Building Resilience gRowth - Grand-Flo Berhad · term growth. It enabled the Group to weather storms and uncover opportunities from unexpected or changing customers’ needs and wider

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No. 3-5, Block D2, Jalan PJU 1/39, Dataran Prima, 47301 Petaling Jaya, Selangor Darul Ehsan, Malaysia

Tel : 603-7880 2222 Fax : 603-7880 3913 Email : [email protected]

KUALA LUmPUR OFFicE

L1-1, Wisma Ehsan Bina No.3, Jalan Kuchai Maju 12, Kuchai Entreprenuers Park, 58200 Kuala Lumpur, Malaysia

Tel : 603-7980 8580 Fax : 603-7980 8790

JOHOR BAHRU OFFicE

57-01, Jalan Harmonium 33/1, Taman Desa Tebrau, 81100 Johor Bahru, Malaysia

Tel : 607-351 1972 Fax : 607-352 6125

mALAccA OFFicE

11-1, Jalan BU5, Taman Bacang Utama, Bacang, 75350 Melaka, Malaysia

Tel : 606-281 7806 Fax : 606-281 7827

SEREmBAN OFFicE

219, 1st Floor, Jalan S2 B10, Uptown Avenue, Seremban 2, 70300 Seremban, Negeri Sembilan, Malaysia

Tel : 606-601 7221 Fax : 606-601 1083

PENANG OFFicE

G-9-2 & 3, Lorong Bayan Indah 1, Bay Avenue, Queensbay, Sg. Nibong, 11900 Penang, Malaysia


HONG KONG OFFicE

cL Solutions Ltd Unit 4, G/F, Po Lung Centre, 11 Wang Chiu Road, Kowloon Bay, Hong Kong

Tel : 852-2989 0300 Fax : 852-2754 3038

GUANGzHOU, cHiNA OFFicE

Guangzhou cL Solutions Limited Room 3811, Jiangwan Business Center, 298, Yanjiang Zhong Road, Guangzhou, People’s Republic of China

Tel : 8620-8386 3338 Fax : 8620-8387 3355

PROPERTy DEvELOPmENT OFFicE

Jalur Bina Sdn Bhd innoceria Sdn Bhd

15, Jalan Todak 5, Pusat Bandar Seberang Jaya, Seberang Jaya, 13700 Perai, Penang, Malaysia.

Tel : 604-399 8912 Fax : 604-370 0119

MISSION1. To be the partner of choice and trusted adviser in Enterprise Data

Collection and Collation System (“EDCCS”)

2. To create quality developments for residential, commercial and industrial purposes for the betterment of the communities and businesses.

VISIONTo enhance community and business with innovation, solution and technology.

CORE VALUES• Team Cooperation• Customer Satisfaction• Integrity• Reliability• Commitment• Innovation• Positive Attitude• Loyalty

01Annual Report 2017

Content Corporate Information 2

Corporate Profile 3

Financial Highlights 4

Corporate Structure 6

Management Discussion and Analysis 7

Board of Directors 11

Directors’ Profile 12

Senior Management Team 16

Sustainability Statement 18

Corporate Governance Overview Statement 24

Audit Committee Report 36

Statement on Risk Management and Internal Control 38

Additional Compliance Information 40

Statement of Directors’ Responsibility 43

Financial Contents 44

Analysis of Shareholdings 150

List of Properties 153

Notice of Annual General Meeting 154

Proxy Form

BUILDING RESILIENCE GROWTHOur forward thinking to understand the economic, social, political technological and environmental issues that create business opportunities and risks, then analyse the opportunities and controlling the risks, to unlock fresh insights and innovate for long term growth. It enabled the Group to weather storms and uncover opportunities from unexpected or changing customers’ needs and wider economic fluctuations, thus developed a robust and enduring strategy in a fast changing world.

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KUALA LUMPUR OFFICE


Tel : 603-7980 8580 Fax : 603-7980 8790

JOHOR BAHRU OFFICE


Tel : 607-351 1972 Fax : 607-352 6125

MALACCA OFFICE


Tel : 606-281 7806 Fax : 606-281 7827

SEREMBAN OFFICE


Tel : 606-601 7221 Fax : 606-601 1083

PENANG OFFICE



HONG KONG OFFICE

CL Solutions Ltd Unit 4, G/F, Po Lung Centre, 11 Wang Chiu Road, Kowloon Bay, Hong Kong

Tel : 852-2989 0300 Fax : 852-2754 3038

GUANGZHOU, CHINA OFFICE

Guangzhou CL Solutions Limited Room 3811, Jiangwan Business Center, 298, Yanjiang Zhong Road, Guangzhou, People’s Republic of China

Tel : 8620-8386 3338 Fax : 8620-8387 3355

PROPERTY DEVELOPMENT OFFICE

Jalur Bina Sdn Bhd Innoceria Sdn Bhd


Tel : 604-399 8912 Fax : 604-370 0119

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Rationale

02 GRAND-FLO BERHAD (607392-W)

BOARD OF DIRECTORS

Tan Sri Azlan Bin Mohd Zainol Independent Non-Executive Chairman (Appointed on 8 September 2017)

Tan Bak Hong Group Managing Director / Group President

Chuah Chew Hai Executive Director

Cheng Ping Liong Executive Director

Tan Chuan Hock Non-Independent Non-Executive Director

Cheong Kee Yoong Senior Independent Non-Executive Director

Yu Chee Sing Independent Non-Executive Director

Lee Eng Eow Independent Non-Executive Director (Appointed on 15 November 2017)

Joyce Wong Ai May Independent Non-Executive Director (Appointed on 22 December 2017)

Tan Sri Datuk Adzmi Bin Abdul Wahab Independent Non-Executive Chairman (Retired on 30 May 2017)

Yap Li Li Executive Director (Resigned on 31 January 2018)

CORPORATE INFORMATION

AUDIT COMMITTEECheong Kee Yoong - ChairmanTan Chuan HockYu Chee SingLee Eng Eow

NOMINATION COMMITTEECheong Kee Yoong - ChairmanTan Chuan HockYu Chee Sing

REMUNERATION COMMITTEELee Eng Eow - ChairmanTan Chuan HockYu Chee Sing

COMPANY SECRETARYTea Sor Hua (MACS 01324)

AUDITORSGrant Thornton Malaysia(Member of Grant Thornton International Ltd)Chartered AccountantsLevel 11, Sheraton Imperial CourtJalan Sultan Ismail50250 Kuala Lumpur, Malaysia.Tel : 603-2692 4022Fax : 603-2732 5119

SHARE REGISTRARTricor Investor & Issuing HouseServices Sdn. Bhd.Unit 32-01, Level 32Tower A, Vertical Business SuiteAvenue 3, Bangsar SouthNo. 8, Jalan Kerinchi59200 Kuala Lumpur, Malaysia.Tel : 603-2783 9299Fax : 603-2783 9222

PRINCIPAL BANKERSAmbank (M) BerhadAminvestment Service BerhadMalayan Banking BerhadPublic Bank BerhadPublic Bank (Hong Kong) LimitedUnited Overseas Bank (Malaysia) BerhadUnited Overseas Bank (Thai) Public Company Limited

REGISTERED OFFICEThird Floor, No. 79 (Room A)Jalan SS 21/60Damansara Utama47400 Petaling JayaSelangor Darul Ehsan, Malaysia.Tel : 603-7725 1777Fax : 603-7722 3668

BUSINESS HEADQUARTERSNo. 3-5, Block D2, Jalan PJU 1/39Dataran Prima, 47301 Petaling JayaSelangor Darul Ehsan, Malaysia.Tel : 603-7880 2222Fax : 603-7880 3913Email : [email protected] : www.grand-flo.com

STOCK INFORMATIONMain Market of Bursa Malaysia Securities Berhad

Bursa Malaysia : GRANFLO / 0056Bloomberg Code : GFLO MKReuters Code : GRFL.KL


For over two decades, Grand-Flo Berhad (“Grand-Flo”) has been establishing successful data management and collaboration solutions for corporations ranging from Fast Moving Consumer Goods businesses to financial institutions, education organisations and even multinational establishments. We have been empowering businesses to manage and collaborate their data efficiently no matter where its origins or capacity frequencies.

Our Enterprise Data Collection and Collation System (“EDCCS”) segment is in providing comprehensive tracking solutions, to businesses across all industrial sectors. Our One Stop EDCCS Solution Centre takes care of all your retail data tracking and management needs, ranging from hardware, middleware, software to media and consumables such as barcode ribbons and labels. Our home-grown ManageSuiteTM application solution is also an emerging product in the market. A comprehensive range of precision tools, ManageSuiteTM has proven to increase efficiency,

harvest market intelligence and facilitate sales force mobility while minimizing potential errors to almost zero. Complemented with any barcode products, ManageSuiteTM enable users to manage and track assets in warehouses, retail outlets and office buildings. With ManageSuiteTM, many businesses have experienced transformation in their operations that leads to unlocking the full potential of their business growth.

Grand-Flo ventured into the property development in mid-2013, and the completion of 50.0004% acquisition of Innoceria Sdn Bhd on 12 August 2014 marked the Group’s effective diversification its business operations to include Property Development. Both projects are located in Mainland Penang, capturing the high-growth opportunities in Northern Peninsular, namely Vortex Business Park and The Glades.

Vortex Business Park, a commercial development located in the industrial hub of Batu Kawan, is well-placed to capture

the demand for strategically-based commercial properties. This development is in close proximity to the Penang Second Bridge which gives easy access to Penang Island, as well as the North South Expressway which facilitates transport to the rest of Peninsular Malaysia.

The Glades features luxury residences in Bukit Mertajam. This development is targeted to those who seek a more tranquil neighbourhood, replete with a modern club house adhering to their lifestyle demands.

With notable infrastructure developments announced to take place in Penang over the next few years, the property development division is expected to reap positive returns going forward.

CORPORATE PROFILE


FINANCIAL HIGHLIGHTS

SUMMARIZED GROUP RESULTS YEAR ENDED 31 DECEMBER

2013 2014 2015 2016 2017

Revenue 89,603 85,633 120,523 120,278 104,050

EBITDA^ 16,746 14,076 24,332 1,630 17,992

Operating Profit/(Loss) 13,564 10,569 21,018 (1,217) 15,504

Profit/(Loss) Before Tax 14,089 9,188 18,596 (2,598) 15,038

Net Profit/(Loss) 12,966 8,101 16,093 (5,485) 14,521

Net Profit/(Loss) Attributable to Owners of the Company 12,968 6,673 11,931 (9,724) 13,189

^ Earnings Before Interest, Tax, Depreciation and Amortisation

SUMMARIZED GROUP FINANCIAL POSITION YEAR ENDED 31 DECEMBER

2013 2014 2015 2016 2017

Non-current Assets 77,404 77,788 76,951 61,947 43,168

Current Assets 49,105 89,606 146,757 143,851 148,534

Total Assets 126,509 167,394 223,708 205,798 191,702

Non-current Liabilities 11,273 14,687 8,158 9,401 1,851

Current Liabilities 27,835 49,207 69,271 44,330 29,435

Total Liabilities 39,108 63,894 77,429 53,731 31,286

Equity Attributable to Owners of the Company 86,614 101,130 123,527 110,036 122,988

Non-controlling Interest 787 2,370 22,752 42,031 37,428

Total Equity 87,401 103,500 146,279 152,067 160,416

Total Equity and Liabilities 126,509 167,394 223,708 205,798 191,702

FINANCIAL ANALYSIS YEAR ENDED 31 DECEMBER

2013 2014 2015 2016 2017

Gearing (Net of Cash) (times) 0.05 0.16 0.09 0.04 0.00

Cash and bank balances (including fixed deposits and overdrafts) (RM’000) 14,432 11,153 13,687 14,150 31,994


FINANCIAL HIGHLIGHTS (cont’d)

REVENUE (RM’000)

FY 2013

89,603

FY 2014

85,633

FY 2015

120,523

FY 2016

120,278

FY 2017

104,050

TOTAL ASSETS(RM’000)

FY 2013

126,509

FY 2014

167,394

FY 2015

223,708

FY 2016

205,798

FY 2017

191,702

GEARING (NET OF CASH) (TIMES)

FY 2013

0.05

FY 2014

0.16

FY 2015

0.09

FY 2016

0.04

FY 2017

0.00

NET PROFIT/(LOSS) ATTRIBUTABLE TO OWNERS OF THE COMPANY(RM’000)

FY 2013

12,968

FY 2014

6,673

FY 2015

11,931

FY 2016

(9,724)

FY 2017

13,189

EQUITY ATTRIBUTABLE TO OWNERS OF THE COMPANY(RM’000)

FY 2013

86,614

FY 2014

101,130

FY 2015

123,527

FY 2016

110,036

FY 2017

122,988

CASH AND BANK BALANCES (INCLUDNG FIXED DEPOSITS AND OVERDRAFT)(RM’000)

FY 2013

14,432

FY 2014

11,153

FY 2015

13,687

FY 2016

14,150

FY 2017

31,994


Malaysia Majority Stake

Minority StakeHong Kong, China

Thailand

100%Grand-Flo Data Centrix

Sdn Bhd

100%Grand-Flo Spritvest

Sdn Bhd

100%Grand-Flo Electronic

System Sdn Bhd

14.12%Simat Labels Co. Ltd

100%Grandcon Sdn Bhd

(fka Grand-Flo Development Sdn Bhd)

100%Grand-Flo Capital

Sdn Bhd

50.0004%Innoceria Sdn Bhd

52%Jalur Bina Sdn Bhd

100%Grand-Flo (HK) Limited

100%Guangzhou CLSolutions Ltd

100%Victor Group Ltd

100%CL Solutions Ltd

100%Labels Network Sdn Bhd

EDCCS: ENTERPRISE DATA COLLECTION & COLLATION SYSTEM PROPERTY DEVELOPMENT

A Main Market listed company


CORPORATE STRUCTURE


Increase in private consumption, investment, exports, government spending; improvement in commodity prices and the strengthening of ringgit against the greenback, were all factors that contributed to the expansion of major sectors of the economy in 2017.

Despite the overall positive outlook, there were concerns raised over the oversupply of some property types that may affect the potential of the broader economy. However, in Malaysia, we believe, urbanisation and population growth have contributed to a shortage of affordable housing supply and therefore, remain optimistic in the demand for this sector.

Amidst all the challenges, the Group had remained resilient in its business performance and sustained its ability to generate steady profitability.

For the financial year ended 31 December 2017 (“FYE 2017”), the Group achieved profit after tax of RM 14.5 million and net profit attributable to shareholders grew by 235.6% to RM 13.2 million. This resulted in earnings per share of 2.77 sen for the FYE 2017.

On behalf of the Board of Directors and management, we hereby present to you the Annual Report and Audited Financial Statements for the FYE 2017.

Dear Shareholders,

The Malaysian economy grew faster than had been forecast last year and its gross domestic product (“GDP”) grew 5.9% for the full year in 2017, highest growth in over 3 years. The growth had been fuelled by more favourable conditions at home and abroad.

According to a report from the Ministry of Finance, domestic demand accelerated 6.7% in the first half of 2017, as compared to 4.7% increase recorded in the first half of 2016 anchored by resilient household consumption and strong private investment which were mainly from investments in the manufacturing and services sectors.

MANAGEMENT DISCUSSION AND ANALySIS

RECENT DEVELOPMENTS

Grand-Flo successfully completed its maiden property development projects namely, Vortex Business Park (Phase 1) and The Glades, in July and June 2017 respectively. Vortex Business Park is a commercial development project located at the industrial hub of Batu Kawan, Penang whilst The Glades, the luxury residences, is nestled in Bukit Mertajam, Penang. As at 31 December 2017, Grand-Flo has sold 82.4% of Vortex Business Park (Phase 1) and 55.3% of The Glades.

Regionally in Thailand, Grand-Flo had disposed of its shareholdings in Simat Technologies Public Company Limited (“Simat”) in 2017 so as to focus on its core businesses in Property Development and EDCCS. Simat ceased to be an associated company of Grand-Flo after the completion of the disposal in November 2017. However, Grand-Flo still holds 14.12% of Simat Label Co., Ltd. (a subsidiary of Simat) via its wholly-owned subsidiary, Labels Network Sdn Bhd. (“LNSB”).

At the local front, Grand-Flo had, in November 2017, disposed of its 80% owned subsidiary, Kopacklabels (PG) Sdn Bhd (“KPSB”). This was in line with the direction to further streamline our business into two main core businesses.


Financial Performance

The consolidated revenue of Grand-Flo for the FYE 2017 of RM 104.0 million were lower by RM 16.3 million or 13.5% compared to RM 120.3 million for the previous financial year ended 2016 (“FYE 2016”). The decrease in the Group’s revenue contribution from the Property Development segment was mitigated by the increase in revenue from the EDCCS.

Despite the lower topline, Grand-Flo recorded consolidated profit after taxation of RM 14.5 million for the FYE 2017, compared to the loss after taxation of RM 5.5 million in the FYE 2016, an increase of 364.7%. The main contribution to the bottomline was RM 11.7 million from the EDCCS segment and RM 2.8 million from the Property Development segment.

• Net revenue for the EDCCS segmentwasRM73.9 million in the FYE 2017, an increase of RM 6.0 million, or 8.8%, compared to RM 67.9 million for the FYE 2016. The increase was mainly contributed by the Malaysian operations. Profit after taxation were RM 11.7 million in the FYE 2017, compared to loss after taxation of RM 14.0 million for the FYE 2016.

Included in the FYE 2017 profit after taxation were the followings:-

i. gain on disposal of associated company in Thailand, Simat of RM 12.3 million;

ii. loss on disposal of Grand-Flo’s Penang labels production business, KPSB, of RM 0.5 million and the goodwill impairment associated with its disposal of RM 0.7 million. Similarly, included in the FYE 2016 loss after taxation were loss on disposal of the main labels production business, Kopacklabels Press Sdn Bhd, of RM 3.8 million and the goodwill written off of RM 4.6 million in LNSB as a result of the disposal.

Had the gain, loss and impairment from these disposals been excluded, the FYE 2017 profit after taxation would have been RM 0.6 million as compared to the loss after taxation of RM 5.6 million for the FYE 2016.

• InthePropertyDevelopmentsegment,netsaleswere RM 30.2 million in the FYE 2017, a decrease of RM 22.2 million or 42.4%, compared to RM 52.4 million in the FYE 2016. In tandem with the drop in sales, its profit after taxation were RM 2.8 million representing a decrease of RM 5.8 million or 67.5% compared to RM 8.5 million for the FYE 2016.

EDCCS

The Malaysia region of the EDCCS segment recorded strong sales in the FYE 2017 compared to the FYE 2016 which were mainly attributable to higher sales from the retail, government-linked companies and logistics industries. This growth was basically driven by the rising confidence level of the businesses in Malaysia hence they were willing to spend to improve their efficiencies and to expand their operations. In tandem with the increase in sales, Grand-Flo’s EDCCS segment achieved a profit after taxation of RM 0.6 million (net of gain, loss and impairment from shares disposals) for the FYE 2017.

The EDCCS research and development team spent considerable time and efforts and had, in FYE 2017, successfully converted Grand-Flo’s proprietary solution, ManageSuiteTM, to be executable across various operating systems currently popular in the handheld environment. With this enhancement to its solution, Grand-Flo will be able to further increase its market shares in the SMEs category.

Grand-Flo believes new drivers of growth in e-commerce and technology, as well as improving infrastructure, will help drive Malaysia’s growth prospects.

Property Development

Despite the property market slowdown, the Group’s property development segment continued to record an uninterrupted profit track record. The weaker revenue and profit in the FYE 2017 was mainly due to lower percentage of completion (both projects were near completion stages as of previous financial year & completed mid-2017) and low new sales. Furthermore, there were no new development projects launched during the financial year under review.

Total unbilled progress billings from subsidiaries as at 31 December 2017 stands at approximately RM 3.8 million.

MANAGEMENT DISCUSSION AND ANALySIS (cont’d)



Going forward, Grand-Flo plans to focus on joint development of affordable homes with land owners at strategic locations in Penang. Also in the plan is for Grand-Flo to seek its shareholders’ approval in an Extraordinary General Meeting to be held, to diversify into construction business, which is complementary to the existing property development segment, as an additional revenue stream to enhance its earning base.

‘Vortex Business Park’

‘Vortex Business Park’, a commercial development located in Batu Kawan, features 60 units of 4-storey semi-detached shop offices and 52 units of 4-storey light industrial factories on 8.4-hectare freehold land. With total Gross Development Value (“GDV”) of RM 220.0 million, the project aims to be a prominent business centre in the area, tapping into consistent demand for smaller yet conveniently-situated commercial properties.

Phase 1 was officially completed in July 2017, with 82.4% take-up as at end-2017. The Group remain confident that the project would be well received by our target markets in line with the accelerated developments in the neighbouring areas. Nonetheless, the tough operating environment resulted in the Group moderating its plan to launch Phase 2 in year 2018.

‘The Glades’

‘The Glades’ is a 3.3-hectare freehold land of exclusive gated and guarded luxury residences in Bukit Mertajam, showcasing 76 units of 2- and 3-storey semi-D and zero-lot bungalows. The RM 63.0 million GDV low-density project aims to be a private enclave for the discerning, with the contemporary clubhouse fulfilling the demands of distinctive lifestyles.

Launched in February 2015, this project was officially completed in June 2017. ‘The Glades’ have achieved 55.3% take-up rate as at end-2017. While the Group is mindful of uncertainties facing the operating environment, we are taking considerable steps to push for sales via strategic marketing and advertising, including engagement in the social media.

Capital Expenditure

Grand-Flo had been investing substantially in solution development by EDCCS segment and needs to undergo regular technology refreshes to cater to customer requirements whereas the Property Development segment had been planning on prospective joint developments and/or acquisition of land.

For the FYE 2017, EDCCS incurred RM 0.8 million for solutions upgrade, maintenance and replacement purposes and were evaluating joint development and land acquisition proposals.


Gearing

Grand-Flo’s gearing ratio decreased as at 31 December 2017 to nil from 4.1% as of 31 December 2016. This was achieved by settlement of term loans with the sale proceeds from disposals of associated company and subsidiary during the FYE 2017.

Dividend

We are committed to deliver the best value to our shareholders via dividend policy. In line with this, the Board of Directors proposed a final dividend of 0.60 sen per share for the FYE 2017.

This translates to a total dividend payout of RM 2,898,694 million or 20% of the Group’s FYE 2017 net profit.

Forward Statement

Although the global economy is set to remain soft and volatile in 2018, domestic demand remains a key engine of growth for Malaysia.

We remain committed to driving shareholder’s value with revenue growth, operating leverage, cash flow generation, and efficient capital deployment. We strive to optimize our capital structure to enable prioritized investments in the business and land acquisitions as a source of generating solid future operating cash flows.

Entering 2018, with the projected expansion in domestic demand and private investments as engine of growth, we believe our EDCCS business is well-positioned to compete in both our core markets and adjacent growth areas. We have a broad spectrum of products and services portfolio specifically tailored for our customer base that spans many layers of governments, logistics, manufacturing and retail. As we add new products, features, and software upgrades, we ensure our solutions are inter-operable and backward-compatible, enabling customers to confidently invest in their future needs while allowing them to utilize their prior investment in our technology.

On the property front, we remain optimistic on the prospective demand for affordable homes at good locations despite the foreseeable challenging property market in 2018 due to stringent loan requirements, rising cost of living as well as consumers adopting cautious approach in their spending habits and capital commitments.

2018 OUTLOOK

The World Bank expects Malaysia’s GDP growth to moderate to 5.2% in 2018, from an estimated 5.9% in 2017, on the back of a gradual slowdown in China which offsets a pickup of activity in the rest of the region.

Regional growth is projected to moderate slightly during the forecast horizon led by a cyclical rebound in several commodity exporters, the bank said in its Global Economic Prospects report.

It said the regional growth is projected to gradually slowdown to 6.2% in 2018 and 6.1% on average in 2019 to 2020 with the continuing gradual structural slowdown in China offsetting a cyclical pickup in the rest of the region.

On the local front, the Associated Chinese Chambers of Commerce and Industry in Malaysia’s survey report on the economic situation in Malaysia for the second half of 2017 showed that 55% of the respondents were optimistic about the economy in 2018, with the percentage increasing to 63% and 71% for 2019 and 2020 respectively. Among the key areas of interest were the digital economy, including the country’s Digital Free Trade Zone (“DFTZ”).

We aim to capture the opportunities presented in the economy growth expansion potentially in the manufacturing, logistics and services sectors to grow our EDCCS segment and the need for affordable homes to grow our Property Development segment.

CONCLUSION

We wish to thank all of our stakeholders, including our shareholders, Board of Directors, senior management, employees, customers, suppliers, business associates, communities and regulators, for your continued support over the year.



BOARD OF

DIRECTORS

1 TAN SRI AZLAN BIN MOHD ZAINOL 2 TAN BAK HONG3 CHUAH CHEW HAI 4 CHENG PING LIONG5 TAN CHUAN HOCK 6 CHEONG KEE YOONG7 YU CHEE SING 8 LEE ENG EOW9 JOYCE WONG AI MAY 10 YAP LI LI

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TAN SRI AZLAN BIN MOHD ZAINOLIndependent Non-Executive Chairman

Tan Sri Azlan Bin Mohd Zainol, a Malaysian, male, aged 68, is the Independent Non-Executive Chairman of the Company and was appointed to the Board on 8 September 2017.

Tan Sri Azlan is a Fellow of the Institute of Chartered Accountants in England and Wales (ICAEW), a Fellow Chartered Banker of the Asian Institute of Chartered Bankers (AICB), a member of Malaysian Institute of Accountants (MIA) and a member of the Malaysian Institute of Certified Public Accountants (MICPA).

TAN BAK HONGGroup Managing Director / Group Presidentand Key Senior Management

Tan Bak Hong, a Malaysian, male, aged 55, is the Group Managing Director/Group President of the Company and was appointed to the Board on 1 December 2003. He graduated with a Bachelor in Engineering (Mechanical) from University of Malaya in 1988 and possesses more than 29 years of experience in the field of automation and tracking solutions business.

Upon graduation, he started his career as a Sales and Application Engineer with an engineering firm where he was mainly involved in the sales of system design and responsible for the installation and commissioning of industrial automation projects. In 1989, he founded Grand-Flo Engineering Sdn Bhd (formerly known as Grand-Flo Engineering Supply & Service Sdn Bhd) (“GFE”), which was principally involved in fluid power and motion control business and distribution of hydraulic and pneumatic industrial products.

During this period, he envisioned the promising potential for the automated identification system (“Auto-ID”) solutions business in Malaysia as most business processes in Malaysia were then, heavily dependent upon manual data collection which was laborious

Tan Sri Azlan was previously the Chief Executive Officer of the Employees Provident Fund Board until his retirement in April 2013. Tan Sri Azlan has more than 30 years of experience in the financial sector, having served as the Managing Director of AmBank Berhad and prior to that, as the Managing Director of AmFinance Berhad.

Tan Sri Azlan’s other directorships in public companies include RHB Bank Berhad (Chairman), RHB Investment Bank Berhad (Chairman), Malaysian Resources Corporation Berhad (Chairman), Eco World International Berhad (Chairman) and Kuala Lumpur Kepong Berhad. Tan Sri Azlan is also the Chairman of Financial Reporting Foundation, Chairman/Trustee of Yayasan Astro Kasih and a Trustee of OSK Foundation.

and error prone. Hence, in 1994, with good business foresight and business knowledge, he founded the Auto-ID business together with Mr. Tan Bak Leng and the management of GFE as part of the expansion of product line in GFE. In view of the rapid expansion of the Auto-ID business, Grand-Flo Electronic System Sdn Bhd was incorporated in 1996 as he believed that the business should move forward and develop its own in-house proprietary solutions to offer complete Auto-ID system solutions to further enhance its services and earnings base.

He is the key person responsible for the strategic planning, development and overall management of the Company and its subsidiaries (“the Group”). Under his leadership, the Group had achieved several milestones including its expansion into Thailand, Vietnam, Hong Kong and China. He was key in steering the Group in its expansion plans through organic growth, mergers and acquisitions and recently, inclusion of property development into the Group.

Mr. Tan currently sits on the board of several private limited companies and Simat Technologies Public Company Limited, a public company listed on the Stock Exchange of Thailand.

DIRECTORS’ PROFILE


CHUAH CHEW HAIExecutive Director and Key Senior Management

Chuah Chew Hai, a Malaysian, male, aged 55, is an Executive Director of the Company and was appointed to the Board on 25 May 2015. He has more than 20 years of experience in the construction and property development industry. Together with his spouse, Ms. Chong Poh Yoong, they founded Metrio group of companies in October 2002, which are principally involved in property development.

Prior to Metrio Group, he was with ABT Construction Sdn Bhd from 1986 to 1988 as a quantity surveyor. He joined Wah Bee Construction Engineering Sdn Bhd in 1989 as a quantity surveyor.

CHENG PING LIONGExecutive Director and Key Senior Management

Cheng Ping Liong, a Malaysian, male, aged 53, is an Executive Director of the Company and was appointed to the Board on 29 September 2006. He graduated with a Bachelor of Business Administration in Finance from University of Iowa, United States of America in 1988. His first employment was with RES Malaysia Sdn Bhd where he held the position of Trainee Programmer from 1989 to 1990. In 1990, he was promoted to the position of an Analyst Programmer and this was followed by his ascension to the position of System Analyst in 1991. During the years 1992 to 1995, he took on the role of a Technical Manager in RES Malaysia Sdn Bhd. It was

TAN CHUAN HOCKNon-Independent Non-Executive Director

Tan Chuan Hock, a Malaysian, male, aged 57, is a Non-Independent Non-Executive Director and was appointed to the Board on 2 October 2004. He is the member of the Remuneration Committee, Audit Committee and Nomination Committee.

He is the Executive Proprietor and also the Founder of William C.H. Tan & Associates, a Chartered Accountants firm. He is a member of Malaysian Institute of Accountants

From 1991 to 1992, he was a Construction Manager in Oriental Max Sdn Bhd. He then joined Panther Construction from 1993 to 2002 as a partner where he was responsible for managing its operations and oversaw the tendering of projects, resource planning and costing.

His extensive experience and knowledge in construction and development industry has driven Metrio group of companies to become a leading property developer in the northern region of Peninsular Malaysia.

in 1995 when he, together with En. Othman bin Bakri jointly incorporated Grand-Flo Spritvest Sdn Bhd. He spearheads Grand-Flo Spritvest Sdn Bhd’s Research & Development initiatives and plays a pivotal role in the conceptualisation of the enterprise data capture solution, namely Direct Store Delivery. He is actively involved in the formation of strategic alliances with business and technology partners for the company as well as formulating the company’s business strategies. In August 2007, Mr. Cheng was appointed the Chief Executive Officer of the integrated company between Grand-Flo Electronic System Sdn Bhd and Grand-Flo Spritvest Sdn Bhd. He is also a director of several private limited companies.

(MIA), Malaysian Institute of Taxation and is a Fellow Member of the Association of Chartered Certified Accountants (ACCA). He has more than thirty years of experience particularly in financial reporting, auditing, taxation and planning, company secretarial as well as corporate management and advisory services.

He holds directorships in several limited companies. Presently, his directorships in other public companies includes Careplus Group Berhad, EITA Resources Berhad and LKL International Berhad.

DIRECTORS’ PROFILE (cont’d)


CHEONG KEE YOONGSenior Independent Non-Executive Director

Cheong Kee Yoong, Malaysian, male, aged 50, is an Independent Non-Executive Director of the Company. He was appointed to the Board on 30 June 2008 and subsequently appointed as Senior Independent Director of the Company on 24 April 2014. Currently he is the Chairman of both Audit Committee and Nomination Committee. He is also the Chief Financial Officer of Southern Acids (M) Berhad, a company listed on the Main Market of Bursa Malaysia Securities Berhad.

YU CHEE SING Independent Non-Executive Director

Yu Chee Sing, a Malaysian, male, aged 55, is an Independent Non-Executive Director of the Company and was appointed to the Board on 2 October 2004. He is a member of the Audit Committee, Nomination Committee and Remuneration Committee of the Company. He obtained a Bachelor Degree in Civil Engineering from University of Malaya in 1988, and has more than 26 years of experience in the construction and development industry. Upon graduation, he started his career as an Engineer in Design Deco Sdn Bhd. Subsequently, he joined Syarikat Murni Utara Sdn Bhd as a Project Manager in 1992. He left the company in

LEE ENG EOWIndependent Non-Executive Director

Lee Eng Eow, a Malaysian, male, aged 44, is an Independent Non-Executive Director of the Company and was appointed to the Board on 15 November 2017. Mr. Lee is the Chairman of the Remuneration Committee and a member of the Audit Committee of Grand-Flo. He graduated from Deakin University, Melbourne, Australia with a Bachelor of Commerce in 1996 and he is a Fellow CPA of Australia, a member of Malaysian Institute of Accountants (MIA) and Member of Chartered Accountant of Institute of Commercial and Industrial Accountants, Malaysia. He has more than 20 years of experience in internal and external audits, tax planning and advisory services.

A graduate of the Association of Chartered Certified Accountants (ACCA) and a member of Malaysian Institute of Accountants (MIA), he has more than 20 years of working experience particularly in corporate planning, fund raising, treasury management, investors relation activities, tax planning, financial management and risk management in various industries and mainly attached to the corporate office of public listed companies.

1995 and joined Lintasan Baru Sdn Bhd as a Project Coordinator. In 2001, he joined Dimensi Baru Sdn Bhd as a Project Director and had since accomplished many construction and development projects.

In 2007, he expanded his forte in property development and construction through his appointment as director of Delta Elegance Sdn Bhd, a property development company and was instrumental in the development of a housing estate located in Kuala Lumpur.

He is also a director of several private limited companies.

He commenced his career in 1997 as a graduate assistant within the assurance division of Deloitte Malaysia for more than 14 years. He has also worked for mid-tier audit firms as an audit principal in Singapore, Kuala Lumpur, Seberang Jaya and Penang for a period of more than 5 years before setting up his own consultancy firm.

He is the founder and also a director of RI Tax Consultancy Sdn Bhd.



JOYCE WONG AI MAYIndependent Non-Executive Director

Joyce Wong Ai May, a Malaysian, female, aged 42, is an Independent Non-Executive Director of the Company and was appointed to the Board on 22 December 2017.She graduated from University of Tasmania, Australia with a Bachelor of Commerce (Accounting and Finance) and she is currently a member of Malaysian Institute of Accountants (MIA) and CPA Australia. She started her first career with Smith Zain Securities Sdn Bhd, which was then under Merrill Lynch International. She later joined Hwang-DBS Securities Berhad in 2004 as an Officer in the Internal Audit Department and subsequently left Hwang-DBS Securities Berhad to join a mid-tier accounting firm in 2005. She became their Director in 2015.

YAP LI LI Executive Director (Resigned on 31 January 2018)and Key Senior Management

Yap Li Li, a Malaysian, female, aged 51, is an Executive Director of the Company and was appointed to the Board on 22 April 2009 and subsequently had resigned on 31 January 2018. She obtained a Bachelor of Arts (Economics) Degree from University of Malaya in 1990. Upon graduation, she joined a distribution company in charge of marketing operations and later, moved on to join a well-established insurance company primarily for the role of agency development and management which encompassed sales achievements for her team.

Notes:1. None of the Directors have family relationship with other directors or major shareholders except of the following:-

a) Mr. Tan Bak Hong is the spouse of Madam Yap Li Li. b) Mr. Tan Bak Hong and Madam Yap Li Li are the directors and shareholders of Grand-Flo Corporation Sdn Bhd, a

substantial shareholder of the Company. 2. None of the Directors have a personal interest in any business arrangement involving the Company except as disclosed in

Note 40 of the Financial Statements on Page 127 of this Annual Report.

3. None of the Directors have been convicted of any offences in the past five (5) years or been imposed on any public sanction or penalty by relevant regulatory bodies during the financial year ended 31 December 2017, other than for traffic offences.

She now runs her own consultancy company and she has more than 14 years professional experience in providing assurance and consulting services such as risk-based internal audit services, enterprise risk assessment and management, internal controls reviews, risk management and corporate governance reviews for proposed listing, business process reviews and enhancements as well as formulation and documentation of policies and procedures. She has wide exposure gained from providing assurance and consulting services in Singapore, Thailand, Cambodia, Vietnam, Philippines, Mongolia, Dubai and Malaysia.

She sits on the Industry Advisory Panel of the School of Business for Disted College, Penang. She is the Members’ State Representative for CPA Australia and a member of the Finance Committee of a non-profit organization and also an Independent Director and Audit Committee Chairman of Dufu Technology Corp. Berhad.

In 1996, she joined Grand-Flo Engineering Supply & Service Sdn Bhd primarily to streamline the operations of the hydraulic engineering business and also, to prepare the Group for further expansion into Auto-ID system as a new business division. Since then, she had been actively involved in the growth and rapid expansion of the Auto-ID business division. Madam Yap was later appointed as a director and later, attached to the corporate office of the Group. She had been instrumental in the Group’s strategic expansion and development plans including its mergers and acquisitions exercises. She possesses more than 18 years of experience in the roles of management, corporate planning and business expansion. She currently sits on the board of several private limited companies.



1. ONG SOO HENG Development Manager - Appointed on 1 April 2014

Ong Soo Heng, a Malaysian, male, aged 48, is our Development Manager who oversees property management including the coordination and monitoring of the progress of the property development activities from the planning stage up to hand-over. Mr Ong obtained his Bachelor Degree in Civil Engineering in 1996 from Universiti Teknologi Malaysia and Master in Business Administration (MBA) from Universiti Utara Malaysia in 2010.

He has 22 years of experience in the property industry. He started his career as a project engineer with Sunissa Sdn Bhd, responsible for designing and building operations, later as a Project Manager with Aroma Development Sdn Bhd where he is responsible to liaise with authorities and consultants and project management. Prior to joining Innoceria Sdn Bhd in 2014, Mr. Ong was a Development Manager attached to Metrio Development Sdn Bhd. He is well versed in all aspects of property development including procurement of land, authorities’ approval, planning, construction and development.

2. TAN BAK LENG General Manager -Appointed on 5 January 1996

Tan Bak Leng, a Malaysian, male, aged 53, is our General Manager who oversees our business operations in the northern region of West Malaysia. He obtained a Diploma in Electronics Engineering from the French Singapore Institute in 1988. Prior to venturing into sales profession in 1991, he was attached to an electronics hardware company, which was involved in providing audio electronics and computer monitors. He was responsible for project coordination between the production and R&D before the production roll out of any new products. In 1991, he joined DCP Malaysia Sdn Bhd and was mainly responsible for the sales development of the Auto-ID products in the northern region of Malaysia.

In 1996, he co-founded the integrated Enterprise Data Collection and Collation System (“EDCCS”) solutions business together with Mr. Tan Bak Hong in Grand-Flo Electronic System Sdn Bhd. Subsequently, he assisted our Group in developing and launching our first customised in-house EDCCS solution “Asset Tracking System” in 2001. He was previously our Executive Director before he resigned from our Board on 16 June 2011. However, he is still responsible for overseeing the day-to-day business operations in our Penang branch. He leads and manages a group of sales and technical personnel to provide the professional support and services to the end-users in the region.

He is a sibling of Mr. Tan Bak Hong.

3. ONG LIANG CHAI Head of Professional Service -Appointed on 1 January 2014

Ong Liang Chai, a Malaysian, male, aged 60, is the Head of Division, Professional Services. He oversees the three key functions in Grand-Flo Spritvest Sdn Bhd; namely Solutions, Helpdesk Support and Technical Support. He firmly believes in first doing the right things before doing the things right. In doing the right things, he is bent on getting an insight into the problem and finding its root cause before devising a solution that will fix the problem indefinitely. The solutions are invariably characterised as being practical, efficient, reliable and maintainable. He was instrumental in overcoming many challenges of using the RFID technology in production tracking for the automotive assembly industry. His present position as Division Head ensures that the company, Grand-Flo Spritvest Sdn Bhd delivers excellent solutions coupled with continuous services and support to give the customer peace of mind in their investments in systems and technology.

He has more than 35 years of experience with good exposure across multiple industries. He obtained the Master of Science in Technology Management from Staffordshire University, United Kingdom in 2005. In 2012 he became a Certified Coaching & Mentoring Professional and started the performance-enhancing culture in Grand-Flo Spritvest Sdn Bhd. He continues to coach several key personnel in the organization to bring out the best in them and mentors them to produce accelerated results and growth.

SENIOR MANAGEMENT TEAM


4. LIU SICA General Manager -Appointed on 31 December 2009

Liu Sica, a Hong Kong resident, male, aged 54, is our General Manager who oversees our business operations in HK and the PRC. He graduated with a degree from Seneca College of Applied Arts and Technology in Toronto Canada with a focus on Computer Engineering in 1989. He has extensive experience in the IT and and Auto-ID industry.

Prior to joining Grand-Flo (HK) Limited, he was Systems Consultant attached to Intermec Technologies Corporation, USA, a manufacturer of bar coding equipment. With the same company, he advanced to Senior Systems Consultant and was posted to HK to support the Asian region.

In 2001, he joined Grand-Flo (HK) Limited which is principally involved in the provision of supply chain solutions and other related computer services in HK and the PRC. With his extensive experience in Auto-ID systems, he led the Grand-Flo (HK) Limited in the provision of data tracking hardware and integration software into a comprehensive suite of supply chain solutions and services that cater to the manufacturing, warehousing, transportation and retail sectors.

5. AU SHEAU YEN Chief Financial Controller -Appointed on 1 January 2015

Au Sheau Yen, a Malaysian, male, aged 54, is our Chief Financial Controller. He completed his undergraduate school majoring in accounting from the University of Montevallo, Alabama, USA in 1987 with a Bachelor of Business Administration. He has more than 10 years of audit experience including audit of MNCs since graduation before moving on to the Fast-Moving Consumer Goods (FMCG) industry where he was involved in corporate exercises. He subsequently joined Grand-Flo Spritvest Sdn Bhd in 2005 as its Financial Controller. Grand-Flo Spritvest Sdn Bhd however was acquired by Grand-Flo Berhad in 2006 hence he was overseeing the accounting and reporting functions of our Group. He is currently the Chief Financial Controller of the Group.

Notes:1. None of the key management personnel except Madam Yap Li Li and Mr. Tan Bak Leng, have any family relationships with

any directors and/or major shareholders of the Company.2. None of the key management personnel has any conflict of interest with the Company.3. None of the key management personnel have been convicted of any offences in the past five (5) years or been imposed

any public sanction or penalty by relevant regulatory bodies during the financial year ended 31 December 2017, other than traffic offences.

SENIOR MANAGEMENT TEAM (cont’d)


SUSTAINABILITy STATEMENT

ABOUT THIS REPORT

Grand-Flo Berhad (“Grand-Flo” or “the Group”) recognises that the stability and growth of our business is interconnected with the sustainability of the economies, the natural environment, workplace and the communities in which we operate and vice versa. Therefore, we are committed to being responsible and making a positive contribution to society and the environment.

This is the Group’s first Sustainability Statement which covers the financial period from 1 January 2017 to 31 December 2017 in this Annual Report. This statement focuses on the Group’s material sustainability risks and opportunities, and is prepared in accordance with Part III, Practice Note 9 of Main Market Listing Requirements (“Listing Requirements”) of Bursa Malaysia Securities Berhad (“Bursa Securities”) on Sustainability Statement.

The Group strives to balance commercial focus with sustainability factors. To this end, the Group is committed to continuously engage its stakeholders and report on the efforts to address the issues that matter to them.

OUR VISION

To enhance community and business with innovation, solution and technology.

OUR MISSION

1. To be the partner of choice and trusted adviser in Enterprise Data Collection and Collation System (“EDCCS”) 2. To create quality developments for residential, commercial and industrial purposes for the betterment of the

communities and businesses.

OUR CORE VALUES

Our 8 core values serve as a guide in all that we carry out:

Team Cooperation Teamwork is the collective talents of many individuals performing together in harmony to achieve a common purpose. Teamwork divides the tasks but multiplies the success.

Customer Satisfaction To provide quality products and services at competitive prices to our customers at all times.

Integrity Business integrity is our responsibility.

Reliability We can be relied upon to continuously improve, expand and seek new business opportunities.

Commitment We are committed to practising good governance and business ethics.

Innovation To nurture and be committed to innovation.

Positive Attitude We must motivate ourselves and our people to realise our vision by applying our core values and achieving our mission.

Loyalty Securing capital, enhance strategic partnership and nurture our human capital.

GOVERNANCE STRUCTURE

Grand-Flo does not have a specific Sustainability Committee at the Board of Directors (“Board”) level. The Group Managing Director/ Group President (“GMD/GP”) plays the role of the Chief Sustainability Officer, reporting directly to the Board on any sustainability matters from time to time. The Board sets the strategy and oversees the integration of sustainability initiatives across the Group. The Executive Directors and Key Management then identify, evaluate, monitor and manage the implementation of the corporation’s sustainability approach, and track the progress, as part of the overall management’s operational task.


SUSTAINABILITy STATEMENT (cont’d)

However, in view that participation of key staff and identified stakeholders, together with the Board and Key Management, is crucial to embrace the vision of sustainability in its entirety, Grand-Flo will gradually adopt a wider sustainability governance structure below. The Sustainability Working Committee’s duties would include collating information, collecting feedback from stakeholders, driving initiatives and addressing issues.

SCOPE AND BASIS

As a kick-start to our sustainability reporting, this report focuses on 2 major key operating operations, i.e. EDDCS and Property Development in Malaysia.

REPORTING PERIOD

This report, which will be produced annually, covers the period from 1 January 2017 to 31 December 2017 (“FYE 2017”). There are no significant restatements of data compared to prior years as this is our first sustainability report.

IDENTIFICATION OF STAKEHOLDERS

Grand-Flo had identified the following stakeholders in the course of our business operations. We believed that as we moved further along our sustainability journey, more stakeholders would be identified.

Stakeholders Engagement ChannelFrequency of Engagement Stakeholders’ Concerns

Shareholders & Investors

Annual General Meeting Extraordinary Meeting Analyst Briefing

AnnualAs neededAs needed

•Profitability•Salesperformance•Cashflow

Customers Customer feedback Analysis of returns

As neededAs needed

•Productquality•Aftersalesservices•Customers’expectations

Employees Management meetings Staff appraisals Trainings

As neededSemi-AnnuallyAs needed

•Recognition&motivation•Compensation&benefits•Learninganddevelopment•Work-lifebalance

Regulators Statutory reporting As required •Compliancewithlegalregulations

Vendors Vendor feedback As needed •Product&servicequality

Local communities Community programmes As needed •Social&environmentalissues

Provides direction on Grand-Flo’sSustainability Strategy

Comprising Executive Directors and Key Management - to oversee the implementation of the Sustainability Strategy

Working groups assigned to drive and track sustainability matters identified

Board of Directors

SustainabilityCommittee

Sustainability Working Committee


MATERIAL SUSTAINABILITY MATTERS IDENTIFIED

We had reviewed various sources from which relevant sustainability issues can be identified, which includes management reports, internal analysis and stakeholder feedbacks. From the reviews, Grand-Flo had identified the following material sustainability matters for a start, which corresponds to the economic, environmental and social elements as follows:

Economics Environmental Social

•Financialsustainability•Productandserviceresponsibility

•CompliancewithRegulatory Authorities & waste management•Environmentfriendly

•Positiveworkplaceculture•Supportingeducationandtraining

Financial sustainability

As a corporation, Grand-Flo strives to build long term value for our stakeholders by maintaining stable business environment, consistent financial performance and prudent cashflow management. Despite challenging market environment, the Company responded to opportunities and moved ahead confidently with our projects. Although revenue was lower in the FYE 2017, as compared to the financial year ended 31 December 2016 (“FYE 2016”), the Group focused on bottom line and managed to achieve a commendable profit level in the FYE 2017.

Financial stability is the key focus of the Board. The GMD/GP, Division Heads including Finance team form the steering team to ensure the Group sets reasonable forecasts and achieves its financial goals.

Acknowledging the importance of good business ethics and corporate governance with the objective of upholding transparency, accountability and integrity, Grand-Flo applies and complies with the principles in corporate governance as set out in the Malaysian Code on Corporate Governance 2017 pursuant to the Listing Requirements of the Bursa Securities.

Product and service responsibility

In the EDCCS division, we established ourselves as a market leader locally with proven track records and with the support of our product business partners and many loyal customers, we are certain to maintain this status. This is certainly true as we have the responsibility to ensure strict and continuous compliance to our business partners’ stringent and high international standards of world renowned brands in EDCCS.

For the record, our wholly-owned subsidiary, Grand-Flo Spritvest Sdn Bhd had been receiving multiple awards through the years from, inter-alia, Zebra for Top Business Partner, Epson for Premium Partner and Sektor for Outstanding Sales Achievement.




Customer satisfaction and feedback were also identified among the important material sustainability matters across all divisions. Knowing what customers expect from us makes it easier for us to strengthen and market our products and services, and hence strengthen our reputation in the long term. Internally, we also collate data and analyse the number of customer complaints and rate of sales returns regularly.

In line with this objective, we participated as organiser/co-organiser in various seminars and exhibitions, some of which were listed below:-

Event Role Description

Technology Update Seminar Organiser Provided latest technology news and new Zebra product launch to reseller and system integrator Government sector or Government-Linked companies.

The Next Manufacturing Revolution – Factory Made Smart with Enterprise Solutions

Co-organiser Joint collaboration with business partner, Honeywell to provide manufacturers with a better understanding on fourth industrial revolution and how they can digitalise their manufacturing operations.

16th Asian Oil, Gas & Petrochemical Engineering Exhibition

Participant A tradeshow targeted to Oil & Gas industry to create opportunities for Oil and Gas Service Providers to sell their technology into this key market.

Accelerating Digital Transformation Co-organiser Joint collaboration with Zebra and Cognex to provide manufacturers with a better understanding on fourth industrial revolution and how they can digitalise their manufacturing operations.

Grand-Flo sales team were also sent to a 2-days training to equip the team with knowledge in managing their sales cycle, managing resources, aligning their thought pattern to be sales focus and how to understand their clients business for expanding business opportunities.

Our property development division, which is comparatively younger in the market, had profiled itself to capture the high-growth opportunities in Northern Peninsular. We participated in various roadshows at Tesco Alma and Queensbay Mall this year, with more activities scheduled for the FYE 2018. We had also embarked on Grand-Flo Property’s own Facebook page from November 2017. With 2 projects, our social media had garnered over 2,000 followers with interest in our product updates, upcoming events and developments, as well as campaigns. Although we have not conducted any formal customer satisfaction surveys, our marketing team had always welcomed feedbacks which would provide us with insights into customer expectations that enabled us to develop and deliver better products and services.

Aside from visible product quality, we were also concerned on the underlying attributes. With reference to The Vortex, we had carried out the vertical drainage soil treatment to safeguard the overall project settlement and area around it, as it’s on marine clay area. And, at The Glades, Alma, Bukit Mertajam, in order to avoid flood issue, we had upgraded the monsoon drain to 3 metres wide. Fogging were also carried out monthly until project completion, to protect not only the workers, but also the residents in the vicinity.


Compliance with Regulatory Authorities and waste management

We make it a priority to ensure compliance and strict adherence to environmental requirements and authorities guidelines, especially in all our development sites. In line with our efforts to comply with the regulatory requirements, we practice close engagement with relevant authorities and our contractors to ensure clear mutual understanding of the requirements.

As a property developer, we generate scheduled and non-scheduled waste such as solid waste, environmental waste as well as domestic waste. In line with the regulations governing scheduled waste, we only store scheduled waste at a designated place and only a scheduled waste handler licensed by Department of Environment is allowed to handle the transportation and disposal of the scheduled waste. We have not put in place any means to measure the total weight of both scheduled and non-scheduled waste generated by property development division, but we are in the process of exploring available approaches.

For both our development projects, our appointed contractor had used the aluminium form work, in replacement of the conventional timber form work. This would reduce the carbon foot print as aluminium form work could be reused approximately 500 times while conventional timber form work could be reused approximately 8 times only. In addition, usage of aluminium form work resulted in more accurate dimension and better finishing.

Environment friendly

Grand-Flo is committed to operate its business in a responsible and environmental friendly manner. Reducing, reusing and recycling papers, switching off lights and air-conditioners when they are not in use are among some of the conservation measures taken by the Group.

It is our Group’s policy to practice zero burning throughout the development projects. This will save the environment from pollution.

Positive workplace culture

“We must motivate ourselves and our people to realise our vision by applying our core values and work towards our mission.” – This has been part of our workplace charter, as we recognised our employees as strength of the Group. Grand-Flo endeavours to create a workplace where our employees are able to perform at their best to deliver sustained high performance. The number and rate of employee turnover are always monitored and discussed in our management meetings.

At our Annual Dinner, we take the opportunity to acknowledge and present long service awards to staff who has shown their loyalty, dedication and contribution over the years.

Although trainings are now based on individual needs, the management reckons that a yearly structured training calendar would be important to address the training and development needs for all levels of staff, in order to develop the talent pool for progression and succession planning.

The Group is committed to ensure matter of importance to the welfare of the employees are taken care of.


>10 years 30%

1-2 years 31%

6-10 years 22%

3-5 years 17%

GRAND-FLO WORKFORCE BY LENGTH OF SERVICE (FYE 2017)


We proudly announced that Grand-Flo Spritvest Sdn Bhd had been awarded the Best Employer Award 2017, under Kuala Lumpur, by Kumpulan Wang Simpanan Pekerja (“KWSP”). On 29 November 2017, Grand-Flo Spritvest Sdn Bhd received the plaque and a Certificate of Appreciation from KWSP Deputy Chief Executive Officer (Operations) YBhg Dato’ Mohd Naim Daruwish at an award presentation ceremony. The main criteria were systematic prompt remittance of contribution, no record of late payment since its establishment, as well as the use of electronic payment system via e-Contribution for the monthly remittance of contribution to EPF.


Supporting education and training

We consciously work towards making a difference, however small, to the communities especially in education and training. In 2017, our contribution includes:

• DonationtowardsconstructionfundofTzuChiInternationalSchoolKL(TCISKL)• DonatedcomputerstoSJKCChungHwa,Butterworth,Penang• Sponsored andparticipated as speaker in Industry 4.0SmartManufacturingSeminar organisedbyThe

Chinese Chamber of Commerce and Industry of Kuala Lumpur & Selangor (KLSCCCI) on 11 March 2017

MOVING INTO THE FYE 2018

Grand-Flo has embarked on our sustainability journey this year, and the Board plans to see progress in the FYE 2018.


CORPORATE GOVERNANCE OVERVIEW STATEMENT

The Board of Directors (“Board”) of Grand-Flo Berhad (“Grand-Flo” or “Company”) is fully committed towards ensuring that the Company and its subsidiaries (“Group”) applies the principles and recommendations of the Malaysian Code of Corporate Governance (“MCCG”), the Main Market Listing Requirements (“MMLR”) of Bursa Malaysia Securities Berhad (“Bursa Securities”) and the Corporate Governance Guide.

The Corporate Governance Overview Statement (“Statement”) is augmented with a Corporate Governance Report, based on a prescribed format as enumerated in Paragraph 15.25(2) of the MMLR so as to provide a detailed articulation on the application of the Group’s corporate governance practices vis-à-vis the MCCG. This Statement is available on the Group’s website, www.grand-flo.com, as well as via an announcement on the website of Bursa Securities.

PRINCIPLE A - BOARD LEADERSHIP AND EFFECTIVENESS

Part I - Board Responsibilities

1.1 Strategic Aims, Values and Standards

The Board leads and has effective controls over the Group whereby collective decision and/or close monitoring are conducted on issues relating to strategy, performance, resources, standards of conduct and financial matters.

The Board directs the Group’s risk assessment, strategic planning, succession planning and financial and operational management to ensure that obligations to shareholders and other stakeholders are understood and met. The Board provides the leadership necessary to enable the Group’s business objectives to be met within the framework of risk management and internal controls as described in this Statement.

The Board has formalised a Board Charter which sets out the ethos of the Group, structure and authority of the Board. The Board Charter is the primary document that elucidates on the governance of the Board, Board Committees and individual Directors. The Board is also cognisant of its responsibility to set the ethical tone for the Group and thus, a Code of Ethics and Conduct and Whistleblowing Policy have been put in place to foster an ethical culture and allow legitimate ethical concerns to be escalated in confidence without risk of reprisal.

The Board Charter with the Code of Ethics and Conduct and Whistleblowing Policy are published on the Group’s website, www.grand-flo.com.

Board Committees such as Audit, Nomination and Remuneration Committees have also been established to assist the Board in its oversight function with reference to specific responsibility areas. The Board retains collective oversight over the Board Committees. These Board Committees have been constituted with clear terms of reference and they are actively engaged to ensure that the Group is in adherence with good corporate governance.

1.2 The Chairman

The Chairman holds a Non-Executive position and is primarily responsible for matters pertaining to the Board and the overall conduct of the Group. The Chairman is committed to good corporate governance practices and has been leading the Board towards high performing culture.

1.3 Chairman and Group Managing Director / Group President (“GMD/GP”) There is a clear division of responsibilities between the Chairman and GMD/GP as well as specific parameters

in which decisions are made in order to ensure independence. The role of the Chairman and the GMD/GP are distinct and separate in ensuring there is balance of power and authority. The Chairman is responsible for the leadership, effectiveness, conduct and governance of the Board while the GMD/GP has overall responsibility for the day-to-day management of the business and implementation of the Board’s policies and decisions.


1.4 Qualified and competent Company Secretary

The Company Secretary has the requisite credentials and is qualified to act as Company Secretary under Section 235(2) of the Companies Act 2016.

All Directors have access to advice and services of the Company Secretary. The Company Secretary, who is qualified, experienced and competent, is a central source of information and advice to the Board and its Committees on issues relating to compliance with laws, rules, corporate governance best practices, procedures and regulation affecting the Company.

1.5 Access to information and advice

From time to time, whenever the Board requires relevant information updates from any members of the Management team, the relevant member of the Management team is invited to attend meetings of the Board and to provide the Board with any such relevant information or updates.

The Board and the Board Committees receive timely and up-to-date information and the Company Secretary ensures a balanced flow of information is disseminated for decisions to be made on an informed basis and for the effective discharge of the Board’s responsibilities.

All Directors have unrestricted access to the advice and services of the Company Secretary to enable them to discharge their duties effectively. The Company Secretary advises the Board on any updates relating to new statutory and regulatory requirements pertaining to the duties and responsibilities of Directors and their impact and implication to the Company and Directors in carrying out their fiduciary duties and responsibilities.

The Company Secretary organises and attends all Board and Board Committee meetings and ensures meetings are properly convened; accurate and proper records of the proceedings and resolutions passed are maintained accordingly at the registered office of the Company, and produced for inspection, if required.

PART II – BOARD COMPOSITION

2.1 Composition of the Board

Currently, the Board has nine (9) members as set out in the table below, which comprises a majority of Independent Directors of the Board:-

Names Designation

1. Tan Sri Azlan Bin Mohd Zainol Independent Non-Executive Chairman

2. Tan Bak Hong Group Managing Director/Group President

3. Chuah Chew Hai Executive Director

4. Cheng Ping Liong Executive Director

5. Tan Chuan Hock Non-Independent Non-Executive Director

6. Cheong Kee Yoong Senior Independent Non-Executive Director

7. Yu Chee Sing Independent Non-Executive Director

8. Lee Eng Eow Independent Non-Executive Director

9. Joyce Wong Ai May Independent Non-Executive Director

CORPORATE GOVERNANCE OVERVIEW STATEMENT (cont’d)


2.2 Tenure of Independent Directors

Mr. Cheong Kee Yoong has served the Board as a Senior Independent Non-Executive Director of the Company for a cumulative term of nearly ten (10) years and Mr. Yu Chee Sing has served the Board as an Independent Non-Executive Director for more than twelve (12) years.

The Board believes that the Independent Directors’ continued contribution, especially their invaluable knowledge of the Group and its operations gained through the years, will provide stability and benefits to the Board and the Company as a whole. The caliber, qualification, experience and personal qualities, and more importantly, the Director’s integrity and objectivity in discharging their responsibilities in the best interest of the Company, predominantly determines the ability of the Director to serve effectively as an Independent Director.

In line with Recommendation under Practice 4.2 of MCCG, the Board will seek the approval of the shareholders of the Company at the forthcoming Annual General Meeting (“AGM”) to support the Board’s decision to retain them as an Independent Directors based on the following justifications, save for Mr. Yu Chee Sing who has served for more than twelve (12) years shall seek approval via two-tier voting process:-

(a) They have fulfilled the criteria under the definition of Independent Director as stated in the MMLR and will thus be able to function as a check and balance and bring an element of objectivity to the Board.

(b) Their vast experience in the finance and corporate industries will enhance the Board’s diverse set of experience, expertise and independent judgement.

(c) They have been with the Company for more than nine years and has good knowledge of the Company’s business operations.

(d) They have devoted sufficient time and attention to their professional obligations for informed and balanced decision making.

(e) They have exercised due care during their tenure as Independent Non-Executive Directors of the Company and carried out their professional duties in the best interest of the Company and shareholders.

2.3 Policy of Independent Director’s Tenure

The Company does not have a policy which limits the tenure of its Independent Directors to nine (9) years. The shareholders’ approval was obtained at the last AGM for the re-appointment of Mr. Cheong Kee Yoong and Mr. Yu Chee Sing respectively.

However, pursuant to Practice Note 4.2 of the MCCG, Mr. Yu Chee Sing shall seek for annual shareholders’ approval for his re-appointment through a two-tier voting process.

2.4 New Appointment to the Board

Appointment to the Board are reviewed by the Nomination Committee (“NC”) and made via a formal, rigorous and transparent process, premised on meritocracy and taking into account objective criteria such as qualification, skills, experience, professionalism, integrity and diversity needed on the Board in the context of the Group’s strategic direction. In the case of Independent Directors, the NC assesses the candidate’s ability to bring the element of detached impartiality and objective judgement to the board deliberation.



2.5 Diverse Board and Senior Management Team

The Board, with the assistance of the NC regularly assesses the optimum size, required mix of skills, experience, independence and diversity required collectively for the Board to effectively fulfill its role. The NC acknowledges the need for gender diversity for good governance practices and to enhance the efficient functioning of the Board. The Board currently has one (1) female Board Member which is represented by Ms. Joyce Wong Ai May, who was appointed to the Board on 22 December 2017.

In line with the MCCG and in view of the gained attention of boardroom diversity as an important element of a well-functioned organisation, the Board shall accord due consideration to inculcate diversity policy in the boardroom and workplace which encapsulates not only to gender, but also age and ethnicity.

2.6 Nomination Committee

The NC which is charged with the responsibility of, amongst others, recommending the appointment of new Directors to the Board and comprises majority of whom are Independent Non-Executive Directors as follows:-

• CheongKeeYoong(SeniorIndependentNon-ExecutiveDirector)–Chairman• TanChuanHock(Non-IndependentNon-ExecutiveDirector)–Member• YuCheeSing(IndependentNon-ExecutiveDirector)–Member

The Terms of Reference of the NC is published on the Company’s website, www.grand-flo.com.

The NC meets as and when required. The NC met twice during the financial year under review. During the meetings, the NC had undertaken the following activities:-

• Evaluatedthebalanceofskills,knowledgeandexperienceoftheBoard.Carriedouttheassessmentand rating of each Director’s performances against the criteria as set out in the annual assessment form. The performance of Non-Executive Directors was also carefully considered, including whether he could devote sufficient time to the role.

• UndertakenaneffectivenessevaluationexerciseoftheBoardanditsCommitteeasawholewiththeobjective of assessing its effectiveness.

• AssessedandrecommendedtotheBoardforapprovalonthere-electionofDirectorswhoweredueto retire at the Fifteenth AGM pursuant to the Company’s Constitution.

• ReviewedandassessedtheindependenceoftheIndependentDirectorsoftheCompany.

• ReviewedandevaluatedtheindependenceofIndependentDirectorswhohaveservedtheBoardfora cumulative term of more than nine (9) years pursuant to MCCG.

• ReviewedandconsideredtheappointmentofnewIndependentDirectorstotheBoard.

• ReviewedandassessedtheperformanceofAuditCommittee.

From the results of the assessment, which include the mix of skills and experience possessed by the Directors, the Board considers the recommendations on the re-election and re-appointment of Directors.

In accordance with the Company’s Constitution, at least one-third (1/3) of the Directors are required to retire from office by rotation annually and shall be eligible for re-election at each AGM. All Directors appointed by the Board shall also be subject to re-election by the shareholders at the AGM following their appointment.



2.7 Attendance of Board & Committees’ Meetings The Board schedules at least four (4) meetings in a year with the Board of Directors’ and Committees’ meetings

scheduled well in advance to facilitate the Directors in planning ahead and to ensure that the dates of the Board and Board Committees meetings are booked in their respective schedules. Additional meetings are convened when urgent and important decisions need to be made between scheduled meetings.

During the financial year under review, five (5) Board meetings were held and details of Directors’ attendances are as follows:

Name of DirectorsNo. of

Meetings Attended

Tan Sri Azlan Bin Mohd Zainol (Appointed on 08.09.2017) 1/1

Tan Bak Hong 5/5

Chuah Chew Hai 5/5

Cheng Ping Liong 5/5

Tan Chuan Hock 5/5

Cheong Kee Yoong 5/5

Yu Chee Sing 5/5

Tan Sri Datuk Adzmi bin Abdul Wahab (Retired on 30.05.2017) 2/3

Lee Eng Eow (Appointed on 15.11.2017) 1/1

Joyce Wong Ai May (Appointed on 22.12.2017) –

Yap Li Li (Resigned on 31.01.2018) 5/5

The following are the record of attendance for Board Committees’ Meetings held in 2017:-

Audit Committee

Name of Committee MembersNo. of

Meetings Attended

Cheong Kee Yoong (Chairman) 5/5

Tan Chuan Hock (Member) 5/5

Yu Chee Sing (Member) 5/5

Lee Eng Eow (Member) (Appointed on 15.11.2017) 1/1

Nomination Committee

Name of Committee MembersNo. of

Meetings Attended

Cheong Kee Yoong (Chairman) 2/2





Remuneration Committee

Name of DirectorsNo. of

Meetings Attended

Lee Eng Eow (Chairman) (Appointed on 15.11.2017) –



Tan Sri Datuk Adzmi Bin Abdul Wahab (Retired on 30.05.2017) 0/1

All existing Directors have attended the Mandatory Accreditation Programme (“MAP”) as required by the Listing Requirements. During the course of the year, they have also attended other training programmes for directors and seminars on areas such as financial reporting standards, performance reviews, tax and accounting conferences that include the following:-

Directors Programmes attended

Tan Sri Azlan Bin Mohd Zainol • P2P/CrowdFunding/CrowdSourcing• SustainabilityReporting(byErnst&Young)• Blockchain Technology andPotentialUseCases in Financial

Services • BankNegaraMalaysiaAnnualReport2016/FinancialStability

and Payment Systems Report 2016 (by Bank Negara Malaysia)• IslamicBanking by 2030: Impact ofDigital Economy, Fintech

&Sustainability as Force ofChange (bySHAPE® Knowledge Services, Kuwait)

• ComplianceConference2017(byBankNegaraMalaysia)• ExclusiveWorkshop forNominationCommitteeChairmanand

Members:BoardSelection–EngagementwithPotentialDirectors(by FIDE Forum)

• AICB Banking Conference – China’s Banking Industry:Opportunities for Growth [by Asian Institute of Chartered Bankers (AICB)]

• MalaysianCode onCorporateGovernance: Expectations &Implications (by Securities Industry Development Corporation)

• MalaysianCode onCorporateGovernance: Expectations &Implications (by PwC)

• Value-Based Intermediation (VBI) Dialogue (byBankNegaraMalaysia)

• ShariahProgramme:Global Perspective onCritical Successand Failure Factors in the Islamic Financial Industry (by Amanie Academy)

• Bankruptcy(Amendment)Act2017




Tan Bak Hong • RetailinginDigitalEra• GlobalFinancialOutlook2017• SharingEconomy• DigitalCo-workingSpace• SuccessintheNewEconomy-Imagineering:Faster,Smarter,Better• MalaysianCode onCorporateGovernance by theCompany

Secretary

Chuah Chew Hai • MalaysianCode onCorporateGovernance by theCompanySecretary

• Contractors’IntegrityandCodeofEthicsCourse

Cheng Ping Liong • MalaysianCode onCorporateGovernance by theCompanySecretary

Tan Chuan Hock • PropertyDevelopmentandConstructionContractActivitiesunderFRS 201 and MFRS/FRS 11

• Updatesofthe2016&2017MFRS–PreparingMFRS–CompliantFinancial Statements in 2016, 2017 and thereafter

• NationalTaxConference2017• MalaysianCode onCorporateGovernance by theCompany

Secretary• 2018BudgetSeminar

Cheong Kee Yoong • 1stEconomySeminar(byCitibank)• CompaniesAct2016;ShareswithNoParValue,ShareBuybacks

and RPS (by MIA)• CSPPracticalIssueundertheCompaniesAct2016(byMAICSA)• EnhancingCommunicationwithShareholder(byMIRA)• 2ndEconomySeminar(byCitibank)• MalaysianCode onCorporateGovernance by theCompany

Secretary• SettingtheESCAgendaforSustainabilityReporting(byMIRA)• IFRS13FairValueMeasurement(byMIA)

Yu Chee Sing • MalaysianCode onCorporateGovernance by theCompanySecretary




Lee Eng Eow • Members DialoguewithMalaysian Institute of AccountantsPresident

• PostBudget2018• GSTandBudget2018–TalkwithDr.ChoongKwaiFatt• Preserving the Integrity of theFinancialSystem:Preventionof

MoneyLaundering&TerrorismFinancing• TheCompaniesAct2016–AddressingtheTransitionalIssues• AtoZofFinancialInstruments–APracticalApproachtoIAS39

(IFRS 9), IAS 32 and IFRS 7• CyberSecurityAwareness2017• Anti-MoneyLaundering,Anti-TerrorismFinancing&Proceedsof

UnlawfulActivitiesAct

Joyce Wong Ai May • MalaysianCodeonCorporateGovernance:ANewDimension(Roadshow)

• AdvocacySessionsonCorporateDisclosure forDirectors andPrincipal Officers of Listed Issuers

PART III - REMUNERATION

3.1 Remuneration Committee (“RC”)

The RC currently comprises majority of whom are Independent Non-Executive Directors as follows:-

• LeeEngEow(IndependentNon-ExecutiveDirector)–Chairman• TanChuanHock(Non-IndependentNon-ExecutiveDirector)–Member• YuCheeSing(IndependentNon-ExecutiveDirector)–Member

The Terms of Reference of the RC is published on the Company’s website at www.grand-flo.com.

The RC is principally responsible for the development and review of the remuneration packages of the GMD/GP and Executive Directors including Board Members, where necessary, and subsequently furnishes their recommendations to the Board for adoption. The RC is also responsible to ensure that the remuneration package and benefits of the Board is benchmarked with industry standards in light of the Group’s performance in the industry.

3.2 Remuneration Policy

The Board had, through the RC, established formal and transparent remuneration policies and procedures to attract and retain Directors.

The Board will determine the level of remuneration of Board Members, taking into consideration the recommendations of the RC for executive Board Members and/or the GMD/GP. The remuneration of the GMD/GP and Executive Directors are reward on performance based.

Non-Executive Directors of the Company will be paid a basic fee as ordinary remuneration based on their responsibilities in the Board and its Committee, their attendance and/or special skills and expertise they bring to the Board. The fee shall be fixed in sum and not by a commission on or percentage of profits or turnover.

Each Director shall abstain from the deliberation and voting on matters pertaining to their own remuneration. Details of the remuneration as set out in item 3.3 herein below.



3.3 Remuneration of Directors and Senior Management

3.3.1 Details of Directors’ Remuneration

The Directors’ fees and/or benefits payable to Non-Executive Directors of the Company are subject to the approval of shareholders of the Company. The remuneration of the Directors of the Company and the Group for the financial year ended 31 December 2017 are as follows:-

The Company

Name of Directors Fees

RM’000Salaries RM’000

Benefits in KindRM’000

Meeting Allowance

RM’000Bonus

RM’000Others

RM’000Total

RM’000

Tan Sri Azlan Bin Mohd Zainol(Appointed on 08.09.2017)

19 – – – – – 19

Tan Sri Datuk Adzmi Bin Abdul Wahab (Retired on 30.05.2017)

17 – – – – – 17

Chuah Chew Hai – – – – – – –

Tan Bak Hong – 420 – – 420 77 917

Cheong Kee Yoong 46 – – – – – 46

Cheng Ping Liong – – – – – – –

Tan Chuan Hock 60 – – – – – 60

Yu Chee Sing 40 – – – – – 40

Lee Eng Eow(Appointed on 15.11.2017)

5 – – – – – 5

Yap Li Li(Resigned on 31.01.2018)

– 168 – – 32 50 250

TOTAL 187 588 – – 452 127 1,354

The Group

Name of Directors Fees

RM’000Salaries RM’000

Benefits in KindRM’000

Meeting Allowance

RM’000Bonus

RM’000Others

RM’000Total

RM

Tan Sri Azlan Bin Mohd Zainol(Appointed on 08.09.2017)

19 – – – – – 19

Tan Sri Datuk Adzmi Bin Abdul Wahab(Resigned on 30.05.2017)

17 – – – – – 17

Chuah Chew Hai – 120 – – – 17 137

Tan Bak Hong – 540 – – 420 95 1,055

Cheong Kee Yoong 46 – – – – – 46

Cheng Ping Liong – 420 – – 420 118 958

Tan Chuan Hock 60 – – – – – 60

Yu Chee Sing 40 – – – – – 40

Lee Eng Eow(Appointed on 15.11.2017)

5 – – – – – 5

Yap Li Li(Resigned on 31.01.2018)

– 168 – – 32 50 250

TOTAL 187 1,248 – – 872 280 2,587



3.3.2 Remuneration of Top Five Senior Management

The remuneration of the Top Five Senior Management of the Group where their profile are set up in the senior management team is as follows:-

Range of remuneration No. of Senior Management

Below RM50,000 –

RM150,001 to RM200,000 1

RM200,001 to RM250,000 1

RM250,001 to RM300,000 1

RM350,001 to RM400,000 1

RM500,001 to RM550,000 1

Due to confidentiality and sensitivity of the remuneration package of senior management as well as security concerns, the Company opts not disclose the Top Five Senior Management’s remuneration components on named basis in the bands of RM50,000.00.

The Board is of the view that the disclosure of the Senior Management’s remuneration components would not be in the best interest of the Company given the competitive human resources environment as such disclosure may give rise to recruitment and talent retention issues.

The Board is of the view that the disclosure of Top Five Senior Management’s aggregated remuneration on unnamed basis in the bands of RM50,000.00 in the annual report is adequate.

PRINCIPLE B – EFFECTIVENESS AUDIT AND RISK MANAGEMENT

PART I – Audit Committee

4.1 Effective and Independent Audit Committee

The Audit Committee (“AC”) is relied upon by the Board to, amongst others, provide advice in the areas of financial reporting, external audit, internal control environment and internal audit process, review of related party transactions as well as conflict of interest situations. The AC also undertakes to provide oversight on the risk management framework of the Group.

The AC is chaired by the Senior Independent Director who is distinct from the Chairman of the Board. All members of the AC are financially literate, whilst the Chairman of the AC is a member of the Malaysian Institute of Accountants. The AC has full access to both the internal and external auditors, who, in turn, have access at all times to the Chairman of the AC.

The AC is empowered by the Board to review any matters concerning the appointment and re-appointment, resignations or dismissals of External Auditors and review and evaluate factors relating to the independence of the External Auditors. The AC works closely with the External Auditors in establishing procedures in assessing the suitability and independence of the External Auditors, in confirming that they are, and have been, independent throughout the conduct of the audit engagement with the Group in accordance with the independence criteria set out by the International Federation of Accountants and the Malaysian Institute of Accountants. The AC reviewed and considered the proposed audit fees and recommended to the Board for approval. The audit fees to the External Auditors for the services rendered to the Group for the financial year ended 31 December 2017 amounted to RM185,172.



PART II - Risk Management and Internal Control Framework

4.2 Effective Risk Management and Internal Control Framework

In recognising the importance of risk management and internal controls, the Board has established a structured risk management framework to identify, evaluate, control, monitor and report the principal business risks faced by the Group on an on-going basis. The key features of the risk management framework are set out in the Statement on Risk Management and Internal Control included in this Annual Report.

The Board has established internal control policies and procedures which are monitored to ensure that such policies and procedures are implemented and effectively carried out by the Management team. The Group has in place an Information Technology Policy that outlines the processes that should be followed to create policies, best practices, standards and the use of the supporting information technologies. The Board is mindful of the legal implications if technology systems or information are misused in a manner which may be found to breach laws and regulations.

Guided by the Statement on Risk Management and Internal Control: Guidelines for Directors of Listed Issuers, the Board performs reviews on an annual basis covering not only financial, but operational and compliance controls and risk management systems, in all material aspects. Details on the Statement on Risk Management and Internal Control are set out in this Annual Report.

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

PART I – Communication with Stakeholders

5.1 Continuous Communication between the Company and Stakeholders The Company recognises the importance of being transparent and accountable to its stakeholders and as such,

maintains an active and constructive communication policy that enables the Board to communicate effectively with investors, financial community and the public generally. The various channels of communications are through meetings with institutional shareholders and investment communities, quarterly announcements on financial results to Bursa Securities, relevant announcements and circulars, when necessary, the Annual and Extraordinary General Meetings and through the Company’s corporate website at www.grand-flo.com, from which shareholders and prospective investors can access corporate information, annual reports, press releases, financial information, company announcements and share prices of the Company.



PART II - Conduct of General Meetings

5.2 Encourage Shareholders Participation at General Meetings

The Board recognises the importance of maintaining transparency and accountability to the Company’s shareholders. The Board ensures that the shareholders are treated equitably and the rights of all investors, including minority shareholders, are protected. The Board provides shareholders and investors with information on its business, financials and other key activities in the Annual Report of the Company, which contents are continuously enhanced to take into account the developments, amongst others, in corporate governance. The Board aims to provide and present a clear and comprehensive assessment of disclosures in the Annual Report to shareholders. In disclosing information in the Annual Report, the Board is guided by the principles set out in the MMLR of Bursa Securities. The Company sends out the Notice of the AGM to shareholders at least twenty-one (21) days before the meeting as required under the MMLR of Bursa Securities, in order to facilitate full understanding and evaluation of the issues involved. Where special business items appear in the Notice of the AGM, a full explanation is provided to shareholders on the effect of the proposed resolution.

The AGM is the principal opportunity for the Board to meet shareholders and for the Chairman to provide an overview of the Group’s progress and receive questions from shareholders.

At the AGM, the shareholders are encouraged to participate in discussing the resolutions proposed or on future developments of the Group’s operations in general. The Board, the Management team and the Company’s External Auditors, are present to answer the questions raised and provide clarification as requested by the shareholders.

STATEMENT BY THE BOARD ON CORPORATE GOVERNANCE STATEMENT

The Board has deliberated, reviewed and approved this Statement. The Board considers and is satisfied that to the best of its knowledge the Company has fulfilled its obligations under the MCCG, the relevant chapters of the MMLR of Bursa Securities on corporate governance and all applicable laws and regulations throughout the financial year ended 31 December 2017.



AUDIT COMMITTEE REPORT

A. OBJECTIVES

The primary objective of the Audit Committee (“the Committee”) is to assist the Board of Directors (“the Board”) in discharging its statutory duties and responsibilities, among others, providing an additional assurance to the Board by giving an objective and independent review of financial, operational and administrative controls and procedures, establishing and maintaining internal controls and reinforce the independence of the Company’s External Auditors, thereby ensuring that the Auditors have free reign in the audit process.

B. COMPOSITION OF AUDIT COMMITTEE

The Committee comprises the following:

Members Designation

Cheong Kee Yoong, Chairman Senior Independent Non-Executive Director

Tan Chuan Hock, Member Non-Independent Non-Executive Director

Yu Chee Sing, Member Independent Non-Executive Director

Lee Eng Eow, Member Independent Non-Executive Director

The Company has complied with Paragraph 15.09 of the Main Market Listing Requirements (“Listing Requirements”) of Bursa Malaysia Securities Berhad (“Bursa Securities”) which requires all members of the Audit Committee to be Non-Executive Directors with a majority of them being Independent Directors.

The Terms of Reference of the Audit Committee can be accessed from the corporate website of the Company at www.grand-flo.com, under the “Investor Relations” tab.

C. SUMMARY OF ACTIVITIES OF THE COMMITTEE DURING THE FINANCIAL YEAR ENDED 31 DECEMBER 2017

During the financial year under review, the Committee convened five (5) meetings and the attendance of the Committee members at meetings is set out as follows:

Committee MembersNo. of

Meetings Attended

Cheong Kee Yoong 5 of 5

Tan Chuan Hock 5 of 5

Yu Chee Sing 5 of 5

Lee Eng Eow (Appointed on 15 November 2017) 1 of 1

The presence of the External Auditors and/or the Internal Auditors at the Committee meetings can be requested if required by the Committee. Other members of the Board and officers of the Company and the Group may attend the meeting (specific to the relevant meeting and to the matters being discussed) upon the invitation of the Committee.


The summary of the works undertaken by the Committee during the financial year ended 31 December 2017, amongst others, included the following:-

1. Reviewed the Company’s unaudited quarterly results and the annual audited financial results together with the relevant announcements thereon and ensured compliance with approved accounting standards and adherence to other legal regulatory requirements as well as making relevant recommendation to the Board for approval.

2. Reviewed with the External Auditors on the results and issues arising from their audit of the financial year end statements and their resolutions of such issues highlighted in their report to the Committee.

3. Reviewed with the Internal Auditors, the internal audit plan, work done and reports, for the internal audit function and considered the findings of internal audit investigations and management responses thereon, and ensure that appropriate actions were taken in addressing the issues reported by the Internal Auditors.

4. Reviewed the related party transactions and/or recurrent related party transactions that transpired within the Group to ensure that the transactions entered into were at arm’s length basis and on normal commercial terms.

5. Considered and recommended to the Board for approval the re-appointment and remuneration of the External Auditors.

6. Reviewed the Corporate Governance Statement, Audit Committee Report, Statement on Risk Management and Internal Control and Additional Compliance Information to ensure adherence to legal and regulatory reporting requirements before recommending to the Board for approval for inclusion in the Company’s Annual Report.

7. Self-appraised the performance of the Committee for the financial year ended 31 December 2016 and submit the evaluation to the Nomination Committee for assessment.

D. INTERNAL AUDIT FUNCTION

Internal audit function of the Group is outsourced to an independent professional services firm to carry out internal audit services for the Group. Internal audit reports are presented, together with Management’s response and proposed action plans to the Committee on a quarterly basis.

The Internal Auditors undertake internal audit functions based on the operational, compliance and risk based audit plan approved by the Committee. The risk-based audit plans covers the review of the key operational and financial activities including the efficacy of risk management practices, efficiency and effectiveness of operational controls and compliance with relevant laws and regulations. Scheduled audits are carried out on various subsidiaries of the Company in accordance to the approved Internal Audit Plan. A risk-based methodology is adopted to evaluate the adequacy and effectiveness of the risk management, financial, operational and governance processes.

The fee incurred during the financial year in relation to the internal audit function is RM36,000.

The internal audits conducted did not reveal any weakness which would result in material losses, contingencies or uncertainties that would require disclosure in the Annual Report.

AUDIT COMMITTEE REPORT (cont’d)


STATEMENT ON RISk MANAGEMENT AND INTERNAl CONTROl

INTRODUCTION

The Board of Directors of Grand-Flo Berhad (“Board”) is committed towards maintaining a sound system of internal control and risk management and is pleased to provide this Statement on Risk Management and Internal Control (“this Statement”) which outlines the scope and nature of internal controls and risk management of Grand-Flo Berhad and its subsidiaries (“the Group”) for the financial year ended 31 December 2017.

For the purpose of disclosure, this Statement is prepared pursuant to Paragraph 15.26(b) of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad (“Bursa Securities”) and is guided by the Statement on Risk Management&InternalControl:GuidelinesforDirectorsofListedIssuers.

BOARD RESPONSIBILITY

The Board recognises that a sound system of internal control and risk management is an integral part of good corporate governance. The Board is committed and acknowledges its overall responsibility to maintain a sound system of internal control and risk management as well as for reviewing its adequacy and effectiveness to safeguard the shareholders’ investments and Group’s assets.

The Board and the Management team are responsible and accountable for the establishment of internal controls for the Group. The risk management and internal control systems and processes are subjected to regular evaluations on their adequacy and effectiveness by the Management team and the Audit Committee (“AC”). This process has been in place for the financial year under review and up to the date of approval of this Statement for inclusion in the Annual Report of the Company.

The system of internal control and risk management covers not only financial controls but operational, risk and compliance controls as well. These systems are designed to manage, rather than eliminate, the risk of failure arising from non-achievement of the Group’s policies, goals and objectives. Such systems provide reasonable, rather than absolute, assurance against material misstatement or loss.

RISK MANAGEMENT FRAMEWORK

The Board has an ongoing process for identifying, evaluating and managing significant risks faced by the Group.

The process of identifying, evaluating and managing the significant risks are embedded in the various work processes and procedures in the Group. The Board and the Management team have put in place certain risk management guidelines, control measures and processes for the Group to identify, evaluate and manage the significant risks.This includes formal risk management policy and risk management framework which sets out the fundamentals of risk and risk management, roles and responsibilities of management and employees in managing risks and the process for identifying, evaluating and managing risks.

The Board has delegated tasks of monitoring the internal control and risk management systems to the Management team. The systems of internal control and risk management are subjected to regular evaluations on their adequacy and effectiveness by the Management team. Any significant risks and mitigating responses are communicated to the Board through the AC to ensure their continuing relevance and compliance with current/applicable laws and regulations. The AC assists the Board to review the adequacy and effectiveness of the systems of internal control and risk management in the Group and ensures that appropriate methods and procedures are used to obtain the level of assurance required by the Board.

The Board is satisfied that, during the financial year under review and up to the date of approval of this Statement for inclusion in the Annual Report of the Company, there is an ongoing process of identifying, evaluating and managing significant risks faced by the Group.

The Board is of the view that the existing system of internal controls is sound and adequate to safeguard the Group’s operations and assets at the existing level of operations of the Group.

The Board has received assurance from the Group Managing Director/Group President and Financial Controller that the Group’s risk management and internal control systems are operating adequately and effectively, in all material aspects, based on the risk management and internal control system of the Group.


The Group’s system of internal control does not apply to associated companies where the Group does not have full management control over these entities. However, the Group’s interest is served through representatives of the Board of the respective associated companies.

The Board recognises that the development of risk management and internal control systems is an ongoing process. Therefore, the Board will continue to strengthen the systems of internal control and risk management.

INTERNAL AUDIT FUNCTION

The internal audit function adopts a risk-based approach and prepares its strategies and plans for AC’s approval prior to execution of internal audit assessments. Internal audit reviews the internal controls in the key activities of the Group’s businesses.

The internal audit team from Baker Tilly Monteiro Heng Governance Sdn Bhd, the independent consulting firm to which the internal audit function has been outsourced, assesses the adequacy and effectiveness of the internal control system based on the scope of work approved by the AC and reports to the AC on its findings and recommendations for improvement. The Internal Auditors develop its audit plan in accordance with accepted auditing practices in which addresses critical business processes, identified risks and internal control gaps, assessed the adequacy and effectiveness of the existing state of internal control of the Group and recommended possible improvements to the internal control process. This is to provide reasonable assurance that such systems continue to operate satisfactorily and effectively within the Group. The audit plan is presented to AC of the Company for approval.

Follow-up visits were also carried out to ensure weaknesses identified have been or are being addressed. Periodic audit reports and status reports on follow up management action plans were tabled to the AC for review on quarterly basis. For the financial year ended 31 December 2017, the total costs incurred for the outsourced internal audit function is RM36,000.

OTHER KEY ELEMENTS OF INTERNAL CONTROL

Apart from risk management and internal audit, the Group’s internal control system comprises the following key elements:-

• ClearlydefinedorganisationalstructurewithclearlinesofdelegationofresponsibilitytoCommitteesoftheBoard, management and operating subsidiaries.

• Experiencedandcompetentstaffsareplacedinareasofresponsibilitytosupportandcontinuouslymonitorthe effectiveness of the Group’s system of internal control.

• RegularmeetingsareheldtodiscussontheoverallGroupandoperatingsubsidiaries’operationalmattersand to resolve key operational, financial, human resource and other related issues.

• TimelygenerationoffinancialandoperationsreportsforManagementreview.• Regularinternalauditreviewsarecarriedouttoidentifyanyareaofimprovement,besidescompliancewith

internal practices, guidelines and objectives. The internal audits were performed in accordance with accepted auditing practices in reviewing effectiveness and efficiency of operations, reliability of financial reporting and compliance with applicable laws and regulations.

• TheACreviewsthequarterlyandannualfinancialstatementsandresultsannouncementsandrecommendedto the Board for approval.

• BudgetisreviewedandapprovedbytheManagementofeachsubsidiarybeforeconsolidationintotheGroup’sbudget for the Board’s review.

• Regular visits to operating subsidiaries bymembers of theBoard and seniormanagementwheneverappropriate.

REVIEW OF THE STATEMENT BY EXTERNAL AUDITORS

As required by Paragraph 15.23 of Main Market Listing Requirements of Bursa Securities, the External Auditors have reviewed this Statement and reported to the Board that nothing has come to their attention that causes them to believe that this Statement is inconsistent with their understanding of the process adopted by the Board in reviewing the adequacy and integrity of the Group’s internal control system.

STATEMENT ON RISk MANAGEMENT AND INTERNAl CONTROl (cont’d)


ADDITIONAl COMPlIANCE INFORMATION

AUDIT AND NON-AUDIT FEES

For the financial year ended 31 December 2017, the amounts of audit and non-audit fees paid or payable by the Company and the Group to the External Auditors are as follows:-

Company Group (RM) (RM)

Audit fees 20,000 185,172Non-auditfees – 10,000

MATERIAL CONTRACTS INVOLVING DIRECTORS’ AND MAJOR SHAREHOLDERS’ INTERESTS

During the financial year under review, there were no material contracts entered by the Group which involved Directors’ or major shareholders’ interests.

UTILISATION OF PROCEEDS FROM CORPORATE PROPOSALS

There were no proceeds raised from corporate proposals during the financial year under review.

RECURRENT RELATED PARTY TRANSACTION

At the Annual General Meeting (“AGM”) of the Company held on 30 May 2017, the Company had obtained shareholders’ mandate to allow the Company and its subsidiaries to enter into recurrent related party transactions (“RRPTs”) of a revenue or trading nature which are necessary for the day to day operations of the Group and in the ordinary course of business with the related parties.

The aforesaid mandate will lapse at the conclusion of the forthcoming Fifteenth AGM of the Company.


In accordance with Paragraph 3.1.5 of Practice Note 12 of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad, details of the RRPTs conducted during the financial year under review pursuant to the aforesaid shareholders’ mandate are as follows:

Transacting company

Related party

Nature oftransaction

Actual value of transaction from 1 January

2017 up to 31 December

2017RM’000

Interested related party

Innoceria Sdn. Bhd.(“ISB”)

Metrio Development Sdn. Bhd. (“Metrio”)

Property development project sales management fee charged by Metrio to ISB in respect of:(i) Project Management -

planning, conceptual layout &design,constructionsupervision&management,authority submission and approval obtainment; and

(ii) Sales&MarketingManagement - market survey, sales&marketingplan&strategy,exhibition&roadshow, customer service and administrative support.

192 Chuah Chew Hai, an Executive Director of Grand-Flo and a Director of ISB is also a director and major shareholder of Metrio. Chong Poh Yoong, the spouse of Chuah Chew Hai and being a person connected to a Director, is also a director and major shareholder of Metrio.

Jalur Bina Sdn. Bhd.(“JBSB”)

Metrio Property development project sales management fee charged by Metrio to JBSB in respect of:(i) Project Management -

planning, conceptual layout &design,constructionsupervision&management,authority submission and approval obtainment; and

(ii) Sales&MarketingManagement - market survey, sales&marketingplan&strategy,exhibition&roadshow, customer service and administrative support.

560 Chuah Chew Hai, an Executive Director of Grand-Flo and a Director of JBSB is also a director and major shareholder of Metrio. Chong Poh Yoong, the spouse of Chuah Chew Hai and being a person connected to a Director, is also a director and major shareholder of Metrio.

ADDITIONAl COMPlIANCE INFORMATION (cont’d)


Transacting company

Related party

Nature oftransaction

Actual value of transaction from 1 January

2017 up to 31 December

2017RM’000

Interested related party

Grand-Flo Spritvest Sdn. Bhd.(“GFSSB”)

Radiant Global ADC Sdn. Bhd. (“Radiant”)

Sales and purchases of computer related products and services.

438 Tan Chuan Hock, a Non-Independent Non-Executive Director of Grand-Flo is a major shareholder of Radiant.

CORPORATE SOCIAL RESPONSIBILITY (“CSR”)

The Group believes that our CSR efforts are synergistic with our business operations as we build a cohesive community, environment and marketplace. In the year under review, we have maintained our commitment to our CSR strategies. In this respect, the Group continued to support the various charitable and non-government organisations that focused on enhancing the lives of the community at large, through donations in cash and kind, as well as through participation in public forums and talks.

ADDITIONAl COMPlIANCE INFORMATION (cont’d)


The Board of Directors of the Company are fully accountable to ensure that the financial statements are drawn up in accordance with Companies Act 2016 (“Act”) and the applicable approved accounting standards prescribed by Malaysian Accounting Standards Board so as to give a true and fair view of the state of affairs of the Company and its subsidiaries (“the Group”) as at 31 December 2017 and of the results and cash flows of the Company and the Group for the financial year then ended.

In the preparation of the financial statements for the financial year ended 31 December 2017, the Board has taken the following measures:-

a. applied relevant and appropriate accounting policies consistently and in accordance with applicable approved accounting standards;

b. made judgments and estimates that are prudent and reasonable; and

c. used the going concern basis for the preparation of the financial statements.

The Board has ensured that the quarterly reports and annual audited financial statements of the Group are released to Bursa Malaysia Securities Berhad in a timely manner in order to keep our investing public informed of the Group’s latest performance and developments.

The Board has also ensured that the Group maintains proper accounting records in accordance with the Act. The Board also has the overall responsibility in taking such steps as are reasonably open to them to safeguard the assets of the Group and to prevent and detect fraud and other irregularities.

STATEMENT OF DIRECTORS’ RESPONSIbIlITy


Financial Content Directors’ Report 45

Statement by Directors and Statutory Declaration 51

Independent Auditors’ Report 52

Statements of Financial Position 57

Statements of Profit or Loss and Other Comprehensive Income 59

Statements of Changes in Equity 61

Statements of Cash Flows 64

Notes to the Financial Statements 68


DIRECTORS’ REPORT

The Directors have pleasure in submitting their report together with the audited financial statements of the Group and of the Company for the financial year ended 31 December 2017.

PRINCIPAL ACTIVITIES

The principal activities of the Company are the provision of information technology solutions and investment holding. The principal activities of the subsidiaries and associates are disclosed in Note 5 and Note 6 to the financial statements respectively.

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

FINANCIAL RESULTS

Group Company RM RM

Net profit for the financial year 14,521,177 17,421,580

Attributable to:-Owners of the company 13,188,670Non-controlling interest 1,332,507

14,521,177

DIVIDENDS

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

The Director recommend a final single tier dividend of 0.60 sen per share in respect of the current financial year for shareholders’ approval at the forthcoming Annual General Meeting. The current financial statements do not reflect this proposed dividend. Such dividend, if approved by the shareholders, will be accounted for in equity as an appropriation of retained earnings in the financial year ending 31 December 2018.

RESERVES AND PROVISIONS

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


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

Company:Tan Bak HongCheng Ping LiongTan Chuan HockCheong Kee YoongYu Chee SingChuah Chew HaiTan Sri Azlan Bin Mohd Zainol (appointed on 08.09.2017)Lee Eng Eow (appointed on 15.11.2017)Joyce Wong Ai May (appointed on 22.12.2017)Tan Sri Datuk Adzmi Bin Abdul Wahab (retired on 30.05.2017)Yap Li Li (resigned on 31.01.2018)

Subsidiaries:Grand-Flo Electronic System Sdn. Bhd. and Grand-Flo Capital Sdn. Bhd.Tan Bak HongTan Bak Leng

Grand-Flo Spritvest Sdn. Bhd. and Grand-Flo Data Centrix Sdn. Bhd.Cheng Ping LiongTan Bak HongTan Bak Leng

Grandcon Sdn. Bhd. (formerly known as Grand-Flo Development Sdn. Bhd.)Chuah Chew Hai (appointed on 25.10.2017)Mohd Shahrim Bin Hashim (appointed on 25.10.2017)Tan Bak Hong (resigned on 25.10.2017)Cheng Ping Liong (resigned on 25.10.2017)

Innoceria Sdn. Bhd.Chuah Chew HaiTan Bak HongYu Chee Sing

Jalur Bina Sdn. Bhd.Tan Bak HongYu Chee SingChuah Bee TengChuah Chew Hai

Labels Network Sdn. Bhd.Tan Bak HongCheng Ping Liong

Grand-Flo (HK) Limited, CL Solutions Limited and Victor Group LimitedTan Bak HongTan Bak LengLiu Si Ca

Guangzhou CL Solutions LimitedTan Bak HongLiu Si Ca

DIRECTORS’ REPORT (cont’d)


DIRECTORS’ INTERESTS

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

Number of ordinary shares Balance at Balance atThe Company 1.1.2017 Bought Sold 31.12.2017

Directinterests:– TanBakHong 21,168,636 – – 21,168,636ChengPingLiong 8,861,734 – – 8,861,734TanChuanHock 12,600,000 – – 12,600,000YapLiLi 1,322,000 50,000 – 1,372,000ChuahChewHai 7,765,000 79,000,000 – 86,765,000

Deemedinterests:– Tan Bak Hong 1 75,183,852 50,000 (50,000,000) 25,233,852Yap Li Li 2 95,030,488 – (50,000,000) 45,030,488Tan Chuan Hock 3 12,000,000 – – 12,000,000Chuah Chew Hai 4 29,412,165 – (29,000,000) 412,165

1 Deemed interested by virtue of his spouse, Ms. Yap Li Li’s interest in the Company and by virtue of his and Ms. Yap Li Li’s interests in Grand-Flo Corporation Sdn. Bhd.

2 Deemed interested by virtue of her spouse, Mr. Tan Bak Hong’s interest in the Company and by virtue of her and Mr. Tan Bak Hong’s interest in Grand-Flo Corporation Sdn. Bhd.

3 Deemed interested by virtue of his interest in AI Capital Sdn. Bhd.4 Deemed interested by virtue of his spouse, Ms. Chong Poh Yoong’s interest in the Company

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

DIRECTORS’ REMUNERATION

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

Incurred by the Incurred by the Company Subsidiaries Group RM RM RM

Directors’ fees 186,700 12,000 198,700Directors’ remuneration 1,167,134 2,336,921 3,504,055IndemnitygivenorinsuranceeffectedforOfficers 11,500 – 11,500



DIRECTORS’ REMUNERATION (CONT’D)

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

ISSUE OF SHARES AND DEBENTURES

There were no changes in the issued and paid up capital of the Company during the financial year except for the transfer of share premium pursuant to Section 618(2) of the Companies Act 2016 amounting to RM14,538,275 and became part of the Company’s share capital.

There were no issuance of debentures during the financial year.

TREASURY SHARES

During the financial year ended 31 December 2017, the Company repurchased 2,163,200 of its issued share from the open market for total consideration paid, including transaction costs of RM508,812. The average price paid for the shares repurchased was approximately RM0.24 per share and was financed by internally generated funds. The shares repurchased are being held as treasury shares and treated in accordance with the requirements of Section 127(6) of Companies Act 2016. As at 31 December 2017, the Company held 7,970,000 treasury shares out of total 483,115,711 issued ordinary shares. Further relevant details are disclosed in Note 22 to the financial statements.

INDEMNITY AND INSURANCE FOR OFFICERS

The amount of indemnity coverage and insurance premium paid for Officers of the Company during the financial year amounted to RM10,000,000 and RM11,500 respectively.

OTHER STATUTORY INFORMATION

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

(a) to ascertain that proper action had been taken in relation to the writing off of bad debts and the making of provision for doubtful debts and satisfied themselves that all known bad debts had been written off and adequate provision had been made for doubtful debts; and

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

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

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

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



OTHER STATUTORY INFORMATION (CONT’D)

Before the financial statements of the Group and of the Company were made out, the Directors took reasonable steps (cont’d):-

At the date of this report, the Directors are not aware of any circumstances (cont’d):

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

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

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

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

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

In opinion of the Directors:

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

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

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

SIGNIFICANT EVENTS DURING THE FINANCIAL YEAR

The significant events during the financial year are disclosed in Note 47 to the financial statements.



AUDITORS

Details of auditors’ remuneration are set out in Note 36 to the financial statements.

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

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

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

............................................................ )TAN BAK HONG ) ) ) ) ) ) DIRECTORS ) ) ) ) ) )............................................................ )CHENG PING LIONG )

Kuala Lumpur

9 April 2018



STATEMENT by DIRECTORS

I, Tan Bak Hong, being the Director primarily responsible for the financial management of Grand-Flo Berhad, do solemnly and sincerely declare that to the best of my knowledge and belief, the financial statements set out on pages 57 to 149 are correct and I make this solemn declaration conscientiously believing the same to be true and by virtue of the Statutory Declarations Act, 1960.

Subscribed and solemnly declared by )the abovenamed at Kuala Lumpur in )the Federal Territory this day of )9 April 2018 ) ................................................................. TAN BAK HONG

Before me:

Commissioner for OathsS. ARULSAMY (W.490)

In the opinion of the Directors, the financial statements set out on pages 57 to 149 are drawn up in accordance with Financial Reporting Standards and the requirements of the Companies Act 2016 in Malaysia so as to give a true and fair view of the financial position of the Group and of the Company as at 31 December 2017 and of their financial performance and cash flows for the financial year then ended.

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

............................................................. ..................................................................TAN BAK HONG CHENG PING LIONG

Kuala Lumpur

9 April 2018

STATUTORy DEClARATION


Report on the Audit of the Financial Statements

Opinion

We have audited the financial statements of Grand-Flo Berhad, which comprise the statements of financial position as at 31 December 2017 of the Group and of the Company, and the statements of profit or loss and other comprehensive income, statements of changes in equity and statements of cash flows of the Group and of the Company for the financial year then ended, and notes to the financial statements, including a summary of significant accounting policies, as set out on pages 57 to 149.

In our opinion, the accompanying financial statements give a true and fair view of the financial position of the Group and of the Company as at 31 December 2017, and of their financial performance and cash flows for the financial year then ended in accordance with Financial Reporting Standards and the requirements of the Companies Act 2016 in Malaysia.

Basis for Opinion

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

Independence and Other Ethical Responsibilities

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

Key Audit Matters

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

Impairment loss on trade receivables

The risk

The Group has a material amount of trade receivables amounting to RM19,713,591 as disclosed in Note 44(a)(i) to the financial statements whereby the amount is past due but not impaired. The key associate risk is recoverability of billed trade receivables as management judgement is required in assessing the adequacy of impairment losses by considering the expected recoverability of the outstanding trade receivables.

Our response

We have challenged management’s assumptions in providing impairment losses of trade receivables. Our procedures includes reviewing the ageing of trade receivables, testing the integrity of ageing, reviewing by recalculating the due date for a number of invoices and assessed the recoverability of outstanding receivables through examination of subsequent cash receipts. We have also tested the operating effectiveness of the relevant control procedures that management has in place.

INDEPENDENT AUDITORS’ REPORTTo the Members of Grand-Flo berhad


INDEPENDENT AUDITORS’ REPORTTo the Members of Grand-Flo berhad (cont’d)

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

Key Audit Matters (cont’d)

Inventories valuation

The risk

The Group holds significant amount of inventories for finished goods amounting to RM3,859,769 as disclosed in Note 12 to the financial statements which are subject to a risk that the inventories might become slow-moving or obsolete and rendering them not saleable or can only be sold for selling prices that are less than the carrying value. Judgement is required to access the appropriate level of provision for items which may be ultimately sold below cost.

Our response

We have tested the methodology for calculating the allowances, challenged the appropriateness and consistency of judgements and assumptions, considered the nature and suitability of historical data used in estimating the underlying allowances. We have compared the allowance with actual historical results by the ageing profile and expiry date of inventory, the process for identifying specific problem inventories and historical loss rates. We have attended physical inventories count in warehouses and tested samples that the quantities and value have been correctly calculated and reflected in the accounting records. We have also enquired the management the judgement taken and the basis of allowance provided regarding obsolete inventories which have been adjusted in the accounting records.

Revenue recognition of property development

The risk

The Group recorded revenue of property development amounting to RM30,173,102 as at 31 December 2017 as disclosed in Note 33 to the financial statements. There are significant accounting judgements involved in determining the stage of completion, the timing of revenue recognition and the calculation under the percentage-of-completion method made by management in applying the Group’s revenue recognition policies entered into by the Group.

Our response

We have performed a range of audit procedures which included obtaining a sample of contracts, reviewing for change orders, retrospectively reviewing estimated profit and costs to complete and enquiring key personnel regarding adjustments for job costing and potential contract losses. We have also performed testing procedures over routine sales transactions.

Impairment of goodwill on consolidation

The risk

The Group holds goodwill on consolidation of RM33,447,524, as disclosed in Note 9 to the financial statements.

The carrying values of goodwill on consolidation are dependent on future cash flows of the underlying cash-generating units(CGU)andthereisriskthatifthesecashflowsdonotmeetmanagement’sexpectationstheassetswillbeimpaired. This risk increases in periods when the Group’s trading performance and projections do not meet prior expectations.

The impairment review performed by management contains a number of significant judgements and estimates includingCGUidentification,operatingprofit forecasts,cashconversion,perpetuitygrowthratesanddiscountrates. Changes in these assumptions can result in materially different impairment charges or available headroom.



Key Audit Matters (cont’d)

Impairment of goodwill on consolidation (cont’d)

Our response

Our procedures includes assessing the reasonableness of the key assumption applied by the Group in determining therecoverableamountoftheaboveCGUs.Inparticular,wehaveevaluatedtheappropriatenessandconsistencyof the underlying assumptions in determining the cash flows forecast and projections, specifically revenue growth discount factor and margin assumptions. We have considered the historical forecast accuracy, compared forecast cashflowstothosecurrentlybeingachievebytheCGUs.Wehavealsoassessedthefuturecashflowsprojectionto known or probable changes in the business environment.

There is no key audit matter to be communicated in respect of the audit of the financial statements of the Company.

Information Other than the Financial Statements and Auditors’ Report Thereon

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

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

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

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

Responsibilities of the Directors for the Financial Statements

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

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




Auditors’ Responsibilities for the Audit of the Financial Statements

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

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

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

• Obtainanunderstandingofinternalcontrolrelevanttotheauditinordertodesignauditproceduresthatareappropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s and the Company’s internal control.

• Evaluatetheappropriatenessofaccountingpoliciesusedandthereasonablenessofaccountingestimatesand related disclosures made by the Directors.

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

• Evaluatetheoverallpresentation,structureandcontentofthefinancialstatementsoftheGroupandoftheCompany, including the disclosures, and whether the financial statements of the Group and of the Company represent the underlying transactions and events in a manner that achieves fair presentation.

• Obtainsufficientappropriateauditevidenceregardingthefinancialinformationoftheentitiesorbusinessactivities within the Group to express an opinion on the financial statements of the Group. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.




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

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

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

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

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

Report on Other Legal and Regulatory Requirements

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

Other Matters

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

............................................................. ..................................................................GRANT THORNTON MALAYSIA LIAN TIAN KWEE(NO. AF: 0737) (NO.: 02943/05/2019 J)CHARTEREDACCOUNTANTS CHARTEREDACCOUNTANT

Kuala Lumpur 9 April 2018



STATEMENTS OF FINANCIAl POSITION As at 31 December 2017

Group Company Note 2017 2016 2017 2016 RM RM RM RM

ASSETSNon-current assets Property, plant and equipment 4 8,350,022 13,306,846 33,303 36,527 Investmentinsubsidiaries 5 – – 56,004,741 62,561,046 Investmentinassociates 6 1,355,925 12,347,419 – 5,265,943 Otherinvestment 7 14,794 15,204 – – Developmentcosts 8 – 1,813,059 – 1,813,059 Goodwillonconsolidation 9 33,447,524 34,126,122 – – Deferredtaxassets 10 – 339,000 – 339,000

Total non-current assets 43,168,265 61,947,650 56,038,044 70,015,575

Current assets Propertydevelopmentcost 11 47,854,767 81,272,845 – – Inventories 12 28,271,678 6,010,694 – – Accruedbillings 13 3,781,856 11,216,282 – – Tradereceivables 14 29,503,333 22,284,852 – – Other receivables 15 4,590,170 2,880,249 1,360,134 2,350 Amountduefromdirectors 16 – 3,563,019 – – Amount due from subsidiaries 17 – – 26,842,174 24,070,776 Amount due from related parties 18 36,227 134,405 – – Tax recoverable 1,441,276 777,654 100,673 98,033 Dividendreceivable 1,060,831 1,060,831 – – Fixed deposits with licensed banks 19 21,137,792 1,693,174 18,082,922 169,000 Cash and bank balances 20 10,856,409 12,956,623 1,626,094 340,801

Total current assets 148,534,339 143,850,628 48,011,997 24,680,960

Total assets 191,702,604 205,798,278 104,050,041 94,696,535



EQUITY AND LIABILITIES EQUITYEquity attributable to owners of the parent: Share capital 21 62,849,846 48,311,571 62,849,846 48,311,571 Sharepremium 21 – 14,538,275 – 14,538,275 Treasury shares 22 (2,006,102) (1,497,290) (2,006,102) (1,497,290) Otherreserves 23 1,109,451 1,109,451 – – Foreign exchange fluctuationreserve 804,826 1,391,694 – – Revaluationreserve 24 4,596,522 6,160,852 – – Retained earnings 25 55,633,196 40,021,750 40,696,093 23,274,513

122,987,739 110,036,303 101,539,837 84,627,069 Non-controllinginterest 5 37,428,476 42,030,530 – –

Total equity 160,416,215 152,066,833 101,539,837 84,627,069

LIABILITIESNon-current liabilities Financeleaseliabilities 26 31,825 215,919 – – Termloans 27 1,791,725 8,093,774 – 5,250,000 Deferredtaxliabilities 10 27,849 1,091,691 – –

Totalnon-currentliabilities 1,851,399 9,401,384 – 5,250,000

Current liabilities Tradepayables 28 15,712,235 26,587,772 – – Other payables 29 4,032,550 4,444,048 711,617 2,214,823 Amountduetoadirector 16 4,870,961 8,000 – – Amountduetoasubsidiary 30 – – 1,798,587 354,643 Amountduetorelatedparties 31 141,996 2,002,632 – – Financeleaseliabilities 26 107,777 134,997 – – Borrowings 32 4,378,776 10,765,097 – 2,250,000 Taxpayable 190,695 387,515 – –

Total current liabilities 29,434,990 44,330,061 2,510,204 4,819,466

Total liabilities 31,286,389 53,731,445 2,510,204 10,069,466

Total equity and liabilities 191,702,604 205,798,278 104,050,041 94,696,535

The accompanying notes form an integral part of the financial statements.

STATEMENTS OF FINANCIAl POSITION As at 31 December 2017 (cont’d)


STATEMENTS OF PROFIT OR lOSS AND OTHER COMPREHENSIVE INCOME

For the Financial year Ended 31 December 2017


Revenue 33 104,050,523 120,277,632 10,366,892 9,368,244

Costs of sales (80,026,232) (90,126,661) (2,633,802) (1,080,719)

Gross profit 24,024,291 30,150,971 7,733,090 8,287,525

Other income 34 12,981,767 883,526 19,004,084 44,299

Administrative expenses (15,281,248) (17,174,888) (2,146,217) (2,399,862)

Selling and distribution expenses (3,432,950) (4,119,283) (66,051) (99,298)

Other expenses (2,787,738) (10,956,952) (6,556,305) (1,984,583)

Finance costs 35 (1,279,505) (2,250,517) (207,120) (224,493)

Share of profit of equity- accountedassociates 813,523 869,327 – –

Profit/(Loss) before tax 36 15,038,140 (2,597,816) 17,761,481 3,623,588

Tax expense 37 (516,963) (2,887,406) (339,901) (6,596)

Net profit/(loss) for the financial year 14,521,177 (5,485,222) 17,421,580 3,616,992

Other comprehensive income/(loss) :Item that will be reclassified subsequently to profit or lossSurplus arising from revaluation of freeholdlandsandbuildings 944,408 – – –Tax effect adjustment on revaluation offreeholdlandsandbuildings 37 (85,962) – – –

858,446 – – –Exchangetranslationdifferences (586,868) (974,784) – –

Total other comprehensice income/(loss) for the financialyear 271,578 (974,784) – –

Total comprehensive income/(loss) for the financial year 14,792,755 (6,460,006) 17,421,580 3,616,992



Profit/(Loss) for the financial year attributable to :Owners of the Company 13,188,670 (9,723,921) 17,421,580 3,616,992 Non-controllinginterest 1,332,507 4,238,699 – –

14,521,177 (5,485,222) 17,421,580 3,616,992

Total comprehensive income/ (loss) attributable to :Owners of the Company 13,460,248 (10,698,705) 17,421,580 3,616,992 Non-controllinginterest 1,332,507 4,238,699 – –

14,792,755 (6,460,006) 17,421,580 3,616,992

Earnings/(Loss) per share attributable to owners of the parent (sen):-Earnings/(Loss) per share - Basic 38 2.77 (2.03)


STATEMENTS OF PROFIT OR lOSS AND OTHER COMPREHENSIVE INCOMEFor the Financial year Ended 31 December 2017 (cont’d)


STATEMENTS OF CHANGES IN EQUITyFor the Financial year Ended 31 December 2017

A

ttrib

utab

le to

ow

ners

of t

he p

aren

t

Non

–dist

ribut

able

Dist

ribut

able

Fore

ign

ex

chan

ge

Non–

Shar

e Sh

are

Trea

sury

Re

valu

atio

n Ot

her

fluct

uatio

n Re

tain

ed

co

ntro

lling

Tota

l

Note

ca

pita

l pr

emiu

m

shar

es

rese

rves

re

serv

es

rese

rve

earn

ings

To

tal

inte

rest

eq

uity

RM

RM

RM

RM

RM

RM

RM

RM

RM

RM

Grou

p

Balan

ce a

t 1 J

anua

ry 2

016

4

8,31

1,57

1

14,

538,

275

(1

,098

,173

) 6

,160

,852

1

,109

,451

2

,366

,478

5

2,13

8,98

9

123

,527

,443

2

2,75

1,87

1

146

,279

,314

Totalc

ompreh

ensiv

eloss

forthe

yea

r

–

–

–

–

–

(974

,784

)(9

,723

,921

)(1

0,69

8,70

5)

4,238

,699

(6

,460

,006

)

Tran

sact

ions

with

ow

ners

:

Issua

nce

of re

deem

able

non-

co

nvertib

lepreferen

cesha

res

–

–

–

–

–

–

–

–

15,07

9,96

0

15,07

9,96

0

Sharerepu

rcha

sed

–

–

(394

,070

)–

–

–

–

(394

,070

)–

(394

,070

)

Tran

sactionco

sts

–

–

(5,047

)–

–

–

–

(5,047

)–

(5,047

)

Divid

end

-Sha

reho

lders

39

–

–

–

–

–

–

(2,393

,318

)(2

,393

,318

)–

(2,393

,318

)-N

on-con

trollin

gInterest

–

–

–

–

–

–

–

–

(40,00

0)

(40,00

0)

Totaltrans

actio

nsw

ithown

ers

–

–

(399

,117

)–

–

–

(2,393

,318

)(2

,792

,435

)15,03

9,96

0

12,24

7,52

5

Balan

ce a

t 31

Dece

mbe

r 201

6

48,3

11,5

71

14,

538,

275

(1

,497

,290

) 6

,160

,852

1

,109

,451

1

,391

,694

4

0,02

1,75

0

110

,036

,303

4

2,03

0,53

0

152

,066

,833

Tota

l com

preh

ensiv

e in

com

e forthe

yea

r

–

–

–

858

,446

–

(586

,868

)13,18

8,67

0

13,46

0,24

8

1,332

,507

14,79

2,75

5

Tran

sitiontono-pa

rvalu

eregime

21

14,53

8,27

5(1

4,53

8,27

5)

–

–

–

–

–

–

–

–


A

ttrib

utab

le to

ow

ners

of t

he p

aren

t

Non

–dist

ribut

able

Dist

ribut

able

Fore

ign

ex

chan

ge

Non–

Shar

e Sh

are

Trea

sury

Re

valu

atio

n Ot

her

fluct

uatio

n Re

tain

ed

co

ntro

lling

Tota

l

Note

ca

pita

l pr

emiu

m

shar

es

rese

rves

re

serv

es

rese

rve

earn

ings

To

tal

inte

rest

eq

uity

RM

RM

RM

RM

RM

RM

RM

RM

RM

RM

Grou

p

Tran

sact

ions

with

ow

ners

:

Rede

mpt

ion

of re

deem

able

no

n-co

vertiblepreferen

cesha

res

–

–

–

–

–

–

–

–

(5,616

,000

)(5

,616

,000

)

Sharerepu

rcha

sed

–

–

(503

,464

)–

–

–

–

(503

,464

)–

(503

,464

)

Tran

sactionco

sts

–

–

(5,348

)–

–

–

–

(5,348

)–

(5,348

)

Reali

satio

n of

reva

luat

ion

rese

rve

on

disp

osal

of le

aseh

old

land

an

dbu

ildings

–

–

–

(2,422

,776

)–

–

2,422

,776

–

–

–

Disp

osal

ofasub

sidiar

y

–

–

–

–

–

–

–

–

(318

,561

)(3

18,561

)

Totaltrans

actio

nsw

ithown

ers

–

–

(508

,812

)(2

,422

,776

)–

–

2,422

,776

(5

08,812

)(5

,934

,561

)(6

,443

,373

)

Balan

ceat3

1De

cembe

r201

7

62,84

9,84

6

–

(2,006

,102

)4,596

,522

1,109

,451

804

,826

55,63

3,19

6122

,987

,739

37,42

8,47

6

160

,416

,215

STATEMENTS OF CHANGES IN EQUITyFor the Financial year Ended 31 December 2017 (cont’d)


STATEMENTS OF CHANGES IN EQUITyFor the Financial year Ended 31 December 2017 (cont’d)

Non–Distributable Distributable Share Treasury Warrant Retained Note capital shares reserves earnings Total RM RM RM RM RM

Company

Balance at 1 January 2016 48,311,571 14,538,275 (1,098,173) 22,050,839 83,802,512

Total comprehensive income forthefinancialyear – – – 3,616,992 3,616,992

Transactions with owners:

Sharerepurchased – – (394,070) – (394,070)

Transactioncosts – – (5,047) – (5,047)

Dividend 39 – – – (2,393,318) (2,393,318)

Totaltransactionswithowners – – (399,117) (2,393,318) (2,792,435)

Balance at 31 December 2016 48,311,571 14,538,275 (1,497,290) 23,274,513 84,627,069

Total comprehensive income forthefinancialyear – – – 17,421,580 17,421,580

Transitiontono-parvalueregime 21 14,538,275 (14,538,275) – – –

Transactions with owners:

Sharerepurchased – – (503,464) – (503,464)

Transactioncosts – – (5,348) – (5,348)

Totaltransactionswithowners – – (508,812) – (508,812)

Balanceat31December2017 62,849,846 –(2,006,102) 40,696,093 101,539,837



STATEMENTS OF CASH FlOWSFor the Financial year Ended 31 December 2017

Group Company 2017 2016 2017 2016 RM RM RM RM

CASH FLOWS FROM OPERATING ACTIVITIESProfit/(Loss) before tax 15,038,140 (2,597,816) 17,761,481 3,623,588 Adjustments for:- Amortisation of development cost 1,013,846 1,080,719 1,013,846 1,080,719 Amortisationofotherinvestment 410 410 – – Baddebtswrittenoff – 3,773 – – Depreciation of property, plant and equipment 660,178 1,765,329 10,224 9,594 Developmentcostwrittenoff 1,619,956 – 1,619,956 – Dividendincome – – (6,755,410) (4,319,076) Loss/(Gain) on disposal of property, plantandequipment 159,606 (13,446) – – Lossondisposalofasubsidiary 1,184,325 3,773,646 – – Lossonstruckoffofasubsidiary 100,000 – – – (Gain)/Lossondisposalofassociate (12,348,072) 180,743 (18,887,146) – Impairment loss on investmentinsubsidiaries – – 6,556,305 1,984,583 Impairmentlossontradereceivables 288,375 237,422 – – Impairmentlossonotherreceivables 650,078 – – – Goodwillwrittenoff – 4,636,472 – – Interest income (288,016) (178,883) (116,938) (44,299) Inventorieswrittenoff 152,482 1,588,663 – – Inventorieswrittendown 543,319 629,535 – – Interest expense 1,279,505 2,250,517 207,120 224,493 Property, plant and equipment writtenoff 12,695 19,288 – – Reversal of impairment loss on tradereceivables (76,101) (3,822) – – Share of gain of equity-accounted associates (813,523) (869,327) – – Unrealisedloss/(gain)onforeign exchange 24,310 (11,999) – –

Operating profit before working capital changes 9,201,513 12,491,224 1,409,438 2,559,602 Changes in working capital:- Propertydevelopmentactivities 33,468,149 (23,735,089) – – Inventories (23,244,810) 2,332,273 – – Receivables (10,599,858) 20,716,054 (1,357,784) – Payables (10,815,122) (11,743,656) (1,503,206) (328,615) Subsidiaries – – (2,919,164) 3,411,284 Directors 3,563,019 1,143,291 – – Relatedparties (1,981,306) 6,798,565 – – Progressbillings/Accruedbillings 7,434,426 (6,934,721) – –

Cash generated from/(used in) operations 7,026,011 1,067,941 (4,370,716) 5,642,271 Taxrefunded 106,162 24,446 – – Tax paid (2,188,259) (3,852,065) (3,541) (5,996)

Net cash from/(used in) operating activities 4,943,914 (2,759,678) (4,374,257) 5,636,275


STATEMENTS OF CASH FlOWSFor the Financial year Ended 31 December 2017 (cont’d)


CASH FLOWS FROM INVESTING ACTIVITIES Advances from/(Repayment to) associates – 105,077 – (1,612) Net cash inflow from disposal ofsubsidiary 5 172,855 1,320,715 – – Net cash outflow from struck offasubsidiary 5 (100,000) – – – Development costs incurred (820,743) (737,998) (820,743) (737,998) Dividend received from subsidiaries – – 6,755,410 4,319,076 Interest received 288,016 178,883 116,938 44,299 Proceeds from disposal ofassociate 24,153,089 1,125,142 24,153,089 – Dividend received from associatescompanies – 38,652 – – Proceeds from disposal of property,plantandequipment 4,546,124 51,519 – – (Placement)/Upliftoffixeddeposit (2,044,510) 970,960 – – Purchase of property, plant and equipment A (79,514) (447,466) (7,000) – Subscriptions of the redeemable non-convertible preferencesharesinasubsidiary – – – (5,000,040) Subscriptions of the redeemable non-convertible preference shares in subsidiaries by non-controlling interest – 15,079,960 – – Redemption of redeemable non-convertible preference shares in a subsidiary by non-controlling interest (5,616,000) – – – Advance from/(Repayment to) subsidiaries – – 1,591,710 (8,764,295)

Net cash from/(used in) investing activities 20,499,317 17,685,444 31,789,404 (10,140,570)



CASH FLOWS FROM FINANCING ACTIVITIES Advance from/(Repayment to) adirector 4,862,961 (1,392,040) – – Advancefromrelatedparties 218,848 – – – Interest paid (1,329,576) (1,639,780) (207,120) (224,493) Repayment of banker acceptances (3,059,000) – – – Drawdown of banker acceptances – 1,915,000 – – Repayment of term loans and shorttermborrowings (10,629,151) (19,516,639) (7,500,000) – Drawdown of term loans and shorttermborrowings 1,500,000 11,908,737 – 7,500,000 Purchase of treasury shares (503,464) (394,070) (503,464) (394,070) Repayment of finance lease liabilities (149,409) (896,484) – – Dividendpaidtoshareholders – (2,393,318) – (2,393,318) Dividend paid to non-controlling interest – (40,000) – – Share issuance expenses (5,348) (5,047) (5,348) (5,047)

Net cash (used in)/from financing activities (9,094,139) (12,453,641) (8,215,932) 4,483,072

Effectofforeignexchangetranslation (1,047,666) (875,567) – –

CASH AND CASH EQUIVALENTS Net increase/(decrease) 15,301,426 1,596,558 19,199,215 (21,223) As at beginning of the financial year:- As previously reported 14,149,578 12,716,477 509,801 531,024 Effect of foreign exchange translation 498,687 (163,457) – – 14,648,265 12,553,020 509,801 531,024

As at end of the financial year B 29,949,691 14,149,578 19,709,016 509,801



NOTES TO THE STATEMENTS OF CASH FLOWS

A. PURCHASE OF PROPERTY, PLANT AND EQUIPMENT

During the financial year, the Group and the Company acquired property, plant equipment with aggregate costs of RM79,514 and RM7,000 (2016: RM532,466 and RM Nil ) respectively of which RM Nil and RM Nil (2016: RM85,000 and RM Nil) respectively were financed by finance lease facilities respectively. Cash payments of RM79,514 and RM7,000 (2016: RM447,466 and RM Nil) for the Group and the Company respectively were made to purchase property, plant and equipment.

B. CASH AND CASH EQUIVALENTS

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


Cash and bank balances 10,856,409 12,956,623 1,626,094 340,801 Fixed deposits with licensed banks 21,137,792 1,693,174 18,082,922 169,000 Bankoverdrafts(Note32) – (500,219) – –

31,994,201 14,149,578 19,709,016 509,801 Less: Fixed deposits pledged withlicensedbanks(Note19) (2,044,510) – – –

29,949,691 14,149,578 19,709,016 509,801




1. GENERAL INFORMATION

The Company is a public limited liability company, incorporated and domiciled in Malaysia and is listed on the Main Market of Bursa Malaysia Securities Berhad. The registered office of the Company is located at Third Floor,No.79(RoomA),JalanSS21/60,DamansaraUtama,47400PetalingJaya,SelangorDarulEhsan.TheprincipalplaceofbusinessoftheCompanyislocatedatNo.3-5,BlockD2,JalanPJU1/39,DataranPrima,47301 Petaling Jaya, Selangor Darul Ehsan.

The principal activities of the Company are the provision of information technology solutions and investment holding. The principal activities of the subsidiaries and associates are disclosed in Note 5 and Note 6 to the financial statements respectively.

There have been no significant changes in the nature of these activities of the Company and its subsidiaries

during the financial year.

The financial statements were authorised for issue by the Board of Directors in accordance with a resolution of the Directors passed on 9 April 2018.

2. BASIS OF PREPARATION

2.1 Statement of Compliance

The financial statements of the Group and of the Company have been prepared in accordance with Financial Reporting Standards (“FRS”) issued by the Malaysian Accounting Standards Board (“MASB”) and the requirements of the Companies Act 2016 in Malaysia.

2.2 Basis of Measurement The financial statements of the Group and of the Company are prepared under the historical cost

convention, except for certain properties and financial instruments that are measured at revalued amounts or fair values at the end of each reporting period as indicated in the summary of significant accounting policies.

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

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

The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.

NOTES TO THE FINANCIAl STATEMENTS 31 December 2017


NOTES TO THE FINANCIAl STATEMENTS 31 December 2017 (cont’d)

2. BASIS OF PREPARATION (CONT’D)

2.2 Basis of Measurement (cont’d)

A fair value measurement of a non-financial market takes into account a market participant’s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.

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

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

- Level1–Quoted(unadjusted)marketpricesinactivemarketsforidenticalassetsorliabilities.- Level2–Valuationtechniquesforwhichthelowestlevelinputthatissignificanttotheirfairvalue

measurement is directly or indirectly observable.- Level3–Valuationtechniquesforwhichthelowestlevelinputthatissignificanttotheirfairvalue

measurement is unobservable.

For assets and liabilities that are recognised in the financial statements on a recurring basis, the Group determines whether transfers have occurred between levels in the hierarchy by re-assessing categorisation (based on the lowest level input that is significant to their fair value measurement as a whole) at the end of each reporting period.

2.3 Functional and Presentation Currency The financial statements are presented in Ringgit Malaysia (“RM”), which is the Company’s functional

currency and all values are rounded to the nearest RM except when otherwise stated.

2.4 Adoption of Amendments/Improvements to FRSs

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

At the beginning of the current financial year, the Group and the Company adopted amendments/improvements to FRSs which are mandatory for the financial periods beginning on or after 1 January 2017.

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

Amendments to FRS 107 Statement of Cash Flows: Disclosure Initiative

The Group and Company have applied these amendments for the first time in the current year. The amendments require entities to provide disclosure of changes in their liabilities arising from financing activities, including both changes arising from cash flows and non-cash changes. The information are provided in Note 44. Consistent with the transition provisions of the amendments, the Group and the Company have not disclosed comparative information for the prior period.




2.5 Standards Issued But Not Yet Effective

At the date of authorisation of these financial statements, certain new standards, amendments and interpretations to existing standards have been published by the Malaysian Accounting Standards Board but are not yet effective, and have not been adopted early by the Group and the Company.

Management anticipates that all of the relevant pronouncements will be adopted in the Group’s and the Company’s accounting policies for the first period beginning after the effective date of the pronouncement.

Information on new standards, amendments and interpretations that are expected to have financial impact on the Group and the Company’s financial statements are provided below. Certain other new standards and interpretations have been issued, but are not expected to have a material impact on the Group’s and the Company’s financial statements.

Malaysian Financial Reporting Standards (MFRSs)

To converge with IFRSs in 2012, the MASB had on 19 November 2011, issued a new MASB approved accounting framework, the MFRSs, which are mandatory for annual financial periods beginning on or after 1 January 2014, with the exception of entities that are within the scope of MFRS 141, Agriculture and IC Interpretation 15, Agreements for Construction of Real Estate, including its parent, significant investor and venture (“Transitioning Entities”).

Transitioning term Entities will be allowed to defer adoption of the new MFRSs for an additional two years. Consequently, adoption of the MFRSs by Transitioning Entities will be mandatory for annual financial periods beginning on or after 1 January 2014. On 2 September 2014, the MASB has decided to allow Transitioning Entities to defer the adoption of the MFRS Framework to another two years and mandated for all companies for annual financial periods beginning on or after 1 January 2017. On 28 October 2015, the MASB issued notice entitled Amendment to the effective date and applicability of MFRSs’ entities shall comply with MFRSs for annual periods beginning on or after 1 January 2018.

The Group falls within the scope of definition of Transitioning Entities and has opted to defer the adoption of the new MFRS Framework. Accordingly, the Group has opted to defer the adoption of the new MFRS framework and will be required to prepare its first set of financial statements using the MFRS Framework for the financial year ending 31 December 2018.

In presenting its first MFRS financial statements, the Group will be required to restate the comparative financial statements to amounts reflecting the application of MFRS Framework. The majority of the adjustments required on transition will be made, retrospectively, against opening retained earnings.

The Group has not completed its quantification of the financial effects of the differences between FRS and accounting standards under the MFRS Framework and are in the process of accessing the financial effects of the differences. Accordingly, the consolidated financial performance and financial position as disclosed in these financial statements for the financial year ended 31 December 2017 could be different if prepared under the MFRS Framework.

The Group expects to be in a position to fully comply with the requirements of the MFRS Framework for the financial year ending 31 December 2018.




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

The initial application of the above standards, amendments and interpretation are not expected to have any financial impacts to the financial statements, except for:-

MFRS 9 Financial Instruments

MFRS 9 Financial Instruments replaces MFRS 139 Financial Instruments: Recognition and Measurement and all previous versions of MFRS 9. MFRS 9 brings together all three aspects of the accounting for financial instruments project: classification and measurement, impairment and hedge accounting. MFRS 9 is effective for annual periods beginning on or after 1 January 2018, with early application permitted. Except for hedge accounting, retrospective application is required but providing comparative information is not compulsory. For hedge accounting, the requirements are generally applied prospectively, with some limited exceptions.

The Group plans to adopt the new standard on the required effective date and will not restate comparative information. During 2017, the Group has performed a detailed impact assessment of all three aspects of MFRS 9. This assessment is based on currently available information and may be subject to changes arising from further reasonable and supportable information being made available to the Group in 2018 when the Group will adopt MFRS 9. Overall, the Group expects no significant impact on its statement of financial position and equity.

(i) Classification and measurement of financial assets

The Group does not expect a significant impact on its statement of financial position or equity on applying the classification and measurement requirements of MFRS 9. It expects to continue measuringatfairvalueallfinancialassetscurrentlyheldatfairvalue.Quotedequitysharescurrentlyheld as available-for-sale (AFS) with gains and losses recorded in OCI will, instead, be measured at fair value through profit or loss, which will increase volatility in recorded profit or loss.

The equity shares in non-listed companies are intended to be held for the foreseeable future. No impairment losses were recognised in profit or loss during prior periods for these investments. The Group will apply the option to present fair value changes in OCI, and, therefore, believes the application of MFRS 9 would not have a significant impact.

Loans as well as trade receivables are held to collect contractual cash flows and are expected to give rise to cash flows representing solely payments of principal and interest. The Group analysed the contractual cash flow characteristics of those instruments and concluded that they meet the criteria for amortised cost measurement under MFRS 9. Therefore, reclassification for these instruments is not required.

(ii) Impairment

MFRS 9 requires the Group to record expected credit losses on all of its debt securities, loans and trade receivables, either on a 12-month or lifetime basis. The Group will apply the simplified approach and record lifetime expected losses on all trade receivables. The Group has determined there is no significant impact on its financial statements.





The initial application of the above standards, amendments and interpretation are not expected to have any financial impacts to the financial statements, except for (cont’d):-

MFRS 9 Financial Instruments (cont’d)

(iii) Other adjustments

In addition to the adjustments described above, on adoption of MFRS 9, other items of the primary financial statements such as deferred taxes, assets held for sale and liabilities associated with them, investments in the associate and joint venture, will be adjusted as necessary. The exchange differences on translation of foreign operations will also be adjusted.

MFRS 15 Revenue from Contracts with Customers

MFRS 15 establishes a five-step model to account for revenue arising from contracts with customers. UnderMFRS15,revenueisrecognisedatanamountthatreflectstheconsiderationtowhichanentityexpects to be entitled for transferring goods or services to a customer.

The new revenue standard will supersede all current revenue recognition requirements under MFRS. Either a full retrospective application or a modified retrospective application is required for annual periods beginning on or after 1 January 2018, with early adoption permitted. The Group plans to adopt the new standard on the required effective date using the full retrospective method. During 2017, the Group performed a preliminary assessment of MFRS 15, which was continued with a more detailed analysis completed in 2017.

The Group is in the business of provision of information technology solutions, investment holding and property development. The equipment and services are sold both on their own in separate identified contracts with customers and non-contract customers whereas revenue for property development is recognised on the development units sold, for which sales agreements have been concluded, using percentage of completion of a physical proportion of the development work.

(i) Sale of goods MFRS 15 requires the estimated variable consideration to be constrained to prevent over-

recognition of revenue. The Group continues to assess individual contracts to determine the estimated variable consideration and related constraint. The Group expects that application of the constraint will result in more revenue being deferred than under current MFRS. The Group has determined that there is no significant impact on its financial statements.

The Group provides warranties for information technology products for general repairs and does not provide extended warranties or maintenance services in its contract with customers. As such, the Group expects that such warranties will be assurance-type warranties which will continue to be accounted for under MFRS 137 Provisions, Contingent Liabilities and Contingent Assets consistent with its current practice.

(ii) Rendering of services

The Group involves in repair and services within the information technology segment. These services are sold either on their own in contracts with the customers or non-contract customer with the provision of information technology solutions to a customer. The Company recognises service revenue when it is probable that the economic benefits will flow to the seller and the amount of revenue and cost incurred in respect of transaction can be measured realiably.






MFRS 15 Revenue from Contracts with Customers (cont’d)

(iii) Property development The revenue arising from property development is assessed as fulfilled the criteria of sales over

the time under the MFRS 15. The revenue currently includes the initial amount agreed in the contract plus any variations in contract work, claims and incentive payments, to the extent that it is probable that they will result in revenue and can be measured reliably. When a claim or variation is recognised, the measured of contract progress or contract price is revised and the cumulative percentage of completion is reassessed at each reporting date.

UnderMFRS15,claimsandvariationswillbeincludedinthecontractaccountingwhentheyareapproved.

The Group has performed an assessment on contracts of property development and does not expect that there will be significant impact on its financial statements.

(iv) Presentation and disclosure requirements

The presentation and disclosure requirements in MFRS 15 are more detailed than under current MFRS. The presentation requirements represent a significant change from current practice and significantly increases the volume of disclosures required in the Group’s financial statements. Many of the disclosure requirements in MFRS 15 are new. In 2017, the Group continued testing of appropriate systems, internal controls, policies and procedures necessary to collect and disclose the required information.

(v) Other adjustments

In addition to the major adjustments described above, on adoption of MFRS 15, other items of the primary financial statements such as deferred taxes, assets held for sale and liabilities associated with them as well as profit or loss after tax for the year from discontinued operations will be affected and adjusted as necessary. Furthermore, exchange differences on translation of foreign operations would also be adjusted.

The recognition and measurement requirements in MFRS 15 are also applicable for recognition and measurement of any gains or losses on disposal of non-financial assets (such as items of property and equipment and intangible assets), when that disposal is not in the ordinary course of business. However, on transition, the effect of these changes is not expected to be material for the Group.






MFRS 16 Leases

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

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

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

MFRS 16 also requires lessees and lessors to make more extensive disclosures than under MFRS 117.

MFRS 16 is effective for annual periods beginning on or after 1 January 2019. Early application is permitted, but not before an entity applies MFRS 15. A lessee can choose to apply the standard using either a full retrospective or a modified retrospective approach. The standard’s transition provisions permit certain reliefs.

The Group plans to assess the potential effect of MFRS 16 on its consolidated financial statements in 2018.

2.6 Significant Accounting Estimates and Judgements

Estimates, assumptions concerning the future and judgements are made in the preparation of the financial statements. They affect the application of the Group’s accounting policies and reported amounts of assets, liabilities, income and expenses, and disclosures made. Estimates and underlying assumptions are assessed on an on-going basis and are based on experience and relevant factors, including expectations of future events that are believed to be reasonable under the circumstances. The actual results may differ from the judgements, estimates and assumptions made by management, and will seldom equal the estimated results.




2.6 Significant Accounting Estimates and Judgements (cont’d)

2.6.1 Estimation Uncertainty

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

Revaluation of property, plant and equipment

The Group measures its land and buildings at revalued amount with changes in fair value being recognised in other comprehensive income. The Group engaged independent valuation specialists to determine fair values as at 31 December 2017.

The carrying amount of the land and buildings at the end of the reporting period, and the relevant revaluation bases, are disclosed in Note 4 to the financial statements.

Usefullivesofdepreciableassets

Management estimates the useful lives of the property, plant and equipment to be within 2 to 86 years and reviews the useful lives of depreciable assets at the end each of the reporting period. At 31 December 2017, management assesses that the useful lives represent the expected utility of the assets to the Group. Actual results, however, may vary due to change in the expected level of usage and technological developments, which resulting the adjustment to the Group’s assets.

The carrying amount of the Group’s property, plant and equipment at the end of the reporting period is disclosed in Note 4 to the financial statements.

Impairment of goodwill

Impairment loss is recognised for the amount by which the asset’s or cash-generating unit’s carrying amount exceeds its recoverable amount. To determine the recoverable amount, management estimates expected future cash flows from each cash-generating unit and determines a suitable interest rate in order to calculate the present value of those cash flows. In the process of measuring expected future cash flows, management makes assumptions about future operating results. These assumptions relate to future events and circumstances. The actual result may vary, and may cause significant adjustments to the Group’s assets within the next financial year.

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

Impairment of property, plant and equipment

The Group carried out impairment tests where there are indications of impairment based on a variety of estimation including value-in-use of cash-generating unit to which the property, plant and equipment are allocated. Estimating the value-in-use requires the Group to make an estimate of the expected future cash flows from cash-generating unit and also to choose a suitable discount rate in order to calculate present value of those cash flows.





2.6.1 Estimation Uncertainty (cont’d)

Inventories

Inventories are measured at the lower of cost and net realisable value. In estimating net realisable values, management takes into account the most reliable evidence available at the times the estimates are made. The Group’s core business is subject to economical and technology changes which may cause selling prices to change rapidly, and the Group’s profit to change.

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

Fair value of financial instruments

Management uses valuation techniques in measuring the fair value of financial instruments where active market quotes are not available. Details of the assumptions used are given in the notes regarding financial assets and liabilities. In applying the valuation techniques management makes maximum use of market inputs, and uses estimates and assumptions that are, as far as possible, consistent with observable data that market participants would use in pricing the instrument. Where applicable data is not observable, management uses its best estimate about the assumptions that market participants would make. These estimates may vary from the actual prices that would be achieved in an arm’s length transaction at the end of the reporting period.

Impairment of loans and receivables

The Group assesses at each reporting date whether there is any objective evidence that a financial asset is impaired. Factors such as probability of insolvency or significant financial difficulties of the receivables and default or significant delay in payments are considered in determining whether there is objective evidence of impairment.

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

The carrying amount of the Group’s loans and receivables at the reporting date is disclosed in Notes 14,15,16,17 and 18 to the financial statements.

Deferred tax assets

Deferred tax assets are recognised for all deductible temporary differences, unutilised tax losses, unabsorbed capital allowances and unused tax credits to the extent that it is probable that taxable profit will be available against which all the deductible temporary differences, unutilised tax losses and unabsorbed capital allowances can be utilised. Significant management judgement is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and level of future taxable profits together with future tax planning strategies.

Assumptions about generation of future taxable profits depend on management’s estimates of future cash flows. These depend on estimates of future production and sales volume, operating costs, capital expenditure, dividends and other capital management transactions. Judgement is also required about application of income tax legislation. These judgements and assumptions are subject to risks and uncertainty, hence there is a possibility that changes in circumstances will alter expectations, which may impact the amount of deferred tax assets recognised in the statement of financial position and the amount of unrecognised tax losses and unrecognised temporary differences.





2.6.1 Estimation Uncertainty (cont’d)

Deferred tax assets (cont’d)

The assessment of the probability of future taxable income in which deferred tax assets can be utilised is based on the Group’s latest approved budget forecast, which is adjusted for significant non-taxable income and expenses and specific limits to the use of any unused tax loss or credit. The tax rules in the numerous jurisdictions in which the Group operates are also carefully taken into consideration. If a positive forecast of taxable income indicates the probable use of a deferred tax asset, especially when it can be utilised without a time limit that deferred tax asset is usually recognised in full. The recognition of deferred tax assets that are subject to certain legal or economic limits or uncertainties is assessed individually by management based on specific facts and circumstances.

Development costs

Management monitors progress of internal research and development projects by using a project management system. Significant judgement is required in distinguishing research from the development phase. Development costs are recognised as an asset when all the criteria are met, whereas research costs are expensed as incurred.

To distinguish any research-type project phase from the development phase, it is the Group’s accounting policy to also require a detailed forecast of sales or cost savings expected to be generated by the intangible asset. The forecast is incorporated into the Group’s overall budget forecast as the capitalisation of development costs commences. This ensures that managerial accounting, impairment testing procedures and accounting for internally-generated intangible assets is based on the same data.

The Group’s management also monitors whether the recognition requirements for development costs continue to be met. This is necessary as the economic success of any product development is uncertain and may be subject to future technical problems after the time of recognition.

Property development revenue

The Group recognises property development revenue and expenses in the statement of profit or loss and other comprehensive income by using the stage of completion method. The stage of completion is determined by the proportion that property development costs incurred for work performed to date bear to the estimated total property development costs. Significant judgement is required in determining the stage of completion, the extent of the property development costs incurred, the estimated total property development revenue and costs, as well as the recoverability of the property development costs. In making the judgement, the Group evaluates based on past experience and by relying on the work of specialists.

The carrying amounts of assets and liabilities of the Group arising from property development activities are disclosed in Note 11 to the financial statements.





2.6.2 Significant Management Judgement

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

Leases

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

3. SIGNIFICANT ACCOUNTING POLICIES

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

3.1 Consolidation

3.1.1 Subsidiaries

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

Investment in subsidiaries is stated at cost less any impairment losses in the Group’s financial position, unless the investment is held for sale or distribution. The cost of investments includes transaction costs.

Uponthedisposalofinvestmentinasubsidiary,thedifferencebetweenthenetdisposalproceedsand its carrying amount is included in profit or loss.



3. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

3.1 Consolidation (cont’d)

3.1.2 Basis of consolidation

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

All intragroup assets and liabilities, equity, income, expenses and cash flows relating to transactions between entities of the Group (profits or losses resulting from intragroup transactions that are recognised in asset, such as inventory and property, plant and equipment) are eliminated in full in preparing the consolidated financial statements. Intragroup losses may indicate an impairment that requires recognition in the consolidated financial statements. Temporary differences arising from the elimination of profits and losses resulting from intragroup transactions will be treated in accordance to Note 3.19.2 of the financial statements.

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

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

3.1.3 Business combinations and goodwill

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

When the Group acquires a business, it assesses the financial assets and liabilities assumed for appropriate classification and designation in accordance with the contractual terms, economic circumstances and pertinent conditions as at the acquisition date. This includes the separation of embedded derivatives in host contracts by the acquiree.

If the business combination is achieved in stages, the acquisition date fair value of the acquirer’s previously held equity interest in the acquiree is remeasured to fair value at the acquisition date through profit or loss.

Any contingent consideration to be transferred by the acquirer will be recognised at fair value at the acquisition date. Subsequent changes in the fair value of the contingent consideration which is deemed to be an asset or liability will be recognised in accordance with FRS 139 either in profit or loss or as a change to other comprehensive income. If the contingent consideration is classified as equity, it will not be remeasured. Subsequent settlement is accounted for within equity. In instances where the contingent consideration does not fall within the scope of FRS 139, it is measured in accordance with the appropriate FRS.





3.1.3 Business combinations and goodwill (cont’d)

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

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

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

3.1.4 Loss of control

Uponthe lossofcontrolofasubsidiary, theGroupderecognisestheassetsand liabilitiesofthe subsidiary, any non-controlling interests and the other components of equity related to the subsidiary. Any surplus or deficit arising on the loss of control is recognised in profit or loss.

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

3.1.5 Non-controlling interests

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

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

3.1.6 Associates

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

TheGroup’s investments in itsassociatesareaccountedforusingtheequitymethod.Underthe equity method, investment in an associate is carried in the statement of financial position at cost plus post acquisition changes in the Group’s share of net assets of the associate since the acquisition date. Goodwill relating to the associate is included in the carrying amount of the investment and is neither amortised nor individually tested for impairment.





3.1.6 Associates (cont’d)

The share of the result of an associate is reflected in profit or loss. Any change in other comprehensive income of those investees is presented as part of the Group’s other comprehensive income. In addition, where there has been a change recognised directly in the equity of an associate, the Group recognises its share of any changes and discloses this, when applicable, inthestatementofchangesinequity.Unrealisedgainsandlossesresultingfromtransactionsbetween the Group and the associate are eliminated to the extent of the interest in the associate.

The aggregate of the Group’s share of profit or loss of an associate is shown on the face of the statement of profit or loss and other comprehensive income outside operating profit and represents profit or loss after tax and non-controlling interests in the subsidiaries of the associate.

When the Group’s share of losses exceeds its interest in an associate, the carrying amount of that interest including any long-term investment is reduced to zero, and the recognition of further losses is discontinued except to the extent that the Group has an obligation or has made payments on behalf of the associate.

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

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

Uponlossofsignificantinfluenceovertheassociate,theGroupmeasuresandrecognisesanyretained investment at its fair value. Any difference between the carrying amount of the associate upon loss of significant influence and the fair value of the retained investment and proceeds from disposal is recognised in profit or loss.

When the Group’s interest in an associate decreases but does not result in a loss of significant influence, any retained interest is not re-measured. Any gain or loss arising from the decrease in interest is recognised in profit or loss. Any gains or losses previously recognised in other comprehensive income are also reclassified proportionately to the profit or loss if that gain or loss would be required to be reclassified to profit or loss on the disposal of the related assets or liabilities.

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




3.2 Foreign currency translation

The Group’s consolidated financial statements are presented in Ringgit Malaysia (“RM”), which is also the parent company’s functional currency.

3.2.1 Foreign currency transactions and balances

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

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

All differences are taken to the profit or loss with the exception of all monetary items that forms part of a net investment in a foreign operation. These are recognised in other comprehensive income until the disposal of the net investment, at which time they are reclassified to profit or loss. Tax charges and credits attributable to exchange differences on those monetary items are also recorded in other comprehensive income.

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

3.2.2 Foreign operations

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

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

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

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




3.3 Property, plant and equipment

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

All property, plant and equipment, except for land and building, are subsequently stated at cost less accumulated depreciation and less any impairment losses. When significant parts of property, plant and equipment are required to be replaced in intervals, the Group recognises such costs as individual assets with specific useful lives and depreciation, respectively. All other repair and maintenance costs are recognised in profit or loss as incurred.

Land is shown at fair values, based on valuations by external independent valuers, less subsequent accumulateddepreciation on buildings and any accumulated impairment losses. Valuations areperformed with sufficient regularity, usually every five years, to ensure that the carrying amount does not differ materially from the fair value of the land and buildings at the end of the reporting period.

As at the date of revaluation, accumulated depreciation, if any, is eliminated against the gross carrying amount of the asset and the net amount is restated to the revalued amount of the asset. Any revaluation surplus arising upon appraisal of land is recognised in other comprehensive income and credited to the ‘revaluation reserve’ in equity. To the extent that any revaluation decrease or impairment loss has previously been recognised in profit or loss, a revaluation increase is credited to profit or loss with the remaining part of the increase recognised in other comprehensive income. Downward revaluations of land are recognised upon appraisal or impairment testing, with the decrease being charged to other comprehensive income to the extent of any revaluation surplus in equity relating to this asset and any remaining decrease recognised in profit or loss. Any revaluation surplus remaining in equity on disposal of the asset is transferred to other comprehensive income.

Buildings that are leasehold property are also included in property, plant and equipment if they are held under a finance lease. Such assets are depreciated over their expected useful lives (determined by reference to comparable owned assets) or over the term of the lease, if shorter.

Depreciation is recognised on the straight line method in order to write off the cost or valuation of each asset over its estimated useful life. Freehold land with an infinite life is not depreciated. Leasehold land is amortised over the lease term of 86 years.

The principal annual depreciation rates used are as follows:-

Buildings 2%Computers 20% - 60%Renovation 8% - 20%Motor vehicles 20%Factory/office furniture and equipment 8% - 25%Plant and machinery 10%

Restoration cost relating to an item of the property, plant and equipment is capitalised only if such expenditure is expected to increase the future benefits from the existing property, plant and equipment beyond its previously assessed standard of performance.

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




3.3 Property, plant and equipment (cont’d) Property, plant and equipment is derecognised upon disposal or when no future economic benefits are

expected from its use or disposal. Gains or losses on the disposal of property, plant and equipment are determined as the difference between the disposal proceeds and the carrying amount of the assets are recognised in profit or loss in the financial year in which the asset is derecognised.

3.4 Property development costs

Development properties consists of land or such portions on which significant development work have been undertaken and are stated at cost and where applicable attributable profit less progress billings.

Cost includes land acquisition cost, professional fees, stamp duties, commissions, conversion fee, other levies, borrowing costs and development expenditure.

Accumulation of cost in property development projects does not cease even where the estimated future realisable revenues are lower than the carrying value of the projects.

However, an allowance is made for foreseeable losses.

When the outcome of a developments project cannot be estimated reliably, revenue is recognised only to the extent of development costs incurred that it is probable will be recoverable.

Profit is recognised on the development units sold, for which sales agreements have been concluded, using the percentage of completion of a physical proportion of the development works.

Where property is under development and agreement has been reached to sell such property when construction is complete, the Directors consider whether the contract comprises a contract to construct a property or a contract for the sale of a completed property.

Where a contract is judged to be for the construction of a property, revenue is recognised using the percentage of completion method as construction progresses.

Where the contract is judged to be for the sale of a completed property, revenue is recognised when the significant risks and rewards of ownership of the real estate have been transferred to the buyer. If, however, the legal terms of the contract are such that the construction represents the continuous transfer of work in progress to the purchaser, the percentage of completion method of revenue recognition is applied and revenue is recognised as work progresses. Continuous transfer of work in progress is applied when:

(a) The buyer controls the work in progress, typically when the land on which the development is taking place is owned by the final customer, and

(b) All significant risks and rewards of ownership of the work in progress in its present state are transferred to the buyer as construction progresses, typically when buyer cannot put the incomplete property back to the Group.

In such conditions, the percentage of work completed is measured based on the costs incurred up until the end of the reporting period as a proportion of total costs expected to be incurred.

Property development costs not recognised as an expense is recognised as an asset and is stated at the lower of costs and net realisable value.

The excess of revenue recognised in the profit or loss over billings to purchasers is classified as accrued billings and the excess of billings to purchasers over revenue recognised in the profit or loss is classified as progress billings.




3.5 Goodwill

Goodwill represents the excess of the cost of acquisition over the Group’s interest in the fair value of the identifiable assets, liabilities and contingent liabilities of a subsidiary, associate and jointly controlled entities at the date of acquisition.

Goodwill arising on the acquisition of subsidiaries is presented separately in the Consolidated Statement of Financial Position while goodwill arising on the acquisition of associate is included within the carrying amount of investment in associate.

Following initial recognition, goodwill is measured at cost less any accumulated impairment losses. Goodwill is reviewed for impairment, annually or more frequently if events or changes in circumstances indicate that the carrying values may be impaired.

For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to each of the Group’s cash-generating units, or groups of cash-generating units, that are expected to benefit from the synergies of the combination.

A cash-generating unit (or group of cash-generating units) to which goodwill has been allocated is tested for impairment annually and, whenever there is an indication that the unit may be impaired, by comparing the carrying amount of the unit, including goodwill, with the recoverable amount of the unit. Where the recoverable amount of the cash-generating unit (or group of cash-generating units) is less than the carrying amount, an impairment loss is recognised in profit or loss. Impairment losses recognised for goodwill are not reversed in subsequent period.

An impairment loss recognised for goodwill should not be reversed in subsequent period. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold.

Where goodwill forms part of a cash-generating unit (or group of cash-generating units) and part of the operations within that unit is disposed off, the goodwill associated with the operations disposed off is included in the carrying amount of the operations when determining the gain or loss on disposal of the operations. Goodwill disposed off in these circumstances is measured based on the relative fair values of the operations disposed off and portion of the cash-generating unit retained.

3.6 Leases The determination of whether an arrangement is, or contains, a lease is based on the substance of the

arrangement at the inception date, whether fulfilment of the arrangement is dependent on the use of a specific asset or asset or the arrangement conveys a right to use the asset, even if that right is not explicitly specific in an arrangement.

3.6.1 Finance lease

Leases in terms of which the Group assumes substantially all the risks and rewards of ownership areclassifiedasfinancelease.Uponinitialrecognition,theleasedassetismeasuredatanamountequal to the lower of its fair value and the present value of the minimum lease payments.

Minimum lease payments made under finance leases are apportioned between finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are recognised in finance costs in the profit or loss.

Contingent lease payments are accounted for by revising the minimum lease payments over the remaining term of the lease when the lease adjustment is confirmed.




3.6 Leases (cont’d)

3.6.1 Finance lease (cont’d)

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

Leasehold land which in substance is a finance lease is classified as a property, plant and equipment.

3.6.2 Operating lease

Leases, where the Group or the Company do not assume substantially all the risks and rewards of ownership are classified as operating leases and, except for property interest held under operating lease, the leased assets are not recognised on the statement of financial position. Property interest held under an operating lease, which is held to earn rental income or for capital appreciation or both, is classified as investment property.

Payments made under operating leases are recognised in profit or loss on a straight-line basis over the term of the lease. Lease incentives received are recognised in profit or loss as an integral part of the total lease expense, over the term of the lease. Contingent rentals are charged to profit or loss in the reporting period in which they are incurred.

3.7 Financial instruments

3.7.1 Initial recognition and measurement

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

Financial assets and financial liabilities are measured initially at fair value plus transactions costs, except for financial assets and financial liabilities carried at fair value through profit or loss, which are measured initially at fair value. Financial assets and financial liabilities are measured subsequently as described below.

Embedded derivative is recognised separately from the host contract and accounted for as a derivative if, and only if, it is not closely related to the economic characteristics and risks of the host contract and the host contract is not categorised at fair value through profit or loss. The host contract, in the event an embedded derivative is recognised separately, is accounted for in accordance with policy applicable to the nature of the host contract.




3.7 Financial instruments (cont’d)

3.7.2 Financial assets - categorisation and subsequent measurement

For the purpose of subsequent measurement, financial assets other than those designated and effective as hedging instruments are classified into the following categories upon initial recognition:

(a) financial assets at fair value through profit or loss;(b) held-to-maturity investments; (c) loans and receivables; and(d) available-for-sale financial assets.

The category determines subsequent measurement and whether any resulting income and expense is recognised in profit or loss or in other comprehensive income.

All financial assets except for those at fair value through profit or loss are subject to review for impairment at least at each end of the reporting period. Financial assets are impaired when there is any objective evidence that a financial asset or a Group of financial assets is impaired. Different criteria to determine impairment are applied for each category of financial assets.

A financial asset or part of it is derecognised when, and only when the contractual rights to the cash flows from the financial asset expire or the financial asset is transferred to another party without retaining control or substantially all risks and rewards of the asset. On derecognition of a financial asset, the difference between the carrying amount and the sum of the consideration received (including any new asset obtained less any new liability assumed) and any cumulative gain or loss that had been recognised in equity is recognised in the profit or loss.

As of reporting date, the Group and the Company carries only loans and receivables and available for sale financial assets on their statement of financial postion.

Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. After initial recognition, these are measured at amortised cost using the effective interest method, less provision for impairment. Discounting is omitted where the effect of discounting is immaterial. Gains or losses are recognised in profit or loss when the loans and receivables are derecognised or impaired, and through the amortisation process. The Group’s cash and cash equivalents, trade and most other receivables, amount due from director, subsidiaries and related parties fall into this category of financial instruments.

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





3.7.2 Financial assets - categorisation and subsequent measurement (cont’d)

Available-for-sale financial assets

Available-for-sale financial assets are non-derivative financial assets that are either designated to this category or do not qualify for inclusion in any of the other categories of financial assets. The Group’s available-for-sale financial assets include listed securities, debentures and the equity instruments.

Available-for-sale financial assets are measured at fair value subsequent to the initial recognition. Gains and losses are recognised in other comprehensive income and reported within the available-for-sale reserve within equity, except for impairment losses and foreign exchange differences on monetary assets, which are recognised in profit or loss. When the asset is disposed of or is determined to be impaired, the cumulative gain or loss recognised in other comprehensive income is reclassified from the equity reserve to profit or loss and presented as a reclassification adjustment within other comprehensive income.

Interest calculated using the effective interest method and dividends are recognised in profit or loss. Dividends on an available-for-sale equity are recognised in profit or loss when the Group’s and the Company’s right to receive payment is established.

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

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

3.7.3 Financial liabilities - categorisation and subsequent measurement

After the initial recognition, financial liabilities are classified as:

(a) financial liabilities at fair value through profit or loss;(b) other financial liabilities measure at amortised cost using the effective interest method; and (c) financial guarantee contracts.

A financial liability or a part of it is derecognised when, and only when, the obligation specified in the contract is discharged or cancelled or expires. On derecognition of a financial liability, the difference between the carrying amount of the financial liability extinguished or transferred to another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in profit or loss.

As at the reporting date, the Group and the Company carries only other financial liabilities on their statement of financial position.

Other financial liabilities measured at amortised cost

The Group’s other financial liabilities include borrowings, trade payables, other payables, amount due to a director, amount due to a subsidiary, amount due to related parties and finance lease liabilities.

Other financial liabilities are subsequently measured at amortised cost using the effective interest method. Borrowings are classified as current liabilities unless the group has an unconditional right to defer settlement of the liability for at least 12 months after the end of the reporting period.





3.7.4 Offsetting of financial instruments

Financial assets and financial liabilities are offset and the net amount reported in the statements of financial position if, and only if, there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, or to realise the assets and settle the liabilities simultaneously.

3.7.5 Fair value of financial instruments

The fair value of financial instruments that are traded in active markets at each reporting date is determined by reference to quoted market process or dealer price quotations (bid price for long positions and ask price for short positions), without any deduction for transaction costs.

For financial instruments not traded in an active market, the fair value is determined using appropriate valuation techniques. Such techniques may include using recent arm’s length market transactions; reference to the current fair value of another instrument that is substantially the same; a discounted cash flow analysis or other valuation models.

An analysis of fair values of financial instruments and further details as how they are measured are provided in Note 44 to the financial statements.

3.8 Impairment of assets

3.8.1 Non-financial assets

The Group assesses at each reporting date whether there is an indication that an asset may be impaired. If any indication exists, or when annual impairment testing for an asset is required, the Group estimates the asset’s recoverable amount. An asset’s recoverable amount is the higher ofanasset’sorcash-generatingunit’s(CGU)fairvaluelesscoststosellanditsvalueinuseandis determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. Where the carrying amount ofanassetorCGUexceedsitsrecoverableamount,theassetisconsideredimpairedandiswritten down to its recoverable amount. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less costs to sell, recent market transactions are taken into account, if available. If no such transactions can be identified, an appropriate valuation model is used. These calculations are corroborated by valuation multiples, quoted share prices for publicly traded subsidiaries or other available fair value indicators.

The Group bases its impairment calculation on detailed budgets and forecast calculations which are prepared separately for each of the Company’s cash-generating units to which the individual assets are allocated. These budgets and forecast calculations are generally covering a period of three years. For longer periods, a long term growth rate is calculated and applied to project future cash flows after the third year.

Impairment losses of continuing operations, including impairment on inventories, are recognised in the profit or loss in those expense categories consistent with the function of the impaired asset, except for a property 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.




3.8 Impairment of assets (cont’d)

3.8.1 Non-financial assets (cont’d)

For assets excluding goodwill, an assessment is made at each reporting date as to whether there is any indication that previously recognised impairment losses may no longer exist or may have decreased. If such indication exists, the Group estimates the asset’s or cash-generating unit’s recoverable amount. A previously recognised impairment loss is reversed only if there has been a change in the assumptions used to determine the asset’s recoverable amount since the last impairment loss was recognised. The reversal is limited so that the carrying amount of the asset does not exceed its recoverable amount, nor exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised for asset in prior years. Such reversal is recognised in the profit or loss unless the asset is carried at a revalued amount, in which case the reversal is treated as a revaluation increase.

Goodwill is tested for impairment annually as at the end of each reporting period, and when circumstances indicate that the carrying value may be impaired. Impairment is determined for goodwill by assessing the recoverable amount of each cash-generating unit (or group of cash-generating units) to which the goodwill relates. Where the recoverable amount of the cash-generating unit is less than their carrying amount, an impairment loss is recognised. Impairment losses relating to goodwill cannot be reversed in future periods.

Intangible assets with indefinite useful lives are tested for impairment annually as at the end of each reporting period, either individually or at the cash-generating unit level, as appropriate and when circumstances indicate that the carrying value may be impaired.

3.8.2 Financial assets

The Group assesses at each reporting date whether there is any objective evidence that a financial asset or a group of financial assets is impaired. A financial asset or a group of financial assets is deemed to be impaired if, and only if, there is objective evidence of impairment as a result of one or more events that has occurred after the initial recognition of the asset (an incurred “loss event”) and that loss event has an impact on the estimated future cash flows of the financial asset or the group of financial assets that can be reliably estimated. Evidence of impairment may include indications that the debtors or a Group of debtors is experiencing significant financial difficulty, default or delinquency in interest or principal payments, the probability that they will enter bankruptcy or other financial reorganisation and where observable date indicate that there is a measurable decrease in the estimated future cash flows, such as changes in arrears or economic conditions that correlate with defaults.

Financial assets carried at amortised cost

For financial assets carried at amortised cost, the Group first assesses whether objective evidence of impairment exists individually for financial assets that are individually significant, or collectively for financial assets that are not individually significant. If the Group determines that no objective evidence of impairment exists for an individually assessed financial asset, whether significant or not, it includes the asset in a group of financial assets with similar credit risk characteristics and collectively assesses them for impairment. Assets that are individually assessed for impairment and for which an impairment loss is, or continue to be, recognised are not included in a collective assessment of impairment.




3.8 Impairment of assets (cont’d)

3.8.2 Financial assets (cont’d)

Financial assets carried at amortised cost (cont’d)

If there is objective evidence that an impairment loss has been incurred, the amount of the loss is measured as the difference between the assets carrying amount and the present value of estimated future cash flows (excluding future expected credit losses that have not yet been incurred). The present value of the estimated future cash flows is discounted at the financial asset’s original effective interest rate. If a loan has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate.

The carrying amount of the asset is reduced through the use of an allowance account and the amount of the loss is recognised in the profit or loss. Interest income continues to be accrued on the reduced carrying amount and is accrued using the rate of interest used to discount the future cash flows for the purpose of measuring the impairment loss. The interest income is recorded as part of finance income in the profit or loss. Loans together with the associated allowance are written off when there is no realistic prospect of future recovery and all collateral has been realised or has been transferred to the Group. If, in a subsequent year, the amount of the estimated impairment loss increases or decreases because of an event occurring after the impairment was recognised, the previously recognised impairment loss is increased or reduced by adjusting the allowance account. If a future write-off is later recovered, the recovery is credited to finance costs in the profit or loss.

Available-for-sale financial assets

For available-for-sale financial assets, the Group assesses at each reporting period whether there is objective evidence that an investment or a group of investment is impaired.

In the case of equity investments classified as available-for-sale, objective evidence would include a significant or prolonged decline in the fair value of the investment below its cost. “Significant” is evaluated against the original cost of the investment and “prolonged” against the period in which the fair value has been below its original cost. Where there is evidence of impairment, the cumulative loss - measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that investment previously recognised in the profit or loss - is removed from other comprehensive income and recognised in the profit or loss. Impairment losses on equity investments are not reversed through profit or loss; increases in their fair value after impairments are recognised directly in other comprehensive income.

In the case of debt instruments classified as available-for-sale, impairment is assessed based on the same criteria as financial assets carried at amortised cost. However, the amount recorded for impairment is the cumulative loss measured as the difference between the amortised cost and the current fair value, less any impairment loss on that investment previously recognised in profit or loss.

Future interest income continues to be accrued based on the reduced carrying amount of the asset, using the rate of interest used to discount the future cash flows for the purpose of measuring the impairment loss. The interest income is recorded as part of finance income. If, in a subsequent year, the fair value of a debt instrument increases and the increase can be objectively related to an event occurring after the impairment loss was recognised in the profit or loss, the impairment loss is reversed through profit or loss.




3.9 Research and development expenditure

All research costs are recognised in profit or loss as incurred. Expenditure incurred on projects to develop new products is capitalised and deferred only when the Group or the Company can demonstrate the technical feasibility of completing the intangible asset so that it will be available for use or sale, its intention to complete and its ability to use or sell the asset, how the asset will generate future economic benefits, the availability of resources to complete the project and the ability to measure reliably the expenditure during the development. Product development expenditure which do not meet these criteria are expensed off when incurred.

Development costs, considered to have finite useful lives, are stated at cost less any impairment losses and are amortised using the straight-line basis over the commercial lives of the underlying products not exceeding five years. Impairment is assessed whenever there is an indication of impairment and the amortisation period and method are also reviewed at least once at each reporting date.

3.10 Inventories

3.10.1 Information technology solutions

Inventories other than inventory properties comprises raw materials, work-in-progress, finished goods are stated at the lower of cost and net realisable value.

Cost of raw material is determined on a weighted average basis. Cost of finished goods and work-in-progress include design cost, raw material, direct labour and an appropriate proportion of production overheads (based on normal operating capacity).

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.

3.10.2 Inventory properties

Property acquired or being constructed for sale in the ordinary course of business, rather than to be held for rental or capital appreciation, is held as inventory and is measured at the lower of cost and net realisable value.

Cost includes freehold land and rights for land, amounts paid to contractors for construction, borrowing costs, planning and design costs, costs of site preparation, professional fees for legal services, property transfer taxes, construction overheads and other related costs.

Net realisable value is the estimated selling price in the ordinary course of the business, based on market prices at the reporting date and discounted for the time value of money if material, less costs to completion and the estimated costs to sale.

3.11 Cash and cash equivalents

Cash and cash equivalents comprise cash on hand, bank balances, short term demand deposits, bank overdraft and highly liquid investments which are readily convertible to known amount of cash and which are subject to an insignificant risk of changes in value.

Bank overdrafts are shown in current liabilities in the statements of financial position.

For the purpose of the statements of financial position, cash and cash equivalents restricted to be used to settle a liability of 12 months or more after the reporting date are classified as non-current asset.




3.12 Equity, reserves and distribution to owners

An equity instrument is any contract that evidences a residual interest in the assets of the Group and the Company after deducting all of its liabilities. Ordinary shares are equity instruments.

The revaluation reserve within equity comprises gains and losses due to the revaluation of property, plant and equipment. Foreign currency translation differences arising on the translation of the Group’s foreign entities are included in the exchange translation reserve. Gains and losses on certain financial instruments are included in reserves for available-for-sale financial assets and cash-flow hedges respectively.

The distribution of non-cash assets to owners is recognised as dividend payable when the dividend was approved by shareholders. The dividend payable is measured at the fair value of the shares to be distributed. At the end of the financial year and on the settlement date, the Group reviews the carrying amount of the dividend payable, with any changes in the fair value of the dividend payable recognised in equity. When the Group settles the dividend payable, the difference between the carrying amount of the dividend distributed and the carrying amount of the dividend payable is recognised as a separate line item in profit or loss.

Retained earnings include all current and prior period retained profits.

Dividends on ordinary shares are accounted for in shareholder’s equity as an appropriation of retained earnings.

All transactions with owners of the parent are recorded separately within equity.

3.13 Treasury shares

When issued share of the Company are repurchased, the consideration paid, including directly attributable costs is presented as a change in equity. Repurchased shares that have not been cancelled are classified as treasury shares and presented as a deduction from equity. No gain or loss is recognised in profit or loss on the sale, reissuance or cancellation of treasury shares.

When treasury shares are distributed as share dividends, the cost of the treasury shares is applied in the reduction of the distributable reserves.

When treasury shares are reissued by resale, the difference between the sale consideration net of directly attributable costs and the carrying amount of the treasury shares is shown as a movement in equity.

3.14 Provisions

Provisions are recognised when there is a present obligation, legal or constructive, as a result of a past event, when it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Provisions are not recognised for future operating losses.

Any reimbursement that the Group can be virtually certain to collect from a third party with respect to the obligation is recognised as separate asset. However, this asset may not exceed the amount of the related provision.

Provisions are reviewed at each end of the reporting period and adjusted to reflect the current best estimate. If it is no longer probable that an outflow of economic resources will be required to settle the obligation, the provision is reversed. Where the effect of the time of money is material, provisions are discounted using a current pre tax rate that reflects, where appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.




3.15 Borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset are capitalised during the period of time that is necessary to complete and prepare the asset for its intended use or sale. Capitalisation of borrowing costs commences when the activities to prepare the asset for its intended use or sale are in progress and the expenditures and borrowing costs are incurred. Borrowing costs are capitalised until the assets are substantially completed for their intended use or sale.

Other borrowing costs are expensed in the period in which they are incurred. Borrowing costs consist of interest and other costs that the Group and the Company incurred in connection with the borrowing of funds.

3.16 Interest-bearing borrowings

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

3.17 Employee benefits

3.17.1 Short term employee benefits

Wages, salaries, bonuses and social security contributions are recognised as an expense in the financial year in which the associated services are rendered by employees of the Group. Short term accumulating compensated absences such as paid annual leave are recognised when services are rendered by employees that increase their entitlement to future compensated absences, and short term non-accumulating compensated absences such as sick leave are recognised when the absences occur.

A provision is made for the estimated liability for leave as a result of services rendered by employees up to the end of the reporting period.

3.17.2 Defined contribution plans

Defined contribution plans are post-employment benefit plans under which the Group pays fixed contributions into independent entities of funds and will have no legal or constructive obligation to pay further contribution if any of the funds do not hold sufficient assets to pay all employee benefits relating to employee services in the current and preceding financial years.

Such contributions are recognised as an expense in the profit or loss as incurred. As required by law, companies in Malaysia make such contributions to the Employees Provident Fund (“EPF”). Some of the Group’s foreign subsidiaries also make contributions to their respective countries’ statutory pension schemes.

3.18 Revenue

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured. Revenue is measured at the fair value of consideration received and receivables.




3.18 Revenue (cont’d)

3.18.1 Sale of goods

Revenue from sale of goods is recognised upon delivery of products and customers’ acceptance and after eliminating sales within the Group.

3.18.2 Rendering of services

Revenue from maintenance services is recognised based on performance of services.

3.18.3 Management fee income

Management fees are recognised when the services are rendered.

3.18.4 Rental income

Rental income is recognised when the rent is due.

3.18.5 Dividend income

Dividend income is recognised when the right to receive payment is established.

3.18.6 Interest income

Interest income is recognised in profit or loss as it accrues, taking into account the effective yield on the asset.

3.18.7 Deferred revenue

Revenue invoiced where risks and ownership on sales of goods have not been transferred or services have not been rendered at reporting date is recognised as deferred revenue.

3.18.8 Property development revenue

Revenue is recognised on the percentage of completion method. The stage of completion for each project is measured by a certificate issued by an architect based on the physical completion of the work performed in proportion to the total development. Anticipated losses are recognised in full immediately in profit or loss.

3.19 Tax expense

Tax expense comprises current and deferred tax. Current tax and deferred tax are recognised in profit or loss except to the extent that it relates to a business combination or items recognised directly in equity or other comprehensive income.

3.19.1 Current tax

Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates enacted or substantively enacted by the end of the reporting period, and any adjustment to tax payable in respect of previous years.

Current tax is recognised in the statement of financial position as a liability (or an asset) to the extent that it is unpaid (or refundable).




3.19 Tax expense (cont’d)

3.19.2 Deferred tax

Deferred tax is recognised using the liability method, providing for temporary differences between the carrying amounts of assets and liabilities in the statement of financial position and their tax bases. Deferred tax is not recognised for the temporary differences arising from the initial recognition of goodwill, the initial recognition of assets and liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit or loss. Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the end of the reporting period.

The amount of deferred tax recognised is measured based on the expected manner of realisation or settlement of the carrying amount of the assets and liabilities, using tax rates enacted or substantively enacted at the reporting date. The amount of deferred tax recognised is measured using the tax rates that would apply on sale of those assets at their carrying value at the reporting date unless the property is depreciable and is held with the objective to consume substantially all of the economic benefits embodied in the property over time, rather than through sale.

Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realised simultaneously.

A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available against which the temporary difference can be utilised. Deferred tax assets are reviewed at the end of each reporting period and are reduced to the extent that it is no longer probable that the related tax benefit will be realised.

3.19.3 Goods and services tax

Goods and Services Tax (“GST”) is a consumption tax based on value-added concept. GST is imposed on goods and services at every production and distribution stage in the supply chain including importation of goods and services, at the applicable tax rate of 6%. Input GST that the Company paid on purchases of business inputs can be deducted from output GST.

Revenues, expenses and assets are recognised net of the amount of GST except:

(i) Where the GST incurred in a purchase of assets or services is not recoverable from the authority, in which case the GST is recognised as part of the cost of acquisition of the assets or as part of the expense item as applicable; and

(ii) Receivables and payables that are stated with the amount of GST included.

The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the statements of financial position.




3.20 Operating segments

An operating segment is a component of the Group that engages in business activities from which it may earn revenues and incur expenses, including revenue and expenses that relate to transactions with any of the Group’s other components. All operating segments’ operating results are reviewed regularly by the chief operating decision maker to make decisions about resources to be allocated to the segment and to assess its performance, and for which discrete financial information is available.

3.21 Contingencies

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

3.22 Related parties

A related party is a person or entity that is related to the Group. A related party transaction is a transfer of resources, services or obligations between the Group and its related party, regardless of whether a price is charged.

(a) A person or a close member of that person’s family is related to the Group if that person:

(i) has control or joint control over the Group;(ii) has significant influence over the Group; or(iii) is a member of the key management personnel of the Group.

(b) An entity is related to the Group if any of the following conditions applies:

(i) the entity and the Group are members of the same group.(ii) one entity is an associate or joint venture of the other entity.(iii) both entities are joint ventures of the same third party.(iv) one entity is a joint venture of a third entity and the other entity is an associate of the third

entity.(v) the entity is a post-employment benefit plan for the benefits of employees of either the

Group or an entity related to the Group.(vi) the entity is controlled or jointly-controlled by a person identified in (a) above.(vii) a person identified in (a)(ii) above has significant influence over the Group or is a member

of the key management personnel of the entity.(viii) the entity, or any member of a group of which it is a party, provides key management

personnel services to the Group or to the parent of the Group.



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22

0,71

734

3,50

688

0,96

121

0,57

11,76

5,32

9Ex

chan

gedifferen

ces

––

––

56,833

–

–56

,833

Dispo

sals

––

–(108

,263

)(293

,581

)(49,41

2)

–(451

,256

)Dispo

salo

fasub

sidiary

––

–(205

,428

)(233

,146

)(6,015

,544

)(261

,096

)(6,715

,214

)Writtenoff

––

––

(144

,692

)–

(31,63

3)

(176

,325

)

At3

1Dec

embe

r201

6–

149,73

625

8,97

873

1,74

22,77

7,30

71,42

8,44

61,52

4,54

36,87

0,75

2Cha

rgeforthe

fina

ncialy

ear

–18

,717

57

,482

16

3,70

324

3,42

960

,666

11

6,18

166

0,17

8Ex

chan

gedifferen

ces

––

––

(174

,462

)–

–(174

,462

)Dispo

sals

–(168

,453

)(131

,922

)(191

,234

)(419

,400

)–

(542

,490

)(1,453

,499

)Dispo

salo

fasub

sidiary

––

–(126

,498

)(187

,726

)(1,489

,112

)(19,23

7)

(1,822

,573

)Writtenoff

––

––

(59,86

8)

––

(59,86

8)

At3

1Dec

embe

r201

7–

–18

4,53

857

7,71

32,17

9,28

0–

1,07

8,99

74,02

0,52

8

Net

car

ryin

g am

ount

At3

1Dec

embe

r201

75,02

9,44

9–

2,16

0,55

148

6,15

149

3,43

4–

180,43

78,35

0,02

2

At 3

1 D

ecem

ber 2

016

4,28

8,95

1 2,

890,

264

3,32

2,20

1 73

5,85

5 88

7,97

1 50

8,29

9 67

3,30

5 13

,306

,846



4. PROPERTY, PLANT AND EQUIPMENT (CONT’D)

Furniture and OfficeCompany Renovation fittings equipment Total RM RM RM RM

Cost

At 1 January 2016 / 31 December 201 20,170 11,687 48,277 80,134Additions – – 7,000 7,000

At 31 December 2017 20,170 11,687 55,277 87,134

Accumulated depreciation

At 1 January 2016 10,891 5,651 17,471 34,013Charge for the financial year 2,420 1,403 5,771 9,594

At 31 December 2016 13,311 7,054 23,242 43,607Charge for the financial year 2,420 1,403 6,401 10,224

At 31 December 2017 15,731 8,457 29,643 53,831

Net carrying amount

At 31 December 2017 4,439 3,230 25,634 33,303

At 31 December 2016 6,859 4,633 25,035 36,527

Revaluation of land and buildings

(i) Freehold land and buildings were revalued in the financial year 2017 by Landserve Sdn. Bhd., a registered valuer. The comparison method was adopted in arriving at the market value of the freehold land and buildings.

In estimating the fair value of the properties, the highest and best use of the properties is their current use. There has been no change to the valuation technique during the year. The revaluation surplus net of applicable deferred tax was credited to other comprehensive income and is shown in “Revaluation Reserve” under the equity.

Fair value measurement of the freehold land and buildings were categorised under Level 2. There were no transfers between Level 1 and Level 2 during the financial year.

Level2FairValue

Level 2 fair value of freehold and buildings have been generally derived using the sales comparison approach. Sales price of comparable properties in close proximity are adjusted for differences in key attributes such as property size. The most significant input into this valuation approach is price per square foot of comparable properties.



4. PROPERTY, PLANT AND EQUIPMENT (CONT’D)

Revaluation of land and buildings (cont’d)

(ii) Had the following assets been stated at historical cost less accumulated depreciation, the net carrying amount would have been as follows:-

Group 2017 2016 RM RM

Freehold land 672,401 672,401Leaseholdland – 899,007Buildings 1,553,504 1,874,249

(iii) Freehold, leasehold land and buildings of the Group have been pledged to licensed banks for banking facilities granted to the Group.

Assets held under finance leases

The net carrying amounts of property, plant and equipment under finance lease arrangements are as follows:-


Plantandmachinery – 232,133Motor vehicles 486,151 624,055

5. INVESTMENT IN SUBSIDIARIES

Company 2017 2016 RM RM

Unquotedshares,atcost - in Malaysia 54,054,533 54,054,533- outside Malaysia 10,491,098 10,491,098

64,545,631 64,545,631Less: Accumulated impairment loss (8,540,890) (1,984,585)

56,004,741 62,561,046

The movement of impairment losses during the financial year is as follow:


At 1 January 1,984,585 2Impairment loss recognised 6,556,305 1,984,583

At 31 December 8,540,890 1,984,585



5. INVESTMENT IN SUBSIDIARIES (CONT’D)

Details of the subsidiaries are as follows:-

Country ofEffectiveinterest

Companies incorporation 2017 2016 Principal activities% %

Grand-Flo Electronic System Sdn. Bhd.

Malaysia 100 100 Supply and installation of Enterprise Data Collection and Collation System and hardware, information technology solutions, computer related accessories, integrating computer system and hardware

Grand-Flo Spritvest Sdn. Bhd. Malaysia 100 100 Provision of information technology solutions specialising in automated data collection processes and mobile computing

Grand-Flo Data Centrix Sdn. Bhd.

Malaysia 100 100 Research and development of software application

Grand-Flo Capital Sdn. Bhd. Malaysia 100 100 Investment holding

Grandcon Sdn. Bhd. (formerly known as Grand- Flo Development Sdn. Bhd.)

Malaysia 100 100 Dormant

Innoceria Sdn. Bhd. Malaysia 50^ 50^ Property development

Labels Network Sdn. Bhd. Malaysia 100 100 Investment holding and trading of price marker system, equipment and paper rolls

Grand-Flo (HK) Limited* Hong Kong, China

100 100 Investment holding and provision of IT solutions and related services

Subsidiaries of Grand-Flo Capital Sdn. Bhd.

Jalur Bina Sdn. Bhd. Malaysia 52 52 Property development

Subsidiaries of Labels Network Sdn. Bhd.

Kopacklabels (PG) Sdn. Bhd. Malaysia – 80 Adhesive labels and stickers printing

Kopacklabels (M) Sdn. Bhd.# Malaysia – 100 Dormant

Subsidiaries of Grand-Flo (HK) Limited

CL Solutions Limited * Hong Kong, China

100 100 Provision of supply chain solutions and related services

VictorGroupLimited* Hong Kong, China

100 100 Investment holding

Subsidiary of Victor Group Limited

Guangzhou CL Solutions Limited *

People’s Republic of

China

100 100 Provision of supply chain solutions and related services

* Not audited by Grant Thornton Malaysia^ Represent of 50.0004%# Placed under members’ voluntary strike off during the financial year and completed on 9 January 2018.




Non-controlling interests in subsidiaries:

The Group’s subsidiaries that have material non-controlling interests are as follows:-

Kopacklabels (PG) Jalur Bina Innoceria Sdn. Bhd. Sdn. Bhd. Sdn. Bhd. Total

2017

Percentage of ownership interest and voting interest (%) 20 48 *49

Carrying amount of non-controllinginterests(RM) – 15,002,373 22,426,103 37,428,476

(Loss)/Profit allocated to non-controlling interests (RM) (14,972) 1,212,828 134,651 1,332,507

Total comprehensive (loss)/income allocated to non-controlling interest (RM) (14,972) 1,212,828 134,651 1,332,507

2016

Percentage of ownership interest and voting interest (%) 20 48 *49

Carrying amount of non-controlling interests (RM) 333,533 19,405,545 22,291,452 42,030,530

(Loss)/Profit allocated to non-controlling interests (RM) (7,974) 466,464 3,780,209 4,238,699

Total comprehensive (loss)/income allocated to non- controlling interest (RM) (7,974) 466,464 3,780,209 4,238,699

* Represent of 49.9996%




Non-controlling interests in subsidiaries (cont’d):

The summary of financial information before intra-group elimination for the Group’s subsidiaries that have material non-controlling interest is as below:

Kopacklabels (PG) Jalur Bina Innoceria Sdn. Bhd. Sdn. Bhd. Sdn. Bhd. RM RM RM

2017Financial position as at 31 DecemberCurrent-assets – 32,575,403 59,913,381Non-currentliabilities – (26,425,000) (26,000,000)Currentliabilities – (1,320,461) (15,060,807)

Netassets – 4,829,942 18,852,574

Summary of financial performance for the financial year ended 31 DecemberProfit for the year/ Total other comprehensiveincome – 2,526,724 269,306

Included in total other comprehensive income is:Revenue – 20,319,463 9,853,639

Summary of cash flows for the financial year ended 31 DecemberNet cash inflow/(outflow) from operatingactivities – 13,392,591 (11,006,665)Net cash (outflow)/inflow frominvestingactivities – (266,256) 6,649,391Net cash (outflow)/inflow fromfinancingactivities – (12,595,341) 2,971,200

Netcashinflow/(outflow) – 530,994 (1,386,074)

2016Financial position as at 31 December Non-currentassets 657,767 – –Current-assets 1,682,121 43,472,016 63,668,774Non-current liabilities (172,840) (38,125,000) (26,000,000)Current liabilities (567,898) (3,043,798) (19,085,506)

Net assets 1,599,150 2,303,218 18,583,268




Non-controlling interests in subsidiaries (cont’d):

The summary of financial information before intra-group elimination for the Group’s subsidiaries that have material non-controlling interest is as below (cont’d):

Kopacklabels (PG) Jalur Bina Innoceria Sdn. Bhd. Sdn. Bhd. Sdn. Bhd. RM RM RM2016 (cont’d)Summary of financial performance for the financial year ended 31 December(Loss)/Profit for the year/ Total other comprehensive (loss)/income (39,872) 971,800 7,560,479

Included in total other comprehensive income is: Revenue 2,663,637 10,304,960 42,082,247

Summary of cash flows for the financial year ended 31 DecemberNet cash inflow/(outflow) from operating activities 419,982 (14,929,844) 4,429,436Net cash inflow/(outflow) from investing activities 20,641 (976,323) (977,893)Net cash (outflow)/inflow from financing activities (248,404) 17,145,942 (1,078,598)

Net cash inflow 192,219 1,239,775 2,372,945

Other informationDividendpaidtonon-controllinginterest 40,000 – –

Disposal of a subsidiary

On 19 October 2017, Labels Network Sdn. Bhd., subsidiary of the Company disposed of its entire 80% equity interest in Kopacklabels (PG) Sdn. Bhd. for a cash consideration of RM700,000. The subsidiary was previously reported as part of the labels segment.




Disposal of a subsidiary (cont’d)

The effect of the disposal of Kopacklabels (PG) Sdn. Bhd. on the financial position of the Group as at the date of disposal was as follows:-

RM Property, plant and equipment 564,591Goodwill 678,598Inventories 288,025Trade and other receivables 781,586Cash and bank balances 508,576Fixed deposits with licensed bank 18,569Tax recoverable 10,551Trade and other payables (468,705)Finance lease liabilities (61,905)Deferred tax liability (117,000)

Net assets 2,202,886Loss on disposal (1,184,325)Non-controlling interest (318,561)

Proceeds from disposal 700,000Less: Cash and cash equivalents of subsidiary disposal (527,145)

Net cash inflows from disposal 172,855

Struck off a subsidiary

On 30 November 2017, the Group struck off its 100% equity interest in Kopacklabels (M) Sdn. Bhd. The struck off of Kopacklabels (M) Sdn. Bhd. gave rise to a loss of RM100,000 in the Group financial statements.

6. INVESTMENT IN ASSOCIATES


Quotedsharesoutside Malaysia,atcost – 5,265,943 – 5,265,943Unquotedsharesoutside Malaysia,atcost 491,520 491,520 – –

491,520 5,757,463 – 5,265,943Shareofpost-acquisitionreserves 864,405 6,589,956 – –

1,355,925 12,347,419 – 5,265,943

Marketvalueofquotedshares – 27,940,845 – 27,940,845



6. INVESTMENT IN ASSOCIATES (CONT’D)

Details of the associates are as follows:-

Country ofEffectiveinterest

Companies incorporation 2017 2016 Principal activities% %

Simat Technologies Public Co., Ltd.*

Thailand – 18.24 Trading of computer hardware, software, network accessories and computer system development

Through Labels Network Sdn. Bhd.

Simat Label Co., Ltd. * Thailand 14.12 14.12 Adhesive labels and stickers printing

* Not audited by Grant Thornton Malaysia

Disposal of an associate

On 16 May 2017, the Company disposed of 23,000,000 Simat Technologies Public Co., Ltd (“Simat”) shares representing 5.80% equity interest at THB3.33 per Simat shares for a total cash consideration of THB76,590,000 (equivalent to approximately RM9,150,776).

On 5 June 2017, Simat issued 1,461,821 new ordinary shares from the conversion of the warrant which resulted a dilution of Grand-Flo’s interest in Simat from 12.44% to 12.31%.

On 18 October 2017, the Company disposed of the balance 48,899,373 Simat shares representing 12.31% equity interest at THB2.70 per Simat shares for a total cash consideration of THB132,028,307 (equivalent to approximately RM15,002,313).

The associate was previously reported as part of the Enterprise Data Collection and Collation System segment.

The following table summarises the financial information of Group’s associate:-

2017 2016 RM RM

Financial position as at 31 DecemberNon-current assets 8,863,886 135,397,608Current-assets 13,295,272 66,960,020Non-current liabilities 1,165,851 (17,175,304)Current liabilities 8,713,436 (92,334,479)

Net assets 32,038,445 92,847,845

Summary of financial performance for the financial year ended 31 December

Profit for the year 4,869,112 6,921,747

Included in the total comprehensive income is: Revenue 80,874,211 188,034,660



6. INVESTMENT IN ASSOCIATES (CONT’D)

2017 2016 RM RM

Reconciliation of net assets to carrying amount as at 31 December

Group’s share of net assets/carrying amount in the statements of financial position 4,523,828 12,347,419

Group’s share of results for the financial year ended 31 December

Group’s share of profit 813,523 869,327Group’sshareofothercomprehensiveincome – –

Group’s share of total comprehensive profit 813,523 869,327

Other information Dividendreceived – 1,060,831

7. OTHER INVESTMENT 2017 2016 RM RM

Golf club membership

CostAt 1 January/31 December 20,500 20,500

Accumulated amortisationAt 1 January 5,296 4,886Amortisation for the financial year 410 410

At 31 December 5,706 5,296

Net carrying amount 14,794 15,204



8. DEVELOPMENT COSTS

Group and Company 2017 2016 RM RM

CostAt 1 January 8,169,774 7,431,776Additions 820,743 737,998Writtenoff (8,990,517) –

At31December – 8,169,774

Accumulated amortisation

At 1 January 6,356,715 5,275,996Amortisation for the financial year 1,013,846 1,080,719Writtenoff (7,370,561) –

At31December – 6,356,715

Netcarryingamount – 1,813,059

The development costs relate to the expenditure incurred for the development of “Warehouse Management Systems” Solutions and other software products of the Group and of the Company.

The development cost has been fully written off at the end of the year as the Company has stopped providing “Warehouse Management System” Solutions during the financial year with effective from 1 January 2018.

Included in development costs incurred during the financial year are as follows:-


Salaries 707,927 628,805Contribution to defined contribution plan 84,744 77,207Social security contributions 5,007 3,511

9. GOODWILL ON CONSOLIDATION


At 1 January 34,126,122 39,209,748Writtenoff – (4,636,472)Disposal of a subsidiary (678,598) (447,154)

At 31 December 33,447,524 34,126,122



9. GOODWILL ON CONSOLIDATION (CONT’D)

Impairment tests for goodwill

Goodwill has been allocated to theGroup’s cash-generating units (“CGU”) identified according to thesubsidiaries, as follows:-


Subsidiaries

Enterprise Data Collection and Collation SystemGrand-Flo Spritvest Sdn. Bhd. and Grand-Flo Data Centrix Sdn. Bhd. 10,338,457 10,338,457Grand-Flo (HK) Ltd. 6,301,318 6,301,318CL Solutions Limited 45,723 45,723

LabelsKopacklabels(PG)Sdn.Bhd. – 678,598

PropertiesJalur Bina Sdn. Bhd. 1,916,700 1,916,700Innoceria Sdn. Bhd. 14,845,326 14,845,326

33,447,524 34,126,122

The recoverable amounts of the investment in the subsidiaries are based on its value in use and the recoverable amounts are higher than the carrying amount of the investment. Thus, there is no impairment loss recognised for the financial year ended 31 December 2017.

Key assumptions used in value-in-use calculations TherecoverableamountofCGUisdeterminedbasedonvalue-in-usecalculationsusingcashflowprojections

based on financial budgets approved by management covering a five-year period. Cash flows beyond the five-year period are extrapolated using the estimated growth rate stated below. The growth rate does not exceed the average historical growth rate over the long term for the industry. The key assumptions used for value-in-use calculations are:-

Growth rate Gross margin Discount rate 2017 2017 2016 2017 2016 % % % % %

Grand-Flo Spritvest Sdn. Bhd. and Grand-Flo Data Centrix Sdn. Bhd. 5-6 19 13 8-9 5-6Grand-Flo (HK) Limited and CL Solution Limited 3-4 42 37 8-9 5Jalur Bina Sdn. Bhd. 5-6 23 22 8-9 4-5Innoceria Sdn. Bhd. 5-6 17 30 8-9 4-5



9. GOODWILL ON CONSOLIDATION (CONT’D)

Key assumptions used in value-in-use calculations (cont’d)

The following describes each key assumption on which management has based its cash flow projections to undertake impairment testing of goodwill:-

(a) Budgeted growth rate

The budgeted growth rate is determined based on the industry trends and past performances of the segments.

(b) Budgeted gross margin

The basis used to determine the value assigned to the budgeted gross margin is the average gross margin achieved in the year immediately before the budgeted year increased for expected efficiency improvements.

(c) Discount rate

The discount rate used is pre-tax and reflect specific risks relating to the relevant segments.

The Group believes that any reasonably possible changes in the above key assumptions applied are not likely to materially cause recoverable amount to be lower than its carrying amount.

10. DEFERRED TAX ASSETS/(LIABILITIES)

Deferred tax assets


At 1 January 333,900 339,000 339,000 339,000 Recognised in profit or loss (Note37) (333,900) – (339,000) –

At31December – 339,000 – 339,000

Deferred tax assets comprise the following:-Carrying amount of qualifying property, plant and equipment in excessoftheirtaxbase – (11,000) – (11,000)Pioneerlosses – 245,000 – 245,000Unutilisedtaxlosses – 105,000 – 105,000

– 339,000 – 339,000



10. DEFERRED TAX ASSETS/(LIABILITIES) (CONT’D)

Deferred tax liabilities


At 1 January (1,091,691) (1,348,662)Recognised in profit or loss (Note 37) 256,215 171,366Recognisedinothercomprehensiveincome (85,962) –Crystalisation of deferred tax arising from revaluation reserveupondisposalofproperty,plantandequipment 775,288 –Foreign exchange translation 118,301 85,605

At 31 December (27,849) (1,091,691)


Deferred tax liabilities comprise the following:- Carrying amount of qualifying property, plant and equipment in excess of their tax base (14,426) (194,834)Provisions 350,121 99,240Revaluation of property, plant and equipment (363,544) (1,016,125)Unutilisedtaxlosses – 9,654Unabsorbedcapitalallowances – 10,374

(27,849) (1,091,691)

Deferred tax assets have not been recognised in respect of the following items:-


Carrying amount of qualifying property, plant and equipment in excess of their tax base 219,000 431,000 17,000 217,000Unutilisedtaxlosses (5,715,000) (8,470,000) (2,533,000) (3,129,000)Unabsorbedcapitalallowances (52,000) (181,000) – –Provision (927,000) – – –

(6,475,000) (8,220,000) (2,516,000) (2,912,000)

The deductible temporary differences, unabsorbed tax losses and unutilised capital allowances are available indefinitely for offset against future taxable profits of the Company and the subsidiaries in which those items arose. Deferred tax assets have not been recognised in respect of these items as they may not be used to offset taxable profits of the subsidiaries in the Group and they have arisen in the subsidiaries that have a recent history of losses.



11. PROPERTY DEVELOPMENT COST


Freehold land, at costBalance brought forward 23,061,067 22,110,187Addition during the financial year 225,446 950,880Disposalduringthefinancialyear (349,600) –

Balance carried forward 22,936,913 23,061,067

Development expenditure, at costBalance brought forward 136,426,415 75,429,435Addition during the financial year 15,050,905 60,996,980

Balance carried forward 151,477,320 136,426,415

174,414,233 159,487,482

Less: Cost recognised as expenseBalance brought forward (78,214,637) (40,611,694)Addition during the financial year (23,932,920) (37,602,943)

Balance carried forward (102,147,557) (78,214,637)Unsoldcompletedpropertiestransferred toinventoryproperties(Note12) (24,411,909) –

47,854,767 81,272,845

The freehold land held for property development is charged to a licensed bank to secure banking facilities granted to subsidiary.

Interest capitalised in land held for property development amounted to RM50,071 (2016: RM598,122).

On 6 December 2016, Innoceria Sdn. Bhd, a subsidiary of the Company has entered into a mutual land exchange agreement with Metrio Development Sdn Bhd for the exchange of land areas from 0.0161 hectare to 0.0455 hectare. As at year end, the title deed of the said land areas are still in the progress of transferring to the Company.



12. INVENTORIES


Completedpropertiesheldforsales 24,411,909 –Rawmaterials – 227,727Finished goods 3,859,769 5,782,967

At carrying amount 28,271,678 6,010,694

Recognised in profit or loss: Inventories recognised as cost of sales 46,167,225 36,255,753Inventories written down 543,319 629,535Inventories written off 152,482 1,588,663

13. ACCRUED BILLINGS/(PROGRESS BILLINGS)


Revenue recognised in profit or loss to-date 141,968,592 111,795,490Accrued billings to-date (138,186,736) (100,579,208)

3,781,856 11,216,282


Accrued billings 3,781,856 11,216,282

14. TRADE RECEIVABLES Group 2017 2016 RM RM

Trade receivables 27,610,499 22,626,832Retentionsumsoncontract 2,423,678 –Less: Impairment losses (530,844) (341,980)

Net trade receivables 29,503,333 22,284,852



14. TRADE RECEIVABLES (CONT’D)

The movement of impairment losses of trade receivables during the financial year is as follow:-


At 1 January 341,980 121,576Disposal of a subsidiary (23,410) (13,196)Impairment loss recognised 288,375 237,422Impairment loss reversed (76,101) (3,822)

At 31 December 530,844 341,980

The normal trade credit terms granted by the Group ranging from 14 to 120 (2016: 14 to 120) days. Other credit terms are assessed and approved on a case-by-case basis.

The reversal of impairment loss were due to there are subsequent receipts from customer during the financial

year ended 31 December 2017.

Retention sums which retained by stakeholders that are due upon expiry of retention periods 24 months as stipulated in the sale and purchase agreements.

15. OTHER RECEIVABLES


Non-tradereceivables 2,013,098 1,726,918 1,315,000 –Less:Impairmentloss (650,078) – – –

1,363,020 1,726,918 1,315,000 –Advancepaymenttosuppliers – 5,080 – –Deposits 726,451 320,471 2,350 2,350DeferredCost 1,884,673 – – –Prepayments 164,095 197,225 42,784 –GSTreceivables 451,931 630,555 – –

Net other receivables 4,590,170 2,880,249 1,360,134 2,350

The movement of impairment losses of other receivables during the financial year is as follow:-


At1January – – – –Impairmentlossrecognised 650,078 – – –

650,078 – – –



16. AMOUNT DUE FROM/(TO) DIRECTORS

The amount due from Directors arising from trade transactions are unsecured, interest free and have credit term of Nil (2016: 14) days.

The amount due to Director are arising from non-trade transactions is unsecured, interest free and repayable

upon demand.

17. AMOUNT DUE FROM SUBSIDIARIES


Amount due from subsidiaries -Trade 4,172,489 –- Non-trade 22,669,685 24,070,776

26,842,174 24,070,776

The outstanding amounts which are trade in nature are unsecured, bear no interest and repayable on demand.

The outstanding amounts which are non-trade in nature are unsecured, bear no interest and repayable on demand.

18. AMOUNT DUE FROM RELATED PARTIES


Amount due from related parties 36,227 134,405

Related parties refer to companies in which certain Directors have financial interest.

The outstanding balances are trade in nature, unsecured, bear no interest and with credit term of 30 (2016: 30) days.

19. FIXED DEPOSITS WITH LICENSED BANKS

Group

The fixed deposits with licensed banks of RM2,044,510 (2016: RM Nil) of the Group have been pledged to licensed banks as security for banking facilities granted to the Group.

The fixed deposits with licensed banks of RMNil (2016: RM17,950) of the Group have been pledged to Tenaga

Nasional Berhad as security for the bank guarantee facility granted to the Group. The fixed deposits bear interest at rates ranging from 1.01% to 3.50% (2016: 3.00% to 3.50%) per annum.

Company

The fixed deposits bear interest at rates ranging from 1.01% to 3.50% (2016: 3.00% to 3.50%) per annum.



20. CASH AND BANK BALANCES


Cash held under-Housingdevelopmentaccount 67,734 103,851 – –-Sinkingfundsaccount 13,178 – – –-Maintenanceaccount 3,361 – – –Cash in hand and cash at bank 10,772,136 12,852,772 1,626,094 340,801

10,856,409 12,956,623 1,626,094 340,801

Included in the cash at banks of the Group held under Housing Development Account pursuant to Housing Development (Control and Licensing) Act, 2012 and are restricted from use in other operations.

Included in the cash at banks of the Group held under sinking funds account and maintenance account pursuant toStrataManagementAct,2013(Act757)&Regulationsandarerestrictedfromuseinotheroperations.

21. SHARE CAPITAL AND SHARE PREMIUM

Group and Company

Number of ordinary Amount shares Share Share capital Share capital premium Total RM RM RM

Issued and fully paid:-At 1 January 2016/ 31 December 2016 483,115,711 48,311,571 14,538,275 62,849,846Transition to no-par value regimeon31January2017 – 14,538,275 (14,538,275) –

At31December2017 483,115,711 62,849,846 – 62,849,846

(a) The new Companies Act 2016 (“The Act”), which came into operation on 31 January 2017, abolished the concept of authorised share capital and par value of share capital. Consequently, the amounts standing to the credit of the share premium account become part of the Company’s share capital pursuant to the transitional provisions set out in Section 618(2) of the Act. Notwithstanding this provision, the Company may within 24 months from the commencement of the Act, use the amount standing to the credit of its share premium account of RM14,538,275 for purposes as set out in Sections 618(3). There is no impact on the numbers of ordinary shares in issue or the relative entitlement of any of the members as a result of this transition.

(b) The holders of ordinary shares are entitled to receive dividends as and when declared by the Company. All ordinary shares carry one vote per share without restrictions and rank equally with regard to the Company residual assets. In respect of the Company’s treasury shares that are held by the Group, all rights are suspended until those shares are reissued.



22. TREASURY SHARES

The shareholders of the Company, by an ordinary resolution passed in an annual general meeting held on 30 May 2017, approved the Group’s plan to repurchase its own shares.

During the financial year, the Group repurchased 2,163,200 (2016: 1,850,800) of its issued ordinary shares from the open market at an average price of RM0.24 (2016: RM0.22) per share. The total consideration paid for the repurchase including transaction costs was RM508,812 (2016: RM399,117). The shares repurchased are being held as treasury shares in accordance with Section 127(6) of the Companies Act 2016.

Of the total 483,115,711 (2016: 483,115,711) issued and fully paid ordinary shares, 7,970,000 (2016: 5,806,800) are held as treasury shares by the Company. As at 31 December 2017, the number of outstanding ordinary shares in issue after the set off is therefore 475,145,711 (2016: 477,308,915) ordinary shares of RM0.13 each.

23. OTHER RESERVES


Non-distributable:-Capital reserve 990,796 990,796Legal reserve 118,655 118,655

1,109,451 1,109,451

Capital reserve represents share dividend received from a foreign associate.

Legal reserve represents net profit of foreign associate set aside.

24. REVALUATION RESERVE


Arising from revaluation of:-- freehold land and buildings 4,596,522 3,738,076-leaseholdlandandbuildings – 2,422,776

4,596,522 6,160,852

The revaluation reserve was in respect of the revaluation surplus of freehold and leasehold land, and building, net of deferred tax and is not available for distribution as dividends.

25. RETAINED EARNINGS

The entire retained earnings as at 31 December 2017 of the Company is available for distribution as divided under the single tier system without incurring additional tax liabilities.



26. FINANCE LEASE LIABILITIES


Minimum lease payments Not later than 1 year 121,087 159,159 Later than 1 year but not later than 5 years 32,586 224,784

153,673 383,943Less: Future finance charges (14,071) (33,027)

139,602 350,916

Present value of finance lease liabilities Not later than 1 year 107,777 134,997 Later than 1 year but not later than 5 years 31,825 215,919

139,602 350,916

The Group’s finance lease liabilities interests are charged at rates ranging from 2.40% to 5.95% (2016: 2.40% to 3.61%) per annum.

27. TERM LOANS Group Company 2017 2016 2017 2016 RM RM RM RM

The term loans are repayable through monthly installments as follows:-Notlaterthan1year(Note32) 808,776 3,635,878 – 2,250,000Later than 1 year but not laterthan5years 1,368,186 8,093,774 – 5,250,000Laterthan5years 423,539 – – –

1,791,725 8,093,774 – 5,250,000

2,600,501 11,729,652 – 7,500,000

The effective annual interest rates and the securities of the term loans are as disclosed in Note 32 to the financial statements.

The term loans of the Company has been fully settled during the financial year.



28. TRADE PAYABLES


Trade payables 12,402,921 17,971,327Retention sums on contract 3,309,314 8,616,445

15,712,235 26,587,772

The normal trade credit terms for trade payables granted to the Group ranging from 30 to 90 (2016: 30 to 90) days and an amount of RM167,090 (2016: RM9,847,436) bears interest at rate 8% (2016: 8%) per annum and for retention sum is 6 to 18 months (2016: 6 to 18 months) upon completion of projects.

29. OTHER PAYABLES


Non-trade payables 1,382,622 2,209,691 15,141 1,992,925Accruals of expense 2,127,039 1,295,839 645,687 158,570Deferredrevenue 411,158 520,568 – –Depositsreceived 109,595 187,362 – –GST payables 2,136 230,588 50,789 63,328

4,032,550 4,444,048 711,617 2,214,823

30. AMOUNT DUE TO SUBSIDIARIES


Amount due (to)/from subsidiaries -Trade – 1,253,325- Non-trade (1,798,587) (1,607,968)

(1,798,587) (354,643)

The outstanding amount which is trade in nature is unsecured, bears no interest and repayable on demand.

The outstanding amount which is non-trade in nature is unsecured, bears no interest and repayable on demand.



31. AMOUNT DUE TO RELATED PARTIES Group 2017 2016 RM RM

Amount due (to)/from related parties- Trade (24,783) (2,104,267)- Non-trade (117,213) 101,635

(141,996) (2,002,632)

Related parties refer to companies in which certain Directors have financial interest.

The outstanding amount which is trade in nature is unsecured, interest free and has credit terms of 30 (2016: 30) days.

The outstanding amount which is non-trade in nature is unsecured, bear interest rates ranging from 4.52%

to 4.64% (2016: Nil) per annum and repayable on demand.

32. BORROWINGS


Secured:Bankers’acceptance 3,570,000 6,629,000 – –Bankoverdrafts – 500,219 – –Termloans(Note27) 808,776 3,635,878 – 2,250,000

4,378,776 10,765,097 – 2,250,000

The effective annual interest rates at the reporting date for borrowings are as follows:-

2017 2016 2017 2016 % % % % Bankers’acceptance 3.83–5.52 3.83–5.49 – –Bankoverdrafts – 7.00–7.25 – –Termloans 4.90–7.96 3.75–8.10 – 4.64



32. BORROWINGS (CONT’D)

The bank borrowings of the Group are secured by way of:-

(a) legal charge over certain property, plant and equipment of the Group;(b) legal charge over leasehold property of the Group;(c) legal charge over freehold property of the Group;(d) a pledge on the fixed deposits of the Group;(e) joint and several guarantee by certain Directors of the Group; (f) guarantee by the Company;(g) facilities agreement;(h) memorandum of deposit for pledge of entire paid out ordinary share of certain subsidiaries;(i) dividends attributable to certain subsidiaries’ shares pledged by way of revocable and irrevocable Letter

ofUndertaking;(j) Credit Guarantee Corporation (M) Bhd’s guarantee under the Portfolio Guarantee Scheme of up to

RM2,100,000 being 70% of the principal limit of the facility of RM3,000,000; and(k) deed of charge over a debt service reserve account to be maintained with the Bank with an initial cash

deposit equivalent to three months’ estimated interest payment under the Banking Facility or such amount as may be specified by the Bank as the minimum credit balance.

The bank borrowings of the Company are secured by way of:-

(a) facility agreement;(b) memorandum of deposits over sufficient number of ordinary shares of Simat Technologies PCL quoted

on The Stock Exchange of Thailand to provide a minimum security cover of three times over the Facility amount prior to drawdown; and

(c) deed of charge over a debt service reserve account to be maintained with the Bank with an initial cash deposit equivalent to three months’ estimated interest payment under the Banking Facility or such amount as may be specified by the Bank as the minimum credit balance.

The term loan of the Company has been fully settled during the financial year.

33. REVENUE


Dividend income from subsidiaries – – 6,755,410 4,319,076Saleofgoods 61,532,315 55,481,391 – –Maintenance income 12,345,106 12,409,034 3,611,482 5,049,168Propertydevelopment 30,173,102 52,387,207 – –

104,050,523 120,277,632 10,366,892 9,368,244



34. OTHER INCOME


Gain on disposal of property, plantandequipment 5,660 13,446 – –Interest income 288,016 178,883 116,938 44,299Rentalincome 135,600 403,700 – –Reversal of impairment lossontradereceivables – 3,822 – –Unrealisedgainonforeign exchange – 11,999 – –Realised gain on foreign exchange 79,102 – – –Sundryincome 125,317 271,676 – –Gain on disposal of associate’sshares 12,348,072 – 18,887,146 –

12,981,767 883,526 19,004,084 44,299

35. FINANCE COST


Interest expense -banker’sacceptance 341,485 301,326 – –-financelease 15,177 62,478 – –-overdraft 13,209 30,324 – –- term loans 437,220 574,066 207,120 179,437-latepaymentinterest 469,345 1,277,583 – –-loanfromsubsidiaries – – – 45,056-commitmentfees 3,069 4,740 – –

1,279,505 2,250,517 207,120 224,493

36. PROFIT/(LOSS) BEFORE TAX

Profit/(Loss) before tax has been determined after charging, amongst others, the following items:-


Auditors’ remuneration- auditors of the Company 111,000 117,500 20,000 19,000-otherauditors 74,172 74,189 – –Realisedlossonforeignexchange – 92,373 1,756 146,421Rental expense 561,690 742,394 9,000 9,000



37. TAX EXPENSE

Income tax expense recognised in profit or loss

Current year provision-Malaysianincometax 853,733 2,730,676 – 2,400-Overseastaxation 178,104 143,000 – –Under/(Over)provisioninprioryear - Current Tax 35 185,096 901 4,196-Deferredtaxation (248,000) (13,189) – –Crystalisation of deferred tax arising from revaluation reserve upon disposal of property, plant and equipment (netofRPGTtax)* (597,694) – – –Transferred from/(to):- (Note 10) -Deferredtaxassets 339,000 – 339,000 –-Deferredtaxliabilities (8,215) (158,177) – –

330,785 (158,177) 339,000 –

516,963 2,887,406 339,901 6,596

*RPGT–RealPropertyGainTax

Income tax expense recognised in other comprehensive income Deferred tax related to net surplus on revaluation of freehold lands and buildings 85,962 – – –

Malaysian income tax is calculated at the statutory tax rate of 24% of the estimated assessable profits for the current financial year. Taxation for other jurisdictions is calculated at the tax rates prevailing in the respective jurisdictions.

Pioneer losses, unabsorbed tax losses and unutilised capital allowances carried forward, subject to the agreement of the Inland Revenue Board are as follows:-


Unabsorbedtaxlosses (6,419,000) (9,180,000) (2,533,000) (3,566,000)Unutilisedcapitalallowances (152,000) (329,000) – –

(6,571,000) (9,509,000) (2,533,000) (3,566,000)



37. TAX EXPENSE (CONT’D)

A reconciliation of income tax expense applicable to profit/(loss) before tax at the statutory tax rate to income tax expense at the effective tax rate of the Group and of the Company are as follows:-


Profit/(loss) before tax 15,038,140 (2,597,816) 17,761,481 3,623,588

Income tax at rate of 24% 3,609,154 (623,476) 4,262,755 869,661

Tax effect in respect of:-Effect of different tax rates inoverseassubsidiaries (51,556) (60,189) – –Expenses not deductible for tax purposes 2,807,493 4,430,601 2,337,594 688,648Income not subject to income tax (4,546,850) (1,755,253) (6,166,349) (1,043,909)Deferred tax assets not recognisedduringtheyear – 723,816 – –Withholding tax on dividend declared by the People’s PublicofChinasubsidiary 41,726 – – –Utilisationofdeferredtax assetsnotrecognised (418,800) – (95,000) (512,000)Crystalisation of deferred tax arising from revaluation reserve upon disposal of property, plant and equipment (netofRPGTtax) (597,694) – – –Taxsavings* (78,545) – – –Under/(Over)provisionin prior year- Current Tax 35 185,096 901 4,196-Deferredtaxation (248,000) (13,189) – –

Total tax expense 516,963 2,887,406 339,901 6,596

* The Government of Malaysia announced the reduction of income tax rate from 24% to a range of 20% to 24% based on the percentage of increase in chargeable income as compared to the immediate preceding year of assessment for years of assessment 2017 and 2018.



38. EARNINGS/(LOSS) PER SHARE

(a) Basic

Basic earnings/(loss) per share is calculated by dividing profit/(loss) for the year attributable to owners of the parent with the weighted average number of ordinary shares in issue during the financial year (excluding treasury shares held by the Company).


Profit/(Loss) for the financial year attributable to owners of the parent (RM) 13,188,670 (9,723,921)

Weighted average number of ordinary shares in issue 476,472,427 478,542,484

Basic earnings/(loss) per share (sen) 2.77 (2.03)

(b) Diluted

There are no diluted earnings per share because the Company does not have any convertible financial instruments as at the end of the financial year.

39. DIVIDENDS


In respect of financial year ended 31 December 2015: Firstandfinalsingletierdividendof0.5senperordinaryshare – 2,393,318

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

The Director recommend a final single tier dividend of 0.60 sen per share in respect of the current financial year for shareholders’ approval at the forthcoming Annual General Meeting. The current financial statements do not reflect this proposed dividend. Such dividend, if approved by the shareholders, will be accounted for in equity as an appropriation of retained earnings in the financial year ending 31 December 2018.

40. EMPLOYEE BENEFITS EXPENSE


Wages and salaries and allowances 7,678,335 8,739,012 212,722 205,998Social security contributions 57,737 57,452 1,263 1,030Contributions to defined contribution plan 755,657 891,578 11,745 24,824Other benefits 120,340 216,387 14,323 23,955

8,612,069 9,904,429 240,053 255,807



40. EMPLOYEE BENEFITS EXPENSE (CONT’D)

Included in the employee benefits expense is the Director remuneration as below:


Directors of the Company Executive:-Salaries and other emoluments 1,356,000 1,356,000 636,000 636,000Bonus 871,500 896,000 451,500 376,000Social contribution plan 4,903 4,206 794 620Defined contribution plans 167,640 282,720 78,840 131,520

Total Executive Directors’ remuneration 2,400,043 2,538,926 1,167,134 1,144,140

Non-Executive:-Fees 169,200 180,000 169,200 180,000

Past Director of the CompanyNon-Executive:-Fees 17,500 18,000 17,500 18,000

Directors of the subsidiariesExecutive:-Salariesandotheremoluments 848,890 1,172,772 – –Bonus 193,240 72,766 – –Socialcontributionplan 1,240 1,670 – –Fees 12,000 18,000 – –Definedcontributionplans 60,642 83,513 – –

1,116,012 1,348,721 – –

Total 3,702,755 4,085,647 1,353,834 1,342,140

41. SIGNIFICANT RELATED PARTY DISCLOSURE

(a) Significant related party transactions during the financial year are as follows:- Group Company 2017 2016 2017 2016 RM RM RM RM

Dividendreceivedfromsubsidiaries – – 6,755,410 4,319,076Interestreceivedfromsubsidiaries – – – 45,056Salestosubsidiaries – – 3,611,482 5,049,109

(b) Key management personnel is defined as those persons having authority and responsibility for planning, directing and controlling the activities of the Group either directly or indirectly and entity that provides key management personnel services to the Group.

(c) The remuneration of key management personnel is same with the Directors’ remuneration as disclosed in Note 40 to the financial statements. The Group and the Company have no other members of key management personnel apart from the Board of Directors.



42. OPERATING SEGMENT

Business Segments

EDCCS* Labels Properties Eliminations Total RM RM RM RM RM

2017Revenue Salestoexternalcustomers 72,379,307 1,498,114 30,173,102 – 104,050,523Inter-segmentrevenue i 10,979,397 252,355 – (11,231,752) –

Total revenue 83,358,704 1,750,469 30,173,102 (11,231,752) 104,050,523

ResultsInterest income (216,280) (2,614) (77,598) 8,476 (288,016)Finance cost 616,142 504,562 194,018 (35,217) 1,279,505Dividendincome – – (13,741) 13,741 –Depreciationandamortisation 1,484,051 190,383 – – 1,674,434Share of profit equity- accountedassociates – 813,523 – – 813,523Incometaxexpense 271,804 (576,981) 822,140 – 516,963Othernon-cashexpenses ii (8,637,071) 948,044 – – (7,689,027)Segment profit/(loss) iii 19,877,972 (1,686,279) 2,772,641 (6,443,157) 14,521,177

Assets Segment assets 155,680,838 3,557,633 107,974,498 (78,387,080) 188,825,889Investmentinassociates iv – 491,520 – 864,405 1,355,925Additionstonon-currentassets v 79,514 – – – 79,514Taxrecoverable 604,807 124,438 712,031 – 1,441,276

Consolidated assets 156,365,159 4,173,591 108,686,529 (77,522,675) 191,702,604

Liabilities

Segment liabilities 36,373,755 1,776,216 84,969,109 (92,051,235) 31,067,845Deferredtaxliabilities 27,849 – – – 27,849Taxpayable 57,462 – 133,233 – 190,695

Consolidated liabilities 36,459,066 1,776,216 85,102,342 (92,051,235) 31,286,389



42. OPERATING SEGMENT (CONT’D)

Business Segments (cont’d)

EDCCS* Labels Properties Eliminations Total RM RM RM RM RM

2016Revenue Salestoexternalcustomers 55,500,616 12,389,809 52,387,207 – 120,277,632Inter-segmentrevenue i 10,432,583 4,154,215 – (14,586,798) –

Total revenue 65,933,199 16,544,024 52,387,207 (14,586,798) 120,277,632

ResultsInterestincome 114,817 32,254 31,812 – 178,883Finance cost (607,712) (1,398,608) (261,102) 16,905 (2,250,517)Dividendincome – (1,220,831) (8,905) 1,229,736 –Depreciationandamortisation (1,593,132) (1,253,326) – – (2,846,458)Share of profit equity- accountedassociates – 869,327 – – 869,327Incometaxexpense (180,575) (17,451) (2,689,380) – (2,887,406)Othernon-cashexpenses ii 11,022,507 17,768 – – 11,040,275Segment (loss)/profit iii (1,832,229) 731,536 8,533,230 (12,917,759) (5,485,222)

Assets Segment assets 140,803,927 12,182,559 129,414,699 (90,599,446) 191,801,739Investmentinassociates iv 5,265,943 491,520 – 6,589,956 12,347,419Additionstonon-currentassets v 166,043 366,423 – – 532,466Deferredtaxassets 339,000 – – – 339,000Taxrecoverable 633,461 144,193 – – 777,654

Consolidated assets 147,208,374 13,184,695 129,414,699 (84,009,490) 205,798,278

Liabilities Segment liabilities 42,582,195 4,083,405 108,253,289 (102,666,650) 52,252,239Deferredtaxliabilities 210,406 881,285 – – 1,091,691Taxpayable 36,139 1,512 349,864 – 387,515

Consolidated liabilities 42,828,740 4,966,202 108,603,153 (102,666,650) 53,731,445

* Enterprise Data Collection and Collation System





Segment assets/liabilities

Nature of adjustments and eliminations to arrive at amounts reported in the consolidated financial statements:

i. Inter-Segment revenues are eliminated on consolidation.

ii Other non-cash (income)/expense consist of the following items:

2017 2016 RM RM

Impairment loss on trade receivables 288,375 237,422 Impairmentlossonotherreceivables 650,078 – Developmentcostwrittenoff 1,619,956 – Goodwillwrittenoff – 4,636,472 Property, plant and equipment written off 12,695 19,288 Inventories written down 543,319 629,535 Inventories written off 152,482 1,588,663 Baddebtswrittenoff – 3,773 Loss/(gain) on disposal of property, plant and equipment 159,606 (13,446) (Gain)/loss on disposal of associate’s shares (12,348,072) 180,743 Loss on disposal of subsidiary 1,184,325 3,773,646 Struckoffofasubsidiary 100,000 – Unrealisedloss/(gain)onforeignexchange 24,310 (11,999) Reversal of impairment loss on trade receivables (76,101) (3,822)

(7,689,027) 11,040,275

iii. The following items are added to/(deducted from) segment profit to arrive at “Net profit/ (loss) for the financial year” presented in the consolidated statement of profit or loss and other comprehensive income:

2017 2016 RM RM

Segment profit/(loss) 15,216,106 (1,395,509)Interest income 288,016 178,883Finance costs (1,279,505) (2,250,517)Share of results of equity-accounted associates 813,523 869,327Tax expense (516,963) (2,887,406)

Net profit/(loss) for the financial year 14,521,177 (5,485,222)

iv. The following items are added to segment assets to arrive at total assets reported in the consolidated statement of financial position:

2017 2016 RM RM

Investment in associates 1,355,925 12,347,419





Segment assets/liabilities (cont’d)

Nature of adjustments and eliminations to arrive at amounts reported in the consolidated financial statements (cont’d):

v. Additions to non-current assets consist of:

2017 2016 RM RM

Property, plant and equipment 79,514 532,466

Geographical Segments

Geographical segments Business activities

Malaysia Mainly consists of supply and installation of Enterprise Data Collection and Collation Systems and hardware, information technology solutions, computer related accessories, integrating computer system and hardware, trading of price marker system, equipment and paper rolls, information technology solutions specialising in automated data collection processes, mobile computing.

Hong Kong and China Mainly consists of provision of supply chain solutions and related services.

The Group’s revenue and non-current assets information based on geographical location are as follows:-

Revenue Non-current assets 2017 2016 2017 2016 RM RM RM RM

Malaysia # 92,218,746 107,193,172 42,840,757 61,109,835Hong Kong and China 11,831,777 13,084,460 312,714 483,611

104,050,523 120,277,632 43,153,471 61,593,446

Non-current assets information presented below consist of the following items as presented in the consolidated statement of financial position:

2017 2016 RM RM

Property, plant and equipment 8,350,022 13,306,846Investment in associates 1,355,925 12,347,419Developmentcost – 1,813,059Goodwill on consolidation 33,447,524 34,126,122

43,153,471 61,593,446

# Company’s home country

Major customers

The Group does not have any revenue from a single external customer which represents 10% or more of the Group’s revenue.



43. CATEGORIES OF FINANCIAL INSTRUMENTS The table below provides an analysis of financial instruments categorised as follows:-

(i) Loansandreceivables(L&R);(ii) Available-for-sale financial assets (AFS); and(iii) Other financial liabilities measured at amortised cost (OFL)

Carrying amount L&R AFS OFLGroup RM RM RM RM

2017Financial assetsOtherinvestment(Note7) 14,794 – 14,794 –Accruedbillings(Note13) 3,781,856 3,781,856 – –Trade and other receivables (Notes14&15) 31,592,804 31,592,804 – –Amount due from a related party (Note 18) 36,227 36,227Dividendreceivable 1,060,831 1,060,831 – –Fixed deposits with licensed banks(Note19) 21,137,792 21,137,792 – –Cash and bank balances (Note20) 10,856,409 10,856,409 – –

68,480,713 68,465,919 14,794 –

2017Financial liabilitiesAmount due to a director (Note16) 4,870,961 – – 4,870,961Amount due to related parties (Note31) 141,996 – – 141,996Finance lease liabilities (Note26) 139,602 – – 139,602Loans and borrowings (Notes27&32) 6,170,501 – – 6,170,501Trade and other payables (Notes28&29) 19,331,491 – – 19,331,491

30,654,551 – – 30,654,551



43. CATEGORIES OF FINANCIAL INSTRUMENTS (CONT’D) The table below provides an analysis of financial instruments categorised as follows (cont’d):-

Carrying amount L&R AFS OFLGroup RM RM RM RM

2016Financial assetsOtherinvestment(Note7) 15,204 – 15,204 –Accruedbillings(Note13) 11,216,282 11,216,282 – –Trade and other receivables (Notes14&15) 24,337,321 24,337,321 – –Amount due from directors (Note16) 3,563,019 3,563,019 – –Amount due from related parties(Note18) 134,405 134,405 – –Dividendreceivable 1,060,831 1,060,831 – –Fixed deposits with licensed banks(Note19) 1,693,174 1,693,174 – –Cash and bank balances (Note20) 12,956,623 12,956,623 – –

54,976,859 54,961,655 15,204 –

Financial liabilitiesAmount due to a director (Note16) 8,000 – – 8,000Amount due to related parties(Note31) 2,002,632 – – 2,002,632Finance lease liabilities (Note26) 350,916 – – 350,916Loans and borrowings (Notes27&32) 18,858,871 – – 18,858,871Trade and other payables (Notes28&29) 30,280,664 – – 30,280,664

51,501,083 – – 51,501,083



43. CATEGORIES OF FINANCIAL INSTRUMENTS (CONT’D) The table below provides an analysis of financial instruments categorised as follows (cont’d):-

Carrying amount L&R AFS OFLCompany RM RM RM RM

2017Financial assetsOtherreceivables(Note15) 1,317,350 1,317,350 – –Amount due from subsidiaries (Note17) 26,842,174 26,842,174 – –Fixed deposits with licensed banks(Note19) 18,082,922 18,082,922 – –Cash and bank balances (Note20) 1,626,094 1,626,094 – –

47,868,540 47,868,540 – –

Financial liabilitiesOtherpayables(Note29) 660,828 – – 660,828Amount due to a subsidiary (Note30) 1,798,587 – – 1,798,587

2,459,415 – – 2,459,415

2016Financial assetsOtherreceivables(Note15) 2,350 2,350 – –Amount due from subsidiaries (Note17) 24,070,776 24,070,776 – –Fixed deposits with licensed banks(Note19) 169,000 169,000 – –Cash and bank balances (Note20) 340,801 340,801 – –

24,582,927 24,582,927 – –

Financial liabilitiesOtherpayables(Note29) 2,151,495 – – 2,151,495Amount due to a subsidiary (Note30) 354,643 – – 354,643Loan and borrowings (Notes27&32) 7,500,000 – – 7,500,000

10,006,138 – – 10,006,138



44. FINANCIAL INSTRUMENTS

Financial risks management

The Group and the Company are exposed to financial risks arising from their operations and the use of financial instruments. Financial risk management policy is established to ensure that adequate resources are available for the development of the Group’s and the Company’s business whilst managing its credit risk, liquidity risk, foreign currency risk and interest rate risk. The Group and the Company operate within clearly defined policies and procedures that are approved by the Board of Directors to ensure the effectiveness of the risk management process.

The main areas of financial risks faced by the Group and Company and the policy in respect of the major areas of treasury activity are set out as follows:-

(a) Credit risk

Credit risk is the risk of a financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations. It is the Group’s policy to enter into financial instrument with a diversity of creditworthy counterparties. The Group does not expect to incur material credit losses of its financial assets or other financial instruments.

Concentration of credit risk exists when changes in economic, industry and geographical factors similarly affect the group of counterparties whose aggregate credit exposure is significant in relation to the Group’s total credit exposure. The Group’s portfolio of financial instrument is broadly diversified along industry, product and geographical lines, and transactions are entered with diverse creditworthy counterparties, thereby mitigate any significant concentration of credit risk.

It is the Group’s policy that all customers who wish to trade on credit terms are subject to credit verification procedures. The Group does not offer credit terms without the approval of the head of credit control.

Following are the areas where the Group and the Company are exposed to credit risk:-

(i) Receivables

As at the end of the reporting date, the maximum exposure to credit risk arising from receivables is limited to the carrying amounts in the statements of financial position.

With a credit policy in place to ensure the credit risk is monitored on an ongoing basis, management has taken reasonable steps to ensure that receivables that are neither past due nor impaired are stated at their realisable values.

A significant portion of these receivables are regular customers that have been transacting with the Group. The Group uses ageing analysis to monitor the credit quality of the receivables. Any receivables having significant balances past due more than credit terms granted are deemed to have higher credit risk and are monitored individually.



44. FINANCIAL INSTRUMENTS (CONT’D)

Financial risks management (cont’d)

(a) Credit risk (cont’d)

Following are the areas where the Group and the Company are exposed to credit risk (cont’d):-

(i) Receivables (cont’d)

The ageing analysis of these trade receivables is as follows:

2017 Individually Gross Impaired NetGroup RM RM RM Notpastdue 7,366,064 – 7,366,064Pastduefor1-30days 14,065,332 – 14,065,332Pastduefor31-60days 1,916,505 – 1,916,505Pastduefor61-90days 2,407,949 – 2,407,949Pastduefor91-120days 183,063 – 183,063Past due for more than 121 days 1,671,586 (530,844) 1,140,742

27,610,499 (530,844) 27,079,655

2016

Group

Notpastdue 7,260,006 – 7,260,006Pastduefor1-30days 6,884,155 – 6,884,155Pastduefor31-60days 1,134,903 – 1,134,903Pastduefor61-90days 1,520,170 – 1,520,170Pastduefor91-120days 2,391,522 – 2,391,522Past due for more than 121 days 3,436,076 (341,980) 3,094,096

22,626,832 (341,980) 22,284,852

The net carrying amount of trade receivables is considered as a reasonable approximate of fair value. The maximum exposure to credit risk is the carrying value of each class of receivables mentioned above.

Receivables that are individually determined to be impaired at the reporting date relate to receivables that are in significant financial difficulties and have defaulted in payments. These receivables are not secured by any collateral or credit enhancements.

Trade receivables that are neither past due nor impaired are creditworthy receivables 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.

As at 31 December 2017, trade receivables of the Group of RM19,713,591 (2016: RM15,024,846) was past due but not impaired. These relate to a number of independent customers for whom there is no recent history of default.





(a) Credit risk (cont’d)

Following are the areas where the Group and the Company are exposed to credit risk (cont’d):-

(i) Receivables (cont’d)

In respect of trade and other receivables, the Group is not exposed to any significant credit risk exposure to any single counterparty or any group of counterparties having similar characteristics except for 59% (2016: 37%) of the Group’s trade receivables was due from three (2016: four) major customers. Trade receivables consist of a large number of customers in various industries and geographical areas. Based on the historical information about customer default rates, management considers the credit quality of trade receivables that are not past due or impaired to be good.

(ii) Intercompany loans and advances

The maximum exposure to credit risk is represented by their carrying amounts in the statements of financial position.

The Company provides unsecured advances to subsidiaries and related parties and monitors their results regularly.

As at the end of the reporting date, there was no indication that advances to the subsidiaries

and related parties are not recoverable.

(iii) Investments and other financial assets

The maximum exposure to credit risk is represented by the carrying amounts in the statements of financial position.

In view of the sound credit rating of counterparties, management does not expect any counterparty to fail to meet its obligations.

(iv) Financial/corporate guarantees

The maximum exposure to credit risk amounts to RM10,699,174 (2016: RM11,086,441) representing the outstanding banking facilities of the subsidiaries as at end of the reporting period.

The Company provides unsecured corporate guarantees to licensed banks in respect of banking facilities granted to certain subsidiaries. The Company monitors on an ongoing basis the results of the subsidiaries and repayments made by them. As at the end of the reporting period, there was no indication that any subsidiaries would default on repayment.

(b) Liquidity risk

Liquidity risk is the risk that the Group and the Company will not be able to meet their financial obligations as they fall due to shortage of funds.

In managing its exposures to liquidity risk arises principally from its various payables and bank borrowings, the Group and the Company maintain a level of cash and cash equivalents and bank facilities deemed adequate by the management to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when they fall due.

The Group and the Company aim at maintaining a balance of sufficient cash and deposits and flexibility in funding by keeping diverse sources of committed and uncommitted credit facilities from various banks.





(b) Liquidity risk (cont’d)

The summary of the maturity profile based on the contractual undiscounted repayment obligation is as follows:

Liquidity risk analysis

Current Non-current Group Carrying contractual Within 1 More than amount cash flow year 2 to 5 years 5 years RM RM RM RM RM

2017Tradepayables 15,712,235 15,712,235 15,712,235 – –Otherpayables 3,619,256 3,619,256 3,619,256 – –Amountduetoadirector 4,870,961 4,870,961 4,870,961 – –Amountduetorelatedparties 141,996 141,996 141,996 – –Loan and borrowings 6,170,501 6,535,000 5,090,334 681,682 762,984Financeleaseliabilities 139,602 153,673 121,087 32,586 –

Total 30,654,551 31,033,121 29,555,869 714,268 762,984

2016Tradepayables 26,587,772 26,587,772 26,587,772 – –Other payables 3,692,892 3,692,892 3,692,892Amountduetoadirector 8,000 8,000 8,000 – –Amountduetorelatedparties 2,002,632 2,002,632 2,002,632 – –Loan and borrowings 18,858,871 24,059,389 14,495,054 7,454,245 2,110,090Financeleaseliabilities 350,916 383,943 159,159 224,784 –

Total 51,501,083 56,734,628 46,945,509 7,679,029 2,110,090

2017Otherpayables 660,828 660,828 660,828 – –Amountduetoasubsidiary 1,798,587 1,798,587 1,798,587 – –

2,459,415 2,459,415 2,459,415 – –

Financialguarantee – 10,699,174 10,699,174 – –

2016Otherpayables 2,151,495 2,151,495 2,151,495 – –Amountduetoasubsidiary 354,643 354,643 354,643 – –Termloan 7,500,000 8,048,730 2,640,443 5,408,287 –

10,006,138 10,554,868 5,146,581 5,408,287 –

Financialguarantee – 11,086,441 11,086,441 – –





(c) Foreign currency risk

Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates.

To mitigate the Group’s and the Company’s exposure to foreign currency risk, the Group and the Company are exposed to foreign currency risk on sales and purchases that are denominated in a currency other than the respective functional currencies of Group entities. The currency giving rise tothisriskisprimarilyUSDollar(USD),HongKongDollar(HKD),EuroDollar(EUR),SingaporeDollar(SGD) and Thai Baht (THB).

The Group is also exposed to currency translation risk arising from its net investment in foreign operation in Hong Kong and Thailand. The investment is not hedged as currency positions in HKD and THB are considered to be long-term in nature.

The Group’s and the Company’s exposure to foreign currency risk, based on carrying amounts as of the end of the reporting period are as follows:-

2017 Denominated in USD HKD EUR THBGroup RM RM RM RM

Tradereceivables 621,095 1,851,287 – –Otherreceivables – 628,736 – 1,315,000Cashandbankbalances 765 3,128,914 – 27,138Tradepayables (540,297) (713,281) (45,983) –Otherpayables – (738,838) – –

2016 Denominated in USD HKD EUR THBGroup RM RM RM RM

Tradereceivables 1,183,838 1,973,013 13,370 –Otherreceivables – 615,456 – –Cashandbankbalances 108,148 4,772,294 – 2,113Tradepayables (1,941,599) (1,161,873) – –Otherpayables – (923,169) – –





(c) Foreign currency risk (cont’d)

The Group’s and the Company’s exposure to foreign currency risk, based on carrying amounts as of the end of the reporting period are as follows (cont’d):-

2017 Denominated in THB USD HKDCompany RM RM RM

Cash and bank balances 27,138 211 3,912Otherreceivables 1,315,000 – –Amountduefromsubsidiaries – – 166,853

2016 Denominated in THB USD HKDCompany RM RM RM

Cash and bank balances 2,113 8,083 3,858Amountduefromsubsidiaries – – 174,907

The following table demonstrates the sensitivity of the Group’s profit for the financial year to a reasonably possiblechangeintheUSD,HKD,EUR,SGDandTHBexchangeratesagainsttherespectivefunctionalcurrency of the Group and of the Company, with all other variables held constant.

Increase/(Decrease)Group Profit/(Loss) for the 2017 financial year Equity RM RM

USD/RM- Strengthened 0.85% (693) (693)- Weakened 0.85% 693 693

HKD/RM - Strengthened 0.91% (37,827) (37,827)- Weakened 0.91% 37,827 37,827

EUR/RM- Strengthened 0.23% (106) (106)- Weakened 0.23% 106 106

THB/RM - Strengthened 0.07% (939) (939)- Weakened 0.07% 939 939






The following table demonstrates the sensitivity of the Group’s profit for the financial year to a reasonably possiblechangeintheUSD,HKD,EUR,SGDandTHBexchangeratesagainsttherespectivefunctionalcurrency of the Group and of the Company, with all other variables held constant (cont’d).

Increase/(Decrease)Group Profit/(Loss) for the 2016 financial year Equity RM RM

USD/RM- Strengthened 0.43% (2,793) (2,793)- Weakened 0.43% 2,793 2,793

HKD/RM - Strengthened 0.43% 22,686 22,686- Weakened 0.43% (22,686) (22,686)

SGD/RM - Strengthened 0.20% 27 27- Weakened 0.20% (27) (27)

THB/RM - Strengthened 0.44% 9 9- Weakened 0.44% (9) (9)

Increase/(Decrease)Company Profit/(Loss) for the 2016 financial year Equity RM RM

USD/RM- Strengthened 0.85% (2) (2)- Weakened 0.85% 2 2

THB/RM - Strengthened 0.06% (867) (867)- Weakened 0.06% 867 867

HKD/RM- Strengthened 0.91% (1,556) (1,556)- Weakened 0.91% 1,556 1,556






The following table demonstrates the sensitivity of the Group’s profit for the financial year to a reasonably possiblechangeintheUSD,HKD,EUR,SGDandTHBexchangeratesagainsttherespectivefunctionalcurrency of the Group and of the Company, with all other variables held constant (cont’d).

(Decrease)/IncreaseCompany Profit/(Loss) for the 2016 financial year Equity RM RM

USD/RM- Strengthened 0.97% 78 78- Weakened 0.97% (78) (78)

THB/RM - Strengthened 0.44% 757 757- Weakened 0.44% (757) (757)

HKD/RM- Strengthened 0.43% 9 9- Weakened 0.43% (9) (9)

Exposures to foreign exchange rates vary during the financial year depending on the volume of overseas

transactions. Nonetheless, the analysis above is considered to be representation of the Group’s and the Company’s exposures to foreign currency risk.

(d) 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 and the Company’s fixed rate borrowings are exposed to a risk of change in their fair value due to changes in interest rates. The Group’s and the Company’s variable rate borrowings are exposed to a risk of change in cash flows due to changes in interest rates. Short term receivables and payables are not significantly exposed to interest rate risk.





(d) Interest rate risk (cont’d)

The interest rate profile of the Group’s significant interest-bearing financial instruments, based on carrying amounts as at end of the reporting period are:


Fixed rate instruments Financial assets 21,137,792 1,693,174Financial liabilities (306,692) (350,916)

20,831,100 1,342,258

Floating rate instruments Financial liabilities (6,170,501) (18,858,871)


Floating rate instruments Financialliabilities – (7,500,000)

Interest rate sensitivity analysis

The Group is exposed to changes in market interest rates through bank borrowings at variable interest rates. Other borrowings are at fixed interest rates. The exposure to interest rates for the Group’s short term placement is considered immaterial.

The following table illustrates the sensitivity of profit to a reasonably possible change in interest rates of +/- 100 basis points (“bp”). These changes are considered to be reasonably possible based on observation of current market conditions. The calculations are based on a change in the average market interest rate for each period, and the financial instruments held at each reporting date that are sensitive to changes in interest rates. All other variables are held constant.

Effect on profit/ (loss) for the year +100bp -100bpGroup RM RM

31 December 2017 (61,705) 61,705

31 December 2016 (188,589) 188,589

Company

31December2017 – –

31 December 2016 (75,000) 75,000




Fair value of financial instruments

The carrying amounts of short term receivables and payables, cash and cash equivalents and short term borrowings approximate their fair values due to the relatively short term nature of these financial instruments and insignificant impact of discounting.

The table below analyses financial instruments carried at fair value and those not carried at fair value for which fair value is disclosed, together with their values and carrying amounts shown in the statement of financial position.

Fair value of Fair value of financial financial instruments instruments carried at fair not carried Total fair Carrying value at fair value value amount Level 2 RM RM RM RM

Group2017Financial assetOtherinvestment 14,794 – 14,794 14,794

Financial liabilitiesFinanceleaseliabilities – 146,472 146,472 139,602Borrowings – 6,062,061 6,062,061 6,170,501

2016Financial assetOtherinvestment 15,204 – 15,204 15,204

Financial liabilitiesFinanceleaseliabilities – 337,639 337,639 350,916Borrowings – 18,492,048 18,492,048 18,858,871

Company2017Financial liabilitiesBorrowings – – – –

2016Financial liabilitiesBorrowings 7,271,636 – 7,271,636 7,500,000




Fair value of financial instruments (cont’d)

Policy on transfer between levels

The fair value of an asset to be transferred between levels is determined as of the date of the event or change in circumstances that caused the transfer.

Level1FairValue

Level 1 fair value is derived from quoted price (unadjusted) in active markets for identical financial assets or liabilities that the entity can access at the measurement date.

Level2FairValue

Level 2 fair value is estimated using inputs other than quoted prices included within Level 1 that are observable for the financial assets or liabilities, either directly or indirectly.

Non-derivatives financial liabilities

Fair value, which is determined for disclosure purposes, is calculated based on the present value of future principal and interest cash flows, discounted at the market rate of interest at the end of the reporting period. In respect of the liability component of convertible notes, the market rate of interest is determined by reference to similar liabilities that do not have a conversion option. For finance leases that market rate of interest is determined by reference to similar lease agreements.

The effective interest rates used to discount estimated cash flow are as follows:-

Group 2017 2016 % %

Termloans 4.99–8.26 3.61–8.10Financeleaseliabilities 2.65–6.99 2.65–6.99Bankoverdraft – 7.00–7.25Bankers’acceptance 3.83–5.52 3.83–5.49

Company 2017 2016 % %

Termloans – 3.61




Reconciliation of liabilities arising from financial activities

1 January 31 DecemberGroup 2017 Cash flows Others 2017 RM RM RM RM

Relatedparties (101,635) 218,848 – 117,213Directors 8,000 4,862,961 – 4,870,961Interestpaid – (1,329,576) 1,329,576^ –Termloan 11,729,652 (9,129,151)* – 2,600,501Bankers’acceptance 6,629,000 (3,059,000) – 3,570,000Treasury shares (1,497,290) (508,812)# – (2,006,102)Finance lease liabilities 350,916 (149,409) (61,905)@ 139,602

17,118,643 (9,094,139) 1,267,671 9,292,175

* This amount are net of drawndown and repayment during the financial year amounted to RM1,500,000 and RM10,629,151 respectively.

# This amount are net of purchase and issuance of treasury shares during the financial year amounted to RM503,464 and RM5,348 respectively.

^ Being the interest expense for the current financial year.

@ Being the disposal of the sub-subsidiary of the Company, Kopacklabels (PG) Sdn. Bhd during the financial year.

1 January 31 DecemberCompany 2017 Cash flows Others 2017 RM RM RM RM Interest paid - (207,120) 207,120^ -Term loan 7,500,000 (7,500,000) - -Treasury shares (1,497,290) (508,812)# - (2,006,102)

6,002,710 (8,215,932) 207,120 (2,006,102)

# This amount are net of purchase and issuance of treasury shares during the financial year amounted to RM503,464 and RM5,348 respectively.

^ Being the interest expense for the current financial year.



45. COMMITMENTS

Operating lease commitments – As lessor

The future minimum lease payments receivable under cancellable operating lease commitments are:


Future minimum lease payments receivables:

Not later than one year 205,600 1,021,567Later than one year but not later than five years 28,800 702,346

Total 234,400 1,723,913

Operating lease commitments represent rental receivables for the rent of the Group’s office. Leases are negotiated for 1 to 3 years (2016: 1 to 3 years) term.

46. CAPITAL MANAGEMENT

The Group’s objectives when managing capital is to maintain a strong capital base and safeguard the Group’s ability to continue as a going concern, 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 year.

47. SIGNIFICANT EVENTS DURING THE FINANCIAL YEAR

(a) On 7 February 2017, Labels Network Sdn Bhd (“LNSB”), a wholly-owned subsidiary of the Company entered into a Sale and Purchase Agreement with third parties for disposed of its 8 units of properties of LNSB to a third party for a total consideration of RM4,770,000.00.

The disposal of properties of LNSB was completed on 3 July 2017.

(b) Pursuant to the acquisition (“Acquisition”) of 50.0004% of Innoceria Sdn Bhd (“ISB”) from Chuah Chew HaiandChongPohYoong(“theVendors”)foratotalpurchaseconsiderationofRM15.0millionsatisfiedby an issuance and allotment of 29,411,765 new Company shares at an issue price of RM0.34 per shareandcashofRM5.0millionwhichwascompletedon21August2014,theVendoralsoirrevocablycovenant, warrants and guarantee to the Company that ISB shall have aggregate audit Profit After Tax (“PAT”) of at least RM15.0 million (“ Profit Guarantee”) as follows:-

• RM5.0millionforthefinancialperiodcommencing1January2014andended31December2014(“Year 1 Guaranteed PAT”);and

• RM10.0millionforthefinancialperiodcommencing1January2015andended31December2015 (“Year 2 Guaranteed PAT”)

On23March2016,theVendorsrequestedanextensionoftheProfitGuaranteePeriodtoincludefinancialyearended31December2016ietheVendorsshallachievetheProfitGuaranteeoverthree(3)financialyears ended 31 December 2014, 31 December 2015 and ended 31 December 2016 (“Extended Profit Guarantee Period”).



47. SIGNIFICANT EVENTS DURING THE FINANCIAL YEAR (CONT’D)

(b) On25March2016,theBoardofDirectorsofCompanyagreedtoandapprovedtheVendors’requestfor the Extended Profit Guarantee Period after reasonable consideration of the unexpected longer gestation period in the development business which was not foreseen at the time of the Acquisition.

The detail of the Extended Profit Guarantee period is as follow:-

Extended Profit Guarantee (RM)

Financial year ended 31 December 2014 2,700,000.00Financial year ended 31 December 2015 7,900,000.00Financial year ended 31 December 2016 4,400,000.00Total 15,000,000.00

The Year 2 Guaranteed PAT shortfall shall be aggregated with the PAT for the financial year ended 31 December 2016 to determine the total shortfall, if any, before releasing the balance of the cash considerationnetofanyshortfalltotheVendors.

In view that the Proposed Extension of Profit Guarantee Period is considered to be a material variation pursuant to Paragraph 8.22 of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad, the approval of the shareholders of the Company will be sought for the Proposed Extension of Profit Guarantee Period at an extraordinary general meeting to be convened.

On 24 May 2016, the Board of Directors of the Company submit the application to seek Bursa Malaysia Securities Berhad (“Bursa Securities”) approval for an extension of time of up to 15 July 2016.

On 27 May 2016, Bursa Securities has approved the application to despatch the circular to shareholders of the Company in relation to the Proposed Extension of Profit Guarantee Period.

On 2 August 2016, the Proposed Extension of Profit Guarantee Period were approved by the Shareholders at the Extraordinary General Meeting of the Company.

Asat31December2016,theVendorachievedProfitGuaranteeofamountedtoRM15,000,000. On 5 May 2017, the Year 3 Extended Guarantee PAT has been achieved in the financial year ended 31

December2016andtheRetainedSumhasbeenpaidtotheVendorsasfullandfinalsettlementofthePurchase Consideration.

(c) On 16 May 2017, the Company disposed of 23,000,000 Simat Technologies Public Co., Ltd (“Simat”) shares representing 5.80% equity interest at THB3.33 per Simat shares for a total cash consideration of THB76,590,000 (equivalent to approximately RM9,150,776).

The disposal of Simat shares was completed on 16 May 2017.

(d) On 5 June 2017, Simat issued 1,461,821 new ordinary shares from the conversion of the warrant which resulted a dilution of Grand-Flo’s interest in Simat from 12.44% to 12.31%.



47. SIGNIFICANT EVENTS DURING THE FINANCIAL YEAR (CONT’D)

(e) On 18 October 2017, the Company disposed of the balance 48,899,373 Simat shares representing 12.31% equity interest at THB2.70 per Simat shares for a total cash consideration of THB132,028,307 (equivalent to approximately RM15,002,313).

The disposal of Simat shares was completed on 9 November 2017.

(f) On 19 October 2017, LNSB, a wholly-owned subsidiary of the Company entered into a Share Sale Agreement with third parties for disposal of its entire 80% of equity shares in Kopacklabels (PG) Sdn. Bhd. to them for a total consideration of RM700,000.

The disposal of subsidiary was completed on 6 November 2017.

(g) On 30 November 2017, Kopacklabels (M) Sdn. Bhd. (“KPM”), a wholly-owned subsidiary of LNSB applied to the Companies Commision of Malaysia (“CCM”) for striking-off KPM from the register pursuant to Section 550 of the Companies Act 2016.

KPM would be dissolved upon publication of its name in the Gazzette by the CCM.

48. COMPARATIVE INFORMATION

Certain comparative figures in the financial statements have been reclassified on the face of the statement of cash flows to conform the current year presentation.

As previously As reported Reclassified RM RM

GroupStatement of Financial PositionCurrent assetsTrade receivables 22,341,257 22,284,852Amount due from related parties 78,000 134,405

Statement of Cash FlowsCash Flows from Operating ActivitiesChanges in working capitalReceivables 20,659,649 20,716,054Related parties 6,854,970 6,798,565

Cash Flows from Investing ActivitiesRepaymenttoadirector (1,392,040) –

Cash Flows from Financing ActivitiesDrawdownofbankers’acceptance – 1,915,000Drawdown of term loans and short term borrowings 13,823,737 11,908,727Repaymenttoadirector – (1,392,040)


ANAlySIS OF SHAREHOlDINGS As at 30 March 2018

Total Number of Issued Shares : 483,115,711 ordinary sharesClass of Equity Securities : Ordinary shares (“shares”)VotingRightsbyShowofHand : OnevoteforeverymemberVotingRightsbyPoll : Onevoteforeveryshareheld

DISTRIBUTION SCHEDULE OF SHAREHOLDERS

No. of No. ofSize of Holdings Holders % Shares *** %

1-99 5 0.306 76 0.000100-1,000 313 19.167 83,702 0.0171,001-10,000 377 23.086 2,662,428 0.56110,001-100,000 728 44.580 30,106,300 6.352100,001-23,695,884 (*) 205 12.553 288,050,953 60.78023,695,885ANDABOVE(**) 5 0.306 153,014,252 32.287

TOTAL 1,633 100.00 473,917,711 100.00

* Less than 5% of Issued Shares** 5% and above of Issued Shares*** Excluding a total of 9,198,000 shares bought and retained as treasury shares

SUBSTANTIAL SHAREHOLDERS’ SHAREHOLDINGSAS AT 30 MARCH 2018(As per the Register of Substantial Shareholders)

No. of Shares Held Direct IndirectNo. Name of Shareholders Interest %^ Interest %^

1. Grand-FloCorporationSdn.Bhd. 23,861,852 5.04 – –2. Tan Bak Hong 21,168,636 4.47 25,233,852 (1) 5.323. Yap Li Li 1,372,000 0.29 45,030,488 (2) 9.504. Tan Chuan Hock 12,600,000 2.66 12,000,000 (3) 2.535. SilverOakManagementLtd 30,000,000 6.33 – –6. Chong Poh Yoong 412,165 0.09 86,765,000 (4) 18.317. Chuah Chew Hai 86,765,000 18.31 412,165 (5) 0.09

Notes:-

(1) Deemed interested by virtue of the shares held by his spouse, Yap Li Li and both his and his spouse’s interest in Grand-Flo Corporation Sdn. Bhd.

(2) Deemed interested by virtue of the shares held by her spouse, Tan Bak Hong and both her and her spouse’s interest in Grand-Flo Corporation Sdn. Bhd.

(3) Deemed interested by virtue of his interest in Al Capital Sdn. Bhd.(4) Deemed interested by virtue of the shares held by her spouse, Chuah Chew Hai.(5) Deemed interested by virtue of the shares held by his spouse, Chong Poh Yoong.


ANAlySIS OF SHAREHOlDINGS As at 30 March 2018 (cont’d)

DIRECTORS’ SHAREHOLDINGS AS AT 30 MARCH 2018(As per the Register of Directors’ Shareholdings)

No. of Shares Held Direct IndirectNo. Name of Directors Interest %^ Interest %^

1. Tan Bak Hong 21,168,636 4.47 25,233,852 (1) 5.322. Tan Chuan Hock 12,600,000 2.66 12,000,000 (2) 2.533. ChengPingLiong 8,861,734 1.87 – –4. Chuah Chew Hai 86,765,000 18.31 412,165 (3) 0.09

Notes:-

(1) Deemed interested by virtue of the shares held by his spouse, Yap Li Li and both his and his spouse’s interest in Grand-Flo Corporation Sdn. Bhd.

(2) Deemed interested by virtue of his interest in AI Capital Sdn. Bhd.(3) Deemed interested by virtue of the shares held by his spouse, Chong Poh Yoong.

STATEMENT OF SHAREHOLDINGSTHIRTY LARGEST REGISTERED SHAREHOLDERS AS AT 30 MARCH 2018(Without aggregating securities from different securities accounts belonging to the same person)

No. Name No. of

Shares Held % ^

1. AMSEC Nominees (Tempatan) Sdn. Bhd.- Pledged Securities Account for Chuah Chew Hai

39,000,000 8.23

2. Maybank Securities Nominees (Tempatan) Sdn. Bhd.- Pledged Securities Account for Chuah Chew Hai (Margin)

30,765,000 6.49

3. HSBC Nominees (Asing) Sdn. Bhd.- Exempt An for BNP Paribas Singapore Branch (A/C Clients-FGN)

30,000,000 6.33

4. DB (Malaysia) Nominee (Asing) Sdn. Bhd. - Exempt An for Bank of Singapore Limited

29,387,400 6.20

5. Grand-Flo Corporation Sdn. Bhd. 23,861,852 5.04

6. Lim Bee Leong 20,000,000 4.22

7. CIMSEC Nominees (Tempatan) Sdn. Bhd.- CIMB Bank for Tan Bak Hong (MM0731)

19,031,000 4.02

8. Maybank Nominees (Tempatan) Sdn. Bhd.- Pledged Securities Account for Chuah Chew Hai

17,000,000 3.59

9. Thongkam Manasilapapan 15,719,700 3.32

10. Asas Masyhur Sdn. Bhd. 14,668,300 3.10


STATEMENT OF SHAREHOLDINGS (CONT’D)THIRTY LARGEST REGISTERED SHAREHOLDERS AS AT 30 MARCH 2018(Without aggregating securities from different securities accounts belonging to the same person)

No. Name No. of

Shares Held % ^

11. Miracle Hectares Sdn. Bhd. 13,484,700 2.85

12. CIMSEC Nominees (Tempatan) Sdn. Bhd.- CIMB Bank for Lim Wee Chai (PBCL-0G0025)

13,000,000 2.74

13. Tan Chuan Hock 12,600,000 2.66

14. AI Capital Sdn. Bhd. 12,000,000 2.53

15. DB (Malaysia) Nominee (Tempatan) Sendirian Berhad- Exempt An for Bank of Singapore Limited

11,727,900 2.47

16. Cheng Ping Liong 8,861,734 1.87

17. Lee Poh Lan 8,200,000 1.73

18. VibrantModelSdn.Bhd. 7,000,000 1.48

19. Mohammed Noor Bin Mohd Sham 5,796,100 1.22

20. Su Bee Leng 5,450,000 1.15

21. Tan Check Ee 5,200,000 1.10

22. CIMSEC Nominees (Tempatan) Sdn. Bhd.- CIMB Bank for Lim Wee Chai (PB)

5,000,000 1.06

23. Wui Mee Ling 4,570,800 0.96

24. UOBKayHianNominees(Asing)Sdn.Bhd.-ExemptAnforUOBKayHian(HongKong)Limited(A/CClients)

3,359,352 0.71

25. Lee Kuan Meng 3,000,000 0.63

26. Tan Jyh Yaong 3,000,000 0.63

27. Moi Ming Huei 2,937,716 0.62

28. CIMSEC Nominees (Tempatan) Sdn. Bhd.- CIMB Bank for Moi Ming Huei (MY0215)

2,717,000 0.57

29. Tan Bak Leng 2,552,780 0.54

30. Lee Kuan Meng 2,500,000 0.53

^ All percentage shareholding computations are based on the total number of issued shares less treasury shares account (9,198,000 shares) arising from the share buy-back exercise.

ANAlySIS OF SHAREHOlDINGS As at 30 March 2018 (cont’d)


Title/Location Description Current use Tenure

Age of building (Years)

Land/Built-up

Area

Carrying Value as at 31.12.2017

(RM)Date of

Acquisition

No.3-1, 3-2, 3-3, 3-4, 3-5 BlockD2JalanPJU1/39,Dataran Prima 47301 Petaling Jaya Selangor Darul Ehsan Malaysia

Five storey shop office

Office Freehold 19 years 771 sq m 3,240,000 8-Dec-04

No.G-9-1,2&3LorongBayan Indah 1, Bay Avenue, Queensbay,Sg.Nibong,11900 Penang, Malaysia

Three storey shop office

Office, laboratory and warehouse

Freehold 9 years 363 sq m 3,950,000 17-Nov-05

7,190,000

lIST OF PROPERTIESAs at 31 December 2017


NOTICE OF ANNUAl GENERAl MEETING

NOTICE IS HEREBY GIVEN that the Fifteenth Annual General Meeting (“AGM” or “Meeting”) of GRAND-FLO BERHAD(“Grand-Flo”or“theCompany”)willbeheldatGreensIII,GroundFloor,SportsWing,TropicanaGolf&Country Resort, Jalan Kelab Tropicana, 47410 Petaling Jaya, Selangor Darul Ehsan on Monday, 25 June 2018 at 10.00 a.m. to transact the following businesses:-

A G E N D A

1. To receive the Audited Financial Statements for the financial year ended 31 December 2017 together with the Reports of the Directors and Auditors thereon.

PLEASE REFER TO NOTE (a)

2. To approve the payment of a Final Single-Tier Dividend of 0.6 sen per ordinary share for the financial year ended 31 December 2017.

ORDINARY RESOLUTION 1

3. To approve the Directors’ fees and benefits of up to RM357,000 for the financial year ending 31 December 2018.


4. To re-elect the following Directors who retire by rotation pursuant to Clause 104 of the Company’s Constitution: -

i. Mr. Cheong Kee Yoong

ii. Mr. Chuah Chew Hai



5. To re-elect the following Directors who retire pursuant to Clause 110 of the Company’s Constitution: -

i. Tan Sri Azlan Bin Mohd Zainol

ii. Mr. Lee Eng Eow

iii. Ms. Joyce Wong Ai May




6. To re-appoint Messrs Grant Thornton Malaysia as Auditors of the Company until the conclusion of the next AGM and to authorise the Directors to fix their remuneration.


As Special Business:To consider and if thought fit, pass with or without any modifications, the following resolutions: -

7. RETENTION OF INDEPENDENT NON-EXECUTIVE DIRECTORS

i. “THAT Mr. Yu Chee Sing, who has served as an Independent Non-Executive Director of the Company for a cumulative term of more than twelve (12) years, be and is hereby retained as an Independent Non-Executive Director of the Company.”

ii. “THAT subject to the passing of Ordinary Resolution 3, Mr. Cheong Kee Yoong, who has served as an Independent Non-Executive Director of the Company for a cumulative term of more than nine (9) years, be and is hereby retained as an Independent Non-Executive Director of the Company.”




NOTICE OF ANNUAl GENERAl MEETING (cont’d)

8. GENERAL AUTHORITY FOR THE DIRECTORS TO ISSUE SHARES PURSUANT TO SECTIONS 75 AND 76 OF THE COMPANIES ACT 2016

“THAT pursuant to Sections 75 and 76 of the Companies Act 2016 (“the Act”), and subject to the approvals of the relevant governmental and/or regulatory authorities, the Directors be and are hereby empowered to allot and issue shares in the Company from time to time at such price, upon such terms and conditions, for such purposes and to such person or persons whomsoever as the Directors may deem fit provided that the aggregate number of shares issued pursuant to this resolution does not exceed 10% of the total number of issued shares of the Company for the time being AND THAT the Directors be and are also empowered to obtain approval from the Bursa Malaysia Securities Berhad (“Bursa Securities”) for the listing of and quotation for the additional shares so issued AND THAT such authority shall continue in force until the conclusion of the next AGM of the Company.”


9. PROPOSED RENEWAL OF THE AUTHORITY FOR THE COMPANY TO PURCHASE ITS OWN SHARES OF UP TO TEN PERCENT (10%) OF ITS TOTAL NUMBER OF ISSUED SHARES (“PROPOSED RENEWAL OF SHARE BUY-BACK AUTHORITY”)

“THAT subject always to the Act, rules, regulations and orders made pursuant to the Act, provisions of the Constitution of the Company, the Main Market Listing Requirements of Bursa Securities (“Listing Requirements”) and the approvals of any other relevant governmental and/or regulatory authorities, the Company be and is hereby authorised to purchase and/or hold such amount of ordinary shares in the Company’s issued share capital (“Grand-Flo Shares”) through Bursa Securities upon such terms and conditions as the Directors may deem fit and expedient in the interest of the Company provided that:

(i) the aggregate number of Grand-Flo Shares bought-back and/or held as treasury shares does not exceed ten percent (10%) of the total number of issued shares of the Company subject to a restriction that the issued share capital of the Company does not fall below the public shareholding spread requirement of the Listing Requirements;

(ii) the maximum funds to be allocated for the share buy-back shall not exceed the aggregate of the retained earnings of the Company; and

(iii) the Grand-Flo Shares purchased pursuant to the Proposed Renewal of Share Buy-Back Authority are to be treated in any of the following manner:

(a) cancel the purchased Grand-Flo Shares;

(b) retain the purchased Grand-Flo Shares as treasury shares for distribution as share dividends to the shareholders of the Company and/or be resold through Bursa Securities in accordance with the relevant rules of Bursa Securities and/or be cancelled subsequently; or

(c) retain part of the purchased Grand-Flo Shares as treasury shares and cancel the remainder,




AND THAT such authority shall commence immediately upon the passing of this resolution until:

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

(ii) the expiration of the period within which the next AGM after that date it is required by law to be held; or

(iii) revoked or varied by ordinary resolution passed by the shareholders of the Company at a general meeting of the Company,

whichever occurs first, but not so as to prejudice the completion of the purchase(s) by the Company of the Grand-Flo Shares before the aforesaid expiry date and made in any event, in accordance with the provisions of the guidelines issued by Bursa Securities and any prevailing laws, rules, regulations, orders, guidelines and requirements issued by any other relevant government and/or regulatory authorities;

ANDFURTHERTHAT, theDirectorsof theCompanybeandareherebyauthorised to take all such steps as are necessary or expedient to implement, finalise, complete or to effect the Proposed Renewal of Share Buy-Back Authority with full powers to assent to any conditions, modifications, resolutions, variations and/or amendments (if any) as may be imposed by the relevant authorities and to do all such acts and things as they may deem fit and expedient in the best interest of the Company to give effect to and to complete the purchase of the Grand-Flo Shares.”

10. PROPOSED RENEWAL OF EXISTING SHAREHOLDERS’ MANDATE AND PROPOSED NEW SHAREHOLDERS’ MANDATE FOR RECURRENT RELATED PARTY TRANSACTIONS OF A REVENUE OR TRADING NATURE (“PROPOSED SHAREHOLDERS’ MANDATE”)

“THAT, authority be and is hereby given in line with Paragraph 10.09 of the Listing Requirements of Bursa Securities, for the Company and/or its subsidiaries to enter into any of the transactions with the related parties as set out in Section 1.3 of the Circular to Shareholders in relation to the Proposed Shareholders’ Mandate dated 30 April 2018 which are necessary for the day-to-day operations of the Company and/or its subsidiaries within the ordinary course of business of the Company and/or its subsidiaries, made on an arm’s length basis and on normal commercial terms which are those generally available to the public and are not detrimental to the minority shareholders of the Company;




AND THAT such authority shall commence immediately upon the passing of this resolution until:

(i) the conclusion of the next AGM of the Company following the general meeting at which the ordinary resolution for the Proposed Shareholders’ Mandate was passed, at which time it shall lapse, unless the authority is renewed by a resolution passed at the next AGM; or

(ii) the expiration of the period within which the next AGM after that date it is required by law to be held pursuant to Section 340(2) of the Act (but shall not extend to such extension as may be allowed pursuant to Section 340(4) of the Act); or

(iii) revoked or varied by an ordinary resolution passed by the shareholders of the Company at a general meeting,

whichever is earlier.

ANDFURTHERTHAT theDirectorsof theCompanybeandareherebyauthorised to do all acts, deeds and things as they may be deemed fit, necessary, expedient and/or appropriate in order to implement the Proposed Shareholders’ Mandate with full power to assent to all or any conditions, variations, modifications and/or amendments in any manner as may be required by any relevant authorities or otherwise and to deal with all matters relating thereto and to take all such steps and to execute, sign and deliver for and on behalf of the Company all such documents, agreements, arrangements and/or undertakings, with any party or parties and to carry out any other matters as may be required to implement, finalise and complete, and give full effect to the Proposed Shareholders’ Mandate in the best interest of the Company.”

11. To transact any other business of which due notice shall have been given.

NOTICE OF DIVIDEND ENTITLEMENT

NOTICEISALSOHEREBYGIVENthataFinalSingle-TierDividendof0.6senperordinaryshareinrespectofthefinancial year ended 31 December 2017, if approved by the shareholders at the Fifteenth AGM of the Company, will be paid on 25 July 2018 to the shareholders whose names appear in the Record of Depositors of the Company at the close of business on 12 July 2018.

A depositor shall qualify for entitlement to the dividend only in respect of:-

(i) Shares transferred into the Depositor’s Securities Account before 4.00 p.m. on 12 July 2018 in respect of ordinary transfers; and

(ii) Shares bought on Bursa Malaysia Securities Berhad on a cum-entitlement basis according to the Rules of Bursa Malaysia Securities Berhad.



By order of the Board

TEA SOR HUA (MACS 01324)Company Secretary

Date: 30 April 2018Petaling Jaya, Selangor Darul Ehsan

Notes:

a) The Agenda 1 is meant for discussion only as the provision of Section 340(1)(a) of the Companies Act 2016 does not require a formal approval of shareholders and hence, is not put forward for voting.

b) A member entitled to attend and vote at the Meeting is entitled to appoint a proxy or proxies to attend and vote in his stead. A proxy may but need not be a member of the Company.

c) A shareholder shall be entitled to appoint up to two (2) proxies to attend and vote at the same meeting. Where a shareholder appoints two (2) proxies, he shall specify the proportion of his shareholdings to be represented by each proxy.

d) Where a member of the Company is an authorised nominee as defined under the Securities Industry (Central Depositories) Act 1991, it may appoint at least one (1) proxy in respect of each securities account it holds with ordinary shares of the Company standing to the credit of the said securities account.

e) Where a member of the Company is an exempt authorised nominee which holds ordinary shares in the Company for multiple beneficial owners in one (1) securities account (“omnibus account”), there is no limit to the number of proxies which the exempt authorised nominee may appoint in respect of each omnibus account it holds. The appointment of multiple proxies shall not be valid unless the proportion of its shareholdings represented by each proxy is specified.

f) The instrument appointing a proxy shall be in writing under the hand of the appointor or his attorney duly authorised in writing. If the appointor is a corporation, the instrument must be executed under its Common Seal or under the hand of an officer or attorney so authorised.

g) To be valid, the instrument appointing a proxy must be deposited at the Share Registrar of the Company situated at Unit 32-01, Level 32, Tower A, Vertical Business Suite, Avenue 3, Bangsar South, No. 8, Jalan Kerinchi, 59200 Kuala Lumpur, not less than forty-eight (48) hours before the time for holding the Meeting or adjourned meeting at which the person named in the instrument proposes to vote.

h) For the purpose of determining a member who shall be entitled to attend the Meeting, the Company will be requesting Bursa Malaysia Depository Sdn. Bhd. in accordance with Clause 65(3) of the Company’s Constitution to issue a General Meeting Record of Depositors as at 19 June 2018. Only members whose names appear in the General Meeting Record of Depositors as at 19 June 2018 shall be regarded as members and entitled to attend, speak and vote at the Fifteenth AGM.

i) All the resolutions set out in this Notice of Meeting will be put to vote by poll.

EXPLANATORY NOTES ON ORDINARY/SPECIAL BUSINESS

1. Item 3 of the Agenda

The Directors’ fees and benefits proposed for the period from 1 January 2018 to 31 December 2018 are calculated based on the current Board size and number of scheduled Board and Committee meetings for 2018. This resolution is to facilitate payment of Directors’ fees and benefit on a current financial year basis. In the event the proposed amount is insufficient due to more meetings or enlarged Board size, approval will be sought at the next AGM for the shortfall.




The Board has assessed the independence of Mr. Yu Chee Sing and Mr. Cheong Kee Yoong, who have served as Independent Non-Executive Directors of the Company for a cumulative term of more than twelve (12) years and nine (9) years, respectively. The Board is satisfied that they have met the independence and recommended them to continue to act as Independent Non-Executive Directors of the Company based on the following justification:

a. they have declared and confirmed that they fulfilled the independence guidelines as set out in Chapter 1 of the Listing Requirements of Bursa Securities;

b. they have vast experience in their respective industries which could provide the Board with a diverse set of experience, expertise and independent judgement;

c. they have good knowledge of the Company’s business operations;d. they have devoted sufficient time and attention to their professional obligations for informed and

balanced decision making; ande. they have exercised due care during their tenure as Independent Non-Executive Director of the Company

and carried out their professional duties in the best interest of the Company and shareholders.

Pursuant to Practice 4.2 of the Malaysian Code on Corporate Governance, the retention of Mr. Yu Chee Sing who has served as an Independent Non-Executive Director of the company for a cumulative term of more than twelve (12) years, the approval of the shareholders at the Meeting will be sought through a two-tier voting process.


The Ordinary Resolution 11 proposed under item 8 of the Agenda is a renewal of the general mandate for issuance of shares by the Company under Sections 75 and 76 of the Companies Act 2016. This Ordinary Resolution, if passed, will give the Directors of the Company from the date of the above meeting, authority to allot and issue ordinary shares from the unissued capital of the Company for such purposes as the Directors consider would be in the interest of the Company. The authority, unless revoked or varied by the Company in a general meeting, will expire at the next AGM.

This general mandate will provide flexibility to the Company for allotment of shares for any possible fund raising activities, including but not limited to further placing of shares, for the purpose of funding future investment project(s), working capital and/or acquisition(s).

As at the date of this Notice, no new shares in the Company were issued pursuant to the mandate granted to the Directors at the last AGM held on 30 May 2017 which will lapse at the conclusion of the Fifteenth AGM.


The Ordinary Resolution 12 proposed under item 9 of the Agenda is to renew the shareholders’ mandate for the share buy-back by the Company. The said proposed renewal of shareholders’ mandate will empower the Directors to buy-back and/or hold up to a maximum of 10% of the Company’s total number of issued shares at any point of time, by utilising the amount allocated which shall not exceed the total retained profits of the Company. This authority unless revoked or varied by the Company at a general meeting, will expire at the conclusion of the next AGM, or the expiration of period within which the next AGM is required by law to be held, whichever is earlier.

Please refer to the Share Buy-Back Statement to Shareholders dated 30 April 2018 for further details.


The Ordinary Resolution 13 proposed under item 10 of the Agenda, if passed, will give the mandate for the Company and/or its subsidiaries to enter into Recurrent Related Party Transactions in accordance with Paragraph 10.09 of the Listing Requirements of Bursa Securities.

Further information is set out in the Circular to Shareholders dated 30 April 2018.

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✄

I/We (full name in capital letters) _______________________________________ NRIC/Company No. _________________________________

of (full address) __________________________________________________________________________________________________________

being (a) member(s) of GRAND-FLO BERHAD (607392-W) (“the Company”) hereby appoint (full name in capital letters) ______________

________________________________________________________________________________________________________________________

NRIC No. ________________________________of (full address) _________________________________________________________________

________________________________________________________________________________________________________________________

or failing him/her, _______________________________________________ NRIC No. _________________________________ of (full address)

______________________________________________________________________________________________________________________ or

failing him/her, the Chairman of the Meeting as my/our proxy to vote for me/us on my/our behalf at the Fifteenth Annual General Meeting (“AGM”or“Meeting”)oftheCompanytobeheldatGreensIII,GroundFloor,SportsWing,TropicanaGolf&CountryResort,JalanKelabTropicana, 47410 Petaling Jaya, Selangor on Monday, 25 June 2018 at 10.00 a.m. and at any adjournment thereof.

Please indicate with an “X” in the appropriate spaces how you wish your votes to be cast. If no specific direction as to vote is given, the Proxy will vote or abstain from voting at his/her discretion.

No. Resolutions For Against1. To approve the payment of a Final Single-Tier Dividend of 0.6 sen per ordinary share for the

financial year ended 31 December 2017.2. To approve the Directors’ fees and benefits of up to RM357,000 for the financial year ending

31 December 2018.3. To re-elect Mr. Cheong Kee Yoong as Director of the Company.4. To re-elect Mr. Chuah Chew Hai as Director of the Company.5. To re-elect Tan Sri Azlan Bin Mohd Zainol as Director of the Company. 6. To re-elect Mr. Lee Eng Eow as Director of the Company.7. To re-elect Ms. Joyce Wong Ai May as Director of the Company.8. To re-appoint Messrs Grant Thornton Malaysia as Auditors of the Company.9. To retain Mr. Yu Chee Sing as an Independent Non-Executive Director of the Company.10. To retain Mr. Cheong Kee Yoong as an Independent Non-Executive Director of the Company.11. To authorise the Directors to allot shares pursuant to Sections 75 and 76 of the Companies

Act 2016.12. To approve the Proposed Renewal of Share Buy-Back Authority.13. To approve the Proposed Shareholders’ Mandate for RRPT.

Dated this ________ day of _______________ 2018.CDS ACCOUNT NO. NO. OF SHARES HELD

Percentage of shareholdings to be represented by the proxies:

No. of shares %

Proxy 1

Proxy 2

Signature of Member(s)/Common Seal TOTAL 100

Notes:a) A member entitled to attend and vote at the Meeting is entitled to appoint a proxy or proxies to attend and vote in his stead. A proxy may

but need not be a member of the Company. b) A shareholder shall be entitled to appoint up to two (2) proxies to attend and vote at the same meeting. Where a shareholder appoints two

(2) proxies, he shall specify the proportion of his shareholdings to be represented by each proxy.c) Where a member of the Company is an authorised nominee as defined under the Securities Industry (Central Depositories) Act 1991, it may

appoint at least one (1) proxy in respect of each securities account it holds with ordinary shares of the Company standing to the credit of the said securities account.

d) Where a member of the Company is an exempt authorised nominee which holds ordinary shares in the Company for multiple beneficial owners in one (1) securities account (“omnibus account”), there is no limit to the number of proxies which the exempt authorised nominee may appoint in respect of each omnibus account it holds. The appointment of multiple proxies shall not be valid unless the proportion of its shareholdings represented by each proxy is specified.

e) The instrument appointing a proxy shall be in writing under the hand of the appointor or his attorney duly authorised in writing. If the appointor is a corporation, the instrument must be executed under its Common Seal or under the hand of an officer or attorney so authorised.

f) Tobevalid,theinstrumentappointingaproxymustbedepositedattheShareRegistraroftheCompanysituatedatUnit32-01,Level32,TowerA,VerticalBusinessSuite,Avenue3,BangsarSouth,No.8,JalanKerinchi,59200KualaLumpur,notlessthanforty-eight(48)hoursbefore the time for holding the Meeting or adjourned meeting at which the person named in the instrument proposes to vote.

g) For the purpose of determining a member who shall be entitled to attend the Meeting, the Company will be requesting Bursa Malaysia Depository Sdn. Bhd. in accordance with Clause 65(3) of the Company’s Constitution to issue a General Meeting Record of Depositors as at 19 June 2018. Only members whose names appear in the General Meeting Record of Depositors as at shall be regarded as members and entitled to attend, speak and vote at the Fifteenth AGM.

h) All the resolutions set out in the Notice of Meeting will be put to vote by poll.

PROXY FORM

The Share Registrar of Grand-Flo Berhad (607392-W)TricorInvestor&IssuingHouseServices Sdn Bhd (11324-H)Unit32-01,Level32,TowerA,VerticalBusinessSuite,Avenue 3, Bangsar South,No. 8, Jalan Kerinchi,59200 Kuala Lumpur.

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A n n u A l R e p o R t 2 0 1 7

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HEAD OFFicE



KUALA LUmPUR OFFicE


Tel : 603-7980 8580 Fax : 603-7980 8790

JOHOR BAHRU OFFicE


Tel : 607-351 1972 Fax : 607-352 6125

mALAccA OFFicE


Tel : 606-281 7806 Fax : 606-281 7827

SEREmBAN OFFicE


Tel : 606-601 7221 Fax : 606-601 1083

PENANG OFFicE



HONG KONG OFFicE

cL Solutions Ltd Unit 4, G/F, Po Lung Centre, 11 Wang Chiu Road, Kowloon Bay, Hong Kong

Tel : 852-2989 0300 Fax : 852-2754 3038

GUANGzHOU, cHiNA OFFicE

Guangzhou cL Solutions Limited Room 3811, Jiangwan Business Center, 298, Yanjiang Zhong Road, Guangzhou, People’s Republic of China

Tel : 8620-8386 3338 Fax : 8620-8387 3355

PROPERTy DEvELOPmENT OFFicE

Jalur Bina Sdn Bhd innoceria Sdn Bhd


Tel : 604-399 8912 Fax : 604-370 0119

Documents

Building Resilience gRowth - Grand-Flo Berhad · term growth. It enabled the Group to weather storms and uncover opportunities from unexpected or changing customers’ needs and wider