in profit orloss. Any gains or losses previously recognised in other comprehensive income are also reclassified proportionatelyto the profit or loss if that gain or loss would be required to be reclassified to profit or loss on the disposal of therelated assets or liabilities.

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(iv) Transactions eliminated on consolidation

Intra-group balances and transactions, and any unrealised income and expenses arising from intra-grouptransactions are eliminated in preparing the consolidated financial statements.

Unrealised gains arising from transactions with equity-accounted associates are eliminated against the investmentto the extent of the Group’s interest in the investee. Unrealised losses are eliminated in the same way as unrealisedgains, but only to the extent that there is no evidence of impairment.

3.2 Separate financial statements

In the Company’s statement of financial position, investments in subsidiaries and associates are measured at cost lessany impairment losses, unless the investment is classified as held for sale or distribution. The cost of investment includestransaction costs. The policy for the recognition and measurement of impairment losses shall be applied on the samebasis as could be required for impairment of non-financial assets as disclosed in Note 3.12(ii).

3.3 Foreign currency transactions and operations

(i) Translation of foreign currency transactions

Foreign currency transactions are translated to the respective functional currencies of the Group entities at theexchange rates prevailing at the dates of the transactions.

At the end of each reporting date, monetary items denominated in foreign currencies are retranslated at theexchange rates prevailing at the reporting date.

Non-monetary items denominated in foreign currencies that are carried at fair value are retranslated at the ratesprevailing at the dates the fair values were determined. Non-monetary items denominated in foreign currencies thatare measured at historical cost are translated at the historical rates as at the dates of the initial transactions.

Foreign exchange differences arising on settlement or retranslation of monetary items are recognised in profit orloss except for monetary item that is designated as a hedging instrument in either a cash flow hedge or a hedge ofthe Group’s net investment of a foreign operation. When settlement of a monetary item receivable from or payableto a foreign operation is neither planned nor likely to occur in the foreseeable future, exchange differences arerecognised in profit or loss in the separate financial statements of the parent company or the individual financialstatements of the foreign operation. In the consolidated financial statements, the exchange differences areconsidered to form part of a net investment in a foreign operation and are recognised initially in other comprehensiveincome until its disposal, at which time, the cumulative amount is reclassified to profit or loss.

The gain or loss arising on translation of non-monetary items measured at fair value is treated in line with therecognition of the gain or loss on the change in fair value of the item (i.e. translation differences on items whose fairvalue gain or loss is recognised in other comprehensive income or profit or loss are also recognised in othercomprehensive income or profit or loss, respectively).

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3.3 Foreign currency transactions and operations (Continued)

(ii) Translation of foreign operations

Exchange differences arising on the translation are recognised in other comprehensive income. However, if theforeign operation is a non-wholly owned subsidiary, then the relevant proportionate share of the translation differenceis allocated to the non-controlling interests.

The assets and liabilities of foreign operations denominated in the functional currency different from the presentationcurrency, including goodwill and fair value adjustments arising on acquisition, are translated into the presentationcurrency at exchange rates prevailing at the reporting date. The income and expenses of foreign operations aretranslated at exchange rates at the dates of the transactions.

When a foreign operation is disposed of such that control, significant influence or joint control is lost, the cumulativeamount in foreign exchange translation reserve related to that foreign operation is reclassified to profit or loss. Fora partial disposal not involving loss of control of a subsidiary that includes a foreign operation, the proportionateshare of cumulative amount in foreign exchange translation reserve is reattributed to non-controlling interests. Forpartial disposals of associates or joint ventures that do not result in the Group losing significant influence or jointcontrol, the proportionate share of the cumulative amount in foreign exchange translation reserve is reclassified toprofit or loss.

3.4 Financial instruments

Financial instruments are recognised in the statements of financial position when, and only when, the Group and theCompany become a party to the contract provisions of the financial instrument.

When financial instruments are recognised initially, they are measured at fair value plus, in the case of financialinstruments not at fair value through profit or loss, transaction costs that are directly attributable to the acquisition orissue of the financial instruments.

(i) Subsequent measurement

The Group and the Company categorise the financial instruments as follows:-

(a) Financial assets

Financial assets at fair value through profit or loss

Financial assets are classified as fair value through profit or loss when the financial assets is either held fortrading, including derivatives (except for a derivative that is a financial guarantee contract or a designated andeffective hedging instrument) or it is designated into this category upon initial recognition.

Subsequent to initial recognition, financial assets at fair value through profit or loss are measured at fair valuewith the gain or loss recognised in profit or loss.

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3.4 Financial instruments (Continued)

(i) Subsequent measurement (Continued)

(a) Financial assets (Continued)

Loans and receivables

Financial assets with fixed or determinable payments that are not quoted in an active market are classified asloans and receivables.

Subsequent to initial recognition, loans and receivables are measured at amortised cost using the effectiveinterest method less accumulated impairment losses, if any. The policy for the recognition and measurementof impairment losses is in accordance with Note 3.12(i). Gains and losses are recognised in profit or lossthrough the amortisation process.

Held-to-maturity investments

Financial assets with fixed or determinable payments and fixed maturities are classified as held-to-maturitywhen the Group has the positive intention and ability to hold them to maturity.

Subsequent to initial recognition, held-to-maturity investments are measured at amortised cost using theeffective interest method less accumulated impairment losses. The policy for the recognition and measurementof impairment losses is in accordance with Note 3.12(i). Gains and losses are recognised in profit or lossthrough the amortisation process.

Available-for-sale financial assets

Available-for-sale financial assets comprise investment in equity and debt securities that are designated asavailable for sale or are not classified in any of the three preceding categories.

Subsequent to initial recognition, available-for-sale financial assets are measured at fair value. Gains or lossesfrom changes in fair value of the financial assets are recognised in other comprehensive income, except forimpairment losses and foreign exchange gains and losses arising from monetary items and gains and lossesof hedged items attributable to hedge risks of fair values hedges which are recognised in profit or loss. Thecumulative gain or loss previously recognised in other comprehensive income is reclassified from equity toprofit or loss as a reclassification adjustment when the financial asset is derecognised. Interest incomecalculated using the effective interest method is recognised in profit or loss. Dividends on an available-for-saleequity instrument are recognised in profit or loss when the Group’s and the Company’s right to receive paymentis established.

Unquoted equity instruments carried at cost

Investments in equity instruments that do not have a quoted market price in an active market and whose fairvalue cannot be reliably measured are measured at cost less accumulated impairment losses, if any. Thepolicy for the recognition and measurement at impairment losses is in accordance with Note 3.12(i).

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(i) Subsequent measurement (Continued)

(b) Financial liabilities

Financial liabilities at fair value through profit or loss

Financial liabilities at fair value through profit or loss include financial liabilities held for trading, includingderivatives (except for a derivative that is a financial guarantee contract or a designated and effective hedginginstrument) or financial liabilities designated into this category upon initial recognition.

Subsequent to initial recognition, financial liabilities at fair value through profit or loss are measured at fairvalue with the gain or loss recognised in profit or loss.

Derivatives that are linked to and must be settled by delivery of equity instruments that do not have a quotedprice in an active market for identical instruments whose fair values otherwise cannot be reliably measuredare measured at cost.

Other financial liabilities

Subsequent to initial recognition, other financial liabilities are measured at amortised cost using the effectiveinterest method. Gains and losses are recognised in profit or loss through the amortisation process.

(ii) Financial guarantee contracts

A financial guarantee contract is a contract that requires the issuer to make specified payments to reimburse theholder for a loss it incurs because a specified debtor fails to make payment when due in accordance with the originalor modified terms of a debt instrument.

Financial guarantee contracts are recognised initially as a liability at fair value, net of transaction costs that aredirectly attributable to the issuance of the guarantee. Subsequent to initial recognition, the liability is measured atthe higher of the best estimate of the expenditure required to settle the present obligation at the reporting date andthe amount initially recognised less cumulative amortisation.

(iii) Regular way purchase or sale of financial assets

A regular way purchase or sale is a purchase or sale of a financial asset under a contract whose terms requiredelivery of the asset within the time frame established generally by regulation or convention in the marketplaceconcerned.

A regular way purchase or sale of financial assets is recognised and derecognised, as applicable, using trade dateaccounting (i.e. the date the Group and the Company itself purchase or sell an asset). Trade date accounting refersto:-

(a) the recognition of an asset to be received and the liability to pay for it on the trade date; and

(b) derecognition of an asset that is sold, recognition of any gain or loss on disposal and the recognition of areceivable from the buyer for payment on the trade date.

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(iv) Derecognition

A financial asset or a part of it is derecognised when, and only when, the contractual rights to receive the cashflows from the financial asset expire or control of the asset is not retained or substantially all of the risks and rewardsof ownership of the financial asset are transferred to another party. On derecognition of a financial asset, thedifference between the carrying amount and the sum of the consideration received (including any new assetobtained less any new liability assumed) and any cumulative gain or loss that had been recognised in othercomprehensive income is recognised in profit or loss.

A financial liability or a part of it is derecognised when, and only when, the obligation specified in the contract isdischarged, cancelled or expires. On derecognition of a financial liability, the difference between the carrying amountand the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in profitor loss.

(v) Offsetting of financial instruments

Financial assets and financial liabilities are offset and the net amount is presented in the statements of financialposition if there is a currently enforceable legal right to offset the recognised amounts and there is an intention tosettle on a net basis, to realised the assets and settle the liabilities simultaneously.

3.5 Property, plant and equipment

(i) Recognition and measurement

Property, plant and equipment (other than freehold land and buildings, leasehold land and buildings and low costapartments) are measured at cost less accumulated depreciation and accumulated impairment losses. The policyfor the recognition of measurement of impairment losses is in accordance with Note 3.12(ii).

Cost of assets includes expenditures that are directly attributable to the acquisition of the asset and any other coststhat are directly attributable to bringing the asset to working condition for its intended use, and the costs ofdismantling and removing the items and restoring the site on which they are located. The cost of self-constructedassets also includes cost of materials, direct labour, and any other direct attributable costs but excludes internalprofits. For qualifying assets, borrowing costs are capitalised in accordance with the accounting policy on borrowingcosts in Note 3.17.

Freehold land and buildings, leasehold land and buildings and low cost apartments are measured at fair value,based on valuations by external independent valuers, less accumulated depreciation on land and buildings andaccumulated impairment losses recognised after the date of revaluation. Valuations are performed with sufficientregularity to ensure that the fair value of the freehold land and buildings, leasehold land and buildings and low costapartments do not differ materially from the carrying amount. Any accumulated depreciation as at the date ofrevaluation is eliminated against the gross carrying amount of the asset and the net amount is restated to therevalued amount of the asset.

A revaluation surplus is recognised in other comprehensive income and credited to the revaluation reserve.However, the increase shall be recognised in profit or loss to the extent that it reverses a revaluation decrease ofthe same asset previously recognised in profit or loss. If an asset’s carrying amount is decreased as a result of arevaluation, the decrease shall be recognised in profit or loss. However, the decrease shall be recognised in othercomprehensive income to the extent of any credit balance existing in the revaluation reserve in respect of that asset.

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3.5 Property, plant and equipment (Continued)

(i) Recognition and measurement (Continued)

Purchased software that is integral to the functionality of the related equipment is capitalised as part of thatequipment.

When significant parts of an item of property, plant and equipment have different useful lives, they are accountedfor as a separate items of property, plant and equipment.

The revaluation reserve is transferred to retained earnings as the assets are used. The amount of revaluationreserve transferred is the difference between depreciation based on the revalued carrying amount of the asset anddepreciation based on the asset’s original cost.

(ii) Subsequent costs

The cost of replacing a part of an item of property, plant and equipment is included in the asset’s carrying amountor recognised as a separate asset, as appropriate, only when it is probable that the future economic benefitsassociated with the part will flow to the Group or the Company and its cost can be measured reliably. The carryingamount of the replaced part is derecognised. All other repairs and maintenance are charged to the profit or loss asincurred.

(iii) Depreciation

Freehold land has an unlimited useful life and therefore is not depreciated. Asset under construction included inproperty, plant and equipment are not depreciated as these assets are not yet available for use.

All other property, plant and equipment are depreciated on straight-line basis by allocating their depreciable amountsover their remaining useful lives.

%Freehold buildings 37 - 38 yearsLeasehold land 53 - 81 yearsLeasehold buildings 53 - 81 yearsLow cost apartments 42 yearsFabrication yard 11 - 35Plant, machinery and equipment 10 - 20Cranes 20Motor vehicles 20Furniture, fittings and office equipment 10 - 30Renovations 10Container/Cabin 10 - 20

The residual values, useful lives and depreciation methods are reviewed at the end of each reporting period andadjusted as appropriate.

(iv) Derecognition

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

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3.6 Leases

The determination of whether an arrangement is, or contains, a lease is based on the substance of the arrangement atthe inception of the lease. The arrangement is, or contains, a lease if fulfilment of the arrangement is dependent on theuse of a specific asset or assets and the arrangement conveys a right to use the asset or assets.

A lease is classified as a finance lease if it transfers substantially all the risks and rewards incidental to ownership. All other leases that do not meet this criterion are classified as operating leases.

(i) Lessee accounting

If an entity in the Group is a lessee in a finance lease, it capitalises the leased asset and recognises the relatedliability. The amount recognised at the inception date is the fair value of the underlying leased asset or, if lower, thepresent value of the minimum lease payments. Subsequent to initial recognition, the asset is accounted for inaccordance with the accounting policy applicable to that assets.

Minimum lease payments are apportioned between the finance charge and the reduction of the outstanding liability.The finance charge is allocated to each period during the lease term so as to produce a constant periodic rate ofinterest on the remaining balance of the liability. Contingent lease payments are charged as expenses in the periodsin which they are incurred.

The capitalised leased asset is classified by nature as property, plant and equipment.

For operating leases, the Group does not capitalise the leased asset or recognise the related liability. Instead leasepayments under an operating lease are recognised as an expense on the straight-line basis over the lease termunless another systematic basis is more representative of the time pattern of the user’s benefit.

(ii) Lessor accounting

If an entity in the Group is a lessor in operating lease, the underlying asset is not derecognised but is presented inthe statements of financial position according to the nature of the asset. Lease income from operating leases isrecognised in profit or loss on a straight-line basis over the lease term, unless another systematic basis is morerepresentative of the time pattern in which use benefit derived from the leased asset is diminished.

3.7 Goodwill and other intangible assets

(i) Goodwill

Goodwill arises on business combinations is initially measured at cost, being the excess of the aggregate of theconsideration transferred and the amount recognised for non-controlling interests, and any previous interest held,over the net identifiable assets acquired and liabilities assumed. After initially recognition, goodwill is measured atcost less accumulated impairment losses. The policy for the recognition and measurement of impairment losses isin accordance with Note 3.12(ii).

In respect of equity-accounted associates, goodwill is included in the carrying amount of the investment and is nottested for impairment individually. Instead, the entire carrying amount of the investment is tested for impairment asa single asset.

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3.7 Goodwill and other intangible assets (Continued)

(ii) Other intangible assets

Intangible assets acquired separately are measured initially at cost. The cost of intangible assets acquired in abusiness combination is their fair value as at the date of acquisition. Following initial acquisition, intangible assetsare carried at cost less any accumulated amortisation and any accumulated impairment losses.

Intangible assets with finite useful lives are amortised over the estimated useful lives and assessed for impairmentwhenever there is an indication that the intangible asset may be impaired. The amortisation period and theamortisation method are reviewed at least at each financial year end. Changes in the expected useful life or theexpected pattern of consumption of future economic benefits embodied in the asset is accounted for by changingthe amortisation period or method, as appropriate, and are treated as changes in accounting estimates. Theamortisation expense on intangible assets with finite useful lives is recognised in profit or loss in the expensecategory consistent with the function of the intangible asset.

Gains or losses arising from de-recognition of an intangible asset are measured as the difference between the netdisposal proceeds and the carrying amount of the asset and are recognised in the profit or loss when the asset isderecognised.

3.8 Inventories

Inventories are measured at the lower of cost and net realisable value.

Costs incurred in bringing the inventories to their present location and condition are accounted for as follows:-

(i) Raw materials

Purchase costs on weighted average cost basis.

(ii) Finished goods and work-in-progress

Costs of direct materials and labour and a proportion of manufacturing overheads based on normal operatingcapacity. These costs are assigned on a weighted average cost basis.

Where necessary, allowance is provided for damaged, obsolete and slow moving items to adjust the carrying value ofinventories to the lower of cost and net realisable value.

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

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3.9 Construction contracts

The Group principally operates fixed price contracts. Contract revenue and contract costs are recognised as revenueand expenses respectively by reference to the stage of completion of the contract activity at the end of the reportingperiod (the percentage of completion method), when the outcome of a construction contract can be estimated reliably.

The outcome of a construction contract can be estimated reliably when:-

(i) total contract revenue can be measured reliably;

(ii) it is probable that the economic benefits associated with the contract will flow to the entity;

(iii) the costs to complete the contract and the stage of completion can be measured reliably; and

(iv) the contract costs attributable to the contract can be clearly identified and measured reliably so that actual contractcosts incurred can be compared with prior estimates.

When the outcome of a construction contract cannot be estimated reliably (principally during early stages of a contract),contract revenue is recognised only to the extent of contact costs incurred that are likely to be recoverable and contractcosts are recognised as expense in the period in which they are incurred.

An expected loss on the construction contract is recognised as an expense immediately when it is probable that totalcontract costs will exceed total contract revenue.

In applying the percentage of completion method, revenue recognised corresponds to the total contract revenue multipliedby the actual completion rate based on the proportion of total contract costs incurred to date and the estimated costs tocomplete.

Construction work-in-progress is presented as part of the contract assets as amount owing by contract customers in thestatements of financial position for all contract in which costs incurred plus recognised profits exceed progress billings.If progress billings exceed costs incurred plus recognised profits, then the difference is presented as amount owing tocontract customers which is part of the contract liabilities in the statements of financial position.

3.10 Non-current assets or disposal group held for sale

Non-current assets or disposal groups are classified as held for sale if their carrying amount will be recovered principallythrough a sale transaction rather than through continuing use. The criteria for held for sale classification is regarded asmet only when:-

• the asset or disposal group is available for immediate sale in its present condition;

• the management is committed to a plan to sell the asset and the asset or disposal group is actively marketed forsale at a price that is reasonable in relation to its current fair value; and

• the sale is expected to be completed within one year from the date of classification and actions required to completethe plan indicates that it is unlikely that significant changes to the plan will be made or that the sale will be withdrawn.

Immediately before classification as held for sale, the assets, or components of a disposal group, are remeasured inaccordance with the Group’s accounting policies. Thereafter, generally the assets or disposal group are measured atthe lower of carrying amount and fair value less costs to sell.

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3.10 Non-current assets or disposal group held for sale (Continued)

Any impairment loss on the disposal group is first allocated to goodwill, and then to remaining assets and liabilitieson pro-rata basis, except that no loss is allocated to inventories, financial assets, deferred tax assets, employeebenefit assets and investment property that is measured at fair value, which continue to be measured in accordancewith the Group’s accounting policies. Impairment losses on initial classification as held for sale and subsequent gainsor losses on remeasurement are recognised in profit or loss. Gains are not recognised in excess of any cumulativeimpairment loss.

Intangible assets and property, plant and equipment once classified as held for sale are not amortised or depreciated.In addition, equity accounting of equity-accounted associates and joint venture ceases once classified as held for sale.

Assets and liabilities classified as held for sale are presented separately as current items in the statements of financialposition.

3.11 Cash and cash equivalents

For the purpose of the statements of cash flows, cash and cash equivalents comprise cash on hand, bank balances anddeposits with a maturity of three months or less, that are readily convertible to known amount of cash and which aresubject to an insignificant risk of changes in value. Cash and cash equivalents are presented net of bank overdrafts.

3.12 Impairment of assets

(i) Impairment and uncollectibility of financial assets

At each reporting date, all financial assets (except for financial assets categorised as fair value through profit orloss and investment in subsidiaries and associates) are assessed whether there is any objective evidence ofimpairment as a result of one or more events having an impact on the estimated future cash flows of the financialasset that can be reliably estimated. Losses expected as a result of future events, no matter how likely, are notrecognised.

Evidence of impairment may include indications that the debtors or a group of debtors are experiencing significantfinancial difficulty, default or delinquency in interest or principal payments, the probability that they will enterbankruptcy or other financial reorganisation, and where observable data indicate that there is a measurabledecrease in the estimated future cash flows, such as changes in arrears or economic conditions that correlate withdefaults.

Loans and receivables and held-to-maturity investments

The Group and the Company first assess whether objective evidence of impairment exists individually for financialassets that are individually significant, and individually or collectively for financial assets that are not individuallysignificant. If there is no objective evidence for impairment exists for an individually assessed financial asset, whethersignificant or not, the Group and the Company include the financial asset in a group of financial assets with similarcredit risk characteristics and collectively assess them for impairment. Financial assets that are individually assessedfor impairment for which an impairment loss is or continues to be recognised are not included in a collectiveassessment of impairment.

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3.12 Impairment of assets (Continued)

(i) Impairment and uncollectibility of financial assets (Continued)

Loans and receivables and held-to-maturity investments (Continued)

The amount of impairment loss is measured as the difference between the financial asset’s carrying amount andthe present value of estimated future cash flows discounted at the financial asset’s original effective interest rate.The carrying amount of the financial asset is reduced through the use of an allowance account and the loss isrecognised in profit or loss.

If, in a subsequent period, the amount of the impairment loss decreases because of an event occurring after theimpairment was recognised, the previously recognised impairment loss is reversed by adjusting an allowanceaccount to the extent that the carrying amount of the financial asset does not exceed what the amortised cost wouldhave been had the impairment not been recognised.

Loan together with the associated allowance are written off when there is no realistic prospect of future recoveryand all collateral has been realised or has been transferred to the Group and the Company. If a write-off is laterrecovered, the recovery is credited to the profit or loss.

Available-for-sale financial assets

In the case of equity investments classified as available for sale, a significant or prolonged decline in the fair valuebelow its cost is considered to be objective evidence of impairment. The Group and the Company use theirjudgement to determine what is considered as significant or prolonged decline, evaluating past volatility experiencesand current market conditions.

When a decline in the fair value of an available-for-sale financial asset has been recognised in the othercomprehensive income, the cumulative loss that has been recognised in other comprehensive income shall bereclassified from equity to profit or loss as a reclassification adjustment even though the financial asset has notbeen derecognised. The amount of cumulative loss that is reclassified from equity to profit or loss shall be thedifference between its cost (net of any principal repayment and amortisation) and its current fair value, less anyimpairment loss previously recognised in profit or loss.

Impairment losses on available-for-sale equity investments are not reversed through profit or loss in the subsequentperiods. Increase in fair value, if any, subsequent to impairment loss is recognised in other comprehensive income.

For available-for-sale debt investments, impairment losses are subsequently reversed through profit or loss if anincrease in the fair value of the investment can be objectively related to loss event occurring after the recognitionof the impairment loss in profit or loss.

Unquoted equity instruments carried at cost

In the case of unquoted equity instruments carried at cost, the amount of the impairment loss is measured as thedifference between the carrying amount of financial asset and the present value of estimated future cash flowsdiscounted at the current market rate of return for a similar financial asset. Such impairment shall not be reversed.

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3.12 Impairment of assets (Continued)

(ii) Impairment of non-financial assets

The carrying amounts of non-financial assets (except for inventories, amount due from customers for contract workand deferred tax assets) are reviewed at the end of each reporting period to determine whether there is anyindication of impairment. If any such indication exists, the Group and the Company make an estimate of the asset’srecoverable amount. For goodwill and intangible assets that have indefinite useful life and are not yet available foruse, the recoverable amount is estimated at each reporting date.

For the purpose of impairment testing, assets are grouped together into the smallest group of assets that generatescash inflows from continuing use that are largely independent of the cash inflows of non-financial assets or cash-generating units (“CGUs”). Subject to an operating segment ceiling test, for the purpose of goodwill impairmenttesting, CGUs to which goodwill has been allocated are aggregated so that the level at which impairment testing isperformed reflects the lowest level at which goodwill is monitored for internal reporting purposes. The goodwillacquired in a business combination, for the purpose of impairment testing, is allocated to a CGU or a group ofCGUs that are expected to benefit from the synergies of business combination.

The recoverable amount of an asset of CGU is the higher of its fair value less costs of disposal and its value in use.In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-taxdiscount rate that reflects current market assessments of the time value of money and the risks specific to the assetor CGU. In determining the fair value less costs of disposal, recent market transactions are taken into account. If no such transactions can be identified, an appropriate valuation model is used.

Where the carrying amount of an asset exceed its recoverable amount, the carrying amount of asset is reduced toits recoverable amount. Impairment losses recognised in respect of a CGU or groups of CGUs are allocated first toreduce the carrying amount of any goodwill allocated to those units or groups of units and then, to reduce thecarrying amount of the other assets in the unit or groups of units on a pro-rata basis.

Impairment losses are recognised in profit or loss except for assets that are previously revalued with the revaluationtaken to other comprehensive income. In this case, the impairment is recognised in other comprehensive incomeup to the amount of any previous revaluation.

An impairment loss in respect of goodwill is not reversed. In respect of other assets, an assessment is made ateach reporting date as to whether there is any indication that previously recognised impairment losses may nolonger exist or may have decreased. An impairment loss is reversed only if there has been a change in the estimatesused to determine the assets recoverable amount since the last impairment loss was recognised. An impairmentloss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that wouldhave been determined, net of depreciation or amortisation, if no impairment loss had been recognised previously.Such reversal is recognised in profit or loss unless the asset is measured at revalued amount, in which case thereversal is treated as a revaluation increase.

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3.13 Share capital

(i) Ordinary shares

Ordinary shares are equity instruments and classified as equity. An equity instrument is a contract that evidencesa residual interest in the assets of the Company after deducting all of its liabilities. Ordinary shares are recorded atthe proceeds received, net of directly attributable incremental transaction costs. Dividends on ordinary shares arerecognised in equity in the period in which they are declared.

(ii) Warrants

Warrants are classified as equity. The issue of ordinary shares upon exercise of the warrants are treated as newsubscription of ordinary shares for the consideration equivalent to the warrants exercise price.

3.14 Employee benefits

(i) Short-term employee benefits

Short-term employee benefit obligations in respect of wages, salaries, social security contributions, annual bonuses,paid annual leave, sick leave and non-monetary benefits are recognised as an expense in the financial year wherethe employees have rendered their services to the Group and the Company.

(ii) Post-employment benefits

As required by law, the Group and the Company contribute to the Employees Provident Fund (“EPF”), the nationaldefined contribution plan. Such contributions are recognised as an expense in the profit or loss in the period inwhich the employees render their services.

3.15 Provisions

Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, itis probable that an outflow of economic resources will be required to settle the obligation and the amount of the obligationcan be estimated reliably.

Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current marketassessments of the time value of money and the risks specific to the liability. The unwinding of the discount is recognisedas finance cost.

Provisions are reviewed at each reporting date and adjusted to reflect the current best estimate. If it is no longer probablethat an outflow of economic resources will be required to settle the obligation, the provision is reversed.

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3.16 Revenue

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenuecan be reliably measured, regardless of when payment is made. Revenue is measured at fair value of considerationreceived or receivable, taking into account contractually defined terms of payment and excluding taxes and duty. TheGroup concluded that it is acting as a principal in all of its revenue arrangement. The following specific recognition criteriamust also be met before revenue is recognised:-

(i) Construction contracts

Revenue from construction contracts is accounted for by the stage of completion method. The stage of completionmethod is measured by reference to the proportion of contract costs incurred for work performed to date to theestimated total contracts costs.

(ii) Sale of goods

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

(iii) Rendering of services

Revenue from services rendered is recognised net of taxes and discounts as and when the services are performed.

(iv) Rental income

Rental income is recognised on a straight-line basis over the term of the lease. Lease incentives granted arerecognised as an integral part of the total rental income, over the term of the lease.

(v) Interest income

Interest income is recognised as it accrues using the effective interest method.

(vi) Dividend income

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

(vii) Management fee

Management fee is recognised on an accrual basis, net of taxes.

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3.17 Borrowing costs

Borrowing costs are interests and other costs that the Group and the Company incur in connection with borrowing offunds.

Borrowing costs that are not directly attributable to the acquisition, construction or production of a qualifying asset arerecognised in profit or loss using the effective interest method.

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

The Group and the Company begin capitalising borrowing costs when the Group and the Company have incurred theexpenditures for the asset, incurred related borrowing costs and undertaken activities that are necessary to prepare theasset for its intended use or sale.

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

3.18 Income taxes

Income tax expense comprises current and deferred tax. Current and deferred tax are recognised in profit or loss exceptto the extent that it relates to a business combination or items recognised directly in equity or other comprehensiveincome.

(i) Current tax

Current tax is the expected taxes payable or receivable on the taxable income or loss for the financial year, usingthe tax rates that have been enacted or substantively enacted by the end of the reporting period, and any adjustmentto tax payable in respect of previous financial years.

(ii) Deferred tax

Deferred tax is provided using the liability method on temporary differences at the reporting date between the taxbases of assets and liabilities and their carrying amounts in the statements of financial position. Deferred taxliabilities are generally recognised for all taxable temporary differences. Deferred tax assets are generally recognisedfor all deductible temporary differences, unused tax losses and unused tax credits, to the extent that it is probablethat future taxable profit will be available against which the deductible temporary differences, unused tax lossesand unused tax credits can be utilised.

Deferred tax is not recognised if the temporary difference arises from the initial recognition of assets and liabilitiesin a transaction that is not a business combination and that affects neither the taxable profit nor the accountingprofit. In addition, deferred tax liabilities are not recognised if the temporary difference arises from the initialrecognition of goodwill.

Deferred tax liabilities are recognised for taxable temporary differences associated with investments in subsidiariesand associates, except where the Group is able to control the timing of the reversal of the temporary differencesand it is probable that the temporary differences will not reverse in the foreseeable future. Deferred tax assetsarising from deductible temporary differences associated with such investments and interests are only recognisedto the extent that it is probable that there will be sufficient taxable profits against which to utilise the benefits of thetemporary differences and they are expected to reverse in the foreseeable future.

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3.18 Income taxes (Continued)

(ii) Deferred tax (Continued)

The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it isno longer probable that sufficient taxable profit will be available to allow the benefit of part or all of that deferred taxasset to be utilised. Unrecognised deferred tax assets are reassessed at each reporting date and are recognisedto the extent that it has become probable that future taxable profit will allow the deferred tax assets to be utilised.

Deferred tax is measured at the tax rates that are expected to apply in the period when the asset is realised or theliability 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 taxitems are recognised in correlation to the underlying transaction either in other comprehensive income or directlyin equity.

Deferred tax assets and deferred tax liabilities are offset if there is a legally enforceable right to offset current taxassets against current tax liabilities and when they relate to income taxes levied by the same taxation authority onthe same taxable entity, or on different tax entities, but they intends to settle their income tax recoverable andincome tax payable on a net basis or their tax assets and liabilities will be realised simultaneously.

(iii) Goods and services tax

Revenues, expenses and assets are recognised net of the amount of goods and services tax (“GST”) except:-

• where the GST incurred in a purchase of assets or services is not recoverable from the taxation authority, inwhich case the GST is recognised as part of the cost of acquisition of the asset or as part of the expense itemas applicable; and

• receivables and payables that are stated with the amount of GST included.

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

3.19 Discontinued operation

A disposal group qualifies as discontinued operation if it is a component of an entity that either has been disposed of, oris classified as held for sale, and:-

(i) represents a separate major line of business or geographical area of operations;

(ii) is part of a single co-ordinated plan to dispose of a separate major line of business or geographical area ofoperations; or

(iii) is a subsidiary acquired exclusively with a view to resale.

Classification as a discontinued operation occurs upon disposal or when the operation meets the criteria to be classifiedas held for sale, if earlier. When an operation is classified as a discontinued operation, the comparative statements ofprofit or loss and other comprehensive is re-presented as if the operation has been discontinued from the start of thecomparative period.

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3.20 Operating segments

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operatingdecision-maker. The chief operating decision-maker, who is responsible for allocating resources and assessingperformance of the operating segments, has been identified as the Chief Executive Officer of the Group that makesstrategic decisions.

3.21 Fair value measurements

Fair value of an asset or a liability, except for lease transactions, is determined as the price that would be received tosell 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 principalmarket or in the absence of a principal market, in the most advantageous market.

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

When measuring the fair value of an asset or a liability, the Group uses observable market data as far as possible. Fairvalue are categorised into different levels in a fair value hierarchy based on the input used in the valuation technique asfollows:-

Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the Group can access at the measurement date.

Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.

Level 3: Unobservable inputs for the asset or liability.

There were no transfers between levels of the fair value hierarchy as of the date of the event or change in circumstances.

3.22 Contingencies

A contingent liability or asset is a possible obligation or asset that arises from past events and whose existence will beconfirmed only by the occurrence or non-occurrence of uncertain future event(s) not wholly within the control of theGroup and of the Company.

Contingent liability is also referred as a present obligation that arises from past events but is not recognised because:-

(i) it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation;or

(ii) the amount of the obligation cannot be measured with sufficient reliability.

Contingent liabilities and assets are not recognised in the statements of financial position.

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3.23 Earnings per share

The Group present basic and diluted earnings per share data for its ordinary shares (“EPS”). Basic EPS is calculated bydividing the profit or loss attributable to ordinary shareholders of the Company by the weighted average number ofordinary shares outstanding during the period, adjusted for own shares held.

Diluted EPS is determined by adjusting the profit or loss attributable to ordinary shareholders and weighted averagenumber of ordinary shares outstanding, adjusted for own shares held, for the effects of all dilutive potential ordinaryshares.

4. SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS

Significant areas of estimation, uncertainty and critical judgements in applying accounting policies that have significant effectin determining the amount recognised in the financial year include the following:-

4.1 Impairment of goodwill

Goodwill is tested for impairment annually and at other times when such indicators exist. This requires an estimation ofthe value-in-use of the cash-generating units to which goodwill is allocated. In determining the value-in-use of a cash-generating unit, management estimates the discounted cash flows using reasonable and supportable inputs about sales,gross profit margin and other operating expenses based on past experience, current events and reasonably possiblefuture developments. When value-in-use calculations are undertaken, management must estimate the expected futurecash flows from the cash-generating unit and choose a suitable discount rate in order to calculate the present value ofthose cash flows.

The carrying amount of the Group’s goodwill and key assumptions used to determine the recoverable amount for differentcash-generating units, including sensitivity analysis, are disclosed in Note 6.

4.2 Construction contract

Significant judgement is used in determining the stage of completion, the extent of the contract costs incurred, theestimated total contract revenue and costs, as well as the recoverability of the contracts. The total contract revenue alsoincludes an estimation of the work that are recoverable from the customers. In making judgements, the Group and theCompany evaluate based on the past experience and work of specialists.

The carrying amounts of amount due from contract customers and amount due to contract customers are disclosed inNote 13.

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4. SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS (CONTINUED)

4.3 Impairment of investment in associates

The Company assesses the carrying amount of its investment in associates at each reporting date whether there is anobjective evidence that the investment may be impaired. Significant judgement is required in the estimation of theperformance of the associates in dealing with the moratorium on bauxite mining and the ban of approved permit. Changesin the legislation could affect the results of the Company’s tests for impairment of investment in associates.

The carrying amount of investment in associates are disclosed in Note 7 to the financial statements.

4.4 Impairment of financial assets

The Group recognises impairment losses for loans and receivables using the incurred loss model. Individually significantloans and receivables are tested for impairment separately by estimating the cash flows expected to be recoverable. Allothers are grouped into credit risk classes and tested for impairment collectively, using the Group’s past experience ofloss statistics, ageing of past due amounts and current economic trends. The actual eventual losses may be differentfrom the allowance made and this may affect the Group’s financial position and results.

The carrying amounts of the Group’s and Company’s financial assets are disclosed in Note 31.

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87

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5. PROPERTY, PLANT AND EQUIPMENT (CONTINUED)

Motor Office vehicles equipment Renovations Total Company RM'000 RM'000 RM'000 RM'000

2017 Cost At 1 September 2016 922 95 - 1,017 Additions 65 128 24 217

At 31 August 2017 987 223 24 1,234

Accumulated depreciation At 1 September 2016 231 15 - 246 Depreciation charge for the financial year 194 16 1 211

At 31 August 2017 425 31 1 457

Carrying amount At 31 August 2017 562 192 23 777

2016 Cost At 1 September 2015 591 60 - 651 Additions 331 35 - 366

At 31 August 2016 922 95 - 1,017

Accumulated depreciation At 1 September 2015 69 7 - 76 Depreciation charge for the financial year 162 8 - 170

At 31 August 2016 231 15 - 246

Carrying amount At 31 August 2016 691 80 - 771



Included in property, plant and equipment of the Group and of the Company are assets acquired under finance lease instalmentplans with carrying amounts as follows:-


Plant and machinery 14,375 6,574 - - Motor vehicles 17,105 14,950 220 691

31,480 21,524 220 691

The carrying amount of property, plant and equipment pledged to financial institutions for banking facilities granted to theGroup as mentioned in Note 19 and are as follows:-

Group 2017 2016 RM'000 RM'000

Freehold land 15,400 13,800 Freehold building 5,100 7,347 Leasehold land - 2,618 Leasehold building - 2,526 Plant and machinery 6,598 7,243 27,098 33,534

During the financial year, the freehold land and building, leasehold land and building and low cost apartments are stated atvaluation based on an independent professional valuation performed by Messrs. Raine & Horne International Zaki + PartnersSdn Bhd using the market value basis.

Fair value of freehold land, freehold building, leasehold land, leasehold buildings and low cost apartments are categorised asfollows:-

Group Level 2 2017 RM'000

Freehold land 15,400 Freehold building 5,100 Leasehold land 10,100 Leasehold building 4,500 Low cost apartments 170

35,270

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Level 2 fair value

Level 2 fair values of lands, buildings and low cost apartments have been derived using the sales comparison approach.Sales prices of comparable lands and buildings in close proximity are adjusted for differences in key attributes such as propertysize. The most significant input into this valuation approach is price per square foot of comparable lands and buildings.

Had the revalued freehold land and building, leasehold land and building and low cost apartments been carried at historicalcost less accumulated depreciation, the carrying amount of each class of properties would have been as follows:-

Group 2017 2016 RM'000 RM'000

Freehold land 2,806 5,255 Freehold building 1,780 5,361 Leasehold land 2,359 4,795 Leasehold building 2,338 4,689 Low cost apartments 100 103 9,383 20,203

6. GOODWILL ON CONSOLIDATION

The principal activities of the subsidiaries are disclosed in Note 8 to the financial statements. The carrying amount of thegoodwill is allocated to each of those companies (collectively known as cash generating units (“CGU”)), which represent thelowest level within the Group at which the goodwill is monitored for internal management purposes.

Group 2017 2016 Goodwill RM'000 RM'000

At 1 September/ 31 August 41,024 41,024

The carrying amounts of goodwill allocated to the CGUs are as follows:-

Group 2017 2016 RM'000 RM'000

WZS BinaRaya Sdn Bhd (Formerly known as WZS KenKeong Sdn Bhd) ("CGU 1") 20,768 20,768 WZS Misi Setia Sdn Bhd (Formerly known as Misi Setia Oil & Gas Sdn Bhd) ("CGU 2") 20,256 20,256 41,024 41,024

The Group tests goodwill annually for impairment or more frequently if there are indication that the goodwill might be impaired.The recoverable amount of CGU is determined from value-in-use calculations using cash flow projections based on financialbudgets approved by management covering a three-year period.

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6. GOODWILL ON CONSOLIDATION (CONTINUED)

For each of the CGUs, the value-in-use calculation is most sensitive to the following key assumptions:-

CGU 1 CGU 2

Annual revenue growth rate 7% 7% Long-term growth rate 2% 2% Discount rate 11% 14%

The gross margin used in the value-in-use calculation range from 16% to 22%.

These key assumptions have been used for the analysis of each CGU. The values assigned to the key assumptions representmanagement’s assessment of future trends in the respective industry and are based on both external sources and internalsources (historical data).

(i) Revenue is the forecasted annual growth rate over the three-year projection period. It is based on the average growthlevels experienced over the past three years.

(ii) Gross margin is the forecasted margin as a percentage of revenue over the three-year projection period. These arebased on the average gross margin of the existing projects.

(iii) Long-term growth rate does not exceed the long-term average growth rates for the industries relevant to the CGU. Cashflows beyond the three-year projection period are extrapolated using the long-term growth rates.

(iv) Discount rate was estimated based on the industry weighted average cost of capital. The discount rate applied to thecash flow projections is pre-tax and reflects management’s estimate of the risks specific to the CGU at the date ofassessment.

Based on the sensitivity analysis performed, management believes that there is no reasonably possible change in keyassumptions that would cause the carrying values of the CGUs to exceed its recoverable amounts. The estimated recoverableamount of the CGUs exceed the carrying amount. As a result of the analysis, management did not identify an impairment forthe CGUs.

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7. INVESTMENT IN ASSOCIATES


Unquoted shares, at cost 3,360 2,360 3,360 2,360 Less: Accumulated impairment loss - - (1,283) - Share of post-acquisition profit 25,227 25,716 - - 28,587 28,076 2,077 2,360

Details of the associates are as follows:-

Principal place Group's of business/country OwnershipName of Entities of incorporation Interest Nature of relationship 2017 2016 % %

Held by the Company SE Satu Sdn Bhd # ^ Malaysia 49 49 Mining operations and("SSSB") activities

SE Satu Pelangi Sdn Bhd # ^ Malaysia 30 30 Mining operations and("SSPSB") activities

WZS Technologies Sdn Bhd Malaysia 20 20 Engage in precision(''WZST'') engineering

Held by SE Satu Sdn BhdSE Sinaran Sdn Bhd # ^ Malaysia 39 39 Provision of port services

# Audited by firms other than Messrs. Baker Tilly Monteiro Heng.

^ The financial year end of these associates is not coterminous with the Group. As such, for the purpose of applying equitymethod of accounting, the management financial statements of these associates for the financial period ended 31 August2017 have been used.

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7. INVESTMENT IN ASSOCIATES (CONTINUED)

The summarised financial information of the Group’s material associates, adjusted for any differences in accounting policiesis as follows:-

WZST SSSB SSPSB Total RM'000 RM'000 RM'000 RM'000

31 August 2017

Current assets 1,950 27,004 34,054 63,008 Non-current assets 13,099 23,642 - 36,741

Total assets 15,049 50,646 34,054 99,749

Current liabilities 9,501 6,099 4,632 20,232 Non-current liabilities 3,978 4,464 - 8,442

Total liabilities 13,479 10,563 4,632 28,674

Non-controlling interests - 398 - 398

Year ended 31 August 2017 Included in total comprehensive income is:- Revenue 2,411 69,550 94,621 166,582 Expenses including finance costs and tax expense (7,481) (67,787) (78,449) (153,717)

(Loss)/Profit for the financial year (5,070) 1,763 16,172 12,865

Reconciliation of net assets to carrying amount Share of net assets at the acquisition date 1,597 1,470 293 3,360 Share of post-acquisition (loss)/profit (1,283) 17,976 8,534 25,227

Carrying amount in statement of financial position 314 19,446 8,827 28,587

Group's share of results Group's share of profit or loss (1,014) 863 4,852 4,701 Group's share of other comprehensive income - - - -

Group's share of total comprehensive income (1,014) 863 4,852 4,701

Other information Dividend received by the Group - 2,940 2,250 5,190

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7. INVESTMENT IN ASSOCIATES (CONTINUED)

The summarised financial information of the Group’s material associates, adjusted for any differences in accounting policiesis as follows:- (Continued)

WZST SSSB SSPSB Total RM'000 RM'000 RM'000 RM'000

31 August 2016

Current assets 3,285 41,579 39,573 84,437 Non-current assets 11,229 25,791 - 37,020

Total assets 14,514 67,370 39,573 121,457

Current liabilities 8,577 17,323 18,823 44,723 Non-current liabilities 4,297 5,962 - 10,259

Total liabilities 12,874 23,285 18,823 54,982

Non-controlling interests - 162 - 162

Year ended 31 August 2016 Included in total comprehensive income is:- Revenue 1,569 106,068 126,303 233,940 Expenses including finance costs and tax expense (2,915) (98,921) (105,773) (207,609)

(Loss)/Profit for the financial year (1,346) 7,147 20,530 26,331

Reconciliation of net assets to carrying amount Share of net assets at the acquisition date 597 1,470 293 2,360 Share of post-acquisition (loss)/profit (269) 20,053 5,932 25,716

Carrying amount in statement of financial position 328 21,523 6,225 28,076

Group's share of results Group's share of profit or loss (269) 3,502 6,159 9,392 Group's share of other comprehensive income - - - -

Group's share of total comprehensive income (269) 3,502 6,159 9,392

Other information Dividend received by the Group - - 3,000 3,000

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8. INVESTMENT IN SUBSIDIARIES

Company 2017 2016 Note RM'000 RM'000

Unquoted shares, at cost At 1 September 128,692 125,013 Additions 5,000 8,600 Disposal - (4,921) Transfer to assets of disposal group classified as held for sale 16 (8,726) -

124,966 128,692 Less: Accumulated impairment losses (3,905) -

At 31 August 121,061 128,692

(i) Details of the subsidiaries are as follows:-

Principal place Effective of business/country Ownership Interest/Name of Entities of incorporation Voting Rights Principal Activities 2017 2016 % %

Direct subsidiariesWZS BinaRaya Sdn Bhd Malaysia 100 100 Construction and civil (Formerly known as engineering WZS KenKeong Sdn Bhd)

WZS Misi Setia Sdn Bhd Malaysia 100 100 Contractor, subcontractor and (Formerly known as to carry on fabrication,Misi Setia Oil & Gas Sdn Bhd) assembly and testing works in oil & gas industries

WZS Industries Sdn Bhd Malaysia 100 100 Manufacturing and processing of cold drawn bright steel products and related steel products

Weng Zheng Trading Sdn Bhd Malaysia 100 100 Dealers in steel products

WZS Powergen Sdn Bhd Malaysia 60 60 Engage in the provision of power generation and power solutions to oil and gas industry and power sector

WZS Bina Sdn Bhd Malaysia 100 100 Transportation agent, trading in sand and quarry products

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8. INVESTMENT IN SUBSIDIARIES (CONTINUED)

(i) Details of the subsidiaries are as follows:- (Continued)

Principal place Effective of business/country Ownership Interest/Name of Entities of incorporation Voting Rights Principal Activities 2017 2016 % %

Direct subsidiaries WZS Geoassets Sdn Bhd Malaysia 75 65 Trading in mineral resources

WZS Prisma Sdn Bhd Malaysia 100 100 Civil engineering and other related works to construction

WZS Engineering Sdn Bhd Malaysia 100 100 Dormant

WZ Satu Sysbuild Sdn Bhd Malaysia 80 80 Dormant

WZS Land Sdn Bhd Malaysia 100 100 Dormant

WZS Minerals Sdn Bhd Malaysia 100 100 Dormant

WZS Capital Sdn Bhd Malaysia 100 100 Dormant

Indirect subsidiaryWZS KenKeong Trading Sdn Bhd Malaysia 100 100 Dormant(Formerly known as WZSKenKeong Machinery Sdn Bhd)

(ii) Acquisition of subsidiary

2016

On 4 March 2016, the Company acquired 2 ordinary shares of RM1 each in the share capital of WZS Capital Sdn Bhd(“Capital”), representing 100% equity interest in Capital for a purchase consideration of RM2.

(iii) Disposal of subsidiaries

2016

(a) On 24 February 2016, the Company completed the disposal of the entire issued and paid-up share capital of PTWZ Steel (“PTWZ”), comprising 5,000 ordinary shares of USD100 each, for a cash consideration of USD500,000or approximately RM2,097,430.

(b) On 29 February 2016, the Company completed the disposal of 50% interest in WZS Technologies Sdn Bhd(“WZST”), comprising 2,500,000 ordinary shares of RM1 each, for a cash consideration of RM2,500,000.Subsequent to the disposal, the Group retained significant influence of 20% interest in WZST and the investmentis reclassified as investment in associates.

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(iii) Disposal of subsidiaries (Continued)

The effects of the disposal of the investment in subsidiaries on the financial position of the Group are as follows:-

2016

PTWZ WZST TOTAL RM'000 RM'000 RM'000

Assets Plant and equipment 17,426 11,503 28,929 Deferred tax assets 254 - 254 Inventories 1,856 - 1,856 Trade and other receivables 2,637 1,489 4,126 Prepayments - 198 198 Tax recoverable 67 - 67 Cash and bank balances 480 108 588 22,720 13,298 36,018 Liabilities Trade and other payables 17,652 4,430 22,082 Borrowings 5,105 5,881 10,986 22,757 10,311 33,068 (37) 2,987 2,950 Non-controlling interest - (896) (896) Fair value of retained investment treated as an associate - (597) (597)

Net assets (37) 1,494 1,457 Corporate exercise expense on disposal of subsidiaries 103 24 127 Cash consideration (2,097) (2,500) (4,597)

Gain on disposal of subsidiaries (2,031) (982) (3,013)

Cash consideration 2,097 2,500 4,597 Less: Cash and cash equivalents of subsidiaries *97 (108) (11)

Net cash inflows on disposal 2,194 2,392 4,586

* This represent bank overdraft balance

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(iv) Additional investment in subsidiaries

2017

During the financial year:-

(a) a subsidiary, WZS BinaRaya Sdn Bhd (Formerly known as WZS KenKeong Sdn Bhd) increased its issued and fullypaid ordinary shares from 10,500,000 units to 12,500,000 units amounting to RM2,000,000 and was fully subscribedby the Company;

(b) a subsidiary, WZS Misi Setia Sdn Bhd (Formerly known as Misi Setia Oil & Gas Sdn Bhd) increased its issued andfully paid ordinary shares from 20,000,000 units to 22,000,000 units amounting to RM2,000,000 and was fullysubscribed by the Company;

(c) a subsidiary, WZS Bina Sdn Bhd increased its issued and fully paid ordinary shares from 3,500,000 units to4,500,000 units amounting to RM1,000,000 and was fully subscribed by the Company; and

(d) the Company subscribed for additional 100,000 ordinary shares amounting to RM2 in WZS Geoassets Sdn Bhd.Further to the subscription of shares, the Company’s effective ownership in WZS Geoassets Sdn Bhd increasedfrom 65% to 75%.

2016

During the previous financial year:-

(a) a subsidiary, WZS Powergen Sdn Bhd increased its issued and fully paid ordinary shares from 2,000,000 units to2,500,000 units of RM1 each. The Company subscribed 100,000 ordinary shares of RM1 each in WZS PowergenSdn Bhd. Further to the subscription of shares, the Company’s effective ownership in WZS Powergen Sdn Bhddecreased from 70% to 60%;

(b) a subsidiary, WZS Prisma Sdn Bhd increased its issued and fully paid ordinary shares from 1,000,000 units to2,000,000 units of RM1 each and was fully subscribed by the Company;

(c) a subsidiary, WZS Engineering Sdn Bhd increased its issued and fully paid ordinary shares from 500,000 units to1,000,000 units of RM1 each and was fully subscribed by the Company;

(d) a subsidiary, WZS BinaRaya Sdn Bhd (Formerly known as WZS KenKeong Sdn Bhd) increased its issued and fullypaid ordinary shares from 7,000,000 units to 10,500,000 units of RM1 each and was fully subscribed by theCompany; and

(e) a subsidiary, WZS Bina Sdn Bhd increased its issued and fully paid ordinary shares from 2 units to 3,500,000 unitsof RM1 each and was fully subscribed by the Company.

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9. CLUB MEMBERSHIPS

Group 2017 2016 RM'000 RM'000

Club memberships, at cost 205 205

10. TRADE AND OTHER RECEIVABLES


Non-current Other receivables Other receivables - 4,416 - 6,116 Current Trade receivables Trade receivables 90,977 96,068 - - Amount due from associate companies 3 9 - - Retention sum 23,670 22,217 - -

114,650 118,294 - - Less: Allowance for impairment loss - Trade receivables (472) (2,951) - -

Trade receivables, net 114,178 115,343 - -

Other receivables Other receivables 33,915 11,317 6,885 5,081 Amount due from associate companies 5,151 3,612 5,069 3,587 Amount due from subsidiaries - - 5,531 9,039 Dividend receivable from subsidiaries - - 22,000 - Deposits 17,548 2,035 15,119 48 Advance payment to suppliers - 1,407 - - 56,614 18,371 54,604 17,755 Total trade and other receivables (current) 170,792 133,714 54,604 17,755 Total trade and other receivables (non-current and current) 170,792 138,130 54,604 23,871

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10. TRADE AND OTHER RECEIVABLES (CONTINUED)

Included in other receivables of the Group and of the Company is an amount owing by a former subsidiary company, WengZheng Marketing Sdn Bhd (“WZ Marketing”) of RM6,535,398 (2016: RM9,416,252). During previous financial years, the Grouphad entered into a settlement agreement with WZ Marketing to settle the amount of RM16,535,398 over a period of 3 years with repayment amounts ranging from RM5,000,000 to RM6,535,398 annually.

Included in the other receivables of the Group and of the Company is GST refundable amounted to RM924,977 andRM103,784 respectively (2016: RM905,474 and RM76,862).

Included in the deposit of the Group and of the Company is an amount of RM15,000,000 representing the refundable securitydeposit for the proposed acquisition of 500,000 ordinary shares in Cekap Semenanjung Sdn Bhd as further disclosed in Note35. Included in the other receivables of the Group is an amount advances to subsidiary of Cekap Semenanjung Sdn Bhdamounted to RM10,068,044 (2016: RM nil).

Trade receivables are non-interest bearing and are generally on 30 to 120 (2016: 30 to 120) days terms. They are recognisedat their original amounts which represent their fair values on initial recognition.

The amount due from subsidiaries are unsecured, bear interest at rate of 6.85% (2016: 6.85%) per annum, repayable upondemand and are expected to be settled in cash.

The non-trade amount due from associates are unsecured, bear interest at rate of 6.85% (2016: 6.85%) per annum, repayableupon demand and are expected to be settled in cash.

The trade receivables of the Group in the foreign currencies are as follows:-

Group 2017 2016 RM'000 RM'000

United States Dollar 508 7,077

Analysis of trade receivables

The Group only maintains an ageing analysis in respect of trade receivables.

The ageing analysis of the Group’s trade receivables are as follows:-

Group 2017 2016 RM'000 RM'000

Neither past due nor impaired 79,209 78,355 1 - 30 days past due not impaired 18,463 13,082 31 - 60 days past due not impaired 2,363 7,618 61 - 90 days past due not impaired 3,015 2,052 More than 91 days past due not impaired 11,128 14,236

34,969 36,988 Impaired 472 2,951

114,650 118,294

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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.Most of the Group’s trade receivables arise from long standing customers with the Group.

Included in trade receivables of the Group are amounts totalling of RM28,252,836 (2016: RM20,350,970) due from 1 (2016: 1) of its significant receivables.

Receivables that are past due but not impaired

The Group has not made any allowance for impairment for receivables that are past due but not impaired as there has notbeen a significant change in the credit quality of these receivables and the amounts due are still recoverable.

In determining the recoverability of a trade receivable, the Group considers any change in the credit quality of the tradereceivable from the date the credit was initially granted up to the reporting date. The Group has policies in place to ensurethat credit is extended only to customers with acceptable credit history and payment track records. Allowances for impairmentare made on specific trade receivables when there is objective evidence that the Group will not be able to collect the amountsdue.

Receivables that are impaired

The Group’s trade receivables that are impaired at the reporting date and the movement of the allowance accounts used torecord the impairment are as follows:-

Individually impaired Group 2017 2016 RM'000 RM'000

Trade receivables - nominal amounts 472 2,951 Less: Impairment loss (472) (2,951)

- -

Movement in allowance accounts:-

Group 2017 2016 RM'000 RM'000

Trade receivables At 1 September 2,951 2,819 Impairment loss on trade receivables 68 391 Reversal of impairment loss (332) (259) Written-off (7) - Reclassified to disposal group classified as held for sale (2,208) - At 31 August 472 2,951

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Movement in allowance accounts:- (Continued)

Group 2017 2016 RM'000 RM'000

Other receivables At 1 September - 219 Written-off - (219)

At 31 August - -

Trade receivables that are individually determined to be impaired at the reporting date relate to debtors that are in significantfinancial difficulties and have defaulted on payments. These receivables are not secured by any collateral or creditenhancements.

11. DEFERRED TAX ASSETS/(LIABILITIES)

Deferred tax assets/(liabilities) relate to the following:-

Recognised in other Reclassified At Recognised compre- to liabilities At 1 September in profit Recognised hensive held for 31 August 2016 or loss in equity income sale 2017Group RM'000 RM'000 RM'000 RM'000 RM'000 RM'000

Deferred tax liabilities:-Temporary differences between net carrying amounts and the corresponding tax written down values of property, plant and equipments (2,357) (204) - - 135 (2,426)Revaluation on property (1,378) (164) 109 (2,627) 240 (3,820)Unabsorbed reinvestment allowance 1,234 (1,234) - - - -Other temporary differences 16 264 - - - 280

(2,485) (1,338) 109 (2,627) 375 (5,966)

Deferred tax assets:-Temporary differences between net carrying amounts and the corresponding tax written down values of property, plant andequipments (149) 149 - - - -Other deductible differences 360 (360) - - - -

211 (211) - - - -

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11. DEFERRED TAX ASSETS/(LIABILITIES) (CONTINUED)

Deferred tax assets/(liabilities) relate to the following:- (Continued) At Recognised At 1 September in profit Recognised Disposal of Exchange 31 August 2015 or loss in equity subsidiary differences 2016Group RM'000 RM'000 RM'000 RM'000 RM'000 RM'000

Deferred tax liabilities:-Temporary differences between net carrying amounts and the corresponding tax written down values of property, plant and equipments (930) (1,427) - - - (2,357)Revaluation on property (1,296) 57 (139) - - (1,378)Unabsorbed reinvestment allowance 350 884 - - - 1,234Other temporary differences (117) 133 - - - 16

(1,993) (353) (139) - - (2,485)

Deferred tax assets:-Temporary differences between net carrying amounts and the corresponding tax written down values of property, plant andequipments 254 (403) - - - (149)Unabsorbed tax losses 242 - - (254) 12 -Other deductible differences 175 185 - - - 360

671 (218) - (254) 12 211

Company 2017 2016 RM'000 RM'000

Property, plant and equipment

At 1 September - (4) Recognised in profit or loss (17) 4 At 31 August (17) -

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11. DEFERRED TAX ASSETS/(LIABILITIES) (CONTINUED)

Presented after appropriate offsetting as follows:-


Deferred tax assets - 211 - - Deferred tax liabilities (5,966) (2,485) (17) -

(5,966) (2,274) (17) -

The estimated amounts of temporary differences for which no deferred tax assets are recognised in the financial statementsare as follows:-

Group 2017 2016 RM'000 RM'000

Deductible/(Taxable) temporary differences 3,155 (3) Unutilised tax losses 2,217 2,774

5,372 2,771

Potential deferred tax assets not recognised at 24% 1,289 665

12. INVENTORIES

Group 2017 2016 RM'000 RM'000 At cost Raw materials 11,463 11,578 Work-in-progress 21 3,439 Finished goods 16,957 14,920

28,441 29,937 At net realisable value Finished goods 235 249

28,676 30,186

The cost of inventories of the Group recognised as expense in cost of sales during the financial year is RM90,852,007 (2016:RM116,598,572).

The cost of inventories of the Group recognised as expense in cost of sales during the financial year in respect of write-downof inventories to net realisable value was RM263,233 (2016: RM225,041).

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13. AMOUNT DUE FROM/(TO) CONTRACT CUSTOMERS

Group 2017 2016 RM'000 RM'000

Aggregrate of costs incurred to date 883,023 583,814 Attributable profits 181,499 125,374 1,064,522 709,188 Recognised losses on contacts with customers (244) - Progress billings (965,620) (670,924) 98,658 38,264

Represented by:- Amount due from contract customers 108,682 51,057 Amount due to contract customers (10,024) (12,793) 98,658 38,264

14. DERIVATIVE FINANCIAL ASSETS/(LIABILITIES)

Group Group 2017 2016 Assets Liabilities Assets Liabilities RM'000 RM'000 RM'000 RM'000

Derivatives used for hedging:- Forward foreign contract exchange contracts - buy contracts 9 (27) 95 (73)

Forward exchange contracts are used to manage the foreign exchange currency exposures arising from the Group’sreceivables and payables denominated in currencies other than the functional currencies of the Group. Most of the foreignexchange contracts have maturities of less than one year after the end of the reporting period. When necessary, the forwardcontracts are rolled over at maturity. The notional principal amounts of the Group’s outstanding forward foreign exchangecontracts were RM4,103,084 (2016: RM9,495,792).

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15. SHORT TERM DEPOSITS, CASH AND BANK BALANCES


Cash on hand and at banks 90,637 110,345 73,202 77,768 Deposits with licensed banks - 17,979 - 5,228

Cash and bank balances 90,637 128,324 73,202 82,996 Less: Bank overdrafts (Note 19) (14,265) (11,969) - - 76,372 116,355 73,202 82,996 Deposits pledged to licensed bank - (12,751) - -

Cash and cash equivalents 76,372 103,604 73,202 82,996

The foreign currency exposure profile of cash and bank balances are as follows:-

Group 2017 2016 RM'000 RM'000

United States Dollar 754 1,650

During the previous financial year, the deposits with licensed banks of the Group amounting to RM12,750,887 have beenpledged to licensed banks for banking facilities granted to subsidiaries. The fixed deposits of the Group earn interest at ratesranging from 2.55% to 3.35% per annum. The deposits of the Group have maturity period ranged from 30 days to 365 days.

16. ASSETS/(LIABILITIES) OF DISPOSAL GROUP CLASSIFIED AS HELD FOR SALE

On 22 August 2017, the Company entered into Share Sale Agreement (“SSA”) to dispose of its subsidiary, Weng ZhengTrading Sdn Bhd (“WZ Trading”).

As at the end of the financial year, the disposal of WZ Trading is not yet completed as a certain condition precedent as statedin the SSA has not been met.

The assets and liabilities related to WZ Trading are being presented in the consolidated statement of financial position as“Assets of disposal group classified as held for sale” and “Liabilities of disposal group classified as held for sale”.

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16. ASSETS/(LIABILITIES) OF DISPOSALGROUP CLASSIFIED AS HELD FOR SALE (CONTINUED)

The major classes of assets and liabilities of WZ Trading classified as held for sale are as follows:-

Group 2017 RM'000

Assets Property, plant and equipment 11,350 Inventories 4,744 Trade and other receivables 9,754 Prepayment 62 Tax recoverable 229 Cash and bank balances 139

Assets of disposal group classified as held for sale 26,278

Liabilities Deferred tax liabilities 375 Trade and other payables 6,868 Short term borrowings 8,692

Liabilities of disposal group classified as held for sale 15,935 The asset classified as held for sale on the Company’s statement of financial position as at 31 August 2017 is as follows:-

Company 2017 RM'000

Asset Investment in a subsidiary 8,726

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17. SHARE CAPITAL

Group and Company 2017 2016 2017 2016 Number of shares Amount Units('000) Units('000) RM'000 RM'000

Issued and fully paid:- At 1 September 335,867 252,909 167,934 126,455 Issuance of ordinary shares pursuant to:- - Bonus issue - 55,648 - 27,824 - Exercise of warrants 13,007 2,019 6,504 1,010 - Private placement - 25,291 - 12,645 - Transition to no-par value regime on 31 January 2017 under the Companies Act 2016 - - 57,222 -

At 31 August - ordinary shares with no par value (2016:par value of RM0.50 each) 348,874 335,867 231,660 167,934

The new Companies Act 2016 (the ‘’Act’’), which came into operation on 31 January 2017, abolished the concept of authorisedshare capital and par value of share capital. Consequently, the amounts standing to the credit of the share premium accountof RM57.22 million become part of the Company’s share capital pursuant to the transitional provisions set out in Section618(2) of the Act. Notwithstanding this provision, the Company may within 24 months from the commencement of the Act usethe amount standing to the credit of its share premium account of RM57.22 million for purposes as set out in Sections 618(3).There is no impact on the number of ordinary shares in issue or the relative entitlement of any of the members as a result ofthis transition.

During the financial year, the issued and paid-up capital of the Company increased from 335,867,395 units to 348,874,195units by way of the issuance of 13,006,800 new ordinary shares arising from the exercise of warrants at an exercise price ofRM0.50.

The new ordinary shares issued during the financial year rank pari-passu in all respects with the existing ordinary shares ofthe Company.

The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote pershare at meetings of the Company. All ordinary shares rank equally with regard to the Company’s residual assets.

Warrants

The Warrants issued on 29 October 2014 are constituted under a Deed Poll dated 9 October 2014 executed by the Company.The Warrants are listed on the Bursa Malaysia Securities Berhad.

The movement of Warrants during the financial year ended 31 August 2017 are stated as below:-

Number of Warrants ('000) At At 1.9.2016 Exercised 31.8.2017

Warrants 111,588 (13,007) 98,581

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17. SHARE CAPITAL (CONTINUED)

Warrants (Continued)

The salient features of the Warrants are as follows:-

(i) Each Warrant entitles the registered holder/(s) at any time prior to 28 October 2024 to subscribe for one (1) new ordinaryshare at RM0.50 each. The Warrants entitlement is subject to adjustments under the terms and conditions as set out inthe Deed Poll dated 9 October 2014;

(ii) The exercise period is ten (10) years from the date of issuance until the maturity date. Upon the expiry of the exerciseperiod, any unexercised rights will lapse and cease to be valid for any purposes; and

(iii) The holders of the Warrants are not entitled to vote in any general meetings or to participate in any dividends, rights,allotment and/or other forms of distribution other than on winding-up, compromise or arrangement of the Company unlessand until the holders of the Warrants become a shareholder of the Company by exercising his Warrants into new sharesor unless otherwise resolved by the Company in general meeting.

18. RESERVES


Share premium - 57,222 - 57,222 Revaluation reserve 19,307 5,036 - - Retained earnings 80,707 65,458 20,297 4,036

100,014 127,716 20,297 61,258

Revaluation reserve

The revaluation reserve represents increases in the fair value of freehold land and building, leasehold land and building andlow cost apartments, net of tax, and decreases to the extent that such decrease relates to an increase on the same assetpreviously recognised in other comprehensive income.

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19. BORROWINGS


Current Secured Finance lease liabilities 6,402 5,381 104 257 Floating rate bank loan 1,820 1,820 - - Bank overdrafts - 37 - - Trade financing 2,072 27,457 - - Unsecured Bank overdrafts 14,265 11,932 - - Trade financing 80,189 33,687 - -

104,748 80,314 104 257

Non-current Secured Finance lease liabilities 16,663 13,303 44 229 Floating rate bank loan 916 2,596 - -

17,579 15,899 44 229

Total borrowings 122,327 96,213 148 486

Floating rate bank loan of a subsidiary of RM2,735,832 (2016: RM4,415,832) bear interest at 5.5% (2016: 5.5%) per annumand is repayable by monthly instalments of RM140,000 and interest shall be calculated monthly and repaid in arrears over 5 years commencing from first day of the month following the month of full drawdown of the loan or the expiry of the availabilityperiod, whichever is earlier.

(i) Finance lease liabilities


Minimum lease payment:-

Within one year 7,573 6,364 107 272 Later than one year but not later than five years 18,043 14,600 45 235

Later than five years - 16 - -

25,616 20,980 152 507 Future interest charge (2,551) (2,296) (4) (21)

Present value of minimum lease payment 23,065 18,684 148 486

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19. BORROWINGS (CONTINUED)

(i) Finance lease liabilities (Continued)


Represented by:-

Current - On demand and within one year 6,402 5,381 104 257

Non-current - Later than one year but not later than five years 16,663 13,288 44 229

- Later than five years - 15 - -

23,065 18,684 148 486

The effective interest rate ranges from 3.22% to 7.03% (2016: 3.22% to 7.03%) per annum. Interest rates are fixed atthe inception of the finance lease arrangements.

The finance lease liabilities are effectively secured on the rights of the assets under finance lease.

(ii) Borrowings

The remaining maturities of the borrowings (excluding finance lease liabilities) as at 31 August 2017 are as follows:-

Group 2017 2016 RM'000 RM'000

On demand and within one year 98,346 74,933 Later than one year but not later than two years 916 1,680 Later than two years but not later than five years - 916

99,262 77,529

The borrowings of the Group are secured by:-

(a) Legal charges over the freehold land and building of a subsidiary as mentioned in Note 5; and

(b) Corporate guarantee given by the Company.

Effective interest rates per annum:-

Group 2017 2016 % %

Floating rate bank loan 5.50 5.50 Bank overdrafts 7.30 to 8.00 7.25 to 8.20 Trade financing 4.20 to 8.25 4.10 to 8.10

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20. TRADE AND OTHER PAYABLES


Trade payables Trade payables 60,413 63,029 - - Retention sums 12,685 9,856 - - Accrued costs 18,383 3,396 - -

Total trade payables 91,481 76,281 - - Other payables Accruals 2,107 2,823 22 73 Other payables 8,304 4,966 6,526 381 Amount due to subsidiary - - 1,977 8,868 Refundable deposits - 27 - - Advance payment from contract customers 6,326 10,046 - -

Total other payables 16,737 17,862 8,525 9,322

Total trade and other payables 108,218 94,143 8,525 9,322

The trade and other payables are non-interest bearing and are normally settled on 30 to 120 (2016: 30 to 120) days terms.

The amounts due to subsidiary are unsecured, bear interest at rate of 6.85% (2016: 6.85%) per annum, repayable upondemand and are expected to be settled in cash.

Included in other payables of the Group is GST payables amounted to RM376,388 (2016: RM576,667).

The advance payment received from contract customers which are unsecured and interest free.

The foreign currency exposure profile of trade payables are as follows:-

Group 2017 2016 RM'000 RM'000

United States Dollar 3,128 4,831 Singapore Dollar 496 519 Euro 534 340 Pound Sterling - 141 New Taiwan Dollar 9 41

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21. PROVISION FOR LIABLITIES

Group 2017 2016 RM'000 RM'000

At 1 September 24 359 Utilised during the year - (56) Reversal during the year - (279)

At 31 August 24 24

Provision for liquidated and ascertained damages is recognised in respect of the delayed projects undertaken by a subsidiary.

The provision has been recognised for the expected liquidated ascertained damages claims based on the applicable termsand conditions stated in the purchase order.

22. REVENUE


Construction revenue 415,966 320,079 - - Sale of goods 139,521 139,549 - - Services rendered 4,641 6,062 - - Dividend income - Subsidiaries - - 29,500 3,500 - Associates - - 5,190 3,000 Others 320 243 55 77 560,448 465,933 34,745 6,577

23. COST OF SALES


Construction costs 352,256 260,237 - - Cost of goods sold 112,587 120,987 - - Services rendered 3,570 3,250 - - 468,413 384,474 - -

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24. FINANCE COSTS


Interest expense on:- - Finance lease liabilities 1,494 1,102 15 21 - Trade financing 5,613 4,156 - - - Term loan 186 263 - - - Bank overdrafts 450 505 - - - Loan from a subsidiary - - 170 89 7,743 6,026 185 110

25. PROFIT BEFORE TAXATION

Profit before taxation has been arrived at:-


This is stated after charging:-

Auditors’ remuneration - current year 209 226 40 40 - (over)/underprovision in prior year (8) 76 - 13 Bad debts written off 11 - - - Depreciation of property, plant and equipment 11,553 7,300 211 170 Directors’ emoluments 4,254 4,581 1,163 2,154 Directors’ fees 432 306 408 296 Impairment loss on investment in associate - - 1,283 - Impairment loss on investment in subsidiaries - - 3,905 - Impairment loss on receivables 68 391 - - Loss on foreign exchange-realised - 694 - - Net fair value loss on derivatives 40 - - - Net loss on financial asset measured at amortised cost - 772 - - Property, plant and equipment written off 130 51 - - Rental of heavy machineries 20,642 12,505 - - Rental of house - 619 - - Rental of land 1,683 5,900 - - Rental of motor vehicles 305 712 - - Rental of office equipment 161 152 - - Rental of premises 856 1,018 - - Rental of store 18 26 - - Staff costs (excluding directors) 61,097 42,291 2,294 1,452

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25. PROFIT BEFORE TAXATION (CONTINUED)

Profit before taxation has been arrived at:- (Continued)


And crediting:- Gain on disposal of property, plant and equipment 3,553 648 - - Gain on disposal of subsidiaries - 3,013 - 39 Gain on foreign exchange - realised 955 20 - - - unrealised 465 160 - - Interest income - subsidiary companies - - 1,061 520 - others 2,663 2,817 2,045 1,914 Net fair value gain on derivatives - 22 - - Net gain on financial asset measured at amortised cost 2,464 - 419 - Rental income from - factory/office 204 629 - - - others 169 - - - Reversal of impairment loss on receivables 332 259 - - Reversal of provision of liabilities - 279 - -

Staff costs (excluding directors) Salaries and wages 46,746 37,027 1,971 1,244 Contributions to defined contribution plans 5,133 3,914 239 153 Social security contribution 441 293 13 9 Other benefits 8,777 1,057 71 46 61,097 42,291 2,294 1,452

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26. DIRECTORS’ REMUNERATION

The details of remuneration receivable by directors of the Group and of the Company during the year are as follows:-


Executive:- - Salaries and other emoluments 3,759 4,070 1,008 1,898 - Defined contribution plans 461 479 121 224

Total Executive Directors' remuneration 4,220 4,549 1,129 2,122

Non-Executive:- - Fees 432 306 408 296 - Other emoluments 34 32 34 32

Total Non-Executive Directors' remuneration 466 338 442 328

Total Directors' remuneration 4,686 4,887 1,571 2,450

The estimated monetary value of benefits-in-kind received by the Directors otherwise than in cash from the Group and the

Company amounted to RM44,263 (2016: RM44,742) and RM19,056 (2016: RM35,200) respectively.

27. TAXATION


Malaysian income tax expense:- - current year 5,284 4,107 500 - - under provision in prior years 178 298 285 - 5,462 4,405 785 -

Deferred taxation (Note 11):- - current year 1,808 648 (4) (4) - (over)/under provision in prior years (259) (77) 21 - 1,549 571 17 (4)

Real property gain tax:- - current year 165 - - -

Income tax expense recognised in profit or loss 7,176 4,976 802 (4)

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27. TAXATION (CONTINUED)

A reconciliation of income tax expense applicable to profit before taxation at the statutory income tax rate to income taxexpense at the effective income tax rate of the Group and of the Company is as follows:-


Profit before taxation 32,682 27,996 27,529 5,183

Tax at applicable tax rate of 24% (2016: 24%) 7,844 6,719 6,607 1,244 Tax effects arising from:- - Crystallisation of deferred tax liabilities arising from revaluation (25) (27) - - - Deferred tax asset not recognised 624 176 - - - Effects of tax incentive - reinvestment allowances (405) (1,077) - - - double deduction - (45) - - - Non-deductible expenses 1,773 1,911 2,318 832 - Non-taxable income (1,213) (648) (8,429) (2,080) - Real property gain tax 165 - - - - Share of results in associates (1,128) (2,254) - - - Tax saving on reduction on income tax rate (161) - - - - Under/(over) provision in prior years - income tax expense 178 298 285 - - deferred tax (259) (77) 21 - - Utilisation of deferred tax assets previously not recognised (217) - - - Tax expense for the financial year 7,176 4,976 802 (4)

28. EARNINGS PER SHARE

Basic earnings per share

Basic earnings per share is calculated by dividing the net profit for the financial year attributable to owners of the Companyby the weighted average number of ordinary shares outstanding during the financial year:-

Group 2017 2016 RM'000 RM'000

Basic Profit attributable to owners of the Company 25,408 23,072

Weighted average number of ordinary shares for basic earnings per share (units) 347,502 329,648

Basic earnings per ordinary share (sen) 7.31 7.00

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28. EARNINGS PER SHARE (CONTINUED)

Diluted earnings per share

Diluted earnings per share is calculated by dividing the profit for the financial year attributable to owners of the Company bythe weighted average number of shares outstanding during the financial year plus the weighted average number of ordinaryshares that would be issued on conversion of the Warrants into ordinary shares.

Group 2017 2016 RM'000 RM'000

Diluted Profit attributable to owners of the Company 25,408 23,072

Weighted average number of ordinary shares for basic earnings per share (units) 347,502 329,648 Effect from dilution from Warrants 55,726 64,791 403,228 394,439

Diluted earnings per ordinary share (sen) 6.30 5.85

29. DIVIDENDS

Final and special dividends of 2 sen and 1 sen per ordinary share respectively in respect of the financial year ended 31 August2016 as reported on that year, paid on 1 March 2017.

At the forthcoming Annual General Meeting, a first and final dividend of 2 sen per ordinary share in respect of the currentfinancial year will be proposed for shareholders approval. The financial statements for the current financial year do not reflectthis proposed dividend. Such dividend, if approved by the shareholders, will be accounted for in equity as an appropriation ofretained earnings in the financial year ending 31 August 2018.

30. RELATED PARTIES

(i) Identification of related parties

Parties are considered to be related to the Group if the Group has the ability, directly or indirectly, to control the partyor exercise significant influence over the party in making financial and operational decisions, or vice versa, or wherethe Group and the party are subject to common control. Related parties may be individuals or other entities.

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30. RELATED PARTIES (CONTINUED)

(i) Identification of related parties (Continued)

Related parties of the Group include:-

(a) subsidiaries;

(b) associates;

(c) joint operations;

(d) related companies in which directors have substantial financial interest; and

(e) key management personnel of the Group’s, comprise persons (including directors) having the authority andresponsibility for planning, directing and controlling the activities directly or indirectly.

(ii) Significant related party transactions

The significant related party transactions of the Group and of the Company are as follows:-

Group Company 2017 2016 2017 2016 RM'000 RM'000 RM'000 RM'000 Associates - Sales - 308 - - - Purchases (1,555) - - - - Dividend income - - 5,190 3,000 - Interest income 288 - 288 - - Management fees 12 - 12 -

Company in which certain directors have substantial interests - Rental income 106 120 - - - Rental expenses (396) - - -

Subsidiaries - Management fees - - 43 59 - Interest income - - 1,061 520 - Dividend income - - 29,500 3,500 - Interest expenses - - (170) (89)

The management fees were charged based on recovery of costs incurred on behalf of the subsidiaries and associates.

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30. RELATED PARTIES (CONTINUED)

(iii) Compensation of key management personnel


Short-term employee benefits 6,984 6,375 2,180 2,226 Post-employment employee benefits 763 701 203 224

7,747 7,076 2,383 2,450

31. FINANCIAL INSTRUMENTS

(i) Categories of financial instruments

The following table analyses the financial assets and liabilities in the statements of financial position by the class offinancial instruments to which they are assigned, and therefore by the measurement basis:-

(a) Loans and receivables (“L&R”)

(b) Fair value through profit or loss (“FVTPL”)- Derivative used for hedging

(c) Other financial liabilities (“FL”)

Derivatives Carrying used for amount L&R/FL hedging

RM'000 RM'000 RM'000

Group 31 August 2017 Financial assets Trade and other receivables 169,867 169,867 - Amount due from contract customers 108,682 108,682 - Derivative financial assets 9 - 9 Short term deposits, cash and bank balances 90,637 90,637 - 369,195 369,186 9

Financial liabilities Trade and other payables 101,516 101,516 - Borrowings 122,327 122,327 - Derivative financial liabilities 27 - 27 223,870 223,843 27

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31. FINANCIAL INSTRUMENTS (CONTINUED)

(i) Categories of financial instruments (Continued)

Derivatives Carrying used for amount L&R/FL hedging

RM'000 RM'000 RM'000

Group 31 August 2016 Financial assets Trade and other receivables 137,225 137,225 - Amount due from contract customers 51,057 51,057 - Derivative financial assets 95 - 95 Short term deposits, cash and bank balances 128,324 128,324 - 316,701 316,606 95

Financial liabilities Trade and other payables 83,520 83,520 - Borrowings 96,213 96,213 - Derivative financial liabilities 73 - 73 179,806 179,733 73

Company 31 August 2017 Financial assets Trade and other receivables 54,500 54,500 - Short term deposits, cash and bank balances 73,202 73,202 -

127,702 127,702 -

Financial liabilities Trade and other payables 8,525 8,525 - Borrowings 148 148 -

8,673 8,673 -

31 August 2016 Financial assets Trade and other receivables 23,794 23,794 - Short term deposits, cash and bank balances 82,996 82,996 -

106,790 106,790 -

Financial liabilities Trade and other payables 9,322 9,322 - Borrowings 486 486 -

9,808 9,808 -

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31. FINANCIAL INSTRUMENTS (CONTINUED)

(ii) Fair value of financial instruments

The carrying amounts of the current portion of borrowings are reasonable approximations of fair values due to theinsignificant impact of discounting.

The carrying amounts of cash and cash equivalents, receivables, payables and short term borrowings are reasonableapproximation of fair values due to the relatively short term nature of these financial instruments.

There has been no transfer between Level 1 and Level 2 during the financial year (2016: no transfer in either direction).

Other than those carrying amounts with reasonable approximation of fair value, the fair value of other financial assetsand liabilities together with the carrying amount shown in the statements of financial position are as follows:-

2017 2016 Carrying Carrying amount Fair value amount Fair value RM'000 RM'000 RM'000 RM'000

Group Derivative financial (liabilities)/asset (18) (18) 22 22 Finance lease liabilities 23,065 22,426 18,684 18,640

Company Finance lease liabilities 148 144 486 460

The fair values of finance lease liabilities are estimated by discounting expected future cash flows at market incrementallending rate for similar types of lending, borrowing or leasing arrangements at the reporting date.

The Group classifies fair value measurements using a fair value hierarchy that reflects the significance of the inputsused in making the measurements. The fair value hierarchy has the following levels:-

• Level 1 – 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 inputs).

The fair value of derivative financial (liabilities)/asset of the Group and of the Company are categorised as Level 1.

The fair value of finance lease liabilities of the Group and of the Company are categorised as Level 2.

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32. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

The Group’s and the Company’s activities are exposed to a variety of financial risks arising from their operations and the useof financial instruments. The key financial risks include interest rate risk, foreign currency risk, liquidity risk and credit risk.The Group’s and the Company's overall financial risk management objective is to optimise value for their shareholders. TheGroup and the Company do not trade in financial instruments.

The Board of Directors reviews and agrees to policies and procedures for the management of these risks, which are executedby the Group’s senior management. The audit committee provides independent oversight to the effectiveness of the riskmanagement process.

(i) Interest rate risk

Interest rate risk arises on interest-bearing financial instruments recognised in the statement of financial position. It willaffect the Group’s income or the value of its holdings of financial instruments.

The Group’s exposures to interest rate risk for changes in interest rates mainly arise from its short term borrowings andterm loans with floating interest rate. Interest rate risk is managed by the Group on an on-going basis with the primaryobjective of limiting the extent to which net interest expense could be affected by an adverse movement in interest rates.

Sensitivity analysis for interest rate risk

At the end of the financial year, if interest rates had been 25 basis points lower/higher, with all other variables heldconstant, the Group’s profit after tax would have been RM248,155 (2016: RM193,823) higher/lower, arising mainly as aresult of lower/higher interest expense on floating rate loans and borrowings.

(ii) Foreign currency risk

Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because ofchanges in foreign exchange rates. The Group’s exposure to the risk rates relates primarily to the Group’s operatingactivities (when sales and purchases that are denominated in foreign currency).

Based on carrying amounts as at the end of the financial year, the material foreign currency denominated financial assetsand liabilities which expose the Group to currency risk are disclosed below:-

United States Singapore Dollar Dollar Euro Total

31 August 2017 RM'000 RM'000 RM'000 RM'000

Trade receivables 508 - - 508 Cash and bank balances 754 - - 754 Trade payables (3,128) (496) (534) (4,158)

Net exposure (1,866) (496) (534) (2,896)

31 August 2016

Trade receivables 7,077 - - 7,077 Cash and bank balances 1,650 - - 1,650 Trade payables (4,831) (519) (340) (5,690)

Net exposure 3,896 (519) (340) 3,037

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32. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTINUED)

(ii) Foreign currency risk (Continued)

Sensitivity analysis for foreign currency risk

The following demonstrates the sensitivity of the Group’s profit after tax to a reasonably possible change in the UnitedStates Dollar, Singapore Dollar and Euro against the Ringgit Malaysia, with all other variables held constant.

2017 2016 RM'000 RM'000

United States Dollar/RM - strengthened 5% (93) 195 - weakened 5% 93 (195)

Singapore Dollar/RM - strengthened 5% (25) (26) - weakened 5% 25 26

Euro/RM - strengthened 5% (27) (17) - weakened 5% 27 17

(iii) Liquidity risk

Liquidity risk is the risk that the Group or the Company will encounter difficulty in meeting financial obligations when theyfall due. The Group's and the Company’s exposure to liquidity risk arise primarily from mismatches of the maturitiesbetween financial assets and liabilities. The Group’s and the Company’s exposure to liquidity risk arise principally fromtrade and other payables, loans and borrowings.

Maturity analysis

The maturity analysis of the Group’s and the Company’s financial liabilities by their relevant maturity at the reportingdate are based on contractual undiscounted repayment obligation as follows:-

More than 1 year On demand or but not Carrying Contractual less than 1 later than 5 More than 5 amount cashflows year years years RM'000 RM'000 RM'000 RM'000 RM'000 Group At 31 August 2017 Trade and other payables 101,516 101,516 101,516 - - Derivative financial liabilities 27 27 27 - - Finance lease liabilities 23,065 25,616 7,573 18,043 - Floating rate bank loan 2,736 2,858 1,926 932 - Short term borrowings 96,526 101,248 101,248 - - Financial guarantee - 7,498 - - - 223,870 238,763 212,290 18,975 -

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(iii) Liquidity risk (Continued)

Maturity analysis (Continued)

More than 1 year On demand or but not Carrying Contractual less than 1 later than 5 More than 5 amount cashflows year years years RM'000 RM'000 RM'000 RM'000 RM'000

Group At 31 August 2016 Trade and other payables 83,520 83,520 83,520 - - Derivative financial liabilities 73 73 73 - - Finance lease liabilities 18,684 20,980 6,364 14,600 16 Floating rate bank loan 4,416 4,741 2,123 2,618 - Short term borrowings 73,113 77,821 77,821 - - Financial guarantee - 5,545 - - - 179,806 192,680 169,901 17,218 16

Company At 31 August 2017 Trade and other payables 8,525 8,525 8,525 - - Finance lease liabilities 148 152 107 45 - Financial guarantee - 121,002 - - - 8,673 129,679 8,632 45 -

At 31 August 2016 Trade and other payables 9,322 9,322 9,322 - - Finance lease liabilities 486 507 272 235 - Financial guarantee - 84,495 - - - 9,808 94,324 9,594 235 -

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(iv) Credit risk

Trade and other receivables

Credit risk is the risk of financial loss to the Group and the Company that may arise on outstanding financial instrumentsshould a counterparty default on its obligations. The Group’s and the Company’s exposure to credit risk arises primarilyfrom trade and other receivables. The Group and the Company have a credit policy in place and the exposure to creditrisk is managed through the application of credit approvals, credit limits and monitoring procedures. For other financialassets, the Group and the Company minimise credit risk by dealing with high credit rating counterparties.

As at the end of the reporting period, the maximum exposure to credit risk arising from trade and other receivables isrepresented by their carrying amounts in the statements of financial position. The carrying amount of trade and otherreceivables are not secured by any collateral or supported by any other credit enhancements. In determining therecoverability of these receivables, the Group and the Company consider any change in the credit quality of thereceivables from the date the credit was initially granted up to the reporting date. The Group and the Company haveadopted a policy of dealing with creditworthy counterparties as a means of mitigating the risk of financial loss fromdefaults.

The Group and the Company use ageing analysis to monitor the credit quality of the trade receivables. The ageing oftrade receivables as at the end of the financial year is disclosed in Note 10. Trade receivables that are neither past duenor impaired are creditworthy debtors with good payment records with the Group and the Company. A significant portionof these trade receivables are regular customers that have been transacting with the Group and the Company.Management has taken reasonable steps to ensure that trade receivables that are neither past due nor impaired arestated at their realisable values. Impairment are made on specific receivables when there is objective evidence that theGroup and the Company will not be able to collect all amounts due.

The Group and the Company monitor the results of the subsidiaries and associate companies in determining therecoverability of these intercompany balances.

Financial guarantee

The Group and the Company are exposed to credit risk in relation to financial guarantees given to banks in respect ofloans granted to certain subsidiaries. The Group and Company monitors the results of the subsidiaries and associatesfor their repayment on an on-going basis. The maximum exposure to credit risks amounts to RM7,498,000 (2016:RM5,545,000) and RM121,002,000 (2016: RM84,495,000) representing the maximum amount the Group and theCompany could pay if the guarantee is called on as disclosed in Note 36.

The financial guarantee has not been recognised since the fair value on initial recognition was not material.

Credit risk concentration profile

The information on credit risk concentration is disclosed in Note 10 to the financial statements.

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33. CAPITAL MANAGEMENT

The primary objective of the Group’s and of the Company’s capital management is to ensure that they maintain a strong creditrating and healthy capital ratio in order to support their business and maximise shareholder value. The Group and theCompany manage their capital structure and make adjustments to it, in light of changes in economic conditions. To maintainor adjust the capital structure, the Group and the Company may adjust the dividend payment to shareholders, return capitalto shareholders or issue new shares. No changes were made in the objectives, policies and processes during the financialyear ended 31 August 2017 and 31 August 2016.

The debt-to-equity ratios at 31 August 2017 and 31 August 2016 are as follows:-

Group 2017 2016 RM'000 RM'000

Total loans and borrowings 122,327 96,213 Less: Cash and bank balances (90,637) (128,324)

Net debt/(cash) 31,690 (32,111)

Total equity 333,161 297,093

Debt-to-equity ratio 0.10 -

34. SEGMENTAL REPORTING

The Group prepared the following segment information in accordance with MFRS 8 Operating Segments based on the internalreports of the Group’s strategic business units which are regularly reviewed by the Group’s Chief Executive Officer (“CEO”)for the purpose of making decisions about resource allocation and performance assessment.

The four reportable operating segments are as follows:-

Segments Products and servicesCivil engineering and construction Securing and carrying out construction contracts Oil and gas Contractor, sub-contractor, carry on fabrication & assembly and testing works, trading and after service of products for oil and gas industriesMining Mining operations and activitiesManufacturing Manufacturing of steel productsInvestment Investment holding

Other non-reportable segments comprise mineral resources business and power generation business which are below thequantitative thresholds for determining operating segments.

The inter-segment transactions have been entered into in the normal course of business and have been established on termsand conditions that are not materially different from those obtainable in transactions with unrelated parties.

Segment profit Segment performance is used to measure performance as Group’s Chief Executive Officer believes that such information is

the most relevant in evaluating the results of certain segments relative to other entities that operate within these industries.Performance is evaluated based on operating profit or loss which is measured differently from operating profit or loss in theconsolidated financial statements.

Segment assets and liabilities The total of segment assets and liabilities is measured based on all assets and liabilities (excluding investment in associates)

of a segment, as included in the internal reports that are reviewed by the Group’s Chief Executive Officer.

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34.

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34. SEGMENTAL REPORTING (CONTINUED)

(i) Operating Segment (Continued)

Reconciliation of reportable segment revenue, profit or loss, assets and liabilities are as follows:-

A. Inter-segment revenue

Inter-segment revenues are eliminated on consolidation.

B. Reconciliation of profit or loss

2017 2016 RM'000 RM'000

Share of results of associates 4,701 9,392 Dividend income from associates (5,190) (3,000) Elimination of inter-segment transactions (22,194) (448)

(22,683) 5,944 Less: Taxation - (222)

(22,683) 5,722

C. Reconciliation of assets

2017 2016 RM'000 RM'000 Investment in subsidiaries (130,787) (128,692) Goodwill on consolidation 41,024 41,024 Inter-segment assets (49,332) (30,235)

(139,095) (117,903)

D. Reconciliation of liabilities

2017 2016 RM'000 RM'000

Inter-segment liabilities (42,462) (28,572)

(ii) Information about major customer

For civil engineering and construction segment, revenue from one (2016: two) customers represented approximatelyRM137,491,000 (2016: RM141,601,000) for the Group’s total revenue.

(iii) Geographical information

The Group operates predominantly in Malaysia and hence, no geographical segment is presented.


35. SIGNIFICANT EVENTS

(i) On 10 February 2017, the Company entered into a conditional Share Sale Agreement (“SSA”) to acquire 500,000 ordinaryshares in Cekap Semenanjung Sdn Bhd (“Cekap Semenanjung”), representing the entire ordinary equity interest inCekap Semenanjung. Cekap Semenanjung is the beneficial owner of the entire ordinary equity interest in Sinergi DayangSdn Bhd. As at the end of the financial year, the acquisition is not yet completed as certain conditions precedent asstated in the SSA have not been meet.

(ii) On 22 August 2017, the Company entered into a Share Sale Agreement (“SSA”) for the proposed disposal of 2,000,000ordinary shares of RM1 each in Weng Zheng Trading Sdn Bhd (a subsidiary company of WZ Satu Berhad at the time ofdisposal) (“WZ Trading”) for a cash consideration of RM22,800,000 (“Proposed Disposal”). As at the end of the financialyear, the disposal of WZ Trading is not yet completed as a certain condition precedent as stated in the SSA has notbeen meet.

36. GUARANTEES


Guarantee given to financial institution in respect of credit facilities granted to subsidiaries - - 744,760 576,414

Amount of banking facilities utilised by subsidiaries as at the financial year - - 113,504 78,950

Guarantee given to financial institution in respect of credit facilities granted to associate 8,214 6,374 8,214 6,374

Amount of banking facilities utilised by associate as at the financial year 7,498 5,545 7,498 5,545

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37. CAPITAL AND OTHER COMMITMENTS

(i) Capital commitments

The Group has made commitments for the following capital expenditure:-

Group 2017 2016 RM'000 RM'000

Contracted and not provided for 11,558 12,366 Authorised and not contracted for 6,370 33,419 17,928 45,785

Share of an associate capital commitment - 1,842

(ii) Operating lease commitment - as lessee

The Group leases a number of site office and equipment under operating leases for average lease term between five toten years, with option to renew the lease at the end of the lease term.

Future minimum rental payable under the non-cancellable operating lease at the reporting date is as follows:-

Group 2017 2016 RM'000 RM'000

Not later than one year 2,165 2,180 More than one year but not later than five years 6,108 6,575 More than five years - 577 8,273 9,332

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On 25 March 2010, Bursa Malaysia Securities Berhad (Bursa Malaysia) issued a directive to all listed issuers pursuant toParagraphs 2.06 and 2.23 of the Bursa Malaysia Main Market Listing Requirements. The directive requires all listed issuers todisclose the breakdown of the unappropriated profits or accumulated losses as at the end of the reporting period, into realised andunrealised profits or losses.

On 20 December 2010, Bursa Malaysia further issued another directive on the disclosure and the prescribed format of presentation.

The breakdown of the retained earnings of the Group and of the Company as at 31 August 2017, into realised and unrealisedprofits, pursuant to the directive, is as follows:-


Total retained earnings of the Company and its subsidiaries- Realised 88,320 76,812 20,297 4,036- Unrealised (635) (2,114) - -

87,685 74,698 20,297 4,036Associates - Realised 26,006 29,043 - -- Unrealised (889) (888) - -

112,802 102,853 20,297 4,036Less: Consolidation adjustment (32,095) (37,395) - -

80,707 65,458 20,297 4,036

The determination of realised and unrealised profits or losses is compiled based on the Guidance on Special Matter No.1,Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia SecuritiesBerhad Listing Requirements, issued by the Malaysian Institute of Accountants on 20 December 2010.

The disclosure of realised and unrealised profits or losses above is solely for complying with the disclosure requirements stipulatedin the directive of Bursa Malaysia and should not be applied for any other purposes.

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SUPPLEMENTARY INFORMATION ON THE DISCLOSURES OF REALISED AND UNREALISED PROFITS OR LOSSES

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We, YM TENGKU DATO’ SRI UZIR BIN TENGKU DATO’ UBAIDILLAH and DATO’ Ir. WILLIAM TAN CHEE KEONG, being twoof the directors of WZ Satu Berhad, do hereby state that in the opinion of the directors, the accompanying financial statements setout on pages 51 to 135 are drawn up in accordance with Malaysian Financial Reporting Standards, International Financial ReportingStandards and the requirements of Companies Act 2016 in Malaysia so as to give a true and fair view of financial position of theGroup and of the Company as at 31 August 2017 and of their financial performance and cash flows for the financial year thenended.

The supplementary information set out on page 136 have been prepared in accordance with the Guidance on Special Matter No.1,Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia SecuritiesBerhad Listing Requirements, as issued by the Malaysian Institute of Accountants and presented based on the format as prescribedby Bursa Malaysia Securities Berhad.

Signed on behalf of the Board of Directors in accordance with a resolution of the directors:-

YM TENGKU DATO’ SRI UZIR BIN TENGKU DATO’ UBAIDILLAH Executive Chairman

DATO’ Ir. WILLIAM TAN CHEE KEONGSenior Executive Director/Chief Operating Officer

Kuala Lumpur

Date: 15 November 2017

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STATEMENT BY DIRECTORSPursuant To Section 251 (2) Of The Companies Act 2016

I, TAN TENG HENG, being the Executive Director cum Chief Financial Officer primarily responsible for the financial managementof WZ SATU BERHAD, do solemnly and sincerely declare that to the best of my knowledge and belief, the financial statementsset out on pages 51 to 135 and supplementary information set out on pages 136 are correct, and I make this solemn declarationconscientiously believing the same to be true, and by virtue of the provisions of the Statutory Declarations Act, 1960.

TAN TENG HENG

Subscribed and solemnly declared by the abovenamed at Kuala Lumpur in the Federal Territory on 15 November 2017.

Before me,

TAN KIM CHOOILicense No. W661

Commissioner for Oaths

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STATUTORY DECLARATIONW

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Pursuant To Section 251 (1) Of The Companies Act 2016

Report on the Financial Statements

Opinion

We have audited the financial statements of WZ Satu Berhad, which comprise the statements of financial position as at 31 August2017 of the Group and of the Company, and the statements of comprehensive income, statements of changes in equity andstatements of cash flows of the Group and of the Company for the financial year then ended, and notes to the financial statements,including a summary of significant accounting policies, as set out on pages 51 to 135.

In our opinion, the accompanying financial statements give a true and fair view of the financial position of the Group and of theCompany as at 31 August 2017, and of their financial performance and cash flows for the financial year then ended in accordancewith the Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of theCompanies 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 FinancialStatements section of our report. We are independent of the Group and of the Company in accordance with the By-Laws (onProfessional Ethics, Conduct and Practice) of the Malaysian Institute of Accountants (“By-Laws”) and the International EthicsStandards Board for Accountants’ Code of Ethics for Professional Accountants (“IESBA Code”), and we have fulfilled our otherethical responsibilities in accordance with the By-Laws and the IESBA Code. We believe that the audit evidence we have obtainedis sufficient and appropriate to provide a basis for our opinion.

Key Audit Matters

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financialstatements of the Group and of the Company for the current financial year. These matters were addressed in the context of ouraudit of the financial statements of the Group and of the Company as a whole, and in forming our opinion thereon, and we do notprovide a separate opinion on these matters.

Revenue and expenses recognition for construction business (Note 4.2, 22 and 23 to the financial statements)

We focused on this area because the amount of revenue and related expenses recognised in the construction business requirethe directors to apply judgement and estimation. The revenue and related expenses are recognised based on stage of completionmethod. The stage of completion method is determined by reference to costs incurred for work performed to date to the estimatedtotal costs for each project. The estimated total revenue and costs are affected by a variety of uncertainties that depend on theoutcome of future events.

Our response:Our audit procedures on a sample of major projects included, among others:• reviewing the design and implementation of controls over the Group’s process in recording project costs, preparing project

budget and calculating the stage of completion;• discussing the progress of the projects and expected outcome with the respective project directors to obtain an understanding

of the basis on which the estimates are made;• assessing the reasonableness of computed stage of completion for identified projects against architect certificate or progress

report and the physical completion; and• testing the mathematical computation of the recognised revenue and expenses during the financial year.

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INDEPENDENT AUDITORS’ REPORTTO THE MEMBERS OF WZ SATU BERHAD

(Incorporated In Malaysia)

Key Audit Matters (Continued)

Goodwill (Note 4.1 and 6 to the financial statements)

The Group has significant goodwill arising from acquisition of WZS BinaRaya Sdn Bhd (formerly known as WZS KenKeong SdnBhd) and WZS Misi Setia Sdn Bhd (formerly known as Misi Setia Oil & Gas Sdn Bhd. The goodwill is tested for impairment annually.In performing the impairment assessment, the Group has identified the construction and oil and gas segments as cash generatingunit to which the goodwill is allocated. We focused on this area because the impairment assessment requires the exercise ofjudgement by the Group on the discount rates applied in the recoverable amount calculation and assumptions supporting theunderlying cash flow projections which include future sales, gross profit margin and operating expenses.

Our audit response:Our audit procedures focused on evaluating the cash flow projections and the Group’s forecasting procedures which included,among others:• comparing the actual results with previous projections to assess the performance of the business and reliability of the

forecasting process;• comparing the Group’s assumptions to externally derived data as well as our assessments in relation to key assumptions to

assess their reasonableness and achievability of the projections;• testing the mathematical accuracy of the impairment assessment; and• performing a sensitivity analysis around the key assumptions that are expected to be more sensitive to the recoverable

amount.

Investment in associates (Note 4.3 and 7 to the financial statements)

The Group determined whether there is objective evidence of impairment exists for investment in associates. We focused on thisarea because the impairment assessment of the investment in associates requires the application of judgement made by thedirectors on the performance of the associates in dealing with the moratorium on bauxite mining and ban of approved permit.

Our audit response:Our audit procedures included, among others:• reviewing the financial statements of the significant associates;• comparing the actual results with previous year audited figures to assess the performance of the associates; and• discussing with management on the future business prospects and reviewing the relevant documents relating to the bauxite

mining and approved permit.

Information other than the Financial Statements and Auditors’ Report Thereon

The directors of the Company are responsible for the other information. The other information comprises the information includedin the annual report, but does not include the financial statements of the Group and of the Company and our auditors’ reportthereon.

Our opinion on the financial statements of the Group and of the Company does not cover the other information and we do notexpress 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 otherinformation and, in doing so, consider whether the other information is materially inconsistent with the financial statements of theGroup and of the Company or our knowledge obtained in the audit, or otherwise appears to be materially misstated.

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

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INDEPENDENT AUDITORS’ REPORTTO THE MEMBERS OF WZ SATU BERHAD (CONTINUED)(Incorporated In Malaysia)

Responsibilities of the Directors for the Financial Statements

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

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

The directors of the Company are responsible for overseeing the Group’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 awhole 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 approvedstandards on auditing in Malaysia and International Standards on Auditing will always detect a material misstatement when itexists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they couldreasonably 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, weexercise 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, whetherdue to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficientand appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud ishigher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, orthe override of internal control.

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

• evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and relateddisclosures made by the directors.

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

• evaluate the overall presentation, structure and content of the financial statements of the Group and of the Company, includingthe disclosures, and whether the financial statements of the Group and of the Company represent the underlying transactionsand events in a manner that achieves fair presentation.

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

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INDEPENDENT AUDITORS’ REPORTTO THE MEMBERS OF WZ SATU BERHAD (CONTINUED)

(Incorporated In Malaysia)

Auditors’ Responsibilities for the Audit of the Financial Statements (Continued)

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

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

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

Other Reporting Responsibilities

The supplementary information set out on page 136 is disclosed to meet the requirement of Bursa Malaysia Securities Berhadand is not part of the financial statements. The directors are responsible for the preparation of the supplementary information inaccordance with Guidance on Special Matter No.1, Determination of Realised and Unrealised Profits or Losses in the Context ofDisclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants(“MIA Guidance”) and the directive of Bursa Malaysia Securities Berhad. In our opinion, the supplementary information is prepared,in all material respects, in accordance with the MIA Guidance and the directive of Bursa Malaysia Securities Berhad.

Other Matters

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

Baker Tilly Monteiro Heng Ong Teng YanNo. AF 0117 No. 3076/07/19 (J)Chartered Accountants Chartered Accountant

Kuala Lumpur

Date: 15 November 2017

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ANALYSIS OFSHAREHOLDINGS

As At 30 November 2017

Number of Issued Share Capital : 348,874,195 Ordinary Shares Voting Rights : One (1) vote per Ordinary Share

ANALYSIS OF SHAREHOLDINGS

Size of Shareholdings No. of Shareholders % No. of Shares %

1 – 99 118 6.71 2,040 0.00100 – 1,000 153 8.70 61,370 0.021,001 – 10,000 835 47.50 3,806,940 1.0910,001 – 100,000 515 29.30 17,276,381 4.95100,001 – 17,443,708 (*) 131 7.45 165,897,308 47.5517,443,709 and above (**) 6 0.34 161,830,156 46.39

TOTAL 1,758 100.00 348,874,195 100.00

Remarks: * Less than 5% of Issued Shares ** 5% and above of Issued Shares

SUBSTANTIAL SHAREHOLDERS

The substantial shareholders of WZ Satu Berhad and their respective shareholdings based on the Register of SubstantialShareholders of WZ Satu Berhad as at 30 November 2017 are as follows:-

No. of SharesSubstantial Shareholders Direct % Indirect %

YM Tengku Dato’ Sri Uzir Bin Tengku Dato’ Ubaidillah 71,421,636 20.47 - -Lembaga Tabung Haji 33,872,400 9.71 - -Tan Ching Kee (Deceased) 27,600,000 7.91 (1)4,202,390 1.20Perbadanan Nasional Berhad 22,000,000 6.31 - -Ong Lee Veng @ Ong Chuan Heng 23,939,000 6.86 - -KDYTM Tengku Abdullah Al-Haji Ibni Sultan Haji Ahmad Shah 19,798,720 5.68 (2)15,000,000 4.30Tan Jing Xin 3,778,432 1.08 (3)27,600,000 7.91

Notes:-

(1) Deemed interested by virtue of his spouse direct interest in the Company. (2) Deemed interested by virtue of his shareholding in T.A.S. Industries Sdn Bhd pursuant to Section 8 of the Companies Act

2016.(3) Deemed interested by virtue of her being the beneficial owner of the shares vide the Grant of Probate pursuant to Section 8

of the Companies Act 2016.

DIRECTORS’ SHAREHOLDINGS

The Directors’ Shareholdings based on the Register of Directors’ Shareholdings of WZ Satu Berhad as at 30 November 2017 areas follows:-

Direct Interest Indirect Interest No. of No. of Directors/Alternate Directors Shares Held % Shares Held %

YM Tengku Dato’ Sri Uzir Bin Tengku Dato’ Ubaidillah 71,421,636 20.47 - -Dato’ Ir. William Tan Chee Keong 13,950,000 4.00 (1)265,800 0.08Tan Teng Heng 6,600,000 1.89 - -Tan Chong Boon 3,648,520 1.05 (1)124,200 0.04Dato’ Ir. Mohd Ghazali Bin Kamaruzaman - - - -Dato’ Amin Rafie Bin Othman 2,400 * - -Datuk Idris Bin Haji Hashim - - - -Dato’ Syed Kamarulzaman Bin Dato’ Syed Zainol Khodki Shahabudin - - - -Dato’ Yeong Kok Hee 85,200 0.02 - -Rosli Bin Shafiei - - - -Datuk Ahmad Nizam Bin Salleh - - - -Ng Chong Tin 2,061,040 0.59 - -Choi Chee Ken 13,950,000 4.00 - - Chief Executive YM Tengku Dato’ Indera Zubir Bin Tengku Dato’ Ubaidillah 520,620 0.15 - -

Notes:-

* Negligible

(1) Deemed interested pursuant to Section 59(11)(c) of the Companies Act 2016 by virtue of their spouse direct interest in theCompany.

By virtue of YM Tengku Dato’ Sri Uzir Bin Tengku Dato’ Ubaidillah’s interest in the ordinary shares of the Company, he is alsodeemed to have an interest in the ordinary shares of all the related corporations to the extent that the Company has an interest.

Other than as disclosed above, none of the other Directors in office has any interest in the ordinary shares of the Company andits related corporations as at 30 November 2017.

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ANALYSIS OFSHAREHOLDINGSAs At 30 November 2017 (Continued)

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ANALYSIS OFSHAREHOLDINGS

As At 30 November 2017 (Continued)

THIRTY LARGEST SHAREHOLDERS BASED ON RECORD OF DEPOSITORS (without aggregating securities from different securities accounts belonging to the same persons)

No. Name No. of Shares %

1. TENGKU UZIR BIN TENGKU UBAIDILLAH 34,110,016 9.78 2. LEMBAGA TABUNG HAJI 33,872,400 9.71 3. MAYBANK NOMINEES (TEMPATAN) SDN BHD 30,111,620 8.63 PLEDGED SECURITIES ACCOUNT FOR TENGKU UZIR BIN TENGKU UBAIDILLAH 4. ONG LEE VENG @ ONG CHUAN HENG 23,939,000 6.86 5. PERBADANAN NASIONAL BERHAD 22,000,000 6.31 6. KENANGA NOMINEES (TEMPATAN) SDN BHD 17,797,120 5.10 PLEDGED SECURITIES ACCOUNT FOR TENGKU ABDULLAH IBNI SULTAN HJ AHMAD SHAH 7. T.A.S. INDUSTRIES SDN BHD 15,000,000 4.30 8. PACIFIC TRUSTEES BERHAD 14,400,000 4.13 TAN CHING KEE 9. PACIFIC TRUSTEES BERHAD 13,950,000 4.00 WILLIAM TAN CHEE KEONG 10. PACIFIC TRUSTEES BERHAD 13,950,000 4.00 CHOI CHEE KEN 11. KENANGA NOMINEES (TEMPATAN) SDN BHD 13,200,000 3.78 PLEDGED SECURITIES ACCOUNT FOR TAN CHING KEE (029) 12. ABB NOMINEE (TEMPATAN) SDN BHD 7,200,000 2.06 PLEDGED SECURITIES ACCOUNT FOR TENGKU UZIR BIN TENGKU UBAIDILLAH 13. PACIFIC TRUSTEES BERHAD 6,549,411 1.88 TEOH CHEE YOONG 14. KENANGA NOMINEES (TEMPATAN) SDN BHD 5,000,000 1.43 PLEDGED SECURITIES ACCOUNT FOR TAN TENG HENG 15. MAJLIS AGAMA ISLAM SELANGOR 4,800,000 1.3816. PACIFIC TRUSTEES BERHAD 4,197,576 1.20 CHONG KIM THAM 17. NG LAY HOON 4,172,390 1.2018. UTUSAN MEWAH SDN. BHD. 4,000,000 1.1519. TAN JING XIN 3,778,432 1.0820. TAN CHONG BOON 3,648,520 1.0521. NG CHONG TIN 2,061,040 0.5922. KAF NOMINEES (TEMPATAN) SDN.BHD. 2,001,600 0.57 PLEDGED SECURITIES ACCOUNT FOR TENGKU ABDULLAH IBNI SULTAN HJ AHMAD SHAH (TE1113) 23. PACIFIC TRUSTEES BERHAD 1,958,894 0.56 MOHD ARIS BIN MOHD ARIF 24. TAN AI CHOO 1,957,320 0.5625. HLB NOMINEES (TEMPATAN) SDN BHD 1,600,000 0.46 PLEDGED SECURITIES ACCOUNT FOR TAN TENG HENG 26. MAYBANK NOMINEES (TEMPATAN) SDN BHD 1,544,000 0.44 PLEDGED SECURITIES ACCOUNT FOR YOONG FUI KIEN 27. PACIFIC TRUSTEES BERHAD 1,500,000 0.43 HO KEK YEE 28. MAYBANK NOMINEES (TEMPATAN) SDN BHD 1,454,200 0.42 SYARIKAT TAKAFUL MALAYSIA BERHAD (TKTK-280349) 29. PHANG CHIN KHIONG 1,381,800 0.4030. KOPERASI PERMODALAN FELDA MALAYSIA BERHAD 1,300,000 0.37

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ANALYSIS OFWARRANT HOLDINGSAs At 30 November 2017

Number of Outstanding Warrants Issued : 98,580,754

ANALYSIS OF WARRANT HOLDINGS

Size of Warrant Holdings No. of Warrant Holders % No. of Warrants %

1 – 99 41 5.31 2,001 0.00100 – 1,000 141 18.26 87,187 0.091,001 – 10,000 298 38.60 1,341,511 1.3610,001 – 100,000 217 28.11 6,844,907 6.94100,001 – 4,929,036 (*) 70 9.07 35,193,681 35.704,929,037 and above (**) 5 0.65 55,111,467 55.91

TOTAL 772 100.00 98,580,754 100.00

Remarks: * Less than 5% of Issued Warrants ** 5% and above of Issued Warrants

DIRECTORS’ WARRANT HOLDINGS

The Directors’ Warrant Holdings based on the Register of Directors’ Shareholdings of WZ Satu Berhad as at 30 November 2017are as follows:-

Direct Interest Indirect Interest No. of No. of Directors/Alternate Directors Warrants Held % Warrants Held %

YM Tengku Dato’ Sri Uzir Bin Tengku Dato’ Ubaidillah 38,161,467 38.71 - -Dato’ Ir. William Tan Chee Keong 6,975,000 7.08 (1)60,900 0.06Tan Teng Heng 2,700,000 2.74 - -Tan Chong Boon 2,412,320 2.45 (1)62,100 0.06Dato’ Ir. Mohd Ghazali Bin Kamaruzaman - - - -Dato’ Amin Rafie Bin Othman 1,200 * - -Datuk Idris Bin Haji Hashim - - - -Dato’ Syed Kamarulzaman Bin Dato’ Syed Zainol Khodki Shahabudin - - - -Dato’ Yeong Kok Hee 303,000 0.31 - -Rosli Bin Shafiei - - - -Datuk Ahmad Nizam Bin Salleh - - - -Ng Chong Tin 1,210,520 1.23 - -Choi Chee Ken 6,975,000 7.08 - - Chief ExecutiveYM Tengku Dato’ Indera Zubir Bin Tengku Dato’ Ubaidillah 260,310 0.26 - -

Notes:-

* Negligible(1) Deemed interested pursuant to Section 59(11)(c) of the Companies Act 2016 by virtue of their spouse direct interest in the

Company.

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ANALYSIS OFWARRANT HOLDINGS

As At 30 November 2017 (Continued)

THIRTY LARGEST WARRANTS HOLDERS BASED ON RECORD OF DEPOSITORS (without aggregating securities from different securities accounts belonging to the same persons)

No. Name No. of Warrants %

1. TENGKU UZIR BIN TENGKU UBAIDILLAH 24,302,787 24.65 2. MAYBANK NOMINEES (TEMPATAN) SDN BHD 10,258,680 10.41 PLEDGED SECURITIES ACCOUNT FOR TENGKU UZIR BIN TENGKU UBAIDILLAH 3. PACIFIC TRUSTEES BERHAD 6,975,000 7.08 WILLIAM TAN CHEE KEONG 4. PACIFIC TRUSTEES BERHAD 6,975,000 7.08 CHOI CHEE KEN 5. KENANGA NOMINEES (TEMPATAN) SDN BHD 6,600,000 6.70 PLEDGED SECURITIES ACCOUNT FOR TAN CHING KEE (029) 6. ABB NOMINEE (TEMPATAN) SDN BHD 3,600,000 3.65 PLEDGED SECURITIES ACCOUNT FOR TENGKU UZIR BIN TENGKU UBAIDILLAH 7. TAN JING XIN 3,069,716 3.11 8. KENANGA NOMINEES (TEMPATAN) SDN BHD 2,700,000 2.74 PLEDGED SECURITIES ACCOUNT FOR TAN TENG HENG 9. TAN CHONG BOON 2,412,320 2.4510. NG LAY HOON 2,086,195 2.1211. NG CHONG TIN 1,210,520 1.2312. TAN PANG HONG 1,065,240 1.0813. KAF NOMINEES (TEMPATAN) SDN.BHD. 1,000,800 1.02 PLEDGED SECURITIES ACCOUNT FOR TENGKU ABDULLAH IBNI SULTAN HJ AHMAD SHAH (TE1113) 14. TAN AI CHOO 978,660 0.9915. CHUA SHIA-TSAN 882,750 0.9016. MALACCA EQUITY NOMINEES (TEMPATAN) SDN BHD 840,700 0.85 PLEDGED SECURITIES ACCOUNT FOR THAM TOO KAM 17. RHB CAPITAL NOMINEES (TEMPATAN) SDN BHD 800,000 0.81 PLEDGED SECURITIES ACCOUNT FOR HAMZAH BIN MOHD SALLEH (BSL) 18. PACIFIC TRUSTEES BERHAD 750,000 0.76 HO KEK YEE 19. RHB NOMINEES (TEMPATAN) SDN BHD 647,000 0.66 PLEDGED SECURITIES ACCOUNT FOR CHUA MENG KEAT 20. WONG TUI WAN 571,500 0.5821. CHUA CHIN HEAN 468,840 0.4822. PHANG CHIN KHIONG 459,340 0.4723. CHENG CHEE CHUNG 450,000 0.4624. TAN JING JIA 450,000 0.4625. TAN AI CHOO 401,495 0.4126. CHANG LEE MING 379,000 0.3827. CHUNG KOK SANG 344,600 0.3528. TAN PANG HONG 332,120 0.3429. LIM LEONG HOCK 330,060 0.3330. MOHAMED TARMIDZI BIN MAT AKHIR 320,300 0.32

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List of PropertiesAs At 31 August 2017

Land area/ Carrying Date of Built-up Description amount Age of acquisitionLocation Tenure area (sq ft) /Existing use (RM'000) building /revaluation

Lot 1850 Jalan KPB 10 Freehold 102,154/ Manufacturing plant 20,500 17 years 2017Kawasan Perindustrian Balakong 79,759 cum warehouse43300 Seri KembanganSelangor Darul Ehsan

Lot 1882 Jalan KPB 9 Leasehold 81,646/ Warehouse 14,600 10 years 2017Kawasan Perindustrian Balakong (Expires 40,86043300 Seri Kembangan 17.8.2065)Selangor Darul Ehsan

B2-1 Block B Freehold 650 Apartment/ 85 14 years 2017Jalan Damai Perdana 2/8 Staff quartersBandar Damai Perdana56100 Kuala Lumpur

B2-2 Block B Freehold 650 Apartment/ 85 14 years 2017Jalan Damai Perdana 2/8 Staff quartersBandar Damai Perdana56100 Kuala Lumpur

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NOTICE OF ANNUAL GENERAL MEETING

NOTICE IS HEREBY GIVEN that the Thirteenth Annual General Meeting (“13th AGM”) of the Company will be held at KristalBallroom 1, Level 1, West Wing, Hilton Petaling Jaya, No. 2, Jalan Barat, 46200 Petaling Jaya, Selangor Darul Ehsan on Tuesday,30 January 2018 at 9:30 a.m. for the following purposes:-

AGENDA

1. To receive the Audited Financial Statements for the financial year ended 31 August 2017 togetherwith the Reports of the Directors and the Auditors thereon.

2. To approve the payment of a final dividend of 2 sen per ordinary share for the financial year ended31 August 2017.

3. To approve the payment of Directors’ fees of RM1,066,000/- for the period from 1 September 2016to 31 January 2019.

4. To approve the payment of benefits payable to the Directors up to an amount of RM174,000/- from1 February 2017 to 31 January 2019.

5. To re-elect the following Directors who are retiring in accordance with Article 84 of the Company’sArticles of Association and being eligible, have offered themselves for re-election:-

(a) Dato’ Ir. William Tan Chee Keong;(b) Encik Rosli Bin Shafiei; and(c) Datuk Idris Bin Haji Hashim.

Mr. Tan Chong Boon who retires in accordance with Article 84 of the Company’s Articles ofAssociation, has expressed his intention not to seek for re-election. Hence, he will retain officeuntil the close of the 13th AGM.

Dato’ Amin Rafie Bin Othman and Dato’ Yeong Kok Hee who were appointed as Directors of theCompany on 26 October 2007, whom have exceeded the cumulative term of 9 years pursuant toPractice 4.2 of the Malaysian Code on Corporate Governance (“MCCG”) will not seek for retentionas Independent Non-Executive Directors of the Company in line with the MCCG. Hence, they willalso retain office until the close of the 13th AGM.

6. To re-appoint Messrs. Baker Tilly Monteiro Heng as Auditors of the Company until the conclusionof the next Annual General Meeting and to authorise the Directors to fix their remuneration.

As Special Business

To consider and if thought fit, with or without any modification, to pass the following OrdinaryResolutions:-

[Please refer toExplanatory Note 1]

(Resolution 1)

(Resolution 2)

(Resolution 3)

(Resolution 4)(Resolution 5)(Resolution 6)

(Resolution 7)

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NOTICE OF ANNUAL GENERAL MEETING(Continued)

7. ORDINARY RESOLUTION 1

- AUTHORITY TO ISSUE SHARES PURSUANT TO THE COMPANIES ACT 2016

“THAT subject to the Companies Act 2016, the Articles of Association of the Company andapprovals of Bursa Malaysia Securities Berhad (“Bursa Securities”) and any othergovernmental/regulatory authorities, the Directors of the Company be and are herebyempowered, pursuant to the Companies Act 2016, to issue and allot shares in the Companyat any time to such persons and upon such terms and conditions and for such purposes asthe Directors of the Company may, in their absolute discretion, deem fit, provided that theaggregate number of shares to be issued pursuant to this resolution does not exceed ten percentum (10%) of the total number of issued shares of the Company for the time being andthe Directors of the Company be and are also empowered to obtain the approval for the listingof and quotation for the additional shares so issued on Bursa Securities; AND THAT suchauthority shall commence immediately upon the passing of this resolution and continue tobe in force until the conclusion of the next Annual General Meeting of the Company.”

ORDINARY RESOLUTION 2

- PROPOSED RENEWAL OF AUTHORITY FOR THE COMPANY TO PURCHASE UP TO10% OF ITS OWN SHARES IN THE TOTAL NUMBER OF ISSUED SHARES OF THECOMPANY (“PROPOSED RENEWAL OF SHARE BUY-BACK AUTHORITY”)

“THAT, subject to the compliance with Section 127 of the Companies Act 2016 and all otherapplicable laws, rules and regulations, provisions of the Company’s Memorandum andArticles of Association and the requirements of Bursa Malaysia Securities Berhad (“BursaSecurities”), approval be and is hereby given to the Company, to purchase such amount ofordinary shares in the Company (“Shares”) as may be determined by the Directors of theCompany from time to time through Bursa Securities as the Directors may deem fit andexpedient in the interest of the Company provided that the aggregate number of Shares tobe purchased and held pursuant to this resolution does not exceed ten per centum (10%) ofthe existing total number of issued shares of the Company including the Shares previouslypurchased and retained as treasury shares (if any), upon such terms and conditions as setout in the Statement to Shareholders dated 29 December 2017;

AND THAT such authority shall commence immediately upon the passing of this resolutionand until the conclusion of the next Annual General Meeting of the Company or the expiry ofthe period within which the next Annual General Meeting is required by law to be held unlessrevoked or varied by an ordinary resolution in a general meeting of the Company but so asnot to prejudice the completion of a purchase made before such expiry date, in any event inaccordance with the provisions of Bursa Securities Main Market Listing Requirements andany other relevant authorities;

AND THAT the maximum amount of funds to be utilised for the purpose of the ProposedRenewal of Share Buy-Back Authority shall not exceed the Company’s retained profits basedon the latest audited and unaudited financial statements of the Company available at thetime of the purchase(s);

(Resolution 8)

(Resolution 9)

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(Continued)

AND THAT authority be and is hereby given to the Directors of the Company to decide intheir absolute discretion to retain the Shares in the Company so purchased by the Companyas treasury shares and/or to cancel them and/or to resell them and/or to distribute them asshare dividends and/or in such manner as may be permitted pursuant to Section 127(7) ofthe Companies Act 2016 and the provisions of Bursa Securities Main Market ListingRequirements and any other relevant authorities;

AND THAT authority be and is hereby given to the Directors of the Company to take all suchsteps as are necessary to implement, finalise and give full effect to the aforesaid with fullpowers to assent to any conditions, modifications, variations and/or amendments (if any) asmay be imposed by the relevant authorities and to do all such acts and things as the Directorsmay deem fit and expedient in the interests of the Company.”

8. To transact any other ordinary business of which due notice shall have been given.

NOTICE OF BOOK CLOSURE

NOTICE IS ALSO HEREBY GIVEN that a final dividend of 2 sen per ordinary share for the financial year ended 31 August 2017will be payable on 1 March 2018 to depositors whose names appear in the Record of Depositors at the close of business on8 February 2018 if approved by the members at the forthcoming 13th AGM on 30 January 2018.

A Depositor shall qualify for entitlement only in respect of:-

(a) Shares transferred into the Depositor’s Securities Account before 4:00 p.m. on 8 February 2018 in respect of ordinary transfers;and

(b) Shares bought on the Bursa Malaysia Securities Berhad (“Bursa Securities”) on a cum entitlement basis according to theRules of the Bursa Securities.

By Order of the Board

CHUA SIEW CHUAN (MAICSA 0777689)YAU JYE YEE (MAICSA 7059233)Company Secretaries

Kuala LumpurDated: 29 December 2017

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NOTICE OF ANNUAL GENERAL MEETING(Continued)

Explanatory Notes: -

1. Audited Financial Statements for financial year ended 31 August 2017

This Agenda item is meant for discussion only, as the provision of Section 340(1)(a) of the Companies Act 2016 does notrequire a formal approval of the shareholders for the Audited Financial Statements. Hence, this Agenda item is not put forwardfor voting.

2. Directors’ Fees and Benefits

Pursuant to Section 230(1) of the Companies Act 2016 which came into effect on 31 January 2017, the fees of the Directors,and any benefits payable to the Directors of a listed company and its subsidiaries shall be approved at the general meeting.

The proposed Resolution 2, if approved, will authorise the payment of Directors’ fees to the Non-Executive Directors (“NEDs”)by the Company for the following financial periods:-

• 1 September 2016 to 31 August 2017; and• 1 September 2017 to 31 January 2019, i.e. until the next AGM of the Company in year 2019 and to be payable on a

monthly basis in arrears after each month of completed service of the Directors. This Resolution is to facilitate paymentof Directors’ fees on current financial year basis.

The proposed Resolution 3, if approved, will authorise the payment of Directors’ benefits to the NEDs by the Company. TheDirectors’ benefits payable of RM174,000/- for the period from 1 February 2017 to 31 January 2019, i.e. until the next AGMin year 2019 are derived from the estimated meeting allowance based on the number of scheduled meetings and unscheduledmeetings (when necessary) for the Board and Board Committees, number of NEDs involved in the meetings, other benefitsin-kind payable to the NEDs and estimated proportionate paid and payable insurance premium.

In the event that the Directors’ fees and benefits payable proposed are insufficient due to enlarged Board size, approval willbe sought at the next Annual General Meeting for additional Directors’ fees and benefits to meet the shortfall.

3. Authority to Issue Shares Pursuant to the Companies Act 2016

The proposed Resolution 8 is for the purpose of granting a renewed general mandate (“General Mandate”) and empoweringthe Directors of the Company, pursuant to the Companies Act 2016, to issue and allot new shares in the Company from timeto time provided that the aggregate number of shares issued pursuant to the General Mandate does not exceed 10% of thetotal number of issued shares of the Company for the time being. The General Mandate, unless revoked or varied by theCompany in general meeting, will expire at the conclusion of the next Annual General Meeting of the Company.

The General Mandate will provide flexibility to the Company for allotment of shares for any possible fund raising activities forthe purpose of funding future investment project(s), working capital and/or acquisition(s).

As at the date of this Notice, no new shares in the Company were issued pursuant to the Mandate granted by the Shareholdersof the Company at the Twelfth Annual General Meeting held on 24 January 2017 and which will lapse at the conclusion of the13th AGM.

4. Proposed Renewal of Share Buy-Back Authority

The proposed Resolution 9 is to renew the authority granted by the shareholders of the Company at the Twelfth AnnualGeneral Meeting held on 24 January 2017. The proposed renewal will allow the Board of Directors to exercise the power ofthe Company to purchase not more than 10% of the total number of issued shares of the Company at any time within thetime period stipulated in Bursa Malaysia Securities Berhad’s Main Market Listing Requirements.

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(Continued)

Notes:-

1. In respect of deposited securities, only members whose names appear in the Record of Depositors on 23 January 2018(General Meeting Record of Depositors) shall be eligible to attend the Meeting.

2. A member entitled to attend and vote at the Meeting is entitled to appoint more than one (1) proxy to attend and vote in hisstead (subject always to a maximum of two (2) proxies of each Meeting). Where a member appoints more than one (1) proxy,the appointments shall be invalid unless he specifies the proportions of his shareholdings to be represented by each proxy.

3. A proxy may but does not need to be a member of the Company. Notwithstanding this, a member entitled to attend and voteat the Meeting is entitled to appoint any person as his proxy to attend and vote instead of the member at the Meeting. Thereshall be no restriction as to the qualification of the proxy. A proxy appointed to attend and vote at the Meeting shall have thesame rights as the member to speak at the Meeting.

4. In the case of a corporate member, the instrument appointing a proxy must be either under its common seal or under thehand of an officer or attorney duly authorised.

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

6. The instrument appointing a proxy must be deposited at the Company’s Registered Office at Level 7, Menara Milenium, JalanDamanlela, Pusat Bandar Damansara, Damansara Heights, 50490 Kuala Lumpur, Wilayah Persekutuan not less than 48hours before the time for holding the Meeting or any adjournment thereof.

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FORM OF PROXY WZ SATU BERHAD(Company No. 666098-X)(Incorporated in Malaysia)

*I/We (full name), ___________________________________________________________________________________________________

bearing *NRIC No./Passport No./Company No. __________________________________________________________________________________

of (full address) ____________________________________________________________________________________________________

being a *member/members of WZ Satu Berhad (“the Company”) hereby appoint:-

First Proxy “A”

Full Name NRIC/ Passport No. Proportion of Shareholdings Represented

No. of Shares % Full Address

and/or failing *him/her, Second Proxy “B”

Full Name NRIC/ Passport No. Proportion of Shareholdings Represented

No. of Shares % Full Address

or failing *him/her, the *Chairman of the Meeting as *my/our proxy to vote for *me/us and on *my/our behalf at the 13th Annual General Meeting of theCompany to be held at Kristal Ballroom 1, Level 1, West Wing, Hilton Petaling Jaya, No. 2, Jalan Barat, 46200 Petaling Jaya, Selangor Darul Ehsanon Tuesday, 30 January 2018 at 9:30 a.m. and at any adjournment thereof.

Please indicate with an “X” in the spaces provided below as to how you wish your votes to be casted. If no specific direction as to voting is given, theproxy will vote or abstain from voting at *his/her discretion.

CDS Account No.

Number of ordinary shares held

No. Agenda To receive the Audited Financial Statements for the financial year ended 31 August 2017 together with the Reports of the Directors and the Auditors thereon.

No. Agenda Resolution For Against

Special Business

To approve the payment of a final dividend of 2 sen per ordinary share for the financial year ended 31 August 2017.

To approve the payment of Directors’ fees of RM1,066,000/- for the period from 1 September 2016 to31 January 2019.

To approve the payment of benefits payable to the Directors up to an amount of RM174,000/- from 1 February 2017 to 31 January 2019.

To re-elect Dato’ Ir. William Tan Chee Keong who is retiring in accordance with Article 84 of theCompany’s Articles of Association and being eligible, has offered himself for re-election.

To re-elect Encik Rosli Bin Shafiei who is retiring in accordance with Article 84 of the Company’s Articlesof Association and being eligible, has offered himself for re-election.

To re-elect Datuk Idris Bin Haji Hashim who is retiring in accordance with Article 84 of the Company’sArticles of Association and being eligible, has offered himself for re-election.

To re-appoint Messrs. Baker Tilly Monteiro Heng as Auditors of the Company until the conclusion of thenext Annual General Meeting and to authorise the Directors to fix their remuneration.

Ordinary Resolution 1Authority to Issue Shares pursuant to the Companies Act 2016

Ordinary Resolution 2Proposed Renewal of Share Buy-back Authority

As witness my/our hand(s) this day __________ of ____________________ 2018.

__________________________________ *Signature of Member /Common Seal *Strike out whichever not applicable

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The Company Secretaries

WZ Satu Berhad (666098-X)Level 7, Menara Milenium,

Jalan Damanlela,Pusat Bandar Damansara,

Damansara Heights,50490 Kuala Lumpur.

AffixStamp

Then fold here

1st Fold here

Notes:-1. In respect of deposited securities, only members whose names appear in the Record of Depositors on 23 January 2018 (General Meeting Record

of Depositors) shall be eligible to attend the Meeting. 2. A member entitled to attend and vote at the Meeting is entitled to appoint more than one (1) proxy to attend and vote in his stead (subject always

to a maximum of two (2) proxies of each Meeting). Where a member appoints more than one (1) proxy, the appointments shall be invalid unlesshe specifies the proportions of his shareholdings to be represented by each proxy.

3. A proxy may but does not need to be a member of the Company. Notwithstanding this, a member entitled to attend and vote at the Meeting isentitled to appoint any person as his proxy to attend and vote instead of the member at the Meeting. There shall be no restriction as to thequalification of the proxy. A proxy appointed to attend and vote at the Meeting shall have the same rights as the member to speak at the Meeting.

4. In the case of a corporate member, the instrument appointing a proxy must be either under its common seal or under the hand of an officer orattorney duly authorised.

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

6. The instrument appointing a proxy must be deposited at the Company’s Registered Office at Level 7, Menara Milenium, Jalan Damanlela, PusatBandar Damansara, Damansara Heights, 50490 Kuala Lumpur, Wilayah Persekutuan not less than 48 hours before the time for holding theMeeting or any adjournment thereof.

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