Annual Report 2013

Transcription

Annual Report 2013

PANTECH CORPORATION SDN BHD
PANAFLO CONTROLS PTE LTD
PANTECH STEEL INDUSTRIES SDN BHD
(176321-P)
(200413822 D)
(509731-A)
MS ISO/IEC Guide 62:1999
OSH 18072007 CB 02
Cert. No. KLR0404021
Cert. No. MY08/00161.1
OSH 18072007 CB 02
Cert. No. SNG6003354
Cert. No. MY08/00161.3
Manufacturer
EMS 12072004 CB 03
SG08/02 123.1
EMS 12072004 CB 03
MY08/00171.1
SG08/02/123.3
MY08/00171.3
Johor Bahru Head Office
Singapore Office
PLO 234, Jalan Tembaga Satu
Pasir Gudang Industrial Estate
81700 Pasir Gudang
Johor Darul Takzim, Malaysia
Tel: +607 259 7979 / 252 1767
Fax: + 607 251 2877 / 252 0835
Email: info@pantechcorp.com
No 22
Pioneer Crescent
#02-06 West Park Biz Central
Singapore 628556
Tel: +65 6562 3048
Fax: +65 6562 3148
Email: info@panaflocontrols.com.sg
Lot 13258 & 13259
Jalan Haji Abdul Manan
Off Jalan Meru
42200 Kapar
Selangor Darul Ehsan, Malaysia
Tel: +603 3393 1633
Fax: +603 3392 8966
Email: pantech2@streamyx.com
PANTECH STAINLESS & ALLOY
INDUSTRIES SDN BHD
(733428-W)
Shah Alam Office
No. 3, Jalan Trompet 33/8
Seksyen 33, 40400 Shah Alam
Tel : +603 5192 7995
Fax : +603 5192 7992
Email : infosa@pantechcorp.com
Pulau Indah (Warehouse Office)
Persiaran Port Klang FZ 7, Jalan FZ 6-P1
Port Klang Free Zone / KS 12
42920 Pulau Indah
Tel : +603 3101 3767
Fax : +603 3101 4767
PANTECH INTERNATIONAL (KSA)
SDN BHD
(890670-K)
PLO 234, Jalan Tembaga Satu
Pasir Gudang Industrial Estate
81700 Pasir Gudang
Email: info@pantechksa.com
Manufacturer
PLO 809, Jalan Kampung Pasir Gudang Baru,
Pasir Gudang Industrial Estate, Zone 12B,
81700 Pasir Gudang,
Tel: +607 251 8888
Fax:+607 251 9999
Email: info@pantechssalloy.com
NAUTIC STEELS LIMITED,
UNITED KINGDOM
PANTECH (KUANTAN) SDN BHD
(02302004)
(191606 U)
Cert. No. LRQ 0921634
Manufacturer
Nautic House, Claymore,
Tame Valley Industrial Estate,
Tamworth, Staffordshire,
England, B77 5DQ
annual report 2013
Lot 5, Jalan Industri Semambu 2
Kawasan Perindustrian Semambu
25350 Kuantan
Pahang Darul Makmur, Malaysia
Tel: +609 568 7550
Fax: +609 568 7553
Email: infokuantan@pantechcorp.com
ANNUAL
REPORT
2013
Pantech Group Holdings Berhad (733607-W)
annual report 2013
contents
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02
03
04
06
09
12
14
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19
21
28
32
134
135
139
140
143
145
Financial Highlights
Corporate Information
Group Structure
Directors’ Profile
Executive Chairman’s Statement
Management Review of Operations
and Financial Results
Corporate Social Responsibility Activities
Corporate Events
Audit Committee Report
Statement on Risk Management and Internal Control
Corporate Governance Statement
Additional Compliance Statement
Financial Statements
List of Properties
Notice of Seventh Annual General Meeting
Appendix I
Analysis of Shareholdings
Analysis of ICULS Holdings
Analysis of Warrant Holdings
Proxy Form
annual report 2013
FINANCIAL
HIGHLIGHTS
GROUP FIVE-YEAR SUMMARY
Ringgit Malaysia (RM'000)
Revenue
EBITDA
Profit Before Tax
Profit After Tax
Profit Attributable to Shareholders
Paid-Up Capital
Shareholders' Equity
Total Assets
Total Net Tangible Assets
Total Borrowings
Basic Earnings Per RM0.20 Share (sen)
Diluted Earnings Per RM0.20 Share (sen)
Total Net Dividend Declared
Net Dividend Per RM0.20 Share (sen)
Net Tangible Assets Per Share (RM)
REVENUE
RM’000
FYE
28 Feb 2009
FYE
28 Feb 2010
FYE
28 Feb 2011
511,595
95,507
82,002
61,459
61,459
75,000
199,885
409,107
199,885
160,798
16.43
N/A
11,231
3.00
0.53
401,578
78,023
66,758
50,871
50,871
75,000
232,891
390,775
232,891
119,560
13.60
N/A
15,716
4.20
0.62
335,779
48,191
37,369
28,980
28,994
90,387
317,268
522,054
317,268
141,657
6.45
6.15
13,722
3.30
0.70
434,604
62,905
47,198
34,223
34,232
90,530
337,230
596,573
337,230
192,770
7.60
5.91
15,728
3.50
0.74
635,663
102,115
80,255
56,063
56,066
102,201
377,019
699,222
377,019
256,455
11.73
9.19
23,175
4.60
0.74
PROFIT AFTER TAXATION
RM’000
635,663
Revenue in FYE2013
improved by
61,459
511,595
56,063
50,871
401,578
FYE
FYE
29 Feb 2012 28 Feb 2013
434,604
335,779
28,980
34,223
46.3% to
RM635.66 million
whilst PAT improved
63.8% to
RM56.06 million
09
10
11
12
13
09
10
11
12
13
Total net dividend
declared for FYE2013 is
RM23.18 million,
EARNING PER SHARE
sen
SHAREHOLDERS’ EQUITY
RM’000
377,019
16.43
317,268
337,230
199,885
6.45
09
10
11
232,891
NTA stands at
translating to a
NTA/share
of RM0.74
7.60
12
41.3% of our PAT
RM377.02 million
13.60
11.73
representing
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10
11
12
13
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Pantech Group Holdings
Holddinggs BBerhad
erhhad
a (7336
(733607-W)
36 7-W)
360
annual report 20133
CORPORATE
INFORMATION
BOARD OF DIRECTORS
Dato’ Chew Ting Leng
Executive Chairman / Group Managing Director
Ms. Ng Lee Lee
Executive Director
Dato’ Goh Teoh Kean
Group Deputy Managing Director
Mr. Tan Sui Hin
Independent Non-Executive Director
Mr. Tan Ang Ang
Executive Director
Mr. Loh Wei Tak
Mr. To Tai Wai
Executive Director
Tuan Haji Yusoff Bin Mohamed
Datuk Faizoull Bin Ahmad
Non-Independent Non-Executive Director
AUDIT COMMITTEE
SHARE REGISTRAR
Chairman
Mr. Tan Sui Hin
MEGA CORPORATE SERVICES SDN. BHD.
(Company No.: 187984-H)
Level 15-2, Bangunan Faber Imperial Court
Jalan Sultan Ismail
50250 Kuala Lumpur
Tel No. : 03-2692 4271
Fax No. : 03-2732 5388
Members
Mr. Loh Wei Tak
REMUNERATION COMMITTEE
PRINCIPAL BANKERS
Chairman
Members
Mr. Tan Sui Hin
NOMINATION COMMITTEE
Chairman
Mr. Loh Wei Tak
Members
Mr. Tan Sui Hin
AmBank (M) Berhad
CIMB Bank Berhad
Citibank Berhad
Hong Leong Bank Berhad
HSBC Bank Malaysia Berhad
HSBC Bank Plc
OCBC Bank (Malaysia) Berhad
The Bank of Nova Scotia Berhad
United Overseas Bank Limited
United Overseas Bank (Malaysia) Berhad
SOLICITORS
Adi Radlan & Co.
Ng Kee Chong & Co.
COMPANY SECRETARIES
AUDITORS
Ms. Lim Seck Wah (MAICSA NO.: 0799845)
Ms. Liang Siew Ching (MAICSA NO.: 7000168)
REGISTERED OFFICE
Jalan Sultan Ismail
50250 Kuala Lumpur
Tel: 03-2692 4271
Fax: 03-2732 5388
Messrs SJ Grant Thornton
(Member of Grant Thornton International Ltd)
Chartered Accountants
Unit 29-08, Level 29, Mailbox 227
Menara Landmark
12, Jalan Ngee Heng
80000 Johor Bahru
STOCK EXCHANGE LISTING
Main Market
Bursa Malaysia Securities Berhad
STOCK CODE: 5125
annual report 2013
GROUP
STRUCTURE
Pantech Corporation Sdn. Bhd.
Pantech (Kuantan) Sdn. Bhd.
Jayee Holdings Sdn. Bhd.
Tuah Nusa Sdn. Bhd.
100%
100%
100%
40%
Pantech Steel Industries Sdn. Bhd.
100%
Pantech Stainless & Alloy Industries Sdn. Bhd.
100%
Panaflo Controls Pte. Ltd.
100%
JC Flow Controls Pte. Ltd.
Nautic Steels (Holdings) Limited
Nautic Steels Limited
Nautic Steels Sdn. Bhd.
Pantech International (KSA) Sdn. Bhd.
70%
100%
100%
100%
90%
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annual report 2013
DIRECTORS’
PROFILE
DATO’ CHEW TING LENG
Executive Chairman / Group Managing Director
TAN ANG ANG
Executive Director
Dato’ Chew Ting Leng, Malaysian, aged 58, is one of the
co-founders of the Group. He has more than 30 years of
experience in the PFF solutions industries. He was
appointed as Group Managing Director and Executive
Chairman of Pantech Group Holdings Berhad (PGHB) on
11 November 2006 and 13 November 2006 respectively.
Mr Adrian Tan, Malaysian, aged 57, was appointed as
Executive Director on 11 November 2006. He is
responsible for the overall operation and performance of
the Group’s manufacturing business and is also the
Managing Director of Pantech Steel Industries Sdn. Bhd.,
Pantech Stainless & Alloy Industries Sdn. Bhd. and
Nautic Steels Limited. He obtained his professional
Diploma from the Chartered Institute of Marketing in
1989. He does not hold any directorships in any other
public companies.
He is a member of the Remuneration Committee.
He does not hold any directorships in any other public
companies.
DATO’ GOH TEOH KEAN
Dato’ Goh Teoh Kean, Malaysian, aged 57, graduated
with Diploma in Commerce (Financial Accounting) from
Tunku Abdul Rahman College.
He has more than 20 years of experience in the PFF
solutions industry. He is one of the co-founders of the
Group and was appointed as the Group Deputy
Managing Director on 11 November 2006. He is
responsible for the financial functions of the Group.
TO TAI WAI
Executive Director
Mr David To, Malaysian, aged 42, was appointed as
Executive Director on 11 November 2006. He started his
career in Pantech Corporation Sdn. Bhd. since 1989 and
has more than 20 years of experience in the PFF
solutions industries. He is primarily responsible for the
domestic, international and project sales activities of the
Group’s trading division and trading operation in
Malaysia.
companies.
companies.
NG LEE LEE
Executive Director
Ms Ng Lee Lee, Malaysian, aged 46, was appointed as
Executive Director on 8 May 2013. She is primarily
responsible for the human resources, administration and
project sales division. She started her career in Pantech
Corporation Sdn Bhd since 1990.
She does not hold any directorships in any other public
companies.
annual report 2013
DIRECTORS’
PROFILE
cont’d
TAN SUI HIN
TUAN HAJI YUSOFF BIN MOHAMED
Mr Tan Sui Hin, Malaysian, aged 63, was appointed as an
Independent Non-Executive Director on 30 November
2006. He graduated with a Diploma in Mechanical
Engineering from Ungku Omar Polytechnic in 1971. He
has more than 35 years of experience in the
manufacturing and building engineering field.
Tuan Haji Yusoff Bin Mohamed, Malaysian, aged 62, was
appointed as an Independent Non-Executive Director on
10 August 2007. He graduated from University
Kebangsaan Malaysia with a Bachelor Degree in
Economics (Hons). He has more than 25 years of
experience in the oil and gas industry.
He is the Chairman of the Audit Committee.
He is the Chairman of the Remuneration Committee and
a member of both the Audit and Nomination Committees.
He is also a member of both the Nomination and
Remuneration Committees.
companies.
companies.
DATUK FAIZOULL BIN AHMAD
LOH WEI TAK
Mr Loh Wei Tak, Malaysian, aged 40, was appointed as
an Independent Non-Executive Director on 30 November
2006. He is a qualified accountant and a member of the
Malaysian Institute of Accountants. He completed his
Bachelor of Business Degree (Majoring in Accounting)
from Monash University, Melbourne, Australia in 1994
and was admitted to Certified Practicing Accountant
from Australia in 1998. In 2000, he was admitted as a
Chartered Accountant to the Malaysian Institute of
Accountants.
He is the Chairman of the Nomination Committee.
He is a member of the Audit Committee.
companies.
Datuk Faizoull Bin Ahmad, Malaysian, aged 53, was
appointed as a Non-Independent Non-Executive
Director on 11 June 2013. He graduated from Virginia
Commonwealth University, United States with a Master
in Public Administration.
He joined FELDA as an Administrative Officer from 1986
until 2003. Subsequently he was promoted to Assistant
General Manager, FELDA Wilayah Persekutuan in 2003
and General Manager, FELDA Wilayah Persekutuan in
2005.
He was promoted to Director, Department of Innovation
and Development for new generation, FELDA in 2010. He
relinquished position as Deputy Director General
(Community Development) and assumed the position of
Director General of FELDA since 2011 until to date.
companies.
OTHER INFORMATION:Directors’ Shareholdings
Details of Directors’ Shareholdings in the Company are as disclosed on page 34 and page 141 of the Annual Report 2013.
Family relationship with Directors and or Major Shareholders
Dato’ Chew Ting Leng and his spouse, Datin Shum Kah Lin are substantial shareholders of Pantech Group Holdings Berhad (“PGHB”)
by virtue of their substantial shareholdings in CTL Capital Holding Sdn Bhd pursuant to Section 6A of the Companies Act 1965.
Dato’ Goh Teoh Kean and his spouse, Datin Lee Sock Kee are substantial shareholders of PGHB by virtue of their substantial
shareholdings in GL Management Agency Sdn Bhd pursuant to Section 6A of the Companies Act 1965.
Conflict of Interest
All directors have no family relationship with each other or major shareholders of PGHB. They have no conflict of interest with PGHB.
Conviction of Offences
All Directors have no convictions of offences within the past 10 years save for traffic offences, if any.
Attendance at Board Meetings
The attendance of the Directors is disclosed in the Corporate Governance Statement on page 24 of the Annual Report 2013.
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annual report 2013
EXECUTIVE CHAIRMAN’S
STATEMENT
Dear Shareholders,
2012 has been a very exciting year for Pantech Group Holdings
Berhad and I have the utmost pleasure of reporting the Group’s
considerable achievements on behalf of the Board of Directors.
Pantech Group turned the year in on 28 February 2013 with a
record increase of 46.3% or RM201.06 million in revenue, from
RM434.60 million to RM635.66 million. And, net profit rose
correspondingly to RM56.06 million, up 63.8% or RM21.84 million
from the RM34.22 million recorded in the previous financial year.
annual report 2013
STATEMENT
cont’d
The strengthening of our core capability as shared in
our Annual Report last year, in particular in
Manufacturing has proven to be a most opportune and
strategic move. The UK-based Nautic Group which we
acquired in March 2012 has contributed significantly to
the Group revenue. We are happy to note that revenue
from the increased total manufacturing output which
involve carbon steel, stainless steel, nickel alloy and
copper nickel pipes and fittings, is double of the
revenue recorded in the last financial year. Of the highly
positive income for our FY2013, the Manufacturing
Division contributed RM250.92 million or about 39.5%
of the total Group revenue.
product presence in South America in particular
Colombia and Brazil, bringing to a total of 59 countries
worldwide which are now using our products.
Contributions from our Trading Division was also up at
RM384.74 million, an increase of approximately 24.8%
and accounting for 60.5% of the Group revenue. This
40:60 revenue contribution ratio for Manufacturing
Division and Trading Division met the target ratio set
earlier. As manufacturing capacity grows, we have set a
target to achieve a 50:50 Manufacturing and Trading
contribution ratio by 2015.
As we optimise the manufacturing capacity at Nautic
Group, the need to expand arose. To this end, we are
investing in an approximate 55,000 square feet of land
with an existing factory lot, located just 5 minutes walk
away from the current factory in Tamworth, United
Kingdom. This factory lot acquired at a purchase
consideration of GBP1.24 million will serve as a base
for both production and warehouse to augment the
current capacity. This expansion will increase the
Nautic land size by 50% to an approximate total land
area of 101,450 square feet.
The oil and gas sector continues to be our prime
market and we are confident that contributions from the
oil and gas sector to the Group revenue will remain
strong as it continues to be the leading choice of fuel
for the world. Closer to home, the new oil and gas
discoveries off the shores of Malaysia and the on-going
investments are expected to intensify capital
investment in this sector. This augurs well for Pantech
Group.
Malaysia remained our key revenue contributor at 60%
of Group revenue. This is slightly lower than the 66%
recorded in FY2012. However, quantum-wise, it is still a
substantial contribution of RM381 million and is in line
with the Group’s expectation as the Pantech brand is
already well-established in the local market here.
We are pleased to report that revenue generated from
countries other than Malaysia has increased to 40%
from the previous year of 34%. This is mainly because
Pantech Group has managed to stretch into new
countries through the Nautic Group. We now have
Nautic Group has not only enlarged our manufacturing
capability and capacity; it has also enlarged our
product range and market footprint. The merger
process has been smooth and it now operates
seamlessly under the Pantech Group. We have chosen
to retain the Nautic brand as it is already established
amongst its customer base. Nautic Group has been
performing and contributed positively to the Group with
a revenue of RM46 million in FY2013.
With the increased capacity, we are also able to
expand the product range. At the time of acquisition,
Nautic Group was producing mainly copper-nickel
fittings and flanges. Nautic have been certified by
Lloyd’s Register to manufacture products to NORSOK
M650 standard for its nickel alloy fittings. Developed by
the Norwegian petroleum industry, the NORSOK
standards ensure adequate safety, value adding and
cost effectiveness for oil and gas industries by
providing a set of qualification requirement to verify that
the manufacturer has sufficient competence and
experience to meet the oil and gas acceptable
practices. We are pleased to update that Nautic Steel
facilities was verified to have meet the requirement.
Plans are now afoot to add to the production list, nickel
alloy items such as duplex and super duplex which are
experiencing growing demands.
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8
annual report 2013
STATEMENT
cont’d
The efforts at Nautic Group will strengthen our
positioning as a One-Stop Pipes, Valves and Fittings
(PVF) Solution Provider as well as our track record.
Being a One-Stop Centre for PVFs has worked in our
favour, enabling Pantech Group to tap deeper into our
markets and compete advantageously in tenders. With
an inventory that stands at 28,000 product items valued
at RM259.2 million as at FYE 28 February 2013, we are
able to deliver on-demand basis. We are not
constrained by factory production lead-time. And this is
a reputation that Pantech Group will continue pursue.
CORPORATE GOVERNANCE
The investment that the Group pumped into the new
plant for Pantech Stainless & Alloy Industries Sdn Bhd
(PSA) turned black in the last quarter of FY2013.
Production capacity at this factory is at 14,400 metric
tonnes per annum. Although there is ongoing
anti-dumping suit on welded stainless steel pipes from
Malaysia, Vietnam and Thailand brought on by the
International Trade Administration of the Department of
Commerce of the United States of America, we
anticipated its impact to be minimal should the suit
follows through as we have begun mitigation activities.
Our corporate governance statement and reports are on
pages 21 to 27.
Pantech Group is also investing into a piece of 7-acre
land adjacent to the 26-acre holding we have in Zone
12B in Pasir Gudang Industrial Estate. This total of 33
acres in one location will provide us the land bank for
future expansion at the same address. Utilisation of the
26-acre portion is progressing well with the building of
the 60,000 square feet Corporate Office expected to
complete soon. We are targeting to operate from one
address for operations, production, warehouse and
management in Q4 this year.
Having weathered the internal learning curve and the
changing dynamics of the world economy including the
ongoing delicate Eurozone, Pantech Group has come
out stronger, learning along the way. We have
continued to deliver higher revenue at the end of each
financial year.
While we are confident that the demand for our
products and services will continue as oil and gas
market burgeons, we are not resting on our laurels. To
continue to enhance our preferred vendor status, we
are constantly raising our own benchmark of standards,
quality and service. Growth is not an option. We are
always on the lookout for opportunities and do not rule
out acquisitions of good value companies. We hold
ourselves accountable for the continuous profitability of
Pantech Group that it may in turn, enable us to share
the wealth with our loyal shareholders.
Pantech Group has paid out RM17.03 million in three
single tier dividends in October 2012 and, January and
April 2013. And we believe loyalty should be
acknowledged. Should our loyal shareholders approve,
a final single tier dividend of 1.2 sen per ordinary share
of RM0.20 each amounting to approximately RM6.14
million for the financial year 28 February 2013 will be
paid out, bringing the total dividend payout to RM23.18
million or 41% of our total net profit for FY2013.
The Group has been profitable for 26 years now. We
celebrated our 25th year milestone last year.
Throughout the years, Pantech is and has always been
dedicated to providing and promoting a business of
trust, reliability and integrity through our products and
services. Ethics and principles are upheld in our
dealings, as with respect for society. We will work hard
to always embody these values as the Group
progresses and grows.
ACKNOWLEDGEMENTS
As I undertake this report each year of our 7 years as a
public listed company, I am extremely cognizant of the
stark fact that Pantech Group will not be bearing such
fruits as you see today without the commitment and
loyalty of my directors, management and staff. The
relentless support of our business partners and
stakeholders are also major contribution factors to the
Group’s success. My heartfelt appreciation goes out to
all who have believed and continue to believe in the
Pantech story, and this includes all our valued loyal
shareholders. We will continue to communicate in a
transparent manner and on this note, I am very pleased
to inform that our Executive Director Adrian Tan was
named Best CEO for IR - Small Cap at the Malaysian
Investor Relations Awards 2013 recently.
A business without customers is no business at all. For
this, I must note that Pantech Group is very privileged
to be serving a large and diverse group of customers,
of whom some have been with us since the beginning.
We hope to continue this relationship long into the
future.
And it is future that continues to look bright for Pantech
in line with the performance of the oil and gas sector as
demand for energy remains unabated. The global
demand continues to grow and the oil and gas industry
searches for new sources. The combination of the
knowledge and established experience of Nautic Group
in the niche marine oil and gas sector together with
Pantech Group’s own, we are in a good position as
now increasingly, oil and gas are found in challenging
areas such as deep waters.
We are confident Pantech Group will continue to
maintain our market position as the one-stop Pipes,
Valves and Fittings (PVF) Solution Provider.
DATO’ CHEW TING LENG (JIMMY)
Executive Chairman
annual report 2013
MANAGEMENT REVIEW OF
OPERATIONS AND FINANCIAL RESULTS
For the financial period under review of 1 March 2012 to 28 February 2013, Pantech Group has notched some
significant achievements which affirmed the Group strategy of expanding manufacturing to drive sustainable growth.
From the improved segmental revenue contribution from manufacturing arising from higher manufacturing capacity
and output, the contribution from newly acquired Nautic Group to diversification of niche products production, the
signs point to a smoother path ahead barring unforeseen circumstances.
FINANCIAL
Revenue contribution from our manufacturing division
doubled from RM126.44 million last financial year to
RM250.92 million. Revenue recognition from Nautic
Group was immediate and this was reflected in the
increased manufacturing contribution. The transition
and merging of Nautic into Pantech Group was smooth
and we managed to retain key personnel, resulting in a
manufacturing revenue contribution of 18% from Nautic
Group.
In Malaysia, both Pantech Steel Industries Sdn. Bhd.
(PSI) and Pantech Stainless & Alloy Industries Sdn.
Bhd. (PSA) which are manufacturing entities increased
their operations and sales activities. Along with this, the
revenue contributions were also higher at 54% and 28%
for FY2013 for PSI and PSA respectively.
PSA is also fast building up its reputation and brand
among customers in country and overseas. This was
seen from the doubling of its sales from FY2012 to
FY2013. With tight cost control by the management
while increasing output of stainless steel pipes and
fittings, PSA broke even in 4Q FY2013.
Revenue contributions from our trading division was also
up at RM384.74 million, an increase of approximately
25%. This higher revenue came mainly from improved
sales demand from the oil and gas sector with on-going
and new projects in Malaysia.
Overall, the RM635.66 million group revenue registered
was also translated to higher profit. The Group profit
margin picked up, from 10.86% Profit Before Tax
(PBT) margin in FYE2012 to 12.63% PBT margin in this
financial year.
The strengthening of our manufacturing capabilities was
accompanied by tighter supply chain and operation
monitoring, resulting in better cost control. Although
cost rose with the larger operations scale and sales
activities at PSI and PSA, we were able to offset it by
selling more high value and niche market items such as
long bends that have a better margin. Likewise, Nautic
Group has good profitability due to its niche products.
Increased efficiency and consistent cost control
produced a cost of business that is comparable to the
previous year while giving a 25% increase in sales. This
enabled a higher conversion of sales to profit for the
trading division.
As a Group, Pantech aims for Operational Excellence
where cost of business and operations remains highly
efficient and only cost of goods sold increase in tandem
with sales. To attain this, we are monitoring closely
the process and manpower productivity. By achieving
Operational Excellence, we will be able to turn increased
revenue to better profit increment.
The gearing level of the Group has increased from
0.58 as at FYE 29 February 2012 to 0.68 as at FYE
28 February 2013, which is still a relatively low level.
The slightly higher gearing is partly attributable to the
financing of the expansion and acquisition of Nautic,
as well as higher working capital required for increased
inventory and sales level. Pantech continuously builds
comprehensive ranges of products within our inventory
and this has been our edge as we are able to fulfill short
sales-to-delivery turnaround time.
The monies raised through ICULS in early 2011 have
been fully utilised in this financial year according to plan;
they were put to good use as working capital and for
manufacturing capacity expansion and acquisition of
Nautic Group. Pantech Group monitors our current and
expected liquidity requirement and constantly exercises
financial prudence to maintain the appropriate cash
level. Healthy working capital and cash flow is one of
the foci of our financial management; it will enable us to
capitalise on opportunities that arise and to weather any
setback that may arise from economic downturn. This
was demonstrated when Pantech Group acquired the
Nautic Group in United Kingdom in March last year. The
management will continue to exercise prudent capital
management to ensure that the Group is always nimble
and able to move swiftly in on market opportunities.
The dividends paid out so far amounted to 3.40 sen per
ordinary share. These dividends were paid out in 3 tiers
throughout our financial year:
-
On 26 July 2012, we announced an interim
dividend of 1.00 sen for every RM0.20 ordinary
share and this was paid on 23 October 2012.
-
The second interim dividend of 1.20 sen for every
RM0.20 ordinary share was announced on 17
October 2012 and the payout was on 16 January
2013.
-
The third interim dividend of 1.20 sen for every
RM0.20 ordinary share was announced on 22
January 2013. This dividend was paid on 17 April
2013.
9
10
annual report 2013
cont’d
Pantech Group has also proposed a single-tier final
dividend of 1.20 sen per ordinary share, which is subject
to shareholders’ approval at the Seventh Annual General
Meeting on 29 August 2013. Upon approval, the total
dividend for FY2013 is 4.60 sen per ordinary share and
the total payout is at approximately 41% of the Group’s
net profit or RM23.18 million.
Pantech Group is now concentrating on enlarging our
footprint within these countries and growing deeper
roots to build firm market presence.
To this end and closer to home, in the Southeast Asian
region, Pantech Group is making firmer inroads into
the Indonesian market in particular via PSI and PSA. In
FY2013, sales/orders increased and we see encouraging
signs in this neighbouring country.
CAPACITIES AND MANUFACTURING
Pantech Group now has a combined manufacturing
capacity of almost 33,000 metric tonnes in Malaysia and
GBP12 million in United Kingdom. The PSI plant in Klang
is running full steam at 18,500 metric tonnes capacity
per annum, 1,500 metric tonnes more than last year’s
17,000 metric tonnes. It produces carbon steel fittings
mainly for markets outside Malaysia and high frequency
induction long bends for Malaysian market. However,
word about the good quality of long bends produced by
PSI has spread and we are now receiving more orders
from overseas.
PSA with a capacity of 14,400 metric tonnes per annum
on single shift, is churning out stainless steel pipes and
fittings. We have started producing 16-inch pipes and
are able to provide a more complete range of stainless
steel products for local and export markets. At the same
time, production of fittings of sizes up to 12 inches
also commenced. This is in addition to the production
of fittings up to 8 inches that started last financial
year. We now have a more complete range of stainless
steel pipes and fittings ready at hand, in stock and we
anticipate better contribution from PSA next year. We
are rebalancing the production ratio towards a higher
output of stainless steel fittings which command higher
margins as they are value-added items.
The acquisition of Nautic Group is the first merger
and acquisition for Pantech Group. Extra efforts were
put in to ensure a smooth transition of acquisition and
technology sharing. The hard work bore good fruits as
Nautic managed to retain key management staff and
continues to deliver revenue and profit, post acquisition.
Pantech value added the acquisition by channeling
resources to improve processes, modernise machineries
and equipment, enhance range and quality of stocks so
as to shorten delivery time. Plans are afoot to increase
the capacity of Nautic, investment has been committed
into a factory lot and new machineries.
MARKET
The acquisition of Nautic Group expanded Pantech’s
market reach by 36 countries, bringing it to a total of 59
countries in which Pantech’s products are being used
in.
Another identified growth area for Pantech Group
now lies in Latin America, where we already have
established presence with Petrobras, the 7th biggest
energy company in the world and the largest company
in the Southern Hemisphere by market capitalization.
More than USD300 billion is expected to be invested in
the Brazilian oil and gas sector over the next 10 years;
and through our track record and the wider range of
products that we now offer, we believe that we are able
to enlarge our footprint in this market and grow with its
potential.
Beyond just the product presence in these eminent oil
and gas corporations, we take heart that products from
Pantech Group have met the stringent requirements set
by the companies. We believe it will help open doors to
more similar entities in the future.
Continuous marketing of our products and services is
an important pillar in our business. To be present and
visible in the core sector that we serve, we participated
in several oil and gas exhibitions. Being amongst notable
industry players also provided us the opportunity to be
updated and gain invaluable insights on the oil and gas
industry. On this note, we are pleased to mention that
Pantech products are used in almost all the top oil and
gas producing countries in the world, and participating in
conferences and exhibitions enables us to network and
touch base with our existing and potential customers.
In the financial year under review, Pantech Group
participated 5 key exhibitions:
-
Tube Fair in Dusseldorf, Germany on 26 - 30
March 2012
-
Malaysian Services Exhibition @ Project Qatar
2012 in Doha, Qatar on 30 April - 3 May 2012
-
3rd Asian Subsea Conference and Exhibition
(SUBSEA ASIA) in Kuala Lumpur, Malaysia on 3 5 October 2012
-
International Oil and Gas Symposium 2012 (IOGS
2012) in Universiti Teknologi Malaysia, Johor,
Malaysia on 7 - 8 November 2012
-
18th International Oil and Gas Exhibition and
Conference (OSEA) in Marina Bay Sands,
Singapore on 27 - 30 November 2012
annual report 2013
cont’d
STREAMLINING OPERATIONS
Aggressive growth can only be achieved and maintained
when it is supported by well-administered and
streamlined management. Pantech Group’s plans to
consolidate administration and management, production
and warehousing onto one site is well underway. The
construction of the new Corporate Head office in Zone
12B in Pasir Gudang where PSA factory and new
warehousing facilities are already located, is progressing
well. The management anticipates to move into the
office in Q3 FY2014.
All 26 acres of the land that Pantech Group holds in
Zone 12B have been utilised as we streamline into a
single address for our operations down South.
OUTLOOK AND CHALLENGES
As a group in which both our trading and manufacturing
divisions deal with the supply of pipes, valves and
fittings that form the fluid transmission solutions in
particular for the oil and gas industry, our outlook is tied
closely to the fortune of the very sector that we serve.
The future outlook of the oil and gas industries continues
to be bright as demand grows. Regionally, we see that
the demand for energy will continue to rise as society
advances through the improvement of technology, and
the rapid pace of economic expansion especially in
Southeast Asia. Globally, the Pipeline and Gas Journal’s
2013 survey indicated that 116,837 miles of pipelines
are planned and under construction worldwide. Of these,
83,806 represent projects in the planning design phase.
We believe that Pantech will be able to get a few miles
of these new developments.
Pantech also aims to benefit from the Petronas fiveyear, RM300 billion capital expenditure, and its RM60
billion Rapid (Refinery and Petrochemicals Integrated
Development) project of 6,300 acres in Pengerang,
Johor. With the new government in place, we anticipate
the investment by the oil and gas sector to maintain
momentum even though the current progress at Rapid
is slow in moving.
We are regularly faced with new challenges as the
Group expands and grows. With the experience of PSA,
we now have the experience of managing raw material
prices in particular the materials used for stainless steel
and nickel alloy products. Overcoming one challenge,
we are presented with another - the minimum wage
for laborers policy comes into effect this year and will
eat into profits. It is not a cost easily passed on to
customers.
Quality talents and retaining talents is another challenge.
In a growing economy like Malaysia, talents are spoilt
for choice in employment opportunities and the loyalty
are more often than not, driven by monetary rewards.
Businesses are faced with paying high emolument
packages that do not necessarily commensurate with
experience.
With the uncertainties of the world economy, political
situations and other challenges faced, Pantech
Group has performed better than expected in the last
financial year. The coming years will be a test of the
Group strategy. We strongly believe our combination
of technical knowledge, expertise, ability, reputation
and track record gives us the edge in an increasingly
competitive market. We will continue to plough on
energetically and are confident that our hard work will
be rewarded.
11
12
annual report 2013
CORPORATE SOCIAL
RESPONSIBILITY ACTIVITIES
People are
at the very heart
of Pantech’s
CSR undertaking.
Corporate Social Responsibility (CSR) has always
been part of the Group’s effort and we have seen
the impact that it has had on our employees,
communities and also our business.
As the company expands and progresses forward, Pantech
remains deeply committed to carrying out CSR activities by
creating a positive workplace environment and by contributing
to the communities in which we work and live in.
People are at the very heart of Pantech’s CSR undertaking. Be
it within the Group itself or the community, our CSR focus is
very much about caring for people. As John C. Maxwell once
said, “People don’t care how much you know until they know
how much you care.”
WORKPLACE
The wellbeing and morale of our staff are always a priority to
us. In November 2012, the Group commemorated its 25th
year anniversary with a joyous celebration with directors, key
management and staff of Pantech.
In addition to this special anniversary celebration, an annual
dinner and family day was held in January 2013 where
approximately 450 staffs and their family members were
treated to a fun-filled night of good food, entertainment
and games. Thoughts were also put in for children of staff clown shows and cultural performance were also part of the
programme. Held at the Amansari Residence Resort in Johor,
each staff went home with a lucky draw prize.
Pantech believes that education holds the key to a brighter
future and being well-equipped contributes towards getting a
child excited especially on the first day of school. The “Back
to School” programme which has been an annual effort since
2007 took place on 29 November 2012. This programme
covers all Pantech staff in Malaysia - every staff of Pantech
received Tesco Vouchers worth RM100 for each primary
school-going child and RM120 for each secondary schoolgoing child. This care-for-staff programme is part of Pantech’s
concern for its staff and is intended to lessen the education
burden especially for items such as stationeries, school
uniform and bag.
annual report 2013
CORPORATE SOCIAL
RESPONSIBILITY ACTIVITIES
cont’d
COMMUNITY
Caring for the community around us is fundamental to
developing society. Extending a helping hand to organisations
who care for our future generation, donations of RM3,000 each
were presented to:
i)
Pusat Kebajikan Care Haven Bhd, a charitable organization
that provides care and full-lodging services for less
fortunate children.
ii)
Careheart Association Johor Bahru, an organization that
provides services and care to the intellectually disabled
young adults.
iii) Tabung Pengurusan Darul Hanan, an organization owned
by Johor Corporation that provides accommodation,
education and care to orphans and the needy.
The mind is more receptive when the stomach is not growling
all the time. As such, Pantech helped put food on the table for
3 families where there were 12 children altogether and one of
whom is a blind girl. Furniture and clothing were also donated
to these families.
While it is challenging for Pantech to employ dedicated talents
for the company, our primary aim is to first retain the talents
that we have. Our goal throughout the Group is to maintain
a conducive, happy workplace which in turn will give rise to
happy employees, and happy employees increase productivity.
Giving the right benefits to our staff while creating the joy of
working for a company that gives back to the society is the
path Pantech has taken towards a sustainable future for our
business.
13
14
annual report 2013
CORPORATE
EVENTS
OGA 2013
(The 14th Asean Oil, Gas &
Petrochemical Engineering Exhibition)
5 - 7 June 2013
Kuala Lumpur Convention Centre, Malaysia
Sabah Oil & Gas
Conference & Exhibition
(SOGCE)
16 - 17 April 2013
annual report 2013
CORPORATE
EVENTS
cont’d
18th International Oil & Gas
Industry Exhibition & Conference
27 - 30 November 2012
3rd Asian Subsea
Conference & Exhibition
(SUBSEA ASIA)
3 - 5 October 2012
Malaysia Investor Relations
Awards 2013
Best CEO for IR - Small Cap
15
16
Pannte
Pan
Pa
ttec
eech Gr
GGroup
rou
ro
rou
oup Holdings
Hold
olldding
ngss BBerhad
ng
erhhad
ad (73
7333336
73
360
60
607-W
7-W)
Pantech
(733607-W)
annual
aann
al re
rreport
eppor
orrt 20
22013
013
01
013
annual
AUDIT COMMITTEE
REPORT
The primary objective of the Audit Committee is to assist the Board in the effective discharge of its fiduciary
responsibilities for corporate governance, financial reporting to shareholders and the public and the internal control.
The Audit Committee will adopt practices aimed at maintaining appropriate standards of responsibility, integrity and
accountability to all the Company’s shareholders.
MEMBERSHIP
The Audit Committee is appointed by the Board and comprises the following members:Chairman
Mr. Tan Sui Hin
:
:
:
Members
Mr. Loh Wei Tak
AUTHORITY
The Committee shall, in accordance with a procedure to be determined by the Board and at the cost of the Company:a)
have authority to investigate any matter within its terms of reference;
b)
have adequate resources and unrestricted access to any information from both internal and external auditors and
all employees of the Group in performing its duties;
c)
have direct communication channels with the external auditors and person(s) carrying out the internal audit
function or activity;
d)
be able to obtain external legal or other independent professional advice and to invite outsiders with relevant
experience to attend, if necessary; and
e)
be able to convene meetings with the external auditors, the internal auditors or both, excluding the attendance of
other directors and employees of the Company, whenever deemed necessary.
MEETINGS
The Chairman shall call a meeting of the Audit Committee if a request is made by any committee member, any
Executive Director, or the external auditors.
A minimum of two members present shall form a quorum provided both of whom present are independent directors.
The Committee shall meet with the external auditors and/or internal auditors without executive board members present
at least once a year. The Company Secretary shall act as Secretary of the Audit Committee or in her/his absence,
another person authorized by the Chairman of the Audit Committee.
There were five (5) Audit Committee meetings held during the financial year 2013. The details of attendance of
Committee members are as follows:Name of Committee Members
Designation
Attendance
Mr. Tan Sui Hin
Mr. Loh Wei Tak
Chairman
Member
Member
5/5
5/5
5/5
Pante
Pan
tec
ech Grou
GGroup
ro p Holdings
rou
Hold
lddiing
ngs BBerhad
eerh
rrhad
a (73
73360
733
3607-W
3607
7 W)
7-W)
Pantech
(733607-W)
aannnual
al re
repor
r por
portt 22013
013
013
01
annual
report
AUDIT COMMITTEE
REPORT
cont’d
RESPONSIBILITIES AND DUTIES OF THE AUDIT COMMITTEE
The duties and responsibilities of the Committee shall include:a)
To review and recommend the appointment of external auditors, the audit fee and any questions of resignation or
dismissal including the nomination of person or persons as external auditors;
b)
To review with the external auditors, the audit plan and audit report;
c)
To review with the external auditors, their evaluation of the system of internal controls;
d)
To review the assistance and cooperation given by the employees of the Company to the external auditors;
e)
To review the adequacy of the scope, functions, competency and resources of the internal audit functions and
that it has the necessary authority to carry out its work;
f)
To review the internal audit programme, processes and the results and findings of the internal audit processes or
investigation undertaken and whether or not appropriate corrective actions are taken on the recommendations of
the internal audit function;
g)
To review the quarterly results and year-end financial statements, prior to their submission for consideration and
approval by the board of directors, focusing particularly on:(i)
changes in or implementation of major new or revised accounting policies;
(ii)
significant and unusual events; and
(iii)
compliance with accounting standards and other legal and regulatory requirements;
h)
To review any related party transaction and conflict of interests situation that may arise within the company or
group including any transaction, procedure or course of conduct that raises questions of management integrity;
i)
To review the competency, professionalism and independency of the external auditors;
j)
To verify the allocation of options pursuant to a share scheme for employees at the end of each financial year.
SUMMARY OF ACTIVITIES OF THE AUDIT COMMITTEE
In line with the terms of reference of the Audit Committee, the following activities were carried out by the Audit
Committee during the financial year ended 28 February 2013 in discharging its functions and duties:a)
Reviewed the External Auditors’ scope of work and audit plans for the financial year under review;
b)
Reviewed the results of audit, the audit report and management letter with management’s response;
c)
Reviewed and approved the Internal Audit Plan and the Internal Audit Report;
d)
Reviewed the quarterly and year-end financial statements of the Group prior to submission to the Directors for
their perusal and approval. This was to ensure compliance of the financial statements with the provisions of the
Companies Act, 1965, Malaysian Financial Reporting Standards, International Financial Reporting Standards and
applicable Listing Requirements of Bursa Malaysia Securities Berhad;
e)
Reviewed the unaudited quarterly financial results announcements before recommending them for the Board
approval;
f)
Considered and recommended to the Board the re-appointment of External Auditors and their fees.
17
18
annual report 2013
AUDIT COMMITTEE
REPORT
cont’d
INTERNAL AUDIT FUNCTION
The Group has outsourced its internal audit function to an independent professional consulting firm to assist the
Audit Committee in discharging their responsibilities and duties. The role of the internal audit function is to undertake
independent, regular and systematic reviews of the system of internal controls so as to provide reasonable assurance
that such systems continue to operate satisfactory and effectively.
The professional fee incurred in respect of the internal audit function for the financial year ended 28 February 2013 was
RM95,000.00.
The detail of internal audit functions during the period under review is stated in the Statement on Risk Management
and Internal Control of this Annual Report.
During the period under review, the Internal Auditors carried out the following activities:a)
Presented and obtained approval from the Audit Committee the annual internal audit plan, its audit strategy and
scope of audit work;
b)
Performed audits according to the annual internal audit plan, to review the adequacy and effectiveness of the
internal control system, compliance with policies and procedures and reported ineffective and inadequate
controls and made recommendations to improve their effectiveness;
c)
Performed follow-up reviews in assessing the progress of the agreed management’s action plans and report to
the management and Audit Committee.
EMPLOYEES’ SHARE OPTION SCHEME (“ESOS”)
The allocations of options were reviewed and verified by the Audit Committee to ensure compliance with the allocation
criteria determined by the Option Committee and in accordance with the By-Laws of the ESOS.
ESOS granted to Non-Executive Directors
A breakdown of the options offered to the Non-Executive Directors pursuant to the ESOS in respect of the financial
year under review are as follows:No. of options
No. Names
Granted on
03.03.2010
Exercised
Expired/
Forfeited
Unexcersised
as at
28.02.2013
1.
Tan Sui Hin
250,000
-
-
250,000
2.
Tuan Haji Abdul Karim Bin Ahmad
(resigned on 17.10.2012)
250,000
-
(250,000)
-
3.
250,000
-
-
250,000
4.
Loh Wei Tak
250,000
-
-
250,000
ESOS granted to Directors and Senior Management
Pursuant to the Company’s ESOS By-Laws, not more than 50% of the Company’s shares available under the scheme
shall be allocated to Directors and Senior Management. At the commencement of the scheme on 3 March 2010, the
Company has granted 44.88% of ESOS to its Directors and senior management staffs.
Since commencement up to the financial year under review, no new option has been granted.
annual report 2013
STATEMENT ON
RISK MANAGEMENT AND INTERNAL CONTROL
The Malaysian Code on Corporate Governance stipulates that the Board of Directors of a listed company should
maintain a sound system of internal control to safeguard shareholders’ investment and the Company’s assets.
The system of internal control covers not only financial controls but operational and compliance controls as well.
This Statement on Risk Management and Internal Control is made pursuant to paragraph 15.26(b) of the Listing
Requirements of Bursa Malaysia Securities Berhad.
In addition, the Group has requested that the external auditors to review this Statement in accordance to paragraph
15.23 of the Listing Requirements and Recommended Practice Guide 5 (“RPG 5”) issued by the Malaysian Institute
of Accountants. The Board is pleased to note that external auditors find this Statement to be consistent with their
understanding of the internal control processes implemented by the Group during their review.
BOARD RESPONSIBILITY
The Board acknowledges its responsibility for the Group’s system of risk management and internal control and for
reviewing adequacy and effectiveness of the system on an on-going basis. The system is designed to manage rather
than eliminate the risk of failure to achieve business objectives, and can only provide reasonable but not absolute
assurance against material misstatement, loss and fraud.
The Board also takes into consideration the need to balance the business risks and the potential returns to
stakeholders in its daily operations, with the dynamic business climate it operates in. The Board also recognises the
need for a concerted effort from the management, head of department and senior staff members in ensuring that the
integrity, effectiveness and adequacy of the control mechanism are monitored and maintained throughout the financial
period.
ENTERPRISE RISK MANAGEMENT FRAMEWORK
The Board recognizes risk management as an important element of the business operations in order to identify and
evaluate principal risks and implement appropriate controls to manage significant risks faced by the Group. As such,
the Board has adopted an Enterprise Risk Management (“ERM”) framework, which is developed within its risk appetite.
The Board has set up a Risk Management Committee (“RMC”) which comprises of Executive Directors and Senior
Management of the Group. Executive Directors, senior management personnel and Departmental Heads are
responsible for managing the risks of their respective business units, operational units and departments. Significant
issues and risks are discussed during management meetings which are attended by Executive Directors and senior
management personnel. This process has been in place during the year under review and up to the date of approval of
this statement for inclusion in the annual report.
INTERNAL AUDIT FUNCTION
The internal audit function has been outsourced by the Group to a professional firm, who reports directly to the
Audit Committee. An internal audit charter and internal audit plan has been submitted and approved by the Audit
Committee.
For the financial year under review, the internal auditors have carried out their review according to the approved internal
audit plan. The review covered the assessment on the adequacy and effectiveness of the Group’s risk management
and internal control system. Upon completion of the internal audit, the internal audit observations, recommendations
and management comments were reported to the Audit Committee.
Total cost incurred for the internal audit function in respect of the financial year ended 28 February 2013 was
RM95,000.
19
20
annual report 2013
STATEMENT ON
RISK MANAGEMENT AND INTERNAL CONTROL
cont’d
KEY ELEMENTS OF THE GROUP’S INTERNAL CONTROL
The key elements of the Group’s system of internal control include:
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disposals or any other transaction not in the ordinary course of business exceeding a certain threshold must be
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financial performance, business planning, control environment and other key issues;
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through internal memorandums, staff briefings and operational meetings to achieve the Group’s overall business
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ensure compliance with occupational safety and health policies and procedures on a continuous basis.
CONCLUSION
In reviewing the risk management and internal control system of the Group, the Board has, through the Audit
Committee, received reports from External Auditors and Internal Auditors in relation to findings on risk management
and internal audit control system. In confirming that necessary actions have been or are being taken to remedy key
weaknesses identified from the review, the Audit Committee has tasked the Internal Auditors in carrying out an followup review on the implementation of management action plans and reporting the results to the Audit Committee.
The Board has also received reasonable assurance from the Group Managing Director and Group Deputy Managing
Director that the Group’s risk management and internal control system is operating adequately and effectively, in all
material respects.
There is no material internal control failures occurred during the financial period that could have resulted in material
losses or contingencies. The Board is of the opinion that the internal control system in place is adequate and effective
at its current level of operations and will continuously strive to enhance the Group’s system of risk management and
internal control in safeguarding shareholders’ investment and Company’s assets.
annual report 2013
STATEMENT
The Board of Directors (“the Board”) of Pantech Group Holdings Berhad (“Pantech” or “the Company”) recognises
and subscribes to the importance of the principles and recommendations set out in the Malaysian Code on Corporate
Governance 2012 (“the Code”) as a key factor towards achieving an optimal governance framework and process in
managing the business and operational activities of the Company and its subsidiaries (“the Group”).
The Board believes that good corporate governance practices are pivotal towards enhancing business prosperity and
corporate accountability with the ultimate objective of realizing long-term shareholder value, whilst taking into account
the interests of other stakeholders. Hence, the Board is fully dedicated to continuously appraise the Group’s corporate
governance practices and procedures to ensure that the principles and recommendations in corporate governance are
applied and adhered to in the best interests of the stakeholders.
The Statement below sets out the manner in which the Group has applied the principles of the Code and the extent of
compliance with recommendations advocated therein.
PRINCIPLE 1 - ESTABLISH CLEAR ROLES AND RESPONSIBILITIES OF THE BOARD AND MANAGEMENT
The Board recognises the key role it plays in charting the strategic direction of the Company and has assumed the
following principal responsibilities in discharging its fiduciary and leadership functions:
reviewing and adopting a strategic plan for the Company, addressing the sustainability of the Group’s business;
overseeing the conduct of the Group’s business and evaluating whether or not its businesses are being properly
managed;
identify principal business risks faced by the Group and ensuring the implementation of appropriate internal
controls and mitigating measures to address such risks;
ensuring that all candidates appointed to senior management positions are of sufficient calibre, including the
orderly succession of senior management personnel;
overseeing the development and implementation of a shareholder communications policy, including an investor
relations programme for the Company; and
reviewing the adequacy and integrity of the Group’s internal control and management information systems.
To assist in the discharge of its stewardship role, the Board has established Board Committees, namely the Audit
Committee, Nomination Committee, Remuneration Committee and Risk Management Committee, to examine
specific issues within their respective terms of reference as approved by the Board and report to the Board with their
recommendations. The ultimate responsibility for decision making, however, lies with the Board.
Board Charter
The Directors and Management of the Company are aware of their respective roles and responsibilities, including
the limits of authority accorded. The Board recognizes the need to formalize the Board Charter to provide clarity and
guidance to Directors and Management on their respective role and to include a formal schedule of matters reserved
for deliberation and decision. The Board will look into the matter to formalize the Board Charter.
Code of Conduct and Whistle-Blower Policy
Though the Company has yet to formalize the Code of Conduct and Whistle-Blower policy, the Board has always
conducted themselves in an ethical manner while executing their duties and function.
Sustainability of Business
The Board is mindful of the importance of business sustainability and, in conducting the Group’s business, the impact
on the environmental, social and governance aspects is taken into consideration. Accordingly, the Board will take
steps to formalize the Company’s sustainability policy and embed the environment, social and governance elements in
its corporate strategy.
21
22
annual report 2013
STATEMENT
cont’d
PRINCIPLE 1 - ESTABLISH CLEAR ROLES AND RESPONSIBILITIES OF THE BOARD AND MANAGEMENT
cont’d
Supply of, and Access to, Information
The Board is supplied with relevant information and reports on financial, operational, corporate, regulatory, business
development and audit matters, by way of Board reports or upon specific requests, for decisions to be made on an
informed basis and effective discharge of Board’s responsibilities.
Good practices have been observed for timely dissemination of meeting agenda, including the relevant Board and
Board Committee papers to all Directors prior to the Board and Board Committee meetings, to give effect to Board
decisions and to deal with matters arising from such meetings. The Executive Directors and/or other relevant Board
members furnish comprehensive explanation on pertinent issues and recommendations by Management. The issues
are then deliberated and discussed thoroughly by the Board prior to decision making.
In addition, the Board members are updated on the Company’s activities and its operations on a regular basis. All
Directors have access to all information of the Company on a timely basis in an appropriate manner and quality
necessary to enable them to discharge their duties and responsibilities.
Senior Management of the Group and external advisers are invited to attend Board meetings to provide additional
insights and professional views, advice and explanations on specific items on the meeting agenda. Besides direct
access to Management, Directors may obtain independent professional advice at the Company’s expense, if
considered necessary, in furtherance of their duties. This procedure will be formalized for inclusion in the Company’s
Board Charter.
Directors have unrestricted access to the advice and services of the Company Secretary to enable them to discharge
their duties effectively. The Board is regularly updated and advised by the Company Secretary who is qualified,
experienced and competent on statutory and regulatory requirements, and the resultant implications of any changes
therein to the Company and Directors in relation to their duties and responsibilities. The Company Secretary, who
oversees adherence with board policies and procedures, briefs the Board on the proposed contents and timing of
material announcements to be made to regulators. The Company Secretary attends all Board and Board Committees
meetings and ensures that meetings are properly convened, and that accurate and proper records of the proceedings
and resolutions passed are taken and maintained accordingly. The removal of Company Secretary, if any, is a matter
for the Board, as a whole, to decide.
PRINCIPLE 2 - STRENGTHEN COMPOSITION OF THE BOARD
As at the date of this report, the Board consists of nine (9) members, comprising of an Executive Chairman who is
also the Group Managing Director, one (1) Group Deputy Managing Director, three (3) Executive Directors, three (3)
Independent non-executive directors and one (1) non-independent and non-executive director. This composition fulfills
the requirements as set out under the Listing Requirements of Bursa Malaysia Securities Berhad (“Bursa”), which
stipulate that at least two (2) Directors or one-third of the Board, whichever is higher, must be Independent. The profile
of each Director is set out in this Annual Report. The Directors, with their differing backgrounds and specializations,
collectively bring with them a wide range of experience and expertise in areas such as finance; accounting and audit;
corporate affairs; and marketing and operations.
Nomination Committee – Selection and Assessment of Directors
A Nomination Committee has been established, with specific terms of reference, by the Board, comprising exclusively
Independent Non-Executive Directors as follows:
Chairman
Mr. Loh Wei Tak
Members
Mr. Tan Sui Hin
annual report 2013
STATEMENT
cont’d
PRINCIPLE 2 - STRENGTHEN COMPOSITION OF THE BOARD cont’d
Nomination Committee – Selection and Assessment of Directors cont’d
The Nomination Committee is primarily responsible for recommending suitable appointments to the Board, taking
into consideration the Board structure, size, composition and the required mix of expertise and experience which the
Director should bring to the Board. It assesses the effectiveness of the Board as a whole, the Board Committees and
the contribution of each Director, including Non-Executive Directors.
The final decision on the appointment of a candidate recommended by Nomination Committee rests with the whole
Board. The Board is entitled to the services of the Company Secretary who would ensure that all appointments are
properly made upon obtaining all necessary information from the Directors.
During the financial year, the Nomination Committee met once, attended by all members, to assess the balance
composition of Board members based on merits, Directors’ contribution and Board effectiveness. The Company
has no policy on gender diversity or target set but believes in merits and commitment of its Board members. The
Nomination Committee assesses the Board members on an objective basis for both genders.
The Company appointed Datuk Faizoull Bin Ahmad on 11 June 2013 as Non-Independent Non-Executive Director,
representing the substantial shareholder, Koperasi Permodalan Felda Malaysia Berhad. The Company has identified
and appointed Madam Ng Lee Lee as Executive Director on 8 May 2013.
Directors’ Remuneration
A Remuneration Committee has been established by the Board, comprising a majority of Non-Executive Directors as
follows:
Chairman
Members
Mr. Tan Sui Hin
Executive Chairman/Group Managing Director
The Remuneration Committee has been entrusted by the Board to determine that the levels of remuneration are
sufficient to attract and retain Directors of quality required to manage the business of the Group. The Remuneration
Committee is entrusted under its terms of reference to assist the Board, amongst others, to recommend to the
Board the remuneration of the Executive Directors. In the case of Non-Executive Directors, the level of remuneration
shall reflect the experience and level of responsibilities undertaken by the Non-Executive Directors concerned. In all
instances, the deliberations are conducted, with the Directors concerned abstaining from discussions on their individual
remuneration. During the financial year under review, the Committee met once attended by all members.
Details of Directors’ remuneration for the financial year ended 28 February 2013 are as follows:
Remuneration (RM)
Executive Directors
Non-Executive Directors
Total
4,769,772
136,645
4,906,417
The remuneration paid to the Directors, analysed in the following bands, is as below:Range of Remuneration (RM)
50,000 and below
850,001 - 900,000
1,100,001 - 1,150,000
1,150,001 - 1,200,000
1,550,001 - 1,600,000
Executive
Non-Executive
1
1
1
1
4
-
There is no service contract made between any Director and the Company or its subsidiary companies.
23
24
annual report 2013
STATEMENT
cont’d
PRINCIPLE 3 – REINFORCE INDEPENDENCE OF THE BOARD
The roles of the Chairman and Group Managing Director are held by the same Director. This departs from the
Recommendation 3.4 of the Code which stipulates that the positions of Chairman and Chief Executive Officer should
be held by different individuals and that the Chairman must be a Non-Executive member of the Board. However, the
Board believes that for its current size, it is more expedient for the two roles to be held by the same person as long as
there are pertinent checks and balance to ensure no one person in the Board has unfettered powers to make major
decisions for the Company unilaterally. As such, the Board is of the view that the significant composition of NonExecutive Directors, which is close to the current Board’s size, provides for the relevant check and balance.
The Executive Chairman is responsible for ensuring the adequacy and effectiveness of the Board’s governance
process and acts as a facilitator at Board meetings to ensure all Directors participate and deliberated at all Board
meetings and that no Board member dominates discussion. As the Group Managing Director, supported by fellow
Executive Directors, he implements the Group’s strategies, policies and decision adopted by the Board and oversees
the operations and business development of the Group.
The Independent Non-Executive Directors bring objective and independent views, advice and judgment on interests,
not only of the Group, but also of shareholders and stakeholders. Independent Non-Executive Directors are essential
for protecting the interests of shareholders and can make significant contributions to the Company’s decision by giving
rationale and fair view and to decide impartially.
The Board recognizes the importance of establishing criteria on independence to be used in the annual assessment
of its Independent Non-Executive Directors. Although the definition on independence according to the Listing
Requirements of Bursa is used, the Board review and assess the independence of its independent directors annually
based on their conduct, argue on the matters objectively and make decision rationally and other independence criteria
to, inter-alia, include the nine (9)-year tenure for Independent Non-Executive Directors in its Board Charter. Procedures
on the extension for Independent Non-Executive Directors to serve beyond the nine (9)-year limit will also be
formalized in line with the Recommendation of the Code even though at the date of this Statement, all the Company’s
Independent Non-Executive Directors have not reached the nine (9)-year limit.
PRINCIPLE 4 – FOSTER COMMITMENT OF DIRECTORS
The Board ordinarily meets at least four (4) times a year, scheduled well in advance before the end of the preceding
financial year to facilitate the Directors in planning their meeting schedule for the year. Additional meetings are
convened when urgent and important decisions need to be made between scheduled meetings. Board and Board
Committee papers which are prepared by the Management, provide the relevant facts and analysis for the convenience
of Directors. The meeting agenda, the relevant reports and Board papers are furnished to Directors and Board
Committee members well before the meeting to allow the Directors sufficient time to peruse for effective discussion
and decision making during meetings. At the quarterly Board meetings, the Board reviews the business performance
of the Group and discusses major operational and financial issues. The Chairman of the Audit Committee informs the
Directors at each Board meetings of any salient matters noted by the Audit Committee and which require the Board’s
attention or direction. All pertinent issues discussed at Board meetings in arriving at the decisions and conclusions are
properly recorded by the Company Secretary by way of minutes of meetings.
Board Meetings
There were seven (7) Board meetings held during the financial year ended 28 February 2013, with details of Directors’
attendance set out below:
Meetings Attended
(out of 7 held)
Mr. Tan Ang Ang
Mr. To Tai Wai
Mr. Tan Sui Hin
Mr. Loh Wei Tak
Tuan Haji Abdul Karim Bin Ahmad
(resigned on 17.10.2012)
Executive Chairman/Group Managing Director
Executive Director
Executive Director
7/7
7/7
6/7
6/7
7/7
7/7
7/7
3/4
annual report 2013
STATEMENT
cont’d
PRINCIPLE 4 – FOSTER COMMITMENT OF DIRECTORS cont’d
Board Meetings cont’d
It is the practice of the Company for Directors to devote sufficient time and efforts to carry out their responsibilities.
In addition, the Board recognizes the need to formalize a policy in its Board Charter, requiring Directors to notify the
Chairman before accepting any new directorships notwithstanding that the Listing Requirements of Bursa allow a
Director to sit on the boards of 5 listed issuers. Such notification is expected to include an indication of time that will
be spent on the new appointment.
Directors’ Training – Continuing Education Programmes
The Board is mindful of the importance for its members to undergo continuous training to keep abreast with changes
to regulatory requirements and the impact such regulatory requirements have on the Group.
All the Directors of the Company have attended the Mandatory Accreditation Programme conducted by Bursatra Sdn
Bhd within the stipulated timeframe required in the Listing Requirements saves for Datuk Faizoull Bin Ahmad and
Madam Ng Lee Lee who were appointed during the financial year ended 2014.
During the year, all Board Members have attended pertinent training as below :Name of Director
Date
Training attended
(a)
28 August 2012
Impact of Amendments to Listing Requirements and
Malaysian Code on Corporate Governance 2012
(b)
28 August 2012
12 December 2012
Oversight Role on Financial Reporting - “Aren’t the
numbers too good to be true”
28 March 2013
Risk Management and Internal Control - Are you
aware of what are you against?
(c)
Mr. Tan Ang Ang
28 August 2012
(d)
Mr. To Tai Wai
28 August 2012
(e)
Mr. Tan Sui Hin
28 August 2012
(f)
Mr. Loh Wei Tak
28 August 2012
(g)
28 August 2012
Throughout the year, the Directors also received updates and briefings, particularly on regulatory, industry and legal
developments, including information on significant changes in business and procedures instituted to mitigate such
risks.
The External Auditors also briefed the Board members on any changes to the Malaysian Financial Reporting Standards
that would affect the Group’s financial statements during the financial year under review. The Directors continue
to undergo relevant training programmes to further enhance their skills and knowledge in the discharge of their
stewardship role.
The Company Secretaries also update the Board Members on the relevant guidelines on statutory and regulatory
requirements from time to time.
25
26
annual report 2013
STATEMENT
cont’d
PRINCIPLE 5 – UPHOLD INTEGRITY IN FINANCIAL REPORTING BY COMPANY
It is the Board’s commitment to present a balanced and meaningful assessment of the Group’s financial performance
and prospects at the end of each reporting period and financial year, primarily through the quarterly announcement
of Group’s results to Bursa, the annual financial statements of the Group and Company as well as the Chairman’s
statement and review of the Group’s operations in the Annual Report, where relevant. A statement by the Directors of
their responsibilities in the preparation of financial statements is set out in the ensuing paragraph.
Statement of Directors’ Responsibility for Preparing Financial Statements
The Board is responsible to ensure that the financial statements are properly drawn up in accordance with the
provisions of the Companies Act, 1965, Malaysian Financial Reporting Standards and International Financial Reporting
Standards so as to give a true and fair view of the financial position of the Group as at the end of the financial year and
of the financial performance and cash flows of the Group for the financial year then ended.
The Directors are satisfied that in preparing the financial statements of the Group for the year ended 28 February 2013,
the Group has adopted suitable accounting policies and applied them consistently, prudently and reasonably. The
Directors also consider that all applicable approved accounting standards have been followed in the preparation of
the financial statements, subject to any material departures being disclosed and explained in the notes to the financial
statements. The financial statements have been prepared on the going concern basis.
The Directors are responsible for ensuring that the Group keeps sufficient accounting records to disclose with
reasonable accuracy, the financial position of the Group and which enable them to ensure that the financial statements
comply with the Companies Act, 1965.
Audit Committee
In assisting the Board to discharge its duties on financial reporting, the Board has established an Audit Committee,
comprising wholly Independent Non-Executive Directors, with Mr Tan Sui Hin as the Committee Chairman. The
composition of the Audit Committee, including its roles and responsibilities, are set out in the Audit Committee Report
of this Annual Report. One of the key responsibilities of the Audit Committee in its specific terms of reference is to
ensure that the financial statements of the Group and Company comply with applicable financial reporting standards
in Malaysia. Such financial statements comprise the quarterly financial report announced to Bursa and the annual
statutory financial statements.
As the Board understands its role in upholding the integrity of financial reporting by the Company, it will take steps to
revise the Audit Committee’s terms of reference by formalizing a policy on the types of non-audit services permitted
to be provided by the external auditors of the Company so as not to compromise their independence and objectivity,
including the need for the Audit Committee’s approval in writing before such services can be provided by the external
auditors.
In assessing the independence of external auditors, the Audit Committee will in future require written assurance by
the external auditors, confirming that they are, and have been, independent throughout the conduct of the audit
engagement with the Company in accordance with the independence criteria set out by the International Federation of
Accountants and the Malaysian Institute of Accountants.
PRINCIPLE 6 – RECOGNISE AND MANAGE RISKS OF THE GROUP
The Company has established a Risk Management Committee (“RMC”) and is headed by the Executive Director and
members of key management team of the respective division. The Board delegates to the RMC the responsibility for
evaluating, reviewing and monitoring the vital enterprise risks that affecting the business and operations as an on-going
basis. The Board is committed to the development and implementation of an effective Enterprise Risk Management
framework (“ERM”) to assist the Group to manage all key businesses risk with the intent to strengthening the risk
management and internal control system as a whole.
Continuous efforts will be made to monitor and re-assess the existing ERM framework in regards to maintaining a
proper system of managing risks as well as the related control activities.
annual report 2013
STATEMENT
cont’d
PRINCIPLE 6 – RECOGNISE AND MANAGE RISKS OF THE GROUP cont’d
The internal audit function of the Group is outsourced to an independent professional firm, whose work is performed
with impartiality, proficiency and due professional care, and in accordance with the International Professional Practices
Framework of the Institute of Internal Auditors, which sets out professional standards on internal audit. It undertakes
regular reviews of the adequacy and effectiveness of the Group’s system of internal controls and risk management
process, as well as appropriateness and effectiveness of the corporate governance practices. The Internal Audit
Function reports directly to the Audit Committee. Further details on the internal audit function can be seen in the Audit
Committee Report and the Statement on Risk Management and Internal Control in this Annual Report.
PRINCIPLE 7 – ENSURE TIMELY AND HIGH QUALITY DISCLOSURE
The Board is aware of the need to establish corporate disclosure policies and procedures to enable comprehensive,
accurate and timely disclosures relating to the Company and its subsidiaries to be made to the regulators, shareholders
and stakeholders. On this basis, the Board will formalize pertinent policies and procedures not only to comply with the
disclosure requirements as stipulated in the Listing Requirements of Bursa, but also setting out the persons authorised
and responsible to approve and disclose material information to regulators, shareholders and stakeholders.
To augment the process of disclosure, the Board will earmark a dedicated section for corporate governance on the
Company’s website where information on the Company’s announcements to the regulators, the Board Charter, rights
of shareholders and the Company’s Annual Report may be accessed.
PRINCIPLE 8 – STRENGTHEN RELATIONSHIP BETWEEN THE COMPANY AND ITS SHAREHOLDERS
Shareholder participation at general meeting
The Annual General Meeting (“AGM”), which is the principal forum for shareholder dialogue, allows shareholders to
review the Group’s performance via the Company’s Annual Report and pose questions to the Board for clarification. At
the AGM, shareholders participate in deliberating resolutions being proposed or on the Group’s operations in general.
At the last AGM, a question & answer session was held where the Chairman invited shareholders to raise questions
with responses from the Board.
The Notice of AGM is circulated at least twenty one (21) days before the date of the meeting to enable shareholders
to go through the Annual Report and papers supporting the resolutions proposed. Shareholders are invited to ask
questions both about the resolutions being proposed before putting a resolution to vote as well as matters relating to
the Group’s operations in general. All the resolutions set out in the Notice of the last AGM were put to vote by show of
hands and duly passed. The outcome of the AGM was announced to Bursa on the same meeting day. Going forward,
the Board will adopt poll voting for related party transactions, if any, which require specific approvals, including the
announcement of the detailed results showing the number of votes cast for and against each resolution.
Communication and engagement with shareholders
The Board recognises the importance of being transparent and accountable to the Company’s investors and, as such,
has various channels to maintain communication with them. The various channels of communications are through
the quarterly announcements on financial results to Bursa, relevant announcements and circulars, when necessary,
the Annual and Extraordinary General Meetings and through the Group’s website at where shareholders can access
pertinent information concerning the Group.
This Statement is issued in accordance with a meeting of the Board held on 24 July 2013.
27
28
annual report 2013
ADDITIONAL COMPLIANCE
STATEMENT
1.
UTILISATION OF PROCEEDS FROM CORPORATE EXERCISE
The Renounceable Rights Issue (“Rights Issue”) of 7-year 7% Irredeemable Convertible Unsecured Loan Stock
(“ICULS”) 2010/2017 together with free detachable warrants were completed on 27 December 2010. The status
of utilization of proceeds raised from Rights Issue is as below:-
No. Purpose
1.
Construction of
factory buildings
and warehouses,
acquisition of plant
and equipment
2.
Investments in related
and/or complementary
businesses locally
and/or overseas
3.
Working capital
4.
Expenses for the
Corporate Exercises
Proposed
utilization
Actual
Utilization
as at 28
February
2013
RM’000
RM’000
39,000
39,000
9,750
Intended
Timeframe
for
Utilization
Deviation
RM’000
%
Explanations
-
N/A
-
-
9,750
-
N/A
-
-
24,591
24,584
-
7
0.03
1,500
1,507
-
(7)
0.46
74,841
74,841
-
-
-
The shortfall was
funded from the
working capital of
Pantech Group
All the proceeds raised from Rights Issue are fully utilized as at 28 February 2013.
The actual utilization is in line with proposed utilization and is within the intended timeframe.
2.
SHARE BUY-BACKS
Details of the share bought-back by the Company during the financial year are set out below:-
Month
No. of Shares
purchased
Price per share (RM)
Lowest
Highest
Average
Total Consideration
(RM)
May - 2012
10,000
0.550
0.550
0.550
5,547.65
November - 2012
20,000
0.700
0.700
0.700
14,102.20
At the end of the financial year, a total of 3,302,300 ordinary shares at RM0.20 each were retained as treasury
shares. There was no sale or cancellation of treasury shares during the financial year.
Subsequent to the financial year ended 28 February 2013, the Company repurchased 50,000 of its own shares
for a total cash consideration of RM45,832.65 from the open market and retained as treasury shares.
annual report 2013
STATEMENT
cont’d
3.
OPTIONS, WARRANTS OR CONVERTIBLE SECURITIES ISSUED AND EXERCISED
Employees’ Shares Options Scheme (“ESOS”)
The Company does not offer any options to the eligible employees of the Company under ESOS during the
financial year.
Irredeemable Convertible Unsecured Loan Stocks 2010/2017 (“ICULS”)
During the financial year, a total of 350,136,700 units of ICULS were converted to 58,356,113 ordinary shares in
the Company at the conversion ratio of six RM0.10 nominal value of ICULS for one fully paid-up ordinary shares
of the Company.
Warrants 2010/2020 (“Warrants”)
During the financial year, a total of 410 units of Warrants were exercised at the exercise price of RM0.60.
4.
DEPOSITORY RECEIPT PROGRAMME
The Company did not sponsor any depository receipt programme during the financial year.
5.
IMPOSITION OF SANCTIONS / PENALTIES
There were no public impositions of sanctions or penalties imposed on the Company and its subsidiaries,
directors or management by the regulatory bodies during the financial year.
6.
NON-AUDIT FEES
The amount of non-audit fees incurred for services rendered to the Company and its subsidiaries during the
financial year ended 28 February 2013 by Messrs SJ Grant Thornton was RM57,800.00.
7.
PROFIT ESTIMATE, FORECAST AND PROJECTION
The Company did not release any profit estimate, forecast or projections during the financial period.
8.
VARIANCE IN RESULTS
There is no significant variance between the profit after tax for the financial statement ended 28 February 2013
and the unaudited results previously announced.
9.
PROFIT GUARANTEE
The Company did not receive any form of profit guarantee from any parties during the financial year under
review.
10.
MATERIAL CONTRACTS AND CONTRACTS RELATING TO LOANS
There were no contracts relating to loan and material contracts of the Company and its subsidiaries involving
the Directors and major shareholders interests during the financial year or since the end of the previous financial
year.
29
30
annual report 2013
STATEMENT
cont’d
11.
RECURRENT RELATED PARTY TRANSACTIONS OF A REVENUE AND TRADING NATURE (“RRPT”)
There is no RRPT entered during the financial year.
12.
EXEMPTION TO CTL CAPITAL HOLDING SDN. BHD. (“CTL CAPITAL”) AND THE PARTIES ACTING IN
CONCERT WITH IT (“PACS”) FROM THE OBLIGATION TO UNDERTAKE A MANDATORY TAKE-OVER
OFFER FOR ALL THE REMAINING VOTING SHARES, ICULS AND WARRANTS IN THE COMPANY NOT
ALREADY OWNED BY THEM
The Company had received the approval from the Securities Commission vide its letter dated 3 November 2010
for the exemption sought by CTL Capital and its PACs pursuant to Practice Note 2.9.1 of the Malaysian Code on
Take-Overs and Mergers, 1998 (replaced by Practice Note 9 of the Malaysian Code on Take-Overs and Mergers
2010 with effect from 15 December 2010).
Amongst others, the approval requires the Company to disclose in its annual and interim accounts and any
public document, including annual reports, prospectuses and circulars for so long as the ESOS Options, ICULS
and Warrants remain outstanding, the following:i.
The time period for which the exemption has been granted
The exemption has been granted from 3 November 2010 up to the issuance and listing of the new Pantech
Shares pursuant to the mandatory conversion of ICULS at its maturity date or upon full conversion of
ICULS, whichever date is earlier.
ii.
Number and percentage of voting shares in the Company, and the number of ESOS Options, ICULS
and Warrants held by CTL Capital and its PACs as at 12 July 2013 :Ordinary Shares
Direct
Parties
CTL Capital
No. of Voting
Shares
No. of ICULS
No. of Warrants
Indirect
% (i)
No. of Voting
Shares
% (i)
Direct
Indirect
Direct
Indirect
No of ESOS
Options (viii)
107,196,480
20.01
-
-
95,463,982
-
17,346,398
-
-
GL Management
Agency Sdn.
Bhd. (“GL
Management”)
79,895,960
14.91
-
-
32,381,300
-
12,838,130
-
-
Dato’ Chew Ting
Leng (“CTL”)
-
-
107,196,480
(ii)
20.01
-
95,463,982
(ii)
-
17,346,398
(ii)
4,500,000
Dato’ Goh Teoh
Kean (“GTK”)
-
-
79,895,960 (iii)
14.91
-
32,381,300 (iii)
-
12,838,130 (iii)
4,500,000
8,889,900
1.66
1,633,000 (iv)
0.30
600
-
1,347,240
213,000 (iv)
4,500,000
12,320,580
2.30
-
21,118,800
-
2,111,880
Datin Shum Kah
Lin (“SKL”)
-
-
107,196,480 (v)
20.01
-
95,463,982 (v)
-
17,346,398 (v)
-
Datin Lee Sock
Kee (“LSK”)
-
-
79,895,960 (vi)
14.91
-
32,381,300 (vi)
-
12,838,130 (vi)
-
Mdm Yong Yui
Kiew (“YYK”)
1,633,000
0.30
8,889,900 (vii)
1.66
-
600 (vii)
213,000
1,347,240 (vii)
-
209,935,920
39.18
-
148,964,682
Tan Ang Ang
(“TAA”)
To Tai Wai
(“TTW”)
TOTAL
-
-
-
33,856,648
-
-
3,150,000
16,650,000
annual report 2013
STATEMENT
cont’d
12.
EXEMPTION TO CTL CAPITAL HOLDING SDN. BHD. (“CTL CAPITAL”) AND THE PARTIES ACTING IN
CONCERT WITH IT (“PACS”) FROM THE OBLIGATION TO UNDERTAKE A MANDATORY TAKE-OVER
OFFER FOR ALL THE REMAINING VOTING SHARES, ICULS AND WARRANTS IN THE COMPANY NOT
ALREADY OWNED BY THEM cont’d
ii.
Number and percentage of voting shares in the Company, and the number of ESOS Options, ICULS
and Warrants held by CTL Capital and its PACs as at 12 July 2013 :- cont’d
Notes:(i)
(ii)
(iii)
(iv)
(v)
(vi)
(vii)
(viii)
iii
Excluding a total of 3,352,300 treasury shares.
Deemed interested by virtue of his and his spouse SKL’s interests in CTL Capital pursuant to Section 6A of the
Companies Act, 1965 (“the Act”).
Deemed interested by virtue of his and his spouse LSK’s interests in GL Management pursuant to Section 6A of
the Act.
Deemed interested by virtue of his spouse YYK’s direct shareholding in the Company pursuant to Section 134(12)
of the Act.
Deemed interested by virtue of her and her spouse CTL’s interests in CTL Capital pursuant to Section 6A of the
Act.
Deemed interested by virtue of her and her spouse GTK’s interests in GL Management pursuant to Section 6A of
the Act.
Deemed interested by virtue of her spouse TAA’s direct shareholding in the Company pursuant to Section 134(12)
of the Act.
Only 80% of the ESOS Option is exercisable as at 12 July 2013.
The maximum potential voting shares or voting rights of CTL Capital and its PACs in the Company,
assuming only CTL Capital and its PACs (but not other shareholders) exercise the ESOS Options,
ICULS and Warrants in full:Direct
Indirect
No. of
Voting Shares
%
CTL Capital
GL Management
CTL
GTK
TAA
TTW
SKL
LSK
YYK
140,453,542
98,130,973
4,500,000
4,500,000
14,737,240
21,102,260
1,846,000
22.98
16.06
0.74
0.74
2.41
3.45
0.30
140,453,542
98,130,973
1,846,000
144,953,542
102,630,973
14,737,240
TOTAL
285,270,015
46.68
-
Parties
No. of
Voting Shares
(i)
(ii)
(iii)
(iv)
(v)
(vi)
%
22.98
16.06
0.30
23.72
16.80
2.41
-
Notes:(i)
(ii)
(iii)
(iv)
(v)
(vi)
iv.
Deemed interested by virtue of his and his spouse SKL’s interests in CTL Capital pursuant to Section 6A of the
Companies Act, 1965 (“the Act”).
Deemed interested by virtue of his and his spouse LSK’s interests in GL Management pursuant to Section 6A of
the Act.
Deemed interested by virtue of his spouse YYK’s direct shareholding in the Company pursuant to Section 134(12)
of the Act.
Deemed interested by virtue of her and her spouse CTL’s interests in CTL Capital pursuant to Section 6A of the
Act.
Deemed interested by virtue of her and her spouse GTK’s interests in GL Management pursuant to Section 6A of
the Act.
Deemed interested by virtue of her spouse TAA’s direct shareholding in the Company pursuant to Section 134(12)
of the Act.
No take-over offer would arise on full exercise of the ESOS Options and Warrants and conversion of
ICULS by CTL Capital and the PACs
31
Financial Statements
33
40
40
41
43
45
46
47
51
54
Directors’ Report
Statement by Directors
Statutory Declaration
Independent Auditors‘ Report
Statements of Financial Position
Income Statements
Statements of Comprehensive Income
Statements of Changes in Equity
Statements of Cash Flows
Notes to the Financial Statements
annual report 2013
DIRECTORS’
REPORT
The Directors of Pantech Group Holdings Berhad have pleasure in submitting their report together with the audited
financial statements of the Group and of the Company for the financial year ended 28 February 2013.
PRINCIPAL ACTIVITIES
The Company is principally engaged in investment holding and provision of management services.
The principal activities of the subsidiary companies, associate company and joint venture are disclosed in Notes 8, 9
and 10 to the Financial Statements respectively.
There have been no significant changes in the nature of these activities of the Company, its subsidiary companies,
associate company and joint venture during the financial year.
RESULTS
Net profit for the financial year
Group
Company
RM
RM
56,062,613
30,802,850
56,066,288
30,802,850
(3,675)
-
56,062,613
30,802,850
Attributable to:Owners of the Company
Non-controlling interest
RESERVES AND PROVISIONS
There were no material transfers to or from reserves or provisions during the financial year other than those disclosed
in the financial statements.
DIVIDENDS
The amount of dividends paid and declared since the end of the last financial year were as follows:RM
Special second interim single tier dividend of 1.20 sen per ordinary share in respect of the
financial year ended 29 February 2012 and paid on 26 March 2012
5,392,535
Final single tier dividend of 1.30 sen per ordinary share in respect of the financial year ended
29 February 2012 and paid on 19 September 2012
6,412,051
Special first interim single tier dividend of 1.00 sen per ordinary share in respect of the financial
year ended 28 February 2013 and paid on 23 October 2012
4,936,097
Special second interim single tier dividend of 1.20 sen per ordinary share in respect of the
financial year ended 28 February 2013 and paid on 16 January 2013
6,006,480
Special third interim single tier dividend of 1.20 sen per ordinary share in respect of the financial
year ended 28 February 2013 and paid on 17 April 2013
6,092,454
33
34
annual report 2013
DIRECTORS’
REPORT
cont’d
DIVIDENDS cont’d
For the final single tier dividend of 1.30 sen per ordinary share in respect of the financial year ended 29 February
2012, the amount paid of RM6,412,051 is higher than RM5,841,913 dividend proposed in last year’s Directors’ report.
The difference of RM570,138 was in respect of net effect from additional shares issued arising from conversion of
Irredeemable Convertible Unsecured Loan Stocks and exercise of warrants together with shares repurchased and held
as treasury shares subsequent to the end of the previous financial year, but prior to the closing date of the entitlement
to dividend.
At the forthcoming Annual General Meeting, a final single tier dividend, in respect of the financial year ended 28
February 2013, of 1.20 sen per ordinary share amounting to a dividend payable of approximately RM6,140,000 will be
proposed for shareholders’ approval. The financial statements for current financial year do not reflect this proposed
dividend. Such dividend, if approved by the shareholders, will be accounted for in equity as an appropriation of
retained earnings in the financial year ending 28 February 2014.
DIRECTORS
The Directors in office since the date of the last report are:Dato’ Chew Ting Leng
Tan Ang Ang
To Tai Wai
Ng Lee Lee
Tan Sui Hin
Loh Wei Tak
Yusoff Bin Mohamed
Abdul Karim Bin Ahmad
(Executive Chairman/Group Managing Director)
(Group Deputy Managing Director)
(Executive Director)
(Executive Director)
(Executive Director) (appointed on 8.5.2013)
(Independent Non-Executive Director)
(Non-Independent Non-Executive Director) (appointed on 11.6.2013)
(Non-Independent Non-Executive Director) (resigned on 17.10.2012)
According to the Register of Directors’ Shareholdings, the beneficial interests of those who were Directors at the end
of the financial year in the shares of the Company are as follows:Number of ordinary shares of RM0.20 each
As at
1.3.2012
Converted
(Sold)
As at
28.2.2013
101,196,480
13,000,000
(7,000,000)
107,196,480
74,895,960
16,000,000
(6,300,000)
84,595,960
- direct interest
7,944,600
2,245,300
-
10,189,900
- deemed interest through his spouse, Yong Yui Kiew
1,278,000
355,000
-
1,633,000
12,320,580
-
-
12,320,580
270,000
-
-
270,000
3,000
-
-
3,000
- deemed interest through CTL Capital Holding
Sdn. Bhd.
- deemed interest through GL Management
Agency Sdn. Bhd.
Tan Ang Ang
To Tai Wai
- direct interest
Tan Sui Hin
- direct interest
Yusoff Bin Mohamed
- direct interest
annual report 2013
DIRECTORS’
REPORT
cont’d
DIRECTORS cont’d
Interest in Pantech Group Holdings Berhad Employees Share Option Scheme of those who were Directors at the end
of the financial year are as follows:Number of ordinary shares of RM0.20 each under option
Granted on
3.3.2010
Exercised
Expired
Unexercised
as at
Lapsed
28.2.2013
4,500,000
-
-
-
4,500,000
4,500,000
-
-
-
4,500,000
Tan Ang Ang
4,500,000
-
-
-
4,500,000
To Tai Wai
3,150,000
-
-
-
3,150,000
Tan Sui Hin
250,000
-
-
-
250,000
Yusoff Bin Mohamed
250,000
-
-
-
250,000
Loh Wei Tak
250,000
-
-
-
250,000
The beneficial interests of those who were Directors at the end of the financial year in the 7-Year 7% Irredeemable
Convertible Unsecured Loan Stocks (“ICULS”) of the Company are as follows:Number of ICULS of RM0.10 each
As at
1.3.2012
Acquired
(Converted)
As at
28.2.2013
173,463,982
-
(78,000,000)
95,463,982
128,381,300
-
(96,000,000)
32,381,300
13,472,400
-
(13,471,800)
600
2,130,000
-
(2,130,000)
-
21,118,800
-
-
21,118,800
150,000
-
-
150,000
Sdn. Bhd.
- deemed interest through GL Management Agency
Sdn. Bhd.
Tan Ang Ang
- direct interest
To Tai Wai
- direct interest
Tan Sui Hin
- direct interest
35
36
annual report 2013
DIRECTORS’
REPORT
cont’d
DIRECTORS cont’d
The beneficial interests of those who were Directors at the end of the financial year in the Warrants of the Company
are as follows:Number of Warrants
As at
As at
1.3.2012
Acquired
(Sold)
28.2.2013
17,346,398
-
-
17,346,398
12,838,130
-
-
12,838,130
1,347,240
-
-
1,347,240
213,000
-
-
213,000
2,111,880
-
-
2,111,880
15,000
-
-
15,000
Sdn. Bhd.
- deemed interest through GL Management Agency
Sdn. Bhd.
Tan Ang Ang
- direct interest
To Tai Wai
- direct interest
Tan Sui Hin
- direct interest
By virtue of Dato’ Chew Ting Leng and Dato’ Goh Teoh Kean’s indirect interest in the Company, they are also deemed
to have interest in the shares of all the subsidiary companies to the extent that the Company has an interest under
Section 6A of the Companies Act 1965.
DIRECTORS’ BENEFITS
During and at the end of the financial year, no arrangements subsisted to which the Company is a party, with the
object or objects of enabling the Directors of the Company to acquire any benefits by means of the acquisition of
shares in or debentures of the Company or any other body corporate, other than those arising from the share options
granted under the Employees Share Option Scheme.
Since the end of the previous financial year, no Director has received or become entitled to receive any benefit (other
than as disclosed in Notes 35, 38 and 40 to 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 he is a member, or with a company in which he has a
substantial financial interest.
ISSUE OF SHARES AND DEBENTURES
During the current financial year, the Company had increased its issued and fully paid-up ordinary share capital from
RM90,530,045 to RM102,201,350 by:(a)
the issuance of 58,356,113 new ordinary shares of RM0.20 each resulting from the conversion of 350,136,700
units of 7-Year 7% Irredeemable Convertible Unsecured Loan Stocks (“ICULS”) at the rate of six RM0.10 nominal
value of ICULS into one fully paid-up ordinary shares of RM0.20 each in the Company.
(b)
the issuance of 410 new ordinary shares of RM0.20 each pursuant to the exercise of 410 units of warrants at
RM0.60 each.
annual report 2013
DIRECTORS’
REPORT
cont’d
ISSUE OF SHARES AND DEBENTURES cont’d
All the new ordinary shares issued during the financial year ranked pari passu in all respects with the existing ordinary
shares of the Company.
There were no debentures issued during the financial year.
TREASURY SHARES
The shareholders of the Company, through the Annual General Meeting held on 21 August 2008, approved the
Company’s plan to repurchase up to 10% of the issued and paid-up share capital of the Company (“Share Buy Back”).
The authority granted by the shareholders was subsequently renewed in every Annual General Meeting held and it was
last renewed in the Annual General Meeting held on 29 August 2012. The Directors of the Company are committed to
enhancing the value of the Company to its shareholders and believe that the purchase plan can be applied in the best
interest of the Company and its shareholders.
During the financial year ended 28 February 2013, the Company repurchased 30,000 ordinary shares of RM0.20 each
of its issued share capital from the open market. The average price paid for the shares repurchased was RM0.65 per
share. The repurchased transactions were financed by internally generated funds. These shares repurchased were held
as treasury shares and treated in accordance with the requirements of Section 67A of the Companies Act 1965.
The Company has the right to cancel, resell these shares and/or distributes as dividends at a later date. As treasury
shares, the rights attached to voting, dividends and participation in other distribution is suspended. None of the
treasury shares repurchased had been sold as at the reporting date.
As at financial year end, the number of ordinary shares issued and fully paid-up after deducting treasury shares against
equity is 507,704,449 ordinary shares of RM0.20 each.
PANTECH GROUP HOLDINGS BERHAD EMPLOYEES SHARE OPTION SCHEME
At an Extraordinary General Meeting held on 10 February 2010, the shareholders approved the Employees Share
Option Scheme (“ESOS”) for the granting of non-transferable options that are settled by physical delivery of
the ordinary shares of the Company, to eligible Directors (including Non-Executive Directors) of the Company and
authorised the Board of Directors to allocate the share options to eligible employees of the Group. The ESOS was
implemented on 3 March 2010 and is to be in force for a period of 5 years from the date of its implementation.
The salient features, other terms of the ESOS and details of the share options granted are disclosed in Note 39 to the
Financial Statements.
The Company has been granted exemption by the Companies Commission of Malaysia from having to disclose in
this report the names of the persons to whom options have been granted and details of their shareholdings pursuant
to Section 169 (11) of the Companies Act 1965 except for information on employees who were granted options
representing 540,000 and above ordinary shares of RM0.20 each.
37
38
annual report 2013
DIRECTORS’
REPORT
cont’d
PANTECH GROUP HOLDINGS BERHAD EMPLOYEES SHARE OPTION SCHEME cont’d
The following are names of employees who have been granted options to subscribe for 540,000 or more ordinary
shares of RM0.20 each.
Number of ordinary shares of RM0.20 each under option
Granted on
3.3.2010
Chew Soon Jiat
Exercised
Expired
Unexercised
as at
Lapsed
28.2.2013
650,000
-
-
-
650,000
Kong Chiong Lee
1,500,000
-
-
-
1,500,000
Lee Liang Mong
1,350,000
-
-
-
1,350,000
960,000
-
-
-
960,000
2,000,000
-
-
-
2,000,000
Lim Shen Lee
Lim Soon Beng
Ng Lee Lee
2,000,000
-
-
-
2,000,000
Shum Bi Shian
2,000,000
-
-
-
2,000,000
800,000
-
-
-
800,000
Wang Woon Chin
Tea Lee Ling
1,350,000
-
-
-
1,350,000
Wong Chun Nam
1,350,000
-
-
-
1,350,000
Details of options granted to Directors are disclosed in the section on Directors’ interest in this report.
7-YEAR 7% IRREDEEMABLE CONVERTIBLE UNSECURED LOAN STOCKS (“ICULS”)
The terms of the conversion of the ICULS are disclosed in Note 25 to the Financial Statements.
As at the end of the financial year, the number of ICULS in issue is 381,704,100.
OTHER STATUTORY INFORMATION
Before the statements of financial position and statements of comprehensive income of the Group and of the Company
were made out, the Directors took reasonable steps:(a)
to ascertain that action had been taken in relation to the writing off of bad debts and the making of provision for
doubtful debts and satisfied themselves that all known bad debts had been written off and adequate provision
had been made for doubtful debts; and
(b)
to ensure that any current assets which were unlikely to be realised in the ordinary course of business including
their values as shown in the accounting records of the Group and of the Company have been written down to an
amount which they might be expected so to realise.
At the date of this report, the Directors are not aware of any circumstances:(a)
which would render the amounts written off for bad debts or the amount of provision for doubtful debts in the
financial statements of the Group and of the Company inadequate to any substantial extent; or
(b)
which would render the values attributed to current assets in the financial statements of the Group and of the
Company misleading; or
(c)
which have arisen which would render adherence to the existing method of valuation of assets or liabilities of the
Group and of the Company misleading or inappropriate; or
(d)
not otherwise dealt with in this report or the financial statements which would render any amount stated in the
financial statements misleading.
annual report 2013
DIRECTORS’
REPORT
cont’d
OTHER STATUTORY INFORMATION cont’d
At the date of this report, there does not exist:(a)
any charge on the assets of the Group and of the Company which has arisen since the end of the financial year
which secures the liability of any other person; or
(b)
any contingent liability of the Group and of the Company which has arisen since the end of the financial year.
In the opinion of the Directors:(a)
no contingent liability or other liability has become enforceable or is likely to become enforceable within the
period of twelve months after the end of the financial year which will or may affect the ability of the Group and of
the Company to meet its obligations as and when they fall due;
(b)
the results of operations of the Group and of the Company during the financial year were not substantially
affected by any item, transaction or event of a material and unusual nature; and
(c)
there has not arisen in the interval between the end of the financial year and the date of this report any item,
transaction or event of a material and unusual nature likely to affect substantially the results of operations of the
Group and of the Company for the current financial year in which this report is made.
SIGNIFICANT EVENT DURING THE FINANCIAL YEAR
The significant event during the financial year is disclosed in Note 45 to the Financial Statements.
SIGNIFICANT EVENT AFTER THE REPORTING DATE
The significant event after the reporting date is disclosed in Note 46 to the Financial Statements.
AUDITORS
The Auditors, Messrs SJ Grant Thornton have expressed their willingness to continue in office.
Signed on behalf of the Board of Directors in accordance with a resolution of the Board of Directors.
Johor Bahru
24 June 2013
)
)
)
)
)
)
)
)
)
)
)
DIRECTORS
39
40
annual report 2013
STATEMENT BY
DIRECTORS
In the opinion of the Directors, the financial statements set out on pages 43 to 132 are drawn up in accordance with
Malaysian Financial Reporting Standards, International Financial Reporting Standards and the Companies Act 1965 in
Malaysia so as to give a true and fair view of the financial position of the Group and of the Company as at 28 February
2013 and of their financial performance and cash flows for the financial year then ended.
In the opinion of the Directors, the information set out on Note 52 on page 133 to the financial statements has been
compiled with the Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the
Context of Disclosures pursuant to Bursa Malaysia Securities Berhad Listing Requirements, issued by the Malaysian
Institute of Accountants, and presented based on the format prescribed by Bursa Malaysia Securities Berhad.
Signed on behalf of the Board of Directors in accordance with a resolution of the Board of Directors.
Johor Bahru
24 June 2013
STATUTORY
DECLARATION
I, Wang Woon Chin, being the Officer primarily responsible for the financial management of Pantech Group Holdings
Berhad, do solemnly and sincerely declare that to the best of my knowledge and belief, the financial statements set
out on pages 43 to 132 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 by
the abovenamed at Johor Bahru in the
State of Johor this day of
24 June 2013
)
)
)
)
WANG WOON CHIN
Before me:
MOHDZAR BIN KHALID
P.L.P., P.L.S.,
No. J204
Commissioner for Oaths
annual report 2013
INDEPENDENT
AUDITORS’ REPORT
To the Members of Pantech Group Holdings Berhad
(Incorporated in Malaysia)
Company No: 733607W
REPORT ON THE FINANCIAL STATEMENTS
We have audited the financial statements of Pantech Group Holdings Berhad, which comprise statements of
financial position as at 28 February 2013 of the Group and of the Company, and income statements, statements
of comprehensive income, statements of changes in equity and statements of cash flows of the Group and of the
Company for the financial year then ended, and a summary of significant accounting policies and other explanatory
information, as set out on pages 43 to 132.
Directors’ Responsibility for the Financial Statements
The Directors of the Company are responsible for the preparation of financial statements so as to give a true and fair
view in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and
the requirements of the Companies Act 1965 in Malaysia. The Directors are also responsible for such internal control
as the Directors determine is necessary to enable the preparation of financial statements that are free from material
misstatement, whether due to fraud or error.
Auditors’ Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit
in accordance with approved standards on auditing in Malaysia. Those standards require that we comply with ethical
requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements
are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial
statements. The procedures selected depend on our judgement, including the assessment of risks of material
misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, we consider
internal control relevant to the entity’s preparation of financial statements that give a true and fair view 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 entity’s internal control. An audit also includes evaluating the appropriateness of accounting
policies used and the reasonableness of accounting estimates made by the Directors, as well as evaluating the overall
presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit
opinion.
Opinion
In our opinion, the financial statements give a true and fair view of the financial position of the Group and of the
Company as of 28 February 2013 and of their financial performance and cash flows for the financial year then ended
in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the
requirements of the Companies Act 1965 in Malaysia.
REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS
In accordance with the requirements of the Companies Act 1965 in Malaysia, we also report the following:a)
In our opinion, the accounting and other records and the registers required by the Act to be kept by the Company
and its subsidiary companies of which we have acted as auditors have been properly kept in accordance with
the provisions of the Act.
b)
We have considered the accounts and the auditors’ reports of all the subsidiary companies of which we have not
acted as auditors, which are indicated in Note 8 to the Financial Statements.
c)
We are satisfied that the accounts of the subsidiary companies that have been consolidated with the Company’s
financial statements are in form and content appropriate and proper for the purposes of the preparation of the
financial statements of the Group and we have received satisfactory information and explanations required by us
for those purposes.
d)
The auditors’ reports on the accounts of the subsidiary companies did not contain any qualification or any
adverse comment made under Section 174 (3) of the Act.
41
42
annual report 2013
INDEPENDENT
AUDITORS’ REPORT
To the Members of Pantech Group Holdings Berhad
(Incorporated in Malaysia)
Company No: 733607W cont’d
OTHER REPORTING RESPONSIBILITIES
The supplementary information set out in Note 52 on page 133 is disclosed to meet the requirement of Bursa Malaysia
Securities Berhad and is not part of the financial statements. The Directors are responsible for the preparation of
the supplementary information in accordance with Guidance on Special Matter No. 1, Determination of Realised
and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing
Requirements, as issued by the Malaysian Institute of Accountants (“MIA Guidance”) and the directive of Bursa
Malaysia Securities Berhad. In our opinion, the supplementary information is prepared, in all material respects, in
accordance with the MIA Guidance and the directive of Bursa Malaysia Securities Berhad.
OTHER MATTERS
As stated in Note 51 to the financial statements, Pantech Group Holdings Berhad adopted Malaysian Financial
Reporting Standards on 1 March 2012 with a transition date of 1 March 2011. These standards were applied
retrospectively by Directors to the comparative information in these financial statements, including the statements of
financial position as at 29 February 2012 and 1 March 2011, and the income statements, statements of comprehensive
income, statements of changes in equity and statements of cash flows for the financial year ended 29 February 2012
and related disclosures. We were not engaged to report on the restated comparative information and it is unaudited.
Our responsibilities as part of our audit of the financial statements of the Group and of the Company for the financial
year ended 28 February 2013 have, in these circumstances, included obtaining sufficient appropriate audit evidence
that the opening balances as at 1 March 2012 do not contain misstatements that materially affect the financial position
as of 28 February 2013 and financial performance and cash flows for the financial year then ended.
This report is made solely to the members of the Company, as a body, in accordance with Section 174 of the
Companies Act 1965 in Malaysia and for no other purpose. We do not assume responsibility to any other person for
the content of this report.
SJ GRANT THORNTON
(NO. AF: 0737)
CHARTERED ACCOUNTANTS
Johor Bahru
24 June 2013
DATO’ N.K. JASANI
(NO: 708/03/14(J/PH))
CHARTERED ACCOUNTANT
annual report 2013
STATEMENTS OF
FINANCIAL POSITION
as at 28 February 2013
Group
Note
Company
Restated
Restated
28.2.2013
29.2.2012
1.3.2011
28.2.2013
29.2.2012
1.3.2011
RM
RM
RM
RM
RM
RM
ASSETS
Non-current assets
Property, plant and equipment
4
159,160,868
123,233,147
104,139,888
-
-
-
Prepaid land lease payments
5
21,023,147
21,381,403
18,678,044
-
-
-
Capital work-in-progress
6
19,525,755
11,830,366
6,748,340
-
-
-
Investment properties
7
200,000
900,000
3,160,000
-
-
-
Investment in subsidiary
companies
8
-
-
-
149,674,449
105,171,435
90,171,435
Investment in an associate
company
9
3,244,944
2,123,451
1,789,618
-
-
-
Investment in a joint venture
company
10
505,366
417,208
379,118
-
-
-
Available for sale investment
11
6,900
6,900
6,900
-
-
-
Goodwill on acquisition
12
715,603
-
-
-
-
-
Deferred tax assets
13
3,053,952
5,326,891
6,054,600
1,783,838
4,338,318
5,480,862
207,436,535
165,219,366
140,956,508
151,458,287
109,509,753
95,652,297
-
Total non-current assets
Current assets
Inventories
14
259,177,636
199,501,681
168,771,532
-
-
Trade receivables
15
100,891,211
70,057,028
58,208,300
-
-
-
Other receivables
16
14,088,093
19,242,056
7,309,306
534,000
534,000
540,628
Derivatives financial
instruments
17
-
56,670
33,020
-
-
-
Amount due from subsidiary
companies
8
-
-
-
71,349,631
61,478,910
35,043,745
Amount due from an associate
company
9
38,475,867
40,136,551
7,749,426
-
-
-
-
26,130
642,995
-
-
55,250,000
Tax recoverable
Fixed deposits with licensed
banks
18
5,887,102
22,827,763
63,244,173
3,722,000
20,220,000
Cash and bank balances
19
73,265,944
79,505,526
75,138,489
1,760,396
14,751,259
20,094,096
491,785,853
431,353,405
381,097,241
77,366,027
96,984,169
110,928,469
699,222,388
596,572,771
522,053,749
228,824,314
206,493,922
206,580,766
Total current assets
Total assets
43
44
annual report 2013
STATEMENTS OF
FINANCIAL POSITION
cont’d
Group
Note
Company
Restated
Restated
28.2.2013
29.2.2012
1.3.2011
28.2.2013
29.2.2012
1.3.2011
RM
RM
RM
RM
RM
RM
102,201,350
90,530,045
90,387,025
102,201,350
90,530,045
90,387,025
-
-
12,960
-
-
12,960
EQUITY AND LIABILITIES
EQUITY
Share capital
20
Share application money
Share premium
21
25,578,357
2,235,706
1,947,507
25,578,357
2,235,706
1,947,507
Treasury shares
22
(1,670,108)
(1,650,458)
(380,002)
(1,670,108)
(1,650,458)
(380,002)
Revaluation reserve
23
4,332,457
4,465,530
4,720,415
-
-
-
Employees share option reserve
24
8,725,724
7,659,523
5,595,312
8,725,724
7,659,523
5,595,312
49,151,154
Irredeemable Convertible
Unsecured Loan Stocks
- Equity component
25
25,490,695
48,873,277
49,151,154
25,490,695
48,873,277
Cash flow hedge reserve
26
(176,786)
-
-
(176,786)
-
-
Warrants reserve
27
7,481,903
7,481,944
7,484,104
7,481,903
7,481,944
7,484,104
(946,920)
100,669
-
-
-
-
28
205,928,928
177,456,692
158,263,184
15,720,340
12,644,615
8,556,420
376,945,600
337,152,928
317,181,659
183,351,475
167,774,652
162,754,480
Exchange translation reserve
Unappropriated profit
Equity attributable to owners of
the Company
Total equity
73,594
77,269
86,161
-
-
-
377,019,194
337,230,197
317,267,820
183,351,475
167,774,652
162,754,480
7,135,355
17,353,272
21,923,448
7,135,355
17,353,272
21,923,448
LIABILITIES
Non-current liabilities
- Liability component
25
Finance lease creditors
29
5,660,409
2,778,550
2,172,112
-
-
-
Borrowings
30
69,788,955
48,157,239
53,442,137
22,250,000
10,000,000
14,000,000
Deferred tax liabilities
31
4,252,108
3,511,535
3,462,508
-
-
-
86,836,827
71,800,596
81,000,205
29,385,355
27,353,272
35,923,448
Total non-current liabilities
Current liabilities
Trade payables
32
24,889,177
23,791,869
23,353,865
-
-
-
Other payables
33
15,919,482
10,416,750
8,765,183
619,412
1,265,274
1,117,062
Derivatives financial instruments
17
203,734
250
-
176,786
-
-
Amount due to a joint venture
company
10
351,134
234,735
357,353
-
-
-
29
2,808,549
1,347,289
1,073,837
-
-
-
Borrowings
30
178,196,997
140,486,459
84,969,119
9,076,606
4,000,000
4,002,663
Dividend payable
6,092,454
5,392,535
2,710,819
6,092,454
5,392,535
2,710,819
Tax payable
6,904,840
5,872,091
2,555,548
122,226
708,189
72,294
235,366,367
187,541,978
123,785,724
16,087,484
11,365,998
7,902,838
Total liabilities
Total current liabilities
322,203,194
259,342,574
204,785,929
45,472,839
38,719,270
43,826,286
Total equity and liabilities
699,222,388
596,572,771
522,053,749
228,824,314
206,493,922
206,580,766
The accompanying notes form an integral part of the financial statements.
annual report 2013
INCOME
STATEMENTS
for the financial year ended 28 February 2013
Group
Note
Revenue
34
Cost of sales
Gross profit
Company
2013
2012
2013
2012
RM
RM
RM
RM
635,663,077
434,603,976
40,695,068
28,015,153
(486,207,022) (337,485,997)
-
-
149,456,055
97,117,979
40,695,068
28,015,153
7,028,156
7,711,120
4,962,966
4,499,470
Selling and distribution expenses
(21,074,077)
(13,219,828)
-
-
Administration expenses
(40,811,413)
(33,802,808)
(3,932,575)
(4,781,207)
(3,088,628)
(2,233,533)
-
-
(12,269,017)
(8,888,543)
(2,768,210)
(1,538,942)
79,241,076
46,684,387
38,957,249
26,194,474
942,993
475,583
-
-
70,789
37,789
-
-
Other income
Other expenses
Finance costs
Profit from operations
Share of profit in associate company
Share of profit in joint venture company
Profit before tax
35
80,254,858
47,197,759
38,957,249
26,194,474
Tax expense
36
(24,192,245)
(12,974,399)
(8,154,399)
(6,812,650)
56,062,613
34,223,360
30,802,850
19,381,824
56,066,288
34,232,252
30,802,850
19,381,824
(3,675)
(8,892)
-
-
56,062,613
34,223,360
30,802,850
19,381,824
Profit/(Loss) attributable to:Owners of the Company
Earnings per share attributable to owners
of the Company
Earnings per 20 sen share
- Basic (sen)
37
11.73
7.60
-
-
- Diluted (sen)
37
9.19
5.91
-
-
45
46
annual report 2013
STATEMENTS OF
COMPREHENSIVE INCOME
Group
Company
2013
2012
2013
2012
RM
RM
RM
RM
56,062,613
34,223,360
30,802,850
19,381,824
(176,786)
-
(176,786)
-
(1,047,589)
100,669
-
-
133,073
139,190
-
-
-
115,695
-
-
(133,073)
(254,885)
-
-
Other comprehensive (loss)/income for the financial
year, net of tax
(1,224,375)
100,669
(176,786)
-
Total comprehensive income for the financial year
54,838,238
34,324,029
30,626,064
19,381,824
54,841,913
34,332,921
30,626,064
19,381,824
(3,675)
(8,892)
-
-
54,838,238
34,324,029
30,626,064
19,381,824
Other comprehensive (loss)/income, net of tax
Fair value loss on cash flow hedge
Foreign currency translation differences for foreign
operations
Realisation of revaluation reserve upon depreciation
of revalued assets
Realisation of revaluation reserve upon disposal of
revalued assets
Transfer of revaluation reserve to unappropriated
profit
Total comprehensive income attributable to:Owners of the Company
Total comprehensive income for the financial year
90,387,025
Balance at 1 March 2011,
restated
-
Special second interim
single tier dividend of
1.20 sen per share
Balance at 29 February
2012, restated
Total comprehensive income
for the financial year
90,530,045
-
143,020
-
First interim single tier
dividend of 1.00 sen per
share
Total transactions with
owners
-
Final single tier dividend of
1.20 sen per share
4,320
Issuance of shares pursuant
to exercise of Warrants
-
138,700
to conversion of ICULS
Acquisition of treasury
shares
-
Share option granted under
ESOS
Transactions with owners:
-
90,387,025
Effect of adopting MFRS 1
Balance at 1 March 2011
Group
RM
-
-
(12,960)
-
-
-
-
(12,960)
-
-
12,960
-
12,960
RM
Share
Share application
capital
money
2,235,706
-
288,199
-
-
-
-
10,800
277,399
-
1,947,507
-
1,947,507
RM
Share
premium
(1,650,458)
-
(1,270,456)
-
-
-
(1,270,456)
-
-
-
(380,002)
-
(380,002)
RM
4,465,530
(254,885)
-
-
-
-
-
-
-
-
4,720,415
-
4,720,415
RM
7,659,523
-
2,064,211
-
-
-
-
-
-
2,064,211
5,595,312
-
5,595,312
RM
Employees
share
Treasury Revaluation
option
shares
reserve
reserve
48,873,277
-
(277,877)
-
-
-
-
-
(277,877)
-
49,151,154
-
49,151,154
RM
Irredeemable
Convertible
Unsecured
Loan Stocks
-
-
-
-
-
-
-
-
-
-
-
-
-
RM
Cash
flow
hedge
reserve
Attributable to owners of the Company
Non-distributable
7,481,944
-
(2,160)
-
-
-
-
(2,160)
-
-
7,484,104
-
7,484,104
RM
100,669
100,669
-
-
-
-
-
-
-
-
-
(149,771)
149,771
RM
Exchange
Warrants translation
reserve
reserve
177,456,692
34,487,137
(15,293,629)
(5,392,535)
(4,493,779)
(5,397,909)
-
-
(9,406)
-
158,263,184
149,771
158,113,413
RM
Unappropriated
profit
Distributable
337,152,928
34,332,921
(14,361,652)
(5,392,535)
(4,493,779)
(5,397,909)
(1,270,456)
-
128,816
2,064,211
317,181,659
-
317,181,659
RM
77,269
(8,892)
-
-
-
-
-
-
-
-
86,161
-
86,161
RM
Noncontrolling
Total
interest
337,230,197
34,324,029
(14,361,652)
(5,392,535)
(4,493,779)
(5,397,909)
(1,270,456)
-
128,816
2,064,211
317,267,820
-
317,267,820
RM
Total
equity
annual report 2013
STATEMENTS OF
CHANGES IN EQUITY
47
-
-
1.20 sen per share
Special third interim single
tier dividend of 1.20 sen
per share
2013
Total comprehensive income
for the financial year
102,201,350
-
11,671,305
-
dividend of 1.00 sen per
share
owners
-
Final single tier dividend of
1.30 sen per share
82
to exercise of Warrants
-
11,671,223
to conversion of ICULS
shares
-
90,530,045
Share option granted under
ESOS
Transactions with owners:
Balance at 1 March 2012,
restated
Group cont’d
RM
-
2,235,706
RM
Share
premium
-
-
-
-
-
205
-
- 25,578,357
-
- 23,342,651
-
-
-
-
-
-
- 23,342,446
-
-
RM
Share
Share application
money
capital
(1,670,108)
-
(19,650)
-
-
-
-
(19,650)
-
-
-
(1,650,458)
RM
4,332,457
(133,073)
-
-
-
-
-
-
-
-
-
4,465,530
RM
8,725,724
-
1,066,201
-
-
-
-
-
-
-
1,066,201
7,659,523
RM
Employees
share
Treasury Revaluation
option
shares
reserve
reserve
25,490,695
-
(23,382,582)
-
-
-
-
-
-
(23,382,582)
-
48,873,277
RM
Irredeemable
Convertible
Unsecured
Loan Stocks
-
(41)
-
-
-
-
-
(41)
-
-
7,481,944
RM
(946,920)
(1,047,589)
-
-
-
-
-
-
-
-
-
100,669
RM
Exchange
Warrants translation
reserve
reserve
(176,786) 7,481,903
(176,786)
-
-
-
-
-
-
-
-
-
-
RM
Cash
flow
hedge
reserve
Attributable to owners of the Company
Non-distributable
205,928,928
56,199,361
(27,727,125)
(6,092,454)
(6,006,480)
(4,936,097)
(6,412,051)
-
-
(4,280,043)
-
177,456,692
RM
Unappropriated
profit
Distributable
376,945,600
54,841,913
(15,049,241)
(6,092,454)
(6,006,480)
(4,936,097)
(6,412,051)
(19,650)
246
7,351,044
1,066,201
337,152,928
RM
RM
Total
equity
54,838,238
(15,049,241)
(6,092,454)
(6,006,480)
(4,936,097)
(6,412,051)
(19,650)
246
7,351,044
1,066,201
73,594 377,019,194
(3,675)
-
-
-
-
-
-
-
-
-
77,269 337,230,197
RM
Noncontrolling
Total
interest
48
annual report 2013
STATEMENTS OF
CHANGES IN EQUITY
cont’d
annual report 2013
STATEMENTS OF
CHANGES IN EQUITY
cont’d
Non-distributable
Share
Share application
capital
money
Distributable
Share
premium
Treasury
shares
Employees
share
option
reserve
Irredeemable
Convertible
Unsecured
Loan Stocks
Cash flow
hedge
reserve
Warrants Unappropriated
reserve
profit
RM
Total
equity
RM
RM
RM
RM
RM
RM
RM
RM
RM
90,387,025
12,960
1,947,507
(380,002)
5,595,312
49,151,154
-
7,484,104
-
-
-
-
2,064,211
-
-
-
-
2,064,211
Issuance of shares
pursuant to
conversion of ICULS
138,700
-
277,399
-
-
(277,877)
-
-
(9,406)
128,816
Issuance of shares
pursuant to exercise
of Warrants
4,320
(12,960)
10,800
-
-
-
-
(2,160)
-
-
shares
-
-
-
(1,270,456)
-
-
-
-
-
(1,270,456)
Final single tier dividend
of 1.20 sen per share
-
-
-
-
-
-
-
-
(5,397,909)
(5,397,909)
dividend of 1.00 sen
per share
-
-
-
-
-
-
-
-
(4,493,779)
(4,493,779)
1.20 sen per share
-
-
-
-
-
-
-
-
(5,392,535)
(5,392,535)
143,020
(12,960)
288,199
(1,270,456)
2,064,211
(277,877)
-
(2,160)
-
-
-
-
-
-
-
-
90,530,045
-
2,235,706
(1,650,458)
7,659,523
48,873,277
-
7,481,944
Company
8,556,420 162,754,480
Transactions with
owners:
Share option granted
under ESOS
owners
Total comprehensive
income for the
financial year
2012
(15,293,629) (14,361,652)
19,381,824
19,381,824
12,644,615 167,774,652
49
50
annual report 2013
STATEMENTS OF
CHANGES IN EQUITY
cont’d
Non-distributable
Share
Share application
capital
money
Distributable
Share
premium
Treasury
shares
Employees
share
option
reserve
Irredeemable
Convertible
Unsecured
Loan Stocks
Cash flow
hedge
reserve
Warrants Unappropriated
reserve
profit
RM
Total
equity
RM
RM
RM
RM
RM
RM
RM
RM
RM
90,530,045
-
2,235,706
(1,650,458)
7,659,523
48,873,277
-
7,481,944
-
-
-
-
1,066,201
-
-
-
-
1,066,201
Issuance of shares
pursuant to
conversion of ICULS
11,671,223
-
23,342,446
-
-
(23,382,582)
-
-
(4,280,043)
7,351,044
Issuance of shares
pursuant to exercise
of Warrants
82
-
205
-
-
-
-
(41)
-
246
shares
-
-
-
(19,650)
-
-
-
-
-
(19,650)
Final single tier dividend
of 1.30 sen per share
-
-
-
-
-
-
-
-
(6,412,051)
(6,412,051)
dividend of 1.00 sen
per share
-
-
-
-
-
-
-
-
(4,936,097)
(4,936,097)
1.20 sen per share
-
-
-
-
-
-
-
-
(6,006,480)
(6,006,480)
Special third interim
1.20 sen per share
-
-
-
-
-
-
-
-
(6,092,454)
(6,092,454)
11,671,305
-
23,342,651
(19,650)
1,066,201
(23,382,582)
-
(41)
-
-
-
-
-
-
(176,786)
-
102,201,350
-
25,578,357
(1,670,108)
8,725,724
25,490,695
(176,786)
7,481,903
Company cont’d
12,644,615 167,774,652
Transactions with
owners:
Share option granted
under ESOS
owners
Total comprehensive
income for the
financial year
2013
(27,727,125) (15,049,241)
30,802,850
30,626,064
15,720,340 183,351,475
annual report 2013
STATEMENTS OF
CASH FLOWS
Group
Note
Company
2013
RM
2012
RM
2013
RM
2012
RM
80,254,858
47,197,759
38,957,249
26,194,474
2,926,233
1,736,204
358,256
10,362,807
11,139,406
157,382
(6,341)
414,503
1,066,201
(1,507,159)
(70,789)
(942,993)
(400)
1,957,963
534,501
319,881
7,664,364
7,723,293
1,259
(62,527)
2,475
2,064,211
(2,385,279)
(37,789)
(475,583)
(288)
2,768,210
1,066,201
(4,929,874)
(37,971,985)
1,538,942
2,064,211
(4,496,527)
(25,921,018)
(340,995)
(15,771)
(800,000)
(1,588,392)
(1,240,000)
(15,771)
-
-
26,948
(56,420)
-
-
(2,202,964)
24,088
749,586
(720,351)
(16,900)
(66,188)
12,686
-
Operating profit/(loss) before working capital
changes
103,329,060
60,815,989
(113,284)
(619,918)
Changes in working capital:Inventories
Receivables
Payables
Subsidiary companies
Associate company
Joint venture
(40,617,673)
(9,508,709)
2,595,241
1,836,843
116,399
(31,197,312)
(19,011,733)
1,656,759
(32,265,157)
(122,618)
(453,305)
61,106,156
-
6,628
130,422
2,348,464
-
57,751,161
(20,124,072)
60,539,567
1,865,596
(22,747,163)
(23,182,897)
(12,602,507)
574,456
(8,717,712)
(22,747,163)
(327,290)
(12,602,507)
(219,336)
11,821,101
(40,869,835)
37,465,114
(10,956,247)
OPERATING ACTIVITIES
Profit before tax
Adjustments for:Allowance for impairment of receivables
Inventories written down
Amortisation of prepaid land lease payments
Depreciation of property, plant and equipment
Interest expense
Property, plant and equipment written off
Reversal of inventories written down
Bad debts written off
Employees Share Option Scheme expenses
Interest income
Share of profit in joint venture company
Share of profit in associate company
Dividend income
Gain on disposal of property, plant and
equipment and prepaid land lease payments
Gain from cross currency swap
Gain on disposal of investment property
Fair value loss/(gain) on derivatives financial
instruments
Allowance for impairment of receivables no
longer required
Under/(Over) provision of leave entitlement
Unrealised loss/(gain) on foreign exchange
Cash flows from/(used in) operations
Dividend paid
Tax refund
Tax paid
Net cash flows from/(used in) operating
activities
51
52
annual report 2013
STATEMENTS OF
CASH FLOWS
cont’d
Group
Note
Company
2013
RM
2012
RM
2013
RM
2012
RM
84,400
1,507,159
(15,699,090)
-
142,038
2,385,279
(18,903,380)
-
32,113,393
(71,000,000)
4,929,874
(44,503,014)
21,106,143
(28,783,629)
4,496,527
(15,000,000)
400,000
1,500,000
(262,500)
(23,445,946)
-
541,106
350,000
(11,830,366)
(3,856,940)
-
-
(40,721,731)
-
-
-
(76,637,708)
(31,172,263)
(78,459,747)
(18,180,959)
FINANCING ACTIVITIES
Proceeds from issuance of share capital
Purchase of treasury shares
Interest paid
Repayment of finance lease creditors
Proceeds from short-term borrowings
Proceeds from finance lease creditors
Repayment of term loans
Drawndown of term loans
246
(19,650)
(14,110,893)
(2,062,843)
30,899,021
650,000
(14,860,891)
41,482,788
(1,270,456)
(12,149,526)
(1,316,111)
55,523,818
(12,544,218)
7,786,615
246
(19,650)
(5,535,354)
(7,750,000)
25,000,000
(1,270,456)
(5,965,175)
(4,000,000)
-
Net cash flows from/(used in) financing
activities
41,977,778
36,030,122
11,695,242
(11,235,631)
(22,838,829)
(341,414)
102,333,289
(36,011,976)
(37,397)
138,382,662
(29,299,391)
(189,472)
34,971,259
(40,372,837)
75,344,096
79,153,046
102,333,289
5,482,396
34,971,259
INVESTING ACTIVITIES
Dividend received
Advances to subsidiary companies
Interest received
Purchase of property, plant and equipment
Investment in subsidiary companies
Proceeds from disposal of property, plant and
Proceeds from disposal of investment property
Additional investment in associate company
Capital work-in-progress incurred
Purchase of prepaid land lease payments
Acquisition of subsidiary companies, net of
cash acquired
A
B
B
Net cash flows used in investing activities
CASH AND CASH EQUIVALENTS
Net change
Effect of exchange rate changes
At beginning of financial year
At end of financial year
C
NOTES TO THE STATEMENTS OF CASH FLOWS
A.
PURCHASE OF PROPERTY, PLANT AND EQUIPMENT
The Group acquired property, plant and equipment with an aggregate cost of RM21,454,672 (2012:
RM21,099,330) of which RM5,755,582 (2012: RM2,195,950) was acquired by means of finance lease. Cash
payment of RM15,699,090 (2012: RM18,903,380) was made to purchase the property, plant and equipment.
annual report 2013
STATEMENTS OF
CASH FLOWS
cont’d
B.
ACQUISITION OF SUBSIDIARY COMPANIES
During the current financial year, the Company acquired 2,000 shares of £1 each and 2 shares of RM1 each,
representing the entire paid-up share capital of Nautic Steels (Holdings) Limited and Nautic Steels Sdn. Bhd. for
a total cash consideration of £9,225,206 and RM2 respectively.
Group and Company
Nautic
Steels
(Holdings)
Limited
2013
RM
Nautic
Steels
Sdn. Bhd.
2013
RM
Total
2013
RM
Inventories
Trade and other receivables
Trade and other payables
Tax payable
9,348,881
20,788,145
16,092,433
3,781,281
(3,751,227)
(2,909,534)
2
-
9,348,881
20,788,145
16,092,433
3,781,283
(3,751,227)
(2,909,534)
Net assets acquired
Add: Deficit of net fair value over acquisition cost
43,349,979
1,153,033
2
-
43,349,981
1,153,033
Cost of investment
44,503,012
2
44,503,014
Cost of investment
Less: Non-cash consideration
44,503,012
-
2
-
44,503,014
-
Company’s cash outflow on acquisition paid
44,503,012
2
44,503,014
Purchase consideration satisfied by cash
Cash and cash equivalents of subsidiary companies
(44,503,012)
3,781,281
(2)
2
(44,503,014)
3,781,283
Net cash outflow from the Group, net of cash and cash
equivalents acquired
(40,721,731)
-
(40,721,731)
The cash outflow on acquisition is as follows:-
C.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents included in the statements of cash flows comprise the following statements of
financial position amounts:Group
Fixed deposits with licensed banks
Company
2013
2012
2013
2012
RM
RM
RM
RM
73,265,944
79,505,526
1,760,396
14,751,259
5,887,102
22,827,763
3,722,000
20,220,000
79,153,046
102,333,289
5,482,396
34,971,259
53
54
annual report 2013
NOTES TO THE
FINANCIAL STATEMENTS
28 February 2013
1.
GENERAL INFORMATION
The Company is principally engaged in investment holding and provision of management services.
The principal activities of the subsidiary companies, associate company and joint venture are disclosed in Notes
8, 9 and 10 to the Financial Statements respectively.
There have been no significant changes in the nature of these activities during the financial year.
The Company is a limited liability company, incorporated and domiciled in Malaysia, and is listed on the Main
Market of Bursa Malaysia Securities Berhad. The registered office of the Company is located at Level 15-2,
Bangunan Faber Imperial Court, Jalan Sultan Ismail, 50250 Kuala Lumpur. The principal place of business of
the Company is located at PLO 234, Jalan Tembaga Satu, Pasir Gudang Industrial Estate, 81700 Pasir Gudang,
Johor Darul Takzim.
The financial statements were authorised for issue by the Board of Directors in accordance with a resolution of
the Directors on 24 June 2013.
2.
BASIS OF PREPARATION
2.1
Statement of Compliance
The financial statements of the Group and of the Company have been prepared in accordance with
Malaysian Financial Reporting Standards (“MFRSs”), International Financial Reporting Standards (“IFRS”)
and the Companies Act 1965 in Malaysia.
2.2
Basis of Measurement
The financial statements of the Group and of the Company are prepared under the historical cost
convention, unless otherwise indicated in the summary of significant accounting policies.
2.3
Functional and Presentation Currency
The financial statements are presented in Ringgit Malaysia (“RM”) which is the Group’s and the Company’s
functional currency and all values are rounded to the nearest RM except when otherwise stated.
2.4
First-time Adoption of MFRSs
In the previous years, the financial statements of the Group and the Company were prepared in accordance
with Financial Reporting Standards (“FRSs”). These are the Group’s and the Company’s first financial
statements prepared in accordance with MFRSs and MFRS 1, First-time Adoption of Malaysian Financial
Reporting Standards has been applied.
The explanation and financial impacts on transition to MFRSs are disclosed in Note 51.
annual report 2013
NOTES TO THE
- 28 February 2013
cont’d
2.
BASIS OF PREPARATION cont’d
2.5
Standards Issued But Not Yet Effective
The Group and the Company have not applied the following MFRSs that have been issued by the Malaysian
Accounting Standards Board (“MASB”) but are not yet effective for the Group and the Company:
Amendments to MFRS effective on 1 July 2012:
MFRS 101
Presentation of Financial Statements - Presentation of Items of Other Comprehensive
Income
MFRSs effective on 1 January 2013:
MFRS
MFRS
MFRS
MFRS
MFRS
10
11
12
13
119
MFRS 127
MFRS 128
IC Interpretation 20
Consolidated Financial Statements
Joint Arrangements
Disclosure of Interests in Other Entities
Fair Value Measurement
Employee Benefits (International Accounting Standard (“IAS”) 19 as amended by
International Accounting Standards Board (“IASB”) in June 2011)
Separate Financial Statements (IAS 27 as amended by IASB in May 2011)
Investments in Associates and Joint Ventures (IAS 28 as amended by IASB in May
2011)
Stripping Costs in the Production of A Surface Mine
Amendments to MFRSs effective on 1 January 2013:
MFRS 1
First-time Adoption of Malaysian Financial Reporting Standards - Government
Loans
MFRS 7
Financial Instruments: Disclosures - Offsetting Financial Assets and Financial
Liabilities
MFRS 10, 11 and 12
Consolidated Financial Statements, Joint Arrangements and Disclosure of Interests
in Other Entities: Transition Guidance
Annual Improvements 2009 – 2011 Cycle issued in July 2012
Amendments to MFRSs effective on 1 January 2014:
MFRS 10, 12 and 127
MFRS 132
Consolidated Financial Statements, Disclosure of Interests in Other Entities and
Separate Financial Statements: Investment Entities
Financial Instruments: Presentation - Offsetting Financial Assets and Financial
Liabilities
MFRSs effective on 1 January 2015:
MFRS 7
MFRS 9
MFRS 9
Financial Instruments: Disclosures – Mandatory Date of MFRS 9 and Transition
Disclosures
Financial Instruments (IFRS 9 issued by IASB in November 2009)
Financial Instruments (IFRS 9 issued by IASB in October 2010)
IC Interpretation 20 is not applicable to the Group’s operations.
MFRS 10, 11, 12, 119, 127, 128 and IC Interpretation 20 are not applicable to the Company’s operations.
55
56
annual report 2013
NOTES TO THE
- 28 February 2013
cont’d
2.
2.5
Standards Issued But Not Yet Effective cont’d
The initial application of the above standards are not expected to have any financial impacts to the financial
statements upon the first adoption, except for:
MFRS 9 Financial Instruments
MFRS 9 addresses the classification, measurement and recognition of financial assets and financial
liabilities. It replaces the guidance in MFRS 139 Financial Instruments: Recognition and Measurement.
MFRS 9 requires financial assets to be classified into two measurement categories: fair value and amortised
cost, determined at initial recognition. The classification depends on the entity’s business model for
managing its financial instruments and the contractual cash flow characteristics of the instrument. Most of
the requirements for financial liabilities are retained, except for cases where the fair value option is taken,
the part of a fair value change due to an entity’s own risk is recorded in other comprehensive income rather
than profit or loss, unless this creates an accounting mismatch.
The adoption of MFRS 9 will result in a change in accounting policy. The Group is currently examining the
financial impact of adopting MFRS 9.
MFRS 11 Joint Arrangements
MFRS 11 supersedes the FRS 131 Interest in Joint Ventures. It aligns more closely the accounting by the
investors with their rights and obligations relating to the joint arrangement. In addition, FRS 131’s option of
using proportionate consolidation for joint ventures has been eliminated. MFRS 11 now requires the use of
the equity accounting method, which is currently used for investment in associates.
MFRS 13 Fair Value Measurement
MFRS 13 does not affect which items are required to be fair-valued, but clarifies the definition of fair value
and provides related guidance and enhance disclosures about fair value measurements. It replaces the
existing fair value guidance in different MFRSs.
The adoption of MFRS 13 will result in a change in accounting policy for the items measured at fair value in
the financial statements. The Group is currently examining the financial impact of adopting MFRS 13.
2.6
Significant Accounting Estimates and Judgements
Estimates, assumptions concerning the future and judgements are made in the preparation of the financial
statements. They affect the application of the Group’s accounting policies and reported amounts of assets,
liabilities, income and expenses, and disclosures made. They are assessed on an on-going basis and are
based on experience and relevant factors, including expectations of future events that are believed to be
reasonable under the circumstances. The actual results may differ from the judgements, estimates, and
assumptions made by management, and will seldom equal the estimated results.
2.6.1 Estimation uncertainty
Information about significant estimates and assumptions that have the most significant effect on
recognition and measurement of assets, liabilities, income and expenses are discussed below.
Impairment of inventories
The management reviews inventories to identify damaged, obsolete and slow-moving inventories
which require judgement and changes in such estimates could result in revision to valuation of
inventories.
annual report 2013
NOTES TO THE
- 28 February 2013
cont’d
2.
2.6
Significant Accounting Estimates and Judgements cont’d
2.6.1 Estimation uncertainty cont’d
Useful lives of depreciable assets
The management estimates the useful lives of the property, plant and equipment to be within 3 to
50 years and reviews the useful lives of depreciable assets at each reporting date. At 28 February
2013, the management assesses that the useful lives represent the expected utility of the assets to
the Group. The carrying amounts are analysed in Note 4 to the Financial Statements. Actual results,
however, may vary due to change in the expected level of usage and technological developments,
which resulting the adjustment to the Group’s assets.
Impairment of loans and receivables
The Group assesses at each reporting date whether there is any objective evidence that a financial
asset is impaired. Factors such as probability of insolvency or significant financial difficulties of the
receivables and default or significant delay in payments are considered in determining whether there
is objective evidence of impairment.
Where there is objective evidence of impairment, the amount and timing of future cash flows are
estimated based on historical loss experience for assets with similar credit risk characteristics.
Impairment of property, plant and equipment and prepaid land lease payments
The Group carries out impairment tests based on a variety of estimation including value-in-use of
cash-generating unit to which the property, plant and equipment and prepaid land lease payments are
allocated. Estimating the value-in-use requires the Group to make an estimate of the expected future
cash flows from cash-generating unit and also to choose a suitable discount rate in order to calculate
present value of those cash flows.
Income taxes/Deferred tax liabilities
Significant judgement is involved in determining the Group-wide provision for income taxes. There
are certain transactions and computations for which the ultimate tax determination is uncertain during
the ordinary course of business. The Group recognised tax liabilities based on estimates of whether
additional taxes will be due. Where the final tax outcome is different from the amounts that were
initially recognised, such difference will impact the income tax and deferred tax provisions in the
period in which such determination is made.
Deferred tax assets
Deferred tax assets are recognised for all deductible temporary differences, unutilised tax losses,
unabsorbed capital allowances and unused tax credits to the extent that it is probable that taxable
profit will be available against which all the deductible temporary differences, unutilised tax losses
and unabsorbed capital allowances can be utilised. Significant management judgement is required to
determine the amount of deferred tax assets that can be recognised, based upon the likely timing and
level of future taxable profits together with future tax planning strategies.
Assumptions about generation of future taxable profits depend on management’s estimates of future
cash flows. These depend on estimates of future production and sales volume, operating costs,
capital expenditure, dividends and other capital management transactions. Judgement is also required
about application of income tax legislation. These judgements and assumptions are subject to risks
and uncertainty, hence there is a possibility that changes in circumstances will alter expectations,
which may impact the amount of deferred tax assets recognised in the statements of financial position
and the amount of unrecognised tax losses and unrecognised temporary differences.
57
58
annual report 2013
NOTES TO THE
- 28 February 2013
cont’d
2.
2.6
2.6.1 Estimation uncertainty cont’d
Employees share option
The Group measures the cost of equity-settled transactions with employees by reference to the fair
value of the equity instruments at the date at which they are granted. Estimating fair value for sharebased payment transactions requires determining the most appropriate valuation model, which is
dependent on the terms and conditions of the grant. This estimate also require determining the most
appropriate inputs to the valuation model including the expected life of the share option, volatility and
dividend yield and making assumptions about them. The assumptions and model used for estimating
fair value for share-based payment transactions, sensitivity analysis and the carrying amounts are
disclosed in Note 39 to the Financial Statements.
Fair value of financial instruments
Management uses valuation techniques in measuring the fair value of financial instruments where
active market quotes are not available. Details of the assumptions used are given in the notes
regarding financial assets and liabilities. In applying the valuation techniques, management makes
maximum use of market inputs, and uses estimates and assumptions that are, as far as possible,
consistent with observable data that market participants would use in pricing the instrument. Where
applicable data is not observable, management uses its best estimate about the assumptions that
market participants would make. These estimates may vary from the actual prices that would be
achieved in an arm’s length transaction at the end of the reporting period.
Revaluation of property, plant and equipment
The Group measures its land and buildings at revalued amount with changes in fair value being
recognised in other comprehensive income. The Group engaged independent valuation specialists to
determine fair values.
The carrying amount of the land and buildings at the end of the reporting period, and the relevant
revaluation bases, are disclosed in Note 4 to the financial statements.
2.6.2 Significant management judgement
The following are significant management judgements in applying the accounting policies of the Group
that have the most significant effect on the financial statements.
Classification between investment properties and owner-occupied properties
The Group determines whether a property qualifies as an investment property, and has developed
criteria in making that judgement. Investment property is a property held to earn rentals or for capital
appreciation or both. Therefore, the Group considers whether a property generates cash flows largely
independently of the other assets held by the Group.
Some properties comprise a portion that is held to earn rentals or for capital appreciation and another
portion that is held for use in the production or supply of goods or services or for administrative
purposes. The Group accounts for the portions separately if the portions could be sold separately (or
leased out separately under a finance lease). If the portions could not be sold separately, the property
is an investment property only if an insignificant portion is held for use in the production or supply of
goods or services or for administrative purposes.
Judgement is made on an individual property basis to determine whether ancillary services are so
significant that a property does not qualify as an investment property.
annual report 2013
NOTES TO THE
- 28 February 2013
cont’d
2.
2.6
2.6.2 Significant management judgement cont’d
Deferred tax assets
The assessment of the probability of future taxable income in which deferred tax assets can be utilised
is based on the Group’s latest approved budget forecast, which is adjusted for significant non-taxable
income and expenses and specific limits to the use of any unused tax loss or credit. The tax rules in
the numerous jurisdictions in which the Group operates are also carefully taken into consideration. If
a positive forecast of taxable income indicates the probable use of a deferred tax asset, especially
when it can be utilised without a time limit, that deferred tax asset is usually recognised in full. The
recognition of deferred tax assets that are subject to certain legal or economic limits or uncertainties
is assessed individually by management based on the specific facts and circumstances.
3.
SIGNIFICANT ACCOUNTING POLICIES
The Group and the Company apply the significant accounting policies, as summarised below, consistently
throughout all periods presented in the financial statements and in preparing their opening MFRS statements of
financial position at 1 March 2011 (the transition date to MFRS framework), unless otherwise stated.
3.1
Consolidation
3.1.1 Subsidiary companies
A subsidiary company is a company in which the Company or the Group has the power to exercise
control over the financial and operating policies so as to obtain benefits from its activities. In
assessing control, potential voting rights that presently are exercisable are taken into account.
Investment in subsidiary companies is stated at cost in the Company’s statement of financial position,
unless the investment is held for sale or distribution.
Upon the disposal of investment in a subsidiary company, the difference between the net disposal
proceeds and its carrying amount is included in profit or loss.
3.1.2 Basis of consolidation
The Group’s financial statements consolidate the audited financial statements of the Company and all
of its subsidiary companies, which have been prepared in accordance with the Group’s accounting
policies. Amounts reported in the financial statements of subsidiary companies have been adjusted
where necessary to ensure consistency with the accounting policies adopted by the Group. The
financial statements of the Company and its subsidiary companies are all drawn up to the same
reporting period.
All intra-group balances, income and expenses and unrealised gains and losses resulting from intragroup transactions are eliminated in full.
Subsidiary companies are consolidated from the date on which control is transferred to the Group
and are no longer consolidated from the date that control ceases.
Changes in the Company owners’ ownership interest in a subsidiary that do not result in a loss of
control are accounted for as equity transactions. In such circumstances, the carrying amounts of the
controlling and non-controlling interests are adjusted to reflect the changes in their relative interests
in the subsidiary company. Any difference between the amount by which the non-controlling interest
is adjusted and the fair value of the consideration paid or received is recognised directly in equity and
attributed to owners of the parent.
59
60
annual report 2013
NOTES TO THE
- 28 February 2013
cont’d
3.
SIGNIFICANT ACCOUNTING POLICIES cont’d
3.1
Consolidation cont’d
3.1.3 Business combinations and goodwill
Business combinations are accounted for using the acquisition method. The cost of an acquisition is
measured as the aggregate of the consideration transferred, measured at acquisition date fair value
and the amount of any non-controlling interest in the acquiree. For each business combination, the
Group elects whether it measures the non-controlling interest in the acquiree either at fair value or
at the proportionate share of the acquiree’s identifiable net assets. Acquisition costs incurred are
expensed and included in administrative expenses.
When the Group acquires a business, it assesses the financial assets and liabilities assumed for
appropriate classification and designation in accordance with the contractual terms, economic
circumstances and pertinent conditions as at the acquisition date. This includes the separation of
embedded derivatives in host contracts by the acquiree.
If the business combination is achieved in stages, the acquisition date fair value of the acquirer’s
previously held equity interest in the acquiree is remeasured to fair value at the acquisition date
through profit or loss.
Any contingent consideration to be transferred by the acquirer will be recognised at fair value at
the acquisition date. Subsequent changes in the fair value of the contingent consideration which is
deemed to be an asset or liability will be recognised in accordance with MFRS 139 either in profit or
loss or as a change to other comprehensive income. If the contingent consideration is classified as
equity, it will not be remeasured. Subsequent settlement is accounted for within equity. In instances
where the contingent consideration does not fall within the scope of MFRS 139, it is measured in
accordance with the appropriate MFRS.
Goodwill is initially measured at cost, being the excess of the aggregate of the consideration
transferred and the amount recognised for non-controlling interest over the net identifiable assets
acquired and liabilities assumed. If this consideration is lower than the fair value of the net assets of
the subsidiary acquired, the difference is recognised in profit or loss.
After initial recognition, goodwill is measured at cost less any accumulated impairment losses. For the
purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition
date, allocated to each of the Group’s cash-generating units that are expected to benefit from the
combination, irrespective of whether other assets or liabilities of the acquiree are assigned to those
units.
Where goodwill forms part of a cash-generating unit and part of the operation within that unit is
disposed of, the goodwill associated with the operation disposed of is included in the carrying amount
of the operation when determining the gain or loss on disposal of the operation. Goodwill disposed of
in this circumstance is measured based on the relative values of the operation disposed of and the
portion of the cash-generating unit retained.
As part of its transition to MFRS framework, the Group elected not to restate those business
combinations that occurred before the date of transition to MFRS. Goodwill arising from acquisitions
before 1 March 2011 has been carried forward from the previous FRS framework as at the date of
transition.
annual report 2013
NOTES TO THE
- 28 February 2013
cont’d
3.
3.1
3.1.4 Loss of control
Upon the loss of control of a subsidiary company, the Group derecognises the assets and liabilities of
the subsidiary company, any non-controlling interests and the other components of equity related to
the subsidiary company. Any surplus or deficit arising on the loss of control is recognised in profit or
loss.
If the Group retains any interest in the previous subsidiary company, then such interest is measured
at fair value at the date that control is lost. Subsequently it is accounted for as an equity accounted
investee or as an available-for-sale financial asset depending on the level of influence retained.
3.1.5 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 profit or loss and other comprehensive income
as an allocation of the profit or loss and the comprehensive income for the year between noncontrolling interests and the owners of the Company.
Losses applicable to the non-controlling interests in a subsidiary are allocated to the non-controlling
interests even if that results in a deficit balance.
3.1.6 Associate company
An associate company is an entity in which the Group has significant influence, but no control, over
its financial and operating policies.
The Group’s investment in associate company is accounted for using the equity method. Under
the equity method, investment in an associate company is carried in the consolidated statement
of financial position at cost plus post acquisition changes in the Group’s share of net assets of the
associate company. Goodwill relating to the associate company is included in the carrying amount of
the investment and is neither amortised nor individually tested for impairment.
The share of the result of an associate company is reflected in profit or loss. This is the profit
attributable to equity holders of the associate company and therefore is the profit after tax and noncontrolling interests in the associate company. When the Group’s share of losses exceeds its interest
in an associate company, the carrying amount of that interest including any long-term investment is
reduced to zero, and the recognition of further losses is discontinued except to the extent that the
Group has an obligation or has made payments on behalf of the associate company.
Where there has been a change recognised directly in the equity of an associate company, the
Group recognises its share of any changes and discloses this, when applicable, in the consolidated
statement of changes in equity.
The financial statements of the associate company are prepared as of the same reporting period
as the Company. Where necessary, adjustments are made to bring the accounting policies of the
associate company in line with those of the Group.
After application of the equity method, the Group determines whether it is necessary to recognise an
additional impairment loss on the Group’s investment in its associate company. The Group determines
at each end of the reporting period whether there is any objective evidence that the investment in the
associate company is impaired. If this is the case, the Group calculates the amount of impairment as
the difference between the recoverable amount of the associate company and their carrying value and
recognise the amount in the “share of profit of associates” in profit or loss.
61
62
annual report 2013
NOTES TO THE
- 28 February 2013
cont’d
3.
3.1
3.1.6 Associate company cont’d
Upon loss of significant influence over an associate company, the Group measures and recognises
any retaining investment at its fair value. Any difference between the carrying amount of the associate
company upon loss of significant influence and the fair value of the retaining investment and proceeds
from disposal is recognised in profit or loss.
In the Company’s separate financial statements, investment in associate company is stated at
cost less impairment losses. On disposal of such investments, the difference between net disposal
proceeds and their carrying amounts is included in profit or loss.
3.1.7 Joint venture
The Group has an interest in a joint venture which is a jointly-controlled entity, whereby the venturers
have a contractual arrangement that establishes joint control over the economic activities of the
entity. The agreement requires unanimous agreement for financial and operating decisions among the
venturers.
The Group’s interests in jointly-controlled entities are accounted for in the Group’s financial
statements using the equity method from the date the Group obtains joint control until the date the
Group ceases to have joint control over the joint venture.
The financial statements of the joint venture are prepared as of the same reporting period as the
Company. Where necessary, adjustments are made to bring the accounting policies in line with those
of the Group.
In the Company’s statement of financial position, investment in jointly-controlled entity is stated at
cost less impairment losses. On disposal of such investment, the difference between net disposal
proceeds and their carrying amount is included in the profit or loss.
3.2
Property, Plant and Equipment
Property, plant and equipment are initially stated at cost. Land and buildings are subsequently shown at
market value, based on valuations by external valuers, less subsequent depreciation and any impairment
losses. All other property, plant and equipment are stated at historical cost less accumulated depreciation
and any impairment losses.
Revaluation is made at least once in every five years based on valuation by an independent valuer on
an open market value basis. Any revaluation increase is credited to equity as a revaluation surplus,
except to the extent that it reverses a revaluation decrease for the same asset previously recognised
as an expense, in which case, the increase is recognised in profit or loss to the extent of the decrease
previously recognised. A revaluation decrease is first offset against an increase on unutilised valuation
surplus in respect of the same asset and is thereafter recognised as an expense. Upon the disposal of
revalued assets, the attributable revaluation surplus remaining in the revaluation reserve is transferred to
unappropriated profit.
Depreciation is provided on the straight-line method in order to write off the cost of each asset over its
estimated useful life. No depreciation is provided on freehold land.
annual report 2013
NOTES TO THE
- 28 February 2013
cont’d
3.
3.2
Property, Plant and Equipment cont’d
The principal annual depreciation rates used are as follows:Factory buildings
Renovation, warehouse extension and electrical installation
Computers and software
Crane, plant and machinery
Factory equipment
Office equipments, furniture and fittings
Telecommunication system, forklift and motor vehicles
2.00% - 5.50%
10.00% - 20.00%
20.00% - 33.33%
7.00% - 15.00%
10.00% - 25.00%
10.00% - 20.00%
15.00% - 25.00%
Restoration cost relating to an item of property, plant and equipment is capitalised only if such expenditure
is expected to increase the future benefits from the existing property, plant and equipment beyond its
previously assessed standard of performance.
Property, plant and equipment are written down to recoverable amount if, in the opinion of the Directors,
it is less than their carrying value. Recoverable amount is the net selling price of the property, plant and
equipment i.e. the amount obtainable from the sale of an asset in an arm’s length transaction between
knowledgeable, willing parties, less the costs of disposal.
The residual values, useful life and depreciation method are reviewed at each financial year end to ensure
that the amount, method and period of depreciation are consistent with previous estimates and the
expected pattern of consumption of the future economic benefits embodied in the items of property, plant
and equipment.
An item of property, plant and equipment is derecognised upon disposal or when no future economic
benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset is
included in profit or loss in the financial year in which the asset is derecognised.
3.3
Investment Properties
Investment properties consist of land and buildings held for capital appreciation or rental purpose and not
occupied by the Group or only an insignificant portion is occupied for use or in the operations of the Group.
Investment properties are treated as long-term investments and are measured initially at cost, including
transaction costs. The carrying amount includes the cost of replacing part of an existing investment
property at the time that cost is incurred if the recognition criteria are met and excludes the costs of dayto-day servicing of an investment property.
Subsequent to initial recognition, investment properties are stated at fair value, which reflects market
conditions at the reporting date. Gain or losses arising from changes in the fair values of investment
properties are included in profit or loss in the financial year in which they arise.
Investment properties are derecognised when either they are disposed of or when they are permanently
withdrawn from use and no future economic benefit is expected from the disposal. Any gain or loss on
the retirement or disposal of an investment property is recognised in profit or loss in the financial year of
retirement or disposal.
3.4
Inventories
Inventories comprises raw materials, work-in-progress and finished goods are stated at the lower of cost
and net realisable value.
Inventories are determined on weighted average method.
63
64
annual report 2013
NOTES TO THE
- 28 February 2013
cont’d
3.
3.4
Inventories cont’d
Cost of raw materials refers to invoiced cost of goods purchased plus incidental handling and freight
charges.
Cost of work-in-progress and finished goods include raw materials, direct labour, other direct costs and an
appropriate proportion of manufacturing overheads.
Net realisable value represents the estimated selling price in the ordinary course of business less selling
and distribution costs and all other estimated costs to completion.
3.5
Leases
Accounting by lessees
Finance leases
Lease of property, plant and equipment acquired under hire purchase and finance lease arrangements
which transfer substantially all the risks and rewards of ownership to the Group are capitalised. The
depreciation policy on these assets is similar to that of the Group’s property, plant and equipment
depreciation policy.
Outstanding obligation due under hire purchase and finance lease arrangements after deducting finance
expenses are included as liabilities in the financial statements. Finance charges on hire purchase and
finance lease arrangements are allocated to profit or loss over the period of the respective agreements.
Operating leases
Leased payments for operating leases, where substantially all the risk and benefits remain with the lessor,
are charged as expenses in the period in which they are incurred.
Leasehold land
Leasehold land that normally has an indefinite economic life and title is not expected to pass to the Group
by the end of the lease term is treated as operating lease. The payment made on entering into or acquiring
a leasehold land is accounted for as prepaid land lease payment and is amortised over the respective lease
term ranging from 60 to 88 years (29.2.2012: 60 to 88 years and 1.3.2011: 42 to 88 years).
3.6
Foreign Currency Translation
The Group’s consolidated financial statements are presented in RM, which is also the parent company’s
functional currency.
3.6.1 Foreign currency transactions and balances
Transactions in foreign currencies are initially recorded at the functional currency rates prevailing at
the date of the transaction.
Monetary assets and liabilities denominated in foreign currencies are retranslated at the functional
currency spot rate of exchange ruling at the reporting date.
All differences are taken to the profit or loss with the exception of all monetary items that forms part
of a net investment in a foreign operation. These are recognised in other comprehensive income until
the disposal of the net investment, at which time they are reclassified to profit or loss. Tax charges
and credits attributable to exchange differences on those monetary items are also recorded in other
comprehensive income.
annual report 2013
NOTES TO THE
- 28 February 2013
cont’d
3.
3.6
Foreign Currency Translation cont’d
3.6.1 Foreign currency transactions and balances cont’d
Non-monetary items that are measured in terms of historical cost in a foreign currency are translated
using the exchange rates as at the dates of the initial transactions. Non-monetary items measured at
fair value in a foreign currency are translated using the exchange rates at the date when the fair value
is determined. The gain or loss arising in translation of non-monetary items is recognised in line with
the gain or loss of the item that gave rise to the translation difference (translation differences on items
whose gain or loss is recognised in other comprehensive income or profit or loss is also recognised in
other comprehensive income or profit or loss respectively).
3.6.2 Foreign operations
The assets and liabilities of foreign operations are translated into RM at the rate of exchange
prevailing at the reporting date and their profit or loss and other comprehensive income are translated
at average rate over the reporting period. The exchange differences arising on the translation are
recognised in other comprehensive income. On disposal of a foreign operation, the component of
other comprehensive income relating to that particular foreign operation is recognised in the profit or
loss.
Any goodwill arising on the acquisition of a foreign operation subsequent to 1 January 2011 and any
fair value adjustments to the carrying amounts of assets and liabilities arising on the acquisition are
treated as assets and liabilities of the foreign operation and translated at the closing rate.
Prior to 1 March 2011, which is the date of transition to MFRS, the Group treated goodwill and any
fair value adjustments to the carrying amounts of assets and liabilities arising on the acquisition as
assets and liabilities of the parent. Therefore, those assets and liabilities are non-monetary items
already expressed in the functional currency of the parent and no further translation differences occur.
3.7
Income Tax
Income tax on profit or loss for the year comprises current and deferred tax. Current tax expense is the
expected amount of income taxes payable in respect of the taxable profit for the financial year and is
measured using the tax rates that have been enacted or substantively enacted by the reporting date.
Deferred tax liabilities and assets are provided for under the liability method at the current tax rate in
respect of all temporary differences at the reporting date between the carrying amount of an asset or
liability in the statements of financial position and its tax base including unused tax losses and capital
allowances.
Deferred tax asset are recognised only to the extent that it is probable that taxable profit will be available
against which the deductible temporary differences can be utilised. The carrying amount of a deferred tax
asset is reviewed at each reporting date. If it is no longer probable that sufficient taxable profit will be
available to allow the benefit of part or all of that deferred tax asset to be utilised, the carrying amount of
the deferred tax asset will be reduced accordingly. When it becomes probable that sufficient taxable profit
will be available, such reductions will be reversed to the extent of the taxable profit.
Current and deferred tax are recognised in profit or loss, except when it arises from a transaction which is
recognised directly in equity, in which case the deferred tax is also charged or credited directly in equity, or
when it arises from a business combination that is an acquisition, in which case the deferred tax is included
in the resulting goodwill.
Deferred tax is measured at the tax rates that are expected to apply in the period when the asset is
realised or the liability is settled, based on tax rates that have been enacted or substantively enacted by the
reporting date.
65
66
annual report 2013
NOTES TO THE
- 28 February 2013
cont’d
3.
3.7
Income Tax cont’d
Value-added tax and goods services tax
The Group’s sale of goods may subject to value-added tax (“VAT”) or goods services tax (“GST”) in
accordance with rules applicable in the jurisdication where the Group operates.
The net amount of such taxes recoverable from, or payable to the authority is included as part of “other
receivables” or “other payables” in the statements of financial position.
Revenues, expenses and assets are recognised net of the amount of taxes except:-
3.8
(i)
where the taxes incurred on the purchase of assets or services is not recoverable from the taxation
authority, in which case the tax incurred is recognised as part of the cost of acquisition of the asset or
as part of the expense item as applicable; and
(ii)
receivables and payables stated is inclusive of the tax elements.
Impairment of Financial Assets
The Group assesses at each reporting date whether there is any objective evidence indicating that a
financial asset is impaired.
Trade and other receivables and other financial assets carried at amortised cost
The Group considers factors such as the probability of insolvency or significant financial difficulties of the
debtor and default or significant delay in payments to determine whether there is objective evidence that an
impairment loss has occurred. For certain categories of financial assets, such as trade receivables, assets
that are assessed not to be impaired individually are subsequently assessed for impairment on a collective
basis based on similar risk characteristics. Objective evidence of impairment for a portfolio of receivables
could include the Group’s past experience with industry group, increase in cases of delayed payments and
observable changes in economic conditions.
If such evidence exists, the amount of impairment loss is measured as the difference between the asset’s
carrying amount and the present value of estimated future cash flows discounted at the financial asset’s
original effective interest rate and the loss is recognised in profit or loss.
The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets
with the exception of trade and other receivables, where the carrying amount is reduced through the use of
an allowance account. When a trade and other receivable becomes uncollectible, it is written off against the
allowance account.
If in a subsequent period, the amount of the impairment loss decreases and the decrease related objectively
to an event occurring after the impairment was recognised, the previously recognised impairment loss is
reversed to the extent that the carrying amount of the asset does not exceed its amortised cost at the
reversal date. The amount of reversal is recognised in profit or loss.
Available-for-sale financial assets
Significant or prolonged decline in fair value below cost, significant financial difficulties of the issuer or
obligor, and the disappearance of an active trading market are considerations to determine whether there is
objective evidence that investment securities classified as available-for-sale financial assets are impaired.
If an available-for-sale financial asset is impaired, an amount comprising the difference between its cost (net
of any principal payment and amortisation) and its current fair value, less any impairment loss previously
recognised in profit or loss, is transferred from equity to profit or loss.
annual report 2013
NOTES TO THE
- 28 February 2013
cont’d
3.
3.8
Impairment of Financial Assets cont’d
Available-for-sale financial assets cont’d
Impairment losses on available-for-sale equity investments are not reversed in profit or loss in the
subsequent periods. Increase in fair value, if any, subsequent to impairment loss is recognised in statement
of comprehensive income. For available-for-sale debt investments, impairment losses are subsequently
reversed in profit or loss if an increase in the fair value of the investment can be objectively related to an
event occurring after the recognition of the impairment loss in profit or loss.
3.9
Impairment of Non-financial Assets
At each reporting date, the Group reviews the carrying amounts of non-financial assets to determine
whether there is any indication of impairment.
If any such indication exists, or when annual impairment testing for an asset is required, the recoverable
amount is estimated and an impairment loss is recognised whenever the recoverable amount of the asset
or a cash-generating unit is less than its carrying amount. Recoverable amount of an asset or a cashgenerating unit is the higher of its fair value less costs to sell and its value in use.
In assessing value in use, estimated future cash flows are discounted to 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. Impairment losses of continuing operations are recognised in profit or loss in those expense
categories consistent with the function of the impaired asset.
An impairment loss is recognised as an expense in profit or loss immediately, unless the asset is carried
at a revalued amount. Any impairment loss of a revalued asset is treated as a revaluation decrease to the
extent of previously recognised revaluation surplus for the same asset.
An assessment is made at each reporting date as to whether there is any indication that previously
recognised impairment losses for an asset other than goodwill may no longer exist or may have decreased.
If such indication exists, the recoverable amount is estimated. A previously recognised impairment loss
is reversed only if there has been a change in the estimates used to determine the asset’s recoverable
amount. That increased amount cannot exceed the carrying amount that would have been determined, net
of depreciation, had no impairment loss been recognised for the asset in prior years.
All reversals of impairment losses are recognised as income immediately in profit or loss unless the asset is
carried at revalued amount, in which case, the reversal in excess of impairment loss previously recognised
through profit or loss is treated as revaluation increase. After such a reversal, depreciation charge is
adjusted in future periods to allocate the revised carrying amount of the asset, less any residual value, on a
systematic basis over its remaining useful life.
3.10 Financial Assets
Financial assets are recognised in the statements of financial position when, and only when, the Group
and the Company become a party to the contractual provisions of the financial instrument and they are
derecognised when the contractual rights to the cash flows from the financial asset expire, or when the
financial asset and all substantial risks and rewards are transferred.
Financial assets are measured initially at fair value plus transactions costs, except for financial assets
carried at fair value through profit or loss, which are measured initially at fair value. Financial assets are
subsequently measured as described below.
67
68
annual report 2013
NOTES TO THE
- 28 February 2013
cont’d
3.
3.10 Financial Assets cont’d
For the purpose of subsequent measurement, financial assets other than those designated and effective as
hedging instruments are classified into the following categories upon initial recognition:a)
b)
c)
d)
Loans and receivables
Financial assets at fair value through profit or loss
Held to maturity investments
The category mentioned above determines subsequent measurement of a financial asset and whether any
resulting income and expense is recognised in profit or loss or in statement of comprehensive income. All
financial assets except for those at fair value through profit or loss are subject to review for impairment
at least once at each reporting date. Financial assets are impaired when there is any objective evidence
that a financial asset or a group of financial assets is impaired. Different criteria are applied to determine
impairment for each category of financial assets, as described in Note 3.8.
All income and expenses relating to financial assets are recognised in profit or loss.
Other than loans and receivables and available-for-sale financial assets, the Group does not have financial
assets at fair value through profit or loss and held-to-maturity investments.
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not
quoted in an active market and they are measured at amortised cost using effective interest method, less
provision for impairment subsequently. Discounting is omitted where the effect of discounting is immaterial
in subsequent measurement. Cash and cash equivalents, amount due from an associate company, trade
and most other receivables of the Group and of the Company fall into this category of financial instruments.
Loans and receivables are classified as current assets and those that mature 12 months after the reporting
date are classified as non-current.
Available-for-sale financial assets are non-derivative financial assets that are either designated to this
category or do not qualify for inclusion in any of the other categories of financial assets. The Group’s
available-for-sale financial assets include quoted equity instruments.
Available-for-sale financial assets are measured at fair value subsequent to the initial recognition. Gains
and losses are recognised in statement of comprehensive income and reported within the available-for-sale
reserve within equity, except for impairment losses and foreign exchange differences on monetary assets,
which are recognised in profit or loss. When the asset is disposed of or is determined to be impaired, the
cumulative gain or loss recognised in statement of comprehensive income is reclassified from the equity
reserve to profit or loss and presented as a reclassification adjustment within statement of comprehensive
income.
Interest calculated using the effective interest method and dividends are recognised in profit or loss.
Dividends on an available-for-sale equity are recognised in profit or loss when the Group’s right to receive
payment is established.
Investment in equity instruments whose fair value cannot be reliably measured are measured at cost less
impairment loss.
Available-for-sale financial assets are classified as non-current assets unless they are expected to be
realised within 12 months after the reporting date.
annual report 2013
NOTES TO THE
- 28 February 2013
cont’d
3.
3.11 Financial Liabilities
Financial liabilities are recognised when the Group becomes a party to the contractual provisions of the
financial instrument. Financial liability is derecognised when it is extinguished, discharged, cancelled or
expires.
Financial liabilities are measured initially at fair value plus transactions costs, except for financial liabilities
carried at fair value through profit or loss, which are measured initially at fair value. Subsequently, they are
measured at amortised cost using the effective interest method except for financial liabilities held for trading
or designated at fair value through profit or loss, that are carried subsequently at fair value with gains or
losses recognised in profit or loss.
All derivative financial instruments which are not designated and effective as hedging instruments are
accounted for at fair value through profit or loss.
The Group’s financial liabilities include Irredeemable Convertible Unsecured Loan Stocks, borrowings,
finance lease creditors, amount due to a joint venture company, trade and other payables.
3.12 Revenue Recognition
Revenue from sale of goods is recognised when the goods are delivered, net of discount and return.
Rental income is recognised when the rent is due.
Interest income is accounted for on accrual basis.
Dividend income is recognised when the Group’s right to receive payment is established.
Insurance commission received is recognised on receivable basis.
Sales and inter-company transactions between companies of the Group are excluded from revenue of the
Group.
3.13 Interest-bearing Borrowings
Interest-bearing borrowings are recorded at the amount of proceeds received, net of transaction costs
incurred. Borrowing costs are recognised as an expense in profit or loss in the period in which they are
incurred. However, borrowing costs incurred to finance the construction of property, plant and equipment
are capitalised as part of the cost of those assets during the period of time that is required to complete and
prepare the assets for its intended use.
3.14 Employee Benefits
(a)
Short term benefits
Wages, salaries, bonuses and social security contributions are recognised as an expense in the
financial year, in which the associated services are rendered by employees of the Group. Short term
accumulating compensated absences such as paid annual leave are recognised when services are
rendered by employees that increase their entitlement to future compensated absences, and short
term non-accumulating compensated absences such as sick leave are recognised when the absences
occur.
69
70
annual report 2013
NOTES TO THE
- 28 February 2013
cont’d
3.
3.14 Employee Benefits cont’d
(b)
Defined contribution plans
Defined contribution plans are post-employment benefit plans under which the Group pays fixed
contributions into separate entities or funds and will have no legal or constructive obligation to pay
further contribution if any of the funds do not hold sufficient assets to pay all employee benefits
relating to employee services in the current and preceding financial years.
Such contributions are recognised as an expense in profit or loss as incurred. As required by law,
companies in Malaysia made such contributions to the Employees Provident Fund (“EPF”). Some
of the Group’s foreign subsidiaries also made contributions to their respective countries’ statutory
pension schemes.
3.15 Share-based Payment Transactions
Share-based payment transactions of the Company
Equity-settled share-based payments to employees and others providing similar services are measured
at the fair value of the equity instruments at the grant date. Details regarding the determination of the fair
value of equity-settled share-based transactions are set out in Note 39 to the Financial Statements.
The fair value determined at the grant date of the equity-settled share-based payments is expensed on a
straight-line basis over the vesting period, based on the Group’s estimate of equity instruments that will
eventually vest, with a corresponding increase in equity. At the end of each reporting period, the Group
revises its estimate of the number of equity instruments expected to vest. The impact of the revision of
the original estimates, if any, is recognised in profit or loss such that the cumulative expense reflects the
revised estimate, with a corresponding adjustment to the equity-settled employee benefits reserve.
The policy described above is applied to all equity-settled share-based payment transactions that were
granted after 31 December 2004 and vested after 1 January 2006. No amounts have been recognised in
the consolidated financial statements in respect of other equity-settled shared-based payments.
Equity-settled share-based payment transactions with parties other than employees are measured at the
fair value of the goods or services received, except where that fair value cannot be estimated reliably, in
which case they are measured at the fair value of the equity instruments granted, measured at the date the
entity obtains the goods or the counterparty renders the service.
For cash-settled share-based payments, a liability is recognised for the goods or services acquired,
measured initially at the fair value of the liability. At the end of each reporting period until the liability is
settled, and at the date of settlement, the fair value of the liability is remeasured, with any changes in fair
value recognised in profit or loss for the year.
Share-based payment transactions of the acquiree in a business combination
When the share-based payment awards held by the employees of an acquiree (acquiree awards) are
replaced by the Group’s share-based payment awards (replacement awards), both the acquiree awards and
the replacement awards are measured in accordance with MFRS 2 Share-based Payment (“market-based
measure”) at the acquisition date. The portion of the replacement awards that is included in measuring
the consideration transferred in a business combination equals the market-based measure of the acquiree
awards multiplied by the ratio of the portion of the vesting period completed to the greater of the total
vesting period or the original vesting period of the acquiree award. The excess of the market-based
measure of the replacement awards over the market-based measure of the acquiree awards included in
measuring the consideration transferred is recognised as remuneration cost for post-combination service.
annual report 2013
NOTES TO THE
- 28 February 2013
cont’d
3.
3.15 Share-based Payment Transactions cont’d
Share-based payment transactions of the acquiree in a business combination cont’d
However, when the acquiree awards expire as a consequence of a business combination and the Group
replaces those awards when it does not have an obligation to do so, the replacement awards are measured
at their market-based measure in accordance with MFRS 2. All of the market-based measure of the
replacement awards is recognised as remuneration cost for post-combination service.
At the acquisition date, when the outstanding equity-settled share-based payment transactions held by the
employees of an acquiree are not exchanged by the Group for its share-based payment transactions, the
acquiree share-based payment transactions are measured at their market-based measure at the acquisition
date. If the share-based payment transactions have vested by the acquisition date, they are included as
part of the non-controlling interest in the acquiree. However, if the share-based payment transactions
have not vested by the acquisition date, the market-based measure of the unvested share-based payment
transactions is allocated to the non-controlling interest in the acquiree based on the ratio of the portion of
the vesting period completed to the greater of the total vesting period or the original vesting period of the
share-based payment transaction. The balance is recognised as remuneration cost for post-combination
service.
3.16 Dividends
Final dividends proposed by the Directors are not accounted for in shareholders’ equity as an appropriation
of unappropriated profit, until they have been approved by the shareholders in a general meeting. When
these dividends have been approved by the shareholders and declared, they were recognised as a liability.
Interim dividends are simultaneously proposed and declared, because the articles of association of the
Company grant the Directors the authority to declare interim dividends. Consequently, interim dividends are
recognised directly as a liability when they are proposed and declared.
3.17 Financial Guarantee Contracts
A financial guarantee contract is a contract that requires the issuer to make specified payments to
reimburse the holder for a loss it incurs because a specified debtor fails to make payment when due.
Financial guarantee contracts are recognised initially as a liability at fair value, net of transaction costs.
Subsequent to initial recognition, financial guarantee contracts are recognised as income in profit or loss
over the period of the guarantee. If the debtor fails to make payment relating to financial guarantee contract
when it is due and the Group, as the issuer, is required to reimburse the holder for the associated loss,
the liability is measured at the higher of the best estimate of the expenditure required to settle the present
obligation at the reporting date and the amount initially recognised less cumulative amortisation.
3.18 Provisions
Provisions are recognised when there is a present legal or constructive obligation that can be estimated
reliably, as a result of a past event, when it is probable that an outflow of resources embodying economic
benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the
obligation. Provisions are not recognised for future operating losses.
Any reimbursement that the Group can be virtually certain to collect from a third party with respect to the
obligation is recognised as a separate asset. However, this asset may not exceed the amount of the related
provision.
Provisions are reviewed at each reporting date and adjusted to reflect the current best estimate. If it is no
longer probable that an outflow of economic resources will be required to settle the obligation, the provision
is reversed. Where the effect of the time value of money is material, provisions are discounted using a
current pre-tax rate that reflects, where appropriate, the risks specific to the liability. When discounting is
used, the increase in the provisions due to the passage of time is recognised as a finance cost.
71
72
annual report 2013
NOTES TO THE
- 28 February 2013
cont’d
3.
3.19 Cash and Cash Equivalents
Cash and cash equivalents comprise cash on hand, bank balances, short term demand deposits and highly
liquid investments which are readily convertible to known amount of cash and which are subject to an
insignificant risk of changes in value.
For the purpose of the statements of financial position, cash and cash equivalents restricted to be used to
settle a liability of 12 months or more after the reporting date are classified as non-current asset.
3.20 Segment Reporting
In identifying its operating segments, management generally follows the Group’s internal reports regularly
reviewed by the Group’s chief operating decision makers in order to allocate resources to the respective
segments and to assess their performance.
3.21 Inter-segment Transfers
Segment revenues, expenses and result include transfers between segments. The prices charged on intersegment transactions are based on negotiation basis. These transfers are eliminated on consolidation.
3.22 Equity and Reserves
An equity instrument is any contract that evidences a residual interest in the assets of the Group and the
Company after deducting all of their liabilities. Ordinary shares are equity instruments.
Share capital represents the nominal value of shares that have been issued.
Share premium includes any premiums received on issue of share capital. Any transaction costs associated
with the issuing of shares are deducted from share premium, net of any related income tax benefits.
The revaluation reserve within equity comprises gains and losses due to the revaluation of property, plant
and equipment. Foreign currency translation differences arising on the translation of the Group’s foreign
entities are included in the exchange translation reserve. Gains and losses on certain financial instruments
are included in reserves for available-for-sale financial assets and cash-flow hedges respectively.
Retained earnings include all current and prior period retained profits.
All transactions with owners of the Company are recorded separately within equity.
3.23 Treasury Shares
When issued share of the Company are repurchased, the consideration paid, including directly attributable
costs is presented as a change in equity. Repurchased shares that have not been cancelled are classify as
treasury shares and presented as a deduction from equity. No gain or loss is recognised in the profit or loss
on the sale, reissuance or cancellation of treasury shares.
When treasury shares are distributed as share dividends, the cost of the treasury shares is applied in the
reduction of the share premium account or distributable reserves, or both.
When treasury shares are reissued by resale, the difference between the sale consideration net of directly
attributable costs and the carrying amount of the treasury shares is shown as a movement in equity.
annual report 2013
NOTES TO THE
- 28 February 2013
cont’d
3.
3.24 Capital Work-in-progress
Capital work-in-progress consists of building and plant and machinery under construction/installation for
intended use as production facilities. The amount is stated at cost and includes capitalisation of interest
incurred on borrowings related to property, plant and equipment under construction/installation until the
property, plant and equipment are ready for their intended use.
3.25 Goodwill/Negative Goodwill
Goodwill/(Negative goodwill) represents the excess/(deficit) of the cost of acquisition of subsidiary company
acquired over the Group’s share of the fair values of their separable net assets at the date of acquisition.
The goodwill is retained in the consolidated statement of financial position and subject to annual impairment
review. The negative goodwill is credited immediately to profit or loss as it arises.
3.26 Contingent Liabilities
A contingent liability is a possible obligation that arises from past events and whose existence will
be confirmed by the occurrences or non-occurrence of one or more uncertain future events not wholly
within the control of the Group. It can also be a present obligation arising from past events that is not
recognised because it is not probable that an outflow of economic resources will be required or the amount
of obligation cannot be measure reliably.
3.27 Irredeemable Convertible Unsecured Loan Stocks (“ICULS”)
The ICULS are regarded as compound financial instruments, consisting of a liability component and an
equity component. At the date of issue, the fair value of the liability component is estimated by discounting
the future contractual cash flows at the prevailing market interest rate available to the Company. The
difference between the proceeds of issue of the ICULS and the fair value assigned to the liability
component, representing the conversion option is accounted in the shareholders’ equity.
The liability component is subsequently stated at amortised cost using the effective interest rate method
until extinguished on conversion whilst the value of the equity component is not adjusted in subsequent
periods except on exercise and conversion to ordinary shares.
Under the effective interest rate method, the interest expense on the liability component is calculated by
applying the prevailing market interest rate. The difference between this amount and the interest paid is
added to the carrying value of the ICULS.
3.28 Warrants
The free detachable warrants were issued pursuant to the ICULS of the Company. The issuance of ordinary
shares upon exercise of the warrants is treated as new subscription of ordinary shares for the consideration
equivalent to the exercise price of the warrants.
Upon exercise of warrants, the proceeds are credited to share capital and share premium. The warrants
reserve in relation to the unexercised warrants at the expiry of the warrants will be transferred to share
premium.
73
74
annual report 2013
NOTES TO THE
- 28 February 2013
cont’d
3.
3.29 Earnings Per Share
The Group presents basic and diluted earnings per share (“EPS”) data for its ordinary shares. Basic EPS
is calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by the
weighted average number of ordinary shares outstanding during the period. Diluted EPS is determined
by adjusting the profit or loss attributable to ordinary shareholders and the weighted average number
of ordinary shares outstanding for the effects of all dilutive potential ordinary shares, which comprise
convertible notes and share options granted to employees.
3.30 Related Parties
A related party is a person or entity that is related to the Group. A related party transaction is a transfer of
resources, services or obligations between the Group and its related party, regardless of whether a price is
charged.
(a)
A person or a close member of that person’s family is related to the Group if that person:
(i)
(ii)
(iii)
(b)
Has control or joint control over the Group;
Has significant influence over the Group; or
Is a member of the key management personnel of the Company, or the Group.
An entity is related to the Group if any of the following conditions applies:
(i)
(ii)
(iii)
(iv)
(v)
(vi)
The entity and the Group are members of the same group.
One entity is an associate or joint venture of the other entity.
Both entities are joint ventures of the same third party.
One entity is a joint venture of a third entity and the other entity is an associate of the third
entity.
The entity is a post-employment benefit plan for the benefits of employees of either the Group
or an entity related to the Group.
The entity is controlled or jointly-controlled by a person identified in (a) above.
3.31 Derivative Financial Instruments and Hedging Activities
Derivatives are initially recognised at fair value on the date a derivative contract is entered into and
subsequently remeasured at their fair value. The method of recognising the resulting gain or loss depends
on whether the derivatives designated as hedging instrument, and if so, the nature of the item being
hedged. The Group designates certain derivatives as follows:Derivative financial instruments
The Group holds derivative financial instruments to hedge its foreign currency exposures.
Forward foreign exchange contracts used are accounted for on an equivalent basis as the underlying
assets, liabilities or net positions. Any profit or loss arising is recognised on the same basis as those arising
from the related assets, liabilities or net position.
Exchange gains or losses on contracts are recognised when settle at which time they are included in the
measurement of the transaction hedged.
The fair value of foreign currency forward contract is determined using the forward exchange market rates
at the reporting date.
annual report 2013
NOTES TO THE
- 28 February 2013
cont’d
3.
3.31 Derivative Financial Instruments and Hedging Activities cont’d
Cash flow hedge
A cash flow hedge is a hedge of exposure to variability in cash flows that is attributable to a particular risk
associated with a recognised asset or liability or a highly probable forecast transaction and could affect
the profit or loss. In a cash flow hedge, the portion of the gain or loss on the hedging instrument that
is determined to be an effective hedge is recognised in other comprehensive income and the ineffective
portion is recognised in profit or loss.
Subsequently, the cumulative gain or loss recognised in other comprehensive income is reclassified from
equity into profit or loss in the same period or periods during which the hedge forecast cash flows affect
profit or loss. If the hedge item is a non-financial asset or liability, the associated gain or loss recognised
in other comprehensive income is removed from equity and included in the initial amount of the asset or
liability. However, loss recognised in other comprehensive income that will not be recovered in one or more
future periods is reclassified from equity into profit or loss.
Cash flow hedge accounting is discontinued prospectively when the hedging instrument expires or is
sold, terminated or exercised, the hedge is no longer highly effective, the forecast transaction is no longer
expected to occur or the hedge designation is revoked. If the hedge is for a forecast transaction, the
cumulative gain or loss on the hedging instrument remains in other comprehensive income until the forecast
transaction occurs. When the forecast transaction is no longer expected to occur, any related cumulative
gain or loss recognised in other comprehensive income on the hedging instrument is reclassified from
equity to profit or loss.
3.32 Operating Segments
An operating segment is a component of the Group that engages in business activities from which it may
earn revenues and incur expenses, including revenue and expenses that relate to transactions with any of
the Group’s other components. All operating segments’ operating results are reviewed regularly by the chief
operating decision maker to make decisions about resources to be allocated to the segment and to assess
its performance, and for which discrete financial information is available.
75
76
annual report 2013
NOTES TO THE
- 28 February 2013
cont’d
4.
PROPERTY, PLANT AND EQUIPMENT
Group
Renovation
and
electrical
installation
Machinery,
equipments,
furniture
and fittings
Forklift,
crane and
motor
vehicles
Total
RM
RM
Freehold
land
Buildings
Total
land and
buildings
RM
RM
RM
RM
RM
17,170,000
51,600,069
68,770,069
4,337,575
40,738,675
9,907,203 123,753,522
Cost/Valuation
Balance as at 1 March 2011
Additions
-
713,880
713,880
-
18,331,182
2,054,268
21,099,330
Disposals
-
(930,000)
(930,000)
(340,430)
(135,184)
(813,742)
(2,219,356)
Written off
-
-
-
(6,008)
(4,073)
-
(10,081)
Transferred from capital
work-in-progress
-
-
-
-
6,748,340
-
6,748,340
Currency translation
difference
-
-
-
242
266
488
996
17,170,000
51,383,949
68,553,949
3,991,379
65,679,206
11,148,217 149,372,751
11,148,217 111,052,751
Balance as at 29 February
2012/1 March 2012
Representing:At cost
-
30,233,949
30,233,949
3,991,379
65,679,206
17,170,000
21,150,000
38,320,000
-
-
17,170,000
51,383,949
68,553,949
3,991,379
65,679,206
310,570
9,872,470
10,183,040
-
6,303,748
74,752
16,561,540
-
237,020
237,020
274,802
18,019,994
2,922,856
21,454,672
Disposals
-
-
-
-
(97,000)
(1,478,310)
(1,575,310)
Written off
-
-
-
(275,596)
(355,312)
-
(630,908)
Transferred from capital
work-in-progress
-
13,354,588
13,354,588
-
2,500,583
-
15,855,171
(5,310)
(168,811)
(174,121)
3
(102,517)
1,496
(275,139)
17,475,260
74,679,216
92,154,476
3,990,588
91,948,702
12,669,011 200,762,777
305,260
53,529,216
53,834,476
3,990,588
91,948,702
12,669,011 162,442,777
At valuation: 2011
17,170,000
21,150,000
38,320,000
-
-
2013
17,475,260
74,679,216
92,154,476
3,990,588
91,948,702
At valuation: 2011
Additions through acquisition
of subsidiary company
Additions
difference
2013
-
38,320,000
11,148,217 149,372,751
Representing:At cost
-
38,320,000
12,669,011 200,762,777
annual report 2013
NOTES TO THE
- 28 February 2013
cont’d
4.
PROPERTY, PLANT AND EQUIPMENT cont’d
Group cont’d
Renovation
and
electrical
installation
Machinery,
equipments,
furniture
and fittings
Forklift,
crane and
motor
vehicles
Total
Freehold
land
Buildings
Total
land and
buildings
RM
RM
RM
RM
RM
RM
RM
-
97,555
97,555
2,410,789
10,848,916
6,256,374
19,613,634
Charge for the financial year
-
1,875,521
1,875,521
655,863
3,757,674
1,375,306
7,664,364
Disposals
-
(46,734)
(46,734)
(235,970)
(37,771)
(809,867)
(1,130,342)
Written off
-
-
-
(6,008)
(2,814)
-
(8,822)
difference
-
-
-
223
153
394
770
2012/1 March 2012
-
1,926,342
1,926,342
2,824,897
14,566,158
6,822,207
26,139,604
Accumulated depreciation
Additions through acquisition
of subsidiary company
-
2,472,056
2,472,056
-
4,688,422
52,181
7,212,659
-
2,185,795
2,185,795
378,927
6,108,790
1,689,295
10,362,807
Disposals
-
-
-
-
(58,278)
(1,458,027)
(1,516,305)
Written off
-
-
-
(248,914)
(224,612)
-
(473,526)
difference
-
(42,270)
(42,270)
-
(80,163)
(897)
(123,330)
2013
-
6,541,923
6,541,923
2,954,910
25,000,317
7,104,759
41,601,909
1.3.2011
17,170,000
51,502,514
68,672,514
1,926,786
29,889,759
3,650,829 104,139,888
29.2.2012
17,170,000
49,457,607
66,627,607
1,166,482
51,113,048
4,326,010 123,233,147
28.2.2013
17,475,260
68,137,293
85,612,553
1,035,678
66,948,385
5,564,252 159,160,868
Net carrying amount
On 15 January 2011, the Directors revalued the above freehold land and buildings based on professional
revaluations made by Sr. Thiruselvam Arumugam, a Registered Valuer in PPC International Sdn. Bhd., on
the market value basis. The freehold land and buildings were valued at RM17,170,000 and RM22,080,000
respectively. The valuations were incorporated in the financial statements for the financial year ended 28 February
2011.
77
78
annual report 2013
NOTES TO THE
- 28 February 2013
cont’d
4.
PROPERTY, PLANT AND EQUIPMENT cont’d
At the reporting date, had the revalued freehold land and buildings of the Group been carried under the cost
model, the net carrying amount would have been as follows:Freehold
land
Buildings
Total
RM
RM
RM
14,739,517
21,736,406
36,475,923
-
(5,151,663)
(5,151,663)
14,739,517
16,584,743
31,324,260
14,739,517
21,736,406
36,475,923
-
(4,784,788)
(4,784,788)
14,739,517
16,951,618
31,691,135
14,739,517
22,662,127
37,401,644
-
(3,797,568)
(3,797,568)
14,739,517
18,864,559
33,604,076
28 February 2013
Cost
Net carrying amount
29 February 2012
Cost
Net carrying amount
1 March 2011
Cost
Net carrying amount
The net carrying amount of property, plant and equipment of the Group which are acquired under finance lease
arrangements amounted to RM10,546,849 (29.2.2012: RM5,566,407 and 1.3.2011: RM4,908,318).
Included in the property, plant and equipment of the Group are fully depreciated property, plant and equipment
with a total cost of RM7,326,930 (29.2.2012: RM6,708,277 and 1.3.2011: RM4,405,197) but still in use.
Included in the property, plant and equipment of the Group is a motor vehicle registered under the name of a
Director of a subsidiary company, who holds in trust for the subsidiary company, with the cost of RM430,327
(29.2.2012: RM413,127 and 1.3.2011: RM394,224) and net carrying amount of RMNil (29.2.2012: RMNil and
1.3.2011: RM6,881).
Certain plant and machinery of a subsidiary company with the net carrying amount of RM218,648 (29.2.2012:
RM235,473 and 1.3.2011: RM313,110) has been pledged for the subsidiary company’s banking facilities.
The cost of property, plant and equipment of the Group includes RMNil (29.2.2012: RM117,067 and 1.3.2011:
RM40,042) of interest capitalised during the financial year.
annual report 2013
NOTES TO THE
- 28 February 2013
cont’d
5.
PREPAID LAND LEASE PAYMENTS
Group
28.2.2013
29.2.2012
1.3.2011
RM
RM
RM
Leasehold land:Cost
22,061,445
19,130,444
19,130,444
Additions
-
3,856,940
-
Disposal
-
(925,939)
-
22,061,445
22,061,445
19,130,444
680,042
452,400
236,217
358,256
319,881
216,183
-
(92,239)
-
1,038,298
680,042
452,400
Net carrying amount
21,023,147
21,381,403
18,678,044
358,256
358,256
216,183
1,433,024
1,433,024
864,732
19,231,867
19,590,123
17,597,129
21,023,147
21,381,403
18,678,044
Accumulated amortisation
Disposal
Amount to be amortised
- Not later than one year
- Later than one year but not later than five years
- Later than five years
The prepaid land lease payments are amortised over the leasehold period of 60 to 88 (29.2.2012: 60 to 88 and
1.3.2011: 42 to 88) years.
79
80
annual report 2013
NOTES TO THE
- 28 February 2013
cont’d
6.
CAPITAL WORK-IN-PROGRESS
Group
Buildings
Machinery,
equipment,
furniture
and fittings
Total
RM
RM
RM
-
6,748,340
6,748,340
10,422,238
1,408,128
11,830,366
-
(6,748,340)
(6,748,340)
Balance as at 29 February 2012
10,422,238
1,408,128
11,830,366
Addition
22,228,127
1,322,433
23,550,560
Transferred to property, plant and equipment
(13,354,588)
(2,500,583)
(15,855,171)
19,295,777
229,978
19,525,755
Addition
Transferred to property, plant and equipment
The carrying amount of capital work-in-progress of the Group includes RM104,614 (29.2.2012: RMNil and
1.3.2011: RM76,403) of interest capitalised during the financial year.
7.
INVESTMENT PROPERTIES
Freehold
land and
shophouse
building
Total
Freehold
land
Buildings
Total
land and
buildings
RM
RM
RM
RM
RM
1,400,000
860,000
2,260,000
900,000
3,160,000
Disposal
(1,400,000)
(860,000)
(2,260,000)
-
(2,260,000)
Balance as at 29 February 2012/1 March
2012
-
-
-
900,000
900,000
Disposal
-
-
-
(700,000)
(700,000)
-
-
-
200,000
200,000
Group
At fair value: -
The investment properties are valued annually at fair value, comprising market value, by an independent
professionally qualified valuer.
The market value is defined as the estimated amount for which an asset or an interest in a property should
exchange on the date of valuation between a willing buyer and a willing seller in an arm’s length transaction after
proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion.
annual report 2013
NOTES TO THE
- 28 February 2013
cont’d
8.
SUBSIDIARY COMPANIES
(a)
Investment in subsidiary companies
Company
28.2.2013
29.2.2012
1.3.2011
RM
RM
RM
105,171,435
90,171,435
82,271,444
Additional investments made
44,503,014
15,000,000
7,899,991
149,674,449
105,171,435
90,171,435
Unquoted shares - At cost:-
The particulars of the subsidiary companies are as follows:-
Name of company
1. Pantech
Corporation
Sdn. Bhd.
Place of
incorporation
Malaysia
Effective equity interest
Principal activities
28.2.2013
29.2.2012
1.3.2011
%
%
%
100
100
100
Trading, supply and stocking
of high pressure seamless and
specialised steel pipes, fittings,
flanges, valves and other related
products for use in the oil and
gas, gas reticulation, marine,
onshore and offshore heavy
engineering, power generation,
petrochemicals, palm oil refining
and other related industries.
Subsidiary companies of Pantech Corporation Sdn. Bhd.: 1.1 Jayee Holdings
Sdn. Bhd.
Malaysia
100
100
100
Investment holding, property
investment and insurance
agency.
1.2 Pantech
(Kuantan)
Sdn. Bhd.
Malaysia
100
100
100
Trading and supply of high
pressure
seamless
and
specialised steel pipes, fittings,
flanges, valves and other related
products for use in the oil and
gas, gas reticulation, marine,
onshore and offshore heavy
engineering, power generation,
petrochemicals, palm oil refining
and other related industries.
81
82
annual report 2013
NOTES TO THE
- 28 February 2013
cont’d
8.
SUBSIDIARY COMPANIES cont’d
(a)
Investment in subsidiary companies cont’d
The particulars of the subsidiary companies are as follows:- cont’d
Name of company
Place of
incorporation
28.2.2013
29.2.2012
1.3.2011
%
%
%
Malaysia
100
100
100
Manufacturing and supply of
butt-welded carbon steel fittings
such as elbows, tees, reducers,
end-caps and high frequency
induction long bends for use in
the oil and gas and other related
industries.
Singapore
100
100
100
Supplier of flow control solutions
such as valves, actuators and
controls for the oil and gas,
petrochemicals, water treatment
and other related industries and
trading of specialised steel pipes
and related products.
4. Pantech Stainless
& Alloy Industries
Sdn. Bhd.
Malaysia
100
100
100
Manufacturing and supply of
stainless steel and alloy pipes,
fittings and related products for
use in the oil and gas, marine,
onshore and offshore, heavy
engineering, petrochemical and
chemical, palm oil refinery and
oleochemical, power generation,
pharmaceutical, water and other
related industries.
5. Pantech
International
(KSA) Sdn. Bhd.
Malaysia
90
90
90
6. Nautic Steels
(Holdings)
Limited*
United
Kingdom
100
-
-
Investment holdings.
2. Pantech Steel
Industries
Sdn. Bhd.
3. Panaflo Controls
Pte. Ltd.*
Dormant.
Subsidiary company of Nautic Steels (Holdings) Limited: 6.1 Nautic Steels
Limited*
7. Nautic Steels
Sdn. Bhd.
*
United
Kingdom
100
-
-
Milling, machining and welding of
tube and pipe fittings in special
metals for the oil industry.
Malaysia
100
-
-
Dormant.
Subsidiary company not audited by SJ Grant Thornton but by other member firm of Grant Thornton International
Ltd.
annual report 2013
NOTES TO THE
- 28 February 2013
cont’d
8.
SUBSIDIARY COMPANIES cont’d
(b)
Amount due from subsidiary companies
The amount due from subsidiary companies is non-trade in-nature, bears no interest and repayable
upon demand except for loans to certain subsidiary companies amounted to RM71,000,000 (29.2.2012:
RM59,666,947 and 1.3.2011: RM30,883,318) which bear interest at rates ranging from 5.4% to 7.2%
(29.2.2012: 5.6% to 7.2% and 1.3.2011: 5.6% to 7.0%) per annum.
9.
ASSOCIATE COMPANY
(a)
Investment in an associate company
Group
28.2.2013
29.2.2012
1.3.2011
RM
RM
RM
Unquoted shares - at cost
26,217
26,217
26,217
Addition
262,500
-
-
288,717
26,217
26,217
2,374,734
1,899,151
1,865,007
- Share of post acquisition profit during the financial year
558,676
475,583
34,144
- Excess of fair value over acquisition cost
384,317
-
-
3,317,727
2,374,734
1,899,151
(361,500)
(277,500)
(135,750)
3,244,944
2,123,451
1,789,618
3,244,944
2,123,451
1,789,618
Share of post acquisition profit
- At beginning of financial year
- At end of financial year
Less: Dividend received
Represented by:Share of net assets
83
84
annual report 2013
NOTES TO THE
- 28 February 2013
cont’d
9.
ASSOCIATE COMPANY cont’d
(a)
Investment in an associate company cont’d
Summarised financial information of associate company is as follows:-
28.2.2013
RM
Group
29.2.2012
RM
1.3.2011
RM
52,537,435
63,219,200
17,632,961
2,032,185
2,302,566
379,344
Total assets
54,569,620
65,521,766
18,012,305
Current liabilities
44,316,883
55,303,462
8,819,307
2,140,376
3,292,635
3,380,107
46,457,259
58,596,097
12,199,414
153,851,993
119,598,542
69,455,447
1,396,692
1,585,278
113,812
Assets and liabilities
Current assets
Non-current assets
Total liabilities
Results
Revenue
Profit for the financial year
The particulars of the associate company are as follows:-
Name of company
Tuah Nusa Sdn. Bhd.
(b)
Place of
incorporation
28.2.2013
29.2.2012
1.3.2011
%
%
%
40
30
30
Malaysia
Trading and supply of specialised
industrial products, alloys and
ferrous materials for the oil and
gas and related industries.
Amount due from an associate company
The amount due from an associate company is trade in-nature, bears no interest and repayable upon
demand.
The currency exposure profile of the amount due from an associate company is as follows (foreign currency
balances are unhedged):-
Ringgit Malaysia
US Dollar
28.2.2013
RM
Group
29.2.2012
RM
1.3.2011
RM
29,844,475
39,048,718
7,138,134
8,631,392
-
611,292
Singapore Dollar
-
39,557
-
EURO
-
1,048,276
-
38,475,867
40,136,551
7,749,426
annual report 2013
NOTES TO THE
- 28 February 2013
cont’d
10.
JOINT VENTURE COMPANY
(a)
Investment in a joint venture company
Group
28.2.2013
29.2.2012
1.3.2011
RM
RM
RM
160,440
160,440
160,440
Unquoted shares - at cost
Share of post acquisition profit
256,768
218,678
163,186
- Share of post acquisition profit during the financial year
- At beginning of financial year
70,789
37,789
57,544
- Currency translation difference
17,369
301
(2,052)
344,926
256,768
218,678
505,366
417,208
379,118
505,366
417,208
379,118
28.2.2013
29.2.2012
1.3.2011
RM
RM
RM
904,807
794,978
771,029
-
-
-
Total assets
904,807
794,978
771,029
Current liabilities
182,811
198,925
229,387
-
-
-
182,811
198,925
229,387
1,030,045
797,416
1,033,241
101,127
53,984
82,206
- At end of financial year
Represented by:Share of net assets
Summarised financial information of joint venture company is as follows:-
Assets and liabilities
Current assets
Non-current assets
Total liabilities
Results
Revenue
Profit for the financial year
The particulars of the joint venture company are as follows:-
Name of company
JC Flow Controls
Pte. Ltd. *
*
Place of
incorporation
28.2.2013
29.2.2012
1.3.2011
%
%
%
70
70
70
Singapore
Held through Panaflo Controls Pte. Ltd.
Sales and distribution of JC
products such as Ball, Gate,
Globe and Check valves for
South East Asian markets.
85
86
annual report 2013
NOTES TO THE
- 28 February 2013
cont’d
10.
JOINT VENTURE COMPANY cont’d
(b)
Amount due to a joint venture company
The amount due to a joint venture company is trade in-nature, unsecured, bears no interest and repayable
upon demand.
The entire amount due to a joint venture company of the Group is denominated in Singapore Dollar.
11.
AVAILABLE FOR SALE INVESTMENT
28.2.2013
RM
Group
29.2.2012
RM
1.3.2011
RM
Quoted investment in Malaysia
6,900
6,900
6,900
Market value of quoted investment in Malaysia
9,440
6,800
6,800
28.2.2013
RM
Group
29.2.2012
RM
1.3.2011
RM
-
-
-
1,153,033
-
-
(437,430)
-
-
715,603
-
-
At cost:-
12.
GOODWILL ON ACQUISITION
At cost and at net carrying amount:
Additions through acquisition of a subsidiary company
Currency translation difference
The goodwill arose from the acquisition of a new subsidiary company on 7 March 2012.
Impairment tests for goodwill
(a)
Allocation of goodwill
For the purpose of impairment testing, goodwill is allocated to the Group’s cash generating units (“CGU”)
identified as follows:
28.2.2013
RM
Group
29.2.2012
RM
1.3.2011
RM
715,603
-
-
715,603
-
-
Subsidiary company
Nautic Steels (Holdings) Limited
The recoverable amount of the above is based on its value in use and the recoverable amount is higher
than the carrying amount of the above goodwill allocated. Thus, there is no impairment loss recognised for
the financial year ended 28 February 2013.
annual report 2013
NOTES TO THE
- 28 February 2013
cont’d
12.
GOODWILL ON ACQUISITION cont’d
Impairment tests for goodwill cont’d
(b)
Key assumptions used in value-in-use calculations
The recoverable amount of a CGU is determined based on value-in-use calculations using cash flow
projections based on financial budgets approved by management covering a period of not more than
two years. Key assumptions and management’s approach to determine the values assigned to each key
assumption are as follows:(i)
Budgeted gross margin
The basis used to determine the value assigned to the budgeted gross margin is the average gross
margins achieved in the year immediately before the budgeted year and revised for expected demand
of their products.
(ii)
Growth rate
The average growth rates used are based on management’s estimate of average growth rate based
on the past and current trends of the industry.
(iii)
Discount rate
The discount rate used is pre-tax and reflect specific risks relating to the relevant business operations.
The Directors believe that any reasonably possible changes in the above key assumptions applied are
not likely to materially cause the recoverable amount to be lower than its carrying amount except for the
changes in prevailing operating environment which is not ascertainable.
13.
DEFERRED TAX ASSETS
Group
At beginning of financial
year
Arising from issuance of
ICULS
Transferred to profit or loss
Company
28.2.2013
29.2.2012
1.3.2011
28.2.2013
29.2.2012
1.3.2011
RM
RM
RM
RM
RM
RM
(5,326,891)
(6,054,600)
(2,719,000)
(4,338,318)
(5,480,862)
-
-
-
(5,792,373)
-
-
(5,792,373)
2,272,939
727,709
2,456,773
2,554,480
1,142,544
311,511
(3,053,952)
(5,326,891)
(6,054,600)
(1,783,838)
(4,338,318)
(5,480,862)
87
88
annual report 2013
NOTES TO THE
- 28 February 2013
cont’d
13.
DEFERRED TAX ASSETS cont’d
The balance in the deferred tax assets is made up of temporary differences arising from:Group
Company
28.2.2013
29.2.2012
1.3.2011
28.2.2013
29.2.2012
1.3.2011
RM
RM
RM
RM
RM
RM
223,845
215,837
210,347
-
-
-
Issuance of ICULS
(1,783,838)
(4,338,318)
(5,480,862)
(1,783,838)
(4,338,318)
(5,480,862)
(1,026,781)
(641,735)
(510,597)
-
-
-
(467,178)
(562,675)
(273,488)
-
-
-
(3,053,952)
(5,326,891)
(6,054,600)
(1,783,838)
(4,338,318)
(5,480,862)
Carrying amount of
qualifying property, plant
and equipment in excess
of their tax base
Allowance for impairment
of receivables
The following temporary differences have not been recognised in the financial statements:Group
28.2.2013
29.2.2012
1.3.2011
RM
RM
RM
30,576,868
16,756,000
9,022,000
(75,778)
-
-
Unabsorbed business losses
(8,843,000)
(7,510,000)
(1,823,000)
Unutilised capital allowances
(37,340,000)
(22,758,000)
(9,386,000)
(24,088)
-
-
(15,705,998)
(13,512,000)
(2,187,000)
Carrying amount of qualifying property, plant and equipment
in excess of their tax base
Provision for leave entitlement
The unabsorbed business losses and unutilised capital allowances are available for offset against future taxable
profits of the subsidiary companies in which those items arose. Deferred tax assets have not been recognised
in respect of these items as they may not be used to offset taxable profits of other subsidiary companies in the
Group and they have arisen in subsidiary companies that have a recent history of losses.
annual report 2013
NOTES TO THE
- 28 February 2013
cont’d
14.
INVENTORIES
Group
28.2.2013
29.2.2012
1.3.2011
RM
RM
RM
58,302,527
20,357,567
17,182,930
-
-
232,915
At carrying amount:Raw materials
Goods in transit
23,076,316
17,551,431
9,086,792
Finished goods
Work-in-progress
177,798,793
161,592,683
142,268,895
Total inventories
259,177,636
199,501,681
168,771,532
A total of RM434,482,656 (29.2.2012: RM302,894,145 and 1.3.2011: RM240,292,627) of inventories was included
in income statements as expense. This includes an amount of RM1,736,204 (29.2.2012: RM534,501 and
1.3.2011: RM184,092) resulting from write down of inventories during the financial year.
The reversal of written down of inventories was made when the related inventories were sold above their carrying
amounts and increased in net realisable value because of changed economic circumstances.
15.
TRADE RECEIVABLES
Group
Trade receivables
Less: Allowance for impairment of trade receivables
28.2.2013
29.2.2012
1.3.2011
RM
RM
RM
104,166,678
72,419,928
59,333,588
(3,275,467)
(2,362,900)
(1,125,288)
100,891,211
70,057,028
58,208,300
28.2.2013
29.2.2012
1.3.2011
RM
RM
RM
(2,362,900)
(1,125,288)
(2,998,958)
Movement in allowance for impairment of trade receivables: Group
Addition through acquisition of subsidiary company
Reversal of impairment
Bad debts written off against allowance for impairment
(189,298)
-
-
(2,926,233)
(1,957,963)
(900,832)
1,827,628
720,351
1,120,363
375,336
-
1,654,139
(3,275,467)
(2,362,900)
(1,125,288)
89
90
annual report 2013
NOTES TO THE
- 28 February 2013
cont’d
15.
TRADE RECEIVABLES cont’d
The currency exposure profile of the trade receivables is as follows (foreign currency balances are unhedged):Group
28.2.2013
29.2.2012
1.3.2011
RM
RM
RM
Ringgit Malaysia
70,119,741
56,996,767
48,272,860
US Dollar
18,269,027
12,339,337
7,014,539
Singapore Dollar
7,615,572
3,050,159
4,046,189
Great Britain Pound Sterling
8,011,535
33,665
-
150,803
-
-
104,166,678
72,419,928
59,333,588
EURO
Trade receivables comprise amounts receivable from sales of goods. The credit terms granted on sales of goods
ranged from 30 days to 90 days (29.2.2012 and 1.3.2011: 30 days to 90 days). Allowance has been made for
estimated irrecoverable of trade receivables based on the default experience of the Group.
16.
OTHER RECEIVABLES
Group
Company
28.2.2013
29.2.2012
1.3.2011
28.2.2013
29.2.2012
1.3.2011
RM
RM
RM
RM
RM
RM
Non-trade receivables
1,133,307
6,319,461
635,943
-
-
6,628
Advance payment to
suppliers
6,245,700
6,886,863
3,929,297
-
-
-
Deposit for purchase
of property, plant and
equipment
3,344,939
3,612,635
824,140
-
-
-
Deposits
1,314,688
1,242,075
1,170,657
534,000
534,000
534,000
Retention sum
Prepayment of expenses
66,000
66,000
-
-
-
-
1,983,459
1,115,022
749,269
-
-
-
14,088,093
19,242,056
7,309,306
534,000
534,000
540,628
The currency exposure profile of the other receivables is as follows (foreign currency balances are unhedged):Group
Company
28.2.2013
29.2.2012
1.3.2011
28.2.2013
29.2.2012
1.3.2011
RM
RM
RM
RM
RM
RM
Ringgit Malaysia
5,759,536
8,396,381
3,088,169
534,000
534,000
540,628
US Dollar
6,161,203
9,766,895
3,646,938
-
-
-
Great Britain Pound
Sterling
1,111,436
-
64,086
-
-
-
EURO
687,557
51,560
278,328
-
-
-
Singapore Dollar
368,361
1,027,220
231,785
-
-
-
14,088,093
19,242,056
7,309,306
534,000
534,000
540,628
annual report 2013
NOTES TO THE
- 28 February 2013
cont’d
17.
DERIVATIVES FINANCIAL INSTRUMENTS
Contract/
Notional
amount
Assets
Liabilities
Net
RM
RM
RM
RM
-
-
-
-
1,855,350
1,855,350
1,798,680
56,670
4,348,900
4,348,900
4,315,880
33,020
11,060,358
10,883,572
11,060,358
(176,786)
6,980,225
6,953,277
6,980,225
(26,948)
18,040,583
17,836,849
18,040,583
(203,734)
300,050
299,800
300,050
(250)
-
-
-
-
11,060,358
10,883,572
11,060,358
(176,786)
Group
Current assets
28.2.2013
Non-hedging derivatives:Forward currency contracts
29.2.2012
1.3.2011
Current liabilities
28.2.2013
Hedging derivatives:Cash flow hedges
- Cross currency swap
29.2.2012
1.3.2011
Company
Current liabilities
28.2.2013
Hedging derivatives:Cash flow hedges
91
92
annual report 2013
NOTES TO THE
- 28 February 2013
cont’d
17.
DERIVATIVES FINANCIAL INSTRUMENTS cont’d
Hedging activities – Cash flow hedges
Cross currency swap
As at 28 February 2013, the Group and the Company held cross currency swap contract designated as hedges
of cash flow currency risk for the acquisition of new foreign subsidiary company.
The terms of the cross currency swap contract have been negotiated to match the terms of the borrowing used
to finance the acquisition.
The cash flow hedges of the borrowing were assessed to be highly effective and a net unrealised loss of
RM176,786 relating to the hedging instruments is included in other comprehensive income.
Non-hedging activities
The Group uses forward currency contracts to manage some of the transaction exposure. Trading derivatives are
classified as a current assets or liability. The full fair value of a derivative is classified as a non-current asset or
liability if the remaining maturity of the hedged item is more than 12 months and, as a current asset or liability, if
the maturity of the hedged item is less than 12 months.
These contacts are not designated as cash flow or fair value hedges and are entered into for periods consistent
with currency transaction exposure and fair value changes exposure. Such derivatives do not qualify for hedge
accounting.
18.
FIXED DEPOSITS WITH LICENSED BANKS
Group
Current
Company
28.2.2013
29.2.2012
1.3.2011
28.2.2013
29.2.2012
1.3.2011
RM
RM
RM
RM
RM
RM
5,887,102
22,827,763
63,244,173
3,722,000
20,220,000
55,250,000
The fixed deposits with licensed banks of the Group and of the Company are on fixed rate basis and will mature
within 1 month to 6 months (29.2.2012 and 1.3.2011: 1 month to 6 months) period.
The effective interest rates on fixed deposits with licensed banks ranged from 1.75% to 3.17% (29.2.2012: 1.75%
to 3.17% and 1.3.2011: 1.65% to 3.00%) per annum.
All fixed deposits with licensed banks are denominated in Ringgit Malaysia.
annual report 2013
NOTES TO THE
- 28 February 2013
cont’d
19.
CASH AND BANK BALANCES
The currency exposure profile of the cash and bank balances is as follows (foreign currency balances are
unhedged):Group
Ringgit Malaysia
20.
Company
28.2.2013
29.2.2012
1.3.2011
28.2.2013
29.2.2012
1.3.2011
RM
RM
RM
RM
RM
RM
57,167,965
64,596,648
61,519,199
933,114
14,751,259
20,094,096
US Dollar
7,515,898
10,008,690
11,527,868
-
-
-
EURO
2,325,015
24,992
2,537
-
-
-
Singapore Dollar
1,730,904
4,875,196
2,088,885
-
-
-
Great Britain Pound
Sterling
4,526,162
-
-
827,282
-
-
73,265,944
79,505,526
75,138,489
1,760,396
14,751,259
20,094,096
28.2.2013
28.2.2013
29.2.2012
29.2.2012
1.3.2011
1.3.2011
Unit
RM
Unit
RM
Unit
RM
500,000,000 2,500,000,000
500,000,000
SHARE CAPITAL
Group and Company
Authorised:Ordinary shares of RM0.20
each
2,500,000,000
500,000,000 2,500,000,000
Issued and fully paid-up:Ordinary shares of RM0.20
each
At beginning of financial
year
452,650,226
90,530,045
451,935,127
90,387,025
375,000,000
75,000,000
-
-
-
-
74,841,027
14,968,205
- Pursuant to conversion
of ICULS
58,356,113
11,671,223
693,499
138,700
2,068,100
413,620
- Pursuant to exercise of
ESOS
-
-
-
-
26,000
5,200
- Pursuant to exercise of
Warrants
410
82
21,600
4,320
-
-
511,006,749
102,201,350
452,650,226
90,530,045
451,935,127
90,387,025
Issued during the financial
year
- Bonus issue
New ordinary shares issued during the financial year ranked pari passu in all respect with the existing ordinary
shares of the Company.
93
94
annual report 2013
NOTES TO THE
- 28 February 2013
cont’d
21.
SHARE PREMIUM
Group and Company
28.2.2013
29.2.2012
1.3.2011
RM
RM
RM
2,235,706
1,947,507
16,067,022
-
-
(14,968,205)
23,342,446
277,399
827,240
Bonus issue during the financial year
Pursuant to conversion of ICULS
Pursuant to exercise of ESOS
-
-
17,160
205
10,800
-
-
-
4,290
25,578,357
2,235,706
1,947,507
Pursuant to exercise of Warrants
Transferred from Employees Share Option Reserve
22.
TREASURY SHARES
The shareholders of the Company, through the Annual General Meeting held on 21 August 2008, approved
the Company’s plan to repurchase up to 10% of the issued and paid-up share capital of the Company (“Share
Buy Back”). The authority granted by the shareholders was subsequently renewed in every Annual General
Meeting held and it was last renewed in the Annual General Meeting held on 29 August 2012. The Directors of
the Company are committed to enhancing the value of the Company to its shareholders and believe that the
purchase plan can be applied in the best interest of the Company and its shareholders.
The Company repurchased 30,000 (29.2.2012: 2,451,500 and 1.3.2011: Nil) ordinary shares of RM0.20 each of
its issued share capital from the open market. The average price paid for the shares repurchased was RM0.65
(29.2.2012: RM0.52 and 1.3.2011: RMNil) per share. The repurchased transactions were financed by internally
generated funds. These shares repurchased were held as treasury shares and treated in accordance with the
requirements of Section 67A of the Companies Act 1965.
The shares purchased were retained as treasury shares. The Company has the right to re-issue these shares at
a later date. As treasury shares, the rights attached as to voting, dividends and participation in other distribution
are suspended.
As at the financial year end, the Group held 3,302,300 (29.2.2012: 3,272,300 and 1.3.2011: 820,800) of the
Company’s shares and the number of outstanding shares in issue after setting treasury shares off against equity
are 507,704,449 (29.2.2012: 449,377,926 and 1.3.2011: 451,114,327).
No treasury shares were sold during the current and previous financial year.
23.
REVALUATION RESERVE
Group
The revaluation reserve arose from the revaluation of lands and buildings and is not available for distribution as
dividends.
annual report 2013
NOTES TO THE
- 28 February 2013
cont’d
24.
EMPLOYEES SHARE OPTION RESERVE
Group and Company
Employees share option reserve represents the equity-settled share option granted to employees. The reserve
is made up of the cumulative value of services received from employees recorded over the vesting period
commencing from the grant date of equity-settled share option, and is reduced by the expiry or exercise of the
share option.
The employees share option reserve is not available for distribution as dividends.
25.
IRREDEEMABLE CONVERTIBLE UNSECURED LOAN STOCKS (“ICULS”)
Group and Company
28.2.2013
29.2.2012
1.3.2011
RM
RM
RM
48,873,277
49,151,154
-
-
-
49,979,816
(23,382,582)
(277,877)
(828,662)
25,490,695
48,873,277
49,151,154
17,353,272
21,923,448
-
-
-
23,169,493
Converted to ordinary shares during the financial year
(7,351,044)
(128,816)
(384,149)
Coupon interest paid/accrued
(3,718,820)
(5,131,764)
(973,942)
851,947
690,404
112,046
7,135,355
17,353,272
21,923,448
32,626,050
66,226,549
71,074,602
Equity component
Arising from rights issue with warrants during the financial year
Converted to ordinary shares during the financial year
Liability component
Arising from rights issue with warrants during the financial year
Interest expense
Total
On 22 December 2010, the Company issued and allotted the renounceable rights issue of RM74,841,040 nominal
value of 7-Year 7% ICULS at 100% of its nominal value on the basis of two RM0.10 nominal value of ICULS for
every one existing ordinary share of RM0.20 each held in the Company together with 74,841,040 free detachable
warrants on the basis of one warrant for every ten ICULS subscribed for.
The ICULS were listed on the Bursa Malaysia Securities Berhad on 27 December 2010.
The ICULS represent the unconverted portion of the original RM74,841,040 nominal value of 7-Year 7% ICULS
issued and allotted at 100% of the nominal value, net of deferred tax and the amount allocated to warrants
reserve.
95
96
annual report 2013
NOTES TO THE
- 28 February 2013
cont’d
25.
IRREDEEMABLE CONVERTIBLE UNSECURED LOAN STOCKS (“ICULS”) cont’d
The salient features of the ICULS are as follows:(a)
The ICULS are convertible into fully paid-up ordinary shares of RM0.20 each at any time during the tenure
of the ICULS from the date of issue of the ICULS up to and including the maturity date on 21 December
2017, at the rate of six RM0.10 nominal value of ICULS for one fully paid-up ordinary shares of RM0.20
each in the Company.
(b)
The ICULS have a tenure period of seven years from the date of issue and will not be redeemable in cash.
All outstanding ICULS will be mandatorily converted by the Company into new ordinary shares at the
conversion price of RM0.60 each on the maturity date.
(c)
The interest on the ICULS is at the rate of 7% per annum on the nominal value of the ICULS and is payable
twice per annum.
(d)
Upon conversion of the ICULS into new ordinary shares, such shares would rank pari passu in all respects
with the existing ordinary shares of the Company in issue at the date of allotment of the new ordinary
shares except that the newly converted ordinary shares shall not be entitled to any rights, allotments of
dividends and/or other distribution if the entitlement date is before the new shares allotment.
On issuance of the ICULS which contain both liability and equity component, the fair value of the liability portion
is determined using a market interest rate for an equivalent financial instrument and the Company is using 13%
per annum as the discounting factor. These amounts are carried as liability until extinguished on conversion or
maturity of the ICULS. The remaining proceeds are allocated to the ICULS which is recognised and included in
shareholders’ equity.
26.
CASH FLOW HEDGE RESERVE
The cash flow hedge reserve contains the effective portion of the gain or loss on hedging instruments in cash
flow hedges.
27.
WARRANTS RESERVE
Group and Company
Arising from rights issue of ICULS with warrants during
the financial year
Pursuant to exercise of Warrants
28.2.2013
29.2.2012
1.3.2011
RM
RM
RM
7,481,944
7,484,104
-
-
-
7,484,104
(41)
(2,160)
-
7,481,903
7,481,944
7,484,104
On 22 December 2010, the Company issued 748,410,400 ICULS at the nominal value of RM0.10, together with
74,841,040 free detachable warrants to the holders of the ICULS on the basis of one free detachable warrants for
every ten ICULS subscribed.
annual report 2013
NOTES TO THE
- 28 February 2013
cont’d
27.
WARRANTS RESERVE cont’d
The fair value of the warrants is estimated using the Vanilla American model, taking into account the terms and
conditions upon which the warrants are acquired. The fair value of the warrants measured at issuance date and
the assumptions are as follows:Valuation model
Exercise type
Tenure
5-day volume weighted average price of Pantech share at 23 December 2010
Conversion price
Volatility rate
Vanilla
American
10 years
RM0.58
RM0.60
20 %
Each warrant entitles the registered holder of warrant to subscribe for one new ordinary share in the Company
at any time on or after 22 December 2010 up to the date of expiry on 21 December 2020, at an exercise price of
RM0.60 per share or such adjusted price in accordance with the provisions in the Deed Poll. The warrants were
listed on the Bursa Malaysia Securities Berhad on 27 December 2010.
During the financial year ended 28 February 2013, 410 units of warrants were exercised and converted to
ordinary shares.
As at the reporting date, 74,819,030 warrants remained unexercised.
28.
UNAPPROPRIATED PROFIT
Prior to the year of assessment 2008, Malaysian companies adopted the full imputation system. In accordance
with the Finance Act, 2007 which was gazetted on 28 December 2007, companies shall not be entitled to deduct
tax on dividend paid, credited or distributed to its shareholders, and such dividends will be exempted from
tax in the hands of the shareholders (“single tier system”). However, there is a transitional period of six years,
expiring on 31 December 2013, to allow companies to pay franked dividends to their shareholders under limited
circumstances.
Companies also have an irrevocable option to disregard the Section 108 balance and opt to pay dividends under
the single tier system. The change in the tax legislation also provides for the Section 108 balance to be locked-in
as at 31 December 2007 in accordance with Section 39 of the Finance Act, 2007.
During the previous financial years, the Company has elected to adopt the Single Tier Income Tax System. As
such, the Company may frank the payment of dividends out of its entire unappropriated profit.
97
98
annual report 2013
NOTES TO THE
- 28 February 2013
cont’d
29.
FINANCE LEASE CREDITORS
Group
28.2.2013
29.2.2012
1.3.2011
RM
RM
RM
- within 1 year
3,242,914
1,548,523
1,243,544
- after 1 year but not later than 5 years
6,100,072
2,979,802
2,358,890
9,342,986
4,528,325
3,602,434
(874,028)
(402,486)
(356,485)
8,468,958
4,125,839
3,245,949
- within 1 year
2,808,549
1,347,289
1,073,837
- after 1 year but not later than 5 years
5,660,409
2,778,550
2,172,112
8,468,958
4,125,839
3,245,949
Minimum lease payment
Less: Interest in suspense
Total principal sum payable
The interest rates on the finance lease range from 2.38% to 4.09% (29.2.2012: 2.33% to 4.10% and 1.3.2011:
2.33% to 4.25%) per annum.
Included in the above total principal sum payable is an amount of RMNil (29.2.2012: RM9,137 and 1.3.2011:
RM64,169) denominated in Singapore Dollar.
30.
BORROWINGS
Group
Company
28.2.2013
29.2.2012
1.3.2011
28.2.2013
29.2.2012
1.3.2011
RM
RM
RM
RM
RM
RM
59,077
80,523
76,483
-
-
-
17,566,494
12,554,867
12,034,275
9,076,606
4,000,000
4,002,663
104,446,000
84,708,000
53,982,721
-
-
-
1,556,169
819,648
587,174
-
-
-
- Onshore foreign currency
loans
44,569,257
37,323,421
18,288,466
-
-
-
- Revolving credits
10,000,000
5,000,000
-
-
-
-
178,137,920
140,405,936
84,892,636
9,076,606
4,000,000
4,002,663
178,196,997
140,486,459
84,969,119
9,076,606
4,000,000
4,002,663
Current
Secured:Term loans
Unsecured:Term loans
Trade loans:- Bankers’ acceptance
- Trust receipts
Total current
annual report 2013
NOTES TO THE
- 28 February 2013
cont’d
30.
BORROWINGS cont’d
Group
Company
28.2.2013
29.2.2012
1.3.2011
28.2.2013
29.2.2012
1.3.2011
RM
RM
RM
RM
RM
RM
-
59,087
139,201
-
-
-
69,788,955
48,098,152
53,302,936
22,250,000
10,000,000
14,000,000
Total non-current
69,788,955
48,157,239
53,442,137
22,250,000
10,000,000
14,000,000
Total borrowings
247,985,952
188,643,698
138,411,256
31,326,606
14,000,000
18,002,663
Non-current
Secured:Term loans
Unsecured:Term loans
(i)
The term loans, bankers’ acceptance, trust receipts, bank overdrafts and revolving credits of the Group are
obtained by way of corporate guarantee from the Company and negative pledge on a subsidiary company’s
assets.
A term loan of a subsidiary company is obtained by way of facility agreement, specific debenture and
corporate guarantee from the Company.
The term loans of the Group and of the Company bear interest at rates ranging from 3.39% to 7.20%
(29.2.2012: 4.14% to 7.85% and 1.3.2011: 3.39% to 7.55%) per annum respectively.
All term loans of the Group and of the Company are repayable by monthly or quarterly installments.
The bankers’ acceptance bears interest at rates ranging from 3.27% to 4.18% (29.2.2012: 3.03% to 4.54%
and 1.3.2011: 2.21% to 4.45%) per annum.
The trust receipts bear interest at rates ranging from 2.40% to 6.25% (29.2.2012 and 1.3.2011: 6.25%) per
annum.
The bank overdrafts bear interest at rates ranging from 7.35% to 7.60% (29.2.2012: 7.30% to 7.60% and
1.3.2011: 6.80% to 7.30%) per annum. The bank overdrafts facility is unutilised as at the reporting date.
The revolving credits bear interest at rates ranging from 4.73% to 4.85% (29.2.2012: 4.60% to 4.85% and
1.3.2011: 4.31% to 4.53%) per annum.
(ii)
The onshore foreign currency loans of the Group are obtained by way of corporate guarantee from the
Company. Certain onshore foreign currency loans are obtained by way of negative pledge on a subsidiary
company’s assets.
It bears interest at rates ranging from 1.45% to 2.55% (29.2.2012: 1.08% to 2.85% and 1.3.2011: 1.30% to
2.15%) per annum.
99
100
annual report 2013
NOTES TO THE
- 28 February 2013
cont’d
30.
BORROWINGS cont’d
The currency exposure profile of the borrowings is as follows (foreign currency balances are unhedged):Group
Ringgit Malaysia
29.2.2012
1.3.2011
28.2.2013
29.2.2012
1.3.2011
RM
RM
RM
RM
RM
RM
191,161,684
150,500,629
119,535,616
20,627,764
14,000,000
18,002,663
45,563,947
37,323,421
18,288,466
-
-
-
561,479
819,648
587,174
-
-
-
10,698,842
-
-
10,698,842
-
-
247,985,952
188,643,698
138,411,256
31,326,606
14,000,000
18,002,663
US Dollar
Singapore Dollar
31.
Company
28.2.2013
DEFERRED TAX LIABILITIES
Group
28.2.2013
29.2.2012
1.3.2011
RM
RM
RM
3,511,535
3,462,508
3,538,844
Addition through acquisition of subsidiary company
230,776
-
-
Transferred from/(to) profit or loss (Note 36)
554,165
134,000
(963,200)
Transferred from other comprehensive income
-
-
925,509
Over provision in prior financial year
-
-
(38,400)
Realisation of deferred tax liabilities upon depreciation of
revalued assets
(44,368)
(46,409)
-
Realisation of deferred tax liabilities upon disposal of revalued
assets
-
(38,565)
-
Currency translation difference
-
1
(245)
4,252,108
3,511,535
3,462,508
The balance in the deferred tax liabilities is made up of temporary differences arising from:Group
Carrying amount of qualifying property, plant and equipment in
excess of their tax base
Revaluation of land and building
28.2.2013
29.2.2012
1.3.2011
RM
RM
RM
3,455,941
2,671,000
2,536,999
796,167
840,535
925,509
4,252,108
3,511,535
3,462,508
annual report 2013
NOTES TO THE
- 28 February 2013
cont’d
32.
TRADE PAYABLES
Group
Trade payables comprise amounts outstanding for trade purchases. The credit terms granted to the Group
ranged from 30 days to 90 days (29.2.2012 and 1.3.2011: 30 days to 90 days).
The currency exposure profile of the trade payables is as follows (foreign currency balances are unhedged):Group
33.
28.2.2013
29.2.2012
1.3.2011
RM
RM
RM
Ringgit Malaysia
9,807,911
13,590,160
12,195,728
US Dollar
2,761,408
2,437,767
6,384,839
Singapore Dollar
5,105,729
7,416,663
4,650,940
3,548,369
72,345
110,683
EURO
3,665,760
274,934
11,675
24,889,177
23,791,869
23,353,865
OTHER PAYABLES
Group
Non-trade payables
Deposits received
Accruals of expenses
Company
28.2.2013
29.2.2012
1.3.2011
28.2.2013
29.2.2012
1.3.2011
RM
RM
RM
RM
RM
RM
4,791,541
6,795,416
6,254,601
26,842
192,998
49,337
40,318
71,318
74,319
-
-
-
6,006,194
3,550,016
2,436,263
592,570
1,072,276
1,067,725
Advance payment from
customers
677,829
-
-
-
-
-
Provision for expenses
4,403,600
-
-
-
-
-
15,919,482
10,416,750
8,765,183
619,412
1,265,274
1,117,062
The currency exposure profile of the other payables is as follows (foreign currency balances are unhedged):Group
Company
28.2.2013
29.2.2012
1.3.2011
28.2.2013
29.2.2012
1.3.2011
RM
RM
RM
RM
RM
RM
12,799,082
8,764,008
8,494,439
619,412
1,213,204
1,117,062
1,951,032
1,386,960
200,480
-
-
-
Singapore Dollar
375,811
213,712
70,264
-
-
-
Great Britain Pound
Sterling
793,557
52,070
-
-
52,070
-
15,919,482
10,416,750
8,765,183
619,412
1,265,274
1,117,062
Ringgit Malaysia
US Dollar
101
102
annual report 2013
NOTES TO THE
- 28 February 2013
cont’d
34.
REVENUE
Group
Sales of goods
35.
Company
2013
2012
2013
2012
RM
RM
RM
RM
635,663,077
434,603,976
-
-
Dividend income
-
-
37,971,985
25,921,018
Management fee
-
-
2,723,083
2,094,135
635,663,077
434,603,976
40,695,068
28,015,153
PROFIT BEFORE TAX
Profit before tax has been determined after charging/(crediting), amongst others, the following items:Group
Allowance for impairment of receivables
Amortisation of prepaid land lease payments
Company
2013
2012
2013
2012
RM
RM
RM
RM
2,926,233
1,957,963
-
-
358,256
319,881
-
-
136,000
124,000
17,000
15,000
Auditors’ remuneration
- statutory
- non-statutory
57,800
101,000
24,500
73,200
- other auditors
123,462
36,029
-
-
414,503
2,475
-
-
10,362,807
7,664,364
-
-
Depreciation
Directors’ remuneration
- fees
- other emoluments
506,645
468,000
136,645
138,000
6,536,093
5,475,947
1,378,872
1,402,687
5,847
231,945
-
-
1,066,201
2,064,211
1,066,201
2,064,211
73,560
43,234
-
-
Direct operating expenses: - revenue generating investment properties
during the financial year
Hire of machinery
Interest expense
- hire purchase/finance lease
- term loans
- bank overdrafts
350,062
231,842
-
-
4,224,698
3,397,641
1,893,140
848,538
26,438
30,829
-
-
- ICULS liability component interest
851,947
690,404
851,947
690,404
- onshore foreign currency loans
836,907
528,453
-
-
- revolving credit
- trust receipts/bankers’ acceptance
- subsidiary companies
245,639
62,170
-
-
4,603,715
2,781,954
-
-
-
-
23,123
-
1,736,204
534,501
-
-
annual report 2013
NOTES TO THE
- 28 February 2013
cont’d
35.
PROFIT BEFORE TAX cont’d
Profit before tax has been determined after charging/(crediting), amongst others, the following items:- cont’d
Group
Company
2013
2012
2013
2012
RM
RM
RM
RM
157,382
1,259
-
-
- premises
979,754
884,240
-
-
- factory and warehouse
290,856
290,856
-
-
Rental expense
- office equipment
- forklift
- lorry
Under/(Over) provision of leave entitlement
62,119
21,394
-
-
114,112
2,695
-
-
1,300
30,705
-
-
24,088
(16,900)
-
-
(1,958,919)
54,310
(17,321)
(2,943)
749,586
(66,188)
12,686
-
(2,202,964)
(720,351)
-
-
-
-
(37,971,985)
(25,921,018)
(400)
(288)
-
-
(Gain)/Loss on foreign exchange
- realised
- unrealised
Allowance for impairment of receivables no
longer required
Dividend income
- subsidiary companies
- others
Fair value loss/(gain) on derivatives financial
instruments
26,948
(56,420)
-
-
Gain on disposal of investment property
(800,000)
(1,240,000)
-
-
Gain on disposal of property, plant and
(340,995)
(1,588,392)
-
-
Government grant received
(50,315)
(24,763)
-
-
Gain from cross currency swap
(15,771)
-
(15,771)
-
(1,360,449)
(2,186,295)
(404,148)
(1,352,788)
(146,710)
(198,984)
(119,771)
(198,984)
Interest income from fixed deposits
Interest income from current bank accounts
Interest income from intercompany loans
Rental income
Share of profit from associate company
Share of profit from joint venture
-
-
(4,405,955)
(2,944,755)
(167,884)
(313,200)
-
-
(6,341)
(62,527)
-
-
(942,993)
(475,583)
-
-
(70,789)
(37,789)
-
-
The estimated monetary value of benefits provided to the Directors of the Group during the financial year by way
of usage of the Group’s assets and other benefits amounted to RM115,150 (2012: RM84,833).
103
104
annual report 2013
NOTES TO THE
- 28 February 2013
cont’d
35.
PROFIT BEFORE TAX cont’d
The remuneration paid to the Directors of the Company is categorised as follows:-
Fees
Other
emoluments
Benefitsin-kind
Total
RM
RM
RM
RM
Executive Directors
240,000
4,437,822
91,950
4,769,772
136,645
-
-
136,645
Total
376,645
4,437,822
91,950
4,906,417
Executive Directors
210,000
3,807,884
82,542
4,100,426
138,000
-
-
138,000
Total
348,000
3,807,884
82,542
4,238,426
2013
2012
The remuneration paid to the Directors of the Company analysed into bands are as follows:-
<RM100,000
RM100,000
to
RM1,000,000
RM1,000,001
to
RM2,000,000
Executive Directors
-
1
3
4
-
-
Executive Directors
-
2
2
4
-
-
Number of Directors
2013
2012
annual report 2013
NOTES TO THE
- 28 February 2013
cont’d
36.
TAX EXPENSE
Group
Company
2013
2012
2013
2012
RM
RM
RM
RM
Current year’s tax expense
20,718,463
12,319,525
6,379,251
5,676,088
Over provision of tax expense in prior financial
year
(1,124,433)
(39,060)
(779,332)
(5,982)
Realisation of deferred tax liabilities upon
depreciation of revalued assets
(44,368)
(46,409)
-
-
disposal of revalued assets
-
(38,565)
-
-
In Malaysia
Transferred to deferred tax liabilities (Note 31)
Transferred from deferred tax assets
583,000
134,000
-
-
2,272,939
727,709
2,554,480
1,142,544
22,405,601
13,057,200
8,154,399
6,812,650
1,810,223
32,774
-
-
5,256
(115,575)
-
-
(28,835)
-
-
-
1,786,644
(82,801)
-
-
24,192,245
12,974,399
8,154,399
6,812,650
Outside Malaysia
Current year’s tax expense
Under/(Over) provision of tax expense in
prior financial year
Transferred from deferred tax liabilities (Note 31)
Total
Malaysian income tax is calculated at the statutory tax rate of 25% (2012: 25%) of the estimated taxable profits
for the financial year.
105
106
annual report 2013
NOTES TO THE
- 28 February 2013
cont’d
36.
TAX EXPENSE cont’d
The reconciliations of income tax expense applicable to profit before tax at the statutory tax rate to the income
tax expense at the effective tax rate of the Group and of the Company are as follows:Group
Company
2013
2012
2013
2012
RM
RM
RM
RM
Profit before tax
80,254,858
47,197,759
38,957,249
26,194,474
Tax expense at Malaysian statutory tax rate
of 25% (2012: 25%)
20,063,715
11,799,440
9,739,312
6,548,619
10,109,902
5,447,785
2,829,337
1,936,005
-
(2,074,903)
-
-
(6,104,122)
(3,744,619)
(3,634,918)
(1,665,992)
(78,785)
-
-
-
Deferred tax assets not recognised in current
financial year
1,389,741
2,072,513
-
-
Over provision of tax expense in prior financial
year
Tax effects in respect of:Expenses not deductible for tax purposes
Utilisation of allowance on value of increased
export
Income not subject to tax
Expenses allowable for double deduction
(1,119,177)
(154,635)
(779,332)
(5,982)
depreciation of revalued assets
(44,368)
(46,409)
-
-
disposal of revalued assets
-
(38,565)
-
-
Utilisation of unutilised business loss brought
forward
-
(273,138)
-
-
(24,661)
(13,070)
-
-
24,192,245
12,974,399
8,154,399
6,812,650
Utilisation of unabsorbed capital allowance
brought forward
Total tax expense
However, the above amounts are subject to the approval of the Inland Revenue Board of Malaysia.
37.
EARNINGS PER SHARE
(a)
Basic earnings per share
The earnings per share have been calculated based on Group’s profit after tax for the financial year
attributable to owners of the Company of RM56,066,288 (2012: RM34,232,252) and the weighted average
number of ordinary shares in issue during the financial year of 477,868,850 (2012: 450,390,766).
annual report 2013
NOTES TO THE
- 28 February 2013
cont’d
37.
EARNINGS PER SHARE cont’d
(b)
Diluted earnings per share
For the purpose of calculating diluted earnings per share, profit after tax for the financial year attributable to
owners of the Company and weighted average number of ordinary shares in issue during the financial year
have been adjusted for dilutive effects of all potential ordinary shares (share options granted to employees,
ICULS and exercise of warrants).
Group
2013
2012
Profit after tax for the financial year attributable to owners of the
Company (RM)
56,066,288
34,232,252
Impact on income statement upon conversion of ICULS (RM)
(1,704,367)
(419,935)
Adjusted profit after tax (RM)
54,361,921
33,812,317
Weighted average number of ordinary shares in issue (basic)
477,868,850
450,390,766
Adjustment for dilutive effect on conversion of ICULS
93,611,093
121,985,436
Adjustment for dilutive effect on exercise of warrant
11,591,739
-
8,717,918
-
591,789,600
572,376,202
9.19
5.91
Adjustment for dilutive effect on exercise of ESOS
Weighted average number of ordinary shares in issue (diluted)
Diluted earnings per share (sen)
38.
EMPLOYEE BENEFITS EXPENSE
Group
Staff costs
Company
2013
2012
2013
2012
RM
RM
RM
RM
43,338,541
24,815,061
1,415,763
1,402,687
Employee benefits expense of the Group and of the Company consists of, amongst others, the following items:Group
Company
2013
2012
2013
2012
RM
RM
RM
RM
4,702,372
4,258,108
1,284,000
1,284,000
453,351
429,822
92,880
116,400
1,372,455
781,819
-
-
7,915
6,198
1,992
2,287
1,755,989
1,586,737
4,187
-
Directors’ remuneration
- Salary
- EPF
- Bonus
- SOCSO
Defined contribution plan – staff EPF
107
108
annual report 2013
NOTES TO THE
- 28 February 2013
cont’d
39.
EMPLOYEES SHARE OPTION SCHEME
(a)
The Pantech Group Holdings Berhad Employees Share Option Scheme (“ESOS”) is governed by the bylaws and approved by the shareholders at an Extraordinary General Meeting held on 10 February 2010. The
tenure of the ESOS is for 5 years from 3 March 2010 and expiring on 2 March 2015.
The salient features of the ESOS are as follows:-
(b)
(i)
The Option Committee appointed by the Board of Directors to administer the ESOS, may from time to
time grant options to eligible employees of the Group to subscribe for new ordinary shares of RM0.20
each in the Company.
(ii)
Subject to the discretion of the Option Committee, any employee whose employment has been
confirmed shall be eligible to participate in the ESOS.
(iii)
The total number of ordinary shares to be issued under the ESOS shall not exceed in aggregate 15%
of the issued paid-up share capital (excluding treasury shares) of the Company at any point of time
during the tenure of the ESOS.
(iv)
The exercise price for each share shall be the higher of weighted average market price of the shares
as quoted in the Daily Official List issued by the Bursa Malaysia Securities Berhad for the five market
days immediately preceding the grant date or the par value of the ordinary shares; and provided
that the exercise price is not provided at a discount of more than 10% from the five days weighted
average market price of the shares immediately preceding the grant date.
(v)
All of the new ordinary shares issued upon exercise of the options granted under the ESOS will
rank pari passu in all respects with the existing ordinary shares of the Company in issue at the date
of allotment of the new ordinary shares except that the newly allotted ordinary shares shall not be
entitled to any rights, allotments of dividends and/or other distribution if the entitlement date is before
the shares allotment date.
Number of unexercised share option
Company
Granted during the financial year
2013
2012
44,199,000
46,454,000
-
-
(1,535,000)
(2,255,000)
-
-
42,664,000
44,199,000
Exercisable in financial year 2012
-
17,676,000
25,596,000
8,841,000
8,534,000
8,841,000
8,534,000
8,841,000
42,664,000
44,199,000
Forfeited during the financial year
Exercised during the financial year
Analysed as:-
annual report 2013
NOTES TO THE
- 28 February 2013
cont’d
39.
EMPLOYEES SHARE OPTION SCHEME cont’d
(c)
Option price
Company
RM
Option granted
(d)
- on grant date
0.86
- after Bonus Issue, ICULS and Warrants
0.67
Share option exercised during the previous financial year
Share option exercised during the previous financial year ended 2011 resulted in the issuance of 26,000
new ordinary shares at the exercise price of RM0.86 each.
(e)
Fair value of share option granted
The fair value of share option granted was estimated by an external valuer using the Binomial Tree Method,
taking into consideration of the terms and conditions upon which the option was granted.
The fair value of the share option measured at grant date and the assumptions are as follow:Fair value of share option granted on 3 March 2010 based on vesting date (RM)
- 3 March 2011
0.226
- 3 March 2012
0.253
- 3 March 2013
0.267
- 3 March 2014
0.272
Expected volatility of Company share price (%)
40.00
Option term (years)
5
Risk free rate of interest (%) per annum
3.68
Expected dividend yield (%) per annum
5.00
109
110
annual report 2013
NOTES TO THE
- 28 February 2013
cont’d
40.
RELATED PARTY DISCLOSURES
(a)
The transactions of the Group and of the Company with the related parties were as follows:Group
Company
2013
2012
2013
2012
RM
RM
RM
RM
Transactions with subsidiary companies:- management fee received
-
-
2,723,083
2,094,135
- dividend received (net)
-
-
32,113,393
21,106,143
- loan interest received
-
-
4,405,955
2,944,755
- loan interest paid
-
-
23,123
-
149,071,211
114,718,476
-
-
500
374,990
-
-
Transactions with an associate company:- sales
- purchases
- rental received
60,000
60,000
-
-
- dividend received (net)
84,000
141,750
-
-
100,000
-
-
-
989,889
797,416
-
-
- purchase of property, plant and
equipment
Transaction with joint venture company:- purchases
(b)
The outstanding balances arising from related party transactions as at the reporting date are disclosed in
Notes 8, 9 and 10 to the Financial Statements.
(c)
The remuneration of key management personnel is same with the Directors’ remunerations as disclosed
in Notes 35 and 38 to the Financial Statements. The Company has no other members of key management
personnel apart from the Board of Directors.
The following are movements in share option of key management personnel.
Group
Forfeited during the financial year
Granted during the financial year
2013
2012
17,650,000
17,650,000
(250,000)
-
-
-
17,400,000
17,650,000
The share option was granted to key management personnel on terms and conditions similar to those
offered to employees of the Group as disclosed in Note 39 to the Financial Statements.
annual report 2013
NOTES TO THE
- 28 February 2013
cont’d
41.
CAPITAL COMMITMENTS
Group
2013
2012
RM
RM
7,171,823
-
226,000
-
Authorised and contracted for:Purchase of - leasehold land
- motor vehicle
- crane, plant and machinery
- buildings
3,684,226
7,935,919
11,616,049
2,820,916
136,000
346,000
Authorised and not contracted for:Motor vehicles
42.
RENTAL COMMITMENTS
The future rental expense commitments are as follows:Group
43.
2013
2012
RM
RM
Year 2013
-
1,355,557
Year 2014
1,536,837
585,686
Year 2015 - 2018
2,413,176
3,029,328
3,950,013
4,970,571
OPERATING LEASE ARRANGEMENTS
The Group has entered into non-cancellable operating lease agreements on its assets. These leases have
remaining non-cancellable lease terms of between 1 to 3 years (2012: 1 to 3 years).
The future minimum lease payments receivable under non-cancellable operating leases contracted for as at the
reporting date but not recognised as receivables are as follows:Group
2013
2012
RM
RM
Within the next twelve months
40,400
75,400
After the next twelve months
12,750
33,150
53,150
108,550
111
112
annual report 2013
NOTES TO THE
- 28 February 2013
cont’d
44.
CONTINGENT LIABILITIES
Company
2013
2012
RM
RM
559,948,530
551,486,535
Corporate guarantees given to finance lease creditors for finance lease facilities
granted to subsidiary companies
5,584,273
2,222,239
Corporate guarantees given to third parties for supply of goods and services to
subsidiary companies
487,877
2,536,900
566,020,680
556,245,674
Unsecured:Corporate guarantees given to licensed financial institutions for credit facilities
granted to subsidiary companies
45.
SIGNIFICANT EVENT DURING THE FINANCIAL YEAR
On 7 March 2012, the Company had entered into a Share Purchase Agreement with Robert Andrews for the
acquisition of the entire 2,000 units of ordinary shares of £1.00 each representing 100% equity interest in Nautic
Steels (Holdings) Limited and its wholly owned subsidiary company, Nautic Steels Limited for the aggregate
consideration of £9,225,206 (equivalent to RM44,503,012). The acquisition has completed during the current
financial year.
46.
SIGNIFICANT EVENT AFTER THE REPORTING DATE
At the forthcoming Annual General Meeting, a final single tier dividend, in respect of the financial year ended 28
February 2013, of 1.20 sen per ordinary share amounting to a dividend payable of approximately RM6,140,000
will be proposed for shareholders’ approval. The financial statements for current financial year do not reflect
this proposed dividend. Such dividend, if approved by the shareholders, will be accounted for in equity as an
appropriation of unappropriated profit in the financial year ending 28 February 2014.
annual report 2013
NOTES TO THE
- 28 February 2013
cont’d
47.
OPERATING SEGMENTS - GROUP
(a)
Business segments
The Group is organised on three major operating segments. These operating segments are monitored
separately for the purpose of making decisions about resource allocation and performance assessment.
Segment performance is evaluated based on operating profit or loss which, in certain respects as explained
in the table below, is measured differently from operating profit in the consolidated financial statements.
The following summary describes the operations in each of the Group’s reportable segments:Operating segments
Business activities
Trading
Trading, supply and stocking of high pressure seamless and specialised steel
pipes, fittings, flanges, valves and other related products for use in the oil and
gas, gas reticulation, marine, onshore and offshore heavy engineering, power
generation, petrochemicals, palm oil refining and other related industries.
Manufacturing
Manufacturing and supply of butt-welded carbon steel fittings such as
elbows, tees, reducers, end-caps and high frequency induction long bends,
manufacturing and supply of stainless steel and alloy pipes, fittings and
related products, as well as milling, machining and welding of tube and
pipe fitting in special metals for use in the oil and gas, marine, onshore and
offshore heavy engineering, petrochemical and chemical, palm oil refinery
and oleochemical, power generation, pharmaceutical, water and other related
industries.
Investment holding
Investment holding, property investment and management service.
Transfer prices between operating segments are on negotiated basis.
113
47.
(a)
410,042,231
Total revenue
(4,912,967)
(2,335,013)
942,993
70,789
Finance costs
Depreciation and
amortisation
Share of results
of associate
company
Share of results
of joint venture
company
Other non-cash
(expenses)/
income
(1,516,712)
(15,332,813)
837,315
Interest income
Income tax
expense
64,869,860
Segment profit/
(loss)
Results
25,297,235
384,744,996
(98,589)
(9,387,354)
37,789
475,583
(2,417,311)
(4,984,330)
627,867
46,028,510
335,960,118
27,793,241
308,166,877
RM
Inter-segment
revenue
External revenue
Revenue
2012
RM
Trading
2013
Business segments cont’d
OPERATING SEGMENTS - GROUP cont’d
(94,637)
(6,417,897)
-
-
(7,433,422)
(8,970,923)
149,665
28,843,177
299,329,504
48,411,423
250,918,081
RM
2013
(92,328)
(1,429,505)
-
-
(4,612,058)
(5,181,107)
194,357
10,566,844
156,472,944
30,035,845
126,437,099
RM
2012
Manufacturing
(1,066,201)
(2,463,894)
-
-
(28)
(2,870,850)
4,965,793
(3,710,103)
40,695,068
40,695,068
-
RM
2013
-
RM
2013
(2,064,211)
(2,179,899)
-
-
(28)
(1,677,021)
4,516,963
(3,407,703)
(1,072,673)
22,359
-
-
(952,600)
4,485,723
(4,445,614)
-
28,015,153 (114,403,726)
65,989
22,359
-
-
(954,848)
2,953,915
(2,953,908)
-
(85,844,239)
(85,844,239)
-
RM
2012
Eliminations
28,015,153 (114,403,726)
-
RM
2012
Investment
holding
C
B
A
Notes
(3,750,223)
(24,192,245)
70,789
942,993
(10,721,063)
(12,269,017)
1,507,159
90,002,934
635,663,077
-
635,663,077
RM
2013
(2,189,139)
(12,974,399)
37,789
475,583
(7,984,245)
(8,888,543)
2,385,279
53,187,651
434,603,976
-
434,603,976
RM
2012
Consolidated
114
annual report 2013
NOTES TO THE
- 28 February 2013
cont’d
annual report 2013
NOTES TO THE
- 28 February 2013
cont’d
47.
(a)
Trading Manufacturing
2013
Investment
holding
Eliminations
RM
RM
RM
RM
Notes
Consolidated
RM
Assets
Segment assets
374,106,128
329,502,823
233,391,203
(244,582,028)
company
D
692,418,126
3,244,944
-
-
-
3,244,944
Investment in joint venture
company
505,366
-
-
-
505,366
Additions to non-current
assets other than
financial instruments
and deferred tax assets
15,757,094
29,269,236
-
(21,098)
E
45,005,232
37,271,228
100,094,404
16,052,143
(98,826,439)
F
54,591,336
328,805,805
226,956,681
210,893,168
(177,976,563)
D
588,679,091
company
2,123,451
-
-
-
2,123,451
Investment in joint venture
company
417,208
-
-
-
417,208
Additions to non-current
assets other than
financial instruments
and deferred tax assets
1,881,752
31,229,013
-
(181,069)
E
32,929,696
44,762,542
56,694,190
26,671,398
(70,938,719)
F
57,189,411
Liabilities
Segment liabilities
2012
Assets
Segment assets
Liabilities
Segment liabilities
115
116
annual report 2013
NOTES TO THE
- 28 February 2013
cont’d
47.
(a)
Notes to the nature of adjustments and eliminations to arrive at amounts reported in the consolidated
financial statements:
A.
Inter-segment revenues are eliminated on consolidation.
B.
The following items are added to/(deducted from) segment profit to arrive at “profit before tax”
presented in the consolidated income statement:2013
RM
2012
RM
Segment profit
90,002,934
53,187,651
Interest income
1,507,159
2,385,279
(12,269,017)
(8,888,543)
942,993
475,583
70,789
37,789
80,254,858
47,197,759
Finance costs
Share of results of associate company
Share of results of joint venture company
Profit before tax
C.
Other non-cash (expenses)/income consist of the following items as presented in the respective notes
to the financial statements:2013
RM
2012
RM
(2,926,233)
(1,957,963)
(414,503)
(2,475)
(157,382)
(1,259)
(1,736,204)
(534,501)
Allowance for impairment of receivables
Allowance for impairment of receivables no longer required
Gain on disposal of property, plant and equipment and prepaid land
lease payments
D.
6,341
62,527
2,202,964
720,351
340,995
1,588,392
(1,066,201)
(2,064,211)
(3,750,223)
(2,189,139)
The following items are added to segment assets to arrive at total assets reported in the consolidated
statement of financial position:-
Segment assets
Deferred tax assets
Tax recoverable
Total assets
2013
RM
2012
RM
692,418,126
588,679,091
3,244,944
2,123,451
505,366
417,208
3,053,952
5,326,891
-
26,130
699,222,388
596,572,771
annual report 2013
NOTES TO THE
- 28 February 2013
cont’d
47.
(a)
Notes to the nature of adjustments and eliminations to arrive at amounts reported in the consolidated
financial statements: cont’d
E.
F.
Additions to non-current assets other than financial instruments and deferred tax assets consist of:2013
2012
RM
RM
21,454,672
21,099,330
23,550,560
11,830,366
45,005,232
32,929,696
The following items are added to segment liabilities to arrive at total liabilities reported in the
consolidated statement of financial position:-
Segment liabilities
2012
RM
RM
54,591,336
57,189,411
8,468,958
4,125,839
247,985,952
188,643,698
Tax payable
6,904,840
5,872,091
4,252,108
3,511,535
322,203,194
259,342,574
Borrowings
Total liabilities
(b)
2013
Geographical information
The Group’s revenue and non-current assets information based on geographical location are as follows:Non-current
assets
Revenue
Malaysia *
*
2013
2012
2013
2012
RM
RM
RM
RM
563,508,107
413,833,166
197,666,241
164,609,024
Republic of Singapore
25,981,413
20,770,810
695,043
610,342
United Kingdom
46,173,557
-
9,075,251
-
635,663,077
434,603,976
207,436,535
165,219,366
Company’s home country
117
118
annual report 2013
NOTES TO THE
- 28 February 2013
cont’d
47.
(b)
Geographical information cont’d
Non-current assets information presented above consist of the following items as presented in the
consolidated statement of financial position:-
2012
RM
RM
159,160,868
123,233,147
Prepaid land lease payments
21,023,147
21,381,403
19,525,755
11,830,366
3,244,944
2,123,451
505,366
417,208
6,900
6,900
3,053,952
5,326,891
Goodwill on acquisition
715,603
-
200,000
900,000
207,436,535
165,219,366
Deferred tax assets
(c)
2013
Major customers
The Group does not have any revenue from a single external customer which represents 10% or more of
the Group’s revenue.
48.
FINANCIAL INSTRUMENTS
Risk management objectives and policies
The Group is exposed to various risks in relation to financial instruments. The Group’s financial assets and
liabilities by category are summarised in Note 3.10 and 3.11. The main types of risks are foreign currency risk,
interest rate risk, credit risk and liquidity risk.
Financial risk management policy is established to ensure that adequate resources are available for the
development of the Group’s businesses whilst managing its foreign currency risk, interest rate risk, credit risk
and liquidity risk. The Group operates within clearly defined policies and procedures that are approved by the
Board of Directors to ensure the effectiveness of the risk management process.
(a)
Foreign currency risk
Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate
because of changes in foreign exchange rates.
The Group is exposed to foreign currency risk mostly on its sales and purchases that are denominated in a
currency other than the functional currency of the Group. The currencies giving rise to this risk are primarily
US Dollar (“USD”), Singapore Dollar (“SGD”), Great Britain Pound Sterling (“GBP”) and EURO (“EURO”).
The Group uses forward exchange contracts to hedge its foreign currency risk and forward exchange
contracts have maturities of less than one year from the reporting date. Where necessary, the forward
exchange contracts are rolled over at maturity.
annual report 2013
NOTES TO THE
- 28 February 2013
cont’d
48.
FINANCIAL INSTRUMENTS cont’d
Risk management objectives and policies cont’d
(a)
Foreign currency risk cont’d
Based on carrying amounts as at the reporting date, foreign currency denominated financial assets and
financial liabilities which expose the Group to currency risk are disclosed below:Group
USD
SGD
GBP
EURO
RM
RM
RM
RM
28 February 2013
39,638,262
9,196,986
13,629,751
3,163,374
Financial liabilities
Financial assets
(49,649,519)
(6,043,019)
(15,040,768)
(3,665,760)
Net exposure
(10,011,257)
3,153,967
(1,411,017)
(502,386)
Financial assets
31,707,329
8,992,132
33,665
1,124,828
(41,148,148)
(8,459,160)
(124,415)
(274,934)
(9,440,819)
532,972
(90,750)
849,894
29 February 2012
Net exposure
1 March 2011
Financial assets
19,153,699
6,135,074
-
2,537
(24,873,785)
(5,705,935)
(110,683)
(11,675)
(5,720,086)
429,139
(110,683)
(9,138)
USD
SGD
GBP
EURO
RM
RM
RM
RM
Financial assets
-
-
827,282
-
-
-
(10,698,842)
-
Net exposure
-
-
(9,871,560)
-
Net exposure
Company
28 February 2013
29 February 2012
Financial assets
-
-
-
-
-
-
(52,070)
-
Net exposure
-
-
(52,070)
-
During the previous financial year ended 2011, all financial assets and financial liabilities of the Company
are denominated in Ringgit Malaysia.
119
120
annual report 2013
NOTES TO THE
- 28 February 2013
cont’d
48.
(a)
Foreign currency risk cont’d
Foreign currency sensitivity analysis
The following table illustrates the sensitivity of profit in regards to the Group’s financial assets and financial
liabilities and the RM/USD exchange rate, RM/SGD exchange rate, RM/GBP exchange rate and RM/EURO
exchange rate with ‘all other things are being equal’.
It assumes a +/- 3% (29.2.2012 and 1.3.2011: 3%) change of the RM/USD, RM/SGD, RM/GBP and RM/
EURO exchange rates respectively. The percentage has been determined based on the average market
volatility in exchange rates in the previous 12 months. The sensitivity analysis is based on the Group’s
foreign currency financial instruments held at each reporting date and also takes into account forward
exchange contracts that offset effects from changes in currency exchange rates.
If the RM had strengthened against the USD, SGD, GBP and EURO by 3% respectively, this would have
the following impact:Increase/(Decrease) on profit for the financial year
Group
USD
SGD
GBP
EURO
Total
RM
RM
RM
RM
RM
28 February 2013
300,338
(94,619)
42,331
15,072
263,122
29 February 2012
283,225
(15,989)
2,723
(25,497)
244,462
1 March 2011
171,603
(12,874)
3,320
274
162,323
USD
SGD
GBP
EURO
Total
RM
RM
RM
RM
RM
28 February 2013
-
-
296,147
-
296,147
29 February 2012
-
-
1,562
-
1,562
1 March 2011
-
-
-
-
-
Company
If the RM had weakened against the USD, SGD, GBP and EURO by 3% respectively, then the impact to
profit for the financial year would be the opposite effect.
Exposures to foreign exchange rates vary during the financial year depending on the volume of overseas
transactions. Nonetheless, the analysis above is considered to be representative of the Group’s exposures
to foreign currency risk.
(b)
Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of the Group’s financial instruments will
fluctuate because of changes in market interest rates.
The Group’s fixed rate borrowings are exposed to a risk of change in their fair value due to changes in
interest rates. The Group’s variable rate borrowings are exposed to the risk of change in cash flows due to
changes in interest rates. Investment in equity securities and short term receivables and payables are not
significantly exposed to interest rate risk.
annual report 2013
NOTES TO THE
- 28 February 2013
cont’d
48.
(b)
Interest rate risk cont’d
The Group’s interest rate management objective is to manage interest expenses consistent with maintaining
an acceptable level of exposure to interest rate fluctuation.
Interest rate sensitivity
The Group is exposed to changes in market interest rates through bank borrowings at variable interest
rates. Other borrowings are at fixed interest rates. The exposure to interest rates for the Group’s short term
placement is considered immaterial.
The interest rate profile of the Group’s and of the Company’s significant interest-bearing financial
instruments, based on carrying amounts as at the end of the reporting period is as follows:Group
Company
RM
RM
5,887,102
3,722,000
-
71,000,000
28.2.2013
Fixed rate instruments
Financial assets
(8,468,958)
-
(104,446,000)
-
Onshore foreign currency loans
(44,569,257)
-
Revolving credits
(10,000,000)
-
Term loans
(31,326,606)
(31,326,606)
(192,923,719)
43,395,394
(56,087,920)
-
(1,556,169)
-
(57,644,089)
-
Bankers’ acceptance
Floating rate instruments
Term loans
Trust receipts
Net financial liabilities
121
122
annual report 2013
NOTES TO THE
- 28 February 2013
cont’d
48.
(b)
Interest rate sensitivity cont’d
The interest rate profile of the Group’s and of the Company’s significant interest-bearing financial
instruments, based on carrying amounts as at the end of the reporting period is as follows:- cont’d
Group
Company
RM
RM
29.2.2012
Financial assets
22,827,763
-
20,220,000
59,666,947
Revolving credits
Term loans
(4,125,839)
(84,708,000)
(37,323,421)
(5,000,000)
(14,000,000)
(14,000,000)
(122,329,497)
65,886,947
Term loans
Trust receipts
(46,792,629)
(819,648)
-
(47,612,277)
-
1.3.2011
Financial assets
63,244,173
-
55,250,000
30,883,318
Term loans
(3,245,949)
(53,982,721)
(18,288,466)
(18,002,663)
(18,002,663)
(30,275,626)
68,130,655
Term loans
Trust receipts
(47,550,232)
(587,174)
-
(48,137,406)
-
annual report 2013
NOTES TO THE
- 28 February 2013
cont’d
48.
(b)
Interest rate sensitivity cont’d
The following table illustrates the sensitivity of profit to a reasonably possible change in interest rates of
+/- 25 (29.2.2012 and 1.3.2011: 50) basis points (“bp”). These changes are considered to be reasonably
possible based on observation of current market conditions. The calculations are based on a change in the
average market interest rates for each period, and the financial instruments held at each reporting date that
are sensitive to changes in interest rates. All other variables are held constant.
(Decrease)/Increase on
profit for the financial year
+ 25 bp
- 25 bp
RM
RM
(144,110)
144,110
+ 50 bp
- 50 bp
RM
RM
29 February 2012
(238,061)
238,061
1 March 2011
(240,687)
240,687
Group
28 February 2013
(c)
Credit risk
Credit risk is the risk that counterparty fails to discharge an obligation to the Group and the Company. The
Group’s and the Company’s maximum exposure to credit risk is limited to the carrying amount of financial
assets recognised at the reporting date, as summarised below:Group
Company
28.2.2013
29.2.2012
1.3.2011
28.2.2013
29.2.2012
1.3.2011
RM
RM
RM
RM
RM
RM
79,153,046 102,333,289 138,382,662
Classes of financial
assets – carrying
amounts:Cash and cash
equivalents
5,482,396
34,971,259
75,344,096
Trade receivables
100,891,211
70,057,028
58,208,300
-
-
-
Other receivables
13,005,141
18,127,034
6,560,037
534,000
534,000
540,628
Amount due from an
associate company
38,475,867
40,136,551
7,749,426
-
-
-
-
-
-
71,349,631
61,478,910
35,043,745
231,525,265 230,653,902 210,900,425
77,366,027
96,984,169 110,928,469
Amount due from
subsidiary
companies
123
124
annual report 2013
NOTES TO THE
- 28 February 2013
cont’d
48.
(c)
Credit risk cont’d
The Group continuously monitors defaults of customers and other counterparties, identified either
individually or by group, and incorporate this information into its credit risk controls. Where available at
reasonable cost, external credit ratings and/or reports on customers and other counterparties are obtained
and used. The Group’s policy is to deal only with creditworthy counterparties.
The Group’s management considers that all the above financial assets that are not impaired or past due for
each of the reporting dates under review are of good credit quality.
The ageing analysis of trade receivables of the Group is as follows:-
Gross
RM
Allowance for impairment loss
Individually Collectively
impaired
impaired
Total
RM
RM
RM
Net
RM
28.2.2013
Within terms
51,313,630
-
-
-
51,313,630
Past due 1 to 30 days
17,473,032
-
-
-
17,473,032
9,587,946
-
-
-
9,587,946
8,043,101
-
-
-
8,043,101
5,285,482
-
-
-
5,285,482
12,463,487
3,275,467
-
3,275,467
9,188,020
104,166,678
3,275,467
-
3,275,467
100,891,211
Past due more than 120 days
29.2.2012
Within terms
38,914,977
-
-
-
38,914,977
11,380,130
-
-
-
11,380,130
7,108,337
-
-
-
7,108,337
5,643,060
-
-
-
5,643,060
1,665,973
-
-
-
1,665,973
7,707,451
2,362,900
-
2,362,900
5,344,551
72,419,928
2,362,900
-
2,362,900
70,057,028
1.3.2011
Within terms
30,190,465
-
-
-
30,190,465
12,575,492
-
-
-
12,575,492
6,179,512
-
-
-
6,179,512
5,209,348
-
-
-
5,209,348
1,058,237
-
-
-
1,058,237
4,120,534
1,125,288
-
1,125,288
2,995,246
59,333,588
1,125,288
-
1,125,288
58,208,300
None of the Group’s financial assets are secured by collateral or other credit enhancements and none of
the carrying amount of financial assets whose terms have been renegotiated that would otherwise be past
due or impaired.
annual report 2013
NOTES TO THE
- 28 February 2013
cont’d
48.
(c)
Credit risk cont’d
In respect of trade and other receivables, the Group is not exposed to any significant credit risk exposure
to any single counterparty or any group of counterparties having similar characteristics. Trade receivables
consist of a large number of customers in various industries and geographical areas. Based on historical
information about customer default rates, the management consider the credit quality of trade receivables
that are not past due or impaired to be good.
The credit risk for cash and cash equivalents and short term placements is considered negligible, since the
counterparties are reputable banks with high quality external credit ratings.
(d)
Liquidity risk
Liquidity risk is the risk arising from the Group and the Company not being able to meet their obligations
due to shortage of funds.
In managing their exposures to liquidity risk, the Group and the Company maintain a level of cash and cash
equivalents and bank credit facilities deemed adequate by the management to ensure that they will have
sufficient liquidity to meet their liabilities when they fall due.
The following table shows the areas where the Group and the Company are exposed to liquidity risk:-
Current
Less than
1 year
RM
28 February 2013
Non-derivative financial
liabilities
Term loans
Trust receipts
Onshore foreign currency
loans
Trade payables
Other payables
Revolving credits
Amount due to a joint
venture company
Derivative financial liabilities
Outflow
Inflow
Total undiscounted financial
liabilities
Group
Non-current
1 to
More than
5 years
5 years
RM
RM
Current
Less than
1 year
RM
Company
Non-current
1 to
More than
5 years
5 years
RM
RM
20,827,690
104,446,000
1,556,169
66,653,536
-
15,149,131
-
10,500,818
-
25,337,931
-
-
44,569,257
-
-
-
-
-
1,811,508
3,242,914
24,889,177
15,919,482
10,000,000
5,323,847
6,100,072
-
-
1,811,508
619,412
-
5,323,847
-
-
351,134
-
-
-
-
-
227,613,331
78,077,455
15,149,131
12,931,738
30,661,778
-
18,040,583
(17,836,849)
-
-
11,060,358
(10,883,572)
-
-
203,734
-
-
176,786
-
-
227,817,065
78,077,455
15,149,131
13,108,524
30,661,778
-
125
126
annual report 2013
NOTES TO THE
- 28 February 2013
cont’d
48.
(d)
Liquidity risk cont’d
The following table shows the areas where the Group and the Company are exposed to liquidity risk:cont’d
Current
Less than
1 year
RM
29 February 2012
liabilities
Term loans
Trust receipts
loans
Trade payables
Other payables
Revolving credits
venture company
Derivative financial liabilities
Forward exchange contracts
Outflow
Inflow
liabilities
Group
Non-current
1 to
More than
5 years
5 years
RM
RM
Current
Less than
1 year
RM
Company
Non-current
1 to
More than
5 years
5 years
RM
RM
14,059,785
84,708,000
819,648
44,145,747
-
13,013,790
-
4,636,570
-
10,643,561
-
-
37,323,421
-
-
-
-
-
3,913,417
1,548,523
23,791,869
10,416,750
5,000,000
13,022,245
2,979,802
-
417,610
-
3,913,417
1,265,274
-
13,022,245
-
417,610
-
234,735
-
-
-
-
-
181,816,148
60,147,794
13,431,400
9,815,261
23,665,806
417,610
300,050
(299,800)
-
-
-
-
-
250
-
-
-
-
-
181,816,398
60,147,794
13,431,400
9,815,261
23,665,806
417,610
annual report 2013
NOTES TO THE
- 28 February 2013
cont’d
48.
(d)
Liquidity risk cont’d
The following table shows the areas where the Group and the Company are exposed to liquidity risk:cont’d
Current
Less than
1 year
RM
1 March 2011
liabilities
Term loans
Trust receipts
loans
Trade payables
Other payables
venture company
liabilities
Group
Non-current
1 to
More than
5 years
5 years
RM
RM
Current
Less than
1 year
RM
Company
Non-current
1 to
More than
5 years
5 years
RM
RM
13,247,858
53,982,721
587,174
50,591,537
-
12,011,882
-
4,851,201
-
15,280,137
-
-
18,288,466
-
-
-
-
-
3,697,408
1,243,544
23,353,865
8,765,183
13,561,518
2,358,890
-
4,664,522
-
3,697,408
1,117,062
13,561,518
-
4,664,522
-
357,353
-
-
-
-
-
123,523,572
66,511,945
16,676,404
9,665,671
28,841,655
4,664,522
The above amounts reflect the contractual undiscounted cash flows, which may differ from the carrying
values of the financial liabilities at the reporting date.
49.
CAPITAL MANAGEMENT OBJECTIVE
The primary capital management objective of the Group is to maintain a strong capital base and safeguard the
Group’s ability to continue as a going concern, so as to sustain future development of the business. There is no
change to the objectives in financial year ended 2013.
The Group manages its capital by regularly monitoring its current and expected liquidity requirement and modify
the combination of equity and borrowings from time to time to meet the needs. Shareholders’ equity and gearing
ratio of the Group and of the Company are as follows:Group
Company
28.2.2013
29.2.2012
1.3.2011
28.2.2013
29.2.2012
1.3.2011
RM
RM
RM
RM
RM
RM
Total equity
377,019,194 337,230,197 317,267,820 183,351,475 167,774,652 162,754,480
Borrowings
256,454,910 192,769,537 141,657,205
Debt-to-equity ratio
0.68
0.57
0.45
31,326,606
14,000,000
18,002,663
0.17
0.08
0.11
127
128
annual report 2013
NOTES TO THE
- 28 February 2013
cont’d
49.
CAPITAL MANAGEMENT OBJECTIVE cont’d
The Group has complied with Practice Note No. 17/2005 (Revision on 3 August 2009, 22 September 2011
and 25 March 2013) of Bursa Malaysia Securities Berhad which requires the Group to maintain a consolidated
shareholders’ equity not less than 25% of the issued and paid-up capital of the Company and such shareholders’
equity is not less than RM40 million.
50.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying amounts of financial assets and liabilities of the Group and of the Company at the reporting date
approximate their fair values due to their short term nature or insignificant impact of discounting.
The following summarises the methods used in determining the fair value of financial instruments:(a)
Investments in equity securities
The fair value of financial assets that are quoted in an active market are determined by reference to their
quoted closing bid price at the end of the reporting period.
(b)
Derivatives
The fair value of forward contract is calculated by reference to current forward exchange rates for contracts
with similar maturity profile.
(c)
Non-derivatives financial liabilities
Fair value, which is determined for disclosure purposes, is calculated based on the present value of future
principal and interest cash flows, discounted at the market rate of interest at the end of the reporting
period. In respect of the liability component of convertible notes, the market rate of interest is determined
by reference to similar liabilities that do not have a conversion option. For finance leases, the market rate of
interest is determined by reference to similar lease agreements.
The interest rate used to discount estimated cash flows, when applicable, are as follows:28.2.2013
29.2.2012
1.3.2011
%
%
%
Bank overdrafts
7.35 – 7.60
7.30 – 7.60
6.80 – 7.30
3.27 – 4.18
3.03 – 4.54
2.21 – 4.45
1.45 – 2.55
1.08 – 2.85
1.30 – 2.15
Revolving credits
4.73 – 4.85
4.60 – 4.85
4.31 – 4.53
Term loans
3.39 – 7.20
4.14 – 7.85
3.39 – 7.55
Trust receipts
2.40 – 6.25
6.25
6.25
2.38 – 4.09
2.33 – 4.10
2.33 – 4.25
7.00
7.00
7.00
Irredeemable Convertible Unsecured Loan Stocks
Fair value hierarchy
The following table provides an analysis of financial instruments that are measured subsequent to initial
recognition at fair value, grouped into Levels 1 to 3 based on the degree to which the fair value is observable.
annual report 2013
NOTES TO THE
- 28 February 2013
cont’d
50.
FAIR VALUE OF FINANCIAL INSTRUMENTS cont’d
Fair value hierarchy cont’d
Quoted in
active markets
for identical
instruments
Significant
other
observable
inputs
Significant
unobservable
inputs
Level 1
Level 2
Level 3
RM
RM
RM
RM
9,440
-
-
9,440
-
176,786
-
176,786
- Forward currency contracts
-
26,948
-
26,948
-
203,734
-
203,734
-
56,670
-
56,670
6,800
-
-
6,800
6,800
56,670
-
63,470
-
250
-
250
-
33,020
-
33,020
6,800
-
-
6,800
6,800
33,020
-
39,820
-
176,786
-
176,786
Total
GROUP
28.2.2013
Financial asset:
- Quoted investment in Malaysia
Financial liabilities:
Derivatives
29.2.2012
Financial assets:
Derivatives
Financial liability:
Derivatives
1.3.2011
Financial assets:
Derivatives
COMPANY
28.2.2013
Financial liability:
Derivatives
There were no transfers between Level 1 and 2 in the reporting period.
129
130
annual report 2013
NOTES TO THE
- 28 February 2013
cont’d
51.
EXPLANATION OF TRANSITION TO MFRSs
As stated in Note 2.4 to the financial statements, these are the first financial statements of the Group and of the
Company prepared in accordance with MFRSs.
The financial statements of the Group and of the Company for the financial year ended 28 February 2013, the
comparative information presented for the financial year ended 29 February 2012 and opening MFRS statement
of financial position at 1 March 2011 (the Group’s and the Company’s date of transition to MFRSs) were prepared
according to accounting policies set out in Note 3.
In preparing the opening statement of financial position at 1 March 2011, the Group and the Company have
adjusted amounts reported previously in financial statements prepared in accordance with previous FRSs. The
effect of the transition from previous FRSs to MFRSs on the Group’s financial position is set out below:51.1 Reconciliation of financial position
Group
Note
As at
1.3.2011
Effect of
transition
As at
1.3.2011
As at
29.2.2012
Effect of
transition
As at
29.2.2012
per FRS
to MFRSs
per MFRSs
per FRS
to MFRSs
per MFRSs
RM
RM
RM
RM
RM
RM
- 104,139,888
123,233,147
ASSETS
Non-current assets
Property, plant and
equipment
104,139,888
Prepaid land lease
payments
- 123,233,147
18,678,044
-
18,678,044
21,381,403
-
21,381,403
6,748,340
-
6,748,340
11,830,366
-
11,830,366
3,160,000
-
3,160,000
900,000
-
900,000
Investment in an
associate company
1,789,618
-
1,789,618
2,123,451
-
2,123,451
379,118
-
379,118
417,208
-
417,208
6,900
-
6,900
6,900
-
6,900
6,054,600
-
6,054,600
5,326,891
-
5,326,891
140,956,508
165,219,366
- 168,771,532
199,501,681
Investment in a joint
venture company
Available for sale
investment
Deferred tax assets
Total non-current assets
140,956,508
165,219,366
Current assets
Inventories
168,771,532
- 199,501,681
Trade receivables
58,208,300
-
58,208,300
70,057,028
-
70,057,028
Other receivables
7,309,306
-
7,309,306
19,242,056
-
19,242,056
33,020
-
33,020
56,670
-
56,670
7,749,426
-
7,749,426
40,136,551
-
40,136,551
642,995
-
642,995
26,130
-
26,130
63,244,173
-
63,244,173
22,827,763
-
22,827,763
75,138,489
-
-
instruments
Amount due from an
associate company
Tax recoverable
Fixed deposits with
licensed banks
75,138,489
79,505,526
Total current assets
381,097,241
381,097,241
431,353,405
431,353,405
79,505,526
Total assets
522,053,749
522,053,749
596,572,771
596,572,771
annual report 2013
NOTES TO THE
- 28 February 2013
cont’d
51.
EXPLANATION OF TRANSITION TO MFRSs cont’d
51.1 Reconciliation of financial position cont’d
Group
Note
As at
1.3.2011
Effect of
transition
As at
1.3.2011
As at
29.2.2012
Effect of
transition
As at
29.2.2012
per FRS
to MFRSs
per MFRSs
per FRS
to MFRSs
per MFRSs
RM
RM
RM
RM
RM
RM
90,387,025
-
90,387,025
90,530,045
-
90,530,045
12,960
-
12,960
-
-
-
Share premium
1,947,507
-
1,947,507
2,235,706
-
2,235,706
Treasury shares
(380,002)
-
(380,002)
(1,650,458)
-
(1,650,458)
Revaluation reserve
4,720,415
-
4,720,415
4,465,530
-
4,465,530
Employees share option
reserve
5,595,312
-
5,595,312
7,659,523
-
7,659,523
49,151,154
-
49,151,154
48,873,277
-
48,873,277
7,484,104
-
7,484,104
7,481,944
-
7,481,944
(149,771)
(149,771)
100,669
EQUITY
Share capital
Share application money
- Equity component
Warrants reserve
Exchange translation
reserve
a
149,771
-
250,440
Unappropriated profit
a
158,113,413
149,771 158,263,184
177,306,921
149,771 177,456,692
317,181,659
- 317,181,659
337,152,928
- 337,152,928
Equity attributable to
owners of the Company
Total equity
86,161
-
317,267,820
86,161
77,269
317,267,820
337,230,197
-
77,269
337,230,197
LIABILITIES
- Liability component
21,923,448
-
21,923,448
17,353,272
-
17,353,272
2,172,112
-
2,172,112
2,778,550
-
2,778,550
53,442,137
-
53,442,137
48,157,239
-
48,157,239
3,462,508
-
3,462,508
3,511,535
-
3,511,535
81,000,205
71,800,596
Borrowings
Total non-current liabilities
81,000,205
71,800,596
131
132
annual report 2013
NOTES TO THE
- 28 February 2013
cont’d
51.
EXPLANATION OF TRANSITION TO MFRSs cont’d
51.1 Reconciliation of financial position cont’d
Group
Note
As at
1.3.2011
Effect of
transition
As at
1.3.2011
As at
29.2.2012
Effect of
transition
As at
29.2.2012
per FRS
to MFRSs
per MFRSs
per FRS
to MFRSs
per MFRSs
RM
RM
RM
RM
RM
RM
Trade payables
23,353,865
-
23,353,865
23,791,869
-
23,791,869
Other payables
8,765,183
-
8,765,183
10,416,750
-
10,416,750
-
-
-
250
-
250
357,353
-
357,353
234,735
-
234,735
-
1,347,289
cont’d
LIABILITIES cont’d
Current liabilities
instruments
venture company
Borrowings
Dividend payable
Tax payable
1,073,837
-
1,073,837
1,347,289
84,969,119
-
84,969,119
140,486,459
2,710,819
-
2,710,819
5,392,535
-
2,555,548
-
-
- 140,486,459
5,392,535
2,555,548
5,872,091
Total current liabilities
123,785,724
123,785,724
187,541,978
187,541,978
5,872,091
Total liabilities
204,785,929
204,785,929
259,342,574
259,342,574
Total equity and liabilities
522,053,749
522,053,749
596,572,771
596,572,771
There is no effect of the transition on the Company.
51.2 Note to reconciliation
(a)
Under FRS, the Group recognised translation differences of foreign operations as a separate
component of equity. At the date of transition to MFRS, the Group applied optional exemption
available under MFRS 1 and reclassified the cumulative foreign currency translation differences at 1
March 2011 amounting to RM149,771 to unappropriated profit.
The transition from FRS to MFRS has no material impact on the statements of comprehensive income
and statements of cash flows of the Group and of the Company.
1.3.2011
29.2.2012
RM
RM
(149,771)
(149,771)
Adjustment to unappropriated profit
149,771
149,771
Consolidated statement of financial position
annual report 2013
NOTES TO THE
- 28 February 2013
cont’d
52.
DISCLOSURE OF REALISED AND UNREALISED PROFITS/(LOSSES)
Bursa Malaysia Securities Berhad has, on 25 March 2010 and 20 December 2010, issued directives requiring all
listed corporations to disclose the breakdown of unappropriated profits or accumulated losses into realised and
unrealised on group and company basis, as the case may be, in quarterly reports and annual audited financial
statements.
The breakdown of unappropriated profit as at the reporting date that has been prepared by the Directors in
accordance with the directives from Bursa Malaysia Securities Berhad stated above and Guidance on Special
Matter No. 1 issued on 20 December 2010 by the Malaysian Institute of Accountants are as follows:Group
Company
Restated
Restated
28.2.2013
29.2.2012
1.3.2011
28.2.2013
29.2.2012
1.3.2011
RM
RM
RM
RM
RM
RM
290,359,894
220,666,089
200,975,104
15,733,026
12,644,615
8,556,420
(241,711)
210,831
141,965
(12,686)
-
-
290,118,183
220,876,920
201,117,069
15,720,340
12,644,615
8,556,420
2,980,699
2,081,213
1,750,042
-
-
-
(24,472)
16,021
13,359
-
-
-
2,956,227
2,097,234
1,763,401
-
-
-
348,502
256,726
220,118
-
-
-
(3,576)
42
(1,440)
-
-
-
344,926
256,768
218,678
-
-
-
Total
293,419,336
223,230,922
203,099,148
15,720,340
12,644,615
8,556,420
Consolidation adjustments
(87,490,408)
(45,774,230)
(44,835,964)
-
-
-
205,928,928
177,456,692
158,263,184
15,720,340
12,644,615
8,556,420
Total unappropriated profit
of the Company and its
subsidiary companies:
- Realised
- Unrealised
Total unappropriated profit
of the Associate Company:
- Realised
- Unrealised
Total unappropriated
profit of the Joint Venture
Company:
- Realised
- Unrealised
The above disclosures were reviewed and approved by the Board of Directors in accordance with a resolution of
the Board of Directors on 24 June 2013.
133
134
annual report 2013
LIST OF
PROPERTIES
( Land area )
Gross build-up
area
Sq.ft.
Tenure
Description /
existing use
Net book Approximate
Value
age of
Date of
@ 28.2.2013
building
last
RM’000
Years
revaluation
No.
Tittle deed
Address
1
HS(D) 484896,
PTD 204334,
Mukim Plentong,
District of Johor Bahru,
Johor Darul Takzim
PLO 809,
Jalan Kampung Pasir
Gudang Baru,
Pasir Gudang Industrial
Estate Zone 12B,
81700 Pasir Gudang,
Johor Darul Takzim
(899,775)
220,660
Leasehold
expiring on
18.08.2070
2 Blocks single
storey factory
buildings
with 1 unit
3-storey office
and ancillary
buildings
43,471
3
2
Geran 95058, 95059
and 95060
Lot No. 23190, 23191
and 23192
Mukim Kapar,
District of Klang,
Selangor Darul Ehsan
Lot 13257, 13258 and
13259,
Jalan Haji Abdul
Manan,
Off Jalan Meru,
41050 Klang,
(544,353)
346,523
Freehold
6 units of
single storey
detached
factories
(Identified for
reference as
Factory A, B,
C, D, E and F)
37,350
Factory A, B
& C - 23
Factory D - 21
Factory E - 6
Factory F -1
3
SF263520, SF207018,
SF209083,
SF318990, SF211845,
SF318991,
SF184517, SF196161
Claymore, Tame Valley
Industrial Estate,
Tamworth
Claymore
Tame Valley Industrial
Estate
Tamworth
Staffordshire
B77 5DQ
United Kingdom
(59,000)
46,450
Freehold
8 units of
building
comprising of
factories,
warehouses
and office
7,382
25 - 31
-
4
HS(D) 501116, PTD
209335
Mukim Plentong,
Johor Darul Takzim
PLO 641, Jalan
Plantinum 1,
Estate, Zone 12B
81700 Pasir Gudang,
Johor Darul Takzim
(254,566)
43,560
Leasehold
expiring on
16.01.2072
A single storey
detached
warehouse
6,232
1
-
5
Lot PT NO 34277,
HS(M) 29537
Mukim and District of
Klang,
HS (D) 114965, Lot PT
17296
Pekan Baru Hicom,
Daerah Petaling,
No. 3, Jalan Trompet
33/8,
Seksyen 33,
40400 Shah Alam,
(123,548)
25,968
Leasehold
expiring on
11.12.2096
&
28.11.2096
A single-storey
detached
warehouse
with 2-storey
office buildings
annexed
5,547
15
15.1.2011
6
PTD 71061, HS(D)
125023,
Mukim Plentong,
Johor Darul Takzim
PLO 234, Jalan
Tembaga Satu,
Estate,
81700 Pasir Gudang,
Johor Darul Takzim
(87,120)
42,300
Leasehold
expiring on
30.9.2045
A single storey
detached
warehouse
with a 3-storey
office building
annexed
3,821
14
11.1.2011
7
Part of Plot 157, Plot
158, Plot 159
and part of Plot 160,
Precinct 1,
Port Klang Free Zone
held under Master Title
Pajakan Negeri 7324,
Lot 7894, Mukim and
District of Klang,
Persiaran Port Klang
FZ 7,
Jalan FZ 6-P1,
Port Klang Free Zone/
KS12,
42920 Pulau Indah,
(304,920)
48,383
Leasehold
expiring on
30.06.2017
A single-storey
warehouse
and an office
block
2,833
5
13.1.2011
8
Geran 252790, Lot
75931,
Mukim Plentong,
Johor Darul Takzim
No. 18 & 18A, Jalan
Lampam 41,
Tanjong Puteri Resort,
81700 Pasir Gudang,
Johor Darul Takzim
(1,540)
3,080
200
16
11.1.2011
Freehold
A double
storey
intermediate
shophouse
-
3.3.2011
annual report 2013
NOTICE OF SEVENTH
ANNUAL GENERAL MEETING
NOTICE IS HEREBY GIVEN that the Seventh Annual General Meeting of Pantech Group Holdings Berhad (“Pantech”
or the “Company”) will be held at Bahamas 2 & 3, Level 12, Sunway Resort Hotel & Spa, Persiaran Lagoon, Bandar
Sunway, 46150 Petaling Jaya, Selangor on Thursday, 29 August 2013 at 10.00 a.m. for the following purposes:-
AGENDA
AS ORDINARY BUSINESS
1.
To receive the Audited Financial Statements for the financial year ended 28 February
2013 together with the Directors’ and Auditors’ Reports thereon.
Please refer to Note A
2.
To approve the payment of a Final Single Tier Dividend of 1.20 sen per ordinary share
of RM0.20 each for the financial year ended 28 February 2013.
Ordinary Resolution 1
3.
To approve the increase and payment of Directors’ fees from RM150,000 to
RM168,000 for the financial year ending 28 February 2014.
4.
To re-elect the following directors retiring pursuant to the Company’s Articles of
Association and being eligible, offered themselves for re-election:
4.1
4.2
4.3
4.4
5.
Dato’ Chew Ting Leng (Article 122)
Mr To Tai Wai (Article 122)
Ms Ng Lee Lee (Article 127)
Datuk Faizoull Bin Ahmad (Article 127)
To re-appoint Messrs SJ Grant Thornton as Auditors of the Company and to
authorise the Directors to fix their remuneration.
Ordinary
Ordinary
Ordinary
Ordinary
Resolution
Resolution
Resolution
Resolution
3
4
5
6
AS SPECIAL BUSINESS
To consider, and if thought fit, to pass the following Resolutions:
6.
AUTHORITY TO ISSUE SHARES BY THE COMPANY PURSUANT TO SECTION
132D OF THE COMPANIES ACT, 1965
“THAT pursuant to Section 132D of the Companies Act, 1965 and subject to the
approvals from the relevant governmental and/or regulatory authorities, the Directors
be and are hereby empowered to issue shares in the Company from time to time 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 ten (10) per cent of the issued share
capital of the Company for the time being excluding and not limited to additional
shares arising from the Exercise of Warrants/Employees’ Share Option Scheme
(“ESOS”) and Conversion of Irredeemable Convertible Unsecured Loan Stocks
(“ICULS”) AND THAT the Directors be and are also hereby empowered to obtain the
approval from the Bursa Malaysia Securities Berhad for the listing and quotation of
the additional shares so issued AND THAT such authority shall continue in force until
the conclusion of the next Annual General Meeting of the Company.”
135
136
annual report 2013
NOTICE OF SEVENTH
cont’d
7.
PROPOSED RENEWAL OF SHARE BUY-BACK
“THAT subject to compliance with all applicable rules, regulations and orders
made pursuant to the Companies Act, 1965 (“ACT”), provisions in the Company’s
Memorandum and Articles of Association, the Listing Requirements of Bursa
Malaysia Securities Berhad (“Bursa Securities”) and any other relevant authorities, the
Company be and is hereby authorised to purchase such number of ordinary shares
of the Company (“Proposed Renewal of Share Buy-Back”) as may be determined by
the Directors of the Company from time to time through Bursa Securities upon such
terms and conditions as the Directors may deem fit and expedient in the interest of
the Company PROVIDED THAT:(1)
the aggregate number of shares purchased or held does not exceed ten per
centum (10%) of the issued and paid-up share capital of the Company as
quoted on Bursa Securities as at the point of purchase;
(2)
the maximum fund to be allocated by the Company for the purpose of
purchasing such number of ordinary shares shall not exceed the retained profit
and share premium account of the Company. As at the latest financial year
ended 28 February 2013, the audited retained profit and share premium account
of the Company stood at RM15,720,340 and RM25,578,357 respectively;
(3)
the authority conferred by this resolution will commence immediately upon
passing of this resolution and will continue to be in force until:(a)
at the conclusion of the next Annual General Meeting (“AGM”) of the
Company following the general meeting in which the authorisation is
obtained, at which time it shall lapse unless by ordinary resolution passed
at that meeting, the authority is renewed either unconditionally or subject
to conditions; or
(b)
the expiration of the period within which the next AGM of the Company is
required by law to be held; or
(c)
revoked or varied by ordinary resolution passed by the shareholders of
the Company in a general meeting.
whichever occurs first;
AND THAT upon completion of the purchase(s) of the ordinary shares of the
Company, the Directors of the Company be and are hereby authorised to deal with
the ordinary shares so purchased in the following manners:(a)
to cancel the ordinary shares so purchased; or
(b)
to retain the ordinary shares so purchased as treasury shares for distribution
as dividend to shareholders and/or resell on Bursa Securities or subsequently
cancelled; or
(c)
to retain part of the ordinary shares so purchased as treasury shares and cancel
the remainder; or
(d)
in any other manner prescribed by the Act, rules, regulations and orders made
to the Act, the Listing Requirements of Bursa Securities and any other relevant
authorities for the time being in force.
annual report 2013
NOTICE OF SEVENTH
cont’d
AND THAT the Board of the Company be and are hereby authorised to take all such
steps as are necessary or expedient to implement, finalise or to effect the aforesaid
share buy-back with full powers to assent to any conditions, modifications, variations,
and/or amendments as may be required or imposed by the relevant authorities and
to do all such acts and things (including executing all documents) as the Board may
deem fit and expedient in the best interest of the Company.”
8.
PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION OF THE
COMPANY
Special Resolution 1
“THAT the Articles of Association of the Company be and are hereby amended in the
manner as set out in Appendix I on page 139 of the Company’s 2013 Annual Report
to be in line with the amended Listing Requirements.
AND THAT the Directors be and are hereby authorised to assent to any modifications,
variations and/or amendments as may be required by the relevant authorities and
to do all acts and things and take all such steps as may be considered necessary
to give full effect to the Proposed Amendments to the Articles of Association of the
Company. ”
NOTICE OF DIVIDEND ENTITLEMENT AND PAYMENT
Subject to the approval of the shareholders, a Final Single Tier Dividend of 1.20 sen per ordinary share for the financial
year ended 28 February 2013 will be paid on 19 September 2013 to Depositors registered in the Record of Depositors
at the closed of business at 5.00 p.m. on 4 September 2013.
A Depositor shall qualify for entitlement only in respect of:
(a)
Shares transferred into the Depositor’s Securities Account before 4.00 p.m. on 4 September 2013, in respect of
ordinary shares; and
(b)
Shares bought on Bursa Securities on a cum entitlement basis according to the Rules of the Bursa Securities.
By order of the Board
LIM SECK WAH (MAICSA 0799845)
LIANG SIEW CHING (MAICSA 7000168)
Company Secretaries
Kuala Lumpur
Dated this: 6 August 2013
137
138
annual report 2013
NOTICE OF SEVENTH
cont’d
Notes
A.
The item 1 of the Agenda is meant for discussion only as it does not require a formal approval of the shareholders and hence, is
not put forward for voting.
1.
For the purpose of determining a member who shall be entitled to attend, speak and vote at the AGM, the Company shall be
requesting the Record of Depositors as at 23 August 2013. Only a depositor whose name appears on the Record of Depositors
as at 23 August 2013 shall be entitled to attend the said meeting or appoint proxies to attend, speak and vote on his/her behalf.
2.
A member entitled to attend and vote at the Meeting is entitled to appoint a proxy to attend and vote in his/her stead. A
member may appoint up to two (2) proxies to attend the same meeting provided that he/she specifies the proportion of his/her
shareholding to be represented by each proxy. A proxy may but need not be a member of the Company and a member may
appoint any person to be his/her proxy without limitation and the provisions of Section 149(1)(a) & (b) of the Companies Act,
1965 shall not apply.
3.
Where a member is an authorised nominee as defined under the Securities Industry (Central Depositories) Act, 1991, it may
appoint at least one (1) proxy in respect of each Securities account it holds with ordinary shares of the Company standing to the
credit of the said securities account.
4.
Where a member is an exempt authorised nominee, it may appoint multiple proxies for each omnibus account it holds.
5.
The instrument appointing a proxy shall be in writing under the hand of the appointer or his/her attorney duly authorized in
writing or, if the appointer is a corporation, either under the Corporation’s Common Seal or under the hand of an officer or
attorney so authorized.
6.
The Proxy Form must be deposited at the Registered Office of the Company at Level 15-2, Bangunan Faber Imperial Court,
Jalan Sultan Ismail, 50250 Kuala Lumpur not less than 48 hours before the time set for holding the meeting or any adjournment
thereof.
7.
Explanatory Notes on Special Businesses:
The proposed Resolution 8 is a renewal of mandate given by the shareholders at the previous AGM held on 29 August 2012,
primarily to give flexibility to the Board of Directors to issue and allot shares at any time in their absolute discretion and for such
purposes as they consider would be in the interest of the Company without convening a general meeting. This authority, unless
revoked or varied at a general meeting, will expire at the next annual general meeting of the Company.
The Company continues to consider opportunities to broaden its earnings potential. If any of the expansion/diversification
proposals involves the issue of new shares, the Directors, under certain circumstance when the opportunity arises, would have
to convene a general meeting to approve the issue of new shares even though the number involved may be less than 10% of
the issue capital.
In order to avoid any delay and costs involved in convening a general meeting to approve such issue of shares, it is thus
considered appropriate that the Directors be empowered to issue shares in the Company, up to any amount not exceeding in
total 10% of the issued share capital of the Company for the time being excluding the number of ordinary shares arising from
the exercise of Warrants/ESOS and Conversion of ICULS. The renewed authority will provide flexibility to the Company for the
allotment of shares for the purpose of the possible fund raising activities for the purpose of funding future project/investment,
working capital and/or acquisitions. This authority, unless revoked or varied at a general meeting will expire at the conclusion of
the next AGM of the Company.
No shares have been issued and allotted by the Company since obtaining the said authority from its shareholders at the last
AGM held on 29 August 2012 except for new shares arising from the ICULS conversion and exercise of Warrants and ESOS.
This resolution will empower the Directors of the Company to purchase the Company’s shares up to ten per centum (10%) of
the issued and paid-up share capital of the Company by utilising the funds allocated which shall not exceed the total retained
profits and share premium of the Company. This authority, unless revoked or varied at a general meeting, will expire at the
conclusion of the next AGM of the Company.
Further information on the Proposed Renewal of Share Buy-Back are set out in the Share Buy-Back Statement dated 6 August
2013 which is dispatched together with the Company’s Annual Report 2013.
Special Resolution 1
The proposed Special Resolution 1 above on the Proposed Amendments to the Articles of Association of the Company is to
align the Articles of Association with the amended Main Market Listing Requirements of Bursa Malaysia Securities Berhad.
annual report 2013
APPENDIX I
DETAILS OF THE PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION
Article No.
Existing Articles
Proposed Revised Articles
-
“Exempt Authorised Nominee” means an
authorised nominee, as defined under the
Central Depositories Act, which is exempted
from compliance with the provisions of Section
25A(1) of Central Depositories Act.
Article 2
Definitions and
Interpretation
Article 87
Proxies of
authorized
nominees
Where a Member is an Authorised Nominee,
he may appoint at least one (1) proxy in
respect of each Securities Account he
holds with ordinary shares of the Company
standing to the credit of the said Securities
Account.
Where a Member of the Company is an
authorised nominee, as defined under the
Central Depositories Act, it may appoint at
least one (1) proxy but not more than two (2)
proxies in respect of each securities account
it holds which is credited with ordinary shares
of the Company. The appointment of two (2)
proxies in respect of any particular securities
account shall be invalid unless the authorised
nominee specifies the proportion of its
shareholding to be represented by each proxy.
Where a Member of the Company is an
Exempt Authorised Nominee which holds
ordinary shares in the Company for multiple
beneficial owners in one securities account
(“Omnibus Account”), there is no limit to
the number of proxies which the Exempt
Authorised Nominee may appoint in respect
of each Omnibus Account it holds. The
appointment of two (2) or more proxies in
respect of any particular Omnibus Account
shall be invalid unless the Exempt Authorised
Nominee specifies the proportion of its
shareholding to be presented by each proxy.
Article 89 (1)
Qualification of
proxy
(New Article)
-
A Member of the Company entitled to attend
and vote at a meeting of the Company, or
at a meeting of any class of members of the
Company, shall be entitled to appoint any
person as his proxy to attend and vote instead
of the Member at the meeting. There shall
be no restriction as to the qualification of the
proxy. A proxy appointed to attend and vote at
a meeting of the company shall have the same
rights as the member to speak at the meeting.
139
140
annual report 2013
ANALYSIS OF
SHAREHOLDINGS
as at 12 July 2013
Authorized Share Capital
Issued and Fully Paid-Up Share Capital
Class of Shares
Voting Rights
No. of Shareholders
:
:
:
:
:
RM500,000,000.00
RM107,816,989.60
Ordinary Shares of RM0.20 Each
One Vote Per Ordinary Share
6,572
DISTRIBUTION OF SHAREHOLDINGS AS AT 12 JULY 2013
Category
No. of
Shareholders
% of
Shareholders
No. of
Shares*
% of Shares*
109
1.66
2,922
0.00
Less than 100
100 – 1,000
318
4.84
234,271
0.04
1,001 – 10,000
3551
54.03
21,371,093
3.97
10,001 – 100,000
2262
34.42
72,842,427
13.51
328
4.99
276,777,589
51.34
4
0.06
167,856,646
31.14
6,572
100.00
539,084,948
100.00
100,001 – less than 5% of issued shares
5% and above of issued shares
Total
Note:
*
Inclusive of 3,352,300 treasury shares retained by the Company.
LIST OF SUBSTANTIAL SHAREHOLDERS AS AT 12 JULY 2013
Direct
No. Names
Indirect
No. of Shares
%*
No. of Shares
1.
CTL Capital Holding Sdn. Bhd.
107,196,480
20.01
-
-
2.
GL Management Agency Sdn. Bhd.
79,895,960
14.91
-
-
3.
Koperasi Permodalan Felda Malaysia Berhad
54,742,766
10.22
-
-
5.
-
-
107,196,480
20.01 (a)
6.
Datin Shum Kah Lin
-
-
107,196,480
20.01 (b)
7.
-
-
79,895,960
14.91 (c)
8.
Datin Lee Sock Kee
-
-
79,895,960
14.91 (d)
Notes:
*
%*
Excluding a total of 3,352,300 shares bought-back by the Company and retained as treasury shares
annual report 2013
ANALYSIS OF
SHAREHOLDINGS
as at 12 July 2013
cont’d
DIRECTORS’ INTERESTS IN SHARES AS AT 12 JULY 2013
Direct
No.
Names
1.
Indirect
No. of Shares
%*
No. of Shares
%*
-
-
107,196,480
20.01 (a)
2.
-
-
79,895,960
14.91 (c)
3.
Tan Ang Ang
8,889,900
1.66
1,633,000
0.31 (e)
4.
To Tai Wai
12,320,580
2.30
-
-
5.
Ng Lee Lee
7,134,623
1.33
123,240
0.02
6.
Tan Sui Hin
470,000
0.09
-
-
7.
-
-
-
-
8.
9.
Loh Wei Tak
3,000
0.00
-
-
200,000
0.04
-
-
(f)
Notes:
(a)
Deemed interested by virtue of his and his spouse Datin Shum Kah Lin’s interest in CTL Capital Holding Sdn. Bhd. pursuant to
Section 6A of the Act
(b)
Deemed interested by virtue of her and her spouse Dato’ Chew Ting Leng’s interest in CTL Capital Holding Sdn. Bhd. pursuant
to Section 6A of the Act
(c)
Deemed interested by virtue of his and his spouse Datin Lee Sock Kee’s interest in GL Management Agency Sdn. Bhd. pursuant
to Section 6A of the Act
(d)
Deemed interested by virtue of her and her spouse Dato’ Goh Teoh Kean’s interest in GL Management Agency Sdn. Bhd.
pursuant to Section 6A of the Act
(e)
Deemed interested by virtue of his spouse Madam Yong Yui Kiew’s direct shareholding in the Company pursuant to Section
134(12) of the Act
(f)
Deemed interested by virtue of her spouse Mr Wong Chong Peng’s direct shareholding in the Company pursuant to Section
134(12) of the Act
*
30 LARGEST SHAREHOLDERS AS AT 12 JULY 2013
No. Shareholders
Shareholdings
%*
54,742,766
10.22
1
KOPERASI PERMODALAN FELDA MALAYSIA BERHAD
2
CTL CAPITAL HOLDING SDN. BHD.
53,713,880
10.03
3
AMSEC NOMINEES (TEMPATAN) SDN. BHD.
PLEDGED SECURITIES ACCOUNT - AMBANK (M) BERHAD
FOR GL MANAGEMENT AGENCY SDN. BHD.
30,000,000
5.60
4
AIBB NOMINEES (TEMPATAN) SDN. BHD.
PLEDGED SECURITIES ACCOUNT FOR CTL CAPITAL HOLDING SDN. BHD.
29,400,000
5.49
5
GL MANAGEMENT AGENCY SDN. BHD.
26,774,200
5.00
6
23,121,760
4.32
7
FOR LEE LIANG MONG
21,073,500
3.93
8
ALLIANCEGROUP NOMINEES (TEMPATAN) SDN. BHD.
PLEDGED SECURITIES ACCOUNT FOR CTL CAPITAL HOLDING SDN. BHD.
16,600,000
3.10
9
HSBC NOMINEES (ASING) SDN. BHD.
EXEMPT AN FOR JPMORGAN CHASE BANK, NATIONAL ASSOCIATION
14,626,900
2.73
141
142
annual report 2013
ANALYSIS OF
SHAREHOLDINGS
as at 12 July 2013
cont’d
30 LARGEST SHAREHOLDERS AS AT 12 JULY 2013 cont’d
No. Shareholders
%*
10
7,482,600
1.40
11
EB NOMINEES (TEMPATAN) SENDIRIAN BERHAD
PLEDGED SECURITIES ACCOUNT FOR TAN ANG ANG
6,272,300
1.17
12
PLEDGED SECURITIES ACCOUNT - AMBANK (M) BERHAD FOR NG LEE LEE
5,656,241
1.06
13
PLEDGED SECURITIES ACCOUNT - AMBANK (M) BERHAD FOR TO TAI WAI
5,000,000
0.93
14
TO TAI WAI
4,376,406
0.82
15
FOR LIM SOON BENG
4,258,950
0.79
16
AMANAHRAYA TRUSTEES BERHAD
PUBLIC ISLAMIC OPPORTUNITIES FUND
3,723,000
0.69
17
FREDDIE CHEW SUN GHEE
3,489,640
0.65
18
LEE LIANG MONG
3,394,100
0.63
19
MALACCA EQUITY NOMINEES (TEMPATAN) SDN. BHD.
EXEMPT AN FOR PHILLIP CAPITAL MANAGEMENT SDN. BHD.
3,150,560
0.59
20
MALACCA EQUITY NOMINEES (TEMPATAN) SDN. BHD.
EXEMPT AN FOR PHILLIP CAPITAL MANAGEMENT SDN. BHD.
3,018,600
0.56
21
TO TAI WAI
2,944,174
0.55
22
AMTRUSTEE BERHAD FOR PACIFIC PEARL FUND
2,738,000
0.51
23
SHUM BI SHIAN
2,728,842
0.51
24
TAN ANG ANG
2,617,600
0.49
25
CITIGROUP NOMINEES (TEMPATAN) SDN. BHD.
EMPLOYEES PROVIDENT FUND BOARD
2,536,800
0.47
26
CITIGROUP NOMINEES (ASING) SDN. BHD.
CIPLC FOR PHEIM SICAV-SIF
2,468,000
0.46
27
MAYBANK NOMINEES (TEMPATAN) SDN. BHD.
PLEDGED SECURITIES ACCOUNT FOR CHONG KHONG SHOONG
2,313,000
0.43
28
PLEDGED SECURITIES ACCOUNT FOR KONG CHIONG LEE
2,300,000
0.43
29
SHUM BI SHIAN
2,291,600
0.43
30
CITIGROUP NOMINEES (TEMPATAN) SDN. BHD.
PLEDGED SECURITIES ACCOUNT FOR LIM CHAI BENG
2,085,700
0.39
344,899,119
64.38
TOTAL
*
Shareholdings
annual report 2013
ANALYSIS OF
IRREDEEMABLE CONVERTIBLE UNSECURED LOAN STOCKS (“ICULS”) HOLDINGS
as at 12 July 2013
Issued Size
Conversion Price
Maturity Date of ICULS
No. of ICULS Holders
:
:
:
:
731,840,800 nominal value of 2010/2017 ICULS
RM0.60
21/12/2017
979
DISTRIBUTION OF ICULS HOLDINGS
Size of Holdings
No. of
ICULS
Holders
% of
ICULS
Holders
<100
No. of
ICULS
Holdings
% of
ICULS
Holdings
0
0.00
0
0.00
40
4.08
17,902
0.01
1,001 – 10,000
315
32.18
2,134,416
0.79
10,001 – 100,000
500
51.07
17,149,300
6.35
100,001 - < 5% issued ICULS
120
12.26
84,027,500
31.09
4
0.41
166,893,782
61.76
979
100.00
270,222,900
100.00
100 – 1,000
5% and above of issued ICULS
DIRECTORS’ INTERESTS IN ICULS AS AT 12 JULY 2013
Direct
No. Names
Indirect
No. of ICULS
%
No. of ICULS
%
1.
-
-
95,463,982
35.33 (a)
2.
-
-
32,381,300
11.98 (b)
3.
Tan Ang Ang
600
0.00
-
4.
Ng Lee Lee
-
-
205,400
5.
To Tai Wai
21,118,800
7.82
-
-
6.
Tan Sui Hin
150,000
0.06
-
-
7.
-
-
-
-
8.
-
-
-
-
9.
Loh Wei Tak
-
-
-
-
0.08 (c)
Notes:
(a)
Deemed interested by virtue of his interest in CTL Capital Holding Sdn. Bhd. pursuant to Section 6A of the Act
(b)
Deemed interested by virtue of his interest in GL Management Agency Sdn. Bhd. pursuant to Section 6A of the Act
(c)
Deemed interested by virtue of her spouse, Mr Wong Chong Peng’s direct ICULS holding in the Company pursuant to Section
134(12) of the Act.
143
144
annual report 2013
ANALYSIS OF
IRREDEEMABLE CONVERTIBLE UNSECURED LOAN STOCKS (“ICULS”) HOLDINGS
as at 12 July 2013
cont’d
30 LARGEST ICULS HOLDERS AS AT 12 JULY 2013
No. ICULS Holders
ICULS
Holdings
%
1
95,463,982
35.33
2
PLEDGED SECURITIES ACCOUNT - AMBANK (M) BERHAD FOR GL
MANAGEMENT AGENCY SDN. BHD.
32,381,300
11.98
3
21,118,800
7.82
4
LIM KHUAN ENG
17,929,700
6.64
5
MALAYSIA NOMINEES (TEMPATAN) SENDIRIAN BERHAD
GREAT EASTERN LIFE ASSURANCE (MALAYSIA) BERHAD
9,320,500
3.45
6
6,929,500
2.56
7
TEO YONG FONG
6,664,500
2.47
8
NG HO FATT
4,441,500
1.64
9
DB (MALAYSIA) NOMINEE (TEMPATAN) SENDIRIAN BERHAD
EXEMPT AN FOR KUMPULAN SENTIASA CEMERLANG SDN. BHD.
3,075,000
1.14
10
MARY TAN @ TAN HUI NGOH
2,084,600
0.77
11
2,075,000
0.77
12
ONN PING LAN
2,000,000
0.74
13
TAN YEIN KIM @ TAN ENG KIAN
1,700,000
0.63
14
PLEDGED SECURITIES ACCOUNT FOR TAN TAI SENG
1,571,800
0.58
15
ONG AH KIM
1,551,400
0.57
16
NG HO FATT
1,524,700
0.56
17
HOH SWEE CHEE
1,510,000
0.56
18
INTER-PACIFIC EQUITY NOMINEES (TEMPATAN) SENDIRIAN BERHAD
PLEDGED SECURITIES ACCOUNT FOR YO KOK KONG @ YUE KOK KONG
1,500,000
0.56
19
LUCKY STAR PTE. LTD.
1,500,000
0.56
20
ONG BEE LIAN
1,500,000
0.56
21
OVERSEAS ASSURANCE CORPORATION (MALAYSIA) BERHAD
1,479,900
0.55
22
LEE CHEE KONG
1,401,000
0.52
23
GEORGE LEE SANG KIAN
1,200,000
0.44
24
CITIGROUP NOMINEES (ASING) SDN. BHD.
EXEMPT AN FOR CITIBANK NA, SINGAPORE
1,200,000
0.44
25
LEE CHEE KONG
1,059,000
0.39
26
ONG KEK POH
1,000,000
0.37
27
TEH CHIA TECK
1,000,000
0.37
28
TAN KIM HIOK
1,000,000
0.37
29
TEO HONG KOK
955,000
0.35
30
GINA GAN
950,300
0.35
227,087,482
84.04
TOTAL
annual report 2013
ANALYSIS OF
WARRANT HOLDINGS
as at 12 July 2013
No. Warrants Issued
Exercise Price of Warrants
Expiry Date of Warrants
No. of Warrant Holders
:
:
:
:
74,819,440 Warrants 2010/2020
RM0.60
21/12/2020
1,527
DISTRIBUTION OF WARRANT HOLDINGS
Size of Holdings
No. of
Warrant
Holders
% of
Warrant
Holders
No. of
Warrant
Holdings
% of
Warrant
Holdings
<100
148
9.69
5,182
0.01
100 – 1,000
294
19.25
192,751
0.26
1,001 – 10,000
623
40.80
2,934,280
3.92
10,001 – 100,000
391
25.61
14,921,099
19.94
69
4.52
26,581,190
35.53
2
0.13
30,184,528
40.34
1,527
100.00
74,819,030
100.00
100,001 - < 5% issued Warrants
5% and above of issued Warrants
DIRECTORS’ INTERESTS IN WARRANTS AS AT 12 JULY 2013
Direct
No. Names
Indirect
No. of
Warrants
%
No. of
Warrants
%
1.
-
-
17,346,398
23.18
(a)
2.
-
-
12,838,130
17.16
(b)
3.
Tan Ang Ang
1,347,240
1.80
213,000
0.28
(c)
4.
To Tai Wai
2,111,880
2.82
-
-
5.
Ng Lee Lee
1,111,190
1.49
20,540
0.03
6.
Tan Sui Hin
15,000
0.02
-
-
7.
-
-
-
-
8.
-
-
-
-
9.
Loh Wei Tak
-
-
-
-
(d)
Notes:
(a)
Deemed interested by virtue of his interest in CTL Capital Holding Sdn. Bhd. pursuant to Section 6A of the Act
(b)
Deemed interested by virtue of his interest in GL Management Agency Sdn. Bhd. pursuant to Section 6A of the Act
(c)
Deemed interested by virtue of his spouse Madam Yong Yui Kiew’s direct warrant holding in the Company pursuant to Section
134(12) of the Act
(d)
Deemed interested by virtue of her spouse, Mr Wong Chong Peng’s direct warrant holding in the Company pursuant to Section
134(12) of the Act.
145
146
annual report 2013
ANALYSIS OF
WARRANT HOLDINGS
as at 12 July 2013
cont’d
30 LARGEST WARRANT HOLDERS AS AT 12 JULY 2013
No. Warrant Holders
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
Warrant Holdings
PLEDGED SECURITIES ACCOUNT - AMBANK (M) BERHAD FOR
PLEDGED SECURITIES ACCOUNT - AMBANK (M) BERHAD FOR LEE LIANG MONG
ALLIANCEGROUP NOMINEES (TEMPATAN) SDN. BHD.
PLEDGED SECURITIES ACCOUNT - AMBANK (M) BERHAD FOR MOHAN A/L
PERUMAL
PLEDGED SECURITIES ACCOUNT - AMBANK (M) BERHAD FOR NG LEE LEE
CIMSEC NOMINEES (TEMPATAN) SDN. BHD.
CIMB BANK FOR LIAW HEN KYUN @ ALEX LIAW
GEORGE LEE SANG KIAN
SHER KHAN BIN KHAN MOHAMAD
PLEDGED SECURITIES ACCOUNT FOR TAN ANG ANG
EE LI CHEN
AFFIN NOMINEES (TEMPATAN) SDN. BHD.
PLEDGED SECURITIES ACCOUNT FOR OOI YING NEE
WILLIE LAU CHIENG
CHUA SUI KENG
TAN ANG ANG
SJ SEC NOMINEES (TEMPATAN) SDN. BHD.
PLEDGED SECURITIES ACCOUNT FOR TAN WEE KEONG
CHOO WAI HUNG
SJ SEC NOMINEES (TEMPATAN) SDN. BHD.
PLEDGED SECURITIES ACCOUNT FOR LAI WAI MING
TEOH SENG HOCK
SHER KHAN BIN KHAN MOHAMAD
PLEDGED SECURITIES ACCOUNT FOR MOHAN A/L PERUMAL
CIMSEC NOMINEES (TEMPATAN) SDN. BHD.
PLEDGED SECURITIES ACCOUNT FOR LAI WAI MING
PLEDGED SECURITIES ACCOUNT FOR KONG CHIONG LEE
MERCSEC NOMINEES (TEMPATAN) SDN. BHD.
PLEDGED SECURITIES ACCOUNT FOR TNTT REALTY SDN. BHD.
SHUM BI SHIAN
ONG SOO THIAH
SUA HING KAM
SMB RESOURCES SDN. BHD.
AFFIN NOMINEES (TEMPATAN) SDN. BHD.
PLEDGED SECURITIES ACCOUNT FOR CHEAH YAW TONG
PLEDGED SECURITIES ACCOUNT FOR YAP TEK LEONG
TOTAL
%
17,346,398
12,838,130
23.18
17.16
3,652,750
4.88
2,111,880
2.82
1,800,000
2.41
1,111,190
1.49
1,050,000
1.40
885,360
870,000
836,240
1.18
1.16
1.12
723,200
550,000
0.97
0.74
547,100
531,500
511,000
489,400
0.73
0.71
0.68
0.65
470,000
406,200
0.63
0.54
350,000
302,000
300,000
0.47
0.40
0.40
300,000
0.40
300,000
0.40
298,000
0.40
291,800
289,600
250,000
250,000
250,000
0.39
0.39
0.33
0.33
0.33
230,000
0.31
50,141,748
67.00
No. of ordinary shares held
PROXY FORM
(Before completing this form please refer to the notes below)
I/We
I/C No./Co. No./CDS A/C No.
(Full name in Capital Letters)
of
(Full address)
being a member/members of PANTECH GROUP HOLDINGS BERHAD, hereby appoint the following person(s):Name of proxy, NRIC No. & Address
No. of shares to be represented
1.
2.
or failing him/her, the Chairman of the Meeting as my/our proxy to attend and vote for me/us on my/our behalf at the
Seventh Annual General Meeting (“AGM”) of the Company to be held at Bahamas 2 & 3, Level 12, Sunway Resort Hotel &
Spa, Persiaran Lagoon, Bandar Sunway, 46150 Petaling Jaya, Selangor on Thursday, 29 August 2013 at 10.00 a.m. My/
our proxy/proxies is to vote as indicated below:FIRST PROXY
FOR
AGAINST
SECOND PROXY
FOR
AGAINST
ORDINARY RESOLUTION
1.
To approve the payment of Final Single Tier Dividend of 1.20 sen
per ordinary share of RM0.20 each for the financial year ended 28
February 2013.
2.
To approve the increase and payment of Directors’ fees from
RM150,000 to RM168,000 for the financial year ending 28
February 2014.
3.
To re-elect Dato’ Chew Ting Leng who retires pursuant to Article
122.
4.
To re-elect Mr To Tai Wai who retires pursuant to Article 122.
5.
To re-elect Ms Ng Lee Lee who retires pursuant to Article 127.
6.
To re-elect Datuk Faizoull Bin Ahmad who retires pursuant to
Article 127.
7.
To re-appoint Messrs SJ Grant Thornton as Auditors and to
authorise the Directors to fix their remuneration.
SPECIAL BUSINESS
8.
Authority to issue shares by the Company pursuant to Section
132D of the Companies Act, 1965.
9.
Proposed Renewal of Share Buy-Back.
SPECIAL RESOLUTION
1.
Proposed Amendments of Articles of Association
(Please indicate with a “√” or “X” in the space provided how you wish your vote to be cast. If no instruction as to voting is
given, the proxy will vote or abstain from voting at his/her discretion). The first named proxy shall be entitled to vote on a
show of hands on my/our behalf.
Signature of Shareholder(s)/Common Seal
Signed this
day of
2013
Notes:
1. For the purpose of determining a member who shall be entitled to attend, speak and vote at the AGM, the Company shall be
requesting the Record of Depositors as at 23 August 2013. Only a depositor whose name appears on the Record of Depositors as at
23 August 2013 shall be entitled to attend the said meeting or appoint proxies to attend, speak and vote on his/her behalf.
2. A member entitled to attend and vote at the Meeting is entitled to appoint up to two (2) proxies attend and vote in his/her stead
provided that he/she specifies the proportion of his/her shareholding to be represented by each proxy. A proxy may but need not be a
member of the Company. The provisions of Section 149(1)(a) & (b) of the Companies Act, 1965 shall not apply.
3. Where a member is an authorised nominee as defined under the Securities Industry (Central Depositories) Act, 1991, it may appoint at
least one (1) proxy in respect of each Securities account it holds with ordinary shares of the Company standing to the credit of the said
securities account.
4. Where a member is an exempt authorised nominee, it may appoint multiple proxies for each omnibus account it holds.
5. The instrument appointing a proxy shall be in writing under the hand of the appointer or his/her attorney duly authorised in writing or, if
the appointer is a corporation, either under the Corporation’s Common Seal or under the hand of an officer or attorney so authorised.
6. The Proxy Form must be deposited at the Registered Office of the Company at Level 15-2, Bangunan Faber Imperial Court, Jalan
Sultan Ismail, 50250 Kuala Lumpur not less than forty-eight (48) hours before the time set for holding the meeting or any adjournment
thereof.
Fold This Flap For Sealing
Then Fold Here
AFFIX
STAMP
THE SECRETARY
PANTECH GROUP HOLDINGS BERHAD (733607-W)
Jalan Sultan Ismail
50250 Kuala Lumpur
1st Fold Here

Annual Report 2013

Transcription

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