ONE-STOP CENTER - Pantech · ONE-STOP CENTER PIPES • FITTINGS • VALVES ONE-STOP CENTER PIPES • FITTINGS • VALVES MS ISO/IEC Guide 66:2000 EMS 12072004 CB 03 SG08/02123.1 MY08/00171.1

PANTECH CORPORATION SDN BHD(176321-P)

Johor Bahru Head Offi cePLO 234, Jalan Tembaga SatuPasir Gudang Industrial Estate81700 Pasir GudangJohor Darul Takzim, MalaysiaTel: +607 259 7979 / 252 1767Fax: + 607 251 2877 / 252 0835Email: [email protected]

Shah Alam Offi ceNo. 3, Jalan Trompet 33/8Seksyen 33, 40400 Shah AlamSelangor Darul Ehsan, MalaysiaTel : +603 5192 7995Fax : +603 5192 7992Email : [email protected]

Pulau Indah (Warehouse Offi ce)Persiaran Port Klang FZ 7, Jalan FZ 6-P1Port Klang Free Zone / KS 1242920 Pulau IndahSelangor Darul Ehsan, MalaysiaTel : +603 3101 3767Fax : +603 3101 4767

PANTECH (KUANTAN) SDN BHD(191606 U)

Lot 5, Jalan Industri Semambu 2Kawasan Perindustrian Semambu25350 KuantanPahang Darul Makmur, MalaysiaTel: +609 568 7550Fax: +609 568 7553Email: [email protected]

PANTECH STEEL INDUSTRIES SDN BHD(509731-A)

ManufacturerLot 13258 & 13259Jalan Haji Abdul MananOff Jalan Meru42200 KaparSelangor Darul Ehsan, MalaysiaTel: +603 3393 1633Fax: +603 3392 8966Email: [email protected]

PANAFLO CONTROLS PTE LTD(200413822 D)

Singapore Offi ceNo. 5Tuas View CloseTradelink PlaceSingapore 637490Tel: +65 6562 3048Fax: +65 6562 3148Email: info@panafl ocontrols.com.sg

PANTECH GROUP HOLDINGS BERHAD (733607-W

) A

NN

UA

L RE

PO

RT

2009

A N N U A L R E P O R T 2 0 0 9

ONE-STOP CENTERP I P E S • F I T T I N G S • V A L V E S


w w w . p a n t e c h - g r o u p . c o m

MS ISO/IEC Guide 66:2000EMS 12072004 CB 03

SG08/02123.1 MY08/00171.1

MS ISO/IEC Guide 62:1999OSH 18072007 CB 02

Cert. No. MY08/00161.1Cert. No. KLR0404021 Cert. No. KLR0403926


Cert. No. MY08/00161.3


SG08/02/123.3 MY08/00171.3

Cert. No. SNG6003354

A N N U A L R E P O R T 2 0 0 9


01 Financial Highlights

02 Corporate Information

03 Corporate Structure

04 Notice of Third Annual General Meeting

06 Statement Accompanying Notice of Annual General Meeting

07 Directors’ Profi le

09 Executive Chairman’s Statement

13 Corporate Social Responsibility Activities

15 Corporate Events During the Financial Year

16 HSE Accreditations & Certifi cations, Recognition Awards

17 Audit Committee Report

20 Statement on Internal Control

22 Corporate Governance Statement

27 Additional Compliance Statement

29 Financial Statements

75 List of Properties

76 Analysis of Shareholdings

77 30 Largest Shareholders

Form of Proxy

ContentsContentsContentsContentsContents

ANNUAL REPORT 2009

01

PANTECH GROUP HOLDINGS BERHAD (733607-W)

We serve mainly the Oil & Gas, Petrochemical and Chemical Industries

Financial Highlights

26,758

34,142

61,459

PROFIT AFTER TAX

50,000

60,000RM’ 000

30,000

40,000

20,000

10,000

0‘07 ‘08 ‘09

SHAREHOLDERS’ FUND

250,000

RM’ 000

150,000

200,000

100,000

50,000

0‘07 ‘08 ‘09

117,839

146,474

199,885

REVENUE

500,000

RM’ 000

300,000

400,000

200,000

100,000

243,000*

* Proforma

313,323

511,595

0‘07 ‘08 ‘09

EARNINGS PER SHARE

* Based on 375,000,000 shares

SEN

20

25

15

10

5

0‘07 ‘08 ‘09

16.43

9.10

7.14*

ContentsContents

02

ANNUAL REPORT 2009

Corporate InformationInventories located in Port Klang Free Zone (PKFZ)

Shah Alam Offi ce

BOARD OF DIRECTORS

Chew Ting LengExecutive Chairman / Group Managing Director

Goh Teoh KeanGroup Deputy Managing Director

Tan Ang AngExecutive Director

To Tai WaiExecutive Director

Abdul Karim Bin AhmadNon-Independent Non-Executive Director

Tan Sui HinIndependent Non-Executive Director

Loh Wei TakIndependent Non-Executive Director

Yusoff Bin MohamedIndependent Non-Executive Director

AUDIT COMMITTEE

ChairmanTan Sui Hin

MembersLoh Wei TakYusoff Bin Mohamed

REMUNERATION COMMITTEE

ChairmanYusoff Bin Mohamed

MembersChew Ting LengTan Sui Hin

NOMINATION COMMITTEE

ChairmanTan Sui Hin

MembersLoh Wei TakYusoff Bin Mohamed

COMPANY SECRETARIES

Lim Seck Wah (MAICSA NO.: 0799845)

Liang Siew Ching(MAICSA NO.: 7000168)

REGISTERED OFFICE

Level 15-2, Faber Imperial CourtJalan Sultan Ismail 50250 Kuala LumpurTel: 03-26924271Fax: 03-27325388

SHARE REGISTRAR

MEGA CORPORATE SERVICES SDN. BHD. (Company No.: 187984-H)

Level 15-2, Faber Imperial CourtJalan Sultan Ismail 50250 Kuala LumpurTel No.: 03-26924271Fax No. : 03-27325388

PRINCIPAL BANKERS

CIMB Bank BerhadCitibank BerhadEON Bank BerhadHSBC Bank Malaysia BerhadUnited Overseas Bank (Malaysia) BerhadHong Leong Bank BerhadAffi n Bank BerhadOCBC Bank (Malaysia) BerhadUnited Overseas Bank LimitedThe Bank of Nova Scotia BerhadAmBank (M) BerhadRaiffeisen Zentralbank Österreich AG (RZB-AUSTRIA)

SOLICITORS

Adi Radlan & Co

AUDITORS

Messrs SJ Grant ThorntonChartered Accountants Level 11, Faber Imperial Court,Jalan Sultan Ismail,50250 Kuala Lumpur

STOCK EXCHANGE LISTING

Main Board of Bursa SecuritiesBursa Securities refers to Bursa Malaysia Securities Berhad

STOCK CODE: 5125

ANNUAL REPORT 2009

03


100%Pantech Steel Industries Sdn. Bhd.

100%Panafl o Controls Pte. Ltd.

70% JC Flow Controls Pte. Ltd.

100%Pantech Corporation Sdn. Bhd.

100% Pantech (Kuantan) Sdn. Bhd.

100% Jayee Holdings Sdn. Bhd.

30% Tuah Nusa Sdn. Bhd.

Corporate Structure

Pantech Steel in Klang Panafl o Controls in Singapore

04

ANNUAL REPORT 2009

Notice of Third Annual General Meeting

1. To receive the Audited Financial Statements for the fi nancial year ended 28 February 2009 together with the Directors’ and Auditors’ Reports thereon.

2. To approve the payment of a Final Single Tier Dividend of 1.0 sen per ordinary share of RM0.20 each for the fi nancial year ended 28 February 2009.

3. To approve the payment of Directors’ fees of RM126,000 for the fi nancial year ending 28 February 2010. 4. To re-elect the following directors retiring pursuant to Article 122 of the Company’s Articles of Association

and being eligible, offered themselves for re-election:

4.1 Mr Tan Ang Ang 4.2 Mr Tan Sui Hin 4.3 Encik Abdul Karim Bin Ahmad 5. To re-appoint Messrs SJ Grant Thornton as Auditors of the Company and to authorise the Directors to fi x

their remuneration.

AS SPECIAL BUSINESS

To consider, and if thought fi t, to pass the following Ordinary Resolutions:

6. PROPOSED RENEWAL ON 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 of the relevant governmental and/or regulatory authorities, the Directors be and are hereby empowered to issue new shares in the Company from time to time upon such terms and conditions and for such purposes as the Directors may deem fi t provided that the aggregate number of shares issued pursuant to this resolution does not exceed 10% of the issued share capital of the Company as at the date of this AGM and that such authority shall continue in force until the conclusion of the next Annual General Meeting of the Company and THAT the Directors be and are hereby also authorised to obtain the approval from Bursa Securities for the listing and quotation of the additional shares so issued.”

7. PROPOSED RENEWAL OF SHARE BUY-BACK AUTHORITY

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 Authority”) 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 fi t and expedient in the interest of the Company PROVIDED THAT:-

(1) the aggregate number of shares purchased 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 profi t and share premium account of the Company. As at the latest fi nancial year ended 28 February 2009, the audited retained profi t and share premium account of the Company stood at RM10,195,863 and RM16,067,022 respectively;

NOTICE IS HEREBY GIVEN that the Third Annual General Meeting of Pantech Group Holdings Berhad (“Pantech” or the “Company”) will be held at The Synergy Room, The Westin Kuala Lumpur Hotel, 199, Jalan Bukit Bintang,55100 Kuala Lumpur on Tuesday, 18th August 2009 at 11.00 a.m. for the following purposes:-

AGENDA

AS ORDINARY BUSINESS

Please referto Note A Resolution 1

Resolution 2

Resolution 3Resolution 4Resolution 5

Resolution 6

Resolution 7

Resolution 8

ANNUAL REPORT 2009

05


(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 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 fi rst;

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 pursuant to the Act, the Listing Requirements of Bursa Securities and any other relevant authorities for the time being in force.

AND THAT the Board of the Company be and are hereby authorised to take all such steps as are necessary or expedient to implement, fi nalise or to effect the aforesaid share buy-back with full powers to assent to any conditions, modifi cations, 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 fi t and expedient in the best interest of the Company.

NOTICE OF DIVIDEND ENTITLEMENT AND PAYMENT Subject to the approval of the shareholders, a Final Single Tier Dividend of 1.0 sen per ordinary share of RM0.20 each for the fi nancial year ended 28 February 2009 will be paid on 15th September 2009 to Depositors registered in the Record of Depositors at the closed of business at 5.00 p.m. on 27th August 2009. 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 27th August 2009, 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 LumpurDated this: 27 July 2009

Notice of Third Annual General Meeting (Cont’d)

06

ANNUAL REPORT 2009

Statement AccompanyingNotice of Annual General MeetingDIRECTORS STANDING FOR RE-ELECTION 1. The Directors who are standing for re-election at the Third Annual General Meeting are as follows:-

(i) Mr Tan Ang Ang (Article 122)

(ii) Mr Tan Sui Hin (Article 122)

(iii) Encik Abdul Karim Bin Ahmad (Article 122)

2. Further details of the above Directors are set out in the Profi le of Directors on pages 7 to 8 of this Annual Report.

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. 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 specifi es 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)(b) & (c) of the Companies Act, 1965 shall not apply.

2. Where a member is an authorised nominee as defi ned under the Security 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.

3. 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 offi cer or attorney so authorized.

4. The Proxy Form must be deposited at the Registered Offi ce of the Company at Level 15-2, 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.

5. Explanatory Notes on Special Businesses:

Ordinary Resolution 7

The effect of Ordinary Resolution no. 7, if passed, will renew the general mandate and gives fl exibility for the Board of Directors to issue and allot shares at any time in their absolute discretion up to and not exceeding in total ten per centum (10%) of the issued share capital of the Company as at the date of this AGM for such purposes as they consider would be in the best interest of the Company without convening a general meeting. This authority, unless revoked or varied by the Company at a general meeting will expire at the next Annual General Meeting of the Company.

The mandate obtained last year was never been exercised and would expire by the conclusion of the Third AGM. There is no immediate plan for the additional issuance of shares. The Board would like to seek the mandate for contingency if there may be a need during this year. The Board is of the view that if there is a need to issue and allot shares. they will notify the relevant parties on the purpose and utilization of proceeds from the general mandate sought accordingly.

Ordinary Resolution 8

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 profi ts and share premium of the Company. This authority, unless revoked or varied at a general meeting, will expire at the conclusion of the next Annual General Meeting of the Company.

Further information on the Proposed Renewal of Share Buy-Back Authority are set out in the Circular to shareholders of the Company dated 27 July 2009 which is dispatched together with the Company’s Annual Report 2009.

Notice of Third Annual General Meeting (Cont’d)

ANNUAL REPORT 2009

07


Directors’ Profi le

High Frequency Induction Long Bend

36” 5D Induction Bend

1. CHEW TING LENG Executive Chairman / Group Managing Director

Mr. Jimmy Chew, a Malaysian, aged 54, is one of theco-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.

He is a member in the Remuneration Committee.

He does not hold any directorships in any other public companies.

He has an indirect interest of 84,330,400 ordinary shares via CTL Capital Holding Sdn Bhd in PGHB.

2. GOH TEOH KEAN Group Deputy Managing Director

Mr Goh, a Malaysian, aged 53, 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 fi nancial and administrative functions of the Group.


He has an indirect interest of 62,413,300 ordinary shares via GL Management Agency Sdn Bhd in PGHB.

3. TAN ANG ANG Executive Director

Mr Adrian Tan, a Malaysian, aged 53, was appointed as the Executive Director on 11 November 2006. He is also the Managing Director of Pantech Steel Industries Sdn Bhd. He obtained his professional Diploma from the Chartered Institute of Marketing in 1989. He is responsible for the overall operation and performance of the Group’s manufacturing business.


He holds 6,620,500 ordinary shares in PGHB and an indirect interest of 1,065,000 ordinary shares through his spouse interest in PGHB.

4. TO TAI WAI Executive Director

Mr. David To, a Malaysian, aged 38, was appointed as the Executive Director on 11 November 2006. He is primarily responsible for the domestic and international sales activities of the Group’s trading division. He started his career in Pantech Corporation Sdn Bhd since 1989.


He holds 10,267,150 ordinary shares in PGHB.

08

ANNUAL REPORT 2009

All directors have no family relationship with each other or major shareholders of PGHB. They have no confl ict of interest with PGHB and have no convictions of offences within the past 10 years saves for traffi c offences, if any.

Directors’ Profi le (Cont’d)

Packing for shipment

Pipes unloaded on site

5. ABDUL KARIM BIN AHMADNon-Independent Non-Executive Director

Encik Abdul Karim Bin Ahmad, a Malaysian, aged 55, was appointed as a Non-Independent Non-Executive Director of PGHB on 30 November 2006 representing the interest of Koperasi Permodalan Felda Berhad (KPFB). He graduated with a Bachelor Degree in Economics (Honours) from University Kebangsaan Malaysia in 1978. He is presently the Regional General Manager for Felda Trolak’s Regional Offi ce in Perak.


He holds 25,000 ordinary shares in PGHB.

6. TAN SUI HIN Independent Non-Executive Director

Mr Tan Sui Hin, a Malaysian, aged 59, was appointed as an Independent Non-Executive Director of PGHB 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 building engineering fi eld.

He is the Chairman of both the Audit and the Nomination Committees.

He is also a member of the Remuneration Committee.


He holds 75,000 shares in PGHB.

7. LOH WEI TAK Independent Non-Executive Director

Mr Loh Wei Tak, a Malaysian, aged 36, was appointed as an Independent Non-Executive Director of PGHB on 30 November 2006. He is a qualifi ed 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 obtained his status as a Certifi ed Practicing Accountant from Australia in 1998. In 2000, he was admitted as a Chartered Accountant to the Malaysian Institute of Accountants.

He is a member in both Audit and Nomination Committees.


He does not hold any shares in PGHB.

8. YUSOFF BIN MOHAMED Independent Non-Executive Director

Encik Yusoff Bin Mohamed, a Malaysian, aged 58, was appointed as an Independent Non-Executive Director of PGHB on 10 August 2007. He graduated from University Kebangsaan Malaysia with a Bachelor Degree in Economics (Hons). Upon his graduation, he joined Land and District Offi ce and Royal Custom Department. After 5 years in public sector, he moved to Petronas and served in various positions within Petronas’s subsidiaries and associate company. He was involved in a number of local and international major oil and gas projects and stayed with the oil and gas industry for more than 24 years.

He is the chairman of the Remuneration Committee and a member of the Audit Committee and Nomination Committee.


He holds 2,500 shares in PGHB.

ANNUAL REPORT 2009

09


Executive Chairman’s StatementTotal fl ow control solutions - Valves,Actuators and Controls

Offshore - a key market for the group

Dear Shareholders

While many companies around the world were adversely affected by global fi nancial volatility during 2008, I am very happy and excited to announce to shareholders that Pantech Group Holdings Berhad (Pantech Group) had an exceptional year for the fi nancial year ended28 February 2009.

While we were able to deliver revenue of RM313.3 million last year, Group revenue for FY2009 has outstripped expectations by vaulting to RM511.6 million, up a staggering 63%. This is indeed a record for Pantech Group and the results refl ected the fundamental strength of our integrated business model that allows us to maximise returns across the entire value-chain.

The robustness of our performance is attributable to several factors: our long-term perspective, deep industry knowledge, a team of professional and dedicated staff and our ability to anticipate the requirements of the industry, going forward.

Before the credit crunch, the world saw rising crude oil prices hit a high of US$147 a barrel in 2008. This situation worked out in Pantech Group’s favour as energy security became a high priority for oil importing countries. This lead to higher expenditure in exploration activities and development of new fi elds were accelerated thus creating an unprecedented demand for our pipes, fi ttings and fl ow controls (PFFs) products.

As an integrated one-stop centre with product range of 24,000 PFFs items, we were able to service this unexpected surge in demand from the O&G industry as companies rushed to expedite their exploration programs. More importantly, our foresight in investing in high-yield and exotic products bore fruit as demand for these products surged in FY2009.

With exploration venturing into even more challenging and unconventional landscape and at an accelerated rate due to the global hunger for oil, we reaped handsomely from the sales of our high-yield and exotic products that met the highly technical environment and conditions. Our high-yield and exotic products cater specially to higher pressure and increased corrosiveness and Pantech Group will continue to stress on technological innovation to meet the challenges that lie ahead.

Recurring business is another mainstay for Pantech Group. New and replacement parts are required regularly for the maintenance of pipes, fi ttings and fl ow controls systems in the O&G industry, which does not compromise on maintaining its high safety and operating standards. As every downtime equates to literally non-fl owing of cash for the O&G industry, the stakeholders are eager to ensure that the system function in entirety with minimal disruption and thereby creating a healthy demand for our products.

Pantech Group’s client base is also growing both domestically and internationally, in particular with the addition of South America market in the fi nancial year under review. At the local front, our track record and reputation have helped grow our client base of international companies investing in Malaysia. These international customers have contributed positively to the group revenue and at the same time, reaffi rmed Pantech Group’s position as the preferred one-stop PFFs centre.

Our commitment to safety and environmental protection and performance is a hallmark of Pantech Group’s success through the years. In line with this, I am very pleased to report that Panafl o Controls and Pantech Corporation were awarded ISO14001:2004 and OHSAS 18001:2007 certifi cations in December 2008. This certainly reinforces Pantech Group’s commitment, training and performance as a company that is compliant with world standards for safety and protection.

10

ANNUAL REPORT 2009

Executive Chairman’s Statement (Cont’d)

On the manufacturing front, we have acquired a new piece of 165,816 sq ft. land next to our existing plant in Klang in preparation for future expansion. We are also very excited that our manufacturing subsidiary, Pantech Steel was awarded the Enterprise 50 Award on 7 November 2008.

Two months after this award, Pantech Steel was once again recognised in The Brand Laureate as the Best Brand for Oil & Gas Pipe Fittings and Induction Bends on 8 January 2009.

Pantech Group benefi ted from the “stocking” activities of the O&G industry last year. We expect to experience a slight market correction as the industry stabilise and exhaust their PFF stock. Nevertheless the O&G industry is one that is very resilient. With the long lead time nature of this industry, Pantech Group is already working on cementing our market share. To this end, we participated in two notable exhibitions and conferences on the oil and gas industry; one which took place in Abu Dhabi in November 2008 and another which was held in Singapore in December 2008.

I am happy to report that we have received good leads from our participation in these two exhibitions which have since been converted into orders.

Not letting up on our marketing efforts, we recently participated in the 12th Asian Oil, Gas and Petrochemical Engineering Exhibition on 10-12 June 2009 which was held closer to home in Kuala Lumpur. We will continue to participate in exhibitions around the world on a cost effi cient basis and weigh the cost-benefi ts before committing resources to such events.

Group Results

Our 2009 fi scal year was a year where we saw spectacular returns from implementing the product strategy and enlargement of Pantech Group’s market footprint globally which we shared a year earlier. Group revenue for FY2009 outstripped expectations, vaulting to RM511.6 million, up 63% from last year’s RM313.3 million revenue. Correspondingly, Profi t After Tax (PAT) increased to RM61.4 million, posting a phenomenal growth of 80%.

The bulk of our revenue was generated locally with both the trading division and manufacturing division outperforming expectations. The demand for our PFFs via our overseas subsidiary boosted the contribution to overall Group revenue from our trading division which was registered at 78.5% or RM401 million. This was largely due to the extensive product items and ranges amounting to 24,000 items that our trading operations were able to offer our customers.

The manufacturing operations registered a growth in revenue of 63.5% from RM71 million last year to a revenue of RM116.3 million this fi scal year. More than 80% of the pipe fi ttings manufactured at our Klang factory are exported.

Market Trends and The Way Forward

The global energy arena is undergoing important changes as populations and economies expand. The hunger for energy especially from growing economies will drive the need for more innovative and unconventional sources of energy; however, the outlook for oil and gas industry will remain positive in the foreseeable future.

Heat Treatment Facilities

Cryogenic and High Pressure Valve

ANNUAL REPORT 2009

11



Pantech Group is aware of the need to be ahead of this and be ready to ride the fresh wave of demand as the O&G industry regains its footing when the economy recovers. We will continue to look into higher value products, meet new product quality requirements and further enhance our safety and environmental performance.

The O&G sector contributed about 70% of our revenue this fi nancial year. We will continue to place emphasis in this sector as we make further inroads into the petrochemical, plantation and refi nery area.

In planning ahead for future streamlining and closer control of our inventories and warehousing, we have acquired a 10.0 acres land in Pasir Gudang Johor for RM6.3 million. We plan to consolidate our southern region warehouse facilities, offi ce and supply chain operations into a larger facility that will also pave the way for our future business expansion. It also allows for greater operational excellence as we continue to monitor the market situation even more closely, while adopting a more cautious approach through diligent administration of cost controls and cash fl ows.

On the technological innovation front, we now have a fully integrated hot induction long bend facility in Malaysia which can produce up to 40” diameter of induction long bends. This augurs well for Pantech Group as we are now well poised to tap the demands of another niche area of the PFFs sector.

From the contacts made and relationship established through our marketing efforts, we have identifi ed the Middle East region as the immediate growth opportunity for Pantech and we plan to develop this market.

Dividends

Pantech Group’s total shareholder return for FYE 28 February 2009 amounted to RM11.24 million or 18.3% of the Group’s reported net profi ts.

The fi rst dividend for the 2009 fi scal year of a single tier dividend of 1.2 sen per ordinary share of RM0.20 was announced on 23 October 2008 and paid on 13 January 2009.

With the ongoing strong performance, we announced a special second interim single tier dividend of 0.8 sen per ordinary shares of RM0.20 each on 12 January 2009. This dividend was paid on 12 May 2009.

We believe in sharing the harvest of the fi elds with our shareholders. As such and in view of the outstanding performance recorded for the fi nancial year ended 28 February 2009, we are also recommending a fi nal single tier dividend of 1.0 sen per ordinary share of RM0.20 each amounting to RM3,750,000. This recommendation is subject to shareholders’ approval at the forthcoming Third Annual General Meeting on 18 August 2009.

12

ANNUAL REPORT 2009


Corporate Governance

Being a good corporate citizen is a core requirement of the changing energy landscape as well. At Pantech Group, we have intertwined ethical business practices and integrity into all aspects of our business culture. This underscores our commitment to transparency, accountability and protection of shareholders’ interest.

Our statement of corporate governance and related reports are on pages 17 to 28.

Acknowledgements

In line with the new corporate governance guideline that require audit committee comprises only non-executive director, our Group Deputy Managing Director Mr Goh Teoh Kean has resigned as an audit committee member. He has been instrumental in ensuring the integrity of our Group’s fi nancial reporting.

On behalf of the Directors, I would like to thank our 442-strong staff strength for their unwavering commitment and hard work, without which, Pantech Group would not been able to produce an outstanding set of results.

My vote of appreciation also goes out to our customers, shareholders and business partners for their continued support.

Pantech Group’s FY2009 results demonstrate our commitment to operational excellence, stringent business controls and disciplined capital investment. These values will ensure Pantech Group is able to successfully meet the challenges of the changing global energy landscape.

Notwithstanding the economic situation, there is still enormous opportunity for Pantech Group as population growth and the inevitable rise in standards of living will drive global demand for energy. I am confi dent that with prudent business strategy and measured growth plans, the Group will ride out the economic uncertainties of 2009 in good stead to deliver a result that is in line with the performance of the oil and gas fabrication and service sector.

CHEW TING LENG (JIMMY)EXECUTIVE CHAIRMAN

Inventories located in Port Klang Free Zone (PKFZ)

Inventories in Shah Alam facilities

ANNUAL REPORT 2009

13


Corporate Social Responsibility Activities

In our commitment to setting standards in business performance, Pantech Group continues to balance out business practice with standards of high social and environmental performance. We treat our commitment towards Corporate Social Responsibility or CSR with the same discipline, rigour and attention to detail as we do our operational and fi nancial responsibilities.

In line with this commitment, Pantech Group has begun to build a track record in terms of having policies, programmes and activities that draw us closer to our employees, care for to the environment via safety and health focus and link us to the community.

Charity begins at home. For Pantech, this is a phrase that requires actions to follow up the words. As part of our employee welfare programme, we maintained our annual Back to School Campaign by contributing 103 sets of school bags, complete with stationery items and also vouchers to purchase school shoes and uniforms to employee’s children in primary and secondary school. This is our way of sharing the fi nancial burden most parents face during this time.

To reward and bond our employees even closer together, Pantech held its annual dinner for Group staff in Johor Bahru and Selangor respectively. Pantech Steel also had a Family Day with staff and their family members at A’Famosa Resort in Melaka.

In addition, we hosted a team building exercise for all employees in the trading division in August 2008, to provide an opportunity for employees to meet and share information and knowledge.

Also high on the list of our priorities is our commitment to the health, welfare and safety of our employees. We are confi dent that happy employees contribute not only to productivity but innovation as well within the company.

Employee safety is an important area for us and we placed great emphasis on safety improvements all year round. In order to upgrade the skills of our employees, we held a safety training course for our forklift drivers in March 2008. Following this, we also held an emergency response plan training and fi rst aid training for our employees.

Emergency Evacuation Drill

Back to School Campaign

Annual Dinner

14

ANNUAL REPORT 2009

Donation for Sichuan Earthquake

In addition, Pantech Group observed Safety Week from 18-22 August 2008. Our continuous focus on safety across all our operations has delivered remarkable improvement in performance over the years. As a responsible organisation, we held a briefi ng on the H1N1 infl uenza for our staff in May this year as soon as the disease is suspected to be pandemic.

The OHSAS 18001:2007 certifi cation received late last year reinforces our commitment to be a company compliant with world standards for safety and protection.

We are also pleased to report that our major trading operations have achieved the internationally recognised ISO 14001:2004 standard for environmental management systems. This standard ensures that Pantech Group is in conformance with international standards to reduce our environmental footprint and to decrease the pollution and waste produced.

Staying true to our commitment to benefi t the community in which we operate in, Pantech supported a charity drive that contributed school bags and shoes to children of the poor in Chukai, Air Panas, Terengganu in November 2008. In widening our reach, we also donated to the victims of the devastating earthquake that took place in Sichuan, China, in May 2008.

Pantech Group believes that our long-term future depends on being a responsible citizen in the world and earning the continuing support of customers, shareholders, employees, local communities and other stakeholders. As such, Pantech Group will continue to build on its programmes and activities aimed at honouring the triple bottom line: People, Planet and Profi t.

Corporate Social Responsibility Activities (Cont’d)

Safety Week

ANNUAL REPORT 2009

15


Corporate Events During the Financial Year

The 12th Asian Oil,Gas and Petrochemical Engineering Exhibition (OGA 2009)

Abu Dhabi International PetroleumExhibition & Conference (ADIPEC 2008)

The 17th International Oil & Gas Industry Exhibition & Conference (OSEA 2008)

Brand Laureate Award

Enterprise 50 Award

16

ANNUAL REPORT 2009

HSE Accreditations and Certifi cations

Recognition Awards Received by Pantech Steel Industries Sdn Bhd

Enterprise50

Selangor Export Excellence Award(Manufacturing)

The Brand LaureateBest Brand for Oil & Gas Pipes

Fittings and Induction Bend

SMB ExportExcellence

Award

Pantech Corporation Sdn. Bhd

Panafl o Controls Pte. Ltd.

ISO 14001 : 2004 (STANDARDS)Certifi cation by SGS

ISO 14001 : 2004(STANDARDS)Certifi cation by SGS

ISO 14001 : 2004(UKAS)Certifi cation by SGS

OHSAS 18001 : 2007,MS 1722 : PART 1:2005Certifi cation by SGS

ISO 14001 : 2004(UKAS)Certifi cation by SGS

OHSAS 18001 : 2007,MS 1722 : PART 1 : 2005Certifi cation by SGS

ISO 14001 : 2004 (STANDARDS)ISO 14001 : 2004 OHSAS 18001 : 2007,

ISO 14001 : 2004 OHSAS 18001 : 2007,

Recognition Awards

ANNUAL REPORT 2009

17


Audit Committee Report

1. COMPOSITION AND MEETING

The Audit Committee was established by the Board on 1 December 2006. The Committee presently comprises of three (3) members of the Board which consists of Non-Executive Directors.

Chairman

Tan Sui Hin Independent Non-Executive Director

Members

Low Wei Tak Independent Non-Executive Director

Yusoff Bin Mohamed Independent Non-Executive Director

2. TERMS OF REFERENCE OF THE AUDIT COMMITTEE

2.1 Constitution

The Audit Committee was formed pursuant to a resolution passed by the Board of Directors on 1 December 2006.

2.2 Membership

The Audit Committee shall be appointed by the Board of Directors from among their members and shall comprise of not less than three (3) members, all members must be non-executive directors, with a majority of them being independent directors.

The members of the Audit Committee shall elect a chairman from among their members who is not an executive director or employees of the Company or any related corporation. The chairman elected shall be subjected to endorsement by the Board.

If a member of the Audit Committee resigns, dies or for any other reason ceases to be a member with the results that the number is reduced below 3, the Board of Directors shall, within 3 months of that event, appoint such number of new members as may be required to make up the minimum number of 3 members.

No alternate Director shall be appointed as a member of the Audit Committee.

At least one member of the Committee:-(a) shall be a member of the Malaysian Institute of Accountants; or(b) if he is not a member of the Malaysian Institute of Accountants, he shall have at least three (3) years’ working

experience and:-i) he must have passed the examination specifi ed in Part 1 of the 1st Schedule of the Accountants Act, 1967; orii) he must be a member of one of the associations of accountants specifi ed in Part II of the 1st Schedule of the

Accountants Act, 1967.

The term of offi ce and performance of the Committee and each of its members must be reviewed by the Board at least once every three (3) years.

2.3. Notice of Meeting and Attendance

The agenda for Audit Committee meetings shall be circulated before each meeting to members of the Committee. The Committee may require the external auditors and any offi cial of the Company to attend any of its meetings as it determined. The external auditors shall have the right to appear and be heard at any meeting of the Audit Committee and shall appear before the Committee when required to do so by the Committee.

Meetings shall be held at least four (4) times a year with a minimum quorum of two (2) members and the majority of members present shall be independent non-executive Directors. Additional meetings may be called at any time at the discretion of the Committee.

At least twice a year, the Committee shall meet with the external and/or internal auditors without any executive Board member present and upon the request of the external auditors, the Chairman of the Committee shall convene a meeting to consider any matter which the external auditors believe should be brought to the attention to the Board or shareholders.

The Company Secretary of the Company shall be the Secretary of the Committee.

HSE Accreditations and Certifi cations

18

ANNUAL REPORT 2009

2.4. Authority

The Audit Committee is authorised to investigate any activity of the Company within its terms of reference and all employees shall be directed to co-operate with any request made by the Committee. The Committee shall be empowered to retain persons having special competence as necessary to assist the Committee in fulfi lling its responsibilities.

The Committee shall have direct communication channels with the external and internal auditors.

The Committee is authorised by the Board to obtain independent professional or other advice at the Company’s expense and to invite outsiders with relevant experience and expertise to attend meetings if necessary.

The Committee would be able to convene meetings with the external auditors, internal auditors or both, excluding the attendance of the other Directors and employees of the Company, whenever deemed necessary.

2.5 Duties And Responsibilities

The duties and responsibilities of the Audit Committee shall be:-

2.5.1 To review the quarterly results and year end fi nancial statements prior to the approval by the Board of Directors focusing particularly on:-

- the going concern assumption;- compliance with accounting standards and other legal requirements;- any changes in accounting policies and practices;- signifi cant issues from the audit and signifi cant and unusual events.

2.5.2 To review with External Auditors on the following:-

- the audit plan;- evaluation of system of internal controls;- problems and observation arising from interim and fi nal audits.

2.5.3 To review:-

- any letter of resignation from External Auditors of the Company or Group;- whether there is reason to believe that the Company or Group’s External Auditors is not suitable for

reappointment;- any recommendations on the nomination of a person or persons as External Auditors and to consider

audit fees;- the appointment or re-appointment of Internal Auditors or recommend the nominations of a person or

persons as Internal Auditors.- any related party transaction and confl ict of interest situation that may arise within the Company or

Group including any transaction, procedure or course of conduct that raises questions of management integrity.

- internal audit program, processes, the results of the internal audit program, processes or investigation undertaken and whether or not appropriate action is taken on the recommendations of the internal audit function.

2.5.4 To assess the adequacy and effectiveness of the system of internal control and accounting control procedures of the Company and Group by reviewing the reports from the Internal Auditors and External Auditors’ management letter and Management’s response.

2.5.5 To undertake such other responsibilities as may be agreed by the Committee and the Board.

Audit Committee Report (cont’d)

ANNUAL REPORT 2009

19


3. SUMMARY OF ACTIVITIES DURING THE FINANCIAL YEAR

A total of fi ve (5) meetings were held during the fi nancial year under review. The details of the attendance of each member of the Audit Committee are as per table below:-

AUDIT COMMITTEE MEMBERS NUMBER OF MEETINGS ATTENDED

Mr Tan Sui Hin 5/5 Mr Loh Wei Tak 5/5 Encik Yusoff Bin Mohamed 5/5 Mr Goh Teoh Kean* 3/3

Note : * Mr Goh Teoh Kean resigned as an Audit Committee Member on 23/10/2008

The summary of the activities of the Audit Committee in discharging of its duties and responsibilities for the fi nancial year ended 28 February 2009 included the following:-

i) Reviewed of the External Auditors’ scope of work and audit plans for the fi nancial year under review.ii) Reviewed of the results of audit, the audit report and management letter with management’s response. iii) Reviewed of the Group’s compliance with the Listing Requirements of Bursa Malaysia Securities Berhad, Financial Reporting

Standards (FRS) in Malaysia and other relevant legal and regulatory requirements with regards to the quarterly and year-end fi nancial statements.

iv) Reviewed and approved the Internal Audit Plan and the Internal Audit Report.v) Reviewed the fi nancial statements of the Group prior to submission to the Directors for their perusal and approval. This was

to ensure compliance of the fi nancial statements with the provisions of the Companies Act, 1965 and Financial Reporting Standards (FRS).

vi) Review of the unaudited quarterly fi nancial results announcements before recommending them for the Board approval.vii) Considered and recommended to the Board the re-appointment of External Auditors and their fees.

4. INTERNAL AUDIT FUNCTIONS

The Audit Committee is aware of the fact that an independent and adequately resourced internal audit function is essential to assist in obtaining the assurance it requires regarding the effectiveness of the system of internal control.

The Board has outsourced its internal audit function to an independent professional service fi rm. The Outsourced Internal Auditors (“Internal Auditors”) report to the Audit Committee at least half yearly. Findings arising from the internal audit review together with the level of concern, the Management’s response, recommendations and personnel responsible from implementing corrective actions are presented to the Audit Committee for its review.

During the period under review, the Internal Auditors carried out the following activities:-

i) Presented and obtained approval from the Audit Committee the annual internal audit plan, its audit strategy and scope of audit work.

ii) 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.

iii) Monitored and followed-up to ensure Management implemented the action plans as agreed.

Audit Committee Report (cont’d)

20

ANNUAL REPORT 2009

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 fi nancial controls but operational and compliance controls as well. This Statement on Internal Control is made pursuant to paragraph 15.27 (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 15.24 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 fi nd 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 internal control and for reviewing adequacy and integrity 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 fi nancial 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 signifi cant risks faced by the Group. As such, the Board has adopted an Enterprise Risk Management (“ERM”) framework, which is developed within its risk appetite.

An ERM report together with the Group’s detailed key risk profi le, were presented to the Board. The Board has set up a Risk Management Committee (“RMC”) which comprises of Executive Directors and Senior Management of the Group to identify, evaluate, and manage signifi cant risks faced by the Group as well as report to the Board on a regular basis.

INTERNAL AUDIT FUNCTION

The internal audit function has been outsourced by the Group to a professional fi rm, 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 fi nancial 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 internal controls 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 fi nancial year ended 28 February 2009 was RM68,000-00.

KEY ELEMENTS OF THE GROUP’S INTERNAL CONTROLS

The key elements of the Group’s system of internal controls include:

• Responsibilities of the Board and management are defi ned to ensure effective discharge of roles and responsibilities;

• The Board and the Audit Committee meet every quarter to discuss matter raised by Management and/or Internal/External Auditors on business and operational matters including potential risks and control issues.

Statement On Internal Control

ANNUAL REPORT 2009

21


• The Board has established and documented a Schedule of Matters Reserved For The Board to facilitate the effective reporting and operation of the Board at regular Board meeting. Major capital investment, acquisition, disposals or any other transaction not in the ordinary course of business exceeding a certain threshold must be referred to the Board for approval.

• Management reports to the Board on material fi ndings and/or variances, if any, and the Board will review their implications to the Group and advise accordingly;

• Senior Management attends Management meetings on a regular basis to address budgets, operational and fi nancial performance, business planning, control environment and other key issues;

• Key personnel from respective subsidiaries provide monthly reports to the corporate offi ce on the subsidiaries’ performance;

• Communication line has been established between subsidiaries, business units, divisions and employees through internal memorandums, staff briefi ngs and operational meetings to achieve the Group’s overall business objectives;

• Close and active involvement of the Executive Directors in the day-to-day business operations of the Group; and

• A Health, Safety and Environmental Committee has been established for one of the business divisions to review and ensure compliance with occupational safety and health policies and procedures on a continuous basis.

INTERNAL CONTROL SUMMARY

There is no material internal control failures occurred during the fi nancial 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 at its current level of operations and will continuously strive to enhance the Group’s system of internal control in safeguarding shareholders’ investment and Company’s assets.

Statement On Internal Control (cont’d)

22

ANNUAL REPORT 2009

The Board of Directors (“the Board”) of Pantech Group Holdings Berhad supports the objectives of the Malaysian Code on Corporate Governance (“the Code”) and also acknowledges their roles in ensuring that shareholders’ interest are properly looked after. For this reason, the Board of Directors is committed in maintaining highest standard of corporate governance pursuant to the Code.

The Group will continue to endeavor to comply with all the key Principles and Best Practices of the Malaysian Code on Corporate Governance in its effort to maintain shareholders value, whilst taking into account the interest of other stakeholders.

This Corporate Governance Statement contained the principles and practices of the Code that the Group has adhered to.

A. BOARD OF DIRECTORS

i. Composition and Attendance

The composition of the Board and the individual Directors’ attendance of meetings during the fi nancial year ended 28 February 2009 were as follows:-

Meetings Attended(out of 5 held)

Mr Chew Ting Leng Executive Chairman/Group Managing Director 5/5

Mr Goh Teoh Kean Group Deputy Managing Director 5/5

Mr Tan Ang Ang Executive Director 5/5

Mr To Tai Wai Executive Director 5/5

Mr Tan Sui Hin Independent Non-Executive Director 5/5

Mr Loh Wei Tak Independent Non-Executive Director 5/5

Encik Yusoff Bin Mohamed Independent Non-Executive Director 5/5

Encik Abdul Karim Bin Ahmad Non-Independent Non-Executive Director 5/5

The Group is lead by an effective Board which controls the activities of the Group. The Board has overall responsibility for corporate governance, strategic planning, formulation of policies and overseeing the investments and business of the Company.

The Board currently consists of eight (8) members, comprising of an Executive Chairman who is also the Group Managing Director, one (1) Group Deputy Managing Director, two (2) Executive Directors and four (4) non-executive directors.

The Board of Directors has complied with the Best Practices in Corporate Governance except that the Chairman also holds an Executive position as Group Managing Director. Although of combined roles, the Board is of the opinion that there is a balanced view at all deliberations due to the presence of at least 1/3 Independent Directors who are unbiased and provide independent views, advice and judgment in compliance with Paragraph 15.02 of the Bursa Securities Listing Requirements.

Although all the Directors have an equal responsibility for the Company’s operations, the presence of Independent Non-Executive Directors brings additional element of balance to the Board. Besides providing valuable expertise and business inputs, the Independent Directors have the caliber to exercise independent judgment in the Board’s decision.

ii. Appointment and Re-election of Directors

According to the Articles of Association of the Company, one-third (or the number nearest to one-third) of the Directors are required to retire from offi ce at each annual general meeting. Further, all the Directors are required to retire from offi ce at least once in every three (3) years. However, a retiring Director is eligible for re-election at the meeting at which he or she retires. An election of the retiring Directors shall take place every year.

Any person appointed as a Director, either to fi ll a casual vacancy or as an addition to the existing Directors shall hold offi ce only until the conclusion of the next annual general meeting, and shall be eligible for re-election but shall not be taken into account in determining the Directors who are to retire by rotation at that meeting.

Corporate Governance Statement

ANNUAL REPORT 2009

23


iii. Directors’ Training

The Board has completed its Mandatory Accreditation Programme. There has been greater awareness of the importance and benefi ts of attending and participating in the training and continuing education programme. The Board is committed to equip themselves in discharging their duties and responsibilities and shall continue to attend relevant seminars, conferences and other training programme deemed appropriate for the Directors.

Pursuant to paragraph 15.09(2) and Appendix 9C (Part A, paragraph 28) of the Listing Requirements, the Directors either individually or collectively have attended and participated in programmes and forums relating to leadership and governance as well as current changes to laws and regulations. Descriptions on types of training attended by the Directors are as follows:-

Mr Chew Ting Leng• Gain Strategic Advantage in the Emerging Global Market : Governance & Control

Mr Goh Teoh Kean• Financial Due Diligence• The Inside Story of the Annual Report: What you need to know

Mr Tan Ang Ang• Financial Due Diligence• Gain Strategic Advantage in the Emerging Global Market : Governance & Control

Mr To Tai Wai• Gain Strategic Advantage in the Emerging Global Market : Governance & Control

Mr Tan Sui Hin• The Inside Story of the Annual Report: What you need to know• Best Practices of Boardroom Affairs

Mr Loh Wei Tak• The Inside Story of the Annual Report: What you need to know• Best Practices of Boardroom Affairs

Encik Abdul Karim Bin Ahmad• Best Practices of Boardroom Affairs

Encik Yusoff Bin Mohamed• Best Practices of Boardroom Affairs

Throughout the year, all the Directors have also been briefed in meetings that covered the following topics:-

• Corporate legal and Bursa Malaysia Listing Requirement update• Single-tier dividend system• New applicable Financial Reporting Standards

The Company Secretaries also circulate the relevant guidelines on statutory and regulatory requirements from time to time for the Directors’ reference and brief the Board members on the update.

iv. Supply of Information

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 form and quality necessary to enable them to discharge their duties and responsibilities. All Directors have access to the advice and services of the Company Secretaries and to obtain independent professional advice, whenever necessary, at the expense of the Company.

Corporate Governance Statement(cont’d)

24

ANNUAL REPORT 2009

v. Board Committees

The Board delegates specifi c responsibilities to three committees; namely, Audit Committee, Nomination Committee and Remuneration Committee. All the Committee has written terms of reference and the Board receives reports of their proceedings and deliberations.

a. Audit Committee

The Audit Committee was formed on 1st December 2006. The Committee plays an active role in assisting the Board in discharging its governance responsibilities which include maintaining a sound system of internal control. The Audit Committee Report is set out separately on pages 17 to 19 of this Annual Report.

b. Nomination Committee

The Nomination Committee presently comprises the following members:-

ChairmanTan Sui Hin Independent Non-Executive Director

MembersLoh Wei Tak Independent Non-Executive DirectorYusoff Bin Mohamed Independent Non-Executive Director

The Board has established the Nomination Committee on 1st December 2006. The Committee is empowered to make recommendations of nominees to the Board. All decisions on appointments are made by the Board after considering the recommendations of the Nomination Committee in accordance with the Company’s Articles of Association.

The Committee comprising of three (3) Non-Executive Directors, involved in assessing the existing Directors and identifying, nominating, recruiting, appointing and orientating new Directors. The Committee also ensures the selection of Board members has an appropriate balance of expertise and abilities by reviewing the skills, experiences and other qualities of the Directors thus strengthen the composition of the Board and contributes extensively to the effectiveness of the Board.

c. Remuneration Committee

The Remuneration Committee presently comprises the following members:-

ChairmanYusoff Bin Mohamed Independent Non-Executive Director

MembersChew Ting Leng Executive Chairman/Group Managing DirectorTan Sui Hin Independent Non-Executive Director

The Remuneration Committee was formed on 1st December 2006. The Committee is responsible for, among others, recommending to the Board the remuneration of all Executive Directors in all its forms, by referring to the KPI and market survey as necessary. In the event an Executive Director is a member of the Remuneration Committee, then he or she would not be part of the decision making process to arrive at his or her own remuneration. The determination of remuneration packages of non-executive directors would be a matter for the Board as a whole. Nonetheless, the non-executive directors concerned would abstain from discussion of their own respective remuneration. The Committee is entrusted under its terms of reference to assist the Board.

d. Risk Management Committee

The Company has established a Risk Management Committee (“RMC”) and is headed by the executive director and comprises members of key management team. 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 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 2009

25


B. DIRECTOR’S REMUNERATION

i. The Level and Make-Up of Remuneration

The aggregate Directors’ remuneration for the fi nancial year ended 28 February 2009 are set out below:

Remuneration (RM)Executive Directors 4,385,127

Non-Executive Directors 126,000

TOTAL 4,511,127

The remuneration paid to the Directors, analysed in the following bands, is as below:-

Range of Remuneration (RM) Executive Non-Executive

50,000 and below - 4

700,001 – 750,000 1 -

850,0001– 900,000 1 -

1,150,001 – 1,200,000 1 -

1,500,001 – 1,550,000 1 -

There is no service contract made between any Director and the Company or its subsidiary companies.

ii. Procedure

The remuneration Committee shall ensure that the levels of remuneration are suffi cient to attract and retain Directors of the quality required to manage the business of the Group.

The Directors’ Fees will be recommended by the Remuneration Committee and submitted to the Board for endorsements. These Directors’ Fees are submitted for shareholders approval at the Annual General Meeting.

C. SHAREHOLDERS

i. Dialogue with Investors

The Board recognizes the values of the dialogue with investors and shareholders and the importance of accountability to them. As such, the Board is disseminating proper, timely and adequate information to the investors and shareholders through annual reports, announcements, circulars to shareholders and press releases. Through such channels, the Company is able to provide an overview of the Group’s performance and operation and to disclose material information.

Shareholders and Investors who would like to obtain further understanding on the Group’s activities or request a copy of some publicly available documents are welcome to send their letters or emails to the Company Secretary at the registered offi ce.

ii. General Meetings

The Company’s annual general meetings and extraordinary general meetings are the main forum for communication by the Company with its shareholders and for shareholder to participate in questions and answers session in obtaining latest development of the Group.


26

ANNUAL REPORT 2009

D. ACCOUNTABILITY AND AUDIT

i. Financial Reporting

The Directors are responsible to present a true and fair assessment of the Group’s position and prospects in the annual reports and quarterly reports. The quarterly fi nancial results were reviewed by the Audit Committee and approved by the Board of Directors prior to submission to Bursa Malaysia Securities Berhad.

A statement by the Directors of their responsibilities in the preparation of fi nancial statements is set out in the ensuing section.

ii. Statement of Directors’ Responsibility for Preparing Financial Statements

The Board is responsible to ensure that the fi nancial statements are properly drawn up in accordance with the provisions of the Companies Act 1965 and approved accounting standards in Malaysia so as to give a true and fair view of the state of affairs of the Group as at the end of the fi nancial year and of the results and cash fl ows of the Group for the fi nancial year then ended. The matter will be further enhanced in the forthcoming year.

The Directors are satisfi ed that in preparing the fi nancial statements of the Group for the year ended 28 February 2009, 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 fi nancial statements, subject to any material departures being disclosed and explained in the notes to the fi nancial statements. The fi nancial statements have been prepared on the going concern basis.

The Directors are responsible for ensuring that the Group keeps suffi cient accounting records to disclose with reasonable accuracy, the fi nancial position of the Group and which enable them to ensure that the fi nancial statements comply with the Companies Act, 1965.

iii. Internal Control

The Board of Directors acknowledges their responsibility for the Group’s system of internal control, which is designed to identify and manage the risks of the businesses of the Group in pursuit of its objectives. In addition, the system of internal control practiced by the Group spans over fi nancial, operational and compliance aspects, particularly to safeguard the Group assets and hence shareholders’ investment. In executing this responsibility, the Board via the Audit Committee and the internal auditors, has adopted procedures to monitor the ongoing adequacy and integrity of the system of internal control.

Further details of the state of the system of internal control of the Group are presented on pages 20 to 21 of this Annual Report.

iv. Relationship with the Auditors

The Board has established a formal and transparent arrangement for maintaining appropriate relationships with the external auditors in seeking professional advice and ensuring the compliance with the appropriate accounting standards. The Audit Committee met with the external auditors to discuss their audit plan, audit fi ndings and the fi nancial statements.

v. Directors’ Responsibility Statement on Annual Audited Accounts

The Directors are required by the Companies Act, 1965 to prepare fi nancial statements for each fi nancial year which are made in accordance with the applicable approved accounting standards in Malaysia and to give a true and fair view of the state of affairs of the Company and of the Group as at the end of each fi nancial year and of the result and cash fl ows of the Company and of the Group for the fi nancial year end.

E. COMPLIANCE STATEMENT

The Company is committed in achieving high standards of corporate governance throughout the Group and to the highest level of integrity and ethical standards in all its business dealings. The Board considers that the Company has complied with the principles and best practices as set out in parts 1 and 2 respectively of the Code.


ANNUAL REPORT 2009

27


Corporate Governance Statement(cont’d) Additional Compliance Statement1. UTILISATION OF PROCEEDS FROM CORPORATE EXERCISE

No proceeds were raised by the Company from any corporate proposals during the fi nancial year.

2. SHARE BUY-BACKS

Details of the share bought-back by the Company during the fi nancial year are set out below:-

MonthNo. of Shares

purchased Price per share (RM)

Total Consideration (RM)Lowest Highest Average

OCT - 08 107,500 0.600 0.605 0.604 65,021.28NOV - 08 28,000 0.500 0.500 0.504 14,102.20DEC - 08 522,800 0.410 0.450 0.430 224,618.50JAN - 09 162,500 0.450 0.475 0.468 76,005.52FEB - 09 - - - - -

At the end of the fi nancial year, a total of 820,800 ordinary shares at RM0.20 each were retained as treasury shares.

There was no sale or cancellation of treasury shares during the fi nancial year.

3. OPTIONS, WARRANTS OR CONVERTIBLE SECURITIES

There were no options, warrants or convertible securities exercised in respect of the current fi nancial year.

4. AMERICAN DEPOSITORY RECEIPT (“ADR”) /GLOBAL DEPOSITORY RECEIPT (“GDR”)

The Company did not sponsor any ADR or GDR programmes during the fi nancial 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 fi nancial year.

6. NON-AUDIT FEES

The amount of non-audit fees incurred for services rendered to the Company and its subsidiaries during the fi nancial year ended 28 February 2009 by Messrs SJ Grant Thornton was RM21,400.00.

7. PROFIT ESTIMATE, FORECAST AND PROJECTION

The Company did not release any profi t estimate, forecast or projections during the fi nancial period.

8. VARIANCE IN RESULTS

There is no signifi cant variance between the profi t after tax for the fi nancial statement ended 28 February 2009 and the unaudited results previously announced.

28

ANNUAL REPORT 2009

Additional Compliance Statement (cont’d)

9. PROFIT GUARANTEE

The Company did not give any form of profi t guarantee to any parties during the fi nancial 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 substantial shareholders since the end of the previous fi nancial year.

11. RECURRENT RELATED PARTY TRANSACTIONS OF A REVENUE AND TRADING NATURE (“”RRPT”)

There is no RRPT entered during the fi nancial year.

12. REVALUATION POLICY ON LANDED PROPERTIES

The Group’s revaluation policies on landed properties held by the Group are disclosed in note 3(e) to the fi nancial statements.

30 Directors’ Report

34 Statement by Directors

34 Statutory Declaration

35 Independent Auditors’ Report

37 Balance Sheets

38 Income Statements

39 Statements of Changes in Equity

41 Cash Flow Statements

43 Notes to the Financial Statements

FinancialStatements

Report

s in Equity

Statements

30

ANNUAL REPORT 2009

The Directors of Pantech Group Holdings Berhad have pleasure in submitting their report together with the audited fi nancial statements of the

Group and of the Company for the fi nancial year ended 28 February 2009.

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 13, 14 and 15 to the Financial

Statements respectively.

There have been no signifi cant changes in the nature of these activities of the Company, its subsidiary companies, associate company and

joint venture during the fi nancial year.

FINANCIAL RESULTS

Group CompanyRM RM

Net profi t for the fi nancial year 61,459,473 14,352,367

Attributable to:-

Equity holders of the Company 61,459,473 14,352,367

DIVIDENDS

The amount of dividends paid and declared since the end of the last fi nancial year were as follows:-

RM

Final dividend of 0.30 sen less 26% income tax per ordinary share in respect of the fi nancial year ended 29 February

2008 and paid on 19 September 2008 832,500

Final single tier dividend of 0.66 sen per ordinary share in respect of the fi nancial year ended 29 February 2008 and

paid on 19 September 2008 2,475,000

First interim single tier dividend of 1.00 sen per ordinary share and special interim single tier dividend of 0.20 sen per

ordinary share in respect of the fi nancial year ended 28 February 2009 and both are paid on 13 January 2009 4,495,782

Special second interim single tier dividend of 0.80 sen per ordinary share in respect of the fi nancial year ended 28

February 2009 and paid on 12 May 2009 2,993,434

At the forthcoming Annual General Meeting, a fi nal single tier dividend, in respect of the fi nancial year ended 28 February 2009, of 1.00 sen

per ordinary share amounting to a dividend payable of RM3,750,000 will be proposed for shareholders’ approval. The fi nancial statements for

current fi nancial year do not refl ect this proposed dividend. Such dividend, if approved by the shareholders, will be accounted for in equity as

an appropriation of retained earnings in the fi nancial year ending 28 February 2010.

RESERVES AND PROVISIONS

There were no material transfers to or from reserves or provisions during the fi nancial year other than those disclosed in the fi nancial

statements.

Directors’ Report


ANNUAL REPORT 2009

31

Directors’ Report (cont’d)

ISSUE OF SHARES AND DEBENTURES

During the fi nancial year, the Company undertook a Share Split exercise whereby its existing 150,000,000 unit of issued and fully paid ordinary

shares of RM0.50 each are subdivided into 375,000,000 unit of new ordinary shares of RM0.20 each.

The new ordinary shares issued rank pari passu with the then existing ordinary shares of the Company.

There were no debentures issued during the fi nancial 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 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 current fi nancial year, the Company repurchased 820,800 ordinary shares of RM0.20 each of its issued share capital from the open

market. The average price paid for the shares repurchased was RM0.46 per share. The repurchased transactions were fi nanced 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 during the fi nancial year had

been sold as at the balance sheet date.

As at the balance sheet date, the number of ordinary shares in issue after deducting treasury shares against equity is 374,179,200 ordinary

shares of RM0.20 each.

INFORMATION ON THE FINANCIAL STATEMENTS

Before the fi nancial statements 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 allowance for doubtful debts and

satisfi ed themselves that all known bad debts had been written off and adequate allowance 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 allowance for doubtful debts in the fi nancial 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 fi nancial statements of the Group and of the Company misleading; or

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

misleading or inappropriate.

No contingent or other liability has become enforceable or is likely to become enforceable within the period of twelve months after the end of

the fi nancial year which, in the opinion of the Directors, will or may affect the ability of the Group and of the Company to meet its obligations

as and when they fall due.

32

ANNUAL REPORT 2009

INFORMATION ON THE FINANCIAL STATEMENTS (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 fi nancial 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 fi nancial year.

OTHER STATUTORY INFORMATION

The Directors state that:-

At the date of this report, they are not aware of any circumstances not otherwise dealt with in this report or the fi nancial statements which

would render any amount stated in the fi nancial statements misleading.

In the opinion of the Directors:-

(a) the results of operations of the Group and of the Company during the fi nancial year were not substantially affected by any item,

transaction or event of a material and unusual nature; and

(b) there has not arisen in the interval between the end of the fi nancial 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

fi nancial year in which this report is made.

DIRECTORS OF THE COMPANY

The Directors in offi ce since the date of the last report are:-

Chew Ting Leng (Executive Chairman/Group Managing Director)

Goh Teoh Kean (Group Deputy Managing Director)

Tan Ang Ang (Executive Director)

To Tai Wai (Executive Director)

Abdul Karim Bin Ahmad (Non-Independent Non-Executive Director)

Tan Sui Hin (Independent Non-Executive Director)

Loh Wei Tak (Independent Non-Executive Director)

Yusoff Bin Mohamed (Independent Non-Executive Director)

According to the Register of Directors’ Shareholdings, the benefi cial interests of those who were Directors at the end of the fi nancial year in

the shares of the Company are as follows:-

Ordinary shares of RM0.50/RM0.20 eachAs at Bought/ Bought/ As at

1.3.2008 (Sold) Subdivision (Sold) 28.2.2009

Chew Ting Leng - deemed interest 33,494,200 45,000 50,308,800 482,400 84,330,400

Goh Teoh Kean - deemed interest 24,815,400 31,000 37,269,600 297,300 62,413,300

Tan Ang Ang - direct interest 3,026,200 - 4,539,300 55,000 7,620,500

- deemed interest - - - 65,000 65,000

To Tai Wai - direct interest 4,002,100 - 6,003,150 261,900 10,267,150

Abdul Karim Bin Ahmad- direct interest 10,000 - 15,000 - 25,000

Tan Sui Hin - direct interest 30,000 - 45,000 - 75,000

Yusoff Bin Mohamed - direct interest 1,000 - 1,500 - 2,500

By virtue of Mr. Chew Ting Leng, Mr. Goh Teoh Kean, Mr. Tan Ang Ang and Mr. To Tai Wai’s direct and 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.



ANNUAL REPORT 2009

33

DIRECTORS’ BENEFITS

During and at the end of the fi nancial 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 benefi ts by means of the acquisition of shares in the Company or any other body corporate.

Since the end of the previous fi nancial year, no Director has received or become entitled to receive any benefi t (other than as disclosed in Notes

28 and 32 to the Financial Statements) by reason of a contract made by the Company or a related corporation with the Director or with a fi rm

of which he is a member, or with a company in which he has a substantial fi nancial interest.

SIGNIFICANT EVENTS DURING THE FINANCIAL YEAR

The signifi cant events during the fi nancial year are disclosed in Note 38 to the Financial Statements.

SIGNIFICANT EVENTS SUBSEQUENT TO THE BALANCE SHEET DATE

The signifi cant events subsequent to the balance sheet date are disclosed in Note 39 to the Financial Statements.

AUDITORS

Messrs SJ Grant Thornton have expressed their willingness to continue in offi ce.

Signed on behalf of the Board of Directors in accordance with a resolution of the Directors dated 18 June 2009.

.................................................... )

CHEW TING LENG )

)

)

)

)

)

) DIRECTORS

)

)

)

)

)

)

.................................................... )

GOH TEOH KEAN )

Johor Bahru


34

ANNUAL REPORT 2009

In the opinion of the Directors, the fi nancial statements set out on pages 37 to 74 are drawn up in accordance with the provisions of

Companies Act, 1965 and Financial Reporting Standards in Malaysia so as to give a true and fair view of the fi nancial position of the Group

and of the Company as at 28 February 2009 and of its fi nancial performance and cash fl ows of the Group and of the Company for the fi nancial

year then ended.

On behalf of the Board

…........................................................... …...........................................................

CHEW TING LENG GOH TEOH KEAN

Johor Bahru

18 June 2009

Statutory DeclarationI, Wang Woon Chin, being the Offi cer primarily responsible for the fi nancial management of Pantech Group Holdings Berhad, do solemnly and

sincerely declare that to the best of my knowledge and belief, the fi nancial statements set out on pages 37 to 74 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 )

18 June 2009 ) …………….…………………………

WANG WOON CHIN

Before me:

RUSLY B. MOHD. YUNUS, J112

Commissioner for Oaths

Statement By Directors


ANNUAL REPORT 2009

35

REPORT ON THE FINANCIAL STATEMENTS

We have audited the fi nancial statements of Pantech Group Holdings Berhad, which comprise the balance sheets as at 28 February 2009 of

the Group and of the Company, and the income statements, statements of changes in equity and cash fl ow statements of the Group and of

the Company for the fi nancial year then ended, and a summary of signifi cant accounting policies and other explanatory notes, as set out on

pages 37 to 74.

Directors’ Responsibilities for the Financial Statements

The directors of the Company are responsible for the preparation and fair presentation of these fi nancial statements in accordance with

Financial Reporting Standards and the Companies Act 1965 in Malaysia. This responsibility includes: designing, implementing and maintaining

internal control relevant to the preparation and fair presentation of fi nancial statements that are free from material misstatement, whether

due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the

circumstances.

Auditors’ Responsibilities

Our responsibility is to express an opinion on these fi nancial 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 whether the fi nancial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the fi nancial statements. The procedures

selected depend on our judgment, including the assessment of risks of material misstatement of the fi nancial statements, whether due to

fraud or error. In making those risk assessments, we consider internal control relevant to the Company’s preparation and fair presentation of

the fi nancial statements 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 Company’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 fi nancial

statements.

We believe that the audit evidence we have obtained is suffi cient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the fi nancial statements have been properly drawn up in accordance with Financial Reporting Standards and the Companies

Act 1965 in Malaysia so as to give a true and fair view of the fi nancial position of the Group and of the Company as at 28 February 2009 and

of their fi nancial performance and cash fl ows for the fi nancial year then ended.

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 fi nancial statements and the auditors’ reports of the subsidiary company of which we have not acted as

auditors, as disclosed in Note 13 to the fi nancial statements.

c) We are satisfi ed that the fi nancial statements of the subsidiary companies that have been consolidated with the Company’s fi nancial

statements are in form and content appropriate and proper for the purposes of the preparation of the fi nancial statements of the Group

and we have received satisfactory information and explanations required by us for those purposes.

d) The auditors’ reports on the fi nancial statements of the subsidiary companies did not contain any qualifi cation or any adverse comment

made under Section 174 (3) of the Act.

Independent Auditors’ Report To The Members Of Pantech Group Holdings Berhad(Incorporated in Malaysia) Company No: 733607 W

36

ANNUAL REPORT 2009

OTHER MATTERS

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 DATO’ N. K. JASANI

(NO. AF: 0737) CHARTERED ACCOUNTANT

CHARTERED ACCOUNTANTS (NO: 708/03/10(J/PH))

Johor Bahru

Date: 18 June 2009

Independent Auditors’ Report (cont’d)To The Members Of Pantech Group Holdings Berhad(Incorporated in Malaysia) Company No: 733607 W


ANNUAL REPORT 2009

37

Group CompanyNote 2009 2008 2009 2008

RM RM RM RM

SHARE CAPITAL 5 75,000,000 75,000,000 75,000,000 75,000,000

SHARE PREMIUM 16,067,022 16,067,022 16,067,022 16,067,022

TREASURY SHARES 6 (380,002) - (380,002) -

EXCHANGE RESERVE 147,216 11,500 - -

UNAPPROPRIATED PROFIT 109,051,175 55,394,984 10,195,863 3,646,778

Equity attributable to equity holders of the

Company / Total equity 199,885,411 146,473,506 100,882,883 94,713,800

NON-CURRENT LIABILITIES

Finance creditors 7 1,426,596 1,879,248 - -

Borrowings 8 30,296,808 26,917,212 - -

Deferred taxation 9 3,244,560 2,934,050 - -

234,853,375 178,204,016 100,882,883 94,713,800

REPRESENTED BY:-

NON-CURRENT ASSETS

Property, plant and equipment 10 54,805,473 48,519,966 - -

Prepaid land lease payments 11 6,141,159 2,270,229 - -

Investment properties 12 3,040,000 3,040,000 - -

Investment in subsidiary companies 13 - - 72,271,435 72,271,435

Investment in an associate company 14 1,542,444 146,829 - -

Investment in a joint venture company 15 274,509 166,616 - -

Other investments 16 6,900 2,006,900 - -

Capital work-in-progress 17 - 787,714 - -

Deferred tax assets 18 1,540,000 645,000 - -

Total non-current assets 67,350,485 57,583,254 72,271,435 72,271,435

CURRENT ASSETS

Inventories 19 202,742,287 140,828,836 - -

Trade receivables 20 48,601,339 67,390,233 - -

Other receivables 21 8,088,270 2,394,871 - -

Amount due from subsidiary companies 13 - - 28,308,465 22,516,713

Amount due from an associate company 14 47,041,780 4,032,647 - -

Tax recoverable 1,426,000 41,750 - -

Fixed deposits with licensed banks 22 1,770,475 1,704,876 - -

Cash and bank balances 23 32,086,348 3,994,619 576,352 178,268

Total current assets 341,756,499 220,387,832 28,884,817 22,694,981

LESS: CURRENT LIABILITIES

Trade payables 24 23,362,806 17,250,676 - -

Other payables 25 13,788,380 4,522,346 251,185 162,212

Amount due to a joint venture company 15 15,751 229,214 - -

Borrowings 8 127,929,063 74,361,213 - -

Bank overdrafts 26 - 793,500 - -

Tax payable 9,157,609 2,610,121 22,184 90,404

Total current liabilities 174,253,609 99,767,070 273,369 252,616

NET CURRENT ASSETS 167,502,890 120,620,762 28,611,448 22,442,365

234,853,375 178,204,016 100,882,883 94,713,800

The accompanying notes form an integral part of the fi nancial statements.

Balance Sheets As At 28 February 2009

38

ANNUAL REPORT 2009


RM RM RM RM

Revenue 27 511,595,330 313,322,452 20,625,486 9,064,806

Cost of sales (363,544,915) (234,102,947) - -

Gross profi t 148,050,415 79,219,505 20,625,486 9,064,806

Other income 1,498,961 4,206,477 12,270 229,065

Selling and distribution expenses (14,316,944) (10,040,781) - -

Administration expenses (36,713,528) (19,610,598) (1,980,119) (1,830,488)

Other expenses (8,178,225) (1,907,222) - -

Profi t from operations 90,340,679 51,867,381 18,657,637 7,463,383

Finance costs (9,834,864) (6,997,965) - -

Share of profi t in associate company 1,395,615 106,629 - -

Share of profi t in joint venture company 100,210 44,799 - -

Profi t before taxation 28 82,001,640 45,020,844 18,657,637 7,463,383

Taxation 29 (20,542,167) (10,878,726) (4,305,270) (1,945,723)

Net profi t for the fi nancial year 61,459,473 34,142,118 14,352,367 5,517,660

Attributable to:- Equity holders of the Company 61,459,473 34,142,118 14,352,367 5,517,660

Earnings per share attributable to equity holders of the CompanyEarnings per 20 sen share

- Basic (sen) 30 16.43 9.10 - -

Proposed Dividends per 20 sen share

- gross (sen) 1.00 0.96

- net (sen) 1.00 0.88

Interim Dividends per 20 sen share

- gross (sen) 1.20 2.00

- net (sen) 1.20 1.48


Income Statements For The Financial Year Ended 28 February 2009


ANNUAL REPORT 2009

39

Attributable to equity holders of the Company Non-distributable Distributable

Share Share Treasury Exchange Unappropriated Totalcapital premium shares reserve profi t equity

RM RM RM RM RM RM

Group

Balance at 1 March 2007 75,000,000 16,067,022 - 13,999 26,757,866 117,838,887

Final dividend of 3 sen less 27% income

tax per share - - - - (3,285,000) (3,285,000)

Interim dividend of 2 sen less 26% income

tax per share - - - - (2,220,000) (2,220,000)

Currency translation differences - - - (2,499) - (2,499)

Net profi t for the fi nancial year - - - - 34,142,118 34,142,118

Balance at 29 February 2008 75,000,000 16,067,022 - 11,500 55,394,984 146,473,506

Final dividend of 0.30 sen less 26% income

tax per share - - - - (832,500) (832,500)

Final single tier dividend of 0.66 sen per share - - - - (2,475,000) (2,475,000)

First interim single tier dividend of 1.00 sen

per share and special interim single tier

dividend of 0.20 sen per share - - - - (4,495,782) (4,495,782)

Treasury shares - - (380,002) - - (380,002)

Currency translation differences - - - 135,716 - 135,716

Net profi t for the fi nancial year - - - - 61,459,473 61,459,473

Balance at 28 February 2009 75,000,000 16,067,022 (380,002) 147,216 109,051,175 199,885,411

Statements Of Changes In EquityFor The Financial Year Ended 28 February 2009

40

ANNUAL REPORT 2009

Non-distributable DistributableShare Share Treasury Unappropriated

capital premium shares profi t Total RM RM RM RM RM

Company

Balance at 1 March 2007 75,000,000 16,067,022 - 3,634,118 94,701,140

Final dividend of 3 sen less 27% income tax per share - - - (3,285,000) (3,285,000)

Interim dividend of 2 sen less 26% income tax per share - - - (2,220,000) (2,220,000)

Net profi t for the fi nancial year - - - 5,517,660 5,517,660

Balance at 29 February 2008 75,000,000 16,067,022 - 3,646,778 94,713,800

Final dividend of 0.30 sen less 26% income tax per share - - - (832,500) (832,500)

Final single tier dividend of 0.66 sen per share - - - (2,475,000) (2,475,000)

First interim single tier dividend of 1.00 sen per share

and special interim single tier dividend of 0.20 sen per share - - - (4,495,782) (4,495,782)

Treasury shares - - (380,002) - (380,002)

Net profi t for the fi nancial year - - - 14,352,367 14,352,367

Balance at 28 February 2009 75,000,000 16,067,022 (380,002) 10,195,863 100,882,883


Statements Of Changes In Equity (cont’d)For The Financial Year Ended 28 February 2009


ANNUAL REPORT 2009

41


RM RM RM RM

CASH FLOWS FROM OPERATING ACTIVITIESProfi t before taxation 82,001,640 45,020,844 18,657,637 7,463,383

Adjustments for:-Allowance for doubtful debts 1,554,301 1,312,480 - -

Allowance for slow moving inventories 2,874,770 30,587 - -

Allowance for write down of inventories 9,243,792 - - -

Allowance for diminution in value of investment 2,000,000 - - -

Amortisation of prepaid land lease payments 79,070 44,043 - -

Depreciation of property, plant and equipment 4,841,142 3,181,548 - -

Interest expenses 9,068,876 6,620,099 - -

Property, plant and equipment written off 9,009 55,671 - -

Allowance for slow moving inventories no longer

required (616) (1,541,046) - -

Bad debts recovered (924) (2,369) - -

Bad debts written off 134,981 2,404 - -

Interest income (375,610) (650,542) (3,394) (228,330)

Gain on disposal of investment properties - (858,420) - -

Share of profi t in joint venture company (100,210) (44,799) - -

Share of profi t in associate company (1,395,615) (106,629) - -

Dividend income (48,315) (197) (18,333,486) (6,940,806)

Gain on disposal of property, plant and equipment (43,415) (44,000) - -

Unrealised loss/(gain) on foreign exchange 1,971,043 (104,623) - -

Operating profi t before working capital changes 111,813,919 52,915,051 320,757 294,247

Changes in working capital:-

Inventories (74,031,397) (41,053,003) - -

Receivables 11,401,390 (4,765,633) - 59,217

Payables 13,469,661 5,250,881 88,973 (128,580)

Subsidiary companies - - (5,791,752) (18,815,805)

Associate company (42,996,119) (3,805,423) - (2,236)

Joint venture (213,463) 206,562 - -

Bills payables 46,960,740 884,123 - -

Cash generated from/(used in) operations 66,404,731 9,632,558 (5,382,022) (18,593,157)

Dividend received 48,315 143 14,167,148 5,201,487

Dividend paid (7,803,282) (5,505,000) (7,803,282) (5,505,000)

Interest received 375,610 650,542 3,394 228,330

Interest paid (9,068,876) (6,620,099) - -

Tax paid (15,965,003) (8,845,254) (207,152) (180,000)

Net cash generated from/(used in) operating activities 33,991,495 (10,687,110) 778,086 (18,848,340)

CASH FLOWS FROM INVESTING ACTIVITIESPurchase of property, plant and equipment A (5,967,683) (16,382,159) - -

Proceeds from disposal of investment properties - 2,128,420 - -

Proceeds from disposal of property, plant and

equipment 171,244 44,000 - -

Purchase of prepaid land lease payments (3,950,000) (925,939) - -

Capital work-in-progress incurred (3,798,091) (787,714) - -

Net cash used in investing activities (13,544,530) (15,923,392) - -

Cash Flow StatementsFor The Financial Year Ended 28 February 2009

42

ANNUAL REPORT 2009


RM RM RM RM

CASH FLOWS FROM FINANCING ACTIVITIESShares buy back (380,002) - (380,002) -

Repayment of hire purchase and fi nance lease

creditors (1,225,762) (1,490,394) - -

Repayment of term loans (1,828,103) (1,661,867) - -

Drawndown of term loans 11,819,401 3,042,320 - -

Net cash generated from/(used in) fi nancing activities 8,385,534 (109,941) (380,002) -

CASH AND CASH EQUIVALENTSNet change 28,832,499 (26,720,443) 398,084 (18,848,340)

Effect of exchange rate changes 118,329 (1,795) - -

Brought forward 4,905,995 31,628,233 178,268 19,026,608

Carried forward B 33,856,823 4,905,995 576,352 178,268

NOTES TO THE CASH FLOW STATEMENTS

A. PURCHASE OF PROPERTY, PLANT AND EQUIPMENT

The Group acquired property, plant and equipment with an aggregate cost of RM6,647,802 (2008: RM17,702,526) of which RM680,119

(2008: RM1,320,367) was acquired by means of hire purchase. Cash payments of RM5,967,683 (2008: RM16,382,159) were made to

purchase the property, plant and equipment.

B. CASH AND CASH EQUIVALENTS

Cash and cash equivalents included in the cash fl ow statements comprise the following balance sheets amounts:-

Group Company2009 2008 2009 2008

RM RM RM RM

Cash and bank balances 32,086,348 3,994,619 576,352 178,268

Fixed deposits with licensed banks 1,770,475 1,704,876 - -

Bank overdrafts - (793,500) - -

33,856,823 4,905,995 576,352 178,268


Cash Flow Statements (cont’d)For The Financial Year Ended 28 February 2009


ANNUAL REPORT 2009

43

1. BASIS OF PREPARATION OF THE FINANCIAL STATEMENTS

The fi nancial statements of the Group and of the Company have been prepared in accordance with the provisions of the Companies

Act, 1965 and Financial Reporting Standards issued by Malaysian Accounting Standards Board (“MASB”).

2. FINANCIAL RISK MANAGEMENT POLICIES

The Group’s fi nancial risk management policy seeks to ensure that adequate fi nancial resources are available for the development of

the Group’s businesses whilst managing its risks. The Group operates within policies that are approved by the Board and the Group’s

policy is not to engage in speculative transactions.

The main areas of fi nancial risks faced by the Group and the policy in respect of the major areas of treasury activity are set out as

follows:-

(a) Foreign currency risk

The Group is exposed to foreign currency risk as a result of its normal operating activities, both external and intra-Group, where

the currency denomination differs from the local currency, Ringgit Malaysia (RM). The Group’s policy is to minimise the exposure

of overseas operating activities to transaction risk by matching local currency income against local currency costs.

(b) Interest rate risk

The Group’s exposure to changes in interest rates relates primarily to the Group’s short term deposits with licensed fi nancial

institution and fi nancing through bank borrowings. The Group ensures that it obtains borrowings at competitive interest rates

under the most favourable terms and conditions. The Group does not use derivate fi nancial instruments to hedge its risks.

(c) Credit risk

The Group is exposed to credit risk mainly from trade and other receivables. The risk is managed through the application of credit

approvals, credit limits and monitoring procedures. Credit is extended to the customers based upon careful evaluation of the

customers’ fi nancial condition and credit history. Surplus funds are placed with licensed fi nancial institutions to minimise the risk

that the counterparties will fail in performing their obligation.

The maximum credit risk exposure of the Group, without taking into account the fair value of collaterals, is represented by the

carrying amount of the trade and other receivables as shown in the balance sheet. The Group is not exposed to signifi cant

concentration of credit risk.

(d) Market risk

The Group’s principal exposures to market risk arises mainly from the changes in equity prices. Equity interests classifi ed as

current assets are available for sale and the Group manages disposal of its interests to optimise returns on realisation.

(e) Liquidity and cash fl ow risks

The Group maintains a prudent liquidity risk management policy by maintaining adequate cash. The Group also periodically

evaluates its cash fl ow requirements and where deemed necessary, based on estimates of future needs, establishes credit lines

with licensed fi nancial institutions in Malaysia.

Notes To The Financial Statements - 28 February 2009

44

ANNUAL REPORT 2009

Notes To The Financial Statements (cont’d)- 28 February 2009

3. SIGNIFICANT ACCOUNTING POLICIES

(a) Accounting convention

The fi nancial statements of the Company have been prepared in accordance with the historical cost convention, unless otherwise

stated in the other signifi cant accounting policies.

The fi nancial statements are presented in Ringgit Malaysia (RM) which is the Company’s functional currency.

(b) Adoption of Revised Financial Reporting Standards (“FRSs”)

(i) The amendments to published standards and IC Interpretations to existing standards effective for the Company for the

fi nancial period beginning on or after 1 March 2008 are as follows:-

1) Amendment to FRS 121 - The Effects of Changes in Foreign Exchange Rates - Net Investment in a Foreign

Operation

2) IC Interpretation 1 - Changes in Existing Decommissioning, Restoration and Similar Liabilities

3) IC Interpretation 2 - Members’ Shares in Co-operative Entities and Similar Instruments

4) IC Interpretation 5 - Rights to Interests arising from Decommissioning, Restoration and Environmental

Rehabilitation Funds

5) IC Interpretation 6 - Liabilities arising from Participating in a Specifi c Market – Waste Electrical and

Electronic Equipment

6) IC Interpretation 7 - Applying the Restatement Approach under FRS 1292004

- Financial Reporting in

Hyperinfl ationary Economies

7) IC Interpretation 8 - Scope of FRS 2

8) FRS 107 - Cash Flow Statements

9) FRS 111 - Construction Contracts

10) FRS 112 - Income Taxes

11) FRS 118 - Revenue

12) FRS 120 - Accounting for Government Grants and Disclosure of Government Assistance

13) FRS 134 - Interim Financial Reporting

14) FRS 137 - Provisions, Contingent Liabilities and Contingent Assets

The above Interpretation, FRS 111 and 120 are not relevant to the Company’s operation.

(ii) The following are the standards and IC Interpretations that is not yet effective and have not been early adopted by the

Company:-

1) FRS 139 - Financial Instruments: Recognition and Measurement will be effective for accounting period beginning

on or after 1 January 2010.

This new standard establishes principles for recognising and measuring fi nancial assets, fi nancial liabilities and some

contracts to buy and sell non-fi nancial items. Hedge accounting is permitted only under strict circumstances.

The Company is exempted from disclosing the possible impact, if any, to the fi nancial statements upon the initial

application of FRS 139.

2) FRS 4 - Insurance Contracts

3) FRS 7 - Financial Instruments: Disclosures

4) FRS 8 - Operating Segments

5) IC Interpretation 9 - Reassessment of Embedded Derivatives

6) IC Interpretation 10 - Interim Financial Reporting and Impairment

The above standards and IC Interpretations shall be effective for accounting period beginning on or after 1 January 2010

except for FRS 8 - Operating Segments, which shall apply to accounting period beginning on or after 1 July 2009.

The initial application of the above standards and IC Interpretations are not expected to have any material impact on the

fi nancial statements of the Company.


ANNUAL REPORT 2009

45


3. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

(b) Adoption of Revised Financial Reporting Standards (“FRSs”) (cont’d)

(iii) The application of the above Amendments and FRS 107, 112, 118, 134 and 137 did not result in signifi cant changes to

the accounting policies of the Company.

(c) Signifi cant Accounting Estimates and Judgements

Estimates, assumptions concerning the future and judgements are made in the preparation of the fi nancial 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.

(i) Key sources of estimation uncertainty

The key assumptions concerning the future and other key sources of estimation uncertainty at the balance sheet date,

that have signifi cant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next

fi nancial year are discussed below:-

Income taxes/Deferred tax liabilities

The Group is exposed to income taxes in numerous jurisdictions. Signifi cant 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 fi nal tax outcome of these matters is different from the amounts that

were initially recognised, such difference will impact the income tax and deferred tax provisions in the period in which such

determination is made.

Depreciation of property, plant and equipment

Property, plant and equipment are depreciated on a straight-line basis over their useful life. Management estimated the

useful life of these assets to be within 4 to 25 years except for the freehold land which is not depreciated. Changes in the

expected level of usage and technological developments could impact the economic useful life and the residual values of

these assets, therefore future depreciation charges could be revised.

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 profi t will be available against which all

the deductible temporary differences, unutilised tax losses and unabsorbed capital allowances can be utilised. Signifi cant

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 profi ts together with future tax planning strategies.

Impairment of property, plant and equipment

The Group carried out the impairment test based on a variety of estimation including the value-in-use of the 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 fl ows from cash-generated unit and also

to choose a suitable discount rate in order to calculate the present value of those cash fl ows.

(ii) Critical judgement made in applying accounting policies

The following is the judgement made by management in the process of applying the Group’s accounting policies that have

the most signifi cant effect on the amounts recognised in the fi nancial statements.

46

ANNUAL REPORT 2009



(c) Signifi cant Accounting Estimates and Judgements (cont’d)

(ii) Critical judgement made in applying accounting policies (cont’d)

Classifi cation between investment properties and owner-occupied properties

The Group determines whether a property qualifi es 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 fl ows 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. If these portions could be sold

separately (or leased out separately under a fi nance lease), the Group accounts for the portions separately. If the portions

could not be sold separately, the property is an investment property only if an insignifi cant 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 signifi cant that a property

does not qualify as an investment property.

(d) Basis of consolidation

The Group fi nancial statements consolidate the audited fi nancial statements of the Company and all of its subsidiary companies,

which have been prepared in accordance with the Group’s accounting policies.

All intercompany transactions, balances and unrealised gains on transactions between group companies are eliminated;

unrealised losses are also eliminated on consolidation unless cost cannot be recovered.

The fi nancial statements of the Company and its subsidiary companies are all drawn up to the same reporting date.

Acquisition of subsidiary companies is accounted for using the purchase method. The cost of an acquisition is measured at the

fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange, plus costs

directly attributable to the acquisition. Identifi able assets acquired and liabilities and contingent liabilities assumed in a business

combination are measured initially at their fair values at the acquisition date, irrespective of the extent of any minority interest.

Any excess of the Group’s interest in the net fair value of the identifi able assets, liabilities and contingent liabilities over the cost of

business combination is recognised as income on the date of acquisition.

Subsidiary companies are consolidated using the acquisition method of accounting from the date on which control is transferred

to the Group and are no longer consolidated from the date that control ceases.

The gain or loss on disposal of a subsidiary company is the difference between net disposal proceeds and the Group’s share of

its net assets together with any unamortised or unimpaired balance of goodwill on acquisition and exchange differences.

(e) 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 fi ve 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 the income statement to

the extent of the decrease previously recognised. A revaluation decrease is fi rst 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 profi t.


ANNUAL REPORT 2009

47



(e) Property, plant and equipment (cont’d)

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.

The principal annual depreciation rates used are as follows:-

Factory buildings 4% - 5.5%

Renovation, warehouse extension and electrical installation 10% - 20%

Computers and software 20%

Plant and machinery 7% - 10%

Factory equipment 10% - 25%

Offi ce equipments, furniture and fi ttings 10% - 20%

Telecommunication system, forklift and motor vehicles 20%

Restoration cost relating to an item of property, plant and equipment is capitalised only if such expenditure is expected to increase

the future benefi ts 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 fi nancial 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 benefi ts 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 benefi ts are expected from

its use or disposal. Any gain or loss arising on derecognition of the asset is included in the income statement in the fi nancial year

in which the asset is derecognised.

(f) Subsidiary companies

A subsidiary company is a company in which the Company or the Group either directly or indirectly owns a power to govern its

fi nancial and operating policies so as to obtain benefi ts from its activities.

Investment in subsidiary companies is stated at cost in the Company’s balance sheet. Where an indication of impairment exists,

the carrying amount of the subsidiary companies is assessed and written down immediately to their recoverable amount.

(g) Associate company

An associate company is a company in which the Company or the Group is in the position to exercise signifi cant infl uence over

its fi nancial and operating policies through management participation but not to exert control over those policies.

Investment in an associate company is accounted for in the consolidated fi nancial statements using equity accounting which

involves recognising in the income statement the Group’s share of the results of associate company based on audited fi nancial

statements of the associate company. The Group’s investment in an associate company is carried in the balance sheet at an

amount that refl ects its share of the net assets of the associate company. Equity accounting is discontinued when the carrying

amount of the investment in an associate company reaches zero, unless the Group has incurred obligations or guaranteed

obligations in respect of the associate company.

Investment in an associate company is stated at cost. Where an indication of impairment exists, the carrying amount of the

associate company is assessed and written down immediately to their recoverable amount.

48

ANNUAL REPORT 2009



(h) Joint venture

The Group’s joint venture is an entity over which the Group has contractual arrangements to jointly share the control over the

economic activity of the entity with one or more parties.

Investment in joint venture is stated at cost. Interest in joint venture is accounted for using the equity method in the balance sheet

of the Group.

Allowance is made for any impairment losses on an individual joint venture basis.

(i) Other investments

Non-current investments other than investment in subsidiary companies, associate company and joint venture are shown at cost

and allowance is only made where, in the opinion of the Directors, there is an impairment in value. Impairment in the value of an

investment is recognised as an expense in the period in which the impairment is identifi ed.

On disposal of an investment, the difference between net disposal proceeds and its carrying amount is charged or credited to

the income statement.

(j) Investment properties

Investment properties consist of land and buildings held for capital appreciation or rental purpose and not occupied or only

an insignifi cant 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 day-to-day servicing of an investment property.

Subsequent to initial recognition, investment properties are stated at fair value, which refl ects market conditions at the balance

sheet date. Gain or losses arising from changes in the fair values of investment properties are included in the income statement

in the fi nancial 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 benefi t is expected from the disposal. Any gain or loss on the retirement or disposal of an investment property

is recognised in the income statement in the fi nancial year of retirement or disposal.

(k) Inventories

Inventories are stated at the lower of cost and net realisable value after adequate allowance has been made for deteriorated,

obsolete and slow moving inventories.

Inventories are determined on a fi rst-in-fi rst-out basis.

Cost of trading goods is determined on weighted average method.

Cost of raw material refers to invoiced cost of goods purchased plus incidental handling and freight charges.

Cost of work-in-progress and fi nished goods include raw materials, direct labour 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.


ANNUAL REPORT 2009

49



(l) Receivables

Receivables are carried at anticipated realisable value. Bad debts are written off in the period in which they are identifi ed. An

allowance is made for doubtful debts based on a review of all outstanding amounts at the fi nancial year end.

(m) Payables

Payables are stated at cost which is fair value of the consideration to be paid in the future for goods and services received.

(n) Assets acquired under lease agreements

Accounting by lessees

Finance leases

Lease of property, plant and equipment acquired under hire purchase and fi nance 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 fi nance lease arrangements after deducting fi nance expenses are included

as liabilities in the fi nancial statements. Finance charges on hire purchase and fi nance lease arrangements are allocated to income

statement over the period of the respective agreements.

Operating leases

Leased payments for operating leases, where substantially all the risk and benefi ts remain with the lessor, are charged as

expenses in the period in which they are incurred.

Leased assets

Leasehold land that normally has an indefi nite 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 42 to 88 years.

Leasehold land at cost

The Group had previously classifi ed a lease of land as fi nance lease and had recognised the amount of prepaid land lease

payment as property within its property, plant and equipment. On adoption of FRS 117 Leases, the Group treats such a lease as

an operating lease, with the unamortised carrying amount reclassifi ed as prepaid lease payments retrospectively in accordance

with the transitional provisions in FRS 117.67A.

(o) Foreign currency transactions and balances

The fi nancial statements are presented in Malaysia Ringgit.

Transactions in foreign currencies are recorded in Ringgit Malaysia at rates of exchange ruling at the date of the transactions.

Foreign currency monetary assets and liabilities are translated at exchange rates ruling at balance sheet date.

The assets and liabilities of the foreign entities, including goodwill and fair value adjustments arising on the acquisitions, are

translated to Ringgit Malaysia at the closing rates at the balance sheet date. The operating results are translated to Ringgit

Malaysia at the exchange rates at the average rates during the fi nancial year.

Gains and losses resulting from settlement of such transactions and conversion of monetary assets and liabilities, whether

realised or unrealised, are included in the income statement as they arise.

50

ANNUAL REPORT 2009



(o) Foreign currency transactions and balances (cont’d)

Financial statements of foreign subsidiary companies are translated at year-end exchange rates with respect to the assets and

liabilities. All resulting translation differences are included in the foreign exchange reserve in shareholders’ equity.

Goodwill and fair value adjustments arising on the acquisition of a foreign entity are deemed to be assets and liabilities of the

Group and translated at the exchange rate ruling at the date of the acquisition.

Goodwill and fair value adjustments arising on the acquisition of a foreign entity on and after 1 January 2006 are treated as assets

and liabilities of the foreign entity and translated at the closing rate at the balance sheet date.

On disposal of a foreign entity, the cumulative amount of exchange differences deferred in equity relating to that foreign entity is

recognised in the income statement as a component of the gain or loss on disposal.

All other foreign exchange differences are taken to the income statement in the fi nancial year in which they arise.

(p) Income tax

Income tax on the profi t 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 profi t for the fi nancial year and is measured using the tax rates that have been

enacted by the balance sheet 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 balance sheet date between the carrying amount of an asset or liability in the balance sheet and its tax base

including unused tax losses and capital allowances.

Deferred tax assets are recognised only to the extent that it is probable that taxable profi t will be available against which the

deductible temporary differences can be utilised. The carrying amount of a deferred tax asset is reviewed at each balance sheet

date. If it is no longer probable that suffi cient taxable profi t will be available to allow the benefi t of part or that entire deferred tax

asset to be utilised, the carrying amount of the deferred tax asset will be reduced accordingly. When it becomes probable that

suffi cient taxable profi t will be available, such reductions will be reversed to the extent of the taxable profi t.

Deferred tax is recognised in the income statement, 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 balance sheet date.

(q) Financial instruments

Financial instruments carried on the balance sheets include cash and bank balances, investments, receivables, payables and

borrowings. The particular recognition methods adopted are disclosed in the individual accounting policy statements associated

with each item.

Financial instruments are offset when the Group has a legally enforceable right to set off the recognised amounts and intends

either to settle on a net basis, or to realise the asset and settle the liability simultaneously.


ANNUAL REPORT 2009

51



(r) Impairment of assets

At each balance sheet date, the Group reviews the carrying amounts of its 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 cash-generating unit is the higher of fair value less costs to sell and its value in

use.

In assessing value in use, the estimated future cash fl ows are discounted to their present value using a pre-tax discount rate

that refl ects current market assessments of the time value of money and the risks specifi c to the asset. Impairment losses of

continuing operations are recognised in the income statement in those expense categories consistent with the function of the

impaired asset.

An impairment loss is recognised as an expense in the income statement 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 any unutilised previously

recognised revaluation surplus for the same asset.

An assessment is made at each balance sheet 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 the income statement unless the asset is carried at

revalued amount, in which case, the reversal in excess of impairment loss previously recognised through the income statement is

treated as revaluation increase. After such a reversal, the depreciation charge is adjusted in future periods to allocate the asset’s

revised carrying amount, less any residual value, on a systematic basis over its remaining useful life.

An impairment loss recognised for goodwill shall not be reversed in the subsequent period.

(s) 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.

Sales and inter-company transactions between companies of the Group are excluded from revenue of the Group.

(t) Employee benefi ts

(i) Short term benefi ts

Wages, salaries, bonuses and social security contributions are recognised as an expense in the fi nancial 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.

52

ANNUAL REPORT 2009



(t) Employee benefi ts (cont’d)

(ii) Defi ned contribution plan

Defi ned contribution plans are post-employment benefi t plans under which the Group pays fi xed 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

suffi cient assets to pay all employee benefi ts relating to employee services in the current and preceding fi nancial years.

Such contributions are recognised as an expense in the income statement as incurred. As required by law, companies in

Malaysia make such contributions to the Employee Provident Fund (“EPF”). Some of the Group’s foreign subsidiaries also

make contributions to their respective countries’ statutory pension schemes.

(u) Interest-bearing borrowings

Interest-bearing borrowings are recorded at the amount of proceeds received, net of transaction costs.

All borrowing costs are recognised as expenses in the income statement in the period in which they are incurred.

(v) Dividends

Dividends on ordinary shares are accounted for in shareholders’ equity as an appropriation of unappropriated profi t in the period

in which they are declared.

(w) Provisions

Provisions are recognised when there is a present obligation, legal or constructive, as a result of a past event, when it is probable

that an outfl ow of resources embodying economic benefi ts will be required to settle the obligation and a reliable estimate can be

made of the amount of the obligation.

Provisions are reviewed at each balance sheet date and adjusted to refl ect the current best estimate. Where the effect of the

time of money is material, the amount of a provision is the present value of the expenditure expected to be required to settle the

obligation.

(x) Cash and cash equivalents

Cash and cash equivalents comprise cash in 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 insignifi cant risk of changes in value.

For the purpose of the balance sheet, cash and cash equivalents are restricted to be used to settle a liability of 12 months or more

after the balance sheet date is classifi ed as non-current asset.

(y) Segmental results

Segment revenues and expenses are those directly attributable to the segments and include any joint revenue and expenses

where a reasonable basis of allocation exists. Segment assets include all assets used by a segment and consist principally

of cash, receivables, inventories, intangible assets and property, plant and equipment, net of allowances and accumulated

depreciation and amortisation. The majority of the segment assets can be directly attributed to the segments on a reasonable

basis. Segment assets and liabilities do not include tax recoverable and deferred income taxes.

(z) Inter-segment transfers

Segment revenues, expenses and result include transfers between segments. The prices charged on inter-segment transactions

are based on negotiation basis. These transfers are eliminated on consolidation.


ANNUAL REPORT 2009

53



(aa) Equity instruments

Ordinary shares are classifi ed as equity which are recorded at the nominal value and proceeds in excess of the nominal value

of shares issued, if any, are accounted for as share premium. Both ordinary shares and share premium are classifi ed as equity.

Dividends on ordinary shares are recognised as liabilities when declared.

The transaction costs of an equity transaction which comprise only those incremental external costs directly attributable to the

equity transaction are accounted for as a deduction from equity, net of tax, from the proceeds.

(ab) 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 income statement 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.

4. PRINCIPAL ACTIVITIES AND 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 13, 14 and 15 to the

Financial Statements respectively.

The Company is a limited liability company, incorporated and domiciled in Malaysia. The registered offi ce of the Company is located at

Level 15-2, 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 fi nancial statements were authorised for issue by the Board of Directors in accordance with a resolution of the Directors on 18 June

2009.

5. SHARE CAPITALGroup and Company

2009 2008RM RM

Authorised:-

Ordinary shares of RM0.50/RM0.20 each

Brought forward 500,000,000 500,000,000

Subdivision of ordinary shares of RM0.50 each into RM0.20 each - -

Carried forward 500,000,000 500,000,000

Issued and fully paid:-

Ordinary shares of RM0.50/RM0.20 each

Brought forward 75,000,000 75,000,000

Subdivision of ordinary shares of RM0.50 each into RM0.20 each - -

Carried forward 75,000,000 75,000,000

54

ANNUAL REPORT 2009


6. 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 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 current fi nancial year, the Company purchased 820,800 ordinary share or 0.22% of its issued share capital from the open

market at the average price paid of RM0.46 per share. The purchase transactions were fi nanced by internally generated funds.

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 balance sheet date, the Group held 820,800 of the Company’s shares and the number of outstanding shares in issue after

setting treasury shares off against equity is 374,179,200.

No treasury shares were sold during the fi nancial year.

7. FINANCE CREDITORS

Group2009 2008

RM RM

Future minimum lease payment

- within 1 year 1,301,269 1,374,514

- after 1 year but not later than 5 years 1,484,989 2,020,648

2,786,258 3,395,162

Less: Interest in suspense (214,209) (288,335)

2,572,049 3,106,827

Total present value payable

- within 1 year 1,145,453 1,227,579

- after 1 year but not later than 5 years 1,426,596 1,879,248

2,572,049 3,106,827

The amount payable within one year has been included in the other payables.


ANNUAL REPORT 2009

55


8. BORROWINGS

Group2009 2008

RM RM

CurrentSecured:-

Term loans - 7,694

- 7,694

Unsecured:-

Term loans 8,640,988 2,021,592

Bankers’ acceptance 100,546,107 58,268,154

Trust receipts 6,471,316 4,102,660

Domestic resource factoring - 1,931,808

Collaterised loan obligations 831,112 835,704

Onshore foreign currency loan 11,439,540 7,193,601

127,929,063 74,361,213

Non-currentUnsecured:-

Term loans 10,296,808 6,917,212

Collaterised loan obligations 20,000,000 20,000,000

30,296,808 26,917,212

Total borrowings 158,225,871 101,278,425

(i) The term loans, bankers’ acceptance and trust receipts of the Group are obtained by way of corporate guarantee from the

Company and negative pledge on a subsidiary company’s assets.

The term loans of the Group bear interest at rates ranging from 2.85% to 8.00% (2008: 3.00% to 8.75%) per annum.

All term loans of the Group are repayable by monthly or quarterly installments.

The bankers’ acceptance bears interest at rates ranging from 2.99% to 5.15% (2008: 3.55% to 5.25%) per annum.

The trust receipts bear interest at rates ranging from 3.90% to 8.00% (2008: 6.25% to 8.25%) per annum.

(ii) Domestic resource factoring of the Group is obtained through joint and several guarantee by certain Directors of the Company.

During the previous fi nancial year, it bears interest at the rate of 7.25% per annum.

(iii) Collaterised Loan Obligations (“CLO”) is payable upon maturity on 20 September 2010. It bears interest at the rate of 8.38%

(2008: 8.38%) per annum of which the interest portion is payable twice per annum.

As a condition to the granting of the above CLO, the Group is required to subscribe to a subordinated bond (Note 16).

(iv) The onshore foreign currency loan of the Group is obtained by way of corporate guarantee from the Company.

It bears interest at rates ranging from 3.30% to 8.25% (2008: 5.00% to 6.00%) per annum.

56

ANNUAL REPORT 2009


8. BORROWINGS (CONT’D)

The currency exposure profi le of the borrowings is as follows (foreign currency balances are unhedged):-

Group2009 2008

RM RM

Ringgit Malaysia 139,207,386 91,113,050

US Dollar 13,865,847 7,193,601

Singapore Dollar 3,078,599 2,971,774

EURO 2,074,039 -

158,225,871 101,278,425

9. DEFERRED TAXATION

Group2009 2008

RM RM

Brought forward 2,934,050 2,217,404

Transferred from income statement 308,926 716,670

Currency translation difference 1,584 (24)

Carried forward 3,244,560 2,934,050

The balance in the deferred taxation is made up of temporary differences arising from:-

Group2009 2008

RM RM

Carrying amount of qualifying property, plant and equipment in excess of their tax base 3,249,351 2,936,340

Provision for leave entitlement (4,791) (2,290)

3,244,560 2,934,050


ANNUAL REPORT 2009

57


10. PROPERTY, PLANT AND EQUIPMENT

Group

Freehold land

Freehold building

Total freehold land and building

Short leasehold

building

Renovation and

electrical installation

Machinery, equipments, furniture and

fi ttings

Forklift, crane and

motor vehicles

Total2009

Total2008

RM RM RM RM RM RM RM RM RM

CostBrought forward 8,700,000 14,029,350 22,729,350 3,525,721 2,994,255 21,644,098 7,360,426 58,253,850 32,071,114

Additions - - - 2,438,918 152,069 3,190,643 866,172 6,647,802 17,702,526

Disposals - - - - - (151,336) (213,391) (364,727) (183,598)

Written off - - - - - (88,686) - (88,686) (112,032)

Transferred from capital

work-in-progress - - - 2,668,138 1,171,817 208,000 537,850 4,585,805 -

Transferred from investment

properties - - - - - - - - 8,776,666

Currency translation

difference - - - - 13,439 10,074 21,471 44,984 (826)

Carried forward 8,700,000 14,029,350 22,729,350 8,632,777 4,331,580 24,812,793 8,572,528 69,079,028 58,253,850

Freehold land

Freehold building

Total freehold land and building

Short leasehold

building

Renovation and

electrical installation


fi ttings

Forklift, crane and

motor vehicles

Total2009

Total2008

RM RM RM RM RM RM RM RM RM

Accumulated depreciation

Brought forward - 474,583 474,583 157,952 674,397 4,550,288 3,876,664 9,733,884 6,792,416

Charge for the fi nancial year - 701,468 701,468 267,316 513,093 1,966,615 1,392,650 4,841,142 3,181,548

Disposals - - - - - (85,169) (151,729) (236,898) (183,598)

Written off - - - - - (79,677) - (79,677) (56,361)

Currency translation

difference - - - - 4,350 2,952 7,802 15,104 (121)

Carried forward - 1,176,051 1,176,051 425,268 1,191,840 6,355,009 5,125,387 14,273,555 9,733,884

Net carrying amount 2009 8,700,000 12,853,299 21,553,299 8,207,509 3,139,740 18,457,784 3,447,141 54,805,473 -

2008 8,700,000 13,554,767 22,254,767 3,367,769 2,319,858 17,093,810 3,483,762 - 48,519,966

Depreciation charge for

fi nancial year ended 29

February 2008 - 378,083 378,083 123,286 308,801 1,208,818 1,162,560 - 3,181,548

The net carrying amount of property, plant and equipment of the Group which are acquired under hire purchase and fi nance lease

arrangements amounted to RM3,447,279 (2008: RM4,143,723).

Included in the property, plant and equipment of the Group are fully depreciated property, plant and equipment with a total cost of

RM2,368,902 (2008: RM1,640,985).

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 with the cost of RM394,224 (2008: RM394,224).

58

ANNUAL REPORT 2009


11. PREPAID LAND LEASE PAYMENTS

Group2009 2008

Short leasehold land:- RM RM

CostBrought forward 2,325,939 1,400,000

Additions 3,950,000 925,939

Carried forward 6,275,939 2,325,939

Accumulated amortisationBrought forward 55,710 11,667

Charge for the fi nancial year 79,070 44,043

Carried forward 134,780 55,710

Net carrying amount 6,141,159 2,270,229

The prepaid land lease payments are amortised over the leasehold period of 42 to 88 (2008: 42) years.

12. INVESTMENT PROPERTIES

Freehold land

Freeholdbuildings

Total freehold land &

buildings

Freehold land & shophouse

building RenovationTotal2009

Total2008

Group RM RM RM RM RM RM RM

At fair value: -Brought forward 1,120,000 1,030,000 2,150,000 880,000 10,000 3,040,000 13,086,666

Disposals - - - - - - (1,270,000)

Transferred to property, plant and equipment - - - - - - (8,776,666)

Carried forward 1,120,000 1,030,000 2,150,000 880,000 10,000 3,040,000 3,040,000

The investment properties are valued annually at fair value, comprising market value, by an independent professionally qualifi ed valuer.

The market value is defi ned 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 acted

knowledgeably, prudently and without compulsion.

13. INVESTMENT IN SUBSIDIARY COMPANIES

Company2009 2008

RM RM

Unquoted shares - At cost 72,271,435 72,271,435


ANNUAL REPORT 2009

59


13. INVESTMENT IN SUBSIDIARY COMPANIES (CONT’D)

The particulars of the subsidiary companies are as follows:-

Name of companyPlace of

incorporationEffective equity

interest Principal activities2009 2008

% %

1. Pantech Corporation Sdn. Bhd. Malaysia 100 100 Trading, supply and stocking of high pressure seamless

and specialised steel pipes, fi ttings, fl anges, 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

refi ning and other related industries.

Subsidiary companies of Pantech Corporation Sdn. Bhd.: -

1.1 Jayee Holdings Sdn. Bhd. Malaysia 100 100 Investment holding, property investment and insurance

agency.

1.2 Pantech (Kuantan) Sdn. Bhd. Malaysia 100 100 Trading and supply of high pressure seamless and

specialised steel pipes, fi ttings, fl anges, 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 refi ning and other

related industries.

2. Pantech Steel Industries Sdn.

Bhd.

Malaysia 100 100 Manufacturing and supply of butt-welded carbon steel

fi ttings such as elbows, tees, reducers, end-caps and

high frequency induction long bends for use in the oil and

gas and other related industries.

3. Panafl o Controls Pte. Ltd.* Singapore 100 100 Supplier of fl ow 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.

* Subsidiary company not audited by SJ Grant Thornton

The amount due from subsidiary companies is unsecured, bear no interest and has no fi xed term of repayment.

14. INVESTMENT IN AN ASSOCIATE COMPANY Group

2009 2008RM RM

Unquoted shares - at cost 26,217 26,217

Share of post acquisition profi t

- Brought forward 120,612 13,983

- Share of post acquisition profi t during the fi nancial year 1,395,615 106,629

- Carried forward 1,516,227 120,612

1,542,444 146,829

Represented by:-

Share of net assets 1,542,444 146,829

60

ANNUAL REPORT 2009


14. INVESTMENT IN AN ASSOCIATE COMPANY (CONT’D)

The particulars of the associate company are as follows:-

Name of company Place of incorporationEffective equity


% %

Tuah Nusa Sdn. Bhd. Malaysia 30 30 Trading and supply of specialised industrial products, alloys

and ferrous materials for the oil and gas and related

industries.

The amount due from an associate company is trade in-nature, unsecured, bears no interest and no scheme of repayment has been

arranged.

15. INVESTMENT IN A JOINT VENTURE COMPANY

Group2009 2008

RM RM

Unquoted shares - at cost 160,440 160,440

Share of post acquisition profi t/(loss)

- Brought forward 6,176 (38,517)

- Share of post acquisition profi t during the fi nancial year 100,210 44,799

- Currency translation difference 7,683 (106)

- Carried forward 114,069 6,176

274,509 166,616

Represented by:-

Share of net assets 274,509 166,616

The particulars of the joint venture company are as follows:-

Name of company Place of incorporationEffective equity


% %

JC Flow Controls Pte.

Ltd. *

Singapore 70 70 Sales and distribution of JC products such as Ball, Gate,

Globe and Check valves for South East Asian markets.

* Held through Panafl o Controls Pte. Ltd.

The amount due to a joint venture company is trade in-nature, unsecured, bears no interest and no scheme of repayment has been

arranged.


ANNUAL REPORT 2009

61


16. OTHER INVESTMENTS

Group2009 2008

RM RM

At cost:-

Quoted investment in Malaysia 6,900 6,900

Subordinated bond (Note 8) 2,000,000 2,000,000

2,006,900 2,006,900

Less: Allowance for diminution in value of investments (2,000,000) -

6,900 2,006,900

Market value of quoted investment in Malaysia 5,440 6,520

17. CAPITAL WORK-IN-PROGRESS

Group

Short leasehold

building

Renovation and electrical

installation


fi ttings

Forklift, crane

and motor vehicles

Total 2009

Total2008

RM RM RM RM RM RM

Brought forward 356,250 215,580 - 215,884 787,714 -

Addition 2,311,888 956,237 208,000 321,966 3,798,091 787,714

Transferred to property, plant and

equipment (2,668,138) (1,171,817) (208,000) (537,850) (4,585,805) -

Carried forward - - - - - 787,714

18. DEFERRED TAX ASSETSGroup

2009 2008RM RM

Brought forward (645,000) (901,195)

Transferred (from)/to income statement (895,000) 256,195

Carried forward (1,540,000) (645,000)

The balance in the deferred tax assets is made up of temporary differences arising from:-

Group2009 2008

RM RM

Carrying amount of qualifying property, plant and equipment in excess of their tax base 227,941 108,038

Allowance for slow moving inventories (1,009,362) (291,504)

Allowance for doubtful debts (758,579) (461,534)

(1,540,000) (645,000)

62

ANNUAL REPORT 2009


19. INVENTORIES

Group2009 2008

RM RM

At cost:-

Raw materials 28,922,204 9,012,917

Work-in-progress 2,981,104 1,011,699

Finished goods 184,213,956 132,061,251

216,117,264 142,085,867

Less: Allowance for slow moving inventories (4,131,185) (1,257,031)

Allowance for write down of inventories (9,243,792) -

202,742,287 140,828,836

20. TRADE RECEIVABLES

Group2009 2008

RM RM

Trade receivables 52,001,775 69,236,368

Less: Allowance for doubtful debts (3,400,436) (1,846,135)

48,601,339 67,390,233

The currency exposure profi le of the trade receivables is as follows (foreign currency balances are unhedged except for EURO):-

Group2009 2008

RM RM


US Dollar 4,037,900 5,592,374


EURO 1,516,304 48,892

52,001,775 69,236,368

Trade receivables comprise amounts receivable from sales of goods. The credit terms granted on sales of goods ranged from 30 days

to 90 days (2008: 30 days to 90 days). Allowance has been made for estimated irrecoverable of trade receivables based on the default

experience of the Group.

21. OTHER RECEIVABLES

Group2009 2008

RM RM

Non-trade receivables 43,903 233,495

Deposit for purchase of inventories and property, plant and equipment 6,378,601 705,334

Sundry deposits 594,205 666,427

Prepayments of expenses 1,071,561 789,615

8,088,270 2,394,871


ANNUAL REPORT 2009

63


22. FIXED DEPOSITS WITH LICENSED BANKS

Group2009 2008

RM RM

Current 1,770,475 1,704,876

The fi xed deposits with licensed banks are on fl oating rate basis and will be matured within 1 month to 6 months (2008: 6 months to 12

months).

23. CASH AND BANK BALANCES

The currency exposure profi le of the cash and bank balances is as follows (foreign currency balances are unhedged):-

Group Company2009 2008 2009 2008

RM RM RM RM

Ringgit Malaysia 26,053,003 1,065,921 576,352 178,268

US Dollar 3,220,568 2,687,675 - -

EURO 468,936 - - -

Singapore Dollar 2,343,841 241,023 - -

32,086,348 3,994,619 576,352 178,268

24. 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 (2008: 30 days to 90 days).

The currency exposure profi le of the trade payables is as follows (foreign currency balances are unhedged):-

Group2009 2008

RM RM


US Dollar 1,910,435 744,467


GBP Sterling 1,016,114 1,208,670

EURO 93,634 138,520

23,362,806 17,250,676

64

ANNUAL REPORT 2009


25. OTHER PAYABLES

Group Company2009 2008 2009 2008

RM RM RM RM

Non-trade payables 3,943,045 1,601,177 40,112 7,745

Deposits received 82,236 175,590 - -

Accruals of expenses 6,581,111 1,518,000 211,073 154,467

Provision for unrealised loss in forward foreign

exchange contract 2,036,535 - - -

Finance creditors 1,145,453 1,227,579 - -

13,788,380 4,522,346 251,185 162,212

26. BANK OVERDRAFTS - UNSECURED

The bank overdrafts of the Group are obtained by way of corporate guarantee from the Company and negative pledge on the assets of

a subsidiary company.

Interest is charged at rates ranging from 6.55% to 8.50% (2008: 7.75% to 8.50%) per annum.

27. REVENUE

Group Company2009 2008 2009 2008

RM RM RM RM

Sales of goods 511,595,330 313,322,452 - -

Dividend income - - 18,333,486 6,940,806

Management fee - - 2,292,000 2,124,000

511,595,330 313,322,452 20,625,486 9,064,806

28. PROFIT BEFORE TAXATION

Profi t before taxation has been determined after charging/(crediting) amongst other items the following:-

Group Company2009 2008 2009 2008

RM RM RM RM

Allowance for doubtful debts 1,554,301 1,312,480 - -

Allowance for slow moving inventories 2,874,770 30,587 - -

Allowance for write down of inventories 9,243,792 - - -

Allowance for diminution in value of investment 2,000,000 - - -

Amortisation of prepaid land lease payments 79,070 44,043 - -

Auditors’ remuneration

- statutory 95,000 82,500 10,000 10,000

- non statutory 21,400 24,500 2,700 13,000

- other auditors 38,330 33,205 - -

Bad debts written off 134,981 2,404 - -

Depreciation 4,841,142 3,181,548 - -


ANNUAL REPORT 2009

65


28. PROFIT BEFORE TAXATION (CONT’D)

Profi t before taxation has been determined after charging/(crediting) amongst other items the following:- (cont’d)

Group Company2009 2008 2009 2008

RM RM RM RM

Directors’ remuneration

- fees 386,000 177,000 126,000 102,000

- other emoluments 5,172,098 3,239,577 1,439,155 1,253,107

Direct operating expenses of investment

properties: -

- revenue generating during the fi nancial year 308,633 220,178 - -

Hire of machinery 83,592 - - -

Interest expenses

- hire purchase/ fi nance lease 182,703 189,625 - -

- term loans/bonds 2,471,369 2,185,585 - -

- bank overdrafts 121,483 69,001 - -

- overdue (271) 271 - -

- onshore foreign currency loan 1,061,535 148,248 - -

- trust receipts/bankers’ acceptance/LC charges 5,232,057 4,027,369 - -

Property, plant and equipment written off 9,009 55,671 - -

Rental

- premises 732,533 515,222 - -

- factory and warehouse 647,224 378,910 - -

- offi ce equipment 10,696 6,733 - -

- crane 26,627 - - -

- yard 678,502 998,457 - -

- lorry 50 - - -

Loss/(Gain) on foreign exchange

- realised 4,014,375 923,849 (8,876) -

- unrealised 1,971,043 (104,623) - -

Allowance for slow moving inventories no longer

required (616) (1,541,046) - -

Bad debts recovered (924) (2,369) - -

Dividend income

- subsidiary companies - - (18,333,486) (6,940,806)

- associate company (48,000) - - -

- others (315) (197) - -

Gain on disposal of investment properties - (858,420) - -

Gain on disposal of property, plant and equipment (43,415) (44,000) - -

Interest income from fi xed deposits (375,610) (650,542) (3,394) (228,330)

Rental income (250,700) (561,000) - -

The estimated monetary value of benefi ts provided to the Directors of the Group during the fi nancial year by way of usage of the Group’s

assets and other benefi ts amounted to RM80,550 (2008: RM80,550).

The remuneration paid to the Directors of the Company is categorised as follows:-

Other Benefi ts-Fees emoluments in-kind Total

RM RM RM RM

2009Executive Directors 210,000 4,103,977 71,150 4,385,127

Non-Executive Directors 126,000 - - 126,000

Total 336,000 4,103,977 71,150 4,511,127

66

ANNUAL REPORT 2009


28. PROFIT BEFORE TAXATION (CONT’D)

The remuneration paid to the Directors of the Company is categorised as follows:- (cont’d)

Other Benefi ts-Fees emoluments in-kind Total

RM RM RM RM

2008Executive Directors 75,000 3,239,577 71,150 3,385,727

Non-Executive Directors 102,000 - - 102,000

Total 177,000 3,239,577 71,150 3,487,727

The remuneration paid to the Directors of the Company analysed into bands are as follows:-

Number of Directors RM100,000 RM1,000,001to to

<RM100,000 RM1,000,000 RM2,000,000

2009Executive Directors - 2 2

Non-Executive Directors 4 - -

2008Executive Directors - 3 1

Non-Executive Directors 5 - -

29. TAXATION

Group Company2009 2008 2009 2008

RM RM RM RM

Current year’s provision 21,553,361 9,713,560 4,313,155 1,953,356

(Over)/Under provision of taxation in prior year (425,120) 192,301 (7,885) (7,633)

Transferred to deferred taxation 308,926 716,670 - -

Transferred (to)/from deferred tax assets (895,000) 256,195 - -

20,542,167 10,878,726 4,305,270 1,945,723

Malaysian income tax is calculated at the statutory rate of 25% (2008: 26%) of the estimated taxable profi ts for the fi nancial year.

The reconciliation of income tax expenses applicable to profi t before taxation at the statutory tax rate to the income tax expenses at the

effective tax rate of the Group and of the Company are as follows:-

Group Company2009 2008 2009 2008

RM RM RM RM

Profi t before taxation 82,001,640 45,020,844 18,657,637 7,463,383

Taxation at Malaysian statutory tax rate of 25%

(2008: 26%) 20,500,410 11,705,420 4,664,409 1,940,480

Tax effects in respect of:-


ANNUAL REPORT 2009

67


29. TAXATION (CONT’D)

Group Company2009 2008 2009 2008

RM RM RM RM

Change in tax rate for the fi rst tranche of chargeable

income (1,915) (32,290) - -

Effect of changes in tax rates on opening balance of

deferred taxation (16,830) (19,740) - -

Expenses not deductible for tax purposes 977,726 1,626,210 65,779 78,358

Utilisation of reinvestment allowance - (1,700,738) - -

Income not subject to tax (428,627) (803,191) (417,033) (65,482)

Expenses allowable for double deduction (63,477) (89,246) - -

(Over)/Under provision of taxation in prior year (425,120) 192,301 (7,885) (7,633)

Effective tax expenses 20,542,167 10,878,726 4,305,270 1,945,723

During the current fi nancial year, 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 profi t.

However, the above amounts are subject to the approval of the Inland Revenue Board of Malaysia.

30. EARNINGS PER SHARE

The earnings per share has been calculated based on Group’s profi t after taxation of RM61,459,473 (2008: RM34,142,118) and the

weighted average number of shares in issue during the fi nancial year of 374,179,200 (2008: 375,000,000).

There is no dilutive earnings per share.

31. EMPLOYEE BENEFITS EXPENSES

Group Company2009 2008 2009 2008

RM RM RM RM

Staff costs 23,863,085 15,184,431 1,439,155 1,253,107

Included in employee benefi ts expenses of the Group and of the Company is Directors’ remuneration of RM5,172,098 and RM1,439,155

(2008: RM3,239,577 and RM1,253,107) respectively and defi ned contribution plan for the Group and the Company of RM1,285,063

and RM151,968 (2008: RM982,860 and RM133,920) respectively.

32. RELATED PARTY DISCLOSURE

(a) The related party transactions of the Group and of the Company during the fi nancial year were as follows:-

Group Company2009 2008 2009 2008

RM RM RM RM

Transactions with subsidiary companies:-

- management fee received - - 2,292,000 2,124,000

- dividend received (net) - - 14,167,148 5,201,487

68

ANNUAL REPORT 2009


32. RELATED PARTY DISCLOSURE (CONT’D)

(a) The related party transactions of the Group and of the Company during the fi nancial year were as follows:- (cont’d)

Group Company2009 2008 2009 2008

RM RM RM RM

Transactions with an associate company:-

- sales 138,546,200 15,171,989 - -

- purchase 1,989,137 70,000 - -

- rental received 24,000 - - -

- dividend received (net) 45,750 - - -

Transaction with joint venture company:-

- purchase 1,199,366 424,691 - -

(b) The outstanding balances arising from related party transactions as at the balance sheet date are disclosed in Notes 13, 14 and

15 to the Financial Statements.

(c) The remuneration of key management personnel is same with the Directors’ remunerations as disclosed in Note 28 to the

Financial Statements. The Company has no other key management personnel apart from the Board of Directors.

33. FINANCIAL INSTRUMENTS

(a) Interest rate risk

The interest rate risk that fi nancial instruments’ values will fl uctuate as a result of changes in market interest rates, and the

effective weighted average interest rates on classes of fi nancial assets and fi nancial liabilities are as follows:-

Less than 1 year 1 to 5 years Total

Effective interest rates during

the fi nancial yearRM RM RM

GROUP2009Financial assetFixed deposits with licensed banks 1,770,475 - 1,770,475 2.80% - 3.10%

Financial liabilitiesTerm loans 8,640,988 10,296,808 18,937,796 2.85% - 8.00%

Collaterised loan obligations 831,112 20,000,000 20,831,112 8.38%

Trust receipts 6,471,316 - 6,471,316 3.90% - 8.00%

Bankers’ acceptance 100,546,107 - 100,546,107 2.99% - 5.15%

Onshore foreign currency loan 11,439,540 - 11,439,540 3.30% - 8.25%

Hire purchase and fi nance lease 1,145,453 1,426,596 2,572,049 2.33% - 4.25%

2008Financial assetFixed deposits with licensed banks 1,704,876 - 1,704,876 3.00% - 3.60%

Financial liabilitiesTerm loans 2,029,286 6,917,212 8,946,498 3.00% - 8.75%

Collaterised loan obligations 835,704 20,000,000 20,835,704 8.38%

Domestic resource factoring 1,931,808 - 1,931,808 7.25%

Trust receipts 4,102,660 - 4,102,660 6.25% - 8.25%

Bankers’ acceptance 58,268,154 - 58,268,154 3.55% - 5.25%

Onshore foreign currency loan 7,193,601 - 7,193,601 5.00% - 6.00%

Bank overdrafts 793,500 - 793,500 7.75% - 8.50%

Hire purchase and fi nance lease 1,227,579 1,879,248 3,106,827 2.45% - 8.64%


ANNUAL REPORT 2009

69


33. FINANCIAL INSTRUMENTS (CONT’D)

(b) Credit risk

The maximum credit risk associated with recognised fi nancial assets is the carrying amount shown in the balance sheets.

The Group and the Company have no signifi cant concentration of credit risk with any single counterparty.

(c) Fair values

The carrying amounts of all fi nancial assets and liabilities of the Group and of the Company as at the balance sheet date

approximated their fair values except as set out below:-

Group CompanyCarrying amount Fair value Carrying amount Fair value

2009 RM RM RM RM

Unquoted shares in subsidiary companies - - 72,271,435 *

Unquoted shares in an associate company 1,542,444 * - -

Unquoted shares in joint venture company 274,509 * - -

Quoted investment in Malaysia 6,900 5,440 - -

Subordinated bond - # - -

2008Unquoted shares in subsidiary companies - - 72,271,435 *

Unquoted shares in an associate company 146,829 * - -

Unquoted shares in joint venture company 166,616 * - -

Quoted investment in Malaysia 6,900 6,520 - -

Subordinated bond 2,000,000 # - -

* It was not practicable within the constraints of timeliness and costs to estimate these fair values reliably. However, at

the end of the fi nancial year, the net tangible assets reported by the subsidiary companies, associate company and joint

venture company were as follows:-

2009 2008RM RM

GroupUnquoted shares in an associate company 4,988,979 489,430

Unquoted shares in joint venture company 392,157 238,023

CompanyUnquoted shares in subsidiary companies 174,248,814 127,744,307

# It was not practicable within the constraints of timeliness and costs to estimate these fair values reliably. However, at the

end of the fi nancial year, the fair value of the subordinated bond is assumed to be the same as carrying amount.

70

ANNUAL REPORT 2009


33. FINANCIAL INSTRUMENTS (CONT’D)

(d) Forward exchange contracts

As at 28 February 2009, the Group has forward exchange contracts with licensed banks as hedges for sales amounted to

approximately RM18.06 million (2008: RM6.6 million). The settlement periods for these contracts are ranging from 1 month to 5

months (2008: 1 month to 6 months).

34. CAPITAL COMMITMENTS

Group2009 2008

RM RM

Authorised and contracted for:-

Purchase of - buildings - 7,093,750

- land 9,037,711 -

- motor vehicles - 195,383

- renovation and electrical installation - 24,854

- plant and machinery 1,603,899 153,146

35. RENTAL COMMITMENTS

The future rental commitments are as follows:-

Group2009 2008

RM RM

Year 2009 - 1,037,241

Year 2010 - 2018 6,137,432 4,621,903

6,137,432 5,659,144

36. OPERATING LEASE COMMITMENTS

The Company has entered into non-cancellable operating lease agreements on its assets. These lease have remaining no-cancellable

lease terms of between 1 to 3 years.

The future minimum lease payments receivable under non-cancellable operating leases contracted for as at the balance sheet date but

not recognised as receivables are as follows:-

Group2009 2008

RM RM

Within next twelve months 256,100 757,400

More than twelve months 121,050 195,450

377,150 952,850


ANNUAL REPORT 2009

71


37. CONTINGENT LIABILITIES

Company2009 2008

RM RM

Unsecured:-

Corporate guarantees given to licensed fi nancial institutions for

credit facilities granted to subsidiary companies 452,822,000 241,465,518

38. SIGNIFICANT EVENTS DURING THE FINANCIAL YEAR

(a) On 14 May 2008, the 150,000,000 unit of ordinary shares of RM0.50 each of the Company are subdivided into 375,000,000 unit

of new ordinary shares of RM0.20 each.

(b) On 21 August 2008, through the Annual General Meeting of the Company, the Company is authorised to purchase its own shares

(“Share Buy-Back”) from time to time from the open market.

39. SIGNIFICANT EVENTS SUBSEQUENT TO THE BALANCE SHEET DATE

(a) At the forthcoming Annual General Meeting, a fi nal single tier dividend, in respect of the fi nancial year ended 28 February 2009,

of 1.00 sen per ordinary share amounting to a dividend payable of RM3,750,000 will be proposed for shareholders’ approval.

The fi nancial statements for current fi nancial year do not refl ect this proposed dividend. Such dividend, if approved by the

shareholders, will be accounted for in equity as an appropriation of retained earnings in the fi nancial year ending 28 February

2010.

(b) A special second interim single tier dividend of 0.80 sen per ordinary shares amounting to RM2,993,434 is paid on 12 May 2009.

(c) On 19 May 2009, the Company, through its wholly-owned subsidiary company Pantech Corporation Sdn. Bhd. (“PCSB”),

signed a Sales and Purchase Agreement (“SPA”) with Johor Corporation (“JC”) for the purchase of one parcel of Industrial Land

distinguished as PLO 809, Zone 12B, Pasir Gudang Industrial Area, Mukim of Plentong, Johor Bahru, Johor Darul Takzim at a

purchase consideration of RM6,339,587.00. A deposit of RM1,901,876.10 has been paid to JC and the remaining amount of

RM4,437,710.90 will be paid within three months from the date of the SPA.

The said purchase is to be funded through internally generated funds and term loan facility from a fi nancial institution.

40. SEGMENTAL REPORTING - GROUP

(a) Primary segmental reporting - Business segment

The Group is organised on a worldwide basis into three major business segments as follows:-

Business segments Business activities

Trading of pipes,

fi ttings and fl ow controls

Trading, supply and stocking of high pressure seamless and specialised steel pipes, fi ttings,

fl anges, 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 refi ning

and other related industries.

Manufacturing of

pipes fi ttings

Manufacturing and supply of butt-welded carbon steel fi ttings such as elbows, tees, reducers,

end-caps and high frequency induction long bends for use in the oil and gas and other related

industries.

Investments and management Investment holding, property investment and management service.

72

ANNUAL REPORT 2009


40. SEGMENTAL REPORTING - GROUP (CONT’D)

(a) Primary segmental reporting - Business segment (cont’d)

Trading of pipes, fi ttings

and fl ow controls

Manufacturing of pipes fi ttings

Investments and

management Eliminations ConsolidatedRM RM RM RM RM

2009RevenueExternal revenue 401,379,793 110,215,537 - - 511,595,330

Inter-segment revenue 27,218,434 6,084,791 20,625,486 (53,928,711) -

Total revenue 428,598,227 116,300,328 20,625,486 (53,928,711) 511,595,330

ResultsSegment results 76,775,765 15,042,657 (1,853,353) - 89,965,069

Interest income 502,228 56,011 3,394 (186,023) 375,610

Profi t/(Loss) from operations 77,277,993 15,098,668 (1,849,959) (186,023) 90,340,679

Finance costs (7,859,483) (1,975,635) (185,769) 186,023 (9,834,864)

Share of profi t in associate company 1,395,615 - - - 1,395,615

Share of profi t in joint venture company 100,210 - - - 100,210

Profi t/(Loss) before taxation 70,914,335 13,123,033 (2,035,728) - 82,001,640

Taxation (18,516,777) (1,718,977) (306,413) - (20,542,167)

Profi t/(Loss) after taxation 52,397,558 11,404,056 (2,342,141) - 61,459,473

2008RevenueExternal revenue 247,527,505 65,794,947 - - 313,322,452

Inter-segment revenue 17,569,527 5,330,686 9,064,806 (31,965,019) -

Total revenue 265,097,032 71,125,633 9,064,806 (31,965,019) 313,322,452

ResultsSegment results 40,856,245 12,148,384 (1,787,790) - 51,216,839

Interest income 446,681 160,902 228,330 (185,371) 650,542

Profi t/(Loss) from operations 41,302,926 12,309,286 (1,559,460) (185,371) 51,867,381

Finance costs (6,134,627) (860,496) (188,213) 185,371 (6,997,965)

Share of profi t in associate company 106,629 - - - 106,629

Share of profi t in joint venture company 44,799 - - - 44,799

Profi t/(Loss) before taxation 35,319,727 11,448,790 (1,747,673) - 45,020,844

Taxation (8,747,702) (1,952,019) (179,005) - (10,878,726)

Profi t/(Loss) after taxation 26,572,025 9,496,771 (1,926,678) - 34,142,118


ANNUAL REPORT 2009

73


40. SEGMENTAL REPORTING - GROUP (CONT’D)


Trading of pipes, fi ttings

and fl ow controls

Manufacturing of pipes fi ttings

Investments and

management Eliminations ConsolidatedRM RM RM RM RM

2009Other informationSegment assets 324,228,450 87,315,949 107,989,115 (115,209,483) 404,324,031

Investment in an associate company 1,542,444 - - - 1,542,444

Investment in joint venture company 274,509 - - - 274,509

Deferred tax assets 1,540,000 - - - 1,540,000

Tax recoverable - 1,426,000 - - 1,426,000

Consolidated total assets 327,585,403 88,741,949 107,989,115 (115,209,483) 409,106,984

Segment liabilities 181,565,603 51,922,889 3,057,087 (39,726,175) 196,819,404

Tax payable 9,100,349 - 57,260 - 9,157,609

Deferred taxation 1,240,560 2,004,000 - - 3,244,560

Consolidated total liabilities 191,906,512 53,926,889 3,114,347 (39,726,175) 209,221,573

Capital expenditure on property,

plant and equipment 4,107,655 2,540,147 - - 6,647,802

Depreciation 2,955,238 1,885,904 - - 4,841,142

2008Other informationSegment assets 230,242,453 54,097,680 101,115,173 (108,484,415) 276,970,891

Investment in an associate company 146,829 - - - 146,829

Investment in joint venture company 166,616 - - - 166,616

Deferred tax assets 645,000 - - - 645,000

Tax recoverable - 41,750 - - 41,750

Consolidated total assets 231,200,898 54,139,430 101,115,173 (108,484,415) 277,971,086

Segment liabilities 130,081,137 27,969,263 2,494,505 (34,591,496) 125,953,409

Tax payable 2,504,497 - 105,624 - 2,610,121

Deferred taxation 1,251,050 1,683,000 - - 2,934,050

Consolidated total liabilities 133,836,684 29,652,263 2,600,129 (34,591,496) 131,497,580

Capital expenditure on property, plant

and equipment 6,930,777 10,771,749 - - 17,702,526

Depreciation 1,983,921 1,197,627 - - 3,181,548

74

ANNUAL REPORT 2009


40. SEGMENTAL REPORTING – GROUP (CONT’D)


Segment assets consist primarily of property, plant and equipment, inventories, receivables and operating cash, and mainly

exclude investment in an associate company, investment in joint venture company, deferred tax assets and tax recoverable.

Segment liabilities comprise operating liabilities and exclude items such as taxation.

Capital expenditure comprises additions to property, plant and equipment, including additions resulting from acquisition through

business combinations.

(b) Secondary segmental reporting - Geographical segment

Revenue Total assets Capital expenditure2009 2008 2009 2008 2009 2008

RM RM RM RM RM RM

Malaysia 461,110,712 278,116,283 388,744,730 265,317,039 6,482,556 17,665,398

Singapore 50,484,618 35,206,169 18,545,301 12,340,602 165,246 37,128

511,595,330 313,322,452 407,290,031 277,657,641 6,647,802 17,702,526

Associate company 1,542,444 146,829

Joint venture company 274,509 166,616

409,106,984 277,971,086

Segment capital expenditure is the total cost incurred during the year to acquire segment assets that are expected to be used

for more than one fi nancial year.

The Group’s business segments are managed on a worldwide basis, they operate in two main geographical areas:-

• Malaysia * - mainly manufacturing and trading of pipes, fi ttings and also investments and management

• Singapore - trading of fl ow control solutions

* Company’s home country.

With the exception of the countries disclosed above, no other individual country contributed more than 10% of consolidated sales

or assets.

In determining the geographical segments of the Group, sales are based on the country in which the customer is located. Total

assets and capital expenditure are determined based on where the assets are allocated.


ANNUAL REPORT 2009

75

No. Tittle deed Address

( Land area )

Gross

build-up

area Sq.ft. Tenure

Description /

existing use

Net Book

Value

@ 28.2.2009

RM’000

Approximate

age of

building

Years

Date of

last

revaluation

1 Geran 95059 and 95060

Lot No. 23191 and 23192

Mukim Kapar

Dsitrict of Klang

Lot 13258 and 13259,

Jalan Haji Abdul Manan,

Off Jalan Meru,

41050 Klang, Selangor

(378,556)

247,990

Freehold 5 units of single

storey detached

factories

(Identifi ed for

reference as

Factory A, B, C, D

and E)

21,553 Factory A,

B & C - 19

Factory D - 17

Factory E - 2

28.2.2009

2 Lot PT NO 34277,

HS(M) 29537,

Mukim and District of Klang,

HS (D) 114965, Lot PT 17296

Pekan Baru Hicom,

Daerah Petaling,

Negeri Selangor

No. 3, Jalan Trompet 33/8,

Seksyen 33,

40400 Shah Alam,

Selangor Darul Ehsan

(123,548)

25,968

Leasehold

expiring on

11.12.2096 &

28.11.2096

A single-storey

detached

warehouse with

2-storey offi ce

buildings annexed

5,439 11 -

3 PTD 71061, HS(D) 125023,

Mukim Plentong,

District of Johor Bahru,

Johor Darul Takzim

PLO 234,

Jalan Tembaga Satu,

Pasir Gudang Industrial Estate,

81700 Pasir Gudang

(87,120)

42,300

Leasehold

expiring on

30.9.2045

A single storey

detached

warehouse with

a 3-storey offi ce

building annexed

4,549 10 28.2.2009

4 Lot P158 & P159,

P157 & P160,

Port Klang Free Zone,

Pulau Indah Klang,

Selangor

Persiaran Port Klang FZ 7,

Jalan FZ 6-P1,

Port Klang Free Zone / KS12,

42920 Pulau Indah,

Selangr Darul Ehsan

(304,920)

48,383

Leasehold

expiring on

30.06.2017

A single-storey

warehouse

2,606 1 -

5 Lot 64305, Geran 73035,

Mukim Plentong,


Johor Darul Takzim

No. 4, Jalan Mutiara 4,

Taman Perindustrian Plentong,

81750 Masai, Johor

(11,808)

11,640

Freehold A single storey

semi-detached

factory with a

3-storey offi ce

annexed

1,800 9 28.2.2009

6 Pajakan Negeri 6725,

Lot 51748, Mukim Plentong,


Johor Darul Takzim

PLO 304, Jalan Perak 4,

Pasir Gudang Industrial Estate,

81700 Pasir Gudang

(99,555)

26,400

Leasehold

expiring on

20.09.2050

A parcel of

industrial land

erected upon with

a single-storey

warehouse with 1

1/2-storey offi ce

section and two

guard houses

1,755 21 -

7 HS (D) 169521,

Lot PTD No. 85407,

Mukim of Plentong,

District of Johor Bahru

No. 1 and 1A,

Jalan Molek 2/1,

Taman Molek,

81100 Johor bahru

(2,704)

4,500

Freehold A double storey

corner shophouse

600 18 28.2.2009

8 HS (D) 206664,

Lot PTD No. 59129,

Mukim of Tebrau,

District of Johor Bahru

No. 12,

Jalan Mutiara Emas 4/20,

Taman Mount Austin,

81100 Johor Bahru

(4,800)

3,930

Freehold A 1 1/2 storey

intermediate

terrace factory

350 17 28.2.2009

9 PTD 102866, HS(D) 228518,

Mukim Plentong,


Johor Darul Takzim

No. 18 & 18A,

Jalan Lampam 41,

Tanjong Puteri Resort,

81700 Pasir Gudang

(1,540)

3,080

Freehold A double storey

intermediate

shophouse

280 12 28.2.2009

List of Propertiesas at 28 February 2009

76

ANNUAL REPORT 2009

Analysis of Shareholdingsas at 2 July 2009

Authorized Share Capital : RM500,000,000.00

Issued and Fully Paid-Up Share Capital : RM 75,000,000.00

Class of Shares : Ordinary Shares of RM0.20 Each

Voting Rights : One Vote Per Ordinary Share

No. of Shareholders : 3,099

DISTRIBUTION OF SHAREHOLDINGS AS AT 2 JULY 2009

CategoryNo. of

Shareholders% of

Shareholders No. of Shares % of SharesLess than 100 33 1.06 1,071 0.00

100 – 1,000 118 3.81 87,679 0.02

1,001 – 10,000 1,887 60.89 10,842,000 2.89

10,001 – 100,000 895 28.88 26,321,800 7.02

100,001 – less than 5% of issued shares 161 5.20 144,354,750 38.50

5% and above of issued shares 5 0.16 193,392,700 51.57

Total 3,099 100.00 375,000,000* 100.00

Note:

* The number of 375,000,000 ordinary shares is inclusive of treasury shares retained by the Company.

LIST OF SUBSTANTIAL SHAREHOLDERS AS AT 2 JULY 2009

Direct IndirectNo. Names No. of Shares %* No. of Shares %*1. CTL Capital Holding Sdn Bhd 84,330,400 22.54 - - -

2. GL Management Agency Sdn Bhd 62,413,300 16.68 - - -

3. Koperasi Permodalan Felda Berhad 46,649,000 12.47 - - -

4. Chew Ting Leng - - 84,330,400 22.54 (a)

5. Shum Kah Lin - - 84,330,400 22.54 (b)

6. Goh Teoh Kean - - 62,413,300 16.68 (c)

7. Lee Sock Kee - - 62,413,300 16.68 (d)

Notes:

* Excluding a total of 820,800 shares bought-back by the Company and retained as treasury shares

DIRECTORS’ INTERESTS IN SHARES AS AT 2 JULY 2009

Direct IndirectNo. Names No. of Shares %* No. of Shares %*1. Chew Ting Leng - - 84,330,400 22.54 (a)

2. Goh Teoh Kean - - 62,413,300 16.68 (c)

3. Tan Ang Ang 6,620,500 1.77 1,065,000 0.28 (e)

4. To Tai Wai 10,267,150 2.74 - - -

5. Tan Sui Hin 75,000 0.02 - - -

6. Abdul Karim Bin Ahmad 25,000 0.01 - - -

7. Yusoff Bin Mohamed 2,500 0.00 - - -

Notes:

(a) Deemed Interest pursuant to Section 6A of the Act through his and his spouse Shum Kah Lin’s interest in CTL Capital Holding Sdn Bhd

(b) Deemed Interest pursuant to Section 6A of the Act through her and her spouse Chew Ting Leng’s interest in CTL Capital Holding Sdn Bhd

(c) Deemed Interest pursuant to Section 6A of the Act through his and his spouse Lee Sock Kee’s interest in GL Management Agency Sdn Bhd

(d) Deemed Interest pursuant to Section 6A of the Act through her and her spouse Goh Teoh Kean’s interest in GL Management Agency Sdn Bhd

(e) Deemed interest through the shares held by his spouse, Madam Yong Yui Kiew

* Excluding a total of 820,800 shares bought-back by the Company and retained as treasury shares


ANNUAL REPORT 2009

77

No. Shareholders Shareholding %*

1. CTL CAPITAL HOLDING SDN. BHD. 50,594,900 13.52

2. KOPERASI PERMODALAN FELDA BERHAD 46,649,000 12.47

3. GL MANAGEMENT AGENCY SDN. BHD. 33,978,500 9.08

4. CTL CAPITAL HOLDING SDN. BHD. 33,735,500 9.02

5. GL MANAGEMENT AGENCY SDN. BHD. 28,434,800 7.60

6. LEE LIANG MONG 7,987,500 2.13

7. CITIGROUP NOMINEES (TEMPATAN) SDN. BHD.

- EXEMPT AN FOR PRUDENTIAL FUND MANAGEMENT BERHAD

7,539,300 2.01

8. TO TAI WAI 6,620,145 1.77

9. LEE LIANG MONG 5,775,000 1.54

10. AMANAH RAYA BERHAD

- KUMPULAN WANG BERSAMA

5,680,550 1.52

11. MALAYSIA NOMINEES (TEMPATAN) SENDIRIAN BERHAD

– GREAT EASTERN LIFE ASSURANCE (MALAYSIA) BERHAD

4,660,250 1.25

12. LEE LIANG MONG 4,501,250 1.20

13. TAN ANG ANG 4,065,500 1.09


– GREAT EASTERN LIFE ASSURANCE (MALAYSIA) BERHAD

4,015,000 1.07

15. LIM SOON BENG 3,970,515 1.06

16. SHUM BI SHIAN 3,687,815 0.99

17. TO TAI WAI 3,647,005 0.97

18. NG LEE LEE 3,170,215 0.85

19. HSBC NOMINEES (TEMPATAN) SDN. BHD.

- HSBC (MALAYSIA) TRUSTEES BERHAD FOR AMANAH SAHAM SARAWAK

3,142,600 0.84

20. FREDDIE CHEW SUN GHEE 3,110,000 0.83

21 MALAYSIA NOMINEES (TEMPATAN) SENDIRIAN BERHAD

- GREAT EASTERN LIFE ASSURANCE (MALAYSIA) BERHAD

3,064,750 0.82

22. SHUM BI SHIAN 2,823,285 0.75

23. KONG CHIONG LEE 2,764,500 0.74

24. AMANAH RAYA NOMINEES (TEMPATAN) SDN. BHD.

- PUBLIC ISLAMIC OPPORTUNITIES FUND

2,581,000 0.69

25. TAN ANG ANG 2,555,000 0.68

26. LIM SOON BENG 2,410,285 0.64


– OVERSEAS ASSURANCE CORPORATION (MALAYSIA) BERHAD

2,354,250 0.63

28. MAYBAN NOMINEES (TEMPATAN) SDN. BHD.

- MAYBAN LIFE ASSURANCE BERHAD

2,350,000 0.63

29. DB (MALAYSIA) NOMINEE (TEMPATAN) SENDIRIAN BERHAD

- EXEMPT AN FOR KUMPULAN SENTIASA CEMERLANG SDN BHD

2,327,500 0.62

30. NG LEE LEE 2,231,985 0.60

TOTAL 290,427,900 77.61

Notes:

- Excluding a total of 820,800 shares bought-back by the Company and retained as treasury shares

30 Largest Shareholdersas at 2 July 2009

This page is left blank intentionally

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 block capital)

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 Third Annual General

Meeting of the Company to be held at The Synergy Room, The Westin Kuala Lumpur Hotel, 199, Jalan Bukit Bintang, 55100 Kuala Lumpur

on Tuesday, 18th August 2009 at 11.00 a.m.. My/our proxy/proxies is to vote as indicated below:-

RESOLUTIONFIRST PROXY SECOND PROXY

FOR AGAINST FOR AGAINSTORDINARY BUSINESS

1. To approve the payment of Final Single Tier Dividend of 1.0

sen per ordinary share of RM0.20 each for the fi nancial year

ended 28 February 2009.

2. To approve the payment of Directors’ Fees of RM126,000

for the fi nancial year ended 28 February 2010.

3. To re-elect Mr Tan Ang Ang who retires pursuant to Article 122.

4. To re-elect Mr Tan Sui Hin who retires pursuant to Article 122.

5. To re-elect Encik Abdul Karim Bin Ahmad who retires pursuant to

Article 122.

6. To re-appoint Messrs SJ Grant Thornton as Auditor and to

authorised the Directors to fi x their remuneration.

SPECIAL BUSINESS7. Proposed renewal on authority to issue shares by the

Company pursuant to Section 132D of the Companies Act,

1965.

8. Proposed renewal of Share buy-back Authority

* 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

Signature of Shareholder(s)/Common Seal Signed this .................day of ..............................2009

Notes:

1. 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

specifi es 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)(b) & (c) of the Companies Act, 1965 shall not apply.

2. Where a member is an authorised nominee as defi ned under the Security 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.

3. 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 offi cer or attorney so authorised.

4. The Proxy Form must be deposited at the Registered Offi ce of the Company at Level 15-2, 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.

PANTECH GROUP HOLDINGS BERHAD(Company No. 733607-W)

No. of ordinary shares held

AFFIX

STAMP

THE SECRETARYPANTECH GROUP HOLDINGS BERHAD (733607-W)

LEVEL 15-2, FABER IMPERIAL COURTJALAN SULTAN ISMAIL50250 KUALA LUMPUR

Then fold here

1st fold here

PANTECH CORPORATION SDN BHD(176321-P)

Johor Bahru Head Offi cePLO 234, Jalan Tembaga SatuPasir Gudang Industrial Estate81700 Pasir GudangJohor Darul Takzim, MalaysiaTel: +607 259 7979 / 252 1767Fax: + 607 251 2877 / 252 0835Email: [email protected]

Shah Alam Offi ceNo. 3, Jalan Trompet 33/8Seksyen 33, 40400 Shah AlamSelangor Darul Ehsan, MalaysiaTel : +603 5192 7995Fax : +603 5192 7992Email : [email protected]

Pulau Indah (Warehouse Offi ce)Persiaran Port Klang FZ 7, Jalan FZ 6-P1Port Klang Free Zone / KS 1242920 Pulau IndahSelangor Darul Ehsan, MalaysiaTel : +603 3101 3767Fax : +603 3101 4767

PANTECH (KUANTAN) SDN BHD(191606 U)

Lot 5, Jalan Industri Semambu 2Kawasan Perindustrian Semambu25350 KuantanPahang Darul Makmur, MalaysiaTel: +609 568 7550Fax: +609 568 7553Email: [email protected]

PANTECH STEEL INDUSTRIES SDN BHD(509731-A)

ManufacturerLot 13258 & 13259Jalan Haji Abdul MananOff Jalan Meru42200 KaparSelangor Darul Ehsan, MalaysiaTel: +603 3393 1633Fax: +603 3392 8966Email: [email protected]

PANAFLO CONTROLS PTE LTD(200413822 D)

Singapore Offi ceNo. 5Tuas View CloseTradelink PlaceSingapore 637490Tel: +65 6562 3048Fax: +65 6562 3148Email: info@panafl ocontrols.com.sg

PANTECH GROUP HOLDINGS BERHAD (733607-W

) A

NN

UA

L RE

PO

RT

2009

A N N U A L R E P O R T 2 0 0 9





SG08/02123.1 MY08/00171.1


Cert. No. MY08/00161.1Cert. No. KLR0404021 Cert. No. KLR0403926


Cert. No. MY08/00161.3


SG08/02/123.3 MY08/00171.3

Cert. No. SNG6003354

A N N U A L R E P O R T 2 0 0 9


Documents

ONE-STOP CENTER - Pantech · ONE-STOP CENTER PIPES • FITTINGS • VALVES ONE-STOP CENTER PIPES • FITTINGS • VALVES MS ISO/IEC Guide 66:2000 EMS 12072004 CB 03 SG08/02123.1 MY08/00171.1