CONTENTS · 2 BOARD OF DIRECTORS DATO’ LIM KHOON HENG Non-Executive Chairman DATO’ LIM LOONG HENG Managing Director LIM KEAN CHOONG Executive Director LIM KAH POON

Corporate Information .........................................................................................................2Group Structure ...................................................................................................................3Board of Directors ...............................................................................................................4Profile of the Directors .........................................................................................................5Profile of Key Senior Management .....................................................................................9Management Discussion and Analysis ............................................................................10Statement of Sustainability and Corporate Social Responsibilities ..............................14Corporate Governance Overview Statement ...................................................................15Audit and Risk Management Committee Report ............................................................26Statement on Risk Management and Internal Control ...................................................29Other Compliance Information .........................................................................................32Responsibility Statement by the Board of Directors ......................................................33Financial Statements ..........................................................................................................34 Analysis of Shareholdings ................................................................................................92 Notice of Annual General Meeting ....................................................................................94 Statement Accompanying Notice of Annual General Meeting .......................................96 Proxy FormRequest Form

CONTENTS

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BOARD OF DIRECTORS

DATO’ LIM KHOON HENGNon-Executive Chairman

DATO’ LIM LOONG HENGManaging Director

LIM KEAN CHOONGExecutive Director

LIM KAH POONIndependent Non-Executive Director

CHOW FOONG YEW Independent Non-Executive Director

CHEN THIAM KWEE @ TAN THIAM KWEE Independent Non-Executive Director

AUDIT AND RISK MANAGEMENT COMMITTEE

LIM KAH POON (CHAIRMAN) CHOW FOONG YEW CHEN THIAM KWEE @ TAN THIAM KWEE

NOMINATION AND REMUNERATION COMMITTEE

CHOW FOONG YEW (CHAIRMAN)LIM KAH POONCHEN THIAM KWEE @ TAN THIAM KWEE

SECRETARY

FOO SIEW LOON (MAICSA 7006874)

REGISTERED OFFICE

Wisma Lim Kim ChuanLot 50A, Jalan 1/89B3½ Mile Off Jalan Sungai Besi57100 Kuala LumpurTel : +603-7983 3333Fax : +603-7980 3333E-mail : [email protected]

WEBSITE

http://www.pineappleresources.com.my

REGISTRAR

SECTRARS MANAGEMENT SDN. BHD.Lot 9-7 Menara Sentral VistaNo. 150 Jalan Sultan Abdul Samad Brickfields50470 Kuala LumpurTel : +603-2276 6138Fax : +603-2276 6131

PRINCIPAL BANKERS

RHB BANK BERHADCIMB BANK BERHAD MALAYAN BANKING BERHADUNITED OVERSEAS BANK (MALAYSIA) BERHAD

AUDITORS

ONG BOON BAH & CO. B-10-1, Megan Avenue 1189, Jalan Tun Razak50400 Kuala LumpurTel : +603-2163 0292Fax : +603-2163 0316

STOCK EXCHANGE LISTING

ACE Market of Bursa Malaysia Securities Berhad(Trading/Services Sector)

Stock Name : PINEAPPStock Code : 0006

CORPORATE INFORMATION

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GROUP STRUCTURE

100%

100%

100%

100%

100%

PINEAPPLE OFFICE SUPPLIES SDN BHD

AGVA MARKETING MALAYSIA SDN BHD

PINEAPPLE COMPUTER UTARA SDN BHD

PINEAPPLE COMPUTER SYSTEMS SDN BHD

SC-PNP EDARAN SDN BHD

100%PINE SYSTEM TECHNOLOGY SDN BHD

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BOARD OF DIRECTORS

1. DATO’ LIM KHOON HENG

2. DATO’ LIM LOONG HENG

3. LIM KEAN CHOONG

4. LIM KAH POON

5. CHOW FOONG YEW

6. CHEN THIAM KWEE @ TAN THIAM KWEE

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DATO’ LIM KHOON HENG, PATRICK(Non-Executive Chairman)65 years of ageMale MalaysianDSSA

Chairman, holding a non-executive and non-independent position since 8 January 2001

Dato’ Lim Khoon Heng was appointed as the Chief Executive Officer and Group Managing Director of Chuan Huat Resources Berhad (“CHRB”) on 2 May 1997. He is the Managing Director of Chuan Huat Steel Sdn Bhd since 14 December 1976. He is responsible for the operation, management and strategic planning of the CHRB Group. He was conferred with the DSSA award which carries the title of “Dato” by the Sultan of Selangor on 13 March 1999. He has been appointed as the Advisor of the Malaysia Hardware, Machinery & Building Materials Dealers’ Association and Malaysia Steel And Metal Distributors’ Association. He was awarded the Outstanding Entrepreneurship Award on 29 July 2010 in the Asia Pacific Entrepreneurship Awards 2010 (APEA 2010). He was again awarded the Asia Pacific Entrepreneurship Award-Building Material Industry on August 2016 in the Asia Pacific Entrepreneurship Award 2016 (APEA 2016).

Dato’ Lim Khoon Heng attended five out of five Board Meetings held in the financial year ended 31 December 2017.

DATO’ LIM LOONG HENG, MARK(Managing Director)63 years of ageMaleMalaysianDIMP

Managing Director, holding an executive and non-independent position, since 12 December 2000.

Dato’ Lim Loong Heng is also the Deputy Managing Director of Chuan Huat Resources Berhad (“CHRB”), a post he held since 2 May 1997. He was attached to Schinger Ltd in UK as an Assistant Accountant for two years prior to his appointment to the Board of Directors of the CHRB Group. He currently takes charge of financial and corporate planning matters of the PINEAPPLE Group. He is responsible for setting up the PINEAPPLE Group and instrumental in the tie-up with local hypermarkets to market and distribute computer media, peripherals and accessories. He was conferred with the DIMP award which carries the title of “Dato” by the Sultan of Pahang on 26 February 2005.

Dato’ Lim Loong Heng attended five out of five Board Meetings held in the financial year ended 31 December 2017.

PROFILE OF THE DIRECTORS

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LIM KEAN CHOONG(Executive Director)37 years of ageMaleMalaysian

Director, holding an executive position and non-independent position since 5 October 2016.

Mr. Lim Kean Choong joined the Pineapple Group in June 2004, initially responsible to promote sales in few of the Pineapple retail outlets. Subsequently was overseeing the operation of the warranty department, fairs and road-shows management and procurement of the Group. Currently manages the day to day operations for Pineapple Group in outlets retailing, e-commerce sale and sourcing of new products. Additional focus now will be the business development of the Group to identify potential business opportunities to enhance the Group’s performance. He holds a Bachelor’s Degree in Business Management from Monash University.”

Mr. Lim Kean Choong attended five out of five Board Meetings held in the financial year ended 31 December 2017.

LIM KAH POON(Independent Non-Executive Director)69 years of ageMale Malaysian

Director, holding a non-executive and independent position since 30 April 2013.

Mr. Lim Kah Poon is a Fellow of the Institute of Chartered Accountants in Ireland and a member of the Malaysian Institute of Accountants (MIA). Mr. Lim is a Chartered Accountant with a broad based business experience, spent the early part of his professional career with Ernst & Whinney in Dublin, Ireland and Price Waterhouse in Kuala Lumpur / Penang for approximately 12 years. Mr. Lim was the Branch Manager of Price Waterhouse, Penang when he left the firm in 1983.

He joined Malaysian Tobacco Company Berhad (“MTC”) - a subsidiary of British American Tobacco Company Ltd (“BAT”), in June 1983, where he held various senior finance positions over a 15 year-period, including the position of Financial Controller from 1990 to June 1996. From July 1996, he assumed the Regional Audit role, responsible for facilitating and identifying the key business risks and evaluating the respective control environment in all the key BAT operations in the Asia Pacific Region with the top management and ensuring that the business risks and weaknesses in the control environment were properly addressed, managed or minimised.

In 1998, he joined a local company, also quoted on Bursa Malaysia Securities Berhad, as its Chief Financial Officer. His finance and regional audit portfolios in both MTC and the local company had provided him with the wide experience covering financial and management accounting and control, formulation of corporate policies and strategies, risks management, corporate governance, business and tax planning and the role of internal audit under the ever changing corporate environment.

He left his last company in September 2001 in order to focus on his consultancy work.

Mr. Lim Kah Poon is also an Independent Non-Executive Director in Chuan Huat Resources Berhad and HeveaBoard Berhad. He attended five out of five Board Meetings held in the financial year ended 31 December 2017.

PROFILE OF THE DIRECTORS (cont’d)

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CHOW FOONG YEW(Independent Non-Executive Director)59 years of ageMale Malaysian

Director, holding a non-executive and independent position since 27 February 2017.

Mr. Chow Foong Yew graduated with a Bsc.(Hons) degree in Electrical and Electronics Engineering from Portsmouth University in 1980. He has served in numerous multi-national companies and conglomerates locally and overseas in his 31 years corporate career. He commenced his career with Asea Brown Boveri (ABB) in 1980 and then joined Malaysia Tobacco Company (MTC) a subsidiary of British American Tobacco in 1981 to 1995 in various positions in Engineering, Production, Product Development and Logistics.

He then joined Philip Morris Asia Ltd (PMAL) in Hong Kong in 1995 as the Regional Manufacturing Manager overseeing third party contract manufacturers in Vietnam, Indonesia, Nepal and Philippines. In 2000, he joined PT HM Sampoerna (PTHMS) in Indonesia as Head of Global Logistics responsible for the management and execution of global supply chain strategies for contract manufacturers in the UK, Germany and Russia. In 2004, he was appointed Country Manager of Sampoerna Brazil Latin America responsible for turnaround strategies to improve profitability and market share.

In 2006, Mr. Chow joined GemsTV Holdings Ltd (GTV), a SGX public listed company as Chief Manufacturing Officer responsible for the jewellery manufacturing facility in Thailand. He undertook the modernization of the manufacturing facility and setting up of the Institute of Jewellery Technology under the Thailand Board of Investment (BOI) privileges. Mr. Chow left GTV in 2010 to pursue his personal interests.

Mr. Chow Foong Yew is also an Independent Non-Executive Director of Chuan Huat Resources Berhad. He attended five out of five Board Meetings held in the financial year ended 31 December 2017.


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Family Relationship

Except for Dato’ Lim Khoon Heng and Dato’ Lim Loong Heng who are brothers while Lim Kean Choong is the son of Dato’ Lim Loong Heng and nephew of Dato’ Lim Khoon Heng, none of the other directors are related to one another, nor with any major shareholders.

Save as disclosed, none of the Directors have :-

1. Any other directorship in public companies and listed issuers;2. Any family relationship with any Director and/or major shareholder;3. Any conflict of interest with the conflict; 4. Any convictions for offences within the past five (5) years other than traffic offences, if any; and5. Any public sanction or penalty imposed by relevant regulatory bodies during the financial year.


CHEN THIAM KWEE @ TAN THIAM KWEE(Independent Non-Executive Director)57 years of ageMale Malaysian

Director, holding a non-executive and independent position since 8 January 2018.

Mr. Chen Thiam Kwee @ Tan Thiam Kwee obtained a Diploma in accounting soon after his secondary education. He started his career attached in the accounting departments handling the full accounting functions for the company. After four years, he left his career in accounting to move on to marketing which he considered as more challenging. During his next 15 years career, he served in the marketing department of 3 different Public Listed Companies listed in Bursa Malaysia. They are Amsteel Berhad, Malayawata Steel Berhad and Perwaja Steel Berhad, the core business of all these companies was in the supply of construction steel. During which he has gained vast experience in the construction steel industry arising from his experiences in marketing construction steel.

Around 1997, Mr. Tan decided left his employment career to start his own business venture. He started his own trading company distributing various products which included building materials, bedding products and kitchen appliances. Since then, he has successfully carried his business for 21 years.

Mr Tan Thiam Kwee did not attend any of the Board Meetings held in the financial year ended 31 December 2017 as he joined the Board on 8 January 2018.

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LEONG WAI YINGGeneral Manager Finance53 yearsFemaleMalaysian

General Manager Finance position since 2001.

Ms. Leong Wai Ying holds an Advance Diploma in Accounting from The Association of International Accountants (AIA). She was a Deputy Audit Manager of a public accounting firm for a period of six years. She first joined the Chuan Huat Resources Berhad (“CHRB”) Group in 1996 as an Accountant of CHRB Selatan Sdn Bhd, a subsidiary of CHRB. She was then promoted to Assistant General Manager – Finance, of the CHRB Group in March 2000. Her work was not just restricted in the operation of financial control but was also responsible for some corporate compliances matters of the CHRB Group including the Pineapple Resources Berhad (PRB) Group. She was a one of the senior team members in the corporate exercise leading to the listing of the Company in 2001 in the Bursa ACE Market. She was promoted to her present position in 2001.

SOON BEE HUAGeneral Manager Marketing64 yearsFemaleMalaysian

General Manager Marketing position since 1987.

Ms. Soon Bee Hua has vast experiences of more 12 years in the trading of consumer products before joining the Pineapple Resources Berhad (PRB) Group in 1987. Her first position was the General Manager of Marketing. She was then in charge of the trading of IT related products and accessories. During 15 years, she has managed to grow the business of the Group to be a large IT retailing chain in the country. Her work was also involved in the identifying domestic procurement channels to support the growing demands of consumers. In recognising her valuable experiences, In 2012, She was assigned to be responsible for the new business of the PRB Group of concessionaries of IT products with the AEON Group. This business segment later grow to be amongst a major contributor to the Group.

PROFILE OF KEY SENIOR MANAGEMENT

Save as disclosed, none of the Senior Management have :-

1. Any other directorship in public companies and listed issuers;2. Any family relationship with any Director and/or major shareholder;3. Any conflict of interest with the conflict; 4. Any convictions for offences within the past five (5) years other than traffic offences, if any; and5. Any public sanction or penalty imposed by relevant regulatory bodies during the financial year.

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MANAGEMENT DISCUSSION AND ANALYSISOverview of Group’s Business

The Group is primarily in the business of retailing and reselling of a full range of computer products and related consumables and accessories in hypermarkets and via e-commerce. The Group’s major products include laptops, printers, printing consumables such as ink and toner cartridges, multimedia speakers, data storage products and computer accessories. The Group’s total revenue is derived from sales of products in the physical retail stores and outlets in hypermarkets and the online e-commerce platform. For the FY2017 under review, sales from the hypermarkets retailing and reselling contributed 80% to total revenue while the online e-commerce sales contributed 20%, an increase from 5% in 2015 to 20% in 2017. New non IT products and items such as home and living products were progressively added on to the e-commerce platform to expand the range of products available to cater to a wider segment of consumers as part of the plan to grow the Group’s revenue and profitability.

In the highly competitive computer and IT products retailing industry, the Group’s strategy is to continue to stay focus on being a major retailer of it’s core business products through optimising its sales operations in hypermarkets while pursuing a growth strategy in the online e-commerce platform. The Group will also pursue expansion into viable non computer IT businesses with growth potential and which has synergy with the Group’s core business competencies for the Group’s longer term sustainability.

Five Years Financial Highlights

2013 2014 2015 2016 2017 RM’000 RM’000 RM’000 RM’000 RM’000Revenue 52,641 49,494 47,117 51,220 57,255Profit/ (loss) before taxation 893 572 (484) (450) 578Profit/ (loss) after taxation 766 378 (626) (377) 354Shareholders’ Funds 26,391 26,769 26,143 25,765 26,119NTA per share (sen) 0.54 0.55 0.54 0.53 0.54Earnings per share (sen) 1.58 0.78 (1.29) (0.78) 0.73

Overview Of The Group’s Financial Performance for the Financial Year ended 31 December 2017

The Group recorded RM57.2 million in revenue for Financial Year ended 31 December 2017 as compared to RM51.2 million for Financial Year ended 31 December 2016. The increase in revenue was mainly due to continuous aggressive promotion activities in all the Group’s physical retail outlets which were supported by the products principals. The increase in e-commerce revenue also contributed towards the Group’s total revenue.

The Group also achieved a positive turnaround in Financial Year ended 31 December 2017 by recording a profit before taxation of RM578k compared with a loss of RM450k in Financial Year ended 31 December 2016. This profit before taxation achievement was attributed to higher revenue, consolidation of sales operations and cost reduction programs conducted throughout the Financial Year ended 31 December 2017.

Earnings per share has also improved from loss of 0.78 sen in Financial Year ended 31 December 2016 to earnings of 0.73 sen for the Financial Year ended 31 December 2017.

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MANAGEMENT DISCUSSION AND ANALYSIS (cont’d)

Overview Of The Group’s Financial Performance for the Financial Year ended 31 December 2017 (cont’d)

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Overview Of Group’s 3 Years Online Sales Performance

Since 2015 when the computer and related products market started to shift towards the e-commerce or online platform, the Group had made the early move by venturing into the online or e-commerce segment in line with the growing consumer trend for online shopping. Since then, the online e-commerce revenue for the Group has seen encouraging growth and the Group has further expanded and diversified the online products range by adding more imported and unique products with higher profit margin over the years resulting in the profit margin growth from 7% in FY2015 to 15% in the Financial Year ended 31 December 2017.

Group’s Prospect

The Group anticipates 2018 to be a very challenging year as more industry competitors are expected to engage the e-commerce business model and enter the online business platform. The increased competition will add more pressure not only to the Group’s current online business but also to the retail business of the Group’s physical stores and outlets operating at the hypermarkets. Whilst the Group has developed plans and strategies to remain competitive in its current physical stores retail and online businesses against the anticipated competition, the Group will also be looking into putting in place other business plans for 2018 to strive for increase in revenue and profit growth.

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Segmental Prospects

1) E-commerce Sales

Currently e-commerce sales is contributing almost 20% to the Group’s total revenue and growth potential in this segment remains high. The Group plans to grow this segment in 2018 through the implementation of AI (Artificial Intelligence) in Big Data Analytics to improve customer retention, increase customer base and to improve the effectiveness of online products selection to meet customer needs. As more resources will be invested in this segment, there are opportunities for the Group to branch out and extend the e-commerce business in providing services to third parties interested in starting their own online e-commerce business.

2) Loyalty Point Program ( P-Points ) Apps

The Group will be launching a Loyalty Point Program (P-Points) Apps which is the Group’s latest proprietary development. There are 3 phases in this development with the first phase scheduled to be launched in early part of 2nd quarter 2018. The objective of the P-Points program is for customers to earn P-Points for their purchases of the Group’s products which the customers can then use their P-Points to redeem products or purchase products at discounted value for products sold in the Group’s e-commerce platform. For the second and third phase, the Group will collaborate with third party retail merchants to extend the P-Points loyalty program to include third party merchants and their products and merchandises. The full extent of the P-Points loyalty program will be fully launched by end 2018. The Group sees this P-Points loyalty program as added value to its customers and an opportunity to diversify into non-IT related business.

3) Investment In Food & Beverages (F & B) Retail

The Group has been constantly pursuing investments in potential business opportunities to grow the Group’s revenue and profits by leveraging the Group’s expertise and experience in products retailing. The Group conducts extensive research and evaluation into each and every potential opportunity to ensure that the business potential has synergy with the Group’s core retail business. One such opportunity is in the F & B industry where the Group’s management team’s retail business experience enables the Group to invest in a F & B company Thai Hou Sek Restaurants Sdn. Bhd. which operates three (3) Thai Hou Sek restaurant outlets in Desa Park City, Mid Valley Megamall and Pavilion Shopping Mall. The Group sees huge potential in the F & B industry and will continue to invest resources to grow this business segment.

Conclusion

The Group is optimistic of achieving greater heights for Financial Year ended 31 December 2018 with all the plans and new business ventures.


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STATEMENT OF SUSTAINABILITY AND CORPORATE SOCIAL RESPONSIBILITIESThe Group takes cognizance of Corporate Social Responsibility practices which endeavour to continue the commitment to behave ethically and contribute to economic development while improving the quality of life of its employees as well as the local community and society at large. At the same time, the Group is also mindful of the importance of business sustainability, which focuses on managing the impacts of the Group’s business on the economy, environment and society. The Group integrate these practices into its day to day operations by the adoption and application of environmentally responsible practices, sound social policies and good governance structures while ensuring a good balance of these aspects. The practices include:-

- continuous improvements and enhancements to minimize any negative impacts on the environment while ensuring all operations and activities are in compliance with the applicable environment rules, regulations and guidelines.

- recognising that its employees are the most valuable asset and acknowledged their invaluable contributions. As such believes that long term sustainability depends on the ability to attract and retain talented and dedicated employees while ensuring a conducive and safe environment for them to work in. Activities to promote teamwork and create a harmonious environment for employees will include social events, sports activities and company trips. During the year, the Group have celebrated its 60th Anniversary and at the Grand Celebration function, long serving staff were recognised and awarded for their dedicated services to the Group.

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CORPORATE GOVERNANCE OVERVIEW STATEMENTThe Board of Directors (“Board”) of Pineapple Resources Berhad (“PRB” or the “Company”) is committed to maintain high standards of corporate governance in conducting the business and affairs of PRB and its subsidiaries (the “Group”) towards promoting business prosperity, corporate integrity and accountability with the ultimate objective of realising long-term shareholder value, whilst taking into account of the interest of other stakeholders.

This Corporate Governance Overview Statement sets out the principal features of the Group’s corporate governance practices during the financial year ended 31 December 2017 and is made pursuant to Rule 15.25(1) of ACE Market Listing Requirements (“AMLR”) of Bursa Securities Berhad (“Bursa Malaysia”) and guidance drawn from Guidance Note 11 of AMLR and the Corporate Governance Guide (3rd edition) issued by Bursa Malaysia.

This overview also summarises the application by the Group of the Principles and Recommendation of the Malaysian Code on Corporate Governance 2017 (the “Code”) issued by the Securities Commission Malaysia. The Company’s detailed application for each practices as set out in the Code is disclosed in the in the Corporate Governance Report (“CG Report”) which is available on the corporate website www.pineappleresources.com.my

A. BOARD LEADERSHIP AND EFFECTIVENES

1. Functions of the Board

1.1 Board Roles & Responsibilities

The Group is controlled and led by a dynamic Board. It has a balanced board composition with effective Independent Directors. The Board acknowledges the pivotal role played by the Board in the stewardship of its direction and operations, and ultimately the enhancement of long-term shareholder value. To fulfil this role, the Board is responsible for the overall corporate governance of the Group, including its strategic direction, establishing goals for management and monitoring the achievement of these goals. Some of the specific responsibilities of the Board include the following:-

• Reviewing and adopting the overall strategic plans and programs for the Company and Group;

• Overseeing and evaluating the conduct of businesses of the Company and Group;

• Identifying principal risks and ensuring implementation of appropriate internal controls and mitigation measures. The Board shall receive an assurance from the Chief Executive Officer and Chief Financial Officer annually on whether the Company’s risk management and internal control system is operating adequately and effectively, in all material aspects, based on the risk management model adopted by the Company;

• Establishing a succession plan;

• Developing and implementing a shareholder communication policy for the Company; and

• Reviewing the adequacy and the integrity of the management information and internal control systems of the Company and Group.

1.2 Functions delegated to the Management

The functions of the Board and Management are clearly demarcated to ensure the effectiveness of the Company’s operations and are guided by the Group’s Authority Limits. The purpose of the Authority Limits is to define the limits of authority designated to specific positions within the Group and to establish the types and maximum amount of obligations that may be approved. The Authority Limits will be reviewed from time to time to ensure it remains relevant to the Group’s objectives.

The Managing Director together with the Executive Director and respective Divisional Heads (collectively “the management”) are accountable to the day-to-day management of financial and operational matters of the Group. The management ensures that all policies and strategies approved by the Board are properly

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CORPORATE GOVERNANCE OVERVIEW STATEMENT (cont’d)

A. BOARD LEADERSHIP AND EFFECTIVENES (cont’d)

1. Functions of the Board (cont’d)

1.2 Functions delegated to the Management (cont’d)

and effectively implemented. The Management is also responsible for developing and recommending to the Board the annual operating budget and business plan to support the Group’s medium and long term vision and strategy. On an annual basis, the Board undertakes a full year review of the group’s performance against the approved budget and business plan.

1.3 The Chairman and Managing Director

There is a distinct and clear division of the roles and responsibilities between the Chairman of the Board and the Group’s Managing Director (“MD”) to ensure that there is a proper balance of power and authority. The Chairman is primarily responsible for the effective conduct of the Board and ensuring that all Directors have full and timely access to all relevant information necessary for informed decision making. The Chairman encourages active participation by Board members and provides reasonable time for discussion of issues raised at meetings in order to reflect the consensus of the whole Board and not the views of any individual or group. The Group’s MD has overall responsibilities over the operational and business units, organisational effectiveness and implementation of Board policies, directives, strategies and decisions.

1.4 Access to Information and advice

The members of the Board in their individual capacity have full and timely access to information with Board papers distributed in advance of meetings for the discharge of their duties and responsibilities. Prior to the meetings of the Board, Board papers which include the agenda and reports relevant to the issues of the meetings covering the areas of strategic, financial, operational and regulatory compliance matters, are circulated to all the directors. The Board meets, reviews and approves all corporate announcements, including the announcement of the quarterly financial results, prior to releasing them to Bursa Securities.

Senior Management are invited to attend the Board meeting to present and brief the Board on matters pertaining to their area of responsibility as and when required.

The Directors have access to the advice and services of the Company Secretary, who is responsible for ensuring the Board and Shareholder meetings procedures are followed and that all applicable regulations are complied with. The Company Secretary is also responsible for advising the Directors of their obligations and duties, disclosures of their interest in securities, disclosure of any conflict of interest in any transactions involving the Group, prohibition on dealings in securities and restrictions on disclosures of price-sensitive information.

The Board is also regularly updated from time to time by the Company Secretary and /or Management on updates to the regulations and guidelines, as well as any amendments thereto issued by Bursa Securities, Securities Commission, Companies Commission of Malaysia and other relevant regulatory authorities.

1.5 Board Charter

The board is guided by a Board Charter which sets out the principles governing the Board and adopts the principles of good governance and practice in accordance with applicable laws and regulations in Malaysia.

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1. Functions of the Board (cont’d)

1.5 Board Charter (cont’d)

The Board shall periodically review and update its Board Charter to ensure compliance with the regulatory and legal requirements, which will take precedence over any stipulation of the Board Charter, and in accordance with the needs of the Company/Group that may have an impact on the discharge of the Board’s duties and responsibilities. The board charter is published on the corporate website – www.pineappleresources.com.my

1.6 Code of Ethics & Conduct

The Board observes the Code of Ethics for the Company Directors issued by the Companies Commission of Malaysia (“CCM”) – Regulatory Code of Ethics.

The CCM - Regulatory Code of Ethics provide the ground rules and guidance for proper standard of conduct and ethical behaviour for the Board based on the principle of sincerity, integrity, responsibility and corporate social responsibility.

The Group has adopted a standard “PRB Code of Ethics” relating to its operations for all it’s employees. New employees will be briefed on the PRB Code of Ethics as documented in the PRB Employee’s Handbook upon joining.

1.7 Whistle Blowing Policy

The Group’s Whistle Blowing Policy was established with the intention of promoting the highest standards of corporate governance and business integrity which aims to provide an avenue for all employees of the Group and members of the public to raise concerns or disclose any improper conduct within the Group and to take appropriate action to resolve them effectively.

1.8 Sustainability

The Board regularly reviews the strategic directions of the group, taking into account, amongst others, the governance aspects of the Group business as part of its broader responsibility to the purchasers, shareholders and other stakeholders within the communities in which it operates and to deliver long-term sustainable value.

2. Board Composition

2.1 Board Balance

The Board is made-up of six (6) members; comprising one (1) Managing Director, one (1) Executive Director, one (1) Non-Executive Director and, three (3) Independent Non-Executive Directors. A brief profile of each Director can be found in the “Profile of the Directors”.

The concept of independence adopted by the Board is in tandem with the definition of an Independent Director in Rule 1.01 of the AMLR of Bursa Securities. The key elements for fulfilling the criteria are the appointment of an Independent Director who is not a member of management (a Non-Executive Director) and who is free of any relationship which could interfere with the exercise of independent judgement or the ability to act in the best interests of the Group. The Board comprising of 3 Independent Directors have complied with Rule 15.02 of the AMLR which requires that at least two (2) directors or one-third of

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2. Board Composition (cont’d)

2.1 Board Balance (cont’d)

the Board, whichever is the higher, are Independent Directors and also Practice 4.1 of the Code which recommends that at least half of the Board comprises Independent Directors.

The current size and composition of the Board are considered adequate to provide an optimum mix of skills and experience. Furthermore, the Board is of the view that with the current Board size, there is no disproportionate imbalance of power and authority on the Board between the non-independent and independent directors. The Board will continue to monitor and review the Board size and composition from time to time.

2.2 Tenure of Independent Director

The Board believes that valuable contributions can be obtained from directors who have, over a period of time, developed valuable insight of the Company and its business. Their experience enables them to discharge their duties and responsibilities independently and effectively in the decision making process of the Board, notwithstanding their tenure on the board.

Practice 4.2 of the Code stipulated that tenure of an independent directors should not exceed a cumulative term of nine (9) years. None of the Independent Directors of the Company has served the Company for more nine (9) years.

2.3 Retirement and Re-election

The Constitutions of the Company provide that at least one-third of the Board, including the Group Managing Director, are subject to retirement by rotation at each Annual General Meeting. The Directors to retire in each year are the Directors who have been longest in office since their appointment or re-appointment. A retiring Director is eligible for re-appointment.

The Constitutions also provide that all Directors including the Group Managing Director who shall be elected from amongst the Board members shall also retire once at least in each three (3) years and shall be eligible for re-election. These provide an opportunity for the shareholders to renew their mandates. The election of each Director is voted on separately. To assist shareholders in their decision, sufficient information such as personal profile, meetings’ attendance and the shareholdings in the Company of each Director standing for election are disclosed under the Profile of the Directors and Statement of Shareholdings.

2.4 Diverse Board & Senior Management

The Directors, with their different backgrounds and specialisations, collectively bring with them a wide range of experience and expertise in areas such as finance, corporate affairs, marketing and operations. The Executive Directors in particular are responsible for implementing the policies and decisions of the Board, overseeing the operations as well as co-ordinating the development and implementation of business and corporate strategies. The Independent Non-Executive Directors bring to bear objective and independent judgement to the decision making of the Board and provide a capable check and balance for the Executive Directors. The Non-Executive Directors contribute significantly in areas such as policy and strategy, performance monitoring, allocation of resources as well as improving governance and controls. Together with the Executive Directors who have intimate knowledge of the business, the Board is constituted of individuals who are committed to business integrity and professionalism in all its activities. As and when a potential conflict of interest arises, it is a mandatory practice for the Directors concerned to declare their interests and abstain from the deliberation.

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2.5 Gender Diversity

The Board has yet to adopt a gender diversity policy. Board membership is dependent on each candidate’s skills, experience, core competencies and other qualities as well as the needs of the Company for the time being, regardless of gender. The Board does not consider gender to be a bar to Board membership. While compliance with the Code is voluntary, the Board will continue to assess the needs to adopt a gender diversity policy.

2.6 Annual Evaluation

The Board undertakes an annual assessment of the Directors which involves a peer and self-assessment carried out by the Directors. The results, in particular the key strength and weaknesses identified from the evaluation, will be shared with the board to allow enhancements to be undertaken.

The Board plans to meets at least four (4) times a year at quarterly intervals with additional meetings convened when urgent and important decisions need to be taken between the scheduled meetings. During the year ended 31 December 2017, the Board met on five (5) occasions; where it deliberated upon and considered a variety of matters including the Group’s financial results, corporate proposals, the business plan and direction of the Group.

The attendance record of each Director is as follows:

Directors Numbers of Meeting attended

Dato’ Lim Khoon Heng 5/5 Dato’ Lim Loong Heng 5/5 Lim Kean Choong 5/5 Lim Kah Poon 5/5 Chow Foong Yew (Appointed 27/02/17) 4/4 Fakri Bin Hj Abdullah (Resigned 05/08/17) 2/3 Chen Thiam Kwee @ Tan Thiam Kwee (Appointed 08/01/18) * Siaw Hum Kiow (Resigned 22/01/18) 5/5

* Mr Chen Thiam Kwee @ Tan Thiam Kwee did not attend any of the Board Meetings held in the financial year ended 31 December 2017, as he joined the Board on 8 January 2018.

The Board receives documents on matters requiring its consideration prior to and in advance of each meeting. The Board papers providing updates on operational, financial and corporate developments as well as minutes of meetings of the Board are circulated prior to the meeting, are comprehensive and encompass both quantitative and qualitative factors so that informed decisions are made. All proceedings from the Board meetings are minuted and signed by the Chairman of the meeting.

The Board is satisfied with the time commitment given by the Directors. All the Directors do not hold more than 5 directorships as required under Rule 15.06 of AMLR.


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2.7 Board Committees i. Audit and Risk Management Committee

The Audit and Risk Management Committee (“ARMC”) of the Board has been in place since 2001. It presently comprises three (3) Independent Non-Executive Directors. A brief report on the ARMC can be found in the “Audit and Risk Management Committee Report” on pages 26 to 28 of this Annual Report.

ii. Nomination and Remuneration Committee

The Nomination and Remuneration Committee (“NRC”) of the Board has been in place since 2013. The terms of references and the activities are aimed to enhance the effectiveness of the Board.

There were two (2) NRC meeting convened during the financial year ended 31 December 2017.

Member Numbers of Meeting attended

Chow Foong Yew (Chairman) (Appointed 27/02/17) 1/1 Lim Kah Poon 2/2 Dato’ Lim Loong Heng (Resigned 31/05/17) 2/2 Fakri Bin Hj Abdullah (Resigned 05/08/17) 1/2 Chen Thiam Kwee @ Tan Thiam Kwee (Appointed 08/01/18) *

* Mr Chen Thiam Kwee @ Tan Thiam Kwee did not attend any of the NRC Meetings held in the financial year ended 31 December 2017, as he joined the Board on 8 January 2018

The NRC will on an on-going basis serves to assist the Board in the following responsibilities:-

• To nominate candidates for directorship on the Board, assessing the effectiveness of the Board, its Committees and the contribution of each individual Director;

• To review and recommend the appropriate remuneration package of the Executive Directors. The

determination of the remuneration package of the Directors is a matter for the Board as a whole and individuals are required to abstain from discussing or deliberating on their own remuneration; and

• To assess the performance of directors of the Company.

Terms of Reference

• To recommend to the Board, candidates for all directorships to be filled by Shareholders or Board of directors;

• To consider and in making its recommendations candidates for directorship proposed by the Managing Director and, within the bounds of practicability, by any other Director or Shareholder;

• To recommend to the Board, nominees to be appointed as members of the Board, its Committees and Senior Management;


21



2.7 Board Committees (cont’d)

• To assess the effectiveness of the Board and Board Committee, as well as capabilities of individual Members;

• To review, assess and recommend, with or without other independent professional advice, remuneration packages of Directors and Senior Management;

• To ensure that the remuneration packages offered are sufficiently attractive to retain the best talents required to run the Company successfully;

• To structure component parts of the remuneration package so as to link rewards to corporate and individual performance; and

• To assess the needs of the Company for talents at the Board-level at any particular time.

Activities

• Shall annually review and determine the required mix of skills, experience, core competencies and other qualities which Executive Directors should possess for recommendation to the Board;

• Shall assess on an annual basis the effectiveness of the Board as a whole, the Board Committees and contributions of each Director;

• Shall conduct periodic reviews of the overall remuneration policies and packages for Executive for recommendation to the Board; and

• Shall be entitled to the services of the Company Secretary who must ensure that all appointments are properly made, that all necessary information is obtained from directors, both for the Company’s records and to meet statutory obligations.

2.8 Training

All the Directors have completed the Mandatory Accreditation Programme (“MAP”) and fulfilled the Continuous Education Programme as prescribed by Bursa Securities.

The Board is mindful of the need to broaden the Board’s perspectives, skills and knowledge and to keep abreast with the development in the corporate environment. All the Directors of the Company attended training programme or seminars for the financial year ended 31 December 2017, the training programme or seminars include:-

• Advocacy Session on Corporate Disclosure for Directors and Principal officers of Listed Issues – Bursa Malaysia Berhad

• Corporate Governance Breakfast Series – Leading in a Volatile, Uncertain, Complex, Ambiguous (VUCA) World – Bursa Malaysia Berhad & ICLIF

• Advocacy Sessions to enhance Quality of Management Discussion & Analysis (MD&A) for Chief Executive Officers (CEO) and Chief Financial Officers (CFO) of Listed Issuers – Bursa Malaysia Berhad


22



2.8 Training (cont’d)

At the same time, the Board also benefited from various briefings on regulatory and legal developments by the Company Secretary and External Auditors during the Board meetings, with an intention to keep the Board updated with the AMLR, Companies Act 2016, relevant accounting standards, regulatory and related legal developments.

The Board believes that continuous training for Directors is vital to the Board members to gain insight into the state of economy, investment opportunities (local and abroad), technological advances, regulatory updates and management strategies to enhance the Board’s skills and knowledge to enable them to discharge their roles, duties and responsibilities effectively. As such every member of the Board is always evaluating their own training needs on a regular basis and actively identifying relevant seminars / courses / conferences to ensure that they are kept abreast on various issues pertaining to the constantly changing environment within which the business of the Group operates, particularly in areas of corporate governance and regulatory compliance.

3. Remuneration

3.1 Details of Directors’ Remuneration

The NRC reviews the remuneration of the Board and Senior Management annually with a view to ensure the Company offers fair compensation and is able to attract and retain talent who can add value to the Group.

The aggregate remuneration of directors who served during the financial year ended 31 December 2017 are as follows:

Received from the Company Defined Other Directorate Fees Salaries Contribution emoluments Total (RM) (RM) (RM) (RM) (RM)

Executive Directors - - - - - Non-Executive Directors 48,000 - - - 48,000 Total 48,000 0 0 0 48,000

Received on Group basis

Defined * Other Directorate Fees Salaries Contribution emoluments Total (RM) (RM) (RM) (RM) (RM)

Executive Directors - 185,280 26,250 34,461 245,991 Non-Executive Directors - - - - - Total 0 185,280 26,250 34,461 245,991


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3. Remuneration (cont’d)

3.1 Details of Directors’ Remuneration (cont’d)

*Other emoluments comprise bonuses, incentives, provisions for leave and allowances

The number of Directors of the Company who served during the financial year and whose total remuneration from the Group falling within the respective bands is as follows:

Range of Remuneration Number of Directors (RM) Executive Non-Executive

RM 50,000 and below 1 3 RM 101,000 – RM250,000 2 2 Total 3 5

The Group departs from Practices 7.2 & 7.3 of the Code in the view that if the Group was to disclosure salary, bonus, benefits-in-kind and other emoluments of Directors and Senior Management on a named basis that it would be detrimental to the Group’s management of its human resources due to the competitive enviroment for resources within the industries that Group operates in.

B. EFFECTIVE AUDIT AND RISK MANAGEMENT

4. Audit and Risk Management Committee

4.1 Effective and Independence Audit and Risk Management Committee

The roles and responsibilities and activities of the Audit and Risk Management Committee of the Company is fully explained in the Audit and Risk Management Committee Report on pages 26 to 28 of this Annual Report.

4.2 Relationship with External Auditors

The Board has a formal and transparent relationship with the External Auditors. The ARMC recommends to the Board on the appointment of the External Auditor which is subject to the approval of the shareholders at the AGM whilst their remuneration is determined by the Board. The ARMC have private session and dialogues with the External Auditors, in the absence of the executive directors and the management.

In practice, the ARMC conduct annual assessment of the External Auditors. Ares of assessment include the objectivity and independence, size and competency of the audit team, audit strategy, audit reporting, partner involvement and audit fees.


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B. EFFECTIVE AUDIT AND RISK MANAGEMENT (cont’d)

5. Risk Management and Internal Control Framework

5.1 Effective Risk Management and Internal Control Framework

The Board is updated on the Group’s internal control system which encompasses risk management practices as well as financial, operational and compliance controls on a quarterly basis. Ongoing reviews are performed throughout the year on quarterly basis to identify, evaluate, monitor and manage significant risks affecting the business and ensure that adequate and effective controls are in place. Such continuous review processes are conducted by the Group’s outsourced internal auditors as well as the Group’s Management team. The findings of the internal auditors are reported to the ARMC. Full details are explained in the Statement on Risk Management and Internal Control on pages 29 to 31 of this Annual Report.

5.2 Effective Governance, Risk Management and Internal Control

The Board has always placed significant emphasis on sound internal controls which are necessary to safeguard the Group’s assets and shareholders’ investment. To this end, the board affirms its overall responsibility for the Group’s internal control system which encompasses risk management practices as well as financial, operational and compliance controls. However, it should be noted that such system, by its’ nature, manages but donot eliminates risks and therefore can provide only reasonable and not absolute assurance against material misstatement, loss or fraud.

Ongoing reviews are performed throughout the year to identify, evaluate, monitor and manage significant risks affecting the business and ensure that adequate and effective controls are in place. Such continuous review processes are conducted by the Group’s outsourced Internal Auditors and the Group’s management team. Full details are explained in the Statement on Risk Management and Internal Control on pages 29 to 31 of this Annual Report.

C. INTEGRITY IN CORPORATE REPORTING AND MEANINGFUL RELATIONSHIP WITH SHAREHOLDERS

The Company recognises the importance of communicating with its shareholders and does this through the Annual Report, Annual General Meeting, Company’s website and analyst meetings. The policy of the Company is to maintain an active dialogue with its shareholders with the intention of giving shareholders a clear and complete picture of the Company’s performance and position. The Company endeavours to provide timely disclosures to the shareholders and all required/ material announcements will be released immediately when the matters are triggered

The key elements of the Company’s dialogue with its shareholders is the opportunity to gather the views of and answer questions from both private and institutional shareholders on all issues relevant to the Company at the Annual General Meeting. At the Annual General Meeting, the shareholders are encouraged to ask questions both about the resolutions being proposed or about the Group’s operations in general. Additionally, a press conference may be held immediately after the Annual General Meeting where the Group’s Managing Director informs the press of the resolutions passed and answers questions on the Group’s operation. The Executive Directors are also present at the press conference to clarify and explain any issue.

The Company also responds to fund managers, institutional investors, investment analysts and members of media upon request, to brief them on key events of the Company. Investors’ and analysts’ feedback is sought to ensure principal issues are being effectively communicated and shareholders’ objectives are known.

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D. COMPLIANCE STATEMENT

The Board has deliberated, reviewed and approved this Corporate Governance Overview Statement. The Board considers that the Statement on Corporate Governance provides the information necessary to enable shareholders to evaluate how the Code has been applied. The Board is satisfied that the Company has in all material aspects satisfactory complied with the principles and practices set out in the Code throughout the financial year ended 31 December 2017 except for the departures set in the CG Report.

This Statement was made in accordance with the resolution of the Board dated 29 March 2018.


26

AUDIT AND RISK MANAGEMENT COMMITTEE REPORTThe Audit and Risk Management Committee (“ARMC”) was established by the Board of Directors with the primary objective to assist the Board of Directors in fulfilling its fiduciary responsibilities relating to corporate governance, system of internal controls, risk management processes and management and financial reporting practices of the Group.

MEMBERSHIP AND MEETINGS

The ARMC is appointed by the Board from amongst its members and consist of no fewer than three members, all the members are Independent Directors. The Chairman of the ARMC is Mr Lim Kah Poon and he is a fellow of the Chartered Institute Of Accounts in Ireland and a member of the Malaysian Institute of Accountants (“MIA”). The details of members and meetings held during the year ended 31 December 2017 are as follows:-

Name No. of meetings attended

Lim Kah Poon (Chairman) 5/5 Chow Foong Yew (Appointed on 27/2/2017) 4/4 Dato’ Lim Khoon Heng (Resigned on 18/1/2018) 5/5 Chen Thiam Kwee @ Tan Thiam Kwee (Appointed on 08/1/2018) Nil

The Managing Director, Group General Manager-Finance and Company Secretary attended the meetings for the purpose of briefing the ARMC on the activities involving their areas of responsibilities. Representatives of both the internal and external auditors were invited regularly to brief on their audit findings. The ARMC had meet twice with the external auditors without the presence of any Executive Members of the Board to discuss any matter relating to the external audit findings.

SUMMARY OF WORK OF THE ARMC

During the financial year ended 31 December 2017, the ARMC had carried out the following activities in accordance with its terms of reference to meet its responsibilities:-

• reviewed the audited financial statements of the Group for the financial year ended 31 December 2017 prior to the Board’s approval, taking into consideration also:-

• changes in or implementation of any major accounting policies and practices, if any; • significant matters highlighted including financial reporting issues, significant judgments made by management,

significant and unusual events or transaction, and how these matters are addressed, if any;

• compliance with accounting standards, regulatory and other legal requirements;

• deliberated on major issues the external auditors raised, and to review the going concern assumptions and problems and reservations arising from the interim and final external audits, if any;

• reviewed the unaudited quarterly reports on the consolidated results prior to the Board’s approval;

• reviewed the recurrent related party transactions of a revenue of trading nature of the Group and any related party transactions, if any entered by the Group;

• discussed and reviewed with the external auditors, the applicability and the impact of the new accounting standards and new financial reporting regime issued by the Malaysian Accounting Standards Board;

• discussed and reviewed the scope of work and audit plan for the financial year ended 31 December 2017, including any significant issues and concerns arising from the audit;

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AUDIT AND RISK MANAGEMENT COMMITTEE REPORT (cont’d)

SUMMARY OF WORK OF THE ARMC (cont’d)

• reviewed the external audit reports and assessed the auditor’s findings and the management’s responses thereto;

• reviewed with the External and Internal Auditors, the adequacy of the internal control and risk management systems and evaluated the systems with the external and internal auditors;

• met twice with the External Auditors without the presence of the Executive Directors and management in the ARMC meetings to enquire on significant findings, fraud consideration, if any, and/ or management cooperation level;

• reviewed the suitability and independence of the External Auditors in order to recommend their re-appointment to the Board for recommendation to the shareholders on the re-appointment of the External Auditors in the forthcoming annual general meeting;

• reviewed the audit fees prior to the Board’s approval;

• assessed the adequacy of the scope, functions, competency and resources of the outsourced internal auditors and that they have the necessary authority to carry out their work;

• reviewed the internal audit plan and reports presented on the state of internal control of the Group and steps taken by management in response to the audit findings;

• reviewed and assessed of the performance of the internal auditors;

SUMMARY OF WORK OF THE INTERNAL AUDIT FUNCTION

The Company acknowledged and the ARMC had put emphasis on the importance of having an internal audit function within the Group and as such, had outsourced its internal audit function to a professional service firm to assist the ARMC and the Board to carry out independent and systematic reviews of the Group’s system internal control and risk management as to provide reasonable assurance that such system continues to operate effectively and efficiently.

The costs incurred for maintaining the outsourced internal audit function for the financial year ended 31 December 2017 amounted to RM21,637. A summary of the activities of the internal audit function for the financial year ended 31 December 2017 is as follows:-

• reviewed and approved the Internal Audit Plan for the financial year ended 31 December 2017 including the audit methodology in assessing and rating risks of auditable areas to ensure adequate scope and comprehensive coverage on the audit activities of the Group. The Internal Audit Plan which encompassed the following audit issues:-

• identifying high risk areas for compliance with established policies, procedures, rules, guidelines, laws and regulations;

• evaluating the adequacy of controls for safeguarding assets; and

• identifying business risks which have not been appropriately addressed.

• reviewed the internal audit reports relating to Retail Management, Procurement and Inventory Management of selected subsidiary of the Company;

• carried out sampling test of the Group’s compliance with its policies and procedures as well as relevant rules and regulations;

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AUDIT AND RISK MANAGEMENT COMMITTEE REPORT (cont’d)

SUMMARY OF WORK OF THE INTERNAL AUDIT FUNCTION (cont’d)

• evaluation of the Group’s adequacy and effectiveness of the internal control review covering the accounting records and administration, fixed assets management, IT general controls and project management cycle;

• reviewed the internal audit findings and recommendations to improve any weakness or non-compliance, and the respective Management’s response thereon, and monitored the implementation recommendations;

• sought and obtained periodic updates on the status of implementations of post-audit recommendations from previous, as well as current, internal audit cycles;

• suggested additional improvement opportunities in the areas of internal control, systems and efficiency improvement;

• reviewed the effectiveness of the Group’s Risk Management Framework including the process for identifying, evaluating and managing business risks, and reviewed the key strategic risks and changes to the risk profiles of the Group and measures implemented to manage risks; and

• reviewed the adequacy and effectiveness of corrective actions taken by the management on all significant matters raised and monitored the corrective actions on the outstanding issues to ensure that all the key risks and control lapses have been addressed.

No major weaknesses that have resulted in any material losses, contingencies or uncertainties were noted. The ARMC had reviewed the quality of the internal audit function and assessed the effectiveness of the internal audit process and found them to be satisfactory.

OTHER ACTIVITIES A. Recurrent Related Party Transactions (“RRPTs”)

During the financial year, the following activities were carried out by the ARMC in relation to RRPTs:-

• Reviewed and recommended to the Board for approval on any material related party transactions and the relevant Announcement to Bursa; and

• Reviewed related party transactions and the adequacy of the group’s procedures and processes in identifying, monitoring, reporting and reviewing related party transactions in a timely and orderly manner.

B. Annual Report

The ARMC reviewed the Statement on Corporate Governance, Audit and Risk Management Committee Report and the Statement on Risk Management and Internal Control in respect of the financial year ended 31 December 2017 and recommended to the Board for consideration and approval for inclusion in the Company’s Annual Report 2017.

BOARD’S CONCLUSION

The Board is satisfied that the ARMC and its members have carried out their functions, duties and responsibilities in accordance with the Terms of Reference of the ARMC and there were no material misstatements, frauds and deficiencies in the systems of internal control not addressed by the management.

29

STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROLINTRODUCTION

The Board of Directors (“the Board”) of PINEAPPLE RESOURCES BERHAD (“PRB” or “the Company”) is pleased to present the following Statement on Risk Management and Internal Control which outlines the nature and scope of Risk Management and Internal Controls frameworks of the PRB Group during the year under review, pursuant to Rule 15.26 (b) of the ACE Market Listing Requirements (“AMLR”) of Bursa Malaysia Securities Berhad (“Bursa Securities”) and Guidance 9.2 of The Malaysian Code on Corporate Governance 2017 (“the Code”).

The Board is also been guided by the “Statement on Risk Management and Internal Control – Guidelines for Directors of Listed Issues” issued by the Task Force on internal Control, December 2012.

BOARD RESPONSIBILITY

The Board acknowledges its responsibility for the Group’s systems of risk management and internal control to safeguard the shareholders’ investment, the interest of customers and the Group’s assets as well as reviewing its effectiveness, adequacy and integrity.

The Board’s responsibility in relation to the system of internal control extends to all subsidiaries of the Group. The system of internal control covers not only financial controls but operational and compliance controls.

Owing to the inherent limitations, the internal controls implemented are intended to reasonably manage but not expected to eliminate all risks of failure to achieve business and corporate objectives of the Group and can only provide reasonable and not absolute assurance against material misstatements, financial losses and fraud.

The Board confirms that through its Audit and Risk Management Committee (“ARMC”), there is an ongoing process to regularly review the results of this process, including mitigating measures taken by Management to address areas of key risks identified for the Group which has been in place for the financial year under review and up to the date of approval of the annual report and financial statements.

RISK MANAGEMENT AND INTERNAL CONTROL PROCESSES

The objective of risk management and internal control processes is to add maximum sustainable value to all the business activities in the Group. Risk Management and Internal Control Systems are in place to enhance the efficiency and effectiveness of the Group’s operations. Such measures will help to minimise possible risks and uncertainties so that the Group will be able to achieve its set objectives and goals.

The Board recognises the importance of maintaining an adequate and effective risk management and internal control system and has implemented an Enterprise Risk Management (ERM) Framework. This framework includes a risk management process which is on-going and results in the compilation of a specific risk profile and action plans for mitigating the identified risks.

In this context, the risk management function is co-ordinated by the outsourced internal audit professional consultant whereby the process is integrated into the operation system of the respective subsidiaries within the Group with each manager and head of department assigned to ensure appropriate risk response actions are carried out in a timely manner.

The ARMC and the Board meet at least once every quarter to review the adequacy, effectiveness and integrity of the system of internal controls in the Group and to ensure relevant mitigating controls are carried out to mitigate the significant business risks faced by the Group.

The Board is of the view that the risk management and internal control system in place for the financial year under review is adequate and effective. Nevertheless, it will continuously be reviewed, enhanced and updated in line with changes in the operating environment.

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STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL (cont’d)

INTERNAL AUDIT FUNCTION

The Group has engaged a professional consulting firm to provide outsourced internal audit services, which provides support to the ARMC in discharging it’s duties with respect to the adequacy and integrity of the system of internal controls within the Group. During the year under review, Internal Auditors carried out audits based on the internal audit plan approved by the ARMC. The audit findings are deliberated and resolved with the management. The ARMC on behalf of the Board, reviews internal control issues identified and recommendations from reports by the internal and external auditors on a regular basis.

Some internal control weaknesses were identified during the financial year under review and all of which have been or are being addressed by the management. None of these weaknesses has resulted in any material loss that would require disclosure in the Group’s Annual Report.

The internal audit function also ensures that the Management follows up on the implementation of action plans where control deficiencies were noted during the internal audits.

KEY ELEMENTS OF INTERNAL CONTROL

In addition to the risk management and internal audits, the Board has put on place the following salient internal control systems regulating the Group’s operations:

i. Monitoring and Reviewing

a. Scheduled operational, management as well as financial meetings are held with the Senior Management team to discuss, review and evaluate the business plans, budgets, financial and operational performances, Key Performance Indicators (KPIs) for the targets established, reports as well as to monitor the business development and resolve key operational and management issues of the Group;

b. The ARMC reviews the Group’s quarterly financial statements containing key financial results and comparisons, which are subsequently presented to the Board for review; and

c. Management information systems have been established to enable transactions to be captured, compiled and reported in a timely and accurate manner.

ii. Policies and Procedures

a. Standing internal policies and operating procedures have been established to cover as far as possible any significant business processes of the Group and have been updated to reflect changing risks or to resolve operational deficiencies;

b. An operational structure with defined lines of responsibility or delegation of authority is in place. A process of hierarchical reporting has been established which provides for a documented and auditable trail of accountability.

c. A documented delegation of authority with clear lines of responsibility has been established to provide the

approving authority and the execution of various day-to-day transactions.

d. Information critical to the achievement of the Group’s business objectives have been communicated through established reporting lines across the Group. This is to ensure that matters that require the Board and Senior Management attention are highlighted for review, deliberation and decision on a timely basis;

e. Employees have been briefed on Code of Ethics during induction. They are required to sign and adhere to the Code of Ethics, which upholds the Group’s corporate values and ethical code of conduct. Formal guidelines are also available to govern staff’s termination and resignation;

f. Insurance and physical safeguards over major assets are in place to ensure that the assets of the Group are adequately covered against any mishap that may result in material losses to the Group.

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WEAKNESSES IN INTERNAL CONTROLS

There were no material losses, contingencies or uncertainties during the financial year ended 31 December 2017 as a result of weaknesses in internal control that would require disclosure in the Group’s Annual Report. Management has taken appropriate measures to remediate any weakness identified for the period under review. The Board, in striving for continuous improvement, will continue to monitor the effectiveness and take measure to strengthen risk management and internal control environment of the Group.

ASSURANCE FROM MANAGEMENT

In accordance with the Paragraph 42 of the Statement on Risk Management and Internal Control – Guidelines for Directors of Listed Issuers by The Task Force of Internal Control, the Board has received assurance from the Managing Director and Executive Director that to the best of their knowledge, the risk management and internal control of the Group are operating effectively and adequately in all material respects, based on the risk management and internal control framework adopted by the Group.

REVIEW OF THE STATEMENT BY EXTERNAL AUDITORS

Pursuant to Rule 15.23 of the AMLR of Bursa Securities, the External Auditors have reviewed this Statement for inclusion in the Annual Report of the Group for the year ended 31 December 2017 and reported to the Board that nothing has come to their attention that caused them to believe that the Statement is inconsistent with their understanding with the process adopted by the Board in reviewing the adequacy and integrity of the system of internal control.

CONCLUSION

The Board is of the view that the Group has implemented an adequate and effective system of risk management and internal controls with a view to provide itself with effective measures to prevent or mitigate any possible negative effects arising from any challenging scenario which may occur that can impact the Group’s performance.

The Board and the Management are also fully committed to ongoing improvements and enhancements and view such measures as both critical and necessary to the Group’s operations. New procedures will be introduced in the course of time as well as changes and improvements will also be made to the existing systems of risk management and internal controls.

This Statement is made in accordance with the resolution of the Board dated 29 March 2018.

STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL (cont’d)

32

Pursuant to the ACE Market Listing Requirements (“AMLR”) of Bursa Malaysia Securities Berhad, additional disclosures by the Group for the financial year ended 31 December 2017 are as follows:-

1. Utilisation of proceeds raised from Corporate Proposals No proceeds raised by the Company from any corporate exercise during the financial year.

2. Audit and Non-audit fee During the financial year, the amounts of audit and non-audit fees incurred by the Company and the Group to the

external auditors are as follows:-

Company (RM) Group (RM)

Audit Fees 16,000 35,340

Non-Audit Fees - -

3. Material Contract involving Directors’/Substantial Shareholders’ Interest There is no material contracts subsisting as at 31 December 2017 or entered into since the end of the previous

financial year, by the Company or its subsidiaries, which involved the interests of the Directors or major shareholders save as disclosed under notes 26 of the Financial Statement herein on the Related Party Transactions.

4. Recurrent Related Party Transactions of Revenue or Trading Nature The Company will not seek any shareholders’ mandate on Recurrent Related Party Transactions of a revenue

or trading nature under Rule 10.09(2) of Chapter 10 of the AMLR in the in the forthcoming 38th Annual General Meeting.

OTHER COMPLIANCE INFORMATION

33

RESPONSIBILITY STATEMENT BY THE BOARD OF DIRECTORS

The financial statements of the Group and of the Company have been drawn up in accordance with Malaysian Financial Reporting Standards and the requirements of the Companies Act, 2016 in Malaysia.

The Directors take responsibility in ensuring that the 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 the results and the cash flows of the Group and of the Company for the financial year then ended.

In order to ensure that the financial statements are properly drawn up, the Board has taken the following measures:-

• to adopt appropriate, adequate and applicable accounting standards and policies and applied them consistently; • ensured that applicable approved accounting standards have been followed; • where applicable, judgments and estimates are made on a reasonable and prudent basis; and • upon due inquiry into the state of affairs of the Company, there are no material matters that may affect the ability

of the Company to continue in business on a going concern basis.

The Board has also ensured that the quarterly and year-end audited financial statements of the Company and 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 Directors are responsible to ensure that the Company maintains proper accounting records, which disclose with reasonable accuracy at any time the financial position of the Group and of the Company and which enable them to ensure that the financial statements comply with the requirements of Companies Act, 2016.

The Directors have overall responsibility for taking such steps that are reasonably open to them to safeguard the assets of the Group and of the Company to prevent and detect fraud and other irregularities.

This Statement was made in accordance with the resolution of the Board dated 29 March 2018.

FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2017

Directors’ report 35

Statement by Directors 39

Statutory declaration 39 Independent auditors’ report 40 Statements of financial position 46 Statements of profit or loss and other comprehensive income 48

Statements of changes in equity 49

Statements of cash flows 51

Notes to the financial statements 53

35

DIRECTORS’ REPORTThe Directors have pleasure in presenting their report and 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 distribution of printing consumables, computers, computers accessories and investment holding. During the year, the Company ceased its distribution of printing consumables, computers and computers accessories. Other than above, there have been no significant changes in these activities during the financial year.

The principal activities of the subsidiary companies are described in Note 5 to the financial statements.

RESULTS GROUP COMPANY RM RM

Net profit for the financial year 353,822 375,997 Profit attributable to: Owners of the Company 353,822 375,997 Non-controlling interests - -

353,822 375,997 DIVIDEND

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

ISSUES OF SHARES AND DEBENTURES

There were no issues of shares and debentures during the financial year.

RESERVES AND PROVISIONS

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

DIRECTORS

The Directors who have held office since the date of the last report are:

Dato’ Lim Khoon HengDato’ Lim Loong HengLim Kah Poon Lim Kean Choong Chow Foong Yew Chen Thiam Kwee @ Tan Thiam Kwee (Appointed on 8.1.2018)Fakri Bin Hj Abdullah (Resigned on 5.6.2017)Siaw Hum Kiow (Resigned on 22.1.2018)

In accordance with the Company’s Articles of Association, Dato’ Lim Loong Heng, Mr. Lim Kah Poon and Mr. Chen Thiam Kwee @ Tan Thiam Kwee retires by rotation at the forthcoming Annual General Meeting of the Company, and being eligible, offers themselves for re-election.

36

DIRECTORS’ REPORT (cont’d)

DIRECTORS’ BENEFITS

Since the end of the previous financial year, no Director of the Company has received or become entitled to receive any benefit (other than a benefit included in the aggregate amount of emoluments received or due and receivable by the Directors as disclosed in the Note 21(b) to the financial statements or the fixed salary of a full time employee of the Company or of related corporations) by reason of a contract made by the Company or a related corporation with any Director or with a firm of which a Director is a member, or with a company in which a Director has a substantial financial interest except for any benefit which may be deemed to have arisen by virtue of the transactions between the Company and certain companies in which certain Directors of the Company are also Directors and/or shareholders as disclosed in the Note 26 to the financial statements.

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

DIRECTORS’ INTERESTS

According to the register of Directors’ Shareholdings, the interests of Directors in office at the end of the financial year in shares in the Company at the end of the financial year were as follows: Number of Ordinary shares As at As at 1.1.2017 Addition Disposal 31.12.2017Direct InterestsDato’ Lim Khoon Heng 200,000 764,706 - 964,706Dato’ Lim Loong Heng 200,000 764,706 - 964,706

Indirect Interests

Dato’ Lim Khoon Heng # 585,000 - - 585,000Dato’ Lim Loong Heng # 585,000 - - 585,000

The Directors’ shareholdings in its ultimate holding company, Chuan Huat Resources Berhad at the end of the financial year are as follows:

Number of Ordinary shares As at As at 1.1.2017 Addition Disposal 31.12.2017Direct InterestsDato’ Lim Khoon Heng 18,001,186 510,100 - 18,511,286 Dato’ Lim Loong Heng 17,801,182 - - 17,801,182

Indirect InterestsDato’ Lim Khoon Heng # 12,497,621 - - 12,497,621Dato’ Lim Loong Heng # 12,497,621 - - 12,497,621

# Indirect interest held through Lim Kim Chuan & Sons Holdings Sdn Bhd

By virtue of the above Directors’ interest in the shares of the Company and of the holding company, the abovementioned Directors are also deemed to have an interest in the shares of the subsidiary companies to the extent that the Company and the ultimate holding company have an interest.

Other than as disclosed above, the Directors of the Company do not have any other interest in shares of the Company or its related companies during and at the end of the financial year.

37

DIRECTORS’ REPORT (CONT’D)

OPTIONS GRANTED OVER UNISSUED SHARES

No options were granted to any person to take up any unissued shares of the Company during the financial year.

OTHER STATUTORY INFORMATION

Before the statements of financial position and the statements of profit or loss and other comprehensive income 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 receivables and the making of allowance for doubtful receivables and has satisfied themselves that all known bad receivables had been written off and that adequate allowance had been made for doubtful receivables; and

(b) to ensure that any current assets which were unlikely to realise in the ordinary course of business their values as

shown in the accounting records had 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 amount written off for bad receivables or the amount of the allowance for doubtful receivables

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 the current assets in the financial statements of the Group and of the Company misleading; or

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

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

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

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

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

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

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

38

DIRECTORS’ REPORT (cont’d)

INDEMNITY AND INSURANCE FOR DIRECTORS AND OFFICERS

The Group maintains Directors’ and officers’ liability insurance for purpose of Section 289 of the Companies Act 2016, throughout the year, which provides appropriate insurance coverage for the Directors and officers of the Company amounted to RM10 million.

HOLDING COMPANY

The Directors regard Chuan Huat Hardware Holdings Sdn Bhd, a company incorporated in Malaysia, as it holding company. The Directors regard Chuan Huat Resources Berhad, a quoted company incorporated in Malaysia and listed on the Main Market of Bursa Malaysia Securities Berhad, as its ultimate holding company.

AUDITORS

The details of auditors’ remuneration and other services for the financial year ended 31 December 2017 is as disclosed in Note 21(a) to the financial statements.

The auditors, Ong Boon Bah & Co, have expressed their willingness to continue in office.

Signed on behalf of the Board, as approved by the Board in accordance with a resolution of the Directors dated 29 March 2018.

DATO’ LIM LOONG HENG Director

LIM KEAN CHOONGDirector

Kuala Lumpur

39

STATEMENT BY DIRECTORSPursuant to Section 251(2) of the Companies Act, 2016

STATUTORY DECLARATIONPursuant to Section 251(1) of the Companies Act, 2016

We, DATO’ LIM LOONG HENG and LIM KEAN CHOONG, being two of the Directors of PINEAPPLE RESOURCES BERHAD, do hereby state that, in the opinion of the Directors, the accompanying financial statements set out on pages 46 to 91 are drawn up in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act 2016 in Malaysia so as to give a true and fair view of the financial position of the Group and of the Company as at 31 December 2017 and of their financial performance for the year then ended.

Signed on behalf of the Board in accordance with a resolution of the Directors dated 29 March 2018.

DATO’ LIM LOONG HENG LIM KEAN CHOONGDirector Director

Kuala Lumpur

I, DATO’ LIM LOONG HENG, being the Director primarily responsible for the financial management of PINEAPPLE RESOURCES BERHAD, do solemnly and sincerely declare that the accompanying financial statements set out on pages 46 to 91 are, in my opinion, correct and I make this solemn declaration conscientiously believing the same to be true and by virtue of the provisions of the Statutory Declarations Act 1960.

Subscribed and solemnly declared by the abovenamed DATO’ LIM LOONG HENG at Kuala Lumpur in the Federal Territory on 29 March 2018.

DATO’ LIM LOONG HENGBefore me

Commissioner for OathsKuala Lumpur

40

INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF PINEAPPLE RESOURCES BERHAD (INCORPORATED IN MALAYSIA) COMPANY NO. 55420 P

Report on the Audit of the Financial Statements

Opinion

We have audited the financial statements of Pineapple Resources 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 year then ended, and notes to the financial statements, including a summary of significant accounting policies, as set out on pages 46 to 91.

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 their cash flows for the year then ended in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act 2016 in Malaysia.

Basis for Opinion

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

Independence and Other Ethical Responsibilities

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

B-10-1, MEGAN AVENUE 1, 189, JALAN TUN RAZAK, 50400 KUALA LUMPUR.P.O.BOX 11077, 50734 KUALA LUMPUR.

TEL: 03-21630292 FAX: 03-21630316

ONG BOON BAH & COCHARTERED ACCOUNTANTS

41


TEL: 03-21630292 FAX: 03-21630316

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.

(a) Revenue recognition

Refer to Notes to the financial statements – Note 1(n) Significant Accounting Policies and Note 19 Revenue.

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group, and that the revenue can be measured reliably. The main stream of revenue is as disclose in the Note 19 (Revenue).

Revenue recognition is highly dependent on the accuracy of the transactions recognised and recorded.

The revenue may be at risk of being overstated arising from pressure faced by the Group in achieving its performance targets.

How the matter was addressed in our audit

Our audit procedures included the following:

i. We tested the operating effectiveness of internal control procedure as well as test of details to ensure accurate processing of revenue transactions;

ii. We assessed sales invoices as well as credit notes issued, both before and after the year end date to assess whether the revenue was recognised in the correct period;

iii. We tested the sales transactions as recorded to duly acknowledged customer delivery orders for ascertaining the validity of sales; and

iv. We evaluated the adequacy of the financial statements disclosure on revenue in accordance with accounting standards.

Based on the above procedures performed, we noted no significant exceptions.

INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF PINEAPPLE RESOURCES BERHAD (CONT’D)(INCORPORATED IN MALAYSIA) COMPANY NO. 55420 P


42


TEL: 03-21630292 FAX: 03-21630316

Key Audit Matters (cont’d)

(b) Existence and valuation of inventories

Refer to Notes to the financial statements - Note 1(i) Significant Accounting Policies and Note 8 Inventories.

Total inventories of RM13 million represents 47% of total assets of the Group. These inventories mainly consist of inventories in the stores, consignment stores and distribution centre.

Valuation of the inventories is at the lower of cost and net realisable value and is determined by using the weighted average method.

Based on the significance inventories as part of total assets, we have concluded that the existence and valuation of inventories is a key audit matter to be addressed in our audit.

How the matter was addressed in our audit

Our audit procedures included the following:

i. We observed physical inventories count to ensure existence;

ii. We performed a net realisable value test to ensure that inventories are stated at the lower of cost and net realisable value and test checked the costing of the weighted average method; and

iii. We also considered and assessed the adequacy of allowance for slow moving, damaged and obsolete inventories.

Based on the above procedures performed, we noted no significant exceptions.

Information Other than the Financial Statements and Auditors’ Report Thereon

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

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

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

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



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TEL: 03-21630292 FAX: 03-21630316

Responsibilities of the Directors for the Financial Statements

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

In preparing the financial statements of the Group and of the Company, the Directors are responsible for assessing the Group’s and the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Directors either 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:

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

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

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



44


TEL: 03-21630292 FAX: 03-21630316

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)

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

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

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

We 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.



45

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.

ONG BOON BAH & CO WONG SOO THIAMAF: 0320 01315/12/2018 JChartered Accountants Chartered Accountant

Kuala Lumpur29 March 2018


TEL: 03-21630292 FAX: 03-21630316



46

STATEMENTS OF FINANCIAL POSITIONAS AT 31 DECEMBER 2017

GROUP COMPANY Note 2017 2016 2017 2016 RM RM RM RM

ASSETSNon-current assets Plant and equipment 4 1,630,090 1,864,556 57,950 166,379 Subsidiary companies 5 - - 1,973,596 2,921,679 Associated company 6 762,907 - - - Goodwill 7 - - - - Amount due from subsidiary companies 11 - - 20,240,000 18,080,000

2,392,997 1,864,556 22,271,546 21,168,058

Current assets

Inventories 8 13,458,454 11,992,674 - -

Trade receivables 9 8,872,850 7,089,219 - -

Other receivables, deposits and prepayments 10 2,190,157 1,665,591 7,049 2,690

Amount due from subsidiary companies 11 - - - 322,782

Tax recoverable 84,164 238,951 36,444 59,020

Fixed deposits with licensed banks 12 - 1,500,000 - -

Cash and bank balances 1,807, 674 4,996,808 154,222 1,088,314

26,413,299 27,483,243 197,715 1,472,806

TOTAL ASSETS 28,806,296 29,347,799 22,469,261 22,640,864

EQUITY AND LIABILITIES Equity attributable to owners of the CompanyShare capital 13 24,250,000 24,250,000 24,250,000 24,250,000 Capital reserves 14 878,117 878,117 - - Retained earnings/ (Accumulated losses) 990,843 637,021 (1,797,539) (2,173,536)

26,118,960 25,765,138 22,452,461 22,076,464 Non-controlling interests - - - - Total equity 26,118,960 25,765,138 22,452,461 22,076,464

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

47

STATEMENTS of FINANCIAL POSITION (cont’d) AS AT 31 DECEMBER 2017


Current liabilities Trade payables 15 2,134,452 3,174,029 - - Other payables, deposits and accruals 16 199,529 167,019 16,800 24,400 Finance lease liabilities 17 27,181 12,214 - - Amount due to a subsidiary company 11 - - - 540,000

2,361,162 3,353,262 16,800 564,400 Net current assets 24,052,137 24,129,981 180,915 908,406

Non-current liabilities Finance lease liabilities 17 102,574 50,868 - - Deferred tax liabilities 18 223,600 178,531 - -

326,174 229,399 - -

Total liabilities 2,687,336 3,582,661 16,800 564,400

TOTAL EQUITY AND LIABILITIES 28,806,296 29,347,799 22,469,261 22,640,864


48

STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOMEFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2017


Revenue 19 57,255,053 51,220,436 - 591,831 Other operating income 438,826 437,245 2,363,226 242,076 Changes in inventories of finished goods 1,465,780 3,785,976 - - Purchases of finished goods (47,729,772) (44,385,595) - (167,028) Employee benefits expenses 20 (6,101,923) (6,182,561) (48,000) (58,670) Depreciation of plant and equipment (436,391) (654,566) (103,826) (273,139) Administrative expenses (4,256,087) (4,655,481) (1,835,403) (140,756) Profit/(Loss) from operations 21 635,486 (434,546) 375,997 194,314 Finance cost 22 (4,640) (15,419) - (8,619) Share in results of an associated company (52,975) - - - Profit/(Loss) before tax 577,871 (449,965) 375,997 185,695 Tax (expenses)/income 23 (224,049) 72,539 - 88,698 Net profit/(loss) for the financial year 353,822 (377,426) 375,997 274,393 Other comprehensive income, net of tax - - - - Total comprehensive (expense)/income for the financial year 353,822 (377,426) 375,997 274,393

Profit/(Loss) attributable to:

Owners of the Company 353,822 (377,426) 375,997 274,393

Non-controlling interests - - - -

353,822 (377,426) 375,997 274,393

Total comprehensive (expense) /income attributable to: Owners of the Company 353,822 (377,426) 375,997 274,393

Non-controlling interests - - - -

353,822 (377,426) 375,997 274,393 Earnings/(Losses) per share attributable to owners of the Company (sen): 24 0.73 (0.78)


49

STATEMENTS OF CHANGES IN EQUITYFOR THE FINANCIAL YEAR END 31 DECEMBER 2017

Attributable to owners of the Company

Non-distributable Distributable Share Capital Retained Total GROUP capital reserves earnings equity RM RM RM RM

As at 1 January 2016 24,250,000 878,117 1,014,447 26,142,564 Total comprehensive income for the financial year - - ( (377,426) (377,426) Balance at 31 December 2016 24,250,000 878,117 637,021 25,765,138 Total comprehensive income for the financial year - - 353,822 353,822 Balance at 31 December 2017 24,250,000 878,117 990,843 26,118,960


50

STATEMENT OF CHANGES IN EQUITY (cont’d) FOR THE FINANCIAL YEAR END 31 DECEMBER 2017

Distributable

Share Accumulated TotalCOMPANY capital losses equity RM RM RM

As at 1 January 2016 24,250,000 (2,447,929) 21,802,071 Total comprehensive income for the financial year - 274,393 274,393 Balance at 31 December 2016 24,250,000 (2,173,536) 22,076,464 Total comprehensive expense for the financial year - 375,997 375,997 Balance at 31 December 2017 24,250,000 (1,797,539) 22,452,461


51

STATEMENT OF CASH FLOWSFOR THE FINANCIAL YEAR END 31 DECEMBER 2017


2017 2016 Note RM RM GROUP

CASH FLOWS FROM OPERATING ACTIVITIES

Profit/(Loss) before tax 577,871 (449,965) Adjustments for non-cash items, interests and dividends 25(a) 694,334 785,166 Operating profit before working capital changes 1,272,205 335,201 Increase in inventories (1,656,923) (3,785,976) Increase in trade and other receivables (2,314,019) (1,754,709) Decrease in trade and other payables (1,007,067) 1,210,091 Cash used in operations (3,705,804) (3,995,393) Tax paid (168,044) (91,650) Tax refunded 143,476 64,060

Net cash outflow from operating activities (3,730,372) (4,022,983) CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from disposal of plant and equipment 8,019 8,491 Purchase of plant and equipment 25(b) (162,761) (282,507) Investment in associated company (793,382) - Net cash inflow from disposal of a subsidiary company 5(a)(i) 1,995 - Interest received 5,334 16,788 Net cash outflow from investing activities (940,795) (257,228) CASH FLOWS FROM FINANCING ACTIVITIES Net repayments of hire purchase liabilities (13,327) (381,541) Increase in fixed deposit pledged - 240,342 Interest paid (4,640) (15,419)Net cash outflow from financing activities (17,967) (156,618) Net decrease in cash and cash equivalents (4,689,134) (4,436,829) Cash and cash equivalents at beginning of the financial year 6,496,808 10,933,637

Cash and cash equivalents at end of the financial year 25(c) 1,807,674 6,496,808

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STATEMENT OF CASH FLOWS (cont’d) FOR THE FINANCIAL YEAR END 31 DECEMBER 2017

2017 2016 Note RM RM COMPANY

CASH FLOWS FROM OPERATING ACTIVITIES Profit before tax 375,997 185,695 Adjustments for non-cash items, interests and dividends 25(a) 1,055,097 304,187 Operating profit before changes in working capital 1,431,094 489,882 (Increase)/Decrease in trade and other receivables (4,359) 3,028 Decrease in amount due from subsidiary companies (217,218) (6,342,004) Decrease in trade and other payables (7,600) (21,254)Cash generated from/(used in) operations 1,201,917 (5,870,348) Tax paid (8,044) (28,400) Tax refunded 30,620 63,000 Net cash inflow/(outflow) from operating activities 1,224,493 (5,835,748) CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from disposal of plant and equipment 1,415 141,776 Interest received - 3,303 Net cash inflow from investing activities 1,415 145,079 CASH FLOWS FROM FINANCING ACTIVITIES Advance to subsidiaries (2,160,000) - Repayment of finance lease liabilities - (259,122) Interest paid - (8,619)Net cash outflow from financing activities (2,160,000) (267,741) Net decrease in cash and cash equivalents (934,092) (5,958,410)Cash and cash equivalents at beginning of the financial year 1,088,314 7,046,724 Cash and cash equivalents at end of the financial year 25(c) 154,222 1,088,314

53

NOTES TO THE FINANCIAL STATEMENTSAS AT 31 DECEMBER 2017

1. SIGNIFICANT ACCOUNTING POLICIES

(a) Basis of preparation

The financial statements of the Group and of the Company have been prepared under the historical cost convention unless otherwise indicated in this summary of significant accounting policies and are in accordance with Malaysian Financial Reporting Standards (“MFRSs”), International Financial Reporting Standards and the requirements of the Companies Act 2016 in Malaysia.

The financial statements are presented in Ringgit Malaysia (“RM”).

(b) New Companies Act effective beginning 31 January 2017

The Companies Act 2016 (“New Act”) was enacted to replace the Companies Act 1965 with the objectives to create a legal and regulatory structure that will facilitate business, and promote accountability as well as protection of corporate directors and shareholders, taking into consideration the interest of other stakeholders.

On 26 January 2017, the Minister of Domestic Trade, Co-operatives and Consumerism announced that the date on which the New Act comes into operation, except Section 241 and Division 8 of Part III of the New Act, would be 31 January 2017.

Amongst the key changes introduced in the New Act which will affect the financial statements of the Company upon the commencement of the New Act on 31 January 2017 are:

(i) removal of the authorised share capital; (ii) shares of the Company will cease to have par or nominal value; and (iii) the Company’s share premium account will become part of the Company’s share capital.

The adoption of the New Act is not expected to have any financial impact on the Company for the current financial year as any accounting implications will only be applied prospectively, if applicable.

(c) Basis of consolidation

(i) Subsidiary companies

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

Under the purchase method of accounting, the financial statements of subsidiary companies are included in the consolidated financial statements from the date that control commences until the date that control ceases. The financial statements of the subsidiary companies are prepared for the same reporting date as the Company.

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

NOTICE OF ANNUAL GENERAL MEETING (CONT’D)

54

1. SIGNIFICANT ACCOUNTING POLICIES (cont’d)

(c) Basis of consolidation (cont’d)

(ii) Business combinations

Business combinations are accounted for using the acquisition method from the acquisition date, which is the date on which control is transferred to the Group.

For new acquistions, the Group measures the cost of goodwill at the acquisition date as:

- the fair value of the consideration transferred; plus - the recognised amount of any non-controlling interests in the acquiree; plus - if the business combination is achieved in stages, the fair value of the existing equity interest in the

acquiree; less - the net recognised amount (generally fair value) of the identifiable assets acquired and liabilities

assumed.

When the excess is negative, a bargain purchase gain is recognised immediately in profit or loss.

For each business combination, the Group elects whether it measures the non-controlling interests in the acquiree either at fair value or at the proportionate share of the acquiree’s identifiable net assets at the acquisition date.

Transaction costs that the Group incurs in connection with a business combination are expensed as incurred.

(iii) Acquisitions of non-controlling interests

The Group treats all changes in its ownership interest in a subsidiary that do not result in a loss of control as equity transactions between the Group and its non-controlling interest holders. Any difference between the Group’s share of net assets before and after the change, and any consideration received or paid, is adjusted to or against Group reserves.

(iv) Loss of control

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

(v) Non-controlling interests

Non-controlling interests at the end of the reporting period, being the equity in a subsidiary company 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 company are allocated to the non-controlling interests even if doing so causes the non-controlling interests to have a deficit balance.

NOTES TO THE FINANCIAL STATEMENTS (cont’d)AS AT 31 DECEMBER 2017


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(c) Basis of consolidation (cont’d)

(vi) Transactions eliminated on consolidation

Intra-group balances and transactions, and any unrealised income and expenses arising from intra-group transactions, are eliminated in preparing the consolidated financial statements.

Unrealised gains arising from transactions with equity-accounted associates and joint ventures are eliminated against the investment to the extent of the Group’s interest in the investees. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment.

Uniform accounting policies are adopted in the consolidated financial statements for like transactions and events in similar circumstances.

(vii) Associates

Associates are entities, including unincorporated entities, in which the Group has significant influence, but not control, over the financial and operating policies.

Investments in associates are accounted for in the consolidated financial statements using the equity method less any impairment losses, unless it is classified as held for sale or distribution. The cost of the investment includes transaction costs. The consolidated financial statements include the Group’s share of the profit or loss and other comprehensive income of the associates, after adjustments if any, to align the accounting policies with those of the Group, from the date that significant influence commences until the date that significant influence ceases.

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.

When the Group ceases to have significant influence over an associate, any retained interest in the former associate at the date when significant influence is lost is measured at fair value and this amount is regarded as the initial carrying amount of a financial asset. The difference between the fair value of any retained interest plus proceeds from the interest disposed of and the carrying amount of the investment at the date when equity method is discontinued 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 remeasured. Any gain or loss arising from the decrease in interest is recognised in profit or loss. Any gain or loss 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.

Investments in associates are measured in the Company’s statement of financial position at cost less any impairment losses, unless the investment is classified as held for sale or distribution. The cost of investment includes transaction costs.


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(d) Goodwill and reserve on consolidation

Goodwill represents the excess of the cost of acquisition over the Group’s share of the fair value of the identifiable net assets of the subsidiary and associated companies at the date of acquisition. Reserve on consolidation represents the excess of the Group’s share of the fair value of the identifiable net assets acquired over the cost of acquisition. Reserve on consolidation are amortised over a period of twenty five years and goodwill is written down immediately through the profit or loss if there is a permanent diminution in its value. The policy for the recognition and measurement of impairment losses for goodwill is in accordance with Note 1(f).

(e) Plant and equipment

All items of plant and equipment are initially recorded at cost. Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when 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. The carrying amount of the replaced part is derecognised. All other repairs and maintenance are charged to profit or loss during the financial year in which they are incurred.

Subsequent to initial recognition, plant and equipment are stated at cost less accumulated depreciation and any accumulated impairment losses. The policy for the recognition and measurement of impairment losses is in accordance with Note 1(f).

Depreciation of plant and equipment is provided for on a straight-line basis to write off the cost of each asset to its residual value over the estimated useful lives of the assets as follows:

Machinery and factory equipment 10% Furniture, fittings and office equipment 10% Motor vehicles 20% Renovation 20%

The residual values, useful life and depreciation method are reviewed at each financial year end to ensure that the amount, method and period of depreciation are consistent with previous estimates and the expected pattern of consumption of the future economic benefits embodied in the items of plant and equipment.

An item of plant and equipment is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. The difference between the net disposal proceeds, if any, and the net carrying amount is recognised in profit or loss.


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1. SIGNIFICANT ACCOUNTING POLICIES (cont’d) (f) Impairment of non-financial assets

The carrying amounts of assets, other than inventories are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, the asset’s recoverable amount is estimated to determine the amount of impairment loss.

The recoverable amount of an asset or cash-generating unit (“CGU”) is the greater of its value in use and its fair value less costs to sell. 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. For the purpose of impairment testing, assets are grouped together into the smallest groups of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or group of assets. The goodwill acquired in a business combination is allocated to CGU that are expected to benefit from the synergies of the combination.

An impairment loss is recognised in profit or loss if the carrying amount of an asset or its CGU exceeds

its recoverable amount. Impairment losses recognised in respect of CGU are allocated first to reduce the carrying amount of any goodwill allocated to the units and then to reduce the carrying amount of the other assets in the unit (groups of units) on a pro rata basis.

An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment losses, if any, recognised in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised. Reversals of impairment losses are credited to profit or loss in the year in which the reversals are recognised.

(g) Financial instruments

Financial assets

(i) Initial recognition and measurement

A financial asset or a financial liability is recognised in the financial statements when, and only when, the Group and the Company becomes a party to the contractual provisions of the instrument.

A financial instrument is recognised initially, at its fair value plus, in the case of a financial instrument not at fair value through profit or loss, transaction costs that are directly attributable to the acquisition or issue of the financial instrument.

(ii) Financial instrument categories and subsequent measurement

The Group and the Company categories financial instruments as follows:

Financial assets

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

Fair value through profit or loss category comprises financial assets that are held for trading, including derivatives (except for a derivative that is a financial guarantee contract or a designated and effective hedging instrument) or financial assets that are specially designated into this category upon initial recognition.


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(g) Financial instruments (cont’d)

(ii) Financial instrument categories and subsequent measurement (cont’d)

Financial assets (cont’d)

(a) Financial assets at fair value through profit or loss (cont’d)

Derivatives that are linked to and must be settled by delivery of unquoted equity instruments whose fair values cannot be reliably measured are measured at cost.

Other financial assets categorised as fair value through profit or loss are subsequently measured at their fair values with the gain or loss recognised in profit or loss.

(b) Loans and receivables

Loans and receivables category comprises debt instruments that are not quoted in an active market, trade and other receivables, refundable deposits and cash and cash equivalents.

Financial assets categorised as loans and receivables are subsequently measured at amortised cost using the effective interest method.

(c) Available-for-sale financial assets

Available-for-sale (“AFS”) category comprises investment in equity and debt securities instruments that are not held for trading.

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

All financial assets, except for those measured at fair value through profit or loss, are subject to review for impairment as described in Note 1(h).

Financial liabilities

All financial liabilities are subsequently measured at amortised cost other than those categorised as fair value through profit or loss.

Fair value through profit or loss category comprises financial liabilities that are held for trading, derivatives (except for a derivative that is a financial guarantee contract or a designated and effective hedging instrument) or financial liabilities that are specifically designated into this category upon initial recognition.

Derivatives that are linked to and must be settled by delivery of unquoted equity instruments whose fair values cannot be reliably measured are measured at cost.

Other financial liabilities categorised as fair value through profit or loss are subsequently measured at their fair values with the gain or loss recognised in profit or loss.


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(g) Financial instruments (cont’d)

(iii) Derecognition

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 profit or loss.

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 it 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.

(h) Impairment of financial assets

All financial assets (except for investment in subsidiary companies) are assessed at each reporting date whether there is any objective evidence of impairment as a result of one or more events having an impact on the estimated future cash flows of the asset. Losses expected as a result of future events, no matter how likely, are not recognised. For an equity instrument, a significant or prolonged decline in the fair value below its cost is an objective evidence of impairment.

An impairment loss in respect of loans and receivables is recognised in profit or loss and is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at the asset’s original effective interest rate. The carrying amount of the assets is reduced through the use of an allowance account. When a trade receivable becomes uncollectible, it is written off against the allowance account.

An impairment loss in respect of available-for-sale financial assets is recognised in the profit or loss and is measured as the difference between the asset’s acquisition cost (net of any principal repayment and amortisation) and the asset’s current fair value, less any impairment loss previously recognised. Where a decline in the fair value of an available-for-sale financial asset has been recognised in the other comprehensive income, the cumulative loss in other comprehensive income is reclassified from equity and recognised to profit or loss.

(i) Inventories

Inventories are stated at the lower of cost and net realisable value and are determined using the weighted average method. Cost of raw materials comprises purchase cost and in the case of finished goods comprises the original purchase price plus costs incurred in bringing the inventories to their present location and conditions.

Net realisable value is the estimated selling price in the ordinary course of business, less the costs of

completion and applicable variable selling expenses.


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(i) Leases

(i) Classification

A lease is recognised as a finance lease if it transfers substantially to the Group all the risks and rewards incident to ownership. All leases that do not transfer substantially all the risks and rewards are classified as operating leases.

(ii) Finance leases

Assets acquired by way of finance leases are stated at an amount equal to the lower of their fair values and the present value of the minimum lease payments at the inception of the leases, less accumulated depreciation and impairment losses. The corresponding liability is included in the statements of financial position as borrowings. In calculating the present value of the minimum lease payments, the discount factor used is the interest rate implicit in the lease, when it is practicable to determine; otherwise, the Group’s incremental borrowing rate is used. Any initial direct costs are also added to the carrying amount of such assets.

Lease payments are apportioned between the finance costs and the reduction of the outstanding liability. Finance costs, which represent the difference between the total leasing commitments and the fair value of the assets acquired, are recognised in the statements of comprehensive income over the term of the relevant lease so as to produce a constant periodic rate of charge on the remaining balance of the obligations for each accounting period.

The depreciation policy for leased assets is consistent with that for depreciable plant and equipment as described in Note 1(e).

(iii) Operating leases

Operating lease payments are recognised as an expense in the statements of comprehensive income on a straight-line basis over the term of the relevant lease. The aggregate benefit of incentives provided by the lessor is recognised as a reduction of rental expense over the lease term on a straight-line basis.

(k) Income taxes

Income tax on the profit or loss for the financial year comprises current and deferred tax. Income tax is 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.

Current tax is the expected amount of income taxes payable or receivable in respect of the taxable profit or loss for the financial year and is measured using the tax rates that have been enacted at the reporting date.

Deferred tax is provided for, using the liability method on temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes. In principle, deferred tax liabilities are recognised for all taxable temporary differences and deferred tax assets are recognised for all deductible temporary differences, unused tax losses and unused tax credits to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, unused tax losses and unused tax credits can be utilised. Deferred tax is not recognised if the temporary difference arises from goodwill or negative goodwill or from the initial recognition of an asset or liability in a transaction which is not a business combination and at the time of the transaction, affects neither accounting profit nor taxable profit.


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(k) Income taxes (cont’d)

Deferred tax is measured at the tax rates that are expected to apply in the year when the asset is realised or the liability is settled, based on tax rates and tax laws that have been enacted or substantively enacted at the reporting date. Deferred tax is recognised as income or an expense and included in the statements of comprehensive income for the period, except when it arises from a transaction which is recognised directly in equity, in which case the deferred tax is also recognised directly in equity, or when it arises from a business combination that is an acquisition, in which case the deferred tax is included in the resulting goodwill or the amount of any excess of the acquirer’s interest in the net fair value of the acquiree’s identifiable assets, liabilities and contingent liabilities over the cost of the combination.

Deferred tax relating to items recognised outside profit or loss is recognised outside profit or loss. Deferred tax items are recognised in correlation to the underlying transaction either in other comprehensive income or directly in equity and deferred tax arising from a business combination is adjusted against goodwill on acquisition.

Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.

(l) Borrowing costs

Borrowing costs are capitalised as part of a qualifying assets if they are directly attributable to the acquisition, construction or production of that asset. Capitalisation of borrowing costs commences when the activities to prepare the assets for its intended use or sales 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.

All other borrowings costs are recognised in the statements of profit or loss and other comprehensive income 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.

(m) Employee benefits

(i) Short-term benefits

Wages, salaries, bonuses and social security contributions are recognised as expenses in the financial year in which the associated services are rendered by the 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. Short-term non-accumulating compensated absences such as sick leave are recognised when the absences occur.


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(m) Employee benefits (cont’d)

(ii) Defined contribution plans

Defined contribution plans are post-employment benefit plans under which the Group pays fixed contributions into separate entities or funds and will have no legal or constructive obligation to pay further contributions if any of the funds do not hold sufficient assets to pay all employees benefits relating to employee services in the current and preceding financial years. Such contributions are recognised as an expense in the period in which the related service is performed. As required by law, companies in Malaysia make such contributions to the Employees Provident Fund (“EPF”).

The Group’s contributions to defined contribution plans are charged to profit or loss in the financial year to which they relate. Once the contributions have been paid, the Group has no further payment obligations.

(n) Revenue recognition

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be measured reliably. The following specific recognition criteria must also be met before revenue is recognised:

(i) Sale of goods

Revenue from sale of goods is measured at the fair value of the consideration received or receivable, is recognised net of returns and discounts and upon transfer of significant risks and rewards of ownership to the buyer. Revenue is not recognised to the extent where there are significant uncertainties regarding recovery of the consideration due, associated costs or the possible return of goods.

(ii) Dividend income

Dividend income is recognised when the Group’s or the Company’s right to receive payment is established.

(o) Cash and cash equivalents

Cash and cash equivalents consist of cash in hand, balances and deposits with banks which have an insignificant risk of changes in value. For the purpose of the statements of cash flows, cash and cash equivalents are presented net of pledged deposits.

Cash and cash equivalents are categorised and measured as loans and receivables in accordance with policy as described in Note 1(g).

(p) Share capital

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.

Ordinary shares are recorded at the proceeds received, net of directly attributable incremental transaction costs. Ordinary shares are classified as equity. Dividends on ordinary shares are recognised in equity in the period in which they are declared.


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(q) Segment reporting

An operating segment is a component of the Group that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Group’s other component. An operating segment’s operating results are reviewed regularly by the chief operating decision maker, which in this case is the Chief Executive Officer of the Group, to make decisions about resources to be allocated to the segment and assess its performance, and for which discrete financial information is available.

2. STANDARDS AND INTERPRETATIONS ISSUED BUT NOT YET EFFECTIVE

At the date of authorisation for issue of these financial statements, the following new MFRSs, Amendments to MFRSs and Issues Committee (“IC”) Interpretation have been issued by the Malaysian Accounting Standards Board (“MASB”) but not yet effective and have not been applied by the Group and the Company.

Effective for financial periods beginning on or after 1 January 2017: Amendments to MFRS 107 Statement of Cash Flows: Disclosure Initiative Amendments to MFRS 112 Income Taxes: Recognition of Deferred Tax Assets for Unrealised Losses

Annual Improvements to MFRSs 2014 - 2016 Cycle Amendments to MFRS 12 Disclosure of Interests in Other Entities

Effective for financial periods beginning on or after 1 January 2018: Amendments to MFRS 2 Share-based Payment: Classification and Measurement of Share-based

Payment Transactions Amendments to MFRS 4 Insurance Contracts: Applying MFRS 9 Financial Instruments with MFRS

4 Insurance Contracts MFRS 9 Financial Instruments (IFRS 9 as issued by IASB in July 2014) MFRS 15 Revenue from Contracts with Customers MFRS 15 Revenue from Contracts with Customers: Clarifications Amendments to MFRS 140 Investment Property: Transfers of Investment Property IC Interpretation 22 Foreign Currency Transactions and Advance Consideration

Annual Improvements to MFRSs 2014 - 2016 Cycle Amendments to MFRS 1 First-time Adoption of Malaysian Financial Reporting Standards Amendments to MFRS 128 Investment in Associates and Joint Ventures

Effective for financial periods beginning on or after 1 January 2019: Amendments to MFRS 9 Financial Instruments: Prepayment Features with Negative Compensation MFRS 16 Leases Amendments to MFRS 128 Investments in Associates and Joint Ventures: Long-term Interests in

Associates and Joint Ventures IC Interpretation 23 Uncertainty over Income Tax Treatments

Annual Improvements to MFRSs 2015 - 2017 Cycle Amendments to MFRS 3 Business Combination Amendments to MFRS 11 Joint Arrangements Amendments to MFRS 112 Income Taxes Amendments to MFRS 123 Borrowing Costs


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2. STANDARDS AND INTERPRETATIONS ISSUED BUT NOT YET EFFECTIVE (cont’d)

Effective for financial periods beginning on or after 1 January 2021: MFRS 17 Insurance Contracts

Deferred to a date to be determined by the MASB: Amendments to MFRS 10 Consolidated Financial Statements: Sale or Contribution of Assets between

an Investor and its Associate or Joint Venture Amendments to MFRS 128 Investment in Associates and Joint Ventures: Sale or Contribution of Assets

between an Investor and its Associate or Joint Venture

The Group and the Company has not adopted the new MFRSs and amendments to MFRSs that have been issued but not yet effective and will adopts these standards when they become effective. The adoption of the above standards and interpretations is not expected to have a material impact on the financial statements in the period of initial application, except as described below:

MFRS 9: Financial Instruments

In November 2014, the MASB issued the final version of MFRS 9 Financial Instruments, replacing MFRS 139. This standard made changes to the requirements for classification and measurement, impairment, and hedge accounting. The adoption of this Standard will have an effect on the classification and measurement of the Group’s and of the Company’s financial assets, but no impact on the classification and measurement of the Group’s and of the Company’s financial liabilities.

MFRS 9 Financial Instruments also requires impairment assessments to be based on an expected loss model, replacing the MFRS 139 incurred loss model. Finally, MFRS 9 Financial Instruments aligns hedge accounting more closely with risk management, establish a more principle-based approach to hedge accounting and address inconsistencies and weaknesses in the previous model.

This standard will come into effect on or after 1 January 2018 with early adoption permitted. Retrospective application is required, but comparative information is not compulsory. The Group and the Company are currently assessing the impact of the adoption of this Standard in relation to the new requirements for classification and measurement and impairment, but the requirements for hedge accounting is not relevant to the Group and the Company.

MFRS 15: Revenue from Contracts with Customers

MFRS 15 establishes principles for reporting useful information about the nature, amount, timing and uncertainty of revenue and cash flows arising from an entity’s contracts with customers. MFRS 15 will supersede the current revenue recognition guidance including MFRS 118 Revenue, MFRS 111 Construction Contracts and the related interpretation when it becomes effective.

The core principle of MFRS 15 is that an entity recognises revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. An entity recognises revenue in accordance with that core principles by applying the following steps:

Step 1: Identify the contract(s) with a customer Step 2: Identify the performance obligations in the contract Step 3: Determine the transaction price Step 4: Allocate the transaction price to the performance obligations in the contracts Step 5: Recognise revenue when (or as) the entity satisfies a performance obligation


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2. STANDARDS AND INTERPRETATIONS ISSUED BUT NOT YET EFFECTIVE (cont’d)

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

Under MFRS 15, an entity recognises revenue when (or as) a performance obligation is satisfied, i.e. when ‘control’ of the goods or services underlying the particular performance obligation is transferred to the customer. Far more prescriptive guidance has been added in MFRS 15 to deal with specific scenarios. Furthermore, extensive disclosures are required by MFRS 15.

The application of MFRS 15 in the future will require careful evaluation by the Group and the Company on their existing and future contracts. However, the Directors of the Group and of the Company do not anticipate that the application of MFRS 15 in the future will have a significant impact on the amounts reported and disclosures made in the financial statements of the Group and of the Company.

MFRS 16 Leases

MFRS 16 specifies how an MFRS reporter will recognise, measure, present and disclose leases. The standard provides a single lessee accounting model, requiring lessees to recognise assets and liabilities for all leases unless the lease term is 12 months or less or the underlying asset has a low value. Lessors continue to classify leases as operating or finance, with MFRS 16’s approach to lessor accounting substantially unchanged from its predecessor, IAS 17.

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

The Directors of the Group and of the Company acknowledge that the application of MFRS 16 will affect how leases are being reported and disclosed the Group’s and the Company’s financial statements. The Company is currently assessing the impact of MFRS 16 and plans to adopt the new standard on the required effective date.

3. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS

Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below:

(a) Depreciation of plant and equipment

The cost of plant and equipment is depreciated on a straight-line basis over the assets’ estimated economic useful lives up to its residual value. Management reviews the residual values, useful lives and depreciation method at the end of each financial year and ensures consistencies with previous estimates and patterns of consumptions of the economic benefits that embodies the items in these assets. Changes in useful lives and residual values of plant and equipment may result in revision of future depreciation charges.


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3. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS (cont’d) (b) Impairment of assets Assets are tested for impairment when indications of potential impairment exist. Indicators of impairment which

could trigger an impairment review include evidence of obsolescence or physical damage, significant fall in market values, significant underperformance relative to historical or projected future operating results, significant changes in the use of assets or the strategy of the business, significant adverse industry or economic changes.

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

(c) Impairment of loans and receivables The Group assesses at each reporting date whether there is any objective evidence that a financial asset is

impaired. To determine whether there is objective evidence of impairment, the Group considers factors such as the probability of insolvency or significant financial difficulties of the debtor and default or significant delay in payments.

(d) Written down for obsolete or slow moving inventories

The Group writes down its obsolete or slow moving inventories based on assessment of their estimated net selling price. Inventories are written down when events or changes in circumstances indicate that the carrying amounts could not be recovered. Management specifically analyses sales trend and current economic trends when making this adjustment to evaluate the adequacy of the write down for obsolete or slow moving inventories. Where expectations differ from the original estimates, the differences would impact the carrying amount of inventories.

(e) Deferred tax

Deferred tax assets are recognised for all unused tax losses and unabsorbed capital allowances to the extent that it is probable that future taxable profits will be available against which the losses and 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.

(f) Income taxes

Significant estimation is involved in determining the provision for income taxes. There are certain transactions and computations for which the ultimate tax determination is uncertain during the ordinary course of business. The Group and the Company recognises liabilities for expected tax issues based on estimates of whether additional taxes will be due. Where the final outcome of these matters is different from the amounts initially recognised, such differences will impact the income tax provisions in the period in which such determination is made. Details of income tax expense are disclosed in Note 23.


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4. PLANT AND EQUIPMENT Furniture, Machinery fittings and factory Motor and office equipment vehicles equipment Renovation Total RM RM RM RM RM

GROUP

2017 COST At 1 January 2017 - 1,990,060 3,427,566 1,070,128 6,487,754 Additions 96,334 132,284 14,143 242,761 Disposal - (91,348) - - (91,348) Written off - - (269,045) (59,667) (328,712)

At 31 December 2017 - 1,995,046 3,290,805 1,024,604 6,310,455

LESS: ACCUMULATED DEPRECIATION

At 1 January 2017 - 1,642,799 2,117,552 862,847 4,623,198 Charge for the financial year - 161,112 216,846 58,433 436,391 Disposal - (91,346) - - (91,346) Written off - - (256,597) (31,281) (287,878)

At 31 December 2017 - 1,712,565 2,077,801 889,999 4,680,365

CARRYING AMOUNTS At 31 December 2017 - 282,481 1,213,004 134,605 1,630,090

GROUP 2016 COST At 1 January 2016 202,993 2,187,183 3,411,925 1,068,335 6,870,436 Additions - 80,278 258,349 12,680 351,307 Disposal - (276,156) - - (276,156) Written off (202,993) (1,245) (242,708) (10,887) (457,833)

At 31 December 2016 - 1,990,060 3,427,566 1,070,128 6,487,754


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4. PLANT AND EQUIPMENT (cont’d) Furniture, Machinery fittings and factory Motor and office equipment vehicles equipment Renovation Total RM RM RM RM RM

GROUP (cont’d) 2016 COST

LESS: ACCUMULATED DEPRECIATION

At 1 January 2016 202,993 1,625,120 2,004,832 776,504 4,609,449 Charge for the financial year - 295,076 264,143 95,347 654,566 Disposal - (276,154) - - (276,154) Written off (202,993) (1,243) (151,423) (9,004) (364,663) At 31 December 2016 - 1,642,799 2,117,552 862,847 4,623,198

CARRYING AMOUNTS At 31 December 2016 - 347,261 1,310,014 207,281 1,864,556

COMPANY 2017 COST At 1 January 2017 - 1,148,652 5,891 20,151 1,174,694 Disposal - (50,391) - - (50,391) Written off - - (5,891) (20,151) (26,042) At 31 December 2017 - 1,098,261 - - 1,098,261

LESS: ACCUMULATED DEPRECIATION At 1 January 2017 - 991,109 5,302 11,904 1,008,315 Charge for the financial year - 99,592 540 3,694 103,826 Disposal - (50,390) - - (50,390) Written off - - (5,842) (15,598) (21,440) At 31 December 2017 - 1,040,311 - - 1,040,311

CARRYING AMOUNTS At 31 December 2017 - 57,950 - - 57,950


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4. PLANT AND EQUIPMENT (cont’d) Furniture, Machinery fittings and factory Motor and office equipment vehicles equipment Renovation Total RM RM RM RM RM

COMPANY 2016 COST At 1 January 2016 - 1,309,747 673,845 28,628 2,012,220 Disposal - (159,848) (667,951) - (827,799) Written off - (1,247) (3) (8,477) (9,727)

At 31 December 2016 - 1,148,652 5,891 20,151 1,174,694 LESS: ACCUMULATED DEPRECIATION At 1 January 2016 - 939,550 475,215 16,155 1,430,920 Charge for the financial year - 212,652 56,264 4,223 273,139 Disposal - (159,848) (526,175) - (686,023) Written off - (1,245) (2) (8,474) (9,721) At 31 December 2016 - 991,109 5,302 11,904 1,008,315

CARRYING AMOUNTS At 31 December 2016 - 157,543 589 8,247 166,379

The carrying amounts of plant and equipment was acquired under finance lease:

GROUP COMPANY 2017 2016 2017 2016 RM RM RM RM

Motor vehicles 150,922 72,250 - -


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5. SUBSIDIARY COMPANIES COMPANY 2017 2016 RM RM

Unquoted shares, at cost 3,209,679 3,209,679 Accumulated impairment losses (1,236,083) (288,000)

1,973,596 2,921,679 The subsidiary companies are as follows:

Country of Holding Principal Name of Company Incorporation In Equity Activities 2017 2016 % % SC-PNP Edaran Sdn Bhd Malaysia 100 100 Ceased operations

Pineapple Computer Systems Sdn Bhd (“PCS”) Malaysia 100 100 Retailing in computers and related accessories AGVA Marketing Malaysia Sdn Bhd Malaysia 100 100 Trading of multimedia storage products

Pineapple Computer Utara Malaysia 100 100 Dormant Sdn Bhd

Pineapple Office Supplies Malaysia 100 100 Dormant Sdn Bhd

Subsidiary companies of PCS

THS Restaurants Sdn Bhd Malaysia - 100 Dormant (Formerly known as Pineapple Computers & Accessories Sdn Bhd (“THS”)) #

Pine System Technology Malaysia 100 100 Dormant Sdn Bhd

All the companies are audited by Ong Boon Bah & Co.

# Disposal of 77.5% equity shareholding of THS during the financial year ended.


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5. SUBSIDIARY COMPANIES (cont’d)

(a) On 12 June 2017, the Company disposed off 77.5% equity interest in THS Restaurants Sdn Bhd (Formerly known as Pineapple Computers & Accessories Sdn Bhd) for a consideration of RM2,325.

(i) The fair value of net assets of the subsidiary company disposed off was as follows:-

2017 RM

Tax recoverable 375 Cash and bank balances 330 Net assets disposed 705 Proceeds from disposal (2,325) Fair value of retained interest (1,490) Gain on disposal to the Group (3,110)

Proceeds from disposal 2,325 Less: Cash and cash equivalents of subsidiary disposed (330) Net cash inflow to the Group 1,995

(ii) The disposal of subsidiary company had the following effect on the Group’s financial results for the year:

Net loss for the financial year (5,919)

(iii) The disposal had the following effect on the financial position of the Group at the end of the financial year:-

Tax recoverable 375 Cash and bank balance 330 Net assets disposed 705


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6. ASSOCIATED COMPANY GROUP 2017 2016 RM RM Unquoted shares at costs 815,882 - Share of post-acquisition loss (52,975) -

Total 762,907 - The associated company is as follows:

Country of Holding Accounting Principal Name of Company Incorporation In Equity Year end Activities 2017 2016 % % THS Restaurants Malaysia 22.5 - 31 March ^ Food and Sdn Bhd (formerly known as beverage Pineapple Computers business & Accessories Sdn Bhd) * * Holding in equity by a subsidiary company.

^ The financial statements of the associated company is based on the unaudited financial statements.

Summarised financial information of the Group’s associate as at 31 December 2017 is as follows: 2017 RM

Non-current assets 1,901,467 Current assets 1,289,727

Current liabilities (1,025,883)

Net assets 2,165,311 Revenue 957,418 Loss for the period (241,362) Group’s share of post-acquisition loss for the financial year (52,975)

Net assets 2,165,311 Proportion of ownership interest held by the Group 22.5%

Group’s share of net assets 487,194 Goodwill 275,713 Carrying amount of the Group’s interest in the associate 762,907


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7. GOODWILL GROUP 2017 2016 RM RM At 1 January 47,827 47,827 Written off (47,827) -

At 31 December - 47,827 Accumulated impairment losses - (47,827) - -

The movements in the allowance for impairment losses of goodwill during the financial year were:

GROUP 2017 2016 RM RM At 1 January 47,827 47,827 Reversal of impairment losses (47,827) -

At 31 December - 47,827

The following describes the key assumptions on which management has based its value-in-use to undertake

impairment assessment of goodwill:

(i) Budgeted gross margins. Gross margins are based on historical averages achieved in the preceding three (3) financial years, adjusted to reflect anticipated efficiency and productivity improvements.

(ii) Growth rates. The forecasted growth rates are based on published industry data and do not exceed the sustainable

long-term average growth rate for the relevant industries.

(iii) Pre-tax discount rates. The discount rates reflect current market assessment of specific risks of the subsidiaries. These discount rate have consistently been used by management as the benchmark rates in project appraisals of the subsidiaries.

8. INVENTORIES GROUP 2017 2016 RM RM At cost: Finished goods 13,369,216 11,949,797 Goods in transit 89,238 42,877

13,458,454 11,992,674

During the financial year, inventories recognised as an expense in profit or loss was RM46,263,992 (2016: RM40,599,619).


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9. TRADE RECEIVABLES GROUP 2017 2016 RM RM Trade receivables 8,872,850 7,115,225 Allowance for impairment losses - (26,006) 8,872,850 7,089,219

Trade receivables are non-interest bearing and are generally on 30 to 90 days (2016: 30 to 90 days) terms. They are recognised at their original invoices amounts which represent their fair values on initial recognition.

Ageing analysis of trade receivables

The ageing analysis of the Group’s and the Company’s trade receivables are as follows: GROUP

2017 2016 RM RM Neither past due nor impaired 8,780,670 6,766,689 1 to 90 days past due not impaired 8,342 120,531 91 to 180 days past due not impaired 49,457 118,321 More than 180 days past due not impaired 34,381 83,678 92,180 322,530 Impaired - 26,006

8,872,850 7,115,225

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

The Group has trade receivables amounting to RM92,180 (2016: RM322,530) that are past due at the reporting date but not impaired.

The movements in the allowance for impairment losses of trade receivables during the financial year were: GROUP 2017 2016 RM RM At 1 January 26,006 26,006 Reversal of impairment (26,006) - At 31 December - 26,006


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10. OTHER RECEIVABLES, DEPOSITS AND PREPAYMENTS

GROUP COMPANY 2017 2016 2017 2016 RM RM RM RM Other receivables 1,888,480 1,477,462 7,049 - Allowance for impairment losses (399) (36,549) - -

1,888,081 1,440,913 7,049 - Deposits 243,557 209,742 - 500 Prepayments 58,519 14,936 - 2,190 2,190,157 1,665,591 7,049 2,690

The movements in the allowance for impairment losses of other receivables during the financial year were:

GROUP COMPANY 2017 2016 2017 2016 RM RM RM RM At 1 January 36,549 36,549 - - Charge for the financial year 399 - - - Disposal of subsidiary (36,549) - - - At 31 December 399 36,549 - -

11. AMOUNTS DUE FROM TO SUBSIDIARY COMPANIES The amount due from/to subsidiary companies which arose mainly from advances and payments made on behalf

are unsecured, interest free (2016: interest free) and is repayable in cash on demand.

12. FIXED DEPOSITS WITH LICENSED BANKS

In the previous financial year, the deposits of the Group carry interest rates at 2.20% per annum and have maturity periods of 7 days.

The deposits with licensed banks amounting were pledged for banking guarantees granted to a subsidiary.


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13. SHARE CAPITAL GROUP AND COMPANY 2017 2016 Number Number of shares RM of shares RM

Issued and fully paid: Ordinary shares At beginning/end of the financial year 48,500,000 24,250,000 48,500,000 24,250,000

The New Act, which came into operation on 31 January 2017, abolished the concept of authorised share capital. The adoption of New Act is not expected to have any financial impact on the Company for the current financial year as any accounting implications will only be applied prospectively, if applicable, as disclosed in Note 1(b).

14. CAPITAL RESERVES

Details of capital reserves as at reporting date are as follows: GROUP 2017 2016 RM RM

Accretion arising from additional investment in subsidiary companies 28,119 28,119 Capitalised for bonus issue by a subsidiary company 849,998 849,998

878,117 878,117

15. TRADE PAYABLES

The normal trade credit term granted to the Group ranges from 30 days to 60 days (2016: 30 days to 60 days).

16. OTHER PAYABLES, DEPOSITS AND ACCRUALS


Other payables and deposit received 15,350 7,992 - - Accruals 184,179 159,027 16,800 24,400 199,529 167,019 16,800 24,400


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17. FINANCE LEASE LIABILITIES


Minimum lease payments: - within one year 35,148 16,404 - - - between one and five years 114,379 57,369 - - 149,527 73,773 - - Finance charges (19,772) (10,691) - - 129,755 63,082 - - Portion due within one year (27,181) (12,214) - -

Non-current portion 102,574 50,868 - -

The present values of payments are repayable as follows:

GROUP COMPANY 2017 2016 2017 2016 RM RM RM RM Within one year 27,181 12,214 - -

Between one and five years 102,574 50,868 - - 129,755 63,082 - -

The finance lease liabilities carry interest rates ranging from 3.43% to 3.38% (2016: 3.38%) per annum.


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18. DEFERRED TAX LIABILITIES GROUP COMPANY 2017 2016 2017 2016 RM RM RM RM

At 1 January 178,531 227,047 - 59,322 Net recognised in profit or loss (Note 23) 45,069 (48,516) - (59,322) At 31 December 223,600 178,531 - -

The Group’s and the Company’s movements of deferred tax liabilities and assets during the financial year comprise the following:

GROUP

Deferred tax liabilities:

Accelerated capital allowances RM

At 1 January 2016 305,689 Recognised in profit or loss (48,516)

At 31 December 2016 257,173 Recognised in profit or loss (33,573)

At 31 December 2017 223,600

Deferred tax assets: Unabsorbed capital Unutilised allowances tax losses Total RM RM RM

At 1 January 2016 (29,240) (49,402) (78,642) Recognised in profit or loss - - -

At 31 December 2016 (29,240) (49,402) (78,642)

Recognised in profit or loss 29,240 49,402 78,642

At 31 December 2017 - - -


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18. DEFERRED TAX LIABILITIES (cont’d)

COMPANY

Deferred tax liabilities: Accelerated capital allowances RM At 1 January 2016 59,322 Recognised in profit or loss (59,322)

At 31 December 2016 - Recognised in profit or loss -

At 31 December 2017 -

Deferred tax assets have not been recognised are as fallows: GROUP 2017 2016 RM RM

Deferred tax assets not accounted for: - Unutilised tax losses 1,105,469 1,189,306 - Unabsorbed capital allowances 329,921 370,207

1,435,390 1,559,513

The tax effect on deferred assets not accounted for 344,494 374,283

The unutilised tax losses and unabsorbed capital allowances of the Group are available indefinitely for offsetting against future taxable profits of the respective entities within the Group, subject to no substantial change in shareholdings of those entities under the Income Tax Act, 1967 and guidelines issued by the tax authority.

19. REVENUE GROUP COMPANY 2017 2016 2017 2016 RM RM RM RM

Sale of goods 57,255,053 51,220,436 - 202,631 Dividends received from a subsidiary company - - - 389,200 57,255,053 51,220,436 - 591,831


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20. EMPLOYEE BENEFITS EXPENSES GROUP COMPANY 2017 2016 2017 2016 RM RM RM RM Salaries, wages and bonuses 4,533,058 4,769,271 - - Defined contribution plans 617,480 628,889 - - Other benefits 951,385 784,401 48,000 58,670 6,101,923 6,182,561 48,000 58,670 Included in employee benefits expenses of the Group’s and the Company’s Directors’ remuneration are as disclosed

in Note 21(b).

21. PROFIT/(LOSS) FROM OPERATIONS

(a) Profit/(Loss) from operations is arrived at:


After charging: Auditors’ remuneration: - current year 35,340 37,800 16,000 16,000 - prior year - 10,626 - 4,300 Bad receivable written off: - trade 26,146 - - - - non- trade 5,283 - - - Directors’ remuneration 293,991 401,159 48,000 56,000

Goodwill written off 47,827 - - - Impairment losses on other receivable 399 - - -

Inventories written off 191,143 - - - Loss on foreign exchange - 20,292 738 5,929 Plant and equipment written off 40,834 93,170 4,602 - Rental of credit card machine 4,135 6,317 - - Rental of premises paid to: - holding company 108,000 108,000 - - - others 405,310 755,450 - - Waiver of debts owing by a subsidiary - - 780,000 -

And crediting: Gain on foreign exchange 5,418 - - - Gain on disposal of plant and equipment 8,017 8,489 1,414 3,773 Interest income from fixed deposits 5,334 16,788 - 3,303 Reversal of impairment losses on associated company 21,010 - - - Reversal of impairment losses on goodwill 47,827 - - - Reversal of impairment losses on trade receivable 26,006 - - - Waiver of debts from subsidiary companies - - 2,350,000 -


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21. PROFIT/(LOSS) FROM OPERATIONS (cont’d) (b) The aggregate amount of remuneration receivable by Directors of the Group and the Company during the

financial year were categorised as follows:


Executive Directors: Salaries and other emoluments 218,084 306,837 - - Defined contribution plans 26,250 36,908 - - Other related expenses 1,657 1,414 - - Non-executive Directors: Fees 48,000 56,000 48,000 56,000 293,991 401,159 48,000 56,000

22. FINANCE COST GROUP COMPANY 2017 2016 2017 2016 RM RM RM RM Interest expense on finance lease 4,640 15,419 - 8,619

23. TAX EXPENSES/(INCOME) The major components of income tax expense for the years ended 31 December 2017 and 2016 are:


Statements of profit or loss: Current tax: - current year 178,980 - - - - prior year - (24,023) - (29,376)

178,980 (24,023) - (29,376) Deferred tax (Note 18): - origination and reversal of temporary differences 45,069 (48,516) - (59,322)

224,049 (72,539) - (88,698)


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23. TAX EXPENSES/(INCOME) (cont’d)

The numerical reconciliation between the effective tax rate and the applicable tax rate are as follows:


Profit/(Loss) before tax 577,871 (449,965) 375,997 185,695

RM RM RM RM Tax at statutory tax rate of 24% (2016: 24%) 138,689 117,705 90,239 44,567 Income not subject to tax (768,399) (613,884) (564,000) (149,808) Expenses not deductible for tax purposes 851,460 587,779 452,527 85,161 Utilisation of unutilised business losses and capital allowances (78,642) (119,112) - - Deferred tax 45,069 (48,516) - (59,322) Prior years - (24,023) - (29,376) Deferred tax assets not recognised 23,158 27,512 21,234 20,080 Tax effect on share in post-acquisitien result of an associated company 12,714 - - - Tax expense/(income) 224,049 (72,539) - (88,698)

24. EARNINGS/(LOSSES) PER SHARE

Basic and diluted earnings/(losses) per share is calculated by dividing the profit for the financial year attributable to equity holders of the Company by the weighted average number of ordinary shares in issue during the financial year.

GROUP 2017 2016

Profit/(Loss) for the financial year attributable to owners of the Company (RM) 353,822 (377,426)

Weighted average number of ordinary shares in issue 48,500,000 48,500,000

Basic and diluted earnings per share (sen) 0.73 (0.78)


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25. STATEMENTS OF CASH FLOWS

(a) Adjustments for non-cash items, interests and dividends:


Bad receivable written off: - trade 26,146 - - - - non- trade 5,283 47,288 - - Depreciation of plant and equipment 436,391 654,566 103,826 273,139 Gain on disposal of plant and equipment (8,017) (8,489) (1,414) - Gain on disposal of subsidiary company (3,110) - - - Goodwill written off 47,827 - - -

Impairment losses on other receivable 399 - - - Impairment losses on value of

investment in subsidiary company - - 948,083 25,726 Interest expense on finance lease 4,640 15,419 - 8,619 Interest income from fixed deposits (5,334) (16,788) - (3,303) Inventories written off 191,143 - - - Share of losses from an associated company 52,975 - - - Plant and equipment written off 40,834 93,170 4,602 6 Reversal of impairment losses on associated company (21,010) - - - Reversal of impairment losses on goodwill (47,827) - - - Reversal of impairment losses on trade receivables (26,006) - - -

694,334 785,166 1,055,097 304,187 (b) Purchase of plant and equipment

During the financial year, the Group and the Company has acquired plant and equipment with an aggregate cost of RM242,761 (2016: RM351,307) and RM Nil (2016: RM Nil) respectively, which RM80,000 (2016: RM68,800) and RM Nil (2016: RM Nil) of the Group and the Company respectively were acquired by means of finance leases.


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25. STATEMENTS OF CASH FLOWS (cont’d)

(c) Cash and cash equivalents at the end of the financial year:

GROUP COMPANY 2017 2016 2017 2016 RM RM RM RM Fixed deposits with licensed banks - 1,500,000 - - Cash and bank balances 1,807,674 4,996,808 154,222 1,088,314

1,807,674 6,496,808 154,222 1,088,314

26. RELATED PARTY TRANSACTIONS

The related parties of the Group and of the Company comprise the followings:

- related parties being companies in which Directors of the Group or the Company has the ability, directly or indirectly, to control the party or exercise significant influence over the party in making financial and operating decisions, or vice versa, or where the Group and or the Company and the party are subject to common control or common significant influence. Related parties may be individuals or other entities.

- key management personnel includes the Company’s Executive and Non-Executive Directors and are defined as those persons having authority and responsibility for planning, directing and controlling the activities of the Group or the Company either directly or indirectly. Executive and Non-Executive Directors compensation is disclosed in Note 21(b).

Related companies represent subsidiary companies of Chuan Huat Resources Berhad.

In addition to the related party information disclosed elsewhere in the financial statements, the following significant transactions took place at terms agreed between the parties during the financial year:

(a) Sale of goods COMPANY 2017 2016 RM RM

Subsidiary companies: - Pineapple Computer Systems Sdn Bhd - 57,992


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26. RELATED PARTY TRANSACTIONS (cont’d)

(b) Others GROUP COMPANY 2017 2016 2017 2016 RM RM RM RM

Rental of premises paid to holding company: - Chuan Huat Hardware Holdings Sdn Bhd 108,000 108,000 - - Water and electricity received from related company: - Keyline Consulting Sdn Bhd 24,000 24,000 - - Dividend income received from subsidiary company:

- Pineapple Computer Systems Sdn Bhd - - - 389,200

Waiver of debts from subsidiary companies: - AGVA Marketing Malaysia Sdn Bhd - - 1,000,000 - - SC-PNP Edaran Sdn Bhd - - 1,350,000 -

Waiver of debts owing by a subsidiary company: - Pineapple Office Supplies Sdn Bhd - - 780,000 -

In the opinion of the Directors, the above related party transactions have been entered into in the normal course of business and have been established under terms that are not more favourable than those arranged with independent third parties.

27. SEGMENT INFORMATION As the Group is principally involved in the trading and distribution of full range of computer peripherals and accessories

within Malaysia, therefore there is no segment information has been presented.


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28. CORPORATE INFORMATION

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

(b) The registered office of the Company is located at Wisma Lim Kim Chuan, Lot 50A, Jalan 1/89B, 3½ Miles, Off

Jalan Sungai Besi, 57100 Kuala Lumpur, Wilayah Persekutuan and its principal place of business is located at Wisma Pineapple, Lot 135, Jalan 1/89B, 3½ Miles, Off Jalan Sungai Besi, 57100 Kuala Lumpur, Wilayah Persekutuan.

(c) The principal activities of the Company are distribution of printing consumables, computers, computers

accessories and investment holding. The principal activities of the subsidiary companies are described in Note 5 to the financial statements.

(d) The Company is a subsidiary company of Chuan Huat Hardware Holdings Sdn Bhd, a company incorporated in Malaysia. The Directors regard Chuan Huat Resources Berhad, a quoted company incorporated in Malaysia and listed on the Main Market of Bursa Malaysia Securities Berhad, as its ultimate holding company.

(e) The financial statements of the Group and of the Company were authorised for issue by the Board of Directors in accordance with a resolution of the Directors on 29 March 2018.

29. FINANCIAL INSTRUMENTS

Financial risk management objectives and policies

The Group’s financial risk management policy seeks to ensure that adequate financial resources are available for the development of the Group’s businesses whilst managing its risks. The Group and the Company are exposed to financial risk from operations and the use of financial instruments. The key financial risks include interest rate risk, credit risk and liquidity risk.

The Board of Directors reviews and agree policies and procedures for the management of these risks, which are executed by the Executive Directors and the Financial Controller. The audit committee provides independent oversight to the effectiveness of the risk management process.

The following sections provide details regarding the Group’s and Company’s exposure to the above-mentioned financial risks and the objectives, policies and processes for the management of these risks.

(a) Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of the Group’s and the Company’s financial instruments will fluctuate because of changes in market interest rates.

The Group’s exposure to interest rate risk arises primarily from finance lease liabilities which are fixed at the inception of the financing arrangements are disclosed in Note 18. Under the current interest rate environment, management anticipates that any changes in interest rate in the near term are not expected to have a significant impact on the Group’s comprehensive income. Accordingly, no sensitivity analysis is prepared.

The information on maturity dates and interest rates of financial assets and liabilities are disclosed in their respective notes.


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29. FINANCIAL INSTRUMENTS (cont’d)

Financial risk management objectives and policies (cont’d)

(b) Credit risk

Credit risk is the risk of loss that may arise on outstanding financial instruments should a counterparty default on its obligations. The Group’s exposure to credit risk arises primarily from trade and other receivables and the Company’s exposure to credit risk arises primarily from trade and other receivables and loans and advances to subsidiary companies. For other financial assets (including cash and bank balances), the Group and the Company minimise credit risk by dealing exclusively with high credit rating counterparties.

Management has a credit policy in place and the exposure to credit risk is monitored on an ongoing basis. Normally credit evaluations are performed on customers requiring credit over a certain amount. As at the end of the reporting date, the maximum exposure to credit risk arising from receivables is represented by the carrying amounts in the statements of financial position.

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 90 days, which are deemed to have higher credit risk, are monitored individually.

Deposits with banks that are neither past due nor impaired are placed with reputable financial institutions with high credit ratings and no history of default.

The Company provides unsecured loans and advances to subsidiary companies. The Company monitors the

results of the subsidiary companies regularly. As at the end of the reporting date, the maximum exposure to credit risk is represented by its carrying amounts in the statements of financial position.

As at the end of the reporting date, there was no indication that the loans and advances to the subsidiary companies are not recoverable. The Company does not specifically monitor the ageing of the advances to the subsidiary companies. Nevertheless, these advances have been overdue for less than a year.

(c) Liquidity risks

Liquidity risk is the risk that the Group and the Company will encounter difficulty in meeting financial obligations due to shortage of funds. The Group’s and the Company’s exposure to liquidity risk arises primarily from mismatches of the maturities of financial assets and liabilities. The Group’s and the Company’s objective is to maintain a balance between continuity of funding and flexibility through the use of credit facilities.


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Financial risk management objectives and policies (cont’d)

(c) Liquidity risks (cont’d)

Analysis of financial instruments by remaining contractual maturities The table below summarises the maturity profile of the Group’s and of the Company’s financial liabilities as at

the end of reporting date based on undiscounted contractual payments.

Carrying On Within From two amount demand one year to five years RM RM RM RM GROUP 2017

Financial liabilities:

Trade and other payables 2,148,596 - 2,148,596 - Finance lease liabilities 129,755 - 27,181 102,574

Total undiscounted financial liabilities 2,278,351 - 2,175,777 102,574

2016


Trade and other payables 3,182,021 - 3,182,021 - Finance lease liabilities 63,082 - 12,214 50,868

Total undiscounted financial liabilities 3,245,103 - 3,194,235 50,868 COMPANY 2016


Amount due to a subsidiary company 540,000 540,000 - - Total undiscounted financial liabilities 540,000 540,000 - -


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Categories of financial instruments

The table below provides an analysis of financial instruments categorised as follows: (a) Loans and receivables (‘‘L&R’’); and (b) Financial liabilities measured at amortised cost (‘‘FL’’).

Carrying L&R/ Amount (FL) RM RM

2017 Financial assets Group Trade and other receivables 10,760,931 10,760,931 Cash and cash equivalents 1,807,674 1,807,674

12,568,605 12,568,605 Company Other receivables 7,049 7,049 Amount due from subsidiary companies 20,240,00 20,240,000 Cash and cash equivalents 154,222 154,222 20,401,271 20,401,271 Financial liabilities Group Trade and other payables (2,148,596) (2,148,596) Finance lease liabilities (129,755) (129,755) (2,278,351) (2,278,351) 2016 Financial assets Group Trade and other receivables 8,556,138 8,556,138 Fixed Deposit with licensed banks 1,500,000 1,500,000 Cash and cash equivalents 4,996,808 4,996,808 15,052,946 15,052,946 Company Amount due from subsidiary companies 18,402,782 18,402,782 Cash and cash equivalents 1,088,314 1,088,314

19,491,096 19,491,096 Financial liabilities Group

Trade and other payables (3,182,021) (3,182,021) Finance lease liabilities (63,082) (63,082)

(3,245,103) (3,245,103) Company Amount due to a subsidiary company (540,000) (540,000)


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Determination of fair values

(a) Financial instruments carried at amortised cost

The carrying amounts of financial assets and liabilities of the Group and of the Company at the reporting date approximated their fair values except as set out below:

2017 2016 Carrying Fair Carrying Fair amount value amount value Note RM RM RM RM

GROUP Financial liabilities

Finance lease liabilities 17 129,755 129,563 63,082 63,007

No disclosure is made for unquoted shares because of the lack of market information and the assumptions used in valuation models to value these investments cannot be reasonably determined.

The following methods and assumptions are used to estimate the fair value of each class of financial instruments:

(i) Deposits, cash and bank balances

The carrying amounts of cash and cash equivalents approximate fair values due to the relatively short-term maturity of these instruments.

(ii) Trade and other receivables and payables The carrying amounts of trade receivables and payables subject to normal trade credit terms approximate

their fair values. The carrying amounts of other receivables and payables is reasonable approximation of fair values due to their short-term nature.

(iii) Borrowings The carrying amount of the current portion of borrowings is reasonable approximation of fair values due

to the insignificant impact of discounting.

The fair value of non-current borrowings is estimated by discounting expected future cash flows at market incremental lending rate for similar types of lending, borrowing or leasing arrangements at the reporting date.

(iv) Amounts due from subsidiary companies

The carrying amounts of the amounts due from subsidiary companies is a reasonable approximation of fair values due to its short maturity.


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Determination of fair values (cont’d)

(b) Financial instruments carried at fair values

The fair value measurement hierarchies used to measure financial assets carried at fair value in the statements of financial position as at 31 December 2017 are as follows:

(a) Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities;

(b) Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. prices) or indirectly (i.e. derived from prices);

(c) Level 3: Inputs for the asset or liability that are not based on observable market data (unabsorbed inputs).

The Group do not have any financial liabilities carried at fair value nor any instruments classified as Level 1, Level 2 and Level 3 as at 31 December 2017.

30. CAPITAL MANAGEMENT

The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern and to maintain an optimal capital structure so as to maximise shareholders’ value. In order to maintain or achieve an optimal capital structure, the Group may issue new shares, adjust the amount of dividend payment and return capital to the shareholders. The Directors of the Group consider that the capital structure of the Group comprises only share capital and reserves. The Group’s overall strategy remains unchanged from year 2016.

31. COMPARATIVE FIGURES

The following comparative figures have been reclassified to conform with current year’s presentation: As As previously Restated Adjustment reported RM RM RM

COMPANY

STATEMENT OF FINANCIAL POSITION Non-current assets

Amount due from subsidiary company 18,080,000 18,080,000 - Current assets

Amount due from subsidiary companies 322,782 (17,540,000) 17,862,782

Current liabilities

Amount due to subsidiary company 540,000 540,000 -

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Issued and Paid-Up Capital : RM24,250,000.00 divided into 48,500,000 shares Voting Rights : On poll - one (1) vote for each share held ANALYSIS OF SHAREHOLDERS Size of Shareholdings No. of No. of Shareholders % Shares Held %

Less Than 100 7 0.88 187 0.00 100 - 1,000 422 52.82 175,613 0.36 1,001 - 10,000 256 32.04 1,097,000 2.26 10,001 - 100,000 88 11.01 2,813,200 5.80 100,001 - Less Than 5% Of Issued Shares 25 3.13 13,443,412 27.72 5% And Above Of Issued Shares 1 0.12 30,970,588 63.86

Total 799 100 48,500,000 100

SUBSTANTIAL SHAREHOLDERS Direct Interest Deemed Interest Names No. of Shares % No. of Shares %

Chuan Huat Hardware Holdings Sdn Bhd 30,970,588 63.86 - -

DIRECTORS’ SHAREHOLDINGS Direct Interest Deemed Interest Names No. of Shares % No. of Shares %

Dato’ Lim Khoon Heng 964,706 1.99 31,555,588(^) 65.06Dato’ Lim Loong Heng 964,706 1.99 31,555,588(^) 65.06Lim Kean Choong - - - -Lim Kah Poon - - - -Chow Foong Yew - - - -Chen Thiam Kwee @ Tan Thiam Kwee - - - -

Note: ^ Deemed interest by virtue of their interest in Chuan Huat Resources Berhad and Lim Kim Chuan & Sons Holdings Sdn Bhd pursuant to Section 8 of the Companies Act, 2016.

ANALYSIS OF SHAREHOLDINGS STATEMENT OF SHAREHOLDINGS AS AT 2 APRIL 2018

93

No. Name No. of Shares Held %

1 CHUAN HUAT HARDWARE HOLDINGS SDN BHD 30,970,588 63.86

2 WAN ZAKI BIN WAN MUDA 2,010,100 4.14

3 YAP RAYMOND 1,564,400 3.23

4 TENGKU AZIZAH BINTI HAJI NIK MOHD SALLEH 1,536,400 3.17

5 CHONG MOAN LAM @ CHEONG MOON LAM 1,407,600 2.90

6 LIM KHOON HENG 964,706 1.99

7 LIM LOONG HENG 964,706 1.998 YAP TECK FUI 748,400 1.54

9 MAYBAN SECURITIES NOMINEES (TEMPATAN) SDN BHDPLEDGED SECURITIES ACCOUNT FOR LIM KIM CHUAN & SONS HOLDINGS SDN BHD

560,000 1.15

10 KONG KOK KEONG 500,000 1.03

11 HEW CHEE WAH 391,500 0.81

12 ESMOND SIT BO SHENG 306,200 0.6313 SIT PENG CHOK 304,200 0.63

14 GHO TIAN SIA 290,000 0.60

15 AFFIN HWANG NOMINEES (TEMPATAN) SDN. BHD PLEDGED SECURITIES ACCOUNT FOR SIAW HUM KIOW 200,000 0.41

16 CHEONG YOKE HA 200,000 0.41

17 HEW KWEE WON 200,000 0.41

18 YAP KIM THIAM 200,000 0.4119 MAYBAN SECURITIES NOMINEES (TEMPATAN) SDN BHD

PLEDGED SECURITIES ACCOUNT FOR GOH HAN CHUAN (REM 893)180,000 0.37

20 KOH THIAN SENG 163,300 0.34

21 YEO PEK HIANG 139,400 0.29

22 AU WENG KEONG 137,500 0.28

23 CHANG VUI YIN 130,500 0.27

24 LOOI SIEW WAH 122,500 0.25

25 TEH ENG BEW 113,300 0.23

26 KOH THIN MIN 108,700 0.22

27 LAW YOKE HEONG 100,000 0.21

28 WONG CHENG SIUNG 90,000 0.19

29 ONG POH ENG 88,200 0.18

30 TENAHMAN SDN BHD 81,700 0.17

44,773,900 92.32

ANALYSIS OF SHAREHOLDINGS (cont’d)

LIST OF 30 LARGEST SHAREHOLDERS AS AT 2 APRIL 2018

94

AGENDA

AS ORDINARY BUSINESS 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 7)

2. To approve the payment of Directors’ Fees for the financial year ended 31 December 2017 of RM48,000 (2016 : RM56,000). (Please refer to Note 8)

3. To approve the payment of Director’s Fees and any benefits of up to RM65,000 to Directors with effect from 28 May 2018 until the next Annual General Meeting of the Company. (Please refer to Note 8)

4. To re-elect the following Directors who retire by rotation in accordance with Article 81 of the Company’s Constitution:

• Dato’ Lim Loong Heng • Lim Kah Poon 5. To re-elect the following Director who was appointed during the year and retire in accordance with

Article 87 of the Company’s Constitution:

• Chen Thiam Kwee @ Tan Thiam Kwee 6. To re-appoint Messrs. Ong Boon Bah & Co. as Auditors of the Company for the ensuing year and

to authorise the Directors to fix their remuneration.

AS SPECIAL BUSINESS 7. To consider and if thought fit, to pass the following Resolution as an Ordinary Resolution: 7.1 ORDINARY RESOLUTION AUTHORITY TO ALLOT AND ISSUE SHARES PURSUANT TO SECTIONS 75 AND 76 OF THE

COMPANIES ACT 2016 (“THE ACT”)

“THAT subject to Sections 75 and 76 of The Act, the Constitution of the Company and approvals of the relevant governmental/regulatory authorities, the Directors be and are hereby authorised to allot and issue shares in the Company, from time to time, at such price, upon such terms and conditions and for such purpose and to such person or persons whomsoever as the Directors may in their absolute discretion deem fit, provided that the aggregate number of shares to be issued pursuant to this resolution does not exceed ten percent (10%) of the total number of issued shares of the Company for the time being and THAT the Directors be and are hereby also empowered to obtain the approval for the listing of and quotation for the additional shares so issued from Bursa Malaysia Securities Berhad and THAT such authority shall continue in force until the conclusion of the next annual general meeting of the Company after the approval was given or at the expiry of the period within which the next annual general meeting is required to be held after the approval was given, whichever is earlier, unless such approval is revoked or varied by the Company at a general meeting.”

NOTICE IS HEREBY GIVEN THAT the 38th Annual General Meeting (“AGM”) of Pineapple Resources Berhad will be held at Wisma Pineapple, 2nd Floor, Lot 135, Jalan 1/89B, 3½ Mile Off Jalan Sungai Besi, 57100 Kuala Lumpur on Monday, 28 May 2018 at 10:00 am for the following purposes:

Resolution 1

Resolution 2

Resolution 3Resolution 4

Resolution 5

Resolution 6

Resolution 7

NOTICE OF ANNUAL GENERAL MEETING

95

8. To transact any other ordinary business of which due notice shall have been given. BY ORDER OF THE BOARD

Foo Siew Loon(MAICSA 7006874)Secretary

Kuala Lumpur30 April 2018

Notes to the Notice of 38th AGM :

1. A member of the Company entitled to attend and vote is entitled to appoint a proxy to attend and vote in his/her stead. A proxy may but need not be a member of the Company. The instrument appointing a proxy shall be in writing under the hand of the appointor or his attorney duly authorised in writing or if such appointor is a corporation, under its common seal or the hand of its attorney or an officer duly authorised.

2. Where a member of the Company is an authorised nominee as defined under the Securities Industry (Central Depositories) Act 1991 (“SICDA”), it may appoint at least one (1) proxy but not more than two (2) proxies in respect of each Securities Account it holds with ordinary shares of the Company standing to the credit of the said Securities Account.

3. Where a member appoints more than one (1) proxy (subject to a maximum of two (2) proxies at each meeting), the appointment shall be invalid unless he specifies the proportions of his shareholdings to be represented by each proxy.

4. Where a member of the Company is an exempt authorised nominee as defined under the SICDA which holds ordinary shares in the Company for multiple beneficial owners in one Securities Account (“omnibus account”), there is no limit to the number of proxies which the exempt authorised nominee may appoint in respect of the omnibus account it holds.

5. To be valid, this duly completed proxy form must be deposited at the Registered Office of the Company at Wisma Lim Kim Chuan, Lot 50A, Jalan 1/89B, 3½ Mile Off Jalan Sungai Besi, 57100 Kuala Lumpur not less than 48 hours before the time fixed for holding the meeting or any adjournment thereof.

6. Any alteration in the form of proxy must be initialled.

7. Poll Voting

Pursuant to Rule 8.31A of the ACE Market Listing Requirements of Bursa Securities, all Resolutions set out in the Notice of 38th AGM will be put to vote by poll. Poll Administrator and Independent Scrutineer will be appointed respectively to conduct polling voting process and to verify the results of the poll.

8. Agenda 1

Agenda 1 is meant for discussion only as the provision of Section 340(1)(a) of the Act, the Audited Financial Statements do not require a formal approval of the members and hence, will not be put forward for voting.

9. Proposed Ordinary Resolutions 1 and 2

Section 230(1) of the Act provides amongst others, that the fees of the Directors and any benefits payable to the Directors of a listed company shall be approved at a general meeting. In this respect, the Board wishes to seek shareholders’ approval for the following payments to Directors at the AGM in two (2) separate resolutions as below:-

• Resolution 1 on payment of Directors’ Fees totalling RM48,000 in respect of the financial year ended 31 December 2017; and

• Resolution 2 on payment of Directors’ Fees and benefits payable to the Directors totalling RM65,000 with effect from 28 May 2018 AGM until the next AGM.

Explanatory Notes To Special Business :

10. Ordinary Resolution 7 - Authority to Allot and Issue Shares Pursuant to Sections 75 and 76 of the Act

The proposed Resolution 7 is a renewal mandate of the previous general mandate obtained from the shareholders at the 37th AGM held on 25 May 2017, which is expiring at the conclusion of the 38th AGM. The proposed Resolution 7, if passed, will avoid any delay and cost involved in convening a general meeting and will empower the Directors to issue up to 10% of the issued share capital 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 of the Company.

As at the date of this Notice, the Directors have not utilised the mandate granted to the Directors at the last AGM held on 25 May 2017 and the said mandate will lapse at the conclusion of the 38th AGM.

The renewal of this mandate will provide flexibility to the Company to undertake any possible fund raising activities, including but not limited to further placing of shares, for purpose of funding current and/or future investment project(s), working capital and/or acquisitions at any time to such persons in their absolute discretion without convening a general meeting.

Members Entitled to Attend 38th AGM

For the purpose of determining a member who shall be entitled to attend this 38th AGM, the Company shall be requesting Bursa Malaysia Depository Sdn. Bhd. in accordance with Article 39 of the Company’s Constitution and Section 34(1) of the Securities Industry (Central Depositories) Act, 1991, to issue a General Meeting Record of Depositors as at 18 May 2018. Only a depositor whose name appears on the Record of Depositors as at 18 May 2018 shall be entitled to attend the said meeting or appoint proxies to attend and/or vote on his/her behalf.

NOTICE OF ANNUAL GENERAL MEETING (cont’d)

96

STATEMENT ACCOMPANYING NOTICE OF ANNUAL GENERAL MEETING[PURSUANT TO RULE 8.29(2) OF THE ACE MARKET LISTING REQUIREMENTS OF BURSA SECURITIES (“AMLR”)]1. Details of individual who is standing for election as Director

Director appointed during the year and retire in accordance with Article 87 of the Constitution of the Company and standing for election :-

CHEN THIAM KWEE @ TAN THIAM KWEE

PROFILE

Director, holding a non-executive and independent position since 8 January 2018.

Mr. Chen Thiam Kwee @ Tan Thiam Kwee obtained a Diploma in accounting soon after his secondary education. He started his career attached in the accounting departments handling the full accounting functions for the company. After four years, he left his career in accounting to move on to marketing which he considered as more challenging. During his next 15 years career, he served in the marketing department of 3 different Public Listed Companies listed in Bursa Malaysia. They are Amsteel Berhad, Malayawata Steel Berhad and Perwaja Steel Berhad, the core business of all these companies was in the supply of construction steel. During which he has gained vast experience in the construction steel industry arising from his experiences in marketing construction steel.

Around 1997, Mr. Tan decided left his employment career to start his own business venture. He started his own trading company distributing various products which included building materials, bedding products and kitchen appliances. Since then, he has successfully carried his business for 21 years.

Mr. Tan Thiam Kwee did not attend any of the Board Meetings held in the financial year ended 31 December 2017 as he joined the Board on 8 January 2018.

The Directors’ Shareholdings in the Company are disclosed under the Statement of Shareholdings.

2. Statement relating to general mandate for issue of securities in accordance to Rule 6.04(3) of AMLR

Details of the general mandate to issue securities in the Company pursuant to Sections 75 and 76 of the Act are set out in the Explanatory Note 10 of the Notice of 38th AGM.

No of shares held

CDS Account no.

PROXY FORM

*I/We (Full Name in Block Letters)

*NRIC No./Passport No./Company No. CDS Account No./Name of beneficial owner* of being a member(s) of Pineapple Resources Berhad, hereby appoint:-

Full Name (in Block Letters) NRIC / Passport No. Proportion of Shareholdings

No. of Shares %Address

*and/or Full Name (in Block Letters) NRIC / Passport No. Proportion of Shareholdings

No. of Shares %Address

or failing him/her, the Chairman of the Meeting as my/our proxy(ies) to vote for me/us and on my/our behalf at the 38th Annual General Meeting (“AGM”) of the Company to be held at Wisma Pineapple, 2nd Floor, Lot 135, Jalan 1/89B, 3½ Mile Off Jalan Sungai Besi, 57100 Kuala Lumpur on Monday, 28 May 2018 at 10:00 am and at every adjournment thereof. My/our proxy/proxies is/are to vote as indicated below:

ORDINARY RESOLUTIONS FOR AGAINST

Resolution 1 To approve payment of Directors’ fees for the financial year ended 31 December 2017

Resolution 2 To approve payment of Directors’ fees and benefits payable from 28 May 2018 until the next AGM

Resolution 3 To re-elect Director – Dato’ Lim Loong Heng

Resolution 4 To re-elect Director – Lim Kah Poon

Resolution 5 To re-elect Director – Chen Thiam Kwee @ Tan Thiam Kwee

Resolution 6 To re-appoint Messrs Ong Boon Bah & Co. as auditors of the Company

Resolution 7 Authority to issue shares pursuant to Sections 75 and 76 of the Companies Act 2016

Please indicate with an “X” in the appropriate box above as to how you wish your vote to be cast. In the absence of specific direction, your proxy will vote or abstain as he/she thinks fit. However, if more than one proxy is appointed, please specify the number of shares represented by each proxy, failing which the appointment shall be invalid.

Dated this day of , 2018 Signature(s) / Common Seal of Shareholder(s)Notes:-

1. The Agenda item 1 is meant for discussion only as the provision of Section 340(1)(a) of the Companies Act, 2016, the Audited Financial Statements do not require a formal approval of the shareholders and hence, will not be put forward for voting.

2. A member of the Company entitled to attend and vote is entitled to appoint a proxy to attend and vote in his/her stead. A proxy may but need not be a member of the Company. The instrument appointing a proxy shall be in writing under the hand of the appointor or his attorney duly authorised in writing or if such appointor is a corporation, under its common seal or the hand of its attorney or an officer duly authorised.

3. Where a member of the Company is an authorised nominee as defined under the Securities Industry (Central Depositories) Act 1991 (“SICDA”), it may appoint at least one (1) proxy but not more than two (2) proxies in respect of each Securities Account it holds with ordinary shares of the Company standing to the credit of the said Securities Account.

4. Where a member appoints more than one (1) proxy (subject to a maximum of two (2) proxies at each meeting), the appointment shall be invalid unless he specifies the proportions of his holdings to be represented by each proxy.

5. Where a member of the Company is an exempt authorised nominee as defined under the SICDA which holds ordinary shares in the Company for multiple beneficial owners in one Securities Account (“omnibus account”), there is no limit to the number of proxies which the exempt authorised nominee may appoint in respect of the omnibus account it holds.

6. To be valid, this duly completed proxy form must be deposited at the Registered Office of the Company at Wisma Lim Kim Chuan, Lot 50A, Jalan 1/89B, 3½ Mile Off Jalan Sungai Besi, 57100 Kuala Lumpur not less than 48 hours before the time fixed for holding the meeting or any adjournment thereof.

7. Only a depositor whose name appears in the Record of Depositors as at 18 May 2018 shall be entitled to attend the said meeting or appoint proxies to attend and/or vote on his/ her behalf.

8. Pursuant to Rule 8.31A of the ACE Market Listing Requirements, all Resolutions set out in the Notice of 38th AGM will be put to vote by poll. Poll Administrator and Independent Scrutineer will be appointed respectively to conduct polling voting process and to verify the results of the poll.

(Full Address)

(FRONT)

Please send me a copy of the PINEAPPLE RESOURCES BERHAD Annual Report 2017.

Sila hantar satu salinan Laporan Tahunan 2017 PINEAPPLE RESOURCES BERHAD kepada saya.

Name/Nama :

Address/Alamat :

NRIC No./No. K.P. :

Company No./No. Syarikat :

Signature of Shareholder/Tandatangan Pemegang Saham

ANNUAL REPORT 2017

The Annual Report 2017 is in a CD-ROM format. Printed copy of the Annual Report shall be provided to the shareholders within 4 market days from the date of receipt of the verbal or written request.

The request must be directed to:

Pineapple Resources BerhadWisma Lim Kim ChuanLot 50A, Jalan 1/89B3½ Mile Off Jalan Sungai Besi57100 Kuala Lumpur

Contact person : Mr Simon Lee/Ms Carmen ChanTelephone : +603-7983 3333 Facsimile : +603-7980 3333E-mail : [email protected]

(BACK)

PINEAPPLE RESOURCES BERHAD (55420-P)WISMA LIM KIM CHUANLOT 50A, JALAN 1/89B

3½ MILE OFF JALAN SUNGAI BESI57100 KUALA LUMPUR

MALAYSIA

Affixstamp here

Documents

CONTENTS · 2 BOARD OF DIRECTORS DATO’ LIM KHOON HENG Non-Executive Chairman DATO’ LIM LOONG HENG Managing Director LIM KEAN CHOONG Executive Director LIM KAH POON