WHO WE ARE - Rohas Tecnic · Wan Afzal-Aris Wan Azmi Khor Yu Leng 5. To approve the Directors’ fees and benefits of RM475,000 for Rohas Tecnic Berhad in respect of the financial

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contents

Who We Are

2

Notice of Twenty-Fifth (25th) Annual General Meeting

4

2018 Group Corporate Structure

8

Corporate Information

9

Mission Statements

10

5 Years Financial Highlight

11

Chairman’s Interview

12

Board of Directors

16

Key Senior Management

18

Management Discussion and Analysis

24

Audit and Risk Management Committee Report

34

Statement of Corporate Governance

38

Statement On Risk Management and Internal Control

52

Our Sustainability Journey and Plans For FY 2019

56

Additional Compliance Information

66

Statement of Directors’ Responsibility

68

Financial Statement

69

Proxy Form

2 3

Rohas Tecnic Berhad and its subsidiaries (RTB Group) is a Malaysia-based group involved in regional utility infrastructure markets primarily in the Power & Energy, Telecommunication and Water & Sewage. RTB Group is the market leader in the manufacturing of steel lattice towers and monopoles for power transmission and telecommunications in Malaysia as well as in the provision of full turnkey solutions in Engineering, Procurement, Construction and Commissioning (EPCC) projects both in Malaysia and other countries in the region.

The strength of RTB Group is supported by its in-house design and engineering capabilities in the field of electrical, structural and civil works. RTB Group has a strong foundation and track record in delivering EPCC projects in a cost effective manner and high quality standards. Its EPCC offerings cover turnkey solutions for High Voltage Transmission lines & substations, Telecommunication towers network roll-out and Mechanical and Electrical (M&E) works for water and sewage treatment plants. With more than 4 decades of industry knowledge and design experience gained over the years, RTB Group will continuously seek new opportunities and to transform it into a leading regional utility infrastructure company.

WHO WE ARE

2 3

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Twenty-FIFTH (25TH) ANNUAL GENERAL MEETING

SPECIAL RESOLUTION :

To consider and if thought fit, to pass the following Resolution as Special Resolution :-

1. PROPOSED ADOPTION OF NEW COMPANY’S CONSTITUTION

“THAT approval be and is hereby given to revoke the existing Constitution of the Company with immediate effect and in place thereof, the proposed new Constitution of the Company as set out in the “Annexure A” accompanying the Company’s Annual Report for the financial year ended 31 December 2018 be and is hereby adopted as the Constitution of the Company AND THAT the Directors of the Company be and are hereby authorised to assent to any modifications, variations and/or amendments as may be required by the relevant authorities and to do all such acts and things and take all such steps as may be considered necessary to give full effect to the foregoing.”

AS ORDINARY BUSINESS :

1. To receive the Audited Financial Statements of the Company for the financial year ended 31 December 2018 together with the Reports of the Directors and Auditors thereon.

2. To approve the payment of a final single-tier dividend of 1 sen per ordinary share in respect of the financial year ended 31 December 2018.

3. To re-elect the following Directors, each of whom retires in accordance with Articles 104 of the Company’s Articles of Association and being eligible, offers herself/himself for re-election :-

Mohamed Tarmizi Ismail Chee Suan Lye Amirul Azhar Baharom

4. To re-elect the following Directors, each of whom retires in accordance with Articles 109 of the Company’s Articles of Association and being eligible, offers herself/himself for re-election :-

Wan Afzal-Aris Wan Azmi Khor Yu Leng

5. To approve the Directors’ fees and benefits of RM475,000 for Rohas Tecnic Berhad in respect

of the financial year ended 31 December 2018.

6. To approve payment of Directors’ fees and benefits for Rohas Tecnic Berhad from 1 January 2019 until the conclusion of the next Annual General Meeting of the Company.

7. To re-appoint Messrs Grant Thornton Malaysia as Auditors of the Company for the financial year ending 31 December 2019 and to authorise the Directors to fix their remuneration.

(Special Resolution 1)

(Please refer Explanatory Note on Ordinary Business 1)

(Ordinary Resolution 1)

(Ordinary Resolution 2)(Ordinary Resolution 3)(Ordinary Resolution 4)

(Ordinary Resolution 5)(Ordinary Resolution 6)




AS SPECIAL BUSINESS :

To consider and if thought fit, to pass the following Resolution as Ordinary Resolution :-

8. ORDINARY RESOLUTION AUTHORITY TO ISSUE SHARES

“THAT, subject always to the Companies Act 2016, the Company’s Constitution and the approvals of the relevant governmental/regulatory authorities, if applicable, the Directors be and are hereby empowered, pursuant to Section 75 and Section 76 of the Companies Act 2016, to issue shares in the Company from time to time and upon such terms and conditions and for such purposes as the Directors may in their absolute discretion deem fit provided that the aggregate number of shares issued pursuant to this Resolution does not exceed 10% of the total number of issue shares of the Company for the time being and that the Directors be and are also empowered to obtain the approval for the listing of and quotation for the additional shares so issued on Bursa Malaysia Securities Berhad and that such authority shall continue to be in force until the conclusion of the next Annual General Meeting of the Company.”

9. To transact any other business of the Company of which due notice shall have been given.

BY ORDER OF THE BOARD

LAANG JHE HOW (MIA 25193)Company Secretary

30 April 2019


NOTICE IS HEREBY GIVEN that the Twenty-Fifth (25th) Annual General Meeting of the Rohas Tecnic Berhad will be held at BE@M, M Floor, Sheraton Imperial Kuala Lumpur, Jalan Sultan Ismail, 50250 Kuala Lumpur on Wednesday, 29 May 2019 at 9.30 a.m for the following purposes :

Notes :

(1) In respect of deposited securities, only members whose names appear in the Record of Depositors on 22 May 2019 shall be eligible to attend and vote at this AGM or appoint a proxy to attend and vote on his behalf. A proxy may but need not be a member of the Company.

(2) A member who is an authorised nominee 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. A member other than an authorised nominee shall be entitled to appoint not more than two (2) proxies to attend and vote at the same meeting. A member who is an exempt authorised nominee which holds ordinary shares in the Company for multiple beneficial owners in one (1) securities account (“omnibus account”), there is no limit to the number of proxies which the exempt authorised nominee may appoint in respect of each omnibus account it holds.

(3) Where a member appoints more than one (1) proxy, the appointment shall be invalid unless he specifies the proportions of his shareholding to be represented by each proxy.

(4) The instrument appointing a proxy shall be in writing under the hand of the appointor or his attorney duly authorised in writing or if the appointor is a corporation either under Common Seal or under the hand of an officer or attorney duly authorised.

(5) To be valid, this Form of Proxy must be completed, signed and deposited at the registered office of the Company at 149A, Jalan Aminuddin Baki, Taman Tun Dr Ismail, 60000 Kuala Lumpur not later than forty-eight (48) hours before the time set for the AGM or adjourned meeting.

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Twenty-FIFTH (25TH) ANNUAL GENERAL MEETING(CONT’D)

Explanatory notes on Special Resolution :-

Special Resolution 1 – Proposed Adoption of New Company’s Constitution

The proposed Special Resolution, if passed, will bring the Company’s Constitution in line with the enforcement of Companies Act 2016 and the amended Main Market Listing Requirements issued by Bursa Malaysia Securities Berhad.

Explanatory notes on Ordinary Businesses :-

Item 1 - Audited Financial StatementsThe Audited Financial Statements laid at this meeting pursuant to Section 340(1)(a) of the Companies Act 2016 are meant for discussion only. It does not require shareholders’ approval, and therefore, shall not be put forward for voting.

Ordinary Resolution 7 – Directors Fees and Benefits 2018 The payment of the Directors’ fees and benefits for financial year ended 31 December 2018, the details of which are set out in Corporate Governance Overview Statement on page 40 of the Annual Report.

Ordinary Resolution 8 – Directors’ Fees and Benefits 2019 The Directors’ fees and benefits proposed for the period from 1 January 2019 up to 31 December 2019 are calculated based on the current Board size and number of scheduled Board and Committee meetings for 2019. This resolution is to facilitate payment of Directors’ fees and benefits on a current financial year basis. In the event the proposed amount is insufficient, e.g. due to more meetings or enlarged Board size, approval will be sought at the next AGM for the shortfall.

Ordinary Resolution 10 – Authority for Directors to allot shares pursuant to Sections 75 and 76 of the Companies Act 2016

This resolution is proposed pursuant to Sections 75 and 76 of the Companies Act 2016, and if passed, will give the Directors of the Company, from the date of the above Annual General Meeting (“AGM”), authority to allot shares in the Company up to and not exceeding in total ten per cent (10%) of the total number of issued shares of the Company for such purposes as the Directors deem fit and in the best interest of the Company. This authority, unless revoked or varied at a general meeting, will expire at the conclusion of the next AGM of the Company or at the expiry of the period within which the next AGM is required to be held after the approval was given, whichever is earlier.

This mandate is a renewal of the last mandate granted to the Directors at the Twenty- Fourth (24th) Annual General Meeting held on 8 May 2018 and which will lapse at the conclusion of the Twenty-Fifth (25th) Annual General Meeting. As at the date of this notice, no new shares in the Company were issued pursuant to the last mandate.

The general mandate from shareholders is to provide the Company the flexibility to undertake any share issuance during the financial year without having to convene a general meeting. The rationale for this proposed mandate is to allow for possible share issue and/or fund raising exercises including placement of shares for the purpose of funding current and/or future investment project, working capital and/or acquisitions as well as in the event of any strategic opportunities involving equity deals which may require the Company to allot and issue new shares on urgent basis and thereby reducing administrative time and costs associated with the convening of additional shareholders meeting(s). In any event, the exercise of the mandate is only to be undertaken if the Board considers it to be in the best interest of the Company.

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Corporate information

Board of DirectorsWan Azmi Wan Hamzah, Tan SriSia Bun ChunChee Suan LyeMohamed Tarmizi IsmailAmirul Azhar BaharomDr. Ir. Jeyanthi RamasamyKhor Yu LengLeong Wai YuanWong Mun KeongShahrulanuar IshakWan Afzal-Aris Wan Azmi(Alternate to Wan Azmi Wan Hamzah, Tan Sri)

Audit and Risk Management CommitteeChee Suan LyeMohamed Tarmizi IsmailAmirul Azhar BaharomDr. Ir. Jeyanthi Ramasamy

Remuneration CommitteeWan Azmi Wan Hamzah, Tan SriMohamed Tarmizi IsmailDr. Ir. Jeyanthi RamasamyKhor Yu Leng

Nomination CommitteeMohamed Tarmizi IsmailChee Suan LyeDr. Ir. Jeyanthi Ramasamy

Company SecretaryLaang Jhe How (MIA 25193)

Registered Office149-A, Jalan Aminuddin Baki,Taman Tun Dr. Ismail,60000 Kuala Lumpur, MalaysiaTel : 603 - 7729 1519Fax : 603 - 7728 5948Email : [email protected]

Head Office15th Floor, East Wing, Rohas PureCircleNo. 9, Jalan P. Ramlee,50250 Kuala Lumpur, MalaysiaTel : 603 - 2163 3900Fax : 603 - 2164 5900Email : [email protected] : www.rohastecnic.com

Share RegistrarsInsurban Corporate Services Sdn. Bhd.149, Jalan Aminuddin Baki,Taman Tun Dr. Ismail,60000 Kuala Lumpur, MalaysiaTel : 603 - 7729 5529Fax : 603 - 7728 5948Email : [email protected]

Stock Exchange ListingBursa Malaysia Securities BerhadMain MarketStock Code : 9741

AuditorsGrant Thornton MalaysiaLevel 11, Sheraton Imperial CourtJalan Sultan Ismail50250 Kuala Lumpur, MalaysiaTel : 603 - 2692 4022

SolicitorsMah-Kamariyah & Philip Koh3A07, Block B, Phileo Damansara II,15, Jalan 16/11, Off Jalan Damansara,46350 Petaling Jaya, Selangor, MalaysiaTel : 603 - 7956 8686Fax : 603 - 7956 2208

Messrs Govindasamy & PekAdvocates & SolicitorsSuite 3.04, 3rd Floor, Wisma E & C,No. 2, Lorong Dungun Kiri,Damansara Heights,50490 Kuala Lumpur, MalaysiaTel : 603 - 2093 1299Fax : 603 - 2093 6299

Principal BankersMaybank Islamic BerhadAmBank (M) BerhadStandard Chartered Saadiq BerhadUnited Overseas Bank (Malaysia) BerhadOCBC Al-Amin Bank Berhad

2018 group CORPORATE STRUCTURE

Note :This chart is not a complete list of Rohas Tecnic Berhad’s (“RTB”) subsidiaries. For the complete list of companies and shareholdings, please refer to Note 5 and 6 to the Financial Statements of this Annual Report.

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5 years Financial Highlight

Note :

The audited numbers of Rohas-Euco Industries Berhad and its subsidiaries (“REI Group”) as at the respective year end has been presented as the comparative following the Regularisation Plan of RTB as explained in the financial statements included in the 2017 Annual Report.

RTB Group had to charge a one-off Regularisation Plan expense in 2017 of RM4.0 million and share based payment expense of RM21.4 million.

The Earnings per share for RTB Group are computed based on 472,657,651 weighted average number of ordinary shares in issue.

1.

2.

3.

Mission statements

MISSION

We aim to maintainour leadership intower construction anddeepen our involvementin EPCC opportunities

MOTTO

We shall do better because we can

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REI RTB Group Group

FINANCIAL YEAR ENDED 2014 2015 2016 2017 2018 RM’000 RM’000 RM’000 RM’000 RM’000

Operating results

Revenue 120,564 155,233 189,123 310,879 404,187

Operating profit 29,029 31,313 35,951 45,677 29,549

EBITDA 33,415 34,644 39,350 22,855 32,186

Profit after tax 23,610 25,029 25,353 4,571 15,262

Profit after tax and minority interest 20,057 22,865 25,353 3,059 16,030

Key statement of financial position data

Cash and cash equivalent 50,492 24,090 44,794 104,685 60,626

Total assets 244,192 270,306 288,220 697,271 689,019

Borrowings 30,083 40,904 38,706 125,838 92,948

Total liabilities 71,097 94,624 94,692 353,744 342,391

Shareholder fund 173,095 175,682 193,528 343,528 346,627

Earnings per share (sen) 29.33 33.44 37.08 0.88 3.39

Net assets per share (RM) 2.53 2.57 2.83 0.66 0.67

Net debt to equity (times) 0.19 0.25 0.20 0.40 0.29

(3)

(2)

(1)

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Away from power transmission, we have now inked our first

participation in a water concession, in Vietnam. The investment

is a 40% stake in PMV. While no contribution is expected in

2019, it will contribute significantly to making RBC Water Sdn

Bhd (“RBC”) a contributor to group profitability. Significant

telecommunication infrastructure rollouts are expected to

happen in East Malaysia. Both REI and RT Telecom Sdn Bhd

are keenly following developments there.

Thus far, power transmission rollout for 2019 has been

disappointing. We detect a continuation of the transitory phase

of new government, where new policies and directions require

to be bedded down first. The traditional second-half year pick-

up of activities should return this year. Conversely, the new

environmental compliance standards in the implementation of

EPCC electricity grid contracts are generating some concern

with erectors and contractors. While the introduction of similar

new requirements are definitely issues of concern for our core

business area, fortunately the state of our order book allows us

to view 2019 with cautious confidence.

Q Last year you presented a strategic vision for the Group,

one that reflects strong corporate ambition and aspiration. Are

you on track?

A After the challenges of the past year, we have made a

decision to proceed with prudence and exercise a little more

caution in the pace of executing that vision. The perceptible

domestic deceleration and external uncertainties are realities

that we have to take into account. We are still committed

to build the group as we observed last year, but the timing

and resource allocation is likely to be more conservatively

positioned, at least in the near term.

Unfortunately, a more restrained allocation of resources

means those ambitions will take a little bit more time to realize.

Should profits return to a healthier growth trend, of course

Management will be assigned more resources to work with.

Q What do you consider the major positives in 2018?

A It has become a cliche to say that one learns more

from failure than from success. And the year does feel a bit

like failure, certainly when measured against the targets we

set for ourselves. But there are several important milestone

events that we are proud of and upon which the Group’s future

prospects should be well-served.

The reorganisation of tower fabrication onto Lot 5, Bentong

allows the REI set-up significant increase of theoretical

capacity. The REI industrial heart grew haphazardly over many

years and was built over several pieces of land, also acquired

at different times. Management took a decision to rationalise

the set-up to achieve maximum industrial efficiency. It has

gone beyond merely addressing capacity and production

issues alone. Material storage and handling efficiency was

a major objective as well. The relative quiet the year brought

allowed REI to look to tweak our industrial processes, all of

which promise to make us better at doing the things we are

already doing well. Small investments of a capital nature will

broaden our product range further.

The galvanisation plant was enlarged and work processes

refined. It already is achieving significant saving of zinc

consumption. These completed initiatives should allow us to

compete confidently against foreign competition, whether at

home or away from home.

We have grappled over many years with the challenge of

installing an ERP system. We have now, after working with

several different systems purveyors over too many years, have

finally installed a system that works to our satisfaction. We

believe this will have very significant impact on our operations

and business.

And with shareholders’ support, we have put in place a Share

Grant Scheme which we believe will incentivise staff to not

only perform but stay.

Q How successful is the Group in extending its activity

footprint overseas?

A We now have teams executing businesses and projects in

Indonesia, PNG, Laos, Vietnam, Cambodia and Bangladesh.

Only time will tell how successful the overseas ventures will

turn out. It is important to bear in mind that for us in some of

these cases, it no longer is a matter of choice. In some areas,

we will be out-growing the Malaysian market and domestic

opportunities.

But like everything else we do, the growth of the overseas

component of total business volume is likely to be steady

rather than spectacular.

Q Any further developments on CSR?

A Giving and doing good becomes a little harder when

you start looking at the details. There are countless options,

needs, resources and relevance issues that Management has

to grapple with. Under the circumstances, we decided to give

ourselves the full facility of time to fix our CSR objectives and

craft our programmes. As I said last year, we shall not be rushed.

Wan Azmi Wan Hamzah

CHAIRMAN’SINTERVIEW

generally held up quite well, the second half year surge of

activity which we have come to expect as a normal occurrence

did not materialise. Some operational issues not previously

experienced with the power company cropped up. This is not

a criticism, but a factual observation.

Q Do you expect things to improve in 2019?

A All businessmen are optimists, or at the very least we

are ‘glass-half-full’ types. Yes, we expect to see discernible

improvement of performance.

Q Could you elaborate?

A There have been progress on several fronts. We believe

the HGPT legacy issues that haunt and hurt in 2018 are now

behind us. Management has been working hard to rationalize

production capacities and squeeze tower fabrication

efficiencies to the benefit of HGPT. This will be achieved

through phased migration of manufacturing and fabrication

activities to Bentong and away from HGPT’s own facility in

Batu Gajah. Other initiatives being worked should lead to an

easing of the working capital demands that typically burden

grid contractors. The HGPT acquisition, we are confident, will

justify itself in 2019.

Q Has 2018 been a good year?

A Measured against planned targets, the answer is ‘no’.

When you cannot maintain your dividend rate, there is no point

pretending otherwise. Other than the top-line number, the

accounts generally showed retreats rather than progress.

Q And why not?

A Several reasons. Foremost, the acquisition of HG Power

Transmission Sdn Bhd (“HGPT”), which was a strategic

acquisition taken to deepen our involvement beyond mere

supply of towers in the power transmission space, turned out

to be more problematic than expected. We were hobbled by

legacy issues there, with late delivery damages eliminating

any positive contribution this year. In the case of the water

treatment and telecommunication activities, it was a case of

under-estimating the complexity of breaking into new activity

areas. And we were grossly mistaken about the time it takes to

negotiate partnerships and tie-ups away from home.

Following the change of government in May 2018, there

was gradual but noticeable slowing down of activities on the

ground. While the old steel tower fabrications business under

wholly-owned subsidiary, Rohas-Euco Industries Bhd (“REI”)

(The questions posed are designed to draw out

in response the philosophy, business policy and

ambition of the Company).

Tan Sri Wan Azmi Wan HamzahChairman

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The rollout of a new Enterprise Resource

Planning (ERP) System is a transformative

process meant to help our people be

more productive by working smarter

and leveraging available technology. The

ERP System is capable of streamlining

all business processes of the Group by

facilitating the flow of information with

complete ease and forms the foundation

for any future improvement in the way we

conduct our operations.

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BOARD OFDIRECTORS

1. Wan Azmi Wan Hamzah, Tan SriNon-Independent Non-Executive Chairman

Nationality Age Gender Date of Appointment

Malaysian 69 Male • 8 March 2017

Tan Sri Wan Azmi qualified as a chartered accountant with the Institute of Chartered Accountants in England and Wales in 1974 and became a member of Malaysian Institute of Certified Public Accountant since 1975. In 1994, he was conferred an Honorary Doctorate in Business Administration from the Robert Gordon University, UK and an Honorary Fellowship by Aberdeen University, UK.

His career spans nearly 5 decades in the UK and Malaysia, serving in leadership position for a number of corporations. Over the years, Tan Sri Wan Azmi had also held directorship in, and acted as the Chairman of several public listed companies.

BOARD COMMITTEE MEMBERSHIPS :• Chairman, Board Remuneration Committee

DIRECTORSHIP IN OTHER PUBLIC COMPANIES AND LISTED ISSUERS :• Director, Syarikat Pengeluar Air Selangor Holdings Berhad

2. Sia Bun ChunNon-Independent Non-Executive Deputy Chairman


Singaporean 71 Male • 8 March 2017

Sia Bun Chun completed his Matriculation program in St Stephen’s College, New Zealand and undertook part-time studies program in engineering at the Wellington Polytechnic, New Zealand.

After several engineering related working stints in New Zealand and Indonesia, he returned to Malaysia in 1974 where he joined REI, which was then known as Crittal Euco Sdn Bhd and was subsequently promoted as its Managing Director in 1976. Sia Bun Chun was the Managing Director of RTB Group until his retirement in 2017, after which he was appointed as the Deputy Chairman.

BOARD COMMITTEE MEMBERSHIPS :• None

DIRECTORSHIP IN OTHER PUBLIC COMPANIES AND LISTED ISSUERS :• None

3. Mohamed Tarmizi IsmailIndependent Non-Executive Director



Mohamed Tarmizi Ismail graduated with a Bachelor of Arts in Sociology from the State University of New York, USA in 1984.

He began his career in Bank Negara Malaysia and subsequently joined D&C Sakura Merchant Bankers Sdn Bhd. After a decade in financial services, Tarmizi joined Land & General Berhad in 1995 prior to pursuing his own business interest. Currently, he is the Managing Partner of Tarmizi Tun Dr Ismail & Partners Sdn Bhd, his own executive search firm which he established in 2002.

BOARD COMMITTEE MEMBERSHIPS :• Chairman, Board Nomination Committee• Member, Board Audit and Risk Management Committee• Member, Board Remuneration Committee


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117

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Notes :

1. Directors’ attendance at Board and Board Committee meetings during the

financial year ended 31 December 2018 are set out in the Statement on Corporate Governance and Audit and Risk Management Committee Report.

2. The above Directors have no family relationship with any Director and/or major shareholder of RTB, except for Wan-Afzal Aris who is the son of Tan Sri Wan Azmi, and Tan Sri Wan Azmi who is the spouse to Puan Sri Nik Anida Binti Nik Manshor, and Sia Bun Chun who is the spouse of Chan Liew Hoon, both of whom are major shareholders of RTB.

3. The above Directors have no conflict of interest with RTB, have not been convicted of any offence within the past five (5) years, and have not been imposed any public sanction or penalty by the relevant regulatory bodies during the financial year 2018.

11. Dr. Ir. Jeyanthi A/P RamasamyIndependent Non-Executive Director


Malaysian 36 Female • 23 August 2017

Dr. Ir. Jeyanthi Ramasamy graduated with aBachelor of Petroleum Engineering from the University of Technology, Malaysia in 2006. Later on, she continued her Master in Petroleum Technology with Curtin University of Technology and graduated with distinction in 2012 and subsequently completed her Industrial PhD on Subsea Engineering with University of Technology, Malaysia in 2016.

She has served in the oil and gas industry since 2006, in between her subsequent academic pursuits. She is a Professional Engineer with practicing certificate (Petroleum) with Board of Engineers Malaysia; Senior Member of The Institute of Engineers Malaysia (IEM); Treasurer of Society of Underwater Technology and LifeMember of Women’s Institute of Management.

BOARD COMMITTEE MEMBERSHIPS :• Member, Board Audit and Risk Management Committee• Member, Board Remuneration Committee• Member, Board Nomination Committee


5. Chee Suan LyeSenior Independent Non-Executive Director


Malaysian 64 Female • 8 March 2017

Chee Suan Lye qualified as a Certified Public Accountants (Malaysia) and was admitted as a member of the Malaysian Institute of Certified Public Accountants since 1978.

She started her career with Price Waterhouse in 1974 and over the years had served in various capacities in other corporations as well as The Association of Banks in Malaysia and had served on the boards of several companies and organisations namely the Banking Mediation Bureau, the Financial Mediation Bureau and Bolton Properties Bhd.

BOARD COMMITTEE MEMBERSHIPS :• Chairman, Board Audit and Risk Management Committee• Member, Board Nomination Committee


7. Khor Yu LengIndependent Non-Executive Director


Malaysian 48 Female • 13 November 2018

Khor Yu Leng graduated with an honours degree in Philosophy, Politics & Economics from Oxford University, UK in 1992 and a masters degree inDevelopment Studies from London School of Economics, UK in 1993.

She is a research specialist in both the quantitative and qualitative aspects of economics and hasvast experience as an international economic consultant, having served a number of Fortune 500 companies, other corporations, government agencies and NGOs in over 150 studies throughout the span of her career. She is currently the Owner and Director of Segi Enam Advisors Pte Ltd in Singapore, a firm specialising ineconomics research and business intelligence; Council Member of the Malaysian Oil Scientists and Technologists Association; and associate with several research institutes and projects including at University of Malaya, Singapore Institute of International Affairs, with French and Swiss academia, and Jane Goodall’s Roots and Shoots Malaysia.

BOARD COMMITTEE MEMBERSHIPS :• Member, Board Remuneration Committee


10. Wong Mun KeongNon-Independent Executive Director



Wong Mun Keong holds a Bachelor of Commerce in Accounting, Finance and Systems (Honours) from the University of New South Wales, Australia since 1986.

From 1987 to 2006, he was working in various capacities related to finance and investment, in Malaysia and Australia. He then joined REI Group in 2007 and is currently the Chief Investment Officer of RTB..


DIRECTORSHIP IN OTHER PUBLIC COMPANIES AND LISTED ISSUERS :• Director, Syarikat Pengeluar Air Selangor Holdings Berhad

4. Leong Wai YuanNon-Independent Executive Director



Leong Wai Yuan is an Honours graduate from the University of Malaya in Materials Engineering with a Master of Business Administration specialising in Finance with Charles Sturt University, Australia; and a member of Malaysia Institute of Management (MIM).

He joined REI Group as Group Chief Operating Officer in 2013 before being promoted as the Deputy Chief Executive Officer. He was appointed as Chief Executive Officer of REI Group in 2017 and subsequently as a board member and Group CEO of the RTB Group. Prior to this, Leong Wai Yuan was General Manager for a leading Australian manufacturer and supplier of steel products and solutions worldwide. He brings experience in production, construction, product development, strategic & corporate planning, supply chain and people management from his various capacities of nearly 20 years.



6. Amirul Azhar BaharomIndependent Non-Executive Director



Amirul Azhar Baharom graduated with a LLB Hons from Staffordshire University, United Kingdom in 1996.

He began his career as a Research Analyst with Cazenove & Co and had been in the financial services industry for a number of years where he was amongst others, with the Securities Commission, BDO Capital Consultants Sdn Bhd and KAF Fund Management Sdn Bhd. He had also previously served as the Group Managing Director and CEO of Vastalux Energy Berhad and as the Acting Group Chief Executive Officer of Avillion Berhad. He had also previously been amember of the Board of Directors of Vastalux Energy Berhad, Reliance Pacific Berhad, Admiral Marina Berhad and Spring Gallery Berhad.

BOARD COMMITTEE MEMBERSHIPS :• Member, Board Audit and Risk Management Committee

DIRECTORSHIP IN OTHER PUBLIC COMPANIES AND LISTED ISSUERS :• Chairman, UMS-Neiken Group Berhad

9. Wan Afzal-Aris Wan AzmiAlternate Director to Wan Azmi Wan Hamzah, Tan Sri


Malaysian 35 Male • 13 November 2018

Wan Afzal-Aris graduated with a Bachelor of Artsmajoring in International Business and Marketing from the European Business School, UK in 2008.

He started his career in 2008 at Halfmoon Bay Capital Sdn Bhd, assisting its Director to coordinate and supervise the firm’s daily operations. In 2010, he joined Riverlee Australia Pty Ltd, a company primarily engaged in property investment and development, subsequently becoming its Asset Manager, handling the company’s oversight on the assigned portfolio. Currently, Wan-Afzal Aris is the Director and Chief Executive Officer of Rohas Sdn Bhd, appointed to the position in 2014.



8. Shahrulanuar IshakNon-Independent Executive Director



Shahrulanuar graduated with a Bachelor of Accounting and Finance from De Montfort University, Leicester, UK in 1998. He is a member of the Association of Chartered Certified Accountants since 2005 and a member of Malaysia Institute of Accountants since 2007. He also did his Post-Graduate Diploma in Islamic Banking and Insurance with The Institute of Islamic Banking and Insurance, London, UK in 2006.

He started his career in 1999 with KPMG Malaysia and after several stints with other corporations, joined REI in 2016. Currently, Shahrulanuar is the Chief Financial Officer of RTB, appointed to the position in 2017.



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TEOH ENG BEE

General Manager - EngineeringRohas-Euco Industries Berhad (“REI”)

Nationality / Age / Gender • Malaysian / 44 / Male

Date of Appointment • 10 September 1997

Academic / Professional Qualifications• Diploma in Civil Engineering, University Teknologi Malaysia• Bachelor of Civil Engineering, University Teknologi Malaysia• Member of Board of Engineers Malaysia

Working ExperienceJoined REI in 1997 as Assistant Engineer and has held various position, the last being Manager in the design division.

Present Directorship(i) Listed Entity : Nil(ii) Other Public Companies : Nil

HARIANTO TARUNA

PresidentPT REI Abadi Indonesia (“PTRAI”)

Nationality / Age / Gender • Indonesia / 49 / Male

Date of Appointment • 7 September 2016

Academic / Professional Qualifications• Diploma in Mechanical Engineering from ATMI, Surakarta, Indonesia• Bachelor of Economic Science in Finance, University of Indonesia• Master of Economic Science in Finance, University of Indonesia• Licensed of Indonesian Capital Market Fund Manager• Licensed of Indonesian Capital Market Underwriter

Working ExperienceJoined PTRAI with the current position. Harianto has more than 14 years working on Japanese Venture Capital in Indonesia and Global Private Equity Fund in Indonesia.


AHMAD LATIFI SUPIAN

General Manager - Supply ChainRohas-Euco Industries Berhad (“REI”)

Nationality / Age / Gender • Malaysian / 53 /MaleDate of Appointment • 1 March 2014

Academic / Professional Qualifications• Diploma in Electrical Engineering, University Technology of Malaysia• Executive Master of Business Administration (EMBA), University Technology of Malaysia

Working ExperienceJoined REI with the current position.


HO CHEE SENG

General Manager - FabricationRohas-Euco Industries Berhad (“REI”)


Date of Appointment • 16 May 1987

Academic / Professional Qualifications• Diploma in Mechanical Engineering, Institut Teknologi Jaya• Bachelor of Engineering (Honours) Mechanical Engineering, University of Northumbria, Newcastle, United Kingdom• Member of Board of Engineers Malaysia

Working ExperienceJoined REI in 1987 as Draftsman and has held various position, the last being Senior Manager in the manufacturing division.


Key Senior Management

RAMLAN SAFRI

Chief Operating OfficerRohas-Euco Industries Berhad (“REI”)


Date of Appointment • 1 March 2015

Academic / Professional Qualifications• Master of Science (Electrical Engineering), UCLA USA• PhD (Electrical Science) Fort Jones Open University, USA

Working ExperienceRamlan joined REI in 2015 as Chief Project Management Officer. In 2017 he was promoted to Chief Manufacturing Officer and subsequently promoted as Chief Operating Officer of REI in 2018.


CHAI KAM CHEONG

Chief Operating OfficerRBC Water Sdn Bhd


Date of Appointment • 1 January 2018

Academic / Professional Qualifications• Bachelor Degree from University of Tasmania• Post-graduate from Australian National University• Master of Science (Water and Environmental Management) from the Water, Engineering and Development Centre (WEDC), Loughborough University, United Kingdom• Member of the Chartered Institute of Water and Management (MCIWEM) and Society of the Environment (CEnv) United Kingdom

Working ExperienceJoined RBC Water with the current position.


RISHABH DEV KHAITAN

Chief Operating OfficerHG Power Transmission Sdn Bhd (“HGPT”)

Nationality / Age / Gender • Indian / 35 / Male

Date of Appointment • 1 November 2017

Academic / Professional Qualifications• Bachelor of Science in Finance, University of Illinois at Urbana-Champaign, USA

Working ExperienceRishabh joined HGPT in May 2017 as Vice President Projects and was promoted to COO from 1st Nov 2017.


SUBHASH DEVAN

Chief Operating OfficerRT Telecom Sdn Bhd (“RTT”)


Date of Appointment • 2 April 2018

Academic / Professional Qualifications• ACCA, Association of Chartered Certified Accountants• B.SC (Hons) Degree in Applied Accounting, Oxford Brooks University, United Kingdom

Working ExperienceJoined RTT with the current position.


20 21

Key Senior Management(CONT’D)

VIVIAN LEE POH CHENG

General Manager – Human ResourceRohas-Euco Industries Berhad (“REI”)

Nationality / Age / Gender • Malaysian / 43 / Female

Date of Appointment • 1 March 2018

Academic / Professional Qualifications• Post Graduate Diploma in Human Resource Management in association with Glasgow Caledonian University Scotland, United Kingdom

Working ExperienceJoined REI with the current position. Vivian has approximately 18 years of experience in Human Resource.


The above Key Senior Management members have no family relationship with any Director and/or major shareholder of RTB, have no conflict of interest with RTB, have not been convicted of any offence within the past five (5) years and have not been imposed any public sanction or penalty by the relevant regulatory bodies during the financial year 2018.

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22 23

With the acquisitions and the building

of a strong foundation for growth in

2019, complemented by our existing

core capability in lattice towers and

monopoles supply and installation jobs

alongside our capability to undertake

EPCC projects, we are well positioned

to penetrate new regional markets and

establish RTB Group as an EPCC

player in the region.

24 25

Key Ratios

The following table sets forth the key financial ratios based on RTB Group’s financial statements :

Notes :(1) Based on total borrowings over total equity.

Revenue growth

For FYE 2018, RTB Group’s revenue grew by 30.0% in 2018 from RM310.9 million in FYE 2017 to RM404.2 million for FYE 2018 due to the RM110.9 million increase in revenue from EPCC segment, mainly from the Power Transmission sector.

Operating profit margin

Operating profit margin for the year was 7.3% in 2018 compared to 14.7% in 2017, mainly due to a larger contribution of revenue from the EPCC segment that accounts for a lower margin as compared to the Fabrication segment. The EPCC segment recorded a higher contribution of 58.8% to RTB Group’s revenue for FYE 2018 as compared to 40.8% for FYE 2017. The lower margin from the EPCC segment was also attributed to the higher cost of completion for the two current projects as highlighted above that impacted the overall margin of the segment.

Current ratio

As at 31 December 2018, RTB Group’s current ratio was 1.82 times, which was lower compared to 1.93 times as at 31 December 2017. This was mainly due to increase in trade payables as at year end due to progress of the EPCC project on hand.

Gearing ratio

As at 31 December 2018, RTB Group’s gearing ratio was 0.27 times. RTB Group’s total borrowings decreased from RM125.84 million as at 31 December 2017 to RM92.95 million as at 31 December 2018. This was mainly due to decrease in utilisation of trade financing as at year end.

MANAGEMENT DISCUSSION AND ANALYSIS

BUSINESS OVERVIEW

RTB and its subsidiaries (“RTB Group” or “the Group”) core businesses remain in the fabrication of steel towers used for power transmission and telecommunication, as well as engineering, procurement, construction and commissioning (“EPCC”) contracts, and other activities.

The acquisition of HG Power Transmission Sdn Bhd (“HGPT”) made during the previous financial year offers great opportunities for the Group to expand into power transmission EPCC projects. In the longer term, HGPT is also expected to open up more EPCC contract opportunities for the Group in new emerging markets.

We hope to secure additional EPCC projects due to the essential nature of the infrastructure industry in emerging markets, making the Group less susceptible to the slowdown in domestic civil works. As ASEAN is one of the fastest growing economic regions in the world, infrastructure investment needs are expected to be robust in the foreseeable future and this will generate steady demand for the products of RTB Group.

We did encounter several challenges during the financial year namely from delayed domestic and Laos projects as well as post-acquisition liabilities from HGPT’s legacy projects. Domestic jobs were delayed due to the change in federal government while the Laos project faced delay due to planning alterations. However, we expect this to be normalised in the near term. The liquidated and ascertained damages from HGPT were incurred post-acquisition by three projects that were completed before it was acquired, while two current projects faced higher cost for completion due to underbudgeting during tender pre-acquisition. One project has been completed while another makes up a very small portion of our order book and is expected to be completed by mid-2019.

Our subsidiary, Rohas-Euco Industries Bhd (REI) is in the midst of expanding and upgrading its fabrication and galvanising facility as part of RTB Group’s future plans to cater for business expansion and growth. This facility, located at Lot 5C and Lot 5D in Bentong, Pahang is meant to integrate all of REI’s fabrication machinery and equipment under one roof. The upgrading process is expected to be completed by end of Q3 2019.

During the financial year, we began the rollout of a new Enterprise Resource Planning (“ERP”) System which is expected

to improve the efficiency of our production process. This is in line with the advent of Industry 4.0 that will see more automation of the manufacturing process and its integration with the supply chain. The ERP System consists of a central database with dedicated applications for suppliers, customers and internal managers from all departments, and is capable of streamlining all business processes of the Group by facilitating the flow of information with complete ease. Most importantly, the ERP System forms the foundation for any future improvement in the way we conduct our operations. We have stabilised the system and plan for its rollout to other subsidiaries in 2019.

In Q1 2019, in line with the plan to diversify and grow our business, we have entered into Share Purchase Agreement to acquire a 40% stake in Phu My Vinh Construction and Investment Corporation (PMV), the owner and operator of two water treatment plants with total combined water supply capacity of 55,000 m³/day in Long An Province, Vietnam. It should be noted that this is not our first venture in Vietnam’s water sector as the Group was previously involved in the construction of the Yenso sewage water treatment plant project in Hanoi. Besides strengthening recurring income, this acquisition also allows RTB Group to expand and grow its water business regionally.

Upon completion, this acquisition will be the second venture by RTB Group to strengthen its recurring income after the acquisition of a 49% stake in PT Century Abadi Perkasa (“PTCAP”), owner and operator of the 7MW Lawe Sikap mini-hydro power plant project in Indonesia which is expected to start contributing by end 2019.

In the preliminary years going forward, the Group will focus on nurturing its newly acquired companies and ensure its dynamic growth in order to achieve the full benefits and value realisation for our shareholders in the long term. The Group is now poised to capitalise on the opportunities ahead and establish RTB Group as an EPCC player in the region.

Financial Performance

For the financial year ended 31 December 2018, RTB Group achieved revenue of RM404.2 million, recorded operating profit of RM29.5 million and reported profit after taxation of RM15.3 million.

CAPITAL MANAGEMENT

RTB Group’s business has been financed via a combination of internal and external sources of funds. The internal sources comprise shareholders’ equity and cash generated from the business operations while external sources are from various credit facilities extended to RTB Group by financial institutions. RTB Group’s principal utilisation of funds has been for its business growth and operations.

As at 31 December 2018, RTB Group had cash and bank balances of RM60.63 million and total borrowings of RM92.95million, gearing ratio was 0.27 times, and current ratio was 1.82 times.

The board of directors of RTB is of the opinion that, after taking into consideration the cash and cash equivalents, the expected funds to be generated from operating activities, the amount unused under the existing banking facilities, and the unutilised proceeds from the previous Public Issue, RTB Group would have adequate working capital to meet their present and foreseeable requirements for a period of 12 months from the date of this Annual Report.

In relation to the expansion and upgrading of REI’s operational facilities in Bentong, as at the end of the financial year, the Group has a remaining capital commitment for renovation works of RM1.3 million, that has been authorised and contracted for. RTB Group incurred a total cost of RM12.1 million on renovation works for FYE 2018.

The Board has approved, as part of the 2019 budget, a total of RM15.7 million for capital expenditure, mainly for machineries and equipment being part of the upgrading of the existing facilities.

PERFORMANCE BY CORPORATE BUSINESSSEGMENTS

1. Fabrication of Tower

The first corporate business segment is the fabrication of power transmission and telecommunications towers, both lattice towers and monopoles. The power transmission towers, contributes to 82.2% of the total revenue of the segment, are generally designed to carry transmission lines with operating voltages ranging from 33kV to 500kV. RTB’s subsidiary, REI is registered as a supplier and design contractor with Tenaga Nasional Berhad for the supply of products and provision of works and services.

In the preliminary years going forward, the Group will focus on nurturing its newly acquired companies and ensure its dynamic growth in order to achieve the full benefits and value realisation for our shareholders in the long term.

Revenue growth

Operating profit margin

Current ratio (times)

Gearing ratio (times) (1)

FYE 2018

30.0%

7.3%

1.82

0.27

64.4%

14.7%

1.93

0.37

FYE 2017

26 27

Performance Highlights

The revenue from the Fabrication segment contributes 37.9% to the total revenue for FYE 2018. Revenue decreased by RM23.5 million or 13.3%, due to the reduction of 5,125 MT or 17.6% in deliveries of lattice towers totalling 23,951 MT in FYE 2018 as compared to 29,076 MT for FYE 2017. Power transmission towers decreased in revenue by RM15.0 million or 10.7% and telecommunications towers decreased by RM8.4 million or 23.6%.

Operational Highlights

The customer base comprised mainly EPCC contractors and steel tower fabricators. EPCC contractors include electrification contractors responsible for installing the power line networks as well as telecommunications infrastructure contractors and network facility providers. The segment also serves other customers namely civil and infrastructure contractors, as well as public and private utility organisations.

Looking Ahead

REI’s business operations are currently supported by its fabrication and galvanising facility in Bentong, Pahang. To cater for business expansion and growth, its existing operational facilities are being upgraded while new facilities are being constructed. The works being carried out include extension of the existing building to increase production area and installation of new equipment. Once completed by end of Q3 2019, this facility should be able to contribute positively to the Group’s operations.

2. EPCC for Telecommunication & Power Transmission

The second corporate business unit is the EPCC for telecommunication towers and power transmission lines.


Revenue from EPCC increased by RM110.9 million or 87.4%, which was mainly attributed to :

• Revenue from EPCC works contributed by HGPT, for works done in Bangladesh and Malaysia, that contributed

89.2% to the total revenue of the segment;

MANAGEMENT DISCUSSION AND ANALYSIS (CONT’D)

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• Telecommunication contributed 7.6% to the segment’s revenue; and

• EPCC works awarded in Laos contributed 3.2% to the segment’s revenue. There was a delay due to planning alternations and subsequently recommenced in Q4 of 2018.

Operational Highlights

EPCC for Telecommunication

In 2018, RTB Group completed 99% of phase 2 and 49% of phase 3 of the Time 3 extension programme. The Time3 extension programme is part of the Malaysian Government’s initiative under Malaysian Communications and Multimedia Commission, to construct a total of 1,000 new telecommunications towers nationwide. The Time 3

extension programme, was announced in 2014, whereby telecommunications towers would be built in three (3) phases throughout Malaysia.

EPCC for Power Transmission

On 15th May 2017, REI was awarded a contract by Electricite du Laos (EDL) to supply and construct transmission lines, substations and distribution lines in the Laos People’s Democratic Republic. The contract value is US$70 million (approximately RM300 million). Works initially commenced in Q4 of 2018 with a duration of 24 months to completion. However, it was delayed due to planning alterations and recommenced by end of 2018. This is REI’s second EPCC project in Laos after having completed the first one in 2014.

Through HPGT, RTB Group is now able to gain access to the entire value chain of the power transmission industry

with enhanced offering of turnkey solutions for the construction of power transmission lines within Malaysia and the region. HGPT has a proven track record in providing turnkey solutions for high voltage transmission lines and substations, capable of designing transmission lines up to 500kV and substations up to 275kV.

Looking Ahead

Phase 3 of the Time 3 extension programme will becompleted in 2019. The project in Laos will also see further progress of more than 50% completion.

On HGPT, its order book currently exceeds RM300 million, of which 70% comprises domestic orders and 30% foreign orders, with the on-going projects expected to continue into the first half of 2019. HGPT is also bidding for additional projects in Malaysia, Bangladesh and Papua New Guinea,

and is confident of securing additional projects with its track record and expertise.

It is the intention of the Group to grow the EPCC segment, especially in overseas markets in neighbouring countries for it to become a regional player within the next 5 years. These growth initiatives are expected to be funded from internally-generated funds.

3. Other business activities

The third corporate business segment includes revenue from external galvanising, EPCC works in water and fabrication of substation structures.

MANAGEMENT DISCUSSION AND ANALYSIS (CONT’D)MANAGEMENT DISCUSSION AND ANALYSIS (CONT’D)

30 31

MANAGEMENT DISCUSSION AND ANALYSIS (CONT’D)


Revenue from this segment increased by RM5.9 million or 81.6%. This is mainly attributed to higher revenue from fabrication of electrical substation structure, which contributed 88.2% to total revenue of the segment. External galvanising work contributed 11.4% to total revenue of the segment.

As part of RTB Group’s plan to grow its business, the Group entered into a Share Purchase Agreement subsequent to year end to acquire a 40% stake valued at VND232 million (approximately MYR41.30 million) in PMV, the owner and operator of Phu My Vinh Water Supply Factory and Hoa Khanh Tay Water Supply Plant, two water treatment plants in Long An Province, Vietnam. The supply of clean water is mainly for the critical economic areas in the Long An province. The total combined water supply capacity is expected to achieve 95,000 m³/day in 2019 from 55,000 m³/day previously due to capacity expansion in Hoa Khanh Tay Water Supply Plant. The Group’s wholly-owned subsidiary, RBC Water Sdn Bhd, is participating as the EPCC contractor for this capacity expansion.

ASSOCIATE COMPANY

The construction of the Mini hydropower plant located in Lawe Sikap by PTCAP is still ongoing.

The Mini hydropower plant is designed with a power generation capacity of 7 MW and PTCAP holds a 20-year concession for the supply of its power to PT Perusahaan Listrik Negara (“PLN”), an Indonesian state owned corporation with a monopoly on the distribution of electricity in Indonesia. Commercial operations are expected to commence by end 2019.

BUSINESS RISKS

Risk management is embedded in our day-to-day operations. Governance policies and procedures are developed with clear accountabilities for senior management to effectively identify, assess, prevent, record and mitigate all material risks for the Group.

In pushing forward with our strategy and execution plans, key risks have been identified and continuous monitoring undertaken to ensure our exposure to all anticipated risks stays within the Group’s overall risk appetite.

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MANAGEMENT DISCUSSION AND ANALYSIS (Cont’d)

DIVIDEND POLICY

RTB does not have a formal dividend policy but is committed in rewarding shareholders through annual dividends.

In respect of the financial year ended 31 December 2018, the Board of Directors has recommended a final single tier dividend of 1.0 sen per share totalling RM4,726,577 million for the shareholders’ approval at the forthcoming Annual General Meeting of the Group .

LOOKING FORWARD

The Group is operating in an intensely competitive and volatile global economic environment.

The current order book of RTB Group, as at the date of this report, stands at almost RM700 million of which 24% is for power transmission and telecommunications towers and 76% is for EPCC works. This is expected to provide a steady earnings growth going forward.

The acquisitions build a strong foundation for growth. Apart from our towers supply business and EPCC capabilities, we endeavor to grow our business in the water and telecommunication sector.

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C. TERM OF REFERENCE

A&RMC primary function is as follows :

a) review with the internal and/or external auditors the nature and scope of their audit plans, audit reports, major findings and evaluations of the internal controls system;

b) review the quarterly and annual financial statements before submission to the Board, focusing on, amongst others, change in implementation of major accounting policies and practices, significant and unusual events, significant adjustments arising from the audit, the going concern assumption and compliance with accounting standards and other regulatory or legal requirements;

c) review matter concerning the suitability for appointment or reappointment of external auditors and matters relating to their resignation;

d) review any related party transactions entered into by RTB Group and any conflict of interest situations that may arise within RTB Group;

e) review the adequacy of the scope, functions, competency and resources of the internal audit function and that it has the necessary authority to carry out its work and to report the same to the Board;

f) perform such other functions as may be requested by the Board;

g) review the adequacy of RTB Group’s risk management framework and assess the resources and knowledge of the management and employee involved in the risk management process;

h) review the effectiveness of internal control systems deployed by the management to address those risks;

i) review and recommend corrective measures undertaken to remedy failings and/or weaknesses;

j) review and further monitor principal risks that may affect RTB Group directly or indirectly that if deemed necessary, recommend additional course of action to mitigate such risks;

k) communication and monitoring of risk assessment results to the Board; and

l) actual and potential impact of any failing or weakness, particularly those related to financial performance or conditions affecting RTB Group.

D. AUTHORITY

A&RMC shall have the authority to :-

1. Investigate any matter within its terms of reference;

2. Have the resources which are required to perform its duties;

3. Have full and unrestricted access to any information which it requires in the course of performing its duties;

4. Have direct communication channels amongst the internal and external auditors;

5. Obtain independent/external professional or other advice and to secure the attendance of outsiders with relevant experience and expertise if it considers this necessary; and

6. Convene meetings with the external auditors, the internal auditors or both, excluding the attendance of other Directors and employees of RTB Group, whenever deemed necessary.

AUDIT AND RISK MANAGEMENT COMMITTEE REPORT

A. COMPOSITION AND ATTENDANCE

The members of the Audit and Risk Management Committee (the “Committee” or “A&RMC”) are as follows :

A&RMC consists of four (4) members of which all are independent non-executive directors. None of them are alternate directors.

Madam Chee Suan Lye, the Chairman of A&RMC is a senior independent non-executive director in accordance with paragraph 15.02(3) of listing requirement. She is not the Chairman of the Board. This is in compliance with the Step up recommendation of CG Code and MMLR.

The principal objective of A&RMC is to implement and support the oversight function of the Board of Directors of RTB (‘the Board”) in the area of governance, risk management and internal control. It provides a means for review of RTB Group’s financial data, its internal controls, corporate code of conduct, the independence of RTB Group’s external auditors, and maintain an open line of communication and consultation between the Board, the internal auditors, the external auditors and Management.

B. MEETINGS

a) A&RMC is to meet at least 4 times a year and as many times as the Committee deems necessary;

b) The quorum for any meeting of A&RMC shall be majority of members present;

c) The Secretary to A&RMC shall be the Company Secretary or any other person appointed by the Committee;

d) The Secretary shall be responsible, in conjunction with the Chairman, for drawing up the Agenda and circulating it to the Committee members prior to each meeting. The Secretary will also be responsible for keeping the minutes of the meeting of A&RMC, and circulating to the Committee members and to other members of the Board; and

e) The A&RMC meeting dates are arranged ahead and communicated to the auditors in advance for them to prepare the Audit Review Memorandum, Audit Planning Memorandum and Audited Financial Statements for presentation to the A&RMC in order to meet deadlines.

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AUDIT AND RISK MANAGEMENT COMMITTEE REPORT(CONT’D)

E. SUMMARY OF ACTIVITIES DURING THE FINANCIAL YEAR

The principal activities undertaken by A&RMC during the financial year are summarised as follows :-

1. Conducted a quarterly and year-end financial review of the unaudited interim financial statements prior to recommending the same for the Board’s approval, focusing particularly on significant and unusual events and compliance with accounting standards and other legal requirements;

2. Conducted a review on the appointment of the external and internal auditors, their independence and effectiveness including their fees;

3. Conducted a review of the external auditors’ audit planning memorandum, comprising their scope of audit, key audit areas, audit approach and timetable;

4. Engaged with the external auditors twice during the year without the presence of the Management to discuss relevant issues and obtain feedback;

5. Conducted a review on the adequacy of the scope, functions, competency and resources of the internal audit function, and that it has the necessary authority to carry out its work;

6. Conducted a review on the scope and results of the internal audit procedures as well as Management’s response to recommendations for improvement, and evaluation of adequacy of the internal control system based on the reports from the internal auditors;

7. Obtain an update from the senior management on the implementation of the new Enterprise Resource Planning system; and

8. Reviewed the updates of the key risk management report of RTB Group as presented by the RMWG on the key risks faced by RTB Group and action plans deployed to manage the risks concerned.

As highlighted by the A&RMC to the Board, from the review conducted, there were areas that requires improvement to further strengthen the governance process of the organisation to ensure risk, inherent and new, are adequately identified, addressed and monitored closely. Management are in the midst of reviewing its internal processes and documentations to ensure areas for improvement identified are being addressed and action plans are in place to mitigate the risk.

F. INTERNAL AUDIT FUNCTION

RTB Group outsourced its internal audit function to an independent internal audit service provider, namely BDO Governance Advisory Sdn Bhd. The primary function of internal audit is to undertake systematic reviews of the governance, risk and internal control systems within RTB Group in accordance with an internal audit plan, so as to provide assurance that such systems are adequate and functioning as proposed.

The internal audit function’s responsibilities are to provide independent and objective reports on the state of internal controls of the various operating units within RTB Group to the A&RMC and provide recommendations for the improvement of the control procedures, so that corrective actions are taken to mitigate weaknesses noted in the system and controls of the respective operating units.

Details of the internal audit activities and scope of coverage of the outsourced internal audit function including the cost incurred are set out in the Statement on Risk Management and Internal Control included in this Annual Report.

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• Overseeing RTB Group’s business to evaluate whether the business activities are being properly managed; • Understanding principal and potential commercial risks of RTB Group and ensuring that appropriate systems are to be develop and put in place to manage and mitigate these risks; • Instituting system of internal control are in place and recommending improvement for management to review the Group’s operating policies and procedures and the appropriate controls are being documented and develop, where required, to safeguard the Shareholder’s investment and Group’s assets and ensure compliance with applicable laws, regulations, rules, directives and guidelines; and • Deliberating, scrutinising and deciding on managements proposals on investment initiative.

Practice 1.2 - Role of Chairman

The Chairman of the Board is responsible for instilling good corporate governance practices, leadership and effectiveness of the Board appointed.

Tan Sri Wan Azmi is in his second year holding office, has shown leadership, entrepreneurship skills and insight to the business. He instils sound corporate governance practices in the best interests of RTB Group. He also communicates regularly with Management and other Board Committee members.

Practice 1.3 - Separation of role of Chairman and Group Chief Executive Officer (“Group CEO”)

The Group CEO, Leong Wai Yuan is assisted by a team of senior management in managing the day to day operations of RTB Group for the financial period under review.

RTB Group continues to comply with the MCCG 2017 in respect of separation of role between Chairman and Group CEO.

Practice 1.4 - Company Secretary

The Company Secretary function of RTB had been outsourced to ED Zone Management Sdn Bhd. The named Company Secretary is experienced and qualified to carry out the function. The Company Secretary provides advice and assists the Board and Committees in achieving good corporate governance by ensuring compliance to statutory laws, legislation, regulatory requirements and other relevant rules and regulations.

The Company Secretary shall also maintain proper statutory records, registers, and documents for RTB which are essential to assist the Board to achieve, meet and discharge their fiduciary responsibilities in accordance with good corporate governance practice. In addition, the Company Secretary is also responsible in ensuring proper conduct at the Annual General Meetings, Extraordinary General Meetings, Board Committees’ Meeting and any other meetings and the preparation of minutes thereat.

All Directors have full access to the advice and services of the Company Secretary who is responsible to the Board for ensuring the Board procedures are complied with. The details on Company Secretary are on page 9.

Practice 1.5 - Information and Support for Directors

The Directors are provided with sufficient information for Board discussions and meetings. Management makes all possible effort and continues to improve itself in providing timely information the Board. Key issues are presented and lengthy deliberation are held to ensure a thorough understanding.

The deliberations and decision of the Board are recorded in the minutes of meetings and the process for recording abstention by Directors on a particular matter is in place. The minutes are circulated to the Board prior to the Board meeting and are reviewed and deliberated before being approved.

STATEMENT OF CORPORATE GOVERNANCE

INTRODUCTION

The Board of Directors of RTB (“the Board”) is committed to ensure that RTB Group will continuously reassess and improve itself in order to be able uphold and implement high standard of corporate governance as well as robust risk management and internal control framework. The Board is responsible for ensuring that appropriate corporate governance structures are in place to facilitate effective leadership, oversight, control, development and the long-term success of RTB Group through the application of the MCCG 2017 principles.

This report demonstrates the steps taken by the Board to apply three (3) key principles highlighted in the CG code in respect of Board Leadership and Effectiveness, Effective Audit and Risk Management and Integrity in Corporate Reporting and Meaningful Relationship with Stakeholders.

GOVERNANCE FRAMEWORK

The Corporate Governance framework was established to strengthen the oversight of operations, corporate governance, compliance, internal control and risk management of RTB Group. The key elements of the framework are as follows :

• Board Charter; • Terms of Reference for Board Committees; • Business Code of Conduct; • Whistleblowing Framework; and • Risk Management and Internal Control Framework.

Good governance depends on capable and effective leadership, professional behaviour and ethical corporate culture. Therefore the Board acknowledges that it is their responsibilities to inculcate the appropriate culture, values which reinforce ethical, prudent and professional behaviour throughout the organisation to create a healthy and dynamic corporate culture within RTB Group.

BOARD LEADERSHIP AND EFFECTIVENESS

Throughout the year, the Board have continued to maintain constructive discourse to deliberate matters concerning strategy, governance and value.

OVERVIEW

The Board

The Board as a whole continues to take ownership of effective leadership and the long-term success of RTB Group. The diversified skills and leadership experience offered by the Non-Executive Directors enables them to scrutinise performance, assess RTB Group’s risk management and control processes and to support the Executive Directors. Details for each of the Directors together with their Board responsibilities are set out on pages 16 and 17.

Practice 1.1 – Roles and Responsibilities of the Board

In discharging its functions and responsibilities, the Board is guided by the Board Charter, as well as matters which have been delegated to the Board Committees, Executive Committee, Group CEO and Senior Management.

During the year, the Board had carried out the followings tasks to ensure its obligation to shareholders and other stakeholders are met :-

• Setting the objectives, goals and strategic plan for RTB Group; • Deliberating, scrutinising and approving RTB Group’s strategy, budgets, plans and policies;

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BOARD MEETINGS

Board meetings for the ensuing financial year are planned and scheduled in advance by the Management before the end of the financial year to enable all Directors to plan ahead.

All Directors are expected to devote sufficient time for the effective discharge of their functions. None of the Directors of RTB serve in more than five (5) listed companies and the Group CEO does not serve as a director in other listed companies. The present directorships in external organisations held by RTB’s Directors do not give rise to any conflict of interests nor impair their ability to discharge their responsibilities to RTB Group.

The Board recognises the need to spend time with Senior Management to discuss on the business strategies, plans and performances of RTB Group. All Board members have committed their time to this effect. In preparing the strategies and budget for RTB Group for 2018, the Executive Directors briefed the Board to obtain their views.

During FY2018, ten (10) Board meetings were held to approve quarterly financial results, statutory financial statements, the annual report, business plans as well as to review the performance of RTB Group and its operating subsidiaries, governance matters and other business development matters. The Board is satisfied with the level of time commitment given by Directors towards fulfilling their roles and responsibilities as Directors which is evidenced by their attendance at the Board, Board Committee meetings and the Annual General Meeting (“AGM”) as follows :

Note : The attendance record above reflects the Directors and meetings held for periods applicable from the date when they were Directors of RTB and members of Board Committees.

STATEMENT OF CORPORATE GOVERNANCE (CONT’D)

All Directors are entitled to obtain independent professional advice, if necessary, at RTB Group’s expense from time to time in performing their duties, subject to the approval of the Senior Independent Non-Executive Director. All Directors also have full unrestricted access to any information pertaining to the listed issues.

DIRECTORS’ TRAINING PROGRAMME

All appointed Directors and Alternate Directors are required to participate in training programmes from time to time to provide them with necessary up to date information to enable them to participate and contribute effectively and efficiently to manage and direct RTB Group.

In addition to the mandatory Accreditation Programmes required by the Bursa Securities for the newly appointed Director and Alternate Director, the Directors and Alternate Director shall continue to update their knowledge and enhance their skills through appropriate continuing education programmes to keep them abreast with the current development of industry as well as any new statutory and regulatory requirements. This also will enable Directors to effectively discharge duties and sustain active participation in the Board deliberations.

Assessment on training needs of each Director and Alternate Director, is carried out annually by the Nomination Committee. The Directors, individually had participated in various training programmes, seminars and briefings in relation to governance, industry, finance and regulatory developments based on the training needs and role in the organisation. The Board members attended the following training programmes, seminars and briefings :

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The Board composition, excluding the Alternate Director, in terms of gender, age, ethnicity and independence for the financial period under review is illustrated below :

Diversity in the appointment of board and senior management, as mentioned by the Chairman previously, is something RTB Group embraces as a conviction and as an objective. As illustrated in the Board composition above, RTB Groups seeks a balanced gender, ethnic and age representation in the boardroom.

Practice 4.6 - Appointment of Directors

The appointment of a new director and alternate director is for consideration and decision by the full Board and upon the recommendation from the Nomination Committee (“NC”).

In identifying candidates for appointment of directors, the Board does not solely rely on recommendations from existing board members, management or major shareholders. The Board utilises independent sources, such as 30% Club Malaysia, to identify suitably qualified candidates.

The Board will take into consideration and review the appropriate skills, independence, experience and knowledge required of the Board members, in the context of the needs of RTB Group. The Board will also review its composition and size from time to time to ensure its appropriateness and effectiveness.

Practice 2.1 - Board Charter

The Board has in place a Board Charter which is accessible on RTB Group website. The Board Charter demarcates the responsibilities between Board, Board Committee, Chairman, Group CEO, individual Directors and Company Secretary.

The Board shall review the said Charter periodically and any amendments or improvements shall be made thereto as and when the Board deems appropriate and necessary. Any subsequent amendments shall be approved by the Board.

Practice 3.1 - Code of Conduct

Business Code of Conduct is in place which includes policies and procedures for managing conflicts of interest as well as preventing abuse of power, corruption, insider trading and money laundering which is accessible from RTB Group’s website.

All Directors and employees were provided with the Business Code of Conduct. All employees are required to read the Business Code of Conduct and sign off in acknowledgement.

Practice 3.2 - Establishing and Implementation of Whistleblowing Policies and Procedures

RTB Group has put in place a Whistleblowing Policy with the aim to enable individuals to raise genuine concerns without fear of retaliation. This policy details the oversight and responsibilities of the whistleblowing process, the reporting process, protection and confidentiality given to the whistleblowers. An overview of the Whistleblowing Policy will be available on RTB Group’s website.

Practice 4.1 - Presence of Independent Directors on the Board

The Board for the financial period under review has ten (10) members comprising two (2) Non-Independent Non-Executive Director, three (3) Non-Independent Executive Directors and five (5) Independent Non-Executive Directors for the period under review. The Board also has one (1) Alternate Director. This is in line with MCCG’s practice 4.1.

Practice 4.2 & 4.3 - Tenure of Independent Directors

All Independent Directors has not exceeded nine (9) years tenure. The Board Charter set out policy to limit the tenure of Independent Directors to nine (9) years.

At this coming AGM, 1/3 of the directors will have to retire annually and submit themselves for re-election and all new directors appointed subsequent to the last AGM will also retire and require to submit themselves for re-election.

Full information is disclosed through the notice of meeting regarding directors who are retiring and who are willing to serve if so re-elected.

Practice 4.4 & 4.5 - Diversity on Board and in Senior Management

The Board acknowledges importance of fostering diversity to enhance the effectiveness of the Board and senior management.

The Board comprises members who have vast experience in the engineering, construction as well as professionals in the finance, legal and consulting sectors. The Board brings in a wide spectrum of diverse skills and expertise to RTB Group which allows it to meet its objectives in the competitive business environment.


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Practice 7.1 & 7.2 & 7.3 - Disclosure of Remuneration

The remuneration of those who were Directors, for the financial year ended 31 December 2018 is as follows :

The top five Senior Management for the financial year ended 31 December 2018 whose remuneration falls within the respective bands is as follows :

RTB Group does not comply with recommendation to disclose on named basis the top five senior management’s remuneration in the bands of RM50,000 in order to preserve confidentiality.


THE BOARD COMMITTEE

Practice 4.7 - Nomination Committee

The Nomination Committee (“NC”), which comprises three (3) Directors, are exclusively made up of Independent Non-Executive Directors. Mohamed Tarmizi bin Ismail is the Chairman of NC who is an Independent Non-Executive Director.

During the financial period under review the NC met two (2) times to discuss matters within its term of reference. The principal objectives and role of the Nomination Committee is available in the Company’s website.

The key activities undertaken by the NC during the year are as follows :

a) Further refining the fit and proper test for appointment of directors and recommending the same assessment to be applied for appointment of alternate directors;b) Evaluated and recommended the appointment of Khor Yu Leng as Independent Non Executive Director to the Board; c) Evaluated the appointment of the internal Company Secretary candidate; andd) Evaluated and recommended the appointment of Head of Internal Audit to the Board.

Practice 5.1 - Evaluation for Board, Board Committees and Individual Directors

As indicated in the TOR, the Board acknowledges that the NC needs to perform annual assessment of Board Committees and individual Director’s performances. However, the Chairman has agreed to perform the assessment for the financial period under review, except for the newly appointed Independent Non-Executive Director where the assessment will be done upon completion of a full year in office.

Practice 6.1 - Remuneration Policy and Procedures for Directors and Senior Management

Directors’ remuneration is formulated by the Remuneration Committee (“RC”) to be competitive and realistic with the aim to attract, motivate and retain Directors with the relevant experience, expertise and quality needed to assist in managing RTB Group effectively.

The level of remuneration is linked to their experience and level of responsibilities undertaken for Non-Executive Directors whilst for the Executive Directors, the remuneration packages link rewards to corporate and individual performance.

Practice 6.2 - Remuneration Committee

The Remuneration Committee (“RC”) is chaired by Tan Sri Wan Azmi bin Wan Hamzah, comprises of four (4) Directors, who are Non-Executive Directors, and of which three (3) are Independent Non-Executive Directors.

During the financial period under review the RC met two (2) times to discuss matters within its term of reference. The terms of reference are as follows :

(a) review and recommend the entire individual remuneration packages for each of the Directors and key management of RTB Group;(b) ensure that a strong link is maintained between the level of remuneration and individual performance against agreed targets, the performance-related elements of remuneration forming a significant proportion of the total remuneration package of the Directors and key management of RTB Group; and(c) establish and recommend to the board of directors of RTB Group the remuneration structure and policy and the terms of employment or contract of employment/service, any benefit, pension or incentive scheme entitlement; other bonuses, fees and expenses; any compensation payable on the termination of the service contract for the Directors and key management.

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Oversight of risk has been delegated to the A&RMC. The A&RMC has responsibility for regularly reviewing the risk management framework to ensure it remains sound. The A&RMC is assisted by RMWG which are responsible for driving and supporting risk management across RTB Group.

The key features of RTB Group’s ERM policy are :

• Sound risk management practice promotes effective governance which is integral to the achievement of business objectives. • Embedding risk management into day-to-day management processes, decision-making and strategic planning. • Every employee of the organisation is responsible to manage risks within their areas of responsibility. • Periodic reporting and monitoring activities instils accountability and responsibility for managing risks. • The risk management processes applied should aim to take advantage of opportunities, manage uncertainties and minimise threats.

Practice 10.1 & 10.2 - Effectiveness of Internal Audit Function

RTB Group outsourced its internal audit function to an independent internal audit service provider, namely BDO Governance Advisory Sdn Bhd. The primary function of internal audit is to undertake systematic reviews of the governance, risk and internal control systems within RTB Group in accordance with an internal audit plan, so as to provide assurance that such systems are adequate and functioning as proposed.

The internal audit function’s responsibilities are to provide independent and objective reports on the state of internal controls of the various operating units within RTB Group to the A&RMC and provide recommendations for the improvement of the control procedures, so that corrective actions are taken to mitigate weaknesses noted in the system and controls of the respective operating units.

Details of the internal audit activities and scope of coverage of the outsourced internal audit function including the cost incurred are set out in the Statement on Risk Management and Internal Control included in this Annual Report.

INTEGRITY IN CORPORATE REPORTING AND MEANINGFUL RELATIONSHIP WITH STAKEHOLDERS

Practice 11.1 - Communication with Stakeholders

The Board is committed to ensure that we continue to engage effectively with our shareholders to facilitate a mutual understanding of objectives. RTB Group has a number of formal channels in place to effectively communicate this information to all the shareholders and stakeholders. The Board primarily achieve this through the following activities; the annual report, announcements to Bursa Malaysia Securities Berhad, quarterly reports, Group’s website and investor relations.

RTB Group also maintains a website which shareholders and other stakeholders can gain access to information about RTB Group, activities and/or any announcements made by RTB Group. This can all be located at www.rohastecnic.com .

Practice 12.1 - Notice of General Meeting

Notice for the AGM was given to the shareholders at least 28 days prior to the meeting so that shareholders have adequate time to consider the resolutions that will be discussed at the AGM.

Practice 12.2 - Attendance of Directors at General Meeting

The Board uses the AGM to communicate with investors and encourages their participation. Shareholders are invited to attend the AGM each year and to ask questions. The Chairman of the A&RMC, NC and RC are to be present at that meeting to answer questions on the work of the Committees.


EFFECTIVE AUDIT AND RISK MANAGEMENT

Practice 8.1 - Chairman of Audit Committee

The Chairman of the Audit and Risk Management Committee (“A&RMC”) is Madam Chee Suan Lye, a Senior Independent Non-Executive Director, and she is not the Chairman of the Board. This is in compliance with the Step up recommendation of CG Code and MMLR.

Practice 8.2 & 8.3 - Cooling off period for Key Audit Partner and Assessment of External Auditor

RTB Group has in place a policy, available in the Company’s website, for former key audit partner of existing external auditor on observing a cooling-off period if they are to be consider to be appointed as a member of the Audit Committee. The policy also assesses the suitability, objectivity and independence of the external auditor.

The A&RMC had undertaken an assessment of the independence, timeliness, competence, audit quality and resource capacity of the external auditor, Grant Thornton Malaysia in relation to the audit, the nature and extent of the non-audit services rendered and the appropriateness of the level of fees.

Practice 8.4 - Independence of Audit Committee

The A&RMC consists of four (4) members of which all are independent non-executive directors. None of them are alternate directors.

Practice 8.5 - Financial Literacy of Audit Committee Member

The A&RMC possess the right mix of skills to discharge its duties effectively.

A&RMC is chaired by Madam Chee Suan Lye who has been a member of, the Malaysian Institute of Certified Public Accountants since 1978. Madam Chee possesses sufficient financial knowledge to provide satisfactory input on financial matters. A&RMC also comprises members with legal, corporate and finance backgrounds which are financially literate and provide diverse perspectives that strengthen the quality of deliberations.

All members receive ongoing training and development as detailed on page 40.

Practice 9.1 & 9.2 - Risk Management and Internal Controls

The Board remains committed to ensuring that its communications with shareholders continue to present a fair, balanced and understandable assessment of RTB Group and its prospects. The Board is responsible for determining the nature and extent of the significant risks it is willing to take in achieving its strategic objectives.

Principal risks and uncertainties associated with RTB Group’s business are summarised on page 31 of the Statement of Risk Management and Internal Control. The A&RMC monitors and reports on RTB Group’s risk management systems, corporate reporting and internal control principles. A&RMC is also responsible for maintaining an appropriate relationship with its internal and external auditors. The 2018 Report of the A&RMC is set out on pages 34 to 36.

Practice 9.3 - Establishment of Risk Management Committee

RTB Group had embarked on risk management initiatives by establishing an Enterprise Risk Management Framework (“ERM”). A Risk Management Working Group (“RMWG”) is in place comprising of the Executive Directors of RTB Group with Group CEO as the chairman of the RMWG.

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Skills upgrading of our talents through training and development is an important factor that will strengthen ourcapability in fulfilling ourcustomer’s needs and ensure the sustainable progress ofRTB Group.

‘‘ ‘‘ STATEMENT OF CORPORATE GOVERNANCE (CONT’D)

Practice 12.3 – Use of Technology for Shareholders Voting

RTB Group does not have large number of shareholders and AGM is held in Kuala Lumpur. Hence, deem the use of technology is not necessary as at the current environment.

Compliance With The CG Code

The Board considers that RTB Group has complied with the best practice and applied the main principles of CG Code with the exception of the following :

CG Report

As required under paragraph 15.25 (2) of MMLR, RTB Group’s application of each Practice of the CG Code during the financial year and explanation for departure and setting out timeline for compliance or alternative practice is set out in RTB Group CG Report and can be downloaded at www.rohastecnic.com .

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RTB’s manufacturing capabilities will be

further strengthened by the expansion of

its fabrication and galvanising facilities as

part of our future plans to cater for

business expansion and growth. We will

be able to continuously deliver reliable

and value-driven products and services

which is essential in an evolving consumer

landscape as we continue to increase our

presence in new economies around the

region.

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The RMWG is responsible to promote and ensure that the risk management process and culture are embedded throughout the Group. During the year, as part of the process of updating the status of the business risk, the Heads of department during the sessions with the Risk Officer, revisited the business risk identified in the ERM Framework and provided updates.

The key responsibilities of the RMWG are to provide regular reporting and update to the Board on key risk management issues. The RMWG met once during the year to update the business risk identified in the ERM and updated the A&RMC accordingly with regards to status of the risk identified and updates on the mitigating factors.

The key features of the Group’s ERM policy are : • Sound risk management practice promotes effective governance which is integral to the achievement of business objectives. • Embedding risk management into day-to-day management processes, decision-making and strategic planning. • Every employee of the organisation is responsible to manage risks within their areas of responsibility. • Periodic reporting and monitoring activities instils accountability and responsibility for managing risks. • The risk management processes applied should aim to take advantage of opportunities, manage uncertainties and minimise threats.

The key Business Risks identified are as follows :

• Over reliance on key customers; • Business Expansion and Growth; • Fluctuations in Prices of Steel as Raw Materials; • Financial Risks of RTB Group; • Impact of Inflation; • Government /Economic/ Fiscal/ Monetary Policies; • Foreign exchange fluctuations; and • Project Management

The details of risk description and key mitigation steps are explained in the Management Discussion & Analysis report onpage 31.

INTERNAL CONTROL SYSTEM

Internal control is embedded in the Group’s operations as follows :

• Clear organizational structure with defined reporting lines; • Annual strategic business planning, budgeting and reporting process; • Clearly documented ISO procedures for manufacturing operation and clearly defined job description for the purpose of succession planning; • Internal audit function provides assurance of the effectiveness of the system of internal control within the Group. Regular internal audit visits are undertaken to review the effectiveness of the control procedures; • Review of internal audit reports and follow-up on findings by the A&RMC; • Regular Board and A&RMC meetings to assess the Group’s internal controls, performance and risks; • Monthly meeting between the EXCO and Senior Management to monitor and get updates on the operations of the operating units; the meeting is chaired by the Group CEO; • Review of monthly management reports by the EXCO and Senior Management to deliberate on results and business strategies, which includes review of performance against budgeted numbers; • Human Resource function sets out policies for business code of conduct, recruitment and staff appraisal to ensure that staff is competent and adequately trained in carrying out their responsibilities; and • Policies and procedures that are currently going through the process of being reviewed, identifying the gaps and enhancing the documentation.

STATEMENT ON RISK MANAGEMENT ANDINTERNAL CONTROL

INTRODUCTION

The Statement on Risk Management and Internal Control (the “Statement”) is prepared pursuant to the Main Market Listing Requirements of Bursa Malaysia Securities Berhad and in accordance with the Statement on Risk Management and Internal Control: Guidelines for Directors of Listed Issuers, a publication of Bursa Malaysia Securities Berhad.

RESPONSIBILITY OF THE BOARD

The Board of Directors (“the Board”) acknowledges that it is their responsibility to review, in an ongoing manner, the risk management and internal control system for its adequacy, effectiveness and integrity. The Board maintains overall responsibility for risk oversight through its Audit and Risk Management Committee (“A&RMC”). The Board is also committed to maintaining a sound system of risk management and internal control within the Group.

The Board has formalised an Enterprise Risk Management framework (“ERM framework” or “framework”) which is based on International accepted framework. The framework aids to the achievement of Group’s objectives and strategies by instilling continuous process of identifying, evaluating, profiling, mitigating, reporting and monitoring significant business risks the Group may face.

There are inherent limitations in any system of risk management and internal control (“system”), thus, the system is designed to manage, rather than eliminate, the risk of failure to achieve the Group’s business and corporate objectives. The system is therefore designed to only provide reasonable, but not absolute, assurance against any material misstatement, financial loss or fraudulent activity.

Management is responsible in developing procedures and processes as well as implement internal controls which will help identify, assess, mitigate and monitor business risks. Management also takes corrective actions as and when needed in order to assist the Board in discharging its duties and responsibilities in maintaining a sound system of risk management and internal control.

The Board has received assurance from the Group Chief Executive Officer (“Group CEO”) and Chief Financial Officer (“CFO”) that the Group’s has in place a reasonable risk management and internal control system that are operating adequately and effectively, in all material aspects, based on the risk management and internal control system of the Group. Management is also going through the process of improving the documentation of the policies and procedures in place to assist with the governance structure of the Group.

Taking into consideration the assurance from the Management and input from the relevant assurance providers, the Board is of the view that the risk management and internal control system in place for the year under review and up to the date of issuance of the financial statements is adequate to safeguard the shareholders’ investment, Group’s assets and the interests of internal and external stakeholders.

Additionally, the Board regards the risks faced by the Group are within acceptable levels in relation to its business objectives. There were no material losses or fraud during the year under review as a result of weaknesses in internal control. The Management is continuously taking necessary measures to improve and strengthening the risk management and internal control system of the Group.

RISK MANAGEMENT

The Group has an established ERM Framework and has also embarked on extending this framework to new subsidiaries of the Group. The Group also has a Risk Management Working Group (“RMWG”) which comprises the Executive Directors of the RTB. The Chairman of the RMWG, the Group CEO, is responsible to present the findings of the RMWG to the A&RMC.

A Risk Officer shall consolidate the departmental risk register and prepare a company-wide risk management report. All new risks and material changes to existing risks shall be highlighted by the Heads of department to the Risk Officer, as and when they are identified, and changes/updates shall be made to the department’s risk register. The RMWG will review the risk management report and the updated risk registers prior to presentation to the A&RMC.

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STATEMENT ON RISK MANAGEMENT ANDINTERNAL CONTROL (CONT’D)

INTERNAL AUDIT FUNCTION

The Internal Audit Function (“IAF”) is carried out in accordance with the International Professional Practice Framework (“IPPF”) by an independent professional firm, namely BDO Governance Advisory Sdn Bhd. The IAF team is headed by Executive Director who possesses the relevant qualification and experience is assisted by three (3) staff including a manager.

The internal audit reviews are performed based on an internal audit plan approved by the A&RMC. Internal Audit reviews findings together with management’s comments and action plans are presented and reviewed by the A&RMC. Follow-up reviews will be conducted to report to the A&RMC on the status of implementation of management action plans.

For the financial year ended 31 December 2018, the following 4 significant business units were identified and selected for internal audit with the A&RMC’s concurrence :

The total cost incurred for the outsourced internal audit function for the financial year under review amounted to approximately RM88,000.

ISO AUDIT FUNCTION

As per requirement of the ISO 9001:2015 –QMS & ISO 14001:2015 -EMS certifications, scheduled audits are conducted internally on yearly basis as well as by the independent certification body, Lloyd’s Register & Bureau Veritas. Management Review Committee reviews the issues arising from these audits, develop action plans and follow-up reviews are conducted to ensure all matters has been resolved. Flow charts are used to document the information which describe and maps out the key processes in the manufacturing business.

CONCLUSION

In assisting the Board to assess the adequacy and operating effectiveness of the Group’s risk management and internal control system, the A&RMC conducted a review of the observations raised by the internal and external auditors. Matters has been highlighted by the internal and external auditors to the Management and has or are currently being addressed.

RTB provides an engaging work environment and industry exposure to our workforce as we recognise the importance of attracting and maintaining new competence to cater for our future growth opportunities.

‘‘ ‘‘

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REVIEW OF STATEMENT BY THE EXTERNAL AUDITORS

Pursuant to Paragraph 15.23 of Bursa’s Listing Requirements, the external auditors have reviewed this Statement for incorporation in the Annual Report for the financial year ended 31 December 2018. The external auditors have reported to the Board that, based on their review of the procedures performed and evidence obtained, it can be found that nothing has come to their attention that causes them to believe that this Statement intended to be included in the Annual Report is not prepared, in all material respects, in accordance with the disclosures required by Paragraphs 41 and 42 of the Statement on Risk Management and Internal Control : Guidelines for Directors of Listed Issues to be set out, nor is the Statement factually inaccurate. This Statement is made in accordance with the resolution of the Board of Directors dated 17 April 2019.

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GOVERNANCE STRUCTURE

As guided by the Group’s corporate governance principles, the Board is committed to ensure, social, and environmental issues of our stakeholders are managed with sustainability in mind. A working Sustainability Committee, comprising of key personnel from relevant departments was formed to review the sustainability performance of RTB Group.

Board of Directors is responsible for :

• Reviews and approves the Group’s Sustainability Report; • Aligning corporate and division priorities, tolerances and strategies.

The EXCO is responsible for :

• Reviewing and monitoring the effectiveness of sustainability treatment measures; • Making the appropriate recommendation to the Board on sustainability management matters

The Sustainability Committee is responsible for :

• Materiality Assessment; • Identification and Monitoring of Initiatives and Actions; • Execution of Initiatives and Actions; and • Report.

OUR SUSTAINABILITY JOURNEY ANDPLANS FOR FY 2019

PURPOSE

Sustainability Vision: To deepen our involvement in sustainability opportunities in the region by focusing on economic, social and environmental impacts of our constructions.

The Business : As an enterprise that has supported national growth initiatives, we are focused on realising our ambition of creating a better nation by bringing power and connectivity to all corners of the country.

SCOPE

Through designing, fabricating, and manufacturing best-in-class steel towers and bespoke facilities, we wish to bridge communication between communities while sustaining them with modern essential needs.

In this report, our material entities, namely :

• Rohas-Euco Industries Bhd. (“REI”); and • HG Power Transmission Sdn. Bhd. (“HGPT”)

Our sustainability report covers the economic, environmental and social impacts of RTB Group.

We have made an effort to report on all issues that are material to RTB Group and this report should be read together with our Annual Report 2018. The report contains qualitative and quantitative results for all indicators presented.

REPORTING PERIOD

The scope of this Sustainability Report refers to the period of 1 January 2018 to 31 December 2018, unless specified otherwise. It also includes 2 years of data for selected performance indicators which have been tracked and monitored as standard practice.

OUR APPROACH

This report is aimed at communicating the Group’s performance on economic, environmental, and social issues, in recognising the importance of wider engagement with stakeholders in sustainability management. This Sustainability Report is written in accordance with and guided by :

• Bursa Malaysia Main Market Listing Requirements, The Sustainability Reporting Guide

For this report, we collated data from the head office and key subsidiaries to ensure that information is comprehensive, transparent and aligned with our Annual Report 2018.

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A summary of who our key stakeholders are and how we engage them through the year is presented below :

SUSTAINING THE BUILD THROUGH QUALITY

Our towers are built to withstand corrosion and to prolong its life. Our towers are built to client’s specification and requirement of their design, detailing, fabrication, testing, supply, and delivery. These requirements are also benchmarked against the British Standard (BS) or Malaysian Standard (MS) to ensure our designs have at least 50 years lifespan.

Hot dip galvanisation is the process we use to ensure the steel towers have high durability coating to prolong the towers’ lifespan. Before a tower is sent for mass production, a prototype is built and tested (strength, durability, etc) in neighboring countries.

During progress meetings, we would recommend methods to prevent landslide damages (using of leg extensions or concrete chimney) as opposed to cut and fill methods which may lead to soil erosions. For towers erected at areas susceptible to high corrosion (e.g. coastal areas) our galvanising thickness are increased to ensure durability.

OUR SUSTAINABILITY JOURNEY ANDPLANS FOR FY 2019 (Cont’d)

MATERIALITY ASSESSMENT

Our first materiality assessment was conducted under the guidance of independent sustainability consultants with participation and contributions from key personnel from respective departments. While the materiality assessment did not involve any external stakeholders, key personnel took into consideration both internal and external perspectives during the material matters prioritisation process.

The materiality assessment process adopted a four-step approach as outlined below :

Moving forward, further emphasis on materiality assessment and its sample broaden to include the external stakeholders.

OUR STAKEHOLDERS

Core to the success of our business is our ability to develop strong and meaningful relationships with all our stakeholders. We have put in place various communication channels designed to allow us to regularly engage with our stakeholders so that we can better understand their needs and interests.

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Within our main subsidiaries, we have contributed to the national Human Resource Development Fund :

To understand the abilities of a person for further growth and development, we recently revamped our appraisal system to help foster growth and constructive learning regardless of age and gender. As the system will be effective for the Financial Year 2019, we are currently assisting our employees to familiarise themselves with the revamped system whilst ensuring their performance objective remain intact.

Our mission to maintain leadership in tower construction and deepen our involvement in EPCC opportunities requires the need to plan for leadership renewal and management succession. We have introduced a review programme, “Peoples Review & Succession” -- a platform for the company’s within the Group and Managers to identify talents within their department. This programme reviews and assesses the overall team performance through identifying the most valuable player, most improved player and team-key strength and potential areas for team improvement. Ultimately, this programme allows Management to revisit their deployment of manpower and propose development programmes for their potential successor.

In addition to our in-house initiatives, we have engaged a third party professional to provide further insight on developing leadership within our senior management team. We embarked on a Personality Development Assessment Programme which has includes three rounds of coaching. The first for individual discovery and improvement, the second for group discovery aligning towards the company’s direction, and thirdly to track the progress of improvements. Overall, we managed to identify potential future leaders and understand the synergy and relationship between the senior management team.


DEVELOPING TALENTS AND REWARDING THEIR STAY

As we have embarked on RTB’s journey after the Regularisation Plan, we will continue to focus on driving the career development,productivity, and opportunities of our 1,106 talents in the Group. We recognise that continuous development of all talents is the impetus behind our business operations.

In this age of disruption and intensive change, we believe a diverse workforce is essential to achieving our goals. The diversity of our people promotes productivity and innovation. Diversity allows us to better respond in the most strategic and effective manner to increasing demands and expectations of our various stakeholders.

To ensure continuous development of our employees in the business operations, we have invested about RM287,000 for both administrative and factory employees in 2018 through internal and external trainings, and leadership programmes.

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The safety structure has been implemented in our active operating locations such as :

1. REI;2. HGPT Jimah Project;3. HGPT Slim River Project;4. HGPT Pasir Gudang Project; and5. HGPT Semenyih Project

To further our commitment into the importance of safety and health, we have employed a NIOSH certified safety officer in REI. The registered safety officer has been licensed since 2014 with current license expiring in 2020. Within each HGPT project, we have onsite registered competent health and safety officers who also acts as the secretary to the Safety & Health Committee.

With the oversight from the Safety & Health Committee, we have implemented policies and controls to manage the safety standards in RTB Group. Such of these are :

• Induction for new employees and contractors; • Periodic refresher for current employees; • Weekly toolbox meetings on safety awareness and incidences; • Enhancements to machinery safety features (sensors, safety guard, 2-hand safety button); • Safety handling and disciplinary policies and procedures; • Demarcation of hazardous & flammable items; • Monthly inspections by Health Safety Committee and Health Safety Officer; and • Usage of Personal Protective Equipment (PPE).

To instill safety as a disciplinary choice within each individual, we have sent our employees to various health and safety training programs through the year, both internal and external. For example :

The aim of these training courses is to ensure employees are instilled with the culture of safety first.

With much of RTB Group’s workforce comprising foreign workers, it is important to successfully integrate them into the workforce. Working in an inclusive environment that provides good understanding of RTB Group’s culture and expectations are important starts for any new employee and we understand it can be especially critical to the success of a foreign worker in the organisation. Along with offering a thorough orientation, we also help new foreign workers to find housing, provide local transportation, and help them get settled into their new community. To ensure continuous success, foreign workers are continuously provided in-house trainings and external trainings such as Plasma Cutting Machine training and harnessing the Effective Safety & Health Communication respectively.

SAFETY IS A DISCIPLINARY CHOICE, NOT AN ACCIDENT

Considering the manufacturing and construction industry we operate in, it is crucial that the highest standard of safety is maintained at all times. We are committed to providing a workplace environment that emphasizes on safety for all employees and visitors alike.

Our safety standards are set via tone from the top which cascades down to employees and visitors alike. These standards aredisseminated through safety & health policies and procedures, covering both external and internal stakeholders. The standards are enforced through an established safety committee, comprising of a balanced number of employer representatives and employee representative. Generally, our safety structure is as below :


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MINIMISING WASTE TO KEEP THE ENVIRONMENT SAFE

Our waste are categorised into general waste, scheduled waste and scraps. To ensure that our waste do not contaminate the environment, we have set up policies and procedures to ensure proper handling of scheduled waste. Moreover, due diligence to is done to appoint Department of Environment (DOE) authorised scheduled waste collectors.

We are committed to optimal usage of our steel raw material and to minimize the amount of scraps produced. We have set a maximum target of 1.1% of scraps produced. These scraps are then sold to a registered recycling trading company which is involved in processing both ferrous and nonferrous scrap materials, as a feeder of raw materials to the steel manufacturing industry.

ENHANCING COMMUNITY LIVES

RTB aims to positively affect the surrounding communities, expand and improve on education and also preserve and protect the environments we operate. Our three core values to enriching community lives are : Education, Environment, and Communities.

RTB has also taken a greener approach as part of our commitment to protect the environment. Within RTB Group’s factory in Bentong, trees were planted by employees to liven the environment as part of “Planting Million Trees” project.

Under RTB’s first CSR initiative, we reached out to Royal Belum, Perak. As part of the enrichment programme, RTB made a green space for social and learning activities outside the classroom. A mini garden was created within the compound of Sekolah Kebangsaan Sungai Tiang.

RTB continues to take a community-driven approach to caring for the underprivileged communities by providing sustainable livelihood through assistance such as food and supplies of books and clothes. RTB volunteer members made their way to an Orang Asli settlement at Kampung Kelewang.

Our people are also the community we treasure. Our engagement activities within HQ and factory area, outdoor activities and cultural activities are planned and carried out year-in-year-out.

We want to ensure that our employees feel involved and recognised by the Company. We are looking at other creative ways in showing appreciation towards are employees and create value in strengthening the relationship between the Company and our employees.

MOVING FORWARD

We are proud of what we have achieved thus far but we believe that more can be done when it comes to delivering and maintaining sustainable results not only to our clients, but also to our own internal stakeholders and the community around us.

As part of our commitment on driving sustainability commitments, we intend to establish a formal mandate at Board level, chaired by an Independent Non-Executive Director, which has oversight responsibilities in relation to the Group’s objectives, policies and practices pertaining to sustainability, more particularly around contributing to a better society, minimising environmental harm and delivering sustainable development.


66 67

1. UTILISATION OF PROCEED

The total proceeds generated from the Issuance of Shares pursuant to private placement will be utilised as follows :-

2. MATERIAL CONTRACTS INVOLVING THE INTERESTS OF DIRECTORS, GROUP CHIEF EXECUTIVE OFFICER AND MAJOR SHAREHOLDERS

There were no material contracts entered into by the Company and/or its subsidiaries involving the interests of Directors and/or Group Chief Executive Officer and/or major shareholders, either still subsisting at the end of FY2018 or entered into since the end of the previous financial year.

3. AUDIT AND NON-AUDIT FEES

The amount of audit and non-audit fees paid or payable to the external auditors of the Company and the Group for FY2018 are as follows :

4. RECURRENT RELATED PARTY TRANSACTIONS (“RRPT”) OF REVENUE OR TRADING NATURE

The Company did not enter into any RRPT which requires the shareholders’ mandate during the financial year ended 31 December 2018.

While nurturingour newly acquiredcompanies and ensureits dynamic growth, wewill continue to expandour geographic footprintand range of services to capitalise on the growthpotential in the domesticand regional market.

‘‘

‘‘

ADDITIONAL COMPLIANCE INFORMATION

67

68 69

Statement Of Directors’ Responsibility

In preparing the financial statements for FY2018 set outon pages 80 to 169 of this Annual Report, the Board considers that the Group and the Company have adopted appropriate accounting policies, consistently applied and supported by reasonable and prudent judgements and estimates. The Board also acknowledges that the Group and the Company have prepared the financial statementson a going concern basis.

The Board has the responsibility for ensuring that the Group and the Company maintain accounting records that disclose the financial position of the Group and the Company with reasonable accuracy which enable themto ensure that the financial statements are in compliancewith the Act.

The Board also has the overall responsibility to take such steps that are reasonably available for them to safeguard the assets of the Group and the Company as well as to prevent and detect fraud in addition to other irregularities.

This Statement of Directors’ Responsibility is made in accordance with a resolution passed by the Board on 17 April 2019.

The Companies Act 2016 (“Act”) Requires The Board Of Directors To Prepare Financial Statements Which Give A True And Fair View Of The State Of Affairs Together With The Results And Cash Flows Of The Company And The Group For Each Financial Year. As Required By The Act And The MMLR, The Financial Statements For FY2018 Have Been Prepared In Accordance With The Applicable Approved Financial Reporting Standards Issued By The Malaysian Accounting Standards Board And Provisions Of The Act.

Financial Statement

Directors’ Report

70

Statements by Directors

75

Statutory Declaration

75

Independent Auditors’ Report

76

Statements of Financial Position

80

Statements Of Profit Or Loss And OtherComprehensive Income

81

Statements of Changes in Equity

82

Statements of Cash Flows

85

Notes to the Financial Statements

88

70 71

DIRECTORS

The name of the Directors of the Company in office during the financial year and during the period commencing from the end of the financial year to the date of this report are:-

Directors of the Company: Directors of the Company and its subsidiaries:Wong Mun Keong Tan Sri Nik Awang @ Wan Azmi Bin Wan Hamzah Sia Bun Chun Leong Wai Yuan Chee Suan Lye Shahrulanuar Bin IshakMohamed Tarmizi Bin Ismail Amirul Azhar Bin Baharom Dr. Ir. Jeyanthi A/P RamasamyKhor Yu Leng (appointed on 13 November 2018)Wan Afzal-Aris Bin Wan Azmi (appointed on 13 November

2018) (alternate for Tan Sri Nik Awang @ Wan Azmi Bin Wan Hamzah)

The Directors of the subsidiaries since the beginning of the financial year to the date of this report, not including those Directors listed above are:-

Harianto TarunaRamlan Bin SafriRishabh Dev Khaitan

DIRECTORS’ INTERESTS

According to the Register of Directors’ Shareholdings required to be kept under Section 59 of the Companies Act, 2016, the interests and deemed interests in the ordinary shares of the Company and its related corporations of those who were Directors as at year end (including the interests of spouses or children of the Directors who themselves are not Directors of the Company) are as follows:-

Number of ordinary shares

At 1.1.2018 Bought Sold

At 31.12.2018

Interests in the Company

Direct interests

Tan Sri Nik Awang @ Wan Azmi Bin Wan Hamzah 46,055,710 30,000,000 (12,750,000) 63,305,710

Sia Bun Chun 29,998,109 - - 29,998,109

Indirect interests

Tan Sri Nik Awang @ Wan Azmi Bin Wan Hamzah* 160,743,531 9,000,000 (30,000,000) 139,743,531

Sia Bun Chun* 39,662,968 - (1,250,000) 38,412,968

(*) Indirect interests by virtue of shares held by spouse.

Directors’ report (Cont’d)

The Directors have pleasure in submitting their report together with the audited financial statements of the Group and of the Company for the financial year ended 31 December 2018.

PRINCIPAL ACTIVITIES

The principal activity of the Company is investment holding whilst those of its subsidiaries are disclosed in Note 5 to the financial statements.

There have been no significant changes in the nature of the activities of the Company and its subsidiaries during the financial year.

RESULTS

Group Company

RM RM

Profit after tax for the financial year 15,261,779 14,561,593

Attributable to:-

Owners of the Company 16,029,532 14,561,593

Non-controlling interests (767,753) -

15,261,779 14,561,593

DIVIDENDS

Dividends paid since the end of the previous financial year are as follows:-

RM

In respect of financial year ended 31 December 2017:-

Final single tier dividend of 1.5 sen per ordinary share, paid on 27 June 2018 7,089,865

The Directors recommend a final single tier dividend of 1 sen per share in respect of the current financial year for the shareholders’ approval at the forthcoming Annual General Meeting. The current financial statements does not reflect this proposed dividend. Such dividend, if approved by the shareholders, will be accounted for in equity as an appropriation of retained earnings in the financial year ending 31 December 2019.

RESERVES AND PROVISIONS

All material transfers to or from reserves or provisions during the financial year are disclosed in the financial statements.

Directors’ report

72 73

OTHER STATUTORY INFORMATION (CONT’D)

At the date of this report, the Directors are not aware of any circumstances:-

(a) which would render it necessary to write off any bad debts or the amount of the provision for doubtful debts in the financial statements of the Group and of the Company inadequate to any substantial extent; or

(b) which would render the values attributed to current assets in the financial statements of the Group and of the Company misleading; or

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

(d) not otherwise dealt with in this report or the financial statements which would render any amount stated in the financial statements misleading.

At the date of this report, there does not exist:-

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

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

In the opinion of the Directors:-

(a) no contingent liability or other liability has become enforceable or is likely to become enforceable within the period of twelve months after the end of the financial year which will or may affect the ability of the Group and of the Company to meet their obligations as and when they fall due;

(b) the results of operations of the Group and of the Company during the financial year were not substantially affected by any item, transaction or event of a material and unusual nature; and

(c) there has not arisen in the interval between the end of the financial year and the date of this report any item, transaction or event of a material and unusual nature likely to affect substantially the results of operations of the Group and of the Company for the current financial year in which this report is made.

INDEMNITY AND INSURANCE FOR DIRECTORS AND OFFICERS

The amount of insurance premium paid for Directors and Officers of the Group and of the Company during the financial year amounted to RM39,500.

SIGNIFICANT AND SUBSEQUENT EVENT TO THE FINANCIAL YEAR

The significant event and subsequent event to the financial year are disclosed in Note 33 to the financial statements.


DIRECTORS’ INTERESTS (CONT’D)

By virtue of Tan Sri Nik Awang @ Wan Azmi Bin Wan Hamzah and Sia Bun Chun’s interests in the shares of the Company, they are also deemed interested in the shares of all the subsidiaries to the extent that the Company has an interest under Section 8 of the Companies Act, 2016.

Other than as disclosed above, none of the other Directors in office at the end of the financial year had any interest in the shares of the Company or its related corporations during the financial year.

DIRECTORS’ REMUNERATION AND BENEFITS

During the financial year, the fees and other benefits received and receivable by the Directors of the Group and of the Company are as follows:-

Incurred by the subsidiaries

Incurred by the Company Total

RM RM RM

Directors’ fees

- Existing Directors - 390,000 390,000- Ex Directors - 21,000 21,000Directors’ salaries and other emoluments

- Existing Directors 2,002,202 250,000 2,252,202Defined contribution plan 201,281 - 201,281

2,203,483 661,000 2,864,483Benefit-in-kind 63,699 - 63,699

2,267,182 661,000 2,928,182

During and at the end of the financial year, no arrangements subsisted to which the Company is a party, with the object or objects of enabling Directors of the Company to acquire benefits by means of the acquisition of shares in, or debentures of, the Company or any other body corporate.

ISSUE OF SHARES AND DEBENTURES

There were no changes in the issued and paid up capital of the Company and no issuance of debentures during the financial year.

OTHER STATUTORY INFORMATION

Before the financial statements of the Group and of the Company were made out, the Directors took reasonable steps:-

(a) to ascertain that proper action had been taken in relation to the writing off of bad debts and the making of provision for doubtful debts, and satisfied themselves that adequate provision had been made for doubtful debts and there were no bad debts to be written off; 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.


74 75

STATEMENT BY Directors

In the opinion of the Directors, the financial statements set out on pages 80 to 169 are drawn up in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act, 2016 in Malaysia so as to give a true and fair view of the financial position of the Group and of the Company as at 31 December 2018 and of their financial performance and cash flows for the financial year then ended.

Signed on behalf of the Directors in accordance with a resolution of the Board of Directors.

……......................................................... ................................................................ TAN SRI NIK AWANG @ LEONG WAI YUAN

WAN AZMI BIN WAN HAMZAH

Kuala Lumpur17 April 2019

STATUTORY DECLARATION

I, Shahrulanuar Bin Ishak, being the Director primarily responsible for the financial management of Rohas Tecnic Berhad, do solemnly and sincerely declare that to the best of my knowledge and belief, the financial statements set out on pages 80 to 169 are correct and I make this solemn declaration conscientiously believing the same to be true and by virtue of the Statutory Declarations Act, 1960.

Subscribed and solemnly declared by )the abovenamed at Kuala Lumpur in )the Federal Territory this day of 17 April 2019 ) ) ..............................................................………..... SHAHRULANUAR BIN ISHAK (MIA No. 28067) Before me:

Commissioner for Oaths

AUDITORS

The total amount of fees paid to or receivable by the Auditors, Messrs Grant Thornton Malaysia, as remuneration for their services as Auditors of the Group and of the Company for the financial year ended 31 December 2018 are amounted to RM238,932 and RM60,000 respectively.

There was no indemnity given to or insurance effected for Auditors of the Company.

The Auditors, Messrs Grant Thornton Malaysia, have expressed their willingness to continue in office.

Signed on behalf of the Directors in accordance with a resolution of the Board of Directors.

............…...........................................…. TAN SRI NIK AWANG @ WAN AZMI BIN WAN HAMZAH ) ) ) ) ) ) ) DIRECTORS ) ) ) ) )............…...........................................…. )LEONG WAI YUAN )



76 77

INDEPENDENT AUDITORS’ REPORT (CONT’D)

Report on the Audit of the Financial Statements

Opinion

We have audited the financial statements of Rohas Tecnic Berhad, which comprise the statements of financial position as at 31 December 2018 of the Group and of the Company, and the statements of profit or loss and other comprehensive income, statements of changes in equity and statements of cash flows of the Group and of the Company for the financial year then ended, and notes to the financial statements, including a summary of significant accounting policies, as set out on pages 80 to 169.

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

Basis for Opinion

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

Independence and Other Ethical Responsibilities

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

Key Audit Matters

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

Impairment losses on receivables

The risk

Refer to the Note 11 to the financial statements. We focused on this area because the Group has material amounts of trade receivables that are past due but not impaired. Management judgement is required in determining the completeness of the trade receivables provision and in assessing its adequacy through considering the expected recoverability of the year-end trade receivables.

Our response

We have reviewed the ageing of receivables in comparison to previous years, testing the integrity of ageing by calculating the due date for a sample of invoices and reviewing the level of bad debts written off in the current year against the prior years. We also assessed the reasonableness of assumptions and judgements made by the management regarding the expected credit losses and recoverability of outstanding receivables through examination of subsequent cash receipts and tested the operating effectiveness of the relevant control procedures that management has in place.

Our finding

As a result, we satisfied ourselves that impairment losses on receivables and contract assets have been provided in line with the policy and we found the estimates in line with our expectation.

INDEPENDENT AUDITORS’ REPORT

Report on the Audit of the Financial Statements (cont’d)

Inventories-valuation net

The risk

Refer to the Note 10 to the financial statements. The Group holds a significant amount of inventories which are subject to a risk that the inventories become slow-moving or obsolete, such that they could not be sold or only be sold for selling prices that are less than the carrying value. There is inherent subjectivity and estimation required in determining the accuracy of inventory obsolescence provision and in making an assessment of its adequacy due to risks such as inventories prices not valid and inventories not stated at the lower of cost and net realisable value.

Our response

For both finished goods and raw materials, we tested the methodology for calculating the provisions, challenged the appropriateness and consistency of judgements and assumptions, and considered the nature and suitability of historic data used in estimating the provisions. In doing so, we obtained understanding on the ageing profile of inventories, the process for identifying specific problem inventories and historic loss rates.

Our finding

As a result, we satisfied ourselves that both inventories have been prepared in line with the policy and we found the estimates in line with our expectation.

Revenue recognition

The risk

Refer to the Note 20 to the financial statements. There are significant accounting judgements involved including determining the stage of completion, the timing of revenue recognition and the calculation under the percentage of completion method made by management in applying the Group’s revenue recognition policy to construction contracts entered into by the Group. The nature of these judgements may result in them being susceptible to management override.

Contract revenue should include the amount agreed in the initial contract, plus revenue from alterations in the original contract work, plus claims and incentive payments that are expected to be collected and that can be measured reliably.

Our response

We performed a range of audit procedures which included obtaining a sample of contracts or letter of awards, reviewing for change orders or variation orders, reviewing estimated profit and costs to complete and enquiry of key personnel regarding adjustments for job costing and potential contract losses.

Our finding

As a result, we satisfied ourselves that revenue and cost recognition have been prepared in line with the policy and we found the estimates in line with our expectation.

There is no key audit matter in relation to the audit of the financial statements of the Company.

78 79

INDEPENDENT AUDITORS’ REPORT (CONT’D)INDEPENDENT AUDITORS’ REPORT (CONT’D)

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

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

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

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

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

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

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

Report on Other Legal and Regulatory Requirements

In accordance with the requirements of the Companies Act, 2016 in Malaysia, we report that the subsidiaries of which we have not acted as auditors, are disclosed in Note 5 to the financial statements.

Other Matters

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

GRANT THORNTON MALAYSIA FOO LEE MENG(NO. AF: 0737) (NO: 03069/07/2019(J))

CHARTERED ACCOUNTANTS CHARTERED ACCOUNTANT


Information Other than the Financial Statements and Auditors’ Report Thereon

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

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

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

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

Responsibilities of the Directors for the Financial Statements

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

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

Auditors’ Responsibilities for the Audit of the Financial Statements

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

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

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

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

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

80 81

Statements of PROFIT OR Loss and othercomprehensive incomeFor the Financial Year Ended 31 December 2018

Group CompanyNote 2018 2017 2018 2017

RM RM RM RM

Revenue 20 404,186,530 310,879,468 15,726,780 10,256,596 Cost of sales (346,379,493) (237,092,243) - -

Gross profit 57,807,037 73,787,225 15,726,780 10,256,596

Other income 5,905,367 4,028,404 - - Allowance for impaired losses no longer required 1,683,146 748,838 - - Distribution expenses (1,651,840) (1,367,254) - - Administration expenses (30,693,993) (28,545,414) (1,208,200) (863,235)Allowance for impairment losses (3,500,517) (2,975,287) - -

Operating profit 29,549,200 45,676,512 14,518,580 9,393,361

Regularisation plan expenses - (4,007,276) - (4,007,276)Acquisition-related expenses - (1,305,240) - (1,305,240)Provision for liquidated and ascertained damages (4,137,180) - - -Finance costs (7,977,373) (4,381,672) (1,039,337) (5,567)Finance income 1,624,919 1,170,323 1,082,350 483,752 Share-based payment expenses - (21,413,993) - - Share of loss of equity-accounted associate (460,578) (153,311) - -

Profit before tax 21 18,598,988 15,585,343 14,561,593 4,559,030 Tax (expense)/income 22 (3,337,209) (11,014,754) - 133

Profit after tax 15,261,779 4,570,589 14,561,593 4,559,163

Other comprehensive income, net of tax:

Items that will not be reclassified subsequently to profit or loss: Remeasurement of retirement benefit obligation - (418,161) - - Tax effect on items that will not be reclassified to profit or loss - 101,828 - -

Items that will be reclassified subsequently to profit or loss: Foreign currency translation for foreign operations Gain on fair value changes on available-for-sale

(924,748) 1,123,458 - -

financial assets - 249,801 - -

Total other comprehensive (loss)/income (924,748) 1,056,926 - -

Total comprehensive income for the financial year 14,337,031 5,627,515 14,561,593 4,559,163

Profit after tax attributable to:- Owners of the Company 16,029,532 3,059,384 14,561,593 4,559,163 Non-controlling interests (767,753) 1,511,205 - -

15,261,779 4,570,589 14,561,593 4,559,163

Total comprehensive income/(loss) attributable to:- Owners of the Company 15,154,759 4,037,566 14,561,593 4,559,163 Non-controlling interests (817,728) 1,589,949 - -

14,337,031 5,627,515 14,561,593 4,559,163

Earnings per share attributable to owners of the Company (sen):-

- Basic 23 3.39 0.88 - Diluted 23 - -

The accompanying notes form an integral part of the financial statements

Statements of financial positionAs at 31 December 2018

Group CompanyNote 2018 2017 2018 2017

RM RM RM RMASSETSNon-current assets Property, plant and equipment 4 58,694,380 46,684,452 - - Investment in subsidiaries 5 - - 291,660,000 291,660,000 Investment in an associate 6 3,190,606 4,134,217 - - Other investments 7 1,732,752 1,959,674 - - Deferred tax assets 8 9,649,049 3,855,901 - - Goodwill on consolidation 9 7,544,540 7,544,540 - -

Total non-current assets 80,811,327 64,178,784 291,660,000 291,660,000

Current assets Inventories 10 134,652,548 117,378,359 - - Trade and other receivables 11 253,358,202 313,797,470 35,081,054 7,595,426 Contract assets 12 151,002,125 93,516,733 - - Tax recoverable 8,567,995 3,714,498 93,779 10,872 Cash and bank balances, deposits and short-term placements

13 60,626,366 104,685,322 174,945 20,265,917

Total current assets 608,207,236 633,092,382 35,349,778 27,872,215

TOTAL ASSETS 689,018,563 697,271,166 327,009,778 319,532,215

EQUITY AND LIABILITIESEQUITY Equity attributable to owners of the Company: Share capital 14 299,484,409 299,484,409 299,484,409 299,484,409 Other reserves 15 (104,044,829) (101,873,394) - - Retained earnings 122,466,341 116,288,097 7,473,861 2,133

317,905,921 313,899,112 306,958,270 299,486,542 Non-controlling interests 28,721,449 29,628,436 - -

Total equity 346,627,370 343,527,548 306,958,270 299,486,542

LIABILITIESNon-current liabilities Borrowings 16 2,891,971 18,339,652 - 15,000,000 Deferred tax liabilities 8 142,647 211,982 - - Finance lease liabilities 17 1,918,757 987,659 - - Retirement benefits 18 2,689,084 5,830,084 - -

Total non-current liabilities 7,642,459 25,369,377 - 15,000,000

Current liabilities Trade and other payables 19 144,829,363 205,519,846 51,508 45,673 Contract liabilities 12 100,978,411 15,817,405 - - Borrowings 16 87,058,628 105,599,769 20,000,000 5,000,000 Finance lease liabilities 17 1,078,798 911,389 - - Tax payable 803,534 525,832 - -

Total current liabilities 334,748,734 328,374,241 20,051,508 5,045,673

Total liabilities 342,391,193 353,743,618 20,051,508 20,045,673

TOTAL EQUITY AND LIABILITIES 689,018,563 697,271,166 327,009,778 319,532,215


82 83

Statements of CHANGES IN EQUITYFor The Financial Year Ended 31 December 2018

Attributable to owners the Company

Non-distributable Distributable

NoteSharecapital

Sharepremium

Reserveupon

consolidationFair valuereserve

Foreigncurrency

translationreserve

Retainedearnings Total

Non-controllinginterests

Totalequity

RM RM RM RM RM RM RM RM RM

Group

68,377,306 5,409,923 - 1,125,605 505,264 118,110,239 193,528,337 - 193,528,337

At 1 January 2017

Transition to no par value regime 5,409,923 (5,409,923) - - - - - - -

Fair value changes of available-for-sale financial assets - - - 171,057 - - 171,057 78,744 249,801

Foreign currency translation for foreign operations - - - - 1,123,458 - 1,123,458 - 1,123,458

Remeasurement of retirement benefit obligation - - - - - (316,333) (316,333) - (316,333)

Profit after tax - - - - - 3,059,384 3,059,384 1,511,205 4,570,589

Total comprehensive income for the financial year

5,409,923 (5,409,923) - 171,057 1,123,458 2,743,051 4,037,566 1,589,949 5,627,515

Adjustment arising from regularisation plan (69,747,496) - (104,798,778) - - 161,384 (174,384,890) - (174,384,890)

Issue of ordinary shares

-Acquisition of subsidiaries 269,160,000 - - - - - 269,160,000 28,038,487 297,198,487

-Public issue 26,284,676 - - - - - 26,284,676 - 26,284,676

Dividends 24 - - - - - (4,726,577) (4,726,577) - (4,726,577)

Total transactions with owners 225,697,180 - (104,798,778) - - (4,565,193) 116,333,209 28,038,487 144,371,696

At 31 December 2017 as previously stated 299,484,409 - (104,798,778) 1,296,662 1,628,722 116,288,097 313,899,112 29,628,436 343,527,548

Adjustment on initial application of

MFRS 9,net of tax - - - (1,296,662) - (2,761,423) (4,058,085) (89,259) (4,147,344)

At 1 January 2018, restated 299,484,409 - (104,798,778) - 1,628,722 113,526,674 309,841,027 29,539,177 339,380,204

Foreign currency translation for foreign operations - - - - (874,773) - (874,773) (49,975) (924,748)

Profit after tax - - - - - 16,029,532 16,029,532 (767,753) 15,261,779

Total comprehensive income for the financial year - - - - (874,773) 16,029,532 15,154,759 (817,728) 14,337,031

Dividends 24 - - - - - (7,089,865) (7,089,865) - (7,089,865)

Total transactions with owners - - - - - (7,089,865) (7,089,865) - (7,089,865)

At 31 December 2018 299,484,409 - (104,798,778) - 753,949 122,466,341 317,905,921 28,721,449 346,627,370

84 85

Attributable to owners of the CompanyDistributable

Company NoteSharecapital

Retainedearnings

Totalequity

RM RM RM

At 1 January 2017 4,039,733 19,964,240 24,003,973

Issue of ordinary shares

- Acquisition of subsidiaries 269,160,000 - 269,160,000

- Public issue 26,284,676 - 26,284,676

Dividends 24 - (24,521,270) (24,521,270)

Total transactions with owners 295,444,676 (24,521,270) 270,923,406


- 4,559,163 4,559,163

At 31 December 2017 299,484,409 2,133 299,486,542

Dividends 24 - (7,089,865) (7,089,865)

Total transations with owners - (7,089,865) (7,089,865)


- 14,561,593 14,561,593

At 31 December 2018 299,484,409 7,473,861 306,958,270

Statements of CHANGES IN EQUITY (CONT’d)For The Financial Year Ended 31 December 2018

Group Company

2018RM

2017RM

2018RM

2017RM

OPERATING ACTIVITIES

Profit before tax 18,598,988 15,585,343 14,561,593 4,559,030

Adjustments for:-

Allowance for impairment losses on receivables 3,500,517 2,975,287 - -

Allowance for impairment losses on receivables

no longer required (1,683,146) (748,838) - -

Depreciation 7,234,571 4,058,472 - -

Dividend income (41,618) (63,125) (15,726,780) (10,256,596)

Interest expenses 7,977,373 4,381,672 1,039,337 5,567

Interest income (1,624,919) (1,170,323) (1,082,350) (483,752)

Net gain on disposal of property, plant and

equipment (132,152) (33,108) - -

Net loss on other investments 226,922 - - -

Net unrealised (gain)/loss on foreign exchange (353,398) 688,693 - -

Provision for liquidated and ascertained damages 4,137,180 - - -

Retirement benefits - 481,416 - -

Share-based payment expenses - 21,413,993 - -

Share of loss of equity-accounted associate 460,578 153,311 - -

Operating profit/(loss) before working capital changes

38,300,896 47,722,793 (1,208,200) (6,175,751)

Changes in working capital:-

Contract assets/(liabilities) 27,311,889 (40,985,745) - -

Inventories (17,277,466) (15,846,410) - -

Bills payable (38,501,291) 5,834,911 - -

Receivables 59,083,617 (38,865,366) (549,476) 3,279,786

Payables (67,153,673) 58,642,028 5,835 (2,358,941)

Retirement benefits (3,141,000) - - -

(1,377,028) 16,502,211 (1,751,841) (5,254,906)

Interest paid (6,662,918) (131,573) (1,039,337) (5,567)

Income tax paid, net of refund (13,742,780) (13,327,062) (82,907) (10,739)

Net cash (used in)/from operating activities (21,782,726) 3,043,576 (2,874,085) (5,271,212)

STATEMENTS OF CASH FLOWS For The Financial Year Ended 31 December 2018


86 87

Group Company

Note2018RM

2017RM

2018RM

2017RM

INVESTING ACTIVITIES Acquisition of subsidiaries, net of cash acquired 5(ii) - (19,304,506) - (22,500,000) Interest received 1,624,919 1,170,323 1,082,350 440,856 Dividends received 41,618 63,125 13,393,410 4,726,577 Purchase of property, plant and equipment A (17,099,395) (2,784,293) - - Proceeds from disposal of property, plant and equipment

202,947 153,871 - -

Withdrawn of fixed deposits - 5,360,663 - - Purchase of other investments - (20,832) - -

Net cash (used in)/from investing activities (15,229,911) (15,361,649) 14,475,760 (17,332,567)

FINANCING ACTIVITIES Loan to subsidiaries - - (25,190,000) - Advances from/(to) subsidiaries - - 587,218 (2,064,407) Advances to associate 304,017 (5,437,406) - - Advances to related parties 26,451 (276,353) - - Interest paid (1,314,455) (4,250,099) - - Dividends paid (7,089,865) (4,726,577) (7,089,865) (24,521,270) Drawdown of revolving credit 4,000,000 23,655,800 - 20,000,000 Repayment of term loan (428,242) (285,161) - - Proceeds from issuance of share capital pursant to private placement

- 26,284,676 - 26,284,676

Fixed deposit discharged/(pledged) as collateral

15,586,909 (510,795) - -

Repayment of finance lease liabilities (1,110,281) (624,903) - -

Net cash from/(used in) financing activities 9,974,534 33,829,182 (31,692,647) 19,698,999

CASH AND CASH EQUIVALENTS Net changes (27,038,103) 21,511,109 (20,090,972) (2,904,780) Effect of exchange rate fluctuations on bank balances

(2,374,655) 1,524,917 - -

Brought forward 67,830,234 44,794,208 20,265,917 23,170,697

Carried forward B 38,417,476 67,830,234 174,945 20,265,917

STATEMENTS OF CASH FLOWS (CONT’D)For The Financial Year Ended 31 December 2018

STATEMENTS OF CASH FLOWS (CONT’D)For The Financial Year Ended 31 December 2018

NOTES TO THE STATEMENTS OF CASH FLOWS

Group Company

2018RM

2017RM

2018RM

2017RM

A. PURCHASE OF PROPERTY, PLANT AND EQUIPMENT

Total purchase of property, plant and equipment 19,308,183 2,784,293 - -

Less: Acquisition by means of finance lease liabilities

(2,208,788) - - -

Total cash paid 17,099,395 2,784,293 - -

B. CASH AND CASH EQUIVLENTS

Cash and cash equivalents included in the statements of cash flows comprise of the following amounts:-

Group Company

2018RM

2017RM

2018RM

2017RM

Deposits with financial institutions 17,998,931 31,923,321 - - Deposits with fund management corporations 464,923 33,314,364 90,143 20,025,134 Cash and bank balances 42,162,512 39,447,637 84,802 240,783

60,626,366 104,685,322 174,945 20,265,917 Less: Deposits pledged (17,999,048) (33,585,957) - - Less: Bank overdraft (4,209,842) (3,269,131) - -

Total cash and cash equivalents 38,417,476 67,830,234 174,945 20,265,917


88 89

1. GENERAL INFORMATION

The Company is a public limited liability company, incorporated and domiciled in Malaysia and listed on the Main Market of the Bursa Malaysia Securities Berhad. The registered office of the Company is located at 149A, Jalan Aminuddin Baki, Taman Tun Dr Ismail, 60000 Kuala Lumpur and the principal place of business of the Company is located at 15th Floor, East Wing, Rohas PureCircle, 9, Jalan P. Ramlee, 50250 Kuala Lumpur, Malaysia.

The principal activity of the Company is investment holding whilst those of its subsidiaries are disclosed in Note 5 to the financial statements.

There have been no significant changes in the nature of the activities of the Company and its subsidiaries during the financial year.

The financial statements were authorised for issue by the Board of Directors in accordance with a resolution of the Directors on 17 April 2019.

2. BASIS OF PREPARATION

2.1 Statement of Compliance

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

2.2 Basis of Measurement

The financial statements of the Group and of the Company are prepared under historical cost convention, unless otherwise indicated in the summary of significant accounting policies.

Historical cost is generally based on the fair value of the consideration given in exchange for goods and services.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date and its measurement assumes that the transaction to sell the asset or transfer the liability takes place either in the principal market for the asset or liability, or in the absence of a principal market, in the most advantageous market for the asset or liability. The principal or the most advantageous market must be accessible to by the Group.

The fair value of an asset or a liability is measured on the assumptions that market participants would act in their economic best interest when pricing the asset or liability. A fair value measurement of a non-financial asset takes into account a market participant’s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.

The Group and the Company use valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.

All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy, described as follows, based on the lowest level input that is significant to their fair value measurement as a whole:

(a) Level 1 – Quoted (unadjusted) market prices in active markets for identical assets or liabilities.

(b) Level 2 –Valuation techniques for which the lowest level input that is significant to their fair

value measurement is directly or indirectly observable.

(c) Level 3 –Valuation techniques for which the lowest level input that is significant to their fair

value measurement is unobservable.

NOTES TO THE FINANCIAL STATEMENTS31 December 2018

NOTES TO THE FINANCIAL STATEMENTS (cont’d)31 December 2018

2. BASIS OF PREPARATION (CONT’D)

2.2 Basis of Measurement (cont’d) For assets and liabilities that are recognised in the financial statements on a recurring basis, the Group and

the Company determine whether transfers have occurred between levels in the hierarchy by re-assessing categorisation (based on the lowest level input that is significant to their fair value measurement as a whole) at the end of each reporting period.

For the purpose of fair value disclosures, the Group and the Company have determined classes of assets and liabilities on the basis of the nature, characteristics and risks of the asset or liability and the level of fair value hierarchy as explained above.

2.3 Functional and Presentation Currency

The financial statements are presented in Ringgit Malaysia (“RM”) which is Company’s functional currency and all values are rounded to the nearest RM except when otherwise stated.

2.4 Adoption of New Standards/Amendments/Improvements to MFRSs

The Group and the Company have consistently applied the accounting policies set out in Note 3 to all years presented in these financial statements.

At the beginning of current financial year, the Group and the Company adopted new standards/amendments/improvements to MFRSs which are mandatory for the financial periods beginning on or after 1 January 2018.

Initial application of new standards/amendments/improvements to MFRSs did not have material impact to the financial statements, except for:-

MFRS 9 Financial Instruments

MFRS 9 Financial Instruments replaces MFRS 139 Financial Instruments: Recognition and Measurement for annual periods beginning on or after 1 January 2018, bringing together all three aspects of the accounting for financial instruments: classification and measurement; impairment; and hedge accounting.

The Group and the Company applied MFRS 9 prospectively, with an initial date of 1 January 2018. The Group and the Company have not restated the comparative information, which continues to be reported under MFRS 139. Differences arising from the adoption of MFRS 9 have been recognised directly in retained earnings and other components of equity.

The effect of adopting MFRS 9 is as follows, whereas there is no impact to the Company:-

Impact on the statements of financial position

GroupFair value

through profit orloss

Impairmentslosses of

receivables andcontract assets

RM RM

Fair value reserve (1,296,662) -Retained earnings brought forward 1,296,662 (4,058,085)

Non-controlling interests - (89,259)

Total - (4,147,344)

90 91


2.4 Adoption of New Standards/Amendments/Improvements to MFRSs (cont’d)

MFRS 9 Financial Instruments (cont’d)

The nature of these adjustments are described below:-

Classification and measurement

Under MFRS 9, debt instruments are subsequently measured at fair value through profit or loss, amortised cost, or fair value through other comprehensive income (“OCI”). The classification is based on two criteria: the Group’s and the Company’s business model for managing the assets; and whether the instruments’ contractual cash flows represent ‘solely payments of principal and interest’ on the principal amount outstanding.

The assessment of the Group’s and the Company’s business model was made as of the date of initial application, 1 January 2018. The assessment of whether contractual cash flows on debt instruments are solely comprised of principal and interest was made based on the facts and circumstances as at the initial recognition of the assets.

The classification and measurement requirements of MFRS 9 did not have a significant impact to the Group and the Company except for the following is the changes in the classification of the Group’s and of the Company’s financial assets:

• Trade receivables, other receivables and cash and bank balances are classified as loans andreceivables as at 31 December 2017 which are held to collect contractual cash flows and give rise to cash flows representing solely payments of principal and interest. These are classified and measured as debt instruments at amortised cost beginning 1 January 2018.

• Listedequityinvestmentsclassifiedasavailable-for-sales(“AFS”)financialassetsasat31December2017 are classified and measured as financial assets at fair value through profit or loss (“FVTPL”) beginning 1 January 2018 as these investments are not held for strategic purposes.

As a result of the change in classification of the Group’s listed equity investments, the fair value adjustment reserve of RM1,296,662 of the Group related to those investments that were previously presented under accumulated OCI, was classified to retained earnings as at 1 January 2018.

The Group and the Company have not designated any financial liabilities as at fair value through profit or loss. There are no changes in classification and measurement for the Group’s and the Company’s financial liabilities.

In summary, upon adoption of MFRS 9, the Group and the Company had the following required or elected reclassification as at 1 January 2018.

Measurement category Carrying amount

GroupUnder

MFRS 139Under

MFRS 9Under

MFRS 139Under

MFRS 9 DifferencesRM RM RM

Trade and other receivables*

Loans and receivables

Amortised cost 308,310,157 304,162,813 4,147,344

Cash and cash equivalents


Amortised cost

104,685,322 104,685,322 -

Other investment Available-for-sale investment FVTPL 1,959,674 1,959,674 -

414,955,153 410,807,809 4,147,344



Initial application of new standards/amendments/improvements to MFRSs did not have material impact to the financial statements, except for (cont’d) :-

MFRS 9 Financial Instruments (cont’d)

Classification and measurement (cont’d)

Measurement category Carrying amount

CompanyUnder

MFRS 139Under

MFRS 9Under

MFRS 139Under

MFRS 9 DifferencesRM RM RM

Trade and other receivables*


Amortised cost 7,595,426 7,595,426 -

Cash and cash equivalents


Amortised cost 20,265,917 20,265,917 -

27,861,343 27,861,343 -

* The change in carrying amount is a result of additional impairment allowance. See the discussion on impairment below.

Impairment

The adoption of MFRS 9 has fundamentally changed the Group’s and the Company’s accounting for impairment losses for financial assets by replacing MFRS 139’s incurred loss approach with a forward-looking expected credit loss (“ECL”) approach. MFRS 9 requires the Group and the Company to recognise an allowance for ECLs for all debt instruments not held at fair value through profit or loss and contract assets.

Upon adoption of MFRS 9, the Group recognised additional impairment on the Group’s receivables of RM4,147,344 respectively which resulted in a decrease in retained earnings of RM4,147,344 as at 1 January 2018 whereas there is no impact to the Company as no allowance for ECL is required.

Below is the reconciliation of the ending impairment allowances in accordance with MFRS 139 to the opening loss allowances determined in accordance with MFRS 9:-

Allowance for impairment

under MFRS 139 as at 31 December

2017 Remeasurement

ECL under MFRS 9 as at 1 January

2018

Group RM RM RM

Loans and receivables under MFRS 139/Financial assets at amortised cost under MFRS 9 and contract assets 5,361,133 4,147,344 9,508,477



92 93



Initial application of new standards/amendments/improvements to MFRSs did not have material impact to the financial statements, except for (cont’d) :-

MFRS 15 Revenue from Contract with Customers

MFRS 15 supercedes MFRS 111 Construction Contracts, MFRS 118 Revenue and related Interpretations and it applies, with limited exceptions, to all revenue arising from contracts with customers. MFRS 15 establishes a five-step model to account for revenue arising from contracts with customers and requires that revenue be recognized at an amount that reflects the consideration to which an entity expects to be entitled in exchange for transferring goods or services to a customer.

MFRS 15 requires entities to exercise judgement, taking into consideration all of the relevant facts and circumstances when applying each step of the model to contracts with their customers. The standard also specifics the accounting for the incremental costs of obtaining a contact and the costs directly related to fulfilling a contract. In addition, the standard requires extensive disclosures.

In the adoption of MFRS 15, the following practical expedients as permitted by the standard have been adopted:-

(a) for contracts that were modified before the beginning of the earliest period presented, the Group and

the Company do not retrospectively restate the contract for those contract modifications. Instead, the Group or the Company reflect the aggregate effect all of the modifications that occur before the beginning of the earliest period presented when:-

(i) identifying the satisfied and unsatisfied performance obligations;(ii) determining the transaction price; and(iii) allocating the transaction price to the satisfied and unsatisfied performance obligations.

(b) for comparatives, the Group and the Company do not disclose the amount of consideration allocated to the remaining performance obligations and an explanation of when the Group and the Company expect to recognise revenue.

The following is the change from the adoption of MFRS 15:

Type of revenue Previous year’s revenue recognition Current year’s revenue recognition

Construction contracts

If the outcome of a construction contract could be estimated reliably, then contract revenue was recognised in proportion to the stage of completion of the contract. The stage of completion was assessed with reference to work performed. Otherwise, contract revenue was recognised only to the extent of contract costs incurred that were likely to be recoverable. Contract expenses were recognised as they were incurred. An expected loss on a contract was recognised immediately in profit or loss. Advances received were included in other payables.

Under MFRS 15, revenue is recognised over time by reference to the cost incurred over the estimated cost. The related costs are recognised in profit or loss when they are incurred. Advances received are now included in contract liabilities.


2.5 Standards Issued But Not Yet Effective

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

MFRS, Amendments to MFRSs and IC Interpretation effective 1 January 2019:-

MFRS 16 Leases

Amendments to MFRS 9 Financial Instruments: Prepayment Features with Negative Compensation*#

Amendments to MFRS 119 Employee Benefits: Plan Amendment, Curtailment or Settlement*#

Amendments to MFRS 128 Investments in Associates and Joint Ventures: Long-term Interests in Associates and Joint Ventures*

IC Interpretation 23 Uncertainty over Income Tax Treatments

Annual Improvements to MFRS Standards 2015-2017 Cycle

Amendments to MFRSs and IC Interpretation effective 1 January 2020:- Amendments to MFRS 3 Business Combinations Amendments to MFRS 101 Presentation of Financial Statements Amendments to MFRS 108 Accounting Policies, Changes in Accounting Estimates and Errors

Amendments to Reference to Conceptual Framework on MFRS Standards (MFRS 2*#, 3*, 6*#, 14*#, 101, 108, 134*#, 137, 138*# and IC Interpretation 12*#, 19*#, 20*#, 22* and 132*#)

MFRS effective 1 January 2021:-

MFRS 17 Insurance Contracts*#

Amendments to MFRSs - effective date deferred indefinitely:-

Amendments to MFRS 10 and MFRS 128

Consolidated Financial Statements and Investments in Associate and Joint Ventures – Sale or Contribution of Assets between Joint Venture*

* Not applicable to the Company.# Not applicable to the Group.



94 95


2.5 Standards Issued But Not Yet Effective (cont’d)

MFRS 16 Leases

MFRS 16 was issued in January 2016 and it replaces MFRS 117 Leases, IC Interpretation 4 Determining whether an Arrangement contains a Lease, SIC-15 Operating Leases-Incentives and SIC-27 Evaluating the Substance of Transactions Involving the Legal Form of a Lease. MFRS 16 sets out the principles for the recognition, measurement, presentation and disclosure of leases and requires lessees to account for all leases under a single on-balance sheet model similar to the accounting for finance leases under MFRS 17. The standard includes two recognition exemptions for lessees – leases of ‘low-value’ assets (e.g. personal computers) and short-term leases (i.e. leases with a lease term of 12 months or less). At the commencement date of a lease, a lessee will recognise a liability to make lease payments (i.e. the lease liability) and an asset representing the right to use the underlying asset during the lease term (i.e. the right-of-use asset). Lessees will be required to separately recognise the interest expense on the lease liability and the depreciation expense on the right-of-use asset.

Lessees will be also required to remeasure the lease liability upon the occurrence of certain events (e.g., a change in the lease term, a change in future lease payments resulting from a change in an index or rate used to determine those payments). The lessee will generally recognise the amount of the remeasurement of the lease liability as an adjustment to the right-of-use asset.

Lessor accounting under MFRS 16 is substantially unchanged from today’s accounting under MRFS 117. Lessors will continue to classify all leases using the same classification principle as in MFRS 117 and distinguish between two types of leases: operating and finance leases.

MFRS 16, which is effective for annual periods beginning on or after 1 January 2019, requires lessees and lessors to make more extensive disclosures than under MFRS 117.

Transition to MFRS 16

The Group and the Company plan to adopt MFRS 16 prospectively, with an initial date of 1 January 2019. The Group and the Company will therefore not apply the standard to contracts that were not previously identified as containing a lease applying MFRS 117 and IC Interpretation 4.

During 2018, the Group and the Company have performed a preliminary impact assessment of MFRS 16.

The Group and the Company will elect to use the exemptions proposed by the standard on lease contracts for which the lease terms ends within 12 months as of the date of initial application.

In summary, the impact of MFRS 16 adoption is expected to be immaterial to the Group.

2.6 Significant Accounting Estimates and Judgements

Estimates, assumptions concerning the future and judgements are made in the preparation of the financial statements. They affect the application of the Group’s and the Company’s accounting policies and reported amounts of assets, liabilities, income and expenses, and disclosures made.

Estimates and underlying assumptions are assessed on an on-going basis and are based on experience and relevant factors, including expectations of future events that are believed to be reasonable under the circumstances. The actual results may differ from the judgements, estimates and assumptions made by management, and will seldom equal the estimated results.


2.6 Significant Accounting Estimates and Judgements (cont’d)

2.6.1 Key Sources of Estimation Uncertainty

Information about significant estimates and assumptions that have the most significant effect on recognition and measurement of assets, liabilities, income and expenses are discussed below.

Useful Lives of Depreciable Assets

The management assesses that the useful lives represent the expected utility of the assets to the Group. The management estimates the useful lives of the property, plant and equipment to be within 3 to 98 years and reviews the useful lives of depreciable assets at each reporting date. The carrying amount is analysed in Note 4 to the financial statements.

Actual results, however, may vary due to change in the expected level of usage and technological develop-ments, which may result in an adjustment to the Group’s assets.

Construction Contracts

The Group recognises contract revenues and contracts costs by using the stage of completion method. The stage of completion is measured by reference to the proportion of the expenses incurred to date to the estimated total contract costs.

The Group’s management assesses the profitability of on-going contracts and the order backlog at least monthly. For more complex contracts in particular, costs to complete and contract profitability are subject to significant estimation uncertainty.

The carrying amount of the Group’s contracts at the end of the reporting date is disclosed in Note 12 to the financial statements.

Retirement Benefits

The cost of defined benefit pension plans and the present value of the pension obligation are determined using actuarial valuations. An actuarial valuation involves making various assumptions which may differ from actual developments in the future.

These include the determination of the discount rate and the staff turnover rate. Due to the complexity of the valuation, the underlying assumptions and its long-term nature, a defined benefit obligation is highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date.

The discount rate is based on 5.2%.

Further details about the assumptions used are given in Note 18 to the financial statements.

Impairment of Non – Financial Assets

An impairment loss is recognised for the amount by which the asset’s or cash-generating unit’s carrying amount exceeds its recoverable amount. To determine the recoverable amount, management estimates expected future cash flows from each cash-generating unit and determines a suitable interest rate in order to calculate the present value of those cash flows.

In the process of measuring expected future cash flows, management makes assumptions about future operating results. The actual results may vary, and may cause significant adjustments to the Group’s and the Company’s assets within the next financial year.

In most cases, determining the applicable discount rate involves estimating the appropriate adjustment to market risk and the appropriate adjustment to asset-specific risk factors.

Further details of the carrying values, key assumptions applied in the impairment assessment of goodwill are disclosed in Note 9 to the financial statements.



96 97



2.6.1 Key Sources of Estimation Uncertainty (cont’d)

Provision for Expected Credit Losses of Receivables and Contract Assets

The Group and the Company use a provision matrix to calculate ECLs for receivables and contract assets. The provision rates are based on the repayment pattern of the customers, customers type and coverage by letters of credit.

The provision matrix is initially based on the Group’s and the Company’s historical observed default rates. The Group and the Company will calibrate the matrix to adjust the historical credit loss experience with forward-looking information. At every reporting date, the historical observed default rates are updated and changes in the forward-looking estimates are analysed.

The assessment of the correlation between historical observed default rates, forecast economic conditions and ECLs is a significant estimate. The amount of ECLs is sensitive to changes in circumstances and of forecast economic conditions. The Group’s and the Company’s historical credit loss experience and forecast of economic conditions may also not be representative of customer’s actual default in the future.

Deferred Tax Assets

The assessment of the probability of future taxable income in which deferred tax assets can be utilised is based on the Group’s latest approved budget or forecast, which is adjusted for significant non-taxable income and expenses and specific limits to the use of any unused tax loss or credit. The tax rules in which the Group operates are also carefully taken into consideration.

If a positive forecast of taxable income indicates the probable use of a deferred tax assets, especially when it can be utilised without a time limit, that deferred tax assets is usually recognised in full. The recognition of deferred tax assets that are subject to certain legal or economic limits or uncertainties is assessed individually by management based on the specific facts and circumstances. The carrying value of the Group’s deferred tax assets at the end of the reporting date is disclosed in Note 8 to the financial statements.

Income Tax

Significant judgement is required in determining the capital allowance and deductibility of certain expenses during the estimation of 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 and the Company recognised tax liabilities based on estimates of whether additional taxes will be due. Where the final 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.

Inventories

The Group writes down its obsolete or slow moving inventories based on assessment of their estimated net selling price. Inventories are written down when events or changes in circumstances indicate that the carrying amounts may not be recoverable. The management specifically analyses sales trend and current economic trends when making a judgement to evaluate the adequacy of the write down for obsolete or slow moving inventories. Where expectation differs from the original estimates, the differences will impact the carrying amount of inventories.

The carrying amount of the Group’s inventories at the reporting date is disclosed in Note 10 to the financial statements.



2.6.1 Key Sources of Estimation Uncertainty (cont’d)

Revenue from contracts with customers

Revenue is recognised when or as the control of the asset is transferred to our customers and, depending on the terms of the contract and the applicable laws governing the contract, control of the asset may transfer over time or at a point in time. If control of the asset transfers over time, revenue is recognised over the period of the contract by reference to the progress, based on the physical proportion of contract work-to-date certified by the Group and the customers.

Significant judgment is required in determining the progress based on the certified work-to-date corroborated by the level of completion of the construction and installation based on actual costs incurred to-date over the estimated total construction and installation costs. The total estimated costs are based on approved budgets, which require assessments and judgments to be made on changes in, for example, work scope, changes in costs and costs to completion. In making these judgments, management relies on past experience and the work of specialists. A change in the estimates will directly affect the revenue to be recognised.

Key Sources of Estimation Uncertainty applied until 31 December 2017:

Impairment of loans and receivables The Group and the Company assess at each reporting date whether there is any objective evidence that a financial asset is impaired. To determine whether there is objective evidence of impairment, the Group and the Company consider factors such as the probability of insolvency or significant financial difficulties of the debtor and default or significant delay in payments.

Where there is objective evidence of impairment, the amount and timing of future cash flows are estimated based on historical loss experience for assets with similar credit risk characteristics.

2.6.2 Significant Management Judgement

The following are significant management judgements in applying the accounting policies of the Group and of the Company that have the most significant effect on the financial statements.

Leases

In applying the classification of leases in MFRS 117, management considers some of its leases of leasehold land as finance lease arrangements. The lease transaction is not always conclusive, and management uses judgement in determining whether the lease is a finance lease arrangement that transfers substantially all the risks and rewards incidental to ownership, whether the lease term is for the major part of the economic life of the asset even if title is not transferred and others in accordance with MFRS 117 Leases.



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3. SIGNIFICANT ACCOUNTING POLICIES

The Group and the Company apply the significant accounting policies, as summarised below, consistently throughout all periods presented in the financial statements, unless otherwise stated.

3.1 Consolidation

3.1.1 Subsidiaries

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

Investment in subsidiaries is stated at cost less any impairment losses in the Company’s financial position, unless the investment is held for sale or distribution.

Upon the disposal of investment in a subsidiary, the difference between the net disposal proceeds and its carrying amounts is included in profit or loss.

3.1.2 Basis of Consolidation

The Group’s financial statements consolidate the audited financial statements of the Company and all of its subsidiaries, which have been prepared in accordance with the Group’s accounting policies. Amounts reported in the financial statements of subsidiaries have been adjusted where necessary to ensure consistency with the accounting policies adopted by the Group. The financial statements of the Company and its subsidiaries are all drawn up to the same reporting period.

All intragroup assets and liabilities, equity, income, expenses and cash flows relating to transactions between entities of the Group (profits or losses resulting from intragroup transactions that are recognised in asset, such as inventory and property, plant and equipment) are eliminated in full in preparing the consolidated financial statements. Intragroup losses may indicate an impairment that requires recognition in the consolidated financial statements. Temporary differences arising from the elimination of profits and losses resulting from intragroup transactions will be treated in accordance to Note 3.15 of the financial statements.

Subsidiaries are consolidated from the date on which control is transferred to the Group and are no longer consolidated from the date that control ceases.

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

3.1.3 Business Combination and Goodwill

Business combinations are accounted for using the acquisition method. The cost of an acquisition is measured as the aggregate of the consideration transferred, measured at acquisition date fair value and the amount of any non-controlling interest in the acquiree. For each business combination, the Group elects whether it measures the non-controlling interest in the acquiree either at fair value or at the proportionate share of the acquiree’s identifiable net assets. Acquisition costs incurred are expensed and included in administrative expenses.

When the Group acquires a business, it assesses the financial assets and liabilities assumed for appropriate classification and designation in accordance with the contractual terms, economic circumstances and pertinent conditions as at the acquisition date.

3. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

3.1 Consolidation (cont’d)

3.1.3 Business Combination and Goodwill (cont’d)

The Group elects for each individual business combination, whether non-controlling interest in the acquiree, if any, is recognised on the acquisition date at fair value, or at the non-controlling interest’s proportionate share of the acquiree’s net identifiable assets.

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

After initial recognition, goodwill is measured at cost less any accumulated impairment losses. For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to each of the Group’s cash-generating units that are expected to benefit from the combination, irrespective of whether other assets or liabilities of the acquiree are assigned to those units.

Where goodwill forms part of a cash-generating unit and part of the operation within that unit is disposed of, the goodwill associated with the operation disposed of is included in the carrying amount of the operation when determining the gain or loss on disposal of the operation. Goodwill disposed of in this circumstance is measured based on the relative values of the operation disposed of and the portion of the cash-generating unit retained.

3.1.4 Reserve Upon Consolidation

The Company is a non-operating public company in 2017.

On 8 March 2017, the Company acquired 68,377,306 ordinary shares representing the entire issued and paid-up shares capital of Rohas-Euco Industries Berhad (“REI”) and its subsidiaries (“REI Group”) for a total purchase consideration of RM200,000,000 which were satisfied by the issuance of 317,460,318 new ordinary shares in the Company, at an issue of price of RM0.63 per share.

Upon completion of the acquisition of REI Group, the Company became the legal holding company of REI Group whereas the former shareholders of REI Group to whom the 317,460,318 shares were allotted became the majority shareholders of the Company, controlling about 100% of the issued and paid-up share capital of the Company. Further, the Company’s key executive management are those of REI Group. In accordance with MFRS 3 Business Combinations, the substance of such business combination between the Company and REI Group constituted a reverse acquisition whereby the acquirer and acquiree of the transaction for accounting purposes should be REI (that is the legal subsidiary, accounting parent) and the Company (that is the legal holding company, the accounting subsidiary) respectively.

However, REI obtained effective control over the Company that is not a business combination and therefore is outside of the scope of MFRS 3. Although this is not a business combination under MFRS 3, the accounting result is similar to reverse acquisition accounting.

3.1.5 Loss of Control

Upon the loss of control of a subsidiary, the Group derecognises the assets and liabilities of the subsidiary, any non-controlling interests and the other components of the equity related to the subsidiary. Any surplus or deficit arising on the loss of control is recognised in profit or loss.

If the Group retains any interest in the previous subsidiary, then such interest is measured at fair value at the date that control is lost.



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3.1.6 Non-controlling Interests

Non-controlling interests at the end of the reporting period, being the equity in a subsidiary not attributable directly or indirectly to the equity holders of the Company, are presented in the consolidated statements of financial position and statements of changes in equity within equity, separately from equity attributable to the owners of the Company. Non-controlling interests in the results of the Group is presented in the consolidated statements of profit or loss and other comprehensive income as an allocation of the profit or loss and the comprehensive income for the financial year between non-controlling interests and the owners of the Company.

Losses applicable to the non-controlling interests in a subsidiary is allocated to the non-controlling interests even if that results in a deficit balance.

3.1.7 Changes in Ownership Interests in Subsidiaries without Change of Control

All changes in the parent’s ownership interest in a subsidiary that do not result in a loss of control are accounted for equity transactions. Any difference between the amount by which the non-controlling interest is adjusted and the fair value of consideration paid or received is recognised directly in equity of the Group.

3.1.8 Associates

Associates are entities in which the Group has significant influence, but no control, over their financial and operating policies.

The Group’s investments in associates are accounted for using the equity method. Under the equity method, investment in an associate is carried in the statements of financial position at cost plus post acquisition changes in the Group’s share of net assets of the associate since the acquisition date. Goodwill relating to the associate is included in the carrying amount of the investment and is neither amortised nor individually tested for impairment.

The share of the result of an associate is reflected in profit or loss. This is the profit attributable to equity holders of the associate and therefore is the profit after tax and non-controlling interests in the subsidiaries of the associate. When the Group’s share of losses exceeds its interest in an associate, the carrying amount of that interest including any long-term investment is reduced to zero, and the recognition of further losses is discontinued except to the extent that the Group has an obligation or has made payments on behalf of the associate.

Where there has been a change recognised directly in the equity of an associate, the Group recognises its share of any changes and discloses this, when applicable, in the statements of changes in equity. Unrealised gains and losses resulting from transactions between the Group and the associate are eliminated to the extent of the interest in the associate.

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

After application of the equity method, the Group determines whether it is necessary to recognise an additional impairment loss on the Group’s investments in its associates. The Group determines at each end of the reporting period whether there is any objective evidence that the investments in the associates are impaired. If this is the case, the Group calculates the amount of impairment as the difference between the recoverable amount of the associates and their carrying value, then recognise the amount in the share of profit of an equity-accounted associate in profit or loss.

Upon loss of significant influence over an associate, the Group measures and recognises any retaining investment at its fair value. Any difference between the carrying amount of the associate upon loss of significant influence and the fair value of the retaining investment and proceeds from disposal is recognised in profit or loss.



3.1.8 Associates (cont’d)

In associates are stated at cost less impairment losses. On disposal of such investments, the difference between net disposal proceeds and their carrying amounts is included in profit or loss.

3.2 Foreign Currency Translation

The Group’s consolidated financial statements are presented in RM, which is also the Company’s functional currency.

3.2.1 Foreign Currency Transactions and Balances

Transactions in foreign currencies are initially recorded at the functional currency rates prevailing at the date of the transaction.

Monetary assets and liabilities denominated in foreign currencies are retranslated at the functional currency spot rate of exchange ruling at the reporting date.

All differences are taken to the profit or loss.

Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates as at the dates of the initial transactions. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value is determined. The gain or loss arising in translation of non-monetary items is recognised in line with the gain or loss of the item that gave rise to the translation difference (translation differences on items whose gain or loss is recognised in other comprehensive income or profit or loss is also recognised in other comprehensive income or profit or loss respectively).

3.2.2 Foreign Operations

The assets and liabilities of operations denominated in functional currencies other than RM, including goodwill and fair value adjustments arising on acquisition, are translated to RM at exchange rates at the end of the reporting period, except for goodwill and fair value adjustments arising from business combination before 1 January 2011 (the date when the Group and the Company first adopted MFRSs) which are treated as assets and liabilities of the Group and the Company. The income and expenses of foreign operations are translated to RM at exchange rates at the date of the transactions.

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

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

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



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3.3 Property, Plant and Equipment

Property, plant and equipment are initially stated at cost. The cost of an item of property, plant and equipment is recognised as an asset if, and only if, it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. All property, plant and equipment are subsequently stated at cost less accumulated depreciation and less any impairment losses.

Cost includes expenditures that are directly attributable to the acquisition of the assets and any other costs directly attributable to bring the asset to working condition for its intended use, cost of replacing component parts of the assets, and the present value of the expected cost for the decommissioning of the assets after their use. The cost of self-constructed assets also includes the cost of materials and direct labour. For qualifying assets, borrowing costs are capitalised in accordance with the accounting policy on borrowing costs. All other repair and maintenance costs are recognised in profit or loss as incurred.

Depreciation is recognised on the straight line method in order to write off the cost of each asset over its estimated useful lives. Freehold land with an infinite life is not depreciated. Other property, plant and equipment are depreciated based on the estimated useful lives of the assets as follows:-

Land on long term lease Over period of the lease

Freehold land and buildings 2 - 3%

Long term leasehold land, factory and building 57 - 98 years

Buildings 2%

Plant and machinery 10 - 20%

Furniture, fittings and office equipment 20 - 33%

Motor vehicles 20%

Capital work-in-progress consists of buildings under construction/ installation for intended use as production facilities. The amount is stated at cost and includes capitalisation of interest incurred on borrowings related to property, plant and equipment under construction/installation until the property, plant and equipment are ready for their intended use. Assets under construction are not depreciated until they are completed and ready for their intended use.

The residual values, useful life and depreciation method are reviewed for impairment when events or changes in circumstances indicate that the carrying amount may not be recoverable, or at least annually to ensure that the amount, method and period of depreciation are consistent with previous estimates and expected pattern of consumption of future economic benefits embodied in the items of property, plant and equipment.

Property, plant and equipment are derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Gains or losses arising on the disposal of property, plant and equipment are determined as the difference between the disposal proceeds and the carrying amount of the assets and are recognised in profit or loss in the financial year in which the asset is derecognised.

3.4 Leases

The determination of whether an arrangement is, or contains, a lease is based on the substance of the arrangement at the inception of the lease. The arrangement is, or contains, a lease if fulfilment of the arrangement is dependent on the use of a specific asset (or asset) or the arrangement conveys a right to use the asset, even if that right is not explicitly specified in an arrangement.

Group as a lessee

A lease is classified at the inception date as a finance lease or an operating lease. A lease that transfers substantially all the risks and rewards incidental to ownership to the Group and the Company is classified as a finance lease.


3.4 Leases (cont’d)

Group as a lessee (cont’d)

Finance leases are capitalised at the commencement of the lease at the inception date fair value or, if lower, at the present value of the minimum lease payments. Lease payments are apportioned between finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are recognised in finance costs in the statement of profit or loss.

A leased assets is depreciated over the useful life of the asset. However, if there is no reasonable certainty that the Group and the Company will obtain ownership by the end of the lease term, the asset is depreciated over the shorter of the estimated useful life of the asset and the lease term.

An operating lease is a lease other than a finance lease. Operating lease payments are recognised as an operating expense in the statement of profit or loss on a straight-line basis over the lease term.

Group as a lessor

Leases in which the Group and the Company do not transfer substantially all the risks and rewards of ownership of an asset are classified as operating leases. Rental income arising is accounted for on a straight-line basis over the lease terms and is included in revenue in the statement of profit or loss due to its operating nature. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised over the lease term on the same basis as rental income. Contingent rents are recognised as revenue in the period in which they are earned.

3.4.1 Finance Leases

Management applies judgement in considering the substance of a lease agreement and whether it transfers substantially all the risks and rewards incidental to ownership of the leased asset. Key factors considered include the length of the lease term in relation to the economic life of the asset, the present value of the minimum lease payments in relation to the asset’s fair value, and whether the Group obtains ownership of the asset at the end of the lease term.

3.4.2 Operating Leases

All other leases are treated as operating leases. Where the Group is a lessee, payments on operating lease agreements are recognised as an expense on a straight-line basis over the lease term. Associated costs, such as maintenance and insurance are expensed as incurred.

3.5 Financial Instruments 3.5.1 Initial recognition and measurement

Financial assets and financial liabilities are recognised when the Group or the Company becomes a party to the contractual provisions of the financial instrument.

Financial assets are derecognised when the contractual rights to the cash flows from the financial asset expire, or when the financial asset and substantially all the risks and rewards are transferred. A financial liability is derecognised when it is extinguished, discharged, cancelled or expired.



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3.5 Financial Instruments (cont’d)

3.5.2 Classification and subsequent measurement of financial assets

Accounting policies applied from 1 January 2018:-

Except for those trade receivables that do not contain a significant financing component and are measured at the transaction price in accordance with MFRS 15, all financial assets are initially measured at fair value adjusted for transaction costs (where applicable).

Financial assets, other than those designated and effective as hedging instruments, are classified into the following categories:

(a) amortised cost;(b) fair value through profit or loss (“FVTPL”); or(c) fair value through other comprehensive income (“FVOCI”).

The classification is determined by both:

(a) the entity’s business model for managing the financial asset; and(b) the contractual cash flow characteristics of the financial asset.

All income and expenses relating to financial assets that are recognised in profit or loss are presented within finance costs, finance income or other financial items, except for impairment of trade receivables which is presented within other expenses. In the period presented, the Group and the Company do not have any financial assets categoried as FVOCI.

Financial assets at amortised cost

Financial assets are measured at amortised cost if the assets meet the following conditions (and are not designated as FVTPL):

(i) they are held within a business model whose objective is to hold the financial assets and collect its contractual cash flows; and

(ii) the contractual terms of the financial assets give rise to cash flows that are solely payments of principal and interest on the principal amount outstanding.

After initial recognition, these are measured at amortised cost using the effective interest method. Discounting is omitted where the effect of discounting is immaterial. The Group’s and the Company’s cash and cash equivalents, trade and most of the other receivables fall into this category of financial instruments.

Financial assets at fair value through profit or loss (FVTPL)

Financial assets that are held within a different business model other than ‘hold to collect’ or ‘hold to collect and sell’ are categorised at fair value through profit or loss. Further, irrespective of business model financial assets whose contractual cash flows are not solely payments of principal and interest are accounted for at FVTPL. All derivative financial instruments fall into this category, except for those designated and effective as hedging instruments, for which the hedge accounting requirements apply.

Assets in this category are measured at fair value with gains or losses recognised in profit or loss. The fair values of financial assets in this category are determined by reference to active market transactions or using a valuation technique where no active market exists.



3.5.2 Classification and subsequent measurement of financial assets (cont’d)

Accounting policies applied until 31 December 2017:-

For the purpose of subsequent measurement, financial assets other than those designated and effective as hedging instruments are classified into the following categories upon initial recognition:-

(a) loans and receivables;(b) financial assets at fair value through profit or loss; (c) held-to-maturity investments; and (d) available-for-sale financial assets.

The category determines subsequent measurement and whether any resulting income and expense is recognised in profit or loss or in other comprehensive income.

All financial assets except for those at fair value through profit or loss are subject to review for impairment at least at each end of the reporting year. Financial assets are impaired when there is any objective evidence that a financial asset or a group of financial assets is impaired. Different criteria to determine impairment are applied for each category of financial assets.

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

At the reporting date, the Group and the Company carry only loans and receivables and available-for-sale financial assets on their statements of financial position.


Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. After initial recognition, these are measured at amortised cost using the effective interest method, less allowance for impairment. Discounting is omitted where the effect of discounting is immaterial. Gains or losses are recognised in profit or loss when the loans and receivables are derecognised or impaired, and through the amortisation process. The Company’s cash and cash equivalents, trade and most of other receivables and contract assets fall into this category of financial instruments.

Loans and receivables are classified as current assets, except for those having maturity dates later than 12 months after the reporting date which are classified as non-current assets.

Available-for-sale financial assets

Available-for-sale financial assets are non-derivative financial assets that are either designated to this category or do not qualify for inclusion in any of the other categories of financial assets. The Group’s available-for-sale financial assets include listed equity instruments.

Available-for-sale financial assets are measured at fair value subsequent to the initial recognition. Gains and losses are recognised in other comprehensive income and reported within the available-for-sale reserve within equity, except for impairment losses and foreign exchange differences on monetary assets, which are recognised in profit or loss. When the asset is disposed of or is determined to be impaired the cumulative gain or loss recognised in other comprehensive income is reclassified from the equity reserve to profit or loss and presented as a reclassification adjustment within other comprehensive income.



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3.5.2 Classification and subsequent measurement of financial assets (cont’d)

Available-for-sale financial assets (cont’d)

Interest calculated using the effective interest method and dividends are recognised in profit or loss. Dividends on an available-for-sale equity are recognised in profit or loss when the Group’s and the Company’s right to receive payment is established.

Investment in equity instruments that do not have a quoted market price in an active market and whose fair value cannot be reliably measured are measured at cost less impairment loss.

Available-for-sale financial assets are classified as non-current assets unless they are expected to be realised within 12 months after the end of the reporting period.

3.5.3 Financial Assets – Impairment

Accounting policies applied from 1 January 2018:-

MFRS 9’s impairment requirements use more forward-looking information to recognise expected credit losses – the ‘expected credit loss (“ECL”) model’. This replaces MFRS 139’s ‘incurred loss model’. Instruments within the scope of the new requirements included loans and other debt-type financial assets measured at amortised cost and FVOCI, trade receivables, contract assets recognised and measured under MFRS 15 and loan commitments and some financial guarantee contracts (for the issuer) that are not measured at fair value through profit or loss.

Recognition of credit losses is no longer dependent on the Group and the Company first identifying a credit loss event. Instead, the Group and the Company consider a broader range of information when assessing credit risk and measuring expected credit losses, including past events, current conditions, reasonable and supportable forecasts that affect the expected collectability of the future cash flows of the instrument.

In applying this forward-looking approach, a distinction is made between:

(a) financial instruments that have not deteriorated significantly in credit quality since initial recognition or that have low credit risk (‘Stage 1’); and

(b) financial instruments that have deteriorated significantly in credit quality since initial recognition and whose credit risk is not low (‘Stage 2’).

‘Stage 3’ would cover financial assets that have objective evidence of impairment at the reporting date.

12-month expected credit losses’ are recognised for the first category while ‘lifetime expected credit losses’ are recognised for the second category.

Measurement of the expected credit losses is determined by a probability-weighted estimate of credit losses over the expected life of the financial instrument.

Trade and other receivables and contract assets

The Group and the Company make use of a simplified approach in accounting for trade and other receivables as well as contract assets and records the loss allowance as lifetime expected credit losses. These are the expected shortfalls in contractual cash flows, considering the potential for default at any point during the life of the financial instrument. In calculating, the Group uses its historical experience, external indicators and forward-looking information to calculate the expected credit losses using a provision matrix.

Refer to Note 30 to the financial statements for a detailed analysis of how the impairment requirement of MFRS 9 are applied.



3.5.3 Financial Assets – Impairment (cont’d)

Accounting policies applied from 1 January 2018 (cont’d) :-

Trade and other receivables and contract assets (cont’d)

For all other financial instruments, the Group and the Company recognise a loss allowance equal to 12-month ECLs unless there has been a significant increase in credit risk of the financial instrument since initial recognition, in which case the loss allowance is measured at an amount equal to lifetime ECLs.

ECLs are re-measured at each reporting date to reflect changes in the financial instrument’s credit risk since initial recognition. Any change in the ECLs amount is recognised as an impairment gain or loss in profit or loss. The Group and the Company recognised an impairment gain or loss for all financial instruments with a corresponding adjustment to their carrying amount through a loss allowance account, except for investments in debt securities that are measured at FVTOCI (recycling), for which the loss allowance is recognised in other comprehensive income and accumulated in the fair value reserve (recycling).

The gross carrying amount of a financial asset is written off (either partially or in full) to the extent that there is no realistic prospect of recovery. This is generally the case when the Group and the Company determine that the debtor does not have any assets or sources of income that could generate sufficient cash flows to repay the amount subject to the write-off.

Accounting policies applied until 31 December 2017:-

The Group and the Company assess at each reporting date whether there is any objective evidence that a financial asset or a group of financial assets is impaired. A financial asset or a group of financial assets is deemed to be impaired if, and only if, there is objective evidence of impairment as a result of one or more events that has occurred after the initial recognition of the asset (an incurred “loss event”) and that loss event has an impact on the estimated future cash flows of the financial asset or the group of financial assets that can be reliably estimated. Evidence of impairment may include indications that the debtor or a group of debtors is experiencing significant financial difficulty, default or delinquency in interest or principal payments, the probability that they will enter bankruptcy or other financial reorganisation and where observable data indicate that there is a measurable decrease in the estimated future cash flows, such as changes in arrears or economic conditions that correlate with defaults.

Financial assets carried at amortised cost


Loans and receivables, the Group and the Company first assess whether objective evidence of impairment exists individually for financial assets that are individually significant, or collectively for financial assets that are not individually significant. If the Group and the Company determine that no objective evidence of impairment exists for an individually assessed financial asset, whether significant or not, it includes the asset in a group of financial assets with similar credit risk characteristics and collectively assesses them for impairment. Assets that are individually assessed for impairment and for which an impairment loss is, or continue to be, recognised are not included in a collective assessment of impairment.

If there is objective evidence that an impairment loss has been incurred, the amount of the loss is measured as the difference between the assets carrying amount and the present value of estimated future cash flows (excluding future expected credit losses that have not yet been incurred). The present value of the estimated future cash flows is discounted at the financial asset’s original effective interest rate.



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3.5.3 Financial Assets – Impairment (cont’d)

Accounting policies applied until 31 December 2017 (cont’d):-

Financial assets carried at amortised cost (cont’d)

Loans and receivables (cont’d)

The carrying amount of the asset is reduced through the use of a provision account and the amount of the loss is recognised in the profit or loss. Interest income continues to be accrued on the reduced carrying amount and is accrued using the rate of interest used to discount the future cash flows for the purpose of measuring the impairment loss. The interest income is recorded as part of finance income in the profit or loss. Loans together with the associated provision are written off when there is no realistic prospect of future recovery and all collateral has been realised or has been transferred to the Group and the Company. If, in a subsequent financial year, the amount of the estimated impairment loss increases or decreases because of an event occurring after the impairment was recognised, the previously recognised impairment loss is increased or reduced by adjusting the provision account. If a write-off is later recovered, the recovery is recognised in the profit or loss.

Available-for-sale investments

Significant or prolonged decline in fair value below cost, significant financial difficulties of the issuer or obligor, and disappearance of an active trading market are considerations to determine whether there is objective evidence that investment securities classified as available-for-sale investments are impaired.

If an available-for-sale financial asset is impaired, an amount comprising the difference between its cost (net of any principal payment and amortisation) and its current fair value, less any impairment loss previously recognised in profit or loss, is transferred from equity to profit or loss.

Impairment losses on available for sale equity investments are not reversed in profit or loss in subsequent periods. Increase in fair value, if any, subsequent to impairment loss is recognised in other comprehensive income. For available-for-sale debt investments, impairment losses are subsequently reversed in profit or loss if an increase in the fair value of the investment can be objectively related to an event occurring after the recognition of the impairment loss in profit or loss.

Unquoted equity securities carried at cost

If there is objective evidence (such as significant adverse changes in the business environment where the issuer operates, probability of insolvency or significant financial difficulties of the issuer) that an impairment loss on financial assets carried at cost has been incurred, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at the current market rate of return for a similar financial asset. Such impairment losses are not reversed in subsequent periods.

3.5.4 Financial Liabilities – Classification and measurement

As the accounting for financial liabilities remains largely the same under MFRS 9 compared to MFRS 139, the Group’s and the Company’s financial liabilities were not impacted by the adoption of MFRS 9. However, for completeness, the accounting policy is disclosed below.

The Group’s and the Company’s financial liabilities include borrowings, finance lease liability, trade and other payables.

Financial liabilities are initially measured at fair value, and, where applicable, adjusted for transaction costs unless the Group and the Company designated a financial liability at fair value through profit or loss.



3.5.4 Financial Liabilities – Classification and measurement (cont’d)

Subsequently, financial liabilities are measured at amortised cost using the effective interest method except for derivatives and financial liabilities designated at FVTPL, which are carried subsequently at fair value with gains or losses recognised in profit or loss (other than derivative financial instruments that are designated and effective as hedging instruments).

All interest-related charges and, if applicable, changes in an instrument’s fair value that are reported in profit or loss are included within finance costs or finance income.

3.5.5 Offsetting of Financial Instruments

Financial assets and financial liabilities are offset and the net amount reported in the statement of financial position if, and only if, there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, or to realise the assets and settle the liabilities simultaneously.

3.6 Inventories

Inventories, comprising raw materials, packing materials and consumables, work-in-progress and finished/trading goods are stated at the lower of cost and net realisable value (“NRV”) after adequate specific write down has been made by the Directors for deteriorated, obsolete and slow-moving inventories.

Cost of raw materials is determined using weighted average method and finished goods include direct materials, direct labour and an appropriate proportion of manufacturing overheads.

Costs of trading goods are determined using weighted average method. Cost includes the original purchase price plus direct cost of bringing these inventories to their present condition and location.

Net realisable value represents estimated selling price in the ordinary course of business less estimated selling and distribution costs and all other estimated costs to completion.

When inventories are sold and revenue is recognised, the carrying amount of those inventories is recognised as cost of goods sold. Write-down to NRV and inventory losses are recognised as expenses when it occurred and any reversal is recognised in the profit or loss in the period in which the reversal occurs.

3.7 Contract Assets and Contract Liabilities

Contract costs comprise costs related directly to the specific contract and those that are attributable to the contract activity in general and can be allocated to the contract and such other costs that are specifically chargeable to the customers under the terms of the contract.

When the outcome of a construction contract can be estimated reliably, contract revenue and contract costs are recognised over the period of contract as revenue and expenses respectively by reference to the percentage of completion of the contract activity at the end of the reporting period. The Group uses the percentage of completion method to determine the appropriate amount of revenue and costs to be recognised in a period of the contract by reference to the proportion that contract costs incurred for work performed to date bear to the estimated total contract cost.

When the outcome of a construction contract cannot be estimated reliably, contract revenue is recognised only to the extent of contract costs incurred that is probably recoverable and contract costs are recognised as expenses in the period in which they incurred.

When it is probable that contract costs will exceed total contract revenue, the expected loss is recognised as an expense immediately.



110 111


3.7 Contract Assets and Contract Liabilities (cont’d)

Contract revenue comprises the initial amount of revenue agreed in the contract and variations in contract work, claims and incentive payments to the extent that it is probably that they will result in revenue and they are capable of being reliably measured.

The aggregate of the costs incurred and the profit/loss recognised on each contract is compared against the progress billings up to the financial year end. Where costs incurred and recognised profits (less recognised losses) exceed progress billings, the balance is shown as contract assets under current assets. Where progress billings exceed costs incurred plus recognised profits (less recognised losses), the balance is shown as contracts liabilities under current liabilities.

3.8 Cash and Cash Equivalents

Cash and cash equivalents comprise cash in hand, bank balances, deposits with licensed bank, bank overdrafts and highly liquid investments which are readily convertible to known amount of cash and which are subject to an insignificant risk of changes in value.

Bank overdrafts are shown in current liabilities in the statements of financial position.

For the purpose of the financial position, cash and cash equivalents restricted to be settle a liability of 12 months or more after the end of the reporting period are classified as non-current assets.

3.9 Impairment of Non-Financial Assets

The Group and the Company assess at each reporting date whether there is an indication that an asset may be impaired. If any indication exists, or when annual impairment testing for an asset is required, the Group and the Company estimate the asset’s recoverable amount. An asset’s recoverable amount is the higher of an asset’s or cash-generating unit’s (“CGU”) fair value less costs to sell and its value in use and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. Where the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less costs to sell, recent market transactions are taken into account, if available. If no such transactions can be identified, an appropriate valuation model is used. These calculations are corroborated by valuation multiples, quoted share prices for publicly trade subsidiaries or other available fair value indicators.

The Group and the Company base their impairment calculation on detailed budgets and forecast calculations which are prepared separately for each of the Group’s and the Company’s cash-generating units to which the individual assets are allocated. These budgets and forecast calculations are generally covering a period of five years. For longer periods, a long term growth rate is calculated and applied to project future cash flows after the fifth year.

Impairment losses are recognised in the profit or loss in those expense categories consistent with the function of the impaired asset.

An assessment is made at each reporting date as to whether there is any indication that previously recognised impairment losses may no longer exist or may have decreased. If such indication exists, the Group and the Company estimate the asset’s or cash-generating unit’s recoverable amount. A previously recognised impairment loss is reversed only if there has been a change in the assumptions used to determine the asset’s recoverable amount since the last impairment loss was recognised. The reversal is limited so that the carrying amount of the asset does not exceed its recoverable amount, nor exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss has been recognised for asset in prior years. Such reversal is recognised in the profit or loss.


3.10 Equity, Reserves and Distribution to Owners

An equity instrument is any contract that evidences a residual interest in the assets of the Company after deducting all of its liabilities. Ordinary shares are equity instruments.

Foreign currency translation differences arising on the translation of the Group’s foreign entities are included in the exchange translation reserve. Gains or losses on available-for-sale financial assets are included in the fair value adjustment reserve until 31 December 2017.

Retained earnings include all current and prior periods’ accumulated profits.

Interim dividends are simultaneously proposed and declared, because the Articles of Association of the Company grants the Directors the authority to declare interim dividends. Consequently, interim dividends are recognised directly as liabilities when they are proposed and declared.

Final dividends proposed by the Directors are not accounted for in shareholder’s equity as an appropriation of retained profits, until they have been approved by the shareholders in a general meeting. When these dividends have been approved by the shareholders and declared, they are recognised as liabilities.

All transactions with the owners of the Company are recorded separately within equity.

3.11 Provisions

Provisions are recognised when there is a present legal or constructive obligation that can be estimated reliably, as a result of a past event, when it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Provisions are not recognised for future operating losses. Any reimbursement that the Group and the Company can be virtually certain to collect from a third party with respect to the obligation is recognised as a separate asset. However, this asset may not exceed the amount of the related provision.

Provisions are reviewed at each reporting date and adjusted to reflect the current best estimate. If it is no longer probable that an outflow of economic resources will be required to settle the obligation, the provisions are reversed. Where the effect of the time value of money is material, provisions are discounted using a current pre tax rate that reflects, where appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.

3.12 Employee Benefits

3.12.1 Short Term Employee Benefits

Short-term employee benefit obligations in respect of salaries, annual bonuses, paid annual leave and sick leave are measured on an undiscounted basis and are expensed as the related service is provided.

A liability is recognised for the amount expected to be paid under short-term cash bonus if the Group and of the Company have a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably.

3.12.2 Defined Contribution Plans

Defined contribution plans are post-employment benefit plans under which the Group and the Company pay fixed contributions into independent entities of funds and will have no legal or constructive obligation to pay further contribution if any of the funds do not hold sufficient assets to pay all employee benefits relating to employee services in the current and preceding financial years.

Such contributions are recongnised as expenses in the profit or loss as incurred. As required by law, companies in Malaysia make such contributions to the Employees Provident Fund (“EPF”). The foreign subsidiary also make contributions to them counting’s statutory pension schemes.



112 113


3.12 Employee Benefits (cont’d)

3.12.3 Retirement Benefit

The Group operates an unfunded defined benefit plan for all eligible Malaysian Directors and employees. The Group’s net obligation in respect of defined benefit plan is calculated separately for each plan by estimating the amount of future benefit that employees have earned in return for their services in the current and prior periods; that benefit is discounted to determine its present value. Net interest expense is calculated by applying the discount rate at the beginning of the period to the net defined benefit liability or asset. The calculation is performed once every three years by a qualified actuary using the projected credit method.

Remeasurement from defined benefit plan comprises of actuarial gains and losses. The Group recognises them immediately in other comprehensive income and all expenses related to defined benefit plan in employee benefits are charged to profit or loss. When the benefits of a plan are changed, or when a plan is curtailed, the portion of the changed benefit related to past service by employees, or the gain or loss on curtailment, is recognised immediately in profit or loss when the plan amendment or curtailment occurs.

The Group recognises gain or losses on the settlement of a defined benefit plan when settlement occurs. The gain or loss on settlement is the difference between the present value of the defined benefit obligation being settled as determined on the date of settlement and the settlement price.

3.12.4 Employee Leave Entitlement

Employee entitlements to annual leave are recognised as a liability when they accrue to the employees. The estimated liability for leave is recognised for services rendered by employees up to the end of the reporting year.

3.13 Revenue

Revenue is recognised when or as a performance obligation in the contract with customer is satisfied, i.e. when the “control” of the goods or services underlying the particular performance obligation is transferred to the customer.

A performance obligation is a promise to transfer a distinct goods or service (or a series of distinct goods or services that are substantially the same and that have the same pattern of transfer) to the customer that is explicitly stated in the contract and implied in the Group’s customary business practices.

Revenue is measured at the amount of consideration to which the Group expects to be entitled in exchange for transferring the promised goods or services to the customer, excluding amounts collected on behalf of third parties such as sales taxes or goods and services taxes.

If the amount of consideration varies due to discounts, rebates, refunds, credits, incentives, penalties or other similar items, the Group estimates the amount of consideration to which it will be entitled based on the expected value or the most likely outcome. If the contract with customer contains more than one performance obligation, the amount of consideration is allocated to each performance obligation based on the relative stand-alone selling prices of the goods or services promised in the contract.

The revenue is recognised to the extent that it is highly probable that a significant reversal in the amount of cumulative revenue recognised will not occur when the uncertainly associated with the variable consideration is subsequently resolved.

The control of the promised goods or services may be transferred over time or at a point in time. Revenue for performance obligation that is not satisfied over time is recognised at the point in time at which the customer obtains control of the promised goods or services.


3.13 Revenue (cont’d)

The control over the goods or services is transferred over time and revenue is recognised over time if:

• the customer simultaneously receives and consumes the benefits provided by the Group’sperformance as the Group performs;

• theGroup’sperformancecreatesorenhancesanassetthatthecustomercontrolsastheassetiscreated or enhanced; or

• theGroup’sperformancedoesnotcreateanassetwithanalternativeuseandtheGrouphasanenforceable right to payment for performance completed to date.

The Group recognises revenue from construction of steel towers and substations structures over time if it creates an asset with no alternative use to the Group and the Group has an enforceable right to payment for performance completed to date. Revenue is recognised over the period of the contract by reference to the progress towards complete satisfaction of that performance obligation. The progress towards complete satisfaction of the performance obligation is measured based on the Group’s efforts or inputs to the satisfaction of the performance obligation (e.g. by reference to the contract costs incurred to date as a percentage of the estimated total contract costs of the contract, i.e. the stage of completion).

3.13.1 Construction Contracts

Revenue from sales of completed steel towers and substations structures is recognised upon completion of steel towers and substations structures where the control of the properties has passed to the customers.

Where the outcome of a construction cannot be reasonably estimated, revenue is recognised to the extent of contract costs incurred that is probable will be recoverable.

When it is probable that total costs will exceed total revenue, the foreseeable loss is immediately recognised in the profit or loss irrespective of whether construction work has commenced or not.

The excess of revenue recognised in the profit or loss over the billings to customers is recognised as contract asset.

The excess of billings to customers over revenue recognised in the profit or loss is recognised as contract liability.

3.13.2 Contract Costs

The incremental costs of obtaining a contract are those costs that the Group incurs to obtain a contract with a customer that it would not have incurred if the contract had not been obtained (for example, a sales commission). These costs are recognised in contract assets if the Group expects to recover those costs.

3.13.3 Sales of Goods

Revenue relating to sale of goods is recognised net of sales returns and discount upon the transfer of control of the goods to the customers. Revenue is not recognised to the extent where there are significant uncertainties regarding recovery of the consideration due, associated costs or the possible return of goods.



114 115


3.13 Revenue (cont’d)

3.13.4 Other Revenue Recognition

Dividend Income

Dividend income and other income from investments are recognised in profit or loss when the right to receive such payment is established.

Rental Income

Rental income is accounted for on a straight-line basis over the lease terms. The aggregate costs of incentives provided to lessees are recognised as a reduction of rental income over the lease term on a straight-line basis.

Interest Income

Interest income is recognised in the profit or loss on time proportion basis taking into account the principal outstanding and the effective rate over the period to maturity, when it is determined that such income will accrue to the Group and the Company.

Management Fee Income

Management fees are recognised when services are rendered.

3.14 Borrowing Costs

Borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset are capitalised as part of the cost of the assets during the period of time that is necessary to complete and prepare the asset for its intended use or sale.

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

All other borrowing costs are expensed in the period in which they are incurred. Borrowing costs consist of interest and other costs that the Group incurred in connection with the borrowing of funds.

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


3.15 Tax Expenses

Tax expenses comprise current tax and deferred tax. Current tax and deferred tax are recognised in profit or loss except to the extent that it relates to a business combination or items recognised directly in equity or other comprehensive income.

3.15.1 Current Tax

Current tax is the expected tax payable or receivable on the taxable profit or loss for the financial year, using tax rates enacted or substantively enacted by the end of the reporting period, and any adjustment to tax payable in respect of previous financial years.

Current tax for current and prior periods is recognised in the statements of financial position as a liability (or an asset) to the extent that it is unpaid (or refundable).

3.15.2 Deferred Tax

Deferred tax is recognised using the liability method, providing for temporary differences between the carrying amounts of assets and liabilities in the statement of financial position and their tax bases. Deferred tax is not recognised for the temporary differences arising from the initial recognition of goodwill, the initial recognition of assets and liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit or loss. Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the end of the reporting period.

Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realised simultaneously.

Deferred tax assets are recognised to the extent that it is probable that future taxable profits will be available against which the temporary differences can be utilised. Deferred tax assets are reviewed at the end of each reporting period and are reduced to the extent that it is no longer probable that the related tax benefit will be realised.

Unutilised reinvestment allowances, being tax incentives that are not tax bases of an asset, are recognised as deferred tax assets to the extent that it is probable that the future taxable profits will be available to offset against the unutilised tax incentive credit.



116 117


3.16 Goods and Services Tax

Goods and Services Tax (“GST”) is a consumption tax based on the value-added concept. GST is imposed on goods and services at every production and distribution stage in the supply chain including importation of goods and services, at the applicable tax rate. Input tax that a company pays on business purchases is offset against output tax.

Revenue, expenses and assets are recognised net of GST except:

- where the GST incurred in a purchase of asset or service is not recoverable from the authority, in which case the GST is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable; and

- receivables and payables that are stated with GST inclusive.

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

The Malaysian Government has zero rated the GST effective from 1 June 2018. This mean the GST rate on the supplier of goods or services or on the importation of goods has been revised from 6% to 0%.

The GST has been replaced with Sales and Services Tax effective from 1 September 2018. The rate for sales tax is fixed at 5% or 10%, while the rate for services tax is fixed at 6%.

3.17 Sales Tax and Service Tax

Expenses and assets are recognised net of the amount of sales tax, except:

- When the sales tax incurred on a purchase of assets or services is not recoverable from the taxation authority, in which case, the sales tax is recognised as part of the cost of acquisition of the asset or as part of the expense item, as applicable;

- When receivables and payables are stated with the amount of sales tax included.

The net amount of payable to the taxation authority is included as part of payables in the statements of financial position.

3.18 Contingencies

Where it is not probable that an inflow or an outflow of economic benefits will be required, or the amount cannot be estimated reliably, the asset or the obligation is not recognised in the statement of financial position and is disclosed as a contingent asset or contingent liability, unless the probability of inflow or outflow of economic benefits is remote. Possible obligations, whose existence will only be confirmed by the occurrence or non-occurrence of one or more future events, are also disclosed as contingent assets or contingent liabilities unless the probability of inflow or outflow of economic benefits is remote.

3.19 Operating Segments

An operating segment is a component of the Group that engages in business activities from which it may earn revenues and incur expenses, including revenue and expenses that relate to transactions with any of the Group’s other components. All operating segments’ operating results are reviewed regularly by the chief operating decision maker to make decisions about resources to be allocated to the segment and to assets its performance, and for which discrete financial information is available.


3.20 Related Parties

A related party is a person or entity that is related to the Group and the Company that is preparing its financial statements. A related party transaction is a transfer of resources, services or obligations between the reporting entity and its related party, regardless of whether a price is charged.

(a) A person or a close member of that person’s family is related to the reporting entity if that person:-

(i) Has control or joint control over the Group and the Company;(ii) Has significant influence over the Group and the Company; or(iii) Is a member of the key management personnel of the Group or the Company.

(b) An entity is related to the Group and the Company if any of the following conditions applies:-

(i) The entity and the Group or the Company are members of the same group;(ii) The entity is an associate of the Group or the Company;(iii) Both the Group or the Company and the entity are joint ventures of the same third party;(iv) The Group or the Company is a joint venture of a third entity and the entity is an associate

of the same third entity;(v) The entity is a post-employment benefit plan for the benefits of employees of either the

Group or the Company for an entity related to the Group or the Company;(vi) The entity is controlled or jointly-controlled by a person identified in (a) above;(vii) A person identified in (a)(i) above has significant influence over the entity or is a member of

the key management personnel of the Group or the entity; or(viii) The entity, or any member of a group of which it is a part, provides key management

personnel services to the Group.

3.21 Earnings per Ordinary Share

The Group presents basic and diluted earnings per share (“EPS”) data for its ordinary shares.

Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Company over the weighted average number of ordinary shares outstanding during the period.

Diluted EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Company over the weighted average number of shares outstanding, for the effects of all dilutive potential ordinary shares during the period.



118 119

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ON

T’D

)

120 121

4. PROPERTY, PLANT AND EQUIPMENT (CONT’D)

Assets held under finance leases

The net carrying amounts of assets held under finance leases are:-

Group

2018 2017

RM RM

Motor vehicles 3,434,772 2,335,230

Plant and machineries 380,688 531,704

3,815,460 2,866,934 Leased assets are pledged as securities for the related finance lease liabilities are disclosed in Note 17 to the financial

statements.

Assets pledged as securities to financial institutions

The net carrying amounts of assets pledged as securities for bank borrowings are:-

Group

2018 2017

RM RM

Land on long term lease 3,208,272 3,302,852

Freehold land and buildings 1,820,950 1,844,650

Long term leasehold land and factory building 5,266,664 3,023,774

10,295,886 8,171,276

The details of assets pledged as securities for bank borrowings are disclosed in Note 16 to the financial statements.

5. INVESTMENT IN SUBSIDIARIES

Company

2018 2017

RM RM

Unquoted shares, at cost - within Malaysia 291,660,000 291,660,000


5. INVESTMENT IN SUBSIDIARIES (CONT’D)

Details of the subsidiaries are as follows:-

Name of companies

Principal place of business/Country of

incorporation Principal activities

Effectiveownership interest and

voting interest2018 2017(%) (%)

Direct subsidiaries of the Company

Rohas-Euco Industries Bhd. (“REI”)

Malaysia

Design and fabrication of steel structure for high tension transmission towers, microwave towers and substations structures and provision of other fabrication and installation works

100 100

HG Power Transmission Sdn. Bhd. (“HGPT”)

MalaysiaContractor for installing electrical transmission lines and provision of other related services

75 75

Subsidiaries of Rohas-Euco Industries Bhd.

Galvanising Engineering and Services Sdn. Bhd. [“GES”]

Malaysia Hot-dip galvanising 100 100

RT Telecom Sdn. Bhd. (formerly known as APL Tech Industry Sdn. Bhd.) [“RTT”]

MalaysiaDesign, supply and construction of telecommunication infrastructure

100 100

RBC Water Sdn. Bhd. [“RBC”]

MalaysiaContractor in the implementation of potable and water treatment projects

100 100

Hydro Haven Sdn. Bhd. [“HH”]

Malaysia Dormant 100 100

REI International (HK) Ltd. [“REIHK”]#

Hong KongInvestment holding and provision of management services

100 100

PT REI International [“PTREI”] #

Republic of Indonesia

Dormant 100 100

Rohas-Euco (Zhuhai) Management Consulting Co. Ltd. [“RZM”]#@

People’s Republic of

ChinaDormant 100 100


122 123122 123


Details of the subsidiaries are as follows (cont’d):-

Name of companies

Principal place of

business/Country of

incorporationPrincipal activities

Effectiveownership interest and

voting interest

2018 2017

(%) (%)

Subsidiary of REI International (HK) Ltd.

PT REI Abadi Indonesia [“PTRAI”]*


Investment holding and provision of management services

99 99

Held through of Hydro Haven Sdn. Bhd.

PT REI Abadi Indonesia [“PTRAI”]*


Investment holding and provision of management services

1 1

Subsidiaries of HG Power Transmission Sdn. Bhd.

HG Power Transmission (PNG) Ltd. (“PNG”) ^

Papua New Guinea

Contractor for installing electrical transmission lines and provision of other related services

100 100

IAC Electricals (M) Sdn. Bhd. (“IAC”)

MalaysiaFabrication of metal products for transmission towers and fittings

100 100

* Audited by Grant Thornton International’s member firm.# Not audited by Grant Thornton Malaysia. However, component audit had been carried out by Grant Thornton

Malaysia on these subsidiaries for the purpose of forming group opinion.@ In progress of winding up.^ Audited by a firm other than Grant Thornton Malaysia.

Acquisition of subsidiaries

(i) In the prior financial year, the Company acquired 68,377,306 ordinary shares representing the entire issued and paid-up share capital of REI for a purchase consideration of RM200,000,000 satisfied entirely by the issuance of 317,460,318 new ordinary shares in the Company, at an issue price of RM0.63 per share.

The share-based payment expense amounting to RM21,413,993 which arose from the Regularisation Plan had been recognised as share-based payment expense and expensed off in the statements of profit or loss and other comprehensive income. This expense was derived from the below.


Acquisition of subsidiaries (cont’d)

(i) The fair value of the identifiable assets and liabilities of the Company as at 8 March 2017:-

RM

Other receivables 3,955,825

Cash and cash equivalents 234,375

Other payables (150,467)

Total identifiable net assets 4,039,733

Deemed purchase consideration of the Company by REI (25,453,726)

Share-based payment expenses (21,413,993)

The reserve upon consolidation as at 8 March 2017 is derived as follows:-

Share capital of the Company immediately before Regularisation Plan (4,039,733)

New shares issued by the Company to acquire REI (200,000,000)

Reversal of issued and paid-up share capital of REI pursuant to Regularisation Plan 68,377,306

Reversal of share premium of REI pursuant to Regularisation Plan 5,409,923

Deemed purchase consideration of the Company by REI 25,453,726

Reserve upon consolidation (104,798,778)

(ii) On 31 October 2017, the Company completed acquisition of 4,900,068 ordinary shares representing 75%

equity interest in HG Power Transmission Sdn. Bhd., the purchase consideration consists of:-

- Cash consideration of RM22,500,000; and- 72,800,000 new ordinary shares of the Company at fair value of RM0.95 each.

Impact of the acquisition on the consolidated statements of profit or loss and other comprehensive income

In the prior financial year, from the date of acquisition, HGPT had contributed RM60,933,546 and RM6,044,822 to the Group’s revenue and profit after tax respectively. If the contribution had taken place at the beginning of the financial year, the HGPT’s revenue and profit after tax would have been RM323,825,575 and RM1,692,776 respectively.



124 125124 125



(iii) Acquisition related costs

In the prior financial year, the Group incurred acquisition related cost of RM1,305,240 in relation to the acquisition of HGPT. These costs have been included as other expenses.

The fair values of identifiable assets and liabilities of HGPT as at the date of acquisition were as follows:-

Group2017RM

Total assets

Inventories 27,179,738

Trade and other receivables 153,113,123

Amount due from customers on contracts 43,756,062

Cash and bank balances, deposits and short-term placements

-cash and bank balances - unrestricted 8,495,140

-cash and bank balances - restricted 6,582,937

-fixed deposits pledged 37,502,679

Property, plant and equipment 15,662,521

Total assets 292,292,200

Total liabilities

Trade and other payables 100,612,857

Amount due to customers on contracts 24,242,544

Finance lease liabilities 1,591,688

Borrowings

-bank overdraft 5,299,646

-bankers acceptances 47,453,798

-term loan 937,720

Total liabilities 180,138,253

Total identifiable net assets 112,153,947



(iii) Acquisition related costs (cont’d)

Net cash outflow arising from acquisition of a subsidiary

Group2017RM

Purchase consideration settled in cash and cash equivalents (22,500,000)

Cash and cash equivalents acquired

- cash and bank balances (unrestricted) 8,495,140

- bank overdraft (5,299,646)

(19,304,506) Goodwill

Goodwill was recognised as a result of the acquisition as follows:-

Group2017RM

Total consideration transferred 91,660,000

Fair value of identifiable net assets (112,153,947)

Non-controlling interests 28,038,487

Goodwill 7,544,540

Non-controlling interests in subsidiary

The Group’s subsidiary that have material non-controlling interests (“NCI”) were as follows:-

HG Power Transmission Sdn. Bhd. 2018RM

2017RM

Percentage of ownership interest and voting interest (%) 25% 25%

Carrying amount of NCI (RM) 28,721,449 29,628,436

(Loss)/Profit allocated to NCI (RM) (817,728) 1,589,949



126 127126 127


Non-controlling interests in subsidiary (cont’d)

The summary of financial information before intra-group elimination for the Group’s subsidiary that have material non-controlling interests are as below:-

HG Power Transmission Sdn. Bhd. 2018 2017

RM RM

Financial position as at 31 December

Non-current assets 23,579,557 16,037,008

Current assets 281,134,117 275,454,173

Non-current liabilities (851,816) (1,479,398)

Current liabilities (188,976,061) (171,498,039)

Net assets 114,885,797 118,513,744

Summary of financial performance for the financial year ended 31 December

Revenue 223,560,064 323,825,575

(Loss)/Profit for the financial year (3,071,013) 1,692,776

Total comprehensive (loss)/income (3,270,912) 1,652,017

Summary of cash flows for the financial year ended 31 December Net cash flows used in operating activities (49,818,208) (1,655,977)

Net cash flows used in investing activities (2,128,018) (4,415,837)

Net cash flows from financing activities 58,861,348 7,727,313

Net cash inflows 6,915,122 1,655,499

6. INVESTMENT IN AN ASSOCIATE

Group

2018 2017

RM RM

Unquoted shares outside Malaysia, at cost 4,448,107 4,505,307Share of loss of equity-accounted associate, net of tax (856,923) (396,345)Translation differences (400,578) 25,255

3,190,606 4,134,217

6. INVESTMENT IN AN ASSOCIATE (CONT’D)

Details of an associate are as follows:-

Name of company

Principal place ofbusiness/Country of

incorporationPrincipalactivities

Effective ownership interest and voting

interest2018(%)

2017(%)

PT Century Abadi Perkasa *

Republic ofIndonesia

Development andoperation of

hydro power plant49 49

* Audited by Grant Thornton International’s member firm. Held through PTRAI

Summary of financial information of an associate, not adjusted for the proportion of ownership interest held by the Group is as follows:-

2018 2017

RM RM

PT Century Abadi Perkasa

Summary of financial position as at 31 December

Non-current assets 23,245,501 6,867,675

Current assets 14,976,039 14,765,282

Non-current liabilities (6,583,856) -

Current liabilities (24,585,379) (13,195,779)

Net assets 7,052,305 8,437,178

Summary of financial performance for the financial year ended 31 December

Loss for the financial year/total comprehensive loss 939,955 312,880

Reconciliation of net assets to carrying amount as at 31 December

Group’s share of net assets 3,455,629 4,134,217Unadjusted foreign translation differences (265,023) -

Carrying amount in the statements of financial position 3,190,606 4,134,217 Group’s share of results for the financial year ended 31 December

Group’s share of loss 460,578 153,311



128 129128 129

Contingent liabilities and capital commitments

The associate has no contingent liabilities as at the reporting date.

The capital commitments as at the reporting date are as follow:-

Group2018 2017RM RM

Approved but not contracted for:-

Capital expenditure on development of mini-hydro plant 49,057,946 68,896,564

7. OTHER INVESTMENTS

Group

2018 2017

Fair value through profit or loss (2018) / Available-for-sale investments (2017)

RM RM

Quoted investments, at fair value- within Malaysia 1,732,752 1,959,674

Unquoted investments, at costs

- within Malaysia - 1

1,732,752 1,959,675

Less: Accumulated impairment loss

Brought forward (1) (1)

Written off 1 -

Carried forward - (1)

1,732,752 1,959,674

8. DEFERRED TAX ASSETS/(LIABILITIES)

Group 2018 2017RM RM

Brought forward 3,643,919 2,551,447Recognised in profit and loss- current financial year 4,113,352 1,109,082- Under/(over)provision in respect of prior financial year 1,749,131 (118,438)Recognised in other comprehensive income - 101,828

Carried forward 9,506,402 3,643,919

Presented after appropriate offsetting as follows:-Deferred tax assets 9,649,049 3,855,901Deferred tax liabilities (142,647) (211,982)

9,506,402 3,643,919

8. DEFERRED TAX ASSETS/(LIABILITIES) (CONT’D)

(a) The components and movement of deferred tax assets and deferred tax liabilities prior to offsetting are as follows:-

Deferred tax assets

Property, plant and equipment

Unabsorbedcapital

allowancesand tax losses

Accumulated impairment

loss Provisions TotalGroup RM RM RM RM RM

At 1 January 2017 (320,489) - 735,749 2,370,317 2,785,577Recognised in profit and loss 78,693 - 537,188 356,141 972,022Recognised in OCI - - - 98,302 98,302

At 31 December 2017 (241,796) - 1,272,937 2,824,760 3,855,901Recognised in profit and loss (1,623,648) 7,846,306 404,250 (833,760) 5,793,148

At 31 December 2018 (1,865,444) 7,846,306 1,677,187 1,991,000 9,649,049

Deferred tax liabilities

Property, plant and

equipment

Unabsorbedcapital

allowancesand tax losses

Unutilised reinvestment allowances Provisions Others Total

RM RM RM RM RM RMGroup

At 1 January 2017 (534,783) - 118,358 165,721 16,574 (234,130)Recognised in profit and loss (57,065) - (118,358) 196,884 (2,839) 18,622Recognised in OCI - - - 3,526 - 3,526

At 31 December 2017 (591,848) - - 366,131 13,735 (211,982)Recognised in profit and loss 85,528 111,190 - (127,260) (123) 69,335

At 31 December 2018 (506,320) 111,190 - 238,871 13,612 (142,647)



6. INVESTMENT IN AN ASSOCIATE (CONT’D)

130 131130 131

8. DEFERRED TAX ASSETS/(LIABILITIES) (CONT’D)

(b) Deferred tax assets have not been recognised in respect of these items as it is not probable that future taxable profits will be available against which the subsidiaries can utilise the benefits therefrom.

Group

2018 2017

RM RM

Unutilised capital allowances and tax losses 8,284,189 5,494,000Other temporary differences 3,049,781 13,073

11,333,970 5,507,073

9. GOODWILL ON CONSOLIDATON

Group2018 2017RM RM

Brought forward 7,544,540 -Addition during the financial year - 7,544,540


Goodwill acquired in a business combination is allocated, at acquisition date, to the cash-generating unit (“CGU”) that is expected to benefit from the business combination.

The Group tests goodwill annually for impairment or more frequently if there are indications that goodwill might be impaired.

The recoverable amount of the CGU is determined by using value-in-use, involving cash flow projections calculations derived from the most recent financial budgets approved by management covering a five-years period.

Value-in-use was determined by discounting the future cash flows generated from the continuing use of the CGU and management’s assessment of future trends based on the following key assumptions:-

(i) revenue is projected based on specific projects with growth rate of 5% (2017:5%) at the end of year two; and(ii) projected profit margin of 9% (2017:5%).

A pre-tax discount rate of 4% (2017:7%) per annum was applied in determining the recoverable amount of the unit.The discount rate was estimated based on the Group’s weighted average cost of capital.

The values assigned to the key assumptions represent management’s assessment of future trends in the industry and are based on external and internal sources. The management is not aware of any reasonably possible change in above key assumptions that would cause the carrying amounts of the CGU to materially exceed their recoverable amounts.

10. INVENTORIES

Group2018 2017RM RM

Raw materials 79,529,426 67,557,117 Work-in-progress 13,589,774 6,987,565 Finished goods 30,448,658 33,998,445 Packing materials and consumables 11,084,690 8,835,232

134,652,548 117,378,359

Recognised in profit or loss:- Inventories recognised as cost of sales 224,058,700 157,376,532

11. TRADE AND OTHER RECEIVABLES

Group Company2018 2017 2018 2017RM RM RM RM

Trade receivables:-Third parties 142,110,938 197,688,188 - -Related parties 14,060 220,149 - -Retention sum 60,937,771 57,142,385 - -

203,062,769 255,050,722 - -Less: Accumulated impairment losses (8,868,888) (4,706,625) - -

194,193,881 250,344,097 - -

Other receivables:-Third parties 36,115,240 43,475,038 - -Subsidiaries - - 34,530,578 7,594,426

Associate 6,155,375 6,459,392 - -Related parties 135,922 162,373 - -Deposits 12,766,988 8,523,765 21,000 1,000Prepayments 4,017,144 4,684,039 529,476 -GST receivable 2,066,887 803,274 - -

61,257,556 64,107,881 35,081,054 7,595,426Less: Accumulated impairment losses (2,093,235) (654,508) - -

59,164,321 63,453,373 35,081,054 7,595,426

253,358,202 313,797,470 35,081,054 7,595,426



132 133132 133

11. TRADE AND OTHER RECEIVABLES (CONT’D)

The movement of accumulated impairment losses of trade receivables is as follows:-

Group2018 2017RM RM

Brought forward as per MFRS 139 4,706,625 2,218,787Additional due to adoption of MFRS 9 2,484,367 -

Brought forward as per MFRS 9 7,190,992 2,218,787Charge for the financial year 3,002,151 2,975,105Reversal of impairment losses (1,324,255) (487,267)


Individually impaired 7,286,550 57,229Collectively impaired 1,582,338 4,649,396

Total 8,868,888 4,706,625

The component of accumulated impairment losses of trade receivables is as follows:-

Group2018 2017RM RM

Third parties 8,868,888 4,706,625

The movement of accumulated impairment losses of other receivables is as follows:-

Group2018 2017RM RM

Brought forward as per MFRS 139 654,508 915,897Additional due to adoption of MFRS 9 1,662,977 -

Brought forward as per MFRS 9 2,317,485 915,897Charge for the financial year 134,641 182Reversal of impairment losses (358,891) (261,571)

Carried forward 2,093,235 654,508

Individually impaired 667,982 -Collectively impaired 1,425,253 654,508

Total 2,093,235 654,508

11. TRADE AND OTHER RECEIVABLES (CONT’D)

The component of accumulated impairment losses of other receivables is as follows:-

Group2018 2017RM RM

Third parties 1,965,394 654,508Deposit 121,118 -Associate 49 -Related parties 6,674 -

2,093,235 654,508

Related companies refer to members of Rohas Tecnic Berhad’s group of companies. Related parties refer to the companies in which Directors have interests.

Trade receivables

The trade receivables are non-interest bearing and are recognised at their original invoice amounts which represent their fair values on initial recognition. The normal credit terms granted to the customers ranged from 1 to 180 days (2017: 1 to 180 days). Other credit terms are assessed and approved by the management on case-by-case basis.

Other receivables

The amount due from subsidiaries, an associate and related parties represents the interest free unsecured cash advances which are payable on demand except for an amount of RM27,490,000 (2017: RM2,060,048) which is due from subsidiaries is subject to the interest rate ranged from 2% to 5.5% (2017: 2%) per annum.

Other receivables that are collectively determined to be impaired at the reporting date relate to debtors that are past due for more than 120 days and have defaulted on payments. These receivables are not secured by any collateral or credit enhancements.

Information on financial risk of trade and other receivables are disclosed in Note 30 to the financial statements.

12. CONTRACT ASSETS/(LIABILITIES)

Group2018 2017RM RM

Contract assets- Contract costs 882,384 -- Construction contracts 150,483,466 93,516,733

Less: Accumulated impairment losses (363,725) -

151,002,125 93,516,733Contract liabilities- Construction contracts (9,265,202) (15,817,405)- Customers deposits (91,713,209) -

(100,978,411) (15,817,405)



134 135134 135

12. CONTRACT ASSETS/(LIABILITIES) (CONT’D)

The movement of the accumulated impairment losses of contract assets is as follow:-

Group2018 2017

Collectively impaired RM RM

Brought forward as per MFRS 9 (2018) and MFRS 139 (2017) - -Charge for the financial year 363,725 -

Carried forward 363,725 -

Contract assets and contract liabilities represent the amount due from/(to) customers in the previous financial year.

Construction contracts

Contract assets primarily relate to the rights to consideration for work completed on construction contracts but not yet billed as at the reporting date.

Contract liabilities consist of advance billings in excess of revenue recognised, typically resulting from the timing differences in revenue recognition and the milestone billings. The milestone billings are structured and/or negotiated with customers to reflect the physical completion of the contracts.

Customers deposits

Customers deposits relate to deposits made by customers for the construction projects which is partially performed or have yet to perform by the Group as at the reporting date. The Group applies the practical expedient in MFRS 15 on not disclosing the aggregate amount of the revenue expected to be recognised in the future as the performance obligation is part of a contract that has an original expected duration of less than one year.

Contract costs

Contract costs relate to the cost generate or enhance resources of the Group that will be used in satisfying performance obligation in the future.

Contract value yet to be recognised as revenue

As at the reporting date, revenue expected to be recognised in the future relating to performance obligations that are unsatisfied (or partially unsatisfied) of the Group is RM599,822,010. The Group expects to recognise this revenue over the next 12-36 months.

Significant changes to the contract assets and contract liabilities balances during the financial year are as follows:-

Group2018RM

Contract liabilities at the beginning of the year recognised as revenue 3,033,796

Increase/(Decrease) in revenue recognised in the reporting period from performance obligations satisfied (or partially satisfied) in previous period 92,870,281

12. CONTRACT ASSETS/(LIABILITIES) (CONT’D)

Comparative information under MFRS 111

Group2017RM

Costs incurred on contract to date 768,908,462Attributable profits 84,892,002

853,800,464Progress billings issued to date (776,101,136)

77,699,328

This represents:-Due from contract customers 93,516,733Due to contract customers (15,817,405)

77,699,328

Advance received from customers included in other payables. 94,850,138

13. CASH AND BANK BALANCES, DEPOSITS AND SHORT-TERM PLACEMENTS


Islamic type - Cash and bank balances 21,079,291 15,868,249 7,627 106,882 - Deposits with financial institutions 12,706,020 18,260,470 - - - Deposits with fund management corporations 463,212 33,314,364 90,143 20,025,134

Conventional type - Cash and bank balances 21,083,221 23,579,388 77,175 133,901 - Deposits with financial institutions 5,292,911 13,662,851 - - - Deposits with fund management corporations 1,711 - - -

60,626,366 104,685,322 174,945 20,265,917

The Group’s deposits amounting to RM17,999,048 (2017: RM33,585,957) are pledged to the banks to secure the banking facilities granted to the subsidiaries.

Information on financial risk of cash and bank balances, deposits and short-term placements are disclosed in Note 30 to the financial statements.



136 137136 137

14. SHARE CAPITAL

Number of ordinary shares Amount2018 2017 2018 2017

Group and Company Unit Unit RM RM

Issued and fully paid:-At beginning of financial year 472,657,651 40,397,333 299,484,409 4,039,733Issuance of ordinary shares:-- acquisition of REI - 317,460,318 - 200,000,000- acquisition of HGPT - 72,800,000 - 69,160,000- private placement - 42,000,000 - 26,284,676

At end of financial year 472,657,651 472,657,651 299,484,409 299,484,409

The holders of ordinary shares are entitled to receive dividends as and when declared by the Company. All ordinary shares carry one vote per share without restrictions and rank equally with regard to the Company’s residual assets.

15. OTHER RESERVES

Group2018 2017RM RM

Non-distributableShare premium - 5,409,923)Reserve upon consolidation (104,798,778) (104,798,778)Fair value reserve - 1,296,662)Foreign currency translation reserve 753,949 1,628,722)Transition to no par-value regime - (5,409,923)

(104,044,829) (101,873,394)

Share premium

The new Companies Act, 2016, which came into operation on 31 January 2017, abolished the concept of authorised share capital and par value of share capital. Consequently, the amounts standing to the credit of the share premium account become part of the Company’s share capital pursuant to the traditional provisions set out in Section 618(2) of the Act. Notwithstanding this provision, the Company may within 24 months from the commencement of the Act, use the amount standing to the credit of its share premium account of RM5,409,923 for purposes as set out in Sections 618(3). There is no impact on the number of ordinary shares in issue or the relative entitlement of any of the members as a result of this transition.

Fair value reserve

Fair value reserve represents the cumulative fair value changes, net of tax of available-for-sale financial assets until they are disposed of or impaired. The Group and the Company adopted MFRS 9 as disclosed in Note 2 to the financial statements and the available-for-sales financial assets is now measured at fair value through profit or loss. Therefore, the fair value reserve brought forward was transferred to retained earnings brought forward in current year.

15. OTHER RESERVES (CONT’D)

Foreign currency translation reserve

Foreign currency translation reserve is used to record foreign currency exchange differences arising from the translation of the financial statements of foreign operations whose functional currencies are different from that of the Group’s presentation currency.

16. BORROWINGS

Group Company 2018 2017 2018 2017RM RM RM RM

Non-currentSecured:-Term loans- Conventional type 2,891,971 3,339,652 - -

Unsecured:-Revolving credit- Islamic type - 15,000,000 - 15,000,000

2,891,971 18,339,652 - 15,000,000

CurrentSecured:-Term loans- Conventional type 444,653 425,214 - -Short term loans - Conventional type 411,893 - - -Revolving credit- Islamic type 3,655,800 3,655,800 - -Bankers’ acceptances - Islamic type- Conventional type

4,327,962-

48,651,9069,006,697

--

--

Bank overdraft -Conventional type 4,209,842 3,269,131 - -Trust receipts -Conventional type 3,005,275 - - -

Unsecured:-Bankers’ acceptances - Islamic type - Conventional type

2,801,22742,460,000

1,292,43931,770,714

--

--

Short term loans - Conventional type 1,741,976 2,527,868 - -Revolving credit- Islamic type 24,000,000 5,000,000 20,000,000 5,000,000

87,058,628 105,599,769 20,000,000 5,000,000

Total 89,950,599 123,939,421 20,000,000 20,000,000



138 139138 139

16. BORROWINGS (CONT’D)

Group

Term loans

The term loans are secured by:-

(a). Certain properties of subsidiaries;(b). Joint and several guarantee of two ex-Directors of a subsidiary;(c). Corporate guarantee by a related party.

The borrowings are secured by way of:-

(a). Joint and several guarantees of two ex-Directors of the Company;(b). Corporate guarantee given by the ex-holding company of a subsidiary; (c). Certain properties of the subsidiaries; (d). Certain fixed deposits of the subsidiaries; and(e). Corporate guarantee of the Company.

Subsequent to the reporting period, except for term loans, the borrowings of a subsidiary are secured by way of:- (a). Certain properties of the Group and of the Company; (b). Fixed deposits of the Group and of the Company pledged as securities; and(c). Corporate guarantee given by the holding company.

Information on financial risks of borrowings is disclosed in Note 30 to the financial statements.

17. FINANCE LEASE LIABILITIES

Group2018 2017RM RM

Minimum lease payments:-- Not later than 1 year 1,212,960 994,302- Later than 1 year but not later than 5 years 2,049,083 1,020,761- Later than 5 years - 3,968

2,049,083 1,024,729

3,262,043 2,019,031Less: Future finance charges on finance lease (264,488) (119,983)

2,997,555 1,899,048Present value of finance lease liabilities:-

- Not later than 1 year 1,078,798 911,389- Later than 1 year but not later than 5 years 1,918,757 984,228

- Later than 5 years - 3,431

1,918,757 987,659

2,997,555 1,899,048

17. FINANCE LEASE LIABILITIES (CONT’D)

The finance lease liabilities are secured by a charge over the leased assets as disclosed in Note 4 to the financial statements and secured against the guarantee by:-

Group2018 2017RM RM

Ex-director of the subsidiaries 797,557 1,583,618 A subsidiary 91,118 125,510

888,675 1,709,128

Information on financial risks of finance lease liabilities is disclosed in Note 30 to the financial statements.

18. RETIREMENT BENEFITS

Defined benefit plan

The defined benefit plan provided by the Group to all eligible Malaysian employees on a discretionary lump sum payment basis upon their retirement with minimum of 10 years of service being attained except to a Director whose lump sum payment is as per terms and conditions of the employment contract. The defined benefit plan is unfunded, as benefits may be payable directly by the Group to the active participants subject to final approval of the Board of Directors being obtained.

The plan exposes the Group to actuarial risks such as interest rate risk and inflation risk as explained below:-

Interest rate risk

The present value of the defined benefit liability is calculated using a discount rate determined by reference to market yields of high quality corporate bonds. The estimated term of the bonds is consistent with the estimated term of the defined benefit obligation. A decrease in market yield on high quality corporate bonds will increase the Group’s defined benefit liability.

Inflation risk

A significant proportion of the defined benefit liability is linked to inflation. An increase in the inflation rate will increase the Group’s liability.



140 141140 141

18. RETIREMENT BENEFITS (CONT’D)

Defined benefit plan (cont’d)

Movement in defined benefit plan

The following is reconciliation of the Group’s defined benefit obligation presented in the statements of financial position for each reporting period:-

Group2018 2017RM RM

Defined benefit obligation brought forward 5,830,084 4,930,507Current service costs - 214,702Net interests - 266,714Remeasurements effect recognised in OCI - 418,161Benefit paid (3,141,000) -

Defined benefit obligation carried forward 2,689,084 5,830,084

Actuarial assumptions

Significant actuarial assumptions for the determination of the defined benefit obligation are the discount rate on the lump sum retirement benefit, the mortality, disability and withdrawal rates. The sensitivity analysis below has been determined based on a reasonably possible changes of the discount rates occurring at the end of the reporting period, while all other assumptions remained constant.

Group Core assumption

Sensitivity analysis

Effect on defined benefit obligation increase

% % RM %2018

Discount rate 5.20% 1.0% decrease 259,204 10%

2017Discount rate 5.20% 1.0% decrease 260,879 4%

The sensitivity analysis presented above may not be representative of the actual change in the defined benefit obligation because it is unlikely that the change in assumptions would occur in isolation of one another as some of the assumptions may be correlated. In presenting the above sensitivity analysis, the present value of the defined benefit obligation has been calculated using the projected unit credit method at the end of the reporting period, which is the same as that applied in calculating the defined benefit obligation liability recognised in the statements of financial position.

Defined benefit plan expenses

Amounts recognised in profit or loss related to the Group’s defined benefit plan are as follows:-

Group2018 2017RM RM

Current service costs - 214,702

Net interests - 266,714

Total expenses recognised in profit or loss - 481,416

18. RETIREMENT BENEFITS (CONT’D)

Defined benefit plan (cont’d)

Defined benefit plan expenses (cont’d)

Amounts recognised in other comprehensive income related to the Group’s defined benefit plan is as follows:-

Group2018 2017RM RM

Actuarial loss due to plan experience - 337,977Actuarial loss due to financial assumption - 80,184

Total expenses recognised in other comprehensive income - 418,161

All the expenses summarised above were included within items that will not be reclassified subsequently to profit or loss in the statements of profit or loss and other comprehensive income.

Other information on the defined benefit plan

The weighted average durations of the benefit obligation at 31 December 2018 is 38 years. The Group expected to make benefit payment of RMNil (2017: RM2,916,000) in the next financial year.

19. TRADE AND OTHER PAYABLES


Trade payables:Third parties 126,565,906 83,366,923 - -Related party 301,035 301,034 - -

126,866,941 83,667,957 - -

Other payables:Third parties 3,478,993 6,508,821 3,508 106Advance received from

Customers/Sundry 291,761 94,850,138 - -Accruals 8,596,543 15,458,548 48,000 45,567Provision for liquidated and ascertained damages 4,137,180 - - -

Deposits received 497,847 3,062,187 - -GST payable 960,098 1,972,195 - -

17,962,422 121,851,889 51,508 45,673

144,829,363 205,519,846 51,508 45,673



142 143142 143

19. TRADE AND OTHER PAYABLES (CONT’D)

Trade payables

The trade payables are non-interest bearing and the normal credit terms granted by the trade payables ranged from 7 to 90 days (2017: 7 to 90 days).

20. REVENUE

Group Company

2018 2017 2018 2017

RM RM RM RM

Primary geographical markets

Malaysia 262,602,265 246,119,636 15,726,780 10,256,596

Australia 3,663,496 6,991,388 - -

Laos 7,680,151 40,664,148 - -

Bangladesh 130,115,642 17,088,416 - -

Indonesia 124,976 - - -

Papua Guinea - 15,880 - -

404,186,530 310,879,468 15,726,780 10,256,596

Major product & services line

Fabrication of towers 153,291,878 180,027,671 - -

Steel towers & substation structures 237,701,467 130,851,797 - -

Others 13,193,185 - 15,726,780 10,256,596

404,186,530 310,879,468 15,726,780 10,256,596

Timing and recognition

At a point in time 209,888,514 180,027,671 15,726,780 10,256,596

Over time 194,298,016 130,851,797 - -

404,186,530 310,879,468 15,726,780 10,256,596

21. PROFIT BEFORE TAX

Profit before tax has been determined after charging/(crediting), amongst other items, the following:-


Charging:-

Auditors’ remuneration: - Charge for the year 238,932 266,740 60,000 45,000

- Other auditors’ remuneration 15,700 87,622 - -- Under provision in prior year 5,000 - 5,000 -- Other services 99,400 686,800 8,000 686,800

Interest expenses:-

- Bank overdraft 254,219 13,975 - -

- Bankers’ acceptances 5,726,295 3,830,759 - -- Bankers’ guarantees 27,938 74,201 - -- Finance lease liabilities 119,971 33,132 - -- Onshore foreign currency loan - 10,020 - -- Short term loans 59,243 87,618 - -- Revolving credit interest 1,207,824 5,567 1,039,337 5,567

- Others 269,823 175,028 - -- Term loan interest 312,060 151,372 - -

Net loss on foreign exchange:-- Realised 341,772 171,480 - -

- Unrealised - 688,693 - -Rental expenses:

- Premises 2,420,249 1,094,493 - -- Machinery and equipment 262,423 73,567 - -- Motor vehicles 419,267 296,163 - -

- Staff quarters 122,180 26,114 - -

Crediting:-

Dividend income:

- Subsidiaries in Malaysia - - 15,726,780 10,256,596

- Quoted shares in Malaysia 41,618 63,125 - -

Net gain on foreign exchange:

- Unrealised 353,398 - - -

Interest income:

- Deposits with financial institutions

1,381,658 731,108 7,692 1,641

- Asset management 243,261 439,215 243,261 439,215- Subsidiaries - - 831,397 42,896

Rental income:

- Related parties 163,761 144,965

- Third parties 51,713 37,600



144 145144 145

22. TAX EXPENSE/(INCOME)

Group Company

2018 2017 2018 2017

RM RM RM RM

Current tax:- current year- under/(over) provision in prior year

8,180,261

1,019,431

9,957,940

2,047,458

-

-

759

(892)

9,199,692 12,005,398 - (133)

Deferred tax:

- origination and reversed at temporary differences

- (under)/over provision in prior year

(4,113,352)

(1,749,131)

(1,109,082)

118,438

-

-

-

-

(5,862,483) (990,644) - -

Total tax expense/(income) 3,337,209 11,014,754 - (133)

Malaysian income tax is calculated at statutory tax rate of 24% (2017: 24%) of the estimated assessable profits for the financial year.

The numerical reconciliations between the effective tax rate and the statutory tax rate of the Group and of the Company are as follows:-

Group Company

2018 2017 2018 2017

RM RM RM RM

Profit before tax 18,598,988 15,585,343 14,561,593 4,559,030

Tax at Malaysian statutory rate of 24% 4,463,758 3,740,482 3,494,783 1,094,167Tax effect in respect of:Non-taxable income (4,120,321) (2,350,919) (3,832,810) (2,567,388)Non-allowable expenses 5,431,181 7,448,295 338,027 1,473,980Movement of deferred tax assets not

recognised 1,398,456 11,000 - -Under/(over) provision of income in

prior year 1,019,431 2,047,458 - (892)(Under)/over provision of deferred tax

assets in prior year (1,749,131) 118,438 - -Effect of change in tax rate in other

countries (3,106,165) - - -

Total tax expenses/(income) 3,337,209 11,014,754 - (133)

Tax expense for other jurisdictions is calculated at the rates prevailing in the respective jurisdictions.

23. EARNINGS PER SHARE

(a) Basic

Basic earnings per ordinary share for the financial year is calculated by dividing the profit for the financial year attributable to equity holders of the Company by the weighted average number of ordinary shares outstanding during the financial year.

Group2018 2017

Profit attributable to equity holders of the Company (RM) 16,029,532 3,059,384

Weighted average number of ordinary shares in issue 472,657,651 346,041,099

Basic earnings per ordinary share (sen) 3.39 0.88

(b) Diluted

Diluted earnings per ordinary share equals basic earnings per ordinary share as there are no dilutive potential ordinary shares.

24. DIVIDENDS


In respect of financial year ended 31 December 2017:- A special dividend of 49

sen on 40,397,333 ordinary shares, paid on 15 February 2017 - - - 19,794,693

- An interim single tier dividend of 1 sen on 472,657,651 ordinary shares, paid on 26 December 2017 - 4,726,577 - 4,726,577

- Final single tier dividend of 1.5 sen on 472,657,651 ordinary shares, paid on 27 June 2018 7,089,865 - 7,089,865 -

7,089,865 4,726,577 7,089,865 24,521,270

The Directors recommend a final single tier dividend of 1 sen per share in respect of the current financial year for the shareholders’ approval at the forthcoming Annual General Meeting. The current financial statements does not reflect this proposed dividend. Such dividend, if approved by the shareholders, will be accounted for in equity as an appropriation of retained earnings in the financial year ending 31 December 2019.



146 147146 147

25. EMPLOYEE BENEFITS EXPENSE

The employee benefits expenses included the followings:-


Salaries, wages and other emoluments 37,561,812 29,698,360 661,000 179,806

Retirement benefits - 481,416 - - Defined contribution plan 2,899,300 2,580,148 - 3,882

40,461,112 32,759,924 661,000 183,688 Directors’ remunerations Included in the employee benefits expenses is the Directors’ remunerations as below:-


Executive Directors: - Existing Directors -Salaries and other emoluments 1,678,202 1,543,292 - - -Defined contribution plan 201,281 184,964 - - Total Executive Directors’

remuneration 1,879,483 1,728,256 - -

Non-Executive Directors:-Existing Directors

-Fees 390,000 - 390,000 --Salaries and otheremoluments 574,000 146,000 250,000 146,000

Ex Directors-Fees 21,000 - 21,000 --Salaries and otheremoluments - 1,235,611 - -

Total Non-ExecutiveDirectors’ remuneration 985,000 1,381,611 661,000 146,000

Total 2,864,483 3,109,867 661,000 146,000

26. RELATED PARTY DISCLOSURES

Related party transactions

The significant related party transactions of the Group and of the Company are as follows:

2018 2017Group RM RM

Related parties:- sales 202,418 133,506- purchases (40,673) (8,905)

- rental income 163,761 144,965- rental expense (1,061,399) (912,817)

Director of the Company:- Retirement benefits paid to a Director 2,916,000 -

Company

Subsidiaries:

- interest income 831,397 42,896- dividend income 15,726,780 10,256,596- loan 26,360,000 1,850,000

Related party balances

Outstanding balances arising from related party transactions as at the reporting date are disclosed in Notes 11 and 19 to the financial statements.

Compensation of key management personnel

Key management personnel is defined as those persons having authority and responsibility for planning, directing and controlling the activities of the Group and the Company either directly or indirectly and entity that provides key management personnel services to the Group and the Company.

Key management includes all the Directors of the Company’s and its subsidiaries and certain members of senior management of the Group and of the Company.


Directors’ remuneration 2,864,483 3,109,867 661,000 146,000

Other key management personnel:-Salaries and other emoluments 2,345,236 1,937,552

-406,221

Defined contribution plan 280,620 231,937 - 48,211Benefit in kind 41,586 19,296 - -

2,667,442 2,188,785 - 454,432

Total 5,531,925 5,298,652 661,000 600,432



148 149148 149

27. OPERATING SEGMENT

For management purposes, the Group is organised into three business units based on their products and services, which comprises the following:-

Business segments Business activities

Fabrication of towers - Power Transmission - Telecommunication

Involving the manufacture, design, fabrication and erection of power transmission towers and telecommunication towers and design and fabrication of electrical substation structures.

Engineering, Procurement, Construction and Commissioning (“EPCC”)

Mechanical and electrical engineering, procurement and construction contractor for water and sewage treatment plant, operation of a hot-dip galvanising plant and electrification and power plant refurbishment.

Others Civil and infrastructure works, fabrication services for other steel work and products, steel skids and accessories for water tank related products, development of mini-hydro plant, investment holdings and management services.

The Group has aggregated certain operating segments to form a reportable segment due to the similar nature and operational characteristics of the products.

Management monitors the operating results of its business units separately for the purpose of making decisions about resource allocation and performance assessment. Segment performance is evaluated based on operating profit or loss which, in certain respects as explained in the table below, is measured differently from operating profit or loss in the consolidated financial statements.

Group interest income and financing (including finance costs) and income taxes are managed on a group basis and are not allocated to operating segments except for those directly attributable to the business unit that can be separately identifiable.

Assets, liabilities and expenses which are common and cannot be meaningfully allocated to the operating segments are presented under Others. Others comprise mainly investments and related income, loans and borrowings and related expenses, corporate assets (primarily the Company’s headquarters) and head office expenses.

Transfer prices between operating segments are on an arm’s length basis in a manner similar to transactions with third parties.

27.

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(42,

270,

300)

227,

167,

335

27. OPERATING SEGMENT (CONT’D)

Business segment (cont’d)

Notes to the nature of adjustments and eliminations to arrive at amounts reported in the consolidated financial statements:-

(a) Inter-segment revenues are eliminated on consolidation.

(b) Other major non-cash income/(expenses) consist of the following items as presented in the respective notes to the financial statements:-

Group2018 2017RM RM

Allowance for impairment loss on receivables (3,500,517) (2,975,287)Allowance for impairment loss on receivables no longer required 1,683,146 748,838Gain on disposal of property, plant and equipment 132,152 33,108Gain/(Loss) on unrealised foreign exchange, net 353,398 (688,693)Loss on other investments, net (226,922) -

(1,558,743) (2,882,034)

(c) The following items are added to/(deducted from) segment profit to arrive at “profit after tax” presented in the consolidated statements of profit or loss:-

Group2018 2017RM RM

Segment profit 22,074,811 7,935,249Interest income 1,624,919 1,170,323

Finance costs (7,977,373) (4,381,672)Share of result of an associate (460,578) (153,311)

Profit after tax 15,261,779 4,570,589

(d) The following items are added to segment assets to arrive at total assets reported in the consolidated statements of financial position.

Group2018 2017RM RM

Segment assets 663,256,979 682,156,227Goodwill on consolidation 7,544,540 7,544,540Deferred tax assets 9,649,049 3,855,901Tax recoverable 8,567,995 3,714,498

Total assets 689,018,563 697,271,166

NO

TE

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O T

HE

FIN

AN

CIA

L S

TAT

EM

EN

TS

(c

on

t’d

)31

Dec

emb

er 2

018


152 153152 153


Business segment (cont’d)

(e) Additions to non-current assets other than financial instruments and deferred tax assets consist of:-

Group

2018 2017

RM RM

Property, plant and equipment 19,308,183 2,784,293

(f) The following items are added to segment liabilities to arrive at total liabilities reported in the consolidated statements of financial position:-

Group

2018 2017

RM RM

Segment liabilities 248,496,858 227,167,335

Deferred tax liabilities 142,647 211,982

Finance lease liabilities 2,997,555 1,899,048

Borrowings 89,950,599 123,939,421

Tax payable 803,534 525,832

Total liabilities 342,391,193 353,743,618

Major Customers

The following are major customers with revenue equal or more than 10 percent of the Group’s revenue:-

Group RM % Operating Segment

2018

Customer A 88,107,182 22 EPCC

Customer B 74,362,784 18 EPCC

Customer C 65,575,229 16 Steel tower & substation structure

228,045,195 56

2017

Customer A 52,522,728 17 Steel tower & substation structure

Customer B 40,664,148 13 Steel tower & substation structure

Customer C 35,165,669 11 Steel tower & substation structure

128,352,545 41


Geographical Information

Revenue and non-current assets information based on the geographical location of the customers and assets respectively are as follows:-

Group2018 2017

RevenueNon-current

assets RevenueNon-current

assetsRM RM RM RM

Malaysia* 262,602,265 66,238,920 246,119,636 54,228,992Australia 3,663,496 - 6,991,388 -Bangladesh 130,115,642 - 17,088,416 -Laos 7,680,150 - 40,664,148 -Papua New Guinea - - 15,880 -Indonesia 124,977 3,190,606 - 4,134,217

404,186,530 69,429,526 310,879,468 58,363,209

The amount of non-current assets consist of property, plant and equipment, investment in associate and goodwill on consolidation.*The Company’s home country

28. CONTINGENT LIABILITIES

The Directors are of the opinion that provisions are not required in respect of these matters as it is not probable that a future sacrifice of economic benefits will be required.


Bank guarantees for design warranty given to a customer by a subsidiary - 13,154,375 - -

Performance bond granted to a third party by a subsidiary 8,793,846 35,000 - -

Corporate guarantee provided to subsidiaries - - 65,294,769 -



154 155154 155

30. FINANCIAL INSTRUMENTS (CONT’D)

Categories of financial instruments (cont’d)

The table below provides an analysis of financial instruments categorised as at 31 December 2017:-

(a) Loans and receivables (“L&R”);(b) Available-for-sale investment(“AFS”); and(c) Other liabilities measured at amortised cost (“AC”).

Carryingamount L&R AFS AC

RM RM RM RM

GroupFinancial assetsTrade and other receivables 308,310,157 308,310,157 - -Other investments 1,959,674 - 1,959,674 -Cash and bank balances, deposits and short term placements 104,685,322 104,685,322 - -

414,955,153 412,995,479 1,959,674 -

Financial liabilitiesTrade and other payables 203,547,651 - - 203,547,651

Finance lease liabilities 1,899,048 - - 1,899,048

Borrowings 123,939,421 - - 123,939,421

329,386,120 - - 329,386,120

CompanyFinancial assetsTrade and other receivables 7,595,426 7,595,426 - -Cash and bank balances, deposits and short-term placements 20,265,917 20,265,917 - -

27,861,343 27,861,343 - -

Financial liabilitiesTrade and other payables 45,673 - - 45,673Borrowings 20,000,000 - - 20,000,000

20,045,673 - - 20,045,673

29. CAPITAL COMMITMENT

Group2018 2017RM RM

Capital expenditure

Authorised and contracted for:-

- Property, plant and equipment 1,291,541 453,181

30. FINANCIAL INSTRUMENTS

Categories of financial instruments

The table below provides an analysis of financial instruments categorised as at 31 December 2018:-

(a) Fair value through profit or loss (“FVTPL”); and(b) Amortised cost (“AC”).

Carrying

amount FVTPL AC

RM RM RM

GroupFinancial assetsTrade and other receivables 247,274,171 - 247,274,171Other investments 1,732,752 1,732,752 -Cash and bank balances, deposits and short-term placements 60,626,366 - 60,626,366

309,633,289 1,732,752 307,900,537

Financial liabilitiesTrade and other payables 143,869,265 - 143,869,265Finance lease liabilities 2,997,555 - 2,997,555Borrowings 89,950,599 - 89,950,599

236,817,419 - 236,817,419

Company

Financial assets

Trade and other receivables 34,551,578 - 34,551,578

Cash and bank balances, deposits and short term placements 174,945 - 174,945

34,726,523 - 34,726,523

Financial liabilities

Trade and other payables 51,508 - 51,508

Borrowings 20,000,000 - 20,000,000

20,051,508 - 20,051,508



156 157156 157


Risk management objectives and policies (cont’d)

30.1 Credit risk (cont’d)

(a) Trade receivables, other receivables and contract assets (cont’d)

Credit risk concentration (cont’d)

The Group and the Company continuously monitor credit standing of customers and other counterparties, identified either individually or by group, and incorporate this information into its credit risk controls. Where available at reasonable cost, external credit ratings and/or reports on customers and other counterparties are obtained and used.

Recognition and measurement of impairment loss

In managing credit risk of trade receivables, the Group and the Company manage their debtors and takes appropriate actions (including but not limited to legal actions) to recover long overdue balances. The Group’s and the Company’s debt recovery process are as follows:-

(i) Above 30 days past due after credit term, the Group will start to initiate together with treasury

team a structured debt recovery process which is monitored by the sales management team; and

(ii) The Group and the Company will commence a legal proceeding against the customers which having dispute.

The Group and the Company uses an allowance matrix to measure ECLs who are having dispute with the trade receivables for trading and construction customers. Invoices which are past due more than 365 days will be considered as credit impaired.

The Group and the Company assessed the risk of loss based on the following factors: (i) overall past trend payments of customers; (ii) financial performances of each individual customers; and (iii) cost of borrowings and interest income rate.

None of the Group’s and the Company’s financial assets are secured by collateral or other credit enhancements.


Risk management objectives and policies The Group and the Company are exposed to financial risks arising from their operations and the use of financial instruments. They have established policies and procedures to ensure effective management of credit risk, liquidity risk, interest rate risk, foreign currency risk and equity price risk.

The following sections explain key risks faced by the Group, the Company and their management. Financial assets and liabilities of the Group and of the Company are summarised in Note 3.5 to financial statements.

30.1 Credit risk

Credit risk refers to the risk that a counter party will default in its contractual obligations resulting in financial loss to the Group and the Company. The Group and the Company adopt the policy of dealing with customers of appropriate standing to mitigate credit risk and customers who wish to trade on credit terms are subject to credit evaluation. Receivables are monitored on an ongoing basis to mitigate risk of bad debts. For other financial assets, the Group and the Company adopt the policy of dealing with reputable institutions.

(a). Trade receivables, other receivables and contract assets

Exposure to credit risk

Maximum exposure of the Group and of the Company to credit risk is represented by the carrying amount of financial assets recognised at reporting date summarised below:-


Classes of financial assets:-

Trade and other receivables 247,274,171 308,310,157 34,551,578 7,595,426Contract assets 151,002,125 93,516,733 - -

Carrying amount 398,276,296 401,826,890 34,551,578 7,595,426

Credit risk concentration

In respect of trade and other receivables, the Group has significant exposure to several customers and as such a concentration of credit risks who are of high credit worthiness and of international repute.

Group

2018 2017

RM % RM %

Top 3 customers (2017: 3) 120,580,146 59 122,990,481 48



158 159158 159




(c) Financial guarantee/Corporate guarantee

The Group provides unsecured financial guarantees to banks in respect of banking facilities granted to certain subsidiaries. The maximum exposure to credit risk is as disclosed in Note 29 as at the reporting date. The Group monitors on an ongoing basis the results of the subsidiaries and repayments made by the subsidiaries. As at the end of the reporting year, there was no indication that the subsidiaries would default on repayment.

30.2 Liquidity risk

Liquidity risk refers to the risk that the Group and of the Company will encounter difficulty in meeting its obligations as they fall due. The Group and the Company are exposed to liquidity risk arising from payables, finance lease liabilities and borrowings and they maintain a level of cash and cash equivalents and bank credit facilities deemed adequate by management to ensure it has sufficient liquidity to meet their obligations when they fall due.

Analysis of financial liabilities by remaining contractual maturity period

The following is a summary of the financial liabilities of the Group and of the Company according to maturity period:-

Contractual cash flowCurrent Non-current

TotalWithin 1

year 2 to 5 yearsMore than 5

yearsGroup RM RM RM RM2018Non-derivative financial liabilitiesBorrowings 90,560,041 87,239,007 2,717,170 603,864Finance lease liabilities 3,262,043 1,212,960 2,049,083 -Trade and other payables 143,869,265 143,869,265 - -Total undiscounted financial liabilities 237,691,349 232,321,232 4,766,253 603,864

Financial guarantee* 8,793,846 8,793,846 - -

2017Non-derivative financial liabilitiesBorrowings 127,330,380 106,764,377 19,559,563 1,006,440Finance lease liabilities 2,019,031 994,302 1,020,761 3,968Trade and other payables 203,547,651 203,547,651 - -Total undiscounted financial liabilities 332,897,062 311,306,330 20,580,324 1,010,408

Financial guarantee* 13,189,375 13,189,375 - -




(a) Trade receivables, other receivables and contract assets (cont’d) Comparative information under MFRS 139

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

Group2017RM

Neither past due nor impaired 133,561,8131 to 30 days past due not impaired 26,758,57831 to 60 days past due not impaired 12,093,18961 to 90 days past due not impaired 5,573,809More than 90 days past due not impaired 72,356,708

116,782,284Impaired 4,706,625

255,050,722

Receivables that are neither past due nor impaired

Trade receivables that are neither past due nor impaired are due from creditworthy customers with good payment records with the Group. None of the Group’s trade receivables that are neither past due nor impaired have been renegotiated during the financial year.

Receivables that are past due but not impaired

The Group has trade receivables amounting to RM116,782,284 in 2017 that are past due at the reporting date but not impaired. The Directors are of the opinion that the receivables are collectible in view of long term business relationships with the customers and these relate to a number of independent customers for whom there is no recent history of default. These receivables are unsecured.

Receivables that are impaired

Trade receivables that are individually determined to be impaired at the reporting date relate to customers that have significant financial difficulties and have defaulted on payments. These receivables are not secured by any collateral or credit enhancements.

(b) Cash & cash equivalents and deposits with license banks

Deposits with banks and investment securities that are neither past due nor impaired are placed with or entered into with reputable financial institutions with high credit ratings and have no history of default. Therefore, credit risk is negligence.



160 161160 161



30.3 Interest rate risk (cont’d)

The following tables set out the carrying amounts, the weighted average effective interest rates [“WAEIR”] of the Group’s and of the Company’s financial instruments as at the reporting date and the periods in which they reprice or mature, whichever is earlier:-

Within 2 - 5 More thanWAEIR 1 year years 5 years Total

% RM RM RM RM

Group

2018Financial assetsFixed rate:- Deposits with financial institution 3.08 17,998,931 - - 17,998,931

Financial liabilitiesFixed rate:- Finance lease liabilities 5.54 1,078,798 1,918,757 - 2,997,555

Floating rate:- Term loans 6.40 444,653 2,298,211 593,760 3,336,624 Short term loans 6.34 2,153,869 - - 2,153,869 Bankers’ acceptances 5.87 49,589,189 - - 49,589,189 Revolving credit 5.98 27,655,800 - - 27,655,800 Bank overdraft 8.76 4,209,842 - - 4,209,842 Trust receipts 9.20 3,005,275 - - 3,005,275

2017

Financial assets

Fixed rate:-

Deposits with financial institutions 2.40 31,923,321 - - 31,923,321

Financial liabilities

Fixed rate:-

Finance lease liabilities4.56 911,389 984,228 3,431 1,899,048

Floating rate:-

Term loans 6.47 425,214 3,339,652 - 3,764,866

Short term loans 3.95 2,527,868 - - 2,527,868

Bank overdraft 8.79 3,269,131 - - 3,269,131

Bankers’ acceptances 5.58 90,721,756 - - 90,721,756

Revolving credit 5.56 8,655,800 15,000,000 - 23,655,800



30.2 Liquidity risk (cont’d)

Analysis of financial liabilities by remaining contractual maturity period (cont’d)

The following is a summary of the financial liabilities of the Group and of the Company according to maturity period (cont’d):-

Contractual cash flowCurrent Non-current

TotalWithin 1year 2 to 5 years

Company RM RM RM2018Non-derivative financial liabilitiesBorrowings 20,000,000 20,000,000 -Trade and other payables 51,508 51,508 -

Total undiscounted financial liabilities 20,051,508 20,051,508 -

Financial guarantee* 65,294,769 65,294,769 -

2017Non-derivative financial liabilitiesBorrowings 22,571,616 5,964,880 16,606,736Trade and other payables 45,673 45,673 -

Total undiscounted financial liabilities 22,617,289 6,010,553 16,606,736

* This exposure is included in liquidity risk for illustration only. No financial guarantee was called upon by the holders as at the end of the reporting period as disclosed in Note 28.

The above amounts reflect the contractual undiscounted cash flows, which may differ from the carrying values of financial liabilities at the reporting date.

30.3 Interest rate risk

Interest rate risk is caused by changes in market interest rate resulting in fluctuation in fair value or future cash flow of financial instruments of the Group and of the Company. The Group’s and the Company’s interest rate management objective is to manage interest expenses consistent with maintaining an acceptable level of exposure to interest rate fluctuation.

The Group’s and the Company’s borrowings at variable interest rates are exposed to the risk of change in cash flow due to changes in interest rate. Investment in equity securities and short term receivables and payables are not significantly exposed to interest rate risk.



162 163162 163




Interest rate sensitivity analysis (cont’d)

The following is interest rate profile of the significant interest-bearing financial instruments, based on carrying amounts as at the reporting date (cont’d):-


Floating rate instrumentsFinancial liabilitiesBorrowings 89,950,599 123,939,421 20,000,000 20,000,000

Net financial liabilities (89,950,599) (123,939,421) (20,000,000) (20,000,000)

The following illustrates the sensitivity of profit to a reasonably possible change in interest rates of +/-25 (2017: +/-25) basis points (“bp”). These changes are considered to be reasonably possible based on observation of current market conditions. The calculations are based on a change in the average market interest rate for each period, and the financial instruments held at each reporting date that are sensitive to changes in interest rates. All other variables are held constant.

Effect on profit for the yearIncrease/(Decrease)

Group CompanyRM RM RM RM

2018 (+/-25bp) (224,876) - (50,000) -2017 (+/-25bp) - (309,849) - (50,000)

30.4 Foreign currency risk

The Group is expected to foreign currency risk as a result of its normal operating activities, where the currency denomination differs from the local currency, Ringgit Malaysia (RM). The Group’s policy is to keep the foreign exchange exposure to an acceptable level.

The Group is exposed to transactional currency risk primarily through sales and costs of sales that are denominated in a currency other than the functional currency to which they related. The currency giving rise to this risk is primarily United States Dollar [“USD”], Indonesian Rupiah [“IDR”], Philippine Peso [“PHP”], Euro [“EUR”], Australia Dollar [“AUD”], Bangladesh Taka [“BDT”] and Papua New Guinea Kina [“PGK”].




The following tables set out the carrying amounts, the weighted average effective interest rates [“WAEIR”] of the Group’s and of the Company’s financial instruments as at the reporting date and the periods in which they reprice or mature, whichever is earlier (cont’d):-

Within 2 - 5 More thanWAEIR 1 year years 5 years Total

% RM RM RM RMCompany2018Financial assetsFixed rate:-Other receivables 5.00 27,490,000 - - 27,490,000

Financial liabilitiesFloating rate:-Revolving credit 5.30 20,000,000 - - 20,000,000

2017Financial assetsFixed rate:-Other receivables 2.00 2,060,048 - - 2,060,048

Financial liabilitiesFloating rate:-Revolving credit 5.08 5,000,000 15,000,000 - 20,000,000

Interest rate sensitivity analysis

The Group and the Company are exposed to changes in market interest rates through bank borrowings at variable interest rates. Other borrowings are at fixed interest rates. The following is interest rate profile of the significant interest-bearing financial instruments, based on carrying amounts as at the reporting date:-


Fixed rate instrumentsFinancial assets

Other receivables - - 27,490,000 2,060,048Deposits with financial institutions 17,998,931 31,923,321 - -

17,998,931 31,923,321 27,490,000 2,060,048

Financial liabilitiesFinance lease liabilities 2,997,555 1,899,048 - -

Net financial assets 15,001,376 30,024,273 27,490,000 2,060,048



164 165164 165



30.4 Foreign currency risk (cont’d)

Foreign currency sensitivity analysis

The following table illustrates the sensitivity of profit or loss with regards to the Group’s financial assets and financial liabilities and the RM/USD exchange rate, RM/IDR exchange rate, RM/PHP exchange rate, RM/EUR exchange rate, RM/AUD exchange rate, RM/BDT exchange rate and RM/PGK exchange rate assuming all other things being equal.

A +/-2% and +/-3% (2017: +/-2% and +/-3%) change in the RM/USD, RM/IDR, RM/PHP, RM/EUR, RM/AUD, RM/BDT and RM/PGK exchange rates at the reporting period is deemed possible. Both of these percentages have been determined based on average market volatility in exchange rates in the previous 12 months. The sensitivity analysis is based on the Group’s foreign currency financial instruments held at each reporting date and also takes into account forward exchange contracts that offset effects from changes in currency exchange rates.

If the RM had strengthened/weakened against the USD, IDR, PHP, EUR, AUD, BDT and PGK, then the impact would be as follows:-

Effect on profit for the yearsIncrease/(Decrease)

Group2018 2017RM RM

RM/USD-Strengthened 3% (2017: 3%) (1,082,287) (2,155,720)-Weakened 3% (2017: 3%) 1,082,287 2,155,720

RM/IDR-Strengthened 2% (2017: 2%) 128,046 127,653-Weakened 2% (2017: 2%) (128,046) (127,653)

RM/PHP-Strengthened 3% (2017: 3%) 2 --Weakened 3% (2017: 3%) (2) -

RM/EUR-Strengthened 2% (2017: 2%) 249,986 65,992-Weakened 2% (2017: 2%) (249,986) (65,992)

RM/AUD-Strengthened 2% (2017: 2%) 7,618 4,171-Weakened 2% (2017: 2%) (7,618) (4,171)




The net unhedged financial assets and financial liabilities of the Group that is not denominated in the functional currency other than those disclosed in the notes above, are as follows:-

Financial assets and liabilities held in non-functional currency:-

Group 2018 2017

RM RM

Trade and other receivables

USD 67,485,535 76,655,940

IDR 6,435,921 6,517,354

EUR 8,035,076 121,242

AUD 380,312 214,694

Cash and bank balances, deposits and short-term placements

USD 1,263,608 19,009,707

IDR 100,763 60,938

PHP 67 4

EUR 15,215,350 3,205,857

AUD 573 3,451

BDT 348,257 1,668,613

PGK 106,661 5,921,675

Trade and other payables

USD (24,692,097) (135,295,501)

IDR (134,383) (195,629)

EUR (10,751,121) (27,521)

AUD - (9,622)

PGK (86,542) (1,819,767)

Borrowings

USD (7,203,374) (32,227,490)

Contract liabilities

USD (72,929,907) -

Net exposure

USD (36,076,235) (71,857,344)

IDR 6,402,301 6,382,663

PHP 67 4

EUR 12,499,305 3,299,578

AUD 380,885 208,523

BDT 348,257 1,668,613

PGK 20,119 4,101,908



166 167166 167


30.6 Fair value on financial instruments (cont’d)

Fair value hierarchy

The following table provides an analysis of financial instruments that are measured subsequent to initial recognition at fair value, grouped into Levels 1 to 3 based on the degree to which the fair value is observable:-

Level 1 Level 2 Level 3 TotalGroup RM RM RM RM

2018Financial assetNon-derivative financial assets at FVTPL 1,732,752 - - 1,732,752

2017Financial assetNon-derivative financial assets at available-for-sale 1,959,674 - - 1,959,674

There was no transfer between Level 1 and Level 2 in 2018 and 2017.

30.7 Net gain or losses arising from financial instruments

Group2018 2017RM RM

Net (loss)/gain on:-Financial assets at FVTPL- recognised in profit or loss (226,922) -

Financial assets at AC- recognised in profit or loss (1,453,646) -

Contract assets - recognised in profit or loss (363,725) -

Disclosure in accordance to MFRS 139 (applied until 31 December 2017):-

Net gain/(loss) on:-Available-for-sale financial assets:--recognised in OCI - 249,801

Loan and receivables:-- recognised in profit or loss - (2,226,449)




Foreign currency sensitivity analysis (cont’d)

If the RM had strengthened/weakened against the USD, IDR, PHP, EUR, AUD, BDT and PGK, then the impact would be as follows (cont’d):-

Effect on profit for the yearsIncrease/(Decrease)

Group2018 2017RM RM

RM/BDT-Strengthened 1% (2017: 1%) 3,483 16,686-Weakened 1% (2017: 1%) (3,483) (16,686)

RM/PGK-Strengthened 1% (2017: 2%) 201 82,038-Weakened 1% (2017: 2%) (201) (82,038)

Exposures to foreign exchange rates vary during the year depending on the volume of overseas transactions. Nonetheless, the analysis above is considered to be representative of the Group’s exposure to currency risk.

30.5 Equity price risk

Equity price risk is the risk that the fair value or future cash flows of the Group’s financial instruments will fluctuate because of changes in market price of quoted securities held as available-for-sale investments in which current year has been classified as financial assets measured at fair value through profit or loss.

A 5% (2017: 5%) increase in share price of each counter at the reporting date would have increase the Group’s profit for the financial year by RM86,638 (2017:RM97,984). A 5% (2017: 5%) weakening in the share price of each counter would have equal but opposite effect on the Group’s profit for the financial year.

30.6 Fair value on financial instruments

The carrying amounts of financial assets and liabilities of the Group and of the Company at reporting date approximate their fair values because they are re-priced to market rates on or near reporting date or they have a short maturity period.



168 169

31. RECONCILIATION OF LIABILITIES ARISING FROM FINANCING ACTIVITIES

Group1 January

2018 Cash flows

Allowancefor

impairment

Purchaseof property, plant and

equipment31 December

2018RM RM RM RM RM

Associate (6,459,392) 304,017 49 - (6,155,326)Related parties (162,373) 26,451 6,674 - (129,248)Revolving credit 23,655,800 4,000,000 - - 27,655,800Term loans 3,764,866 (428,242) - - 3,336,624Finance lease liabilities 1,899,048 (1,110,281) - 2,208,788 2,997,555Dividend paid - (7,089,865) - - (7,089,865)

Total 22,697,949 (4,297,920) 6,723 2,208,788 20,615,540

Company1 January

2018Cash Flows

Loan to subsidiaries

Dividend income

Dividend received

31 December 2018

RM RM RM RM RM RM

Dividend - (7,089,865) - - - (7,089,865)Subsidiaries (7,594,426) 587,218 (25,190,000) (15,726,780) 13,393,410 (34,530,578)

Total (7,594,426) (6,502,647) (25,190,000)

(15,726,780) 13,393,410

(41,620,443)

Group 1 January 2017 Cash Flows

Acquisition of subsidiary

31 December 2017

RM RM RM RM

Dividend - (4,726,577) - (4,726,577)

Revolving credit - 23,655,800 - 23,655,800

Term loan 3,112,307 (285,161) 937,720 3,764,866

Finance lease liabilities 932,263 (624,903) 1,591,688 1,899,048

Total 4,044,570 18,019,159 2,529,408 24,593,137

Company

Dividend - (4,726,577) - (4,726,577)

Revolving credit - 20,000,000 - 20,000,000

Total - 15,273,423 - 15,273,423

32. CAPITAL MANAGEMENT

The Group’s objective when managing capital are to safeguard the Group’s ability to continue as a going concern and to maintain an optimal capital structure so as to maximise shareholder value. The Group’s policy is to maintain an adequate capital base so as to maintain investor, creditor and market confidence and to sustain future business developments. The Group funds its operations and growth through a mix of equity and debts. This includes the maintenance of adequate lines of credit and assessing the need to raise additional equity when required.

In the management of capital risk, management takes into consideration the net debt equity ratio as well as the Group’s working capital requirement. The net debt equity ratio is calculated as net debt divided by total capital. Net debt is calculated as total liabilities less total income tax payable, deferred tax liabilities and cash and cash equivalents. Total capital comprises share capital and reserves attributable to equity holders of the Group.


Net debt 280,818,646 248,320,482 19,876,563 -

Total capital 317,905,921 313,899,112 306,958,270 299,486,542

Total debt against equity ratio 0.88 0.79 0.06 - There were no changes in the Group’s approach to capital management during the financial year.

33. SIGNIFICANT AND SUBSEQUENT EVENT TO THE FINANCIAL YEAR Proposed acquisition of an associate

Its wholly-owned subsidiary, RBC Water Sdn Bhd (“RBC”) had on 1 August 2018 entered into a non-binding term sheet (“Term Sheet”) with the shareholders of Phu My Vinh Construction and Investment Corporation (“PMV”) namely, Nguyen Vu Hien, Tran Thi Mai Tram, Le Van Xin, Nguyen Thi Thanh, Vo Minh Thanh, Nguyen Vu Vinh and Minh Thong Company (collectively referred to as the “Vendors”) in respect of a proposed acquisition of 8,000,000 of ordinary shares, representing 40% to the total shares in PMV. Total purchase price of such proposed acquisition is amounting VND 232,000,000,000 (approximately RM41,300,000).

On 25 January 2019, RBC entered into a Share Purchase Agreement (“SPA”) with Vendors and PMV.

The above proposal is yet to be completed as at the report date.



170 171

Total number of issued shares : 472,657,651 ordinary sharesVoting rights : One vote per ordinary share

DISTRIBUTION OF SHAREHOLDINGS

Size of ShareholdingsNo. of

Shareholders% of

ShareholdersTotal

Shareholdings% of

Shareholdings

less than 100 shares 31 2.01 907 0.00

100 to 1,000 shares 187 12.11 114,673 0.02

1,001 to 10,000 shares 907 58.74 3,594,020 0.76

10,001 to 100,000 shares 296 19.17 9,533,531 2.02

100,001 to 1,000,000 shares 79 5.12 27,559,006 5.83

Over 1,000,000 shares 44 2.85 431,855,514 91.37

Total 1,544 100.00 472,657,651 100.00

30 LARGEST SECURITIES ACCOUNT HOLDERS AS PER RECORD OF DEPOSITORS(Without aggregating the securities from different securities accounts belonging to the same Depositor)

No. Name of Shareholders No. of Shares Percentage (%)

1 Kenanga Nominees (Tempatan) Sdn BhdBeneficiary: Pledged securities account for Nik Anida Binti Nik Manshor

139,743,531 29.57

2 Kenanga Nominees (Tempatan) Sdn BhdBeneficiary: Pledged securities account for Nik Awang @ Wan Azmi Bin Wan Hamzah

46,100,000 9.75

3 Chan Liew Hoon 38,412,968 8.13

4 Sia Bun Chun 30,139,009 6.38

5 Maybank Securities Nominees (Tempatan) Sdn Bhd Beneficiary: Maybank Kim Eng Securities Pte Ltd for PT Safe Tower Systems Sdn Bhd

17,800,000 3.77

6 Public Nominees (Tempatan) Sdn BhdBeneficiary: Pledged securities account for Nik Awang @ Wan Azmi Bin Wan Hamzah

16,600,000 3.51

7 DB (Malaysia) Nominee (Tempatan) Sendirian BerhadBeneficiary: Deutsche Trustees Malaysia Berhad for Eastspring Investments Small-Cap Fund

14,072,100 2.98

8 CIMB Group Nominees (Tempatan) Sdn BhdBeneficiary: CIMB Commerce Trustee Berhad - Kenanga Growth Fund

12,199,600 2.58

9 Citigroup Nominees (Asing) Sdn BhdBeneficiary: Exempt an for Citibank New York (Norges Bank 14)

9,200,000 1.95

10 Gan Kim Huat 8,695,949 1.84

11 Graceful Assessment Sdn. Bhd. 8,035,000 1.70

No. Name of Shareholders No. of Shares Percentage (%)

12 Citigroup Nominees (Tempatan) Sdn BhdBeneficiary: Kumpulan Wang Persaraan (Diperbadankan) (Kenanga)

7,684,400 1.63

13 Maybank Nominees (Tempatan) Sdn Bhd Beneficiary: National Trust Fund (IFM Kenanga)

5,826,000 1.23

14 Citigroup Nominees (Tempatan) Sdn Bhd Beneficiary : Kumpulan Wang Persaraan (Diperbadankan)(Nomura)

5,500,000 1.16

15 Citigroup Nominees (Tempatan) Sdn Bhd Beneficiary : Kumpulan Wang Persaraan (Diperbadankan)(ESPG IV SC E)

4,872,200 1.03

16 Tokio Marine Life Insurance Malaysia Bhd Beneficiary: As Beneficial Owner (PF)

4,777,000 1.01

17 Zenith Highlight Sdn Bhd 4,136,257 0.88

18 Maybank Nominees (Tempatan) Sdn BhdBeneficiary: Maybank Trustees Berhad for CIMB-Principal Small Cap Fund

3,360,800 0.71

19 Citigroup Nominees (Tempatan) Sdn Bhd Beneficiary: Great Eastern Life Assurance (Malaysia) Berhad (LEEF)

3,200,000 0.68

20 Citigroup Nominees (Tempatan) Sdn Bhd Beneficiary: Great Eastern Life Assurance (Malaysia) Berhad (LGF)

3,161,300 0.67

21 Citigroup Nominees (Tempatan) Sdn BhdBeneficiary: Universal Trustee (Malaysia) Berhad for CIMB Islamic Small Cap Fund

3,058,800 0.65

22 Kenanga Nominees (Tempatan) Sdn Bhd Beneficiary: Pledged securities account for Abdul Aziz Bin Abu Bakar

2,736,700 0.58

23 Cartaban Nominees (Tempatan) Sdn Bhd Beneficiary: PAMB For Participating Fund

2,700,000 0.57

24 Maybank Nominees (Tempatan) Sdn BhdBeneficiary: MTrustee Berhad for Tenaga Nasional Berhad Retirement Benefit Trust Fund (RB-TNB-NOMUR) (419513)

2,689,200 0.57

25 Citigroup Nominees (Tempatan) Sdn Bhd Beneficiary: Great Eastern Life Assurance (Malaysia) Berhad (LBF)

2,614,900 0.55

26 Maybank Nominees (Tempatan) Sdn Bhd Beneficiary: Etiqa Life Insurance Berhad (Life Non Par)

2,468,000 0.52

27 Maybank Nominees (Tempatan) Sdn Bhd Beneficiary: Etiqa Life Insurance Berhad (Life Par)

2,224,000 0.47

28 Tokio Marine Life Insurance Malaysia Bhd Beneficiary: As Beneficial Owner (TMEF)

2,186,000 0.46

29 Zenith Highlight Sdn Bhd 2,166,100 0.46

30 Citigroup Nominees (Tempatan) Sdn BhdBeneficiary: Kumpulan Wang Persaraan (Diperbadankan) (Espring ABSR EQ)

2,135,500 0.45

ANALYSIS OF SHAREHOLDINGAs at 25 April 2019

ANALYSIS OF SHAREHOLDING (cont’d)As at 25 April 2019

30 LARGEST SECURITIES ACCOUNT HOLDERS AS PER RECORD OF DEPOSITORS (CONT’D)(Without aggregating the securities from different securities accounts belonging to the same Depositor)

172 173

SUBSTANTIAL SHAREHOLDERS

Name of Substantial Shareholders Direct Interest Indirect Interest (1)

No. of Shares % No. of Shares %

Nik Anida Binti Nik Manshor (2)139,743,531 29.57 63,305,710 13.39

Nik Awang @ Wan Azmi Bin Wan Hamzah (2)63,305,710 13.39 139,743,531 29.57

Chan Liew Hoon 38,412,968 8.13 30,139,009 6.38

Sia Bun Chun 30,139,009 6.38 38,412,968 8.13

Eastspring Investments Berhad (3)24,886,500 5.26

Notes:(1) Deemed interested by virtue of shares held by their spouse(2) Including shares held under Kenanga Nominees (Tempatan) Sdn Bhd and Public Nominees (Tempatan) Sdn Bhd(3) Including shares held under DB (Malaysia) Nominee (Tempatan) Sendirian Berhad, Citigroup Nominees (Tempatan) Sdn Bhd

and Cartaban Nominees (Tempatan) Sdn Bhd

DIRECTORS’ SHAREHOLDINGS

Name of Substantial Shareholders Direct Interest Indirect Interest (1)

No. of Shares % No. of Shares %

Nik Awang @ Wan Azmi Bin Wan Hamzah 63,305,710 13.39 139,743,531 29.57

Sia Bun Chun 30,139,009 6.38 38,412,968 8.13

Notes:(1) Deemed interested by virtue of shares held by their spouse

ANALYSIS OF SHAREHOLDING (cont’d)As at 25 April 2019

LIST OF PROPERTIES

No AddressDescription/Existing Use

Land/ Built up Area (sq

ft)

Tenure/Date of Expiry of

Lease

Age of Building

Net Book Value

@31/12/18

Revaluation, if any

1Lot 12-14, Kawasan Perindustrian Bentong, 28700 Bentong, Pahang

Factory and office

76,055 / 36,194

66 years expiring on 08.04.2059

11 years 3,499,360 -

2Lot 5D, Kawasan Perindustrian Bentong, 28700 Bentong, Pahang

Warehouse and store

224,029 / 71,005


28 years 3,119,813 -

3No 20, Bemban Industrial Estate, Jalan Bemban. 31000 Batu Gajah Perak

Factory20,234 / N/A


17 years 2,421,857 -

4Lot 11, Kawasan Perindustrian Bentong, 28700 Bentong, Pahang

Warehouse and store

335,700 / 36,000


27 years 2,360,489 -

5Lot 5C, Kawasan Perindustrian Bentong, 28700 Bentong, Pahang

Vacant land133,074 / N/A


N/A 1,195,559 -

6

Unit 3A33,3A35,3A37 & 3A39 Block A, Kelana Centre Point, Jalan SS7/19, 47301 Petaling Jaya

Office 6,297 23.01.2094 N/A 2,136,200 -


Factory219,909 / 38,182


16 years 2,097,911 -

8Lot 20D, Kawasan Perindustrian Bentong, 28700 Bentong, Pahang

Factory, warehouse and office

130,680 / 45,200


24 years 1,804,570 -


Factory, warehouse and office

217,800 / 48,420


31 years 1,431,731 -

10Jalan SS 3/60, Petaling Jaya

Workers housing

3,199 Freehold43 years (reg. April

1977)1,180,160 -

I/We, NRIC No./Passport No./Company No.

of

being a member/members of ROHAS TECNIC BERHAD, hereby appoint

*and/*or failing him/her (*delete as appropriate)

ROHAS TECNIC BERHAD(Incorporated in Malaysia)

Full Name NRIC No./Passport No Proportion of Shareholdings

No. of Shares (%)

Address

Full Name NRIC No./Passport No Proportion of Shareholdings

No. of Shares (%)

Address

or failing him/her/them, the Chairman of the Meeting as *my/our proxy to vote for *me/us on *my/our behalf at the Annual General Meeting of the Company to be held at BE@M, M Floor, Sheraton Imperial Kuala Lumpur, Jalan Sultan Ismail, 50250 Kuala Lumpur on Wednesday, 29 May 2019 at 9.30 a.m or any adjournment thereof and *my/our proxy is to vote as indicated below:-

(Please indicate with an “X” in the space provided and to show how you wish your vote to be cast. If no specific direction as to voting is given, the proxy will vote or abstain at his/her discretion).

Dated on this day of 2019

Signature(s)/Common Seal of Shareholder(s)* Strike out whichever is inapplicable

Notes:-1. In respect of deposited securities, only members whose names appear in the Record of Depositors on 22 May 2019 shall be eligible to attend and vote at this AGM or appoint a proxy to attend

and vote on his behalf. A proxy may but need not be a member of the Company.

2. A member who is an authorised nominee 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. A member other than an authorised nominee shall be entitled to appoint not more than two (2) proxies to attend and vote at the same meeting. A member who is an exempt authorised nominee which holds ordinary shares in the Company for multiple beneficial owners in one (1) securities account (“omnibus account”), there is no limit to the number of proxies which the exempt authorised nominee may appoint in respect of each omnibus account it holds.

3. Where a member appoints more than one (1) proxy, the appointment shall be invalid unless he specifies the proportions of his shareholding to be represented by each proxy.

4. The instrument appointing a proxy shall be in writing under the hand of the appointor or his attorney duly authorised in writing or if the appointor is a corporation either under Common Seal or under the hand of an officer or attorney duly authorised.

5. To be valid, this Form of Proxy must be completed, signed and deposited at the registered office of the Company at 149A, Jalan Aminuddin Baki, Taman Tun Dr Ismail, 60000 Kuala Lumpur not later than forty-eight (48) hours before the time set for the AGM or adjourned meeting

No AGENDA :- RESOLUTION *FOR *AGAINST

Special Resolution

1. Proposed Adoption of New Company’s Constitution 1 Ordinary Resolutions

1. Payment of a Final Dividend of 1 sen per ordinary share 12. Re-election of Mohamed Tarmizi bin Ismail as Director 23. Re-election of Chee Suan Lye as Director 34. Re-election of Amirul Azhar Bin Baharom as Director 45. Re-election of Wan Afzal-Aris Bin Wan Azmi as Director 56. Re-election of Khor Yu Leng as Director 6

7. Approval of Directors’ fees and benefits of RM475,000 for the financial year ended 31 December 2018.

7

8. Approval of Directors’ fees and benefits from 1 January 2019 until the conclusion of the next Annual General Meeting of the Company.

8

9. Re-appointment of Messrs Grant Thornton Malaysia as Auditors and authorise the Directors to fix their remuneration.

9

10. Authority for Directors to allot shares pursuant to Sections 75 and 76 of the Companies Act 2016.

10

CDS Account No.

No. of shares held

PROXY FORM

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FOLD HERE

FOLD HERE

STAMP

THE COMPANY SECRETARY ED Zone Management Sdn. Bhd.

149A, Jalan Aminuddin Baki Taman Tun Dr Ismail 60000 Kuala Lumpur Wilayah Persekutuan

Malaysia

Documents

WHO WE ARE - Rohas Tecnic · Wan Afzal-Aris Wan Azmi Khor Yu Leng 5. To approve the Directors’ fees and benefits of RM475,000 for Rohas Tecnic Berhad in respect of the financial