Annu al Repor t - Johan Holdings...Malayan Banking Berhad United Overseas Bank Limited STOCK...

Johan Holdings Berhad (314-K

annual report for the financial year ended 31 January 2018

A n n u a l R e p o r tfor the financial year ended 31 January 2018

WHAT’S INSIDE...

Corporate Informa�on

Chairman’s Management Discussion & Analysis Disclosures

Profile of Directors

Profile of Key Senior Management

Five-Year Group Financial Highlights

Share Price Performance

Corporate Governance Overview Statement

Directors‘ Responsibility in Financial Repor�ng

Sustainability Report

Audit Commi�ee Report

Statement on Risk Management and Internal Control

Addi�onal Informa�on

Financial Statements

Analysis of Shareholdings

Statement on Directors’ Interests

List of Proper�es Held

No�ce of Annual General Mee�ng

Administra�ve Details

Form of Proxy

CORPORATE PROFILEJohan began its activities in 1920 as Johan Tin Dredging Ltd. It operated a mining lease off

the Sungei Johan in the Kinta District of Perak, Malaysia with a paid-up capital of RM136,000 which remained unchanged for 61 years until 1981. In 1979, the Company was

renamed Johan Holdings Berhad.

Since 1979, Johan diversified away from its tin mining business and through acquisitions and organic growth. The Johan Group today is a Malaysian grown group with diversified operations.

Johan is listed on the Main Market of Bursa Malaysia Securities Berhad.

Johan Group’s current principal activities are as franchise operator for Diners Club charge and credit cards, travel and tours, property development, resorts and hotels.

GROUP CORPORATE DIRECTORYPRINCIPAL COMPANIES

Malaysia

Johan Holdings Berhad11th Floor, Wisma E&CNo. 2 Lorong Dungun Kiri,Damansara Heights50490 Kuala LumpurTel : 603 2092 1858Fax : 603 2092 2812Website : www.johanholdings.com

The Orient Star Resort, Lumut(owned by Lumut Park Resort Sdn Bhd)Lot 203 & 366 Jalan Iskandar Shah32200 Lumut, Perak Darul RidzuanTel : 605 683 3800Fax : 605 683 8088Website : www.orientstar.com.my

Diners Club (Malaysia) Sdn BhdSuite 16.03, 16th Floor, Menara Tan & Tan, 207 Jalan Tun Razak, 50400 Kuala Lumpur Tel : 603 2161 1322Fax : 603 2161 1518Website : www.dinersclub.com.my

Diners World Travel (Malaysia) Sdn BhdSuite 16.03, 16th Floor, Menara Tan & Tan207 Jalan Tun Razak50400 Kuala LumpurTel : 603 2164 0068Fax : 603 2162 3670

Singapore

Diners Club (Singapore) Pte Ltd7500-E, Beach Road#03-201, The PlazaSingapore 199595Tel : 65 6295 2027Fax : 65 6296 5981Website : www.dinersclub.com.sg

Diners World Travel Pte Ltd7500-E, Beach Road#02-201, The Plaza, Singapore 199595Tel : 65 6298 8988Fax : 65 6295 1485Website : www.dinerstravel.com.sg

1Annual Report 2018

CORPORATE INFORMATION

BOARD OF DIRECTORS

Tan Sri Dato’ Tan Kay HockChairman & Chief Executive

Puan Sri Datin Tan Swee BeeGroup Managing Director

Tan Sri Dato’ Seri Dr Ting Chew Peh Non-Independent Non-Executive Director

Dato’ Ahmad Khairummuzammil Bin Mohd YusoffIndependent Non-Executive Director

Ooi Teng ChewIndependent Non-Executive Director

SHARE REGISTRAR

Johan Management Services Sdn. Bhd. 11th Floor, Wisma E&CNo. 2 Lorong Dungun KiriDamansara Heights 50490 Kuala LumpurTel : 603-2092 1858Fax : 603-2092 2812E-mail : johanms1@outlook.com

REGISTERED OFFICE 11th Floor, Wisma E&CNo. 2 Lorong Dungun KiriDamansara Heights 50490 Kuala LumpurTel : 603-2092 1858Fax : 603-2092 2812

BUSINESS OFFICE

11th Floor, Wisma E&CNo. 2 Lorong Dungun KiriDamansara Heights 50490 Kuala LumpurTel : 603-2092 1858Fax : 603-2092 2812E-mail : jhb@johanholdings.com.myWebsite : www.johanholdings.com

GROUP PRINCIPAL BANKERS (in alphabetical order)

DBS Bank LtdMalayan Banking BerhadUnited Overseas Bank Limited

STOCK EXCHANGE LISTING

Main Market, Bursa Malaysia Securities Berhad Stock Name : JOHANStock Code : 3441 Sector : Finance

CORPORATE WEBSITE

www.johanholdings.com

AUDIT COMMITTEE

Dato’ Ahmad Khairummuzammil Bin Mohd Yusoff (Chairman)Tan Sri Dato’ Seri Dr Ting Chew Peh Ooi Teng Chew

RISK MANAGEMENT COMMITTEEE

Tan Sri Dato’ Tan Kay Hock (Chairman)Puan Sri Datin Tan Swee Bee Chong Cheok Weng

REMUNERATION COMMITTEE

Tan Sri Dato’ Seri Dr Ting Chew Peh (Chairman)Dato’ Ahmad Khairummuzammil Bin Mohd YusoffPuan Sri Datin Tan Swee Bee

NOMINATING COMMITTEE

Dato’ Ahmad Khairummuzammil Bin Mohd Yusoff (Chairman)Tan Sri Dato’ Seri Dr Ting Chew Peh Ooi Teng Chew

COMPANY SECRETARY

Teh Yong Fah (MACS 00400)

AUDITORS

Deloitte PLTChartered Accountants

CHAIRMAN’SMANAGEMENT DISCUSSION & ANALYSIS DISCLOSURES

2 Johan Holdings Berhad (314-K)

ON BEHALF OF YOUR BOARD OF DIRECTORS, IT IS MY PLEASURE TO PRESENT TO SHAREHOLDERS, THE ANNUAL REPORT OF JOHAN HOLDINGS BERHAD FOR THE FINANCIAL YEAR ENDED 31 JANUARY 2018 (“FY 2017/18”) AND MANAGEMENT DISCUSSION & ANALYSIS DISCLOSURES.

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CHAIRMAN’S MANAGEMENT DISCUSSION& ANALYSIS DISCLOSURES

cont’d

ECONOMIC AND BUSINESS ENVIRONMENT REVIEW

The global economy in 2017 strengthened, improving to an estimated growth of 3.6% from 3.2% in 2016. Consumers in emerging markets continued to drive spending growth. China continued with stronger economic growth and the Eurozone ended year 2017 with its strongest growth since 2007. On the downside, Brexit continued to weigh on business confidence in the UK and weak productivity growth in many markets remains a concern. Geopolitical instability posed a risk as consumers move into 2018 continuing to question priorities, values and purchasing decisions. Shifting consumer attitudes and behaviours will continue to cause disruption for business, with mobile technology and internet accessibility playing a crucial role in shaping these changes. The unorthodox economic policies of Donald Trump, who took office as the President of the United States in January 2017, have given rise to concern in respect of Trump’s adverse policies and trade war risks.

The Malaysian economy outshone many in the region, registering growth of 5.9% for year 2017 (2016: 4.2%), supported by strong exports and domestic demand amid steady employment rate. Inflation averaged at 3.7% (2016: 2.1%), with higher transportation and food prices being the two main components that continued to push up inflation. The Ringgit regained some strength supported by the return of foreign interests in Malaysian equities and debt papers. The country’s GDP growth accelerated at the fastest pace in three years, a surprise to many, despite the prolonged downturn in the Oil & Gas industry and the soft Property market. Brent crude oil’s steady rise, breaching the US$60 level per barrel has fuelled inflation with the Consumer Price Index staying above 3% throughout the year. Malaysia’s future economic growth will hinge on its choice of fiscal discipline, its dependency on oil prices while external demand for its goods will likely be influenced by the health of the global economy growth in 2018.

The Singapore economy expanded 3.6% in year 2017 (2016: 2.4%), largely due to strong growth in the Manufacturing sector, on the back of surging global demand for electronic gadgets. This trade driven lift helped push 2017 growth above an earlier estimate of 3.5%, which was already more than double initial forecasts. Domestically oriented sectors such as retail and food services are expected to pick up pace on the back of improving consumer sentiments amid the ongoing recovery in the labour market. Singapore’s external demand

outlook is likely to be slightly weaker compared to last year, as Singapore’s key trading partners enter a more mature phase of recovery. While risks have receded since 2017, some remain, including concerns over protectionist sentiment and trade policies, especially in the United States.

REVIEW OF GROUP FINANCIAL RESULTS

FY 2017/18 remained a challenging year for your Group as uncertainty in the global economic environment and the weak Ringgit coupled with market volatility weighed on business sentiment, affecting domestic demand.

Against this difficult business environment, Group revenue from its continuing operations was RM122.5 million for FY 2017/18, 5% lower from RM128.8 million in financial year ended 31 January 2017 (“FY 2016/17”). All operating subsidiaries registered lower revenue, attributed mainly to lower revenue by Diners World Travel Pte Ltd due to loss of a significant corporate customer and lower service charges income by Diners Club (Singapore) Pte Ltd.

The Group Marketing & Distribution expenses, Administrative expenses and Other Operating expenses for FY 2017/18 amounted to RM104.2 million, a drop of 23.77% from RM136.7 million in FY 2016/17. The drop in such expenses are mainly due to streamlining operating overhead implemented to reduce operating costs and forex gain of RM8.65 million (forex loss RM10.63 million in FY 2016/17) in AIH Holdings Ltd.

We are delighted to highlight that the Group registered a turnaround, achieving profit before tax from continuing operations of RM25.7 million, 269% higher when compared to loss of RM15.2 million (FY 2016/17). This is mainly due to Johan Equities Sdn Bhd which recorded a fair value gain of RM42.46 million (gain of RM27.65 million in FY 2016/17) from its quoted investment securities. However after taking into account the loss by Prestige Ceramics Sdn Bhd of RM45.189 million, which included impairment of RM30.683 million for its factory building and plant & machinery as a result of closure of its ceramic tiles operation, Group loss for FY 2017/18 was RM23.224 million compared to loss of RM38.329 million for FY 2016/17.

OPERATIONS AND FINANCIAL PERFORMANCE REVIEW BY BUSINESS SEGMENTS

(1) Card Services & Hospitality Segment

This segment encompasses the following businesses carried out by the following wholly-owned subsidiaries:-

(i) DINERS CLUB (SINGAPORE) PTE LTD, the franchise operator for the Diners Club International charge and credit cards business in Singapore;

(ii) DINERSPAY PTE LTD, which is in the business of merchant acquiring and payment processing services.

(iii) DINERS WORLD TRAVEL PTE LTD, which operates air ticketing & travel management business in Singapore;

(iv) DINERS WORLD TRAVEL (MALAYSIA) SDN BHD, which operates air ticketing & travel management business in Malaysia; and

(v) LUMUT PARK RESORT SDN BHD, which owns and operate The Orient Star Resort Hotel in Lumut, Malaysia.

Diners Club (Singapore) Pte Ltd (“DCS”)

DCS recorded 3.4% lower Revenue when compared to the previous financial year mainly due to lower service charge income attributable to lower receivables and lower membership fees from higher level of renewal fees waiver.

Resulting from continuous streamlining measures taken to reduce operating costs, Administrative expenses for FY 2017/18 was 16% lower when compared to FY 2016/17. EBITA for FY 2017/18 was SGD12.623 million when compared with SGD13.324 million for FY 2016/17. DCS recorded Loss before tax of SGD0.354 million compared to profit of SGD0.101 million in FY 2016/17.

During FY 2017/18, DCS continued to focus on card acquisition through existing cobrand partnerships such as Sheng Siong Supermarket Group, Mustafa Departmental store and Vicom Cobrand Programs. These have proven over time to have good response, both in card number growth and turnover. The Diners/VICOM ‘V’ Card, launched in August 2015, had gained 28,000 members by the end of 2017.

Besides card growth, DCS continued its focus on money lending products including Ready Cash and Dcash with more extensive sales channels. DCS launched an online instant approval Dcash loan application module in Q2 of 2017 where Diners card members can conveniently apply for the Dcash loan via online or their mobile phone and receive instant approval in principle. Additionally, new programs were implemented to increase receivables such as capturing large ticket size transactions such as hospitals with BNPL.

On the corporate front, DCS will continue to pursue new opportunities with our electricity billing for Industrial and commercial sectors.

CHAIRMAN’S MANAGEMENT DISCUSSION& ANALYSIS DISCLOSUREScont’d

5Annual Report 2018

Along with the Government Fintech initiative, DCS will be launching a fully automated mobile and online card application system in the second quarter of year 2018 which will enable card members to apply online using MyInfo and receive approval in principle via SMS. In addition, DCS is looking at Fintech solutions to acquire merchant in a more cost effective way via QR code payment gateway.

DinersPay Pte Ltd (“DinersPay”)

On 21 July 2017, an existing dormant subsidiary, Lifestyle Collection (s) Pte Ltd was renamed DinersPay Pte Ltd and re-activated to provide payment processing and merchant acquiring services to DCS. In July 2017, DinersPay signed an agreement with Alipay, making DinersPay the first subsidiary of a financial institution in Singapore to collaborate with Alipay for expanding merchant acceptance in Singapore.

During FY 2018/19, DinersPay has been successful in acquiring, merchants such as LVMH, Mustafa, SISTIC, Harvey Norman, OG Department Store, Sheng Siong Supermarket and Diary Farm Group. We are close to acquiring several key merchant outlets popular with tourists from the People’s Republic of China.

DinersPay has also agreed in principle to undertake a referral program with Wirecard, a 3rd party Visa/Mastercard merchant acquirer, to assist in referring merchants to Wirecard for which DinersPay will receive a referral fee for on-going transactions. In addition, DinersPay is looking at strengthening its merchant acquiring capability with major payment Apps and major card schemes.

Diners Club (Malaysia) Sdn Bhd (“DCM”)

DCM ceased its local Diners Club cards business with effect from 31 October 2015 and ceased being processor for local transactions incurred by Diners Club cards issued by overseas franchisees with effect from 1 January 2017. Currently, DCM continues to collect the outstanding principal and earn interest income from the outstanding cardholders receivables. DCM achieved profit before tax of RM4.2 million as compared to RM1.3 million in FY 2016/17 mainly due to dividend income received from Diners World Travel (M) Sdn Bhd of RM2.8 million.

Diners World Travel Pte Ltd (“DWTS”)

DWTS’s revenue for FY 2017/18 was 48% lower when compared to the immediate preceeding financial year. Resulting from continuous streamlining measures taken to reduce operating cost, Marketing & Distribution and Administrative expenses for FY 2017/18 were 60% and 26% lower respectively as compared to FY 2016/17. As a result, DWTS recorded a lower Loss after tax of RM760,000 compared to Loss of RM963,000 in FY 2016/17.

The economic climate for FY 2018/19 is expected to stabilise and the air travel business to be at similar volume as at FY 2017/18. DWTS is targeting to secure more business with local SME and local MNC companies and exploring partnership with co working space providers or business centres, start-ups and established companies for travel services. In addition, DWTS is exploring at strategic partnership with pocket WIFI business partner to provide value added services to its customers.

In order to pursue MNC’s prospect, DWTS is exploring participation in a global fare system such as eGlobalfares, which will provide air fares from regional and cross continents, allowing consumers to gain benefit from marginally low fares in comparison with fares from local Global Distributing System (GDS). Similarly, DWTS is able to supply local fares to other travel management companies within the network with incremental revenue.

For FY 2018/19, DWTS will also focus in growing the MICE Group Business for new customers and existing Corporate clients. MICE Department will organise road shows at Corporate customers’ office to generate more FIT/MICE businesses. 2nd Quarter seems to show that MICE Growth is on the rise.

DWTS being a service orientated company, will focus on improving the service level and operations processes.

cont’d

Diners World Travel (Malaysia) Sdn Bhd (“DWTM”)

DWTM recorded 26% higher revenue when compared with the previous financial year. Profit before tax was RM265,000 compared with RM471,000 (FY 2016/17).

Due to the economic downturn, the weak Ringgit Malaysia and global terrorism threat, many corporate and multinational companies have cut their travelling budgets and using online booking platform to save costs. These had resulted in the poor performance of DWTM for FY 2017/18. DWTM also faced several hurdles in the corporate bidding processes especially where pricing was concerned.

Due to the weak Ringgit against the US Dollar, DWTM sees great potential and good opportunity to develop inbound business namely tourists from China and S.E.A region.

The Orient Star Resort Lumut Hotel (“OSRL”)

The operating environment in FY 2017/18 was tougher in terms of business challenges as compared to previous years, due to decline of business in OSRL’s core market segment, i.e. Oil and Gas, Shipping and Government agencies. In addition, the lower revenue was reflective of the softer domestic leisure demand, weak Ringgit and mushrooming of budget hotels and home stay amid more challenging market conditions.

For FY 2017/18, revenue for OSRL was down by 16.91% compared to the immediate preceding financial year. Total gross operating income was lower by 22.66%, mainly attributed to lower sales from the hotel core market segment.

Weak performance of the hotel market segment was mainly attributed to the unfavourable domestic and global economic climate, coupled with weak consumer spending sentiment impacted from post implementation of the Goods and Services Tax (GST) in the country and weakening of the Ringgit. Hotel accommodation revenue from Oil and Gas and Shipping market segment amounted to RM0.53 million was 40.28% lower from RM0.9 million in the previous financial year. This was mainly attributable to lower global crude oil prices, suspension and deferment of ongoing Oil and Gas projects by major players within the region of Manjung.

Lower revenue from Government, Industrial and Corporate segmentation was mainly due to suspension of budget spending from Government sector and decline in spending power from other sectors. Free Individual Traveller (FIT) and Travel Agent spending also declined.

Moving forward into FY 2018/19, continuing weak market conditions will cause further uncertainties and apprehension amongst businesses supporting the performance of OSRL in Lumut. However, we will focus to build business from other core market segment other than traditional market segments of Oil and Gas, Government and Shipping to Online Travel Agents (OTA). We will put more efforts to participate in Trade Fair and Exhibition to promote the hotel, and to secure more business from Association and Leisure Clubs with provision of an event organiser for corporate team building, incentive tours and family day to diversify revenue stream in order to cushion the negative impact from weak market condition.

7Annual Report 2018

cont’d

(2) Building Materials Segment

Prestige Ceramics Sdn Bhd (“Prestige”) which manufacture and market ceramic tiles at its manufacturing plant in Puchong, Selangor Darul Ehsan for the housing industry in Malaysia is categorised under this segment.

The operating environment in the beginning of FY 2017/18 was far tougher in terms of business challenges in comparison to previous years. Intensive market competition arising from the continued pricing pressure contributed to lower average selling price.

Prestige had been incurring losses since FY 2010/11, despite of all efforts and measures taken by the management to turn the company around. In view of the unfavourable operating environment, high production costs vis-a vis the aging manufacturing plant and depressed selling prices of ceramic tiles due to intense competition in the local market, your Board decided that it was no longer commercially viable for

Prestige to continue with its tile manufacturing business. Accordingly, on 30 August, 2017, your Board decided to proceed with winding down of Prestige’s business operations. Prestige eventually ceased the loss-making ceramic tiles business at the end of FY 2017/18.

In respect of the FY 2017/18, Prestige registered turnover of RM24.0 million and incurred net loss of RM45.245 million. The loss was mainly attributable to the impairment of building, plant and machinery of RM30.683 million due to closure of the manufacturing plant.

DIVIDEND

Your Board does not propose to declare any dividend for the financial year under review.

LOOKING FORWARD

Under the current global economic conditions and the volatility of our Malaysia Ringgit coupled with intense competition in the business operations of your Group, we expect the market outlook to remain challenging. Our foremost task is to stay focus on plans and strategies to enhance the growth of its various businesses, especially its credit cards business in Singapore, whilst at the same time exploring to venture into new businesses to replace those loss making businesses which the Group had disposed or ceased operating over the years. To this end, your Board is exploring to venture more extensively in property development as one of the core business of your Group.

ACKNOWLEDGEMENT

On behalf of your Board of Directors, I wish to thank the management and staff at all levels for their commitment, dedication and collective efforts and contribution. I wish also to thank our valued customers, suppliers, business partners and shareholders for their continued support.

TAN SRI DATO’ TAN KAY HOCKChairmanDate: 3 May 2018

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PROFILE OF DIRECTORS

TAN SRI DATO’ TAN KAY HOCKChairman & Chief ExecutiveNon-Independent Executive Director

Age Gender Nationality 70 Male Malaysian

A Barrister-at-Law, Tan Sri Dato’ Tan Kay Hock is a lawyer by training having been called to the Bar by the Honourable Society of Lincoln’s Inn, UK in 1971. In 1972, he was admitted as an advocate and solicitor to the Supreme Court of Malaysia. He is a non-practising lawyer. Since 1982, he is the non-Executive Chairman of George Kent (Malaysia) Berhad (“GKM”), listed on the Main Market of Bursa Malaysia Securities Berhad. GKM is an engineering company engaged in the water infrastructure, rail transportation and hospital construction industry.

Tan Sri Dato’ Tan Kay Hock was appointed to the Board on 5 November 1980. He is the Chairman of the Risk Management Committee. He holds directorship in other listed issuer and public companies as follows:-

Listed issuer : George Kent (Malaysia) BerhadPublic Companies : -

PUAN SRI DATIN TAN SWEE BEEGroup Managing DirectorNon-Independent Executive Director

Age Gender Nationality 71 Female Permanent Resident (Malaysia)

A Barrister-at-Law, Puan Sri Datin Tan Swee Bee is a lawyer by training having been called to the Bar by the Honourable Society of Lincoln’s Inn, UK in 1971. In 1972, she was admitted as an advocate and solicitor to the Supreme Court of Malaysia. She is a non-practising lawyer. She was appointed Managing Director of Johan Group since 17 December 1984. Since 1989, she is a Non-Executive Director of George Kent (Malaysia) Berhad (“GKM”), listed on the Main Market of Bursa Malaysia Securities Berhad. GKM is an engineering company engaged in the water infrastructure, rail transportation and hospital construction industry.

Puan Sri Datin Tan Swee Bee was appointed to the Board on 29 January 1983. She is a member of Remuneration Committee and Risk Management Committee. She holds directorship in other listed issuer and public companies as follows:-

Listed issuers : George Kent (Malaysia) BerhadPublic Companies : -

PROFILE OF DIRECTORScont’d

TAN SRI DATO’ SERI DR TING CHEW PEH Non-Independent Non-Executive Director

Tan Sri Dato’ Seri Dr Ting Chew Peh holds a Bachelor of Arts from University of Malaya in 1970, Master of Science from University of London in 1972 and Doctor of Philosophy from University of Warwick in 1976. He was formerly a Lecturer (1974-1980) and Associate Professor (1981-1987) for Faculty of Humanities and Social Science of National University of Malaya. He was also a Parliament Secretary (Ministry of Health) (1988-1989), Deputy Minister (Prime Minister’s Department) (1989-1990) and Minister of Housing and Local Government (1990-1999). He was a Member of Parliament (1987-February 2008) and was the Chairman of Klang Port Authority (2000-2004).

Tan Sri Dato’ Seri Dr Ting Chew Peh was appointed to the Board on 1 November 2003. He is the Chairman of the Remuneration Committee and also a member of the Audit Committee and Nominating Committee. He holds directorship in other listed issuer and public companies as follows:-

Listed issuers : 1) Puncak Niaga Holdings Berhad 2) Hua Yang Berhad 3) Sycal Ventures BerhadPublic Companies : UTAR Education Foundation

DATO’ AHMAD KHAIRUMMUZAMMIL BIN MOHD YUSOFFIndependent Non-Executive Director

Dato’ Ahmad Khairummuzammil Bin Mohd Yusoff holds a Bachelor of Arts (Economics Honours) from University of Malaya. He was a Deputy Chairman of the Urban Development Authority (UDA) Kuala Lumpur from 1978 to 1981. He was subsequently appointed the Director-General, Chief Executive and Board Member of UDA in 1981. From May 1986 to 1994, he held various senior management positions in the Kumpulan Guthrie Berhad Group and also Executive Director of Kumpulan Guthrie Berhad from May 1986 to December 1987. He was a Vice President and a Director of HICOM Holdings Berhad from February 1995 to July 2000 and subsequently held the post of Group Director in the DRB-Hicom Group until March 2006. He was the Director/Chairman of Metrojaya Berhad from 1979 to 2015.

Dato’ Ahmad Khairummuzammil Bin Mohd Yusoff was appointed to the Board on 4 July 2005. He is the Chairman of the Audit Committee and the Nominating Committee and also a member of the Remuneration Committee. He holds directorship in other listed issuer and public companies as follows:-

Listed issuers : George Kent (Malaysia) BerhadPublic Companies : -

11Annual Report 2018

PROFILE OF DIRECTORScont’d

OOI TENG CHEW Independent Non-Executive Director

Mr Ooi Teng Chew is a fellow member of Institute of Chartered Accountants in England and Wales and member of Malaysian Institute of Certified Public Accountants. He was in public practice from 1974 till 2011 with 1974 in Messrs Ernst & Young and its predecessor firms. He is currently a member of the Board of Governors of the Wawasan Open University, a Director of Wawasan Open University Sdn Bhd and its subsidiary, Disted Pulau Pinang Sdn Bhd.

Mr Ooi Teng Chew was appointed to the Board on 12 March 2009. He is a member of Audit Committee and Nominating Committee.

Mr Ooi Teng Chew does not hold any other directorship in other listed issuer and public companies.

ADDITIONAL INFORMATION:-

1) Except for Tan Sri Dato’ Tan Kay Hock who is the spouse of Puan Sri Datin Tan Sri Bee, none of the other directors has any family relationship with any director and/or major shareholder of the Company.

2) None of the directors has any conflict of interest with the Company.

3) None of the directors has any convictions for offences (other than traffic offence, if any) within the past five (5) years and none of them was imposed with any public sanction or penalty by relevant regulatory bodies during the financial year.

PROFILE OF KEY SENIOR MANAGEMENT

CHONG CHEOK WENGGeneral Manager – Finance

Mr Chong Cheok Weng joined Johan Holdings Berhad as General Manager – Finance on 15 June 2016. He is responsible for Group’s financial reporting, treasury, tax and corporate affairs.

He is a fellow of Association of Chartered Certified Accountants, and member of Malaysian Institute of Accountants and Chartered Tax Institute of Malaysia. He has over 18 years of experience in finance and operations derived from the industry of manufacturing and trading of non-ferrous metal, property developer and property investment. He started his career in tax and subsequently joined a public listed company involved in manufacturing and trading of non-ferrous metal as Treasury and Credit Control Manager. Thereafter, he joined a public listed company involved in property development and property investment as Group Accountant. Prior to joining Johan, he was the Chief Financial Officer of a public listed company involved in printed business directories, online advertising and content data licensing.

JAMES KOH CHUAN LIMExecutive Director-Regional Operations Diners Club (Malaysia) Sdn Bhd and Diners Club (Singapore) Pte Ltd

Age Gender Nationality 64 Male Singaporean

Mr James Koh Chuan Lim is the Executive Director of Diners Club (Malaysia) Sdn Bhd and Diners Club (Singapore) Pte Ltd overseeing and responsible for Diners charge and credit cards business.

He is a Fellow of Association of Chartered Certified Accountants and The Chartered Institute of Management Accountants. He has over 38 years of diverse professional experience. He joined Diners Club (Singapore) Pte Ltd on 1 January 1980 as Finance & Administrative Manager. He was subsequently promoted to Deputy General Manager, thereafter General Manager (Operations) and currently as Executive Director.

PROFILE OF KEY SENIOR MANAGEMENTcont’d

SOO YIP KHOONGeneral Manager Diners World Travel Malaysia Sdn Bhd

Mr Soo Yip Khoon is the General Manager of Diners World Travel Malaysia Sdn Bhd. He is responsible for the travel business in Malaysia.

He graduated from Tunku Abdul Rahman College A Level (Arts) and has over 36 years experience in the travel industry. He joined Diners World Travel Malaysia Sdn Bhd on 30 May 2018 and prior to this, he was the Senior General Manager of a renowned travel company since year 1993.

VINCENT EE KIM CHUAN Hotel Manager The Orient Star Resort, Lumut

Mr Vincent Ee Kim Chuan is the Hotel Manager of The Orient Star Resort, Lumut since 15 December 2009. He holds a Diploma In Hotel, SHATEC Singapore and has over 36 years of experience in the hotel industry.

ADDITIONAL INFORMATION:

1) None of the Key Senior Management staff holds directorship in public companies and listed issuers.

2) None of the Key Senior Management staff has any family relationship with any director and/or major shareholder of the Company.

3) None of the Key Senior Management staff has any conflict of interest with the Company.

4) None of the Key Senior Management staff has any convictions for offences (other than traffic offence, if any) within the past five (5) years and none of them was imposed with any public sanction or penalty by relevant regulatory bodies during the financial year.

FIVE-YEAR GROUP FINANCIAL HIGHLIGHTS

Year Ended 31 January 2018 2017 2016 2015 2014

RM’000 RM’000 RM’000 RM’000 RM’000Restated Restated Restated Restated

Income Statement

Revenue from continuing operations 122,485 128,772 157,000 148,358 169,313 Profit/(Loss) Before Tax from continuing operations 25,747 (15,187) (47,171) (25,403) (18,696)Income Tax Credit/(Expense) from continuing operations (3,782) (1,554) 4,217 (1,941) (4,372)Profit/(Loss) for the year from continuing operations 21,965 (16,741) (42,954) (27,344) (23,068)Profit/(Loss) for the year from discontinued operations (45,189) (21,588) 29,677 10,721 (15,088)Loss for the year (23,224) (38,329) (13,277) (16,623) (38,156)

Statements of Financial Position

Total non-current assets 325,089 349,132 344,091 344,085 347,300 Total current assets 704,558 715,828 672,315 683,386 816,999 Shareholders’ fund 183,521 197,466 207,133 202,153 207,977 Non-controlling Interest 2,965 3,801 4,910 9,108 9,344 Shareholders’ Equity 186,486 201,247 212,043 211,261 217,321 Total non-current liabilities 317,463 327,642 30,767 322,379 52,976 Total current liabilities 525,698 536,071 773,596 493,831 894,002

SHARE INFORMATIONPer Ordinary Share

Loss, basic (sen) (3.59) (5.97) (2.11) (2.63) (6.18)Net assets (sen) 29.94 32.31 34.04 33.91 34.89 Share price as at 31 January (RM) 0.32 0.18 0.12 0.20 0.15

FINANCIAL RATIOS

Return on equity (%) (12.20) (18.85) (6.34) (8.11) (18.50)Net Debt-Equity ratio (Note 1) 0.80:1 0.80:1 0.77:1 0.79:1 0.80:1

Note 1: Net Debt comprise current & non-current loan and borrowings, trade and other payables, funding from non-recourse investors’

certificates and senior certificates less cash and bank balances.

SHARE PRICE PERFORMANCE

Feb '17 Mar '17 Apr '17 May '17 June '17 July '17 Aug '17 Sept '17 Oct '17 Nov '17 Dec '17 Jan '18 Feb '18 Mac '18 Apr '18High (RM) 0.19 0.26 0.40 0.35 0.27 0.33 0.36 0.33 0.30 0.31 0.40 0.39 0.35 0.32 0.27Low (RM) 0.17 0.17 0.18 0.22 0.21 0.23 0.29 0.24 0.23 0.26 0.28 0.32 0.28 0.26 0.21Total Volume (million) 28.2 200.4 509.4 109.4 51.0 147.0 172.4 127.8 118.5 75.9 125.0 84.5 40.1 30.3 8.5

Volume (Million)

PRICE (RM)

Share Price Performance in 2017/2018

High (RM) Low (RM) Total Volume (million)

CORPORATE GOVERNANCE OVERVIEW STATEMENT

The Board of Directors (“Board”) of Johan Holdings Berhad (the “Company”) is committed to ensuring high standards of good corporate governance throughout the Company and its subsidiaries (the “Group”) and endeavours to ensure consistency of policies and procedures of the Group in different geographical regions.

This statement illustrates how the Group has applied and complied with the principles and best practices of the Malaysian Code on Corporate Governance 2017 (“MCCG 2017) for the financial year ended 31 January 2018. The Corporate Governance Report is available at the Company’s website at www.johanholdings.com.

PRINCIPLE A: BOARD LEADERSHIP AND EFFECTIVENESS

I. Board Responsibilities

Roles and Responsibilities of the Board

The Board is responsible for oversight and overall management of the Company with an ultimate accountability and responsibility for the performance of the Company and promote legitimate interests of the Company, its shareholders and other stakeholders.

The principal responsibilities of the Board include, inter alia, the following:

l reviewing and adopting a strategic plan including setting performance objectives and approving operating budgets for the Group and ensuring that the strategies promote sustainability;

l overseeing the conduct of the Company’s business and build sustainable value for Shareholders;

l reviewing the procedures to identify principal risks and ensuring the implementation of appropriate internal controls and mitigation measures;

l succession planning, including appointing, assessing, training, fixing the compensation of and where appropriate, replacing senior management;

l developing and implementing a Corporate Disclosure Policy (including an investor relations programme or shareholder communications policy) for the Group;

l reviewing the adequacy and the integrity of the Group’s internal control systems and management information systems, including systems for compliance with applicable laws, regulations, rules, directives and guidelines;

l monitoring and reviewing management processes aimed at ensuring the integrity of financial and other reporting;

l ensuring that the Company’s financial statements are true and fair and conform with the accounting standards; l monitoring and reviewing policies and procedures relating to occupational health and safety and compliance with

relevant laws and regulations; and

l ensuring that the Company adheres to high standards of ethics and corporate behaviour.

CORPORATE GOVERNANCE OVERVIEW STATEMENTcont’d

PRINCIPLE A: BOARD LEADERSHIP AND EFFECTIVENESS cont’d

I. Board Responsibilities cont’d

Roles and Responsibilities of the Board cont’d

The Board has delegated certain responsibilities and duties to the Board Committees namely Audit Committee, Remuneration Committee and Nominating Committee. All the Board Committees discharge their duties and responsibilities within the specific terms of reference approved by the Board. Except for the Remuneration Committee, the Board Committees do not have executive powers but report to the Board on all matters considered and their recommendations thereon. The ultimate responsibility for decision making lies with the Board.

The Board also set out Limits of Authority which outline the relevant matters and applicable limits including those require the Board’s approval and those the Board may delegate to the Management. Key matters reserved for the Board’s approval include the annual budget, business continuity plan, new issue of securities, business restructuring, capital expenditure above certain limit, disposal of significant fixed assets and the acquisition or disposal of companies within the Group. The Management remains accountable to the Board for the authority being delegated.

Role of the Chairman, Group Managing Director, Independent Directors and Senior Independent Director

The Chairman is also the Chief Executive Officer of the Company. The Chairman carries out a leadership role in the conduct of the Board and its relations with the shareholders and other stakeholders. The Chairman is responsible for instilling good corporate governance practices, leadership and effectiveness of the Board. He is also responsible for long range strategic planning for the Group.

The Group Managing Director has overall responsibility in managing the Group’s business and to ensure the effective implementation of the Group’s Business Plan and policies established by the Board

The Independent Directors are to provide unbiased and independent view, advice and judgement to fulfil a pivotal role in corporate accountability. Their presence provides a check and balance in the discharge of the Board function as all decisions arrived at the Board are made on consensus.

The Board has appointed Dato’ Ahmad Khairummuzammil Bin Mohd Yusoff as Senior Independent Non-Executive Director, to whom concerns may be conveyed by shareholders and other stakeholders.

Company Secretary

The Company Secretary plays an advisory role to the Board in relation to the Company’s Constitution, the Board’s policies and procedures, and compliance with the relevant regulatory requirements, codes, guidance and legislations. The Company Secretary is suitably qualified, competent and capable of carrying out the duties required and have attended trainings and seminars conducted by relevant regulatory body to keep abreast with the relevant updates on statutory and regulatory requirements and updates on the Main Market Listing Requirements of Bursa Malaysia Securities Berhad (“Listing Requirements”).

The Company Secretary is responsible for advising the Directors of their obligations and duties to disclose their interest in securities, disclosure of any conflict of interest in a transaction involving the Group, prohibition on dealing in securities and restrictions on disclosure of price-sensitive information as well as to update Board members regularly on amendments to the Listing Requirements and the Companies Act, 2016.

Access to Information and Advice

All Directors are provided with an agenda and a set of Board papers prior to each Board Meeting to be convened. Board papers are required to be circulated at least five (5) market days prior to the date of each Board Meeting to enable Directors to obtain further explanation, if necessary, in order to be properly briefed before each meeting. Board members are supplied with full, timely and accurate information necessary to enable them to discharge their responsibilities. Senior management staffs are also invited to attend Board Meetings when necessary to provide the Board with further explanation and clarification on matters being tabled for consideration by the Board.

The Board convenes at least four (4) Board Meetings a year to consider the quarterly financial results and review operational performance. Additional meetings are convened as and when necessary.

During the financial year ended 31 January 2018, the number of Board Meetings held and the attendance of each Director are as follows:-

No. of Board MeetingsDirectors Held Attended

Tan Sri Dato’ Tan Kay Hock 6 4Puan Sri Datin Tan Swee Bee 6 4Tan Sri Dato’ Seri Dr. Ting Chew Peh 6 6Dato’ Ahmad Khairummuzammil Bin Mohd Yusoff 6 6Ooi Teng Chew 6 6

The deliberations and decisions at Board Meetings are well documented in minutes. The status of actions taken with reference to the previous minutes of meetings is updated in the matters arising for the Board’s notation.

All Directors have access to the advice and services of the Company Secretary and are updated on new statutory or regulatory requirements concerning their duties and responsibilities.

If required, the Directors may obtain independent professional advice at the Company’s expense in furtherance of their duties, after consultation with the Chairman and other Board members.

Newly appointed Directors are briefed by the Board, the Company Secretary and the members of the management on the nature of business and current issues within the Group.

Board Charter

The Board has adopted a Board Charter which provides guidance for Directors and Management regarding the responsibilities of the Board, its Committee and Management. The Board Charter is reviewed regularly to ensure it complies with legislation and best practices, and remains relevant and effective in the light of the Board’s objective. The Board Charter was last reviewed in March 2018.

The Board Charter is available on the Company’s website at www.johanholdings.com.

Code of Conduct and Ethics

The Board has adopted a Code of Ethics for Company Directors. This Code of Ethics provides good guidance for a standard of ethical behaviour for Directors based on trustworthiness and values that can be accepted and to uphold the spirit of responsibility and social responsibility in line with the legislation, regulations and guidelines for administrating a company.

The Board has also adopted a Code of Conduct and Ethics which provides guidance to the Directors, management and employees of the Group on acceptable practices and guide behaviour to assist them in their obligation to comply with the applicable laws and regulations and to act in high ethical standards of business integrity.

The areas covered by the Code of Conduct and Ethics are Compliance with Laws, Conflicts of Interest, Related

Party Transactions, Confidential Information, Insider Trading, Bribery and Corruption, Business Courtesies, Money Laundering, Work Environment, Harassment in the Workplace, Equal Opportunity and Company’s Assets.

Both of the Code of Ethics and Code of Conduct and Ethics are available on the Company’s website at www.johanholdings.com.

Whistleblower Policy

The Board has formalised a Whistleblower Policy which enables employees and stakeholders to report genuine concerns about unethical behaviour, malpractices, illegal acts or failure to comply with regulatory requirements. Any concern should be raised with immediate superior or reported to the Group Chairman & Chief Executive Officer. The findings on investigation performed on complaints received together with the proposed course of action will be reviewed by the Audit Committee for a decision.

II. Board Composition

Composition and Independence of the Board

The Board currently has five (5) members comprises:-

(i) Tan Sri Dato’ Tan Kay Hock - Chairman and Chief Executive(ii) Puan Sri Datin Tan Swee Bee - Group Managing Director(iii) Dato’ Ahmad Khairummuzammil Bin Mohd Yusoff - Independent Non-Executive Director(iv) Tan Sri Dato’ Seri Dr Ting Chew Peh - Non-Independent Non-Executive Director(v) Mr Ooi Teng Chew - Independent Non-Executive Director

This composition fulfils the requirement under the Listing Requirements which stipulates that at least two (2) Directors or one-third of the Board, whichever is higher, must be independent. Collectively, the Directors have a diverse wealth of experience as well as skills and knowledge in law, engineering, accounting and general management. The profile of each Director on the current Board is included in Pages 9 to 11 of this Annual Report.

In accordance with the Constitution of the Company, at least one-third of the Directors including the Managing Director are required to retire by rotation at each Annual General Meeting but shall be eligible for re-election. All Directors shall retire from office once at least 3 years but shall be elegible for re-election.

II. Board Composition cont’d

Annual Assessment of Independence

The Nominating Committee annually assesses the independence of Independent Directors based on the criteria set out in Corporate Governance Guide. Based on the assessment carried out in 2018, the Board is of the view that all the Independent Directors fulfil the criteria of independence as defined in the Listing Requirements and are able to continue to bring independent and objective judgement to the board deliberations.

Tenure of Independent Director

The Board takes cognizance of the MCCG 2017 best practices that the tenure of an Independent Director should not exceed a cumulative term of nine (9) years. Upon completion of the nine (9) years, an Independent Director may continue to serve on the Board if it is determined that his expertise and experience is relevant to the Company. The Board may wish to retain an Independent Director who has more than nine (9) years tenure of service to continue to serve as an Independent Director. In such an event, the Nominating Committee and the Board must carry out an assessment to justify retaining him as an Independent Director and the Board to make a recommendation and provide strong justification to seek shareholders’ approval at a general meeting.

In ascertaining the independence status of the Directors, the Board continues to believe that tenure should not form part of the assessment criteria. It is of the view that the fiduciary duties of Directors are the primary concerns of all Directors, regardless of their status. The Board firmly believe that the ability of a Director to serve effectively is dependent on his calibre, qualification, experience and personal qualities, particularly his integrity and objectivity. It also believes there are significant advantages to be gained from long serving-Directors who possess insight and knowledge of the Company’s business and affairs in view of the continuous challenges faced by the Company.

Dato’ Ahmad Khairummuzammil Bin Mohd Yusoff was appointed as Independent Non-Executive Director on 4 July 2005 and he has served the Board for more than twelve (12) years. Annual Shareholders’ approval was obtained for Dato’ Ahmad Khairummuzammil Bin Mohd Yusoff to continue to act as an Independent Non-Executive Director of the Company since 2014. Mr Ooi Teng Chew was appointed as Independent Non-Executive Director on 12 March 2009 and he served the Board for more than nine (9) years.

The Board has via the Nominating Committee conducted an annual performance evaluation and assessment on the Independent Directors and is of the opinion that Dato’ Ahmad Khairummuzammil Bin Mohd Yusoff and Mr Ooi Teng Chew remain objective and independent in expressing their views. The Board will be seeking the shareholders’ approval at the forthcoming Annual General Meeting for Dato’ Ahmad Khairummuzammil Bin Mohd Yusoff and Mr Ooi Teng Chew to continue as Independent Directors of the Company. The justifications for their continuation as Independent Directors are disclosed in the Notice of the Annual General Meeting.

Given that the two-tier voting process is not provided in the Company’s Constitution to accommodate the unique feature prescribed by the MCCG 2017 which is varied from the usual notion of shareholders’ voting rights and passing of resolutions, the Board is not recommending two-tier voting process for the resolution to retain Dato’ Ahmad Khairummuzammil Bin Mohd Yusoff as Independent Director of the Company, at the forthcoming Annual General Meeting.

Recruitment and Appointment of Directors

The Nominating Committee is responsible to recommend to the Board for the appointment of new Directors. The Board currently does not have any gender, ethnicity and age policy or target. The criteria to be used by the Nominating Committee in the selection and appointment process is mainly to ensure the Board comprises a good mix of skill and experience of Directors to discharge its responsibilities in an effective and competent manner, as well as the candidates’ competencies and ability to commit sufficient time to the Company’s matters.

Nevertheless, the Board is supportive of gender diversity in the boardroom as recommended by the MCCG 2017 to promote the representation of women in the composition of the Board. The Board will endeavour to ensure that gender, ethnicity and age diversity will be taken into account in nominating and selecting new directors to be appointed on the Board. Presently, Puan Sri Datin Tan Swee Bee is the only female Director comprised in the Board of five (5) Directors.

Nominating Committee

The Nominating Committee was set up by the Board on 27 March 2013 which comprises the following members:-

(i) Dato’ Ahmad Khairummuzammil Bin Mohd Yusoff (Independent Non-Executive Director - Chairman)(ii) Tan Sri Dato’ Seri Dr Ting Chew Peh (Non-Independent Non-Executive Director)(iii) Ooi Teng Chew (Independent Non-Executive Director)

The Nominating Committee’s Terms of Reference include the authority delegated by the Board to oversee the selection and assessment of Directors. The Nominating Committee shall:-

(i) recommend to the Board for the appointment of new Director;

(ii) assess the effectiveness of the Board as a whole, the committees of the Board and the contribution of each existing individual Director, in terms of the appropriate size and skills, balance between Executive Director, Non-Executive Directors and Independent Directors, the mixture of skills and other core competencies required;

(iii) assess the independence of Independent Directors to consider whether the Independent Directors can continue to bring independent and objective judgement to board deliberations; and

(iv) to recommend to the Board if an Independent Director who serves the Board for more than 9 years is justifiable to remain independent on Board.

The Chairman of the Nominating Committee, Dato’ Ahmad Khairummuzammil Bin Mohd Yusoff, is the Senior Independent Director identified by the Board.

Annual Assessment of Directors

The Nominating Committee reviews annually the required mix of skills and experience of Directors, including core-competencies which Non-Executive Directors should bring to the Board. The Committee also assesses annually the effectiveness of the Board as a whole, the Committees of the Board and contribution of each individual Director based on the criteria set out in Corporate Governance Guide.

The summary of the assessments and comments by each individual Director are tabled to the Nominating Committee and reported to the Board.

During the financial year under review, the Nominating Committee had carried out the annual assessment and satisfied that the Board and Board Committees are effective as a whole, considering the required mix of skills, size and composition, experience, core competencies and other qualities. The Nominating Committee was also satisfied that each of its Directors has the character, experience, integrity, competence and time to effectively discharge their respective role.

The Board has fixed the maximum number of five (5) listed company board representations which any Director may hold at any point of time. Directors shall inform the Chairman before accepting any new directorships in other public listed company.

Directors’ Training

The Board encourages its Directors to attend talks, seminars, workshops and in-house conferences to update and enhance their skills and knowledge and to keep abreast with developments in regulatory and corporate governance issues. During the year, the Directors in their individual capacity and as Director of other public listed companies in Malaysia, had attended various courses, briefings and seminars.

Directors’ Training cont’d

Details of training attended by Directors during the financial year ended 31 January 2018 are as follows:

Name of Directors Programme

1. Tan Sri Dato’ Tan Kay Hock Sustainability Reporting

2. Puan Sri Datin Tan Swee Bee Sustainability Reporting

3. Tan Sri Dato’ Seri Dr Ting Chew Peh i) Financial Reporting For Public Listed Companyii) Cyber In The Boardroom: The First Place To Address Cyber Security

Riskiii) Audit Committee Institute (ACI) Breakfast Roundtable 2017:

Malaysian Code on Corporate Governanceiv) SDG Business Summit 2017: Business As A Force For Good. The Role

Of Private Sector In Achieving The Sustainable Development Goalsv) Singapore International Water Week Spotlight (SIWW) 2017vi) Malaysian Code On Corporate Governance: Dealing With Issues And

Expectations On Board Leadership And Effectivenessvii) Malaysian Code On Corporate Governance: Dealing With Issues And

Expectations On Audit Committee, Risk Management And Stakeholder Management

viii) Directors Risk Management Programme - I Am Ready To Manage Risksix) Advocacy Session On Corporate Disclosure For Directors And Principal

Officers Of Listed Issuers

4. Dato’ Ahmad Khairummuzammil Bin Mohd Yusoff

Sustainability Reporting

5. Ooi Teng Chew i) Suruhanjaya Syarikat Malaysia Seminar on Companies Act 2016ii) MAICSA Financial Reportng for Public Listed Companyiii) Ernst & Young 2018 Budget & Tax Conference

III Remuneration

Directors’ Remuneration

The Remuneration Committee comprises of two (2) Non-Executive Directors and one (1) Executive Director. The members comprises of:-

(i) Tan Sri Dato’ Seri Dr Ting Chew Peh (Non-Independent Non-Executive Director - Chairman)(ii) Dato’ Ahmad Khairummuzammil Bin Mohd Yusoff (Independent Non-Executive Director)(iii) Puan Sri Datin Tan Swee Bee (Group Managing Director)

The Remuneration Committee’s primary responsibilities are to recommend to the Board the remuneration package and the terms of employment on each Executive Director. The determination of fees payable to Non-Executive Director will be a matter for the Board as a whole and a Director shall not participate in the decision on their own remuneration packages. The Remuneration Committee is also responsible for developing the Group’s remuneration policy and determining the remuneration packages of senior executive employees of the Group.

The remuneration of Directors is determined at levels which enable the Company to attract and retain Directors with the relevant experience and expertise to manage the Groups effectively.

The Non-Executive Directors are paid on annual basic fee, any increase of which are subject to approval by shareholders at the Annual General Meeting. The Chairman of the Audit Committee is paid an allowance of RM1,500/- per meeting and Audit Committee member is paid RM1,000/- per meeting.

The aggregate remuneration of the Directors for the financial year ended 31 January 2018 is as follows:-

Remuneration received from the Company

Remuneration received from subsidiary companies

Salaries & Other

EmolumentsBenefits-

In-KindCompany

Total Fees

Salaries & Other

EmolumentsGroup

Total(RM’000) (RM’000) (RM’000) (RM’000) (RM’000) (RM’000) (RM’000)

Executive DirectorsTan Sri Dato’ Tan Kay Hock - 738 216 954 - 362 1,316Puan Sri Datin Tan Swee Bee - 566 28 594 - 256 850

Non-Executive DirectorsDato’ Ahmad Khairummuzammil

Bin Mohd Yusoff 50 11 - 61 - - 61Tan Sri Dato’ Seri Dr Ting Chew Peh 50 4 - 54 - - 54Ooi Teng Chew 50 4 - 54 - - 54

150 1,323 244 1,717 - 618 2,335

III Remuneration cont’d

Directors’ Remuneration cont’d

The number of Directors whose remuneration falls into bands of RM50,000 is as follows:-

Company Group

Range of RemunerationExecutive Directors

Non-Executive Directors

Executive Directors

Non-Executive Directors

RM50,001 to RM100,000 - 3 - 3RM550,001 to RM600,000 1 - - -RM800,001 to RM850,000 - - 1 -RM950,001 to RM1,000,000 1 - - -RM1,300,001 to RM1,350,000 - - 1 -

2 3 2 3

PRINCIPLE B: EFFECTIVE AUDIT AND RISK MANAGEMENT

I. Audit Committee

The Board ensures that shareholders are provided with a balanced and clear assessment of the Group’s position and financial performance through the issuance of Annual Audited Financial Statements and quarterly financial reports. The Audit Committee assists the Board in overseeing the financial reporting of the Group by reviewing the quarterly financial reports and Annual Audited Financial Statements to ensure they are drawn up in accordance with the Companies Act, 2016 and applicable accounting standards prior to recommending them for approval by the Board and issuance to shareholders.

The Audit Committee comprises three (3) members, all of whom are Non-Executive Directors, with a majority of Independent Directors. The Audit Committee is chaired by an Independent Non-Executive Director who is not a Chairman of the Board.

The Audit Committee took note of the Practice 8.2 of the MCCG 2017 and accordingly, the Terms of Reference of the Audit Committee was amended to reflect the requirement of a former key audit partner to observe a cooling-off period of at least two (2) years before he can be considered for appointment as an Audit Committee member of the Company. This is to safeguard the independence of the audit by avoiding the potential threats which may arise when a former key audit partner is in a position to exert influence over the audit and preparation of the Company’s financial statements. The Terms of Reference of the Audit Committee is available at the Company’s website at www.johanholdings.com.

For details on the composition, attendance record and summary of activities of the Audit Committee, please refer to the Audit Committee Report on pages 37 to 39.

PRINCIPLE B: EFFECTIVE AUDIT AND RISK MANAGEMENT cont’d

I. Audit Committee cont’d

External Auditors

The Audit Committee had assessed the external auditor’s engagement teams’ calibre, performance, experience, global network resources as well as ability to perform the scope of work within the Company’s timeline. The Audit Committee took into account the openness in communication and interaction with the lead audit engagement partner and engagement team through discussions at private meetings, which demonstrated their independence, objectivity and professionalism. The Audit Committee was satisfied with the suitability of Deloitte PLT based on the quality of services and sufficiency of resources they provided to the Group, in terms of the firm and the professional staff assigned to the audit. The Audit Committee was also satisfied in its review that the provision of non-audit services by Deloitte PLT to the Company for the financial year ended 31 January 2018 did not in any way impaired their objectivity and independence as external auditors of the Company. The external auditors have confirmed that they are, and have been, independent throughout the conduct of the audit engagement.

Following the assessment, the Audit Committee had recommended to the Board for Deloitte PLT to be re-appointed by shareholders as external auditors of the Company for the financial year ending 31 January 2019 at the forthcoming Annual General Meeting.

Having regard to the outcome of the evaluations and the annual assessment of external auditors which supported the Audit Committee’s recommendation, the Board had approved the Audit Committee’s recommendation for the shareholders’ approval to be sought at the forthcoming Annual General Meeting for re-appointment of Deloitte PLT as external auditors of the Company for the financial year ending 31 January 2019.

II. Risk Management and Internal Control Framework

The Board acknowledges its overall responsibility for ensuring that a sound system of risk management and internal control is maintained throughout the Group and the need to review its effectiveness regularly. The Board recognises that risks cannot be totally eliminated and the system of internal controls instituted can only help minimise and manage risks and provide some assurance that the assets of the Company and of the Group are safeguarded against material loss and unauthorised use and that financial statements are not materially misstated.

The Board has set up a Risk Management Committee comprises the following members:-

(i) Tan Sri Dato’ Tan Kay Hock (Non-Independent Executive Director - Chairman)(ii) Puan Sri Datin Tan Swee Bee (Group Managing Director)(iii) Chong Cheok Weng (General Manager - Finance)

The Risk Management Committee is responsible to oversee the overall risk management of the Group, particularly on the strategic areas of the business. The Risk Management Committee, supported by various sub-RMCs established at respective business units that are responsible for identifying, managing and mitigating risks through a systematic risk evaluation or profiling exercise. The Risk Profile of respective business units is reviewed and revised on a half yearly basis and submitted to the Risk Management Committee for review. Thereafter the Risk Scorecard and Risk Register would be presented to the Audit Committee for further deliberation on half yearly basis. The details of Risk Management Framework can be found in the Statement on Risk Management and Internal Control on pages 40 to 43 of this Annual Report.

PRINCIPLE B: EFFECTIVE AUDIT AND RISK MANAGEMENT cont’d

II. Risk Management and Internal Control Framework cont’d

The Group has an independent internal audit function, reporting directly to the Audit Committee. Internal audit findings of operating units of the Group and investigations carried out by internal audit department are tabled at the Audit Committee Meeting. A statement on the Internal Audit Function with the required disclosure is presented in the Audit Committee Report of this Annual Report.

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

I. Communication with Stakeholders

The Board acknowledges the need for shareholders and other stakeholders to be informed of all material business and developments concerning the Group. In addition to various announcements made during the year, the Board had ensured timely release of financial results on a quarterly basis to provide shareholders with an overview of the Group’s performance and operations. Copies of all announcements are available to shareholders and members of the public upon request.

The Board has established Corporate Disclosure Policies and Procedures in relation to provision of accurate, timely, consistent and fair disclosure of corporate information to enable informed and orderly market decision by investors.

To ensure comprehensive, accurate and timely disclosures, the Board is also fully aware of and guided by the Corporate Disclosure Guide 2011 issued by Bursa Malaysia Securities Berhad. The Guide aimed at providing shareholders and investors with comprehensive, accurate and quality information on a timely and even basis, and not merely meeting the minimum requirements under the Listing Requirements.

II. Conduct of General Meeting

The Annual General Meeting is the principal forum for communicating with shareholders. Shareholders who are unable to attend are allowed to appoint not more than two (2) proxies, who need not be the shareholders, to attend and vote on their behalf. Board members as well as the General Manager – Finance and the External Auditors of the Company are present to answer questions raised by shareholders. Shareholders are given the opportunity to ask questions during the questions and answers session prior to each resolution being proposed for consideration by shareholders. The Board encourages participation at general meetings and all resolutions to be considered at general meetings of shareholders will be voted on by way of poll pursuant to paragraph 8.29A of the Listing Requirements. The Board took cognizance of the Practice 12.1 of the MCCG 2017 and has given more than 28 days’ notice for the forthcoming Annual General Meeting to allow shareholders additional time to go through the Annual Report and make the necessary attendance and voting arrangements.

Corporate information of the Group is also available via the Company’s website, www.johanholdings.com.

DIRECTORS’ RESPONSIBILITY IN FINANCIAL REPORTING

The Board acknowledges their responsibility to ensure that the financial statements of the Company and the Group are prepared in accordance with the provisions of the Companies Act, 2016 and approved accounting standards in Malaysia so as to give a true and fair view of the state of affairs and the result of the Company and of the Group.

In preparing these financial statements, the Directors have:-

- adopted suitable accounting policies and applying them consistently;- made judgement and estimates that are prudent and reasonable;- ensured applicable accounting standards have been followed, subject to any material departures disclosed and

explained in the financial statements; and- prepared the financial statements on a going concern basis.

The Directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of the Company and the Group and to enable them to ensure that the financial statements as prepared comply with the Companies Act, 2016. The Directors are also responsible for safeguarding the assets of the Company and the Group and to take reasonable steps for the prevention and detection of fraud and other irregularities.

SUSTAINABILITY REPORT

ABOUT THE REPORT

Scope of the Report

• This Sustainability Report has been prepared in reference with the GRI Standards to meet Bursa Malaysia’s Main Market Listing Requirements.

• This report focuses on key sustainability topics that are material to Johan Holdings Berhad (“Johan”) for the financial year ended 31 January 2018.

Boundary

The disclosures covered in this report are within the following boundaries (unless indicated otherwise).• Selected activities of Johan Holdings Berhad and Diners

Club (Singapore) Pte Ltd. (“DCS”)• Company’s operations.• Performance data’s collected from selected subsidiary,

Availability and Coverage

This report is available online on our website, www.johanholdings.com.

Audience

This report is published for our valued stakeholders that include shareholders, media, government, suppliers, customers, employees and local communities.

Reporting Period

This is our inaugural Sustainability Report and it covers the financial year from 1 February 2017 to 31 January 2018, unless otherwise stated. Moving forward, we will disclose our sustainability performance in successive Sustainability Report annually.

Feedback for the Report We welcome your comments, thoughts and remarks, which can be directed to our headquarters:

Johan Holdings Berhad,11th Floor Wisma E&C,No. 2 Lorong Dungun Kiri,Damansara Heights,50490 Kuala Lumpur,Malaysia

Telephone : +603 2092 1858Email : jhb@johanholdings.com.myWebpage : www.johanholdings.com

SUSTAINABILITY REPORTcont’d

Economic

KEYSUSTAINABILITY

HIGHLIGHTS

Social

Employees 506 Breaches on

Customer Privacy3

Established Personal Data Protec�on Team and Informa�on Security Team4

RM146,497,000

ZEROCorrup�on Case2

Total Revenue1

1 Group total revenue for Johan Holdings Berhad with inclusive of revenue from discontinued operation amounted to RM24,012,000.2,3 Data from DCS4 For DCS’s operations

CHAIRMAN’S MESSAGE

“Creating sustainable value is the essence of our culture and the strategic goal that guides our action plans.”

It is with great pleasure that we present Johan Holdings Berhad’s inaugural Sustainability Report on behalf the Board of Directors. We at Johan recognise that the growth and stability of our business is inseparably linked with the sustainability of the economies and the communities within which we operate. Thus, we strive to be a responsible and proactive corporate citizen by conducting our business in a sustainable and ethical manner. This report presents an overview of our sustainability journey, dedication and commitment towards building sustainable business practices and creating value for our stakeholders.

Governance

Corporate governance is a crucial element towards realising our sustainability goals. It provides us with a foundation to implement sustainability strategies across the business and remain steadfast with regard to the needs of our stakeholders. We endeavour to achieve high standards of good corporate governance throughout the Company and our subsidiaries by embracing transparency, integrity, accountability and discipline in all our practices. We have adopted relevant guidelines such as the Malaysian Code of Corporate Governance 2017 (MCCG 2017) to strengthen our efforts in maintaining high standards of governance on our road towards sustainability.

Social

The Group is committed to attracting and retaining highly-skilled and talented professionals. We provide our employees with attractive career development opportunities and benefits that not only boosts our performance as a Group, but also supports them in achieving their own personal aspirations as they grow on this journey with us. We put great emphasis on talent management and development to ensure our people are capable of supporting and contributing to our sustainability goals. As developing human capital is one of our key strategic directions, the Group is also dedicated to implementing an equal employment

opportunity approach to promote and increase workplace diversity, irrespective of age, gender, race or cultural background. We believe the diversity that permeates our Group enhances our ability to offer sustainable and innovative solutions for our customers and the community.

Economic

The Group endeavours to provide products and services that not only accommodate customers’ needs but also meet the ever-changing requirements of the digital era. While we acknowledge the importance of maintaining the market recognition of our business, we also maintain a steadfast confidence in sustainability. Thus, we strive to cultivate a workplace culture that embodies high ethical conduct and standards of compliance to serve our customers better. For the year 2017, we are pleased to note that DCS has maintained zero confirmed incidents of corruption across all our business operations and achieved zero identified breaches and substantiate complaints with regard to customer privacy. This demonstrates our commitment in providing value and nurturing long-term relationships with our stakeholders.

Environment

Our sustainability efforts also take into consideration the environmental impact of our operations. The Group is committed to minimising our environmental footprint through product and resource stewardship, taking meticulous steps in addressing any possible adverse impact on the environment, and complying with all relevant regulatory requirements with regard to environmental issues.

Going Forward

We aspire to move beyond data collection and towards measuring the results and impacts of our business. We have identified our material sustainability issues and recognise the challenges ahead. We therefore hope to improve our initiatives and reporting, as we build on our existing foundation.

We trust you will find this Sustainability Report informative and we welcome your feedback on how we can further enhance our efforts as we venture forth towards the next phase of our sustainability journey.

TAN SRI DATO’ TAN KAY HOCKChairman

In Johan, we believe that stakeholder engagement is a vital component of our sustainability journey. We continuously communicate with our stakeholders to obtain valuable feedback pertaining to sustainability issues. Throughout the year, we frequently engage with our stakeholders to increase their participation in our decision-making process. Our approach to stakeholder engagement is summarised below:

Stakeholders Mode of Engagement Frequency of Engagement

Shareholders and Investors • Annual General Meeting• Extraordinary General Meeting

• Annually • As needed

Media • Media events• Advertisements

• As needed• As needed

Government • Income Tax Filling • GST Reporting• Electronic Communication

• Annually• Monthly / Quarterly• As needed

Customers • Customer Feedback• Questionnaire / Survey• Electronic Communication

• As needed• As needed• As needed

Employees • Monthly Payroll• Staff Appraisals• Training

• Monthly• Annually• Periodically

Local Communities • Community Engagement Programme • As needed

MATERIALITYWe acknowledge the importance of allocating our resources and efforts to address sustainability issues that are of significant importance to our stakeholders and business. On this basis, we have conducted stakeholder engagement workshops to ascertain material sustainability issues under Economic, Environment and Social (EES) areas. The obtained results are compiled and mapped based on the significance and level of influence of each sustainability issue studied. As illustrated in the materiality matrix below, 4 sustainability topics are ranked as top priority and will be further disclosed in this report.

Signifinance of Economics, Environment & Social Impacts

Customer Privacy

An�-corrup�on

Marke�ng and Labeling

An�-compe��ve behavior

Employment

EconomicPerformance

1 Economic Performance 4 Employment2 Customer Privacy 5 Anti-competitive behaviour3 Anti-corruption 6 Marketing and Labeling

Chosen Material Sustainability Issues

Category GRI Standard Topic Disclosures

Economic201-1 Economic Performance Direct economic value generated and distributed1

205-3 Anti-Corruption Confirmed incidents of corruption and actions taken

Social401-1 Employment New employee hires and employee turnover

418-1 Customer Privacy Substantiated complaints concerning breaches of customer privacy and losses of customer data

1 Detailed economic performance figures is discussed in Annual Report 2018 page 56 to page 59.

ECONOMIC

Anti-corruption

Why it matters

We believe it is our Group’s responsibility to adhere to applicable anti-corruption laws and regulations while providing quality service to our customers. Regardless of the volatility of the market environment and evolving policy requirements, we continue to see solid anti-corruption practices as a prerequisite for our survival as it ultimately fosters long-term relationship with our customers and suppliers. We are convinced that even a single breach of anti-corruption practices results in substantial damages to the brand and reputation we have fostered for decades.

Management approach

A set of Code of Conduct and Ethics has been established to contribute towards streamlining our anti-corruption practices in every aspect of our business. An integral component of the Code of Conduct and Ethics is to ensure all our employees, regardless of their business functions and positions, conduct all business activities in an honest and ethical manner. For example, all our employees are required to ensure full compliance with the Code of Conduct and Ethics throughout all engagements with customers and suppliers.

We encourage all our employees to report any incidents related to corruption to their immediate supervisors, the Group Chairman and Chief Executive Officer. Under our Group’s Whistle-blower Policy, we ensure that the whistle-blowers are protected from retaliation. Every reported case will be investigated and thereafter, reported to and reviewed by the Audit Committee. In the event of a breach of compliance, disciplinary action will be taken against those found to be involved.

For the financial year ended 31 January 2018 (“FY 2017/18”), we have maintained a corruption-free workplace in DCS. There was zero confirmed incidents of corruption in our business. No employee was found to have breached the Code of Conduct and Ethics during the reporting period. We see this achievement as confirmation of the effectiveness of the measures we have undertaken towards eliminating corruption in all aspects of our business.

ZeroConfirmed Incidents of Corruption in DCS

SOCIALEmployment

Why it matters

We acknowledge that our people are amongst our key assets and will continue to be a major driving force in transforming our company into a high-performing organisation. Our priority is to attract, motivate and retain highly skilled talents in order to deliver outstanding services to our customers. Therefore, we are always focussed on the overall well-being of our employees, taking all measures possible to provide them with fulfilling and rewarding careers.

Management approach

We steadfastly uphold the principles of fair employment and non-discrimination. Our subsidiary, DCS, implements

strategies to decrease employee turnover by offering attractive remuneration packages and benefits. We also provide guidance in helping employees to achieve their career goals. Senior management, the Human Resources Department and Heads of Department are entrusted to manage and monitor the work performance of our employees. They also work in tandem with supervisors to address any grievances. Inquiry sessions will be conducted if there are issues raised. In addition, we also use questionnaires as a medium for employees to raise their concerns in the workplace.

Every year, senior management and supervisors are tasked to ensure that our employees meet assigned targets and objectives. Evaluations are conducted through annual performance appraisals. Counselling services are provided for employees who fail to meet the minimum expectations of the company.

By Age

< 30 years old 30 - 50 years old > 50 years old 8 12

By Age

< 30 years old 30 - 50 years old > 50 years old 25 22

By Gender

Total Number of New Employee Hires by Age and Gender

Total Number of Employee Turnover by Age and Gender

DCS’S WORKFORCE

Customer Privacy

Why it matters

As we proceed headfast into new frontiers of the digital era, there are increasing concerns with regard to issues of cyber and data security in the marketplace. As our credit card businesses involve a high volume of customer personal information, we believe that the highest standard of protection for customer privacy should be embedded in all our operations and services. It is also our responsibility to abide by all applicable personal data protection laws and regulations to ensure that our customers’ personal information remain free from any form of data breach.

Management approach

With the enforcement of the Singapore Personal Data Protection Act (PDPA) in 2014, DCS have established the Personal Data Protection Team and Information Security Team to oversee our practices with regard to customer privacy. These teams have no affiliation with any department connected to DCS and the teams’ officer(s)reports exclusively and directly to the Executive Director. We have also introduced the following policies in order to demonstrate our commitment to customer privacy:

a) Personal Data Protection Act Governance Frameworkb) Personal Data Protection Act Policyc) Personal Data Protection Act Code of Practiced) Do-not-call-Policye) Technology Risk Management Guideline

Our Personal Data Protection Team embeds customer privacy throughout the data management cycle that includes:

• how data is collected• how data is stored• how data is used• how data is to be destroyed

All our employees are responsible for adhering to the aforementioned policies and practices that highlight customer privacy as a core function across our operations and services. In addition, we have also established internal policies to secure email correspondence and data by using Websence, a software which monitors and prevents any attempts of data breach. All customers’ data, for example, is required to be encrypted and password protected before sending. These measures are complemented by mandatory training sessions on the requirements of PDPA for all our employees.

For the FY 2017/18, we have achieved our target of zero cases of substantiated complaints from our customers and regulatory bodies concerning breaches of customer privacy in DCS. There are also no identified leaks, theft or loss of any customer data during the reporting period.

ZeroSubstantiate Complaints in Customer Privacy in DCS

ZeroIdentified Breaches of Customer Privacy in DCS

AUDIT COMMITTEE REPORT

A. MEMBERS

The Audit Committee (“AC”) comprises the following members, all of whom are Non-Executive Directors with a majority of Independent Directors:-

(i) Dato’ Ahmad Khairummuzammil Bin Mohd Yusoff (Independent Non-Executive Director - Chairman)(ii) Tan Sri Dato’ Seri Dr. Ting Chew Peh (Non-Independent Non-Executive Director)(iii) Ooi Teng Chew (Independent Non-Executive Director)

The composition of the AC comply the requirements of Paragraph 15.09(1)(a) and (b) of the Bursa Malaysia Securities Berhad (“Bursa Securities”) Main Market Listing Requirements (“Listing Requirements”).

B. MEETINGS AND ACTIVITIES

During the year ended 31 January 2018, four (4) AC Meetings were held. Details of attendance of each AC member were as follows:-

No. of Meetings

Name AC members Held Attended

Dato’ Ahmad Khairummuzammil Bin Mohd Yusoff (Chairman) 4 4Tan Sri Dato’ Seri Dr Ting Chew Peh 4 4Ooi Teng Chew 4 4

At each of these AC Meetings, the General Manager - Finance, the Senior Manager-Internal Audit and the representatives of the external auditors were invited to review with the AC members the quarterly reports and annual financial statements as the case may be.

After each AC Meeting, the Chairman of the AC reports to the Board on the proceedings conducted thereat and to convey the recommendations by the AC on the quarterly reports and annual financial statements with or without amendments as the case may be to be approved and adopted by the Board for release to the Bursa Securities.

Highlights of Activities

In line with the terms of reference of the AC, the following activities were carried out by the AC during the year ended 31 January 2018 in the discharge of its functions and duties:-

i) Reviewed the quarterly financial results of the Group including the draft announcements pertaining thereto, and made recommendations to the Board for approval. The reviews, served to ensure that the Company’s financial reporting and disclosures present a true and fair view of the Company’s financial positions and performance and are in compliance with the Listing Requirements and applicable accounting standards in Malaysia;

ii) Reviewed the results, reported issues arising from the annual statutory audit, Management’s responses to the audit findings for the financial year ended 31 January 2017;

iii) Reviewed and made recommendations to the Board for approval, the annual audited financial statements of the Company and the Group for the financial year ended 31 January 2017 to ensure that it presented a true and fair view of the Company’s financial positions and performance for the year and compliance with regulatory requirements;

AUDIT COMMITTEE REPORTcont’d

B. MEETINGS AND ACTIVITIES cont’d

Highlights of Activities cont’d

iv) Reviewed with the external auditors, their audit plan for the financial year ended 31 January 2018, outlining the audit scope, methodology and timetable, audit materiality, areas of focus, fraud risk assessment and proposed fees for the audit and non-audit services rendered by the external auditors for the financial year ended 31 January 2018;

v) Met with the external auditors twice without the presence of Management during the year under review;

vi) Reviewed and approved the 2018 internal audit plan to ensure that adequate scope and comprehensive coverage over the activities of Group and adequate resources within the internal audit team to carry out the audit works;

vii) Reviewed the internal audit reports issued by the internal audit department and monitored the implementation of management action plan on outstanding issues on a quarterly basis to ensure that all key risks and control weaknesses are being properly addressed;

viii) Reviewed the risk profile of the respective business units to ensure the risk being properly managed and mitigated;

ix) Reviewed the related party transactions entered into by the Group to ensure that current procedures for monitoring of related parties transactions have been complied with.

C. INTERNAL AUDIT FUNCTION

Since December 1990, Johan had established an Internal Audit department to carry out internal audit function of the Group’s key operations in Malaysia and overseas. The scope of internal audit works are conducted on a rotation basis and as and when directed by the management. The internal audit reports generated were reviewed and discussed at each of the AC Meetings to assist the AC to discharge its functions more effectively.

Mr Sia Chin Yap, the Senior Manager - Internal Audit, is responsible for providing independent audit and value-added assurance and consulting services to the Group. He has over 21 years of experience in internal audit. There are three (3) personnel with relevant qualifications in the Internal Audit Department. All of them are free from any relationship or conflict of interest, which could impair their objectivity and independence.

The Internal Audit Charter defines the authority, duties and responsibilities of internal audit function which allowed internal audit personnel to have unrestricted access to all activities across the organisation. The internal audit function monitors the compliance with the Group’s policies and procedures, applicable laws and regulations, and provides independent and objective assurance on the adequacy and effectiveness of the system of internal controls by reviewing such controls and procedures of the Company and its subsidiaries. Audit reports incorporating the audit findings, recommendations to improve on the control weaknesses, management’s comments and action plan to rectify the significant weaknesses on the findings are presented to the AC in a timely manner for their consideration and approval.

The annual Internal Audit plan is approved by the AC at the beginning of each financial year. The AC also reviews the adequacy of the scope, function, competency and resources of the internal audit function.

AUDIT COMMITTEE REPORTcont’d

C. INTERNAL AUDIT FUNCTION cont’d

Internal Audit Department adopts a risk-based approach to plan and conduct of their audit. The routine audits on the operating units within the Group are carried out with the emphasis on the principal risk areas. The internal audit team is independent and has no involvement in the operations of Group companies.

The total cost incurred for the internal audit function for the year ended 31 January 2018 was RM592,481 (2017 : RM492,648).

The Malaysian Code on Corporate Governance 2017 (“MCCG”) requires the board of directors of a listed company to maintain a sound framework of risk management and internal controls to safeguard shareholders’ investments and assets of the Group.

The Board of Directors (“the Board”) of Johan Holdings Berhad is pleased to present its Statement on Risk Management and Internal Control for the financial year ended 31 January 2018 which has been prepared pursuant to paragraph 15.26(b) of Bursa Malaysia Securities Berhad (“Bursa Securities”) Main Market Listing Requirements (“Listing Requirements”) and in accordance with the Principles and Recommendations relating to risk management and internal controls provided in the MCCG.

The statement below outlines the nature and scope of risk management and internal control system of the Company during the financial year ended 31 January 2018.

BOARD’S RESPONSIBILITIES

The Board acknowledges its overall responsibility for the Group’s risk management and internal control environment, which includes the establishment of an appropriate risk and control framework as well as the review of its effectiveness in safeguarding shareholders’ interests and the Group’s assets. The Board believes that the risk management and internal control framework is designed to manage rather than eliminate the risk of failure in achieving its corporate goals and objectives, and therefore only provide reasonable but not absolute assurance against material misstatement of management and financial information and records or against financial losses or fraud.

RISK MANAGEMENT FRAMEWORK

The Board has established an ongoing process for identifying, measuring, evaluating and managing the significant risks faced by the Group in its achievement of objectives and strategies and this process includes enhancing the risk management and internal control system as and when there are changes to the business environment or regulatory guidelines. In order to align with the dynamic changes in the business environment, the system of risk management and internal control instituted throughout the Group is reviewed and updated on a periodic basis to ensure its continued effectiveness, adequacy and integrity. This process has been in place throughout the year under review and carried out in the following perspective:-

l Board of Directors

The Board is fully responsible in determining the Group’s risk appetite and level of risk exposure. In its regular Board Meetings, significant risk and material issues are brought to the attention of Directors which require decision to be made. To safeguard shareholders’ interest and the Group’s assets, the Board ensure that business risks are identified, assessed and managed, in the Group’s strategic planning and decision making process.

l Audit Committee

The Audit Committee (“AC”) is assisted by an in-house Internal Audit Department (“IAD”) which performs regular independent reviews, monitor and ensure compliance with the Group’s policies, procedures and systems of risk management & internal control. The AC, in every AC Meeting, review internal audit reports for the Group prepared by the IAD. It will consider major findings of the internal auditors and management response thereto. Monitoring on the corrective actions of any outstanding audit issues are on going to ensure that all the risks and control lapses have been addressed.

STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL

RISK MANAGEMENT FRAMEWORK cont’d

l Risk Management Committee

The Risk Management Committee (“RMC”) was set up by the Board in September 2002. The RMC, assisted by the IAD, identifies, evaluates and manages significant risk faced by the Group.

The Risk Management Policy of the Group is in place to ensure a systematic approach to identify key risks faced by the Group and to monitor them on a regular basis. Key risks to each business unit’s objectives are identified and scored based on a matrix for likelihood of the risks occurring and the magnitude of the impact. The policy helps to determine the appropriate risk appetite or level of exposure for the Group. The risk appetite for the Johan Group may be controllable and uncontrollable and it depends on several factors such as knowledge of the matter, past experience and magnitude of potential gains/losses.

A detailed risk register/scorecard of risks identified with appropriate controls has been created. The risk profiles of the respective business units are updated every six months to reflect the prevailing operating conditions.

Risk Profiles are submitted by the RMC of operating subsidiaries on a half year basis to be reviewed by the Head Office RMC. The Risk Profiles are also presented to the AC periodically. Any major changes to risks or emerging significant risk of the business units in the Group together with the appropriate actions and/or strategies to be taken, will be brought to the attention of the AC.

l All operating business units

Standard operating policies and procedures (SOPP) were formalised to guide the operations of the Group’s operating business units. It documents how transactions are captured and where internal controls are applied. In addition, as part of the performance monitoring process, management information in the form of annual budgets, revised forecasts, quarterly management accounts and monthly management reports are submitted to the Head Office Finance Department for review and onward presentation to the Board for review and approval.

INTERNAL CONTROL FRAMEWORK

The Board acknowledges that a sound system of internal control forms part of the good governance practice and risk management forms part of the internal control. The following key elements constitute a controlled environment which shall encompass the System of Internal Control of the Johan Group:-

l Organisational structures in place for each operating unit with clearly defined levels of authority.

l Operational management has clear responsibility for identifying risks affecting their business and for instituting adequate procedures and internal controls to mitigate and monitor such risks on an ongoing basis.

l The SOPP of each business units sets out clear definition of authorisation procedures and clear line of accountability, with strict authorisation, approval and control within the Group.

l The Group has in place a Management Information System in which management and financial reports are generated regularly to facilitate the Board and the Group’s Management in performing financial and operating reviews of the various operating units.

cont’d

INTERNAL CONTROL FRAMEWORK cont’d

l The IAD, staffed by a team of professionally qualified personnel who is independent and has no involvement in the operations of Group companies, provides the AC with reasonable independent assurance on the effectiveness and integrity of the Group’s system of internal control. For the year ended 31 January 2018, the major internal audit activities undertaken during the year are as follows:

Developed a risk-based annual audit plan; Reviewed the adequacy and effectiveness of internal control processes; Reviewed compliance with established policies and procedures and statutory requirements; Performed financial and operational audits in major subsidiaries; Carried out ad-hoc assignments requested by Senior Management; and Followed-up on the implementation of Management Action Plan to ensure that necessary actions have been

taken/are being taken to remedy any significant findings and weaknesses.

• The duty of reviewing and monitoring the effectiveness of the Group’s system of internal control was vested to the AC which provides independent views. Periodic reports from the IAD to the AC recommend remedial action to be taken by the Management.

• The existence of the RMC to oversee the overall risk management holds responsibility to identify, assessing, managing and monitoring significant risk within the Group.

The Board, however, recognises that a sound system of internal control will reduce, but cannot eliminate the possibility of poor judgement in decision-making, human error, control processes being deliberately circumvented by employees and others, management overriding controls and the occurrence of unforeseeable circumstances.

REVIEW OF EFFECTIVENESS

The Board is satisfied with the procedures outlined above and believes, with assurance from the Chairman & Chief Executive Officer and General Manager - Finance that, the risk management and system of internal controls had continued to operate adequately and effectively in the financial year under review.

The Board also relies on the assessment by internal auditors to evaluate the state of internal controls and risk management at each operating unit. The Board is committed to the continuous improvement of internal controls and risk management practices within the Group to meet its business objectives.

REVIEW OF THIS STATEMENT

Pursuant to Paragraph 15.23 of the Listing Requirements, the External Auditors have reviewed this Statement for inclusion in the 2018 Annual Report, and reported to the Board that nothing has come to their attention that causes them to believe that this Statement is inconsistent with their understanding of the process adopted by the Board in reviewing the adequacy and integrity of the system of internal control of the Group.

STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROLcont’d

CONCLUSION

The Board is of the view that the systems of risk management and internal control is in place for the year under review, and up to the date of approval of this Statement, is sound and adequate to safeguard the shareholders’ investment, the interests of customers, regulators, employees and other stakeholders, and the Group’s assets.

There was no significant weakness in the systems of risk management and internal control, contingencies or uncertainties that could result in material loss and adversely effect on the financial results of the Group for the financial year under review and up to the date of issuance of the financial statements. The Group continues to take necessary measures to strengthen its internal control structure and management of risks, taking into consideration the changing and challenging business environment. Therefore, the Board will, when necessary, put in place appropriate action plans to further enhance the system of risk management and internal control.

This statement is made in respect of the financial year ended 31 January 2018 and in accordance with a resolution of the Board of Directors’ dated 3 May 2018.

cont’d

ADDITIONAL INFORMATION

UTILISATION OF PROCEEDS RAISED FROM ANY CORPORATE PROPOSAL

The Company did not implement any fund raising corporate exercise during the financial year ended 31 January 2018.

AUDIT AND NON-AUDIT FEES

The details of audit and non-audit fees paid/payable in financial year ended 31 January 2018 to the Company’s external auditors, Messrs Deloitte PLT and its affiliated firm are set out below:-

Group Company(RM’000) (RM’000)

Audit fees - Deloitte Malaysia 201 58- Deloitte Singapore 336 -

Total Audit fees 537 58

Non-audit fees- Audit related:-n Quarterly limited review 33 33n Subsidiary group consolidated review 16 16

- Statutory related:-n Review of Statement of Risk Management and Internal Control 8 8

- Tax services 79 10

Total Non-audit fees 136 67

MATERIAL CONTRACTS AND CONTRACTS

There are no material contracts including contracts relating to any loan entered into by the Company and its subsidiaries involving Directors’ and major shareholders’ interests.

FINANCIAL STATEMENTS...Report of the Directors

Independent Auditors’ Report

Statements of Profit or Loss andOther Comprehensive Income

Statements of Financial Posi�on

Statements of Changes in Equity

Statements of Cash Flows

Notes to the Financial Statements

Statement by Directors

Declara�on by the Officer Primarily Responsible for the Financial Management of the Company

The directors of JOHAN HOLDINGS BERHAD hereby submit their report and the audited financial statements of the Group and of the Company for the financial year ended 31 January 2018.

PRINCIPAL ACTIVITIES

The principal activities of the Company are that of investment holding and provision of management services to its subsidiaries.

The information on the names, places of incorporation, principal activities and percentage of issued share capital held by the Company in subsidiaries are described in Note 17 to the Financial Statements.

RESULTS OF OPERATIONS

The results of operations of the Group and of the Company for the financial year are as follows:

The Group The CompanyRM’000 RM’000

Profit/(Loss) for the year from continuing operations 21,965 (5,727)Loss for the year from discontinued operations (45,189) -

Loss for the year, net of tax (23,224) (5,727)

Loss attributable to:Owners of the Company (22,388) (5,727)Non-controlling interests (836) -

(23,224) (5,727)

In the opinion of the directors, the results of operations of the Group and of the Company during the financial year have not been substantially affected by any item, transaction or event of a material and unusual nature other than the discontinuation of the ceramic tiles operations as disclosed in Note 12 to the Financial Statements.

DIVIDENDS

No dividend has been paid or declared by the Company since the end of the previous financial year. The directors also do not recommend any final dividend payment in respect of the current financial year.

RESERVES AND PROVISIONS

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

REPORT OF THE DIRECTORS

ISSUE OF SHARES AND DEBENTURES

The Company has not issued any new shares or debentures during the financial year.

SHARE OPTIONS

No options have been granted by the Company to any parties during the financial year to take up unissued shares of the Company.

No shares have been issued during the financial year by virtue of the exercise of any option to take up unissued shares of the Company. As at the end of the financial year, there were no unissued shares of the Company under options.

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 allowance for doubtful debts, and had satisfied themselves that all known bad debts had been written off and that adequate allowance had been made for doubtful debts; and

(b) to ensure that any current assets which were unlikely to realise in the ordinary course of business including the value of current assets as shown in the accounting records of the Group and of the Company had been written down to an amount which the current assets might be expected so to realise.

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

(a) which would render the amount written off for bad debts or the amount of the allowance 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 financial statements of the Group and of the Company 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 and of the Company which has arisen since the end of the financial year which secures the liabilities of any other person; or

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

REPORT OF THE DIRECTORScont’d

OTHER STATUTORY INFORMATION cont’d

No contingent or other liability has become enforceable, or is likely to become enforceable, within the period of twelve months after the end of the financial year which, in the opinion of the directors, will or may substantially affect the ability of the Group and of the Company to meet their obligations as and when they fall due.

In the opinion of the directors, no item, transaction or event of a material and unusual nature has arisen in the interval between the end of the financial year and the date of this report which is likely to affect substantially the results of operations of the Group and of the Company in the financial year in which this report is made.

DIRECTORS

The directors of the Company in office during the financial year and during the period from the end of the financial year to the date of this report are:

Tan Sri Dato’ Tan Kay HockPuan Sri Datin Tan Swee BeeTan Sri Dato’ Seri Dr Ting Chew PehDato’ Ahmad Khairummuzammil Bin Mohd YusoffOoi Teng Chew

The directors of the subsidiaries in office during the financial year and during the period from the end of the financial year to the date of this report are:

Tan Sri Dato’ Tan Kay HockPuan Sri Tan Swee BeeKoh Chuan Tiok @ Koh Chuan LimLeong Kwee HengPeter Tam Kui PuiTeh Yong FahTio Yit ChingYap Fook LoiYuen Kum FongChong Cheok Weng (appointed on 26.4.2017)Ng Yew Soon (resigned on 26.4.2017)

DIRECTORS’ INTERESTS

The shareholdings in the Company and in the holding company of those who were directors at the end of the financial year according to the Register of Directors’ Shareholdings kept by the Company under Section 59 of the Companies Act, 2016, are as follows:

No. of ordinary shares

Shares in the CompanyBalance at

1.2.2017 Addition DisposalBalance at31.1.2018

Direct InterestsTan Sri Dato’ Tan Kay Hock 59,391,100 - (59,391,100) -Puan Sri Datin Tan Swee Bee 85,119,367 - (85,119,367) -Ooi Teng Chew 200,000 - - 200,000

Indirect InterestsTan Sri Dato’ Tan Kay Hock 213,717,484 102,996,473 - 316,713,957Puan Sri Datin Tan Swee Bee 187,989,217 128,724,740 - 316,713,957

No. of ordinary shares Shares in the holding company, Sky Wealth Ventures Limited

Balance at 11.12.2017* Addition Disposal

Balance at31.1.2018

Direct InterestsTan Sri Dato’ Tan Kay Hock and Puan Sri Datin Tan Swee Bee

(Joint holder)2 - - 2

* Sky Wealth Ventures Limited became the holding company on 11 December 2017.

Tan Sri Dato’ Tan Kay Hock and Puan Sri Datin Tan Swee Bee, by virtue of their interests in the shares of the Company, are also deemed to have an interest in the shares of the subsidiaries of the Company to the extent that the Company has interest.

None of the other directors in office at the end of the financial year held shares or had beneficial interest in the shares of the Company or of its related companies during and at the end of the financial year.

DIRECTORS’ BENEFITS

Since the end of the previous financial year, none of the directors of the Company has received or become entitled to receive any benefit (other than the benefits included in the aggregate of remuneration received or due and receivable by the directors or the fixed salary of a full time employee of the Company as disclosed in Note 10 to the Financial Statements) by reason of a contract made by the Company or a related corporation with the director or with a firm of which the director is a member, or with a company in which the director has a substantial financial interest except for any benefit which may be deemed to have arisen by virtue of the transactions between the Company and certain companies in which certain directors of the Company are also directors and/or shareholders as disclosed in Note 31 to the Financial Statements.

DIRECTORS’ BENEFITS cont’d

During and at the end of the financial year, no arrangement subsisted to which the Company was a party whereby directors of the Company might acquire benefits by means of the acquisition of shares in, or debentures of, the Company or any other body corporate.

INDEMNITY AND INSURANCE FOR DIRECTORS AND OFFICERS

The Company maintains director’ and officers’ liability insurance for purposes of Section 289 of the Companies Act, 2016 throughout the year, which provides appropriate insurance cover for the directors and officers of the Company and the subsidiaries. The amount of insurance premium paid during the year amounted to RM19,514.

There were no indemnities given to or insurance affected for the auditors of the Company in accordance with section 284 of the Companies Act, 2016.

HOLDING COMPANY

The Company is a subsidiary of Sky Wealth Ventures Limited, a company incorporated in the British Virgin Islands, which is also regarded by the directors as the ultimate holding company.

AUDITORS

The auditors, Deloitte PLT, have indicated their willingness to continue in office.

AUDITORS’ REMUNERATION

The amount paid as remuneration of the auditors for the financial year ended 31 January 2018 is as disclosed in Notes 8 and 12 to the Financial Statements.

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

PUAN SRI DATIN TAN SWEE BEE DATO’ AHMAD KHAIRUMMUZAMMIL BIN MOHD YUSOFF

Kuala Lumpur3 May 2018

REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS

Opinion

We have audited the financial statements of JOHAN HOLDINGS BERHAD, which comprise the statements of financial position of the Group and of the Company as at 31 January 2018, 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 year then ended, and notes to the financial statements, including a summary of significant accounting policies, as set out on pages from 56 to 143.

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 January 2018, and of their financial performance and their cash flows for the 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 ethical responsibilities in accordance with the By-Laws and the IESBA Code.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance 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 forming our opinion thereon, and we do not provide a separate opinion on these matters.

Recognition of interest income from charge and credit card receivables

As disclosed in Note 5 to the Financial Statements, revenue from charge and credit card operations accounted for approximately 88% of the Group’s revenue from continuing operations. This segment is operated by Diners Club (Singapore) Private Limited (“DCS”), which provides charge and credit card services under Diners Club franchise in Singapore. Approximately 40% of DCS’s revenue comprised interest income on amount outstanding from cardholders, which is accrued on a time basis by reference to the principal outstanding at the effective interest rate, except for interest income from inactive accounts which is recognised when recovered.

Recognition of interest income from charge and credit card receivables has been identified as a key audit matter considering its magnitude relative to the Group’s revenue, the huge volume of transactions and the complexity of the underlying computation which varies depending upon the quantum of principal sum outstanding, the length of outstanding period and the interest rate levied on each individual transaction.

INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF JOHAN HOLDINGS BERHAD

(Incorporated in Malaysia)

REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS cont’d

Key Audit Matters cont’d

Recognition of interest income from charge and credit card receivables cont’d

Our audit response

DCS was audited by a component auditor which is a member firm of Deloitte PLT. As the group engagement auditors, we communicated with the component auditors via written referral instructions and verbal discussions on significant risks and areas of audit focus, audit strategy and procedures. We also monitored the audit progress, obtained reporting deliverables from the component auditors and overviewed their audit workpapers to ascertain that the audit on DCS has been executed in accordance with the group audit plan and the audit evidence obtained supported the audit opinion.

Audit procedures carried out by the component auditors of DCS on the interest income from charge and credit card receivables comprised the following:

l Obtained an understanding of the relevant controls put in place by DCS in respect of recognition of interest income and evaluated the design and implementation of such controls.

l Engaged information technology (“IT”) specialist to test the general IT controls of the application system used in recording interest income, the application controls used in computing the aging of card receivables and interest income and, the interface of such application system with the general ledger system of DCS to ensure that they operated effectively during the year and supported reliable financial reporting.

l Used data analytics tool to independently re-calculate the entire interest income recognised during the year using transactional and balance data from the underlying pool of cardholders of DCS, compared the expected interest income against actual interest income recognised by DCS, investigated and corroborated any outliers noted. Performed test of details to test the reliability and completeness of the underlying data against supporting documents.

Allowance for impairment of charge and credit card receivables

Charge and credit card receivables arising from the operations of DCS contributed to 96% of the Group’s trade receivables and 49% of the Group’s total assets. 23% of the charge and credit card receivables have been impaired via collective assessment allowance.

The allowance for impairment of charge and credit card receivables has been identified as a key audit matter considering its magnitude relative to the Group’s total assets and the estimation process by management through the application of judgement and use of subjective assumptions.

The Group assesses at the end of each reporting period whether there is any objective evidence that a receivable is impaired. To determine whether there is objective evidence of impairment, the Group considers factors such as the probability of insolvency or significant 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 of receivables with similar credit risk characteristics. While the estimation process includes historical data and analysis, there is a significant amount of judgement applied in selecting inputs and analysing the results produced to determine the impairment allowances.

Refer to Notes 4(ii)(e) and 20 for disclosures on allowance for impairment of charge and credit card receivables.

INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF JOHAN HOLDINGS BERHAD(Incorporated in Malaysia)cont’d

Key Audit Matters cont’d

Allowance for impairment of charge and credit card receivables cont’d

Our audit response

DCS was audited by a component auditor which is a member firm of Deloitte PLT. As the group engagement auditors, we communicated with the component auditors via written referral instructions and verbal discussions on significant risks and areas of audit focus, audit strategy and procedures. We also monitored the audit progress, obtained reporting deliverables from the component auditors and overviewed their audit workpapers to ascertain that the audit on DCS has been executed in accordance with the group audit plan and the audit evidence obtained supported the audit opinion.

Audit procedures carried out by the component auditors of DCS on the allowance for impairment loss of charge and credit card receivables comprised the following:

l Obtained an understanding of the relevant controls put in place by DCS in respect of approval of charge and credit cards, recording and monitoring of receivables and the identification of impaired receivables which warrant individual impairment assessment, and evaluated the design and implementation of such controls.

l Engaged IT specialist to test the application controls used in computing the aging of card receivables to ensure that they operated effectively during the year and supported reliable financial reporting.

l For individual impairment assessment, reviewed management’s assessment in concluding that no default event has occurred which warrants specific impairment allowance to be made.

l For collective impairment assessment, reviewed the reasonableness of default rates estimated by management by reference to historical loss data of DCS and independently re-calculated the impairment loss.

l Assessed whether the financial statement disclosures appropriately reflect the Group’s exposure to credit risk.

We have determined that there are no key audit matters in the audit of the separate financial statements of the Company to communicate in our auditors’ report.

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 of the Group 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 and will 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 identified above 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.

(Incorporated in Malaysia)cont’d

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 has 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 judgment and maintain professional scepticism throughout the audit. We also:

l 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.

l 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 the Company’s internal control.

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

l 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.

INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF JOHAN HOLDINGS BERHAD(Incorporated in Malaysia)cont’d

Auditors’ Responsibilities for the Audit of the Financial Statements cont’d

l 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.

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

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

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

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

Report on Other Legal and Regulatory Requirements

In accordance with the requirements of the Companies Act, 2016 in Malaysia, we report that the subsidiaries of which we have not acted as auditors, are disclosed in Note 17 to the Financial Statements.

Other Matter

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 towards any other person for the contents of this report.

DELOITTE PLT (LLP0010145-LCA) LAI CAN YIEWChartered Accountants (AF 0080) Partner - 02179/11/2018 J Chartered Accountant

3 May 2018

(Incorporated in Malaysia)cont’d

The Group The CompanyNote 2018 2017 2018 2017

RM’000 RM’000 RM’000 RM’000

Continuing operationsRevenue 5 122,485 128,772 60 60Cost of sales 6 (4,558) (7,888) - -

Gross profit 117,927 120,884 60 60

Net fair value gain on investment securities 42,460 27,646 - -Other operating income 5,501 10,039 546 471Distribution expenses (18,147) (17,059) - -Administrative expenses (81,135) (110,582) (6,308) (6,455)Other operating expenses (4,957) (9,066) - -Finance costs 7 (35,902) (37,049) (25) (30)

Profit/(Loss) before tax 8 25,747 (15,187) (5,727) (5,954)Income tax expense 11 (3,782) (1,554) - -

Profit/(Loss) for the year from continuing operations 21,965 (16,741) (5,727) (5,954)

Discontinued operationsLoss for the year from discontinued operations 12 (45,189) (21,588) - -

Loss for the year (23,224) (38,329) (5,727) (5,954)

STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOMEFOR THE YEAR ENDED 31 JANUARY 2018

RM’000 RM’000 RM’000 RM’000

Other comprehensive incomeItems that will not be reclassified subsequently to

profit or loss:

Gain on revaluation of properties 23(b) 14,335 19,610 - -

Items that may be reclassified subsequently to profit or loss:Foreign currency translation difference for

foreign operations 23(a) (5,872) 7,923 - -

Other comprehensive income for the year, net of tax 8,463 27,533 - -

Total comprehensive loss for the year (14,761) (10,796) (5,727) (5,954)

Loss attributable to:Owners of the Company (22,388) (37,220) (5,727) (5,954)Non-controlling interests (836) (1,109) - -

(23,224) (38,329) (5,727) (5,954)

Total comprehensive Loss attributable to:Owners of the Company (13,925) (9,687) (5,727) (5,954) Non-controlling interests (836) (1,109) - -

(14,761) (10,796) (5,727) (5,954)

Basic earnings/(loss) per share attributable to owners of the Company (sen)From continuing operations 13 3.66 (2.51) From discontinued operations 13 (7.25) (3.46)

13 (3.59) (5.97)

The accompanying Notes form an integral part of the Financial Statements.

STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

FOR THE YEAR ENDED 31 JANUARY 2018cont’d

RM’000 RM’000 RM’000 RM’000

ASSETS

Non-Current AssetsProperty, plant and equipment 14 307,024 328,331 658 790Inventories

- non-current 15 6,144 6,272 - -Intangible assets 16 11,883 14,486 - -Investment in subsidiaries 17 - - 146,486 146,570Investment securities 18 38 43 - -Deferred tax assets 19 - - - -

Total Non-Current Assets 325,089 349,132 147,144 147,360

Current AssetsInvestment securities 18 90,109 47,649 - -Inventories 15 736 17,398 - -Trade receivables 20 523,795 555,473 - -Other receivables and prepaid expenses 21 13,107 51,535 299 226Amount owing by subsidiaries 17 - - 10,974 2,970Tax recoverable 235 108 - -Cash and bank balances 30 76,576 43,665 1,711 1,509

Total Current Assets 704,558 715,828 12,984 4,705

TOTAL ASSETS 1,029,647 1,064,960 160,128 152,065

STATEMENTS OF FINANCIAL POSITION AS OF 31 JANUARY 2018

RM’000 RM’000 RM’000 RM’000

EQUITY AND LIABILITIES

Capital and ReservesShare capital 22 380,889 380,889 380,889 380,889Reserves 23 100,173 91,710 - -Accumulated losses (297,541) (275,153) (273,705) (267,978)

183,521 197,446 107,184 112,911Non-controlling interests 2,965 3,801 - -

Total Equity 186,486 201,247 107,184 112,911

Non-Current LiabilitiesLoans and borrowings 24 326 1,879 232 382Investor certificates 26 294,082 306,864 - -Deferred tax liabilities 19 23,055 18,899 - -

Total Non-Current Liabilities 317,463 327,642 232 382

Current LiabilitiesTrade payables 27 231,578 184,696 - -Other payables and accrued expenses 28 19,415 22,677 426 180Amount owing to subsidiaries 17 - - 52,141 38,430Loans and borrowings 24 111,797 160,497 145 162Investor certificates 26 153,526 161,005 - -Deferred revenue 29 2,974 3,567 - -Tax liabilities 6,408 3,629 - -

Total Current Liabilities 525,698 536,071 52,712 38,772

Total Liabilities 843,161 863,713 52,944 39,154

TOTAL EQUITY AND LIABILITIES 1,029,647 1,064,960 160,128 152,065

STATEMENTS OF FINANCIAL POSITION AS OF 31 JANUARY 2018

cont’d

Attributable to owners of the Company Non-distributable reserves

The GroupShare

capitalShare

premiumExchange

reserve

Propertiesrevaluation

reserveAccumulated

losses Total

Non-controlling

interests TotalRM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Balance as of 1 February 2016 311,474 69,415 26,304 37,873 (237,933) 207,133 4,910 212,043

Total comprehensive income/(loss) for the year - - 7,923 19,610 (37,220) (9,687) (1,109) (10,796)

Transfer of share premium to share capital (Note 22) 69,415 (69,415) - - - - - -

Balance as of 31 January 2017 380,889 - 34,227 57,483 (275,153) 197,446 3,801 201,247

Attributable to owners of the Company Non-distributable reserves

The GroupShare

capitalExchange

reserve

Propertiesrevaluation

reserveAccumulated

losses Total

Non-controlling

interests TotalRM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Balance as of 1 February 2017 380,889 34,227 57,483 (275,153) 197,446 3,801 201,247Total comprehensive income/

(loss) for the year - (5,872) 14,335 (22,388) (13,925) (836) (14,761)

Balance as of 31 January 2018 380,889 28,355 71,818 (297,541) 183,521 2,965 186,486

STATEMENTS OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 JANUARY 2018

The CompanyShare

capital

Non-distributable

reserveshare

premiumAccumulated

losses TotalRM’000 RM’000 RM’000 RM’000

Balance as of 1 February 2016 311,474 69,415 (262,024) 118,865Total comprehensive loss for the year - - (5,954) (5,954)Transfer of share premium to share capital (Note 22) 69,415 (69,415) - -

Balance as of 31 January 2017 380,889 - (267,978) 112,911

Balance as of 1 February 2017 380,889 - (267,978) 112,911Total comprehensive loss for the year - - (5,727) (5,727)

Balance as of 31 January 2018 380,889 - (273,705) 107,184

STATEMENTS OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 JANUARY 2018

cont’d

The Group The Company2018 2017 2018 2017

RM’000 RM’000 RM’000 RM’000

CASH FLOWS FROM/(USED IN) OPERATING ACTIVITIESProfit/(Loss) before tax from continuing operations 25,747 (15,187) (5,727) (5,954)Loss before tax for the year from discontinued operations (45,140) (20,155) - -

(19,393) (35,342) (5,727) (5,954) Adjustments for:

Interest expense 36,840 37,838 25 30Impairment loss on property, plant and equipment

(Note 12) 30,683 15,881 - -Depreciation of property, plant and equipment

[Note 14(e)] 6,607 8,689 148 161Inventories written down 4,256 551 - -Allowance for doubtful debts:

Trade receivables 3,763 6,162 - -Amount owing by subsidiaries - - 16 250

Amortisation of intangible assets (Note 8) 3,542 3,411 - -Increase/(Decrease) in provision for customer

reward points 142 (829) - -Property, plant and equipment written off 19 30 - -Loss on disposal of investment securities - 3 - -Impairment loss on investment in subsidiaries - - 84 -Net fair value gain on investment securities (42,460) (27,646) - -Unrealised (gain)/loss on foreign exchange - net (1,621) 1,055 - -Reversal of inventory written down (1,156) - - -Interest income (232) (233) (303) (374)Allowance for doubtful debts no longer required:

Trade receivables (99) (448) - -Amount owing by subsidiaries - - (70) -

(Gain)/Loss on disposal of property, plant and equipment (59) 135 (2) -Dividend income from investment securities (30) (66) - -Write back of inventories written down - (23) - -

Operating Profit/(Loss) Before Working Capital Changes 20,802 9,168 (5,829) (5,887)

STATEMENTS OF CASH FLOWS FOR THE YEAR ENDED 31 JANUARY 2018

RM’000 RM’000 RM’000 RM’000

(Increase)/Decrease in:Inventories 13,526 (5,155) - -Trade receivables 3,773 5,736 - -Other receivables and prepaid expenses 37,734 (37,018) (73) 36

(Decrease)/Increase in:Trade payables 58,006 (2,451) - -Other payables and accrued expenses (2,430) (6,623) 246 (291)Deferred revenue (586) (990) - -

Cash Generated From/(Used In) Operations 130,825 (37,333) (5,656) (6,142)Income tax paid (3,982) (6,031) - -

Net Cash From/(Used In) Operating Activities 126,843 (43,364) (5,656) (6,142)

CASH FLOWS (USED IN)/FROM INVESTING ACTIVITIESInterest received 232 233 303 374Proceeds from disposal of property, plant and equipment 103 143 2 -Dividend income from investment securities 30 66 - -Proceeds from disposal of investment securities - 167 - -Purchase of intangible assets (1,375) (61) - -Purchase of property, plant and equipment (1,118) (832) (16) (7)(Increase)/Decrease in amount owing by subsidiaries - - (7,950) 145

Net Cash (Used In)/From Investing Activities (2,128) (284) (7,661) 512

CASH FLOWS FROM/(USED IN) FINANCING ACTIVITIESNet proceeds from investor certificates 1,835 17,856 - -Increase in amount owing to subsidiaries - - 13,711 15Interest paid (36,840) (37,838) (25) (30)Repayments of loans and borrowings, excluding bank

overdrafts (3,780) (27,550) (167) (188)Increase in deposits pledged with licensed financial

institutions (2,143) (105) - -

Net Cash (Used In)/From Financing Activities (40,928) (47,637) 13,519 (203)

STATEMENTS OF CASH FLOWS FOR THE YEAR ENDED 31 JANUARY 2018

cont’d

RM’000 RM’000 RM’000 RM’000

NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS 83,787 (91,285) 202 (5,833)

Effect of foreign exchange rate changes (8,230) (2,260) - -

CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR (67,155) 26,390 1,509 7,342

CASH AND CASH EQUIVALENTS AT END OF YEAR 30 8,402 (67,155) 1,711 1,509

STATEMENTS OF CASH FLOWS FOR THE YEAR ENDED 31 JANUARY 2018cont’d

1. GENERAL INFORMATION

The Company is a public limited liability company, incorporated and domiciled in Malaysia, and listed on the Main Market of Bursa Malaysia Securities Berhad.

The principal activities of the Company are that of investment holding and provision of management services to its subsidiaries.

The information on the names, places of incorporation, principal activities and percentage of issued share capital held by the Company in each subsidiaries are described in Note 17.

The registered office and principal place of business of the Company is located at 11th Floor, Wisma E&C, 2 Lorong Dungun Kiri, Damansara Heights, 50490 Kuala Lumpur, Malaysia.

The financial statements of the Group and of the Company were authorised by the Board of Directors for issuance on 3 May 2018.

2. BASIS OF PREPARATION OF THE FINANCIAL STATEMENTS

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

Adoption of New and Revised Malaysian Financial Reporting Standards

During the current financial year, the Group and the Company have adopted a number of Amendments to MFRSs issued by the Malaysian Accounting Standards Board (“MASB”) that are effective for annual periods beginning on or after 1 February 2017 and relevant to their operations as follows:

Amendments to MFRS 107 Disclosure InitiativeAmendments to MFRS 112 Recognition of Deferred Tax Assets for Unrealised Losses

Amendments to MFRSs contained in the document entitled Annual Improvements to MFRSs 2014 - 2016 Cycle

The adoption of the above Amendments to MFRSs did not have any material effect on the financial performance or position of the Group and the Company.

NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 JANUARY 2018

NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 JANUARY 2018cont’d

2. BASIS OF PREPARATION OF THE FINANCIAL STATEMENTS cont’d

Standards, Amendments and Interpretations in issue but not yet effective At the date of authorisation for issue of these financial statements, the new and revised Standards and Interpretation

(“IC Int.”) to the Group and the Company which were in issue but not yet effective and not early adopted by the Group and the Company are as listed below.

MFRS 9 Financial Instruments1

MFRS 15 Revenue from Contracts with Customers (and the related Clarifications)1

MFRS 16 Leases2

MFRS 17 Insurance Contracts3

Amendments to MFRS 2 Classification and Measurement of Share-based Payment Transactions1

Amendments to MFRS 4 Applying MFRS 9 Financial Instruments with MFRS 4 Insurance Contracts1

Amendments to MFRS 9 Prepayment Features with Negative Compensation2

Amendments to MFRS 10 and MFRS 128

Sale or Contribution of Assets between an Investor and its Associate or Joint Venture4

Amendments to MFRS 119 Plan Amendment, Curtailment or Settlement2

Amendments to MFRS 128 Long-term Interests in Associates and Joint Ventures2

Amendments to MFRS 140 Transfer of Investment Property1

IC Int. 22 Foreign Currency Transactions and Advance Consideration1

IC Int. 23 Uncertainty over Income Tax Payments2

Amendments to MFRSs contained in the document entitled Annual Improvements to MFRSs 2015 - 2017 Cycle2

1 Effective for annual periods beginning on or after 1 January 2018, with earlier application permitted.2 Effective for annual periods beginning on or after 1 January 2019, with earlier application permitted. 3 Effective for annual periods beginning on or after 1 January 2021, with earlier application permitted. 4 Effective for annual periods beginning on or after a date to be determined.

The directors anticipate that the abovementioned Standards, Amendments and Interpretations will be adopted in the annual financial statements of the Group and of the Company when they become effective and that the adoption of these Standards, Amendments and Interpretations will have no material impact on the financial statements of the Group and of the Company in the period of initial application except as disclosed below.

MFRS 9 Financial Instruments

MFRS 9 issued in November 2009 introduced new requirements for the classification and measurement of financial assets. MFRS 9 was subsequently amended in October 2010 to include requirements for the classification and measurement of financial liabilities and for derecognition, and in November 2013 to include the new requirements for general hedge accounting. Another revised version of MFRS 9 was issued in July 2014 mainly to include a) impairment requirements for financial assets and b) limited amendments to the classification and measurement requirements by introducing a ‘fair value through other comprehensive income’ (FVTOCI) measurement category for certain simple debt instruments.

cont’d

Standards, Amendments and Interpretations in issue but not yet effective cont’d

MFRS 9 Financial Instruments cont’d

Key requirements of MFRS 9:

l All recognised financial assets that are within the scope of MFRS 139 Financial Instruments: Recognition and Measurement to be subsequently measured at amortised cost or fair value. Specifically, debt investments that are held within a business model whose objective is to collect the contractual cash flows, and that have contractual cash flows that are solely payments of principal and interest on the principal outstanding are generally measured at amortised cost at the end of subsequent accounting periods. All other debt investments and equity investments are measured at their fair values at the end of subsequent accounting periods. In addition, under MFRS 9, entities may make an irrevocable election to present subsequent changes in fair value of equity instrument (that is not held for trading) in other comprehensive income, with only dividend income generally recognised in profit or loss.

l With regard to the measurement of financial liabilities designated as at fair value through profit or loss, MFRS 9 requires that the amount of change in the fair value of the financial liability that is attributable to changes in the credit risk of that liability, is presented in other comprehensive income, unless the recognition of the effects of changes in the liability’s credit risk in other comprehensive income would create or enlarge an accounting mismatch in profit or loss. Changes in fair value attributable to financial liability’s credit risk are not subsequently reclassified to profit or loss. Previously, under MFRS 139, the entire amount of the change in the fair value of the financial liability designated as at fair value through profit or loss was presented in profit or loss.

l In relation to the impairment of financial assets, MFRS 9 requires an expected credit loss model, as opposed to an incurred credit loss model under MFRS 139. The expected credit loss model requires an entity to account for expected credit losses and changes in those expected credit losses at each reporting date to reflect changes in credit risk since initial recognition. In other words, it is no longer necessary for a credit event to have occurred before credit losses are recognised.

l The new general hedge accounting requirements retain the three types of hedge accounting mechanisms currently available in MFRS 139. Under MFRS 9, greater flexibility has been introduced to the types of transactions eligible for hedge accounting, specifically broadening the types of instruments that qualify for hedging instruments and the types of risk components of non-financial items that are eligible for hedge accounting. In addition, the effectiveness test has been overhauled and replaced with the principle of an “economic relationship”. Retrospective assessment of hedge effectiveness is also no longer required. Enhanced disclosure requirements about any entity’s risk management activities have also been introduced.

MFRS 9 Financial Instruments cont’d

The Group and the Company will apply MFRS 9 effectively on 1 February 2018. The directors of the Group and Company anticipate that upon adoption of MFRS 9:

l Financial assets and financial liabilities of the Group and the Company which are currently carried at amortised costs and fair value through profit or loss (“FVTPL”) respectively under MFRS 139 [Note 32(c)] will continue to be measured on the same basis. Equity investments which are currently categorised as available-for-sale under MFRS 139 [Note 32(c)] will be categorised as FVTPL under MFRS 9 and the Group may make an irrevocable election to present subsequent changes in fair value of equity instrument in other comprehensive income, with only dividend income generally recognised in profit or loss.

l Allowance for doubtful debts of the Group as of 31 January 2018 related mainly to trade receivables arising from the provision of charge card and credit card services of Diners Club (Singapore) Private Limited. The application of expected credit loss model of MFRS 9 is not expected to have a significant impact on the amount of loss allowance recognised.

l There will be no impact arising from the new general hedge accounting requirements as the Group and the Company do not adopt hedge accounting.

MFRS 15 Revenue from Contracts with Customers

MFRS 15 establishes a new five-step models that will apply to revenue arising from contracts with customers. MFRS 15 will supersede the current revenue recognition guidance including MFR 118 Revenue, MFRS 111 Construction Contracts and the related interpretations when it becomes effective.

The core principle of MFRS 15 is that an entity should recognise revenue which depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.

Under MFRS 15, an entity recognises revenue when (or as) a performance obligation is satisfied, i.e when “control” of the goods or services underlying the particular performance obligation is transferred to the customer.

The Group’s revenue from its continuing operations comprises mainly service revenue from charge and credit card operations, ticket and travel operations and hotel operations. Apart from providing more extensive disclosure on the Group’s revenue transactions, the directors of the Group and Company do not anticipate the application of MFRS 15 will have a significant impact on the financial position and/or the financial performances of the Group.

MFRS 16 Leases

MFRS 16 specifies how an MFRS reporter will recognise, measure, present and disclose leases. The standard provides a single lessee accounting model, requiring lessees to recognise assets and liabilities for all leases unless the lease term is 12 months or less or the underlying asset has a low value. Lessors continue to classify leases as operating or finance, with MFRS 16’s approach to lessor accounting substantially unchanged from its predecessor, MFRS 117.

cont’d

MFRS 16 Leases cont’d

At lease commencement, a lessee will recognise a right-of-use asset and a lease liability. The right-of use asset is treated similarly to other non-financial assets and depreciated accordingly and the liability accrues interest. The lease liability is initially measured at the present value of the lease payments payable over the lease term, discounted at the rate implicit in the lease if that can be readily determined. If that rate cannot be readily determined, the lessees shall use their incremental borrowing rate.

Management anticipates that the initial application of the new MFRS 16 will result in changes to the accounting policies relating to leases. Management will perform an assessment of the possible impact of implementing MFRS 16. It is currently impracticable to disclose any further information on the known or reasonably estimable impact to the Group’s financial statements in the period of initial application as the management has yet to complete its detailed assessment.

3. SIGNIFICANT ACCOUNTING POLICIES

Basis of Accounting

The financial statements of the Group and of the Company have been prepared under the historical cost convention unless otherwise stated in the accounting policies mentioned below. Historical cost is generally based on the fair value of the consideration given in exchange for assets.

The financial statements of the Group and of the Company are presented in Ringgit Malaysia (“RM”), and all values are rounded to the nearest thousand (RM’000) except when otherwise indicated.

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, regardless of whether that price is directly observable or estimated using another valuation technique. In estimating the fair value of an asset or a liability, the Group takes into account the characteristics of the asset or liability if market participants would take those characteristics into account when pricing the asset or liability at the measurement date. Fair value for measurement and/or disclosure purposes in these financial statements is determined on such a basis, except for any share-based payment transactions that are within the scope of MFRS 2, leasing transactions that are within the scope of MFRS 117, and measurements that have some similarities to fair value but are not fair value, such as net realisable value in MFRS 102 or value-in-use in MFRS 136.

In addition, for financial reporting purposes, fair value measurements are categorised into Level 1, 2 or 3 based on the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement in its entirety, which are described as follows:

l Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date;

l Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for the asset or liability, either directly or indirectly; and

l Level 3 inputs are unobservable inputs for the asset or liability.

3. SIGNIFICANT ACCOUNTING POLICIES cont’d

Basis of Consolidation and Subsidiaries

The consolidated financial statements incorporate the financial statements of the Company and entities (including special purpose entities) controlled by the Company (its subsidiaries). Control is achieved when the Company:

l has power over the investee; l is exposed, or has rights, to variable returns from its involvement with the investee; andl has the ability to use its power to affect its returns.

The Company reassesses whether or not it controls and investee if facts and circumstances indicate that there are changes to one or more of the three elements of control listed above.

When the Company has less than a majority of the voting rights of an investee, it has power over the investee when the voting rights are sufficient to give it the practical ability to direct the relevant activities of the investee unilaterally. The Company considers all relevant facts and circumstances in assessing whether or not the Company’s voting rights in an investee are sufficient to give it power, including:

l the size of the Company’s holding of voting rights relative to the size and dispersion of holdings of the other vote holders;

l potential voting rights held by the Company, other vote holders or other parties;l rights arising from other contractual arrangements; andl any additional facts and circumstances that indicate that the Company has, or does not have, the current ability

to direct the relevant activities at the time that decisions need to be made, including voting patterns at previous shareholders’ meetings.

Consolidation of a subsidiary begins when the Company obtains control over the subsidiary and ceases when the Company loses control of the subsidiary. Specifically, income and expenses of a subsidiary acquired or disposed of during the year are included in the consolidated statement of profit or loss and other comprehensive income from the date the Company gains control until the date when the Company ceases to control the subsidiary.

Profit or loss and each component of other comprehensive income are attributed to the owners of the Company and to the non-controlling interest. Total comprehensive income of subsidiary is attributed to the owners of the Company and to the non-controlling interests even if this results in the non-controlling interest having a deficit balance.

When necessary, adjustments are made to the financial statements of subsidiary to bring their accounting policies into line with the Group’s accounting policies.

All intra-group assets and liabilities, equity income, expenses and cash flows relating to transactions between members of the Group are eliminated in full on consolidation.

Changes in Group’s ownership interest in existing subsidiaries

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

cont’d

Basis of Consolidation and Subsidiaries cont’d

Changes in Group’s ownership interest in existing subsidiaries cont’d

When the Group loses control of a subsidiary, a gain or loss is recognised in profit or loss and is calculated as the difference between (i) the aggregate of the fair value of the consideration received and the fair value of any retained interest and (ii) the previous carrying amount of the assets (including goodwill), and liabilities of the subsidiary and any non-controlling interests. When assets of the subsidiary are carried at revalued amounts or fair values and the related cumulative gain or loss has been recognised in other comprehensive income and accumulated in equity, the amounts previously recognised in other comprehensive income are accounted for as if the Group had directly disposed of the relevant assets (i.e. reclassified to profit or loss or transferred directly to retained earnings as specified by applicable MFRSs). The fair value of any investment retained in the former subsidiary at the date when control is lost is regarded as the fair value on initial recognition for subsequent accounting under MFRS 139 Financial Instruments: Recognition and Measurement or, when applicable, the cost on initial recognition of an investment in an associate or jointly controlled entity.

Subsidiaries Investment in subsidiaries, which are eliminated on consolidation, are stated at cost less any accumulated impairment

losses, if any, in the Company’s financial statements.

Business Combinations

Acquisitions of subsidiaries and businesses are accounted for using the acquisition method. The consideration transferred in a business combination is measured at fair value which is calculated as the sum of the acquisition-date fair values of assets transferred by the Group, liabilities incurred by the Group to the former owners of the acquiree and equity instruments issued by the Group in exchange for control of the acquiree. Acquisition-related costs are recognised in profit or loss as incurred.

At acquisition date, the identifiable assets acquired and liabilities assumed are recognised at the fair value, except that:

l deferred tax assets or liabilities and assets or liabilities related to employee benefit arrangements are recognised and measured in accordance with MFRS 112 Income Taxes and MFRS 119 Employee Benefits respectively.

l liabilities or equity instruments related to the replacement by the Group of an acquiree’s share-based payment awards are measured in accordance with MFRS 2 Share-based Payment; and

l assets (or disposal groups) that are classified as held for sale in accordance with MFRS 5 Non-current Assets Held for Sale and Discontinued Operations are measured in accordance with that Standard.

Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any non-controlling interests in the acquiree, and the fair value of the acquirer’s previously held equity interest in the acquiree (if any) over the net of the acquisition-date amounts of the identifiable assets acquired and the liabilities assumed. If, after reassessment, the net of the acquisition-date amounts of the identifiable assets acquired and liabilities assumed exceeds the sum of the consideration transferred, the amount of any non-controlling interests in the acquiree and the fair value of the acquirer’s previously held equity interest in the acquiree (if any), the excess is recognised immediately in profit or loss as a bargain purchase gain.

Business Combinations cont’d

Non-controlling interests that are present ownership interests and entitle their holders to a proportionate share of the entity’s net assets in the event of liquidation may be initially measured either at fair value or at the non-controlling interests’ proportionate share of the recognised amounts of the acquiree’s identifiable net assets. The choice of measurement basis is made on a transaction-by-transaction basis. Other types of non-controlling interests are measured at fair value or, when applicable, on the basis specified in another MFRSs.

When the consideration transferred by the Group in a business combination includes assets or liabilities resulting from a contingent consideration arrangement, the contingent consideration is measured at its acquisition-date fair value. Changes in the fair value of the contingent consideration that qualify as measurement period adjustments are adjusted retrospectively, with corresponding adjustments against goodwill. Measurement period adjustments are adjustments that arise from additional information obtained during the measurement period (which cannot exceed one year from the acquisition date) about facts and circumstances that existed at the acquisition date.

The subsequent accounting for changes in the fair value of contingent consideration that do not qualify as measurement period adjustments depends on how the contingent consideration is classified. Contingent consideration that is classified as equity is not remeasured at subsequent reporting dates and its subsequent settlement is accounted for within equity. Contingent consideration that is classified as an asset or liability is remeasured at subsequent reporting dates in accordance with MFRS 137 Provisions, Contingent Liabilities and Contingent Assets, as appropriate, with the corresponding gain or loss being recognised in profit or loss.

Where a business combination is achieved in stages, the Group’s previously held equity interests in the acquiree are remeasured to fair value at the acquisition date (i.e. the date when the Group attains control) and the resulting gain or loss, if any, is recognised in profit or loss. Amounts arising from interests in the acquiree prior to the acquisition date that have previously been recognised in other comprehensive income are reclassified to profit or loss, where such treatment would be appropriate if that interest were disposed of.

If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, the Group reports provisional amounts for the items for which the accounting is incomplete. Those provisional amounts are adjusted during the measurement period (see above), or additional assets or liabilities are recognised, to reflect new information obtained about facts and circumstances that existed as of the acquisition date that, if known, would have affected the amounts recognised at that date.

Revenue Recognition

Revenue is recognised when it is probable that the economic benefits associated with the transaction will flow to the Group and the Company and the amount of revenue can be measured reliably. Revenue is measured at the fair value of consideration received and receivable in the normal course of business.

cont’d

Revenue Recognition cont’d

The following specific recognition criteria must also be met before revenue is recognised:

(i) Dividend income

Dividend income from investments is recognised when the right to receive payment has been established. (ii) Charge and credit card operations

Revenue from charge and credit card commissions are recognised at the point of transaction at service establishments. Annual subscription fees are recognised on a time-apportionment basis over the membership period. Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate. Revenue from inactive accounts are recognised when recovered.

Provision of charge and credit card services that result in award credits for cardholders are accounted for as multiple element revenue transactions and the fair value of the consideration received or receivable is allocated between the services provided and the reward credits granted. The consideration allocated to the award credits is measured by reference to their fair value. Such transaction is not recognised as revenue at the time of the initial transaction but is deferred and recognised as revenue when the reward credits are redeemed and the Group’s obligations have been fulfilled.

(iii) Ticketing and travel revenue

Revenue from air ticket sales is recognised based on fee earned and upon issue and delivery of air tickets. Revenue from travel services is recognised upon departure or arrival dates of the tours and services rendered.

(iv) Sales of goods

Revenue is recognised upon the transfer of significant risk and rewards of ownership of the goods to the customer, which generally coincides with delivery and acceptance of the goods sold. 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.

(v) Revenue from hotel operations

Revenue from rental of hotel rooms, sale of food and beverage and other related income are recognised on an accrual basis.

(vi) Revenue from development properties

Revenue from sale of development properties is recognised in profit or loss when significant risks and rewards of ownership of the properties have been transferred to the buyer on delivery in its entirety at a single time on vacant possession.

(vii) Interest income

Interest income is recognised on an accrual basis using the effective interest rate method.

Revenue Recognition cont’d

(viii) 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.

Foreign Currency Conversion

The individual financial statements of each group entity are presented in the currency of the primary economic environment in which the entity operates (its functional currency). For the purpose of the consolidated financial statements, the results and financial position of each group entity are expressed in Ringgit Malaysia (“RM”), which is the functional currency of the Company and the presentation currency for the consolidated financial statements.

In preparing the financial statements of the individual entities, transactions in currencies other than the functional currency (foreign currencies) are recorded at the rates of exchange prevailing at the dates of the transactions. At the end of each reporting period, monetary items denominated in foreign currencies are retranslated at the rates prevailing at that date. Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing at the date when the fair values were determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.

Exchange differences are recognised in profit or loss in the period in which they arise except for:

• Exchange differences arising on the retranslation of non-monetary items carried at fair value in respect of which gain and losses are recognised in other comprehensive income. For such non-monetary items, the exchange component of that gain or loss is also recognised in other comprehensive income;

• Exchange differences on foreign currency borrowings relating to assets under construction for future productive use, which are included in the cost of those assets when they are regarded as an adjustment to interest costs on those foreign currency borrowings;

• Exchange differences on transactions entered into in order to hedge certain foreign currency risks; and

• Exchange differences on monetary items receivable from or payable to a foreign operation for which settlement is neither planned nor likely to occur (therefore, forming part of the net investment in the foreign operation), which are recognised initially in other comprehensive income and reclassified from equity to profit or loss on repayment of the monetary items.

For the purpose of presenting consolidated financial statements, the assets and liabilities of the Group’s foreign operations are translated into RM using exchange rates prevailing at the end of the reporting period. Income and expenses items are translated at the average exchange rates for the period, unless exchange rates fluctuated significantly during that period, in which case the exchange rates at the dates of transactions are used. Exchange differences arising, if any, are recognised in other comprehensive income and accumulated in equity (attributable to non-controlling interests as appropriate).

cont’d

Foreign Currency Conversion cont’d

On the disposal of a foreign operation (i.e. a disposal of the Group’s entire interest in a foreign operation, or a disposal involving loss of control over a subsidiary that includes a foreign operation, loss of joint control over a jointly controlled entity that includes a foreign operation, or loss of significant influence over an associate that includes a foreign operation), all of the accumulated exchange differences in respect of that operation attributable to the Group are reclassified to profit or loss. Any exchange differences that have previously been attributed to non-controlling interests are derecognised, but they are not reclassified to profit or loss.

In addition, in relation to a partial disposal of a subsidiary that does not result in the Group losing control over the subsidiary, the proportionate share of accumulated exchange differences are re-attributed to non-controlling interests and are not recognised in profit or loss. For all other partial disposals (i.e. of associates or jointly controlled entities that do not result in the Group losing significant influence or joint control), the proportionate share of the accumulated exchange differences is reclassified to profit or loss.

Goodwill and fair value adjustments on identifiable assets and liabilities arising on the acquisition of a foreign operation are treated as assets and liabilities of the foreign operation and translated at the rate of exchange prevailing at the end of each reporting period. Exchange differences arising are recognised in other comprehensive income and accumulated in equity.

Employee Benefits

Short-term benefits

Wages, salaries, bonuses and non-monetary benefits are accrued in the period in which the associated services are rendered by employees of the Group and the Company. Short-term accumulating compensated absences such as paid annual leave are recognised when services are rendered by employees that increase their entitlement to future compensated absences. Short-term non-accumulating compensated absences such as sick leave are recognised when the absences occur.

Defined contribution plans

The Group participates in the national pension schemes as defined by the laws of the countries in which it has operations. The Malaysian companies in the Group make contributions to the Employees Provident Fund (“EPF”) in Malaysia, a defined contribution pension scheme. Contributions to defined contribution pension schemes are recognised as an expense in the period in which the related service is performed.

Leases

Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.

The Group as lessee

Assets held under finance leases are initially recognised as assets of the Group at their fair value at the inception of the lease or, if lower, at the present value of the minimum lease payments. The corresponding liability to the lessor is included in the statement of financial position as a finance lease obligation.

Leases cont’d

The Group as lessee cont’d

Lease payments are apportioned between finance expenses and reduction of the lease obligation so as to achieve a constant rate of interest on the remaining balance of the liability. Finance expenses are recognised immediately in profit or loss, unless they are directly attributable to qualifying assets, in which case they are capitalised in accordance with the Group’s general policy on borrowing costs (see below). Contingent rentals are recognised as expenses in the periods in which they are incurred.

Operating lease payments are recognised as an expense on a straight-line basis over the lease term, except where another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed. Contingent rentals arising under operating leases are recognised as an expense in the period in which they are incurred.

In the event that lease incentives are received to enter into operating leases, such incentives are recognised as a liability. The aggregate benefit of incentives is recognised as a reduction of rental expense on a straight-line basis, except where another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed.

The Group as lessor

Leases where the Group retains substantially all the risks and rewards of ownership of the asset are classified as operating leases. Initial direct costs incurred in negotiating an operating lease are added to the carrying amount of the leased asset and recognised over the lease term on the same bases as rental income. The accounting policy for rental income is set out above.

Borrowing Costs

Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale. Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for recognised.

All other borrowing costs are recognised in profit or loss in the period in which they are incurred. Borrowing costs consist of interest and other costs that the Group and the Company incurred in connection with the borrowing of funds.

Income Tax

Income tax expense for the year comprises currently payable and deferred tax.

cont’d

Income Tax cont’d

Current tax

The tax currently payable is based on taxable profit for the year. Taxable profit differs from profit as reported in the statements of comprehensive income because of items of income or expense that are taxable or deductible in other years and items that are never taxable or deductible. The Group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the end of the reporting period.

Deferred tax

Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognised for all taxable temporary differences. Deferred tax assets are generally recognised for all deductible temporary differences, unused tax losses and unused tax credits to the extent that it is probable that taxable profits will be available against which those deductible temporary differences, unused tax losses and unused tax credits can be utilised. Such deferred tax assets and liabilities are not recognised if the temporary difference arises from goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.

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

In respect of property, plant and equipment measured at revalued amount, deferred tax liabilities are recognised for taxable temporary differences between the carrying amount of the revalued asset and its tax base.

The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realised, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Group and the Company expect, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Group and the Company intend to settle its current tax assets and liabilities on a net basis.

Income Tax cont’d

Current and deferred tax for the period

Current and deferred tax are recognised as an expense or income in profit or loss, except when they relate to items that are recognised outside profit or loss (whether in other comprehensive income or directly in equity), in which case the current and deferred tax is also recognised in other comprehensive income or directly in equity respectively. Where current or deferred tax arises from the initial accounting for a business combination, the tax effect is included in the accounting for the business combination.

Impairment of Non-Financial Assets Other Than Goodwill

At the end of each reporting period, the Group reviews the carrying amounts of its non-financial assets other than goodwill to determine whether there is any indication that these assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs. When a reasonable and consistent basis of allocation can be identified, corporate assets are also allocated to individual cash-generating units, or otherwise they are allocated to the smallest group of cash-generating units for which a reasonable and consistent allocation basis can be identified.

Recoverable amount is the higher of fair value less costs to sell and value-in-use. In assessing value-in-use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset (or cash-generating unit) for which the estimates of future cash flows have not been adjusted.

If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss.

Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is

increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss.

Property, Plant and Equipment

Land and buildings held for use in the production or supply of goods or services, or for administrative purposes, are stated in the statement of financial position at their revalued amounts, being the fair value at the date of revaluation, less any subsequent accumulated depreciation and subsequent accumulated impairment losses. Revaluations are performed with sufficient regularity such that the carrying amount does not differ materially from that which would be determined using fair values at the end of the reporting period.

cont’d

Property, Plant and Equipment cont’d

Any revaluation increase arising on the revaluation of such land and buildings is recognised in other comprehensive income and accumulated in properties revaluation reserve, except to the extent that it reverses a revaluation decrease for the same asset previously recognised in profit or loss, in which case the increase is credited to profit or loss to the extent of the decrease previously expensed. A decrease in carrying amount arising on the revaluation of such land and buildings is charged to profit or loss to the extent that it exceeds the balance, if any, held in the properties revaluation reserve relating to a previous revaluation of that asset.

Gain or loss arising from the disposal of an asset is determined as the difference between the estimated net disposal proceeds and the carrying amount of the asset, and is recognised in profit or loss.

Freehold land is not depreciated. Long-term leasehold land are depreciated based on the carrying values of the land over the remaining period of the leases.

Depreciation of other property, plant and equipment is computed using the straight-line method to write off the cost of the various assets over their estimated useful lives at the following annual rates:

Freehold buildings 2%Long-term leasehold buildings 1.76% - 2%Long-term leasehold hotel properties 2%Plant and machinery, furniture, equipment and motor vehicles 5% - 33.3%

At the end of each reporting period, the residual values, useful lives and depreciation methods of property, plant and equipment are reviewed, and the effects of any change in estimates are recognised prospectively.

Assets held under finance leases are depreciated over their expected useful lives on the same basis as owned assets.

Intangible Assets

Goodwill

Goodwill arising on an acquisition of a business is carried at cost as established at the date of acquisition of the business less accumulated impairment losses, if any.

For the purposes of impairment testing, goodwill is allocated to each of the Group’s cash-generating units (or groups of cash-generating units) that is expected to benefit from the synergies of the combination.

The cash-generating unit to which goodwill has been allocated is tested for impairment annually, or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the cash-generating unit is less than its carrying amount, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro-rata on the basis of the carrying amount of each asset in the unit. Any impairment loss for goodwill is recognised directly in profit or loss. An impairment loss recognised for goodwill is not reversed in subsequent periods.

Intangible Assets cont’d

Goodwill cont’d

Where goodwill forms part of a cash-generating unit and part of the operation within that cash-generating 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 fair values of the operations disposed of and the portion of the cash-generating unit retained.

On disposal of the relevant cash-generating unit, the attributable amount of goodwill is included in the determination of the profit or loss on disposal.

Other intangible assets

Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible assets acquired in a business combination is their fair value as at the date of acquisition. Following initial recognition, intangible assets are carried at cost less any accumulated amortisation and any accumulated impairment losses. The useful lives of intangible assets are assessed to be either finite or indefinite. Intangible assets with finite lives are amortised on a straight-line basis over the estimated economic useful lives and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortisation period and the amortisation method for an intangible asset with a finite useful life are reviewed at least at each reporting date.

Computer software acquired are amortised on a straight-line basis over a period of 7 years (their estimated useful lives).

Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment at least annually, and whenever there is an indication that the asset may be impaired.

Inventories

Inventories are stated at lower of cost and net realisable value. Net realisable value represents the estimated selling price for inventories less all estimated costs of completion and costs necessary to make the sale.

Raw materials, work-in-progress, finished goods and merchandise

Cost of raw materials, finished goods and merchandise is determined on a weighted average or first-in-first-out basis, as appropriate, according to the category of inventories concerned. Cost of materials and merchandise comprises the original purchase price plus the costs incurred in bringing the inventories to their present location and condition. Cost of work-in-progress and finished goods include the costs of raw materials, direct labour, other direct costs and appropriate production overheads.

Contract work-in-progress

Contract work-in-progress include amounts of work completed and estimates of the realisable value of work done but not charged to clients at the end of the reporting period. The statements of profit or loss and other comprehensive income reflect the profits and losses on contracts completed prior to the end of the reporting period and the results of current contracts based on the percentage of completion method.

cont’d

Inventories cont’d

Land held for property development

Land held for property development consists of land on which no development activities have been undertaken or where development activities are not expected to be completed within the normal operating cycle. Such land is classified as non-current asset and is stated at cost less accumulated impairment losses.

Costs associated with the acquisition of land include the purchase price of the land, professional fees, stamp duties, commissions, conversion fees and other relevant levies.

Land held for property development is transferred to property development costs (under current assets) when development activities have commenced and where the development activities are expected to be completed within the normal operating cycle.

Provisions

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

The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation. Where a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows.

When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, a receivable is recognised as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably.

Financial Instruments

Financial assets and financial liabilities are recognised when, and only when, the Group and the Company become a party to the contractual provisions of the instruments.

Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of the financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs that are directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognised immediately in profit or loss.

Financial Assets

Financial assets are classified into the following specified categories: financial assets “at fair value through profit or loss” (FVTPL), “held-to-maturity” investments, “available-for-sale” (AFS) financial assets and, “loans and receivables”. The classification depends on the nature and purpose of the financial assets and is determined at the time of initial recognition. All regular way purchases or sales of financial assets are recognised and derecognised on a trade date basis. Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the time frame established by regulation or convention in the marketplace.

Effective interest method

The effective interest method is a method of calculating the amortised cost of a debt instrument and of allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset, or (where appropriate) a shorter period, to the net carrying amount on initial recognition.

Income is recognised on an effective interest basis for debt instruments other than those financial assets classified as at FVTPL.

Financial assets at FVTPL

Financial assets are classified as at FVTPL when the financial asset is (i) contingent consideration that may be paid by an acquirer as part of a business combination to which MFRS 3 applies, (ii) held for trading, or (iii) it is designated as at FVTPL.

A financial asset is classified as held for trading if:

• it has been acquired principally for the purpose of selling it in the near term; or• on initial recognition it is part of a portfolio of identified financial instruments that the Group manages together

and has a recent actual pattern of short-term profit-taking; or• it is a derivative that is not designated and effective as a hedging instrument.

A financial asset other than a financial asset held for trading or contingent consideration that may be paid by an acquirer as part of a business combination may be designated as at FVTPL upon initial recognition if:

• such designation eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise arise; or

• the financial asset forms part of a group of financial assets or financial liabilities or both, which is managed and its performance is evaluated on a fair value basis, in accordance with the Group’s documented risk management or investment strategy, and information about the grouping is provided internally on that basis; or

• it forms part of a contract containing one or more embedded derivatives, and MFRS139 permits the entire combined contract to be designated as at FVTPL.

Financial assets at FVTPL are stated at fair value, with any gains or losses arising on remeasurement is recognised in profit or loss.

cont’d

Financial Assets cont’d

AFS financial assets

AFS financial assets are non-derivatives that are either designated as available-for-sale or are not classified as loans and receivables, held-to-maturity investments or financial assets at FVTPL.

All AFS assets are measured at fair value at the end of the reporting period. Fair value is determined in the manner described in Note 32. Gains and losses arising from changes in fair value are recognised in other comprehensive income and accumulated in the investments revaluation reserve, with the exception of impairment losses, interest calculated using the effective interest method, and foreign exchange gains and losses on monetary assets, which are recognised in profit or loss. Where the investment is disposed of or is determined to be impaired, the cumulative gain or loss previously accumulated in the investments revaluation reserve is reclassified to profit or loss.

AFS equity investments that do not have a quoted market price in an active market and whose fair value cannot be reliably measured and derivatives that are linked to and must be settled by delivery of such unquoted equity investments are measured at cost less any identified impairment losses at the end of the reporting period.

Dividends on AFS equity instruments are recognised in profit or loss when the Group’s right to receive the dividends is established.

The fair value of AFS monetary assets denominated in a foreign currency is determined in that foreign currency and translated at the spot rate at the end of the reporting period. The foreign exchange gains and losses that are recognised in profit or loss are determined based on the amortised cost of the monetary asset. Other foreign exchange gains and losses are recognised in other comprehensive income.

Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Loans and receivables are measured at amortised cost using the effective interest method, less any impairment. Interest income is recognised by applying the effective interest rate, except for short-term receivables when the recognition of interest would be immaterial.

Impairment of financial assets

Financial assets, other than those at FVTPL, are assessed for indicators of impairment at the end of each reporting period. Financial assets are considered to be impaired when there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows of the investment have been affected.

Objective evidence of impairment could include:

• significant financial difficulty of the issuer or counterparty; or• default or delinquency in interest or principal payments; or• it becoming probable that the borrower will enter bankruptcy or financial reorganisation.

Impairment of financial assets cont’d

For certain categories of financial asset, such as trade receivables, assets that are assessed not to be impaired individually are, in addition, assessed for impairment on a collective basis. Objective evidence of impairment for a portfolio of receivables could include the Group’s and the Company’s past experience of collecting payments, an increase in the number of delayed payments in the portfolio past the average credit period, as well as observable changes in national or local economic conditions that correlate with default on receivables.

For financial assets carried at amortised cost, the amount of the impairment loss recognised is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the financial asset’s original effective interest rate.

The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception of trade receivables, where the carrying amount is reduced through the use of an allowance account. When a trade receivable is considered uncollectible, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against the allowance account. Changes in the carrying amount of the allowance account are recognised in profit or loss.

When an AFS financial asset is considered to be impaired, cumulative gains or losses previously recognised in other comprehensive income are reclassified to profit or loss in the period.

For financial assets measured at amortised cost, if, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed through profit or loss to the extent that the carrying amount of the investment at the date the impairment is reversed does not exceed what the amortised cost would have been had the impairment not been recognised.

In respect of AFS equity securities, impairment losses previously recognised in profit or loss are not reversed through profit or loss. Any increase in fair value subsequent to an impairment loss is recognised in other comprehensive income and accumulated under the heading of investments revaluation reserve. In respect of AFS debt securities, impairment losses are subsequently reversed through 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.

Derecognition of financial assets

The Group and the Company derecognises a financial asset only when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity. If the Group and the Company neither transfer nor retain substantially all the risks and rewards of ownership and continue to control the transferred asset, the Group and the Company recognise their retained interest in the asset and an associated liability for amounts it may have to pay. If the Group and the Company retain substantially all the risks and rewards of ownership of a transferred financial asset, the Group and the Company continue to recognise the financial asset and also recognise a collateralised borrowing for the proceeds received.

cont’d

Derecognition of financial assets cont’d

On derecognition of a financial asset in its entirety, the difference between the asset’s carrying amount and the sum of the consideration received and receivable and the cumulative gain or loss that had been recognised in other comprehensive income and accumulated in equity is recognised in profit or loss.

Financial Liabilities and Equity Instruments issued by the Group and the Company

Classification as debt or equity

Debt and equity instruments are classified as either financial liability or as equity in accordance with the substance of the contractual arrangement.

Equity instruments

An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by the Group and the Company are recognised at the proceeds received, net of direct issue costs. Ordinary shares are equity instruments.

Financial liabilities

Financial liabilities are classified as either financial liabilities “at FVTPL” or “other financial liabilities”.

Other financial liabilities

Other financial liabilities are initially measured at fair value, net of transaction costs and are subsequently measured at amortised cost using the effective interest method, with interest expense recognised on an effective yield basis.

The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments through the expected life of the financial liability, or (where appropriate) a shorter period, to the net carrying amount on initial recognition.

Derecognition of financial liabilities

The Group and the Company derecognise financial liabilities when, and only when, the Group’s and the Company’s obligations are discharged, cancelled or they expire. The difference between the carrying amount of the financial liability derecognised and the consideration paid and payable is recognised in profit or loss.

Discontinued Operations

A discontinued operation is a separate major line of business of the Group that can be distinguished operationally and for financial reporting purposes, which is disposed of in its entirety or piecemeal, or terminated through abandonment. Post-tax profit or loss of the discontinued operation is presented as a single amount on the face of the statement of comprehensive income with comparatives re-presented to include operations classified as discontinued in the current year. Non-current assets (or disposal group) relating to the discontinued operations are accounted for in accordance with “non-current assets held for sale” as disclosed below.

Statements of Cash Flows

The Group and the Company adopt the indirect method in the preparation of the statements of cash flows.

Cash and cash equivalents are short-term, highly liquid investments with maturities of three months or less from the date of acquisition that are readily convertible to a known amount of cash with insignificant risk of changes in value, against which bank overdrafts, if any, are deducted.

4. CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

(i) Critical judgements in applying the Group’s and the Company’s accounting policies

In the process of applying the Group’s and the Company’s accounting policies, which are described in Note 3 above, the directors are of the opinion that there are no instances of application of judgement which are expected to have a significant effect on the amounts recognised in the financial statements except as follows:

(a) Land and buildings

The Group’s land and buildings are accounted for using the revaluation model. The directors use their judgement in selecting and applying an appropriate valuation technique, by relying on the work of independent firm of valuers, for land and buildings. The directors are of the opinion that this provides more reliable and relevant information on the value of the land and buildings.

(b) Control Over Special Purpose Entity (“SPE”) As disclosed in Note 17, SPE is considered subsidiary of the Group although the Group does not hold any

shares in the SPE. The directors of the Company have assessed the factors as described in Note 17 and concluded that the Group has control over the SPE.

cont’d

4. CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY cont’d

(ii) Key sources of estimation uncertainty

The following are the key assumptions concerning the future, and other key sources of estimation uncertainty at the end of the reporting period, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year.

(a) Impairment of goodwill

The Group determines whether goodwill is impaired at least on an annual basis. This requires the estimation of the value-in-use of the cash-generating units to which goodwill is allocated. Estimating the value-in-use requires the Group to make an estimate of the expected future cash flows from the cash-generating unit and also to choose a suitable discount rate in order to calculate the present value of those cash flows. The carrying amount of the Group’s goodwill at 31 January 2018 was RM4,494,000 (2017: RM4,494,000). Further details are disclosed in Note 16.

(b) Depreciation of plant and equipment

The cost/revalued amount of property, plant and equipment are depreciated on a straight-line basis over the assets’ useful lives. The directors estimate the useful lives of these plant and machinery to be within 3 to 20 years. The carrying amounts of the Group’s property, plant and equipment at 31 January 2018 are disclosed in Note 14. Changes in the expected level of maintenance, usage and technological developments could impact the economic lives and the residual values of these assets, therefore future depreciation charges could be revised.

(c) Impairment of property, plant and equipment

The Group assesses whether there is any indication of impairment for all non-financial assets other than goodwill at each reporting date. Non-financial assets other than goodwill are tested for impairment when there are indicators that the carrying amounts may not be recoverable. In the current financial year, the Group carried out the impairment test on all the property, plant and equipment used in the discontinued operation. Details of the impairment loss required during the year are disclosed in Note 14.

(d) Deferred revenue

Deferred revenue arising from customer reward points of the Group, as disclosed in Note 29, pertains to the fair value of the award credits awarded to card members based on the spending on their credit and charge cards that could be redeemed for services and merchandise at a later date. There is no expiry date attached to these reward points. The reward points represent costs which are expected to be incurred and is recognised in accordance with IC Int. 13 Customer Loyalty Programme.

(e) Impairment of trade and other receivables

The Group assesses at the end of each reporting period whether there is any objective evidence that a financial asset is impaired. To determine whether there is objective evidence of impairment, the Group considers factors such as the probability of insolvency or significant difficulties of the debtor and default or significant delay in payments.

4. CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY cont’d

(ii) Key sources of estimation uncertainty cont’d

(e) Impairment of trade and other receivables cont’d

Where there is objective evidence of impairment the amount and timing of future cash flows are estimated based on historical loss experience of assets with similar credit risk characteristics. While the estimation process includes historical data and analysis, there is a significant amount of judgement applied in selecting inputs and analysing the results produced to determine the impairment allowances. The carrying amounts of the Group’s loans and receivables at the end of the reporting period are disclosed in Notes 20 and 21.

5. REVENUE

RM’000 RM’000 RM’000 RM’000

Continuing operationsCharge and credit cards operations 107,367 108,854 - -Air ticketing and travel 9,736 14,152 - -Hotel operations 3,297 4,027 - -Dividend income from investment securities 1,848 1,226 - -Management fees 123 125 60 60Sale of goods 64 170 - -Management services 50 68 - -Sales of property - 150 - -

122,485 128,772 60 60

Gross billing to charge and credit card customers during the year totaling RM2,371,825,000 (2017: RM1,871,835,000) consist of the amount spent by the customers using the charge and credit card, which generated the revenue earned, as disclosed above.

Gross billing to air ticketing and travel customers during the year totaling RM129,194,000 (2017: RM165,602,000) consist of air tickets and other related charges billed, which generated revenue earned by the Group, as disclosed above.

cont’d

6. COST OF SALES

The Group2018 2017

RM’000 RM’000

Continuing operationsTravel service costs 4,138 7,241Hotel operations costs 418 459Cost of inventories sold 2 188

4,558 7,888

7. FINANCE COSTS

RM’000 RM’000 RM’000 RM’000

Continuing operationsInterest expense on:

Non-recourse investors’ certificates and senior certificates 27,055 25,409 - -

Bank borrowings 8,726 11,185 - -Finance leases 117 453 23 28Others 4 2 2 2

35,902 37,049 25 30

8. PROFIT/(LOSS)BEFORETAX

Profit/(Loss) before tax is arrived at after the following (charges)/credits:

RM’000 RM’000 RM’000 RM’000

Continuing operationsEmployee benefits expense (Note 9) (41,517) (47,012) (3,778) (4,081)Depreciation of property, plant and equipment

[Note 14(e)] (4,792) (4,404) (148) (161)Allowance for doubtful debts:

Trade receivables (Note 20) (3,763) (6,162) - -Amount owing by subsidiaries (Note 17) - - (16) (250)

Amortisation of intangible asset (Note 16) (3,542) (3,411) - -Asset securitisation programme expenses (2,974) (6,778) - -Rental for:

Land and buildings (1,999) (3,282) (617) (583)Office equipment (5) (776) - (4)

Audit fees:Auditors of the Company (166) (182) (58) (55)Other auditors (391) (336) - -

Increase/(Decrease) in provision for customer reward points (Note 29) (142) 829 - -

Property, plant and equipment written off (19) (30) - -Loss on disposal of investment securities - (3) - -Impairment loss on investment in subsidiaries

(Note 17) - - (84) -Net fair value gain on investment securities 42,460 27,646 - -(Gain)/Loss on foreign exchange - net:

Realised 9,011 (10,365) (28) 29Unrealised 1,621 (1,021) - -

Interest income from:Third parties 232 233 45 103Subsidiaries - - 258 271

Bad debts recovered 195 1,598 - -Dividend income from investment securities 30 66 - -Gain/(Loss) on disposal of property, plant and

equipment 26 (135) 2 -Allowance for doubtful debts no longer required:

Trade receivables (Note 20) - 448 - -Amount owing by subsidiaries (Note 17) - - 70 -

cont’d

9. EMPLOYEEBENEFITSEXPENSE

RM’000 RM’000 RM’000 RM’000

Continuing operationsSalaries, bonuses and allowance 36,471 41,753 3,270 3,407Contributions to defined contribution plans 3,800 3,639 354 400Other staff related expenses 1,246 1,620 154 274

41,517 47,012 3,778 4,081 Included in employee benefits expense of the Group and of the Company are Executive Directors’ remuneration

amounting to RM4,316,000 (2017: RM4,392,000) and RM1,548,000 (2017: RM1,447,000), respectively as further disclosed in Note 10.

10. DIRECTORS’ REMUNERATION

Directors’ remuneration of the Group and of the Company classified into executive and non-executive directors are as follows:

RM’000 RM’000 RM’000 RM’000

Continuing operationsDirectors of the CompanyExecutive directors:Salary and other emoluments 2,166 2,065 1,548 1,447

Non-executive directors:

Fees 150 150 150 150Salary and other emoluments 19 19 19 19

169 169 169 169

2,335 2,234 1,717 1,616

10. DIRECTORS’ REMUNERATION cont’d

RM’000 RM’000 RM’000 RM’000

Directors of the subsidiariesExecutive directors:

Salary and other emoluments 2,096 2,252 - -Contributions to defined contribution plans 54 75 - -

2,150 2,327 - -Non-executive directors:Fees 3 12 - -

2,153 2,339 - -

Total 4,488 4,573 1,717 1,616

The estimated monetary value of benefits-in-kind received and receivable by the directors otherwise than in cash from the Group and the Company amounted to RM244,000 (2017: RM144,000), respectively.

The number of directors of the Company whose total remuneration during the year fell within the following bands is analysed below:

Number of Directors2018 2017

Executive directors:RM800,001 - RM1,000,000 1 1RM1,000,001 - RM1,400,000 1 1

Non-executive directors:RM50,000 - RM100,000 3 3

cont’d

11. INCOMETAXEXPENSE/(CREDIT)

RM’000 RM’000 RM’000 RM’000

Continuing operationsEstimated tax payable:

Current year:

Malaysian tax 293 117 - -Foreign tax 2,495 1,337 - -

Under/(Over)provision in prior years 1,384 (2,282) - -

4,172 (828) - -Deferred tax (Note 19):

Current year 624 2,394 - -Overprovision in prior years (1,014) (12) - -

(390) 2,382 - -

Total tax expense relating to continuing operations 3,782 1,554 - -

Discontinued operationsEstimated tax payable:

Current year - 33 - -

Deferred tax (Note 19):Current year - 1,400 - -Underprovision in prior years 49 - - -

Total tax expense relating to discontinued operations (Note 12) 49 1,433 - -

Total tax expense 3,831 2,987 - -

Domestic income tax is calculated at the Malaysian statutory tax rate of 24% (2017: 24%) of the estimated taxable profit for the year. Taxation of other jurisdictions is calculated at the rate prevailing in the respective jurisdictions.

11. INCOMETAXEXPENSE/(CREDIT) cont’d

A reconciliation of income tax expense at the applicable statutory income tax rate to income tax expense at the effective income tax rate is as follows:

RM’000 RM’000 RM’000 RM’000

Profit/(Loss) before tax:Continuing operations 25,747 (15,187) (5,727) (5,954)Discontinued operations (Note 12) (45,140) (20,155) - -

(19,393) (35,342) (5,727) (5,954)

Tax at the applicable statutory tax rate of 24% (4,654) (8,482) (1,374) (1,429)Effect of different tax rate of subsidiaries operating

in different jurisdictions 31 39 - -Tax effects of:

Expenses that are not tax deductible 10,222 13,976 1,389 122Income not subject to tax (13,937) (7,627) - -

Deferred tax assets written off due to cessation of manufacturing operations 8,221 - - -

Deferred tax assets not recognised due to uncertainty of realisation 3,544 7,375 - 1,307

Utilisation of deferred tax assets previously not recognised (15) - (15) -

(Over)/Underprovision in prior years:Current tax 1,384 (2,282) - -Deferred tax (965) (12) - -

3,831 2,987 - -

As of 31 January 2018, unutilised reinvestment allowance of approximately RM37,543,000 (2017: RM37,543,000) and unabsorbed capital allowance of approximately RM10,468,000 (2017: RM9,000,000) relating to the discontinued operations will not be available for utilisation against the statutory income from other business sources and accordingly, no deferred tax assets has been recognised.

cont’d

12. DISCONTINUED OPERATIONS

On 30 August 2017, the Group announced the plan to cease the ceramic tiles operations of Prestige Ceramics Sdn Bhd (“PCSB”) due to market outlook and competitive intensity of the industry. The cessation has been completed at the end of the current financial year ended 31 January 2018.

The Group recognised impairment loss totalling RM30,683,000 during the year in respect of factory buildings and plant and machinery of PCSB.

Analysis of loss for the year from discontinued operations

The results of the discontinued operations included in the profit or loss for the year are set out below. The comparative results from discontinued operations have been represented to include the operations classified as discontinued in the current year.

The Group2018 2017

RM’000 RM’000

Revenue 24,012 56,634Cost of sales (32,842) (53,138)

Gross profit (8,830) 3,496Other income 2,378 2,307Distribution expenses (202) (342)Administrative expenses (2,922) (7,723)Other operating expenses (34,626) (17,104)Finance costs (938) (789)

Loss before tax (45,140) (20,155)Income tax expense (Note 11) (49) (1,433)

Loss for the year from discontinued operations (45,189) (21,588)

12. DISCONTINUED OPERATIONS cont’d

The following (charges)/credits have been included in arriving at the loss before tax of the discontinued operations:

The Group2018 2017

RM’000 RM’000

Impairment loss on property, plant and equipment (Note 14) (30,683) (15,881)Change in inventories of finished goods (9,711) (4,429)Raw materials and consumables used (7,541) (18,430)Employee benefits expense (6,388) (10,389)Inventories written down (4,256) (551)Depreciation of property, plant and equipment [Note 14(e)] (1,815) (4,285)Rental for:

Office equipment (218) (979)Land and buildings (36) (54)

Audit fees (35) (35)Reversal of inventories written down 1,156 -Allowance for doubtful debts no longer required 99 -Gain on disposal of property, plant and equipment 33 -Foreign exchange gain/(loss):

Realised 33 (124)Unrealised - (34)

Write back of inventories written down - 23

Employee benefits expenses relating to discontinued operations comprise:

The Group2018 2017

RM’000 RM’000

Salaries, bonuses and allowance (4,145) (7,880)Contributions to defined contribution plans (213) (341)Other staff related expenses (2,030) (2,168)

(6,388) (10,389)

cont’d

12. DISCONTINUED OPERATIONS cont’d

Cash flows from discontinued operations:

The Group2018 2017

RM’000 RM’000

Net cash (outflows)/inflows from operating activities (659) 2,581Net cash outflows from investing activities (396) (260)Net cash (outflows)/inflows from financing activities (103) 213

Net cash (outflows)/inflows (1,158) 2,534

13. EARNINGS/(LOSS)PERSHARE

Basic and diluted earnings/(loss) per share

Basic and diluted earnings/(loss) per share of the Group is calculated by dividing earnings/(loss) for the year attributable to owners of the Company by the number of ordinary shares in issue during the financial year.

The Group2018 2017

Profit/(Loss) attributable to owners of the Company (RM’000):Continuing operations 22,801 (15,632)Discontinued operations (45,189) (21,588)

(22,388) (37,220)

Number of ordinary shares in issue 622,948,000 622,948,000

Basic earnings/(loss) per share (sen):Continuing operations 3.66 (2.51)Discontinued operations (7.25) (3.46)

(3.59) (5.97)

The diluted and basic earnings per share are the same as the Company has no dilutive ordinary shares.

14. PROPERTY, PLANT AND EQUIPMENT

The GroupFreehold

landFreeholdbuildings

Long-term leasehold

Long-term leasehold land and buildings

Long-term leasehold

hotel properties

Plant and

machinery

Furniture, equipment and motor

vehicles TotalRM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Cost/ValuationBalance as of 1 February

2016 90,732 22,490 39,159 91,264 40,000 96,889 22,099 402,633Additions - - - - 47 397 1,193 1,637Disposals - - - - - - (1,436) (1,436) Write-offs - - - - - - (92) (92) Revaluation 18,148 (2,000) (2,334) 2,622 453 - - 16,889Exchange differences - - - 5,856 - - 2,284 8,140

Balance as of 31 January 2017 108,880 20,490 36,825 99,742 40,500 97,286 24,048 427,771

Cost/ValuationBalance as of 1 February

2017 108,880 20,490 36,825 99,742 40,500 97,286 24,048 427,771Additions - - - - - 39 1,079 1,118Disposals - - - - - (6) (1,580) (1,586)Write-offs - - - - - - (387) (387)Revaluation 18,150 (665) - (1,849) - - - 15,636Exchange differences - - - (4,086) - - (360) (4,446)

Accumulated depreciationBalance as of 1 February

2016 - - 7,885 749 618 61,609 16,065 86,926Charge for the year

(Notes 8) - 644 406 1,250 1,092 3,614 1,683 8,689Disposals - - - - - - (1,319) (1,319)Write-offs - - - - - - (62) (62)Revaluation - (644) (8,291) (1,999) (1,710) - - (12,644)Exchange differences - - - - - - 1,726 1,726

Balance as of 31 January 2017 - - - - - 65,223 18,093 83,316

cont’d

14. PROPERTY, PLANT AND EQUIPMENT cont’d

The GroupFreehold

landFreeholdbuildings

Long-term leasehold

Long-term leasehold land and buildings

Long-term leasehold

hotel properties

Plant and

machinery

Furniture, equipment and motor

vehicles TotalRM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Accumulated depreciationBalance as of 1 February

2017 - - - - - 65,223 18,093 83,316Charge for the year

(Notes 8) - 644 479 1,601 1,154 1,142 1,587 6,607Disposals - - - - - - (1,542) (1,542)Write-offs - - - - - - (368) (368)Revaluation - (644) (479) (1,241) (1,154) - - (3,518)Exchange differences - - - (18) - - (202) (220)

Balance as of 31 January 2018 - - - 342 - 66,365 17,568 84,275

Accumulated impairment losses

Balance as of 1 February 2016 - - - - - 243 - 243

Impairment loss for the year (Note 12) - - - - - 15,881 - 15,881

Balance as of 31 January 2017 - - - - - 16,124 - 16,124

Balance as of 1 February 2017 - - - - - 16,124 - 16,124

Impairment loss for the year (Note 12) - 15,750 - - - 14,830 103 30,683

Balance as of 31 January 2018 - 15,750 - - - 30,954 103 46,807

Net Book ValueBalance as of 31 January

2018 127,030 4,075 36,825 93,465 40,500 - 5,129 307,024

The Company

Furniture and

equipment Motor

vehicles TotalRM’000 RM’000 RM’000

CostBalance as of 1 February 2016 2,176 1,386 3,562Additions 7 - 7

Balance as of 31 January 2017/1 February 2017 2,183 1,386 3,569Additions 11 5 16Disposal - (8) (8)

Balance as of 31 January 2018 2,194 1,383 3,577

Accumulated DepreciationBalance as of 1 February 2016 2,047 571 2,618Charge for the year 25 136 161

Balance as of 31 January 2017/1 February 2017 2,072 707 2,779Charge for the year 22 126 148Disposal - (8) (8)

Balance as of 31 January 2018 2,094 825 2,919

Net Book ValueBalance as of 31 January 2018 100 558 658

Balance as of 31 January 2017 111 679 790

(a) Freehold land and buildings carried at fair value

Independent valuations of the land and buildings of the Group were performed by independent qualified valuers to determine the fair value of the land and buildings as of 31 January 2018. The valuers have the appropriate qualifications and recent experience in the fair value measurement of properties in the relevant locations.

The fair value of the land and buildings was determined based on the market comparable approach that reflects recent transaction prices for similar properties.

cont’d

(a) Freehold land and buildings carried at fair value cont’d

Details of the Group’s land and buildings and information about the fair value hierarchy as at 31 January 2018 are as follows:

The Group Level 1 Level 2 Level 3 Fair value RM’000 RM’000 RM’000 RM’000

As of 31 January 2018In MalaysiaA manufacturing plant that contains:

Freehold land - - 127,030 127,030Buildings - - 19,825 19,825

Long-term leasehold hotel properties - - 40,500 40,500Long-term leasehold land and building - - 11,650 11,650Long-term leasehold land - - 36,825 36,825

In SingaporeLong-term leasehold land and buildings - - 82,157 82,157

As of 31 January 2017In MalaysiaA manufacturing plant that contains:

Freehold land - - 108,880 108,880Buildings - - 20,490 20,490

Long-term leasehold hotel properties - - 40,500 40,500Long-term leasehold land and building - - 11,650 11,650Long-term leasehold land - - 36,825 36,825

In SingaporeLong-term leasehold land and buildings - - 88,092 88,092

The following table shows the significant unobservable input used in the valuation model:

Type Significant unobservable inputsRelationship of unobservable inputs

and fair value measurement

Land and buildings Sale price of comparable land and buildings

The higher the sales price of comparable land and buildings, or the higher the fair value

(a) Freehold land and buildings carried at fair value cont’d

Had the Group’s land and buildings been measured on a historical cost basis, their carrying amounts would have been as follows:

The Group2018 2017

RM’000 RM’000

Freehold land 81,053 81,180Buildings 19,410 20,065Long-term leasehold land and buildings 49,901 51,116Long-term leasehold hotel properties 17,509 18,664Long-term leasehold land 18,310 18,788

(b) Assets acquired under finance lease

During the financial year, the Group and the Company acquired property, plant and equipment at aggregate cost of RM1,118,000 (2017: RM1,637,000) and RM16,000 (2017: RM7,000), respectively, of which RM Nil (2017: RM805,000) of the Group were acquired by means of finance lease arrangements. The net book value of property, plant and equipment held under finance lease arrangements were as follows:

RM’000 RM’000 RM’000 RM’000

Furniture, equipment and motor vehicles 1,961 3,739 554 678

(c) Assets pledged as security

Certain property, plant and equipment have been pledged as security for the bank loans under a mortgage. The Group is not allowed to deal with these assets without the prior written consent from the chargers. The net book value of pledged assets are as follows:

The Group2018 2017

RM’000 RM’000

Freehold land and buildings 131,105 129,370Long-term leasehold land and buildings 93,464 99,742Long-term leasehold hotel properties 40,500 40,500Plant and machinery - 15,939

265,069 285,551

cont’d

(d) Impairment of plant and machinery

Up to the financial year ended 31 January 2017, Prestige Ceramics Sdn Bhd (“PCSB”), a subsidiary, recognised cumulative impairment loss of totalling RM16,124,000 on plant and machinery based on the excess of the carrying amount over the recoverable amount following management’s decision to scale down the operations of the said subsidiary in consideration of the unfavorable trading condition.

The recoverable amounts of the plant and machinery were determined based on value in use calculations using directors’ best estimates of cash flows projections based on the remaining useful lives of the plant and machinery from the approved financial budget. The cash flows were discounted at a rate of 15% per annum.

Key assumptions used in value in use calculations in 2017

(i) Budgeted gross margins: Gross margins are based on the average results achieved in the current financial year.

(ii) Discount rate: Discount rate reflects the current market assessment of the risks specific to the industry in which the subsidiary operates. The discount rate was estimated based on the average percentage of a weighted average cost of capital for the industry. This rate was further adjusted to reflect the market assessment of any risk specific to the subsidiary for which future estimates of cash-flows have not been adjusted.

(iii) Growth rates: The forecasted growth rates are based on the management’s approved business plan which ranged between 2% to 3% per annum.

Sensitivity to changes in assumption in 2017

The directors believe that no reasonable possible changes in any of the key assumptions above will cause the carrying amount of the plant and machinery to materially exceed its recoverable amount.

As disclosed in Note 12, PCSB recognised impairment loss totalling RM30,683,000 during the year in respect of factory buildings and plant of machinery.

(e) Depreciation charge of property, plant and equipment

RM’000 RM’000 RM’000 RM’000

Continuing operations (Note 8) 4,792 4,404 148 161Discontinued operations (Note 12) 1,815 4,285 - -

6,607 8,689 148 161

15. INVENTORIES

(a) Inventories - non-current

Inventories - non-current consist of land held for property development as follows:

The Group2018 2017

RM’000 RM’000

Leasehold land 4,439 4,439Development expenditure 1,705 1,833

6,144 6,272

As of 31 January 2018, the land held for property development of the Group belonging to a subsidiary company, Lumut Park Resort Sdn Bhd, were charged to a local licensed bank as security for the term loan granted to the said subsidiary company as mentioned in Note 24.

(b) Inventories - current

Inventories - current consist of the following:

The Group2018 2017

RM’000 RM’000

At cost:

Finished goods 1 1,701Work-in-progress 1 382Raw materials - 9,300

2 11,383At net realisable value:

Finished goods 734 6,015

736 17,398

During the financial year, the amount of inventories recognised as an expense in profit or loss of the Group amounted to RM32,842,000 (2017: RM53,306,000).

cont’d

16. INTANGIBLE ASSETS

The Group GoodwillComputer

software TotalRM’000 RM’000 RM’000

CostBalance as of 1 February 2016 4,494 23,046 27,540Additions - 299 299Write-offs - (13) (13)Exchange differences - 1,372 1,372

Balance as of 31 January 2017/1 February 2017 4,494 24,704 29,198Additions - 1,375 1,375Write-offs - (819) (819)Exchange differences - (1,122) (1,122)

Balance as of 31 January 2018 4,494 24,138 28,632

Accumulated amortisationBalance as of 1 February 2016 - 10,607 10,607Amortisation for the year (Note 8) - 3,411 3,411Write-offs - (13) (13)Exchange differences - 707 707

Balance as of 31 January 2017/1 February 2017 - 14,712 14,712Amortisation for the year (Note 8) - 3,542 3,542Write-offs - (819) (819)Exchange differences - (686) (686)

Balance as of 31 January 2018 - 16,749 16,749

Net carrying amountBalance as of 31 January 2018 4,494 7,389 11,883

Balance as of 31 January 2017 4,494 9,992 14,486 Assets acquired under finance lease

During the financial year, the hospitality and card services segment of the Group acquired computer software at aggregate costs of RM1,375,000 (2017: RM299,000) of which Nil (2017: RM238,000) was acquired by means of finance lease arrangements. The net carrying amount of computer software held under finance lease arrangements as at 31 January 2018 amounted to RM3,590,000 (2017: RM6,001,000).

16. INTANGIBLE ASSETS cont’d

Impairment of goodwill

The net carrying amount of goodwill allocated to the cash generating unit (“CGU”) of Diners Club (Singapore) Private Limited (“DCS”), which is under the hospitality and card services segment, is as follows:

The Group provision for charge card and credit card services segment

2018 2017RM’000 RM’000

Net carrying amount of goodwill 4,494 4,494 The recoverable amount of DCS is determined based on value in use calculation using cash flow projections based on

financial budgets approved by the directors covering a period of 5 years. The pre-tax discount rate and the forecasted growth rates applied to the cash flow projections for the five-year period are 10% (2017: 10%) per annum and ranging from 4.0% to 11.3% (2017: 1.4% to 5.3%) per annum, respectively.

Sensitivity to changes in assumptions

The directors believe that no reasonable possible changes in any of the key assumptions above will cause the carrying amount of the goodwill to materially exceed its recoverable amount.

17. INVESTMENT IN SUBSIDIARIES

The Company2018 2017

RM’000 RM’000

Shares, at cost 384,057 384,057Less: Accumulated impairment losses (237,571) (237,487)

146,486 146,570

Movements in accumulated impairment losses are as follows:

RM’000 RM’000

At beginning of year 237,487 237,487Add: Impairment loss during the year (Note 8) 84 -

At end of year 237,571 237,487

cont’d

17. INVESTMENT IN SUBSIDIARIES cont’d

The details of the subsidiaries are as follows:

Name of subsidiaries

Proportion of ownership interest and voting

power held Principal activities2018 2017

Incorporated in Malaysia

Johan Management Services Sdn Bhd 100 100 Provision of secretarial and management services and insurance agent

Johan Land Sdn Bhd 100 100 Property development and investment holding

Johan Properties Sdn Bhd(2) 100 100 Property holding and investment

Johan Equities Sdn Bhd 100 100 Investment trading

Johan Pasifik Sdn Bhd(2) 100 100 Investment holding

Diners Club (Malaysia) Sdn Bhd 100 100 Ceased its card activities as processor for Diners Club Cards issued by overseas franchisees and currently, it continues to collect outstanding principal and earns interest income from outstanding cardholders

Diners World Travel (Malaysia) Sdn Bhd 100 100 Ticketing and tour management solutions provider

Prestige Ceramics Sdn Bhd 100 100 Ceased operations in manufacturing and marketing of ceramic tiles during the year

William Jacks & Company (Malaysia) Sdn Bhd

100 100 Investment holding, provision of data processing services and trading of engineering and building material

Nature’s Farm (Health Foods) Sdn Bhd 100 100 Trading in health foods and supplements

Vitamin World Sdn Bhd(2) 100 100 Inactive

Wismer Automation Sdn Bhd(2) 96.68 96.68 Inactive

Lumut Marine Resort Bhd 70 70 Inactive

Mustika Resort Sdn Bhd 85 85 Inactive

Lumut Park Resort Sdn Bhd 80 80 Property development and operation of hotel and resort related business

Johan Capital Sdn Bhd 100 100 Investment holding and management services

JCC Equities Sdn Bhd 100 100 Provision of secretarial and management services

Jacks Edar Sdn Bhd(2) 100 100 Inactive

Johan Leasing Sdn Bhd(2) 100 100 Inactive

Johan Nominees (Tempatan) Sdn Bhd(2) 100 100 Inactive

Johan Air Services Sdn Bhd(2) 100 100 Inactive

Johan Industries (Malaysia) Sdn Bhd(2) 100 100 Inactive

Strategic Usage Sdn Bhd 100 100 Investment holding

Incorporated in Singapore

Johan Investment Private Limited(1) 100 100 Investment holding

Diners Club (Singapore) Private Limited(1)

100 100 Provision of charge card and credit card services under Diners Club franchise

Diners World Travel Pte Ltd(1) 100 100 Ticketing and tour management solutions provider

DinersPay Pte Ltd (formerly known as Lifestyle Collection (S) Pte Ltd)(1)

100 100 Merchandiser and payment processing service

DCS Assets Funding Pte Ltd - -(4) Provision of financing arrangement between Diners Club (Singapore) Private Limited and institutional lenders

DFS Assets Purchase Pte Ltd

-(5) -(5) Provision of financing arrangement between Diners Club (Singapore) Private Limited and institutional lenders

cont’d

Incorporated in Hong Kong

AIH Holdings Ltd(2) 100 100 Investment holding and management

Johan International Limited(2) 100 100 Investment holding

Worldwide Victory Limited(2) 100 100 Inactive

Incorporated in The Netherlands

Abacus Pacific N.V.(3) 100 100 Investment holding

(1) The financial statements of these subsidiaries are audited by member firm of Deloitte.

(2) The financial statements of these subsidiaries are audited by auditors other than the auditors of the Company.

(3) Not required to present audited financial statements under the laws of its country of incorporation.

(4) Diners Club (Singapore) Private Limited has elected to exit the Asset Securitisation Programme with DCSAF and migrated to a revised Asset Securitisation Programme on 5 September 2016 with DFSAP. Accordingly the Company does not retain residual or ownership risks related to DCSAF’s assets and it has ceased to be a subsidiary of the Group thereafter.

(5) Although the Group does not hold shares in this special purpose entity (“SPE”), it is considered as deemed subsidiary as the activities of the SPE are being conducted on behalf of the Group according to its specific business requirement and that the Group retains the majority of the residual or ownership risk related to this company on its assets. The Group’s consolidated financial statements include the results, assets and liabilities of this SPE.

Amount owing by/to subsidiaries

Amount owing by subsidiaries consist of the following:

RM’000 RM’000

Amount owing by subsidiaries 20,703 12,753Less: Allowance for doubtful debts (9,729) (9,783)

10,974 2,970

Amount owing by/to subsidiaries cont’d

Amount owing by/to subsidiaries, which arose mainly from payments on behalf, is unsecured and repayable on demand. Amount owing by subsidiaries bear interest rate at 2.95% (2017: 2.95%) per annum while amount owing to subsidiaries is interest-free.

Movement in the allowance for doubtful debts:

RM’000 RM’000

At beginning of year 9,783 9,533Allowance for the year (Note 8) 16 250Allowance no longer required for the year (Note 8) (70) -

At end of year 9,729 9,783

18. INVESTMENT SECURITIES

The Group

Carryingamount

Market valueof quoted

investmentsCarryingamount

Market value of quoted

investments 2018 2017

RM’000 RM’000 RM’000 RM’000

Non-Current:Available-for-sale financial assets:

Equity instruments (quoted outside Malaysia) 28 28 33 33Equity instruments (unquoted), at cost 10 * 10 *

Current:Fair value through profit or loss:

Equity instruments (quoted in Malaysia) 90,109 90,109 47,649 47,649

Total investment securities 90,147 47,692

* Unquoted shares are stated at cost after their initial recognition, as they do not have a quoted market price and the fair value cannot be reliably measured.

cont’d

18. INVESTMENT SECURITIES cont’d

Investment pledged as security

The Group’s investment in equity instruments amounting to RM40,913,000 (2017: RM14,153,000) are pledged as security for a short-term bank loan as disclosed in Note 24.

19. DEFERREDTAXASSETS/(LIABILITIES)

Deferred tax assets

The Group2018 2017

RM’000 RM’000

At beginning of year - 5,474(Charge)/Credit to profit or loss for the year:

Property, plant and equipment 8,908 8,340Inventories (434) 127Trade receivables (25) -Trade payables (8) 16Unutilised reinvestment allowances (6,298) (9,010)Unabsorbed capital allowances (2,143) 277Unused tax losses - (1,199)

- (1,449)Transfer from properties revaluation reserve - (4,025)

At end of year - -

19. DEFERREDTAXASSETS/(LIABILITIES) cont’d

Deferred tax assets cont’d

The deferred tax assets provided in the financial statements are in respect of the tax effects on the following:

The Group2018 2017

RM’000 RM’000

Deferred tax assets (before offsetting):Temporary differences arising from:

Inventories - 434Trade receivables - 25Trade payables - 8

Unabsorbed capital allowances - 2,143Unutilised reinvestment allowances - 6,298

- 8,908Offsetting - (8,908)

Deferred tax assets (after offsetting) - -

Deferred tax liabilities (before offsetting):Temporary differences arising from property, plant and equipment - (8,908)Offsetting - 8,908

Deferred tax liabilities (after offsetting) - -

cont’d

Deferred tax liabilities

The Group2018 2017

RM’000 RM’000

At beginning of year 18,899 11,431Charge/(Credit) to profit or loss for the year:

Property, plant and equipment 2,297 6,214Accrued interest income 75 585Other payables and accrued expenses (133) 273 Deferred revenue 92 179Trade receivables 6 (20)Inventories (1,178) -Unabsorbed capital allowances (1,480) (361)Unutilised investment tax allowances 871 (1,596)Unused tax losses (891) (2,941)

(341) 2,333Transfer from property revaluation reserve [Note 23(b)] 4,497 4,417Exchange differences - 718

At end of year 23,055 18,899

The deferred tax liabilities provided in the financial statements are in respect of the tax effects on the following:

The Group2018 2017

RM’000 RM’000

Deferred tax liabilities (before offsetting):Temporary differences arising from:

Property, plant and equipment 26,208 19,414Accrued interest income 6,071 5,996

32,279 25,410Offsetting (9,224) (6,511)

Deferred tax liabilities (after offsetting) 23,055 18,899

Deferred tax liabilities cont’d

The Group2018 2017

RM’000 RM’000

Deferred tax assets (before offsetting):Temporary differences arising from:

Other payables and accrued expenses 1,129 996Deferred revenue 505 597Trade receivables 14 20Inventories 1,178 -

Unabsorbed capital allowances 1,841 361Unutilised investment tax allowances 725 1,596Unused tax losses 3,832 2,941

9,224 6,511Offsetting (9,224) (6,511)

Deferred tax assets (after offsetting) - -

As mentioned in Note 3, the tax effects of deductible temporary differences, unused tax losses and unused tax credits which would give rise to deferred tax assets are recognised to the extent that it is probable that sufficient future taxable profits will be available against which the deductible temporary differences, unused tax losses and unused tax credits can be utilised. As of 31 January 2018, the estimated amount of deductible temporary differences, unused tax losses and unused tax credits for which the deferred tax assets have not been recognised in the financial statements due to uncertainty of their realisation are as follows:

RM’000 RM’000 RM’000 RM’000

Unused tax losses 177,220 166,903 18,529 18,600Unutilised investment tax allowances 14,482 10,103 - -Unabsorbed capital allowances 2,045 2,036 183 174

193,747 179,042 18,712 18,774

cont’d

20. TRADE RECEIVABLES

The Group2018 2017

RM’000 RM’000

Securitised trade receivables 371,205 419,325Non-securitised trade receivables 357,372 356,824

728,577 776,149Less: Allowance for doubtful debts

Collective impairment (191,801) (207,599) Individual impairment (12,981) (13,077)

(204,782) (220,676)

523,795 555,473

The Group’s credit period generally ranges from 30 to 90 days (2017: 30 to 90 days). Other credit terms are assessed and approved on a case-by-case basis.

Trade receivables disclosed above include amounts (see below for aged analysis) that are past due at the end of the reporting period but against which the Group has not recognised an allowance for doubtful debts because there has not been a significant change in credit quality and the amounts are still considered recoverable. The Group does not hold any collateral or other credit enhancements over these balances nor does it have a legal right of offset against any amounts owed by the Group to the counterparty.

Ageing of trade receivables not impaired

The Group2018 2017

RM’000 RM’000

Not past due 379,110 391,787Past due 30 days 29,447 39,923Past due 31 - 60 days 6,218 9,359Past due 61 - 90 days 3,690 5,432Past due more than 90 days 105,330 108,972

523,795 555,473

20. TRADE RECEIVABLES cont’d

Ageing of trade receivables not impaired cont’d

The Group’s trade receivables that are subject to collective/individual impairment review at the end of the reporting period are as follows:

The GroupCollective Individual Total

RM’000 RM’000 RM’000

As of 31 January 2018Trade receivables - gross amounts 713,900 14,677 728,577Less: Allowance for doubtful debts (191,801) (12,981) (204,782)

522,099 1,696 523,795

As of 31 January 2017Trade receivables - gross amounts 739,840 36,309 776,149Less: Allowance for doubtful debts (207,599) (13,077) (220,676)

532,241 23,232 555,473

Movement in allowance for doubtful debts

Movement in allowance accounts for individual and collective impairment are as follows:

The Group2018 2017

RM’000 RM’000

At beginning of year 220,676 233,451Allowance for the year (Note 8) 3,763 6,162Allowance no longer required (Note 8) (99) (448)Bad debts written off (11,082) (30,504)Exchange differences (8,476) 12,015

At end of year 204,782 220,676

In determining the recoverability of the trade receivables, the Group considers any change in the credit quality of the trade receivables from the date credit was initially granted up to the reporting date. The directors believe that there is no further credit provision required in excess of the allowance for doubtful debts.

cont’d

Movement in allowance for doubtful debts cont’d

The currency profile of trade receivables is as follows:

The Group2018 2017

RM’000 RM’000

Singapore Dollar 511,481 528,573Ringgit Malaysia 12,314 26,900

523,795 555,473

Securitised trade receivables in Singapore is disclosed as follows:

Singapore

Diners Club (Singapore) Private Limited (“DCS”) elected to exit the original Assets Securitisation Programme with Card Centre Asset Purchase Company Pte Ltd (“CCAPC”), a special purpose entity set up for this purpose in 2012 and migrated to a revised Asset Securitisation Programme (the “Asset Securitisation Programme”) on 5 September 2012 with DCS Asset Funding Pte Ltd (“DCSAF”), a special purpose entity set up for this purpose to raise funds up to SGD223 million over a 30 month period through the securitisation of DCS’s charge card and credit card receivables (“Eligible Receivables”). This arrangement has been extended for a further 30-month period with effect from March 2014.

In 2017, DCS elected to exit the Asset Securitisation Programme with DCSAF and migrated to a revised Asset Securitisation Programme (“SG Programme”) on 5 September 2016 with DFS Asset Purchase (“DFSAP”), a special purpose entity set up for this purpose to raise funds of up to SGD223 million over a 36-month period through the securitisation of Eligible Receivable. This arrangement has been extended for a 36-month period with effect from September 2016.

In DFSAP, a trust is declared over the Eligible Receivables sold by DCS. The ownership of the trust assets is held through six certificates of beneficial interest, namely Class A certificates, Class B certificates, Class C certificates, Class D certificates and Seller Certificates. Seller Certificates are the certificates representing DCS’s interest in the trust assets. The proceeds from the Notes will be used to repay DCS for the sold receivables on each receivable purchase date (i.e. each business day other than seventh of each month).

Movement in allowance for doubtful debts cont’d

During the period of the SG programme, the Eligible Receivable outstanding as at the tenth working day before the seventh of each month (“Calculation Date”) will be sold to DFSAP subject to the receivable purchase agreement. The collections from the securitised trade receivables, received by DCS in trust for DFSAP, between two settlement dates (sixth calendar day of two consecutive months) will be utilised as follows:

(i) 10% of the collection up to the Target Interest Collection will be used by DFSAP to meet the financing costs, administrative expenses and other costs incurred relating to the program. Any excess will be paid by DFSAP to DCS on the next settlement date; and

(ii) the balances of the collections will be advanced by DFSAP to DCS on a daily basis for the purchase of new receivables at the next calculation date.

The securitised trade receivables have not been derecognised as DCS is deemed to have retained substantially all of the risks and rewards.

The funding from investors in relation to securitised trade receivables are disclosed as Investor Certificates in Note 26.

21. OTHERRECEIVABLESANDPREPAIDEXPENSES

RM’000 RM’000 RM’000 RM’000

Other receivables 7,128 46,091 172 172Less: Allowance for doubtful debts - (29) - -

7,128 46,062 172 172Prepaid expenses 3,898 3,183 61 32Refundable deposits 2,015 2,257 - -Goods and Services Tax receivable 66 33 66 22

13,107 51,535 299 226 The Group and the Company have no significant concentration of credit risk for other receivables that may arise from

exposure to a single debtor or to groups of debtors.

cont’d

22. SHARE CAPITAL

No. of shares The Group and the Company

2018 2017 2018 2017(‘000) (‘000) RM’000 RM’000

Issued and fully paidOrdinary shares

At beginning of year 622,948 622,948 380,889 311,474Transfer of share premium to share capital - - - 69,415

At end of year 622,948 622,948 380,889 380,889 In accordance with the transitional provision of the Companies Act, 2016 which came into operation on 31 January

2017, the amount standing to the credit of the Company’s share premium account has become part of the Company’s share capital. These changes do not have an impact on the number of shares in issue or the relative entitlement of any of the shareholders.

However, the Company has a period of 24 months from the effective date of the Act to use the existing balances credited in the share premium account in manner as specified by the Act.

23. RESERVES

The Group2018 2017

RM’000 RM’000

Exchange reserve (a) 28,355 34,227Properties revaluation reserve (b) 71,818 57,483

100,173 91,710

(a) Exchange reserve

Exchange reserve represents exchange difference arising from the translation of the financial statements of foreign operations whose functional currencies are different from that of the Group’s presentation currency. It is also used to record the exchange differences arising from monetary items which form part of the Group’s investment in foreign operations.

On disposal of foreign operation, all accumulated exchange differences in respect of that operation attributable to the Group are reclassified to profit or loss.

23. RESERVES cont’d

(a) Exchange reserve cont’d

Movements during the year are as follows:

The Group2018 2017

RM’000 RM’000

At beginning of year 34,227 26,304Foreign currency translation difference for foreign operations (5,872) 7,923

At end of year 28,355 34,227

(b) Properties revaluation reserve

The Group2018 2017

RM’000 RM’000

At beginning of year 57,483 37,873

Increase arising on revaluation of land and buildings 18,832 28,052Deferred tax liabilities arising on revaluation surplus (4,497) (8,442)

14,335 19,610

At end of year 71,818 57,483

cont’d

24. LOANS AND BORROWINGS

Maturity RM’000 RM’000 RM’000 RM’000

Current Secured:

Bank overdrafts (Note 30) On demand 62,647 107,436 - -Revolving credits and short-term

loans 2018 15,102 7,234 - -Trust receipts and bankers’

acceptance 2018 17,703 23,539 - -Term loans 2018 14,849 20,074 - -Finance lease payables (Note 25) 2018 1,496 2,214 145 162

Total Current 111,797 160,497 145 162

Non-current Secured:

Finance lease payables (Note 25) 2018 - 2021 326 1,879 232 382

Total 112,123 162,376 377 544

The remaining maturities of borrowings as of 31 January 2018 are as follows:

RM’000 RM’000 RM’000 RM’000

On demand or within one year 111,797 160,497 145 162More than 1 year and less than 2 years 231 1,165 137 137More than 2 years and less than 5 years 95 714 95 245

112,123 162,376 377 544

24. LOANS AND BORROWINGS cont’d

The weighted average interest rates per annum for borrowings as of 31 January 2018 are as follows:

(%) (%) (%) (%)

Bank overdrafts 6.38 6.37 - -Revolving credits and short-term loans 8.00 7.56 - -Trust receipts and bankers’ acceptance 5.28 5.42 - -Term loans 8.00 9.05 - -Obligation under finance lease 3.20 3.20 3.47 2.74

The secured term loans of the Group are secured by charges over certain freehold land and buildings, long-term leasehold land and buildings, plant and machinery, long-term leasehold hotel properties, land held for property development, investment securities, and the leasehold lands held as non-current inventories and fixed deposits as disclosed in Notes 14(c), 15(a), 18 and 30, respectively.

25. FINANCE LEASE PAYABLES

The Group and the Company have entered into finance lease arrangements for certain items of its furniture, equipment and motor vehicles [Note 14 (b)]. These leases do not have terms of renewal, but have purchase options at nominal values at the end of the lease term. The Group’s and the Company’s finance lease payables are secured by the financial institutions’ charge over the assets under finance lease.

Future minimum lease payments under finance leases together with the present value of the net minimum lease payments are as follows:

RM’000 RM’000 RM’000 RM’000

Minimum lease payments:Not later than 1 year 1,508 2,419 145 185Later than 1 year but not later than 5 years 384 2,047 287 439

Total minimum lease payments 1,892 4,466 432 624Less: Future finance charges (70) (373) (55) (80)

Present value of minimum lease payables 1,822 4,093 377 544

cont’d

25. FINANCE LEASE PAYABLES cont’d

RM’000 RM’000 RM’000 RM’000

Present value of payments:Not later than 1 year 1,496 2,214 145 162Later than 1 year but not later than 5 years 326 1,879 232 382

Present value of minimum lease payables 1,822 4,093 377 544Less: Amount due within the next 12 months

(current portion) (1,496) (2,214) (145) (162)

Non-current portion 326 1,879 232 382

26. INVESTOR CERTIFICATES

The investor certificates relate to the funding for securitised trade receivables of DCS as disclosed in Note 20. Interest rates payable on the investor certificates range from 3.22% to 3.77% (2017: 4.39% to 15.23%) per annum, respectively.

27. TRADE PAYABLES

The normal credit period granted to the Group for trade purchases ranges from 30 to 120 days (2017: 30 to 120 days).

The currency profile of trade payables is as follows:

The Group2018 2017

RM’000 RM’000

231,578 184,696

28. OTHERPAYABLESANDACCRUEDEXPENSES

RM’000 RM’000 RM’000 RM’000

Other payables 9,976 11,350 - -Accrued expenses 9,439 11,327 426 180

19,415 22,677 426 180

The currency profile of other payables is as follows:

The Group2018 2017

RM’000 RM’000

9,976 11,350

29. DEFERRED REVENUE

The Group2018 2017

RM’000 RM’000

Arising from:Customer reward points (i) 2,974 3,514Interest income (ii) - 53

2,974 3,567

cont’d

29. DEFERRED REVENUE cont’d

Movement in customer reward points are as follows:

The Group2018 2017

RM’000 RM’000

At beginning of year 3,514 4,680Charge/(Credit) for the year (Note 8) 142 (829)Utilisation for the year (533) (488)Exchange differences (149) 151

At end of year 2,974 3,514

(i) Deferred revenue arising from customer reward points pertains to the amounts awarded to card members based on the spending on their credit and charge cards that could be redeemed for services and merchandise at a later date. There is no expiry date attached to these reward points. The reward points are recognised in accordance with IC Int. 13 Customer Loyalty Programmes.

(ii) Deferred revenue arising from interest income are in respect of the unearned interest income from cash advances granted to credit card customers.

30. CASH AND CASH EQUIVALENTS

Cash and cash equivalents included in the statements of cash flows represent the following:

RM’000 RM’000 RM’000 RM’000

Cash and bank balances 70,578 37,135 211 309Deposits with licensed financial institutions 5,998 6,530 1,500 1,200

76,576 43,665 1,711 1,509Less: Bank overdrafts (Note 24) (62,647) (107,436) - -Less: Pledged deposits with licensed financial

institutions (5,527) (3,384) - -

8,402 (67,155) 1,711 1,509

Fixed deposits of the Group amounting to RM5,527,000 (2017: RM3,384,000) are pledged with financial institutions as security for banking facilities extended to the subsidiaries as disclosed in Note 24.

30. CASH AND CASH EQUIVALENTS cont’d

Included in deposits with licensed banks and cash and bank balances of the Group are amounts held in the designated trust accounts of the special purpose entities totalling RM41,360,000 (2017: RM24,736,000) pursuant to the terms of the respective trade receivables securitization programmes. These amounts can only be used for the purposes as disclosed in Note 20.

The effective interest rates and maturities of deposits as at the end of the financial year were as follows:

The Group and the Company 2018 2017

Effective interest rates

Maturitiesdays

Effective interest rates

Maturities days

(%) (%)

Licensed banks 0.07 - 2.75 1 - 365 0.05 - 3.15 1 - 365Licensed financial institutions 3.35 365 2.70 365

The currency profile of cash and bank balances is as follows:

RM’000 RM’000 RM’000 RM’000

Singapore Dollar 64,764 36,431 10 10Ringgit Malaysia 6,607 6,523 1,701 1,498US Dollar 4,836 473 - -Brunei 354 204 - -Others 15 34 - 1

76,576 43,665 1,711 1,509

cont’d

31. RELATED PARTY TRANSACTIONS

During the financial year, significant related party transactions undertaken between the Group and the Company with related parties, which are determined on a basis as negotiated between the related parties, are as follows:

2018 2017

RM’000 RM’000

The GroupTransactions with corporations in which certain directors of the Company are deemed

related through their directorship and/or financial interest in George Kent (Malaysia) Berhad:Sales of air tickets 780 760Recovery of secretarial and share registration fees 125 119Income from rental of motor vehicles and land 372 231Expense from rental of motor vehicles 8 13

The CompanyTransactions with subsidiaries:

Interest charged on amount owing by subsidiaries (Note 8) 258 271Secretarial fee payable 72 72Management fees receivable (Note 5) 60 60

Compensation of Key Management Personnel

The key management personnel of the Group and of the Company include directors of the Company and subsidiaries and certain members of senior management of the Group and the Company. Their compensation are as follows:

RM’000 RM’000 RM’000 RM’000

Salaries and other short-term employee benefits 9,101 9,345 1,547 1,447Contributions to defined contribution plans 480 982 - -

9,581 10,327 1,547 1,447

32. FINANCIAL INSTRUMENTS AND CAPITAL RISK MANAGEMENT

(a) Capital risk management

The primary objective of the Group’s capital management is to ensure that it maintains a strong credit rating and healthy capital ratios in order to support its business and maximise shareholder value.

The Group manages its capital structure and makes adjustments to it, in light of changes in economic conditions. To maintain or adjust the capital structure, the Group may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares. No changes were made in the objectives, policies or processes during the years ended 31 January 2018 and 31 January 2017.

The Group monitors capital using a gearing ratio, which is net debt divided by total capital plus net debt. The Group includes within net debts, loans and borrowings, trade and other payables, funding from non-recourse investors certificates and senior certificates, less cash and bank balances. Capital includes equity attributable to the owners of the Company.

The Group2018 2017

RM’000 RM’000

Loans and borrowings (Note 24) 112,123 162,376Trade and other payables and accrued expenses (Notes 27 and 28) 250,993 207,373Funding from non-recourse investor certificates (Note 26) 447,608 467,869Less: Cash and bank balances (Note 30) (76,576) (43,665)

Net debt 734,148 793,953

Equity attributable to the owners of the Company 183,521 197,446

Capital and net debt 917,669 991,399

Gearing ratio 80% 80%

(b) Significant accounting policies

Details of significant accounting policies and methods adopted (including the criteria for recognition, the bases of measurement, and the bases for recognition of income and expenses) for each class of financial assets, financial liabilities and equity instruments are disclosed in Note 3.

cont’d

32. FINANCIAL INSTRUMENTS AND CAPITAL RISK MANAGEMENT cont’d

(c) Categories of financial instruments

RM’000 RM’000 RM’000 RM’000

Financial assetsLoans and receivables:

Trade receivables 523,795 555,473 - -Other receivables and refundable deposits

(Note 21) 9,143 48,319 172 172Amount owing by subsidiaries - - 10,974 2,970

Cash and bank balances 76,576 43,665 1,711 1,509Fair value through profit or loss:

Investment securities 90,109 47,649 - -Available-for-sale:

Investment securities (Note 18) 38 43 - -

Financial liabilitiesOther financial liabilities:

Trade payables 231,578 184,696 - -Other payables and accrued expenses (Note 28) 19,415 22,677 426 180Amount owing to subsidiaries - - 52,141 38,430Investor certificates 447,608 467,869 - -Loans and borrowings (Note 24) 112,123 162,376 377 544

(d) Financial risk management

The operations of the Group are subject to various financial risks which include credit risk, foreign currency risk, interest rate risk, liquidity risk and market price risk in connection with its use or holding of financial instruments. The Group has adopted a financial risk management framework with the principal objective of effectively managing risks and minimising any potential adverse effects on the financial performance of the Group.

The Board of Directors reviews and agrees policies and procedures for the management of these risks, which are executed by the general managers of the respective operating units. The Audit Committee provides independent oversight to the effectiveness of the risk management process.

It is, and has been throughout the current and previous financial years, the Group’s policy that no derivatives shall be undertaken except for the use as hedging instruments where appropriate and cost-efficient.

The following sections provide details regarding the Group’s and the Company’s exposure to the above-mentioned financial risks and the objectives, policies and processes for the management of these risks.

(e) Credit risk management

Credit risk is the risk of loss that may arise on outstanding financial instruments should a counterparty default on its obligations. The Group’s and the Company’s exposure to credit risk arises primarily from trade and other receivables. The Group’s objective is to seek continual revenue growth while minimising losses incurred due to increased credit risk exposure.

The Group controls its credit risk by the application of credit approval limits and monitoring procedures. Credit evaluations are performed on customers requiring credit over a certain amount. Trade receivables are monitored on an on-going basis.

At the end of the reporting period, the maximum credit exposure of the Group and the Company is represented by the carrying amounts of the trade and other receivables as shown on the statements of financial position.

The Group determines concentration of credit risk by monitoring the country and industry section profile of its trade receivables on an ongoing basis. The credit risk concentration profile of the Group’s trade receivables at the reporting date are as follows:

The Group 2018 2017

RM’000 % RM’000 %

By country:Singapore 511,480 98 528,573 95Malaysia and others 12,315 2 26,900 5

523,795 100 555,473 100

By segment:Credit and charge cards business and hospitality 523,787 99 549,470 99General trading 8 1 7 -Building materials - - 5,688 1Investment holding and secretarial services - - 308 -

523,795 100 555,473 100

(f) Foreign currency risk management

Foreign currency risk is that risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates.

The Group has transactional currency exposures arising from sales and purchases that are denominated in a currency other than a respective functional currencies of Group entities, primarily Ringgit Malaysia (“RM”) and Singapore Dollar (“SGD”).

cont’d

(f) Foreign currency risk management cont’d

As a result of significant operating activities in Singapore and Hong Kong, the Group’s statement of financial position can be affected significantly by movements in the SGD and United States Dollar (“USD”) against RM exchange rate.

The Group is also exposed to currency translation risk arising from its net investments in foreign operations, including Singapore and Hong Kong.

Foreign exchange exposures in transactional currencies other than functional currencies of the operating entities are kept to an acceptable level.

Sensitivity analysis for foreign currency risk

The following table demonstrates the sensitivity of the Group’s loss after tax to a reasonably possible change in the SGD and USD exchange rates against the respective functional currencies of the Group entities, with all other variables held constant.

The Group2018 2017

RM’000 RM’000Loss after tax Loss after tax

SGD/RM - strengthened 5% +584 +295- weakened 5% -584 -295

USD/RM - strengthened 5% +10 +53- weakened 5% -10 -53

The above sensitivity analysis is unrepresentative of the inherent foreign currency risk because the year-end exposure does not reflect the exposure during the year.

(g) Interest rate risk management

Interest rate risk is the risk that the fair value or future cash flows of the Group’s and the Company’s financial instruments will fluctuate because of changes in the market interest rates. The Group’s and the Company’s exposure to interest rate risk arise primarily from their loans and borrowings bearing interest at floating rates.

(g) Interest rate risk management cont’d

Sensitivity analysis for interest rate risk

The sensitivity analysis below has been determined based on the exposure to interest rate for deposits with licensed financial institutions and loans and borrowings bearing interest at floating rates at the end of the reporting period. At the reporting date, if interest rates had been 100 basis points lower/higher, with all other variables held constant, the Group’s loss after tax would have been RM63,000 lower/higher (2017: RM1,582,000), arising mainly as a result of lower/higher interest expense on floating rate loans and borrowings and higher/lower interest income from floating rate deposits. The assumed movement in basis points for interest rate sensitivity analysis is based on management’s assessment on the currently observable market environment.

The above sensitivity analysis is unrepresentative of the inherent interest rate risk because the year-end exposure does not reflect the exposure during the year.

(h) Liquidity risk management

Liquidity risk is the risk that the Group and the Company will encounter difficulty in meeting financial obligations due to shortage of funds. The Group’s and the Company’s exposure to liquidity risk arises primarily from mismatches of the maturities of financial assets and liabilities. The Group’s and the Company’s objective is to maintain a balance between continuity of funding and flexibility through the use of stand-by credit facilities.

At the reporting date, approximately 99% (2017: 99%) and 38% (2017: 30%) of the Group’s and the Company’s loans and borrowings (Note 24) respectively will mature in less than one year based on the carrying amounts reflected in the financial statements.

cont’d

(h) Liquidity risk management cont’d

Liquidity tables

The following tables detail the Group’s and the Company’s remaining contractual maturity for its non-derivative financial liabilities with agreed repayments periods. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Group and the Company can be required to pay. The tables include both interest and principal cash flows. To the extent the interest flows are floating rates, the undiscounted amount is derived from the interest rate at the end of the reporting period. The contractual maturity is based on the earliest date on which the Group and the Company may be required to pay.

The Group Maturity profile

Less than1 year

1 - 5 years

5+ years Total

RM’000 RM’000 RM’000 RM’000

31 January 2018Non-interest bearing:Trade payables 231,578 - - 231,578Other payables and accrued expenses (Note 28) 19,415 - - 19,415

Interest bearing:Investor certificates 168,587 389,398 - 557,985Loans and borrowings 119,169 370 - 119,539

538,749 389,768 - 928,517

31 January 2017Non-interest bearing:Trade payables 184,696 - - 184,696Other payables and accrued expenses (Note 28) 22,677 - - 22,677

Interest bearing:Investor certificates 176,800 406,323 - 583,123Loans and borrowings 170,862 2,001 - 172,863

555,035 408,324 - 963,359

Liquidity tables cont’d

The Company Maturity profile

Less than1 year

1 - 5 years

5+ years Total

RM’000 RM’000 RM’000 RM’000

31 January 2018Non-interest bearing:Other payables and accrued expenses 426 - - 426Amount owing to subsidiaries 52,141 - - 52,141

Interest bearing:Loans and borrowings 165 432 - 597

52,732 432 - 53,164

31 January 2017Non-interest bearing:Other payables and accrued expenses 180 - - 180Amount owing to subsidiaries 38,430 - - 38,430

Interest bearing:Loans and borrowings 185 439 - 624

38,795 439 - 39,234

cont’d

The following table details the Group’s and the Company’s expected maturity for its non-derivative financial assets. The table has been drawn up based on the undiscounted contractual maturities of the financial assets including interest that will be earned on those assets. The inclusion of information on non-derivative financial assets is necessary in order to understand the Group’s liquidity risk management as the liquidity is managed on a net asset and liability basis.

The Group Maturity profile

Less than1 year

1 - 5 years

5+ years Total

RM’000 RM’000 RM’000 RM’000

31 January 2018Non-interest bearing:Investment securities 90,109 38 - 90,147Trade receivables 523,795 - - 523,795Other receivables and refundable deposits 9,143 - - 9,143Cash and bank balances 70,578 - - 70,578

Interest bearing:Cash and bank balances 5,998 - - 5,998

699,623 38 - 699,661

31 January 2017Non-interest bearing:Investment securities 47,649 43 - 47,692Trade receivables 555,473 - - 555,473Other receivables and refundable deposits 48,319 - - 48,319Cash and bank balances 37,135 - - 37,135

Interest bearing:Cash and bank balances 6,530 - - 6,530

695,106 43 - 695,149

The Company Maturity profile

Less than1 year

1 - 5 years

5+ years Total

RM’000 RM’000 RM’000 RM’000

31 January 2018Non-interest bearing:Other receivables and refundable deposits 172 - - 172Cash and bank balances 211 - - 211

Interest bearing:Cash and bank balances 1,500 - - 1,500Amount owing by subsidiaries 10,974 - - 10,974

12,857 - - 12,857

31 January 2017Non-interest bearing:Other receivables and refundable deposits 172 - - 172Cash and bank balances 309 - - 309

Interest bearing:Cash and bank balances 1,200 - - 1,200Amount owing by subsidiaries 2,970 - - 2,970

4,651 - - 4,651

(i) Fair values

The fair values of financial instruments refer to the amounts at which the instruments could be exchanged or settled between knowledgeable and willing parties in an arm’s length transaction. Fair values have been arrived at based on prices quoted in an active, liquid market or estimated using certain valuation techniques such as discounted future cash flows based upon certain assumptions. Amounts derived from such methods and valuation techniques are inherently subjective and therefore do not necessarily reflect the amounts that would be received or paid in the event of imcmediate settlement of the instruments concerned.

cont’d

(i) Fair values cont’d

On the basis of the amounts estimated from the methods and techniques as mentioned in the preceding paragraph, the carrying amounts of the various financial assets and financial liabilities reflected on the statement of financial position approximate their fair values.

The following methods and assumptions were used to estimate the fair values of the principal financial assets and liabilities of the Group and of the Company:

• Cash and cash equivalents, trade and other receivables, refundable deposits, amount owing by/to subsidiaries, trade and other payables and accrued expenses: The carrying amounts are considered to approximate the fair values as they are either within the normal credit terms or they have a short-term maturity period.

• Investment securities: Investment securities are carried at market value.

• Loans and borrowings: As the loans and borrowings were obtained from licensed financial institutions at the prevailing market rate, the carrying value of these financial liabilities approximates its fair value.

• Investor certificates: The fair values of investor certificates are determined by estimating future cash flows on a borrowing-by-borrowing basis, and discounting these future cash flows using an interest rate which takes into consideration the Group’s incremental borrowing rate at year end for similar types of debt arrangements.

Fair value measurements recognised in the statements of financial position

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.

Financial assets

Fair value as of 31 January Fair value

hierarchy

Valuation technique

and key input2018 2017

1) Available-for-sale non-derivative financialassets-Investmentsecurities

Quoted outside

Malaysia -RM38,000

Quoted outside

Malaysia -RM43,000

Level 1 Quoted bid prices

in an active market

2) Held-for trading non-derivative financial assets-Investmentsecurities

Quoted in Malaysia

-RM90,109,000

Quoted in Malaysia

-RM47,649,000

Level 1 Quoted bid prices

in an active market

There were no transfers between Levels 1 and 2 during the financial year.

(j) Market price risk management

Market price risk is the risk that fair value or future cash flows of the Group’s financial instruments will fluctuate because of changes in market prices (other than interest or exchange rates).

The Group is exposed to equity price risk arising from its investments is quoted equity instruments in Malaysia and Singapore stock exchanges. These instruments are mainly classified as fair value through profit or loss. The Group does not have exposure to commodity price risk.

Sensitivity analysis for equity price risk

At the reporting date, if the share price had been 5% (2017: 5%) higher/lower with all other variables held constant, the Group’s loss net of tax would have been RM4,505,000 lower/higher (2017: RM2,385,000), arising as result of higher/lower fair value gains on its investments in quoted equity instruments.

The above sensitivity analysis is unrepresentative of the inherent equity price risk because the year-end exposure does not reflect the exposure during the year.

33. SEGMENT INFORMATION

For the Group’s chief operating decision maker (“CODM”) purposes, the Group is organised into business units based on their products and services, and has five reportable operating segments as follows:

(i) Building materials

(ii) General trading

(iii) Property

(iv) Hospitality and card services

(v) Investment holding and secretarial services

Building material segment (manufacturing and marketing of ceramic tiles by Prestige Ceramics Sdn Bhd) was discontinued during the current year. The segment results in the next page does not include any amount for this discontinued operations, which are described in Note 12.

Except as indicated above, no operating segments have been aggregated to form the above reportable segments.

CODM 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.

cont’d

ont’d

italit

RM’0

’000

RM’0

’000

RM’0

’000

RM’0

’000

RM’0

’000

RM’0

’000

fit/(l

italit

’000

RM’0

’000

RM’0

’000

RM’0

’000

RM’0

’000

RM’0

’000

RM’0

’000

RM’0

33. SEGMENT INFORMATION cont’d

Note: Nature of adjustments and eliminations to arrive at amounts reported in the consolidated financial statements.

A Inter-segment revenues and expenses eliminations.

B Other material non-cash income and expenses consist of the following items as presented in the respective notes to the financial statements.

2018 2017RM’000 RM’000

Net fair value gain on investment securities (42,460) (27,646)Net unrealised foreign exchange gain/(loss) (1,621) 1,021(Gain)/Loss on disposal of property, plant and equipment (26) 135Allowance for doubtful debt no longer required:

Trade receivables - (448)Write back of inventories written down - (23)Allowance for doubtful receivables:

Trade and other receivables 3,763 6,162Increase/(Decrease) in provision for customer reward points 142 (829)Property, plant and equipment written off 19 30Loss on disposal of investment securities - 3

(40,183) (21,595)

C Additions to non-current assets consist of:

2018 2017RM’000 RM’000

Property, plant and equipment (Note 14) 1,118 1,637Intangible assets (Note 16) 1,375 299

2,493 1,936

D The following items are consolidation eliminations deducted from segment assets to arrive at total assets reported in the consolidated statement of financial position:

2018 2017RM’000 RM’000

Inter-segment assets 23,584 22,448

cont’d

33. SEGMENT INFORMATION cont’d

E The following are consolidation eliminations deducted from segment liabilities to arrive at total liabilities reported in the consolidated statement of financial position:

2018 2017RM’000 RM’000

Inter-segment liabilities 1,989 122

Geographical information

Revenue and non-current assets information based on the geographical location of customers and assets respectively are as follows:

Revenue Non-current assets2018 2017 2018 2017

RM’000 RM’000 RM’000 RM’000

Singapore 111,123 116,913 96,130 100,657Malaysia and others 11,362 11,859 228,959 248,475

122,485 128,772 325,089 349,132

Non-current assets information presented above consists of the following items as presented in the consolidated statement of financial position:

The Group 2018 2017

RM’000 RM’000

Property, plant and equipment 307,024 328,331Land held for property development 6,144 6,272Intangible assets 11,883 14,486Investment securities 38 43

325,089 349,132

34. COMMITMENTS

(i) Capital commitments

Capital expenditure as at the reporting date is as follows:

The Group 2018 2017

RM’000 RM’000

Capital expenditureApproved and contracted for:

Property, plant and equipment 1,219 1,219

(ii) Operating lease commitments

The Group has entered into commercial property leases for the use of land and buildings and office equipment. These leases have an average tenure of between one to five years with no renewal option or contingent rent provision included in the contracts. Lease terms do not contain restrictions on the Group’s activities concerning dividends, additional debt or further leasing.

As at the end of the reporting period, the Group has non-cancellable operating lease commitments in respect of the rental of premises as follows:

The Group Future minimum lease payments

2018 2017RM’000 RM’000

Within one year 1,126 1,177In the second to fifth years 156 1,248

1,282 2,425

cont’d

35. CONTINGENT ASSETS

Total contingent assets as of 31 January 2018 amounted to approximately RM 13.736 million. These consist of judgement sum, special damages, costs and accrued interest awarded by the High Court in favour of Johan Properties Sdn Bhd (“JPSB”) in respect of a suit filed by JPSB on 25 July 1996 against five (5) Defendants for wrongful repudiation or beach of a contract in relation to the purchase by JPSB of a piece of land held under Lot 289, Section 57, Bandar Kuala Lumpur (“Lot 289”). The litigation was concluded on 3 May 2016 when the Federal Court refused the Defendants’ application for leave to appeal, citing no merits in the application.

On 23 January 2017, the Registrar of the High Court allowed JPSB’s application for leave to issue a Writ of Seizure and Sale for recovery of the judgement sum from the Defendants and extended the Prohibitory Order on Lot 289. JPSB had on 4 April 2017 filed a Notice of Sale together with a valuation report dated 20 February 2017 valuing Lot 289 at RM53,725,000.

The High Court fixed 2 October 2017 for sale of Lot 289 by public auction at a reserved price of RM53,725,000 and subsequently fixed 6 April 2018 as the new action date for sale of Lot 289 by public auction at a lower reserve price of RM48,352,500. Both auctions were adjourned as there were no bidders. As of the date of this financial statements, JPSB is in the process of applying to the High Court to fix a new auction date.

As of 31 January 2018, the deposit sum paid by JPSB in respect of the land acquisition of RM1,700,000 is reflected in the financial statements as current asset.

36. RECONCILIATION OF LIABILITIES ARISING FROM FINANCING ACTIVITIES

The table below details changes in the Group’s and the Company’s liabilities arising from financing activities, including both cash and non-cash changes. Liabilities arising from financing activities are those for which cash flows were, or future cash flows will be, classified in the Group’s and the Company’s statement of cash flows as cash flows from/(used in) financing activities.

At1 February

2017Cash

Non-CashChanges -Exchange

Differences

At31 January

2018RM’000 RM’000 RM’000 RM’000

The GroupInvestor certificates 467,869 1,835 (22,096) 447,608Loans and borrowings, excluding bank overdrafts

(Note 24) 54,940 (3,780) (1,684) 49,476

The CompanyLoans and borrowings, excluding bank overdrafts

(Note 24) 544 (167) - 377Amount owing to subsidiaries 38,430 13,711 - 52,141

The directors of JOHAN HOLDINGS BERHAD state that, in their opinion, the accompanying financial statements are drawn up in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the provisions 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 of 31 January 2018 and of the financial performance and the cash flows of the Group and of the Company for the year ended on that date.

Signed in accordance witha resolution of the Directors,

PUAN SRI DATIN TAN SWEE BEE DATO’ AHMAD KHAIRUMMUZAMMIL BIN MOHD YUSOFF

Kuala Lumpur3 May 2018

I, CHONG CHEOK WENG, the officer primarily responsible for the financial management of JOHAN HOLDINGS BERHAD, do solemnly and sincerely declare that the accompanying financial statements are, in my opinion, correct and I make this solemn declaration conscientiously believing the same to be true, and by virtue of the provisions of the Statutory Declarations Act, 1960.

CHONG CHEOK WENG(MIA Membership No. 21132)

Subscribed and solemnly declared by the above named CHONG CHEOK WENG at KUALA LUMPUR on this 3rd day of May, 2018.

Before me,

YM TENGKU FARIDDUDIN BIN TENGKU SULAIMANNo. W533COMMISSIONER FOR OATHS205, BANGUNAN LOKE YEW4, JALAN MAHKAMAH PERSEKUTUAN50050 KUALA LUMPUR

STATEMENT BY DIRECTORS

DECLARATION BY THE OFFICER PRIMARILY RESPONSIBLE FOR THE FINANCIAL MANAGEMENT OF THE COMPANY

ANALYSIS OF SHAREHOLDINGSAS AT 30 APRIL 2018

SHARE CAPITAL INFORMATION Total Number of Issued Shares : 622,948,527 Class of Securities : Ordinary Shares Voting Rights : One (1) vote per Ordinary Share

DISTRIBUTION OF SHAREHOLDINGS

No. of Holders % Size of Holdings Total Holdings %

99 1.33 Less than 100 shares 2,905 0.002,145 28.86 100 to 1,000 shares 1,963,796 0.323,595 48.37 1,001 to 10,000 shares 16,114,667 2.591,313 17.66 10,001 to 100,000 shares 47,398,803 7.61

277 3.73 100,001 to less than 5% of issued shares 320,594,299 51.464 0.05 5% and above of issued shares 236,874,057 38.02

7,433 100.00 Total 622,948,527 100.00 LIST OF THIRTY LARGEST REGISTERED SHAREHOLDERS (as shown in the Record of Depositors)

No. Name of ShareholdersNo. of

Shares Held %

1 MUSTIKA MANIS SDN BHD 120,539,567 19.352 STAR WEALTH INVESTMENT LIMITED 47,306,117 7.593 DB (MALAYSIA) NOMINEE (ASING) SDN BHD

FOR KIN FAI INTERNATIONAL LIMITED37,423,000 6.01

4 RHB NOMINEES (TEMPATAN) SDN BHDOSK CAPITAL SDN BHD FOR MUSTIKA MANIS SDN BHD

31,605,373 5.07

5 UOBM NOMINEES (ASING) SDN BHDFOR SUNCROWN HOLDINGS LIMITED

30,675,000 4.92

6 HSBC NOMINEES (ASING) SDN BHDEXEMPT AN FOR CREDIT SUISSE (SWITZERLAND) LTD

30,500,000 4.90

7 LOTUS GLOBAL INVESTMENTS LTD 30,500,000 4.908 DB (MALAYSIA) NOMINEE (ASING) SDN BHD

DEUTSCHE BANK AG SINGAPORE FOR LAVANOS EMERGING MARKETS LIMITED30,000,500 4.82

9 CIMB GROUP NOMINEES (ASING) SDN. BHD.FOR KWOK HENG HOLDINGS LIMITED (SG1600482833)

25,194,000 4.04

10 UOBM NOMINEES (ASING) SDN BHDUNITED OVERSEAS BANK NOMINEES (PTE) LTD FOR STAR WEALTH INVESTMENT LIMITED

23,970,900 3.85

ANALYSIS OF SHAREHOLDINGSAS AT 30 APRIL 2018cont’d

LIST OF THIRTY LARGEST REGISTERED SHAREHOLDERS cont’d (as shown in the Record of Depositors)

No. Name of ShareholdersNo. of

Shares Held %

11 DB (MALAYSIA) NOMINEE (ASING) SDN BHDEXEMPT AN FOR NOMURA PB NOMINEES LTD

10,000,000 1.61

12 RHB NOMINEES (TEMPATAN) SDN BHDOSK EQUITY HOLDINGS SDN. BHD.

8,570,000 1.38

13 KENANGA NOMINEES (ASING) SDN. BHD. RHB SECURITIES PTE LTD FOR KEEN CAPITAL INVESTMENTS LTD

6,750,400 1.08

14 CARTABAN NOMINEES (ASING) SDN BHDEXEMPT AN FOR LGT BANK AG (FOREIGN)

5,700,000 0.91

15 RCI VENTURES SDN BHD 5,550,000 0.8916 AFFIN HWANG NOMINEES (TEMPATAN) SDN. BHD.

PLEDGED SECURITIES ACCOUNT FOR LIM CHAI BENG (M02)4,566,800 0.73

17 PUBLIC INVEST NOMINEES (TEMPATAN) SDN BHDEXEMPT AN FOR PHILLIP SECURITIES PTE LTD (CLIENTS)

3,310,000 0.53

18 LIM SOON GUAN 3,251,500 0.5219 MAYBANK NOMINEES (TEMPATAN) SDN BHD

PLEDGED SECURITIES ACCOUNT FOR LEONG KWOK TONG3,125,000 0.50

20 BEKALSAMA SILKSCREENING & SERVICES SDN BHD 3,083,700 0.4921 MEGA FIRST HOUSING DEVELOPMENT SDN BHD 2,834,200 0.4522 SOH SWEE SEE 2,280,000 0.3723 LAU YONG YING 2,220,000 0.3624 PUBLIC NOMINEES (TEMPATAN) SDN BHD

PLEDGED SECURITIES ACCOUNT FOR TAN CHIA HONG @ GAN CHIA HONG2,103,700 0.34

25 ONG JU XING 2,000,000 0.3226 ACO-BINA SDN BHD 1,800,000 0.2927 CHOON SIEW WAH 1,599,000 0.2628 NORELLA BINTI TALIB 1,593,000 0.2629 SIM TECK SENG 1,414,700 0.2330 GAN CHIA SHONG 1,373,100 0.22

480,839,557 77.19

ANALYSIS OF SHAREHOLDINGSAS AT 30 APRIL 2018

cont’d

SUBSTANTIALSHAREHOLDERS(EXCLUDINGBARETRUSTEES)ASAT30APRIL2018(as per Register of Substantial Shareholders)

No. of Ordinary Shares Name of Substantial Shareholder

Direct Interest % Deemed Interest %

Tan Sri Dato’ Tan Kay Hock - - 316,713,957* 50.84Puan Sri Datin Tan Swee Bee - - 316,713,957* 50.84Star Wealth Investment Limited 71,277,017 11.44 - -Kin Fai International Limited 37,423,000 6.01 - -Mustika Manis Sdn Bhd 152,144,940 24.42 - -Sky Wealth Ventures Limited - - 316,713,957* 50.84

Notes:-

* Deemed interested by virtue of their equity interest in Kin Fai International Limited, Kwok Heng Holdings Limited, Suncrown Holdings Limited, Star Wealth Investment Limited and Mustika Manis Sdn Bhd.

STATEMENT ON DIRECTORS’ INTERESTSIN THE COMPANY AND RELATED CORPORATION AS AT 30 APRIL 2018

DIRECTORS’ INTEREST IN SHARES (as shown in the Register of Directors’ Holdings)

In Johan Holdings Berhad No. of Ordinary Shares Name of Director Direct Interest % Deemed Interest %

Tan Sri Dato’ Tan Kay Hock - - 316,713,957* 50.84Puan Sri Datin Tan Swee Bee - - 316,713,957* 50.84Tan Sri Dato’ Seri Dr Ting Chew Peh - - - -Dato’ Ahmad Khairummuzammil bin Mohd Yusoff - - - -Ooi Teng Chew 200,000 0.03 - -

Notes:-

* Deemed interested by virtue of their equity interest in Kin Fai International Limited, Kwok Heng Holdings Limited, Suncrown Holdings Limited, Star Wealth Investment Limited and Mustika Manis Sdn Bhd.

In the Holdings CompanySky Wealth Venture Limited No. of Ordinary Shares Name of Director Direct Interest % Deemed Interest %

Tan Sri Dato’ Tan Kay Hock andPuan Sri Datin Tan Swee Bee (Joint holder) 2 100 - -

LIST OF PROPERTIES HELDAS AT 31 JANUARY 2018

Location DescriptionArea

Sq. metre Tenure

NetBook Value

RM’000

Age ofBuilding(Years)

Year ofRevaluation

Year ofAcquisition

1) MALAYSIA

PT 6280 HS(D) 2595Mukim Dengkil Daerah SepangSelangor Darul Ehsan

Offices, factory

and warehouse

112,390 Freehold 146,855 22 2018 1996

Lot 4182 Jalan Titi Panjang32200 Lumut, Perak

Marine Club 12,141 Leasehold - Expiring

29.4.2093

11,650 22 2018 1996

PT 4106Mukim LumutDaerah ManjungPerak Darul Ridzuan

Hotel 16,137 Leasehold - Expiring

14.1.2092

40,500 26 2018 1992

P.T. 3005 H.S. (D)DGS6374 & PT3014H.S(D) DGS6362Pulau PangkorMukim LumutDaerah Manjung

Leasehold land

58.43 acres Leasehold - Expiring 4.5.2094

36,825 - 2018 1995

2) SINGAPORE

7500E Beach Road#02-201, #03-301,#04-201, The Plaza

Offices 1,435 Leasehold - Expiring 2.9.2067

82,318 40 2018 1978

NOTICE OF ANNUAL GENERAL MEETING

NOTICE IS HEREBY GIVEN that the Ninety-Third Annual General Meeting of the Company will be held at George Kent Technology Centre, 1115 Jalan Puchong, Taman Meranti Jaya, 47120 Puchong, Selangor Darul Ehsan on Wednesday, 4 July 2018 at 11.00 a.m. for the following purposes:-

ORDINARY BUSINESS 1. To receive the Audited Financial Statements for the year ended 31 January 2018 and the

Directors’ and Auditors’ Reports thereon. (Please refer to Note A.) 2. To re-elect the following Directors who retire by rotation pursuant to Article 83 of the

Constitution of the Company and being eligible, offer themselves for re-election:-

(a) Tan Sri Dato’ Tan Kay Hock(b) Tan Sri Dato’ Seri Dr Ting Chew Peh

3. To approve the payment of Directors’ Fees and benefits of RM169,000 to Non-Executive

Directors for the financial year ended 31 January 2018. 4. To re-appoint Deloitte PLT, as Auditors of the Company for the financial year ending 31

January 2019 and to authorise the Directors to fix their remuneration.

SPECIAL BUSINESS To consider and if thought fit, pass with or without modifications the following as Ordinary Resolutions:-

5. Retention of Independent Non-Executive Director

“THAT approval be and is hereby given to Dato’ Ahmad Khairummuzammil Bin Mohd Yusoff, who has served as an Independent Non-Executive Director of the Company for a cumulative term of more than nine years, to continue to act as Independent Non-Executive Director.”

6. Retention of Independent Non-Executive Director

“THAT approval be and is hereby given to Mr Ooi Teng Chew, who has served as an Independent Non-Executive Director of the Company for a cumulative term of more than nine years, to continue to act as Independent Non-Executive Director.”

Ordinary Resolution 1Ordinary Resolution 2

Ordinary Resolution 3

7. Authority To Allot And Issue Shares In General Pursuant To Sections 75 and 76 of The Companies Act, 2016

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

8. To transact any other business of which due notice shall have been given.

By Order Of The Board.

Teh Yong FahGroup Secretary (MACS 00400)KUALA LUMPUR31 May 2018

Notes:-

A. This Agenda item is meant for discussion only. The provisions of Section 340(1)(a) of the Companies Act, 2016 and the Constitution of the Company require that the audited financial statements and the Reports of the Directors and Auditors thereon be laid before the Company at its Annual General Meeting. As such this Agenda item is not a business which requires a resolution to be put to the vote by shareholders.

1. A member of the Company entitled to attend and vote is entitled to appoint not more than two proxies to attend and vote instead of him. Where a member appoints two proxies, he shall specify the proportion of his shareholdings to be represented by each proxy. The instrument appointing proxy/proxies shall be in writing under the hand of the appointor or his attorney or if such an appointor is a corporation under its Common Seal or the hands of its attorney. A proxy need not be a member of the Company.

2. Where a member of the Company is an exempt authorised nominee which holds ordinary shares in the Company for multiple beneficial owners in one securities account (“omnibus account”), there is no limit to the number of proxies which the exempt authorised nominee may appoint in respect of each omnibus account it holds.

3. The instrument appointing proxy/proxies and the power of attorney (if any) under which it is signed or an office copy or notarially certified copy thereof shall be deposited at the Registered Office of the Company at 11th Floor, Wisma E&C, No. 2 Lorong Dungun Kiri, Damansara Heights 50490 Kuala Lumpur not less than twenty-four (24) hours before the time stipulated for holding the meeting or adjourned meeting (as the case may be).

4. In respect of deposited securities, only members whose names appear on the Record of Depositors on 25 June 2018 (General Meeting Record of Depositors) shall be eligible to attend the meeting or appoint proxy(ies) to attend and/or vote on his/her behalf.

NOTICE OF ANNUAL GENERAL MEETINGcont’d

Explanatory Notes on Special Business

1. Ordinary Resolution 5 - Retention of Independent Non-Executive Director

Dato’ Ahmad Khairummuzammil Bin Mohd Yusoff has served as an Independent Non-Executive Director of the Company for a cumulative term of more than nine years. In line with the Malaysian Code on Corporate Governance 2017, upon assessment and recommendation of the Nominating Committee, the rest of the Board members were of the unanimous opinion that Dato’ Ahmad Khairummuzammil Bin Mohd Yusoff should continue to act as an Independent Non-Executive Director of the Company based on the following justification:-

(a) He fulfilled the criteria under the definition of “Independent Director” as stated in the Listing Requirements,

(b) He has over time, developed a deep understanding of the Group’s business operations and therefore can contribute to the effectiveness of the Board as a whole,

(c) He does not have any conflict of interest as throughout his tenure of office as an Independent Director of the Company, he has not entered into and is not expected to enter into any contracts which will give rise to any related party transactions with the Company and its subsidiaries,

(d) He remains to be objective and independent in expressing his views and has actively participated in the deliberations and decision making process of the Board and Board Committees of which he is a member. His length of service on the Board and Board Committees does not in any way interfere with his exercise of independent judgement and ability to act in the best interest of the Company.

(e) He had exercised due care during his tenure as an Independent Non-Executive Director and as Chairman of the Audit Committee and Nominating Committee and had carried out his professional duties in the best interest of the Company and its shareholders.

2. Ordinary Resolution 6 - Retention of Independent Non-Executive Director

Mr Ooi Teng Chew has served as an Independent Non-Executive Director of the Company for a cumulative term of more than nine years. In line with the Malaysian Code on Corporate Governance 2017, upon assessment and recommendation of the Nominating Committee, the rest of the Board members were of the unanimous opinion that Mr Ooi Teng Chew should continue to act as an Independent Non-Executive Director of the Company based on the following justification:-

(a) He fulfilled the criteria under the definition of “Independent Director” as stated in the Listing Requirements,

(b) He has over time, developed a deep understanding of the Group’s business operations and therefore can contribute to the effectiveness of the Board as a whole,

(c) He does not have any conflict of interest as throughout his tenure of office as an Independent Director of the Company, he has not entered into and is not expected to enter into any contracts which will give rise to any related party transactions with the Company and its subsidiaries,

(d) He remains to be objective and independent in expressing his views and has actively participated in the deliberations and decision making process of the Board and Board Committees of which he is a member. His length of service on the Board and Board Committees does not in any way interfere with his exercise of independent judgement and ability to act in the best interest of the Company.

(e) He had exercised due care during his tenure as an Independent Non-Executive Director and as a member of the Audit Committee and Nominating Committee and had carried out his professional duties in the best interest of the Company and its shareholders.

3. Ordinary Resolution 7 - Authority to Allot and Issue Shares in General Pursuant to Sections 75 and 76 of the Companies Act, 2016

The proposed Ordinary Resolution if passed will empower the Directors to issue shares of the Company up to 10% of the total number of issued shares of the Company for the time being for such purposes as the Directors consider would be in the interest of the Company. This would avoid any delays and costs in convening a general meeting to specifically approve such an issue of shares. This authority unless revoked or varied by the Company in general meeting will expire at the next Annual General Meeting (“AGM”) of the Company.

The Company has not issued any new shares under this general authority which was approved at the last AGM held on 21 June 2017 and which will lapse at the conclusion at this AGM. A renewal of this general authority is being sought at this AGM under the proposed resolution 7. The renewed mandate is to provide flexibility to the Company for any possible future fund raising activities including but not limited to placement of shares for purposes of funding future investments, working capital and/or acquisition.

ADMINISTRATIVE DETAILSFOR THE NINETY-THIRD ANNUAL GENERAL MEETING

Day/Date : Wednesday, 4 July 2018

Time : 11.00 a.m.

Venue : George Kent Technology Centre, 1115 Jalan Puchong, Taman Meranti Jaya, 47120 Puchong, Selangor Darul Ehsan

REGISTRATION

1. Registration will start at 10.00 a.m.

2. Please produce your original Identity Card (IC) or Passport (applicable for foreigners) at the registration counter for verification. Kindly ensure you collect your IC/Passport upon completion. No photocopies will be accepted.

3. You are not allowed to register on behalf of another person, even with the original IC or Passport of that other person.

4. Upon verification, you are required to sign the Record of Attendance.

5. Upon registration, you will be given one (1) barcoded wristband. One (1) electronic voting keypad will be distributed before you enter the meeting venue. This electronic voting keypad must be returned to the registration counter at the conclusion of the meeting.

6. If you are attending the meeting as Shareholder as well as Proxy, you will be registered once and will be given only one (1) barcoded wristband and one (1) electronic voting keypad.

7. You must wear the barcoded wristband throughout the meeting, as no person will be allowed to enter the meeting venue without the barcoded wristband. Please ensure that you keep the barcoded wristband in your safe custody as there will be no replacement in the event that the barcoded wristband and/or electronic voting keypad are misplaced.

ENTITLEMENT TO ATTEND AND VOTE

8. Only Members whose names appear in the Record of Depositors as at 5.00 p.m. on 25 June 2018 (General Meeting Record of Depositors) shall be entitled to attend and vote at the meeting in respect of the number of shares registered in their name at that time.

9. If you are a Member of the Company at the time set out above, you are entitled to appoint not more than two (2) proxies (who need not be members of the Company) to exercise all or any of your rights to attend, speak and vote at the meeting.

10. Where a member of the Company is an exempt authorised nominee which holds ordinary shares in the Company for multiple beneficial owners in one securities account (Omnibus Account), there is no limit to the number of proxies which the exempt authorised nominees may appoint in respect of each Omnibus Account it holds.

ADMINISTRATIVE DETAILSFOR THE NINETY-THIRD ANNUAL GENERAL MEETINGcont’d

11. To appoint a proxy, the originally signed Form of Proxy must be sent and delivered to the registered office at 11th Floor, Wisma E&C, No. 2 Lorong Dungun Kiri, Damansara Heights, 50490 Kuala Lumpur before 11.00 a.m., 3 July 2018, which is not less than twenty-four (24) hours before the time stipulated for holding the meeting.

12. In the case of a member which is a company, the Form of Proxy must be executed either under its common seal or under the hand of any officer or attorney duly authorised.

REVOCATIONOFPROXY

13. If you wish to appoint a proxy, please note that a proxy may be revoked by:

a) the attendance of the appointor at the meeting and exercising his/her voting rights at the meeting personally, which will automatically revoke the proxy;

b) a notice of revocation by the appointor of the Form of Proxy served at the registered office at 11th Floor, Wisma E&C, No. 2 Lorong Dungun Kiri, Damansara Heights, 50490 Kuala Lumpur before 11.00 a.m. on 3 July 2018;

c) the appointor appointing a new proxy by depositing a new Form of Proxy in favour of another person before 11.00 a.m. on 3 July 2018; or

d) the appointor ceasing to be on the Record of Depositors as at 25 June 2018.

CORPORATE MEMBER

14. Any corporate member who wishes to appoint a representative instead of a proxy to attend this meeting should lodge the certificate of appointment under the seal of the corporation, at the registered office at 11th Floor, Wisma E&C, No. 2 Lorong Dungun Kiri, Damansara Heights, 50490 Kuala Lumpur before 11.00 a.m. on 3 July 2018.

I/We, (Company/NRIC/Passport No. )

being a member/members of JOHAN HOLDINGS BERHAD hereby appoint:-

Name Address NRIC/Passport No.Proportionof

Shareholding (%)

and/or (delete as appropriate)

Name Address NRIC/Passport No.Proportionof

Shareholding (%)

as my/our proxy/proxies to vote for me/us on my/our behalf at the Ninety-Third Annual General Meeting of the Company, to be held at George Kent Technology Centre, 1115 Jalan Puchong, Taman Meranti Jaya, 47120 Puchong, Selangor Darul Ehsan on Wednesday, 4 July 2018 at 11.00 a.m. and at any adjournment thereof.

I/We direct my/our proxy/proxies to vote for or against the Resolutions to be proposed at the meeting as hereunder indicated.

RESOLUTIONS For Against

1 To re-elect Tan Sri Dato’ Tan Kay Hock as a Director

2 To re-elect Tan Sri Dato’ Seri Dr Ting Chew Peh as a Director

3 To approve the payment of Directors’ fees and benefits to Non-Executive Directors for financial year ended 31 January 2018

4 To re-appoint Deloitte PLT as the Company’s Auditors for the financial year ending 31 January 2019 and to authorise the Board of Directors to fix their remuneration.

5 Retention of Independent Non-Executive Director - Dato’ Ahmad Khairummuzammil Bin Mohd Yusoff

6 Retention of Independent Non-Executive Director - Mr Ooi Teng Chew

7 Authority to Directors to allot shares

(Please indicate with a cross (“X”) in the appropriate box against each Resolution how you wish your proxy/proxies to vote. If this proxy form is returned without any indication as to how the proxy/proxies shall vote, the proxy/proxies will vote or abstain as he/their think fit.)

Dated this day of , 2018.

Signature/Common Seal

FORMOFPROXY(Beforecompletingtheform,pleaserefertonotesonnextpage)

No. of Shares HeldCDS Account No.

AFFIXSTAMP

Then Fold Here

First Fold Here

The Company SecretaryJOHAN HOLDINGS BERHAD11th Floor, Wisma E&CNo. 2 Lorong Dungun KiriDamansara Heights50490 Kuala Lumpur

Notes:-

1. AmemberoftheCompanyentitledtoattendandvoteisentitledtoappointnotmorethantwoproxiestoattendandvoteinsteadofhim.Whereamemberappointstwoproxies,heshallspecifytheproportionofhisshareholdingstoberepresentedbyeachproxy.Theinstrumentappointingproxy/proxies shall be inwritingunder thehandof theappointor or his attorneyor if suchanappointor is acorporationunderitsCommonSealorthehandsofitsattorney.AproxyneednotbeamemberoftheCompany.

2. WhereamemberoftheCompanyisanexemptauthorisednomineewhichholdsordinarysharesintheCompanyformultiplebeneficialownersinonesecuritiesaccount(“omnibusaccount”),thereisnolimittothenumberofproxieswhichtheexemptauthorisednomineemay appoint in respect of each omnibus account it holds.

3. Theinstrumentappointingproxy/proxiesandthepowerofattorney(ifany)underwhichitissignedoranofficecopyornotariallycertifiedcopythereofshallbedepositedattheRegisteredOfficeoftheCompanyat11thFloor,WismaE&C,No.2LorongDungunKiri,DamansaraHeights50490KualaLumpurnotlessthantwenty-four(24)hoursbeforethetimestipulatedforholdingthemeetingoradjournedmeeting(as the case may be).

4. Inrespectofdepositedsecurities,onlymemberswhosenamesappearontheRecordofDepositorson25June2018(GeneralMeetingRecordofDepositors)shallbeeligibletoattendthemeetingorappointproxy(ies)toattendand/orvoteonhis/herbehalf.

WHAT’S INSIDE...

Corporate Informa�on

Chairman’s Management Discussion & Analysis Disclosures

Profile of Directors

Profile of Key Senior Management

Five-Year Group Financial Highlights

Share Price Performance

Corporate Governance Overview Statement

Directors‘ Responsibility in Financial Repor�ng

Sustainability Report

Audit Commi�ee Report

Statement on Risk Management and Internal Control

Addi�onal Informa�on

Financial Statements

Analysis of Shareholdings

Statement on Directors’ Interests

List of Proper�es Held

No�ce of Annual General Mee�ng

Administra�ve Details

Form of Proxy

CORPORATE PROFILEJohan began its activities in 1920 as Johan Tin Dredging Ltd. It operated a mining lease off

the Sungei Johan in the Kinta District of Perak, Malaysia with a paid-up capital of RM136,000 which remained unchanged for 61 years until 1981. In 1979, the Company was

renamed Johan Holdings Berhad.

Since 1979, Johan diversified away from its tin mining business and through acquisitions and organic growth. The Johan Group today is a Malaysian grown group with diversified operations.

Johan is listed on the Main Market of Bursa Malaysia Securities Berhad.

Johan Group’s current principal activities are as franchise operator for Diners Club charge and credit cards, travel and tours, property development, resorts and hotels.

GROUP CORPORATE DIRECTORYPRINCIPAL COMPANIES

Malaysia

Johan Holdings Berhad11th Floor, Wisma E&CNo. 2 Lorong Dungun Kiri,Damansara Heights50490 Kuala LumpurTel : 603 2092 1858Fax : 603 2092 2812Website : www.johanholdings.com

The Orient Star Resort, Lumut(owned by Lumut Park Resort Sdn Bhd)Lot 203 & 366 Jalan Iskandar Shah32200 Lumut, Perak Darul RidzuanTel : 605 683 3800Fax : 605 683 8088Website : www.orientstar.com.my

Diners Club (Malaysia) Sdn BhdSuite 16.03, 16th Floor, Menara Tan & Tan, 207 Jalan Tun Razak, 50400 Kuala Lumpur Tel : 603 2161 1322Fax : 603 2161 1518Website : www.dinersclub.com.my

Diners World Travel (Malaysia) Sdn BhdSuite 16.03, 16th Floor, Menara Tan & Tan207 Jalan Tun Razak50400 Kuala LumpurTel : 603 2164 0068Fax : 603 2162 3670

Singapore

Diners Club (Singapore) Pte Ltd7500-E, Beach Road#03-201, The PlazaSingapore 199595Tel : 65 6295 2027Fax : 65 6296 5981Website : www.dinersclub.com.sg

Diners World Travel Pte Ltd7500-E, Beach Road#02-201, The Plaza, Singapore 199595Tel : 65 6298 8988Fax : 65 6295 1485Website : www.dinerstravel.com.sg

Johan Holdings Berhad (314-K

annual report for the financial year ended 31 January 2018

A n n u a l R e p o r tfor the financial year ended 31 January 2018

Annu al Repor t - Johan Holdings...Malayan Banking Berhad United Overseas Bank Limited STOCK...

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