ANNUAL REPORT 2016 - COMCORPcomcorp.com.my/comcorp/images/Annual_Reports/2016/... · TuV NORD CERT procedures for Design, Development and Provision of System Integration of Total

ANNUAL REPORT 2016

VisionTo be a world class provider of total integrated ICT and Radio Frequency Communication Solution System. We strive to meet our customer needs and expectations by providing high quality products and solutions that combine performance with value pricing. We establish successful and long term relationships with our customers and our principals with key emphasis on strong integration services and capability to provide local support and maintenance service to our customers.

PHiLosoPHYWe care to dare. This philosophy underscores our commitment to provide our customers with the best service and solutions. The customer is the heart of everything we do. Responding to our customer’s needs and expetations, we leave no stones unturned. Complex problems require precise and innovative solutions. We take the best optimum IT & Telecommunication solutions and integrate them together to build a total solution, limited only by our imagination, robust for future requirements. Innovative solution provider makes a world of difference and at Comintel is where the present meets the future. We strive to continuously discover the undiscovered opportuunities and trekking the unexplored boundaries to seek solutions. We go out of our way to develop new approaches and pushing the boundaries to convert challenges into opportunities.

TransformaTionTo susTainabiLiTY

02 Corporate Information

03 Group Structure

04 Group Profile

06 Notice of Thirteenth (“13th”) Annual General Meeting

10 Statement Accompanying Notice of Thirteenth (“13th”) Annual General Meeting

11 Profile of Directors

20 Board of Directors

22 Chairman's Statement

24 Corporate Social Responsibility

26 Management Discussion and Analysis

29 Corporate Governance Statement

35 Sustainability Statement

36 Statement on Risk Management and Internal Control

38 Audit Committee Report

41 Additional Compliance Information

42 Financial Highlights

43 Financial Statements

110 Analysis of Shareholdings

113 List of Property

Proxy Form

CONTENT

Comintel is an ideal and reliable partner for your total IT & Communication solutions to meet the complexity of a challenging environment of the new millennium. Our core business is to deliver a robust ICT system that is both effective and efficient, considering both current requirements and future demands. Since 1984, we have been providing total IT & Communication solutions for all types of applications.

We invest in the best to guarantee total customer satisfaction. Our dedicated team of experts and technical support staff are ably backed up by ongoing Research and Development. We formed strategic alliance with reputable technology partners to deliver specific system solutions to our customers. Many of our principals are established in the arena of public safety, defense communication and broadcasting, to name a few.

We have in-house expertise in these leading technologies and products, as such we are able to provide project management, implement and systems integrate total solutions and provide timely and reliable ongoing support, maintenance and repair services.

ABOuT uS

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CORPORATE INFORMATION

BoARD oF DiReCtoRSTan Sri Dato’ Samshuri bin Arshad (Independent Non-Executive Chairman)

Datuk Awalan bin Abdul Aziz(Executive Deputy Chairman)

Mr Leng Keng Hok @ Lim Keng Hock(Managing Director)

Mr Loh Hock Chiang(Executive Director)

Dato’ Abdul Majid bin Omar(Executive Director)

Mr Mohamadon bin Abdullah(Executive Director)

Dato’ Ramli bin Abd Rahman(Independent Director)

Mr Wong Mun Wai(Independent Director)

Ms Lee Chai Bee(Independent Director)

CompAny SeCRetARieSMr Loh Hock Chiang(MIA 11139)

Ms Wong Soon Kiong(LS 0009395)

RegiSteReD oFFiCe/pRinCipAl plACeNo. 37, Jalan Pelukis u1/46Section u1, Temasya Industrial Park40150 GlenmarieShah AlamSelangor Darul EhsanMalaysiaTel : 603 5039 9898Fax : 603 5039 9833

WeBSitewww.comcorp.com.my

DAte oF inCoRpoRAtion2 October 2003

ShARe RegiStRARTricor Investor & Issuing House Services Sdn Bhdunit 32-01, Level 32, Tower AVertical Business Suite Avenue 3, Bangsar SouthNo. 8, Jalan Kerinchi59200 Kuala LumpurTel : 603 2783 9299Fax : 603 2783 9222Email : [email protected]

AuDitoRSMessrs Russ Ooi & AssociatesChartered AccountantsNo. 1-3B, Blok AJalan Solaris, Mont’ Kiara50480 Kuala LumpurTel : 603 6203 6511Fax : 603 6203 6577

liStingMain Market of Bursa MalaysiaSecurities Berhad

StoCk CoDeCOMCORP 7195

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GROuP STRuCTuRE

100%

100%

100%

100%

100%

100%

70%

80%

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GROuP PROFILE

Comintel SDn BhD (Comintel)

Comintel was incorporated on 20 October 1984 and has established a strong proven record as a System Integrator providing total IT and Telecommunication solutions for all type of applications. The expertise, experience and knowledge of the people have contributed to the formulation of robust and effective IT and communication solutions.

Its strength and ability to differentiate itself in the competitive systems integration sector lies in its ability to combine RF components with IT systems. The dedicated team of experts and technical support staff are ably backed by ongoing research and development in IT and Telecommunication.

The company is also accredited with the certification of Management system as per ISO 9001: 2008 in accordance with TuV NORD CERT procedures for Design, Development and Provision of System Integration of Total Integrated ICT and Radio Frequency Communication Solution Systems.

Comintel CoRpoRAtion BhD (ComCoRp)

Comintel Corporation Bhd was incorporated on 2 October 2003 as a private limited company under the name of Comintel Corporation Sdn Bhd and was subsequently converted into a public limited company under its present name on 10 November 2003 and was listed on the second board of Bursa Malaysia Securities Berhad (“Bursa Securities”) on 16 August 2004 (Stock Code: COMCORP 7195). Following the merger of the main and second boards into a unified board on 3 August 2009, Comcorp is subsequently listed on the Main Market of Bursa Securities. Comcorp is an Investment Holding company with the synergistic group of IT, Telecommunication, Manufacturing and R&D companies focusing in providing niche solutions under its subsidiaries. Each subsidiary has its unique strengths and complements each other to provide total integrated IT & Telecommunication solutions to its customers.

BCm eleCtRoniCS CoRpoRAtion SDn BhD (BCm)

BCM, a Malaysian Electronics Manufacturing Services (EMS) entity that provides turnkey manufacturing services, was incorporated on 20 August 1993.

BCM has since evolved from merely a cost effective local manufacturing entity to a world class EMS provider servicing multi-national and international companies currently. BCM possess RF engineering know-how with box-build and product development capabilities, comprehensive supply chain management in the high-mix low volume niche manufacturing segment.

The company is also accredited with the certifications of MS ISO 14001:2004 Environmental Management System, MS ISO 9001:2008 Quality Management System, ISO/TS 16949:2009 Manufacturing of Telecommunication PCB Assembly and Box-Build Assembly for the Automotive Industry (without product design and development), EN ISO 13485:2012+AC:2012 Contract Manufacture of Power Supply Modules for Medical Devices and BS OHSAS 18001: 2007 Health and Safety management System.

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Comintel teCh SeRViCeS SDn BhD (FoRmeRly knoWn AS ComleniA SenDiRiAn BeRhAD) (CtSSB)

CTSSB, was incorporated on 15 October 1997. CTSSB operates in the field of Integrated Logistics Support, electronic system repairing and testing of Command and Control System, Fire Control System, Torpedo Launching System, Missile Launching System and Radars. CTSSB’s activities are mainly related to Combat System maintenance, repair of LRus at Depot Level and on-site repair.

CTSSB have invested substantially in both lab facilities and human resources to achieve total in-country support capability. Its well furnished workshop uses the latest state of art and fully computerised Automatic Test Equipment (ATE) for repairs and covers differing technologies including Intermediate Frequency, Radio Frequency (IF/RF) equipment up to the Ku band.

The company is also accredited with the certification of MS ISO 9001:2008 Quality Management System by Lloyd’s Register Quality Assurance for Provision of spare part supply, repair and maintenance service of electronic equipments for defence and civil application.

GROuP PROFILE

inDuSmAtiC CoRpoRAtion SDn BhD (iCSB)

ICSB, incorporated on 6 July 1985 provides R & D services. ICSB supports Comintel through its development work with a specific focus on systems design interfacing for technical proposals submitted by Comintel. ICSB enhances Comintel’s service offerings by developing and continuously improving the integration of hardware, software and service solutions that enable Comintel to integrate various software programs and systems to create customised systems for customers.

pt. intelCom inDoneSiA (pti)

PT. Intelcom Indonesia was acquired by Comcorp on 8 October 2012. Its principal activities are in the renewable energy and telecommunication business segment.

Comintel gReen teChnologieS SDn BhD (Cgt)

CGT was incorporated on 24 May 1993 and changed to its current principal activities in September 2011. CGT markets a wide range of Green Technologies solution products ranging from Advanced Biomass Gasification System, LED Lightings, Induction Lightings, Lighting Management System, and other energy efficient solutions. CGT provide a holistic system in creating the best Green Energy Solutions to optimise customers’ benefits.

Comintel (hk) limiteD (Chk)

CHK was incorporated on 7 March 1996 and is involved in the trading of electronic, engineering and telecommunication equipment and provision of related services.

Comintel moBility SDn BhD (CmSB)

CMSB was acquired by Comintel on 7 December 2011. CMSB provides software as a service for mobile applications, hosted mobile device management platform for business enterprise and as a Mobile Virtual Network Operator.

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NOTICE OF THIRTEENTH (“13TH”)ANNuAL GENERAL MEETING

notiCe iS heReBy giVen thAt the thirteenth (“13th”) Annual general meeting (“Agm”) of the Company will be held at Classics Ballroom, holiday Villa Subang, no. 9 Jalan SS12/1, Subang Jaya, 47500 petaling Jaya, Selangor Darul ehsan on thursday, 23 June 2016 at 10.00 a.m. for the purpose of considering and if thought fit, to pass the following resolutions:

AgenDA

1. To receive the Audited Financial Statements for the financial year ended 31 January 2016 together with the Reports of the Directors and Auditors thereon.

2. To approve the payment of Directors’ Fees of RM120,000/- for the financial year ended 31 January 2016.

3. To re-elect the following Directors retiring pursuant to Article 93 of the Company’s Articles of Association:

3.1 Dato’ Abdul Majid bin Omar 3.2 Mr Loh Hock Chiang

4. To re-appoint the following Directors retiring pursuant to Section 129 (6) of the Companies Act, 1965 to hold office until the next Annual General Meeting:

4.1 Tan Sri Dato’ Samshuri bin Arshad 4.2 Mr Leng Keng Hok @ Lim Keng Hock

5. To re-appoint Messrs Russ Ooi & Associates as Auditors of the Company and to authorise the Directors to fix their remuneration.

SpeCiAl BuSineSS

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

6. Continuing in oFFiCe oF mS lee ChAi Bee AS inDepenDent DiReCtoR oF the CompAny

“thAt Ms Lee Chai Bee who has served as an Independent Director for more than nine (9) years, shall continue to act as an Independent Director of the Company until the conclusion of the next Annual General Meeting in accordance with the Malaysian Code of Corporate Governance 2012.”

7. AuthoRity to DiReCtoRS to iSSue ShAReS puRSuAnt to SeCtion 132D oF the CompAnieS ACt, 1965

“thAt pursuant to Section 132D of the Companies Act, 1965, the Directors be and are hereby empowered to issue shares in the Company, at any time and upon such terms and conditions and for such purposes as the Directors may, in their absolute discretion, deem fit, provided that the aggregate number of shares issued pursuant to this resolution in any one financial year does not exceed 10% of the issued capital of the Company for the time being and the Directors be and are also empowered to obtain approval for the listing of and quotation for the additional shares so issued on Bursa Malaysia Securities Berhad (“Bursa Securities”) and that such authority shall continue in force until the conclusion of the next AGM of the Company.”

pleASe ReFeR to note A oF the

explAnAtoRy noteS

ReSolution 1

ReSolution 2ReSolution 3

ReSolution 4ReSolution 5

ReSolution 6

ReSolution 7

ReSolution 8

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NOTICE OF THIRTEENTH (“13TH”) ANNuAL GENERAL MEETING

8. pRopoSeD ShAReholDeRS’ mAnDAte FoR ReCuRRent RelAteD pARty tRAnSACtionS oF A ReVenue oR tRADing nAtuRe (“pRopoSeD ShAReholDeRS’ mAnDAte”)

“thAt approval be and is hereby given to the Company and its subsidiaries to enter into and give effect to the recurrent related party transactions of a revenue or trading nature with the related parties as stated in Sections 2.3 and 2.4 of the Circular to Shareholders dated 30 May 2016, being necessary for the day-to-day operations of the Group, subject to the following:

(i) the transactions are in the ordinary course of business and are on terms not more favourable to the related parties than those generally available to the public and is not to the detriment of the minority shareholders and that such transactions are made on an arm’s length basis and on normal commercial terms; and

(ii) disclosure is made in the annual report of the aggregate value of transactions conducted pursuant to this shareholders’ mandate during the financial year; and

(iii) the authority hereby given shall continue in force until:

(a) the conclusion of the next AGM of the Company, at which time it will lapse unless, by a resolution passed at the meeting, the authority is renewed; or

(b) the expiration of the period within which the next AGM of the Company is required to be held pursuant to Section 143(1) of the Companies Act, 1965 (but shall not extend to such extension as may be allowed pursuant to Section 143(2) of the Companies Act, 1965); or

(c) it is revoked or varied by resolution passed by the shareholders in general meeting,

whichever is the earliest; and

(iv) the Board by any one or more of the directors be and are hereby authorised to complete and do all such acts, deeds and things necessary to give effect to the transactions contemplated or authorised by this resolution.”

9. pRopoSeD ReneWAl oF AuthoRity FoR the CompAny to puRChASe itS oWn ShAReS (“pRopoSeD ShARe Buy-BACk”)

“thAt, subject to the Companies Act, 1965 (the “Act”), rules, regulations and orders made pursuant to the Act, provisions of the Company’s Articles of Association and the requirements of Bursa Securities and any other relevant authority, the Directors of the Company be and are hereby authorised to make purchases of ordinary shares of RM0.50 each in the Company’s issued and paid-up share capital through Bursa Securities subject further to the following:

(i) the maximum number of shares which may be purchased and/or be held by the Company shall be equivalent to 10% of the issued and paid-up share capital of the Company (“Purchased Shares”) for the time being;

(ii) the maximum funds to be allocated by the Company for the purpose of purchasing the Purchased Shares shall not exceed the aggregate of the retained profits and/or share premium account of the Company as certified by the auditors of the Company;

(iii) the authority conferred by this resolution will commence immediately upon passing of this resolution and will continue to be in force until:

(a) the conclusion of the next AGM of the Company; or(b) the expiration of the period within which the next AGM after that date is required by law

to be held; or(c) it is revoked or varied by ordinary resolution passed by the shareholders of the Company

in general meeting;

whichever occurs first,

ReSolution 9

ReSolution 10

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(iv) upon completion of the purchase of the Purchased Shares by the Company, the Directors of the Company be and are hereby authorised to deal with the Purchased Shares in the following manner:

(a) to cancel the Purchased Shares so purchased; or(b) to retain the Purchased Shares so purchased as treasury shares; or(c) to retain part of the Purchased Shares so purchased as treasury shares and cancel the

remainder; or(d) to distribute the treasury shares as dividends to shareholders and/or resell on Bursa

Securities and/or cancel all or part of them; or

in any other manner as prescribed by the Act, rules, regulations and orders made pursuant to the Act and the requirements of the Bursa Securities and any other relevant authority for the time being in force;

AnD thAt, the Directors of the Company be and are hereby authorised to take all such steps as are necessary or expedient to implement or to effect the purchase(s) of the Purchased Shares with full power to assent to any condition, modification, variation and/or amendment as may be imposed by the relevant authorities and to take all such steps as they may deem necessary or expedient in order to implement, finalise and give full effect in relation thereto.”

10. To transact any other business for which due notice shall have been given.

By order of the Board

loh hock Chiang (MIA 11139)Wong Soon kiong (LS 0009395)Company Secretaries

Shah Alam30 May 2016


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note A

This Agenda item is meant for discussion only as under the provision of Section 169 (1) of the Companies Act, 1965, the audited financial statements do not require a formal approval of the shareholders. Hence, this Agenda item will not be put forward for voting.

explAnAtoRy noteS to ReSolution 7

The Proposed Resolution 7 is proposed to enable Ms Lee Chai Bee to continue serving as an Independent Director of the Company to fulfil the requirements of paragraph 3.04 of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad and in line with Recommendation 3.3 of the Malaysian Code on Corporate Governance 2012.

The Nomination Committee and the Board have assessed the independence of its Independent Director who have served as an Independent Director for more than nine (9) years and recommended Ms Lee Chai Bee to continue to act as an Independent Director of the Company. The justifications of the Board of Directors for recommending and supporting resolution for her continuing in office as an Independent Director is set out under the Statement of Corporate Governance in the Company’s Annual Report.


The proposed Resolution 8 as Ordinary Resolution, if passed will empower the Directors of the Company the authority to issue and allot shares up to an aggregate amount of not exceeding 10% of the issued share capital of the Company without convening a general meeting. This authority, unless revoked or varied at a General Meeting will expire at the next AGM.

The general mandate sought for issue of shares is a renewal of the mandate that was approved by the shareholders on 25 June 2015. As at the date of this Notice, no shares were issued pursuant to this general mandate which will lapse at the conclusion of the next AGM of the Company.

The renewal of the general mandate is to provide flexibility to the Company for any possible fund raising exercise including but not limited to issuance of new shares for funding investment project(s), working capital and/or acquisitions.


The proposed Resolution 9 as Ordinary Resolution, if passed, will empower the Company to conduct recurrent related party transactions of a revenue or trading nature which are necessary for the Group’s day to day operations, and will eliminate the need to convene separate general meetings from time to time to seek shareholders’ approval. This will substantially reduce administrative time, inconvenience and expenses associated with the convening of such meetings, without compromising the corporate objectives of the Group or adversely affecting the business opportunities available to the Group.

The detailed information on Recurrent Related Party Transactions is set out in the Circular to Shareholders dated 30 May 2016 which is despatched together with the 2016 Annual Report.


The proposed Resolution 10 as Ordinary Resolution, if passed, will give authority to the Directors of the Company to make purchases of shares in the Company through Bursa Securities up to 10% of the issued and paid-up share capital of the Company. This authority, unless revoked or varied at a general meeting, will expire at the conclusion of the next AGM of the Company.

The detailed information on Proposed Share Buy-Back is set out in the Circular to Shareholders dated 30 May 2016 which is despatched together with the 2016 Annual Report.

noteS:

1. In respect of deposited securities, only Members whose names appear in the Record of Depositors on 16 June 2016 (General Meeting Record of Depositors) shall be entitled to attend, speak and vote at this 13th AGM.

2. A member entitled to attend and vote at the general meeting is entitled to appoint up to two (2) proxies to attend and vote in his/her stead. A proxy may but need not be a member of the Company and the provisions of Section 149(1) (a) and (b) of the Companies Act, 1965 shall not apply to the Company.

3. Where a member appoints two (2) proxies, the appointment shall be invalid unless he/she specifies the proportion of his/her shareholdings to be represented by each proxy.

4. 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.

5. The instrument appointing a proxy shall be in writing under the hand of the appointer or his/her attorney duly authorised in writing, or if the appointer is a corporation, under its Common Seal or under the hand of an attorney.

6. The instrument of proxy must be deposited at the office of Share Registrar, Tricor Investor & Issuing House Services Sdn Bhd at Unit 32-01, Level 32, Tower A, Vertical Business Suite, Avenue 3, Bangsar South, No. 8, Jalan Kerinchi, 59200 Kuala Lumpur, Malaysia or at its Customer Service Centre situated at Unit G-3, Ground Floor, Vertical Podium, Avenue 3, Bangsar South, No. 8, Jalan Kerinchi, 59200 Kuala Lumpur, Malaysia not less than forty-eight (48) hours before the time set for holding the meeting or any adjournment thereof.


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STATEMENT ACCOMPANYING NOTICE OF THIRTEENTH (“13TH”) ANNuAL GENERAL MEETING

1. the DiReCtoRS Who ARe StAnDing FoR Re-eleCtion At the thiRteenth (“13th”) AnnuAl geneRAl meeting oF the CompAny ARe AS FolloWS:

(a) pursuant to Article 93 of the Company’s Articles of Association on retirement by rotation:

(i) Dato’ Abdul Majid bin Omar(ii) Mr Loh Hock Chiang

2. the DiReCtoRS Who ARe StAnDing FoR Re-Appointment puRSuAnt to SeCtion 129 oF the CompAnieS ACt, 1965 At the thiRteenth (“13th”) AnnuAl geneRAl meeting oF the CompAny ARe AS FolloW:

(i) Tan Sri Dato’ Samshuri bin Arshad(ii) Mr Leng Keng Hok @ Lim Keng Hock

3. FuRtheR DetAilS oF inDiViDuAlS Who ARe StAnDing FoR Re-eleCtion/Re-Appointment AS DiReCtoRS

(i) Directors’ profile on pages 11 to 19(ii) Details of interest in the securities of the Company, if any, are disclosed in the Directors’ shareholding on page 112

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PROFILE OF DIRECTORS

Tan Sri Dato’ Samshuri bin Arshad, a Malaysian, aged 74 was appointed Chairman of the Company on 28 June 2004 and re-designated as Independent Non-Executive Chairman on 28 February 2013. He is also the Chairman of the Nomination Committee. He was a police officer with the Royal Malaysian Police force, which he served for 34 years. He retired from the police force upon reaching the compulsory retirement age of 55 years on 5 May 1997. His last appointment was as Deputy Inspector General of Police, a post he held for 3½ years. He has considerable experience in police operations, management, command and control, criminal investigations and also served as the Chief Police Officer in Selangor, Sabah and Perak.

tAn SRi DAto’ SAmShuRi Bin ARShAD(Independent Non-Executive Chairman)

Appointed Chairman of the Company on 28 June

2004 and re-designated as Independent Non-Executive

Chairman on 28 February 2013

Police officer with the Royal

Malaysian Police force

Chairman of the Nomination

Committee

He has benefited from wide regional and international exposures and networking when he served as the head of missions for Interpol, the Association of Asean Police Forces and the united Nations Crime Prevention Commission (Vienna). He had undergone international police training in Japan, Australia and uK. He also attended the leadership and management programmes conducted by Harvard Business School in uSA, National Training Institute in South Korea and the Imperial Defence College in uK.

He attended all the five (5) Board Meetings of Comcorp held during the financial year ended 31 January 2016. He has no family relationship with the other directors or major shareholders of Comcorp, no conflict of interest with Comcorp and has no conviction for offences within the past ten years.

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Datuk Awalan bin Abdul Aziz, a Malaysian, aged 49, was appointed to the Board on 28 October 2013. He brings with him vast experience in the area of investment management, strategic planning, business development, sales and marketing.

He currently serves as an Executive Chairman of Komconsult Sdn Bhd, Managing Director of Success Circle Group of Companies (an Investment Holdings Company) and also the Chairman of the Board of Directors of Success Diar Sdn Bhd, a joint venture company between Qatari Diar Real Estate Investment Company (wholly owned by Qatar Investment Authority) and Success Circle Sdn. Bhd. He is also the Executive Chairman of Strovi Tel Sdn Bhd, a bio-medical company which had entered into a 20 years’ Contract Manufacturing Agreement for Plasma Fractionation with the Government of Malaysia. Prior to that, he was the Managing Director of Solsis (M) Sdn Bhd and Senior Vice President of Dataprep Holdings Berhad from 2005 to 2008, and was the General Manager of Perbadanan Nasional Berhad, a Development Financial Institution under the Minister of Finance Incorporated.

DAtuk AWAlAn Bin ABDul Aziz(Executive Deputy Chairman)

Appointed to the Board on

28 October 2013

Chairman of the Board of Directors

of Success Diar Sdn Bhd

Executive Chairman of Komconsult Sdn Bhd, Managing Director of

Success Circle Group of Companies



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Mr Leng Keng Hok @ Lim Keng Hock, a Malaysian, aged 70, is a founder of the Comcorp Group of companies. On June 28, 2004, he was appointed Managing Director of the Company. His educational credentials include an Associate Diploma in Electrical Engineering from the Royal Melbourne Institute of Technology, Australia. upon graduation, he was part of the design team at PMG Research Laboratory in Melbourne from 1968 to 1969. At the end of his tenure at PMG, he relocated to Singapore where he held the position of Calibration Manager at Singapore Electronics and Engineering Pte Ltd. Returning to the country of his birth, he joined Melen Engineering Sdn Bhd in 1973 as Technical Manager where he was promptly promoted to the position of General Manager in 1976. In 1984, he recognised a strategic opportunity and founded Comintel Sdn Bhd, holding the positions of both Executive Director and General Manager.

mR leng keng hok @ lim keng hoCk(Managing Director)

Appointed Managing Director of the Company on28 June 2004

Associate Diploma in Electrical Engineering from

the Royal Melbourne Institute of Technology, Australia

With his extensive experience in telecommunications system engineering, he has been instrumental in various projects including the testing and designing of cable pair identification test sets using pseudorandom noise generators, as well as designing a go-no-go high voltage impulse test set for insulation testing. Through his leadership, Comcorp has emerged as a cutting-edge leader in systems design and engineering, consistently pushing the boundaries of telecommunication systems infrastructure development in each of its various government and private offshore and onshore enterprises.

He attended all the five (5) Board Meetings of Comcorp held during the financial year ended 31 January 2016. He is a major shareholder of Comcorp. He has no conflict of interest with Comcorp and has no prior convictions in the last ten years.

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Mr Loh Hock Chiang, a Malaysian, aged 51, was appointed to the Board on 28 June 2004. He holds an Honours Degree in Management Studies and he is a member of the Chartered Accountants, Australia and New Zealand, and the Malaysian Institute of Accountants. He joined Comintel Sdn Bhd in 1994 and has held various positions in the Group. He currently assumes the post of Chief Financial Officer of the Group.

mR loh hoCk ChiAng(Executive Director)

Appointed to the Board on

28 June 2004

Member of the Chartered Accountants, Australia and New

Zealand, and the Malaysian Institute of Accountants

He attended all five (5) Board Meetings of Comcorp held during the financial year ended 31 January 2016. He has no family relationship with the other directors or major shareholders of Comcorp, no conflict of interest with Comcorp and has no conviction for offences within the past ten years.


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Dato’ Abdul Majid bin Omar, a Malaysian, aged 67, was appointed to the Board on 28 June 2004. He brings with him 32 years of varied experience with in-depth emphasis in banking and finance. He grounded his corporate experience with extensive business as well as operational responsibilities at various levels and positions in banking, money brokering and construction. His banking experience covers central, merchant and retail banking. He has also attended various banking courses and holds a Diploma in Advance Banking from the Asian Institute of Management. He has served in various operational and advisory capacities to Chairman of boards, board members and chief executive officer.

DAto’ ABDul mAJiD Bin omAR(Executive Director)

Appointed to the Board on 28 June 2004

Served in various operational and

advisory capacities to Chairman of boards, board members and

chief executive officer

Brings with him 32 years of varied

experience with in-depth emphasis

in banking and finance

He attended four (4) out of the five (5) Board Meetings of Comcorp held during the financial year ended 31 January 2016. He has no family relationship with the other directors or major shareholders of Comcorp, no conflict of interest with Comcorp and has no conviction for offences within the past ten years.


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Mr Mohamadon bin Abdullah, a Malaysian, aged 69, was appointed to the Board on 28 June 2004. He is a member of the Remuneration Committee. He graduated from the university of Malaya in 1972 with a Bachelor of Arts (Honours). He joined Malaysian Airline System Berhad (“MAS”) in June 1972 as a management trainee and was appointed as. Independent Non-Executive Director of MAS in June 2012. During his career in MAS, he attended various training programmes and gained wide experience in human resource management, sales and marketing (passenger and cargo sector), airlines catering, management development, centralised purchasing & procurement, in-flight services and flight operations. He has held the position of Senior General Manager of Corporate Services in MAS and is responsible for MAS’s legal affairs, insurance, management development, government relations and corporate communications, aviation safety and security and medical services. With his wide experience in management, his forte lies in the management of the overall operation of the Comcorp Group. He was re-designated as Executive Director of Comcorp on 21 March 2013. He is currently an Executive Director of Borneo Isthmus Corporation Sdn Bhd, a wholly-

mR mohAmADon Bin ABDullAh(Executive Director)

Appointed to the Board on28 June 2004

Executive Director of

Borneo Isthmus Corporation

Sdn Bhd

Member of the Remuneration

Committee

owned subsidiary of the Sarawak State Government providing Hospitality Management services to Borneo Convention Centre Kuching (“BCCK”). As Executive Director, he is responsible for the overall performance of BCCK.

He attended all the five (5) Board Meetings of Comcorp held during the financial year ended 31 January 2016. He is also a major shareholder of Comcorp and has no family relationship with the other directors, no conflict of interest with Comcorp and has no conviction for offences within the past ten years.


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Dato’ Ramli bin Abd Rahman, a Malaysian, aged 68, graduated from the university of Malaya. He was appointed to the Board on 12 November 2007 and subsequently appointed as a member of the Audit Committee on 26 December 2007. He was also appointed as the Chairman of the Remuneration Committee on 17 May 2010. He began his career in the Malaysian Civil Service in the Administrative and Diplomatic Service (PTD) in 1973. In his career of 31 years, he was extensively involved in managing the country’s national security serving mostly the Ministry of Home Affairs and Prime Minister’s Department. His long tenure in the government sector with vast management skills became the hallmark of his career until his retirement as Director General, National Anti Narcotics Agency, Ministry of Internal Security on 14 May 2004.

DAto’ RAmli Bin ABD RAhmAn(Independent Director)

Appointed to the Board on 12 November

2007

His retirement as Director General,

National Anti Narcotics Agency, Ministry of Internal

Security on 14 May 2004

Subsequently appointed as a member of the

Audit Committee on 26 December

2007

He attended four (4) out of the five (5) Board Meetings of Comcorp held during the financial year ended 31 January 2016. He has no family relationship with the other directors or major shareholders of Comcorp, no conflict of interest with Comcorp and has no conviction for offences within the past ten years.


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Mr Wong Mun Wai, a Malaysian, aged 59, was appointed to the Board and as Chairman of the Audit Committee on 1 October 2010. He is a Fellow Member of The Chartered Association of Certified Accountants, Associate Member of The Malaysian Institute of Chartered Secretaries and Administrators and also a member of the Malaysian Institute of Accountants. He started his professional career in 1981 as auditor before joining a Main Board company as a Finance Manager in 1993 and was promoted as Senior Finance Manager cum Company Secretary before leaving in 1996. From 1997 to 2003, he was the Chief Operating Officer and Executive Director of Second Board company. He was an Independent Director of a Mesdaq listed company from 2006 to 2008. Currently, he is with a consultancy firm with affiliation to Nexia International.

mR Wong mun WAi(Independent Director)

Appointed to the Board and as Chairman of the Audit

Committee on1 October 2010

Associate Member of The Malaysian

Institute of Chartered Secretaries and

Administrators and Member of the

Malaysian Institute of Accountants

Fellow Member of The Chartered

Association of Certified

Accountants



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Ms Lee Chai Bee, a Malaysian, aged 66, was appointed to the Board on 28 June 2004. She was also appointed as a member of the Audit Committee on 26 December 2007 and as a member of Remuneration Committee on 27 March 2014. She was admitted as a member of the Institute of Chartered Secretaries and Administrators in 1972 upon completing the professional examinations conducted by the said Institute. She subsequently started her career in the same year as an accounts assistant with Kidson Chartered Accountants in Birmingham, uK. In 1978, she joined Tan Chong Motor Holdings Bhd as their internal auditor. In 1985, she joined Auto Parts Manufacturers Bhd as Manager. In 1989, she was a Senior Manager of Operations for Kilang Alat-Ganti Letrik Kereta Sdn Bhd.

mS lee ChAi Bee(Independent Director)

Appointed to the Board on 28 June 2004

Member of Remuneration Committee on 27 March 2014

Appointed as a member of the Audit

Committee on 26 December 2007

In 1993, she joined Seldredge Industries Sdn Bhd as General Manager-Projects and was overseeing Oriental Metal Industries Sdn Bhd. In addition, she was also a Director of a subsidiary of Seldredge Industries Sdn Bhd, namely Parajaya Sdn Bhd where she served for 7 years.

She attended all the five (5) Board Meetings of Comcorp held during the financial year ended 31 January 2016. She has no family relationship with the other directors or major shareholders of Comcorp, no conflict of interest with Comcorp and has no conviction for offences within the past ten years.


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BOARD OF DIRECTORS

tAn SRi DAto’ SAmShuRi Bin ARShAD(Independent Non-Executive Chairman)

DAtuk AWAlAn Bin ABDul Aziz

(Executive Deputy Chairman)

mR leng keng hok @ lim keng hoCk(Managing Director)

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BOARD OF DIRECTORS

mR loh hoCk ChiAng(Executive Director)

DAto’ ABDul mAJiD Bin omAR(Executive Director)

mR mohAmADon Bin ABDullAh

(Executive Director)

DAto’ RAmli Bin ABD

RAhmAn(Independent

Director)

mR Wongmun WAi(Independent Director)

mS leeChAi Bee(Independent Director)

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CHAIRMAN’S STATEMENT

022

for the current financial year under review, the Group recorded a revenue of rm376.7 million and net profit attributable to owners of the Company of rm13.5 million which represents an earnings per share of 9.63 sen. This is one of the best financial performances achieved by the Group in recent years despite the global economic uncertainty.

tan Sri Dato’ Samshuri bin ArshadChairman

DeAR VAlueD ShAReholDeRS,On behalf of the Board of Directors, I am pleased to present the Annual Report and the Audited Financial Statements of Comintel Corporation Bhd and its subsidiaries for the financial year ended 31 January 2016.

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FinAnCiAl peRFoRmAnCe ReVieWFor the current financial year under review, the Group recorded a revenue of RM376.7 million and net profit attributable to owners of the Company of RM13.5 million which represents an earnings per share of 9.63 sen. This is one of the best financial performances achieved by the Group in recent years despite the global economic uncertainty.

opeRAtionAl oVeRVieWOur manufacturing segment was the main revenue contributor to the Group for the financial year ended 31 January 2016, contributing approximately 96% of the Group’s revenue. Our continuous efforts of cost improvement and initiatives to improve productivity and efficiency have begun to see its contribution to the bottom line. The weak Ringgit also has helped to position our products more competitively in the global markets especially to our North American customers which contributed about 80% of our Group’s total revenue. This segment is expected to continue to contribute substantially towards the revenue and earnings of the Group in the coming years.

Our communication, system integration and defence maintenance segments achieved total revenue of RM16.5million, an improvement of RM4.8 million as compared to the preceding financial year. Nevertheless, the revenue contribution from these two business segments are still very low overall as the fiscal spending by the government in telecommunications and IT infrastructure projects is limited due to the sluggish local economy environment.

CoRpoRAte goVeRnAnCeThe Board fully subscribes to the principles behind the recommendations contained in the Malaysian Code on Corporate

Governance. The Group, at all times, is committed to practicing good corporate governance, transparency and upholding professionalism and integrity in all our business dealings. Accordingly, the processes adopted by the Board in relation to various aspects of the recommendations are described in this annual report.

CoRpoRAte AnD SoCiAl ReSponSiBility (CSR)CSR is one of the initiatives which we have focused on as of prime importance. The Group initiated several CSR activities during the year including a “Post Raya Dinner with the residents of Rumah Titian Kaseh, Titiwangsa, Kuala Lumpur, Aid of RM8,000.00 to Nepal Earthquake Disaster victims, RM35,000.00 contribution in support to the unfortunate, cash donation to a widower of a fire victim from company and employees and annual blood donation in support of General Hospital blood bank.

outlook AnD pRoSpeCtSThe Group remains cautious due to the volatility of the industry it is involved and other factors such as increase of minimum wages, other costs of doing business, outsourcing competition and effects of foreign currency fluctuation in export business. Nevertheless, we are cautiously optimistic of the Manufacturing Segment’s future performance as we continuously focus on lean manufacturing processes for operational productivity, efficiency and for product quality improvement to capitalise on the opportunity in manufacturing outsourcing activities from our existing and new customers.

We believe green-based economy will be the future pillar of economic development not only here in Malaysia but the world as a whole. It is also our commitment to pursue development in a more sustainable manner to ensure Malaysia and the

world’s environment and natural endowments are conserved and protected for a better living of our future generation. In addition to our advanced gasification green energy generation system, we have developed innovative LED lighting products. These innovative LED products are ready for market now and we are confident this will contribute positively towards the Group’s earnings and sustainable green business model in the future. Going green and promote innovation in green technology is the core value closed to our hearts; we believe our valued stakeholders share this same vision of ours.

Barring any unforeseen circumstances, the Group is expecting a satisfactory performance in both revenue and profit in the coming year.

AppReCiAtionOn behalf of the Board, I wish to record our sincere appreciation to our valued shareholders, our loyal customers, business partners, vendors and bankers for their continuous support and valuable contribution to the growth of our Group. I would also like to record our sincere thanks to all our management and staff to whom I am most grateful for their hard work, dedication and commitment.

Last but not least, to my fellow members of the Board, thank you for your expertise, guidance and support throughout the year.

tan Sri Dato’ Samshuri bin ArshadChairman

CHAIRMAN’S STATEMENT

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CORPORATE SOCIAL RESPONSIBILITY

Comintel Corporation Bhd’s Hari Raya Open House for Corporate Social Responsibility (“CSR”)

RM35k contribution in support to the unfortunate.

Cash donation to a widower of a fire victim from company and employees .

Annual blood donation in support of GH blood bank.

8k In Aid to Nepal Earthquake Disaster victims.

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CORPORATE SOCIAL RESPONSIBILITY

Post Raya Dinner with the residents of Rumah Titian Kaseh, Titiwangsa, Kuala Lumpur

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MANAGEMENT DISCuSSIONAND ANALYSISThe information in this management discussion and analysis should be read in conjunction with the Company’s consolidated financial statements and the notes related thereto. The discussion of results, causes and trends should not be construed to imply any conclusions that such results, causes or trends will necessarily continue in the future.

oVeRVieW – ouR CompAny

We operate in 3 business segments; Manufacturing, Communication & System Integration (CSI) and Defence Maintenance (DM).

Our Manufacturing segment provides EMS services to multinational and international companies in the public safety, oil & gas, transportation, telecommunication and networking industries. Our portfolio of products manufactured also have applications in automobile, medical and consumer electronics markets. All of the products manufactured by our Manufacturing segment are for export market. For financial year ended 31 January 2016, approximately 80% of our EMS revenue was derived from North America, 15% from Asia-Pacific region and 5% from Europe.

With over 20 years in operation, our Manufacturing segment has demonstrated its ability to produce products of high quality standard demanded by our customers. We possess strong track records of box-build know how for niche high mix, low volume products. We have consistently proven ourselves a valuable supplier in the chosen industries by developing cost effective total manufacturing solutions to our customers.

With over 30 years experience in the RF communication solutions, our CSI segment offers sophisticated complex mission critical communication systems. Our CSI activities cover the area of ICT and RF communication solution systems in defence, public safety, transportation and broadcasting industries. Our DM segment is set up to provide in-country comprehensive maintenance support for the defence industry in Malaysia. We equip ourselves with state of the art test equipment and also possess the technical expertise in providing total integrated logistic support, ranging from repair, system maintenance, system testing and spare parts obsolescence management for the combat management system, fire control system, torpedo system, missile system, radar and communication system. All of our revenues from the CSI and DM segments were derived locally in Malaysia. However, the revenue contributions from these two segments are not encouraging due to the sluggish local economy environment and the reduction of fiscal spending by the Government of Malaysia.

The Company is principally operating in Malaysia. Our EMS facility is located in Kulim Hi-Tech Park with workforce strength of approximately 1,200 people. Our CSI and DM are operating in three locations in Malaysia; Shah Alam, Lumut and Kota Kinabalu.

FinAnCiAl peRFoRmAnCe oVeRVieW

For the financial year ended 31 January 2016, the Group recorded revenue of RM376.7 million and a profit attributable to the owners of the Company of RM13.5 million which represents earnings per share of 9.63 sen. This is one of the best financial performances achieved by the Group in recent years despite the global economic uncertainty.

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Selected financial information of the operating units of the Company for financial year ended 31 January 2016 and financial year ended 31 January 2015 were as follows:

y/e 2016(Rm’000)

y/e 2015(Rm’000)

Revenue

• Manufacturing 360,193 297,850

• SI & DM 16,530 11,688

Net Profit/(Loss)

• Manufacturing 21,533 7,526

• SI & DM (7,268) (8,484)

Manufacturing segment remains the main revenue and earnings contribution to the Group. For the financial year ended 31 January 2016, manufacturing segment revenue improved by approximately 21% as compared to year ended 31 January 2015 and contributed approximately 95.6% of the Group total revenue. The improvement was primarily attributed to the higher shipment of our products for the automotive industry. The automotive sector contributed RM52 million to the total revenue as compared to RM19 million in the preceding year. CSI and DM segments revenues improved by approximately 41% as compared to the previous year. However, the revenue contribution by these 2 segments is insignificant and contributed only approximately 4.4% of the Group’s revenue. In the future financial reporting for segmental results, CSI and DM segments will be combined as System Integration and Maintenance (SI&M) segment.

With the improved revenue, our manufacturing segment recorded a net profit of RM21.5 million as compared to RM7.5 million in the year ended January 2015. Our continuous efforts of cost improvement and initiatives to improve productivity and efficiency have begun to see its contribution to the bottom line. Our operating expenses are driven principally by the cost of labour, the cost of materials that we use and our ability to effectively and efficiently manage overhead cost. Lean manufacturing process and methodology implemented in the production floor has resulted in substantial cost saving and efficiency. The weak Ringgit also has helped to position our products more competitively in the global markets especially to our North American customers which contributed about 80% of our Group’s total revenue.

For the current financial year under review, CSI and DM segments have contributed higher revenue and narrowed the losses as compared to the preceding year. However, the earnings generated were not sufficient to offset the cost of operation. These two segments were not able to secure more contracts as the market opportunities are limited due to the prudent spending by the local ICT industries in general and the government spending in particular. In recent years’ budget, we have seen the government reduced substantially the fiscal spending, in particular the development expenditure in the ICT related initiative in the defence and public safety sectors.

MANAGEMENT DISCuSSION AND ANALYSIS

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MANAGEMENT DISCuSSION AND ANALYSIS

ReCent ACtiVitieS

Acquisition

With the aim to further consolidate and solidify our maintenance and after sale activities, we have completed the acquisition of remaining 30% shareholding in Comlenia Sdn Bhd from Selex Integrati S.p.A. in Liquidazione. With effect from 14th March 2016, Comlenia Sdn Bhd is a 100% subsidiary of the Company. Subsequently, on 12th April 2016, the name of the company was changed to Comintel Tech Services Sdn Bhd to reflect the principal activities of the company.

litigation

Comintel Sdn Bhd (“Comintel”), a wholly owned subsidiary of the Company has an on-going litigation with uTV Sdn Bhd (“1st Defendant”) and Tan Sri Dato’ Seri Vincent Tan Chee Yioun (“2nd Defendant”). On 3rd October 2013, Kuala Lumpur High Court ruled in favour of Comintel the claims for RM11.2 million and the storage and insurance claim of RM284 thousand together with interest thereon. The Court of Appeal’s panel of judges has on 28th August unanimously dismissed the 1st Defendant’s appeal and affirmed the High Court’s decision. On 3rd March 2016, the Federal Court allowed the application by the Defendants for leave to appeal the decision by the Court of Appeal and no date has been fixed for the appeal before the Federal Court.

own Designed products

With the investment and concerted efforts in R&D, we have developed innovative LED lighting products with built-in intelligence. We have also registered a LED lighting product with patent pending status. These LED lighting products are ready for market now. We have also designed the smart meter with communication intelligence and are currently going through the process of certification. All these products will be manufactured and marketed by us. This is part of the initiatives to grow the revenue and earnings of the Company and at the same time diversify into Original Design Manufacturer (ODM) and increase the product portfolio.

outlook and pRoSpeCt

The Group remains cautious due to the volatility of the industry it is involved and other factors such as increase of minimum wages, other costs of doing business, outsourcing competition and effects of foreign currency fluctuation in export business. Nevertheless, we are cautiously optimistic of the Company's future performance as we continuously focus on lean manufacturing processes for operational productivity, efficiency and for product quality improvement to capitalise on the opportunity in manufacturing outsourcing activities from our existing and new customers.

We believe green-based economy will be the future pillar of economic development not only here in Malaysia but the world as a whole. It is also our commitment to pursue development in a more sustainable manner to ensure Malaysia and the world’s environment and natural endowments are conserved and protected for our future generations. In addition to our advanced gasification green energy generation system, we have developed innovative LED lighting products. These innovative LED products are ready for market now and we are confident this will contribute positively towards the Group’s earnings and sustainable green business model in the future. Going green and promote innovation in green technology is the core value close to our hearts; we believe our valued stakeholders share this same vision of ours.

Barring any unforeseen circumstances, the Group is expecting a satisfactory performance in both revenue and earnings in the coming year.

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CORPORATE GOVERNANCE STATEMENT

The Board of Directors (“Board”) of Comintel Corporation Bhd (“Comcorp” or “the Company”) is committed to manage the Comcorp Group in line with corporate governance practices as proposed in the Malaysian Code on Corporate Governance 2012 (the “Code”) and the Main Market Listing Requirements (“LR”) of the Bursa Securities Malaysia Berhad (“Bursa Securities”). The Board firmly believes that corporate accountability complements business practices that will facilitate the achievement of the Company’s goals and objectives.

To this end, the Board continues to implement the recommendations of the Code, which sets out the principles and best practices on structures and processes that companies may use in their operations towards achieving the optimal governance framework.

The Board is pleased to disclose to the shareholders on the manner in which the Group has applied the principles of the Code and the extent to which the Company has complied with the best practices of the Code throughout the financial year ended 31 January 2016.

A. DiReCtoRS

1. Responsibilities

The Board is made up of Directors who have an extensive range of skills, experience and knowledge and who are overall accountable for the corporate governance and strategic direction of the Group and are entrusted to exercise reasonable and due care in employing the Company’s resources in the best interests of its shareholders and to safeguard the Company’s assets.

Three (3) Committees, namely the Audit Committee (“AC”), the Nomination Committee (“NC”) and Remuneration Committee (“RC”) while Risk Management units (“RMu”) have been formed to assist the Board in the deliberation of issue within their respective functions and terms of reference. These Committees, as entrusted by the Board, will discuss relevant issues and report to the Board with their recommendations. However, this does not absolve the Board’s ultimate responsibility of decision-making. RMu were formed at the beginning of this year, headed by the respective Heads of Departments/Divisions to assist the Board in the area of risk management.

As certain Board functions are delegated to Management, the Board ensures Management is of the highest calibre and has in place programmes to train and develop the skills of key personnel for succession of Management.

The Directors observe a code of ethics in accordance with the Company Directors’ Code of Ethics established by the Companies Commission of Malaysia. The following had been established and approved by the Board at its meeting held on 23 May 2013:-

• Board Charter• Corporate Disclosure Policy• Whistle Blowing Policy• Risk Management Policy

2. Board Balance

For the financial year ended 31 January 2016, the Board comprised of nine (9) Directors, with five (5) Executive Directors, one (1) Independent Non-Executive Director and three (3) Independent Directors. There is a clear

ANNUAL REPORT 2016

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division of responsibilities at the head of the Company to ensure a balance of authority and power. The wide spectrum of knowledge, skills and experience of the Board members give added strength to the leadership which is necessary for the effective stewardship of the Group.

The Board acknowledges the Code’s recommendation of at least 30% women representative in boardroom and will take the necessary measures to comply with the recommendation.

The Board recognises the importance and contribution of its Independent Directors. They represent the element of objectivity, impartiality and independent judgement of the Board. This ensures that there is adequate check and balance at the Board level. The three (3) Independent Directors of the Company provide the Board with vast and varied exposure, expertise and broad business and commercial experience.

Tan Sri Dato’ Samshuri bin Arshad, the Independent Non-Executive Chairman leads the Board while the executive management of the Company is led by Mr Leng Keng Hok @ Lim Keng Hock, the Managing Director.

A brief profile of the Directors is set out on pages 11 to 19 of this Annual Report.

3. Appointment to the Board

The Nomination Committee makes independent recommendations for appointments to the Board. In making these recommendations, the Nomination Committee assesses the suitability of candidates taking into account the required mix of skills, knowledge, expertise and experience, professionalism, integrity, competencies, time commitment and other qualities of the candidates before recommending their appointments to the Board for approval.

4. Board meetings

In order to ensure that the Comcorp Group is efficiently managed, the Board meets on a quarterly basis and additionally as and when required, with a formal schedule of matters specifically reserved for its deliberation and decision.

During the financial year under review, five (5) Board meetings were held and where it deliberated and considered a variety of matters affecting the Company’s operations including the Group’s financial results, business plan and the direction of the Group.

The Boards’ attendance record is as follows:

Directors Total Meetings Attended

Tan Sri Dato’ Samshuri bin Arshad 5/5

Datuk Awalan bin Abdul Aziz 5/5

Mr Leng Keng Hok @ Lim Keng Hock 5/5

Dato’ Ramli bin Abd Rahman 4/5

Mr Loh Hock Chiang 5/5

Dato’ Abdul Majid bin Omar 5/5

Mr Mohamadon bin Abdullah 5/5

Mr Wong Mun Wai 5/5

Ms Lee Chai Bee 5/5 The Board is updated on Comcorp Group’s affairs at Board meetings. The Directors are encouraged to obtain

information on the Group’s activities by consultation with senior management at anytime. This is to ensure and enable the Board members to discharge their duties and responsibilities competently and in an informed manner.

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5. Supply of information

Board members are provided with the notice, setting out the agenda and subsequently the comprehensive Board papers in a timely manner prior to Board meetings. This is to ensure and enable the members of the Board to discharge their duties and responsibilities competently and in a well-informed manner. All members of the Board have access to the advice and services of the Company Secretary, and where necessary, independent professional advisers. They also have unlimited access to all information with regard to the activities of the Comcorp Group.

6. Board Committees

The Board is assisted by the following Board Committees:

(a) Audit Committee

The Audit Committee comprises of three (3) Independent Directors. The details are set out on pages 11 to 19 of this Annual Report.

The members of the Audit Committee comprised:

• Mr Wong Mun Wai (Chairman)• Dato’ Ramli bin Abd Rahman• Ms Lee Chai Bee

(b) nomination Committee

The Nomination Committee comprises of one (1) Independent Non-Executive Director and one (1) Independent Director. The Committee is responsible for proposing and recommending new nominees to the Board as well as directors to fill seats on Board committees; assessing the effectiveness of the Board and the contribution of each individual director on an on-going basis.

The members of the Nomination Committee comprised:

• Tan Sri Dato’ Samshuri bin Arshad (Chairman)• Mr Wong Mun Wai

Summary of Activities

The NC convened one (1) meeting during the financial year ended 31 January 2016 which was attended by all the members and the key activities carried out are as follows –

(a) Reviewed and assessed the performance and effectiveness of the Board of Directors, the Committees of the Board and the performance of each Director for financial year ended 31 January 2016.

(b) Recommended the re-election of directors at the Thirteenth Annual General Meeting (“13th AGM”).

(c) Recommended the continuing in office of Ms Lee Chai Bee as an Independent Director of the Company as she has served as an Independent Director for more than nine (9) years.


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(c) Remuneration Committee

The Remuneration Committee, comprising of two (2) Independent Directors and one (1) Executive Director, is responsible for the implementation of remuneration policy and to make recommendation to the Board on the remuneration packages of the Executive Directors. The ultimate responsibility for determining remuneration of the Executive Directors lies with the Board. The Board also determines the remuneration of the Non-Executive Directors.The members of the Remuneration Committee comprised:

• Dato’ Ramli bin Abd Rahman (Chairman)• Ms Lee Chai Bee• Mr Mohamadon bin Abdullah

(d) Risk management units

The Risk Management units comprises of three (3) units, namely Manufacturing unit, Communication & System Integration unit and Defence Maintenance unit. Each unit is headed by the Head of the Department/Division. Their main function is to assist in Identification and Quantification of risks and providing suggestions and recommended action plans required to protect the company’s interests and increase the probability of achieving its stated goals and objectives.

7. Re-election

The Articles of Association of the Company provide that at least one-third of the Directors are subject to retirement by rotation at each Annual General Meeting and that all Directors shall retire at least once in every three years. The Articles of Association also provide that a Director who is appointed by the Board in the course of the year is subject to re-election at the next Annual General Meeting to be held following his appointment.

Directors over seventy years of age are required to submit themselves for re-appointment annually in accordance with Section 129(6) of the Companies Act, 1965.

8. Directors’ training

All Directors of the Company have completed the Mandatory Accreditation Programme. The Directors of the Company attended various conferences and seminars organised by external organisers to keep abreast of industry developments and trends and to assist the Directors in the discharge of their duties.

Conferences, seminars and training programmes attended by the Directors included:-

• Goods and Services Tax In-House Training held on 4 & 5 March 2015• Getting Women on Board of Public Listed Company on 8 May 2015• Corporate Governance: Balancing Rules & Practices on 11 May 2015• Technical Briefing on Computation of Percentage Ratios (Chapter 10 of Main Market and ACE Market LRs)

for Company Secretaries of Listed Issuers on 2 June 2015• Corporate Governance Breakfast Series – How to Maximise Internal Audit on 9 September 2015• Corporate Governance Breakfast Series with Directors: Future of Auditor Reporting – The Game Changer

for Board room on 2 November 2015


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B. DiReCtoRS’ RemuneRAtion

The Code states that the remuneration of Directors should be determined so as to ensure that the Company attracts and retains the Directors needed to manage the Company successfully. In Comcorp, remuneration for Executive Directors is structured so as to link reward to corporate and individual performance. In the case of Non-Executive Directors, the quantum of remuneration reflects the level of experience and responsibility undertaken by them during the period under review.

The details of directors’ remuneration for the financial year ended 31 January 2016, distinguishing between Executive and Non-Executive Directors, are as follows:

Categories Executive Directors (RM) Non-Executive Directors (RM)

Salary & Other Emoluments 1,552,800 -

Fees 66,000 120,000

Total 1,618,800 120,000

The number of Directors whose total remuneration for the financial year ended 31 January 2016 falls within the required disclosure bands are set out below:

Remuneration Band Executive Non-Executive

RM50,000 and below 1 4

RM50,001 to RM100,000 - -

RM100,001 to RM500,000 3 -

RM500,001 to RM1,000,000 1 -

C. ShAReholDeRS

The Board places emphasis on timely and equitable dissemination of information to shareholders on Comcorp Group’s performance. Pursuant to the Listing Requirements of Bursa Securities, timely announcements are made to the public in regard to the Group’s corporate proposals, financial results and other requisite matters. The Company’s Annual General Meeting serves as a forum for dialogue with shareholders. At the Annual General Meeting, shareholders are encouraged to participate in the question and answer session. The status of all resolutions proposed at the Annual General Meeting is submitted to Bursa Securities at the end of the meeting day.

Apart from contacts at general meetings, there is no formal programme or schedule of meetings with investors, shareholders, stakeholders and the public generally. However, the management has the option of calling for meetings with investors/analysts if it is deemed necessary.


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D. ACCountABility AnD AuDit

1 Financial Reporting

The Board is responsible to present a balanced and comprehensive assessment of the Comcorp Group’s financial position to shareholders by means of the annual and quarterly reports and other published information. In this regard, the Board is responsible for the preparation of financial statements that present a true and fair view of the financial state of affairs of the Comcorp Group.

2 internal Control

The Statement on Risk Management and Internal Control as set out on page 36 and 37 of this Annual Report provides an overview of the state of internal controls within the Group.

3 Relationship with Auditors

The Company, through the Audit Committee (“AC”) has an appropriate and transparent relationship with the external auditors. Key features underlying the relationship of the AC with the external auditors are included in the AC Report as set out on pages 38 to 40 of this Annual Report.

e. DiReCtoRS’ ReSponSiBility StAtement

The Directors are responsible for the preparation of financial statements prepared for each financial year to give a true and fair view of the state of affairs of the Group and of the Company and of the results and cash flows of the Group and of the Company for the financial year then ended.

In preparing those financial statements the Directors have:• ensured compliance with applicable approved accounting standards;• adopted suitable accounting policies and apply them consistently; and• made judgements and estimates that are reasonable and prudent.

The Directors are responsible for ensuring that proper accounting and other records are kept which disclose with reasonable accuracy at any time the financial position of the Group and the Company and that the underlying financial statements are prepared in compliance with the provisions of the Companies Act, 1965.


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SuSTAINABILITY IN MARKET PLACE

The Company is continuously and constantly interacting and engaging with our stakeholders. We gain meaningful information about the expectations of the stakeholder groups within and outside of our Company through these interactions as illustrated below -

StAkeholDeR oBJeCtiVeS hoW ComCoRp engAgeS

Customers Provide value in line with our customers’ expectations

Conduct ongoing customer support correction action;

Conduct sales and technical training; Conduct on-going business review; Conduct ongoing customer loyalty

survey.

Employees Built an environment where all employees can fulfill their maximum potential

Provide ongoing training; Conduct ongoing employees

engagement activities; Conduct annual employees

motivation and satisfaction survey.

Global Environment Strengthen efforts toward environment management that is integrated across entire company

Comply with all laws and regulatory compliances;

Set social and environment targets; Increase recycling and driving carbon

neutral on what we do.

Suppliers Strengthen our engagement with suppliers Conduct annual review of suppliers; Conduct annual assessment of logistic

service providers’ performance.+

Local communities Contribute to positive social change through our business activities and societal participation by our employees

Engage our employees; Engage with local authorities; Engage with local orphanages, old

folks’ homes and so on; Employee volunteering.

Shareholders/ Investors Carry out sound and highly transparent management

Quarterly Board of Directors’ Meeting; Adherence to best practices in

corporate governance.

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the BoARD'S ReSponSiBilitieS

The Board of Directors ("the Board") is fully committed in discharging its responsibilities by establishing a sound system of risk management and internal control to safeguard the Group's assets and to enhance shareholders' investment, as well as reviewing its adequacy and effectiveness of the said system.

The Board reviews the risk management process on a regular basis in identifying, evaluating and managing significant risks with the intention to effectively mitigating the risks that may impede the achievement of the Group of companies' business and corporate objectives.

The duty of reviewing the adequacy and effectiveness of the internal control system has been assigned to the Audit Committee ("AC"), to seek assurance on the adequacy and effectiveness of the internal control system through reports it receives from independent reviews conducted by the Internal Audit function.

The risk management and internal control system is designed to manage rather than eliminate the significant business risks, hence it can only provide reasonable but not absolute assurance against material misstatement, fraud or loss.

the RiSk mAnAgement pRoCeSS

The Group recognises that risk represents an integral part of its business activities. Key Management staff and Heads of Department are delegated with the responsibility to manage identified principle risks within defined parameters and standards. Regular Management and operational meetings are held to deliberate key risks and the appropriate mitigating controls. Significant risks affecting the Group's strategic and business plans are tabled to the Board at their scheduled meetings. This ongoing process is undertaken at all the major subsidiaries of the Group, as well as collectively at the Group level.

The Board is responsible for overseeing the on-going process to identify, evaluate and manage significant risks for the year under review. In compliance with the Guidelines for Directors of Listed Issuers which was issued by the Bursa Securities Malaysia Berhad ("Bursa Securities"), the Board shall re-evaluate the Group's existing risk management process to ensure it is appropriate for the Group's requirements.

the inteRnAl ContRol pRoCeSS

The key aspects of the internal control process are:

• The Board and the AC meet at least every quarter to discuss matters raised by Management, Internal Audit and the external auditors on business and operational matters including potential risks and control issues.

• The Board has delegated the responsibilities to relevant committees established by the Board to implement and monitor the Board's policies on control.

• Internal procedures and policies are documented in manuals, which are regularly reviewed and updated to meet changing business, operational requirements and statutory reporting needs.

• Performance and cash flow meetings are conducted on a monthly basis to facilitate review and monitoring of the financial performance and cash flow position.

• Regular visits are made to operating units by members of the Board and senior management.

For the year under review, some weaknesses and deficiencies in the internal controls were identified but were deemed not significant to be mentioned in this Statement as none of them have material impact on the business or operations of the Group. Nevertheless, measures had been taken to address those weaknesses.

STATEMENT ON RISK MANAGEMENT & INTERNAL CONTROL

ANNUAL REPORT 2016

37

STATEMENT ON RISK MANAGEMENT & INTERNAL CONTROL

the inteRnAl AuDit FunCtion

The internal audit team, outsourced to an independent professional services firm, assists the Audit Committee to review the control processes implemented by the management from time to time and reports quarterly on its findings and recommendations to the Audit Committee. The duties and responsibilities of the Audit Committee are detailed in the Terms of Reference of the Audit Committee. The Audit Committee, by considerating both internal and external audit reports, is able to gauge the effectiveness and adequacy of the internal control system, for presentation of its findings to the Board.

There was no material or significant losses incurred during the financial year as a result of weakness in internal control. The Board and management continue to take appropriate measures to improve and strengthen the control environment.

ReVieW oF StAtement By exteRnAl AuDitoRS

Pursuant to Paragraph 15.23 of the Main Market Listing Requirements of Bursa Securities, the external auditors have reviewed this Statement for inclusion in the Annual Report of the Group for the financial year ended 31/01/2016 and reported to the Board that nothing has come to their attention that caused them to believe that the Statement is inconsistent with their understanding of the processes adopted by the Board in reviewing the adequacy and integrity of the system of risk management and internal control.

ConCluSion

In line with the Guidelines, the Group Chief Executive Officer has provided assurance that the Group's risk management and internal control systems have operated adequately and effectively, in all material aspects, in line with the Group's objectives during the financial year under review.

ANNUAL REPORT 2016

38

AuDIT COMMITTEEREPORT

In line with the Malaysian Code of Corporate Governance (“Code”) and in compliance with the Main Market Listing Requirements of Bursa Malaysia Securities Berhad (“MMLR”), all three (3) members of the Audit Committee (“AC”) are Independent Directors.

Mr Wong Mun Wai, the AC Chairman is a Fellow member of the Association of Chartered Certified Accountants and a member of the Malaysian Institute of Accountants. In this respect, the Company is in compliance with paragraph 15.09(1)(c)(i) of the MMLR.

memBeRS

1. Mr Wong Mun Wai (Chairman)2. Dato’ Ramli bin Abd Rahman3. Ms Lee Chai Bee

meetingS

The AC convened five (5) meetings during the financial year ended 31 January 2016. The details of the attendance are as follows:

AC members no. of meetings attended

Mr Wong Mun Wai (Chairman) 5/5

Dato’ Ramli bin Abd Rahman 4/5

Ms Lee Chai Bee 5/5

The AC has met twice with the external auditor without the presence of the Executive Board members.

teRmS oF ReFeRenCe

objective

The objective of the AC is to assist the Board of Directors in the effective discharge of its fiduciary responsibilities relating to corporate governance, financial accounting and reporting practices, the audit process, internal control and compliance of statutory and MMLR.

Composition

The AC shall be appointed by the Board of Directors (“Board”) from among its members which fulfils the following requirements:

(a) the AC must be composed of no fewer than 3 members;(b) all the AC members must be non-executive directors, with a majority of them being independent directors; and at

least one member of the AC:

(i) must be a member of the Malaysian Institute of Accountants; or(ii) if he is not a member of the Malaysian Institute of Accountants, he must have at least three (3) years’ working

experience and:• he must have passed the examinations specified in Part I of the 1st Schedule of the Accountants Act 1967; or• he must be a member of one of the associations of accountants specified in Part II of the 1st Schedule of

the Accountants Act 1967.(iii) fulfils such other requirements as prescribed or approved by the Bursa Malaysia Securities Berhad.

ANNUAL REPORT 2016

39

AuDIT COMMITTEE REPORT

In the event of any vacancy in the AC resulting in the non-compliance of the abovementioned composition, the Board of Directors shall fill the vacancy within three (3) months of that event.

The members of the AC shall elect a chairperson from among their numbers who shall be an independent director.

meetings

The Committee shall meet at least five (5) times a year. At least twice a year the AC shall meet the external auditors without executive Board members present.

In addition, the chairperson may call a meeting of the Committee if requested to do so by any committee member, internal auditors or external auditors.

Two (2) members, who shall be independent and non-executive directors, shall constitute a quorum for meetings.

The Chief Financial Officer and the Head of Internal Audit shall normally attend meetings. The presence of external auditor or his representative may be requested, if required. Other Board members, employees and external independent professional advisers may attend meetings upon the invitation of the AC.

The Company Secretary shall act as secretary of the AC and shall be responsible for drawing up the agenda with the concurrence of the chairperson and circulating it, supported by relevant documentation to Committee members prior to each meeting.

The Secretary shall also be responsible for keeping the minutes of meetings of the AC and circulating them to the AC members and the Board.

Authority

The AC shall, wherever necessary and reasonable for the performance of its duties, have the following authority as empowered by the Board:

(a) have authority to investigate any matter within its terms of reference;(b) have the resources which are required to perform its duties;(c) have full and unrestricted access to any information pertaining to the Company or group;(d) have direct communication channels with the external auditors and persons carrying out the internal audit function

or activity;(e) be able to obtain independent professional or other advice; and(f) be able to convene meetings with the external auditors, the internal auditors or both, excluding the attendance

of other directors and employees of the Company, whenever deemed necessary.

Functions of the Audit Committee

The AC shall, amongst others, discharge the following functions:

1. Review the following and report the same to the Board:(a) with the external auditor, the audit plan;(b) with the external auditor, his evaluation of the system of internal controls;(c) with the external auditor, his audit report;(d) the assistance given by the employees to the external auditor;(e) the adequacy of the scope, functions, competency and resources of the internal audit functions and that it

has the necessary authority to carry out its work;

ANNUAL REPORT 2016

40

(f) the internal audit programme, processes, the results of the internal audit programme, processes or investigation undertaken and whether or not appropriate action is taken on the recommendations of the internal audit function;

(g) the quarterly results and year end financial statements, prior to the approval by the Board, focusing particularly on:• changes in accounting policies and practices;• significant adjustments arising from the audit;• significant and unusual events;• the going concern assumption; and• compliance with accounting standards and other legal requirements;

(h) any related party transaction and conflict of interest situation that may arise within the Company or group including any transaction, procedure or course of conduct that raises questions of management integrity;

(i) any letter of resignation from the external auditors; and(j) whether there is reason (supported by grounds) to believe that the company’s external auditor is not suitable

for re-appointment; and

2. Recommend the nomination of a person or persons as external auditors, and review the audit fees.

SummARy oF ACtiVitieS oF the AuDit Committee

The Audit Committee has discharged the following functions and duties during the financial year ended 31 January 2016:

• Reviewed the quarterly financial result announcements and recommended to the Board for approval;• Reviewed the Group’s annual audited financial statements and recommended to the Board for approval;• Reviewed the external auditors’ scope of work, proposed audit fees and audit plan for the year;• Reviewed the external auditors’ report and their audit findings;• Assessed the Group’s financial performance;• Reviewed related party transactions within the Group;• Reviewed and deliberated on issues raised in the audit reports by internal auditors in relation to weaknesses in

internal controls; and• Reviewed its Terms of Reference to conform to amendments to the LR of Bursa Securities and the Code.

inteRnAl AuDit

The Board recognised the importance of the internal audit function and the independent status required for it to carry out its functions effectively. The internal audit functions has been outsourced to a professional services firm, Kloo Point Risk Management Services Sdn Bhd, which is tasked with the aim of assisting the AC in assessing risks, recommend measures to mitigate risks, establish cost effective controls and assess proper governance process.

The firm has conducted ongoing review of the adequacy and effectiveness of the system of internal control. The audit conducted including reviewing the extent of compliance with the established internal policies and procedures governing the operations of the Group. In undertaking each of the audit assignment, the internal auditor reviewed the risk management procedures with emphasis on major risk areas, performed relevant compliance and substantive audit procedures and reported his findings, recommendations and the response from the management to the Audit Committee. The internal auditor has, where necessary follow up on the implementation and satisfactory dispositions of all audit findings and recommendations on all previous audits. Some internal weaknesses were identified during the financial year under review, all of which have been or are being addressed by the management.

The total costs incurred for the internal audit function for the Group since 1 February 2015 up to 31 January 2016 amounted to RM50,600.00.

AuDIT COMMITTEE REPORT

ANNUAL REPORT 2016

41

ADDITIONAL COMPLIANCE INFORMATION

The following information is provided in compliance with the Main Market Listing Requirements of the Bursa Malaysia Securities Berhad.

1. non-AuDit FeeS

The Group’s non-audit fees amounted to RM17,000.00 was paid to the external auditors for the financial year ended 31 January 2016.

2. VARiAtion in ReSultS

There were no material variations between the audited results for the financial year ended 31 January 2016 and the unaudited results for the quarter ended 31 January 2016 of the Group.

3. mAteRiAl ContRACtS

There were no material contracts entered into by the Company or any of its subsidiaries involving Directors’ and major shareholders’ interests, or relate to loan subsisting as at 31 January 2016 or entered into during the financial year ended 31 January 2016 except as disclosed in the Financial Statements as set out in this Annual Report.

4. impoSition oF SAnCtionS AnD/oR penAltieS

There were no sanctions and/or penalties imposed on the Company and its subsidiaries, Directors or management by the relevant authorities during the financial year ended 31 January 2016.

5. DepoSitoRy ReCeipt pRogRAmme

The Company did not sponsor any depository receipt programme during the financial year ended 31 January 2016.

6. ReCuRRent RelAteD pARty tRAnSACtionS oF A ReVenue oR tRADing nAtuRe

The Recurrent Related Party Transactions of a Revenue or Trading Nature are disclosed in Note 23 to the Financial Statements of this Annual Report.

ANNUAL REPORT 2016

42

FINANCIAL HIGHLIGHTS

FinAnCiAl yeAR 2016 Rm’000

2015 Rm’000

2014 Rm’000

2013 Rm’000

2012 Rm’000

Turnover 376,724 309,538 315,032 416,201 301,469

Profit/(Loss) Before Taxation 15,280 (2,059) (4,643) 6,778 (7,199)

Profit/(Loss) For the Financial Year 12,683 (1,816) (4,503) 2,779 (7,094)

Profit/(Loss) Attributable To Owners of The Company 13,485 (1,396) (3,979) 3,447 (7,058)

Total Assets 269,808 259,836 249,978 260,243 210,210

Shareholders’ Funds 110,975 97,056 96,233 100,033 87,042

Net Earning/(Loss) Per Share (in sen) 9.63 (1.00) (2.84) 2.46 (5.04)

Net Tangible Assets Per Share (in RM) 0.80 0.69 0.69 0.71 0.62

tuRnoVeR (Rm’000) totAl ASSetS (Rm’000) ShAReholDingS’ FunDS (Rm’000)

02016 2016 20162015 2015 2015

376,

724

269,

808

110,

975

309,

538

500,000

400,000

300,000

300,000

250,000

200,000

150,000

120,000

100,000

80,000

60,000

40,000

20,000

0

10,000

5,000

200,000

100,000

20,000

15,000

15,000

12,000

9,000

6,000

3,000

- 3,000

- 6,000

- 9,000

0

10,000

-10,000

5,000

- 5,000

0

0

259,

836

97,0

56

96,2

33

100,

033

87,0

42249,

978

260,

243

210,

210

315,

032 41

6,20

1

301,

469

2014 2014 20142013 2013 20132012 2012 2012

pRoFit / (loSS) BeFoRe tAxAtion (Rm’000)

2016 2015

(2,0

59)

(4,6

43)

6,77

8

(7,1

99)

2014 2013 2012

15,2

80

pRoFit / (loSS) FoR the FinAnCiAl yeAR (Rm’000)

2016 2015

(1,8

16)

(4,5

03)

2,77

9

(7,0

94)

2014 2013 2012

12,6

83

44 Report of the Directors

48 Consolidated Statement of Financial Position

50 Consolidated Statement of Profit or Loss and Other Comprehensive Income

51 Consolidated Statement of Changes in Equity

52 Consolidated Statement of Cash Flows

54 Statement of Financial Position

55 Statement of Profit or Loss and Other Comprehensive Income

56 Statement of Changes in Equity

57 Statement of Cash Flows

58 Notes to the Financial Statements

107 Statement by Directors

107 Statutory Declaration

108 Independent Auditors’ Report to the Members of Comintel Corporation Bhd

FINANCIALSTATEMENTS

ANNUAL REPORT 2016

44

REPORT OF THE DIRECTORS

The Directors have pleasure in presenting their report together with the audited financial statements of the Group and of the Company for the financial year ended 31 January 2016.

pRinCipAl ACtiVitieS

The Company is principally engaged in investment holding. The principal activities of the subsidiary companies are described in Note 5 to the financial statements.

There have been no significant changes in the nature of these activities during the financial year.

FinAnCiAl ReSultS

group Company

Rm Rm

Profit / (Loss) for the financial year 12,682,626 (1,557,131)

Attributable to:

Owners of the Company 13,484,845 (1,557,131)

Non-controlling interests (802,219) -

12,682,626 (1,557,131)

DiViDenDS

There were no dividends paid, declared or proposed by the Company since the end of the previous financial year.

ReSeRVeS AnD pRoViSionS

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

BAD AnD DouBtFul DeBtS

Before the financial statements of the Group and of the Company were made out, the Directors took reasonable steps to ascertain that action had been taken in relation to the writing off of bad debts and the making of provisions for doubtful debts, and all known bad debts had been written off and adequate provision had been made for doubtful debts.

At the date of this report, the Directors are not aware of any circumstances that would render the amount written off for bad debts, or the amount of the provision for doubtful debts, in the Group and in the Company, inadequate to any substantial extent.

VAluAtion methoDS

At the date of this report, the Directors are not aware of any circumstances which have arisen which render adherence to the existing methods of valuation of assets or liabilities in the financial statements of the Group and of the Company misleading or inappropriate.

ANNUAL REPORT 2016

45

CuRRent ASSetS

Before the financial statements of the Group and of the Company were made out, the Directors took reasonable steps to ascertain whether any current assets, other than debts, were unlikely to realise in the ordinary course of business their value as shown in the accounting records of the Group and of the Company and to the extent so ascertained were written down to an amount that they might be expected to realise.

At the date of this report, the Directors are not aware of any circumstances that would render the values attributed to the current assets in the financial statements of the Group and of the Company misleading.

Contingent AnD otheR liABilitieS

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

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

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

No contingent liability or other liability of the Group and of the Company 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.

itemS oF An unuSuAl nAtuRe

The results of the operations of the Group and of the Company for the financial year were not, in the opinion of the Directors, substantially affected by any item, transaction or event of a material and unusual nature other than those disclosed in the notes to the financial statements.

There has not arisen in the interval between the end of the financial year and the date of this report any item, transaction or event of a material and unusual nature likely, in the opinion of the Directors, to affect substantially the results of the operations of the Group and of the Company for the current financial year.

ChAnge oF CiRCumStAnCeS

At the date of this report, the Directors are not aware of any circumstances, not otherwise dealt with in this report or the financial statements of the Group and of the Company, that would render any amount stated in the respective financial statements misleading.

ShARe CApitAl

During the financial year, no issue of shares has been made by the Company.

ShARe Buy-BACk

At the Annual General Meeting (AGM) of the Company held on 25 June 2015, the shareholders granted an authority for the share buy-back of up to 10% of the issued and paid-up share capital of the Company. This authority will expire and be renewed at the forthcoming AGM of the Company.

During the financial year, the Company has not purchased any of its own shares, retained its shares as treasury shares or cancelled its shares.


ANNUAL REPORT 2016

46

optionS

No option has been granted to any person to take up unissued shares of the Company and no shares have been issued by virtue of any option.

DiReCtoRS oF the CompAny

The Directors who served since the date of the last report are :-

Tan Sri Dato’ Samshuri Bin Arshad Datuk Awalan Bin Abdul AzizLeng Keng Hok @ Lim Keng HockDato’ Abdul Majid Bin OmarLoh Hock ChiangMohamadon Bin AbdullahDato’ Ramli Bin Abd RahmanLee Chai Bee (F)Wong Mun Wai

In accordance with the Articles of Association, DATO’ ABDuL MAJID BIN OMAR and MR. LOH HOCK CHIANG retire by rotation from the Board of Directors at the forthcoming Annual General Meeting, and being eligible, offer themselves for re-election.

TAN SRI DATO’ SAMSHuRI BIN ARSHAD and MR. LENG KENG HOK @ LIM KENG HOCK retire pursuant to Section 129 of the Companies Act, 1965 at the forthcoming Annual General Meeting and offer themselves for re-appointment in accordance with Section 129 of the Companies Act, 1965 to hold office until the conclusion of the Company’s next Annual General Meeting.

DiReCtoRS’ inteReSt

According to the register of Directors’ shareholdings maintained by the Company in accordance with Section 134 of the Companies Act, 1965, the following Directors, who held office at the end of the financial year, had interests in the shares of the Company and its related corporations as stated below:-

ordinary shares of Rm0.50 eachBalance @ 01.02.2015 Bought Sold

Balance @ 31.01.2016

Direct interestTan Sri Dato' Samshuri Bin Arshad 4,897,328 - - 4,897,328Leng Keng Hok @ Lim Keng Hock 626,900 - - 626,900Dato' Abdul Majid Bin Omar 40,000 - 30,000 10,000Loh Hock Chiang 100,000 - - 100,000Mohamadon Bin Abdullah 4,114,885 - - 4,114,885Lee Chai Bee (F) 30,000 - - 30,000

indirect interestLeng Keng Hok @ Lim Keng Hock 31,875,762 - - 31,875,762Dato' Abdul Majid Bin Omar 80,000 - - 80,000Loh Hock Chiang 1,064,885 - - 1,064,885Mohamadon Bin Abdullah 28,856,680 - - 28,856,680


ANNUAL REPORT 2016

47

DiReCtoRS’ BeneFitS

Since the end of the previous financial year, no Director of the Company has received or become entitled to receive any benefit (other than those disclosed in the financial statements) by reason of a contract made by the Company or a related corporation with the Director or with a firm of which the Director is a member, or with a Company in which the Director has a substantial financial interest.

Neither during nor at the end of the financial year, was the Company or any of its related corporations a party to any arrangement whose object is to enable the Directors to acquire benefits by means of the acquisition of shares in or debentures of the Company or any other body corporate.

SigniFiCAnt SuBSequent eVentS

Details of the significant subsequent events are disclosed in Note 34 to the financial statements.

AuDitoRS

The auditors, Russ Ooi & Associates, have expressed their willingness to continue in office.

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

tAn SRi DAto’ SAmShuRi Bin ARShAD

leng keng hok @ lim keng hoCk

Shah Alam,Dated : 19 May 2016


ANNUAL REPORT 2016

48

CONSOLIDATED STATEMENT OFFINANCIAL POSITIONAS AT 31 JANuARY 2016

note

2016Rm

2015Rm

ASSetS

non-current assets

Property, plant and equipment 4 57,663,866 52,396,217

Investment in unquoted shares outside Malaysia, at cost 6 1 1

57,663,867 52,396,218

Current assets

Inventories 7 70,219,847 78,891,319

Trade receivables 8 90,232,294 69,650,524

Other receivables, deposits and prepayments 9 5,388,554 4,663,894

Tax refundable - 450,013

Short term deposits with financial institutions 10 11,547,554 17,561,470

Cash and bank balances 10 34,755,870 36,882,301

212,144,119 208,099,521

totAl ASSetS 269,807,986 260,495,739

The notes set out on pages 58 to 106 form an integral part of, and should be read in conjunction with, these financial statements.

ANNUAL REPORT 2016

49

note

2016Rm

2015Rm

equity AnD liABilitieS

equity attributable to owners of the Company

Share capital 11 70,000,000 70,000,000

Share premium 25,744,796 25,744,796

Other reserves 12 4,606,500 4,172,394

Retained profits / (Accumulated losses) 10,623,252 (2,861,593)

110,974,548 97,055,597

Non-controlling interests 1,258,558 2,060,564

total equity 112,233,106 99,116,161

non-current liabilities

Bank borrowings 13 10,877,302 10,192,473

Hire purchase payables 14 2,851,044 180,163

Deferred tax liabilities 15 2,666,000 2,052,203

16,394,346 12,424,839

Current liabilities

Trade payables 16 48,451,733 50,275,244

Other payables and accruals 17 9,395,272 10,347,402

Provision for warranty 18 138,815 150,000

Bank borrowings 13 78,933,451 83,966,764

Hire purchase payables 14 780,250 212,553

Provision for taxation 3,481,013 4,002,776

141,180,534 148,954,739

total liabilities 157,574,880 161,379,578

totAl equity AnD liABilitieS 269,807,986 260,495,739

CONSOLIDATED STATEMENT OF FINANCIAL POSITIONAS AT 31 JANuARY 2016


ANNUAL REPORT 2016

50

note

2016Rm

2015Rm

Revenue 19 376,723,614 309,538,429

Cost of sales (336,026,514) (286,385,801)

gross profit 40,697,100 23,152,628

Other income 4,252,405 2,033,156

Administrative expenses (11,602,476) (8,960,760)

Other operating expenses (15,591,802) (15,701,957)

Selling and distribution expenses (262,429) (197,929)

profit from operations 17,492,798 325,138

Finance costs (2,212,332) (2,384,293)

profit / (loss) before taxation 20 15,280,466 (2,059,155)

taxation 21 (2,597,840) 242,971

profit / (loss) for the financial year 12,682,626 (1,816,184)

other comprehensive income:

items that are or may be reclassified subsequently to profit or loss- Exchange differences arising from translation of foreign operations 434,319 260,649

items that will not be reclassified subsequently to profit or loss- Realisation of asset revaluation reserve upon disposal - 1,959,227

other comprehensive income for the financial year 434,319 2,219,876

total comprehensive income for the financial year 13,116,945 403,692

profit / (loss) attributable to:Owners of the Company 13,484,845 (1,396,073)

Non-controlling interests (802,219) (420,111)

12,682,626 (1,816,184)

total comprehensive income / (loss) attributable to:Owners of the Company 13,918,951 822,535

Non-controlling interests (802,006) (418,843)

13,116,945 403,692

Basic and diluted earnings / (loss) per ordinary share (sen) 22 9.63 (1.00)


CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOMEFOR THE FINANCIAL YEAR ENDED 31 JANuARY 2016

ANNUAL REPORT 2016

51

CONSOLIDATED STATEMENT OFCHANGES IN EQuITYFOR THE FINANCIAL YEAR ENDED 31 JANuARY 2016

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ANNUAL REPORT 2016

52

CONSOLIDATED STATEMENTOF CASH FLOWSFOR THE FINANCIAL YEAR ENDED 31 JANuARY 2016

note2016

Rm2015

Rm

Cash flows from operating activities

Profit / (Loss) before taxation 15,280,466 (2,059,155)

Adjustments for:

Allowances for inventory obsolescence 2,056,373 -

Depreciation of property, plant and equipment 4 3,037,556 2,895,884

Bad debts written off 695,872 2,025,880

Hire purchase interest 154,660 28,399

Impairment losses on investments - 1,052,074

Interest expense 2,057,672 2,350,454

Inventory written off 1,998,841 1,033,923

Provision for doubtful debts 483,279 -

Provision for warranty cost 18 138,815 63,636

Gain on disposal of property, plant and equipment (29,396) (732,956)

Interest income from short term deposits (363,451) (337,932)

Provision for warranty cost written back 18 (150,000) (325,526)

unrealised foreign exchange (gain) / loss (1,005,126) 1,817,950

Operating cash flow before working capital changes 24,355,561 7,812,631

Changes in working capital

Inventories 4,616,258 3,766,374

Trade receivables (30,223,125) (1,892,360)

Other receivables, deposits and prepayments (766,105) 1,143,302

Trade payables 3,593,482 (4,866,739)

Other payables and accruals (1,697,375) 3,463,425

Net cash flow (used in) / generated from operations (121,304) 9,426,633

Interest paid (2,212,332) (2,378,853)

Income tax refunded 470,416 -

Income tax paid (2,525,823) (1,627,142)

Net cash flow (used in) / generated from operating activities (4,389,043) 5,420,638

Balance carried forward (4,389,043) 5,420,638


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CONSOLIDATED STATEMENT OF CASH FLOWSFOR THE FINANCIAL YEAR ENDED 31 JANuARY 2016

note2016

Rm2015

Rm

Balance brought forward (4,389,043) 5,420,638

Cash flows from investing activities

Purchase of property, plant and equipment 4 (4,532,782) (18,966,420)

Proceeds from disposal of property, plant and equipment 101,577 30,133,860

Interest income received 363,451 337,932

Net cash flow (used in) / generated from investing activities (4,067,754) 11,505,372

Cash flow from financing activities

Drawdown of bank borrowings 464,022,921 380,803,509

Repayment of bank borrowings (457,267,800) (370,316,515)

Repayment of hire purchase liabilities (605,063) (252,709)

Placement of short term deposits pledged for banking facilities 513,916 (5,132,126)

Net cash flow generated from financing activities 6,663,974 5,102,159

Effect of exchange rate changes (4,734,551) 1,757,460

Net (decrease) / increase in cash and cash equivalents (6,527,374) 23,785,629

Cash and cash equivalents at the beginning of the financial year 41,251,066 17,465,437

Cash and cash equivalents at the end of the financial year 10 34,723,692 41,251,066


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note2016

Rm2015

Rm

ASSetS

non-current assets

Investments in subsidiaries 5 59,778,929 60,397,328

Investment in unquoted shares outside Malaysia, at cost 6 1 1

59,778,930 60,397,329

Current assets

Other receivables and prepayments 9 6,975,524 6,491,709

Tax refundable - 449,965

Bank balances 10 42,556 991,677

7,018,080 7,933,351

totAl ASSetS 66,797,010 68,330,680

equity AnD liABilitieS

equity attributable to owners of the Company

Share capital 11 70,000,000 70,000,000

Share premium 25,744,796 25,744,796

Accumulated losses (29,002,672) (27,445,541)

total equity 66,742,124 68,299,255

Current liabilities

Other payables and accruals 17 54,886 31,425

total liabilities 54,886 31,425

totAl equity AnD liABilitieS 66,797,010 68,330,680

STATEMENT OF FINANCIAL POSITIONAS AT 31 JANuARY 2016

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STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOMEFOR THE FINANCIAL YEAR ENDED 31 JANuARY 2016

note2016

Rm2015

Rm

Revenue 19 - 986,096

Cost of sales - -

gross profit - 986,096

Administrative expenses (29,860) (43,784)

Other operating expenses (1,527,054) (23,206,921)

loss from operations (1,556,914) (22,264,609)

Finance cost (217) (155)

loss before taxation 20 (1,557,131) (22,264,764)

taxation 21 - 461,211

loss for the financial year (1,557,131) (21,803,553)

Other comprehensive income - -

total comprehensive loss for the financial year (1,557,131) (21,803,553)


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STATEMENT OF CHANGES IN EQuITYFOR THE FINANCIAL YEAR ENDED 31 JANuARY 2016

non-distributable

Distributable

Sharecapital

Rm

Sharepremium

Rm

Accumulatedlosses

Rmtotal

Rm

At 1 February 2014 70,000,000 25,744,796 (5,641,988) 90,102,808

Total comprehensive loss for the financial year - - (21,803,553) (21,803,553)

At 31 January 2015 70,000,000 25,744,796 (27,445,541) 68,299,255

Total comprehensive loss for the financial year - - (1,557,131) (1,557,131)

At 31 January 2016 70,000,000 25,744,796 (29,002,672) 66,742,124

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STATEMENT OF CASH FLOWSFOR THE FINANCIAL YEAR ENDED 31 JANuARY 2016

note2016

Rm2015

Rm

Cash flows from operating activities

Loss before taxation (1,557,131) (22,264,764)

Adjustments for :

Interest expense 217 155

Impairment losses on investments 618,399 22,348,613

operating cash flow before working capital changes (938,515) 84,004

Changes in working capital

Other receivables and prepayments (19,665) 565,883

Other payables and accruals 23,461 (158)

Cash flow (used in) / generated from operations (934,719) 649,729

Interest paid (217) (155)

Tax refunded 449,965 -

net cash flow (used in) / generated from operating activities (484,971) 649,574

Cash flows from investing activities

Repayment from subsidiary company - 337,626

Advances to subsidiary company (464,150) -

net cash flow (used in) / generated from investing activities (464,150) 337,626

net (decrease) / increase in cash and cash equivalents (949,121) 987,200

Cash and cash equivalents at the beginning of the financial year 991,677 4,477

Cash and cash equivalents at the end of the financial year 10 42,556 991,677


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NOTES TO THE FINANCIAL STATEMENTS

1. pRinCipAl ACtiVitieS

The Company is principally engaged in investment holding. The principal activities of the subsidiary companies are described in Note 5 to the financial statements.

There have been no significant changes in the nature of these activities during the financial year.

2. SigniFiCAnt ACCounting poliCieS Basis of preparation

The financial statements of the Group and the Company have been prepared in accordance with Malaysian Financial Reporting Standards (MFRS) and the requirements of the Companies Act, 1965 in Malaysia. These financial statements also comply with the applicable disclosure provisions of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad.

Standards issued but not yet effective

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

Effective for financial periods beginning on or after 1 January 2016:

MFRS 14 Regulatory Deferral Accounts

Amendments to MFRS 10 Consolidated Financial Statements - Investment Entities: Applying the Consolidation Exception

Amendments to MFRS 11 Joint Arrangements - Accounting for Acquisition of Interests in Joint Operations

Amendments to MFRS 12 Disclosure of Interests in Other Entities - Investment Entities: Applying the Consolidation Exception

Amendments to MFRS 101 Presentation of Financial Statements - Disclosure Initiative

Amendments to MFRS 116 Property, Plant and Equipment - Clarification of Acceptable Methods of Depreciation and Amortisation

Amendments to MFRS 116 Property, Plant and Equipment - Agriculture: Bearer Plants

Amendments to MFRS 127 Separate Financial Statements - Equity Method in Separate Financial Statements

Amendments to MFRS 128 Investments in Associates and Joint Ventures - Investment Entities: Applying the Consolidation Exception

Amendments to MFRS 138

Amendments to MFRS 141

Intangible Assets - Clarification of Acceptable Methods of Depreciation and Amortisation

Agriculture - Agriculture: Bearer Plants

Annual Improvements to MFRSs 2012 - 2014 Cycle


Amendments to MFRS 107 Statement of Cash Flows - Disclosure Initiative

Amendments to MFRS 112 Income Taxes - Recognition of Deferred Tax Assets for unrealised Losses

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2. SigniFiCAnt ACCounting poliCieS (Cont’D)

Standards issued but not yet effective (cont’d)


MFRS 9 Financial Instruments (2014)

MFRS 15 Revenue from Contracts with Customers


MFRS 16 Leases

Effective for a date yet to be confirmed:

Amendments to MFRS 10 Consolidated Financial Statements - Sale or Contribution of Assets between an Investor and its Associate or Joint Venture

Amendments to MFRS 128 Investments in Associates and Joint Ventures - Sale or Contribution of Assets between an Investor and its Associate or Joint Venture

The Group and the Company will adopt the above pronouncements when they become effective in the respective financial periods. These pronouncements are not expected to have any effect to the financial statements of the Group and of the Company upon their initial application, except as described below:

(a) MFRS 9, Financial Instruments

In November 2014, MASB issued the final version of MFRS 9 Financial Instruments which reflects all phases of the financial instruments project and replaces MFRS 139 Financial Instruments: Recognition and Measurement and all previous versions of MFRS 9. MFRS 9 is effective for annual periods beginning on or after 1 January 2018, with early application permitted. Retrospective application is required, but comparative information is not compulsory. The standard introduces new requirements for classification and measurement of financial assets and liabilities, impairment of financial assets and hedge accounting. upon adoption of MFRS 9, financial assets will be measured at either fair value or amortised cost.

The Company is currently assessing the financial impact of adopting MFRS 9.

(b) MFRS 15, Revenue from Contracts with Customers

MFRS 15 establishes principles that an entity shall apply to report useful information about the nature, amount, timing and uncertainty of revenue and cash flows arising from a contract with customers. The core principle of MFRS 15 is that an entity recognises revenue in a manner which reflects the consideration an entity expects to be entitled in exchange for goods and services.

The Company is currently assessing the financial impact of adopting MFRS 15.

The initial application of other standards, amendments and interpretations is not expected to have any material financial impacts to the current and prior periods financial statements upon their first adoption.

Basis of measurement

The financial statements of the Group and of the Company have been prepared on the historical cost basis except as disclosed in the financial statements.

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Functional and presentation currency

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

Basis of consolidation

The consolidated financial statements incorporate the financial statements of the Company and its subsidiary companies made up to the end of the financial year using the acquisition method of accounting. Subsidiaries are consolidated from the date on which control is transferred to the Group up to the effective date on which control ceases, as appropriate.

Inter-company transactions and balances are eliminated on consolidation.

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

(a) Business combinations

under the acquisition method, the consideration transferred for acquisition of a subsidiary is the fair value of the assets transferred, liabilities incurred and the equity interests issued by the Group at the acquisition date. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement. Acquisition-related costs, other than the costs to issue debt or equity securities, are recognised in profit or loss when incurred.

In a business combination achieved in stages, previously held equity interests in the acquiree are re-measured to fair value at the acquisition date and any corresponding gain or loss is recognised in profit or loss.

Non-controlling interests in the acquiree may be initially measured either at fair value or at the non-controlling interests’ proportionate share of the fair value of the acquiree’s identifiable net assets at the date of acquisition. The choice of measurement basis is made on a transaction-by-transaction basis.

(b) non-controlling interests

Non-controlling interests are presented within equity in the consolidated statement of financial position, separately from the Company’s shareholders’ equity, and are separately disclosed in the consolidated statement of profit or loss and other comprehensive income. Transactions with non-controlling interests are accounted for as transactions with owners and are recognised directly in equity. Profit or loss and each component of other comprehensive income are attributed to the owners of the parent and to the non-controlling interests. Total comprehensive income is attributed to non-controlling interests even if this results in the non-controlling interests having a deficit balance.

At the end of each reporting period, the carrying amount of non-controlling interests is the amount of those interests at initial recognition plus the non-controlling interests’ share of subsequent changes in equity.

(c) loss of control

upon the loss of control of a subsidiary, the Group derecognises the assets and liabilities of the subsidiary, any non-controlling interests and the other components of equity related to the subsidiary.

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Basis of consolidation (cont’d)

(c) loss of control (cont’d)

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

(d) goodwill on consolidation

Goodwill arising on consolidation, if any, represents the excess of the sum of the fair value of the consideration transferred in the business combination, the amount of non-controlling interests recognised and the fair value of the Group’s previously held equity interest in the acquiree (if any), over the net fair value of the acquiree’s identifiable assets and liabilities at the date of acquisition is recorded as goodwill. Where the later amount exceeds the former, after reassessment, the excess represents a bargain purchase gain and is recognised as a gain in profit or loss.

Goodwill is stated at cost less any accumulated impairment losses. Goodwill is not amortised, but instead, it is reviewed for impairment at least annually and whenever events or changes in circumstances indicate that the carrying value may be impaired. The impairment value of goodwill is recognised immediately in profit or loss. An impairment loss recognised for goodwill is not reversed in the subsequent period.

(e) Foreign operations

The assets and liabilities of operations denominated in functional currencies other than RM are translated to RM at exchange rates at the end of the reporting period. The income and expenses of foreign operations, excluding foreign operations in hyperinflationary economies, are translated to RM at exchange rates at the dates of the transactions.

Foreign currency differences are recognised in other comprehensive income and accumulated in the translation reserve under other reserve in equity.

On the disposal of a foreign operation, the cumulative amount recognised in other comprehensive income relating to that particular foreign operation is reclassified from equity to profit or loss as part of the profit or loss on disposal. Goodwill and fair value adjustments arising from the acquisition of foreign operations are treated as assets and liabilities of the foreign operations and are recorded in the functional currency of the foreign operations and translated at the closing rate at the end of the reporting period.

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

investments in subsidiaries

Subsidiaries are entities including unincorporated entities over which the Group has the ability to control the financial and operating policies so as to obtain benefits from their activities. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group has such power over another entity.

Investments in subsidiaries are stated in the Company’s statement of financial position at cost less any impairment losses, unless the investment is classified as held for sale or distribution. The cost of investments includes transaction costs. On disposal of such investments, the difference between net disposal proceeds and their carrying amount is included in profit or loss.

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property, plant and equipment and depreciation

Property, plant and equipment are initially stated at cost. Land and buildings which have been subsequently revalued, are shown at fair value at the date of the revaluation less any subsequent accumulated depreciation and subsequent accumulated impairment losses. All other property, plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses.

Cost includes expenditures that are directly attributable to the acquisition of the asset and any other costs directly attributable to bringing the asset to working condition for its intended use, and the costs of dismantling and removing the item and restoring the site on which they are located. The cost of self-constructed assets also includes the cost of materials and direct labour. For qualifying assets, borrowing costs are capitalised in accordance with the accounting policy on borrowing costs. Cost also may include transfers from equity of any gain or loss on qualifying cash flow hedges of foreign currency purchases of property, plant and equipment.

Surpluses arising on revaluation are recognised under other comprehensive income and accumulated in equity under the revaluation reserve. Deficit arising from revaluation, to the extent that they are not supported by any previous revaluation surpluses, is recognised in profit or loss. In all other cases, a decrease in carrying amount is charged to the profit or loss. Subsequent to revaluation, any addition is stated at cost whilst disposal is stated at cost or valuation as appropriate.

The carrying amounts of the property, plant and equipment at valuation are reviewed at least once in every five years based on a valuation by an independent valuer on an open market value basis.

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

Depreciation of property, plant and equipment is calculated to write off the cost of the assets on a straight line basis over the expected useful lives of the assets. Freehold land is not depreciated. Leasehold land is depreciated over the terms of the lease period. Property, plant and equipment under construction are not depreciated until the assets are ready for their intended use.

The principal annual rates applied are as follows:-

Leasehold land and buildings 60 years

Freehold buildings 2%

Motor vehicles 20%

Plant and machinery 10% - 20%

Furniture, fittings and equipment 10% - 20%

Where an indication of impairment exists, the carrying amount of the asset is assessed and written down immediately to its recoverable amount.

The residual value, useful life and depreciation method are reviewed at each financial year end, and adjusted prospectively, if appropriate.

An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss on derecognition of the asset is included in the profit or loss in the year the asset is derecognised.

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impairment of non-financial assets

The Group assesses at the end of each reporting period whether there is an indication that an asset may be impaired. If any such indication exists, or when an annual impairment assessment for an asset is required, the Group makes an estimate of the asset’s recoverable amount.

An asset’s recoverable amount is the higher of an asset’s fair value less costs to sell and its value in use. For the purpose of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units (“CGu”)).

In assessing value in use, the estimated future cash flows expected to be generated by the asset 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. Where the carrying amount of an asset exceeds its recoverable amount, the asset is written down to its recoverable amount. Impairment losses recognised in respect of a CGu or groups of CGus are allocated first to reduce the carrying amount of any goodwill allocated to those units or groups of units and then, to reduce the carrying amount of the other assets in the unit or groups of units on a pro-rata basis.

Impairment losses are recognised in profit or loss except for assets that are previously revalued where the revaluation was taken to other comprehensive income. In this case the impairment is also recognised in other comprehensive income up to the amount of any previous revaluation.

An assessment is made at the end of each reporting period as to whether there is any indication that previously recognised impairment losses may no longer exist or may have decreased. A previously recognised impairment loss is reversed only if there has been a change in the estimates used to determine the asset’s recoverable amount since the last impairment loss was recognised. If that is the case, the carrying amount of the asset is increased to its recoverable amount. That increase cannot exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised previously. Such reversal is recognised in profit or loss unless the asset is measured at revalued amount, in which case the reversal is treated as a revaluation increase. Impairment loss on goodwill is not reversed in a subsequent period.

Financial assets

Financial assets are recognised in the statements of financial position when, and only when, the Group and the Company become a party to the contractual provisions of the financial instrument.

When financial assets are recognised initially, they are measured at fair value, plus, in the case of financial assets not at fair value through profit or loss, directly attributable transaction costs.

The Group and the Company determine the classification of their financial assets at initial recognition, and the categories include loans and receivables and available-for-sale financial assets.

(a) loans and receivables

Financial assets with fixed or determinable payments that are not quoted in an active market are classified as loans and receivables.

Subsequent to initial recognition, loans and receivables are measured at amortised cost using the effective interest method. Gains and losses are recognised in profit or loss when the loans and receivables are derecognised or impaired, and through the amortisation process.

Loans and receivables are classified as current assets, except for those having maturity dates later than 12 months after the end of the reporting period which are classified as non-current.

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Financial assets (cont’d)

(b) Available-for-sale financial assets

Available-for-sale category comprises investment in equity and debt securities instruments that are not held for trading.

Investments in equity instruments that do not have a quoted market price in an active market and whose fair value cannot be reliably measured are measured at cost.

Other financial assets categorised as available-for-sale are subsequently measured at their fair value. Any gains or losses from changes in fair value of the financial assets are recognised in other comprehensive income, except that impairment losses, foreign exchange gains and losses on monetary instruments and interest calculated using the effective interest method are recognised in profit or loss. The cumulative gain or loss previously recognised in other comprehensive income is reclassified from equity to profit or loss as a reclassification adjustment when the financial asset is derecognised. Interest income calculated using the effective interest method is recognised in profit or loss. Dividends on an available-for-sale equity instrument are recognised in profit or loss when the Group and the Company’s right to receive payment is established.

Available-for-sale financial assets are classified as non-current assets unless they are expected to be realised within 12 months after the end of the reporting period.

A financial asset is derecognised when the contractual right to receive cash flows from the asset has expired. On derecognition of a financial asset in its entirety, the difference between the carrying amount and the sum of the consideration received and any cumulative gain or loss that had been recognised in other comprehensive income is recognised in profit or loss.

Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the period generally established by regulation or convention in the marketplace concerned. All regular way purchases and sales of financial assets are recognised or derecognised on the trade date i.e., the date that the Group and the Company commit to purchase or sell the asset.

Research and development

Expenditure on research activities, undertaken with the prospect of gaining new scientific or technical knowledge and understanding, is recognised in the profit or loss as an expense as incurred.

Expenditure on development activities, whereby research findings are applied to a plan or design for the production of new or substantially improved products and processes, is capitalised if the product or process is technically and commercially feasible and the Group has sufficient resources to complete development. The expenditure capitalised includes the cost of materials, direct labour and an appropriate proportion of overheads. For qualifying assets, borrowing costs are capitalised in accordance with the accounting policy on borrowing costs. Other development expenditure is recognised in the profit or loss as an expense as incurred.

impairment of financial assets

The Group and the Company assess at the end of each reporting period whether there is any objective evidence that a financial asset is impaired.

(a) trade and other receivables and other financial assets carried at amortised cost

To determine whether there is objective evidence that an impairment loss on financial assets has been incurred, the Group and the Company consider factors such as the probability of insolvency or significant financial difficulties of the debtor and default or significant delay in payments.

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impairment of financial assets (cont’d)

(a) trade and other receivables and other financial assets carried at amortised cost (cont’d)

For certain categories of financial assets, such as trade receivables, assets that are assessed not to be impaired individually are subsequently assessed for impairment on a collective basis based on similar risk characteristics. Objective evidence of impairment for a portfolio of receivables could include the Group’s 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 and observable changes in national or local economic conditions that correlate with default on receivables.

If any such evidence exists, the amount of impairment loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at the financial asset’s original effective interest rate. The impairment loss is recognised in profit or loss.

The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception of trade receivables, where the carrying amount is reduced through the use of an allowance account. When a trade receivable becomes uncollectible, it is written off against the allowance account.

If in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed to the extent that the carrying amount of the asset does not exceed its amortised cost at the reversal date. The amount of reversal is recognised in profit or loss.

(b) unquoted equity securities carried at cost

If there is objective evidence (such as significant adverse changes in the business environment where the issuer operates, probability of insolvency or significant financial difficulties of the issuer) that an impairment loss on financial assets carried at cost has been incurred, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at the current market rate of return for a similar financial asset. Such impairment losses are not reversed in subsequent periods.

(c) Available-for-sale financial assets

Significant or prolonged decline in fair value below cost, significant financial difficulties of the issuer or obligor, and the disappearance of an active trading market are considerations to determine whether there is objective evidence that investment securities classified as available-for-sale financial assets are impaired.

If an available-for-sale financial asset is impaired, an amount comprising the difference between its cost (net of any principal payment and amortisation) and its current fair value, less any impairment loss previously recognised in profit or loss, is transferred from equity to profit or loss.

Impairment losses on available-for-sale equity investments are not reversed in profit or loss in the subsequent periods. Increase in fair value, if any, subsequent to impairment loss is recognised in other comprehensive income. For available-for-sale debt investments, impairment losses are subsequently reversed in profit or loss if an increase in the fair value of the investment can be objectively related to an event occurring after the recognition of the impairment loss in profit or loss.

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inventories

Inventories are stated at the lower of cost and net realisable value after due provision is made for any obsolete or slow moving items. Cost is determined on a first-in first-out or weighted average basis. Cost of finished goods and work-in-progress includes direct materials, direct labour and appropriate proportion of manufacturing overheads and the aggregate cost of purchase and other incidentals incurred in bringing the inventories to their present condition and location.

Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and the estimated costs necessary to make the sale.

provision for liabilities

Provision for liabilities is recognised when the Group and the Company has a present obligation as a result of a past event and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate of the amount can be made. Provisions are reviewed at end of each reporting period and adjusted to reflect the current best estimate. Where the effect of the time value of money is material, the amount of a provision is the present value of the expenditure expected to be required to settle the obligation.

Contingent liabilities

Where it is not probable that an outflow of economic benefits will be required, or the amount cannot be estimated reliably, the obligation is not recognised in the statements of financial positions and is disclosed as a contingent liability, unless the probability of outflow of economic benefits is remote. Possible obligations, whose existence will only be confirmed by the occurrence or non-occurrence of one or more future events, are also disclosed as contingent liabilities unless the probability of outflow of economic benefits is remote.

Financial liabilities

Financial liabilities are classified according to the substance of the contractual arrangements entered into and the definitions of a financial liability.

Financial liabilities are recognised in the statements of financial position when, and only when, the Group and the Company become a party to the contractual provisions of the financial instrument. Financial liabilities are classified as either financial liabilities at fair value through profit or loss or other financial liabilities.

(a) Financial liabilities at fair value through profit or loss

Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated upon initial recognition as at fair value through profit or loss.

Financial liabilities held for trading include derivatives entered into by the Group and the Company that do not meet the hedge accounting criteria. Derivative liabilities are initially measured at fair value and subsequently stated at fair value, with any resultant gains or losses recognised in profit or loss. Net gains or losses on derivatives include exchange differences.

The Group and the Company have not designated any financial liabilities as at fair value through profit or loss.

(b) other financial liabilities

The Group’s and the Company’s other financial liabilities include trade payables, other payables and loans and borrowings.

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Financial liabilities (cont’d)

(b) other financial liabilities (cont’d)

Trade and other payables are recognised initially at fair value plus directly attributable transaction costs and subsequently measured at amortised cost using the effective interest method. Loans and borrowings are recognised initially at fair value, net of transaction costs incurred, and subsequently measured at amortised cost using the effective interest method. Borrowings are classified as current liabilities unless the Group and the Company has an unconditional right to defer settlement of the liability for at least 12 months after the end of the reporting period.

For other financial liabilities, gains and losses are recognised in profit or loss when the liabilities are derecognised, and through the amortisation process.

A financial liability is derecognised when the obligation under the liability is extinguished. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognised in profit or loss.

Borrowing costs

Borrowing costs incurred that are directly attributable to the construction or production of qualifying assets are capitalised as part of the cost of those assets during the period of time that is required to complete and prepare the assets for their intended use or sale.

All other borrowing costs that are not directly attibutable to the acquisition, construction or production of a qualifying asset are recognised as an expense in the period in which they are incurred.

employee benefits

(a) Short term employee benefits

Wages, salaries, paid annual leave and sick leave, bonuses and non-monetary benefits are accrued in the period in which the associated services are rendered by employees of the Group and of 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.

(b) Defined contribution plan

As required by law, companies in Malaysia make contributions to the Employees Provident Fund (EPF). Such contributions are recognised as an expense in profit or loss in the period to which the related service is performed.

Foreign currencies

Transactions in foreign currencies are converted into the respective functional currencies on initial recognition, using the exchange rates approximating those ruling at the transaction dates. Monetary assets and liabilities at the end of the reporting period are translated at the rates ruling as of that date. Non-monetary assets and liabilities are translated using exchange rates that existed when the values were determined.

All exchange gains and losses are included in profit or loss.

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Foreign currencies (cont’d)

The principal exchange rates used for each respective unit of foreign currency ruling as at the end of the reporting period are as follows:

2016 2015

Rm Rm

1 uS Dollar 4.2 3.6

1 Euro Dollar 4.5 4.1

100 HK Dollar 53.3 46.8

1 Au Dollar 2.9 2.8

1 Singapore Dollar 2.9 2.7

1 Canadian Dollar 3.0 2.9

100 Japanese Yen 3.4 3.1

1 Sterling Pound 5.9 5.5

100 Indonesia Rupiah 0.030 0.029

equity instruments

Ordinary shares are classified as equity. Dividends on ordinary shares are recognised in equity in the period in which they are declared.

The transaction costs of an equity transaction are accounted for as a deduction from equity, net of tax. Equity transaction costs comprise only those incremental external costs directly attributable to the equity transaction which would otherwise have been avoided.

Revenue recognition

(a) Recognition of contract income

The Group’s contracts stipulate an invoicing schedule directly related to the volume of work performed. Income is recognised progressively as work on the contract is completed. Provision is made for all anticipated losses, if any, on contract works.

(b) Sales of goods

Revenue relating to sale of goods is recognised net of sales taxes and discounts upon the transfer of risks and rewards.

(c) Recognition of interest income

Interest income is recognised on a time proportioned basis that reflects the effective yield.

(d) Dividend income

Dividend income is recognised in profit or loss on the date that the Group’s or the Company’s right to receive payment is established.

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Revenue recognition (cont’d)

(e) Rental income

Rental income from sub-leased property is recognised in profit or loss as other income.

taxation

The taxation charge for the financial year, if any, comprises current and deferred tax. Current tax is the expected amount of income taxes payable in respect of the taxable profit for the financial year and is measured using the tax rates that have been enacted or substantially enacted at the end of the reporting period.

Deferred tax will be provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. Deferred tax liabilities are recognised for all taxable temporary differences.

Deferred tax assets are recognised for all deductible temporary differences, unused tax losses and unused tax credits to the extent that it is probable that future taxable profits will be available against which the deductible temporary differences, unused tax losses and unused tax credits can be utilised.

A tax incentive that is not a tax base of an asset is recognised as a reduction of tax expense in profit or loss as and when it is granted and claimed. Any unutilised portion of the tax incentive is recognised as a deferred tax asset to the extent that it is probable that future taxable profits will be available against which the unutilised tax incentive can be utilised.

leases

(a) Finance leases

A lease is recognised as a finance lease if it transfers substantially to the Group the risks and rewards incidental to ownership. upon initial recognition, the leases assets is measured at an amount equal to the lower of its fair value and the present value of the minimum lease payments. Subsequent to initial recognition, the asset is accounted for in accordance with the accounting policy applicable to that asset.

Minimum lease payments are apportioned between the finance charges and reduction of the lease liability so as to achieve a constant periodic rate of interest on the remaining balance of the liability for each period. Finance charges are recognised as expenses in profit or loss.

(b) operating leases

Leases where the lessor effectively retains substantially all the risks and rewards of the ownership of the leased item are classified as operating lease. Operating lease payments are recognised as an expenses on a straight-line basis over the term of the relevant lease.

Segment reporting

Segment reporting in the financial statements is presented on the same basis as it is used by management internally for evaluating operating segment performance and in deciding how to allocate resources to each operating segment. Operating segments are distinguishable components of the Group that engage in business activities from which they may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Group’s other components. An operating segment’s results are reviewed regularly by the chief operating decision maker to decide how to allocate resources to the segment and assess its performance, and for which discrete financial information is available.

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Segment reporting (cont’d)

Segment revenue, expenses, assets and liabilities are those amounts resulting from operating activities of a segment that are directly attributable to the segment and a relevant portion that can be allocated on a reasonable basis to the segment.

Segment revenue, expenses, assets and liabilities are determined before intra-group balances and intra-group transactions are eliminated as part of the consolidation process, except to the extent that such intra-group balances and transactions are between group entities within a single segment.

Cash and cash equivalents

For the purpose of the statements of cash flows, cash and cash equivalents comprise cash and bank balances, deposits with licensed financial institutions, bank overdrafts and other short term, highly liquid investments that are readily convertible to known amounts of cash and are subject to insignificant risk of changes in fair value.

3. CRitiCAl JuDgement AnD key eStimAtion unCeRtAinty

The preparation of financial statements requires the management to exercise judgement and make estimates which have a significant impact on the carrying amounts of the Group’s assets, liabilities, income and expenditure. The following presents a summary of the critical judgement and key estimation uncertainty.

Depreciation of property, plant and equipment

The estimates for the residual values, useful lives and related depreciation charges for the property, plant and equipment are based on commercial and production factors which could change significantly as a result of technical innovations and competitors’ actions in response to the market conditions.

It is possible that changes in the expected level of usage and technological development in the future may affect the estimated useful life of certain plant and machinery of the Group.

impairment of assets

Assets are tested for impairment when indications of potential impairment exist. Indicators of impairment which could trigger an impairment review include evidence of obsolescence or physical damage, significant fall in market values, significant underperformance relative to historical or projected future operating results, significant changes in the use of assets or the strategy of the business, significant adverse industry or economic changes.

Recoverable amounts of assets are based on management’s estimates and assumptions of the net realisable value, cash flows arising from the future operating performance and revenue generating capacity of the assets and CGus, and future market conditions. Changes in circumstances may lead to changes in estimates and assumptions, and change the recoverable amounts of assets and impairment losses needed.

impairment of loans and receivables

The Group assesses at 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 financial difficulties of the debtor and default or significant delay in payments.

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3. CRitiCAl JuDgement AnD key eStimAtion unCeRtAinty

inventories valuation

The Group reviews the adequacy of allowance for slow moving inventories on a regular basis. These reviews require judgement and estimates. Demand levels, exchange rates, technological advances and pricing competition could change from time to time. If such factors result in an adverse effect on the Group’s products, the Group may be required to reduce the value of its inventories and allowance for slow moving inventories may be required.

provisions for warranties

The Group provides warranties on certain products with an undertaking to repair or replace items that fail to perform satisfactorily. A provision is recognised for products under warranty at the end of the reporting period based on past experience on the levels of repairs and returns and industry averages for defective products.

Factors that could impact the estimated warranty claim include the quality of the products and the costs of parts and labour.

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4. pRopeRty, plAnt AnD equipment

gRoup

land and buildings*

plant and machinery

Furniture, fittings and equipment

motor vehicles

Assets under construction total

Rm Rm Rm Rm Rm Rm

Cost / Valuation

At 1 February 2015 29,620,000 58,092,459 25,437,035 2,156,307 17,890,135 133,195,936

Additions during the year - 3,352,365 1,898,386 372,480 2,359,959 7,983,190

Borrowing costs capitalised at 8% p.a. - - - - 393,233 393,233

Disposals / Write offs - (5,582,739) (722,014) (91,387) - (6,396,140)

Exchange difference - - 1,849 - - 1,849

At 31 January 2016 29,620,000 55,862,085 26,615,256 2,437,400 20,643,327 135,178,068

Analysed by:

Cost - 55,862,085 26,615,256 2,437,400 20,643,327 105,558,068

Valuation 29,620,000 - - - - 29,620,000

Accumulated depreciation

At 1 February 2015 1,458,561 55,947,128 21,622,162 1,771,868 - 80,799,719

Charge for the year 673,181 1,147,845 1,028,005 188,525 - 3,037,556

Disposals / Write offs - (5,582,739) (719,896) (21,324) - (6,323,959)

Exchange difference - - 886 - - 886

At 31 January 2016 2,131,742 51,512,234 21,931,157 1,939,069 - 77,514,202

Carrying amount

At 31 January 2016 27,488,258 4,349,851 4,684,099 498,331 20,643,327 57,663,866

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4. pRopeRty, plAnt AnD equipment (Cont’D)

* Summary of Land and buildings

gRoup

leasehold land

Buildings on leasehold

land total

Rm Rm Rm

Valuation

At 1 February 2015 / At 31 January 2016 7,000,000 22,620,000 29,620,000


At 1 February 2015 344,697 1,113,864 1,458,561

Charge for the year 159,091 514,090 673,181

At 31 January 2016 503,788 1,627,954 2,131,742

Carrying amount

At 31 January 2016 6,496,212 20,992,046 27,488,258

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gRoup

land and buildings*

plant and machinery

Furniture, fittings and equipment

motor vehicles

Assets under construction total

Rm Rm Rm Rm Rm Rm

Cost / Valuation

At 1 February 2014 59,620,000 60,993,480 25,232,777 2,435,283 - 148,281,540

Additions during the year - - 921,148 155,137 17,028,766 18,105,051

Borrowing costs capitalised at 8% p.a. - - - - 861,369 861,369

Disposals / Write offs (30,000,000) (2,901,021) (718,300) (434,113) - (34,053,434)

Exchange difference - - 1,410 - - 1,410

At 31 January 2015 29,620,000 58,092,459 25,437,035 2,156,307 17,890,135 133,195,936

Analysed by:

Cost - 58,092,459 25,437,035 2,156,307 17,890,135 103,575,936

Valuation 29,620,000 - - - - 29,620,000


At 1 February 2014 1,147,046 57,882,717 21,473,957 2,052,176 - 82,555,896

Charge for the year 931,515 962,431 848,134 153,804 - 2,895,884

Disposals / Write offs (620,000) (2,898,020) (700,398) (434,112) - (4,652,530)

Exchange difference - - 469 - - 469

At 31 January 2015 1,458,561 55,947,128 21,622,162 1,771,868 - 80,799,719

Carrying amount

At 31 January 2015 28,161,439 2,145,331 3,814,873 384,439 17,890,135 52,396,217

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* Summary of Land and buildings

gRoup

Freehold commercial

landleasehold

landFreehold building

Buildings on leasehold

land totalRm Rm Rm Rm Rm

ValuationAt 1 February 2014 14,500,000 7,000,000 15,500,000 22,620,000 59,620,000

Disposals (14,500,000) - (15,500,000) - (30,000,000)

At 31 January 2015 - 7,000,000 - 22,620,000 29,620,000

Accumulated depreciationAt 1 February 2014 - 185,606 361,667 599,773 1,147,046

Charge for the year - 159,091 258,333 514,091 931,515

Disposals - - (620,000) - (620,000)

At 31 January 2015 - 344,697 - 1,113,864 1,458,561

Carrying amountAt 31 January 2015 - 6,655,303 - 21,506,136 28,161,439

During the financial year, the Group purchased property, plant and equipment under the following categories:

group

2016 Rm

2015 Rm

Cash 4,532,782 18,966,420

Hire purchase arrangements 3,843,641 -

8,376,423 18,966,420

The property, plant and equipment purchased during the year capitalised under “Assets under contruction” relates to Comintel Green Technologies Sdn Bhd, a 70% owned subsidiary held through Comintel Sdn Bhd and the whole amount of RM20,643,327 (2015: RM17,890,135) has been charged to the financial institution as disclosed in Note 13.

As at the financial year end, the carrying amount of property, plant and equipment under hire purchase arrangements for the Group is as follows:

group

2016 Rm

2015 Rm

Motor vehicles 336,250 324,273

Plant and machinery 3,482,575 473,154

3,818,825 797,427

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(a) The carrying amount of the leasehold land and the freehold commercial land approximated their fair values based on an independent valuation carried out by a firm of professional valuers in November 2012 using market value basis. The level of fair value hierarchy for the leasehold land and the freehold commercial land is categorised under Level 3.

(b) As at the financial year end, the carrying amount of revalued leasehold land and building (had these assets been carried at cost less accumulated depreciation) would have been RM21,698,374 (2015: RM22,244,245).

(c) The leasehold property is charged to financial institutions for the banking facilities made available to the Group (Note 13).

5. inVeStment in SuBSiDiARieS

Company2016

Rm2015

Rm

At cost

unquoted shares 81,693,867 81,693,867

Less: Impairement losses (21,914,938) (21,296,539)

59,778,929 60,397,328

The particulars of subsidiaries are as follows:-

name of CompanyCountry of

incorporationeffective interest principal activities

2016 2015

held by the Company

Comintel Sdn Bhd Malaysia 100% 100% Turnkey engineering design and integration, programme management, installation and commissioning as well as investment holding.

BCM Electronics Corporation Sdn Bhd Malaysia 100% 100% Manufacturing and assembling of electronic components.

* PT. Intelcom Indonesia Indonesia 80% 80% Turnkey engineering design and integration, programme management, installation and commissioning & carrying out the business in renewable and green technology products and other energy efficient solutions.

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5. inVeStment in SuBSiDiARieS

name of CompanyCountry of

incorporationeffective interest principal activities

2016 2015

held through Comintel Sdn Bhd:

Indusmatic Corporation Sdn Bhd Malaysia 100% 100% Provision of research and development services and dealers in all kinds of telecommunication and electronic equipment and the provision of related services.

* Comintel (HK) Limited Hong Kong 100% 100% Trading of electronic, engineering and telecommunication equipment and the provision of related services.

Comintel Mobility Sdn Bhd Malaysia 100% 100% Providing services for mobile applications, hosted mobile devices management platform and as a mobile virtual network operator.

Comintel Tech Services Sdn Bhd (formerly known as Comlenia Sendirian Berhad)

Malaysia 70% 70% Electronic systems testing and repair, development of test programs and provision of integrated logistic support.

Comintel Green Technologies Sdn Bhd

Malaysia 70% 70% Carrying out business in renewable and green technology products and other energy efficient solutions.

* Not audited by Russ Ooi & Associates

6. inVeStment in unquoteD ShAReS outSiDe mAlAySiA, At CoSt

group/Company

2016 Rm

2015 Rm

non-current

Available-for-sale financial assets 1,052,075 1,052,075

Less: Impairment losses (1,052,074) (1,052,074)

1 1

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7. inVentoRieS

group

2016 Rm

2015Rm

At cost:

Raw materials 52,321,361 56,957,984

Allowance for obsolescent inventory

At beginning of the financial year - (75,358)

Allowance for inventory obsolescence (2,056,373) -

Write back of allowance - 75,358

At end of the financial year (2,056,373) -

50,264,988 56,957,984

Work-in-progress 4,039,019 4,608,233

Finished goods 15,915,840 17,325,102

70,219,847 78,891,319

Recognised in profit or loss:

Inventories recognised as cost of sales 331,971,300 285,350,429

Inventories written off 1,998,841 1,033,923

Allowance for inventory obsolescence 2,056,373 -

336,026,514 286,384,352

The inventories written off and allowance for inventory obsolescence are included in cost of sales.

8. tRADe ReCeiVABleS

group

2016 Rm

2015Rm

Trade receivables 90,232,294 69,650,524

The currency profile of trade receivables is as follows:

- Ringgit Malaysia 2,577,727 6,983,450

- Indonesia Rupiah 388,249 494,309

- uS Dollars 87,265,431 62,172,765

- Euro Dollar 887 -

90,232,294 69,650,524

The Group’s normal trade credit terms range from 15 to 90 days. Other credit terms are assessed and approved on a case-by-case basis.

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8. tRADe ReCeiVABleS (Cont’D)

Ageing analysis of trade receivables

The Group’s normal trade credit terms range from 15 to 19 days. Other credit terms are assessed and approved on a case-by case basis.

The ageing analysis of the Group’s trade receivables is as follows:

group

2016Rm

2015Rm

Neither past due nor impaired 83,505,819 61,348,278

1 to 30 days past due not impaired 4,846,744 2,398,016

31 to 60 days past due not impaired 1,057,229 3,387,545

61 to 90 days past due not impaired 265,761 773,093

91 to 120 days past due not impaired 4,383 48,326

More than 121 days past due not impaired 552,358 1,695,266

6,726,475 8,302,246

90,232,294 69,650,524

Receivables that are neither past due nor impaired

Trade receivables that are neither past due nor impaired are creditworthy debtors with good payment records with the Group. None of the Group’s trade receivables that are neither past due nor impaired have been renegotiated during the financial year.

Receivables that are past due but not impaired

The Group has trade receivables amounting to RM6,726,475 (2015: RM8,302,246) that are past due at the end of the reporting period but not impaired.

Receivables that are past due but not impaired relate to customers that the Group still deemed to be creditworthy. Based on the past experience, the Board believes that no impairment is necessary in respect of those balances.

The receivables that are past due but not impaired are unsecured in nature.

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9. otheR ReCeiVABleS, DepoSitS AnD pRepAymentS

group Company

2016Rm

2015Rm

2016Rm

2015Rm

Other receivables 2,397,500 1,066,398 - -

Deposits 103,283 118,359 - -

Prepayments 2,874,762 3,470,870 19,665 -

Amounts due from related parties 13,009 8,267 - -

Amount due from subsidiary company - - 6,955,859 6,491,709

5,388,554 4,663,894 6,975,524 6,491,709

Amounts due from subsidiary company and related parties

The amounts due from the subsidiary company and related parties are unsecured, interest free and have no fixed terms of repayment.

10. CASh AnD BAnk BAlAnCeS

group Company

2016Rm

2015Rm

2016Rm

2015Rm

Short term deposits with financial institutions 11,547,554 17,561,470 - -

Cash and bank balances 34,755,870 36,882,301 42,556 991,677

Bank overdrafts (Note 13) (32,178) (1,131,235) - -

46,271,246 53,312,536 42,556 991,677

Less: Short term deposits pledged and/or with maturity more than 3 months (11,547,554) (12,061,470) - -

Total cash and cash equivalents 34,723,692 41,251,066 42,556 991,677

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10. CASh AnD BAnk BAlAnCeS (Cont’D)

The currency profile of cash and bank balances is as follows:

group Company

2016Rm

2015Rm

2016Rm

2015Rm

- Ringgit Malaysia 3,663,868 10,625,782 42,556 991,677

- HK Dollar 15,382 12,434 - -

- Indonesia Rupiah 2,061 27,755 - -

- uS Dollars 31,074,559 26,216,330 - -

34,755,870 36,882,301 42,556 991,677

Short term deposits with financial institutions

Short term deposits amounting to RM11,547,554 (2015: RM12,061,470) have been pledged to financial institutions for the banking facilities made available to the Group (Note 13).

The maturity period of the fixed deposits ranges from 1 month to 12 months and the weighted average effective interest rates was 3.0% (2015: 3.0%) per annum.

11. ShARe CApitAl

group / Company

2016Rm

2015Rm

Ordinary shares of RM0.50 each

Authorised:

400,000,000 shares 200,000,000 200,000,000

Issued and fully paid:

140,000,000 shares 70,000,000 70,000,000

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12. otheR ReSeRVeS

group

Revaluation reserve

translation reserve total

Rm Rm Rm

At 1 February 2014 10,862,779 281,944 11,144,723

Translation reserve - 259,381 259,381

Realisation of asset revalution reserve upon disposal (7,231,710) - (7,231,710)

At 31 January 2015 3,631,069 541,325 4,172,394

Translation reserve - 434,106 434,106

At 31 January 2016 3,631,069 975,431 4,606,500

The nature and purpose of each category of reserves are as follows:

(a) Revaluation reserve

The revaluation reserve is used to record increases in the fair value of property, plant and equipment and decreases to the extent that such decrease relates to an increase on the same asset previously recognised in equity.

(b) translation reserve

The translation reserve is used to record exchange differences arising from the translation of the financial statements of foreign operations whose functional currencies are different from that of the Group’s presentation currency. It is also used to record the exchange differences arising from monetary items which form part of the Group’s net investment in foreign operations, where the monetary item is denominated in either the functional currency of the reporting entity or the foreign operation.

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13. BAnk BoRRoWingS

group

2016Rm

2015Rm

Short term borrowings

Term loan 1,980,160 834,000

Bankers’ acceptances and trust receipts 76,921,113 82,001,529

Bank overdrafts 32,178 1,131,235

78,933,451 83,966,764

long term borrowings

Term loan 10,877,302 10,192,473

total bank borrowings 89,810,753 94,159,237

The currency profile of bankers’ acceptances and trust receipts is as follows:


- uS Dollars 70,117,113 77,454,758

76,921,113 82,001,529

Maturity of bank borrowings as at reporting date is as follows:

Payable within one year 78,933,451 83,966,764

Payable between one to two years 1,668,000 1,668,000

Payable between two to five years 5,004,000 5,004,000

Payable after five years 4,205,302 3,520,473

Payable after one year 10,877,302 10,192,473

89,810,753 94,159,237

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13. BAnk BoRRoWingS (Cont’D)

The term loan is secured as follows:- (a) first rank fixed and floating charge over the Comintel Green Technologies Sdn Bhd’s (a 70% owned subsidiary held

through Comintel Sdn Bhd) present and future assets;(b) 60% of the loan is guaranteed by Credit Guarantee Corporation Berhad;(c) assignment of all rights, interest and benefits of Comintel Green Technologies Sdn Bhd, a 70% owned subsidiary held

through Comintel Sdn Bhd and the proceeds from the sale of electricity in respect of the Renewable Energy Power;(d) corporate guarantee by the Company for RM14.5 million; and(e) first party first legal charge over the lease of the project site.

The other bank borrowings are secured as follows:-(a) legal charges over a subsidiary’s leasehold property (Note 4);(b) debenture over a subsidiary’s present and future assets;(c) corporate guarantee by the Company for RM222.1 million (2015: RM225 million); and(d) short term deposits of subsidiaries (Note 10).

At end of the reporting period, the weighted average effective interest rates for bank borrowings were as follows:

group

2016% p.a.

2015% p.a.

Term loan 8.0 8.0

Bankers’ acceptances and trust receipts 2.7 2.7

Bank overdrafts 8.2 8.2

14. hiRe puRChASe pAyABleS

group

2016Rm

2015Rm

Minimum hire purchase payments:

- not later than 1 year 983,604 225,873

- later than 1 year and not later than 5 years 3,150,907 189,394

4,134,511 415,267

Future hire purchase interest charges (503,217) (22,551)

Present value of hire purchase liabilities 3,631,294 392,716

Analysis of present value of hire purchase liabilities:

- not later than 1 year 780,250 212,553

- later than 1 year and not later than 5 years 2,851,044 180,163

3,631,294 392,716

The hire purchase payables bear weighted average effective interest rate for hire purchase at 3.1% (2015: 3.7%) per annum.

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15. DeFeRReD tAx

group

2016Rm

2015Rm

At beginning of the financial year (2,052,203) (4,309,227)

Recognised in the profit or loss (613,797) 297,797

Recognised in other comprehensive income - 1,959,227

At end of the financial year (2,666,000) (2,052,203)

Represented by:

Deferred tax liabilities (2,666,000) (2,052,203)

The components and movements of deferred tax liabilities during the financial year prior to offsetting are as follows:

Deferred tax liabilitiesSurplus on

revaluation

Accelerated capital

allowances total

Rm Rm Rm

At 1 February 2014 (3,233,582) (1,075,645) (4,309,227)

Recognised in the profit or loss - 297,797 297,797

Recognised in other comprehensive income 1,959,227 - 1,959,227

At 31 January 2015 (1,274,355) (777,848) (2,052,203)

Recognised in the profit or loss - (613,797) (613,797)

At 31 January 2016 (1,274,355) (1,391,645) (2,666,000)

The potential tax benefits arising from deferred tax assets not recognised in the financial statements are as follows:

group

2016Rm

2015Rm

unabsorbed tax losses 5,073,000 4,774,637

unutilised capital allowances 397,000 925,991

unutilised reinvestment allowances 4,898,000 9,057,000

10,368,000 14,757,628

The unabsorbed tax losses, unutilised capital allowances and unutilised reinvestment allowances are available indefinitely for offset against future taxable profits of the respective subsidiaries. Deferred tax assets have not been recognised in respect of these items due to uncertainty of its realisation.

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16. tRADe pAyABleS

The currency profile of trade payables is as follows:

group

2016Rm

2015Rm


- Australian Dollar 12,458 90,827

- Canadian Dollar - 179,177

- Euro Dollar 832,698 2,598,555

- Japanese Yen 41,161 49,033

- Singapore Dollar 31,573 22,192

- Sterling Pound 1,806 3,621

- uS Dollar 45,242,830 44,998,554

48,451,733 50,275,244

The normal trade credit terms range from 15 to 90 days.

17. otheR pAyABleS AnD ACCRuAlS

group Company

2016Rm

2015Rm

2016Rm

2015Rm

Other payables 3,077,838 4,028,450 23,461 -

Accruals 4,743,903 4,854,587 31,425 31,425

Deposits received 230,988 179,538 - -

Amounts due to related parties 1,216,586 1,216,586 - -

Amount due to a director 125,957 68,241 - -

9,395,272 10,347,402 54,886 31,425

The currency profile of other payables and accruals is as follows:


- HK Dollar 8,267 14,508

- Indonesia Rupiah 148,691 147,157

- Singapore Dollar - 5,649

- uS Dollar 1,041,179 8,605

9,395,272 10,347,402

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17. otheR pAyABleS AnD ACCRuAlS (Cont’D)

Amounts due to related parties and a Director

The amounts due to the related parties and a Director are unsecured, interest free and have no fixed terms of repayment.

18. pRoViSion FoR WARRAnty

group

2016Rm

2015Rm

At beginning of the financial year 150,000 411,890

Additional provision during the financial year 138,815 63,636

Provision written back during the year (150,000) (325,526)

At end of the financial year 138,815 150,000

The Group provide warranties on certain products with an undertaking to repair or replace items that fail to perform satisfactorily. This provision is made for products under warranty at the end of the reporting period based on past experience on the levels of repairs and returns and industry averages for defective products.

19. ReVenue

group Company

2016Rm

2015Rm

2016Rm

2015Rm

Manufacturing 360,193,894 297,850,146 - -

Sales of goods and services 16,529,720 11,688,283 - 986,096

376,723,614 309,538,429 - 986,096

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20. pRoFit / (loSS) BeFoRe tAxAtion

group Company

2016Rm

2015Rm

2016Rm

2015Rm

(a) The profit / (loss) before taxation is stated after charging / (crediting):

Allowance for inventory obsolescence 2,056,373 - - -

Auditors’ remuneration 136,761 132,967 21,000 21,000

Bad debts written off 695,872 2,025,880 - -

Bank interest and charges 2,057,672 2,350,454 217 155

Depreciation of property, plant and equipment (Note 4) 3,037,556 2,895,884 - -

Hire purchase interest 154,660 28,399 - -

Impairment losses on investments - 1,052,074 618,399 22,348,613

Inventories written off 1,998,841 1,033,923 - -

Lease of premises 2,400,000 433,333 - -

Provision for doubtful debts 483,279 - - -

Provision for warranty cost (Note 18) 138,815 63,636 - -

Realised loss on foreign exchange 5,179,882 2,017,923 - -

Rental of apartment 23,400 22,800 - -

Rental of equipment 42,492 48,795 - -

Rental of land 114,000 118,750 -

Rental of land for car park 26,500 22,800 - -

Rental of motor vehicle 4,100 760 - -

Rental of premises 122,200 123,595 - -

Rental of warehouse and hostel 7,581 21,547 - -

Research and development expenses 2,078 82,263 - -

Gain on disposal of property, plant and equipment (29,396) (732,956) - -

Interest income (363,451) (337,932) - -

Provision for warranty written back (Note 18) (150,000) (325,526) - -

unrealised (gain) / loss on foreign exchange (1,005,126) 1,817,950 - -

Realised gain on foreign exchange (3,652) (7,013) - -

Rental income (1,056,571) (781,504) - -

Written back on accrued directors’ fee (132,000) - - -

ANNUAL REPORT 2016

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20. pRoFit/(loSS) BeFoRe tAxAtion (Cont’D)

group Company

2016Rm

2015Rm

2016Rm

2015Rm

(b) The key management personnel compensation is as follows:

Executives Directors:-

- Fees 96,000 96,000 30,000 30,000

- Salaries and other emoluments 1,653,912 1,620,312 201,600 168,000

Non-Executives Directors:-

- Fees 162,000 182,000 120,000 140,000

- Salaries and other emoluments 30,000 30,000 7,500 -

1,941,912 1,928,312 359,100 338,000

Apart from the Company’s directors, there are no other key management personnel having authority and responsibility for planning, directing and controlling the activities of the entity directly or indirectly.

group Company

2016Rm

2015Rm

2016Rm

2015Rm

(c) Employee information

Staff cost

Bonus 2,101,380 1,200,000 - -

Contribution to defined contribution plan 3,363,255 3,399,725 10,080 10,080

Other benefits 215,112 216,316 - 280

Salaries and wages 31,379,781 30,364,997 84,600 92,387

Social security contributions 421,167 424,498 1,240 1,136

37,480,695 35,605,536 95,920 103,883

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21. tAxAtion

group Company

2016Rm

2015Rm

2016Rm

2015Rm

Income tax:

- Current year’s provision 1,900,085 530,000 - -

- Over provision in prior years 83,958 (475,174) - (461,211)

1,984,043 54,826 - (461,211)

Deferred tax:

- Current year’s provision 613,797 (297,797) - -

613,797 (297,797) - -

2,597,840 (242,971) - (461,211)

A reconciliation of the statutory tax rate to the effective tax rate applicable to the profit / (loss) before taxation is as follows:-

group Company

2016Rm

2015Rm

2016Rm

2015Rm

Profit / (Loss) before taxation 15,280,466 (2,059,155) (1,557,131) (22,264,764)

Tax at applicable statutory tax rate 3,667,312 (514,789) (373,711) (5,566,191)

Tax effects of:

Non-assessable income (563,546) (203,643) - (246,524)

Non-deductible expenses 3,549,968 1,218,934 373,711 5,812,715

under / (Over) provision of income tax expense in prior years 83,958 (475,463) - (461,211)

Deferred tax assets not recognised in the financial statements 1,001,225 1,120,628 - -

utilisation of deferred tax assets previously not recognised (5,390,853) (1,289,000) - -

Others 249,776 (99,638) -

2,597,840 (242,971) - (461,211)

The applicable statutory tax rate used is 24% (2015: 25%).

ANNUAL REPORT 2016

91


22. eARning / (loSS) peR ShARe

The calculation of basic and diluted earnings / (loss) per share is based on the net profit of RM13,484,845 (2015: net loss of RM1,396,073) attributable to owners of the Company over the weighted average number of 140,000,000 ordinary shares in issue during the financial year.

23. SigniFiCAnt RelAteD pARty tRAnSACtionS

For the purpose of these financial statements, parties are considered to be related to the Group if the Group or the Company has the ability, directly or indirectly, to control or jointly control the party or exercise significant influence over the party in making financial and operating decision, or vice versa, or where the Group or the Company and the party are subject to common control.

Related parties may be individuals or other entities. The Group and the Company have related party relationships with Directors, key management personnel and companies in which certain Directors have substantial financial interest.

Related party transactions have been entered into in the normal course of business under normal trade terms. The significant related party transactions of the Group and the Company are as follows:

group Company

2016Rm

2015Rm

2016Rm

2015Rm

(a) Subsidiaries

Purchase of property, plant and equipment - 1,042,560 - -

Management fee income (60,000) (60,000) - -

Rental income (107,514) (174,479) - -

Sale of goods (2,171,300) (3,370,000) - -

Sale of property, plant and equipment - (1,042,560) - -

(b) Sub-subsidiaries

Management fee expenses 60,000 60,000 - -

Purchase of property, plant and equipment 2,171,300 3,370,000 - -

Rental expenses 107,514 174,479 - -

(c) Related party

Security services provided by Gallant Guard Services Sdn Bhd, a firm in which a director has financial interest 108,008 108,008 - -

ANNUAL REPORT 2016

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24. SegmentAl inFoRmAtion

The Group comprises the following main business segments:

(a) Communication and The provision of turnkey engineering design and integration, program management, system integration installation and commissioning.

(b) Defence maintenance The provision of electronic systems testing and repair.

(c) Manufacturing The provision of manufacturing and assembling of electronic components.

The revenue, assets and liabilities pertaining to the investment holding have been classified under communication and system integration segment for disclosure purposes as the amounts involved are insignificant.

The Group’s operations are substantially operated in Malaysia.

In presenting information on the basis of geographical segments, segment revenue is based on the geographical location of the customers. Segment assets are also based on the geographical location of assets.

Business segments

Communication and system integration

Defence maintenance manufacturing Consolidated

Rm Rm Rm Rm

31 January 2016

Revenue from external customers 16,117,195 412,525 360,193,894 376,723,614

Segment results (8,209,419) (421,653) 26,123,870 17,492,798

Finance costs (201,699) (3,247) (2,007,386) (2,212,332)

(Loss)/Profit before taxation (8,411,118) (424,900) 24,116,484 15,280,466

Taxation (14,268) - (2,583,572) (2,597,840)

(Loss) / Profit for the financial year (8,425,386) (424,900) 21,532,912 12,682,626

31 January 2016

AssetsSegment assets 42,477,074 967,732 226,363,179 269,807,985

Investment in unquoted shares 1

Consolidated total assets 269,807,986

liabilitiesSegment liabilities 22,478,923 1,513,924 133,582,033 157,574,880

Consolidated total liabilities 157,574,880

Capital expenditure 3,390,252 2,805 4,983,366 8,376,423

Depreciation of property, plant and equipment 488,525 8,493 2,540,538 3,037,556

ANNUAL REPORT 2016

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Business segments

Communication and system integration

Defence maintenance manufacturing Consolidated

Rm Rm Rm Rm

31 January 2015

Revenue from external customers 10,630,622 1,057,661 297,850,146 309,538,429

Segment results (9,454,216) 72,216 9,707,138 325,138

Finance costs (429,026) (5,440) (1,949,827) (2,384,293)

(Loss) / Profit before taxation (9,883,242) 66,776 7,757,311 (2,059,155)

Taxation 474,719 - (231,748) 242,971

(Loss) / Profit for the financial year (9,408,523) 66,776 7,525,563 (1,816,184)

31 January 2015

Assets

Segment assets 47,305,747 6,629,676 206,560,315 260,495,738

Investment in unquoted shares 1

Consolidated total assets 260,495,739

liabilities

Segment liabilities 24,909,148 1,568,099 134,902,331 161,379,578

Consolidated total liabilities 161,379,578

Capital expenditure 18,081,070 2,200 883,150 18,966,420

Depreciation of property, plant and equipment 666,962 12,444 2,216,478 2,895,884

geographical segments malaysia overseas Consolidated

Rm Rm Rm

31 January 2016

Revenue from external customers 16,529,720 360,193,894 376,723,614

Segment assets by locations of assets 269,118,398 689,587 269,807,985

Capital expenditure by locations of assets 8,376,423 - 8,376,423

24. SegmentAl inFoRmAtion (Cont’D)

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24. SegmentAl inFoRmAtion (Cont’D)

geographical segments (cont’d) malaysia overseas Consolidated

Rm Rm Rm

31 January 2015

Revenue from external customers 11,615,335 297,923,094 309,538,429

Segment assets by locations of assets 259,794,727 701,011 260,495,738

Capital expenditure by locations of assets 18,964,557 1,863 18,966,420

25. Contingent liABilitieS

Company

2016Rm

2015Rm

Corporate guarantees given to financial institutions for credit facilities granted to subsidiaries 236,600,000 239,500,000

As at reporting date, no values are ascribed on guarantees provided by the Company to secure banking facilities described above as the Directors regard the value of the credit enhancement provided by these guarantees as minimal and the probability of default based on historical track records of the parties receiving the guarantees are remote.

26. mAteRiAl litigAtion

On 3 October 2013, Kuala Lumpur High Court ruled in favour of Comintel Sdn Bhd (“Comintel”), a wholly owned subsidiary of the Company with regards to the litigation action taken by Comintel against u Television Sdn Bhd (“1st Defendant”) and Tan Sri Dato’ Seri Vincent Tan Chee Yioun (“2nd Defendant”) upon the following:-

(a) Comintel’s claim for RM11,217,798 together with interest thereon at the rate of 5% p.a. from 5 July 2010 until the date of payment;

(b) Storage cost and insurance amounting to RM284,905 as at 31 October 2012 together with interest thereon at the rate of 5% p.a. from 5 July 2010 until date of payment;

(c) Cost of RM75,000; and

(d) Cost of storage and insurance for Transmitter from 1 November 2012 till the date of removal.

Thereafter, the defendants filed for a stay of execution pending an appeal, which was fixed for hearing on 10 September 2014.

The stay of execution was granted on condition that the said sums of money be paid to a joint escrow account of the solicitors.

Subsequently, due to the change of the Defendants’ Solicitors as well as a change in the composition of the panel of judges, the hearing of the defendants’ appeal was fixed on 28 August 2015.

ANNUAL REPORT 2016

95


26. mAteRiAl litigAtion (Cont’D)

After hearing extensive oral arguments from counsel for 1st Defendant and Comintel, the panel of judges unanimously dismissed 1st Defendant’s appeal and affirmed the High Court’s decision with cost of RM30,000 to be paid to Comintel.

Thereafter, 1st Defendant’s motion to apply for leave to appeal to the Federal Court was fixed for hearing on 2 February 2016 and due to rescheduling of cases in the Federal Court, the hearing was postponed to 3 March 2016.

On 3 March 2016, the Federal Court allowed the application by the Defendants for leave to appeal against the decision of the Court of Appeal dated 28 August 2015. No hearing date has been fixed for the appeal before the Federal Court.

27. FinAnCiAl inStRumentS The following table analyses the financial assets and liabilities in the statements of the financial position by the class

of financial instruments to which they are assigned:-

loan and receivablesAvailable-for-salefinancial assets

2016Rm

2015Rm

2016Rm

2015Rm

Financial assets

group

Investment in unquoted shares outside Malaysia - - 1 1

Trade receivables 90,232,294 69,650,524 - -

Other receivables and deposits 2,513,792 1,193,024 - -

Cash and cash equivalents 34,723,692 41,251,066 - -

Company

Investment in unquoted shares outside Malaysia - - 1 1

Other receivables and deposits 6,955,859 6,491,709 - -

Cash and cash equivalents 42,556 991,677 - -

ANNUAL REPORT 2016

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27. FinAnCiAl inStRumentS (Cont’D)

Financial liabilities at amortised cost

2016Rm

2015Rm

Financial liabilitiesgroupTrade payables 48,451,733 50,275,244

Other payables and accruals 9,395,272 10,347,402

Bank borrowings:-

- Term loan 12,857,462 11,026,473

- Bankers’ acceptances and trust receipts 76,921,113 82,001,529

Company

Other payables and accruals 54,886 31,425

28. FinAnCiAl RiSk mAnAgement poliCieS

The Group’s financial risk management policies seek to ensure that adequate financial resources are available for the development of the Group’s business whilst managing its currency, interest rate, credit, liquidity, cash flow and market price risks. The Group operates within defined guidelines that are approved by the Board and the policies in respect of the major areas of treasury activity are as follows:

Currency risk

The Group is principally exposed to transactional currency risks through the purchase of materials and consumables, sales of finished goods, and in its financing activities that are denominated in a currency other than the functional currency. The currency giving rise to this risk is primarily the united States Dollar (“uS Dollar”). The Group monitors developments in Government policies and market conditions to take necessary actions should there be any indication of unfavourable foreign exchange movement.

The financial assets and liabilities of the Group that are not denominated in its functional currencies are as follows:

group uS Dollar euro others total

2016 Rm Rm Rm Rm

equivalent equivalent equivalent equivalent

Trade receivables 87,265,431 887 388,249 87,654,567

Cash and bank balances 31,074,559 - 17,443 31,092,002

Bank borrowings (70,117,113) - - (70,117,113)

Trade payables (45,242,830) (832,698) (86,998) (46,162,526)

Other payables and accruals (1,041,179) - (156,958) (1,198,137)

Net currency exposure 1,938,868 (831,811) 161,736 1,268,793

ANNUAL REPORT 2016

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28. FinAnCiAl RiSk mAnAgement poliCieS (Cont’D)

Currency risk (cont’d)

The financial assets and liabilities of the Group that are not denominated in its functional currencies are as follows: (cont’d)

group uS Dollar euro others total

2015 Rm Rm Rm Rm

equivalent equivalent equivalent equivalent

Trade receivables 62,172,765 - 494,309 62,667,074

Cash and bank balances 26,216,330 - 40,189 26,256,519

Bank borrowings (77,454,758) - - (77,454,758)

Trade payables (44,998,554) (2,598,555) (344,850) (47,941,959)

Other payables and accruals (8,605) - (167,314) (175,919)

Net currency exposure (34,072,822) (2,598,555) 22,334 (36,649,043)

Sensitivity analysis for currency risk

The following table demonstrates the sensitivity of the Group’s result net of tax to a reasonably possible change in the uS Dollar and Euro Dollar exchange rates against the functional currencies of the Group, with all other variables held constant.

group

2016Rm

2015Rm

uS Dollar / RM - strengthened 3% (2015: 3%) 58,166 (1,022,185)

- weakened 3% (2015: 3%) (58,166) 1,022,185

Euro Dollar / RM - strengthened 3% (2015: 3%) (24,954) (77,957)

- weakened 3% (2015: 3%) 24,954 77,957

interest rate risk

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 market interest rates, the Group’s exposure to interest rate risk arises from the Group’s borrowings and short term deposits.

The Group’s bank borrowings are subject to the prime lending rate of the banks while hire purchase and lease financing are based on fixed rates. Investments in financial assets are short term in nature and are mostly placed as short term deposits with licensed financial institutions.

Market interest rates movements are monitored with a view to ensure that the most competitive rates are secured and where appropriate borrowing arrangements and interest bearing instruments are restructured or reduced.

ANNUAL REPORT 2016

98



interest rate risk (cont’d)

Sensitivity analysis for interest rate risk

At the reporting date, if the interest rates had been 10 basis points higher/lower, with all other variables held constant, the Group’s result net of tax would increase/decrease by RM1,141 (2015: RM3,890) accordingly.

Credit risk

Credit risk is the risk of loss that may arise on outstanding financial instruments should a counterparty default on its obligations. The Group’s exposure to credit risk arises primarily from trade and other receivables and the Company’s exposure to credit risk arises primarily from loans and advances to subsidiaries and financial guarantees given. For other financial assets (investment securities, cash and bank balances), the Group and the Company minimise credit risk by dealing exclusively with high credit rating counterparties.

Management has a credit policy in place and the exposure to credit risk is monitored on an ongoing basis. Normally credit evaluations are performed on customers requiring credit over a certain amount. As at the end of the reporting date, the Group does not have any major concentration of credit risk related to any individual customer or counterparty. As at end of the reporting period, the maximum exposure to credit risk arising from receivables is represented by the carrying amounts in the statements of financial position.

The Company provides unsecured financial guarantees to banks in respect of banking facilities granted to certain subsidiaries. The Company monitors on an ongoing basis the results of the subsidiaries and repayment made by the subsidiaries. As at end of the reporting date, there was no indication that any subsidiary would default on repayment. The financial guarantee has not been recognised since the fair value on initial recognition was not material.

The Company provides unsecured loans and advances to subsidiaries. The Company monitors the results of the subsidiaries regularly. As at the end of the reporting date, the maximum exposure to credit risk is represented by its carrying amounts in the statement of financial position.

market price risk

Market price risk is the risk that the fair value or future cash flows of the Group’s financial instruments will fluctuate because of changes in market prices (other than interest or exchange rates).

The Group does not have exposure to commodity price risk.

liquidity and cash flow risks

The Group’s exposure to liquidity and cash flow risks arises mainly from general funding and business activities.

Liquidity and cash flow risks are addressed by annual and continuous review and forward planning of cash flow in relation to business plans to ensure a balanced and prudent portfolio of cash and other liquid assets and credit facilities are maintained. Borrowings are arranged so as not to go beyond the Group’s ability to repay or refinance.

ANNUAL REPORT 2016

99



liquidity and cash flow risks (cont’d)

maturity analysis

The table below summarises the maturity profile of the Group’s and the Company’s financial liabilities as at the end of the reporting period based on undiscounted contractual payments:

Contractual

Carrying interest Contractual under more than

amount rate / coupon

cash flows 1 year 1 - 2 years 2 - 5 years 5 years

Rm Rm Rm Rm Rm Rm

2016

group

Trade payables 48,451,733 - 48,451,733 48,451,733 - - -

Other payables and accruals 9,395,272 - 9,395,272 9,395,272 - - -

Bank borrowings:

- Term loan 12,857,462 8.0% 16,669,695 2,922,121 2,476,522 6,628,924 4,642,128

- Bankers’ acceptances and trust receipts 76,921,113 1.5% to 8.4% 76,921,113 76,921,113 - - -

- Bank overdraft 32,178 8.6% 32,178 32,178 - - -

147,657,758 151,469,991 137,722,417 2,476,522 6,628,924 4,642,128

Company

Other payables and accruals 54,886 - 54,886 54,886 - - -

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liquidity and cash flow risks (cont’d)

maturity analysis (cont’d)

The table below summarises the maturity profile of the Group’s and the Company’s financial liabilities as at the end of the reporting period based on undiscounted contractual payments: (cont’d)

Contractual

Carrying interest Contractual under more than

amount rate / coupon

cash flows 1 year 1 - 2 years 2 - 5 years 5 years

Rm Rm Rm Rm Rm Rm

2015

group

Trade payables 50,275,244 - 50,275,244 50,275,244 - - -

Other payables and accruals 10,347,402 - 10,347,402 10,347,402 - - -

Bank borrowings:

- Term loan 11,026,473 8.0% 13,979,364 1,264,639 2,421,735 6,464,566 3,828,424

- Bankers’ acceptances and trust receipts 82,001,529

1.5% to 8.4% 82,001,529 82,001,529 - - -

- Bank overdraft 1,131,235 8.6% 1,131,235 1,131,235 - - -

154,781,883 157,734,774 145,020,049 2,421,735 6,464,566 3,828,424

Company

Other payables and accruals 31,425 - 31,425 31,425 - - -


ANNUAL REPORT 2016

101

29. CApitAl mAnAgement

The Group’s primary objective in managing its capital is to maintain an adequate capital base so as to maintain investor, creditor and market confidence and to sustain future development of the business. There were no changes in the Group’s approach to capital management during the financial year.

The Group uses the debt to equity ratio, which is total net debt divided by total equity attributable to owners of the Company, as the key measurement for its capital structure management.

The debt-to-equity ratio of the Company as at the end of the reporting period is as follows:

group

2016Rm

2015Rm

Bank borrowings (Note 13) 89,810,753 94,159,237

Hire purchase payables (Note 14) 3,631,294 392,716

Less: Short term deposits with financial institutions (Note 10) (11,547,554) (12,061,470)

Cash and bank balances (Note 10) (34,755,870) (36,882,301)

Net debt 47,138,623 45,608,182

Equity attributable to the owners of the Company 110,974,548 97,055,597

Debt-to-equity ratio 0.42 0.47

30. CApitAl CommitmentS

group

2016Rm

2015Rm

Capital expenditure commitments

plant and equipment

Contracted but not provided for 1,120,698 3,473,527

31. FAiR VAlue oF FinAnCiAl inStRumentS

The carrying amounts of financial assets and liabilities reported in the financial statements approximated their fair values.

The methods and assumptions used to estimate the fair values of the following classes of financial instruments are as follows :-

(a) Cash and Cash Equivalents, Trade and Other Receivables and Payables

The carrying amounts approximated their values due to the relatively short term maturity of these financial instruments.


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31. FAiR VAlue oF FinAnCiAl inStRumentS (Cont’D)

(b) Borrowings and Hire Purchase Liabilities

The fair value of borrowings and hire purchase liabilities is estimated by discounting the expected future cash flows using the current interest rates of comparable borrowing and hire purchase arrangements.

(c) Investment in unquoted shares outside Malaysia, at cost

It was not practicable to estimate the fair value of the Group’s investment in unquoted shares due to the lack of comparable quoted market prices and the inability to estimate fair value without incurring excessive costs.

Fair Value hierarchy

The following table provides an analysis of financial instruments that are measured subsequent to initial recognition at fair value, grouped into Levels 1 to 3 based on the degree to which the fair value is observable.

(i) Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets or liabilities.

(ii) Level 2 fair value measurements are those derived from inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).

(iii) Level 3 fair value measurements are those derived from inputs for the asset or liability that are not based on observable market data (unobservable inputs).

The Group does not have any financial instruments carried at fair value nor any instruments classified as Level 1, Level 2 and Level 3 as at the end of the reporting period.


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32. ReAliSeD AnD unReAliSeD pRoFitS / (loSSeS) DiSCloSuRe

The breakdown of the retained profits / (accumulated losses) of the Group and of the Company as at the end of the reporting period, into realised and unrealised profits / (losses), pursuant to Paragraphs 2.06 and 2.23 of Bursa Malaysia Main Market Listing Requirements, are as follows:

group Company

2016Rm

2015Rm

2016Rm

2015Rm

Total retained profits/(accumulated losses) of the Company and its subsidiaries

- Realised 13,990,306 (1,377,864) (29,002,672) (27,445,541)

- unrealised (407,565) 1,103,999 - -

13,582,741 (273,865) (29,002,672) (27,445,541)

Less: Consolidation adjustments (2,959,489) (2,587,728) - -

Total retained profits / (accumulated losses) 10,623,252 (2,861,593) (29,002,672) (27,445,541)

The determination of realised and unrealised profits / (losses) is based on the Guidance of Special Matter No.1, Determination of Realised and unrealised Profits or Losses in the Context of Disclosures Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, issued by Malaysian Institute of Accountants on 20 December 2010.

The disclosure of realised and unrealised profits / (losses) above is solely for complying with the disclosure requirements stipulated in the directive of Bursa Malaysia and should not be applied for any other purposes.


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33. CompARAtiVe FiguReS

Certain comparative figures, have been reclassified to conform with current year’s presentation:

group

As restatedAs previously

reported

2015Rm

2015Rm

Consolidated statement of cash flows

Cash flows from financing activities

Placement of short term deposits pledged for banking facilities (5,132,126) (10,632,126)

Net increase in cash and cash equivalents 23,785,629 18,285,629

Cash and cash equivalents at the end of the financial year 41,251,066 35,751,066

notes to the financial statements

Note 10: Cash and bank balances

Less: Short term deposits pledged and / or with maturity more than 3 months (12,061,470) (17,561,470)

Total cash and cash equivalents 41,251,066 35,751,066

Note 17: Other payables and accruals

Other payables 4,028,450 4,207,988

Deposits received 179,538 -


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105

33. CompARAtiVe FiguReS (Cont’D)

Certain comparative figures, have been reclassified to conform with current year’s presentation: (cont’d)

group

As restatedAs previously

reported

2015Rm

2015Rm

notes to the financial statements (cont’d)

Note 20: Profit / (Loss) before taxation

(b) The key management personnel compensation are as follows:-

Directors’ fees - 465,200

Directors’ remuneration - 987,264

Executives Directors:-

- Fees 96,000 -

- Salaries and other emoluments 1,620,312 -

Non-Executives Directors:-

- Fees 182,000 -

- Salaries and other emoluments 30,000 -

1,928,312 1,452,464

(c) Employee information

Staff cost

Bonus 1,200,000 -

Contribution to defined contribution plan 3,399,725 3,459,173

Other benefits 216,316 216,316

Salaries and wages 30,364,997 31,951,397

Social security contributions 424,498 424,498

35,605,536 36,051,384


ANNUAL REPORT 2016

106

34. SigniFiCAnt SuBSequent eVentS

On 3 February 2016, Comintel Sdn Bhd, a wholly owned subsidiary of the Company entered into a share purchase agreement with Selex Sistemi Integrati S.p.A. In Liquidazione to purchase 450,000 ordinary shares of RM1 each in Comintel Tech Services Sdn Bhd (formerly known as Comlenia Sendirian Berhad), a subsidiary held through Comintel Sdn Bhd for a total cash consideration of RM540,000. On 14 March 2016, the said transaction was completed, thereby making Comintel Tech Services Sdn Bhd (formerly known as Comlenia Sendirian Berhad) a wholly-owned subsidiary of Comintel Sdn Bhd and a wholly-owned sub-subsidiary of the Company.

On 12 April 2016, the name of the Company of COMLENIA SENDIRIAN BERHAD, a wholly-owned subsidiary held through Comintel Sdn Bhd had been changed to COMINTEL TECH SERVICES SDN BHD.

35. AppRoVAl oF FinAnCiAl StAtementS

The financial statements have been approved in accordance with a resolution of the Board of Directors on 19 May 2016.


ANNUAL REPORT 2016

107

STATEMENT BY DIRECTORS

STATuTORY DECLARATION

In the opinion of the Directors, the financial statements set out on pages 48 to 106 are drawn up in accordance with Malaysian Financial Reporting Standards in Malaysia and the provisions of the Companies Act, 1965, so as to give a true and fair view of the state of affairs of the Group and of the Company as at 31 January 2016 and of the results and cash flows of the Group and of the Company for the financial year then ended.

The supplementary information as set out in note 32 to the financial statements have been prepared in accordance with the Guidance on Special Matter No.1, Determination of Realised and unrealised Profits or Losses in the Context of Disclosure pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants.

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

I, LOH HOCK CHIANG, being the Director primarily responsible for the financial management of COMINTEL CORPORATION BHD, do solemnly and sincerely declare that the financial statements of the Group and of the Company set out on pages 48 to 106, are to the best of my knowledge and belief, correct and I make this solemn declaration conscientiously believing the same to be true, and by virtue of the provisions of the Statutory Declarations Act, 1960.

Subscribed and solemnly declared by )LOH HOCK CHIANG )at Kuala Lumpur )in the state of Wilayah Persekutuan )on this day of 19 May 2016 )

loh hoCk ChiAngBefore me :-

Commissioner for Oaths Mohammad Roslan Bin Mustafa

tAn SRi DAto’ SAmShuRi Bin ARShAD leng keng hok @ lim keng hoCk

Shah Alam,Dated : 19 May 2016

ANNUAL REPORT 2016

108

INDEPENDENT AuDITORS’ REPORTTO THE MEMBER OF COMINTEL CORPORATION BHD

Report on the Financial Statements

We have audited the financial statements of COMINTEL CORPORATION BHD, which comprise the statements of financial position as at 31 January 2016 of the Group and of the Company, and the statements of profit or loss and other comprehensive income, statements of changes in equity and statements of cash flows of the Group and of the Company for the year then ended, and a summary of significant accounting policies and other explanatory information, as set out on pages 48 to 106.

Directors’ Responsibility for the Financial Statements

The directors of the Company are responsible for the preparation of financial statements so as to give a true and fair view in accordance with Malaysian Financial Reporting Standards and the requirements of the Companies Act, 1965 in Malaysia. The directors are also responsible for the internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditors’ Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with approved standards on auditing in Malaysia. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on our judgement, including the assessment of risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the entity’s preparation of financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the financial statements give a true and fair view of the financial position of the Group and of the Company as of 31 January 2016 and of their financial performance and cash flows for the year then ended in accordance with Malaysian Financial Reporting Standards and the requirements of the Companies Act, 1965 in Malaysia. Report on other legal and Regulatory Requirements

In accordance with the requirements of the Companies Act, 1965 in Malaysia, we also report the following:

(a) In our opinion, the accounting and other records and the registers required by the Act to be kept by the Company and its subsidiaries of which we have acted as auditors have been properly kept in accordance with the provisions of the Act.

(b) We have considered the accounts and the auditors’ reports of the subsidiaries of which we have not acted as auditors, which are indicated in note 5 to the financial statements.

(c) We are satisfied that the accounts of the subsidiaries that have been consolidated with the Company’s financial statements are in form and content appropriate and proper for the purposes of the preparation of the financial statements of the Group and we have received satisfactory information and explanations required by us for those purposes.

ANNUAL REPORT 2016

109

Report on other legal and Regulatory Requirements (cont’d)

In accordance with the requirements of the Companies Act, 1965 in Malaysia, we also report the following: (cont’d)

(d) The audit reports on the accounts of the subsidiaries were not subject to any qualification and did not include any comment required to be made under Section 174 (3) of the Act.

other reporting responsibilities

The supplementary information set out in note 32 to the financial statements is disclosed to meet the requirement of Bursa Malaysia Securities Berhad and is not part of the financial statements. The directors are responsible for the preparation of the supplementary information in accordance with the Guidance on Special Matter No. 1, Determination of Realised and unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants (MIA Guidance) and the directive of Bursa Malaysia Securities Berhad. In our opinion, the supplementary information is prepared, in all material respects, in accordance with the MIA Guidance and the directive of Bursa Malaysia Securities Berhad.

other matters This report is made solely to the members of the Company, as a body, in accordance with Section 174 of the Companies Act, 1965 in Malaysia and for no other purpose. We do not assume responsibility to any other person for the content of this report.

RuSS ooi & ASSoCiAteS ooi Jit huAtNo. A.F. 0152 No. 1073 / 05 / 17 (J)Chartered Accountants Chartered Accountant

Kuala Lumpur,

Date: 19 May 2016

INDEPENDENT AuDITORS’ REPORTTO THE MEMBER OF COMINTEL CORPORATION BHD

ANNUAL REPORT 2016

110

Authorised share capital : RM200,000,000Issued & paid-up capital : RM70,000,000Class of Shares : Ordinary Shares of RM0.50 eachVoting Rights- on show of hands : 1 vote- on a poll : 1 vote for each share held

Size of holdings no. of holders % no. of Shares %

1 – 99 17 0.89 253 0.00

100 – 1,000 246 12.87 189,622 0.14

1,001 – 10,000 910 47.62 5,775,250 4.13

10,001 – 100,000 643 33.65 21,578,500 15.41

100,001 – 6,999,999 (*) 92 4.81 41,399,505 29.57

7,000,000 and above (**) 3 0.16 71,056,870 50.75

Total: 1,911 100.00 140,000,000 100.00

Remark:*Less than 5% of issued shares** 5% and above of issued shares

ANALYSIS OF SHAREHOLDINGSAS AT 05 MAY 2016

ANNUAL REPORT 2016

111

no. nAme holDingS %

1 JuST TRADING SDN BHD 31,875,762 22.768

2 SAGITTARIuS WORLD TRADE SDN BHD 28,856,680 20.611

3 AMG RESOuRCES SDN BHD 10,324,428 7.374

4 SAMSHuRI BIN ARSHAD 4,897,328 3.498

5 MOHAMADON BIN ABDuLLAH 4,114,885 2.939

6 HuANG CHAI SHENG 4,070,000 2.907

7 ALLIANCEGROuP NOMINEES (TEMPATAN) SDN BHDPLEDGED SECuRITIES ACCOuNT FOR CHEW HAN NGIN (8108397)

3,100,000 2.214

8 NOOR AZLEEZAM BIN MOHAMED AZMI 2,131,107 1.522

9 YEOH KEAN BENG 1,292,000 0.922

10 OMNILITE SDN BHD 1,064,885 0.760

11 ONG LEI IM 1,053,000 0.752

12 JOEL OW YANG 730,800 0.522

13 AHMAD RAMLI BIN MOHD NOR 650,000 0.464

14 LENG KENG HOK @ LIM KENG HOCK 626,900 0.447

15 CIMSEC NOMINEES (TEMPATAN) SDN BHDCIMB BANK FOR LOOI BOON HAN (MY0992)

605,200 0.432

16 CHAI KHIN CHuNG 580,000 0.414

17 TEO YAu KWANG @ DAVID 550,200 0.393

18 HLIB NOMINEES (TEMPATAN) SDN BHDPLEDGED SECuRITIES ACCOuNT FOR HALIZA BINTI IBRAHIM

500,000 0.357

19 TAN KAY KEONG 500,000 0.357

20 ZAINuL ABIDEEN BIN FAZLE ABBAS 500,000 0.357

21 TAN SIEW HEONG 490,000 0.350

22 LIONG SIET THO 470,000 0.335

23 CIMSEC NOMINEES (TEMPATAN) SDN BHDPLEDGED SECuRITIES ACCOuNT FOR LEE GAIK CHING (TTDI-CL)

438,000 0.312

24 RHB NOMINEES (TEMPATAN) SDN BHDPLEDGED SECuRITIES ACCOuNT FOR RAJA ZAINAL ABIDIN BIN RAJA HuSSIN

382,000 0.272

25 MAYBANK NOMINEES (TEMPATAN) SDN BHDPLEDGED SECuRITIES ACCOuNT FOR LOI TEIK TONG @ LEE TEIK TONG

367,100 0.262

26 LIM SIEW HWEE 340,000 0.242

27 ENG SAu KuEN 339,000 0.242

28 CHAI MING JIAT 300,000 0.214

29 LEE GAIK CHING 300,000 0.214

30 NEOH HuNG POR 290,000 0.207


THIRTY LARGEST SHAREHOLDERS AS AT 05 MAY 2016

ANNUAL REPORT 2016

112

SuBStAntiAl ShAReholDeRS AS peR RegiSteR oF SuBStAintiAl ShAReholDeRS AS At 5 mAy 2016

Direct interest Deemed interest

name of Shareholders no. of shares % no. of Share %

Just Trading Sdn Bhd 31,875,762 22.77 - -

Sagittarius World Trade Sdn Bhd 28,856,680 20.61 - -

AMG Resources Sdn Bhd 10,324,428 7.37 - -

DiReCtoRS’ inteReStS AS peR RegiSteR oF DiReCtoRS’ ShAReholDingS AS At 5 mAy 2016

Direct interest Deemed interest

name of Shareholders no. of shares % no. of Share %

1 Tan Sri Dato’ Samshuri bin Arshad 4,897,328 3.50 - -

2 Datuk Awalan Bin Abdul Aziz - - - -

3 Mr Leng Keng Hok @ Lim Keng Hock 626,900 0.45 31,875,762(1) 22.77

4 Dato’ Ramli bin Abd Rahman - - - -

5 Mr Loh Hock Chiang 100,000 0.07 1,064,885(2) 0.76

6 Dato’ Abdul Majid bin Omar 10,000 0.01 80,000(3) 0.06

7 Mr Mohamadon bin Abdullah 4,114,885 2.94 28,856,680(4) 20.61

8 Mr Wong Mun Wai - - - -

9 Ms Lee Chai Bee 30,000 0.02 - -

note:

(1) Deemed interest by virtue of Section 6A of the Companies Act, 1965 held through Just Trading Sdn Bhd.(2) Deemed interest by virtue of Section 6A of the Companies Act, 1965 held through Omnilite Sdn Bhd.(3) Deemed interest by virtue of his spouse’s interest in the Company.(4) Deemed interest by virtue of Section 6A of the Companies Act, 1965 held through Sagittarius World Trade Sdn Bhd


ANNUAL REPORT 2016

113

LIST OF PROPERTIES HELD BY COMINTEL CORPORATION BHD GROuP AS AT 31 JANuARY 2016

locationDescription/existing use

land area/Built-up area

tenure/lease period

Age of building (years)

net Book Value (Rm)

Plot 21, Jalan Hi-Tech 4Kulim Hi-Tech ParkPhase 109000 Kulim Kedah Darul Aman

Single storey detached factory building, annexed with a double (2) storey building at the front and a 1 ½ storey building at the rear

40,627 sq mtr/17,211 sq mtr

Freehold(leased to BCM Electronics Corporation Sdn Bhd for 60 years expiring on 28 October 2056)

16 years(Phase 1) / 12 ½ years (Phase 2)

27,488,258

This page had been intentionally left blank.

I/We ____________________________________________________________________________________________________________

NRIC or Company No._____________________________________________ of ___________________________________________

_________________________________________________________________________________________________________________

being a member/members of COMINTEL CORPORATION BHD hereby appoint:-

__________________________________________________________________ NRIC No. _____________________________________

of _______________________________________________________________________________________________________________

or failing him/her _____________________________________________________ NRIC No. __________________________________

of _______________________________________________________________________________________________________________

or failing him/her, the Chairman of the meeting as my/our proxy to vote for me/us on my/our behalf at the thirteenth (13th) Annual general meeting of the Company to be held at Classics Ballroom, holiday Villa Subang, no. 9, Jalan SS12/1, Subang Jaya, 47500 petaling Jaya, Selangor Darul ehsan on thursday, 23 June 2016 at 10.00 a.m. and at any adjournment thereof.

This proxy is to vote on the Resolutions set out in the Notice of the Meeting as indicated with an “x” in the appropriate spaces. If no specific direction as to voting is given, the proxy will vote or abstain from voting at his/her discretion.

FoR AgAinSt

ReSolution 1 - To approve the payment of Directors’ Fees

ReSolution 2 - To re-elect Dato’ Abdul Majid bin Omar as Director

ReSolution 3 - To re-elect Mr Loh Hock Chiang as Director

ReSolution 4 - To re-appoint Tan Sri Dato’ Samshuri bin Arshad as Director

ReSolution 5 - To re-appoint Mr Leng Keng Hok @ Lim Keng Hock as Director

ReSolution 6 - To re-appoint Messrs Russ Ooi & Associates

ReSolution 7 - To retain Ms Lee Chai Bee as Independent Director

ReSolution 8 - To approve Authority to Issue and Allot Shares

ReSolution 9 - To approve Mandate on Recurrent Related Party Transactions

ReSolution 10 - To approve Proposed Share Buy-Back

Dated this ___________ day of ___________________________ 2016 No. of Shares held

______________________________________ Signature of Member(s)

notes:

1. In respect of deposited securities, only Members whose names appear in the Record of Depositors on 16 June 2016 (General Meeting Record of Depositors) shall be entitled to attend, speak and vote at this 13th AGM.

2. A member entitled to attend and vote at the general meeting is entitled to appoint up to two (2) proxies to attend and vote in his/her stead. A proxy may but need not be a member of the Company and the provisions of Section 149(1) (a) and (b) of the Companies Act, 1965 shall not apply to the Company.

3. Where a member appoints two (2) proxies, the appointment shall be invalid unless he/she specifies the proportion of his/her shareholdings to be represented by each proxy. Where a member of the Company is an exempt authorised nominee which holds ordinary shares in the Company for multiple beneficial owners in one securities account (“omnibus account”), there is no limit to the number of proxies which the exempt authorised nominee may appoint in respect of each omnibus account it holds.

4. The instrument appointing a proxy shall be in writing under the hand of the appointer or his/her attorney duly authorised in writing, or if the appointer is a corporation, under its Common Seal or under the hand of an attorney.

5. The instrument of proxy must be deposited at the office of Share Registrar, Tricor Investor & Issuing House Services Sdn Bhd at unit 32-01, Level 32, Tower A, Vertical Business Suite, Avenue 3, Bangsar South, No. 8, Jalan Kerinchi, or at its Customer Service Centre situated at unit G-3, Ground Floor, Vertical Podium, Avenue 3, Bangsar South, No. 8, Jalan Kerinchi, 59200 Kuala Lumpur, Malaysia not less than forty-eight (48) hours before the time set for holding the meeting or any adjournment thereof.

PROXY FORM

The Share Registrar of

Comintel CoRpoRAtion BhD (630068-T)

tRiCoR inVeStoR SeRViCeS SDn BhDLevel 17, The Gardens North Tower

Mid Valley CityLingkaran Syed Putra59200 Kuala Lumpur

Malaysia

1st fold here

Lastly fold here

2nd fold here

AFFIXSTAMP

No. 37, Jalan Pelukis U1/46, Section U1, Temasya Industrial Park,40150 Glenmarie Shah Alam, Selangor Darul Ehsan, Malaysia

Tel : 603 5039 9898 Fax : 603 5039 9833

www.comcorp.com.my

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