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Annual Report 2018

GOODWAY INTEGRATED INDUSTRIES BERHAD(Incorporated In Malaysia)(Company No. 618972-T)

MOVING FORWARD

CORPORATE INFORMATION 2

CORPORATE STRUCTURE 3

GROUP FINANCIAL HIGHLIGHTS 4

CHAIRMAN’S STATEMENT 6

MANAGEMENT DISCUSSION AND ANALYSIS 8

PROFILE OF THE DIRECTORS 12

PROFILE OF KEY SENIOR MANAGEMENT 16

FURTHER INFORMATION ON BOARD OF DIRECTORS 17

AUDIT AND RISK MANAGEMENT COMMITTEE REPORT 18

CORPORATE GOVERNANCE OVERVIEW STATEMENT 21

SUSTAINABILITY STATEMENT 31

STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROLS 33

STATEMENT OF BOARD OF DIRECTORS’ RESPONSIBILITIES 36

FINANCIAL STATEMENTS Directors’ Report 38Independent Auditors’ Report 43Consolidated Statement of Financial Position 49 Consolidated Statement of Profit or Loss and Other Comprehensive Income 51Consolidated Statement of Changes in Equity 52 Consolidated Statement of Cash Flows 54Statement of Financial Position 56Statement of Profit or Loss and Other Comprehensive Income 57 Statement of Changes in Equity 58 Statement of Cash Flows 59Notes to the Financial Statements 60Statement by Directors 167 Statutory Declaration 168

LIST OF GROUP PROPERTIES 169

ANALYSIS OF SHAREHOLDINGS 171

NOTICE OF ANNUAL GENERAL MEETING 174

STATEMENT ACCOMPANYING NOTICE OF ANNUAL GENERAL MEETING 177

FORM OF PROXY Enclosed

CONTENTS

GOODWAY INTEGRATED INDUSTRIES BERHAD (Incorporated In Malaysia) (Company No. 618972-T) Annual Report 2018 1

Annual Report 2018 GOODWAY INTEGRATED INDUSTRIES BERHAD (Incorporated In Malaysia) (Company No. 618972-T) 2

CORPORATE INFORMATION

BOARD OF DIRECTORS

Y.A.M. Tengku Sulaiman Shah Alhaj Ibni Almarhum Sultan Salahuddin Abdul Aziz Shah Alhaj(Chairman, IndependentNon-Executive Director)

Tai Boon Wee(Chief Executive Officer)

Ramlee Bin Mohd Shariff (Chief Operating Officer)

Tai Qisheng(Executive Director)

Tai Qiyao(Alternate Director to Tai Boon Wee)

Muk Sai Tat(Independent Non-Executive Director)(Appointed on 21 August 2018)

Kiran Kaur A/P Jogindar Singh(Independent Non-Executive Director)(Appointed on 23 August 2018)

Wong Yien Kim(Independent Non-Executive Director)(Resigned on 31 July 2018)

Lt Jen (B) Datuk Hj Adenan Bin Hj Mohamad Zain(Non-IndependentNon-Executive Director)(Retired on 23 May 2017)

Wong Ping Kiong(Executive Director)(Retired on 23 May 2017)

AUDIT AND RISK MANAGEMENT COMMITTEE

Muk Sai Tat(Chairman)(Appointed on 21 August 2018)

Y.A.M. Tengku Sulaiman Shah Alhaj Ibni Almarhum Sultan Salahuddin Abdul Aziz Shah Alhaj(Appointed on 23 May 2017)

Kiran Kaur A/P Jogindar Singh(Appointed on 23 August 2018)

Wong Yien Kim(Resigned on 31 July 2018)

Ramlee Bin Mohd Shariff(Resigned on 05 July 2018)

Lt Jen (B) Datuk Hj Adenan Bin Hj Mohamad Zain(Resigned on 23 May 2017)

JOINT NOMINATION AND REMUNERATION COMMITTEE

Kiran Kaur A/P Jogindar Singh(Chairman)(Appointed on 23 August 2018)

Y.A.M. Tengku Sulaiman Shah Alhaj Ibni Almarhum Sultan Salahuddin Abdul Aziz Shah Alhaj

Muk Sai Tat(Appointed on 21 August 2018)

Ramlee Bin Mohd Shariff(Resigned on 05 July 2018)

Lt Jen (B) Datuk Hj Adenan Bin Hj Mohamad Zain(Resigned on 23 May 2017)

COMPANY SECRETARY

Foo Siew Loon (MAICSA 7006874)

AUDITORS

Kreston John & Gan (AF0113) 160-2-1, Kompleks Maluri Business Centre, Jalan Jejaka 55100 Kuala LumpurTel : 603-9287 1889 Fax : 603-9283 0889

PRINCIPAL BANKERS

AmBank (Malaysia) Berhad Affin Bank BerhadCIMB Bank BerhadMaybank Islamic Bank Berhad United Overseas Bank Berhad

PRINCIPAL PLACE OF BUSINESS

Manufacturing Plant Lot PT 1654 & PT 1657 Nilai Industrial Estate 71800 NilaiNegeri Sembilan Darul KhususTel : 606-799 4833Fax : 606-799 4866

Sales & Marketing / Corporate Office Unit 3-5-9, Level 5, Tower 3UOA Business ParkJalan Pengaturcara U1/51AKawasan Perindustrian Temasya40150 Shah Alam, MalaysiaTel : 603-5567 9986Fax : 603-5569 9916Web : http://www.giibworld.com

REGISTERED OFFICE

Level 33A, Menara 1 MK Kompleks 1 Mont’ Kiara No.1, Jalan KiaraMont’ Kiara50480 Kuala LumpurTel : 603-6203 5828 / 5322Fax : 603-6203 2788

SHARE REGISTRAR

Symphony Share Registrars Sdn Bhd Level 6, Symphony HousePusat Dagangan Dana 1 Jalan PJU 1A/4647301 Petaling Jaya Tel : 603-7841 8000 Fax : 603-7841 8152

STOCK EXCHANGE LISTING

Main MarketBursa Malaysia Securities Berhad (“Bursa Securities”)


CORPORATE STRUCTURE


RUBBER COMPOUNDING

• GOODWAY RUBBER INDUSTRIES SDN BHD

• GOODWAY RUBBER COMPANY PTY LTD

• GOODWAY MARKETING SDN BHD

• GIIB BIZ SOLUTION SDN BHD

TYRE RETREADING

• BIG WHEEL GREEN TYRES SDN BHD

• BIG WHEEL (MALAYSIA) SDN BHD

PROPERTY DEVELOPMENT

• GIIB DEVELOPMENT SDN BHD

Note:The above structure does not include dormant/non-operating subsidiaries


GROUP FINANCIAL HIGHLIGHTS

Description 2018 2016 2015 2014 2013 * Restated * Restated * Restated RM'000 RM'000 RM'000 RM'000 RM'000

Revenue 198,555 157,117 181,362 207,475 265,771(Loss) / Profit Before Tax (1,249) (33,926) (13,450) (17,947) 6,869(Loss) / Profit For The Year 2,052 (36,501) (15,824) (15,517) 6,045(Loss) / Profit Attributable to Shareholders 2,134 (36,340) (15,921) (15,111) 5,767

Share Capital 55,259 55,259 55,259 55,259 55,259Reserves (10,695) (10,686) 8,082 20,397 35,268

Net Equity Funds 44,564 44,573 63,341 75,656 90,527Non-Controlling Interests 32 115 386 290 1,057

TOTAL EQUITY 44,596 44,688 63,727 75,946 91,584

Long Term Liabilities 33,691 50,729 51,874 56,385 63,254Current Liabilities 80,157 132,599 139,779 130,443 116,254

TOTAL EQUITY AND LIABILITIES 158,444 228,016 255,380 262,774 271,092

Property, Plant and Equipment 70,716 101,507 89,524 85,578 79,535Land Held for Development 7,411 7,411 7,411 7,411 7,411Goodwill 0 586 586 6,648 6,673Other Non-Current Assets 0 0 0 0 75Current Assets 80,317 118,512 157,859 163,137 177,398

TOTAL ASSETS 158,444 228,016 255,380 262,774 271,092

Net Assets Per Share (RM) 0.40 0.40 0.58 0.69 0.83Net (Loss) / Earnings Per Share (sen) 1.93 (32.88) (14.41) (13.67) 5.22

10,000

5,000

0

(5,000)

(10,000)

(15,000)

(20,000)

(25,000)

(30,000)

(35,000)

(40,000)

2,052

(36,501)

(15,824) (15,517)

6,045

(Loss) / Profit For The Year (RM’000)300,000

250,000

200,000

150,000

100,000

50,000

0

198,555

157,117

181,362

207,475

265,771

Revenue (RM’000)

2018 2016 2015 2014 2013Restated Restated Restated 2018 2016 2015 2014 2013

Restated Restated Restated

* The Group is restating its financial statements for the year ended 31 December 2016, 31 December 2015 and 31 December 2014 to correctly reflect prior year adjustments made as detailed in Note 34 of the Notes to the Financial Statements.


GROUP FINANCIAL HIGHLIGHTS (CONTINUED)

10.00

5.00

0

(5.00)

(10.00)

(15.00)

(20.00)

(25.00)

(30.00)

(35.00)

(40.00)

1.93

(32.88)

(14.41) (13.67)

5.22

Net (Loss) / Earnings Per Share (sen)

100,000

90,000

80,000

70,000

60,000

50,000

40,000

30,000

20,000

10,000

0

44,564 44,573

63,341

75,656

90,527

Shareholders’ Funds (RM’000)

2018 2016 2015 2014 2013Restated Restated Restated

300,000

250,000

200,000

150,000

100,000

50,000

0

158,444

228,016

255,380 262,774271,092

Total Assets (RM’000)




Dear Shareholders,

On behalf of the Board of Directors, I am pleased to present the Annual Report for Goodway Integrated Industries Bhd incorporating the Audited Financial Statements of the Group and the Company for the financial period ended 30 June 2018.

BUSINESS OVERVIEW

The financial period ended 30 June 2018 was a challenging time for the Group as losses incurred during the previous years, particularly for the year ended 31 December 2016, had affected the Group’s financial position significantly. Aggravating matters were various accounting issues brought forward from the financial year ended 31 December 2016 during which the Group’s audited accounts were qualified for the first time in its financial history.

Therefore, during the financial period ended 30 June 2018, considerable efforts were made by the Management to strengthen the Group’s financial position. The measures carried out include streamlining business operations by disposing non-performing assets as part of the Group’s asset rationalisation and business optimisation plan and in line with its strategy to reduce its borrowings. And I am pleased to note that together with the continued backing from the Group’s stakeholders, particularly our bankers, customers and suppliers, the Group returned to the black for the financial period after registering losses for three consecutive prior years.

I wish to express my heartfelt gratitude to the Management team and all employees of the Group for their unparalleled commitment as well as our stakeholders for their unwavering support that has made such an achievement possible. I am confident that this is the starting point for better things to come.

I would also like to commend the Management and the finance personnel for their relentless effort in resolving the major accounting issues brought forward from the previous year, which was by no means easy.

FINANCIAL PERFORMANCE

The Group’s revenue increased from RM157.12 million for the financial year ended 31 December 2016 to RM198.55 million for the 18-month period ended 30 June 2018. Nonetheless, on an annualised basis, the Group’s revenue had comparatively decreased mainly due to lower contributions from the compound business segment.

After a bad experience in the previous financial year where a huge sum had to be allocated for trade receivables, the Group became more selective in choosing its customers during the financial period under review. The Group also changed its business strategy during the same financial period to focus more on selling higher-margin products. These measures have resulted in a comparatively lower revenue from the compound business for the current financial period compared to the previous financial year. Nonetheless, this is expected to be temporary as the Group expects these strategies to contribute positively to its financial results in the ensuing years.

The Group’s gross profit improved from RM19.47 million for the financial year ended 31 December 2016 to RM29.91 million for the financial period ended 30 June 2018 mainly due to bigger profit being recognised from the property segment during the financial period compared to the previous year. This was because more units from Phase 1 of the Big Wheel Industrial Park project were sold and the development progress had reached the final stage of completion during the financial period under review.

For the 18-month period ended 30 June 2018, the Group recorded profit after taxation amounting to RM2.05 million compared to loss after taxation incurred for the financial year ended 31 December 2016 of RM36.50 million (restated). Such a significant improvement is mainly due to the increase in gross profit as explained above. Furthermore, also included in the financial year ended 31 December 2016 are provisions made for impairment losses on certain classes of assets and bad debts written off amounting to a total of RM26.04 million (restated) which were absent from this year’s results.

CHAIRMAN’S STATEMENT


CHAIRMAN’S STATEMENT (CONTINUED)

OUTLOOK

For the coming year, the Group will continue undertaking measures to strengthen its financial position further and these include the cost-rationalisation exercise and streamlining of business operations via the disposal of non-performing assets carried out during the financial period.

For operations, the Group expects better performance from the compound business segment moving forward as the Group has made significant efforts during the financial period in building its customers base with an emphasis on having good customers as well as focusing on selling high-margin products. For the retread business segment however, we foresee a challenging year as stiff competition from new tyres will continue. The “trade war” between the United States of America and China may aggravate matters as the manufacturers from China may “dump” their tyres in other countries including Malaysia. To deal with this, we strive to manage the costs of our production as well as improve efficiency to ensure the prices of our product will be competitive compared to the prices of new tyres.

In terms of the property development business segment, the plan is to develop Phase 2 of the Big Wheel Industrial Park project following the completion of Phase 1. However, we do not foresee a significant contribution from this project for the financial year ending 30 June 2019 as the relevant procedures that need to be complied with before commencement such as obtaining approval from the relevant authorities will take time. Nonetheless, Phase 2 of the project is expected to contribute positively to the Group’s earnings in the ensuing years.

Most importantly, as the Group has done in the past, we will continue to emphasise on providing our customers with quality in all our products.

DIVIDEND

The Board of Directors do not recommend any dividend payment for the financial period ended 30 June 2018.

ACKNOWLEDGEMENTS

On behalf of the Board of Directors, I would like to extend my heartfelt appreciation to my fellow colleagues on the Board for their valued contributions and support as well as to the Management team and employees for their hard work and commitment towards ensuring the growth and success of the Group. I would like to express my gratitude to YBhg. Lt. Gen. (R) Datuk Hj. Adenan Bin Hj. Mohamad Zain who has retired from the Board of Directors after 10 years of service and Mr. Arthur Lim Yien Kim who has served for more than 2 years. I am also pleased to welcome our new Board members, Mr. Muk Sai Tat and Ms. Kiran Kaur A/P Jogindar Singh, who joined us in August 2018 as Independent Non-Executive Directors as well as En. Ramlee Mohd Shariff who has taken an executive role in the company as our Chief Operating Officer.

My gratitude and appreciation is also extended to our valued customers, suppliers, business partners and associates, financiers, shareholders, dealers and regulatory authorities for their continuous support to the Group.

Y.A.M. Tengku Sulaiman Shah ibni Almarhum Sultan Salahuddin Abdul Aziz Chairman


MANAGEMENT DISCUSSION AND ANALYSIS

GROUP BUSINESS AND OPERATIONS

Goodway Rubber Industries Berhad (“GIIB” or the “Company”) together with its group of companies (collectively the “Group”) is principally involved in three main operating segments under three distinct subsidiaries, namely:-

1. Goodway Rubber Industries Sdn Bhd which is located in Nilai and is principally involved in the rubber compound business;

2. Big Wheel Green Tyres Sdn Bhd which is located in Kota Kinabalu and is principally involved in the tyre retreading business; and

3. GIIB Development Sdn Bhd., a company involved in property development in Kota Kinabalu.

The rubber compound business has always been the main driver for our Group and the main end products can be divided into 2 major categories, namely, technical compound and tyre compound. Technical compound is a specialised and high performance product used in special applications such as high pressure hydraulic hoses, bridge bearings as well as automotive parts. Our customers for the technical compound are typically well-established international companies.

Tyre compound on the other hand, is mainly used in the tyre retreading industry and raw material by well-established international tyre manufacturing companies. From the tyre compound, we also manufacture retread liners and cushion gum for retread tyres. These liners and cushion gum are consumed by our customers and our subsidiaries.

As the main end products from our rubber compound play a crucial role in ensuring safety of equipment or machineries, failure of which would affect human lives, our emphasis is on producing high quality products. Our products and services are internationally recognised by top tyre manufacturers and comply with global standards.

For the financial period ended 30 June 2018, approximately 33% of our revenue from this segment was generated from exports.

Our property development in Sabah focuses on the development of distinctive properties and we recently completed development of 40 units of exclusive high-end combined detached and semi-detached showroom cum office cum warehouse properties.

REVIEW OF GROUP’S FINANCIAL RESULTS AND FINANCIAL CONDITIONS

Financial year ended (“FYE”)/ FYE FYE FYE FYE FYEFinancial period ended (“FPE”) 31 Dec 2013 31 Dec 2014 31 Dec 2015 31 Dec 2016 30 Jun 2018 (Restated) (Restated) (Restated) (RM’000) (RM’000) (RM’000) (RM’000) (RM’000)

Revenue 265,771 207,475 181,362 157,117 198,555

Profit/(Loss) before tax 6,869 (17,947) (13,450) (33,926) (1,249)

Profit/(Loss) after tax 6,045 (15,111) (15,824) (36,501) 2,052

As at 31 Dec 2013 31 Dec 2014 31 Dec 2015 31 Dec 2016 30 Jun 2018 (Restated) (Restated) (Restated)

Shareholders’ funds (RM’000) 90,527 75,656 63,341 44,573 44,564

Net assets per shares (RM) 0.83 0.69 0.58 0.40 0.40


MANAGEMENT DISCUSSION AND ANALYSIS (CONTINUED)

a. Revenue

The Group’s revenue has increased from RM157.12 million for the financial year ended 31 December 2016 to RM198.55 million for the 18 month period ended 30 June 2018. Nonetheless, on an annualised basis, the Group’s revenue has comparatively decreased mainly due to lower contributions from the compound and retreading business segments.

For the compound business, after the bad experience the Group had in the previous financial year where a huge amount had to be provided for trade receivables, the Group is more selective in choosing its customers during the financial period under review. The Group also changed its business strategy during the financial period under review to focus more on selling higher margin products. These measures have resulted in a comparatively lower revenue from the compound business for the current financial period compared to the previous financial year. Nonetheless, this is expected to be temporary as we expect these strategies to contribute positively to the Group’s financial results in the ensuing years.

For the retread tyres business, the market, especially in East Malaysia, has shrunk. Previously, retread tyres were an excellent alternative to new tyres, there being a huge price differential between new tyres and retread tyres. This scenario nevertheless has changed as tyre manufacturers from industrial powerhouses such as China and India are churning out cheaper new tyres from their factories and tyre manufacturers from Korea and Taiwan are also jumping into the bandwagon, in line with their expansion in South East Asia. As a result, lower revenue was generated from the retread business segment during the current financial period compared to the previous financial year.

The Group’s gross profit has improved from RM19.47 million (restated) for the financial year ended 31 December 2016 to RM29.91 million for the financial period ended 30 June 2018 mainly due to a higher margin obtained from the compound business segment while for the property business segment, as more units for Phase 1 were sold during the financial period under review compared to the previous financial year and development has reached the final stage of completion, more profit was recognised during the financial period compared to the previous year.

b. Loss before taxation

For the 18 month period ended 30 June 2018, the Group recorded loss before taxation amounting to RM1.25 million compared to loss before taxation incurred for the financial year ended 31 December 2016 of RM33.93 million (restated) and the significant improvement is mainly due to the following:-

i. Improvement in gross profit as explained in section a. Revenue above;

ii. Included in loss before taxation incurred for the financial year ended 31 December 2016 are provisions made for impairment losses on inventories, property, plant and equipment, trade receivables and other receivables amounting to RM1.09 million, RM2.65 million, RM9.30 million and RM9.90 million respectively, and bad debts written off of RM3.10 million (restated).

c. Profit after taxation

The Group profit after taxation improved from a loss after taxation amounting to RM36.50 million (restated) incurred for the financial year ended 31 December 2016 to profit after taxation of RM2.05 million recorded for the financial period ended 30 June 2018 in line with b. above.


d. Total assets

The Group’s total assets has decreased by approximately 31% from RM228.02 million (restated) as at 31 December 2016 to RM158.44 million as at 30 June 2018 mainly due to the following:-

i. Reduction in property, plant and equipment from RM101.51 million (restated) as at 31 December 2016 to RM70.72 million as at 30 June 2018, as the Group streamlined its business operations by disposing of non-performing assets as part of the Group’s asset rationalisation and business optimisation plan and in line with the Group’s strategy to reduce its borrowings. And these assets include a piece of property in Karamunsing, a piece of property in Australia and a piece of property and equipment in Nilai.

As a consequence, there was a significant reduction in the gearing ratio of the Group from 2.59 times as at 31 December 2016 to 1.73 times as at 30 June 2018, an improvement of approximately 33%;

ii. A significant drop in property development expenditure from RM33.16 million (restated) as at 31 December 2016 to RM2.15 million as at 30 June 2018, as a significant portion of the properties developed under Phase 1 have been completed and a majority of the units sold; and

iii. A reduction in the Group’s inventories which stood at RM12.95 million as at the end of the financial period compared to RM29.52 million (restated) as at the end the financial year ended 31 December 2016, mainly due to improved inventories management.

DIVIDENDS

The Board of Directors does not recommend any dividends payments for the financial period under review.

CAPITAL EXPENDITURE

The Group does not foresee incurring any significant capital expenditure during the financial year ending 30 June 2019.

ANTICIPATED BUSINESS RISKS

The Group is exposed to several business risks such as market competition, rise in raw materials prices and volatility in currency exchange rates.

(a) Market competition

As mentioned earlier, we expect the outlook for the business of retread tyres to be challenging and to address this, we will strive to manage costs of production as well as improve efficiency and to ensure that the prices of our product will be competitive compared to the price of new tyres.

(b) Rise in raw materials prices

Presently, our compound and retread tyres prices are significantly influenced by the price of crude oil therefore, a significant increase in the price of crude oil will affect the Group’s gross profit margin.

The Group accordingly strives to lower production costs and where possible, pass all or a substantial portion of costs that have increased due to an increase in the price of crude oil, to our customers. The Group also monitors closely and manages the costs of production as well as improve efficiency to maintain our margins.



(c) Volatility in currency exchange rates

Even though a significant portion of our materials are imported and a significant portion of our revenue are from exports, we are still subject to foreign currency risk as the timing of our purchases and sales differ and the proportion of our exports compared to domestic sales may change in future.

To minimise the impact of foreign currency risks, the Group also hedges the foreign currency transactions.

OUTLOOK

During the financial year under review, the Group has undertaken various measures to improve profitability, including cost-rationalisation and streamlining our business operations by disposing of non-performing assets and reducing borrowings. For the compound business segment, the Group made significant efforts during the financial period building its customers base with the emphasis on having good customers as well as focusing on selling high margin products. We therefore expect better performance from the compound business, moving forward.

For the retread business segment, we foresee a challenging year as the stiff competition from new tyres will continue. The “trade war” between the United States of America and China may aggravate matters as the manufacturers from China may “dump” their tyres in other countries including Malaysia. To deal with this, we strive to manage the costs of our production as well as improve efficiency to ensure that the price of our product will be competitive compared to the price of new tyres.

In the property development business segment, as Phase 1 of the Big Wheel Industrial Park project is nearing completion, the plan is to develop Phase 2. However, we do not foresee a significant contribution from this project for the financial year ending 30 June 2019 as the relevant procedures that need to be complied with before commencement such as obtaining approval from the relevant authorities, will take time. Nonetheless, Phase 2 of the project is expected to contribute positively to the Group’s earnings in the ensuing years.



Y.A.M. TENGKU SULAIMAN SHAH ALHAJ IBNI ALMARHUM SULTAN SALAHUDDIN ABDUL AZIZ SHAH ALHAJChairman, Independent Non-Executive Director Male, Malaysian, aged 68

Since 1970, Y.A.M. Tengku Sulaiman Shah became actively involved in business particularly in the building construction and housing development. He started his career with a world known advertising company called Ogilvy & Mather. Throughout his stint from 1971-1975, he gained wide knowledge in the advertising and branding industry. His motivation drives him to be more enterprising and the ultimate goal is to be a major player in the construction industry.

Y.A.M. Tengku Sulaiman Shah with his other partners formed Syarikat Pembinaan Setia Sdn Bhd which is now known as SP Setia Berhad a public listed company in the main board. In 1997, he relinquished his position in SP Setia Berhad. Y.A.M. Tengku Sulaiman Shah was also appointed as the Chief of Ceremony for the State of Selangor by his late father H.R.H. The Sultan of Selangor in 1978 which carries the title ‘Y.A.M. Tengku Panglima DiRaja Selangor’, he is also a member of The Council of the Royal Court of Selangor (Dewan DiRaja). On 27th June 2016 Tengku Sulaiman has been appointed as the Tengku Laksmana of Selangor by his brother H.R.H. The Sultan of Selangor.

Tengku Sulaiman Shah Alhaj was formerly a Director of the following public listed companies:-

1) Malaysian Resources Corporation Berhad 2) Samanda Holdings Berhad 3) MCB Holdings Berhad 4) SIME UEP5) Bina Goodyear Berhad 6) Baneng Holdings Berhad7) KFC Holdings (Malaysia) Berhad8) QSR Brands Bhd9) General Aluminium Sdn Bhd (Subsidiary of public listed company)

Tengku Sulaiman Shah Alhaj is currently a Director of the following public listed companies:

1) Goodway Integrated Industries Berhad 2) WTK Holdings Berhad3) Loh & Loh Corporation Berhad

Tengku Sulaiman Shah Alhaj passion includes photography and travelling. He is married to Y.A.M. Tunku Kamariah Bt. Sultan Iskandar Alhaj, Tunku Puteri Johor and he is blessed with four Princes and one Princess.

In the financial period ended 30 June 2018, Y.A.M. Tengku Sulaiman Shah attended 10 out of the 15 Board of Directors meetings.

PROFILE OF THE DIRECTORS


PROFILE OF THE DIRECTORS (CONTINUED)

TAI BOON WEEExecutive Director - Chief Executive Officer Male, Malaysian, aged 58

Mr Tai Boon Wee (“Mr Tai”) was appointed as the Chief Executive Officer and Group Managing Director of the Company on 20 May 2004.

He joined Goodway Rubber Industries Sdn Bhd in 1989 as the Marketing Manager overseeing the international market. With his visionary leadership and outstanding performance, he was later appointed as the Operations Director in 1991 and subsequently assumed the position of Managing Director in 1994.

He contributed immensely towards the Group’s expansion from 1993 to 2003 by successfully leading a 10 years joint venture project with Gummiwerk Kraiburg Produktions GmbH (“GK”), a German rubber compound entity, involving the transfer of technology know-how for the manufacturing of technical rubber and rubber compounds by GK to the Group. Mr Tai was the chief strategist for the overall market expansion of the Group globally. He was also instrumental in orchestrating the listing of Goodway Integrated Industries Berhad on Bursa Malaysia Securities Berhad in 2004.

In the financial period ended 30 June 2018, Mr Tai attended 15 out of the 15 Board of Directors meetings.

RAMLEE BIN MOHD SHARIFFExecutive DirectorMale, Malaysian, aged 54

Encik Ramlee bin Mohd Shariff (“Encik Ramlee”) was appointed as an Independent Non-Executive Director of the Company on 1 July 2015. He was also the Chairman of the Audit and Risk Management Committee and a member of the Joint Nomination and Remuneration Committee of the Company. On 5 July 2018, he resigned from both committees as he was re-designated to an Executive Director as he was appointed as the Chief Operating Officer of the Company.

He started his career in 1987 with one of the big four accounting firms, where he gained extensive experience handling a wide client portfolio. In 1993, he joined a Malaysian conglomerate as the Group Internal Audit Manager and was promoted to Group Financial Controller in 1995. In 1997, he joined a public listed company as the General Manager - Finance and was responsible for coordinating and directing the financial planning, budgeting and investment activities of the Group. He left the said company in 1998 and was then involved in the restructuring exercise of a public listed company under Section 176 of the Companies Act 1965. He was appointed as a director of a public listed company in 2000 and resigned in 2009. Subsequently, he was involved in several corporate exercises including listing and fund raising.

He is a fellow member of the Association of Chartered Certified Accountants.

In the financial period ended 30 June 2018, Encik Ramlee attended 15 out of the 15 Board of Directors meetings.



TAI QISHENGExecutive DirectorMale, Malaysian, aged 31

Mr Tai Qisheng was appointed as an Executive Director of the Company on 1 April 2016.

He graduated from the University of Sydney, Australia with a Degree in Bachelor of Commerce (Accounting and Finance). He started his career in the Company in 2008 as Enterprise Risk Management Junior Executive. His main task was to provide assistance in developing, streamlining the processes and SOP of all the departments of the Company. In year 2009, he was transferred to the Sales and Marketing Department of Goodway Rubber Industries Sdn Bhd (“GRISB”), a wholly owned subsidiary of the Company. He was then promoted to the position of Head of Sales and Marketing Department of GRISB. During his tenure with GRISB, he managed to secure various contracts for the company, including with USA’s top tyre company. In 2014, he was promoted to the position of Group Strategy and Communication Manager and was responsible for structuring the overall organisation to build long term strategy for the overall businesses and to improve the profitability of the Company. He has experience in business development. He has been an Honorary Member of the Malaysia Rubber Products Manufacturer Association (“MRPMA”) since 2015. He also currently serves as the Deputy President of the Malaysian Association of ASEAN Young Entrepreneur (“MAAYE”).

In the financial period ended 30 June 2018, Mr Tai Qisheng attended 11 out of the 15 Board of Directors meetings.

MUK SAI TATIndependent Non-Executive DirectorMale, Malaysian, aged 55

Mr Muk was appointed as an Independent Non-Executive Director of the Company on 21 August 2018. He is also the Chairman of the Audit and Risk Management Committee and a member of the Joint Nomination and Remuneration Committee of the Company.

He graduated from University of Bath, United Kingdom with Masters of Business Administration (General Management) and is a Member of the Malaysian Institute of Accountants and Malaysian Institute of Certified Public Accountants. He commenced his working career in 1983 with PricewaterhouseCoopers as an Audit Assistant and progressed to Audit Senior upon completion of the Malaysian Association of Certified Public Accountants examination in June 1989. In September 1990, he joined Ogilvy & Mather (Malaysia) Sdn Bhd as an Accountant and later joined Energizer Battery Company (M) Sdn Bhd in 1991 as a Sales Accounting Manager and Financial Analyst. In 1996, he joined Emerson Electric (M) Sdn Bhd as a Financial Controller-Southeast Asia and later joined Pernas Otis Elevator Co. Sdn Bhd and Otis Manufacturing Company Sdn Bhd in 1999 as a Financial Controller/Chief Financial Officer.

In 2000, he joined Skyline Concepts Sdn Bhd as a General Manager and later joined Concino Sdn Bhd in 2001 as the Group Chief Executive Officer. In 2003, Mr Muk joined Mangium Industries Bhd as the Group Chief Executive Officer/Executive Director and later joined WaKa Parter AG/Forestry Investment Trust (F.I.T.) and WaKa-Forest Investment Services AG (WaKa-FIS) in 2007 as a Representative for Asia (F.I.T.) and as a Director in Asia Pacific for WaKa-FIS in 2009. In 2010, he joined TT Resources Bhd as an Executive Director. In 2011, he joined Asian Business Solutions Sdn Bhd as a Partner/Consultant. In 2016, Mr Muk joined Mahzan Sulaiman as a consulting partner.



KIRAN KAUR A/P JOGINDAR SINGHIndependent Non-Executive DirectorFemale, Malaysian, aged 60

Ms Kiran Kaur was appointed as an Independent Non-Executive Director of the Company on 23 August 2018. She is also the Chairman of the Joint Nomination and Remuneration Committee and a member of the Audit and Risk Management Committee of the Company. She graduated from University Malaya with an Honours Degree in Economics (Public Administration). She commenced her working career in 1980 with Bank Negara Malaysia. In 1994, she joined Chase Perdana Berhad as General Manager, Business Development. She subsequently worked briefly at Malayan Banking Berhad as Manager, Corporate Planning Division. In 1996, she was appointed as Senior Vice President of Business Development at Malaysian Rating Corporation Berhad, taking charge of the Company’s corporate and marketing functions. In 2007, she joined MBF Cards (Malaysia) Sdn Bhd as Senior Vice President/Head, Business Development and Investor Relations/Funding. She was an Associate at the Minority Shareholders Watchdog Group specifically on matters related to Independent Directors Pool from Dec 2011 till June 2012. She is also a Panel Member of Finance Accreditation Agency.

TAI QIYAOAlternate Director to Tai Boon WeeMale, Malaysian, aged 30

Mr Tai Qiyao was appointed as an Alternate Director to Mr Tai Boon Wee, Chief Executive Officer of the Company on 1 April 2016.

He graduated from the University of Sydney, Australia with a Degree in Bachelor of Economics. He started his career as an Enterprise Risk Management Executive in Goodway Rubber Industries Sdn Bhd (“GRISB”) and his responsibility was to raise awareness on Risk Management to GRISB and Big Wheel Green Tyres Sdn Bhd (“BWGT”). During his tenure with GRISB, he implemented an Enterprise Risk Management for GRISB and BWGT. He was then appointed as Head of Franchising of GRISB and established the Supercool Franchise Programme in Indonesia, UAE, Philippines, Tanzania, Bahrain and Qatar. In year 2014, he was appointed as Corporate Manager of the Company to establish clear strategies for growth and profitability. He has experience in the operational and commercial aspects of the business.

In the financial period ended 30 June 2018, Mr Tai Qiyao attended 15 out of the 15 Board of Directors meetings.


BOB NGAAU – Managing Director (Rubber Division)Male, New Zealander, Aged 50

Mr. Bob Ngaau, a New Zealand national has joined the company since 1994 as the Technical Advisor and has since risen through the ranks of the organization to become the Managing Director of the Rubber Division. He has previously worked for Bridgestone, world’s largest producer of tyres as well as Bandag, a key player in the tyre retreading industry. Now he oversees the entire operation of GIIB Rubber division and has contributed towards the improvement of the various business processes in the operations.

He was appointed to this position on 1st January 2016. He does not hold any other directorship in other companies. He does not have any family relationship with any director/shareholder.

JAMES YEOH HEAN SEONG – Business Management DirectorMale, Malaysian, Aged 47

Mr James Yeoh, a Malaysian national has joined the company since 2017 as the Business Management Director of the company. Prior to this, he run his own business and was based in India as the Country Manager of an American publishing company, Grolier. He was also the CEO of Elken, managing its business in India with Elken Group. He is tasked to manage the Sales and Business Development of the company.

He was appointed to this position on the 17th April 2017. He does not hold any other directorship in other companies. He does not have any family relationship with any director/shareholder.

ALISON WONG PING KIONG – Procurement DirectorFemale, Malaysian, Aged 55

Ms. Alison Wong is the first employee of Goodway and has been with the company close to 30 years. She has contributed to many departments within the organization such as finance, sales and operations. Her stronghold is in Procurement and hence she is tasked to manage all the procurement especially when this industry requires high dynamism on the market pricing.

She was appointed since 1989. She does not hold any other directorship with other companies. She is a shareholder in the GIIB Group but does not have any relationship with any other director/shareholder.

SAIMON YEW HONG AUN – Chief Financial OfficerMale, Malaysian, Aged 48

Mr. Saimon Yew has Financial experiences of more than 24 years in this field. His experience spans across all disciplines of the finance but he has especially in fund raising, treasury as well as financial reporting. Previously he has served with TH Group Berhad, a listed company on Bursa Malaysia as their Group Finance. He is a Fellowship Member of FCCA and a Chartered Accountant on the Malaysian Institute of Accountants (MIA).

He was appointed since 1st November 2017. He does not hold any other directorship with other companies. He does not have any family relationship with any other director/shareholder.

None of the Key Senior Management holds any directorship in any public companies or listed issuers nor do they have any conflicts of interests with the listed issuer.

None of the Key Senior Management have any family relationship with any director and/or major shareholder of the listed issuer.

Other than traffic offenses (if any), none of the Key Senior Management has any convictions for offences within the last 5 years, nor there were any public sanctions or penalty imposed by any relevant regulatory bodies during the financial period under review.

PROFILE OF KEY SENIOR MANAGEMENT


SHAREHOLDINGS

Details of Directors’ Shareholdings in the Company are disclosed in pages 171 to 173 of this Annual Report.

CONVICTION OF OFFENCES

None of the Directors have any convictions of offences within the past 5 years.

CONFLICT OF INTEREST

None of the Directors have conflict of interest with the Company.

None of the Directors have any family relationship with any director and/or major shareholders of the Company save and except for the following:-

a. Mr Tai Qisheng and Mr Tai Qiyao are brothers and they are sons of Mr Tai Boon Wee (“Mr Tai”); and

b. Mr Tai, Mr Tai Qisheng and Mr Tai Qiyao are related to Massive Structure Sdn Bhd and Sierra Growth Sdn Bhd, the major shareholders of the Company.

Massive Structure Sdn Bhd is a company incorporated in Malaysia and its directors and shareholders are Madam Goh Gee Thien and Mr Tai Qisheng. Madam Goh Gee Thien and Mr Tai Qisheng are related to Mr Tai as wife and son, respectively. Madam Goh Gee Thien is related to both Mr Tai Qisheng and Mr Tai Qiyao as mother.

Sierra Growth Sdn Bhd is a company incorporated in Malaysia and its directors and shareholders are Mr Tai and Madam Goh Gee Thien. Madam Goh Gee Thien is related to Mr Tai as wife. Mr Tai and Madam Goh Gee Thien are related to Mr Tai Qisheng and Mr Tai Qiyao as father and mother, respectively.

Impositions of Sanctions and Penalties

There were no sanctions and penalties imposed on the Company, its subsidiaries, Directors and/or Management by any regulatory bodies during the financial year.

FURTHER INFORMATION ON BOARD OF DIRECTORS


AUDIT AND RISK MANAGEMENT COMMITTEE REPORT

The Board of Directors (the “Board”) of Goodway Integrated Industries Berhad (“GIIB” or the “Company”) is pleased to present the report of the Audit and Risk Management Committee (“ARMC”) for the financial period ended 30 June 2018. The ARMC was established by the Board on 20 May 2004 and was then called the Audit Committee. The name was changed to its existing name on 25 February 2010 to reflect its wider role and responsibilities.

1. COMPOSITION

The ARMC members, all of whom are Independent Non-Executive Directors, are as follows:-

Chairman - Ramlee bin Mohd Shariff (Resigned on 5 July 2018) - Muk Sai Tat (Appointed on 21 August 2018)

Members - Lt. Jen. (B) Datuk Hj. Adenan bin Hj. Mohamad Zain (Resigned on 23 May 2017) - Y.A.M. Tengku Sulaiman Shah Alhaj Ibni Almarhum Sultan Salahuddin Abdul Aziz Shah Alhaj (Appointed on 23 May 2017) - Wong Yien Kim (Resigned on 31 July 2018) - Kiran Kaur A/P Jogindar Singh (Appointed on 23 August 2018)

The current composition complies with the Main Market Listing Requirements of Bursa Malaysia Securities Berhad which requires all audit committee members to be Non-Executive Directors, with a majority of them being Independent directors.

2. TERMS OF REFERENCE

The ARMC operates in accordance with its Terms of Reference (“TOR”) and a copy of it can be viewed on the Company’s website at www.giibworld.com.

3. MEETINGS

The ARMC held fourteen (14) meetings during the financial period ended 30 June 2018 and had accordingly complied with the frequency of meetings requirement under its TOR. The attendance of each member who was in office during the financial period, is as follows:-

Name of members Total meetings attended

Ramlee bin Mohd Shariff (Resigned on 5 July 2018) 14/14Lt. Jen. (B) Datuk Hj. Adenan bin Hj. Mohamad Zain (Resigned on 23 May 2017) 4/4Wong Yien Kim (Resigned on 31 July 2018) 14/14Y.A.M. Tengku Sulaiman Shah Alhaj Ibni Almarhum Sultan Salahuddin Abdul Aziz Shah Alhaj (Appointed on 23 May 2017) 8/14


AUDIT AND RISK MANAGEMENT COMMITTEE REPORT (CONTINUED)

The Chief Executive Officer, together with the members of the Management were invited to attend all the ARMC meetings particularly to provide clarification on audit and risk related issues and to report on the operations. And out of fourteen (14) of these meetings, the External Auditors were invited to attend four (4) meetings and the Internal Auditors were invited to attend three (3) meetings.

The ARMC had a private discussion with the External Auditors on 27 February 2017 without the presence of the Management during the review of the audited financial statements for the year ended 31 December 2016 to discuss any problems or issues arising from the final audit and the assistance provided by the personnel of the Group during the course of audit to the External Auditors. During the meeting, the External Auditors have also declared their independence to the Company and their compliance with By-Laws (on professional ethics, conduct and practice) of the Malaysian Institute of Accountants and other regulatory requirements.

The ARMC had another meeting with the External Auditors on 24 May 2018 and during the meeting, the ARMC reviewed the External Auditors audit plan for the financial period ended 30 June 2018, among others, outline of the audit scope, methodology, timetable, audit materiality, areas of focus, fraud consideration and the risk of management override and also the new and revised auditors’ reporting standards, on-going review of key audit matters and changes in the regulatory environment.

The Company Secretary is also the Secretary of the ARMC. Minutes of each of the ARMC meetings were recorded and were included as part of the papers of the Board for the Board’s information and notation.

4. SUMMARY OF ACTIVITIES AND WORK OF THE ARMC

The ARMC carried out its duties in accordance with its TOR and the key activities undertaken to meet its responsibilities during the financial period ended 30 June 2018 were as follows:-

a. Reviewed quarterly financial results and year-end financial statements of the Company and of the Group focusing particularly on, where applicable, significant changes in or implementation of accounting policies and practices, accounting treatments, the going concern assumption, significant judgements made by the Management, adjustments arising from the audit, compliance with relevant accounting standards and disclosure requirements, prior to making a recommendation to the Board for approval and public release thereof;

b. Deliberated on significant accounting or audit issues and unusual events or transactions highlighted by the External Auditors and/or the Management and reasonableness of application of the accounting standards in preparing the financial statements of the Company and of the Group;

c. Reviewed and recommended to the Board for approval, the Audit Committee Report, Statement of Corporate Governance and Statement on Risk Management and Internal Controls for inclusion in the Annual Report for the financial year ended 31 December 2016;

d. Evaluated the performance of the External Auditors for the financial year ended 31 December 2016 covering areas such as calibre, audit team, audit scope, audit processes, audit governance and independence as well as the audit fees of the External Auditors and having been satisfied with the independence, suitability and performance of the External Auditors, had recommended to the Board for their re-appointment for the financial period ended 30 June 2018;

e. Reviewed the External Auditors audit plan for the financial period ended 30 June 2018, among others, outline of the audit scope, methodology, timetable, audit materiality, areas of focus, fraud consideration and the risk of management override and also the new and revised auditors’ reporting standards, on-going review of key audit matters and changes in the regulatory environment;


f. Assessed the suitability of internal audit firms to perform the internal audit function of the Group that was previously carried out by internal personnel. Consequently, selected and appointed RSM Corporate Consulting (Malaysia) Sdn. Bhd. (“RSM” or the “Internal Auditors”);

g. Reviewed the audit plan of the Internal Auditors to ensure that the scope and coverage of their internal audit on the Group’s operations is adequate and comprehensive. Consequently, reviewed the internal audit report issued by the Internal Auditors and considered the major findings and the Management’s response, prior to making a recommendation to the Board for approval;

h. Reviewed the Circular to Shareholders on the proposed renewal of shareholders’ mandate for recurrent related party transactions of a revenue or trading nature;

i. Reviewed the Management’s proposals to dispose of certain assets of the Group and the related draft announcements, prior to making recommendations to the Board for approval and public release thereof;

j. Oversee the impairment test assessments on the carrying amount of the Group’s plant and equipment and the inventories of a subsidiary performed by PKF Business Services Sdn Bhd and ensured that it was properly carried out and the relevant adjustments were consequently made in the financial statements;

k. Assisted the Board and the Management in responding to queries by the authorities:

l. Assisted the Board in reviewing the proposed corporate exercise of the Company; and

m. Reported to the Board on significant issues and concerns discussed during the ARMC meetings.

5. INTERNAL AUDIT FUNCTIONS AND SUMMARY OF WORK OF THE INTERNAL AUDITORS

RSM reports directly to the ARMC and the primary role of RSM is to assess the adequacy and effectiveness of the system of internal controls of the Group. The internal audit work carried out by RSM during the financial period ended 30 June 2018 included the following:-

a. Tabled the Internal audit plan for the ARMC’s review and endorsement;

b. Conducted an audit on the “Human Resources Management” and assessed the adequacy and effectiveness of the internal controls system; and

c. Issued and presented an internal audit report to the ARMC incorporating audit recommendations and Management’s responses to the audit findings on weaknesses in the systems of controls.

The cost incurred for the Internal Audit for the financial period ended 30 June 2018 was approximately RM32,000.

The Board has reviewed the terms of office of the ARMC members and assessed the performance of the ARMC and is satisfied that the ARMC and its members discharged their functions, duties and responsibilities in accordance with the ARMC’s TOR and support the Board in ensuring that the Group upholds the relevant Corporate Governance standards.

AUDIT AND RISK MANAGEMENT COMMITTEE REPORT (CONTINUED)


The Board of Directors (“the Board”) of Goodway Integrated Industries Berhad (the “Company”) comprehends its accountability to the shareholders and other stakeholders of the Company. In discharging its regulatory role, the Board is therefore committed in ensuring that the Company and its subsidiaries (collectively “the Group”) carries out its business operations by applying the required standard of corporate governance as set out in the Malaysian Code on Corporate Governance (“MCCG”) as the Board recognises that this is vital to the success of the business of the Group and will assist in protecting and enhancing the Company’s shareholders’ value.

This Corporate Governance Overview Statement (“CG Statement”) is prepared in compliance with Bursa Malaysia Securities Berhad (“Bursa Securities”) Main Market Listing Requirements (“MMLR”) and is to be read together with the Company’s Corporate Governance Report (“CG Report”) which is available at the Company’s website at www.giibworld.com as well as Bursa Securities’ website at www.bursamalaysia.com.

This Statement provides a summary of the corporate governance practices of the Company during the financial period ended 30 June 2018 with reference to the following three key Principles of good corporate practices set out in the MCCG having consideration for the Group’s structure, business environment and industry practices:-

(a) Board leadership and effectiveness; (b) Effective audit and risk management; and (c) Integrity in corporate reporting and meaningful relationship with stakeholders.

PRINCIPLE A – BOARD LEADERSHIP AND EFFECTIVENESS

The Board comprehends its overall responsibility for the Group’s strategic direction, for monitoring the implementation of the Group’s strategies as well as overseeing the conduct of the businesses of the Group. And to promote high standards of corporate governance, the Board has adopted a Board Charter which is available on the Company’s website at www.giibworld.com. The Board Charter, inter alia, identifies the respective roles and responsibilities of the Board, Board Committees, individual directors, the CEO and Company Secretary and matters reserved for the Board’s approval. Key matters reserved for the Board’s approval include overall strategic direction, business expansion and restructuring plans, material acquisitions and disposals, expenditure above certain limits, issuance of new securities and capital alteration plans.

The Board is led by the Chairman, namely, Y.A.M. Tengku Sulaiman Shah Alhaj Ibni Almarhum Sultan Salahuddin Abdul Aziz Shah Alhaj, an Independent Non-Executive Director, who is responsible for providing leadership to the Board and ensuring smooth and effective functioning of the Board. The Chairman is elected by the Board and will preside at all Board meetings and general meetings of the Company. The Chairman will ensure that procedural rules are followed in the conduct of meetings and that decisions made are formally recorded and adopted. The Chairman also ensures that good corporate practices and procedures are established and implemented throughout the Group.

The positions of Chairman and CEO of the Company are held by different individuals and the distinct and separate roles and responsibilities of the Chairman and CEO are provided in Paragraphs 2.5 and 2.6 of the Board Charter, respectively. In essence, the Chairman is responsible for leading the Board effectively and ensuring that the Board functions effectively and independently of Management while the CEO is accountable to the Board for the achievement of the Group’s objectives.

In effectively discharging its duties and responsibilities, among others, the Board has established a Governance Model for the Group where specific powers of the Board are delegated to the Chief Executive Officer (“CEO”) as well as the Board Committees which comprise two Governance Committees, namely, the Audit Risk and Management Committee (“ARMC”) and the Joint Nomination and Remuneration Committee (“JNRC”).

The CEO is accountable to the Board for the profitability and development of the Group. He is principally responsible for the day-to-day management of the Group, ensuring the efficiency and effectiveness of the operations of the Group and manages it in accordance with the strategies and policies approved by the Board. The CEO is supported by the Chief Operating Officer (“COO”) and other key Management personnel (Collectively the “Management”) and they meet regularly to review and monitor the performance of the Group’s operations. The CEO briefs the Board during the Board meetings on the Group’s business operations and management’s initiatives. The Management’s performance is assessed by the Board through monitoring the success in delivering the approved targets and business plans.

CORPORATE GOVERNANCE OVERVIEW STATEMENT


CORPORATE GOVERNANCE OVERVIEW STATEMENT (CONTINUED)

There is a clear segregation of responsibilities between the Executive and Non-Executive Directors in the Company to ensure a balance of power and authority. Non-Executive Directors of the Company are not involved in the day-to-day management of the Group but play a pivotal role in ensuring corporate accountability by providing unbiased and independent views as well as sharing their knowledge and experience during the corporate decision-making process. The participation of the Non-Executive Directors as members of the Board Committees, namely, the ARMC and JNRC, also contribute towards the enhancement of corporate governance and controls of the Group.

Both the ARMC and the JNRC are entrusted with specific tasks and operate within their defined terms of reference which are available on the Company’s website at www.giibworld.com and these Board Committees are empowered to examine and deliberate on issues delegated to them and report to the Board with their recommendations and comments. The ultimate responsibility for the final decision on all matters proposed by these Board Committees nonetheless lies with the Board as a whole.

The ARMC comprises 3 members, all of whom are Independent Non-Executive Directors. The positions of the Chairman of the ARMC and the Chairman of the Board are held by different individuals. The JNRC also comprises 3 members, all of whom are Independent Non-Executive Directors and the positions of the Chairman of the JNRC and the Chairman of the Board are also held by different individuals. All deliberations and decisions taken by the Board Committees are documented and approved by the respective Chairman of the Committees and the report and recommendations of the Board Committees are included as agenda items for deliberation at the meetings of the Board.

The Board Charter stipulates that “the Board shall meet at least four (4) times a year at quarterly intervals with additional meetings to be convened where necessary to deal with urgent and important matters that require the attention of the Board.” In accordance with the above, during the financial period under review, fifteen (15) Board meetings were held and the attendance of the Board members, who were in the office during the financial period, are as follows:- Name Attendance

1. Y.A.M. Tengku Sulaiman Shah Alhaj Ibni Alharhum Sultan Salahuddin Abdul Aziz Shah Alhaj (Chairman) 10/152. Tai Boon Wee 15/153. Wong Ping Kiong (Retired on 23 May 2017) 5/154. Lt Jen (B) Datuk Hj Adenan Bin Hj Mohamad Zain (Retired on 23 May 2017) 4/155. Ramlee Bin Mohd Shariff 15/156. Tai Qisheng 11/157. Tai Qiyao (alternate to Tai Boon Wee) 15/158. Wong Yien Kim (Appointed on 18 July 2016; Resigned on 31 July 2018) 15/15

Based on the above, all remaining Directors have complied with the minimum 50% requirement on attendance at Board meetings held during the financial period as stipulated in the Listing Requirements.

For the financial period ended 30 June 2018, the Board is satisfied with the level of time commitment given by the Directors towards fulfilling their roles and responsibilities as Directors of the Company. To ensure that all the Directors remain fully committed in carrying out their duties and responsibilities and are able to give sufficient time commitment to their duties and responsibilities, the directors are required to notify the Chairman of the Board before accepting new directorships outside the Group and provide the time that will be spent on the new directorship. Similarly, the Chairman of the Board shall do likewise before taking up any additional appointment of directorships.

The Board and Board Committees materials and information such as agenda, minutes, Board papers and other supporting documents that contain, where relevant, updates on operational, financial and corporate developments, are made available prior to each meeting so that Directors have sufficient time to read and understand the information and obtain further information, clarification or explanation from the Management on the issues to be considered, where necessary. In the event that there is a potential conflict of interest, it is mandatory practice for the Director concerned to declare his interest and abstain from any Board decisions.



Additionally, whenever required, the Management personnel, External Auditors and/or Internal Auditors are invited to attend the meetings to present and brief the Board and/or Board Committees on matters within their expertise, knowledge and provide clarity on the agenda being discussed to enable the Directors to make independent and informed decisions.

All Directors whether as a full Board or in their individual capacity, also have access to all information within the Group as well as professional advice. In addition, the Directors may engage external and independent professional advisors, whenever required, at the Company’s expense, in order to discharge their duties and responsibilities more effectively.

The date scheduled for the Board meetings as well as the Board Committees meetings and the forthcoming AGM were set in advance based on the availability of the Board members to ensure that the Group benefits optimally from their presence and each Board member is able to satisfactorily discharge his or her responsibility. In the intervals between Board meetings, any matters requiring urgent Board decisions or approvals will be sought via circular resolutions of the Directors and these are supported with all the relevant information and explanations required for an informed decision to be made.

The Company Secretary attends all Board and Board Committee meetings and ensures that meetings are properly convened, and that accurate and proper records of the proceedings and resolutions passed are recorded and maintained accordingly. Meetings of the Board and the Board Committees are properly minuted and subsequently circulated to all Board members. The Directors were also notified of any corporate announcement released to Bursa Securities.

The Company Secretary is experienced and competent and is a member of the professional body, namely, Malaysian Institute of Chartered Secretaries and Administrators, and qualified to act as a company secretary under the Companies Act 2016. All Directors have full access to the advice and services of the Company Secretary who also advises the Board on matters including corporate governance issues and the Directors’ responsibilities in complying with the relevant legislations and regulations such as their obligations and duties to disclose their interest in securities, disclosure of any conflict of interest in a transaction involving the Group, prohibition on dealing in securities and restrictions on disclosure of price-sensitive information. The Company Secretary is also responsible in ensuring that all the statutory records of the Company are properly maintained at the registered office of the Company.

To also assist in discharging its duties, the Board has also endorsed a clear Code of Conduct for the Group which serves as the basis for among others, the formulation of policies governing accepted corporate behaviour, conduct and practices across the Group to be followed by the Board of Directors and employees of the Group. The Code of Conduct also includes guidance on disclosure of conflict of interests, maintaining confidentiality and disclosure of information, and the duty to report where there is a breach of the Code. The Code of Conduct is available at the Company’s website at www.giibworld.com.

The Board has also endorsed the Company’s Whistleblowing Policy which aims to develop a culture of openness, accountability and integrity within the Group, sets out the procedures which must be followed to enable employees or any external party to voice their concerns without fear of retaliation and with the confidence that their complaints will be acted upon and their identity kept confidential. By virtue of this, employees have free access to the Independent Directors and may raise concerns of non-compliance to them or through the personnel stated in the Policy and may also report observed non-compliance of the Code of conduct to the Chairman of the ARMC.

The ARMC is responsible to ensure that an independent investigation is fairly conducted where necessary. The ARMC is also responsible to review the policy to ensure that it remains relevant to the Group’s needs, continues to reinforce the strategic objectives of the Group and will reflect changing legal, regulatory and ethical standards and a copy of the policy is available on the Company’s website at www.giibworld.com.

The Board also recognises the importance of business sustainability and views the commitment to sustainability and environmental, social and governance performance as part of its broader responsibility to shareholders and the community.

The Board currently has 6 Directors, comprising 3 executive members and 3 non-executive members. The non-executive Directors constitute 50% of the Board and are independent and all of them have satisfied the independence test based on the criteria set out in the Main Market Listing Requirements of Bursa Securities.



A brief profile of each Director is presented in the “Board of Directors’ Profile” section on pages 12 to 15 of this Annual Report.

The present composition of the Board is also in compliance with Chapter 15.02 of the Main Market Listing Requirements of Bursa Securities which requires at least 2 or one third (1/3) of the Board members of a listed issuer to be Independent Directors. The Board also believes that its present composition constitutes the optimal size for the Group, and appropriate for leading the Group effectively on its future business growth and provides an adequate mix of skills, knowledge and expertise which allows the Board to effectively discharge its stewardship and responsibilities.

The Company has a policy which limits the tenure of Independent Directors to cumulative terms of no more than nine years and this policy is specified in item 2.2 of the Board Charter. The Board Charter nonetheless also specifies that, the Board recognises that the limit on tenure may cause loss of experience and expertise that are important contributors to the efficient working of the Board. As such, the overall performance of the relevant Board member will be assessed by the JNRC upon completion of his or her nine year tenure and if there is strong justification for the Board member to remain as an independent Director, the Board will justify and make recommendation of the same to the shareholders for their approval. Alternatively, the relevant independent Director may continue to serve on the Board subject to the Director’s re-designation as a non-independent Director.

Having said the above, none of the tenures of the Independent Directors of the Company have exceeded a cumulative term of 9 years. Y.A.M. Tengku Sulaiman Shah Alhaj Ibni Almarhum Sultan Salahuddin Abdul Aziz Shah Alhaj was appointed as an Independent Director on 5 July 2015, Muk Sai Tat was appointed as an Independent Director on 21 August 2018 and Kiran Kaur A/P Jogindar Singh was appointed as an Independent Director on 23 August 2018.

All the Directors of the Company have confirmed that they do not hold more than five (5) directorships in listed issuers pursuant to paragraph 15.06 of the Main Market Listing Requirements of Bursa Securities and to also assist in ensuring adherence to this requirement, the Company Secretary continuously monitors the number of directorships held by each Director and advises the Board on new appointments.

The JNRC is a merger between the Nomination and Remuneration Committees of the Company on 28 February 2008. The JNRC is tasked with the responsibility for identifying, assessing and recommending the right candidates to the Board, including succession planning, as well as reviewing and assessing the size, composition and performance of the Board to ensure that it has the optimal mix of qualifications, skills, experience and other qualities, including core competencies to serve the Board effectively and efficiently. In making its recommendations, the JNRC will consider, inter alia, the individual’s capacity, integrity, track record, experience and qualifications. The JNRC would also consider boardroom diversity including gender diversity and in the case of candidates for the position of Independent Non-Executive Directors, the JNRC shall also evaluate the candidates’ ability to discharge such responsibilities or functions expected of Independent Non-Executive Directors.

The JNRC is also entrusted by the Board to annually review the effectiveness of the Board and Board Committees, the performance of individual directors as well as the independence of each Independent Non-Executive Director. The evaluation which is internally facilitated is based on a combination of self and peer assessment by Board members via a customised questionnaire circulated to all Board members. Their responses are collected and collated by the Company Secretary on behalf of the JNRC and the outcome of the assessments and comments by all Directors are summarised and discussed at the JNRC meeting which are then reported to the Board at the Board Meeting. All assessments and evaluations carried out by the JNRC in the discharge of its duties are properly documented.

The JNRC is further entrusted to conduct an assessment of the Directors who are subject to retirement at the forthcoming annual general meeting (“AGM”) in accordance with the provisions of the Company’s Constitution and the relevant provisions of the Companies Act 2016. The Company’s Constitution provides that a Director appointed during the year is required to retire and seek approval for re-election from the shareholders at the following AGM immediately after their appointment. The Constitution also requires that one-third (1/3) of the Directors shall retire by rotation and they are eligible to seek re-election at each AGM and that each Director shall submit himself/herself for re-election once every three (3) years.



The JNRC is also responsible for recommending to the Board those Directors who are eligible to stand for re-election. At the forthcoming 15th AGM, the Directors who will retire by rotation and eligible for re-election pursuant to Article 79 of the Company’s Constitution are Y.A.M. Tengku Sulaiman Shah Alhaj Ibni Almarhum Sultan Salahuddin Abdul Aziz Shah Alhaj and Ramlee Bin Mohd Shariff. The new Directors, namely, Muk Sai Tat who was appointed on 21 August 2018 and Kiran Kaur A/P Jogindar Singh who was appointed on 23 August 2018, will also retire and be eligible for re-election at the forthcoming AGM pursuant to Article 84 of the Company’s Constitution.

The Board comprehends the importance of boardroom diversity in terms of age, gender, nationality, ethnicity and recognises the benefits that it will bring to the Group but is of the view that the standard selection criteria of a Director, based on, for example, an effective blend of competencies, skills, extensive experience and knowledge to strengthen the Board, should remain a priority. Having said this, the Board will continuously strive to meet the targets for gender diversity requirements and will take the necessary measures towards promoting a corporate culture that embraces gender diversity in the boardroom, whenever possible, even though a Diversity Policy which sets out the Board’s aim to achieve its target of at least 30% women directors on the Board, is presently not in place.

In view of the above, in seeking potential candidates for new appointments, the Board shall take into account the various diversity factors to ensure the Board remains balanced. Consequently, on 23 August 2018, the Board appointed one (1) female board member, namely, Kiran Kaur A/P Jogindar Singh as a Director of the Company and she currently represents approximately 17% of the composition of the Board.

The Board believes that continuous training for Directors is vital for the Board members particularly in areas of corporate governance and regulatory changes so that they would be able to discharge their duties as directors effectively. The Board therefore has entrusted the JNRC to assess the training needs of each Director on an annual basis by determining areas that would strengthen their contribution to the Board. The Board nonetheless, assumes the onus of determining and overseeing the training needs of their Directors.

All Directors have attended the Mandatory Accreditation Programme (“MAP”) as required under the Main Market Listing Requirements of Bursa Securities. Details of the training attended by the Directors who were in office during the financial period ended 30 June 2018 are as follows:-

Mode of No. of hours / Director Training Training day(s) spent

Tai Boon Wee • Corporate Governance Briefing Session Presentation 2.5 hours

Tai Qisheng • Advocacy Session on Corporate Disclosure for Presentation 2.5 hours Directors and Principal Officers of Listed Issuers

Ramlee Bin Mohd Shariff • CG Breakfast Series (Leading Change @ The Brain) Presentation 3.5 hours • CG Breakfast Series: Integrating An Innovation Presentation 3.5 hours Mindset with Effective Governance • CG Breakfast Series: Board Excellence Presentation 3.5 hours • Advocacy Session on Corporate Disclosure for Presentation 2.5 hours Directors and Principal Officers of Listed Issuers • Corporate Governance Briefing Session Presentation 2.5 hours • Business as a Force for Good Presentation 1 day

Tai Qiyao (alternate to • Sustainability Reporting Workshops for Workshop 2 daysTai Boon Wee) Practitioners 2018

Wong Yien Kim • Bursa Risk Management Programme: Presentation 8.0 hours(resigned on 31 July 2018) I am Ready to Manage Risks • Advocacy Session on Corporate Disclosure for Presentation 2.5 hours Directors and Principal Officers of Listed Issuers


Y.A.M. Tengku Sulaiman Shah Alhaj Ibni Almarhum Sultan Salahuddin Abdul Aziz Shah Alhaj, Lt Jen (B) Datuk Hj Adenan Bin Hj Mohamad Zain (resigned on 23 May 2017) and Wong Ping Kiong (retired on 23 May 2017) did not attend any seminars or trainings during the financial period due to work constraints.

All Directors are mindful that they shall attend suitable training programmes, from time to time to, inter alia, keep abreast with current developments of the industry as well as new statutory and regulatory requirements and therefore will continue to participate in relevant training programmes to enable them to effectively discharge their duties and continuously contribute towards the successful direction of the Group. Board members were also regularly updated by the Company Secretary during the Board meetings on any regulatory and legal developments.

The JNRC is also entrusted by the Board to review matters relating to the remuneration of the Directors and key Management and consequently recommend to the Board for approval. In doing so, the JNRC will among others, take the following into account:-

a. the remuneration structure is sufficient to attract as well as motivate and retain suitable individuals needed to manage the Group successfully at both the Board and the Senior Management levels;

b. the rewards are based on the Group’s and individual’s performance, responsibilities, expertise and complexity of the Group’s activities; and

c. the interests of Directors, Senior Management and the stakeholders are aligned with the business strategy and long-term objectives of the Group.

Equally important, when making recommendations for the remuneration of Directors and Senior Management to the Board, the JNRC is also guided by the market norms and industry practices. Additionally, the Board as a whole recommends the Non-Executive Directors proposed fees with the individual directors concerned abstaining from making decisions in respect of their individual remuneration. The payment of Directors’ fees, allowance and benefits-in-kind to the Directors are subject to the approval of the shareholders at the Company’s Annual General Meeting.

Details of the Directors’ fees and other benefits paid or payable to the Directors of the Company who were in office for the financial period ended 30 June 2018, which are subject to the approval of shareholders of the Company, are as follows:-

OtherName of Directors Fees Remuneration emoluments* Total RM’000 RM’000 RM’000 RM’000

Non-Executive Directors Y.A.M. Tengku Sulaiman Shah Alhaj Ibni Alharhum Sultan Salahuddin Abdul Aziz Shah Alhaj 74.25 - 22.80 97.05Lt Jen (B) Datuk Hj Adenan Bin Hj Mohamad Zain (resigned on 23 May 2017) 14.10 - 7.80 21.90Wong Yien Kim (resigned on 31 July 2018) 59.40 - 15.60 75.00Ramlee Bin Mohd Shariff 59.40 - 30.00 89.40 Executive Directors Tai Boon Wee - 911.17 174.27 1,085.44Wong Ping Kiong (resigned on 23 May 2017) - 125.00 24.01 149.01 Tai Qisheng - 249.01 33.55 282.56Tai Qiyao (alternate to Tai Boon Wee) - 224.00 27.66 251.66

* Other emoluments includes E.P.F.




The aggregate remuneration paid to the 5 key Management was RM1,997,026 which represent 9.59% of the total employees remuneration of the Group. This amount is a combination of their annual salaries, bonuses and benefits-in-kind and was determined in a similar manner as other management employee of the Company. Further, the basis has been consistently applied and is based on the individual’s performance, the overall performance of the Company and benchmarked against other companies operating in similar industry.

The Board comprehends that, although the MCCG has recommended that the Company should disclose the Remuneration of 5 Key Management Personnel on a named basis, it is of the opinion that it would not be in the best interest of the Group to do so in view of the competitiveness in the employment market. The Board therefore would like to maintain the confidentiality of these personnel’s remuneration details.

The Board nonetheless strives to ensure that the remuneration package of the Senior Management of the Group is reviewed annually during the Company’s annual performance review and measured against the targets set for the financial year and that the remuneration package of the Senior Management is fair and commensurate with the performance of the Company and the contributions made by the Senior Management. Equally important, the Board also strives to ensure that the remuneration package of the Senior Management of the Group is able to retain and motivate the Senior Management to excel in their respective roles as well as attract qualified personnel from outside to join the Group.

The Board is also of the opinion that non-disclosure of the individual remuneration of each Director will not significantly affect the understanding and evaluation of the Group’s governance.

PRINCIPLE B – EFFECTIVE AUDIT AND RISK MANAGEMENT

The ARMC was established by the Board of Directors (the “Board”) on 20 May 2004 and was then called the Audit Committee and the name was changed to its existing name on 25 February 2010 to reflect its wider role and responsibilities. The ARMC members, all of whom are Independent Non-Executive Directors, are as follows:-

Chairman - Ramlee bin Mohd Shariff (Resigned on 5 July 2018) Muk Sai Tat (Appointed on 21 August 2018)

Members - Lt. Jen. (B) Datuk Hj. Adenan bin Hj. Mohamad Zain (Resigned on 23 May 2017) - Y.A.M. Tengku Sulaiman Shah Alhaj Ibni Almarhum Sultan Salahuddin Abdul Aziz Shah Alhaj (Appointed on 23 May 2017) - Wong Yien Kim (Resigned on 31 July 2018) - Kiran Kaur A/P Jogindar Singh (Appointed on 23 August 2018)

The position of Chairman of the Board and the Chairman of the ARMC are presently held by different individuals. As mentioned earlier, the composition, authority as well as the duties and responsibilities of the ARMC are set out in its Terms of Reference approved by the Board. The current composition of the ARMC complies with the Main Market Listing Requirements of Bursa Malaysia Securities Berhad that requires all audit committee members to be Non-Executive Directors, with a majority of them being Independent directors.

The Group presently does not have a policy with regard to limitation on appointment of former key audit partner as an independent director, nevertheless, none of the existing independent directors are former key audit partners of the Company and its subsidiaries.


The Board strongly believes that the present members of the ARMC possess a mix of skills, knowledge and the necessary level of expertise and experience to enable them to satisfactorily discharge their duties and responsibilities pursuant to the Terms of Reference of the ARMC. The present Chairman of the ARMC is a member of the Malaysian Institute of Certified Public Accountants and the Malaysian Institute of Accountants, hence, the Company has fulfilled the requirement under Paragraph 15.09(1)(c)(i) of the Main Market Listing Requirements of Bursa Securities, that requires at least one (1) member of the Audit Committee to be a member of the Malaysian Institute of Accountants.

The ARMC held fourteen (14) meetings during the financial period ended 30 June 2018 and had accordingly complied with the frequency of meeting requirement under its TOR. The attendance of each member who was in office during the financial period, is as follows:-

Name of members Total meetings attended

Ramlee bin Mohd Shariff 14/14Lt. Jen. (B) Datuk Hj. Adenan bin Hj. Mohamad Zain (Resigned on 23 May 2017) 4/14Wong Yien Kim (Resigned on 31 July 2018) 14/14Y.A.M. Tengku Sulaiman Shah Alhaj Ibni Almarhum Sultan Salahuddin Abdul Aziz Shah Alhaj (Appointed on 23 May 2017) 8/14

The Chief Executive Officer, together with the members of the Management were invited to attend all the ARMC meetings particularly to provide clarification on audit and risk related issues and to report on the operations. And out of six (6) of these meetings, the External Auditors were invited to attend four (4) meetings and the Internal Auditors were invited to attend three (3) meetings.

The ARMC has been entrusted by the Board to oversee the Company’s and Group’s financial reporting process and the quality of financial reporting and ensure that the financial statements comply with the provisions of the Companies Act 2016 and the applicable Malaysian Financial Reporting Standards and International Financial Reporting Standards in Malaysia.

Correspondingly, the main task undertaken by the ARMC during the financial period ended 30 June 2018 was reviewing the quarterly financial results and year-end financial statements of the Company and of the Group focusing particularly on, where applicable, significant changes in or implementation of accounting policies and practices, accounting treatments, the going concern assumption, significant judgements made by the Management, adjustments arising from the audit, compliance with relevant accounting standards and disclosure requirements, prior to making a recommendation to the Board for approval and public release thereof. The ARMC also assisted the Board in examining and reviewing information for disclosure to ensure accuracy, completeness and quality of reporting prior to official release to regulatory authorities and shareholders.

The ARMC further assisted the Board in reviewing the Management’s proposals to dispose of certain assets of the Group and the related draft announcements, prior to making recommendations to the Board for approval and public release thereof, oversee the impairment test assessments on the carrying amount of the Group’s plant and equipment and the inventories of a subsidiary performed by PKF Business Services Sdn Bhd and ensured that it was properly carried out and the relevant adjustments were consequently made in the financial statements and also assisted the Board and the Management in responding to queries by the authorities. The ARMC also had a private discussion with the External Auditors on 27 February 2017 without the presence of the Management and during the review of the audited financial statements for the year ended 31 December 2016 to discuss any problems or issues arising from the final audit and the assistance provided to the External Auditors by the personnel of the Group during the course of audit.

The ARMC consequently evaluated the performance of the External Auditors for the financial year ended 31 December 2016 covering areas such as calibre, audit team, audit scope, audit processes, audit communication, audit governance and independence as well as the audit fees of the External Auditors and having been satisfied with the independence, suitability and performance of the External Auditors, had recommended to the Board for their re-appointment for the financial period ended 30 June 2018.




The ARMC had another meeting with the External Auditors on 24 May 2018 and during the meeting, the ARMC reviewed the External Auditors audit plan for the financial period ended 30 June 2018, inter alia, outline of the audit scope, methodology, timetable, audit materiality, areas of focus, fraud consideration and the risk of management override and also the new and revised Auditors’ Reporting Standards, on-going review of key audit matters and changes in the regulatory environment. The External Auditors have also declared their independence to the Company and their compliance with by-Laws (on professional ethics, conduct and practice) of the Malaysian Institute of Accountants and other regulatory requirements.

The amount of the statutory audit fees and non-audit fees paid/payable to the External Auditors and its affiliates by the Company and the Group respectively for the financial period ended 30 June 2018 were as follows:-

Statutory Audit Fees Non-Audit Fees Company Group Company Group RM’000 RM’000 RM’000 RM’000

Statutory audit fees paid or payable to Kreston, John & Gan 67.5 325.5 10.0 10.0

The External Auditors were also invited to attend the Company’s previous AGM and will be invited to attend the Company’s forthcoming AGM to answer any questions from the shareholders on the conduct of the statutory audit and the contents of the Audited Financial Statements. The ARMC is also entrusted by the Board to oversee the Group’s risk management framework and policies. Risk management is regarded by the Board as an integral part of the business operations and therefore embedded in the day-to-day business activities and management decision-making framework of the Group. The risk management process includes conducting risk profiling and determining key risk areas and its impact including developing an internal plan, updating the system of risk management and internal controls when there are changes to the business environment or regulatory guidelines. Management at all levels have a collective responsibility for creating a risk-aware culture and ensuring that business risk assessment becomes an explicit part of the decision-making process in the Group.

To assist in discharging its responsibilities, the ARMC has outsourced the internal audit function to RSM Corporate Consulting (Malaysia) Sdn Bhd (“RSM” or the “Internal Auditors”) and RSM reports directly to the ARMC. The primary role of RSM is to assess the adequacy and effectiveness of the internal controls system of the Group and carries out their internal audit based on the plan approved by the ARMC.

RSM’s internal audit personnel are free from any relationships or conflict of interest which could impair their objectivity and independence. RSM is led by Mr Jaymes Foo, the Head of Governance, Risk and Compliance (‘GRC’), who graduated with a Degree in Bachelor of Science in Applied Accounting, is a Member of the Association of Chartered Certified Accountants and a Professional Member of Institute of Internal Auditors Malaysia (“CMIIA”). The Internal audit reviews of the Group were conducted in accordance with the International Standards for the Professional Practice of Internal Auditing and the risk-based audit plan approved by the ARMC.

During the financial period ended 30 June 2018, RSM, tabled the internal audit plan for the ARMC’s review and endorsement, conducted an audit on the “Human Resources Management” and assessed the adequacy and effectiveness of the internal controls system and subsequently, issued and presented an internal audit report to the ARMC incorporating audit recommendations and Management’s responses to the audit findings on weaknesses in the systems of controls. The ARMC consequently considered the major findings and the Management’s response and made a recommendation to the Board for approval of the Internal Audit Report.

The detailed report on the activities of the ARMC for the financial period ended 30 June 2018 is set out in the Company’s Annual Report.


PRINCIPLE C – INTEGRITY IN CORPORATE REPORTING AND MEANINGFUL RELATIONSHIP WITH STAKEHOLDERS

The Board comprehends the importance of effective, transparent and timely dissemination of information to the Company’s shareholders and other stakeholders, to ensure that they are well informed of all major developments in the Company and the Group.

The Group leverages on a number of formal channels for effective dissemination of information to its shareholders and other stakeholders by making timely and informative disclosures in the quarterly announcements on financial results and other periodicals or relevant announcements to Bursa Securities, circulars and Annual Report, general meetings of shareholders and the Company’s website at www.giibworld.com.

The Company regards the Annual General Meeting (“AGM”) to be the primary forum for dialogue and interactions with its shareholders and other stakeholders especially as the AGM will provide an opportunity for the shareholders and other stakeholders to seek clarification from the Board and Senior Management on issues pertaining to the Annual Report, audited financial statements and the businesses of the Group. All Directors were present at the 14th AGM of the Company and barring unforeseen circumstances, all Directors as well as the external auditors of the Company shall be attending the forthcoming 15th AGM of the Company scheduled on 19 December 2018 to respond to the shareholders’ questions at the AGM.

In line with the above, the Company will strive to ensure that the AGM will continue to provide an important opportunity for effective communication with and constructive feedback from the Company’s shareholders and other stakeholders and will therefore send the Company’s Notice of the forthcoming 15th Annual General Meeting at least 28 days prior to the meeting scheduled on 19 December 2018 to facilitate them to make the necessary arrangements to attend and participate in person or through corporate representatives, proxies or attorneys and enable them to review the Annual Report and papers supporting the resolutions proposed and consequently make an informed decision when exercising their voting rights at the general meeting. To further encourage the shareholders to attend the Company’s forthcoming AGM, as in the past few years, the venue for the AGM will be in Subang Jaya, which is easily accessible to the shareholders. And for shareholders who are unable to attend, they are allowed to appoint proxies to attend, speak and vote on their behalf.

This CG Overview Statement was approved by the Board of Directors of the Company on 22 October 2018.



SUSTAINABILITY STATEMENT

Goodway Integrated Industries Berhad and its subsidiaries (collectively “the Group”) recognise that our business activities have a direct and indirect impact on the environment, economy and social risks and opportunities. The Group therefore comprehends the importance of sustainability and our tagline “Engineered to Care” shows how we place a strong emphasis on these factors. “Engineered to Care” is all encompassing, where the term “Engineered” means to think through our actions and decisions in a rational and structured manner while the word “to care” means going beyond complying, i.e., thinking and acting beyond the basic requirement.

1. ENVIRONMENT

The Group comprehends the importance of the wellbeing of the environment and we believe that our business activities of producing tyre liners for retreading tyres play a significant role in protecting the environment. This is so as retreading makes it possible for the old tyre to be reused by replacing only about 10% of the old tyre. Replacing the old tyre with a new one after each use not only is a waste of resources but will result in the old tyre building up the landfill.

We also believe in living in harmony with the flora and fauna. Therefore, nestled in the midst of our factory is a garden planted with various types of trees that not only provides oxygen and absorbs carbon dioxide but also serves as a habitat for birds and small animals such as squirrels. A fountain in front of our factory’s office provides a place for the birds and squirrels to bathe and drink. Trees are also planted in other areas of the factory including a few rubber trees at the entrance.

The Group also does its part in managing waste. We term it as managing materials as “waste” subconsciously makes us think that the materials cannot be reused. Our materials therefore are segregated at every level, from paper used in the office to those used for production, such as oil, water, plastic, wood and rubber. Used oils are kept in drums and are clearly labelled and then sold to licensed recyclers to be reused or disposed of in a safe and environment friendly way.

We also use a lot of water mainly for cooling purposes in production and we reduce water consumption by continuously pumping the water from the filtration and cooling tower to the production area and back to the filtration and cooling tower. We also use a lot of wooden pallets and one of the methods adopted to reduce purchases of new ones is to repair those that can still be reused. Having said this, we also reduce usage of wooden pallets by gradually replacing them with re-usable metal pallets.

As a rubber products manufacturer, there are always “extras” from production. Even though these “extras” can be re-used, we comprehend that the more sustainable way is to reduce them. Therefore, we emphasise on training and efficient operations.

The Group is proud to have recently renewed its ISO14000: 2015 standards as this certification clearly endorses our actions, our business process and our environmental management.

2. ECONOMIC

We comprehend that as we play an important role in the entire value chain eco-system, we ensure that we purchase responsibly from our vendors who practise ethical sourcing and equally important, their sustainability is assured.

We also stress on the importance for all our employees to comply with the applicable laws and policies and procedures and maintain a high standard of personnel conduct when dealing with various stakeholders of our Group.


To assist us achieve the above, we have established a Whistleblowing Policy that aims to develop a culture of openness, accountability and integrity within the Group, sets out the procedures which must be followed to enable employees or any external party to voice their concerns without fear of retaliation and with the confidence that their complaints will be acted upon and their identity kept confidential.

We are also of the opinion that every little thing matters. Therefore, our business processes are regularly reviewed to identify new methods that increase efficiency, improves job satisfaction and increase the skills of our personnel. Among others, we have in the last 18 months introduced SAP ERP solutions, increased staff collaboration through the use of Google Suite Professional and use of Global Number 1 CRM solution.

3. SOCIAL

It is our objective to ensure each employee’s safety and we are proud to have been accredited with OHSAS18001, as this forms the basis for our business process, engineering designs as well as the operational flow of our production. We also recognise that our employees spend a considerable amount of time at work and therefore strive to provide a conducive working environment for them that includes affordable and balanced meals.

Equal opportunities are given to deserving employees. The management and employees have a good rapport, inculcated through the weekly assemblies held and by celebrating festivities together.

We also comprehend our social responsibilities to users of our products. As the main end products of our rubber compound play a crucial role in ensuring safety of equipment or machineries, failure of which would affect human lives, our emphasis is on producing high quality products.

4. CONCLUSION

This is the first Sustainability Statement for the Group. It has been a very insightful discovery of ourselves as the Sustainability Statement highlights areas that have done well and areas that require improvement.

Moving forward, the Group will continue developing sustainable products and services that generate sustainable outcome for all our stakeholders.

SUSTAINABILITY STATEMENT (CONTINUED)


STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROLS

INTRODUCTION

This Statement on Risk Management and Internal Controls (the “Statement”) is made pursuant to paragraph 15.26(b) of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad (“MMLR”) and Principle B(II) of the 2017 Malaysian Code on Corporate Governance, guided by the Statement on Risk Management & Internal Control: Guidelines for Directors of Listed Issuers.

This Statement is intended to provide our stakeholders and readers of this Annual Report with meaningful information about the adequacy and effectiveness of the risk management and internal controls system of the Company and its subsidiaries (the “Group”) throughout the financial period ended 30 June 2018. In general, risk management and internal controls are integrated into the management processes and embedded in all the day to day business activities of the Group.

BOARD RESPONSIBILITY

The Board comprehends its responsibilities and the importance of sound risk management practices and internal controls, including being assured of its adequacy and integrity to address the need to safeguard the shareholders’ investment and the assets of the Group as well as its alignment with the Group’s business objectives. The Board consequently is committed to ensuring the existence of an appropriate risk management framework and the design and implementation of adequate, efficient and effective system of internal controls. The Board also comprehends that its responsibility for the internal controls system covers not only financial controls but also operational, organisational and compliance controls and reviewing the adequacy and integrity of these systems.

In effectively attaining the above, whilst the Board has overall responsibility for the Group’s systems of risk management and internal controls, it has delegated implementation of the systems to the Management who regularly report on risks identified and the steps taken to mitigate the risks to the Board. This critical area is overseen by the Audit Risk and Management Committee (“ARMC”) which comprises three (3) members, all of whom are independent non-Executive Directors, and the ARMC is governed by clearly defined Terms of Reference that outlines its respective functions and authorities.

To assist in attaining the above objective, the ARMC has outsourced the internal audit function to RSM Corporate Consulting (Malaysia) Sdn Bhd (“RSM” or the “Internal Auditors”). And the Internal Auditors report directly to the ARMC.

To further achieve the above objective, the Board has established the Joint Nomination and Remuneration Committee (“JNRC”), which consist wholly of Independent Non-Executive Directors, and operates within its Terms of Reference that outlines its respective functions and authorities.

Notwithstanding the above, the Board recognises that, in view of the limitations that are inherent in any system of risk management and internal controls, they are designed to manage rather than eliminate entirely risks including those that may impede the Group from achieving its business objectives. As such, the systems of risk management and internal controls implemented can only provide a reasonable but not absolute assurance against the occurrence of any material misstatement and/or losses. Equally important, the Board recognises that the cost of managing the risks and controls procedures should not outweigh or exceed the expected benefits.

RISK MANAGEMENT AND INTERNAL CONTROLS FRAMEWORK

Risk management is regarded by the Board as an integral part of the business operations and therefore embedded in the day-to-day business activities and management decision-making framework of the Group. The risk management process includes conducting risk profiling and determining key risk areas and its impact including developing an internal plan, updating the system of risk management and internal controls when there are changes to the business environment or regulatory guidelines and Management at all levels have a collective responsibility for creating a risk-aware culture and ensuring that business risk assessment becomes an explicit part of the decision-making process in the Group.


Supporting the above broader risk management framework is an internal controls system that facilitates internal controls design and operating effectiveness to manage key risks. The principal features which form part of the Group’s system of internal controls can be summarised as follows:-

a. Delegation of responsibilities

The Group has a clearly defined delegation of responsibilities for the Board Committees and Management, including authorisation levels for all aspects of the businesses. The Board is guided by the Board Charter, which among others outline the duties and responsibilities of the Board, matters reserved for the Board as well as those which the Board may delegate to the Board Committees and Management.

Board meetings are held at least once in a quarter with a formal agenda on matters for discussion and the Board is kept updated on the Group’s activities and operations on a timely and regular basis.

b. Clear and Structured Organisation Structure

The Group has a well-defined structure that sets out clearly the segregation of roles and responsibilities, lines of accountability and levels of authorities to ensure effective controls at all levels in the Group.

c. Policies and Procedures

The Group has a clear formalised and documented internal controls policies and procedures including standard operating procedures in place to ensure compliance with internal controls and the relevant rules and regulations. Regular reviews are carried out to ensure that documentation is current and relevant.

d. Employee Handbook

The Group has a detailed employee handbook that provides a common and clear understanding and consistent practice of Human Resource policies and procedures throughout the Group to effectively support the Group’s operations.

e. Monitoring of financial performance

One of the key financial performance monitoring systems of the Group is the requirement for all companies in the Group to prepare business plans and budgets, which must then be reviewed and approved by the Board before implementation. The Group’s business plan and actual versus budget financial performance for the year are reviewed and deliberated on by the Board on a quarterly basis.

f. ARMC and the Internal Auditors

The main responsibility of the ARMC is to assist the Board in fulfilling its statutory and fiduciary responsibilities of monitoring the Group’s management of financial risk processes, governance, accounting and financial reporting practices and in ensuring the implementation of appropriate systems to manage the overall risk exposure of the Group.

The ARMC is assisted by the Internal Auditors, who are required to conduct quarterly assessments on the adequacy and effectiveness of the internal controls system of the Group. The audit plan and the adequacy of the scope, functions, competency and resources of the Internal Auditors are reviewed and approved yearly by the ARMC.

The ARMC is also responsible for reviewing the interim financial results and year-end financial statements of the Company and of the Group focusing particularly on, where applicable, significant changes in or implementation of accounting policies and practices, accounting treatments, the going concern assumption, significant judgements made by the Management, adjustments arising from the audit, compliance with relevant accounting standards and disclosure requirements, prior to making a recommendation to the Board for approval and public release thereof.

STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROLS (CONTINUED)


g. Code of conduct

The Group’s Code of Business Conduct reinforces the Group’s core value on integrity by providing guidance on moral and ethical behaviour expected of all the employees in complying with the laws, policies, standards and procedures.

h. Whistleblowing policy

The Group’s whistleblowing policy was established to provide communication and feedback channels which facilitate whistleblowing in a transparent and confidential manner. The Chairman of the ARMC is responsible for overseeing all whistleblowing cases, from the receipt of cases via the online system or otherwise, to closure of each investigation.

i. Quality Health Safety and Environment

The Group has adopted an integrated management system that has been certified by SIRIM Berhad and TIV (Technical Inspection Association) as compliant with ISO 9001:2000 (quality management), ISO 14001:2004 (environmental management), OHSAS 18001:2007 (safety management) and MS224 (quality management). The system is subjected to ongoing internal audit programmes, as well as annual audits by SIRIM Berhad and TIV.

The Group strives to achieve an accident free environment and to accomplish this, the activities are monitored by comparing against key performance indicators and monthly reports on the progress are provided to the Heads of the Operating Units.

REVIEW OF THE STATEMENT

As required by Paragraph 15.23 of the MMLR of Bursa Malaysia Securities Berhad, the External Auditors have reviewed this Statement for inclusion in the Annual Report of the Group for the financial period ended 30 June 2018, and have reported to the Board that nothing has come to their attention that causes them to believe that the Statement is not prepared, in all material aspects, in accordance with the disclosures required by paragraphs 41 and 42 of the Statement on Risk Management and Internal Control Guidelines for Directors of Listed Issuers, nor is the Statement factually inaccurate. The report from the External Auditors was made solely to the Board in connection with their compliance with the Listing Requirements of Bursa Malaysia Securities Berhad and for no other purpose or parties.

As stated in their report, the external auditors do not assume responsibility to any person other than the Board in respect of any aspect of this report.

The Internal Auditors have also reviewed this Statement and reported to the ARMC that, although they found certain weaknesses in the internal controls system of the area covered during the course of their internal audit assignments for the period, they have not identified any circumstances which suggest any fundamental deficiencies in the Group’s internal controls and risk management system.

CONCLUSION

The Board is of the view that the systems of risk management and internal controls being instituted throughout the Group for the financial period under review and up to the date of approval of this statement, is sound and effective. The Board is also of the view that the monitoring, review and reporting arrangements in place provide reasonable assurance that the structure and operation of controls are appropriate for the Group’s operations and that risks are at an acceptable level throughout its businesses.

The Board has also received assurance from the CEO and CFO that the Group’s internal controls and risk management system is operating adequately and effectively, in all material aspects, based on the framework adopted by the Group.

This Statement was approved by the Board on 22 October 2018.

STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROLS (CONTINUED)


STATEMENT OF BOARD OF DIRECTORS’ RESPONSIBILITIES For preparing the Audited Financial Statements for the period ended 30 June 2018.

The Companies Act, 2016 requires Directors to prepare financial statements for each financial period, which give a true and fair view of the financial position as at the end of the financial period and the financial performance for the financial period of the Group and the Company for the financial period.

In preparing the financial statements, the Directors are responsible for the adoption of suitable accounting policies that comply with the provisions of the Companies Act, 2016, the Malaysian Financial Reporting Standards, and International Financial Reporting Standards. The Directors are also responsible to ensure their consistent use in the financial statements, supported where necessary by reasonable and prudent judgements.

The Directors hereby confirm that suitable accounting policies have been consistently applied in the preparation of the financial statements. The Directors also confirm that the Group and the Company maintains adequate accounting records and an effective system of internal control to safeguard the assets of the Group and the Company and prevent and detect fraud or any other irregularities.

FINANCIALSTATEMENTS


Goodway Integrated Industries Berhad ( Incorporated in Malaysia, Company No. 618972 – T )

4

Directors' Report for the financial period from 1st January 2017 to 30th June 2018 Valuation methods At the date of this report, the directors are not aware of any circumstances which have arisen which render adherence to the existing methods 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 that has arisen since the end of the

financial period which secures the liabilities of any other person, or ii) any contingent liability in respect of the Group or of the Company that has arisen since the end of

the financial period. No contingent liability or other liability of the Group or of the Company has become enforceable, or is likely to become enforceable within the period of twelve months after the end of the financial period which, in the opinion of the directors, will or may substantially affect the ability of the Group or of the Company to meet its 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 financial statements of the Group and of the Company, that would render any amount stated in the financial statements misleading. Items of an unusual nature In the opinion of the directors, the results of the operations of the Group and of the Company for the financial period were not, in the opinion of the directors, substantially affected by any item, transaction or event of a material and unusual nature other than those as disclosed in the financial statements. There has not arisen in the interval between the end of the financial period and the date of this report any item, transaction or event of a material and unusual nature likely, in the opinion of the directors, to affect substantially the results of the operations of the Group or of the Company for the current financial period. Shares and debentures The Company did not issue any shares and debentures during the financial period.


3

Directors' Report for the financial period from 1st January 2017 to 30th June 2018 The directors have pleasure in submitting their report and the audited financial statements of the Group and of the Company for the financial period ended 30th June 2018. Principal activities The Company is principally engaged in investment holding, whilst the principal activities of the subsidiary companies are set out in Note 7 to the financial statements. There have been no significant changes in the nature of these activities.

Results Group Company RM RM Profit /(Loss) after taxation attributable to : - Equity holders of the Company 2,134,415 (1,482,837) Non-controlling interests

(82,444)

-

2,051,971

(1,482,837)

Dividends No dividend has been paid, declared or proposed since the end of the previous financial year.

Reserves and provisions There were no material transfers to or from reserves or provisions during the financial period other than those as disclosed in the financial statements. Bad and doubtful debts Before the financial statements of the Group and of the Company were made out, the directors took reasonable steps to ascertain that action had been taken in relation to the writing off of bad debts and the making of allowance for doubtful debts and satisfied themselves that all known bad debts had been written off and 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 debts, or the amount of the allowance for doubtful debts, in the Group or in the Company inadequate to any substantial extent. Current assets Before the financial statements of the Group and of the Company were made out, the directors took reasonable steps to ascertain whether any current assets, other than debts, were unlikely to realise in the ordinary course of business their value as shown in the accounting records of the Group and of the Company and to the extent so ascertained were written down to an amount that they might be expected to realise. At the date of this report, the directors are not aware of any circumstances that would render the values attributed to the current assets in the financial statements of the Group and of the Company misleading.

38


4

Directors' Report for the financial period from 1st January 2017 to 30th June 2018 Valuation methods At the date of this report, the directors are not aware of any circumstances which have arisen which render adherence to the existing methods 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 that has arisen since the end of the

financial period which secures the liabilities of any other person, or ii) any contingent liability in respect of the Group or of the Company that has arisen since the end of

the financial period. No contingent liability or other liability of the Group or of the Company has become enforceable, or is likely to become enforceable within the period of twelve months after the end of the financial period which, in the opinion of the directors, will or may substantially affect the ability of the Group or of the Company to meet its 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 financial statements of the Group and of the Company, that would render any amount stated in the financial statements misleading. Items of an unusual nature In the opinion of the directors, the results of the operations of the Group and of the Company for the financial period were not, in the opinion of the directors, substantially affected by any item, transaction or event of a material and unusual nature other than those as disclosed in the financial statements. There has not arisen in the interval between the end of the financial period and the date of this report any item, transaction or event of a material and unusual nature likely, in the opinion of the directors, to affect substantially the results of the operations of the Group or of the Company for the current financial period. Shares and debentures The Company did not issue any shares and debentures during the financial period.

39


6

Directors' Report for the financial period from 1st January 2017 to 30th June 2018 Directors' interests The interests and deemed interest in the ordinary shares of the Company of those who are Directors at the period end (including the interests of the spouses or children of the Directors) as recorded in the Register of Directors’ Shareholdings are as follows : - Number of ordinary shares As at

1/1/2017

Bought

Sold As at

30/6/2018 Direct interests Tai Boon Wee 26,309,860 - - 26,309,860 Tai Qisheng 60,000 - - 60,000 Tai Qiyao 25,000 - - 25,000 Indirect interests Tai Boon Wee 8,237,749 - - 8,237,749 Tai Qisheng 34,487,609 - - 34,487,609 Tai Qiyao 34,522,609 - - 34,522,609 By virtue of Section 8 of the Companies Act, 2016, the abovementioned directors are also deemed to have an interest in shares of the subsidiary companies during the financial period to the extent that the Company has an interest. None of the other directors in office at the end of the financial period held shares or had beneficial interest of the Company or its related corporation during or at the beginning and end of the financial period. Directors’ remuneration The amounts of the remuneration of the Directors of the Group and of the Company comprising remunerations received /receivable from the Group and the Company during the financial period are disclosed in Note 30 to the financial statements. None of the Directors of the Group and of the Company have received any other benefits otherwise than in cash from the Company during the financial period. No payment has been paid to or payable to any third party in respect of the services provided to the Group or the Company by the Directors of the Group and of the Company during the financial period. Indemnifying directors, officers or auditors No indemnities have been given or insurance premiums paid, during or since the end of the financial period, for any person who is or has been the director, officer or auditor of the Company.


5

Directors' Report for the financial period from 1st January 2017 to 30th June 2018 Directors of the Company The directors of the Company in office at any time during the financial period and since the last report are : - Y.A.M. Tengku Sulaiman Shah Alhaj Ibni Almarhum Sultan Salahuddin Abdul Aziz Shah Alhaj Tai Boon Wee Ramlee Bin Mohd Shariff Tai Qisheng Tai Qiyao (Alternate Director to Tai Boon Wee) Muk Sai Tat - appointed on 21/8/2018 Kiran Kaur A/P Jogindar Singh - appointed on 21/8/2018 Wong Yien Kim - resigned on 31/7/2018 Wong Ping Kiong - retired on 23/5/2017 Lt. Jen (B) Datuk Hj Adenan Bin Hj Mohamad Zain - retired on 23/5/2017 The directors who hold office in the subsidiary companies (excluding directors who are also directors of the Company) during the financial period until the date of this report are : - Chai Kean Wei Erwin Nauli Basa Ng Ho Sin Vui Ong Shaw Hua Wong Ping Kiong

23/8/2018

40


6

Directors' Report for the financial period from 1st January 2017 to 30th June 2018 Directors' interests The interests and deemed interest in the ordinary shares of the Company of those who are Directors at the period end (including the interests of the spouses or children of the Directors) as recorded in the Register of Directors’ Shareholdings are as follows : - Number of ordinary shares As at

1/1/2017

Bought

Sold As at

30/6/2018 Direct interests Tai Boon Wee 26,309,860 - - 26,309,860 Tai Qisheng 60,000 - - 60,000 Tai Qiyao 25,000 - - 25,000 Indirect interests Tai Boon Wee 8,237,749 - - 8,237,749 Tai Qisheng 34,487,609 - - 34,487,609 Tai Qiyao 34,522,609 - - 34,522,609 By virtue of Section 8 of the Companies Act, 2016, the abovementioned directors are also deemed to have an interest in shares of the subsidiary companies during the financial period to the extent that the Company has an interest. None of the other directors in office at the end of the financial period held shares or had beneficial interest of the Company or its related corporation during or at the beginning and end of the financial period. Directors’ remuneration The amounts of the remuneration of the Directors of the Group and of the Company comprising remunerations received /receivable from the Group and the Company during the financial period are disclosed in Note 30 to the financial statements. None of the Directors of the Group and of the Company have received any other benefits otherwise than in cash from the Company during the financial period. No payment has been paid to or payable to any third party in respect of the services provided to the Group or the Company by the Directors of the Group and of the Company during the financial period. Indemnifying directors, officers or auditors No indemnities have been given or insurance premiums paid, during or since the end of the financial period, for any person who is or has been the director, officer or auditor of the Company.

41

Kreston John & Gan 8 Chartered Accountants • AF 0113

160-2-1, Kompleks Maluri, Business Centre, Jalan Jejaka, 55100 Kuala Lumpur. T : + 603 92871889 F : + 603 92830889 E : [email protected] W : www.kreston.com.my Audit I Tax I Advisory

Independent Auditors' Report to members of Goodway Integrated Industries Berhad ( Incorporated in Malaysia, Company No. 618972 – T )

Report on the Audit of the Financial Statements

Opinion

We have audited the financial statements of Goodway Integrated Industries Berhad, which comprise the statements of financial position as at 30th June 2018 of the Group and of the Company, and the statements of profit or loss and other comprehensive income, statements of changes in equity and statements of cash flows of the Group and of the Company for the period then ended, and notes to the financial statements, including a summary of significant accounting policies, as set out on pages 14 to 131.

In our opinion, the accompanying financial statements give a true and fair view of the financial position of the Group and of the Company as at 30th June 2018, and of their financial performance and their cash flows for the period then ended in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act, 2016 in Malaysia.

Basis for Opinion

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

Independence and Other Ethical Responsibilities

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

Key Audit Matters

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


7

Directors' Report for the financial period from 1st January 2017 to 30th June 2018 Directors’ benefits Since the end of the previous financial year, none of the directors of the Company have received or become entitled to receive a benefit (other than a benefit included in the aggregate amount of emoluments received or due and receivable by the directors as shown in the financial statements) by reason of a contract made by the Company or a related corporation with the director or with a firm of which the director is a member, or with a company in which the director has a substantial financial interest except for any benefits which may be deemed to have arisen by virtue of the significant related party transactions as disclosed in Note 42 to the financial statements. There were no arrangements during and at the end of the financial period, to which the Company or its subsidiary companies is a party, which had the object of enabling the directors of the Company to acquire benefits by means of the acquisition of shares in or debentures of the Company or any other body corporate. Change of accounting year end The Company changed its accounting year end from 31st December to 30th June. Significant events Details of significant events are disclosed in the Note 40 to the financial statements. Auditors a) Details of the auditors’ remuneration for the Group and the Company are disclosed in Note 28 to

the financial statements.

b) The auditors, Kreston John & Gan, Chartered Accountants have expressed their willingness to continue in office.

Signed on behalf of the Board of Directors in accordance with a resolution of the Directors Tai Boon Wee Tai Qisheng

Subang Jaya, Date : 22nd October 2018





Opinion



Basis for Opinion




Key Audit Matters


42





Opinion



Basis for Opinion




Key Audit Matters






Opinion



Basis for Opinion




Key Audit Matters


49 166.

43

10

Audit I Tax I Advisory


Key Audit Matters (Cont’d.)

No. Key audit matter Our audit performed and responses thereon

2 Revenue recognition

Revenue is one of the significant accounts in the financial statements and also an important driver of the Group’s operating results.

There is a risk that management could adopt accounting policies in such a way as to lead material misstatement in the reported revenue position and resulting profit.

Our audit procedures included as following : -

a) Tested the operating effectiveness of the Group’s internal controls over timing and amount of revenue recognised;

b) Verified the documents for transactions selected based on sampling basis;

c) Tested sales transactions as well as credit notes issued, near to year ended to assess whether the revenue was recognised in the correct period; and

d) Checked the sales prior and subsequent to the year-end and inspected the documents which evidenced the delivery of goods to customers.

3 Property, plant and equipment

The carrying amount of the Group’s property, plant and equipment amounted RM70,716,391 and this represented 91% of the Group’s total non-current assets as at 30th June 2018.

The management has assessed if there are indicators of impairment and performed an assessment on the carrying amount of the property, plant and equipment. External valuer was being appointed to assess the recoverable amount of the property.


a) Assessed objectivity, competency and professional qualification of the external valuer;

b) Considered appropriateness of the valuation techniques used by the external valuer by understanding the valuation methodology and basis used by the valuer.

c) Sample selected high net book value items and inspect for physical existence and current usage.

9





1 Liquidity risk

As at 30th June 2018, the Group and the Company have incurred accumulated losses of RM31,472,750 and RM24,547,784 respectively.

The Group has net current liabilities of RM6,640,558 (Not including Assets held for sale) as at 30th June 2018. The current assets of the Group also comprised inventories of RM15,097,319, which are not readily convertible to cash.

The Group has total borrowings of RM77,285,245. The ability of the Group to meet its obligations as and when their fall due formed a significant business risk of the Group.


a) Reviewed the profit projections of the Group prepared by the management and approved by the Board of Directors over the next 12 months based on the assumptions of cash inflows from business activities and the successful negotiation with key bankers on certain loan repayment timing and obtaining additional banking facilities;

b) Assessed the reasonableness of management’s sensitivity analysis for any potential change in the assumptions and the resultant impact on available funds;

c) Evaluated management’s initiatives to manage its working capital by improving efficiency and carrying out a cost reduction plan as well as continuing to derive cash inflows from its existing business activities;

d) Checked repayment of the borrowing against loan agreements;

e) Reviewed securities between loan agreements and bank confirmation received;

f) Vouched to the transactions amount utilised for the credit facilities.

44

10





2 Revenue recognition

Revenue is one of the significant accounts in the financial statements and also an important driver of the Group’s operating results.

There is a risk that management could adopt accounting policies in such a way as to lead material misstatement in the reported revenue position and resulting profit.


a) Tested the operating effectiveness of the Group’s internal controls over timing and amount of revenue recognised;

b) Verified the documents for transactions selected based on sampling basis;

c) Tested sales transactions as well as credit notes issued, near to year ended to assess whether the revenue was recognised in the correct period; and

d) Checked the sales prior and subsequent to the year-end and inspected the documents which evidenced the delivery of goods to customers.

3 Property, plant and equipment

The carrying amount of the Group’s property, plant and equipment amounted RM70,716,391 and this represented 91% of the Group’s total non-current assets as at 30th June 2018.

The management has assessed if there are indicators of impairment and performed an assessment on the carrying amount of the property, plant and equipment. External valuer was being appointed to assess the recoverable amount of the property.


a) Assessed objectivity, competency and professional qualification of the external valuer;

b) Considered appropriateness of the valuation techniques used by the external valuer by understanding the valuation methodology and basis used by the valuer.

c) Sample selected high net book value items and inspect for physical existence and current usage.

45

12



Auditors’ Responsibilities for the Audit of the Financial Statements (Cont’d.)

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

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

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

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

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

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

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

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

Report on Other Legal and Regulatory Requirements

In accordance with the requirements of the Companies Act, 2016 in Malaysia, we also report that the subsidiaries of which we have not acted as auditors are indicated in Note 7 to the financial statements.

11



Information Other than the Financial Statements and Auditors’ Report Thereon

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

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

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

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

Responsibilities of the Directors for the Financial Statements

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

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

Auditors’ Responsibilities for the Audit of the Financial Statements

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

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

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

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

46

12



Auditors’ Responsibilities for the Audit of the Financial Statements (Cont’d.)

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

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

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

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

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

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

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

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

Report on Other Legal and Regulatory Requirements

In accordance with the requirements of the Companies Act, 2016 in Malaysia, we also report that the subsidiaries of which we have not acted as auditors are indicated in Note 7 to the financial statements.

47


14

Consolidated Statement of Financial Position 30th June 2018

Note 30/6/2018 31/12/2016 1/1/2016RM RM RM

Restated Restated

ASSETSNon-current Assets

Property, plant and equipment 4 70,716,391 101,507,103 89,523,609 Inventories 5 7,411,595 7,411,595 7,411,595 Intangible assets 6 - 586,002 586,002

Total Non-current Assets 78,127,986 109,504,700 97,521,206

Current AssetsInventories 5 15,097,319 62,934,721 59,583,140 Trade receivables 8 50,580,066 40,660,098 59,605,602 Contract assets 9 - 3,075,085 - Other receivables, deposits and prepayments 10 2,396,866 7,852,227 25,709,003 Current tax assets 323,448 917,529 1,502,384 Deposit with a licensed bank 12 - - 1,221,954 Cash and bank balances 5,118,134 3,071,319 10,236,804

73,515,833 118,510,979 157,858,887 Assets held for sale 13 6,800,000 - -

Total Current Assets 80,315,833 118,510,979 157,858,887

Total Assets 158,443,819 228,015,679 255,380,093

EQUITY AND LIABILITIES

Equity attributable to ownersShare capital 14 55,258,750 55,258,750 55,258,750 Share premium 14 210,571 210,571 210,571 Reserves 15 (10,905,842) (10,897,015) 7,871,351

Equity attributable to owners of Company 44,563,479 44,572,306 63,340,672 Non-controlling interests 16 32,499 114,943 386,565

Total Equity 44,595,978 44,687,249 63,727,237

13



Other Matters

1. As stated in Note 2(a) to the financial statements, the Group and the Company re-adopted Malaysian Financial Reporting Standards on 1st January 2017 with a transition date of 1st January 2015. These standards were applied retrospectively by the directors to the comparative information in these financial statements, including the statements of financial position of the Group and of the Company as at 31st December 2016 and 1st

January 2015, and the statements of profit or loss and other comprehensive income, statements of changes in equity and statements of cash flows of the Group and of the Company for the period ended 30th June 2018 and related disclosures. Our responsibilities as part of our audit of the financial statements of the Group and of the Company for the financial period ended 30th June 2018, in these circumstances, included obtaining sufficient appropriate audit evidence that the opening balances as at 1st January 2017 do not contain misstatements that materially affect the financial position as at 30th June 2018 and the financial performance and cash flows for the year then ended.

2. The financial statements of the Group and the Company for the financial year ended 31st December 2016 which audited by us were expressed with a modified opinion on those statements on 28th April 2017. The details of the previous modified opinion on the previous financial statements are disclosed in Note 45 to the financial statements.

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

Kreston John & Gan Charles Lee King Long Chartered Accountants Approval No. 3142/04/2019(J) ( AF 0113 ) Chartered Accountant

Kuala Lumpur,Date : 22nd October 2018

48


14


Note 30/6/2018 31/12/2016 1/1/2016RM RM RM

Restated Restated

ASSETSNon-current Assets

Property, plant and equipment 4 70,716,391 101,507,103 89,523,609 Inventories 5 7,411,595 7,411,595 7,411,595 Intangible assets 6 - 586,002 586,002


Current AssetsInventories 5 15,097,319 62,934,721 59,583,140 Trade receivables 8 50,580,066 40,660,098 59,605,602 Contract assets 9 - 3,075,085 - Other receivables, deposits and prepayments 10 2,396,866 7,852,227 25,709,003 Current tax assets 323,448 917,529 1,502,384 Deposit with a licensed bank 12 - - 1,221,954 Cash and bank balances 5,118,134 3,071,319 10,236,804

73,515,833 118,510,979 157,858,887 Assets held for sale 13 6,800,000 - -


Total Assets 158,443,819 228,015,679 255,380,093


Equity attributable to ownersShare capital 14 55,258,750 55,258,750 55,258,750 Share premium 14 210,571 210,571 210,571 Reserves 15 (10,905,842) (10,897,015) 7,871,351

Equity attributable to owners of Company 44,563,479 44,572,306 63,340,672 Non-controlling interests 16 32,499 114,943 386,565

Total Equity 44,595,978 44,687,249 63,727,237

49


16

Consolidated Statement of Profit or Loss and Other Comprehensive Income for the financial period from 1st January 2017 to 30th June 2018

18 months for 12 months forperiod ended year ended

Note 30/6/2018 31/12/2016RM RM

Restated

Revenue 25 198,555,115 157,117,137 Cost of sales (168,648,381) (137,650,995)

Gross profit 29,906,734 19,466,142

Other income 26 8,418,211 5,176,756 Selling and marketing costs (3,975,083) (4,399,303) Administrative expenses (15,864,051) (14,617,294) Other expenses (12,536,817) (34,586,347)

5,948,994 (28,960,046)

Finance costs 27 (7,197,941) (4,966,445)

Loss before taxation 28 (1,248,947) (33,926,491)

Income tax credit /(expense) 31 3,300,918 (2,574,574)

Profit /(Loss) for the period /year 2,051,971 (36,501,065)

Other comprehensive income, net of tax

Item that is or may be reclassified subsequently to profit or lossRevaluation (deficit) /surplus, net of deferred tax (1,973,344) 17,669,885 Exchange difference on translation of foreign operations (169,898) (208,808)

Total comprehensive loss for the period /year (91,271) (19,039,988)

Profit /(Loss) for the period /year attributable to : -

Equity holders of the Company 2,134,415 (36,339,859) Non-controlling interests (82,444) (161,206)

2,051,971 (36,501,065)

Total comprehensive loss for the period /year attributable to : -

Equity holders of the Company (8,827) (18,878,782) Non-controlling interests (82,444) (161,206)

(91,271) (19,039,988)

Earning /(Loss) per share (sen) 32 1.93 (32.88)

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


15


Note 30/6/2018 31/12/2016 1/1/2016RM RM RM

Restated RestatedEQUITY AND LIABILITIES

Non-current LiabilitiesDeferred tax liabilities 17 8,748,106 12,530,234 5,504,435 Borrowings 18 24,943,344 38,198,825 46,369,719

Total Non-current Liabilities 33,691,450 50,729,059 51,874,154

Current LiabilitiesTrade payables 23 17,596,081 41,179,231 45,617,643 Contract liabilities 9 - - 1,525,582 Other payables and accruals 24 10,218,409 14,064,346 16,843,702 Borrowings 18 52,341,901 77,355,794 75,781,469 Current tax liabilities - - 10,306

Total Current Liabilities 80,156,391 132,599,371 139,778,702

Total Liabilities 113,847,841 183,328,430 191,652,856

Total Equity and Liabilities 158,443,819 228,015,679 255,380,093


50


16

Consolidated Statement of Profit or Loss and Other Comprehensive Income for the financial period from 1st January 2017 to 30th June 2018


Note 30/6/2018 31/12/2016RM RM

Restated

Revenue 25 198,555,115 157,117,137 Cost of sales (168,648,381) (137,650,995)

Gross profit 29,906,734 19,466,142

Other income 26 8,418,211 5,176,756 Selling and marketing costs (3,975,083) (4,399,303) Administrative expenses (15,864,051) (14,617,294) Other expenses (12,536,817) (34,586,347)

5,948,994 (28,960,046)

Finance costs 27 (7,197,941) (4,966,445)


Income tax credit /(expense) 31 3,300,918 (2,574,574)

Profit /(Loss) for the period /year 2,051,971 (36,501,065)

Other comprehensive income, net of tax

Item that is or may be reclassified subsequently to profit or lossRevaluation (deficit) /surplus, net of deferred tax (1,973,344) 17,669,885 Exchange difference on translation of foreign operations (169,898) (208,808)

Total comprehensive loss for the period /year (91,271) (19,039,988)

Profit /(Loss) for the period /year attributable to : -

Equity holders of the Company 2,134,415 (36,339,859) Non-controlling interests (82,444) (161,206)

2,051,971 (36,501,065)

Total comprehensive loss for the period /year attributable to : -

Equity holders of the Company (8,827) (18,878,782) Non-controlling interests (82,444) (161,206)

(91,271) (19,039,988)

Earning /(Loss) per share (sen) 32 1.93 (32.88)


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53


20

Consolidated Statement of Cash Flows for the financial period from 1st January 2017 to 30th June 2018


Note 30/6/2018 31/12/2016RM RM

Restated

Balance brought forward 31,348,558 420,619

Cash flows from investing activities

Interest received 8,181 74,340 Proceeds from disposal of property, plant and equipment 9,504,555 344,725 Proceeds from disposal of subsidiary company, net of cash and cash equivalent 515 -Purchase of property, plant and equipment 35 (847,420) (1,986,364) Uplifted of fixed deposit - 124,285

Net cash from /(used in) investing activities 8,665,831 (1,443,014)

40,014,389 (1,022,395)

Cash flows from financing activities

Drawndown of term loan and Islamic bank financings - 2,001,918 (Repayment of) /Proceeds from banker acceptance and bill payables (22,069,656) 1,188,338 Repayment of term loans and Islamic financing (12,426,913) (8,913,929) Repayment of finance lease creditors (2,416,962) (1,522,756)

Net cash used in financing activities (36,913,531) (7,246,429)

Net increase /(decrease) in cash and cash equivalents 3,100,858 (8,268,824)

Effect of change on foreign exchange difference 96,048 (141,068)

Cash and cash equivalents at the beginning of the period /year (2,946,907) 5,462,985

Cash and cash equivalents at the end of the period /year 36 249,999 (2,946,907)



19



Note 30/6/2018 31/12/2016RM RM

RestatedCash flows from operating activities

Loss before taxation (1,248,947) (33,926,491)

Adjustments for : -

Bad debts written off 113,431 3,097,121 Depreciation 11,344,620 8,364,202 Gain on disposal of property, plant and equipment (2,749,051) (36,166) Gain on disposal of subsidiary company - (44,113) Gain on foreign exchange - unrealised (1,191,370) (2,504,992) Impairment loss on obsolete inventories 3,840,593 1,093,643 Impairment loss on trade receivables 785,298 9,300,802 Impairment loss on other receivables - 9,897,605 Impairment loss on property, plant and equipment - 2,645,963 Interest expense 6,299,027 4,250,733 Interest income (8,181) (74,340) Intangible assets written off 585,487 -Islamic financing expenses 831,566 667,560 Loss on disposal of property, plant and equipment 488,728 13,223 Loss on disposal of subsidiary company 116,871 -Loss on foreign exchange - unrealised 308,817 910,532 Loss on stike off of subsidiary company 507,778 - Plant and equipment written off 3,230,882 799,208 Reversal of impairment losses (424,711) (2,067) Reversal of unrealised gain on foreign exchange 3,297,122 - Reversal of unrealised loss on foreign exchange (438,793) -Payables written back (1,256,591) (536,920)

Operating profit before working capital changes 24,432,576 3,915,503

Decrease in inventories 40,434,376 14,295,843 (Increase) /Decrease in trade receivables (21,011,410) 1,479,525 Decrease in contract assets 3,075,085 -Decrease in other receivables, deposits and prepayments 15,003,002 1,758,748 Decrease in trade payables (25,541,721) (3,320,624) Increase /(Decrease) in other payables and accruals 1,983,204 (12,835,130)

Cash generated from operations 38,375,112 5,293,865

Interest paid (6,299,027) (4,250,733) Islamic financing expenses paid (831,566) (667,560) Tax paid - (1,007,116) Tax refund 104,039 1,052,163

Net cash from operating activities 31,348,558 420,619

586,002

116,356

54


20



Note 30/6/2018 31/12/2016RM RM

Restated

Balance brought forward 31,348,558 420,619


Interest received 8,181 74,340 Proceeds from disposal of property, plant and equipment 9,504,555 344,725 Proceeds from disposal of subsidiary company, net of cash and cash equivalent 515 -Purchase of property, plant and equipment 35 (847,420) (1,986,364) Uplifted of fixed deposit - 124,285

Net cash from /(used in) investing activities 8,665,831 (1,443,014)

40,014,389 (1,022,395)


Drawndown of term loan and Islamic bank financings - 2,001,918 (Repayment of) /Proceeds from banker acceptance and bill payables (22,069,656) 1,188,338 Repayment of term loans and Islamic financing (12,426,913) (8,913,929) Repayment of finance lease creditors (2,416,962) (1,522,756)

Net cash used in financing activities (36,913,531) (7,246,429)

Net increase /(decrease) in cash and cash equivalents 3,100,858 (8,268,824)

Effect of change on foreign exchange difference 96,048 (141,068)

Cash and cash equivalents at the beginning of the period /year (2,946,907) 5,462,985

Cash and cash equivalents at the end of the period /year 36 249,999 (2,946,907)


33

55


22

Statement of Profit or Loss and Other Comprehensive Income for the financial period from 1st January 2017 to 30th June 2018

18 month for 12 months forperiod ended year ended

Note 30/6/2018 31/12/2016RM RM

Revenue 25 1,877,446 2,026,715 Other income 26 3,040,122 260,238 Administrative expenses (6,281,189) (6,787,551) Other expenses (105,330) (165,587)

(1,468,951) (4,666,185)

Finance costs 27 (13,886) (6,400)


Income tax expense 31 - (1,300)

Loss for the period /year, represent total comprehensive loss for the period /year (1,482,837) (4,673,885)



21

Statement of Financial Position 30th June 2018

Note 30/6/2018 31/12/2016 1/1/2016RM RM RM

ASSETS

Non-current AssetsPlant and equipment 4 355,701 287,915 345,726 Investment in subsidiary companies 7 52,202,787 52,202,787 52,304,787


Current AssetsOther receivables, deposits and prepayments 10 33,115 71,133 77,321 Amount due from subsidiary companies 11 42,742,978 42,664,237 42,478,366 Current tax assets 251,941 251,941 427,059 Deposit with a licensed bank 12 - - 118,393 Cash and bank balances 20,647 878,386 12,384


Total Assets 95,607,169 96,356,399 95,764,036


Equity attributable to ownersShare capital 14 55,258,750 55,258,750 55,258,750 Share premium 14 210,571 210,571 210,571 Reserves 15 (24,547,784) (23,064,947) (18,391,062)

Total Equity 30,921,537 32,404,374 37,078,259

Non-current LiabilitiesDeferred tax liabilities 17 6,800 6,800 5,500 Borrowings 18 15,671,175 22,880,242 27,549,379

Total Non-current Liabilities 15,677,975 22,887,042 27,554,879

Current LiabilitiesOther payables and accruals 24 594,938 1,204,723 467,952 Amount due to subsidiary companies 11 42,092,679 33,481,772 24,291,370 Borrowings 18 6,320,040 6,378,488 6,371,576

Total Current Liabilities 49,007,657 41,064,983 31,130,898

Total Liabilities 64,685,632 63,952,025 58,685,777

Total Equity and Liabilities 95,607,169 96,356,399 95,764,036


56


22

Statement of Profit or Loss and Other Comprehensive Income for the financial period from 1st January 2017 to 30th June 2018

18 month for 12 months forperiod ended year ended

Note 30/6/2018 31/12/2016RM RM

Revenue 25 1,877,446 2,026,715 Other income 26 3,040,122 260,238 Administrative expenses (6,281,189) (6,787,551) Other expenses (105,330) (165,587)

(1,468,951) (4,666,185)

Finance costs 27 (13,886) (6,400)


Income tax expense 31 - (1,300)

Loss for the period /year, represent total comprehensive loss for the period /year (1,482,837) (4,673,885)


57


24

Statement of Cash Flows for the financial period from 1st January 2017 to 30th June 2018


Note 30/6/2018 31/12/2016RM RM

Cash flows from operating activities


Adjustments for : -

Depreciation 105,330 57,811 Gain on disposal of subsidiary company (515) - Impairment loss on investment in subsidiary companies - 102,000 Interest expenses 13,141 6,102 Interest income - (5,892) Payables written back (443,537) (254,346) Reversal of impairment losses (1,414,689) -

Operating loss before working capital changes (3,223,107) (4,766,910)

Decrease in other receivables, deposits and prepayment 38,018 6,188 (Decrease) /Increase in other payables and accruals (166,248) 991,117

Cash used in operations (3,351,337) (3,769,605)

Interest paid (13,141) (6,102) Tax paid - (18,295)

Net cash used in operating activities (3,364,478) (3,794,002)


Advance to subsidiary companies 1,335,948 (185,871) Proceed from disposal of a subsidiary company 515 - Purchase of plant and equipment 35 (173,116) - Uplifted of deposits with financial institution - 124,285

Net cash from /(used in) investing activities 1,163,347 (61,586)

(2,201,131) (3,855,588)


Advance from subsidiary companies 8,610,907 9,383,815 Repayment of term loan (7,181,278) (4,621,519) Repayment of finance lease creditors (86,237) (40,706)

Net cash from financing activities 1,343,392 4,721,590

Net (decrease) /increase in cash and cash equivalents (857,739) 866,002

Cash and cash equivalents at the beginning of the period /year 878,386 12,384

Cash and cash equivalents at the end of the period /year 36 20,647 878,386


Goo

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201

855

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58


24

Statement of Cash Flows for the financial period from 1st January 2017 to 30th June 2018


Note 30/6/2018 31/12/2016RM RM

Cash flows from operating activities


Adjustments for : -

Depreciation 105,330 57,811 Gain on disposal of subsidiary company (515) - Impairment loss on investment in subsidiary companies - 102,000 Interest expenses 13,141 6,102 Interest income - (5,892) Payables written back (443,537) (254,346) Reversal of impairment losses (1,414,689) -

Operating loss before working capital changes (3,223,107) (4,766,910)

Decrease in other receivables, deposits and prepayment 38,018 6,188 (Decrease) /Increase in other payables and accruals (166,248) 991,117

Cash used in operations (3,351,337) (3,769,605)

Interest paid (13,141) (6,102) Tax paid - (18,295)

Net cash used in operating activities (3,364,478) (3,794,002)


Advance to subsidiary companies 1,335,948 (185,871) Proceed from disposal of a subsidiary company 515 - Purchase of plant and equipment 35 (173,116) - Uplifted of deposits with financial institution - 124,285

Net cash from /(used in) investing activities 1,163,347 (61,586)

(2,201,131) (3,855,588)


Advance from subsidiary companies 8,610,907 9,383,815 Repayment of term loan (7,181,278) (4,621,519) Repayment of finance lease creditors (86,237) (40,706)

Net cash from financing activities 1,343,392 4,721,590

Net (decrease) /increase in cash and cash equivalents (857,739) 866,002

Cash and cash equivalents at the beginning of the period /year 878,386 12,384

Cash and cash equivalents at the end of the period /year 36 20,647 878,386


59


26

Notes to the Financial Statements 30th June 2018 2. Basis of preparation of financial statements (Cont’d.)

a) Statement of compliance (Cont’d.) To rectify the abovementioned deficiency, during the current financial period, the Group and the Company reverted the application of the MFRS Framework retrospectively since 1st January 2015 together with the early adoption of MFRS 15, Revenue from Contracts with Customers. MFRS 15, which replaces MFRS 111, Construction Contracts, MFRS 118, Revenue, IC Interpretation 13, Customer Loyalty Programmes, IC Interpretation 15, Arrangements for Construction of Real Estate, IC Interpretation 18, Transfers of Assets from Customers and IC Interpretation 131, Revenue – Barter Transactions Involving Advertising Services, establishes a single comprehensive model for revenue recognition. Under MFRS 15, revenue is recognised when (or as) the entity satisfies a performance obligation by transferring a promised good or service (i.e. an asset) to a customer. An asset is transferred when (or as) the customer obtains control of that asset. Revenue is recognised either over time or at a point in time depending on the timing of transfer of control. The Group has assessed the effects of applying this standard at the inception of the application of MFRS Framework retrospectively since 1st January 2015 and has concluded that apart from providing more extensive disclosures on the Group’s revenue transactions, the rectification will not have a significant impact on the financial position and /or financial performance of the Group as the relevant development is a standalone short duration project. With the adoption of MFRS 15, revenue is recognised by reference to each distinct performance obligation in the contract with customer. Transaction price is allocated to each performance obligation based on the relative standalone selling prices of each distinct good or services promised in the contract. Depending on the substance of a contract, revenue is recognised when the performance obligation is satisfied, which may be at a point in time or over time.

The following are accounting standards, amendments and interpretations of MFRS framework that have been issued by the Malaysian Accounting Standards Board (“MASB”) but have not been adopted by the Group and the Company.

MFRSs, Interpretations and amendments effective for annual periods beginning on or after 1 January 2018 • Amendments to MFRS 1, First-time Adoption of Malaysian Financial Reporting Standards

(Annual Improvements to MFRS Standards 2014-2016 Cycle) • Amendments to MFRS 2, Share-based Payment – Classification and Measurement of

Share-based Payment Transactions • Amendments to MFRS 4, Insurance Contracts – Applying MFRS 9 Financial Instruments

with MFRS 4 Insurance Contracts • MFRS 9, Financial Instruments (2014) • Amendments to MFRS 128, Investments in Associates and Joint Ventures (Annual

Improvements to MFRS Standards 2014-2016 Cycle) • Amendments to MFRS 140, Investment Property – Transfer of Investment Property • IC Interpretation 22, Foreign Currency Transactions and Advance Consideration


25

Notes to the Financial Statements 30th June 2018 1. General information

Goodway Integrated Industries Berhad is a public limited liability company, incorporated and domiciled in Malaysia and is listed on the Main Market of Bursa Malaysia Securities Berhad. The addresses of the principal place of business and registered office of the Company are as follows:-

Principal place of business : Corporate Office /Sales and Marketing Unit 3-5-9, Level 5, Tower 3, UOA Business Park Jalan Pengaturcara U1/51A, Kawasan Perindustrian Temasya 40150 Shah Alam, Selangor Darul Ehsan Manufacturing Plant Lot PT 1654 & PT 1657, Nilai Industrial Estate 71800 Nilai, Negeri Sembilan Darul Khusus

Registered office : Level 33A, Menara 1MK, Kompleks 1 Mont Kiara No. 1, Jalan Kiara, Mont Kiara, 50480 Kuala Lumpur

The consolidated financial statements of the Company as at and for the financial period ended 30th June 2018 comprise the Company and its subsidiaries (together referred to as the “Group” and individually referred to as “Group entities”) and the Group’s interest in associates. The Company is principally engaged in investment holding, whilst the principal activities of the subsidiary companies are set out in Note 7 to the financial statements. These financial statements were authorised for issue by the Board of Directors on 22nd October 2018.

2. Basis of preparation of financial statements

a) Statement of compliance The financial statements of the Group and the Company have been prepared in accordance with Malaysian Financial Reporting Standards (“MFRSs”), International Financial Reporting Standards (“IFRS”) and the requirements of the Companies Act, 2016 in Malaysia. Prior to financial year beginning on 1st January 2015, the Group and the Company applied FRS Framework up to the financial year ended 31st December 2011. Not being a Transitioning Entity then, the Group and the Company adopted the MFRS Framework on 1st January 2012 in preparing their financial statements for the year ended 31st December 2012 and the subsequent year then ended. In year 2015, the Group became a Transitioning Entity upon diversification of its existing core businesses to include property development business. The Group and the Company therefore resumed the application of the FRS Framework in preparing their financial statements for the financial year ended 31st December 2015 with a transition date of 1st January 2014, and FRS 1 First-time Adoption of Financial Reporting Standards has been applied. However, the resumption of the application of the FRS Framework was subsequently found to be not in line with the requirement of the accounting standard for which the entity shall not revert to apply FRSs if it has adopted the MFRS Framework even if it met the criteria to do so.

60


26


a) Statement of compliance (Cont’d.) To rectify the abovementioned deficiency, during the current financial period, the Group and the Company reverted the application of the MFRS Framework retrospectively since 1st January 2015 together with the early adoption of MFRS 15, Revenue from Contracts with Customers. MFRS 15, which replaces MFRS 111, Construction Contracts, MFRS 118, Revenue, IC Interpretation 13, Customer Loyalty Programmes, IC Interpretation 15, Arrangements for Construction of Real Estate, IC Interpretation 18, Transfers of Assets from Customers and IC Interpretation 131, Revenue – Barter Transactions Involving Advertising Services, establishes a single comprehensive model for revenue recognition. Under MFRS 15, revenue is recognised when (or as) the entity satisfies a performance obligation by transferring a promised good or service (i.e. an asset) to a customer. An asset is transferred when (or as) the customer obtains control of that asset. Revenue is recognised either over time or at a point in time depending on the timing of transfer of control. The Group has assessed the effects of applying this standard at the inception of the application of MFRS Framework retrospectively since 1st January 2015 and has concluded that apart from providing more extensive disclosures on the Group’s revenue transactions, the rectification will not have a significant impact on the financial position and /or financial performance of the Group as the relevant development is a standalone short duration project. With the adoption of MFRS 15, revenue is recognised by reference to each distinct performance obligation in the contract with customer. Transaction price is allocated to each performance obligation based on the relative standalone selling prices of each distinct good or services promised in the contract. Depending on the substance of a contract, revenue is recognised when the performance obligation is satisfied, which may be at a point in time or over time.

The following are accounting standards, amendments and interpretations of MFRS framework that have been issued by the Malaysian Accounting Standards Board (“MASB”) but have not been adopted by the Group and the Company.

MFRSs, Interpretations and amendments effective for annual periods beginning on or after 1 January 2018 • Amendments to MFRS 1, First-time Adoption of Malaysian Financial Reporting Standards

(Annual Improvements to MFRS Standards 2014-2016 Cycle) • Amendments to MFRS 2, Share-based Payment – Classification and Measurement of

Share-based Payment Transactions • Amendments to MFRS 4, Insurance Contracts – Applying MFRS 9 Financial Instruments

with MFRS 4 Insurance Contracts • MFRS 9, Financial Instruments (2014) • Amendments to MFRS 128, Investments in Associates and Joint Ventures (Annual

Improvements to MFRS Standards 2014-2016 Cycle) • Amendments to MFRS 140, Investment Property – Transfer of Investment Property • IC Interpretation 22, Foreign Currency Transactions and Advance Consideration

61


28

Notes to the Financial Statements 30th June 2018

2. Basis of preparation of financial statements (Cont’d.)

a) Statement of compliance (Cont’d.) MFRSs, Interpretations and amendments effective for annual periods beginning on or after 1 January 2021 • MFRS 17, Insurance Contracts MFRSs, Interpretations and Amendments effective for a date yet to be confirmed

• Amendments to MFRS 10, Consolidated Financial Statements and MFRS 128,

Investments in Associates and Joint Ventures – Sale or Contribution of Assets between an Investor and its Associate or Joint Venture

The Group and the Company plan to apply the abovementioned accounting standards, amendments and interpretations : - • from the annual period beginning on 1st July 2018 for those accounting standards,

amendments or interpretations that are applicable to the Group and the Company and effective for annual periods beginning on or after 1st January 2018;

• from the annual period beginning on 1st July 2019 for those accounting standards,



amendments or interpretations that are applicable to the Group and the Company and effective for annual periods beginning on or after 1st January 2020; and


amendments or interpretations that are applicable to the Group and the Company and effective for annual periods beginning on or after 1st January 2021.

The initial application of the accounting standards, amendments or interpretations are not expected to have any material financial impacts to the current period and prior period financial statements of the Group and of the Company except as mentioned below : - MFRS 9, Financial Instruments MFRS 9 replaces MFRS 139, Financial Instruments – Recognition and Measurement. MFRS 9 contains a new classification and measurement approach for financial assets based on the business model for managing the assets and the contractual cash flow characteristics of the assets. The new standard contains three principal classification categories for financial assets: measured at amortised cost, fair value through other comprehensive income (“FVOCI) and fair value through profit or loss (“FVTPL”) and eliminates the excising MFRS 139 categories of held to maturity, loans and receivables and available-for-sale investments.


27



a) Statement of compliance (Cont’d.)

MFRSs, Interpretations and amendments effective for annual periods beginning on or after 1 January 2019 • Amendments to MFRS 3, Business Combinations (Annual Improvements to MFRS

Standards 2015-2017 Cycle) • Amendments to MFRS 9, Financial Instruments – Prepayment Features with Negative

Compensation • Amendments to MFRS 11, Joint Arrangements (Annual Improvements to MFRS Standards

2015-2017 Cycle) • MFRS 16, Leases • Amendments to MFRS 112, Income Taxes (Annual Improvements to MFRS Standards

2015-2017 Cycle) • Amendments to MFRS 119, Employee Benefits – Plan Amendment, Curtailment or

Settlement • Amendments to MFRS 123, Borrowing Costs (Annual Improvements to MFRS Standards

2015-2017 Cycle) • Amendments to MFRS 128, Investments in Associates and Joint Ventures – Long-term

Interests in Associates and Joint Ventures • IC Interpretation 23, Uncertainty over Income Tax Treatments

MFRSs, Interpretations and amendments effective for annual periods beginning on or after 1 January 2020 • Amendments to MFRS 2, Share-Based Payment • Amendment to MFRS 3, Business Combinations • Amendments to MFRS 6, Exploration for and Evaluation of Mineral Resources • Amendment to MFRS 14, Regulatory Deferral Accounts • Amendments to MFRS 101, Presentation of Financial Statements • Amendments to MFRS 108, Accounting Policies, Changes in Accounting Estimates and

Errors • Amendments to MFRS 134, Interim Financial Reporting • Amendment to MFRS 137, Provisions, Contingent Liabilities and Contingent Assets • Amendment to MFRS 138, Intangible Assets • Amendment to IC Interpretation 12, Service Concession Arrangements • Amendment to IC Interpretation 19, Extinguishing Financial Liabilities with Equity

Instruments • Amendment to IC Interpretation 20, Stripping Costs in the Production Phase of a Surface

Mine • Amendment to IC Interpretation 22, Foreign Currency Transactions and Advance

Consideration • Amendments to IC Interpretation 132, Intangible Assets – Web Site Costs

62


28



a) Statement of compliance (Cont’d.) MFRSs, Interpretations and amendments effective for annual periods beginning on or after 1 January 2021 • MFRS 17, Insurance Contracts MFRSs, Interpretations and Amendments effective for a date yet to be confirmed

• Amendments to MFRS 10, Consolidated Financial Statements and MFRS 128,

Investments in Associates and Joint Ventures – Sale or Contribution of Assets between an Investor and its Associate or Joint Venture

The Group and the Company plan to apply the abovementioned accounting standards, amendments and interpretations : - • from the annual period beginning on 1st July 2018 for those accounting standards,





amendments or interpretations that are applicable to the Group and the Company and effective for annual periods beginning on or after 1st January 2020; and


amendments or interpretations that are applicable to the Group and the Company and effective for annual periods beginning on or after 1st January 2021.

The initial application of the accounting standards, amendments or interpretations are not expected to have any material financial impacts to the current period and prior period financial statements of the Group and of the Company except as mentioned below : - MFRS 9, Financial Instruments MFRS 9 replaces MFRS 139, Financial Instruments – Recognition and Measurement. MFRS 9 contains a new classification and measurement approach for financial assets based on the business model for managing the assets and the contractual cash flow characteristics of the assets. The new standard contains three principal classification categories for financial assets: measured at amortised cost, fair value through other comprehensive income (“FVOCI) and fair value through profit or loss (“FVTPL”) and eliminates the excising MFRS 139 categories of held to maturity, loans and receivables and available-for-sale investments.

63


30



IC Interpretation 23, Uncertainty over Income Tax Treatments IC Interpretation 23 provides guidance on how to recognise and measure deferred and current income tax assets and liabilities where there is uncertainty over a tax treatment. If it is not probable that the tax treatment will be accepted by the tax authority, the effect of the tax uncertainty should be included in the period when such determination is made. The effect of uncertainty shall be measured suing the method which best predicts the resolution of the uncertainty. IC interpretation 23 will be effective for annual reporting periods beginning on or after 1st January 2019.

Amendments to MFRS 10, Consolidated Financial Statements and MFRS 128, Investments in Associates and Joint Ventures – Sale or Contribution of Assets between an Investor and its Associate or Joint Venture

The amendments clarify that : - • gains and losses resulting from transactions involving assets that do not constitute a

business, between investor and its associate or joint venture are recognised in the entity’s financial statements only to the extent of unrelated investors’ interests in the associate or joint venture; and

• gains and losses resulting from transactions involving the sale or contribution of assets to

an associate of a joint venture that constitute a business is recognised in full.

The amendments are to be applied prospectively to the sale or contribution of assets occurring in annual periods beginning on or after a date to be determined by MASB. Earlier application is permitted. These amendments are not expected to have any impact on the Group and the Company. The Group and the Company are currently assessing the financial impact that may arise from the adoption of MFRS 9, MFRS 16, amendments to MFRS 123, IC Interpretation 23 and amendments to MFRS 10

b) Basis of measurement

The financial statements have been prepared on the historical cost basis other than as disclosed in Note 3.

c) Functional and presentation currency

These financial statements are presented in Ringgit Malaysia (“RM”), which is the Group’s and Company’s functional currency.

d) Use of estimates and judgements

The preparation of the financial statements in conformity with MFRSs requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.


29


a) Statement of compliance (Cont’d.) MFRS 9, Financial Instruments (Cont’d.) With regard to the measurement of financial liabilities, the standard retains most of the MFRS 139 requirements except for liabilities designated at inception to be measured at FVTPL. MFRS 9 requires that fair value changes attributable to own credit risk shall be presented in other comprehensive income (“OCI”) rather than in profit or loss, unless the recognition of the effects of changes in the liability’s credit risk in OCI would create or enlarge an accounting mismatch in profit or loss. Changes in fair value attributable to a financial liability’s credit risk are not subsequently reclassified to profit or loss. The new impairment model requires the recognition of impairment provisions based in expected credit losses rather than incurred credit losses as is the case under MFRS 139. It applies to financial assets classified at amortised cost, debt instruments measured at fair value after other comprehensive income, contract assets under MFRS 15, Revenue from Contracts with Customers and intercompany balances. The new impairment model may have an impact on the Group’s and the Company’s financial results given the significant financial asset balances at each reporting date. The Group and the Company will adopt the standard using the cumulative catch-up transition method and will therefore not restate comparative periods. The cumulative effect will be recognised in opening retained earnings and /or other comprehensive of equity as at 1st July 2018 (date of initial application).

MFRS 16, Leases MFRS 16 sets out the principles for the recognition, measurement, presentation and disclosure of leases. It introduces a single lessee accounting model and requires a lessee to recognise assets and liabilities for all leases with a term if more than 12 months, unless the underlying asset is of low value. A lessee is required to recognise a right-of-use asset representing its right to use the underlying leased asset and a lease liability representing its obligation to make lease payments. MFRS 16 will be effective for annual reporting periods beginning on or after 1st January 2019.

Amendments to MFRS 123, Borrowing Costs Amendments to MFRS 123 (effective form 1st January 2019) clarify that if a specific borrowing remains outstanding after the related qualifying asset is ready for its intended use or sale, it becomes part of general borrowings.

64


30



IC Interpretation 23, Uncertainty over Income Tax Treatments IC Interpretation 23 provides guidance on how to recognise and measure deferred and current income tax assets and liabilities where there is uncertainty over a tax treatment. If it is not probable that the tax treatment will be accepted by the tax authority, the effect of the tax uncertainty should be included in the period when such determination is made. The effect of uncertainty shall be measured suing the method which best predicts the resolution of the uncertainty. IC interpretation 23 will be effective for annual reporting periods beginning on or after 1st January 2019.

Amendments to MFRS 10, Consolidated Financial Statements and MFRS 128, Investments in Associates and Joint Ventures – Sale or Contribution of Assets between an Investor and its Associate or Joint Venture

The amendments clarify that : - • gains and losses resulting from transactions involving assets that do not constitute a

business, between investor and its associate or joint venture are recognised in the entity’s financial statements only to the extent of unrelated investors’ interests in the associate or joint venture; and

• gains and losses resulting from transactions involving the sale or contribution of assets to

an associate of a joint venture that constitute a business is recognised in full.

The amendments are to be applied prospectively to the sale or contribution of assets occurring in annual periods beginning on or after a date to be determined by MASB. Earlier application is permitted. These amendments are not expected to have any impact on the Group and the Company. The Group and the Company are currently assessing the financial impact that may arise from the adoption of MFRS 9, MFRS 16, amendments to MFRS 123, IC Interpretation 23 and amendments to MFRS 10

b) Basis of measurement

The financial statements have been prepared on the historical cost basis other than as disclosed in Note 3.

c) Functional and presentation currency

These financial statements are presented in Ringgit Malaysia (“RM”), which is the Group’s and Company’s functional currency.

d) Use of estimates and judgements

The preparation of the financial statements in conformity with MFRSs requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.

65


32


2. Basis of preparation of financial statements (Cont’d.) d) Use of estimates and judgments (Cont’d.)

iv) Deferred tax assets

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

v) Income tax expense

There are certain transactions and computations for which the ultimate tax determination may be different from the initial estimate. The Company and its subsidiary companies recognised tax liabilities based on its understanding of the prevailing tax laws and estimates of whether such taxes will be due in the ordinary course of business. Where the final outcome of these matters is different from the amounts that were initially recognized, such difference will impact the income tax and deferred tax provisions in the period in which such determination is made.

vi) Allowance for inventories

Reviews are made periodically by management on damaged, obsolete and slow-moving inventories. These reviews required judgement and estimates. Possible changes in these estimates could result in revisions to the valuation of inventories.

vii) Revenue recognition from property development activities

Revenue is recognised as and when the control of the asset is transferred to customers and it is probable that the Group and the Company will collect the consideration to which it will be entitled in exchange for the asset that will be transferred to the customer. Depending on the terms of the contract and the applicable laws governing the contract, control of the asset may transfer over time or at a point in time. If control of the asset transfers over time, revenue is recognised over the period of the contract by reference to the progress towards complete satisfaction of that performance obligation based on the physical proportion of contract work-to-date certified by professional consultants. Significant judgement is required in determining the progress towards complete satisfaction of that performance obligation based on the certified work-to-date corroborated by the level of completion of the development based on actual costs incurred to date over the estimated total property development costs. The total estimated costs are based on approved budgets, which require assessments and judgements to be made on changes in, for example, work scope, changes in costs and costs to completion. In making these judgements, management relies on past experience and the work of specialists.


31


2. Basis of preparation of financial statements (Cont’d.) d) Use of estimates and judgements (Cont’d.)

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised and in any future periods affected.

There are no significant areas of estimation uncertainty and critical judgements in applying accounting policies that have significant effect on the amounts recognised in the financial statements other than those disclosed in the following notes : -

i) Depreciation of property, plant and equipment

Property, plant and equipment are depreciated in a straight-line basis over their estimated useful life. Management estimated the useful life of these assets to be 2 to 75 years. Changes in the expected level of usage and technological developments could impact economic useful life and the residual values of these assets, therefore future depreciation charges could be revised.

ii) Impairment of goodwill

The Group determines whether goodwill is impaired at least on an annual basis. This requires an estimation of the value-in-use of the cash generating units (“CGU”) to which the goodwill is allocated. Estimating value-in-use amount requires management to make an estimate of the expected future cash flows from the CGU and also to choose a suitable discount rate in order to calculate the present value of those cash flows. The carrying amounts of goodwill as at 30th June 2018 was Nil (31/12/2016 – RM586,002; 1/1/2016 - RM586,002). Further details are disclosed in Note 6 to the financial statements.

iii) Impairment losses for receivables

The Group and the Company make impairment losses based on an assessment of the recoverability of receivables. Impairment loss is applied to receivables where events or changes in circumstances indicate that the carrying amounts may not be recoverable. Management specifically analyses historical default rate, and changes in customer payment terms when making a judgements to evaluate the adequacy of the impairment losses of receivables. Where the expectation is different from the original estimate, such difference will impact the carrying value of receivables.

At the end of the reporting period, the allowance account for trade receivables of the Group is individually assessed impairment losses for trade receivables amounting to RM6,931,888 (31/12/2016 – RM15,532,211; 1/1/2016 – RM6,254,782). The estimates of individually assessed impairment for trade receivables are based on the historical default rate. Hence, should the actual default rate becomes higher than the estimated default rate, the Group may be required to charge additional impairment losses to the profit or loss within the next financial year.

66


32



iv) Deferred tax assets

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

v) Income tax expense

There are certain transactions and computations for which the ultimate tax determination may be different from the initial estimate. The Company and its subsidiary companies recognised tax liabilities based on its understanding of the prevailing tax laws and estimates of whether such taxes will be due in the ordinary course of business. Where the final outcome of these matters is different from the amounts that were initially recognized, such difference will impact the income tax and deferred tax provisions in the period in which such determination is made.

vi) Allowance for inventories

Reviews are made periodically by management on damaged, obsolete and slow-moving inventories. These reviews required judgement and estimates. Possible changes in these estimates could result in revisions to the valuation of inventories.

vii) Revenue recognition from property development activities

Revenue is recognised as and when the control of the asset is transferred to customers and it is probable that the Group and the Company will collect the consideration to which it will be entitled in exchange for the asset that will be transferred to the customer. Depending on the terms of the contract and the applicable laws governing the contract, control of the asset may transfer over time or at a point in time. If control of the asset transfers over time, revenue is recognised over the period of the contract by reference to the progress towards complete satisfaction of that performance obligation based on the physical proportion of contract work-to-date certified by professional consultants. Significant judgement is required in determining the progress towards complete satisfaction of that performance obligation based on the certified work-to-date corroborated by the level of completion of the development based on actual costs incurred to date over the estimated total property development costs. The total estimated costs are based on approved budgets, which require assessments and judgements to be made on changes in, for example, work scope, changes in costs and costs to completion. In making these judgements, management relies on past experience and the work of specialists.

There are certain transactions and computations for which the ultimate tax determination may be different from the initial estimate. The Company and its subsidiaries recognised tax liabilities based on its understanding of the prevailing tax laws and estimates of whether such taxes will be due in the ordinary course of business. Where the final outcome of these matters is different from the amounts that were initially recognised, such difference will impact the income tax and deferred tax provisions in the period in which such determination is made.

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Notes to the Financial Statements 30th June 2018 3. Significant accounting policies (Cont’d.)

a) Basis of consolidation (Cont’d.)

ii) Business combinations (Cont’d.)

For new acquisitions, the Group measures the cost of goodwill at the acquisition date as : - • the fair value of the consideration transferred; plus • the recognised amount of any non-controlling interests in the acquiree; plus • if the business combination is achieved in stages, the fair value of the existing equity

interest in the acquiree; less • the net recognised amount (generally fair value) of the identifiable assets acquired

and liabilities assumed.

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

For each business combination, the Group elects whether it measures the non-controlling interests in the acquiree either at fair value or at the proportionate share of the acquiree’s identifiable net assets at the acquisition date.

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

iii) Acquisition of non-controlling interests

The Group accounts for all changes in its ownership interest in a subsidiary that do not result in a loss of control as equity transactions between the Group and its non-controlling interest holders. Any difference between the Group’s share of net assets before and after the change, and any consideration received or paid, is adjusted to or against Group reserves.

iv) Loss of control

Upon the loss of control of a 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 the consolidated statement of financial position. Any surplus or deficit arising on the loss of control is recognised in profit or loss. If the Group retains any interest in the former subsidiary, then such interest is measured at fair value at the date that control is lost. Subsequently, it is accounted for as an equity accounted investee or as an available-for-sale financial asset depending on the level of influence retained.

v) Associates

Associates are entities, including unincorporated entities, in which the Group has significant influence, but not control, over the financial and operating policies.


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viii) Impairment of investments in subsidiaries

The Company reviews the investments in subsidiaries for impairment when there is an indication of impairment and assess the impairment of receivables on the amounts due from subsidiaries when the receivables are long outstanding. The recoverable amounts of the investments in subsidiaries and amounts due from subsidiaries are assessed by reference to the value in use of the respective subsidiaries. The value in use is the net present value of the projected future cash flows derived from the business operations of the respective subsidiaries discounted at an appropriate discount rate. For such discounted cash flow method, it involves the use of estimated future results and a set assumptions to reflect their income and cash flows. Judgement had also been used to determine the discount rate for the cash flows and the future growth of the businesses of the businesses of the subsidiaries.

3. Significant accounting policies

The accounting policies set out below have been applied consistently to the periods presented in these financial statements and have been applied consistently by Group entities, unless otherwise stated.

a) Basis of consolidation

i) Subsidiaries

Subsidiaries are entities, including structured entities, controlled by the Company. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases.

The Company controls an entity when it is exposed, or has rights, to variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Potential voting rights are considered when assessing control only when such rights are substantive. The Company also considers it has de facto power over an investee when, despite not having the majority of voting rights, it has the current ability to direct the activities of the investee that significantly affect the investee’s return.

Investments in subsidiaries are measured in the Company’s statement of financial position at cost less any impairment losses, unless the investment is classified as held for sale or distribution. The cost of investment includes transaction costs.

ii) Business combinations

Business combinations are accounted for using the acquisition method from the acquisition date, which is the date on which control is transferred to the Company.

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ii) Business combinations (Cont’d.)

For new acquisitions, the Group measures the cost of goodwill at the acquisition date as : - • the fair value of the consideration transferred; plus • the recognised amount of any non-controlling interests in the acquiree; plus • if the business combination is achieved in stages, the fair value of the existing equity

interest in the acquiree; less • the net recognised amount (generally fair value) of the identifiable assets acquired

and liabilities assumed.

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

For each business combination, the Group elects whether it measures the non-controlling interests in the acquiree either at fair value or at the proportionate share of the acquiree’s identifiable net assets at the acquisition date.

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

iii) Acquisition of non-controlling interests

The Group accounts for all changes in its ownership interest in a subsidiary that do not result in a loss of control as equity transactions between the Group and its non-controlling interest holders. Any difference between the Group’s share of net assets before and after the change, and any consideration received or paid, is adjusted to or against Group reserves.

iv) Loss of control

Upon the loss of control of a 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 the consolidated statement of financial position. Any surplus or deficit arising on the loss of control is recognised in profit or loss. If the Group retains any interest in the former subsidiary, then such interest is measured at fair value at the date that control is lost. Subsequently, it is accounted for as an equity accounted investee or as an available-for-sale financial asset depending on the level of influence retained.

v) Associates

Associates are entities, including unincorporated entities, in which the Group has significant influence, but not control, over the financial and operating policies.

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vii) Transactions eliminated on consolidation

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

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

b) Foreign currency

i) Foreign currency transactions

Transactions in foreign currencies are translated to the respective functional currencies of Group entities at exchange rates at the dates of the transactions.

Monetary assets and liabilities denominated in foreign currencies at the end of the reporting period are retranslated to the functional currency at the exchange rate at that date.

Non-monetary assets and liabilities denominated in foreign currencies are not retranslated at the end of the reporting date, except for those that are measured at fair value are retranslated to the functional currency at the exchange rate at the date that the fair value was determined.

Foreign currency differences arising on retranslation are recognised in profit or loss, except for differences arising on the retranslation of available-for-sale equity instruments or a financial instrument designated as a hedge of currency risk, which are recognised in other comprehensive income.

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

ii) Operations denominated in functional currencies other than Ringgit Malaysia

The assets and liabilities of operations denominated in functional currencies other than RM, including goodwill and fair value adjustments arising on acquisition, are translated to RM at exchange rates at the end of the reporting period, except for goodwill and fair value adjustments arising from business combinations before 1st January 2012 which are treated as assets and liabilities of the Company. The income and expenses of foreign operations, excluding foreign operations in hyperinflationary economies, are translated to RM at exchange rates at the dates of the transactions.


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v) Associates (Cont’d.)

Investments in associates are accounted for in the consolidated financial statements using the equity method less any impairment losses, unless it is classified as held for sale or distribution. The cost of the investment includes transaction costs. The consolidated financial statements include the Group’s share of the profit or loss and other comprehensive income of the associates, after adjustments if any, to align the accounting policies with those of the Group, from the date that significant influence commences until the date that significant influence ceases.

When the Group’s share of losses exceeds its interest in an associate, the carrying amount of that interest including any long-term investments is reduced to zero, and the recognition of further losses is discontinued except to the extent that the Group has an obligation or has made payments on behalf of the associate. When the Group ceases to have significant influence over an associate, any retained interest in the former associate at the date when significant influence is lost is measured at fair value and this amount is regarded as the initial carrying amount of a financial asset. The difference between the fair value of any retained interest plus proceeds from the interest disposed of and the carrying amount of the investment at the date when equity method is discontinued is recognised in the profit or loss.

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

Investments in associates are measured in the Company’s statement of financial position at cost less any impairment losses, unless the investment is classified as held for sale or distribution. The cost of investments includes transaction costs.

vi) Non-controlling interests

Non-controlling interests at the end of the reporting period, being the equity in a subsidiary not attributable directly or indirectly to the equity holders of the Company, are presented in the consolidated statement of financial position and statement of changes in equity within equity, separately from equity attributable to the owners of the Company. Non-controlling interests in the results of the Group is presented in the consolidated statement of profit or loss and other comprehensive income as an allocation of the profit or loss and the comprehensive income for the year between non-controlling interest and owners of the Company. Losses applicable to the non-controlling interests in a subsidiary are allocated to the non-controlling interests even if doing so causes the non-controlling interests to have a deficit balance.

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vii) Transactions eliminated on consolidation

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

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

b) Foreign currency

i) Foreign currency transactions

Transactions in foreign currencies are translated to the respective functional currencies of Group entities at exchange rates at the dates of the transactions.

Monetary assets and liabilities denominated in foreign currencies at the end of the reporting period are retranslated to the functional currency at the exchange rate at that date.

Non-monetary assets and liabilities denominated in foreign currencies are not retranslated at the end of the reporting date, except for those that are measured at fair value are retranslated to the functional currency at the exchange rate at the date that the fair value was determined.

Foreign currency differences arising on retranslation are recognised in profit or loss, except for differences arising on the retranslation of available-for-sale equity instruments or a financial instrument designated as a hedge of currency risk, which are recognised in other comprehensive income.

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

ii) Operations denominated in functional currencies other than Ringgit Malaysia

The assets and liabilities of operations denominated in functional currencies other than RM, including goodwill and fair value adjustments arising on acquisition, are translated to RM at exchange rates at the end of the reporting period, except for goodwill and fair value adjustments arising from business combinations before 1st January 2012 which are treated as assets and liabilities of the Company. The income and expenses of foreign operations, excluding foreign operations in hyperinflationary economies, are translated to RM at exchange rates at the dates of the transactions.

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c) Financial instruments (Cont’d.)

ii) Financial instrument categorise and subsequent measurement The Group and the Company categorise financial instruments as follows:-

Financial assets a) Financial assets at fair value through profit or loss Fair value through profit or loss category comprises financial assets that are held for

trading, including derivatives (except for a derivative that is a financial guarantee contract or a designated and effective hedging instrument) or financial assets that are specifically designated into this category upon initial recognition.

Derivatives that are linked to and must be settled by delivery of unquoted equity

instruments whose fair values cannot be reliably measured are measured at cost. Other financial assets categorised as fair value through profit or loss are

subsequently measured at their fair values with the gain or loss recognised in profit or loss.

b) Held-to-maturity investments Held-to-maturity investments category comprises debt instruments that are quoted in

an active market and the Group or the Company has the positive intention and ability to hold them to maturity.

Financial assets categorised as held-to-maturity investments are subsequently

measured at amortised cost using the effective interest method. c) Loans and receivables Loans and receivables category comprises debt instruments that are not quoted in an

active market. Financial assets categorised as loans and receivables are subsequently measured at

amortised cost using the effective interest method.


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b) Foreign currency

ii) Operations denominated in functional currencies other than Ringgit Malaysia (Cont’d.)

The income and expenses of foreign operations in hyperinflationary economies are translated to RM at the exchange rate at the end of the reporting period. Prior to translating the financial statements of foreign operations in hyperinflationary economies, their financial statements for the current period are restated to account for changes in the general purchasing power of the local currency. The restatement is based on relevant price indices at the end of the reporting period.

Foreign currency differences are recognised in other comprehensive income and accumulated in the foreign currency translation reserve (“FCTR”) in equity. However, if the operation is a non-wholly owned subsidiary, then the relevant proportionate share of the translation difference is allocated to the non-controlling interests. When a foreign operation is disposed of such that control, significant influence or joint control is lost, the cumulative amount in the FCTR related to that foreign operation is reclassified to profit or loss as part of the gain or loss on disposal.

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

c) Financial instruments

i) Initial recognition and measurement

A financial asset or a financial liability is recognised in the statement of financial position when, and only when, the Group or the Company becomes a party to the contractual provisions of the instrument.

A financial instrument is recognised initially, at its fair value plus, in the case of a financial instrument not at fair value through profit or loss, transaction costs that are directly attributable to the acquisition or issue of the financial instrument.

An embedded derivative is recognised separately from the host contract and accounted for as a derivative if, and only if, it is not closely related to the economic characteristics and risks of the host contract and the host contract is not categorised as fair value through profit or loss. The host contract, in the event an embedded derivative is recognised separately, is accounted for in accordance with policy applicable to the nature of the host contract.

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ii) Financial instrument categorise and subsequent measurement The Group and the Company categorise financial instruments as follows:-

Financial assets a) Financial assets at fair value through profit or loss Fair value through profit or loss category comprises financial assets that are held for

trading, including derivatives (except for a derivative that is a financial guarantee contract or a designated and effective hedging instrument) or financial assets that are specifically designated into this category upon initial recognition.

Derivatives that are linked to and must be settled by delivery of unquoted equity

instruments whose fair values cannot be reliably measured are measured at cost. Other financial assets categorised as fair value through profit or loss are

subsequently measured at their fair values with the gain or loss recognised in profit or loss.

b) Held-to-maturity investments Held-to-maturity investments category comprises debt instruments that are quoted in

an active market and the Group or the Company has the positive intention and ability to hold them to maturity.

Financial assets categorised as held-to-maturity investments are subsequently

measured at amortised cost using the effective interest method. c) Loans and receivables Loans and receivables category comprises debt instruments that are not quoted in an

active market. Financial assets categorised as loans and receivables are subsequently measured at

amortised cost using the effective interest method.

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iii) Financial guarantee contracts

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

Fair value arising from financial guarantee contracts are classified as deferred income and is amortised to profit or loss using a straight-line method over the contractual period or, when there is no specified contractual period, recognised in profit or loss upon discharge of the guarantee. When settlement of a financial guarantee contract becomes probable, an estimate of the obligation is made. If the carrying value of the financial guarantee contract is lower than the obligation, the carrying value is adjusted to the obligation amount and accounted for as a provision.

iv) 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 require delivery of the asset within the time frame established generally by regulation or convention in the marketplace concerned.

A regular way purchase or sale of financial assets is recognised and derecognised, as applicable, using trade date accounting. Trade date accounting refers to : - (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 a receivable from the buyer for payment on the trade date.

v) Derecognition A financial asset or part of it is derecognised when, and only when the contractual rights to the cash flows from the financial asset expire or the financial asset is transferred to another party without retaining control or substantially all risks and rewards of the asset. On derecognition of a financial asset, the difference between the carrying amount and the sum of the consideration received (including any new asset obtained less any liability assumed) and any cumulative gain or loss that had been recognised in equity is recognised in the profit or loss.

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


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ii) Financial instrument categorise and subsequent measurement (Cont’d.)

The Group and the Company categorise financial instruments as follows:- (Cont’d.)

Financial assets (Cont’d.)

d) Available-for-sale financial assets

Available-for-sale category comprises investment in equity and debt securities instruments that are not held for trading. Investments in equity instruments that do not have a quoted market price in an active market and whose fair value cannot be reliably measured are measured at cost. Other financial assets categorised as available-for-sale are subsequently measured at their fair values with the gain or loss recognised in other comprehensive income, except for impairment losses, foreign exchange gains and losses arising from monetary items and gains and losses of hedged items attributable to hedge risks of fair value hedges which are recognised in profit or loss. On derecognition, the cumulative gain or loss recognised in other comprehensive income is reclassified from equity into profit or loss. Interest calculated for a debt instrument using the effective interest method is recognised in profit or loss.

All financial assets, except for those measured at fair value through profit or loss, are subject to review for impairment (see Note 3(j)(i)).

Financial liabilities All financial liabilities are subsequently measured at amortised cost other than those categorised as fair value through profit or loss. Fair value through profit or loss category comprises financial liabilities that are derivatives (except for a derivative that is a financial guarantee contract or a designated and effective hedging instrument) or financial liabilities that are specifically designated into this category upon initial recognition.

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

Other financial liabilities categorised as fair value through profit or loss are subsequently measured at their fair values with the gain or loss recognised in profit or loss.

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iii) Financial guarantee contracts

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

Fair value arising from financial guarantee contracts are classified as deferred income and is amortised to profit or loss using a straight-line method over the contractual period or, when there is no specified contractual period, recognised in profit or loss upon discharge of the guarantee. When settlement of a financial guarantee contract becomes probable, an estimate of the obligation is made. If the carrying value of the financial guarantee contract is lower than the obligation, the carrying value is adjusted to the obligation amount and accounted for as a provision.

iv) 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 require delivery of the asset within the time frame established generally by regulation or convention in the marketplace concerned.

A regular way purchase or sale of financial assets is recognised and derecognised, as applicable, using trade date accounting. Trade date accounting refers to : - (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 a receivable from the buyer for payment on the trade date.

v) Derecognition A financial asset or part of it is derecognised when, and only when the contractual rights to the cash flows from the financial asset expire or the financial asset is transferred to another party without retaining control or substantially all risks and rewards of the asset. On derecognition of a financial asset, the difference between the carrying amount and the sum of the consideration received (including any new asset obtained less any liability assumed) and any cumulative gain or loss that had been recognised in equity is recognised in the profit or loss.

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

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3. Significant accounting policies (Cont’d.)

d) Property, plant and equipment

ii) Subsequent costs

The cost of replacing a component of an item of property, plant and equipment is recognised in the carrying amount of the item if it is probable that the future economic benefits embodied within the component will flow to the Group or the Company, and its cost can be measured reliably. The carrying amount of the replaced component is derecognised to profit or loss. The costs of the day-to-day servicing of property, plant and equipment are recognised in profit or loss as incurred.

iii) Depreciation

Depreciation is based on the cost /valuation of an asset less its residual value. Significant components of individual assets are assessed, and if a component has a useful life that is different from the remainder of that asset, then that component are depreciated separately.

Depreciation is recognised in profit or loss on a straight-line basis over the estimated useful lives of each component of an item of property, plant and equipment from the date that they are available for use. Leased assets are depreciated over the shorter of the lease term and their useful lives unless it is reasonably certain that the Group will obtain ownership by the end of the lease term. Freehold land is not depreciated. Property, plant and equipment under construction are not depreciated until the assets are ready for their intended use. The principal annual rates of depreciation for the property, plant and equipment are as follows :-

Rate %

Buildings 2 Motor vehicles 20 Plant and machinery 5 - 10 Furniture and fittings 10 - 15 Renovation 2 Equipment 10 - 50

Depreciation methods, useful lives and residual values are reviewed at end of the reporting period, and adjusted as appropriate.


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d) Property, plant and equipment i) Recognition and measurement

Items of property, plant and equipment except for freehold land are measured at cost /valuation less any accumulated depreciation and any accumulated impairment losses. Freehold land with indefinite useful life is not depreciated. The Group revalues its freehold and leasehold land, and buildings every 5 years and at shorter intervals whenever the fair value of the revalued assets is expected to differ materially from their carrying value. Valuation of the properties involves a degree of judgement before arriving at the respective property’s revalued amount. As such, the revalued amount of the properties may be different from its actual market price. Surpluses arising from revaluation are dealt with in the revaluation reserve account. Any deficit arising is offset against the revaluation reserve to the extent of a previous increase for the same property. In all other cases, a decrease in carrying amount is charged to the profit or loss. Cost includes expenditures that are directly attributable to the acquisition of the asset and any other costs directly attributable to bringing the asset to working condition for its intended use, and the costs of dismantling and removing the items and restoring the site on which they are located. The cost of self-constructed assets also includes the cost of materials and direct labour. For qualifying assets, borrowing costs are capitalised in accordance with the accounting policy on borrowing costs. Cost also may include transfers from equity of any gain or loss on qualifying cash flow hedges of foreign currency purchases of property, plant and equipment. Purchased software that is integral to the functionality of the related equipment is capitalised as part of that equipment.

The cost of property, plant and equipment recognised as a result of a business combination is based on fair value at acquisition date. The fair value of property is the estimated amount for which a property could be exchanged between knowledgeable willing parties in an arm’s length transaction after making proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion. The fair value of other items of plant and equipment is based on the quoted market prices for similar items when available and replacement cost when appropriate. When significant parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment. The gain or loss on disposal of an item of property, plant and equipment is determined by comparing the proceeds from disposal with the carrying amount of property, plant and equipment and is recognised net within “other income” and “other expenses” respectively in profit or loss.

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d) Property, plant and equipment

ii) Subsequent costs

The cost of replacing a component of an item of property, plant and equipment is recognised in the carrying amount of the item if it is probable that the future economic benefits embodied within the component will flow to the Group or the Company, and its cost can be measured reliably. The carrying amount of the replaced component is derecognised to profit or loss. The costs of the day-to-day servicing of property, plant and equipment are recognised in profit or loss as incurred.

iii) Depreciation

Depreciation is based on the cost /valuation of an asset less its residual value. Significant components of individual assets are assessed, and if a component has a useful life that is different from the remainder of that asset, then that component are depreciated separately.

Depreciation is recognised in profit or loss on a straight-line basis over the estimated useful lives of each component of an item of property, plant and equipment from the date that they are available for use. Leased assets are depreciated over the shorter of the lease term and their useful lives unless it is reasonably certain that the Group will obtain ownership by the end of the lease term. Freehold land is not depreciated. Property, plant and equipment under construction are not depreciated until the assets are ready for their intended use. The principal annual rates of depreciation for the property, plant and equipment are as follows :-

Rate %

Buildings 2 Motor vehicles 20 Plant and machinery 5 - 10 Furniture and fittings 10 - 15 Renovation 2 Equipment 10 - 50

Depreciation methods, useful lives and residual values are reviewed at end of the reporting period, and adjusted as appropriate.

(Cont’d.)

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f) Intangible assets (Cont’d.)

ii) Trademarks and other intangible assets

Trademarks and other intangible assets, other than goodwill, that are acquired by the Group, which have finite useful lives, are measured at cost less accumulated amortisation and any accumulated impairment losses.

iii) Subsequent expenditure

Subsequent expenditure is capitalised only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure, including expenditure on internally generated goodwill and brands, is recognised in profit or loss as incurred.

iv) Amortisation

Goodwill and intangible assets with indefinite useful lives are not amortised but are tested for impairment annually and whenever there is an indication that they may be impaired. Other intangible assets are amortised from the date that they are available for use. Amortisation is based on the cost of an asset less its residual value. Amortisation is recognised in profit or loss on a straight-line basis over the estimated useful lives of intangible assets. Amortisation methods, useful lives and residual values are reviewed at the end of each reporting period and adjusted, if appropriate.

g) Inventories

i) Land held for property development

Land held for property development for which no significant development work has been undertaken or where development activities are not expected to be completed within the normal operating cycle, is classified as non-current. The carrying value of such land classified as inventory under non-current assets is carried at the lower of cost and net realisable value. Cost associated with the acquisition of land included the purchase price of the land, professional fees, stamp duties, commissions, conversion fees and other relevant levies. Land held for property development is transferred to property development costs under current assets when development activities have commenced and are expected to be completed within the normal operating cycle.


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e) Leased assets i) Finance lease

Leases in terms of which the Group or the Company assumes substantially all the risks and rewards of ownership are classified as finance leases. Upon initial recognition, the leased asset is measured at an amount equal to the lower of its fair value and present value of the minimum lease payments. Subsequent to initial recognition, the asset is accounted for in accordance with the accounting policy applicable to that asset.

Minimum lease payments made under finance leases are apportioned between the finance expense and the reduction of the outstanding liability. The finance expense is allocated to each period during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability. Contingent lease payments are accounted for by revising the minimum lease payments over the remaining term of the lease when the lease adjustment is confirmed.

Leasehold land which in substance is a finance lease is classified as property, plant and equipment, or as investment property if held to earn rental income or for capital appreciation or for both.

ii) Operating lease

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

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

Leasehold land which in substance is an operating lease is classified as prepaid lease payments.

f) Intangible assets

i) Goodwill

Goodwill arises on business combinations is measured at cost less any accumulated impairment losses. In respect of equity-accounted associates, the carrying amount of goodwill is included in the carrying amount of the investment and an impairment loss on such an investment is not allocated to any asset, including goodwill, that forms part of the carrying amount of the equity accounted associates.

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f) Intangible assets (Cont’d.)

ii) Trademarks and other intangible assets

Trademarks and other intangible assets, other than goodwill, that are acquired by the Group, which have finite useful lives, are measured at cost less accumulated amortisation and any accumulated impairment losses.

iii) Subsequent expenditure

Subsequent expenditure is capitalised only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure, including expenditure on internally generated goodwill and brands, is recognised in profit or loss as incurred.

iv) Amortisation

Goodwill and intangible assets with indefinite useful lives are not amortised but are tested for impairment annually and whenever there is an indication that they may be impaired. Other intangible assets are amortised from the date that they are available for use. Amortisation is based on the cost of an asset less its residual value. Amortisation is recognised in profit or loss on a straight-line basis over the estimated useful lives of intangible assets. Amortisation methods, useful lives and residual values are reviewed at the end of each reporting period and adjusted, if appropriate.

g) Inventories

i) Land held for property development

Land held for property development for which no significant development work has been undertaken or where development activities are not expected to be completed within the normal operating cycle, is classified as non-current. The carrying value of such land classified as inventory under non-current assets is carried at the lower of cost and net realisable value. Cost associated with the acquisition of land included the purchase price of the land, professional fees, stamp duties, commissions, conversion fees and other relevant levies. Land held for property development is transferred to property development costs under current assets when development activities have commenced and are expected to be completed within the normal operating cycle.

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h) Non-current assets held for sale (Cont’d.) 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 associated ceases once classified as held for sale.

i) Cash and cash equivalents

Cash and cash equivalents consists of cash on hand, balances and deposits with banks and highly liquid investments which have an insignificant risk of changes in fair value with original maturities of three months or less, and are used by the Group and the Company in the management of their short term commitments. For the purpose of the statement of cash flows, cash and cash equivalents are presented net of bank overdrafts and pledged deposits.

j) Impairment

i) Financial assets

All financial assets (except for financial assets categorised as fair value through profit or loss, investment in subsidiaries and investment in associates) are assessed at each reporting date whether there is any objective evidence of impairment as a result of one or more events having an impact on the estimated future cash flows of the asset. Losses expected as a result of future events, no matter how likely, are not recognised. For an investment in an equity instrument, a significant or prolonged decline in the fair value below its cost is an objective evidence of impairment. If any such objective evidence exists, then the impairment loss of the financial asset is estimated. An impairment loss in respect of loans and receivables and held-to-maturity investments is recognised in profit or loss and is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at the asset’s original effective interest rate. The carrying amount of the asset is reduced through the use of an allowance account. An impairment loss in respect of available-for-sale financial assets is recognised in profit or loss and is measured as the difference between the asset’s acquisition cost (net of any principal payment and amortisation) and the asset’s current fair value, less any impairment loss previously recognised. Where a decline in the fair value of an available-for-sale financial asset has been recognised in other comprehensive income, the cumulative loss in other comprehensive income is reclassified from equity to profit or loss. An impairment loss in respect of unquoted equity instrument that is carried at cost is recognised in profit or loss and is measured as the difference between the financial asset’s carrying amount and the present value of estimated future cash flows discounted at the current market rate of return for a similar financial asset. Impairment losses recognised in profit or loss for an investment in an equity instrument classified as available-for-sale is not reversed through profit or loss.


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g) Inventories (Cont’d.)

ii) Property development costs

Property development costs are stated at the lower of costs and net realisable value. The cost of land, related development costs common to whole projects and direct building costs less cumulative amounts recognised as expense in the profit or loss for property under development are carried in the statements of financial position as property development costs. The property development cost is subsequently recognised as an expense in profit or loss as and when the control of the inventory is transferred to the customer.

iii) Completed development units

Units of development properties completed and held for sale are stated at lower of cost and net realisable value. Costs comprise cost of acquisition of land including all related costs incurred subsequent to the acquisition necessary to prepare the land for its intended use, related development costs to projects and direct building costs.

iv) Finished goods and raw materials Inventories are measured at the lower of cost and estimated selling price less costs to complete and sell. The cost of inventories is calculated using the weighted average cost formula, and includes expenditure incurred in acquiring the inventories, production or conversion costs and other costs incurred in bringing them to their existing location and condition. In the case of work-in-progress and finished goods, cost includes an appropriate share of production overheads based on normal operating capacity. Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and the estimated costs necessary to make the sale.

h) Non-current assets held for sale

Non-current assets, or disposal group comprising assets and liabilities that are expected to be recovered primarily through sale rather than through continuing use, are classified as held for sale. Immediately before classification as held for sale, the assets, or components of a disposal group, are remeasured in accordance with Group’s accounting policies. Thereafter generally the assets, or disposal group, are measure at lower of their carrying amount and fair value less costs of disposal. Any impairment loss on a disposal group is first allocated to goodwill, and then to remaining assets and liabilities on pro rata basis, except that no loss is allocated to inventories and financial assets which continue to be measured in accordance with Group’s accounting policies. Impairment losses on initial classification as held for sale and subsequent gains or losses on remeasurement are recognised in profit or loss. Gains are not recognised in excess of any cumulative impairment loss.

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h) Non-current assets held for sale (Cont’d.) 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 associated ceases once classified as held for sale.

i) Cash and cash equivalents

Cash and cash equivalents consists of cash on hand, balances and deposits with banks and highly liquid investments which have an insignificant risk of changes in fair value with original maturities of three months or less, and are used by the Group and the Company in the management of their short term commitments. For the purpose of the statement of cash flows, cash and cash equivalents are presented net of bank overdrafts and pledged deposits.

j) Impairment

i) Financial assets

All financial assets (except for financial assets categorised as fair value through profit or loss, investment in subsidiaries and investment in associates) are assessed at each reporting date whether there is any objective evidence of impairment as a result of one or more events having an impact on the estimated future cash flows of the asset. Losses expected as a result of future events, no matter how likely, are not recognised. For an investment in an equity instrument, a significant or prolonged decline in the fair value below its cost is an objective evidence of impairment. If any such objective evidence exists, then the impairment loss of the financial asset is estimated. An impairment loss in respect of loans and receivables and held-to-maturity investments is recognised in profit or loss and is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at the asset’s original effective interest rate. The carrying amount of the asset is reduced through the use of an allowance account. An impairment loss in respect of available-for-sale financial assets is recognised in profit or loss and is measured as the difference between the asset’s acquisition cost (net of any principal payment and amortisation) and the asset’s current fair value, less any impairment loss previously recognised. Where a decline in the fair value of an available-for-sale financial asset has been recognised in other comprehensive income, the cumulative loss in other comprehensive income is reclassified from equity to profit or loss. An impairment loss in respect of unquoted equity instrument that is carried at cost is recognised in profit or loss and is measured as the difference between the financial asset’s carrying amount and the present value of estimated future cash flows discounted at the current market rate of return for a similar financial asset. Impairment losses recognised in profit or loss for an investment in an equity instrument classified as available-for-sale is not reversed through profit or loss.

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j) Impairment (Cont’d.)

ii) Other assets (Cont’d.) An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment losses recognised in prior periods are assessed at the end of each reporting period for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount since the last impairment loss was recognised. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised. Reversals of impairment losses are credited to profit or loss in the financial year in which the reversals are recognised.

k) Equity instruments

Instruments classified as equity are measured at cost on initial recognition and are not remeasured subsequently.

i) Issue expenses

Costs directly attributable to the issue of instruments classified as equity are recognised as a deduction from equity.

ii) Ordinary shares

Ordinary shares are classified as equity.

l) Employee benefits

i) Short-term employee benefits Short-term employee benefit obligations in respect of salaries, annual bonuses, paid annual leave and sick leave are measured on an undiscounted basis and are expensed as the related service is provided. A liability is recognised for the amount expected to be paid under short-term cash bonus or profit-sharing plans if the Group has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably.

ii) State plans

The Group’s contributions to statutory pension funds are charged to profit or loss in the financial year to which they relate. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in future payments is available.


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i) Financial assets (Cont’d.) If, in a subsequent period, the fair value of a debt instrument increases and the increase can be objectively related to an event occurring after the impairment loss was recognised in profit or loss, the impairment loss is reversed, to the extent that the asset’s carrying amount does not exceed what the carrying amount would have been had the impairment not been recognised at the date the impairment is reversed. The amount of the reversal is recognised in profit or loss.

ii) Other assets

The carrying amounts of other assets (except for inventories, amount due from contract customers, deferred tax asset, assets arising from employee benefits, investment property measured at fair value and non-current assets (or disposal groups) classified as held for sale) are reviewed at the end of each reporting period to determine whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated. For goodwill and intangible assets that have indefinite useful lives or that are not yet available for use, the recoverable amount is estimated each period at the same time. For the purpose of impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or cash-generating units. Subject to an operating segment ceiling test, for the purpose of goodwill impairment testing, cash-generating units to which goodwill has been allocated are aggregated so that the level at which impairment testing is performed reflects the lowest level at which goodwill is monitored for internal reporting purposes. The goodwill acquired in a business combination, for the purpose of impairment testing, is allocated to a cash-generating unit or a group of cash-generating units that are expected to benefit from the synergies of the combination. The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs of disposal. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset or cash-generating unit. An impairment loss is recognised if the carrying amount of an asset or its related cash-generating unit exceeds its estimated recoverable amount. Impairment losses are recognised in profit or loss. Impairment losses recognised in respect of cash-generating units are allocated first to reduce the carrying amount of any goodwill allocated to the cash-generating unit (group of cash-generating units) and then to reduce the carrying amounts of the other assets in the cash-generating unit (groups of cash-generating units) on a pro rata basis.

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ii) Other assets (Cont’d.) An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment losses recognised in prior periods are assessed at the end of each reporting period for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount since the last impairment loss was recognised. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised. Reversals of impairment losses are credited to profit or loss in the financial year in which the reversals are recognised.

k) Equity instruments

Instruments classified as equity are measured at cost on initial recognition and are not remeasured subsequently.

i) Issue expenses

Costs directly attributable to the issue of instruments classified as equity are recognised as a deduction from equity.

ii) Ordinary shares

Ordinary shares are classified as equity.

l) Employee benefits

i) Short-term employee benefits Short-term employee benefit obligations in respect of salaries, annual bonuses, paid annual leave and sick leave are measured on an undiscounted basis and are expensed as the related service is provided. A liability is recognised for the amount expected to be paid under short-term cash bonus or profit-sharing plans if the Group has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably.

ii) State plans

The Group’s contributions to statutory pension funds are charged to profit or loss in the financial year to which they relate. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in future payments is available.

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o) Revenue and other income

i) Goods sold

Revenue from the sale of goods in the course of ordinary activities is measured at fair value of the consideration received or receivable, net of returns and allowances, trade discounts and volume rebates. Revenue is recognised when persuasive evidence exists, usually in the form of an executed sales agreement, that the significant risks and rewards of ownership have been transferred to the customer, recovery of the consideration is probable, the associated costs and possible return of goods can be estimated reliably, there is no continuing management involvement with the goods, and the amount of revenue can be measured reliably. If it is probable that discounts will be granted and the amount can be measured reliably, then the discount is recognised as a reduction of revenue as the sales are recognised.

ii) Revenue from property development

Contracts with customers may include multiple promises to customers and therefore accounted for as separate performance obligations. In this case, the transaction price will be allocated to each performance obligation based on the stand-alone selling prices. When these are not directly observable, they are estimated based on expected cost plus margin. The revenue from property development is measured at the fixed transaction price agreed under the sales and purchase agreement.

Revenue from property development is recognised as and when the control of the asset is transferred to the customer and it is probable that the Group will collect the consideration to which it will be entitled in exchange for the asset that will be transferred to the customer. Depending on the terms of the contract and the laws that apply to the contract, control of the asset may transfer over time or at a point in time. Control of the asset is transferred over time if the Group’s performance does not create an asset with an alternative use to the Group and the Group has an enforceable right to payment for performance completed to date. If control of the asset transfers over time, revenue is recognised over the period of the contract by reference to the progress towards complete satisfaction of that performance obligation. Otherwise, revenue is recognised at a point in time when the customer obtains control of the asset. The Group recognises revenue over time using the output method, which is based on the level of completion of the physical proportion of contract work to-date, certified by professional consultants.


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l) Employee benefits (Cont’d.)

iii) Defined contribution plans

As required by law, companies in Malaysia make contributions to state pension scheme, the Employees Provident Fund (“EPF”). Such contributions are recognised as an expense in the profit or loss as incurred.

iv) Termination benefits

Termination benefits are expensed at the earlier of when the Group can no longer withdraw the offer of those benefits and when the Group recognises costs for a restructuring. If benefits are not expected to be settled wholly within 12 months of the end of the reporting period, then they are discounted.

m) Provisions

A provision is recognised if, as a result of a past event, the Group has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. The unwinding of the discount is recognised as finance cost.

n) Contract assets and contract liabilities

Contract asset is the right to consideration for goods or services transferred to the customers. In case of property development and construction contracts, contract asset is the excess of cumulative revenue earned over cumulative billings to-date. When there is objective evidence of impairment, the amount of impairment losses is determined by comprising the contract asset’s carrying amount and the present value of estimated future cash flows to be generated by the contract asset. Contract liability is the obligation to transfer goods or services to customer for which the Group or the Company has received the consideration or has billed the customer. In case of property development and construction contracts, contract liability is the excess of cumulative billings to-date over cumulative revenue earned.

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o) Revenue and other income

i) Goods sold

Revenue from the sale of goods in the course of ordinary activities is measured at fair value of the consideration received or receivable, net of returns and allowances, trade discounts and volume rebates. Revenue is recognised when persuasive evidence exists, usually in the form of an executed sales agreement, that the significant risks and rewards of ownership have been transferred to the customer, recovery of the consideration is probable, the associated costs and possible return of goods can be estimated reliably, there is no continuing management involvement with the goods, and the amount of revenue can be measured reliably. If it is probable that discounts will be granted and the amount can be measured reliably, then the discount is recognised as a reduction of revenue as the sales are recognised.

ii) Revenue from property development

Contracts with customers may include multiple promises to customers and therefore accounted for as separate performance obligations. In this case, the transaction price will be allocated to each performance obligation based on the stand-alone selling prices. When these are not directly observable, they are estimated based on expected cost plus margin. The revenue from property development is measured at the fixed transaction price agreed under the sales and purchase agreement.

Revenue from property development is recognised as and when the control of the asset is transferred to the customer and it is probable that the Group will collect the consideration to which it will be entitled in exchange for the asset that will be transferred to the customer. Depending on the terms of the contract and the laws that apply to the contract, control of the asset may transfer over time or at a point in time. Control of the asset is transferred over time if the Group’s performance does not create an asset with an alternative use to the Group and the Group has an enforceable right to payment for performance completed to date. If control of the asset transfers over time, revenue is recognised over the period of the contract by reference to the progress towards complete satisfaction of that performance obligation. Otherwise, revenue is recognised at a point in time when the customer obtains control of the asset. The Group recognises revenue over time using the output method, which is based on the level of completion of the physical proportion of contract work to-date, certified by professional consultants.

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p) Borrowing costs (Cont’d.)

The capitalisation of borrowing costs as part of the cost of a qualifying asset commences when expenditure for the asset is being incurred borrowing costs are being incurred and activities that are necessary to prepare the asset for its intended use or sale are in progress. Capitalisation of borrowing costs is suspended or ceases when substantially all the activities necessary to prepare the qualifying asset for its intended use or sale are interrupted or completed.

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

q) Income tax

Income tax expense comprises current and deferred tax. Current tax and deferred tax are recognised in profit or loss except to the extent that it relates to a business combination or items recognised directly in equity or other comprehensive income. Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates enacted or substantively enacted by the end of the reporting period, and any adjustment to tax payable in respect of previous financial years.

Deferred tax is recognised using the liability method, providing for temporary differences between the carrying amounts of assets and liabilities in the statement of financial position and their tax bases. Deferred tax is not recognised for the following temporary differences: the initial recognition of goodwill, the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit or loss. Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences when they reserve, based on the laws that have been enacted or substantively enacted by the end of the reporting period.

Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax assets and liabilities on a net basis or their tax assets and liabilities will be realised simultaneously.

A deferred tax asset is recognised to the extent that is probable that future taxable profits will be available against which the temporary difference can be utilised. Deferred tax assets are reviewed at the end of each reporting period and are reduced to the extent that it is no longer probable that the related tax benefit will be realised.

Unutilised reinvestment allowance and investment tax allowance, being tax incentives that is not a tax base of an asset, is recognised as a deferred tax asset to the extent that it is probable that future taxable profits will be available against which the unutilised tax incentive can be utilised.


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o) Revenue and other income (Cont’d.)

ii) Revenue from property development (Cont’d.) The promised properties are specifically identified by its plot, lot and parcel number and its attributes (such as its size and location) in the sale and purchase agreements and the attached layout plan. The purchasers could enforce its rights to the promised properties if the Group seeks to sell the unit to another purchaser. The contractual restriction on the Group’s ability to direct the promised residential property for another use is substantive and the promised properties sold to the purchasers do not have an alternative use to the Group. The Group has the right to payment for performance completed to date. The Group is entitled to continue to transfer to the customer the development units promised and has the rights to complete the construction of the properties and enforce its rights to full payment. The Group recognises sales at a point in time for the sale of completed properties, when the control of the properties has been transferred to the purchasers, being when the properties have been completed and delivered to the customers and it is probable that the Group will collect the considerations to which it will be entitled to in exchange for the assets sold.

iii) Services Revenue from services rendered is recognised in the profit or loss when services are

performed.

iv) Rental income Rental income is recognised in profit or loss on accrual basis.

v) Interest income

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

vi) Management fees

Management fees are recognised when the services are rendered.

p) Borrowing costs

Borrowing costs that are not directly attributable to the acquisition, construction or production of a qualifying asset are recognised in profit or loss using the effective interest method. Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are capitalised as part of the cost of those assets.

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p) Borrowing costs (Cont’d.)

The capitalisation of borrowing costs as part of the cost of a qualifying asset commences when expenditure for the asset is being incurred borrowing costs are being incurred and activities that are necessary to prepare the asset for its intended use or sale are in progress. Capitalisation of borrowing costs is suspended or ceases when substantially all the activities necessary to prepare the qualifying asset for its intended use or sale are interrupted or completed.

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

q) Income tax

Income tax expense comprises current and deferred tax. Current tax and deferred tax are recognised in profit or loss except to the extent that it relates to a business combination or items recognised directly in equity or other comprehensive income. Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates enacted or substantively enacted by the end of the reporting period, and any adjustment to tax payable in respect of previous financial years.

Deferred tax is recognised using the liability method, providing for temporary differences between the carrying amounts of assets and liabilities in the statement of financial position and their tax bases. Deferred tax is not recognised for the following temporary differences: the initial recognition of goodwill, the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit or loss. Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences when they reserve, based on the laws that have been enacted or substantively enacted by the end of the reporting period.

Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax assets and liabilities on a net basis or their tax assets and liabilities will be realised simultaneously.

A deferred tax asset is recognised to the extent that is probable that future taxable profits will be available against which the temporary difference can be utilised. Deferred tax assets are reviewed at the end of each reporting period and are reduced to the extent that it is no longer probable that the related tax benefit will be realised.

Unutilised reinvestment allowance and investment tax allowance, being tax incentives that is not a tax base of an asset, is recognised as a deferred tax asset to the extent that it is probable that future taxable profits will be available against which the unutilised tax incentive can be utilised.

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3. Significant accounting policies (Cont’d.) u) Contingencies (Cont’d.)

ii) Contingent assets

When an inflow of economic benefit of an asset is probable where it arises from past events and where existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the entity, the asset is not recognised in the statements of financial position but is being disclosed as a contingent asset. When the inflow of economic benefit is virtually certain, then the related asset is recognised.

v) Fair value measurements

Fair value of an asset or a liability, except for share-based payment and lease transactions, is determined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The measurement assumes that the transaction to sell the asset or transfer the liability takes place either in the principal market or in the absence of a principal market, in the most advantageous market. For non-financial asset, the fair value measurement takes into account a market participant’s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use. When measuring the fair value of an asset or a liability, the Group uses observable market data as far as possible. Fair value are categorised into different levels in a fair value hierarchy based on the input used in the valuation technique as follows : - 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.

The Group recognises transfers between levels of the fair value hierarchy as of the date of the event or change in circumstances that caused the transfers.


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r) Discontinued operations

A discontinued operation is a component of the Group’s business that represents a separate major line of business or geographical area of operations that has been disposed of or is held for sale or distribution, or 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 classified as held for sale, if earlier. When an operation is classified as a discontinued operation, the comparative statement of profit or loss and other comprehensive income is re-presented as if the operation had been discontinued from the start of the comparative period.

s) Earnings per ordinary share

The Group presents basic and diluted earnings per share data for its ordinary shares (“EPS’). Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the period, adjusted for own shares held. Diluted EPS is determined by adjusting the profit or loss attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding , adjusted for own shares held, for the effects of all dilutive potential ordinary shares, which comprise convertible notes and share options granted to employees.

t) Operating segments

An operating segment is a component of the Group that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Group’s other components. Operating segment results are reviewed regularly by the chief operating decision maker, which in this case is the Board of Directors of the Group, to make decisions about resources to be allocated to the segment and to assess its performance, and for which discrete financial information is available.

u) Contingencies

i) Contingent liabilities

Where it is not probable that an outflow of economic benefits will be required, or the amount cannot be estimated reliably, the obligation is not recognised in the statements of financial position and is disclosed as a contingent liability, unless the probability of outflow of economic benefits is remote. Possible obligations, whose existence will only be confirmed by the occurrence or non-occurrence of one or more future events, are also disclosed as contingent liabilities unless the probability of outflow of economic benefits is remote.

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3. Significant accounting policies (Cont’d.) u) Contingencies (Cont’d.)

ii) Contingent assets

When an inflow of economic benefit of an asset is probable where it arises from past events and where existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the entity, the asset is not recognised in the statements of financial position but is being disclosed as a contingent asset. When the inflow of economic benefit is virtually certain, then the related asset is recognised.

v) Fair value measurements

Fair value of an asset or a liability, except for share-based payment and lease transactions, is determined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The measurement assumes that the transaction to sell the asset or transfer the liability takes place either in the principal market or in the absence of a principal market, in the most advantageous market. For non-financial asset, the fair value measurement takes into account a market participant’s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use. When measuring the fair value of an asset or a liability, the Group uses observable market data as far as possible. Fair value are categorised into different levels in a fair value hierarchy based on the input used in the valuation technique as follows : - 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.

The Group recognises transfers between levels of the fair value hierarchy as of the date of the event or change in circumstances that caused the transfers.

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Notes to the Financial Statements 30th June 2018 4. Property, plant and equipment (Cont’d.)

Motorvehicles, plant,

machinery,furniture

Long term and fittings, Capitalleasehold renovation work-in-

Group land Buildings and equipment progress Total31/12/2016 RM RM RM RM RM

At cost /valuation

Balance at 1/1/16 21,462,878 36,580,258 149,132,053 1,347,098 208,522,287 Additions - - 1,932,495 83,050 2,015,545 Revaluation surplus 17,297,587 4,756,496 - - 22,054,083 Reclassification - - 1,430,148 (1,430,148) - Disposal /Written off - - (3,233,654) - (3,233,654) Foreign currencytranslation - 118,213 (1,142,569) - (1,024,356)

Balance at 31/12/16 38,760,465 41,454,967 148,118,473 - 228,333,905

Accumulated Depreciation

Balance at 1/1/16 2,372,580 5,961,605 107,725,778 - 116,059,963 Charge for the year 959,085 1,244,071 6,161,046 - 8,364,202 Deletion - - (2,112,333) - (2,112,333) Foreign currencytranslation - (52,172) (1,017,536) - (1,069,708)

Balance at 31/12/16 3,331,665 7,153,504 110,756,955 - 121,242,124

Impairment lossesBalance at 1/1/16 - - 2,938,715 - 2,938,715 Charge for the year - 2,332,550 313,413 - 2,645,963

Balance at 31/12/16 - 2,332,550 3,252,128 - 5,584,678


55

Notes to the Financial Statements 30th June 2018 4. Property, plant and equipment


machinery,furniture



At cost /valuation

Balance at 1/1/17 38,760,465 41,454,967 148,118,473 - 228,333,905 Additions - - 847,420 - 847,420 Disposal /Written off (3,855,105) (4,592,388) (39,002,865) - (47,450,358) Revaluation deficit (253,358) (186,288) - - (439,646) Transfer to assets held for sale (4,251,950) (3,126,359) - - (7,378,309) Foreign currency translation - (38,285) (53,598) - (91,883)

Balance at 30/6/18 30,400,052 33,511,647 109,909,430 - 173,821,129


Balance at 1/1/17 3,331,665 7,153,504 110,756,955 - 121,242,124 Charge for the period 1,788,168 1,781,160 7,775,292 - 11,344,620 Deletion (331,481) (502,617) (33,637,053) - (34,471,151) Transfer to assets held for sale (221,545) (356,764) - - (578,309) Foreign currency translation - (41) (17,183) - (17,224)

Balance at 30/6/18 4,566,807 8,075,242 84,878,011 - 97,520,060

Impairment lossesBalance at 1/1/17 - 2,332,550 3,252,128 - 5,584,678 Charge for the period - - - - -

Balance at 30/6/18 - 2,332,550 3,252,128 - 5,584,678

90


56



machinery,furniture



At cost /valuation

Balance at 1/1/16 21,462,878 36,580,258 149,132,053 1,347,098 208,522,287 Additions - - 1,932,495 83,050 2,015,545 Revaluation surplus 17,297,587 4,756,496 - - 22,054,083 Reclassification - - 1,430,148 (1,430,148) - Disposal /Written off - - (3,233,654) - (3,233,654) Foreign currencytranslation - 118,213 (1,142,569) - (1,024,356)

Balance at 31/12/16 38,760,465 41,454,967 148,118,473 - 228,333,905


Balance at 1/1/16 2,372,580 5,961,605 107,725,778 - 116,059,963 Charge for the year 959,085 1,244,071 6,161,046 - 8,364,202 Deletion - - (2,112,333) - (2,112,333) Foreign currencytranslation - (52,172) (1,017,536) - (1,069,708)

Balance at 31/12/16 3,331,665 7,153,504 110,756,955 - 121,242,124

Impairment lossesBalance at 1/1/16 - - 2,938,715 - 2,938,715 Charge for the year - 2,332,550 313,413 - 2,645,963

Balance at 31/12/16 - 2,332,550 3,252,128 - 5,584,678

91


58


Office Motor

Company Renovation equipment vehicle Total30/6/2018 RM RM RM RM

At cost

Balance at 1/1/17 273,766 26,998 280,572 581,336Additions 123,008 50,108 - 173,116 Written off - (20,145) - (20,145)

Balance at 30/6/18 396,774 56,961 280,572 734,307


Balance at 1/1/17 157,416 23,777 112,228 293,421Charge for the period 52,340 10,904 42,086 105,330 Deletion - (20,145) - (20,145)

Balance at 30/6/18 209,756 14,536 154,314 378,606

31/12/2016

At cost

Balance at 1/1/16 273,766 26,998 280,572 581,336Additions - - - -

Balance at 31/12/16 273,766 26,998 280,572 581,336


Balance at 1/1/16 130,040 21,399 84,171 235,610Charge for the year 27,376 2,378 28,057 57,811

Balance at 31/12/16 157,416 23,777 112,228 293,421

Net Book ValueAt 1/1/16 143,726 5,599 196,401 345,726

At 31/12/16 116,350 3,221 168,344 287,915

At 30/6/18 187,018 42,425 126,258 355,701


57



machinery,furniture


Group land Buildings and equipment progress TotalRM RM RM RM RM

Net Book ValueAt 1/1/16 19,090,298 30,618,653 38,467,560 1,347,098 89,523,609

At 31/12/16 35,428,800 31,968,913 34,109,390 - 101,507,103

At 30/6/18 25,833,245 23,103,855 21,779,291 - 70,716,391

Representing : -At 1/1/2016At cost 11,233,183 5,002,275 38,467,559 1,347,098 56,050,115 At valuation 7,857,115 25,616,379 - - 33,473,494

19,090,298 30,618,654 38,467,559 1,347,098 89,523,609

At 31/12/2016At cost - - 34,109,390 - 34,109,390 At valuation 35,428,800 31,968,913 - - 67,397,713

35,428,800 31,968,913 34,109,390 - 101,507,103

At 30/6/2018At cost - - 21,779,291 - 21,779,291 At valuation 25,833,245 23,103,855 - - 48,937,100

25,833,245 23,103,855 21,779,291 - 70,716,391

92


58


Office Motor

Company Renovation equipment vehicle Total30/6/2018 RM RM RM RM

At cost

Balance at 1/1/17 273,766 26,998 280,572 581,336Additions 123,008 50,108 - 173,116 Written off - (20,145) - (20,145)

Balance at 30/6/18 396,774 56,961 280,572 734,307


Balance at 1/1/17 157,416 23,777 112,228 293,421Charge for the period 52,340 10,904 42,086 105,330 Deletion - (20,145) - (20,145)

Balance at 30/6/18 209,756 14,536 154,314 378,606

31/12/2016

At cost

Balance at 1/1/16 273,766 26,998 280,572 581,336Additions - - - -

Balance at 31/12/16 273,766 26,998 280,572 581,336


Balance at 1/1/16 130,040 21,399 84,171 235,610Charge for the year 27,376 2,378 28,057 57,811

Balance at 31/12/16 157,416 23,777 112,228 293,421

Net Book ValueAt 1/1/16 143,726 5,599 196,401 345,726

At 31/12/16 116,350 3,221 168,344 287,915

At 30/6/18 187,018 42,425 126,258 355,701

93


59


i) The long term leasehold land have unexpired lease period of 75 years expiring in year 2093.

ii) The leasehold land and buildings at carrying amount of RM48,937,100 (31/12/2016 –

RM67,397,713; 1/1/2016 – RM33,473,494) are stated at fair value based on valuation performed by independent professional valuer on the open market value basis conducted in year 2018.

Had the leasehold land and buildings been carried at historical cost less accumulated depreciation, the carrying amounts of the revalued assets that would have been included in the financial statements at the end of the financial year is RM9,838,182 (31/12/2016 – RM12,866,396; 1/1/2016 – RM13,218,553).

iii) Details of the Group’s leasehold land and buildings and information about the fair value hierarchy are as follows : -

Level 1 Level 2 Level 3Group RM RM RM30/6/2018

Leasehold land - 25,833,245 - Buildings - 23,103,855 -

- 48,937,100 -

31/12/2016


- 67,397,713 -

1/1/2016


- 33,473,494 -

<------------------------Fair value---------------------->

The fair value of long term leasehold land and buildings of the Group are categorised as Level 2. The properties are valued by an independent firm of professional valuers using open market valuation. This method entails comparing the subject property with similar properties that have been sold recently and those that are currently being offered for sale in the vicinity or other comparable localities.

The significant input into this valuation approach is price per square feet of comparable properties.


60


iii) Details of the Group’s leasehold land and buildings and information about the fair value hierarchy are as follows : - (Cont’d.)

Level 2 fair value

Level 2 fair value freehold and long term leasehold land and building have been generally derived using the open market value approach. Sales price of comparable properties in close proximity are adjusted for differences in key attributes such as property size. The most significant input into this valuation approach is comparing the subject property with comparable properties which have been sold or are being offered for sale and making adjustment for factors which affect value such as location, floor level and siting, floor area, finishes, building services, management and maintenance, age and state of repair, market conditions and other relevant factors.

The Group does not have any non-financial assets measured at Level 1 and Level 3

hierarchy.

iv) The leasehold land and buildings at carrying amounts of RM47,439,497 (31/12/2016 – RM67,397,713; 1/1/2016 – RM35,629,481) have been pledged to licensed banks as security for credit facilities granted to the Group and the Company.

v) The plant and machinery at carrying amounts of RM2,085,042 (31/12/2016 – RM2,297,080;

1/1/2016 – RM2,438,439) have been pledged to a licensed banks as security for credit facilities granted to the Group.

vi) The gross carrying amounts of fully depreciated plant and equipment of the Group and of

the Company are as follows : -

Group30/6/2018 31/12/2016 1/1/2016

RM RM RM

Plant, machinery, furniture and fittings, renovation and equipment 71,300,003 84,145,295 72,832,566 Motor vehicles 1,096,179 2,647,037 2,647,038

72,396,182 86,792,332 75,479,604

Company

30/6/2018 31/12/2016 1/1/2016RM RM RM

Office equipment - 20,145 -

amounts

94


60


iii) Details of the Group’s leasehold land and buildings and information about the fair value hierarchy are as follows : - (Cont’d.)

Level 2 fair value

Level 2 fair value freehold and long term leasehold land and building have been generally derived using the open market value approach. Sales price of comparable properties in close proximity are adjusted for differences in key attributes such as property size. The most significant input into this valuation approach is comparing the subject property with comparable properties which have been sold or are being offered for sale and making adjustment for factors which affect value such as location, floor level and siting, floor area, finishes, building services, management and maintenance, age and state of repair, market conditions and other relevant factors.

The Group does not have any non-financial assets measured at Level 1 and Level 3

hierarchy.

iv) The leasehold land and buildings at carrying amounts of RM47,439,497 (31/12/2016 – RM67,397,713; 1/1/2016 – RM35,629,481) have been pledged to licensed banks as security for credit facilities granted to the Group and the Company.

v) The plant and machinery at carrying amounts of RM2,085,042 (31/12/2016 – RM2,297,080;

1/1/2016 – RM2,438,439) have been pledged to a licensed banks as security for credit facilities granted to the Group.

vi) The gross carrying amounts of fully depreciated plant and equipment of the Group and of

the Company are as follows : -

Group30/6/2018 31/12/2016 1/1/2016

RM RM RM

Plant, machinery, furniture and fittings, renovation and equipment 71,300,003 84,145,295 72,832,566 Motor vehicles 1,096,179 2,647,037 2,647,038

72,396,182 86,792,332 75,479,604

Company

30/6/2018 31/12/2016 1/1/2016RM RM RM

Office equipment - 20,145 -

RM48,937,100

amount of

95


62


5. Inventories (Cont’d.) a) Land held for property development

30/6/2018 31/12/2016 1/1/2016RM RM RM

Group

Long term leasehold land, at cost 7,411,595 7,411,595 7,411,595

b) Property development costs

Leasehold Development

land expenditure TotalGroup RM RM RM

30/6/2018

Property development expenditure

Balance at 1st January 2017 8,358,837 24,805,846 33,164,683 Cost incurred during the period - 14,024,070 14,024,070 Cost recognised in profit or loss (7,654,003) (37,387,603) (45,041,606)

Balance at 30th June 2018 704,834 1,442,313 2,147,147

31/12/2016


Balance at 1st January 2016 15,314,617 7,516,788 22,831,405 Cost incurred during the year - 26,983,446 26,983,446 Cost recognised in profit or loss (6,955,780) (9,694,388) (16,650,168)

Balance at 31st December 2016 8,358,837 24,805,846 33,164,683


61


vii) The carrying amount of property, plant and equipment at the reporting date held under

finance lease arrangements is as follows : -

Group30/6/2018 31/12/2016 1/1/2016

RM RM RM

Building 2,969,130 3,224,845 3,395,321 Motor vehicles 841,011 1,973,824 2,603,248

3,810,141 5,198,669 5,998,569

Company30/6/2018 31/12/2016 1/1/2016

RM RM RM

Motor vehicles - 168,343 196,400

5. Inventories

30/6/2018 31/12/2016 1/1/2016Group RM RM RM

Non-current assets

7,411,595 7,411,595 7,411,595

Current assets

At costRaw materials 6,828,915 15,247,248 13,493,474 Work-in-progress 3,078,038 1,620,074 2,087,404 Finished goods 3,043,219 12,787,168 19,924,141 Goods in transit - - 1,131,168

12,950,172 29,654,490 36,636,187 At net realisable valueWork-in-progress - 115,548 115,548

12,950,172 29,770,038 36,751,735

Property development costs (Note 5(b)) 2,147,147 33,164,683 22,831,405

15,097,319 62,934,721 59,583,140

Total inventories 22,508,914 70,346,316 66,994,735

Land held for property development (Note 5(a))

The cost of inventories recognised as an expense during the financial period /year by the Group amounted to RM164,220,489 (31/12/2016 – RM123,165,804; 1/1/2016 – RM134,092,802).

96


62


5. Inventories (Cont’d.) a) Land held for property development

30/6/2018 31/12/2016 1/1/2016RM RM RM

Group

Long term leasehold land, at cost 7,411,595 7,411,595 7,411,595

b) Property development costs

Leasehold Development

land expenditure TotalGroup RM RM RM

30/6/2018


Balance at 1st January 2017 8,358,837 24,805,846 33,164,683 Cost incurred during the period - 14,024,070 14,024,070 Cost recognised in profit or loss (7,654,003) (37,387,603) (45,041,606)

Balance at 30th June 2018 704,834 1,442,313 2,147,147

31/12/2016


Balance at 1st January 2016 15,314,617 7,516,788 22,831,405 Cost incurred during the year - 26,983,446 26,983,446 Cost recognised in profit or loss (6,955,780) (9,694,388) (16,650,168)

Balance at 31st December 2016 8,358,837 24,805,846 33,164,683

97


64


6. Intangible assets (Cont’d.)

Impairment testing for cash-generating units containing goodwill through acquisition of business with carrying amount of Nil (31/12/2016 – RM586,002; 1/1/2016 – RM586,002). Goodwill acquired in the business combination is, from the acquisition date, allocated to the group of customers (the cash-generating unit) that is expected to benefit from the synergies of the combination. The recoverable amount of the cash-generating unit (CGU) is determined based on the computation of its value in use. Value in use (VIU) was determined by discounting the future cash flows generated from the continuing use of the Unit and was based on the following key assumptions : - - Cash flow was projected based on actual operating results and the 5-year business plan - Revenue used to calculate the cash flows from operations was determined after taking into

consideration performance trends of the industries in which the CGU are exposed to. Value assigned are consistent with the external sources of information

- A pre-tax discount rate ranging from 10% to 20% were applied in determining the recoverable

amount of the Unit. The discount rate was estimated based on the Company’s incremental borrowing rate

The values assigned to the key assumptions represent management’s assessment of future trends in the Company’s and the Unit’s principal activities and are based on internal sources (historical data).

7. Investment in subsidiary companies

Company30/6/2018 31/12/2016 1/1/2016

RM RM RM

Unquoted shares, at cost 53,370,538 53,635,918 53,860,401 Less : Impairment losses (1,167,751) (1,433,131) (1,555,614)

52,202,787 52,202,787 52,304,787


63

Notes to the Financial Statements 30th June 2018 6. Intangible assets

GoodwillRM

Group

30/6/2018

CostAt 1/1/2017 734,248 Written off (734,248)

At 30/6/2018 -

Accumulated impairment and amortisationAt 1/1/2017 148,246 Deletion (148,246)

At 30/6/2018 -

31/12/2016

CostAt 1/1/2016 734,248 Addition -

At 31/12/2016 734,248

Accumulated impairment and amortisationAt 1/1/2016 148,246 Amortisation for the year -

At 31/12/2016 148,246

Net Book ValueAt 1/1/2016 586,002

At 31/12/2016 586,002

At 30/6/2018 -

98


64


6. Intangible assets (Cont’d.)

Impairment testing for cash-generating units containing goodwill through acquisition of business with carrying amount of Nil (31/12/2016 – RM586,002; 1/1/2016 – RM586,002). Goodwill acquired in the business combination is, from the acquisition date, allocated to the group of customers (the cash-generating unit) that is expected to benefit from the synergies of the combination. The recoverable amount of the cash-generating unit (CGU) is determined based on the computation of its value in use. Value in use (VIU) was determined by discounting the future cash flows generated from the continuing use of the Unit and was based on the following key assumptions : - - Cash flow was projected based on actual operating results and the 5-year business plan - Revenue used to calculate the cash flows from operations was determined after taking into

consideration performance trends of the industries in which the CGU are exposed to. Value assigned are consistent with the external sources of information

- A pre-tax discount rate ranging from 10% to 20% were applied in determining the recoverable

amount of the Unit. The discount rate was estimated based on the Company’s incremental borrowing rate

The values assigned to the key assumptions represent management’s assessment of future trends in the Company’s and the Unit’s principal activities and are based on internal sources (historical data).

7. Investment in subsidiary companies

Company30/6/2018 31/12/2016 1/1/2016

RM RM RM

Unquoted shares, at cost 53,370,538 53,635,918 53,860,401 Less : Impairment losses (1,167,751) (1,433,131) (1,555,614)

52,202,787 52,202,787 52,304,787

99


66


7. Investment in subsidiary companies (Cont’d.)

Details of the subsidiary companies are as follows (Cont’d.) : -

Name of subsidiary

Country of Incorporation

Principal activities

Effective equity ownership

interest 30/6/2018 31/12/2016 1/1/2016 % % % PT Vulkanisir Goodway Indonesia (*)(+)

Indonesia Disposed on 29th December 2016

- - 60

Goodway Simplex (HK) Pte. Ltd. (#)(*)

Hong Kong Investment holding

- 100 100

Subsidiary of Goodway Rubber Industries Sdn. Bhd. Wellrank Equity Sdn. Bhd. (+)

Malaysia Disposed off on 20th December 2016

- - 100

Subsidiary of Goodway Rubber Company Pty. Ltd. Goodway Supercool Pty. Ltd. (*)

Australia Strike off on 13th June 2018

- 90 90

Subsidiary of Goodway Simplex (HK) Pte. Ltd. Jiangsu Goodway Rubber Product Co. Ltd. (#)(*)

People’s Republic of

China

Manufacturing of rubber compound and other products

- 100 100

(+) These subsidiary companies were disposed of during the financial year 2016. (#) These subsidiary companies were disposed of during the financial period. (*) The financial statements of the subsidiary company were audited by a firm other than Kreston

John & Gan (^) The auditors’ reports contained emphasis of matter related to going concern.


65


7. Investment in subsidiary companies (Cont’d.) Details of the subsidiary companies are as follows : -

Name of subsidiary




interest 30/6/2018 31/12/2016 1/1/2016

% % % Goodway Rubber Industries Sdn. Bhd.

Malaysia Manufacturing of rubber compound and other related products

100 100 100

Big Wheel Green Tyres Sdn. Bhd.

Malaysia Manufacturing and retreading of tyres for motor vehicles

100 100 100

Goodway SMR Sdn. Bhd. ( ^ )

Malaysia Retreading and wholesale of natural rubber

100 100 100

Bigwheel OTR Sdn. Bhd. ( ^ )

Malaysia Retreading of earthmovers tyres

75 75 75

Big Wheel (Malaysia) Sdn. Bhd.

Malaysia Manufacturing and retailing of tyres and rubber products

100 100 100

Goodway Marketing Sdn. Bhd.

Malaysia Dormant 100 100 100

GIIB Biz Solution Sdn. Bhd.

Malaysia Dormant 100 100 100

GIIB Development Sdn. Bhd.

Malaysia Property development and construction

100 100 100

Goodway Rubber Company Pty. Ltd. (*)

Australia Trading of rubber compound material

90 90 90

Goodway Europe (Sweden) AB (*)

Sweden Strike off on 13th May 2016

- - 100

100


66




Name of subsidiary






- - 60



- 100 100



- - 100



- 90 90



China


- 100 100




66




Name of subsidiary






- - 60



- 100 100



- - 100



- 90 90



China


- 100 100




66




Name of subsidiary






- - 60



- 100 100



- - 100



- 90 90



China


- 100 100



companies were audited by a firm other than Kreston

101


68

Notes to the Financial Statements 30th June 2018 7. Investment in subsidiary companies (Cont’d.)

Non-controlling interest in subsidiary company (Cont’d.)

Goodway Rubber Big Wheel

Company OTR Pty Ltd Sdn. Bhd. Total

NCI percentage of ownership 10% 25%interest and voting interestCarrying amount of NCI (RM) 1,169,034 (1,054,091) 114,943

Profit /(Loss) allocated to NCI (RM) 34,480 (195,686) (161,206)

Summarised financial information before intra-group elimination :

RM RMAs at 31st DecemberNon-current assets 4,588,647 28 Current assets 12,654,037 1,340,787 Current liabilities (1,145,179) (11,427,706)

Net assets /(liabilities) 16,097,505 (10,086,891)

Year ended 31st DecemberRevenue 18,835,647 211,116 Profit /(Loss) for the year, representingtotal comprehensive income /(loss) 344,795 (782,740)

Cash flows from /(used in) operating activities (3,519,336) 2,813,820 Cash flows from /(used in) investing activities 1,848,797 360,344 Cash flows from /(used in) financing activities 1,466,017 (3,316,605)

Net increase /(decrease) in cash and cash equivalents (204,522) (142,441)

31/12/2016


67



Non-controlling interest in subsidiary company The Company’s subsidiary companies where there are material non-controlling interest (“NCI”) are as follows : -

Goodway Rubber Bigwheel



Loss allocated to NCI (RM) (64,748) (17,696) (82,444)


RM RMAs at 30th JuneNon-current assets 579,119 28 Current assets 9,950,660 1,136,753 Current liabilities - (11,294,455)


Year ended 30th JuneRevenue 6,633,298 - Loss for the period, representingtotal comprehensive loss (647,482) (70,783)

Cash flows from /(used in) operating activities 5,816,792 (17,187) Cash flows used in investing activities (3,990,661) - Cash flows from /(used in) financing activities (2,335,664) 17,165

Net decrease in cash and cash equivalents (509,533) (22)

30/6/2018

102


68



Goodway Rubber Big Wheel



Profit /(Loss) allocated to NCI (RM) 34,480 (195,686) (161,206)


RM RMAs at 31st DecemberNon-current assets 4,588,647 28 Current assets 12,654,037 1,340,787 Current liabilities (1,145,179) (11,427,706)


Year ended 31st DecemberRevenue 18,835,647 211,116 Profit /(Loss) for the year, representingtotal comprehensive income /(loss) 344,795 (782,740)

Cash flows from /(used in) operating activities (3,519,336) 2,813,820 Cash flows from /(used in) investing activities 1,848,797 360,344 Cash flows from /(used in) financing activities 1,466,017 (3,316,605)

Net increase /(decrease) in cash and cash equivalents (204,522) (142,441)

31/12/2016

103


70

Notes to the Financial Statements 30th June 2018 8. Trade receivables

Group30/6/2018 31/12/2016 1/1/2016

RM RM RM

Trade receivables 57,511,954 56,192,609 65,860,384 Less : Allowance account (6,931,888) (15,532,511) (6,254,782)

50,580,066 40,660,098 59,605,602

The reconciliation of the allowance account is as follows : -

Group30/6/2018 31/12/2016 1/1/2016

RM RM RM

At beginning of the financial period /year 15,532,511 6,254,782 5,485,728 Impairment losses recognised 785,298 9,300,802 1,918,623 Amount written off (8,957,064) - (170,654) Amounts recovered and reversed (424,711) (2,067) (1,015,779) Foreign currency translation (4,146) (21,006) 36,864

At the end of the financial period /year 6,931,888 15,532,511 6,254,782

Allowance account at end of the financial year represents individually assessed impairment. Included in trade receivables is an amount of RM521,932 (31/12/2016 – RM1,452,534; 1/1/2016 - RM3,247,863) due from a company, Coltrac Sdn. Bhd. which is connected to a director of the Company, Tai Boon Wee.

The normal credit terms of trade receivables range from immediate payment to 120 days. Other terms are assessed and approved on a case-by-case basis. They are recognised at their original invoice amounts which represents their fair value on initial recognition.

The foreign currency exposures of trade receivables of the Group are as follows : -

30/6/2018 31/12/2016 1/1/2016 RM RM RM US Dollar 4,033,087 12,144,853 5,155,100 Australian Dollar 11,123,694 8,660,309 7,270,155 Swedish Krona - - 260,468 Chinese Renminbi - 988 985,167 Singapore Dollar 582,430 1,845,397 676,444


69



Goodway Rubber Big Wheel PT Vulkanisir

Company OTR GoodwayPty Ltd Sdn. Bhd. Indonesia Total

NCI percentage of ownership 10% 25% 40%interest and voting interestCarrying amount of NCI (RM) 1,134,554 (858,406) 110,417 386,565

Profit /(Loss) allocated to NCI (RM) (67,811) (32,572) 3,422 (96,961)


RM RM RMAs at 31st DecemberNon-current assets 4,207,037 511,538 -Current assets 12,339,876 5,617,658 252,872 Current liabilities (3,901,484) (15,433,347) (30,097)

Net assets /(liabilities) 12,645,429 (9,304,151) 222,775

Year ended 31st DecemberRevenue 17,885,243 2,801,246 -Profit /(Loss) for the year, representingtotal comprehensive income /(loss) 678,105 130,286 (8,556)

Cash flows from /(used in) operating activities 1,109,899 (3,268,100) 557 Cash flows from /(used in) investing activities 1,415,779 (209,512) -Cash flows from /(used in) financing activities (6,911,178) 3,500,741 -

Net increase /(decrease) in cash and cash equivalents (4,385,500) 23,129 557

1/1/2016

The Group does not have any significant restrictions on its ability to access or use the assets and settle the liabilities within the Group.

104


70

Notes to the Financial Statements 30th June 2018 8. Trade receivables

Group30/6/2018 31/12/2016 1/1/2016

RM RM RM

Trade receivables 57,511,954 56,192,609 65,860,384 Less : Allowance account (6,931,888) (15,532,511) (6,254,782)

50,580,066 40,660,098 59,605,602


Group30/6/2018 31/12/2016 1/1/2016

RM RM RM


At the end of the financial period /year 6,931,888 15,532,511 6,254,782

Allowance account at end of the financial year represents individually assessed impairment. Included in trade receivables is an amount of RM521,932 (31/12/2016 – RM1,452,534; 1/1/2016 - RM3,247,863) due from a company, Coltrac Sdn. Bhd. which is connected to a director of the Company, Tai Boon Wee.

The normal credit terms of trade receivables range from immediate payment to 120 days. Other terms are assessed and approved on a case-by-case basis. They are recognised at their original invoice amounts which represents their fair value on initial recognition.

The foreign currency exposures of trade receivables of the Group are as follows : -

30/6/2018 31/12/2016 1/1/2016 RM RM RM US Dollar 4,033,087 12,144,853 5,155,100 Australian Dollar 11,123,694 8,660,309 7,270,155 Swedish Krona - - 260,468 Chinese Renminbi - 988 985,167 Singapore Dollar 582,430 1,845,397 676,444

Allowance account at end of the financial period/year represents individually assessed impairment.

105


72

Notes to the Financial Statements 30th June 2018 10. Other receivables, deposits and prepayments (Cont’d.)

Company

30/6/2018 31/12/2016 1/1/2016RM RM RM

Other receivables 33,115 - 413 Other deposits - 71,133 76,908

33,115 71,133 77,321


Group30/6/2018 31/12/2016 1/1/2016

RM RM RM

At beginning of the financial period /year 9,392,072 - 19,172 Impairment losses recognised - 9,054,511 - Amount reversed - - (19,172) Foreign currency translation - 337,561 - Disposal of subsidiary company (9,392,072) - -

At end of the financial period /year - 9,392,072 -

The foreign currency exposures of other receivables, deposits and prepayments of the Group are as follows : - 30/6/2018 31/12/2016 1/1/2016 RM RM RM Australian Dollar 56,409 5,134,003 188,981 Swedish Krona - - 45,222 Chinese Renminbi - 18,685 12,866,736

11. Amounts due from /(to) subsidiary companies

Company30/6/2018 31/12/2016 1/1/2016

RM RM RM

Amount due from subsidiary companies 42,742,978 42,664,237 42,478,366

Amount due to subsidiary companies (42,092,679) (33,481,772) (24,291,370)

The amounts due from /(to) subsidiary companies are in respect of advances and payments made on behalf, which are non-trade in nature, unsecured and repayable on demand on cash and cash equivalents.


71

Notes to the Financial Statements 30th June 2018 9. Contract assets /(liabilities)

30/6/2018 31/12/2016 1/1/2016RM RM RM

Group

Contract assets /(liabilities) from property development - 3,075,085 (1,525,582)

The Group is entitled to a percentage of payment over the sale price based on the construction milestones stipulated in the sale and purchase agreement. The Group issues progress billings to purchasers when the construction milestones are satisfied. The aggregate of the costs incurred and the attributable profit or loss recognised on property development is compared against the progress billings up to the end of the financial year. Where the revenue recognised in profit or loss exceeds billings to purchasers, the balance is presented as contract assets. Where billings to purchasers exceed revenue recognised in profit or loss, the balance is presented as contract liabilities. The Group’s contract assets /(liabilities) relating to the sale of properties as of each financial period /year end can be summarised as follows : -

30/6/2018 31/12/2016 1/1/2016RM RM RM

At 1st January 3,075,085 (1,525,582) - Property development revenue recognised during the financial period /year 65,426,930 23,699,074 29,338,045 Progress billings during the financial period /year (68,502,015) (19,098,407) (30,863,627)

At 30th June /31st December - 3,075,085 (1,525,582)

10. Other receivables, deposits and prepayments

Group30/6/2018 31/12/2016 1/1/2016

RM RM RM

Other receivables 1,447,163 11,670,061 17,229,542 Less : Allowance account - (9,392,072) -

1,447,163 2,277,989 17,229,542 Other deposits 589,376 712,453 4,894,459 Prepayments 360,327 4,861,785 3,585,002

2,396,866 7,852,227 25,709,003

106


72

Notes to the Financial Statements 30th June 2018 10. Other receivables, deposits and prepayments (Cont’d.)

Company

30/6/2018 31/12/2016 1/1/2016RM RM RM

Other receivables 33,115 - 413 Other deposits - 71,133 76,908

33,115 71,133 77,321


Group30/6/2018 31/12/2016 1/1/2016

RM RM RM

At beginning of the financial period /year 9,392,072 - 19,172 Impairment losses recognised - 9,054,511 - Amount reversed - - (19,172) Foreign currency translation - 337,561 - Disposal of subsidiary company (9,392,072) - -

At end of the financial period /year - 9,392,072 -

The foreign currency exposures of other receivables, deposits and prepayments of the Group are as follows : - 30/6/2018 31/12/2016 1/1/2016 RM RM RM Australian Dollar 56,409 5,134,003 188,981 Swedish Krona - - 45,222 Chinese Renminbi - 18,685 12,866,736

11. Amounts due from /(to) subsidiary companies

Company30/6/2018 31/12/2016 1/1/2016

RM RM RM

Amount due from subsidiary companies 42,742,978 42,664,237 42,478,366

Amount due to subsidiary companies (42,092,679) (33,481,772) (24,291,370)

The amounts due from /(to) subsidiary companies are in respect of advances and payments made on behalf, which are non-trade in nature, unsecured and repayable on demand on cash and cash equivalents.

107


74


13. Assets held for sale (Cont’d.)

The leasehold land and building at net book value of RM6,800,000 (31/12/2016 – Nil) have been pledged to a licensed bank as security for credit facilities granted to the Group.

14. Share capital and share premium

Number ofShare capital shares RMAuthorised : Ordinary shares of RM0.50 each30/6/2018 N/A N/A31/12/2016 200,000,000 100,000,000

1/1/2016 200,000,000 100,000,000

Issued and fully paidOrdinary shares 30/6/2018 (No par value) 110,517,500 55,258,750 31/12/2016 (Par value of RM0.50 each) 110,517,500 55,258,750

1/1/2016 (Par value of RM0.50 each) 110,517,500 55,258,750

Share premium30/6/2018 210,571 31/12/2016 210,571

1/1/2016 210,571

Total share capital and share premium30/6/2018 55,469,321 31/12/2016 55,469,321

1/1/2016 55,469,321

Group and Company

The new Companies Act, 2016 (“New Act”), which came into operation on 31st January 2017, abolished the concept of authorised share capital and par value of share capital. Consequently, the amount standing to the credit of the share premium account and capital redemption reserve become part of the Company’s share capital pursuant to the transitional provisions set out in Section 618(2) of New Act. Notwithstanding this provision, the Company may within 24 months from the commencement of the New Act, use the amount standing to the credit of the share premium account and capital reserve for purposes as set out in Section 618(3) of the New Act.

The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at meetings of the Company. All ordinary shares rank equally with regard to the Company’s residual assets.


73


11. Amounts due from /(to) subsidiary companies (Cont’d.)

The amounts due from subsidiary companies of which RM24,857,322 (31/12/2016 – RM25,227,265; 1/1/2016 – RM24,648,104) are subject to bear the interest rate of 8.60% (31/12/2016 – 8.60%; 1/1/2016 – 8.60%) per annum.

12. Deposit with a licensed bank

Group30/6/2018 31/12/2016 1/1/2016

RM RM RM

Al-Mudharabah Investment - - 1,221,954

Company30/6/2018 31/12/2016 1/1/2016

RM RM RM

Al-Mudharabah Investment - - 118,393

The deposit with a licensed bank was pledged as security for credit facilities granted to the Group and Company. The profit sharing rates of Al-Mudharabah Investment that were effective during the financial period /year was Nil (31/12/2016 – Nil; 1/1/2016 – 3.70%) per annum.

13. Assets held for sale

On 3rd April 2018, the Group entered into sale and purchase agreement to dispose of a piece of land and an office building for total consideration of RM6,800,000. The transaction has not completed and the ownership of the said property was not transferred to the purchaser as at 30th June 018. The non-current assets have been classified as assets held for sale in the statements of financial position.

Group30/6/2018 31/12/2016 1/1/2016

RM RM RMAssets classified as held for sale

Property 6,800,000 - -

The carrying value of property, plant and equipment is the same as its carrying value before it was reclassified to current asset.

Property held for sale comprise the following : -

Group30/6/2018 31/12/2016 1/1/2016

RM RM RM

Cost (Note 4) 7,378,309 - - Accumulated depreciation (Note 4) (578,309) - -

6,800,000 - -

108


74


13. Assets held for sale (Cont’d.)

The leasehold land and building at net book value of RM6,800,000 (31/12/2016 – Nil) have been pledged to a licensed bank as security for credit facilities granted to the Group.

14. Share capital and share premium

Number ofShare capital shares RMAuthorised : Ordinary shares of RM0.50 each30/6/2018 N/A N/A31/12/2016 200,000,000 100,000,000

1/1/2016 200,000,000 100,000,000

Issued and fully paidOrdinary shares 30/6/2018 (No par value) 110,517,500 55,258,750 31/12/2016 (Par value of RM0.50 each) 110,517,500 55,258,750

1/1/2016 (Par value of RM0.50 each) 110,517,500 55,258,750

Share premium30/6/2018 210,571 31/12/2016 210,571

1/1/2016 210,571

Total share capital and share premium30/6/2018 55,469,321 31/12/2016 55,469,321

1/1/2016 55,469,321

Group and Company

The new Companies Act, 2016 (“New Act”), which came into operation on 31st January 2017, abolished the concept of authorised share capital and par value of share capital. Consequently, the amount standing to the credit of the share premium account and capital redemption reserve become part of the Company’s share capital pursuant to the transitional provisions set out in Section 618(2) of New Act. Notwithstanding this provision, the Company may within 24 months from the commencement of the New Act, use the amount standing to the credit of the share premium account and capital reserve for purposes as set out in Section 618(3) of the New Act.

The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at meetings of the Company. All ordinary shares rank equally with regard to the Company’s residual assets.

109


76


17. Deferred tax liabilities

Group30/6/2018 31/12/2016 1/1/2016

RM RM RM

Balance at the beginning of the period /year 12,530,234 5,504,435 3,896,768 Charged /(Credit) to profit or loss (3,582,389) 2,232,695 1,609,339 Transfer from /(to) revaluation reserves (213,406) 4,797,472 - Foreign currency translation 13,667 (4,368) (1,672)

Balance at the end of the period /year 8,748,106 12,530,234 5,504,435

Company30/6/2018 31/12/2016 1/1/2016

RM RM RM

Balance at the beginning of the period /year 6,800 5,500 - Charged to profit or loss - 1,300 5,500

Balance at the end of the period /year 6,800 6,800 5,500

The components and movements of deferred tax assets and liabilities during the financial period

/year prior to offsetting are as follows : -

Effect ofTransfer from movement

Group Charge/ /(to) inAs at (Credit) to revaluation exchange As at

1st January profit or loss reserves rates 30th June30/6/2018 RM RM RM RM RM

Deferred tax assetsAccelerated capital allowances 85,772 (95,199) - 654 (8,773) Other temporary differences (2,004,368) 1,768,854 - 13,116 (222,398)

(1,918,596) 1,673,655 - 13,770 (231,171)

Deferred tax liabilitiesSurplus on revaluation 8,113,878 (3,458,652) (213,406) - 4,441,820 Accelerated capital allowances 4,984,996 (737,594) - - 4,247,402 Other temporary differences 1,349,956 (1,059,798) - (103) 290,055

14,448,830 (5,256,044) (213,406) (103) 8,979,277


75

Notes to the Financial Statements 30th June 2018 15. Reserves

Group30/6/2018 31/12/2016 1/1/2016

RM RM RMNon-distributableForeign currency translation reserves 1,449,536 1,619,434 1,828,242 Revaluation reserves 19,117,372 23,558,380 5,888,495

20,566,908 25,177,814 7,716,737 Distributable(Accumulated losses) /Retained profit (31,472,750) (36,074,829) 154,614

(10,905,842) (10,897,015) 7,871,351

Company30/6/2018 31/12/2016 1/1/2016

RM RM RMDistributableAccumulated losses (24,547,784) (23,064,947) (18,391,062)

Foreign currency translation reserves

The foreign currency translation reserves comprise all foreign currency differences arising from the translation of the financial statements of foreign operations.

Revaluation reserves

The revaluation reserves of the Group represents surplus on revaluation of leasehold land and buildings of subsidiary companies.

16. Non-controlling interests

Group30/6/2018 31/12/2016 1/1/2016

RM RM RM

Balance at the beginning of the period /year 114,943 386,565 289,604 Transferred to profit or loss (82,444) (161,206) 96,961 Changes in ownership interest in a subsidiary - (110,416) -


110


76


17. Deferred tax liabilities

Group30/6/2018 31/12/2016 1/1/2016

RM RM RM

Balance at the beginning of the period /year 12,530,234 5,504,435 3,896,768 Charged /(Credit) to profit or loss (3,582,389) 2,232,695 1,609,339 Transfer from /(to) revaluation reserves (213,406) 4,797,472 - Foreign currency translation 13,667 (4,368) (1,672)

Balance at the end of the period /year 8,748,106 12,530,234 5,504,435

Company30/6/2018 31/12/2016 1/1/2016

RM RM RM

Balance at the beginning of the period /year 6,800 5,500 - Charged to profit or loss - 1,300 5,500


The components and movements of deferred tax assets and liabilities during the financial period

/year prior to offsetting are as follows : -

Effect ofTransfer from movement

Group Charge/ /(to) inAs at (Credit) to revaluation exchange As at

1st January profit or loss reserves rates 30th June30/6/2018 RM RM RM RM RM

Deferred tax assetsAccelerated capital allowances 85,772 (95,199) - 654 (8,773) Other temporary differences (2,004,368) 1,768,854 - 13,116 (222,398)

(1,918,596) 1,673,655 - 13,770 (231,171)

Deferred tax liabilitiesSurplus on revaluation 8,113,878 (3,458,652) (213,406) - 4,441,820 Accelerated capital allowances 4,984,996 (737,594) - - 4,247,402 Other temporary differences 1,349,956 (1,059,798) - (103) 290,055

14,448,830 (5,256,044) (213,406) (103) 8,979,277

(Credited) / Charged to profit or loss

111


78


17. Deferred tax liabilities (Cont’d.) Company Charge/

As at (Credit) to As at1st January profit or loss 31st December

30/6/2018 RM RM RM

Deferred tax liabilitiesAccelerated capital allowances 6,800 - 6,800

31/12/2016

Deferred tax liabilitiesAccelerated capital allowances 5,500 1,300 6,800

1/1/2016

Deferred tax liabilitiesAccelerated capital allowances - 5,500 5,500

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set-off current tax assets against current tax liabilities and where the deferred income taxes relate to the same tax authority. The net deferred tax assets and liabilities shown on the statements of financial position after appropriate offsetting are : -

Group30/6/2018 31/12/2016 1/1/2016

RM RM RM

Deferred tax assets (231,171) (1,918,596) (88,167) Deferred tax liabilities 8,979,277 14,448,830 5,592,602

8,748,106 12,530,234 5,504,435

Company30/6/2018 31/12/2016 1/1/2016

RM RM RM

Deferred tax liabilities 6,800 6,800 5,500


77


17. Deferred tax liabilities (Cont’d.)

Effect ofmovement

Group Charge/ Transfer from inAs at (Credit) to revaluation exchange As at

1st January profit or loss reserves rates 31st DecemberRM RM RM RM RM

31/12/2016

Deferred tax assetsAccelerated capital allowance (88,167) 173,939 - - 85,772 Other temporary differences - (2,000,000) - (4,368) (2,004,368)

(88,167) (1,826,061) - (4,368) (1,918,596)

Deferred tax liabilitiesSurplus on revaluation (547,000) 3,863,406 4,797,472 - 8,113,878 Accelerated capital allowances 6,051,102 (1,066,106) - - 4,984,996 Other temporary differences 88,500 1,261,456 - - 1,349,956

5,592,602 4,058,756 4,797,472 - 14,448,830

1/1/2016

Deferred tax assetsAccelerated capital allowance - (86,495) - (1,672) (88,167) Unabsorbed reinvestmentallowance (173,940) 173,940 - - - Other temporary differences (2,105,394) 2,105,394 - - -

(2,279,334) 2,192,839 - (1,672) (88,167)

Deferred tax liabilitiesSurplus on revaluation 924,500 (1,471,500) - - (547,000) Accelerated capital allowances 7,862,102 (1,811,000) - - 6,051,102 Other temporary differences (2,610,500) 2,699,000 - - 88,500

6,176,102 (583,500) - - 5,592,602

112


78


17. Deferred tax liabilities (Cont’d.) Company Charge/

As at (Credit) to As at1st January profit or loss 31st December

30/6/2018 RM RM RM

Deferred tax liabilitiesAccelerated capital allowances 6,800 - 6,800

31/12/2016

Deferred tax liabilitiesAccelerated capital allowances 5,500 1,300 6,800

1/1/2016

Deferred tax liabilitiesAccelerated capital allowances - 5,500 5,500

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set-off current tax assets against current tax liabilities and where the deferred income taxes relate to the same tax authority. The net deferred tax assets and liabilities shown on the statements of financial position after appropriate offsetting are : -

Group30/6/2018 31/12/2016 1/1/2016

RM RM RM

Deferred tax assets (231,171) (1,918,596) (88,167) Deferred tax liabilities 8,979,277 14,448,830 5,592,602

8,748,106 12,530,234 5,504,435

Company30/6/2018 31/12/2016 1/1/2016

RM RM RM

Deferred tax liabilities 6,800 6,800 5,500

113


80

Notes to the Financial Statements 30th June 2018 18. Borrowings (Cont’d.)

Company

30/6/2018 31/12/2016 1/1/2016RM RM RM

Non-current liabilities

SecuredTerm loan 15,671,175 22,852,493 27,473,971 Finance lease liabilities - 27,749 75,408

15,671,175 22,880,242 27,549,379

Current liabilities


6,320,040 6,378,488 6,371,576

Total borrowings

SecuredTerm loan (Note 20) 21,991,215 29,172,493 33,794,011 Finance lease liabilities (Note 22) - 86,237 126,944

21,991,215 29,258,730 33,920,955

Effective interest /expense rates per annum on the borrowings of the Group and of the Company are as follows : -

Group30/6/2018 31/12/2016 1/1/2016

% % %

Bankers' acceptance 3.47 - 3.95 3.47 - 3.95 - Bank overdraft 6.60 - 7.60 6.60 - 7.85 6.60 - 7.85Bills payable 5.59 3.47 - 5.59 3.90 - 5.59Term loans 6.60 - 8.60 6.60 - 8.60 6.60 - 8.60Islamic bank financings 4.45 - 8.60 4.45 - 8.60 10.60 Finance lease liabilities 2.40 - 4.25 2.29 - 4.25 2.29 - 3.76

Company30/6/2018 31/12/2016 1/1/2016

% % %

Term loan 8.60 8.60 8.60 Finance lease liabilities - 2.29 2.29


79


18. Borrowings

Group30/6/2018 31/12/2016 1/1/2016

RM RM RMNon-current liabilities

SecuredTerm loans 15,671,175 25,167,623 28,547,292 Islamic bank financings 8,922,910 11,276,175 14,542,969 Finance lease liabilities 349,259 1,755,027 3,279,458

24,943,344 38,198,825 46,369,719

Current liabilities

SecuredBankers' acceptance 9,321,017 15,529,926 - Bank overdraft 4,868,135 6,018,226 5,877,380 Bills payable 29,101,320 45,174,589 59,031,667 Term loans 6,553,355 7,080,108 6,880,044 Islamic bank financings 2,122,344 2,122,344 2,587,956 Finance lease liabilities 375,730 1,430,601 1,404,422

52,341,901 77,355,794 75,781,469

SecuredBankers' acceptance (Note 19) 9,321,017 15,529,926 - Bank overdraft (Note 19) 4,868,135 6,018,226 5,877,380 Bills payable (Note 19) 29,101,320 45,174,589 59,031,667 Term loans (Note 20) 22,224,530 32,247,731 35,427,336 Islamic bank financings (Note 21) 11,045,254 13,398,519 17,130,925 Finance lease liabilities (Note 22) 724,989 3,185,628 4,683,880

Total borrowings 77,285,245 115,554,619 122,151,188

Total borrowings


79


18. Borrowings

Group30/6/2018 31/12/2016 1/1/2016

RM RM RMNon-current liabilities

SecuredTerm loans 15,671,175 25,167,623 28,547,292 Islamic bank financings 8,922,910 11,276,175 14,542,969 Finance lease liabilities 349,259 1,755,027 3,279,458

24,943,344 38,198,825 46,369,719

Current liabilities

SecuredBankers' acceptance 9,321,017 15,529,926 - Bank overdraft 4,868,135 6,018,226 5,877,380 Bills payable 29,101,320 45,174,589 59,031,667 Term loans 6,553,355 7,080,108 6,880,044 Islamic bank financings 2,122,344 2,122,344 2,587,956 Finance lease liabilities 375,730 1,430,601 1,404,422

52,341,901 77,355,794 75,781,469

SecuredBankers' acceptance (Note 19) 9,321,017 15,529,926 - Bank overdraft (Note 19) 4,868,135 6,018,226 5,877,380 Bills payable (Note 19) 29,101,320 45,174,589 59,031,667 Term loans (Note 20) 22,224,530 32,247,731 35,427,336 Islamic bank financings (Note 21) 11,045,254 13,398,519 17,130,925 Finance lease liabilities (Note 22) 724,989 3,185,628 4,683,880

Total borrowings 77,285,245 115,554,619 122,151,188

114


80

Notes to the Financial Statements 30th June 2018 18. Borrowings (Cont’d.)

Company

30/6/2018 31/12/2016 1/1/2016RM RM RM

Non-current liabilities


15,671,175 22,880,242 27,549,379

Current liabilities


6,320,040 6,378,488 6,371,576

Total borrowings

SecuredTerm loan (Note 20) 21,991,215 29,172,493 33,794,011 Finance lease liabilities (Note 22) - 86,237 126,944

21,991,215 29,258,730 33,920,955

Effective interest /expense rates per annum on the borrowings of the Group and of the Company are as follows : -

Group30/6/2018 31/12/2016 1/1/2016

% % %

Bankers' acceptance 3.47 - 3.95 3.47 - 3.95 - Bank overdraft 6.60 - 7.60 6.60 - 7.85 6.60 - 7.85Bills payable 5.59 3.47 - 5.59 3.90 - 5.59Term loans 6.60 - 8.60 6.60 - 8.60 6.60 - 8.60Islamic bank financings 4.45 - 8.60 4.45 - 8.60 10.60 Finance lease liabilities 2.40 - 4.25 2.29 - 4.25 2.29 - 3.76

Company30/6/2018 31/12/2016 1/1/2016

% % %

Term loan 8.60 8.60 8.60 Finance lease liabilities - 2.29 2.29

3.47 - 5.59

N/A

115


82


20. Term loans (Cont’d.)

Company30/6/2018 31/12/2016 1/1/2016

RM RM RM

SecuredTerm loan I 21,991,215 29,172,493 33,794,011

Repayable as follows :-

Non-current liabilities- later than one year and not later than two years 6,320,040 6,320,000 6,320,040 - later than two years and not later than five years 9,351,135 16,532,493 18,960,120 - later than five years - - 2,193,811

15,671,175 22,852,493 27,473,971

Current liabilities- not later than one year 6,320,040 6,320,000 6,320,040

21,991,215 29,172,493 33,794,011

Group

The term loan I is secured by the following : -

i) first legal charge over the leasehold land and buildings of subsidiaries, Goodway Rubber

Industries Sdn. Bhd. and Big Wheel Green Tyres Sdn. Bhd.; ii) corporate guarantee by the Company of RM50million.

The term loan I is repayable by 120 equal monthly instalments of RM526,670.

The term loan II is secured by the following : -

i) Corporate guarantee from company;

ii) Specific Debenture over 1 unit of plant and equipment of the Company;

The term loan II is repayable by 60 equal monthly instalments of RM46,667. Company






81


19. Bankers’ acceptance, bank overdraft and bills payable Secured Group

The bankers’acceptance, bank overdraft and bills payable are secured by the following : -

i) fixed charge over the leasehold land and buildings of subsidiary companies, Big Wheel Green Tyres Sdn. Bhd. and Goodway Rubber Industries Sdn. Bhd.;

ii) corporate guarantee by the Company of RM41.4 million. iii) blanket counter indemnity from a subsidiary, Goodway Rubber Industries Sdn. Bhd. iv) third party blanket counter indemnity from a company which connected to a Director of the

Company, Tai Boon Wee.

v) letter of negative pledge from a subsidiary, Goodway Rubber Industries Sdn. Bhd.

vi) trade financing general agreement from a subsidiary, Goodway Rubber Industries Sdn. Bhd.

vii) asset purchase agreement for RM2,000,000 and asset sale agreement for RM3,085,000. 20. Term loans

Group

30/6/2018 31/12/2016 1/1/2016RM RM RM

SecuredTerm loan I 21,991,215 31,174,410 33,794,011 Term loan II 233,315 1,073,321 1,633,325

22,224,530 32,247,731 35,427,336

Repayable as follows : -


15,671,175 25,167,623 28,547,292


22,224,530 32,247,731 35,427,336

116


82


20. Term loans (Cont’d.)

Company30/6/2018 31/12/2016 1/1/2016

RM RM RM

SecuredTerm loan I 21,991,215 29,172,493 33,794,011

Repayable as follows :-


15,671,175 22,852,493 27,473,971


21,991,215 29,172,493 33,794,011

Group





The term loan II is secured by the following : -

i) Corporate guarantee from company;

ii) Specific Debenture over 1 unit of plant and equipment of the Company;

The term loan II is repayable by 60 equal monthly instalments of RM46,667. Company





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84

Notes to the Financial Statements 30th June 2018 22. Finance lease liabilities

Group30/6/2018 31/12/2016 1/1/2016

RM RM RM

Minimum lease payments : -- not later than one year 408,761 1,557,090 1,599,591 - later than one year and not later than two years 324,349 1,277,389 1,577,447 - later than two years and not later than five years 57,797 574,177 1,767,803 - later than five years - - 175,440

790,907 3,408,656 5,120,281 Less : Future interest charges (65,918) (223,028) (436,401)

Present value of finance lease liabilities 724,989 3,185,628 4,683,880


Non-current liabilities- later than one year and not later than two years 299,242 1,225,109 1,467,716 - later than two years and not later than five years 50,017 529,918 1,636,302 - later than five years - - 175,440

349,259 1,755,027 3,279,458

Current liabilities- not later than one year 375,730 1,430,601 1,404,422

724,989 3,185,628 4,683,880

Company

30/6/2018 31/12/2016 1/1/2016RM RM RM

Minimum lease payments : -- not later than one year - 60,853 56,172 - later than one year and not later than two years - 28,080 56,172 - later than two years and not later than five years - - 23,399

- 88,933 135,743 Less : Future interest charges - (2,696) (8,799)

Present value of finance lease liabilities - 86,237 126,944


83

Notes to the Financial Statements 30th June 2018 21. Islamic bank financings

Group30/6/2018 31/12/2016 1/1/2016

RM RM RM

SecuredIslamic financings- Commodity Murabahah Term Financing I - - 2,236,831 - Commodity Murabahah Term Financing II 8,856,474 10,807,609 12,042,205 - Commodity Murabahah Term Financing III 2,188,780 2,590,910 2,851,889

11,045,254 13,398,519 17,130,925


Non-current liabilities- later than one year and not later than two years 2,122,344 2,122,344 2,587,956 - later than two years and not later than five years 6,367,032 6,367,032 7,672,639 - later than five years 433,534 2,786,799 4,282,374

8,922,910 11,276,175 14,542,969


11,045,254 13,398,519 17,130,925

Group The Commodity Murabahah Term Financing I is repayable by 180 equal monthly installments of RM38,801. The Commodity Murabahah Term Financing II is repayable by 120 equal monthly installments of RM145,540. The Commodity Murabahah Term Financing III is repayable by 120 equal monthly installments of RM31,322. The Islamic bank financings are secured by the following : -

i) First Legal Charge over the leasehold land and buildings of a subsidiary company, Big

Wheel Green Tyres Sdn. Bhd. and GIIB Development Sdn. Bhd.

ii) Corporate guarantee by the Company for a sum of RM34,602,631.

118


84

Notes to the Financial Statements 30th June 2018 22. Finance lease liabilities

Group30/6/2018 31/12/2016 1/1/2016

RM RM RM

Minimum lease payments : -- not later than one year 408,761 1,557,090 1,599,591 - later than one year and not later than two years 324,349 1,277,389 1,577,447 - later than two years and not later than five years 57,797 574,177 1,767,803 - later than five years - - 175,440

790,907 3,408,656 5,120,281 Less : Future interest charges (65,918) (223,028) (436,401)

Present value of finance lease liabilities 724,989 3,185,628 4,683,880


Non-current liabilities- later than one year and not later than two years 299,242 1,225,109 1,467,716 - later than two years and not later than five years 50,017 529,918 1,636,302 - later than five years - - 175,440

349,259 1,755,027 3,279,458

Current liabilities- not later than one year 375,730 1,430,601 1,404,422

724,989 3,185,628 4,683,880

Company

30/6/2018 31/12/2016 1/1/2016RM RM RM

Minimum lease payments : -- not later than one year - 60,853 56,172 - later than one year and not later than two years - 28,080 56,172 - later than two years and not later than five years - - 23,399

- 88,933 135,743 Less : Future interest charges - (2,696) (8,799)

Present value of finance lease liabilities - 86,237 126,944

119


86

Notes to the Financial Statements 30th June 2018 24. Other payables and accruals

Group30/6/2018 31/12/2016 1/1/2016

RM RM RM

Other payables 7,200,760 11,266,285 13,072,121 Accruals 3,017,649 2,798,061 3,771,581

10,218,409 14,064,346 16,843,702

30/6/2018 31/12/2016 1/1/2016RM RM RM

Other payables 221,792 543,401 102,869 Accruals 373,146 661,322 365,083

594,938 1,204,723 467,952

Company

The foreign currency exposures of other payables and accruals of the Group are as follows : -

30/6/2018 31/12/2016 1/1/2016 RM RM RM US Dollar - - 987,592 Australian Dollar - 247,046 311,932 Swedish Krona - - 24,733 Chinese Renminbi - 828,204 3,583,941 Indonesian Rupiah - - 30,097 Great Britain Pound 5,224 - -

25. Revenue

Group Company

18 months for 12 months for 18 months for 12 months forperiod ended year ended period ended year ended

30/6/2018 31/12/2016 30/6/2018 31/12/2016RM RM RM RM

Revenue from contracts with customers : -- Sale of rubber compounds 99,442,469 97,916,173 - -- Property development 65,426,930 23,699,074 - -- Revenue from re-treading services 33,685,716 35,501,890 - -- Management fee - - 1,877,446 2,026,715

198,555,115 157,117,137 1,877,446 2,026,715


85

Notes to the Financial Statements 30th June 2018 22. Finance lease liabilities (Cont’d.)

Company30/6/2018 31/12/2016 1/1/2016

RM RM RM


Non-current liabilities- later than one year and not later than two years - 27,749 53,807 - later than two years and not later than five years - - 21,601

- 27,749 75,408

Current liabilities- not later than one year - 58,488 51,536

- 86,237 126,944

The Group and Company obtain finance lease facilities to finance its purchase of motor vehicles.

The remaining finance lease terms range from 1 to 4 years as at 30th June 2018. Implicit interest rates of the finance lease are fixed at the inception of the finance lease arrangements, and the finance lease instalments are fixed throughout the finance lease period. The Group and Company have the option to purchase the assets at the end of the agreements. There are no significant restriction clauses imposed on the finance lease arrangements.

23. Trade payables Group

The normal credit terms of trade payables range from immediate payment to 90 days. However, the terms may vary upon negotiation with the trade payables.

The foreign currency exposures of trade payables of the Group are as follows : - 30/6/2018 31/12/2016 1/1/2016 RM RM RM US Dollar 793,627 10,701,332 9,833,096 EURO 210,475 15,125 682,139 Australian Dollar - 599,297 3,480,430 Chinese Renminbi - - 379,381 Japanese Yen - 46,002 180,797

120


86

Notes to the Financial Statements 30th June 2018 24. Other payables and accruals

Group30/6/2018 31/12/2016 1/1/2016

RM RM RM

Other payables 7,200,760 11,266,285 13,072,121 Accruals 3,017,649 2,798,061 3,771,581

10,218,409 14,064,346 16,843,702

30/6/2018 31/12/2016 1/1/2016RM RM RM

Other payables 221,792 543,401 102,869 Accruals 373,146 661,322 365,083

594,938 1,204,723 467,952

Company

The foreign currency exposures of other payables and accruals of the Group are as follows : -

30/6/2018 31/12/2016 1/1/2016 RM RM RM US Dollar - - 987,592 Australian Dollar - 247,046 311,932 Swedish Krona - - 24,733 Chinese Renminbi - 828,204 3,583,941 Indonesian Rupiah - - 30,097 Great Britain Pound 5,224 - -

25. Revenue

Group Company


30/6/2018 31/12/2016 30/6/2018 31/12/2016RM RM RM RM

Revenue from contracts with customers : -- Sale of rubber compounds 99,442,469 97,916,173 - -- Property development 65,426,930 23,699,074 - -- Revenue from re-treading services 33,685,716 35,501,890 - -- Management fee - - 1,877,446 2,026,715

198,555,115 157,117,137 1,877,446 2,026,715

121


88


27. Finance costs

Group Company18 months for 12 months for 18 months for 12 months forperiod ended year ended period ended year ended

30/6/2018 31/12/2016 30/6/2018 31/12/2016RM RM RM RM

Bank overdraft interest 914,305 418,276 175 - Bankers' acceptance 30,333 58,313 - - Bank charges 67,348 48,152 745 298 Bills payable 2,710,526 1,865,295 - - Export credit refinancing - 25,227 - - Finance lease interest 169,282 208,978 12,966 6,102 Islamic financing expenses 831,566 667,560 - - Term loan interest 2,474,581 1,674,644 - -

7,197,941 4,966,445 13,886 6,400

28. Loss before taxation Group Company 18 months

for period ended

12 months for year

ended

18 months for period

ended

12 months for year

ended 30/6/2018 31/12/2016 30/6/2018 31/12/2016 RM RM RM RM Loss before tax is arrived at after charging : - Auditors’ remuneration - Kreston John & Gan (KJG) 325,500 226,000 67,500 45,000 - Under /(Over)provision in previous

year

30,000

(23,000)

30,000

(15,000) - Affiliates of KJG - 72,190 - - Bad debts written off 113,431 3,097,121 - - Depreciation 11,344,620 8,364,202 105,330 57,811 Director’s emolument 283,350 1,716,013 283,350 1,574,413 Employee benefits expenses (Note 29) 20,822,104 21,499,471 4,750,943 2,936,304 Impairment loss on investment in

subsidiary companies

-

-

-

102,000 Impairment losses on obsolete

inventories

3,840,593

1,093,643

-

- Impairment losses on trade receivables 785,298 9,300,802 - - Impairment losses on other receivables - 9,897,605 - - Impairment losses on property, plant

and equipment

-

2,645,903

-

- Intangible assets written off 585,487 - - - Interest expense on : - - Bank overdraft 914,305 418,276 175 - - Banker’s acceptance 30,333 58,313 - - - Bills payable 2,710,526 1,865,295 - -


87

Notes to the Financial Statements 30th June 2018 25. Revenue (Cont’d.)


30/6/2018 31/12/2016 30/6/2018 31/12/2016RM RM RM RM

Timing of revenue- over time 38,731,012 23,699,074 - - - at a point in time 159,824,103 133,418,063 1,877,446 2,026,715

198,555,115 157,117,137 1,877,446 2,026,715

26. Other income


30/6/2018 31/12/2016 30/6/2018 31/12/2016RM RM RM RM

Bad debt recovery 1,785 300 - - Gain on foreign exchange - realised 31,903 160,550 - - - unrealised 1,191,370 2,504,992 - -Gain on disposal of plant and equipment 2,749,051 36,166 - - Gain on disposal of subsidiary companies - 44,113 515 - Insurance claims 3,595 - - -Interest income 8,181 74,340 - 5,892 Payables written back 1,256,591 536,920 443,537 254,346 Rental income 93,767 - - - Reversal of impairment losses 424,711 2,067 1,414,689 - Reversal of unrealised loss on foreign exchange 438,793 - - - Sundry income 2,218,464 1,817,308 1,181,381 -

8,418,211 5,176,756 3,040,122 260,238

of property,

122


88


27. Finance costs


30/6/2018 31/12/2016 30/6/2018 31/12/2016RM RM RM RM

Bank overdraft interest 914,305 418,276 175 - Bankers' acceptance 30,333 58,313 - - Bank charges 67,348 48,152 745 298 Bills payable 2,710,526 1,865,295 - - Export credit refinancing - 25,227 - - Finance lease interest 169,282 208,978 12,966 6,102 Islamic financing expenses 831,566 667,560 - - Term loan interest 2,474,581 1,674,644 - -

7,197,941 4,966,445 13,886 6,400

28. Loss before taxation Group Company 18 months

for period ended

12 months for year

ended


ended

12 months for year

ended 30/6/2018 31/12/2016 30/6/2018 31/12/2016 RM RM RM RM Loss before tax is arrived at after charging : - Auditors’ remuneration - Kreston John & Gan (KJG) 325,500 226,000 67,500 45,000 - Under /(Over)provision in previous

year

30,000

(23,000)

30,000

(15,000) - Affiliates of KJG - 72,190 - - Bad debts written off 113,431 3,097,121 - - Depreciation 11,344,620 8,364,202 105,330 57,811 Director’s emolument 283,350 1,716,013 283,350 1,574,413 Employee benefits expenses (Note 29) 20,822,104 21,499,471 4,750,943 2,936,304 Impairment loss on investment in


-

-

-

102,000 Impairment losses on obsolete

inventories

3,840,593

1,093,643

-

- Impairment losses on trade receivables 785,298 9,300,802 - - Impairment losses on other receivables - 9,897,605 - - Impairment losses on property, plant

and equipment

-

2,645,903

-

- Intangible assets written off 585,487 - - - Interest expense on : - - Bank overdraft 914,305 418,276 175 - - Banker’s acceptance 30,333 58,313 - - - Bills payable 2,710,526 1,865,295 - -

2,743,837 2,043,649 2,052,106 1,574,413

586,002

123


89


28. Loss before taxation (Cont’d.)

Group Company 18 months

for period ended

12 months for year

ended


ended

12 months for year

ended 30/6/2018 31/12/2016 30/6/2018 31/12/2016 RM RM RM RM Loss before tax is arrived at after charging : - (Cont’d.) Interest expense on : - - Export credit refinancing - 25,227 - - - Finance lease 169,282 208,978 12,966 6,102 - Term loans 2,474,581 1,674,644 - - Islamic financing expenses 831,566 667,560 - - Loss on foreign exchange : - - realised 643,835 1,727,008 - - - unrealised 308,817 910,532 - - Loss on disposal of property, plant and

equipment

488,728

13,223

-

- Loss on disposal of subsidiary company 116,871 - - - Loss on liquidation of subsidiary

company

507,778

-

-

- Plant and equipment written off 3,230,882 799,208 - - Rental 598,851 849,662 - - Reversal of unrealised gain on foreign

exchange

3,297,122

-

-

- and after crediting : - Bad debt recovery 1,785 300 - - Gain on disposal of subsidiary

company

-

44,113

515

- Gain on disposal of property, plant and

equipment

2,749,051

36,166

-

- Gain on foreign exchange : - - realised 31,903 160,550 - - - unrealised 1,191,370 2,504,992 - - Interest income 8,181 74,340 - 5,892 Management fee - - 1,877,446 2,026,715 Payables written back 1,256,591 536,920 443,537 254,346 Rental income 93,767 - - - Reversal of impairment losses 424,711 2,067 1,414,689 - Reversal of unrealised loss on foreign

exchange

438,793

-

-

-


90

Notes to the Financial Statements 30th June 2018 29. Employee benefits expense


30/6/2018 31/12/2016 30/6/2018 31/12/2016RM RM RM RM

Salaries and allowances 18,140,247 17,799,422 4,504,810 2,535,786 Employment Insurance Scheme 1,326 - - - Employees Provident Fund 1,075,137 1,334,494 191,967 367,698 Social security costs 113,719 110,940 11,261 7,622 Other staff related expenses 1,491,675 2,254,615 42,905 25,198

20,822,104 21,499,471 4,750,943 2,936,304

Group Company

Included in employee benefits expense of the Group and of the Company are executive directors’ remuneration excluding benefits-in-kind, amounting to RM1,768,756 (31/12/2016 - RM1,388,563) and RM1,768,756 (31/12/2016 - RM1,388,563) respectively as disclosed in Note 30.

Loss on strike off of subsidiary116,356

124


90

Notes to the Financial Statements 30th June 2018 29. Employee benefits expense


30/6/2018 31/12/2016 30/6/2018 31/12/2016RM RM RM RM

Salaries and allowances 18,140,247 17,799,422 4,504,810 2,535,786 Employment Insurance Scheme 1,326 - - - Employees Provident Fund 1,075,137 1,334,494 191,967 367,698 Social security costs 113,719 110,940 11,261 7,622 Other staff related expenses 1,491,675 2,254,615 42,905 25,198

20,822,104 21,499,471 4,750,943 2,936,304

Group Company

Included in employee benefits expense of the Group and of the Company are executive directors’ remuneration excluding benefits-in-kind, amounting to RM1,768,756 (31/12/2016 - RM1,388,563) and RM1,768,756 (31/12/2016 - RM1,388,563) respectively as disclosed in Note 30.

RM2,460,487 (31/12/2016 - RM1,716,199)

125


92


31. Income tax expenses


30/6/2018 31/12/2016 30/6/2018 31/12/2016RM RM RM RM

Malaysian income tax Income tax- current year provision 455,000 260,000 - - - overprovision in previous year (169,573) (72,542) - - Deferred taxation (Note 17) (3,429,066) 2,230,300 - 1,300

(3,143,639) 2,417,758 - 1,300

Foreign income taxIncome tax- current year provision (3,956) 154,421 - -Deferred taxation (Note 17) (153,323) 2,395 - -

(157,279) 156,816 - -

(3,300,918) 2,574,574 - 1,300

Domestic income tax is calculated at the Malaysian statutory tax rate of 20% - 24% (31/12/2016 – 24%) of the estimated assessable profit for the year. Taxation for other jurisdiction is calculated at the rates in the respective jurisdictions.

The numerical reconciliation between the effective tax rate and the applicable tax rate is as

follows:-

30/6/2018 31/12/2016 30/6/2018 31/12/2016% % % %

Applicable tax rate (24) (24) (24) (24) Tax effects of :Deferred tax assets not recognised during the year - 9 - -Depreciation on non-qualifying assets 24 1 - -Non-allowable expenses 18 24 24 24 Non-taxable income (159) (2) - - Overprovision of taxation in previous year (14) - - -Overprovision of deferred taxation in previous year (92) - - -Utilisation of deferred tax assets (17) - - -

Effective tax rate (264) 8 - -

CompanyGroup


91

Notes to the Financial Statements 30th June 2018 30. Directors’ remunerations


30/6/2018 31/12/2016 30/6/2018 31/12/2016RM RM RM RM

Directors of the Company

Executive directors- Fees - 86,400 - 86,400 - Other emoluments 1,517,265 1,302,163 1,517,265 1,302,163 - Contribution to defined contribution plan 251,491 - 251,491 -

1,768,756 1,388,563 1,768,756 1,388,563

Non-executive directors- Fees 207,150 185,850 207,150 185,850 - Other emoluments 76,200 141,600 76,200 -

283,350 327,450 283,350 185,850

Total excluding benefits-in-kind 2,052,106 1,716,013 2,052,106 1,574,413

Directors of a subsidiary companyExecutive directors- Fees 39,000 - - -- Other emoluments 564,094 292,816 - -- Contribution to defined contribution plan 88,637 34,820 - -

691,731 327,636 - -

Total excluding benefits-in-kind 691,731 327,636 - -

126


92


31. Income tax expenses


30/6/2018 31/12/2016 30/6/2018 31/12/2016RM RM RM RM

Malaysian income tax Income tax- current year provision 455,000 260,000 - - - overprovision in previous year (169,573) (72,542) - - Deferred taxation (Note 17) (3,429,066) 2,230,300 - 1,300

(3,143,639) 2,417,758 - 1,300

Foreign income taxIncome tax- current year provision (3,956) 154,421 - -Deferred taxation (Note 17) (153,323) 2,395 - -

(157,279) 156,816 - -

(3,300,918) 2,574,574 - 1,300

Domestic income tax is calculated at the Malaysian statutory tax rate of 20% - 24% (31/12/2016 – 24%) of the estimated assessable profit for the year. Taxation for other jurisdiction is calculated at the rates in the respective jurisdictions.

The numerical reconciliation between the effective tax rate and the applicable tax rate is as

follows:-

30/6/2018 31/12/2016 30/6/2018 31/12/2016% % % %

Applicable tax rate (24) (24) (24) (24) Tax effects of :Deferred tax assets not recognised during the year - 9 - -Depreciation on non-qualifying assets 24 1 - -Non-allowable expenses 18 24 24 24 Non-taxable income (159) (2) - - Overprovision of taxation in previous year (14) - - -Overprovision of deferred taxation in previous year (92) - - -Utilisation of deferred tax assets (17) - - -

Effective tax rate (264) 8 - -

CompanyGroup

Income tax credit/ (expenses)

- current year provision (455,000) (260,000) - -- overprovision in previous year 169,573 72,542 - -Deferred taxation (Note 17) 3,429,066 (2,230,300) - (1,300)

3,143,639 (2,417,758) - (1,300)

- current year provision 3,956 (154,421) - -Deferred taxation (Note 17) 153,323 (2,395) - -

157,279 (156,816) - -

3,300,918 (2,574,574) - (1,300)

Applicable tax rate 24 24 24 24Tax effects of :Deferred tax assets not recognised during the year - (9) - -Depreciation on non-qualifying assets (24) (1) - -Non-allowable expenses (18) (24) (24) (24)Non-taxable income 159 2 - -Overprovision of taxation in previous year 14 - - -Overprovision of deferred taxation in previous year 92 - - -Utilisation of deferred tax assets 17 - - -

Effective tax rate 264 (8) - -

127


94


32. Earning /(Loss) per share (Cont’d.) Diluted :

The basic and diluted earnings per share are equal as the Company has no dilutive potential

ordinary shares. 33. Disposal of subsidiary companies

On 28th June 2018, the Company disposed its shareholding of the Company in Goodway Simplex (HK) Pte Ltd for a total cash consideration of HKD 1,000, equivalent to RM515 only. The effect of the disposal on the financial position of the Group is as follows : -

30/6/2018RM

Goodway Simplex (HK) Pte Ltd

Current tax assets 116,871

The effect of the disposal on the cash flows of the Group during the financial period is as follows : -

30/6/2018RM

Net assets disposed 116,871 Loss on disposal (116,356)

Total cash consideration from disposal 515 Less : Cash and cash equivalent of subsidiaries -

Proceeds from disposal, net of cash and cash equivalent 515


93


31. Income tax expenses (Cont’d.) Unabsorbed tax losses, capital allowances and unutilised reinvestment allowance of the Group which are available to set-off against future chargeable income for which the tax effects have not been recognised in the financial statements are shown below : - Group 30/6/2018 31/12/2016 1/1/2016 RM RM RM Unabsorbed tax losses 20,654,000 20,990,000 9,859,000 Unabsorbed capital allowances 8,779,000 9,339,000 9,135,210 Unutilised reinvestment allowance 2,161,000 2,161,000 2,161,000

The potential deferred tax benefits that have not been accounted for in the financial statements are

as follows : -

Unabsorbed Unutilised AcceleratedUnabsorbed capital reinvestment capital

Group tax losses allowances allowances allowances TotalRM RM RM RM RM

Balance at 1st January 2016 2,584,300 1,609,200 518,700 (69,000) 4,643,200 Arising during the year 2,453,300 631,800 - 50,000 3,135,100

Balance at 31st December 2016 5,037,600 2,241,000 518,700 (19,000) 7,778,300 Utilised during the period (80,600) (135,000) - - (215,600)

Balance at 30th June 2018 4,957,000 2,106,000 518,700 (19,000) 7,562,700

32. Earning /(Loss) per share Basic :

Basic earning /(loss) per share is calculated by dividing the loss for the year attributable to equity holders of the Company by the weighted average number of ordinary shares in issue during the financial period /year.

Group30/6/2018 31/12/2016

RM RMProfit /(Loss) for the period /year attributable to ordinary equity holders of the Company 2,134,415 (36,339,859)

Weighted average number of ordinary shares in issue 110,517,500 110,517,500

Earning /(Loss) per share (sen) 1.93 (32.88)

Number of shares

Income tax credit/ (expenses) (Cont’d.)

128


94


32. Earning /(Loss) per share (Cont’d.) Diluted :

The basic and diluted earnings per share are equal as the Company has no dilutive potential

ordinary shares. 33. Disposal of subsidiary companies

On 28th June 2018, the Company disposed its shareholding of the Company in Goodway Simplex (HK) Pte Ltd for a total cash consideration of HKD 1,000, equivalent to RM515 only. The effect of the disposal on the financial position of the Group is as follows : -

30/6/2018RM

Goodway Simplex (HK) Pte Ltd

Current tax assets 116,871

The effect of the disposal on the cash flows of the Group during the financial period is as follows : -

30/6/2018RM

Net assets disposed 116,871 Loss on disposal (116,356)

Total cash consideration from disposal 515 Less : Cash and cash equivalent of subsidiaries -

Proceeds from disposal, net of cash and cash equivalent 515

129


96

Notes to the Financial Statements 30th June 2018 35. Purchase of property, plant and equipment

During the financial period /year, the Group and the Company made the following cash payments to purchase property, plant and equipment : -


30/6/2018 31/12/2016 30/6/2018 31/12/2016RM RM RM RM

Purchase of property, plant andequipment (Note 4) 847,420 2,015,545 173,116 - Financed by finance leasearrangements - (29,181) - -

Cash payments on purchase of property, plant and equipment 847,420 1,986,364 173,116 -

36. Cash and cash equivalents

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

30/6/2018 31/12/2016 1/1/2016RM RM RM

Deposit with a licensed bank - - 1,221,954 Less : Deposits with maturity period more than 3 months - - (118,393)

- - 1,103,561 Cash and bank balances 5,118,134 3,071,319 10,236,804 Bank overdraft (Note 18) (4,868,135) (6,018,226) (5,877,380)

249,999 (2,946,907) 5,462,985

30/6/2018 31/12/2016 1/1/2016RM RM RM

Deposit with a licensed bank - - 118,393 Less : Deposits with maturity period more than 3 months - - (118,393)

- - -Cash and bank balances 20,647 878,386 12,384 Bank overdraft - - -

20,647 878,386 12,384

Group

Company


95


34. Prior years adjustments Prior years adjustments represent the following : -

(a) Understatement of cost of sales in years prior to 1st January 2016

The financial statements for prior years have been restated to adjust for the understatement of the purchases in Big Wheel Green Tyres Sdn. Bhd., a subsidiary of the Company amounting to RM9,283,317.

(b) Reversal of bad debts written off for the financial year ended 31st December 2016

The reversal of bad debts written off no longer required for the financial year ended 31st December 2016 amounting to RM9,283,317.

The prior years adjustments affecting the financial ended 31st December are as follows : -

2014 2015 2016 Total

RM RM RM RM

Cost of sales 2,707,818 6,575,499 - 9,283,317 Other expenses - - (9,283,317) (9,283,317)

As a result, the prior years adjustments were made retrospectively to the financial statements of prior years as disclosed in Note 43 to the financial statements.


96




30/6/2018 31/12/2016 30/6/2018 31/12/2016RM RM RM RM





30/6/2018 31/12/2016 1/1/2016RM RM RM



249,999 (2,946,907) 5,462,985

30/6/2018 31/12/2016 1/1/2016RM RM RM



20,647 878,386 12,384

Group

Company

130


96




30/6/2018 31/12/2016 30/6/2018 31/12/2016RM RM RM RM





30/6/2018 31/12/2016 1/1/2016RM RM RM



249,999 (2,946,907) 5,462,985

30/6/2018 31/12/2016 1/1/2016RM RM RM



20,647 878,386 12,384

Group

Company


96




30/6/2018 31/12/2016 30/6/2018 31/12/2016RM RM RM RM





30/6/2018 31/12/2016 1/1/2016RM RM RM



249,999 (2,946,907) 5,462,985

30/6/2018 31/12/2016 1/1/2016RM RM RM



20,647 878,386 12,384

Group

Company

131


98

Notes to the Financial Statements 30th June 2018 37. Segmental information (Cont’d.)

Segment assets and liabilities The total of segment assets and liabilities are measured based on all assets and liabilities of a segment, as included in the internal management reports that are reviewed by the Group’s Chief Executive Officer. Segment capital expenditure Segment capital expenditure is the total cost incurred during the financial period to acquire property, plant and equipment, and intangible assets other than goodwill.


97


36. Cash and cash equivalents (Cont’d.) The foreign currency exposures of cash and bank balances of the Group are as follows : -

30/6/2018 31/12/2016 1/1/2016 RM RM RM US Dollar 57,725 89,957 972,562 EURO 5 3 4 Australian Dollar 626,139 754,320 909,640 Swedish Krona - - 1,104,250 Chinese Renminbi - 26,857 757,755 Singapore Dollar 403,445 51,218 269

37. Segmental information

Segment information is presented in respect of the Group’s business and geographical segments. The primary format, business segments, is based on the Group’s management and internal reporting structure.

Segment results, assets and liabilities include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. Unallocated items mainly comprise interest-earning assets and revenue, interest-bearing loans, borrowings and expenses, and corporate assets and expenses.

Segment capital expenditure is the total cost incurred during the year to acquire segment assets that are expected to be used for more than one year.

Business segments The Group comprises the following main business segments : - Rubber compounds Manufacture and distribution of rubber compounds and

related products. Retreading services Retreading of tyres for motor vehicles, earthmovers and

trading of tyres related products.

Property development Trading

Property development. Retailing and wholesale of natural rubber and other related goods.

There are varying levels of integration among the reportable segments. This integration includes transfers of raw materials, shared managed services and financial resources. Inter-segment pricing is determined on negotiated basis in a manner similar to transactions with third parties.

Performance is measured based on segment profit before tax, interest, depreciation and amortisation, as included in the internal management reports that are reviewed by Group’s Chief Executive Officer (the chief operating decision maker). Segment profit is used to measure performance as management believes that such information is the most relevant in evaluating the results of certain segments relative to other entities that operate within these industries.


97
















97
















97















132


98

Notes to the Financial Statements 30th June 2018 37. Segmental information (Cont’d.)

Segment assets and liabilities The total of segment assets and liabilities are measured based on all assets and liabilities of a segment, as included in the internal management reports that are reviewed by the Group’s Chief Executive Officer. Segment capital expenditure Segment capital expenditure is the total cost incurred during the financial period to acquire property, plant and equipment, and intangible assets other than goodwill.

133

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137


104

Notes to the Financial Statements 30th June 2018 38. Financial instruments

a) Categories of financial instruments

The table below provides an analysis of financial instruments categorised as follows : - (a) Loans and receivables (“L&R”); (b) Financial liabilities measured at amortised cost (“FL”).

Carrying

Group amount L&R FLRM RM RM

30/6/2018

Financial assetsTrade receivables 50,580,066 50,580,066 -Other receivables 1,447,163 1,447,163 -Cash and bank balances 5,118,134 5,118,134 -- -

57,145,363 57,145,363 -

Financial liabilitiesTrade payables (17,596,081) - (17,596,081) Other payables and accruals (10,218,409) - (10,218,409) Bankers' acceptance (9,321,017) - (9,321,017) Bank overdraft (4,868,135) - (4,868,135) Bills payable (29,101,320) - (29,101,320) Term loans (22,224,530) - (22,224,530) Islamic bank financings (11,045,254) - (11,045,254) Finance lease liabilities (724,989) - (724,989) - -

(105,099,735) - (105,099,735)

31/12/2016

Financial assetsTrade receivables 40,660,098 40,660,098 -Contract assets 3,075,085 3,075,085 -Other receivables 2,277,989 2,277,989 -Cash and bank balances 3,071,319 3,071,319 -- -

49,084,491 49,084,491 -

Financial liabilitiesTrade payables (41,179,231) - (41,179,231) Other payables and accruals (14,064,346) - (14,064,346) Bankers' acceptance (15,529,926) - (15,529,926) Bank overdraft (6,018,226) - (6,018,226) Bills payable (45,174,589) - (45,174,589) Term loans (32,247,731) - (32,247,731) Islamic bank financings (13,398,519) - (13,398,519) Finance lease liabilities (3,185,628) - (3,185,628) - -

(170,798,196) - (170,798,196)


103


37. Segmental information (Cont’d.)

b) Geographical segment

The retreading service, property development and trading operations are solely based in Malaysia. Whereas, the rubber compound operations are based not only in Malaysia but also spread throughout the rest of Asia, Europe, North America, Oceanic, Africa and South America. In presenting information on the basis of geographical segments, segment revenue is based on the geographical location of customers whereas segment assets are based on the geographical location of assets.

Revenue Segment assets

30/6/2018 31/12/2016 30/6/2018 31/12/2016RM RM RM RM

Malaysia 165,793,122 86,743,480 147,914,040 202,481,859 Rest of Asia 15,994,440 35,277,028 - 8,291,136 Europe - 1,275,835 - -North America - 9,588,949 - -Oceanic 14,613,774 19,548,205 10,529,779 17,242,684 Africa 1,943,694 4,215,752 - - South America 210,085 467,888 - -

198,555,115 157,117,137 158,443,819 228,015,679

The following are the major customer with revenue equal or more than 10% of the Group’s total revenue : -

Revenue Segment

30/6/2018 31/12/2016RM RM

Customer A 21,180,129 - Rubber compoundsCustomer B 18,295,917 - Property development

138


104

Notes to the Financial Statements 30th June 2018 38. Financial instruments

a) Categories of financial instruments

The table below provides an analysis of financial instruments categorised as follows : - (a) Loans and receivables (“L&R”); (b) Financial liabilities measured at amortised cost (“FL”).

Carrying

Group amount L&R FLRM RM RM

30/6/2018

Financial assetsTrade receivables 50,580,066 50,580,066 -Other receivables 1,447,163 1,447,163 -Cash and bank balances 5,118,134 5,118,134 -- -

57,145,363 57,145,363 -

Financial liabilitiesTrade payables (17,596,081) - (17,596,081) Other payables and accruals (10,218,409) - (10,218,409) Bankers' acceptance (9,321,017) - (9,321,017) Bank overdraft (4,868,135) - (4,868,135) Bills payable (29,101,320) - (29,101,320) Term loans (22,224,530) - (22,224,530) Islamic bank financings (11,045,254) - (11,045,254) Finance lease liabilities (724,989) - (724,989) - -

(105,099,735) - (105,099,735)

31/12/2016

Financial assetsTrade receivables 40,660,098 40,660,098 -Contract assets 3,075,085 3,075,085 -Other receivables 2,277,989 2,277,989 -Cash and bank balances 3,071,319 3,071,319 -- -

49,084,491 49,084,491 -

Financial liabilitiesTrade payables (41,179,231) - (41,179,231) Other payables and accruals (14,064,346) - (14,064,346) Bankers' acceptance (15,529,926) - (15,529,926) Bank overdraft (6,018,226) - (6,018,226) Bills payable (45,174,589) - (45,174,589) Term loans (32,247,731) - (32,247,731) Islamic bank financings (13,398,519) - (13,398,519) Finance lease liabilities (3,185,628) - (3,185,628) - -

(170,798,196) - (170,798,196)

139


106

Notes to the Financial Statements 30th June 2018 38. Financial instruments (Cont’d.)

a) Categories of financial instruments (Cont’d.)

CarryingCompany amount L&R FL

RM RM RM31/12/2016

Financial assetsAmount due from subsidiary companies 42,664,237 42,664,237 -Cash and bank balances 878,386 878,386 --

43,542,623 43,542,623 -

Financial liabilitiesOther payables and accruals (1,204,723) - (1,204,723) Amount due to subsidiary companies (33,481,772) - (33,481,772) Term loan (29,172,493) - (29,172,493) Finance lease liability (86,237) - (86,237)

(63,945,225) - (63,945,225)

1/1/2016

Financial assetsOther receivables 413 413 -Amount due from subsidiary companies 42,478,366 42,478,366 -Deposit with a licensed bank 118,393 118,393 -Cash and bank balances 12,384 12,384 -

42,609,556 42,609,556 -

Financial liabilitiesOther payables and accruals (467,952) - (467,952) Amount due to subsidiary companies (24,291,370) - (24,291,370) Term loan (33,794,011) - (33,794,011) Finance lease liability (126,944) - (126,944)

(58,680,277) - (58,680,277)


105



CarryingGroup amount L&R FL

RM RM RM1/1/2016

Financial assetsTrade receivables 59,605,602 59,605,602 -Other receivables 17,229,542 17,229,542 -Deposit with a licensed bank 1,221,954 1,221,954 -Cash and bank balances 10,236,804 10,236,804 -

88,293,902 88,293,902 -

Financial liabilitiesTrade payables (45,617,643) - (45,617,643) Contract liabilities (1,525,582) - (1,525,582) Other payables and accruals (16,843,702) - (16,843,702) Bank overdraft (5,877,380) - (5,877,380) Bills payable (59,031,667) - (59,031,667) Term loans (35,427,336) - (35,427,336) Islamic bank financings (17,130,925) - (17,130,925) Finance lease liabilities (4,683,880) - (4,683,880) - -

(186,138,115) - (186,138,115)

Company

30/6/2018

Financial assetsOther receivables 33,115 33,115 - Amount due from subsidiary companies 42,742,978 42,742,978 -Cash and bank balances 20,647 20,647 --

42,796,740 42,796,740 -

Financial liabilitiesOther payables and accruals (594,938) - (594,938) Amount due to subsidiary companies (42,092,679) - (42,092,679) Term loan (21,991,215) - (21,991,215)

(64,678,832) - (64,678,832)

140


106



CarryingCompany amount L&R FL

RM RM RM31/12/2016

Financial assetsAmount due from subsidiary companies 42,664,237 42,664,237 -Cash and bank balances 878,386 878,386 --

43,542,623 43,542,623 -

Financial liabilitiesOther payables and accruals (1,204,723) - (1,204,723) Amount due to subsidiary companies (33,481,772) - (33,481,772) Term loan (29,172,493) - (29,172,493) Finance lease liability (86,237) - (86,237)

(63,945,225) - (63,945,225)

1/1/2016

Financial assetsOther receivables 413 413 -Amount due from subsidiary companies 42,478,366 42,478,366 -Deposit with a licensed bank 118,393 118,393 -Cash and bank balances 12,384 12,384 -

42,609,556 42,609,556 -

Financial liabilitiesOther payables and accruals (467,952) - (467,952) Amount due to subsidiary companies (24,291,370) - (24,291,370) Term loan (33,794,011) - (33,794,011) Finance lease liability (126,944) - (126,944)

(58,680,277) - (58,680,277)

141


107

Notes to the Financial Statements 30th June 2018 38. Financial instruments (Cont’d.) b) Financial risk management (Cont’d.)

i) Credit risk

Credit risk is the risk of a financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations. The Group’s exposure to credit risk arises principally from its receivables from customers. The Company’s exposure to credit risk arises principally from loans and advances to subsidiaries and financial guarantees given to banks for credit facilities granted to subsidiaries. The Group also has an internal credit review which is conducted if the credit risk is material. Trade receivables are monitored on an ongoing basis via Group management reporting procedures.

Receivables

Risk management objectives, policies and processes for managing the risk The credit risk is controlled by the application of credit approvals, limits and monitoring procedures. Credit risks are minimised and monitored via strictly limiting the Group’s associations to business partners with high credit worthiness. The Group also has an internal credit review which is conducted if the credit risk is material. Trade receivables are monitored on an ongoing basis via Group management reporting procedures.

Exposure to credit risk, credit quality and collateral As at the end of the reporting period, the maximum exposure to credit risk arising from receivables is represented by the carrying amounts in the statement of financial position. The following shows the total amount due from the top six (6) major customers as at reporting date, which represents more than 30% (31/12/2016 – 32%; 1/1/2016 – 39%) of the total trade receivables.

Group30/6/2018 31/12/2016 1/1/2016

Trade receivables RM15,325,187 RM12,914,614 RM23,224,090

Management has taken reasonable steps to ensure that receivables that are neither past due nor impaired are measured at their realisable values. A significant portion of these receivables are regular customers that have been transacting with the Group. The Group uses ageing analysis to monitor the credit quality of the receivables. Any past due receivables having significant balances, which are deemed to have higher credit risk, are monitored individually. The trade receivables are not secured by any collateral or supported by any other credit enhancements.

142


108


i) Credit risk (Cont’d.)

Receivables (Cont’d.)

The ageing analysis of the trade receivables is as follows : -

Group30/6/2018 31/12/2016 1/1/2016

RM RM RM

Within credit term : 37,921,431 26,245,475 32,353,837 Past due : 1 - 30 days 2,348,215 2,506,829 5,221,795 Over 30 days 10,310,420 11,907,794 22,029,970

12,658,635 14,414,623 27,251,765

Total trade receivables 50,580,066 40,660,098 59,605,602

Receivables that are neither past due nor impaired Trade receivables that are neither past due nor impaired are creditworthy debtors with good payment records with the Group. None of the Group’s trade receivables have been renegotiated during the financial period /year. Receivables that are past due but not impaired As at 30th June 2018, trade receivables of approximately RM12,658,635 (31/12/2016 – RM14,414,623; 1/1/2016 – RM27,251,765) were past due but not impaired. These relate to a number of independent customers for whom there is no recent history of default. All trade receivables, whether current or past due, are reviewed for impairment on a case-by-case basis to identify impairment taking into account the ageing of the debt, the likelihood of recoverability and other external factors.

143


109


i) Credit risk (Cont’d.)

Receivables that are impaired :

The movement in the allowances for impairment of trade receivables during the financial period /year were : -

30/6/2018 31/12/2016 1/1/2016RM RM RM


At the end of the financial period / year 6,931,888 15,532,211 6,254,782

Inter-company loans and advances Risk management objectives, policies and processes for managing the risk

The Company provides unsecured loans and advances to subsidiaries. The Company monitors the results of the subsidiaries regularly.

Exposure to credit risk, credit quality and collateral

As at the end of the reporting period, the maximum exposure to credit risk is represented by their carrying amounts in the statement of financial position.

Impairment losses

As at the end of the reporting period, there was no indication that the loans and advances to the subsidiaries are not recoverable. The Company does not specifically monitor the ageing of current advances to the subsidiaries. Financial guarantees

Risk management objectives, policies and processes for managing the risk The Company provides unsecured financial guarantees to banks in respect of banking facilities granted to certain subsidiaries. The Company monitors on an ongoing basis the results of the subsidiaries and repayments made by the subsidiaries.

Exposure to credit risk, credit quality and collateral The maximum exposure to credit risk amounts to RM55,294,030 (31/12/2016 – RM86,295,889; 1/1/2016 – RM88,230,233) representing the outstanding banking facilities of the subsidiaries as at the end of the reporting period.

144


110


i) Credit risk (Cont’d.) As at the end of the reporting period, there was no indication that any subsidiary would default on repayment. The financial guarantees have not been recognised since the fair value on initial recognition was not material.

ii) Liquidity risk and cash flow risk

Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group’s exposure to liquidity risk arises principally from its various payables, loans and borrowings. The Group maintains a level of cash and cash equivalents and bank facilities deemed adequate by the management to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when they fall due. It is not expected that the cash flows included in the maturity analysis could occur significantly earlier or at significantly different amounts.

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116


b) Financial risk management (Cont’d.)

iii) Market risk

Market risk is the risk that changes in market prices, such as foreign exchange rates and interest rates that will affect the Group’s financial position or cash flows.

Currency risk

The Group is exposed to foreign currency risk on sales that are denominated in a currency other than the respective functional currency of Group entities. The currency giving rise to this risk was primarily U.S. Dollar (“USD”), EURO (“EUR”), Australian Dollar (“AUD”), Swedish Krona (“SEK”), Chinese Renminbi (“CNY”), Singapore Dollar (“SGD”), Japanese Yen (“JPY”), Indonesian Rupiah (“IDR”) and Great Britain Pound (“GBP”). Exposure to foreign currency risk The Group’s exposure to foreign currency (a currency which is other than the functional currency of the Group entities) risk, based on carrying amounts as at the end of the reporting period was : - 30/6/2018 31/12/2016 1/1/2016 Group RM RM RM

US Dollar - Trade receivables (Note 8) 4,033,087 12,144,853 5,155,100 - Trade payables (Note 23) (793,627) (10,701,332) (9,833,096) - Other payables and accruals (Note 24)

-

-

(987,592)

- Cash and bank balances (Note 36) 57,725 89,957 972,562 EURO - Trade payables (Note 23) (210,475) (15,125) (682,139) - Cash and bank balances (Note 36) 5 3 4 Australian Dollar - Trade receivables (Note 8) 11,123,694 8,660,309 7,270,155 - Other receivables, deposits and prepayments (Note 10)

56,409

5,134,003

188,981

- Trade payables (Note 23) - (599,297) (3,480,430) - Other payables and accruals (Note 24)

-

(247,046)

(311,932)

- Cash and bank balances (Note 36) 626,139 754,320 909,640 Swedish Krona - Trade receivables (Note 8) - - 260,468 - Other receivables, deposits and prepayments (Note 10)

-

-

45,222

- Other payables and accruals (Note 24)

-

-

(24,733)

- Cash and bank balances (Note 36) - - 1,104,250

150


116



iii) Market risk

Market risk is the risk that changes in market prices, such as foreign exchange rates and interest rates that will affect the Group’s financial position or cash flows.

Currency risk

The Group is exposed to foreign currency risk on sales that are denominated in a currency other than the respective functional currency of Group entities. The currency giving rise to this risk was primarily U.S. Dollar (“USD”), EURO (“EUR”), Australian Dollar (“AUD”), Swedish Krona (“SEK”), Chinese Renminbi (“CNY”), Singapore Dollar (“SGD”), Japanese Yen (“JPY”), Indonesian Rupiah (“IDR”) and Great Britain Pound (“GBP”). Exposure to foreign currency risk The Group’s exposure to foreign currency (a currency which is other than the functional currency of the Group entities) risk, based on carrying amounts as at the end of the reporting period was : - 30/6/2018 31/12/2016 1/1/2016 Group RM RM RM

US Dollar - Trade receivables (Note 8) 4,033,087 12,144,853 5,155,100 - Trade payables (Note 23) (793,627) (10,701,332) (9,833,096) - Other payables and accruals (Note 24)

-

-

(987,592)

- Cash and bank balances (Note 36) 57,725 89,957 972,562 EURO - Trade payables (Note 23) (210,475) (15,125) (682,139) - Cash and bank balances (Note 36) 5 3 4 Australian Dollar - Trade receivables (Note 8) 11,123,694 8,660,309 7,270,155 - Other receivables, deposits and prepayments (Note 10)

56,409

5,134,003

188,981

- Trade payables (Note 23) - (599,297) (3,480,430) - Other payables and accruals (Note 24)

-

(247,046)

(311,932)

- Cash and bank balances (Note 36) 626,139 754,320 909,640 Swedish Krona - Trade receivables (Note 8) - - 260,468 - Other receivables, deposits and prepayments (Note 10)

-

-

45,222

- Other payables and accruals (Note 24)

-

-

(24,733)

- Cash and bank balances (Note 36) - - 1,104,250

151


117


38. Financial instruments (Cont’d.)


iii) Market risk (Cont’d.)

30/6/2018 31/12/2016 1/1/2016 Group RM RM RM

Chinese Renminbi - Trade receivables (Note 8) - 988 985,167 - Other receivables, deposits and prepayments (Note 10)

-

18,685

12,866,736

- Trade payables (Note 23) - - (379,381) - Other payables and accruals (Note 24)

-

(828,204)

(3,583,941)

- Cash and bank balances (Note 36) - 26,857 757,755 Singapore Dollar - Trade receivables (Note 8) 582,430 1,845,397 676,444 - Cash and bank balances (Note 36) 403,445 51,218 269 Japanese Yen - Trade payables (Note 23) - (46,002) (180,797) Indonesia Rupiah - Other payables and accruals (Note 24)

-

-

(30,097)

Great Britain Pound - Other payables and accruals (Note 24)

(5,224)

-

-

Currency risk sensitivity analysis

A 5% strengthening of RM against the following currency at the end of the reporting period would have increased /(decreased) equity and profit or loss before tax by the amount shown below. This analysis is based on foreign currency exchange rate variances that the Group considered to be reasonable possible at the end of the reporting period. The analysis assumes that all other variables, in particular interest rates, remained constant.

Loss Loss Lossbefore before before

Equity tax Equity tax Equity taxRM RM RM RM RM RM

Increase 793,680 (793,680) 814,479 (814,479) 949,096 (949,096)

31/12/2016 1/1/201630/6/2018

A 5% of weakened of RM against the above foreign currency at the end of the reporting period would have had equal but opposite effect on the above currency to the amount shown above, on the basis that all other variables remained constant.

152


118





Interest rate risk The Group’s fixed rate borrowings are exposed to a risk of change in their fair value due to changes in interest rate. The Group’s variable rate borrowings are exposed to a risk of change in cash flows due to changes interest rates. Short term investment such as deposits with licensed bank are not significantly exposed to interest rate risk. Risk management objectives, policies and processes for managing the risk The Group’s policy is to borrow principally on the floating rate basis but to retain a proportion of fixed rate debt. The objectives for the mix between fixed and floating rate borrowings are set to reduce the impact of an upward change in interest rates while enabling benefits to be enjoyed if interest rates fall. Exposure to interest rate risk The interest rate profile of the Group’s and the Company’s significant interest-bearing financial instruments, based on carrying amounts as at the end of the reporting period was : - Group Company 30/6/2018

Effective Interest /Expense

rate


rate RM % RM % Fixed rate instruments Amount due from subsidiary companies

-

-

24,857,322

8.60

Finance lease liabilities (724,989) 2.40-4.25 - - Floating rate instruments

Bankers’ acceptance (9,321,017) 3.47-3.95 - - Bank overdraft (4,868,135) 6.60-7.60 - - Bills payable (29,101,320) 5.59 - - Term loans (22,224,530) 6.60-8.60 (21,991,215) 8.60 Islamic bank financings (11,045,254) 4.45-8.60 - -

3.47-5.59

153


119





Interest rate risk (Cont’d.)

Exposure to interest rate risk (Cont’d.) Group Company 31/12/2016


rate


rate RM % RM % Fixed rate instruments Amount due from


-

-

25,227,265

8.60 Finance lease liabilities (3,185,628) 2.29-4.25 (86,237) 2.29 Floating rate instruments

Bankers’ acceptance (15,529,926) 3.47-3.95 - - Bank overdraft (6,018,226) 6.60-7.85 - - Bills payable (45,174,589) 3.47-5.59 - - Term loans (32,247,731) 6.60-8.60 (29,172,493) 8.60 Islamic bank financings (13,398,519) 4.45-8.60 - - 1/1/2016 Fixed rate instruments Amount due from


-

-

24,648,104

8.60 Deposit with a licensed

bank

1,221,954

3.70

118,393

3.70 Finance lease liabilities (4,683,880) 2.29-3.76 (126,944) 2.29 Floating rate instruments

Bank overdraft (5,877,380) 6.60-7.85 - - Bills payable (59,031,667) 3.90-5.59 - - Term loans (35,427,336) 6.60-8.60 (33,794,011) 8.60 Islamic bank financings (17,130,925) 10.60 - -

154


120



b) Financial risk management (Cont’d.) iii) Market risk (Cont’d.)

Interest rate risk (Cont’d.)

Interest /Expense rate risk sensitivity analysis : -

Fair value sensitivity analysis for fixed rate instruments

The Company does not account for any fixed rate financial assets and liabilities at fair value through profit or loss. Therefore, a change on interest rates at the end of the reporting period would not affect profit or loss.

Cash flow sensitivity analysis for variable rate instruments At the reporting date, if interest rates had been 100 basis points lower/higher, with all other variables held constant, the Group’s loss net of tax would have been RM765,603 higher/lower, arising mainly as a result of lower/higher interest expense on floating rate borrowings. The assumed movement in basis points for interest /expense rate sensitivity analysis is based on the currently observable market environment.

iv) Operational risk

The operational risk arises from the daily activities of the Group which includes legal, credit reputation and financing risk and other risks associated to daily running of its business operations.

Such risks are mitigated through proper authority levels of approval limits, clear reporting structure, segregation of duties, policies and procedures implemented and periodic management meetings.

In dealing with its stewardship, the directors recognise that effective risk management is an integral part of good business practice.

The directors will pursue an ongoing process of identifying, assessing and managing key

business areas, overall operational and financial risks faced by the business units as well as regularly reviewing and enhancing risk mitigating strategies with its appointed and key management personnel.

155

Goo

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Inte

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Ber

had

( Inc

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rate

d in

Mal

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, Com

pany

No.

618

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– T

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121

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28,9

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2,52

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-

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-

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Term

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-3,

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212

3,79

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212

4,68

3,88

0

-

-

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-

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156

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618

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122

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b) Fair value information (Cont’d.) The following shows the valuation techniques used in the determination of fair values within Level 3 for financial instruments not carried at fair value, as well as the key unobservable inputs used in the valuation models.

Type Description of valuation technique and inputs used Bank borrowing

Discounted cash flows using a rate based on the current market rate of borrowing of the respective Group entities at the reporting date.

39. Capital management

The overall capital management objective of the Group is to safeguard its ability to continue as a going concern so as to provide fair returns to owners and benefits to other stakeholders. In order to meet this objective, the Group always strives to maintain an optimal capital structure to reduce the cost of capital and sustain its business development.

The Group considers its total equity to be the key component of its capital structure and may, from time to time, adjust the dividend payouts, purchase own shares, issue new shares, redeem debts or sell assets, where necessary, to maintain an optimal capital structure. Management has not formulated any formal policies and processes for monitoring the Group’s capital in view of its simple structure. Nevertheless, management will always strive to improve those policies and processes whenever the need arises.

40. Significant events a) Companies Act, 2016

The Companies Act, 2016 (“New Act”) was enacted to replace the Companies Act, 1965 and was passed by Parliament on 4th April 2016. The New Act was subsequently gazette on 15th September 2016. On 26th January 2017, the Minister of Domestic Trade, Co-operatives and Consumerism announced that the effective date of the New Act, except for section 241 and Division 8 of Part III of the New Act, to be 31st January 2017. Amongst the key changes introduced in the New Act, which will affect the financial statements of the Group and of the Company would include the removal of the authorised share capital, replacement of no par value shares in place of par or nominal value shares, and the treatment of share premium and capital redemption reserves. The adoption of the New Act does not have any financial impact on the Group and the Company for the financial year ended 30th June 2018.

158


124


b) Fair value information (Cont’d.) The following shows the valuation techniques used in the determination of fair values within Level 3 for financial instruments not carried at fair value, as well as the key unobservable inputs used in the valuation models.

Type Description of valuation technique and inputs used Bank borrowing

Discounted cash flows using a rate based on the current market rate of borrowing of the respective Group entities at the reporting date.

39. Capital management

The overall capital management objective of the Group is to safeguard its ability to continue as a going concern so as to provide fair returns to owners and benefits to other stakeholders. In order to meet this objective, the Group always strives to maintain an optimal capital structure to reduce the cost of capital and sustain its business development.

The Group considers its total equity to be the key component of its capital structure and may, from time to time, adjust the dividend payouts, purchase own shares, issue new shares, redeem debts or sell assets, where necessary, to maintain an optimal capital structure. Management has not formulated any formal policies and processes for monitoring the Group’s capital in view of its simple structure. Nevertheless, management will always strive to improve those policies and processes whenever the need arises.

40. Significant events a) Companies Act, 2016

The Companies Act, 2016 (“New Act”) was enacted to replace the Companies Act, 1965 and was passed by Parliament on 4th April 2016. The New Act was subsequently gazette on 15th September 2016. On 26th January 2017, the Minister of Domestic Trade, Co-operatives and Consumerism announced that the effective date of the New Act, except for section 241 and Division 8 of Part III of the New Act, to be 31st January 2017. Amongst the key changes introduced in the New Act, which will affect the financial statements of the Group and of the Company would include the removal of the authorised share capital, replacement of no par value shares in place of par or nominal value shares, and the treatment of share premium and capital redemption reserves. The adoption of the New Act does not have any financial impact on the Group and the Company for the financial year ended 30th June 2018.

159


125


40. Significant events (Cont’d.) b) Corporate Proposals On 18th July 2016, the Company entered into a conditional share sale agreement (“SSA”) with

NSA Technology Sdn. Bhd. (“Vendor”) for the proposed acquisition of the entire issued and paid-up share capital of S5 Systems Sdn. Bhd. from the vendor for a purchase consideration of RM900 million to be satisfied by the issuance of 1.8 billion new ordinary shares of RM0.50 each in GIIB (“Shares” or “GIIB Shares”) (“Consideration Shares”) (“Proposed Acquisition”).

On 11th April 2017, the Company and the Vendor had entered into an agreement to mutually terminate the SSA for the Proposed Acquisition, including the Supplemental SSA, (collectively referred to as “Agreement”) with immediate effect due to the prolonged timing for the fulfillment of the Conditions Precedent. Arising from the termination of the Agreement, neither party shall have any right or obligation, or any claim against the other, under and in relation to the Agreement. Consequently, the Proposed Offer for Sale, Proposed Placement, Proposed ESOS and Proposed IASC, which are conditional upon the Proposed Acquisition, will be aborted. In addition, the Vendor will no longer be obliged to undertake the Proposed MO.

The termination of the Proposals did not have any material financial impact on GIIB’s earnings per share and net assets per share.

c) On 28th June 2018, the Company entered into a Share Sale Agreement (“SSA”) with a third

party to dispose of the entire shareholding of the Company in Goodway Simplex (HK) Pte. Ltd. for a total cash consideration of HKD 1,000, equivalent to RM515.

d) On 3rd April 2018, the Group entered into sale and purchase agreement to dispose of a piece

of land and an office building for total consideration of RM6,800,000. The transaction has not completed and the ownership of the said property has not been transferred to the purchaser as at 30th June 018. The non-current assets have been classified as assets held for sale in the statements of financial position.

160


126

Notes to the Financial Statements 30th June 2018 41. Contingent liabilities

Group30/6/2018 31/12/2016 1/1/2016

RM RM RMSecuredBank guarantee issued infavour of third parties 1,011,674 1,606,166 981,000

Letter of credit issuedin favour of third parties - 1,248,700 -

1,011,674 2,854,866 981,000

Company

30/6/2018 31/12/2016 1/1/2016RM RM RM

UnsecuredCorporate guarantees issued to bankfor bank facilities granted to : -- subsidiary companies 46,656,789 78,315,883 69,808,642

Group Secured The bank guarantee is secured by the leasehold land and buildings of subsidiary companies.

The directors are of the opinion that adequate allowance has been made in the financial statements for any possible liabilities.

42. Related parties

Identity of related parties

For the purposes of these financial statements, parties are considered to be related to the Company if the Company has the ability, directly or indirectly, to control the party or exercise significant influence over the party in making financial and operating decisions, or vice versa, or where the Company and the party are subject to common control or common significant influence. Related parties may be individuals or other entities. Related parties also include key management personnel defined as those persons having authority and responsibility for planning, directing and controlling the activities of the Company either directly or indirectly. The key management personnel include all the Directors of the Company, and certain members of the senior management of the Company. The Company has related party relationship with its subsidiaries, Directors and key management personnel.

161


127

Notes to the Financial Statements 30th June 2018 42. Related parties (Cont’d.)

Significant related party transactions Related party transactions have been entered into the normal course of business under normal trade terms. The significant related party transactions of the Group and the Company are show below. The related party balances are shown in Note 8 and 11.

a) Transactions and balances with related parties i) Significant related company transactions in the financial statements are as follows : -

Group 18 months

for period ended

12 months for year

ended 30/6/2018 31/12/2016 RM RM Sales to a company, Coltrac Sdn. Bhd. which is connected to a director of the Company, Tai Boon Wee

3,546,724

5,125,549

* These transactions have been entered in the normal course of business and

established under negotiated terms.

Company 18 months

for period ended

12 months for year

ended 30/6/2018 31/12/2016 RM RM

Management income received and receivable from subsidiary companies

- Big Wheel Green Tyres Sdn. Bhd. 348,437 337,603 - Bigwheel OTR Sdn. Bhd. - 195 - GIIB Development Sdn. Bhd. 422,655 236,991 - Goodway Rubber Industries Sdn. Bhd 1,106,354 1,056,227 - Goodway Rubber Company Pty. Ltd. - 378,374 - Goodway Supercool Pty. Ltd. - 17,325

162


128

Notes to the Financial Statements 30th June 2018 42. Related parties (Cont’d.)

Significant related party transactions (Cont’d.) b) Compensation of Key Management Personnel

The remuneration paid by the Group and the Company to key management personnel during the financial period are as follows : -

Group Company18 months for period

ended

12 months for year

ended


ended

12 months for year

ended30/6/2018 31/12/2016 30/6/2018 31/12/2016

RM RM RM RMShort-term employeebenefits 3,882,896 1,694,365 1,768,756 1,366,729 Post-employment benefits : - Defined contribution plan - EPF 574,617 207,684 - 207,684

4,457,513 1,902,049 1,768,756 1,574,413

Included in the total key management personnel are : -

Group Company18 months for period

ended

12 months for year

ended


ended

12 months for year

ended30/6/2018 31/12/2016 30/6/2018 31/12/2016

RM RM RM RM

Directors' remuneration (Note 30)- Directors of the Company 1,468,756 1,574,413 1,768,756 1,574,413 - Directors of the subsidiaries 691,731 327,636 - -

2,160,487 1,902,049 1,768,756 1,574,413

1,468,756 1,574,413 1,768,756 1,574,413 691,731 327,636 - - 2,160,487 1,902,049 1,768,756 1 ,574,413

1,517,265

251,491

163


129

Notes to the Financial Statements 30th June 2018 43. Comparative figures

a) The following comparative figures have been reclassified and restated to conform with the current year’s presentation and to reflect the impacts due to the prior years adjustments as disclosed in Note 34 to the financial statements : -

As Effects of

previously prior years AsGroup reported adjustments Reclassification restated

RM RM RM RMStatement of Financial PositionAt 1st January 2016

Non-current AssetsLand held for development 7,411,595 - (7,411,595) - Inventories - - 7,411,595 7,411,595

Current AssetsProperty development 22,831,405 - (22,831,405) - expenditureInventories 36,751,735 - 22,831,405 59,583,140 Other receivables, deposits and prepayments 34,992,320 (9,283,317) - 25,709,003

EquityShare premium - - 210,571 210,571 Reserves 17,365,239 (9,283,317) (210,571) 7,871,351

At 31st December 2016 -

Non-current AssetsLand held for development 7,411,595 - (7,411,595) -Inventories - - 7,411,595 7,411,595

Current AssetsProperty development 33,164,683 - (33,164,683) - expenditureInventories 29,770,038 - 33,164,683 62,934,721 Trade receivables 43,735,183 - (3,075,085) 40,660,098 Contract assets - - 3,075,085 3,075,085

EquityShare premium - - 210,571 210,571 Reserves (10,686,444) * (210,571) (10,897,015)

* Effects of prior years adjusted on : -

RM (a) Cost of sales 9,283,317 (b) Reversal of bad debts written off (9,273,317) Nil

(9,283,317)

164


130


43. Comparative figures (Cont’d.)

a) The following comparative figures have been reclassified and restated to conform with the current year’s presentation and to reflect the impacts due to the prior years adjustments as disclosed in Note 34 to the financial statements : - (Cont’d.)

As Effects of

previously prior years AsGroup reported adjustments Reclassification restated

RM RM RM RM

Statement of Profit or Lossand Other ComprehensiveIncome for the year ended31st December 2016

Other expenses (43,869,664) 9,283,317 - (34,586,347)

Loss for the year attributable to : - Equity holders of the (45,623,176) 9,283,317 - (36,339,859) Company Non-controlling interests (161,206) - - (161,206)

(45,784,382) 9,283,317 - (36,501,065)

b) The financial statements for the current financial period ended 30th June 2018 cover 18

months from 1st January 2017 to 30th June 2018. The financial statements for the year ended 31st December 2016 cover 12 months from 1st January 2016 to 31st December 2016.

44. Change of accounting year The Company changed its accounting year ended from 31st December to 30th June.

165


131

Notes to the Financial Statements 30th June 2018 45. Qualified opinion on the statutory financial statements for the financial year ended 31st

December 2016 issued by the auditors

The auditors had in its audit report dated 28th April 2017 qualified the following matters on the statutory financial statements for the financial year ended 31st December 2016. Plant and equipment, and inventories The auditors reported that as at 31st December 2016, the management had neither performed an impairment test nor assessed the recoverable amounts of the plant and equipment of the Group at carrying amount of RM34,109,390 in accordance with FRS 136 Impairment of Assets. Further, included in the carrying amount of the inventories of the Group as at 31st December 2016 was an amount of RM11,403,572 reported in a subsidiary, Big Wheel Green Tyres Sdn. Bhd. in which the cost could not be reliably measured. The management has not assessed the estimated selling price less costs to complete and sell of the inventories in accordance with FRS 102 Inventories. The management was of the view that no impairment was required on the carrying amounts of the plant and equipment, and inventories as at reporting date. The auditors were therefore unable to obtain sufficient appropriate audit evidence on the carrying amount of the plant and equipment of RM34,109,390 and inventories of RM11,403,572 as at 31st December 2016. Accordingly, the auditors could not determine the effect of adjustment, if any, on the financial statements of Group for the financial year ended 31st December 2016. During the financial period ended 30th June 2018, the company engaged a professional firm to assess the present value of the estimated future cash flows expected to arise from the continuing use of the assets and from disposal at the end of its useful life in order to determining the value in use. For non-recoverable assets, the management have decided to impair the plant and equipment to the profit or loss account amounted to RM469,024. The management had also identified slow moving and obsolete inventories amounted to RM252,502 and decided to write down the subsidiary’s inventories to net realisable value to profit or loss account based on their assessment of estimated net selling prices.

166


132

Statement by Directors Pursuant to Section 251(2) of the Companies Act, 2016 We, Tai Boon Wee and Tai Qisheng, being two of the directors of Goodway Integrated Industries Berhad,

do hereby state that, in the opinion of the directors, the financial statements set out on pages 14 to 131

are drawn up in accordance with Malaysian Financial Reporting Standards, International Financial

Reporting Standards and the requirements of the Companies Act, 2016 in Malaysia so as to give a true

and fair view of the state of affairs of the Group and of the Company at 30th June 2018 and of the results

and the cash flows of the Group and of the Company for the financial period ended on that date.

Signed on behalf of the Board in accordance with a resolution of the directors

Tai Boon Wee

Tai Qisheng

Subang Jaya Date: 22nd October 2018

49 to 166

167


133

Statutory Declaration Pursuant to Section 251(1)(b) of the Companies Act, 2016 I, Yew Hong Aun, NRIC : 701001-10-5587, being the officer primarily responsible for the financial

management of Goodway Integrated Industries Berhad, do solemnly and sincerely declare that the

financial statements set out on pages 14 to 131, to the best of my knowledge and belief, are correct.

And, I make this solemn declaration conscientiously believing the same to be true, and by virtue of the

provisions of the Statutory Declarations Act, 1960.

Subscribed and solemnly declared at Kuala Lumpur on

Yew Hong Aun Before me

D. Selvaraj (W320)20) Commissioner for Oaths

49 to 166

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Total number of issued shares : 110,517,500 sharesClass of shares : Ordinary sharesVoting rights (on a poll) : One vote for each ordinary share heldNo of shareholders : 1,657

DISTRIBUTION OF SHAREHOLDINGS(as per the Record of Depositors)

No. of % of No. of % of IssuedSize of Holdings Holders Holders Shares Held Shares

Less than 100 71 4.28 2,901 0.00100 - 1,000 103 6.22 50,146 0.041,001 - 10,000 748 45.14 3,819,015 3.4610,001 - 100,000 633 38.20 21,258,550 19.24100,001 to less than 5% of issued shares 100 6.04 61,070,224 55.265% and above of issued shares 2 0.12 24,316,664 22.00

TOTAL 1,657 100.00 110,517,500 100.00

SHAREHOLDINGS OF SUBSTANTIAL SHAREHOLDERS(as per the Record of Substantial Shareholders)

Director Interest Deemed Interest No. of Shares % of Issued No. of Shares % of Issued Name of Directors Held Shares Held Shares

1. Tai Boon Wee 26,309,860 (1) 23.81 8,237,749 (2) 7.452. Lee Fook Seng 6,057,926 (3) 5.48 - -

DIRECTORS’ INTEREST IN SHARES OF THE COMPANY(as per the Register of Directors’ Shareholdings)

Director Interest Deemed Interest No. of Shares % of Issued No. of Shares % of Issued Name of Directors Held Shares Held Shares

1. Y.A.M Tengku Sulaiman Shah Alhaj Ibni - - - - Almarhum Sultan Salahuddin Abdul Aziz Shah Alhaj 2. Tai Boon Wee 26,309,860 (1) 23.81 8,237,749 (2) 7.453. Tai Qisheng 60,000 0.05 34,487,609 (6) 31.214. Tai Qiyao^ 25,000 0.02 34,562,609 (7) 31.275. Ramlee Bin Mohd Shariff - - - -6. Muk Sai Tat - - - -7. Kiran Kaur A/P Jogindar Singh - - - -

ANALYSIS OF SHAREHOLDINGS AS AT 3 OCTOBER 2018


30 LARGEST SHAREHOLDERS

No of Shares % of Issued No. Name of Shareholders Held Shares

1. TAI BOON WEE 18,258,738 16.52

2. LEE FOOK SENG 6,057,926 5.48

3. RHB CAPITAL NOMINEES (TEMPATAN) SDN BHD PLEDGED SECURITIES ACCOUNT FOR CHEN KHAI VOON 5,503,100 4.98

4. MASSIVE STRUCTURE SDN BHD 5,477,724 4.96

5. TAI BOON WEE 4,379,997 3.96

6. LIM KONG JOO 3,670,000 3.32

7. SIERRA GROWTH SDN BHD 2,675,025 2.42

8. WONG PING KIONG 2,322,953 2.10

9. GUAN HUAIYUN 2,140,000 1.94

10. RHB CAPITAL NOMINEES (TEMPATAN) SDN BHD PLEDGED SECURITIES ACCOUNT FOR TAI BOON WEE 2,083,625 1.89

11. CHIN LEE HEONG 2,000,000 1.81

12. JF APEX NOMINEES (TEMPATAN) SDN BHD PLEDGED SECURITIES ACCOUNT FOR WONG PING KIONG 1,750,000 1.58

13. CIMSEC NOMINEES (TEMPATAN) SDN BHD CIMB BANK FOR TAI BOON WEE 1,587,500 1.44

14. CITIGROUP NOMINEES (TEMPATAN) SDN BHD PLEDGED SECURITIES ACCOUNT FOR KUEK SZE TONG 1,250,000 1.13

ANALYSIS OF SHAREHOLDINGS AS AT 3 OCTOBER 2018 (CONTINUED)

Notes: (1) of which 22,638,735 shares are held under own CDS account of which 2,083,625 shares are held under RHB Capital Nominees (Tempatan) Sdn Bhd of which 1,587,500 shares are held under CIMSEC Nominees (Tempatan) Sdn Bhd(2) deemed interest by virtue of Section 8 of the Act held through Massive Structure, Sierra Growth, spouse and

children(3) of which 6,057,926 shares are held under own CDS account(4) of which 2,322,953shares are held under own CDS Account of which 25,000 shares are held under AmInvestment Bank Berhad of which 1,750,000 shares are held under JF Apex Nominees (Tempatan) Sdn Bhd(5) deemed interest by virtue of Section 8 of the Act held through spouse(6) deemed interest by virtue of Section 8 of the Act held through Massive Structure, Sierra Growth, parents and sibling.(7) deemed interest by virtue of Section 8 of the Act held through Massive Structure, Sierra Growth, spouse, parents

and sibling^ alternate director to Tai Boon Wee


ANALYSIS OF SHAREHOLDINGS AS AT 3 OCTOBER 2018 (CONTINUED)

30 LARGEST SHAREHOLDERS (CONT’D)

No of Shares % of Issued No. Name of Shareholders Held Shares

15. ALLIANCEGROUP NOMINEES (TEMPATAN) SDN BHD PLEDGED SECURITIES ACCOUNT FOR LIM BENG GUAN 1,221,500 1.11

16. CHAN BEE CHUAN 1,080,000 0.98

17. LOW LAY PING 951,200 0.86

18. LEE SING GEE 914,300 0.83

19. STALING TIE LING 900,000 0.81

20. HII LAY YIENG 877,000 0.79

21 CIMSEC NOMINEES (TEMPATAN) SDN BHD CIMB BANK FOR TEH SWEE HENG 876,800 0.79 22 KELVIN TEH WEI LOON 617,300 0.56

23. PUBLIC NOMINEES (TEMPATAN) SDN BHD PLEDGED SECURITIES ACCOUNT FOR TAN KIM CHIN 554,900 0.50

24. NIEW LAI KEONG 500,000 0.45

25. ONG ENG KOOI 500,000 0.45

26. TIE SING PING 500,000 0.45

27. WONG SENG MOW 460,000 0.42

28. PUBLIC NOMINEES (TEMPATAN) SDN BHD PLEDGED SECURITIES ACCOUNT FOR CHIENG TIONG ANN 459,000 0.42

29. TJHANG DJIE FUI 451,400 0.41

30. CHEW CHONG EU 450,400 0.41


NOTICE OF ANNUAL GENERAL MEETING

NOTICE IS HEREBY GIVEN that the Fifteenth Annual General Meeting of the Company will be held at Crown Theater, Empire Hotel Subang, Empire Subang, Jalan SS16/1, 47500 Subang Jaya, Selangor Darul Ehsan on Wednesday, 19 December 2018 at 10.00 a.m. for the following purposes:

1. To receive the Audited Financial Statements for the financial period ended 30 June 2018 and the Reports of the Directors and the Auditor thereon.

2. To approve the payment of Directors’ fees of RM207,150 for the financial period from 1 January 2017 to 30 June 2018 [2016: RM226,050].

3. To approve the payment of Directors’ fees and Directors’ benefits up to RM231,000 from

1 July 2018 until the next Annual General Meeting of the Company [2016: RM350,625].

4. To re-elect Y.A.M. Tengku Sulaiman Shah Alhaj Ibni Almarhum Sultan Salahuddin Abdul Aziz Shah Alhaj, the director retiring in accordance with Article 79 of the Company’s Constitution.

5. To re-elect En Ramlee Bin Mohd Shariff, the director retiring in accordance with Article

79 of the Company’s Constitution. 6. To re-elect Mr Muk Sai Tat, the director retiring in accordance with Article 84 of the

Company’s Constitution.

7. To re-elect Ms Kiran Kaur A/P Jogindar Singh, the director retiring in accordance with Article 84 of the Company’s Constitution.

8. To re-appoint Messrs Kreston John & Gan as the Auditor of the Company for the

ensuing year and to authorise the Directors to fix their remuneration.

As Special Business

To consider and if thought fit, to pass the following resolutions: 9. Ordinary Resolution Authority to Issue Shares pursuant to Sections 75 and 76 of the Companies Act

2016 (“the Act”)

“THAT pursuant to Sections 75 and 76 of the Companies Act 2016, the Constitution of the Company and subject to the approvals of the relevant governmental and/or regulatory authorities where approval is necessary, authority be and is hereby given to the Directors to issue and allot shares in the Company at any time, to such persons and upon such terms and conditions and for such purposes as the Directors may, in their absolute discretion, deem fit, provided that the aggregate number of shares issued pursuant to this Resolution does not exceed 10% of the total number of issued shares of the Company for the time being AND THAT the Directors be and are also empowered to obtain the approval for the listing of and quotation for the additional shares so issued on Bursa Malaysia Securities Berhad AND THAT such authority shall continue to be in force until the conclusion of the next Annual General Meeting of the Company.”

Please refer to Note 1

Resolution 1

Resolution 2

Resolution 3

Resolution 4

Resolution 5

Resolution 6

Resolution 7

Resolution 8


NOTICE OF ANNUAL GENERAL MEETING (CONTINUED)

Resolution 910. Ordinary Resolution Proposed Renewal of Shareholders’ Mandate for Recurrent Related Party

Transactions of a Revenue or Trading Nature

“THAT subject to the provision of the Listing Requirements of Bursa Malaysia Securities Berhad, approval be and is hereby given for the renewal of the Shareholders’ Mandate for the Goodway Integrated Industries Berhad Group of Companies to enter into any category of recurrent transactions of a revenue or trading nature falling within the types of transactions as set out in Section 3.3 in the Circular to Shareholders dated 31 October 2018 with the related parties falling within the classes of persons set out in Section 3.2 in the Circular which are necessary for day-to-day operations and are carried out in the ordinary course of business on terms which are not more favorable to the related parties than those generally available to the public and are not to the detriment of minority shareholders;

THAT the authority conferred by such mandate shall continue to be in force until:-

(a) the conclusion of the next Annual General Meeting (“AGM”) of the Company at which time the mandate will lapse, unless by an ordinary resolution passed at the AGM, the mandate is renewed; or

(b) the expiration of the period within which the next AGM of the Company is required

to be held pursuant to Section 340(2) of the Act (but shall not extend to such extension as may be allowed pursuant to Section 340(4) of the Act); or

(c) revoked or varied by ordinary resolution passed by the shareholders in a general

meeting. whichever is the earlier. AND THAT the Directors be and are hereby authorised to complete and do all such acts

and things including executing such documents as may be required to give effect to the transactions contemplated and/or authorised by this mandate.”

11. To transact any other ordinary business of which due notice shall have been given.

By Order of the Board

Foo Siew Loon (MAICSA 7006874)Secretary

Selangor Darul Ehsan31 October 2018


Notes:1. A member of the Company is entitled to attend, speak and vote at the meeting may appoint not more than two (2) proxies to

attend, speak and vote instead of him. Where a member appoints two (2) proxies, the appointment shall not be valid unless the member specifies the proportion of his shareholding to be represented by each proxy. A proxy need not be a member of the Company.

2. Where a member is an Exempt Authorised Nominee which holds ordinary shares in the Company for multiple beneficial owners in one securities account (“omnibus account”) as defined under the Securities Industry (Central Depositories) Act, 1991, there is no limit to the number of proxies which the Exempt Authorised Nominee may appoint in respect of each omnibus account it holds.

3. The instrument appointing a proxy shall be in writing under the hand of the appointer or of his attorney duly authorised in writing or, if the appointer is a corporation, either under its common seal or in some other manner approved by its Directors.

4. The instrument of proxy must be deposited at the Company’s registered office at Level 33A, Menara 1MK, Kompleks 1 Mont’ Kiara, No.1, Jalan Kiara, Mont’ Kiara, 50480 Kuala Lumpur, not later than forty-eight (48) hours before the time appointed for holding the meeting or any adjournment thereof.

5. Members whose name appears in the Record of Depositors as at 10 December 2018 (General Meeting Record of Depositors) shall be regarded as members entitled to attend, speak and vote at the AGM or appoint proxy(ies) to attend and vote on his/her behalf.

6. Pursuant to Paragraph 8.29A(1) of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad (“Bursa Securities”), all the Resolutions set out in this Notice will be put to the vote by way of poll. Independent Scrutineers will be appointed to conduct the polling process and to verify the results of the poll.

7. PERSONAL DATA PRIVACY By submitting an instrument appointing a proxy(ies) and/or representative(s) to attend, speak and vote at the forthcoming Fifteenth

AGM and/or any adjournment thereof, a member of the Company:-

(i) consents to the collection, use and disclosure of the member’s personal data by the Company (or its agents) for the purpose of the processing and administration by the Company (or its agents) of proxies and representatives appointed for the AGM (including any adjournment thereof) and the preparation and compilation of the attendance lists, minutes and other documents relating to the AGM (including any adjournment thereof), and in order for the Company (or its agents) to comply with any applicable laws, listing rules, regulations and/or guidelines (collectively, the “Purposes”);

(ii) warrants that where the member discloses the personal data of the member’s proxy(ies) and/or representative(s) to the Company (or its agents), the member has obtained the prior consent of such proxy(ies) and/or representative(s) for the collection, use and disclosure by the Company (or its agents) of the personal data of such proxy(ies) and/or representative(s) for the Purposes; and

(iii) agrees that the member will indemnify the Company in respect of any penalties, claims, demands, losses and damages as a result of the member’s breach of warranty.

Explanatory Notes to the Agenda:

1. Item 1 of the Agenda

The audited financial statements are for discussion only as it does not require shareholders’ approval under the provision of Section 340(1)(a) of the Companies Act 2016. Hence, it will not be put forward for voting.

2. Items 2 and 3 of the Agenda

• Resolution 2 on payment of Directors’ Fees totaling RM207,150 for the financial period from 1 January 2017 to 30 June 2018; and

• Resolution 3 on payment of Directors’ Fees and benefits up to RM231,000 from 1 July 2018 until the next AGM of the Company.

The Directors’ benefits comprise of meeting attendance allowances and/or other allowances to meet expenses incurred in carrying out their duties. In determining the estimated total amount, the Board has considered various factors, among others, the estimated number of meetings for the Board and its Committees.



Explanatory Notes on Special Business:

1. Resolution 8

The proposed Ordinary Resolution under item no. 9 of the agenda, if passed, will avoid any delay and cost involved in convening a general meeting and will empower the Directors to issue up to 10% of the issued share capital of the Company. This authority will, unless revoked or varied by the Company in a general meeting, expire at the conclusion of the next AGM or the expiration of the period within which the next AGM is required by law to be held, whichever is earlier.

The proposed Ordinary Resolution is a renewal of the mandate on the authority granted to Directors to issue shares pursuant to Sections 75 and 76 of the Companies Act 2016 passed at the previous AGM held on 23 May 2017, which is expiring at the conclusion of the Fifteenth AGM. No new shares in the Company were allotted or issued by the Directors pursuant to the same mandate granted last year.

The renewal of this mandate will provide flexibility to the Company for any possible fund raising exercise, including but not limited

to further placing of shares, for purpose of funding current and/or future investment projects, working capital and/or acquisitions. 2. Resolution 9

The proposed Ordinary Resolution under item no. 10 of the agenda, if passed, will renew the mandate to allow the Company and its subsidiaries to enter into Recurrent Related Party Transactions of a Revenue or Trading Nature and to enable the Company to comply with Paragraph 10.09, Part E of Listing Requirements of Bursa Malaysia Securities Berhad. The mandate will take effect from the date of the passing of the ordinary resolution until the next AGM of the Company.

Please refer to the Circular to Shareholders dated 31 October 2018 for further information.

* Details of individuals who are standing for election as Directors

No individual is seeking election as a Director at the forthcoming Fifteenth AGM of the Company.


STATEMENT ACCOMPANYING THE NOTICE OF ANNUAL GENERAL MEETING PURSUANT TO PARAGRAPH 8.27(2) OF THE LISTING REQUIREMENTS OF BURSA MALAYSIA SECURITIES BERHAD

This page is intentionally left blank.


I/We, ...............................................................................................................................................................................................................(FULL NAME IN CAPITAL LETTERS, NRIC NO./COMPANY NO.)

of.....................................................................................................................................................................................................................(FULL ADDRESS)

being a member(s) of Goodway Integrated Industries Berhad hereby appoint ………….................………....................…………………...

………………................................................................................................................................................................................................... (FULL NAME IN CAPITAL LETTERS, NRIC NO)

of .................................................................................................................................................................................................................... (FULL ADDRESS)

or failing him/her, ...........................................................................................................................................................................................(FULL NAME IN CAPITAL LETTERS, NRIC NO)

of .................................................................................................................................................................................................................... (FULL ADDRESS)

or failing him/her, *the Chairman of the Meeting as my/our proxy(ies), to vote for me/us on my/our behalf at the 15th Annual General Meeting of the Company to be held at Crown Theater, Empire Hotel Subang, Empire Subang, Jalan SS16/1, 47500 Subang Jaya, Selangor Darul Ehsan on Wednesday, 19 December 2018 at 10.00 a.m. and at any adjournment thereof.

My/our proxy/proxies is/are to vote as indicated below:

NO. ORDINARY RESOLUTIONS FOR AGAINST

1. To approve payment of Directors’ fees for the financial period from 1 January 2017 to 30 June 2018

2. To approve payment of Directors’ fees and Directors’ benefits from 1 July 2018 until the next Annual General Meeting of the Company

3. To re-elect Y.A.M. Tengku Sulaiman Shah Alhaj Ibni Almarhum Sultan Salahuddin Abdul Aziz Shah Alhaj as Director

4. To re-elect Ramlee Bin Mohd Shariff as Director

5. To re-elect Muk Sai Tat as Director

6. To re-elect Kiran Kaur A/P Jogindar Singh as Director

7. To re-appoint Messrs Kreston John & Gan as Auditor

8. Authority to issue shares pursuant to Sections 75 and 76 of the Companies Act 2016

9. Proposed renewal of Shareholders’ Mandate for Recurrent Related Party Transactions of a Revenue or Trading Nature

(Please indicate with an “X” in the appropriate boxes on how you wish your vote to be cast. If no specific direction as to voting is given, the proxy will vote or abstain at his discretion.)

Signed this _______ day of ___________________, 2018

*Strike out whichever not applicable

FORM OF PROXYNo. of Shares held

CDS Account No.

For appointment of two proxies, the shareholdings to be represented by the proxies:Proxies Percentage (%) of shares Proxy 1Proxy 2Total 100%

Notes:1. A member of the Company is entitled to attend, speak and vote at the meeting may appoint not more than two (2) proxies to attend, speak and vote instead of him. Where

a member appoints two (2) proxies, the appointment shall not be valid unless the member specifies the proportion of his shareholding to be represented by each proxy. A proxy need not be a member of the Company.

2. Where a member is an Exempt Authorised Nominee which holds ordinary shares in the Company for multiple beneficial owners in one securities account (“omnibus account”) as defined under the Securities Industry (Central Depositories) Act, 1991, there is no limit to the number of proxies which the Exempt Authorised Nominee may appoint in respect of each omnibus account it holds.

3. The instrument appointing a proxy shall be in writing under the hand of the appointer or of his attorney duly authorised in writing or, if the appointer is a corporation, either under its common seal or in some other manner approved by its Directors.

4. The instrument of proxy must be deposited at the Company’s registered office at Level 33A, Menara 1MK, Kompleks 1 Mont’ Kiara, No.1, Jalan Kiara, Mont’ Kiara, 50480 Kuala Lumpur, not later than forty-eight (48) hours before the time appointed for holding the meeting or any adjournment thereof.

5. Members whose name appears in the Record of Depositors as at 10 December 2018 (General Meeting Record of Depositors) shall be regarded as members entitled to attend, speak and vote at the AGM or appoint proxy(ies) to attend and vote on his/her behalf.

6. Pursuant to Paragraph 8.29A(1) of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad (“Bursa Securities”), all the Resolutions set out in this Notice will be put to the vote by way of poll. Independent Scrutineers will be appointed to conduct the polling process and to verify the results of the poll.

7. PERSONAL DATA PRIVACY By submitting an instrument appointing a proxy(ies) and/or representative(s) to attend, speak and vote at the forthcoming Fifteenth AGM and/or any adjournment thereof,

a member of the Company:-(i) consents to the collection, use and disclosure of the member’s personal data by the Company (or its agents) for the purpose of the processing and administration

by the Company (or its agents) of proxies and representatives appointed for the AGM (including any adjournment thereof) and the preparation and compilation of the attendance lists, minutes and other documents relating to the AGM (including any adjournment thereof), and in order for the Company (or its agents) to comply with any applicable laws, listing rules, regulations and/or guidelines (collectively, the “Purposes”);

(ii) warrants that where the member discloses the personal data of the member’s proxy(ies) and/or representative(s) to the Company (or its agents), the member has obtained the prior consent of such proxy(ies) and/or representative(s) for the collection, use and disclosure by the Company (or its agents) of the personal data of such proxy(ies) and/or representative(s) for the Purposes; and

(iii) agrees that the member will indemnify the Company in respect of any penalties, claims, demands, losses and damages as a result of the member’s breach of warranty.

Fold this flap for sealing

Then fold here

1st fold here

Level 33A, Menara 1MKKompleks 1 Mont’ Kiara

No. 1 Jalan Kiara, Mont’ Kiara50480 Kuala Lumpur

AFFIXSTAMP


GOODWAY INTEGRATED INDUSTRIES BHD(Incorporated In Malaysia)(Company No. 618972-T)

Unit 3-5-9, Level 5, Tower 3, UOA Business Park, Jalan Pengaturcara U1/51A,Kawasan Perindustrian Temasya, 40150 Shah Alam, Malaysia.

Tel : 603-5567 9986 Fax : 603-5569 9916

www.giibworld.com

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